Exhibit 10.2
AMENDMENT TO
STRATEGIC ALLIANCE AGREEMENT
     This Amendment (“Amendment”) to the Strategic Alliance Agreement dated on
or about July 22, 2005 as amended from time to time (the “Strategic Alliance
Agreement”) and, where indicated, to any one or all of the Strategic Agreements
(defined below), is made as of October 7, 2009 (the “Effective Date of the
Amendment”) by and among Quest Diagnostics Incorporated, a Delaware corporation
(“Quest Diagnostics”) and Vermillion, Inc., a Delaware corporation
(“Vermillion”).
RECITALS
     A. On March 30, 2009, Vermillion filed a voluntary petition for relief,
thereby commencing case no. 09-11091 (CSS) (the “Case”) pursuant to Chapter 11
of Title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (as in effect
for purposes of the Case, the “Bankruptcy Code”), in the United States
Bankruptcy Court for the District of Delaware and has continued in possession of
its assets and in the management of its business as a debtor-in-possession
pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code.
     B. Vermillion has requested that Quest Diagnostics provide a senior secured
super priority term loan facility of up to $1,500,000 (one million five hundred
thousand dollars) (the “Facility”) on the terms and conditions set forth in the
Loan Agreement (defined below) for Vermillion’s general working capital and
corporate purposes.
     C. Quest Diagnostics has agreed to enter into the Loan Agreement provided
that Vermillion assumes the Strategic Agreements (defined below) pursuant to the
terms of this Amendment.
     NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
AGREEMENT
     1. Vermillion, Inc. Throughout the Strategic Alliance Agreement and the
Alliance Agreements the term “Ciphergen” is hereby replaced with the term
“Vermillion.”
     2. Defined Term. Schedule A of the Strategic Alliance Agreement is hereby
amended to:
          (i) include the following defined term: “Loan Agreement” means that
certain Debtor-In-Possession Credit and Security Agreement by and between
Vermillion and Quest Diagnostics and dated October 7, 2009.”; and
          (ii) delete and replace in its entirety the current definition of
“Agreement” with the following definition: “Agreement” means the Strategic
Alliance Agreement as defined in

 

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and as amended pursuant to that certain Amendment to Strategic Alliance
Agreement made as of October 7, 2009.”
     3. Base Term. Section 2.7 of the Strategic Alliance Agreement is hereby
deleted and replaced in its entirety with the following provision:

“2.7   Base Term. As used in this Agreement, “Base Term” means the period
beginning on the Effective Date and ending on the earliest of:

(a) the date that is three (3) years after the Effective Date of the Amendment;
or
(b) the date Quest Diagnostics has Commercially Launched three (3) Licensed
Laboratory Tests under this Agreement.
Notwithstanding the foregoing, the Parties shall continue activities after the
Base Term with respect to the development of a Licensed Laboratory Test and Test
Kit to the extent that a Plan has been accepted by Quest Diagnostics pursuant to
Section 4.3 during the Base Term but development activities have not been
completed during the Base Term for a Licensed Laboratory Test and/or a Test Kit
with respect to such Plan. This obligation shall expire two (2) years after the
end of the Base Term.”
     4. Development of Test Kits. Article 7 of the Strategic Alliance Agreement
is hereby amended as follows:
          (i) Section 7.1 of the Strategic Alliance Agreement is hereby amended
by deleting the word “Following” at the beginning of the very first sentence
following the heading, “Ciphergen to Develop the Test Kits.” and replacing it in
its entirety with the phrase, “Subject to Section 7.3 hereof, following”
          (ii) Section 7.2 of the Strategic Alliance Agreement is hereby amended
by deleting the word “The” at the beginning of the very first sentence following
the heading “Roles of the Parties.” and replacing it in its entirety with the
phrase, “Subject to Section 7.3 hereof, the”
          (iii) adding the following new Section 7.3 at the very end of
Article 7 of the Strategic Alliance Agreement:

“7.3   Quest Diagnostics’ Step In Rights and Role with respect to Regulatory
Authorities and Commercialization Activities. Notwithstanding anything to the
contrary in any of the Strategic Agreements (defined below) and without limiting
any other of the parties’ respective rights and remedies under the Strategic
Agreements, in equity or law, in the event of:

     (a) an “Event of Default” by Vermillion under and as such term is defined
in the Loan Agreement,

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     (b) Quest Diagnostics determining, at its reasonable discretion and with at
least 24 (twenty four) hours notice to Vermillion and the Creditors’ Committee
in Vermillion’s bankruptcy, that Vermillion is unable to effectively carry out
actions necessary or appropriate in pursuit and/or maintenance of FDA clearance
obligations under any of the Strategic Agreements or under any other agreement
or understanding by and between Quest Diagnostics and Vermillion and/or,
     (c) Quest Diagnostics determining at its reasonable discretion and at least
twenty four (24) hours notice to Vermillion and the Creditor’s Committee in
Vermillion’s bankruptcy, that the commercial viability or salability of any of
the products contemplated under the Strategic Agreements may be impaired in any
way, as evidenced by way of examples only, but not necessarily limited to, the
issuance of an FDA inquiry, “un-titled letter” that results in a warning letter,
or warning letter, any failure or uncured deficiencies in response to any
audits, “483” notices, recalls, market withdrawals, injunctions, seizures,
safety alerts, other warnings, and/or any other deficiencies with respect to
quality systems, recurrent back order deficiencies, product recalls, labeling
requirements or otherwise,

    Vermillion shall assign and/or transfer to Quest Diagnostics such FDA
clearance or standing as registrant, petitioner, applicant and/or other similar
status as Vermillion may have or obtain or which may be otherwise available to
Vermillion and/or Quest Diagnostics for the OVA-1 test and/or for any other
ongoing or future tests in connection with any prior, current or future
elections under the Strategic Agreements. Effective immediately upon the
occurrence of any one or a combinations of events set forth in clauses (a),
(b) or (c) of this Section 7.3 (referred to herein as a “Step In Event”),
Vermillion hereby grants Quest Diagnostics with step-in rights and hereby
permits Quest Diagnostics to perform or have a third party perform any and all
obligations of Vermillion under the Strategic Agreements relevant to the Step In
Event that has occurred, including without limitation any activities related to
manufacturing, obtaining and maintaining FDA clearance/approval for the
applicable Test Kit or in filing or maintaining applicable intellectual
property. In addition, effective immediately upon a Step-In Event, Vermillion
shall duly execute and deliver, or cause to be duly executed and delivered such
further instruments and do and cause to be done such further acts and things,
including without limitation, the filing of such additional assignments,
agreements, documents and instruments, that may be necessary or as Quest
Diagnostics may at any time and from time to time reasonably request in order to
effectuate the purpose of this Section 7.3 and any and all allocations of
applicable rights, responsibilities, and restrictions under the Strategic
Agreements, including without limitation Sections 7.1, 7.2, 8.1, and 9.4 of the
Strategic Alliance Agreement, shall, at Quest Diagnostics’ reasonable discretion
and upon at least forty eight (48) hours notice to Vermillion and the Creditor’s
Committee in the Vermillion bankruptcy, become subject to this Section 7.3. In
connection with the foregoing, Vermillion hereby irrevocably makes, constitutes,
and appoints Quest Diagnostics (and any agents designated by Quest Diagnostics)
as Vermillion’s true and lawful attorney, with power to: at any time that a Step
In Event has occurred and is continuing, if Vermillion refuses to, or fails
timely to execute and deliver any of the necessary or appropriate documents,
cause to be assigned and/or transferred to Quest Diagnostics Vermillion’s
clearance or standing as registrant,

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    petitioner and/or applicant and/or other similar status as Vermillion may
obtain from the FDA for (x) the OVA-1 test and/or (y) any other ongoing or
future tests in connection with any prior, current or future elections under the
Strategic Agreements, as may be applicable with respect to the respective
Step-In Event and Quest Diagnostics exercise of its respective rights hereunder
in connection with such test.

Notwithstanding the foregoing, nothing in this Section 7.3 shall be construed
as: (a) granting Quest Diagnostics any ownership rights in Vermillion’s
intellectual property not otherwise already granted under the terms of any or
all of the Strategic Agreements; or (b) limiting Vermillion’s right to receive
payments or royalties otherwise due pursuant and subject to the terms and
conditions of the Strategic Agreements to Vermillion by Quest Diagnostics or any
third party.
     5. Commercialization of Licensed Laboratory Test Components and Test Kits.
Section 8.1 of the Strategic Alliance Agreement is hereby amended by deleting
the word “As” at the beginning of the very first sentence following the heading,
“Restrictions.” and replacing it in its entirety with the phrase, “Subject to
Section 7.3 hereof, as”
     6. Supply Agreement. Section 9.4 of the Strategic Alliance Agreement is
hereby amended by deleting the phrase, “Except as set forth in Section 9.7,” at
the very beginning of the last sentence of Section 9.4 and replacing it in its
entirety with the phrase, “Except as set forth in Sections 7.3 and 9.7,”
     7. Breach of Strategic Documents. Section 15.3 of the Strategic Alliance
Agreement is hereby deleted and replaced in its entirety with the following
provision:

“15.3   Breach of Strategic Agreements. If either Party materially violates,
breaches or fails to perform any term or covenant under any of the Strategic
Agreements and fails to cure such material breach pursuant to the terms of the
respective Strategic Agreement, the non-breaching Party may treat such material
violation, breach or failure to perform as a breach of this Agreement within the
meaning of Section 15.2 hereof. The foregoing shall not expand or limit any
remedies the non-breaching Party is entitled to under the respective Strategic
Agreement.”

     8. Entire Agreement. Section 16.9 of the Strategic Alliance Agreement is
hereby deleted and replaced in its entirety with the following provision:

“16.9   Entire Agreement; Amendment. This Agreement and all Schedules attached
hereto, as amended as of the date hereof, including without limitation pursuant
to this Amendment, together with the Stock Purchase Agreement, the Warrant
issued pursuant to the Stock Purchase Agreement, the Observer Rights Agreement,
the Credit Agreement, as modified pursuant to newly added Section 16.19 under
the Amendment, the Security Agreement and any Supply Agreement and technology
escrow agreement entered into in accordance with Article 9 hereof, each as may
have been amended from time to time, (collectively, the “Alliance Agreements”),
and the Loan Agreement contain the entire agreement of the

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    Parties relating to the subject matter hereof and supersede any and all
prior agreements, written or oral, between the Parties relating to the subject
matter of this Agreement, including without limitation the Prior NDA and that
certain Option Agreement between the Parties effective as of June 30, 2005. This
Agreement may not be amended unless agreed to in writing by both Parties. The
Strategic Alliance Agreement, this Amendment, the Alliance Agreements and the
Loan Agreement are collectively referred to as the “Strategic Agreements.”
Capitalized terms not otherwise defined herein shall have the meaning set forth
in the Strategic Alliance Agreement.”

     9. Express Assumption of the Strategic Agreements. The following
Section 16.19 is hereby added to the Strategic Alliance Agreement:

“16.19   Express Assumption of the Strategic Agreements; Pre Petition Debt under
the Credit Agreement. For purposes of this Section 16.19, Quest Diagnostics
hereby confirms and agrees that as of the date hereof no defaults or material
breaches exist with respect to any of the Assumed Agreements or to the extent of
any defaults or material breaches, all such defaults and material breaches are
hereby waived; provided, however, that nothing herein shall be deemed a waiver
of Quest Diagnostics’ right to assert any default or material breach or cure
with respect to the Assumed Agreements occurring hereafter.

(a) Assumption of Obligations. Vermillion hereby confirms and agrees that no
waiver by Quest Diagnostics of any default of any terms of any of the Strategic
Agreements shall (x) be deemed or construed as a waiver or relinquishment for
the future of any such term, provision, condition or option or the waiver or
relinquishment of any other term, provision, condition or option or (y) prevent
Quest Diagnostics from requesting adequate assurance of future performance in
connection with the Assumed Agreements (as hereinafter defined). Vermillion
further understands and agrees that in the event the Loan Agreement and/or the
respective Facility there under is terminated for any reason, including without
limitation, the payment of all obligations there under, the Strategic Alliance
Agreement, this Amendment, and the other Alliance Agreements, with the exception
of the Credit Agreement and Security Agreement, shall remain fully and
unequivocally assumed and in full force and effect pursuant to Section 365 of
Title 11 of the United States Code (such assumed agreements, the “Assumed
Agreements”). Vermillion further understands and acknowledges that other than
the modifications specifically set forth herein, the Assumed Agreements will
reincorporate all of the remaining rights and obligations there under, and under
current, pre-bankruptcy and ongoing tests and elections exercised there under,
which rights and obligations shall remain in full force and effect. All such
rights and obligations there under shall be assumed, together with the
assumption of this Amendment pursuant to Section 365 of Title 11 of the United
States Code, including without limitation, to the full extent originally
anticipated under Section 16.18 of the Strategic Alliance Agreement except as
modified pursuant to the terms herein, and shall constitute binding and
enforceable obligations of Vermillion during its bankruptcy case and upon its
emergence, conversion or dismissal from bankruptcy.

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(b) Pre Petition Debt Under the Credit Agreement. Vermillion acknowledges and
agrees that upon the filing of the Case by Vermillion all amounts due under the
Credit Agreement became immediately due and payable to Quest Diagnostics.
Vermillion and Quest Diagnostics hereby agree and acknowledge that as of the
date hereof the total principal amount due to Quest Diagnostics based on the
Credit Agreement is $10,000,000 (such principal amount together with any and all
accrued and outstanding interest thereon collectively referred to herein as the
“Pre Petition Debt”). Without limiting any of its rights in law or equity, Quest
Diagnostics hereby agrees to extend the payment term with respect to the Pre
Petition Debt as follows:
(i) Pre Petition Debt to be Forgiven Upon Achievement of Milestones; Repayment
of Principal and Interest. Provided that no material breach under any of the
Strategic Agreements (other than the Loan Agreement) by Vermillion has occurred
and is continuing, or any event of default which qualifies as an “Event of
Default” under either the Credit Agreement or the Loan Agreement, which breach
or event of default has occurred and is continuing, the Pre Petition Debt shall
be forgiven to the extent that Vermillion achieves certain milestones set forth
on Schedule B of the Credit Agreement with respect to three Plans presented
pursuant to the Strategic Alliance Agreement. In the event Vermillion fails to
achieve certain milestones as set forth on Schedule B of the Credit Agreement,
the principal amount outstanding related to each milestone not achieved shall be
due and payable to Quest Diagnostics in one lump sum on the third anniversary of
the Effective Date of the Amendment (the “Extended Term”), and notwithstanding
anything to the contrary in the Credit Agreement, the term of the Credit
Agreement shall be the Extended Term; provided that, as currently set forth in
Section 7 of the Credit Agreement, the termination of the Credit Agreement shall
not affect Vermillion’s obligation of repayment pursuant to Section 1.5 of the
Credit Agreement, as modified herein, and until all outstanding principal,
interest and late fees have been repaid, Quest Diagnostics’ rights under
Section 4 of the Credit Agreement. Vermillion understands and agrees that Quest
Diagnostics is extending the term of the Pre Petition Debt on the basis that
except to the extent the Loan (as defined under the Credit Agreement) is
forgiven pursuant to Schedule B of the Credit Agreement, Vermillion is to
continue to pay (subject to the immediately succeeding proviso) to Quest
Diagnostics, on a monthly basis and at such time as any principal is prepaid or
paid at maturity, all accrued and unpaid interest on the Loan (as defined under
the Credit Agreement), including all interest accrued during the pendency of the
Case, all pursuant to the terms of the Credit Agreement and Schedule B attached
thereto, including without limitation, with respect to use of proceeds, timing
of payments, events of default, interest and late payment penalties set forth
therein; provided, however, that payment of any such amounts shall not be
required to be made during the pendency of the Case. For purposes of
clarification, Vermillion further acknowledges and agrees, in consideration of
Quest Diagnostics’ forgiveness of Pre Petition Debt strictly pursuant to the
terms of this Section

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16.19(b)(i), to reaffirm its covenants and obligations to Quest Diagnostics
under the respective Security Agreement and Credit Agreement, with the sole
modification being that modification to Section 1.5.2 of the Credit Agreement
solely as contemplated under this Section 16.19(b)(i), such modification to be
effective upon curing any Events of Default (as defined in the Credit Agreement)
thereunder.”
     10. Governing Law. This Amendment will be governed by, and construed in
accordance with, the laws of the State of Delaware applicable to contracts to be
executed and performed in that state and without regard to the 1980 Convention
on the International Sale of Goods. Each of the Parties hereby expressly submits
to the personal jurisdiction of any court of competent jurisdiction in
California, Delaware, New York or New Jersey with respect to any matter arising
out of or in connection with this Amendment.
     11. References. Notwithstanding anything to the contrary herein, any and
all references to the Strategic Alliance Agreement in any of the Strategic
Agreements which are not strictly and solely historical references to the actual
Strategic Alliance Agreement entered into on or about July 22, 2005, shall refer
to the Strategic Alliance Agreement as defined in and as amended pursuant to
this Amendment.
     12. Counterparts. This Amendment may be executed in counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument.

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     IN WITNESS WHEREOF, the parties have executive this Amendment to be
effective as of the Effective Date of the Amendment set forth above.

          Quest Diagnostics Incorporated,
A Delaware corporation
      By:   /s/ Dermot Shorten         Name:   Dermot Shorten        Its:   VP,
Office of the Chairman      Vermillion, Inc., A Delaware corporation
      By:   /s/ Gail S. Page         Name:   Gail S. Page        Its:  Executive
Director    

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