Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from............... to ...............
Commission file number 1-10546
MOLECULAR BIOSYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3078632
(State of Incorporation) (I.R.S. Identification No.)
10030 Barnes Canyon Road
San Diego, California 92121
(619) 452-0681
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X Yes No
The number of shares outstanding of the issuer's common stock, $.01 par value,
as of February 9, 1996 was 13,290,736 shares.
<PAGE>
INDEX PAGE
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
1. Consolidated Balance Sheets 3
December 31, 1995
March 31, 1995
2. Consolidated Statements of Operations 5
Three Months Ended December 31, 1995 and 1994
Nine Months Ended December 31, 1995 and 1994
3. Consolidated Statements of Cash Flows 6
Nine Months Ended December 31, 1995 and 1994
4. Notes to Financial Statements 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II -OTHER INFORMATION
Item 1 - Legal Proceedings 13
Item 2 - Changes in Securities 13
Item 3 - Defaults Upon Senior Securities 13
Item 4 - Submission of Matters to a Vote of Securities Holders 13
Item 5 - Other Information 13
Item 6 - Exhibits and Reports on Form 8-K 13
(a) Exhibits
(b) Reports on Form 8-K
Signatures 14
<PAGE>
<TABLE>
<CAPTION>
MOLECULAR BIOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars in thousands)
December 31,
1995 March 31,
(Unaudited) 1995
----------------- ----------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $2,231 $3,882
Marketable securities, available-for-sale 18,889 15,836
Accounts and notes receivable 376 5,180
Property held for sale 6,476 -
License rights 2,700 -
Inventories 697 1,394
Prepaid expenses and other assets 523 442
----------------- ----------------
Total current assets 31,892 26,734
----------------- ----------------
PROPERTY AND EQUIPMENT, at cost:
Building and improvements 14,171 18,125
Equipment, furniture and fixtures 5,378 5,216
Construction in progress 609 2,253
----------------- ----------------
20,158 25,594
Less: Accumulated depreciation and amortization 6,566 5,947
----------------- ----------------
13,592 19,647
----------------- ----------------
OTHER ASSETS:
Patents and license rights, net 341 1,724
Other assets, net 1,903 2,534
----------------- ----------------
2,244 4,258
----------------- ----------------
$47,728 $50,639
================= ================
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
MOLECULAR BIOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(Dollars in thousands)
December 31,
1995 March 31,
(Unaudited) 1995
----------------- ----------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $5,238 $5,089
Current portion of long-term debt 307 307
Compensation accruals 658 411
----------------- ----------------
Total current liabilities 6,203 5,807
----------------- ----------------
LONG-TERM DEBT, net of current portion 8,183 8,408
----------------- ----------------
COMMITMENTS AND CONTINGENCIES (Note 2)
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value,
20,000,000 shares authorized,
13,290,736 and 11,999,561 shares
issued and outstanding, respectively 133 120
Additional paid-in capital 91,432 78,422
Retained deficit (57,769) (41,472)
Unrealized loss on available-for-sale securities (6) (118)
Less notes receivable from sale of common stock (281) (469)
Less treasury stock, at cost (167) (59)
----------------- ----------------
Total shareholders' equity 33,342 36,424
----------------- ----------------
$47,728 $50,639
================= ================
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
MOLECULAR BIOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES:
Revenues under collaborative agreements $ 1,013 $ 6,188 $ 1,412 $ 14,921
Product revenues 232 720 506 1,267
License fees - - 25 40
-------------- -------------- -------------- --------------
1,245 6,908 1,943 16,228
-------------- -------------- -------------- --------------
RESEARCH AND DEVELOPMENT COSTS:
Compensation 1,499 1,519 4,111 5,404
Equipment and supplies 545 1,384 1,549 3,312
Outside research, preclinical and clinical trials 75 345 564 1,512
Legal, professional and consulting 355 275 1,022 1,093
Occupancy costs 359 237 1,128 1,011
Other 443 492 1,483 1,779
-------------- -------------- -------------- --------------
3,276 4,252 9,857 14,111
COST OF PRODUCTS SOLD 587 643 1,311 988
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 1,066 1,338 4,178 4,278
OTHER EXPENSE 3,110 3,000 3,110 3,350
-------------- -------------- -------------- --------------
Total operating costs and expenses 8,039 9,233 18,456 22,727
-------------- -------------- -------------- --------------
LOSS FROM OPERATIONS (6,794) (2,325) (16,513) (6,499)
INTEREST EXPENSE (195) (193) (596) (496)
INTEREST INCOME 344 283 812 930
-------------- -------------- -------------- --------------
NET LOSS $ (6,645) $ (2,235) $ (16,297) $ (6,065)
============== ============== ============== ==============
NET LOSS PER COMMON SHARE $ (0.50) $ (0.19) $ (1.30) $ (0.51)
============== ============== ============== ==============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 13,291 12,000 12,535 11,999
============== ============== ============== ==============
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
MOLECULAR BIOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
(Unaudited; in thousands)
1995 1994
-------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($16,297) ($6,065)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 1,868 2,455
Write-down of property to be sold 667 -
Loss on write-off of license fees related to discontinued products 1,025 -
Forgiveness of note receivable from sale of common stock 56 -
Changes in operating assets and liabilities:
Receivables 4,748 (10,216)
License Rights 2,700 -
Inventories 697 49
Prepaid expenses and other assets (80) (242)
Accounts payable and accrued liabilities 1,649 3,185
Compensation accruals 247 50
-------------- -------------
Cash used in operating activities (8,120) (10,784)
-------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,945) (882)
Additions to patents and license rights (45) (500)
Increase in other assets (23) -
(Increase) decrease in marketable securities (2,941) 6,502
-------------- -------------
Cash provided by (used in) investing activities (4,908) 5,120
-------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common shares 11,602 183
Long-term debt proceeds - 5,000
Principal payments on long-term debt (225) (180)
-------------- -------------
Cash provided by financing activities 11,377 5,003
-------------- -------------
DECREASE IN CASH AND CASH
EQUIVALENTS (1,651) (661)
CASH AND CASH EQUIVALENTS, beginning of period 3,882 1,557
-------------- -------------
CASH AND CASH EQUIVALENTS, end of period $2,231 $896
============== =============
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest income received $804 $1,063
============== =============
Interest paid $592 $492
============== =============
</TABLE>
See accompanying notes.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
(1) Basis of Presentation-
----------------------
The Notes to the Consolidated Financial Statements of Molecular
Biosystems, Inc. (the "Company") were submitted with the Company's Form
10-K for the year ended March 31, 1995 and should be read in
conjunction with this Form 10-Q.
These interim Consolidated Financial Statements of the Company have
not been audited by independent public accountants. However, in the
opinion of the Company, all adjustments required for a fair
presentation of the financial position of the Company as of December
31, 1995, and the results of its operations for the three- and nine-
months ended December 31, 1995 and 1994, and its cash flows for
the nine-month periods ended December 31, 1995 and 1994, have been
made. The results of operations for these interim periods are not
necessarily indicative of the operating results for the full year.
(2) Contingencies-
--------------
In May 1993 the Company entered into an exclusive license agreement
with Bracco S.p.A. of Milan, Italy, for the distribution rights in
Europe and the former Soviet Union to the Company's proprietary oral
ultrasound agent for imaging the gastrointestinal tract. At that time
Bracco paid the Company a license fee of $2 million and undertook
certain developmental obligations in the territory. In March 1994,
Bracco notified the Company that it desired to rescind the agreement
and demanded that the Company return the license fee. The Company
denied that Bracco was entitled to rescind the agreement or to the
return of any portion of the license fee. In January 1995, Bracco filed
a demand for arbitration claiming return of the $2 million license fee,
in addition to other monetary relief. The Company filed a response
denying the material allegations of Bracco's demand. On November 22,
1995, the arbitrator ruled in favor of MBI on two counts of Bracco's
claim; however, he also awarded Bracco $1.7 million plus statutory
interest on a legal theory not advanced by Bracco. MBI is appealing the
award. As a result of the arbitrator's ruling, the Company has
recognized a charge to operations of approximately $2.4 million to
reflect the amount of the award, interest accrued thereon and related
attorneys' fees. Of this charge, approximately $1.4 million was
recorded during the quarter ended December 31, 1995. Included in
accounts payable and accrued liabilities at December 31, 1995 is a
reserve of $2 million for the possible payment of this award.
(3) Stock Settlement-
-----------------
In June 1994, the United States District Court for the Southern
District of California granted final approval to an agreement settling
a class action complaint against the Company, certain of its officers
and all of the members of its Board of Directors (Sherman v. Widder, et
al., No. TS 92-1827-IEG (M)) alleging violations of the Securities
Exchange Act of 1934 and California securities laws. Part of the
settlement agreement provided for the Company to issue shares of MBI's
common stock worth $1.5 million to qualifying class members. In May
1995, the stock was transferred to the qualifying class members.
<PAGE>
(4) Other Expense-
--------------
During the quarters ended December 31, 1995 and December 31, 1994, the
Company recorded the following charges:
<TABLE>
Three Months Ended Nine Months Ended
December 31, December 31,
1995 1994 1995 1994
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Legal settlement and related costs $ 1,418 $ - $ 1,418 $ 350
Write-off of license fees related to discontinued products 1,025 1,025
Write-down of real estate to be sold 667 - 667 -
Approval bonus paid by U.S. marketing partner - 3,000 - 3,000
---------- ---------- ---------- -----------
Total litigation and other $ 3,110 $ 3,000 $ 3,110 $ 3,350
========== ========== ========== ===========
</TABLE>
The arbitration award and related costs are discussed in note (2) on
page 7.
As a result of the Company's decision to focus its research and
development activities on its ultrasound contrast agents, the Company
wrote-off approximately $1 million of license fees related to
discontinued products which previously had been capitalized.
Additionally, in November 1995, the Company entered into a contract for
the sale of the two buildings and underlying land that the Company
purchased in December 1993. The sale of the buildings is expected to be
completed in March 1996. As a result, the Company has written-down the
carrying value of the buildings by $667,000 to the net amount it
expects to receive from this sale.
Finally, during the quarter ended December 31, 1994, the Company
received a bonus from Mallinckrodt Medical, its U.S. marketing partner
of approximately $3 million related to the approval of ALBUNEX(R) for
marketing in the United States. Under the terms of the marketing and
distribution agreement with Mallinckrodt, this bonus was paid to MBI's
employees. As a result, the Company accrued a liability for the payment
of these bonuses in the quarter ended December 31, 1994 of $3 million.
The bonus was paid to employees in the quarter ended March 31, 1995.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following management discussion and analysis should be read in
conjunction with (1) the current consolidated financial statements and (2) the
Company's consolidated financial statements and management's discussion and
analysis of financial condition and results of operations in its Annual Report
on Form 10-K for the year ended March 31, 1995.
Liquidity and Capital Resources
On September 7, 1995, the Company entered into an amended and restated
distribution agreement and a related investment agreement with Mallinckrodt
Medical, Inc. ("Mallinckrodt") which will provide the Company with between $33
million and $47.5 million in new financing (includes the $13 million common
stock investment discussed below). Under the terms of the agreement,
Mallinckrodt will pay the Company $20 million over four years to support
clinical trials of FS069 (the Company's second-generation cardiac perfusion
product), related regulatory submissions and associated product development.
These payments will be made in 16 quarterly installments starting at $1 million
for the first four quarters, $1.25 million for the following eight quarters and
$1.5 million for the final four quarters. The first and second quarterly
payments were paid on October 1, 1995 and January 2, 1996.
The amended distribution agreement requires the Company to spend at
least $10 million of this $20 million on clinical trials to support regulatory
filings with the FDA for cardiac indications of FS069. After the Company has
spent this $10 million, the amended distribution agreement requires the Company
and Mallinckrodt to share equally in the cost of any additional clinical trials
of FS069 in the United States, up to a maximum total of $5 million ($2.5 million
each).
The amended distribution agreement also provides for potential payments
to the Company of up to $12 million upon the satisfaction of certain milestones.
(There can be no assurance, however, that all or any of these milestones will be
satisfied.)
In connection with the amended distribution agreement, the Company also
entered into an investment agreement whereby the Company sold 1,118,761
unregistered shares of its common stock to Mallinckrodt for $13 million, or a
price of $11.62 per share before related costs. With the 181,818 shares of the
Company's common stock that Mallinckrodt acquired in December 1988 (under an
investment agreement which the Company and Mallinckrodt entered into at the same
time as they entered into the original distribution agreement), Mallinckrodt
owns approximately 9.8% of the Company's issued and outstanding shares.
The Company expects that the funding provided under the amended
distribution agreement to be its major source of funds for Company operations
over the next several years. At December 31, 1995, the Company had net working
capital of $25.7 million compared to $20.9 million at March 31, 1995. Cash and
current marketable securities were $21.1 million at December 31, 1995 compared
to $19.7 million at March 31, 1995.
For the next several years, the Company expects to incur substantial
additional expenditures associated with product development. As discussed above,
funding provided under the amended distribution agreement will be the major
source to fund the Company's operating costs and expenses. The Company will also
continue to utilize product revenues from sales of ALBUNEX(R) and its existing
cash and marketable securities and the interest earned thereon to fund its
operations and capital spending needs. The Company may pursue a number of
options to raise additional funds, including borrowings; lease arrangements;
collaborative research and development arrangements with pharmaceutical
companies; the licensing of product rights to third parties; or additional
public and private financing, as anticipated capital requirements change as a
result of strategic, competitive, technological and regulatory factors. There
can be no assurance that funds from these sources will be available on favorable
terms, if at all.
Results of Operations
Revenues. During the first year after the Company received clearance
for the marketing and sale of ALBUNEX(R) in the United States, the Company
recognized revenues both on its sales to Mallinckrodt (see "Product Revenues and
License Fees," below) and on Mallinckrodt's subsequent sales to the end users of
ALBUNEX(R) (see "Revenues Under Collaborative Agreements," below).
Revenues Under Collaborative Agreements. Revenues under collaborative
agreements, which have been the primary source of revenues for the Company in
the past, were $1 million and $1.4 million for the three-month and nine-month
periods ended December 31, 1995, compared to $6.2 million and $14.9 million for
both of the same periods in the prior year.
For both the three-month and nine-month periods ended December 31,
1995, $1 million of the revenues under collaborative agreements was attributable
to the receipt of the first quarterly payment from Mallinckrodt to support
clinical trials (discussed above under "Liquidity and Capital Resources"). The
remaining $13,000 and $412,000 for the same periods were based on Mallinckrodt's
sales to its customers. Under the original Mallinckrodt contract, for the first
twelve months after the Company received clearance for ALBUNEX(R) in the United
States, Mallinckrodt agreed to pay a bonus to MBI equivalent to Mallinckrodt's
first year product sales at its sales price to the end users of the product. The
Company earned $757,000 based upon the first-year product sales of ALBUNEX(R) by
Mallinckrodt. The bonus payment was received in December 1995. Prior year
revenues consisted of milestone revenues recognized as a result of the Company
receiving approval to market ALBUNEX(R) in the United States and the release of
ALBUNEX(R) to Mallinckrodt's sales force.
Product Revenues and License Fees. Revenues, excluding revenues under
collaborative agreements, were $232,000 and $531,000 for the three-month and
nine-month periods ended December 31, 1995, compared to $720,000 and $1.3
million for the same periods in the prior year. Product sales are based upon
MBI's sales to Mallinckrodt and Shionogi and are recognized upon shipment of the
product. The transfer price for MBI's sales of ALBUNEX(R) to Mallinckrodt is
equal to 40% of Mallinckrodt's net sales price to its end users of the product
and the transfer price for MBI's sales of ALBUNEX(R) to Shionogi is equal to 30%
of Shionogi's net sales price to its end users of the product.
Cost of Products Sold. Cost of products sold totaled $587,000 and $1.3
million for the three-month and nine-month periods ending December 31, 1995,
resulting in a negative gross profit margin due to the current low levels of
production. Cost of products sold totaled $988,000 for the period ended December
31, 1994, resulting in a gross profit margin of 22%. The higher gross profit
margin percentage in the prior year was due to then greater levels of
production.
Research and Development Costs. For the three-month and nine-month
periods ended December 31, 1995, the Company's research and development costs
totaled $3.3 million and $9.9 million, as compared to $4.3 million and $14.1
million, respectively, for the same periods in 1994. This decrease of 30% in the
current year is due in large part to the decision the Company made in February
1995 to focus its research and development efforts primarily on its ultrasound
contrast agents and reduce its staffing by approximately twenty five percent.
Selling, General and Administrative Expenses. For the three-month and
nine-month periods ended December 31, 1995, the Company's selling, general and
administrative expenses totaled $1.1 million and $4.3 million, as compared to
$1.3 million and $4.6 million, respectively, for the same periods in 1994. This
decrease in the current year is also due to the decision to reduce the
Company's staffing made in February 1995.
Interest Expense and Interest Income. Interest expense for the
three-month and nine-month periods ended December 31, 1995 and 1994 consists of
mortgage interest on the Company's buildings. Interest expense is higher in the
current year due to a note payable which the Company entered into in May 1994 to
finance the purchase of two unimproved buildings and underlying land in December
1993.
The decrease in interest income in the current year is due to lower
average cash and marketable securities balances.
The Company's cash is invested primarily in short-term, fixed principal
investments, such as U.S. Government agency issues, corporate bonds,
certificates of deposit and commercial paper.
Prospective Information
As noted above, on September 7, 1995, the Company entered into an
amended and restated distribution agreement and a related investment agreement
with Mallinckrodt. This amended distribution agreement modifies the original
December 1988 distribution agreement between the Company and Mallinckrodt in a
number of respects. Under the amended distribution agreement, the geographical
scope of Mallinckrodt's exclusive right to market the Company's proprietary
contrast agent for transpulmonary cardiac ultrasound imaging, ALBUNEX(R), the
Company's second generation ultrasound contrast agent, FS069 (currently under
development), and related products was expanded to include all of the countries
of the world other than those covered by the Company's license agreements with
Shionogi & Co., Ltd. and Nycomed AS. The duration of Mallinckrodt's exclusive
right was also extended from October 1999 until the later of July 1, 2003 or
three years after the date that Company obtains approval from the U.S. Food and
Drug Administration ("FDA") to market FS069 for an intravenous myocardial
perfusion indication (use).
The amended distribution agreement requires the Company to spend at
least $10 million of the $20 million it receives over four years on clinical
trials to support regulatory filings with the FDA for cardiac indications of
FS069. The Company's expenditure of this $10 million will be made in accordance
with the directions of a joint steering committee which the Company and
Mallinckrodt will establish in order to expedite the development and regulatory
approval of FS069 by enabling the parties to share their expertise relating to
clinical trials and the regulatory approval process. The Company and
Mallinckrodt will each appoint two of the four members of the joint steering
committee.
After the Company has spent this $10 million, the amended distribution
agreement requires the Company and Mallinckrodt to share equally in the cost of
any additional clinical trials of FS069 in the United States which the joint
steering committee may direct to be performed, up to a maximum of $5 million on
a combined basis.
In addition, the amended distribution agreement grants the Company the
option (at its own discretion) to repurchase all of the shares of the Company's
common stock that Mallinckrodt purchased under the investment agreement for $45
million, subject to various price adjustments. This option is exercisable
beginning the later of July 1, 2000 or the date that the Company obtains
approval from the FDA to market FS069 for an intravenous myocardial perfusion
indication and ending on the later of June 30, 2003 or three years after the
date that the Company obtains approval from the FDA to market FS069 for an
intravenous myocardial perfusion. If the Company exercises this option, the
Company may co-market ALBUNEX(R), FS069 and related products in all of the
countries covered by the amended distribution agreement.
Shares sold to Mallinckrodt under the related investment agreement are
subject to certain anti-dilution and registration rights of Mallinckrodt and
certain first refusal and "standstill" rights of MBI.
In October 1995, the Company entered into an agreement whereby it
reaquired all rights to INFOSON (the European designation for ALBUNEX(R)), FS069
and related products from Nycomed, the Company's European licensee. Nycomed has
received approval to market ALBUNEX(R) in Sweden, Finland and the United Kingdom
and has filed applications in several other European countries, but has not yet
begun to market the product. The Company is currently in discussions with
another potential licensee for Nycomed's territory, which includes Europe,
Africa, parts of Asia and India. Financial terms will be disclosed at a later
date.
Sales of ALBUNEX(R) . In October 1993, ALBUNEX(R) was approved for
marketing in Japan and became the first ultrasound contrast agent available in
that country. As initial sales were below the Company's expectations, Shionogi
and the Company engaged in an intensive cooperative study of the situation.
However, to increase the likelihood of improved sales performance in the future,
Shionogi, with the Company's concurrence, decided during the first quarter of
fiscal 1995 to curtail promotional efforts and limit current Japanese sales to
selected accounts until these issues have been resolved. The Company has had
limited sales to Shionogi since the second quarter of fiscal 1995. The Company
and Shionogi have recently discussed the possibility of terminating the
agreement between the companies. The Company believes that it is likely that the
relationship with Shionogi will be terminated within the next twelve months on
terms to be determined.
In August 1994, the Company received clearance for the marketing and
sale of ALBUNEX(R) in the United States. Product sales from the Company to
Mallinckrodt, the Company's distributor in the United States, totaled $1.4
million for the first 15 months the product has been marketed in the United
States.
President and Chief Operating Officer. In October 1995 the Company
appointed Mr. Bobba Venkatadri as President and Chief Operating Officer. Mr.
Venkatadri most recently served as Executive Vice President of the
Pharmaceutical Division of Centocor, Inc., in Malvern, Pennsylvania. He was
instrumental in restructuring Centocor which included building strategic
alliances, management of R&D, product approvals and scale-up of new products.
Mr. Venkatadri was appointed to fill the vacancy created by the
resignation of Vincent A. Frank. Mr. Frank, who served as MBI's President and
Chief Operating Officer for 10 years, passed away in August 1995 after a lengthy
illness.
PART II - OTHER INFORMATION
Item 1-5 - The Company has nothing to report with respect to these items during
the quarter ended December 31, 1995.
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a)Exhibits -
10.1 Amended and Restated Distribution Agreement dated September 11, 1995
between the Company and Mallinckrodt Medical, Inc.
10.2 Investment Agreement dated September 7, 1995 between the Company and
Mallinckrodt Medical, Inc.
10.3 Amendment No. 3 to License and Cooperative Development Agreement dated
October 24, 1995 between the Company and Nycomed Imaging AS.
(b)Reports on Form 8-K
A Current Report on Form 8-K dated September 7, 1995, was filed
on September 25, 1995, reporting a restated distribution agreement and
a related investment agreement with Mallinckrodt Medical, Inc.
A Current Report on Form 8-K dated November 22, 1995, was filed on
December 13, 1995, reporting that the arbitrator in arbitration proceedings
between Molecular Biosystems, Inc. (the "Company") and Bracco S.p.A.
("Bracco") entered an award refunding a portion of the license fee that
Bracco paid to MBI in May 1993 in connection with the Company's license to
Bracco of MBI's oral ultrasound agent technology.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MOLECULAR BIOSYSTEMS, INC.
/s/ Gerard A. Wills
- -------------------
Gerard A. Wills
Vice President Finance and
Chief Financial Officer
4/09/96
- -----------
Date
Amended and Restated Distribution Agreement
This Agreement is entered into as of September 7, 1995 by and between
Mallinckrodt Medical, Inc., a Delaware corporation with an address at 675
McDonnell Boulevard, Post Office Box 5840, St. Louis, Missouri 63134
("Mallinckrodt"), and Molecular Biosystems, Inc., a Delaware corporation with an
address at 10030 Barnes Canyon Road, San Diego, California 92121 ("MBI"). This
Agreement is effective as of December 7, 1988 except as provided in Section
16.15.
Recitals
A. Mallinckrodt and MBI are parties to a Distribution Agreement dated as
of December 7, 1988, as amended by an Agreement dated November 7, 1989 (as
amended, the "Current Distribution Agreement").
B. Mallinckrodt and MBI desire to amend and restate the Current
Distribution Agreement as follows.
Now, therefore, in consideration of their mutual promises, the parties
agree as follows:
Article 1
Definitions
As used in this Agreement, the following terms shall have the meanings
specified below:
1.01 Additional Territory shall mean all of the countries of the world
except the countries included in the Territory, the Nycomed Territory and the
Shionogi Territory.
1.02 Affiliate shall mean with respect to a corporation, association,
partnership, individual, trust or unincorporated organization, any other
corporation, association, partnership, individual, trust or unincorporated
organization that, directly or indirectly, controls, is controlled by or under
common control with such corporation, association, partnership, individual,
trust or unincorporated organization.
1.03 Agreement shall mean this Amended and Restated Distribution
Agreement, as amended from time to time.
1.04 ALBUNEX shall mean any product for medical applications, including
all modifications and improvements related thereto, that is an in vivo contrast
agent for ultrasound and echocardiography diagnostic imaging and (a) that is
covered by or described in, or manufactured in accordance with a process covered
by or described in, any patent or pending patent application included in
Appendix 2, (b) that is functionally similar to a product included
<PAGE>
in (a) above and is currently in the possession or control (by license or
otherwise) of MBI, (c) that could be made pursuant to any process referred to in
(a) above, whether or not it is in fact made by that process, or (d) that
consists of microbubbles or hollow microspheres made of a biocompatible
material.
The term "ALBUNEX" includes (but is not limited to) products consisting
of sonicated albumin microspheres containing a perfluorocarbon in gaseous form
and specifically includes the product consisting of sonicated albumin
microspheres containing perfluoropropane which MBI has code-named "FS069."
1.05 Albunex Product means each vial size of ALBUNEX manufactured for
commercial sale for which the manufacturer assigns a separate identifying
number. Each vial size of ALBUNEX manufactured for commercial sale shall be
assigned a separate identifying number for each country in which vials of that
size are sold or to be offered for sale. If a particular vial size is labelled
in a manner that permits vials of that size to be sold in more than one country,
a single identifying number shall be assigned in respect of all such countries.
1.06 Average Selling Price means, for each Albunex Product which is sold
during any calendar quarter, the quotient obtained by dividing (i) the Net Sales
of that Albunex Product during the quarter by (ii) the number of vials of that
Albunex Product shipped to purchasers during the quarter (including vials given
away in order to provide a discounted purchase price and vials distributed as
samples, but not including vials shipped at no charge for preclinical and
clinical trials). The Average Selling Price for each Albunex Product which is
labelled in a manner that permits vials of that product to be sold in more than
one country shall be determined on a sales-weighted basis by taking into account
the aggregate Net Sales of that Albunex Product in all such countries during the
quarter (i.e., the Average Selling Price shall not be determined by averaging
the Average Selling Price for each such country).
1.07 Change in Control shall mean with respect to MBI, a change of
control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended ("Exchange Act"). Without limiting the foregoing, a
Change in Control shall be deemed to have occurred for purposes of the
Agreement, regardless of the provisions of the Exchange Act, if (a) any "person"
(as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act, and
including any "group" of persons) is or becomes the beneficial owner (as
determined in accordance with Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of securities of MBI, which when combined with all
securities of MBI theretofore directly or indirectly beneficially owned by such
person, represent 40% or more of the combined voting power of MBI's then
outstanding securities; (b) at any election or series of elections, persons not
proposed for nomination or nominated by the management of MBI are elected as
directors of MBI, and together constitute 50% or more of the MBI board of
directors; or (c) any person or group solicits and receives valid proxies for
the election of the MBI board of directors in opposition to the nominees of
management of MBI representing an aggregate of 50% or more of the combined
voting power of MBI's then outstanding securities.
1.08 Confidential Information shall mean (a) any data or information
relating to ALBUNEX that is competitively sensitive material, and not generally
known to the public, such as, but not limited to, product planning information,
marketing strategies, sales estimates, business plans, and internal performance
results relating to ALBUNEX; (b) any scientific or technical information,
design, process, procedure, formula, or improvement relating to ALBUNEX that is
commercially valuable and secret in the sense that its confidentiality affords
the disclosing party a competitive advantage over its competitors, including
without limitation, the manufacturing techniques, sources of raw material and
composition of matter relating to ALBUNEX; and (c) all confidential or
proprietary concepts, inventions, and information relating to ALBUNEX, including
but not limited to know-how and trade secrets relating to ALBUNEX. Confidential
Information includes without limitation, all documents, inventions, substances,
engineering and laboratory notebooks, drawings, specifications, bills of
material, equipment, prototypes and models relating to ALBUNEX, and any other
tangible manifestation of the foregoing which now exist or come into the control
or possession of the party.
1.09 Damages is defined in Section 7.01(c)(2)(A).
1.10 Effective Date is defined in Section 16.15.
1.11 Exclusive Period is defined in Section 9.01.
1.12 FDA shall mean the United States Food and Drug Administration, or
any successor agency thereto.
1.13 Force Majeure shall mean any act or occurrence beyond the
reasonable control of a party that prevents its performance of any covenant or
obligation under this Agreement including without limitation: (a) lightning,
storms, earthquakes, landslides, flood, washouts, or other acts of God; (b)
fires, explosions, or breakage of or accidents to plant, machinery, equipment,
or storage; (c) shortage of necessary labor, strikes, lockouts, or other labor
disturbances; (d) civil disturbances, sabotage, war, blockades, insurrections,
vandalism, riots, or epidemics; (e) acts of any governmental agency or military
authority; (f) unavailability of utilities or transportation; or, (g) any other
cause, whether enumerated herein or otherwise, that is not reasonably within the
control of the party claiming suspension, which by the exercise of due
diligence, such party is unable to overcome. Notwithstanding the foregoing, the
lack of finances for whatever reason shall in no event be, or be deemed to be, a
cause beyond the party's control.
1.14 Forecast is defined in Section 2.05(b).
1.15 [Omitted; filed separately with the Commission.]
1.16 Joint Steering Committee is defined in Section 2.16.
1.17 Know-how shall mean complete information concerning ALBUNEX,
including but not limited to (a) all Confidential Information of a technical
nature relating to ALBUNEX, (b) all useful pre-clinical, clinical and other data
respecting the safety and efficacy of ALBUNEX, (c) all the records of case
histories of use, medical evaluations, submissions to and correspondence with
the FDA and corresponding foreign agencies relating to ALBUNEX, and (d) all
useful technical data and information, including but not limited to all
documents and prototypes and models actually provided to Mallinckrodt by MBI,
relating to formulas for and the manufacture, use or sale of ALBUNEX owned,
controlled or licensed by MBI which is necessary to or helpful to (x) enable
Mallinckrodt most efficiently to manufacture, use or sell ALBUNEX, or (y) obtain
any governmental approval to sell ALBUNEX.
1.18 Launch Date shall mean October 17, 1994, which was the date that
Mallinckrodt first released ALBUNEX to its sales force for commercial sale after
the FDA issued its initial approval letter for ALBUNEX.
1.19 Loss shall mean any liability, loss, cost, damage or actual expense
reasonably incurred (including, without limitation, reasonable and appropriate
attorneys' fees) sustained by the indemnified party, together with any related
interest and penalties.
1.20 Mallinckrodt shall mean Mallinckrodt Medical, Inc., a Delaware
corporation (which is the successor in interest to Mallinckrodt, Inc. as a
party to this Agreement).
1.21 MBI shall mean Molecular Biosystems, Inc., a Delaware corporation.
1.22 MBI's Manufacturing Obligations means MBI's manufacturing and
delivery obligations and covenants in Sections 2.02, 2.03, 2.04(b), (c), (d) and
(e), 2.06, 2.07, 2.09(c), 2.13 and 6.02(i) and (j).
1.23 MBI Trademarks shall mean the trademarks, including the
registrations and applications therefor listed in Appendix 1, together with any
other trademarks, registrations or applications similar to the "ALBUNEX(R)"
mark.
1.24 NDA shall mean with respect to any formulation or indication of
ALBUNEX a New Drug Application as required to be filed with the FDA.
1.25 Net Sales shall mean, for each Albunex Product, the aggregate gross
sales of that Albunex Product by Mallinckrodt or its Affiliates to purchasers
who are not Affiliates of Mallinckrodt, less the aggregate related (i)
allowances for spoiled, damaged, out-of-date (under Section 2.04(e)),
out-of-specification (in respect of specifications required by this Agreement),
recalled or returned vials (if the spoilage, damage, being out-of-date or
out-of-specification, recall or return is due to the fault of MBI), (ii) trade,
quantity and cash discounts and rebates allowed, (iii) all sales, use and excise
taxes and duties paid, and (iv) transportation and handling charges paid. For
any Net Sales in a currency other than United States dollars, the amount of such
Net Sales shall be computed using the average of the daily exchange rates for
the month of sale, as reported by Reuters Ltd. Money 2000 System or any other
exchange rate reporting service or commercial source selected by Mallinckrodt
and approved by MBI (which shall not unreasonably withhold its approval),
provided that Mallinckrodt shall not select another reporting service or
commercial source arbitrarily or for the purpose of gaining an exchange rate
more favorable to it than the exchange rate reported by the Reuters Ltd. Money
2000 System.
1.26 1995 Investment Agreement means the Investment Agreement dated as
of September 7, 1995 between MBI and Mallinckrodt.
1.27 [Omitted; filed separately with the Securities and Exchange
Commission ("Commission")]
1.28 [Omitted; filed separately with the Commission.]
1.29 [Omitted; filed separately with the Commission.]
1.30 [Omitted; filed separately with the Commission.]
1.31 [Omitted; filed separately with the Commission.]
1.32 PMA shall mean with respect to any formulation or indication of
ALBUNEX a Pre-Market Approval submission as required to be filed with the FDA.
1.33 Product Literature shall mean the product literature for ALBUNEX
developed pursuant to Section 2.10.
1.34 Product Specifications shall mean the specifications for ALBUNEX to
be supplied by MBI as in effect from time to time as provided in Section 2.02.
1.35 Repurchasable Shares is defined in Section 9.02.
1.36 [Omitted; filed separately with the Commission.]
1.37 [Omitted; filed separately with the Commission.]
1.38 [Omitted; filed separately with the Commission.]
1.39 [Omitted; filed separately with the Commission.]
1.40 [Omitted; filed separately with the Commission.]
1.41 Start-Up Costs is defined in Section 7.01(c)(2)(A).
1.42 Stock Repurchase Option is defined in Section 9.02.
1.43 Technology Rights shall mean the following:
(a) Those patents and patent applications, if any, in the Territory, the
Additional Territory, [omitted; filed separately with the Commission], as
currently set forth in Appendix 2, together with any patent which may be issued
thereunder, and any divisional, continuation or continuation-in-part
applications based thereon, and any patents resulting from any of said
applications and any reissues or extensions based on any of such patents, and
any equivalent patents and patent applications in countries of the Territory,
the Additional Territory, [omitted; filed separately with the Commission]; and
(b) Any other patents or patent applications in countries of the
Territory, the Additional Territory, [omitted; filed separately with the
Commission], or Know-how presently owned, controlled or licensed by, being
developed or subsequently developed or acquired (under license or otherwise) by,
MBI which relate directly to ALBUNEX and its manufacture or use.
1.42 Territory shall mean all countries, territories and possessions
located in North America, Central America or South America, excluding Greenland.
Article 2
Manufacture of ALBUNEX
2.01 Regulatory Matters.
(a) All applications submitted to the FDA relating to ALBUNEX shall be
in compliance with all FDA regulations and requirements. All activities
necessary for the commercialization of ALBUNEX under this Article 2, including
but not limited to pre-clinical and clinical trials, pre-marketing activities
and pre-production activities, shall be conducted in a commercially reasonable
manner and in accordance with accepted industry standards. Clinical trials and
other studies shall be conducted in accordance with applicable FDA requirements
and procedures, including but not limited to Good Laboratory Practices.
(b) Timing of the preparation and submission of all FDA applications
shall be as mutually agreed by Mallinckrodt and MBI. All fees, expenses and
charges incurred with respect to all FDA or foreign equivalent applications
shall be borne by the party which has the responsibility under this Section 2.01
to perform the activities related to such application.
(c) Notwithstanding the first sentence of Section 2.01(b) and Sections
2.01(d) through (g), MBI shall complete the initial Phase III of the Human
Clinical Trials for the indication of ALBUNEX specified in Appendix 4 (the
"Current Product"). MBI shall file with the FDA a NDA or PMA application
relating to the Current Product as soon as practicable. Mallinckrodt shall
provide reasonable assistance to MBI in connection with the NDA or PMA
application relating to the Current Product. Mallinckrodt shall have the right
to review and approve the NDA or PMA application for the Current Product prior
to submission to the FDA, which approval shall not be unreasonably withheld or
delayed. MBI shall include Mallinckrodt as an alternative manufacturing site in
all relevant submissions and applications to the FDA.
(d) MBI shall be responsible for obtaining all FDA approvals and
conducting any activities related thereto, including but not limited to
pre-clinical and clinical trials, for (x) all cardiac indications of ALBUNEX
listed on Appendix 3, and (y) any other cardiac indication of ALBUNEX which MBI
determines, in its judgment after consultation with Mallinckrodt, has a
reasonable market opportunity to support the anticipated expenses associated
with obtaining the FDA regulatory approvals for such indication. Mallinckrodt
shall provide reasonable assistance to MBI in connection with any application or
submission to the FDA by MBI pursuant to this Section 2.01(d). Mallinckrodt
shall have the right to review and approve any application or submission to the
FDA by MBI pursuant to this Section 2.01(d) prior to submission to the FDA,
which approval shall not be unreasonably withheld or delayed. MBI shall include
Mallinckrodt as an alternative manufacturing site in all relevant submissions
and applications to the FDA provided that Mallinckrodt's manufacturing facility
is reasonably likely to satisfy all FDA requirements in respect of such site
which must be satisfied for approval of the particular submission or
application. At Mallinckrodt's request, MBI shall also promptly take appropriate
steps to enable Mallinckrodt to reference or otherwise have the benefit of all
approvals and applications that MBI obtains or submits under this Section
2.01(d).
(e) Mallinckrodt shall be responsible for obtaining all FDA approvals
and conducting any activities related thereto, including but not limited to
pre-clinical and clinical trials, for any indication of ALBUNEX (other than
those which MBI has or undertakes responsibility for pursuant to Sections
2.01(c) or (d)) which Mallinckrodt determines, in its judgment after
consultation with MBI, has a reasonable market opportunity to support the
anticipated expenses associated with obtaining the FDA regulatory approvals for
such indication. MBI shall provide reasonable assistance to Mallinckrodt in
connection with any application or submission to the FDA by Mallinckrodt
pursuant to this Section 2.01(e). MBI shall have the right to review and approve
any application or submission to the FDA by Mallinckrodt pursuant to this
Section 2.01(e) prior to submission to the FDA, which approval shall not be
unreasonably withheld or delayed. Mallinckrodt shall include MBI as an
alternative manufacturing site in all relevant submissions and applications to
the FDA. At MBI's request, Mallinckrodt shall also promptly take appropriate
steps to enable MBI to reference or otherwise have the benefit of all approvals
and applications that Mallinckrodt obtains or submits under this Section 2.01(e)
in respect of all ALBUNEX developed by MBI, or jointly by MBI and Mallinckrodt,
if and when (i) MBI exercises either of its options under Sections 9.01(a) and
(b) or (ii) MBI terminates this Agreement pursuant to Sections 14.02(b), (d) or
(f).
(f) Mallinckrodt shall be responsible for obtaining all approvals of any
foreign equivalent of the FDA in (i) any country in the Territory other than the
United States of America and (ii) any country in the Additional Territory,
[omitted; filed separately with the Commission], and conducting any activities
related thereto, including but not limited to preclinical and clinical trials,
for any indication of ALBUNEX which Mallinckrodt determines, in its judgment
after consultation with MBI, has a reasonable market opportunity in such country
to support the anticipated expense associated with obtaining the applicable
regulatory approvals for such indication. [Omitted; filed separately with the
Commission.] MBI shall provide reasonable assistance to Mallinckrodt in
connection with any applicable application or submission by Mallinckrodt
pursuant to this Section 2.01(f). MBI shall have the right to review and approve
any application or submission to the foreign equivalent of the FDA by
Mallinckrodt pursuant to this Section 2.01(f) prior to submission to the foreign
equivalent of the FDA, which approval shall not be unreasonably withheld or
delayed. Mallinckrodt shall include MBI as an alternative manufacturing site in
all relevant submissions and applications to the foreign equivalent to the FDA.
At MBI's request [omitted; filed separately with the Commission], Mallinckrodt
shall also promptly take appropriate steps to enable MBI to reference or
otherwise have the benefit of all approvals that Mallinckrodt obtains or submits
under this Section 2.01(f) in respect of all ALBUNEX developed by MBI, or
jointly by MBI and Mallinckrodt, if and when (i) MBI exercises either of its
options under Sections 9.01(a) and (b) or (ii) MBI terminates this Agreement
pursuant to Sections 14.02(b), (d) or (f).
(g) In the event that MBI, in its sole judgment, decides to seek FDA or
any foreign equivalent thereof approval for any indication of ALBUNEX for which
Mallinckrodt determines pursuant to Sections 2.01(e) or (f) not to seek such
approval, then MBI shall be responsible for obtaining all such approvals and
conducting any activities related thereto, including but not limited to
pre-clinical and clinical trials, for such indication of ALBUNEX. Mallinckrodt
shall have the right to review and approve any application or submission by MBI
pursuant to this Section 2.01(g) prior to submission, which approval shall not
be unreasonably withheld or delayed. MBI shall include Mallinckrodt as an
alternative manufacturing site in all relevant submissions and applications
provided that Mallinckrodt's manufacturing facility is reasonably likely to
satisfy all requirements of the FDA or the applicable foreign equivalent in
respect of such site which must be satisfied for approval of the particular
submission or application.
(h) MBI and Mallinckrodt shall promptly make available to the other all
pharmacological, toxicological, and clinical data and reports, stability data,
and similar information relating to any formulation or indication of ALBUNEX now
or hereafter known to, or possessed, acquired or developed by MBI or jointly
developed by MBI and Mallinckrodt.
(i) Subject to the consent of MBI, which consent shall not be
unreasonably withheld, Mallinckrodt shall have the right to participate in, and
assist MBI with, all activities MBI is required to take under this Section 2.01,
including, but not limited to, preclinical and clinical trials, and to attend
and participate in MBI meetings with the FDA, consistent with the Joint Steering
Committee's directions.
2.02 Products. The products to be manufactured by MBI pursuant to this
Article 2 may, from time to time, change as the parties agree to additional
formulations of ALBUNEX to be manufactured by MBI pursuant to this Article 2, or
as the parties agree to modify the specifications of ALBUNEX then manufactured
by MBI pursuant to this Article 2 (collectively, the "Specification Changes").
MBI and Mallinckrodt may make Specification Changes from time to time by both
parties executing an amendment to Appendix 5. Appendix 5 contains the current
specifications for ALBUNEX to be manufactured pursuant to this Article 2.
2.03 Manufacture. Subject to Sections 2.14(d)(1)(A), 2.14(d)(2)(A)
and 7.01(c), MBI shall manufacture ALBUNEX for, or supply ALBUNEX to,
Mallinckrodt under the terms and conditions of this Agreement. [Omitted;
filed separately with the Commission.]
2.04 Duties of MBI. MBI shall:
(a) Promptly inform Mallinckrodt of any clinical trials reasonably
related to ALBUNEX approval and the results thereof and any problems in starting
production, and subject to the consent of MBI, which consent shall not be
unreasonably withheld or delayed, Mallinckrodt shall have the right to
participate in and assist MBI with any MBI pre-production activities;
(b) Establish and maintain, with Mallinckrodt's assistance, current Good
Manufacturing Practices with respect to the manufacturing of ALBUNEX in
compliance with the requirements of the FDA as such requirements shall be in
effect from time to time;
(c) Ship the quantities of Albunex Products ordered for the first two
calendar quarters of each Forecast that Mallinckrodt provides to MBI pursuant to
Section 2.05(b), for delivery during those quarters in a manner to assure
product stability. MBI shall use its best efforts to deliver the quantities
ordered during the particular months of each of those quarters as specified in
the Forecast (but in any event shall deliver the quantities ordered for each
such quarter no later than the last day of the quarter). In addition, MBI shall
use best efforts to deliver amounts ordered prior to the first Forecast provided
by Mallinckrodt;
(d) Prepare and deliver to Mallinckrodt a complete and accurate
documentation package (including current Good Manufacturing Practices
documentation and copies of any filings with the FDA or corresponding foreign
agencies in the Territory relating to ALBUNEX or MBI's facilities or processes
used to manufacture ALBUNEX) concerning the development and manufacturing of
ALBUNEX, name Mallinckrodt as an alternative manufacturing site in any and all
appropriate submissions or applications, and update such package whenever any
changes occur;
(e) Provide with each shipment of ALBUNEX a quality certification
substantially in the form of Appendix 6 certifying, among other things, the
purity and quality of materials, compliance of ALBUNEX with the Product
Specifications and compliance of the manufacturing process with current Good
Manufacturing Practices. MBI shall also certify that all vials of each Albunex
Product included in the shipment will have a remaining shelf-life, from the date
of receipt by Mallinckrodt at the designated site for delivery (i.e.,
Mallinckrodt's designated warehouse), at least equal to two-thirds of the
shelf-life allowed by the FDA (or the foreign equivalent of the FDA) before the
product is considered out-of-date;
(f) Promptly forward to Mallinckrodt all inquiries and complaints it
receives from customers for ALBUNEX and provide Mallinckrodt with any reasonable
assistance requested by Mallinckrodt in connection with customer complaints or
product recalls. Mallinckrodt and MBI shall establish procedures to provide MBI
with the opportunity to obtain direct clinical responses from Mallinckrodt's
customers, in the presence of Mallinckrodt representatives, regarding their
satisfaction with ALBUNEX, understanding of and training in its use, perception
of its clinical utility, and utilization rates. Mallinckrodt shall provide these
opportunities to MBI at a minimum of four times per year through (among other
possible means, and where considered appropriate by Mallinckrodt) attendance at
meetings of Mallinckrodt's medical advisory boards, presence at Mallinckrodt
focus groups and work in the field with Mallinckrodt sales or marketing
representatives. MBI shall not contact Mallinckrodt's ALBUNEX customers for any
reason whatsoever without the prior written consent of Mallinckrodt, except with
respect to (i) products or services not contemplated by this Agreement, (ii)
MBI's contacts with clinicians, experts and institutions in connection with
MBI's preclinical and clinical activities and (iii) MBI's market research
studies authorized under and subject to the limitations of this Section 2.04(f).
In order to avoid potential confusion among customers about Mallinckrodt's
exclusive distributorship, MBI shall not be an exhibitor of ALBUNEX at medical
trade shows (for example, meetings of the American College of Cardiology,
American Heart Association, American Institute of Ultrasound and Medicine,
American Society of Echocardiography, and Radiological Society of North America)
or regional hospital/physician-sponsored meetings. MBI may be an exhibitor of
non-ALBUNEX products at these meetings (and its exhibit may indicate that MBI is
the developer of ALBUNEX and manufacturer of ALBUNEX for Mallinckrodt), and in
any case, MBI may attend these meetings and present papers. In addition, MBI
shall not conduct any advertising or promotional activities for ALBUNEX to
Mallinckrodt customers. Mallinckrodt is responsible for market research for
ALBUNEX, but MBI may undertake limited market research studies for the sole
purpose of identifying desirable additional indications of ALBUNEX for clinical
development. MBI may conduct such studies subject to the conditions that (i) MBI
provides Mallinckrodt with copies of all interim and final reports and (ii) MBI
does not single out known Mallinckrodt customers in conducting such studies;
(g) Undertake to keep Mallinckrodt regularly and promptly informed of
any and all significant medical, technical, legal, commercial or other matters
of which it shall gain knowledge in connection with the manufacture or use of
ALBUNEX or in connection with the sale of ALBUNEX in the Territory, the
Additional Territory, [omitted; filed separately with the Commission]. MBI shall
meet with Mallinckrodt periodically, but not less frequently than quarterly, to
discuss such matters as well as any other matters related to ALBUNEX or MBI as
reasonably requested by Mallinckrodt;
(h) Provide Mallinckrodt (i) copies of all correspondence, reports and
other written documents received by or provided by MBI under the License
Agreement dated November 5, 1986 between MBI and Steven B. Feinstein, M.D., as
amended, and (ii) prompt notice of any claim, controversy or dispute arising
under or related to such License Agreement. MBI shall provide Mallinckrodt a
copy of any proposed amendment or modification to such License Agreement not
less than 30 days prior to its disclosure to or oral discussion with Steven B.
Feinstein, M.D., his attorneys or representatives. In the event that
Mallinckrodt notifies MBI within 10 working days after receipt of such copy from
MBI that Mallinckrodt, in its reasonable judgment, determines that the proposed
amendment or modification is detrimental to Mallinckrodt, then MBI shall not
amend or modify such License Agreement without the prior written consent of
Mallinckrodt which consent shall not be unreasonably withheld. MBI shall take
all action necessary to preserve and maintain its rights and license under such
License Agreement;
(i) Except after prior consultation with and the prior written consent
of Mallinckrodt, which consent shall not be unreasonably withheld, not (a) take
official or formal steps or make any public announcement to stop or suspend the
sale and distribution of ALBUNEX, or (b) cancel or cause to be cancelled any
necessary government authorizations regarding the use and distribution of
ALBUNEX, in the Territory, the Additional Territory, [omitted; filed separately
with the Commission];
(j) Cause members of key management of MBI to devote all necessary time
and effort to the performance of MBI's obligations under this Agreement; and
(k) Assist Mallinckrodt, upon its reasonable request, in complying with
applicable laws and government regulations affecting the sale and distribution
of ALBUNEX and which are not otherwise the responsibility of MBI as provided
herein, provided that Mallinckrodt shall reimburse MBI for any fees paid to any
governmental agency by MBI pursuant to a request under this Section 2.04(k).
2.05 Duties of Mallinckrodt. Mallinckrodt shall:
(a) Comply with applicable laws and governmental regulations affecting
the sale and distribution of ALBUNEX, with the assistance of MBI, if so
requested by Mallinckrodt;
(b) Provide MBI, no later than the first business day of each calendar
quarter, with a written four-quarter forecast by month (a "Forecast") of
Mallinckrodt's purchases of ALBUNEX during that calendar quarter and the next
three calendar quarters. Each Forecast shall specify the quantities of each
Albunex Product that Mallinckrodt estimates that it will purchase each quarter
of the Forecast, by month, and the forecast for the first two calendar quarters
of each Forecast shall be a firm order for those quarters, for delivery by MBI
during those quarters in accordance with Section 2.04(c). In addition,
Mallinckrodt shall provide MBI, no later than the first business day of the
second and third months of each calendar quarter, a written update of its
forecast of purchases of ALBUNEX for the next 12 months. All Forecasts and
updates shall be made in good faith and with due regard to known demand, market
conditions and competitive factors;
(c) Except as permitted by Section 7.01(c)(1), during the term
hereof, neither manufacture ALBUNEX nor purchase ALBUNEX from anyone other
than MBI. [Omitted; filed separately with the Commission]; and
(d) To the extent readily available to Mallinckrodt prior to MBI's
exercise of either of its options under Sections 9.01(a) or (b), Mallinckrodt
shall provide MBI with (i) appropriately detailed summaries of internal and
independent market research and pharmacoeconomic reports, analyses and studies
relating to ALBUNEX and echocardiography generally and (ii) a yearly estimate of
ALBUNEX market size by Albunex Product (including the underlying assumptions and
the factors influencing such estimate). This information may be provided at the
marketing meetings held in accordance with Section 3.07(a).
(e) Mallinckrodt shall promptly forward to MBI reasonably detailed
notice of all complaints that Mallinckrodt receives from its customers for
ALBUNEX.
2.06 Shipment.
(a) MBI shall ship ALBUNEX in a commercially reasonable manner to
Mallinckrodt sites, warehouses and freight forwarders in the United States of
America and the possessions of the United States of America within the
Territory, and, if commercially reasonable, on an isolated basis directly to
Mallinckrodt customers, all as Mallinckrodt may from time to time designate.
[Omitted; filed separately with the Commission.]
(b) MBI shall not transport or ship any ALBUNEX until (i) MBI and
Mallinckrodt shall have each obtained all approvals, authorizations, and
licenses of any required governmental agency or instrumentality for shipment
(including, without limitation, any export or import licenses or approvals), and
(ii) MBI and Mallinckrodt have complied with all applicable laws and regulations
regarding the export, import, shipment, and labeling of ALBUNEX. Each party
shall provide reasonable assistance to the other party in obtaining the
necessary approvals, authorizations and licenses.
2.07 F.O.B. All shipments of ALBUNEX shall be F.O.B. destination.
2.08 Rejection. If any shipment of ALBUNEX is found by Mallinckrodt
within a reasonable time after delivery to be defective in material or
workmanship or otherwise not in conformity with the Product Specifications or
other requirements hereof, Mallinckrodt, in addition to any other rights which
it may have under any warranties in this Agreement or otherwise, may reject and
return such ALBUNEX at MBI's expense, which goods shall not be replaced without
Mallinckrodt's prior written authorization. Payment for the ALBUNEX shall not
constitute acceptance. ALBUNEX rejected by Mallinckrodt which utilizes any
Mallinckrodt name, trade name, trademark, insignia, symbol, decorative design or
evidence of Mallinckrodt's purchase or inspection shall have the same removed
prior to any disposition by MBI. MBI shall indemnify Mallinckrodt from any
claim, loss or damage arising out of any failure of MBI so to do.
2.09 Mallinckrodt Trademarks.
(a) MBI shall not have any right, title or interest in or to, and shall
not in any respect use, the Mallinckrodt name or logo.
(b) Mallinckrodt shall have the right to market and sell ALBUNEX
provided by MBI pursuant to this Article 2 under any trademark Mallinckrodt, in
its discretion after consultation with MBI, deems appropriate.
(c) The packaging for ALBUNEX provided by MBI to Mallinckrodt pursuant
to this Article 2 shall be consistent with the packaging provided by MBI as of
the Effective Date and shall include all product inserts. MBI shall be
responsible for all costs of such packaging except that Mallinckrodt shall
provide the artwork in connection with such packaging. Mallinckrodt shall be
responsible for all costs of additional packaging or re-packaging, if any, for
shipment to customers.
(d) All final packaging, including product inserts and labels, shall
make appropriate reference to MBI including when Mallinckrodt manufactures
ALBUNEX.
2.10 Product Literature. MBI shall provide to Mallinckrodt technical,
performance and testing information, and any other such information as may
reasonably be requested by Mallinckrodt to assist in the production of sales
material, product inserts, packaging, user instructions or other similar items
for ALBUNEX. Mallinckrodt shall provide MBI with representative samples of
product promotional and sales literature prior to release.
2.11 Insurance.
(a) Prior to the Launch Date, MBI shall take out and maintain
comprehensive general liability insurance, including products liability
insurance, with minimum limits of $5,000,000 combined for bodily injury and
property damage liabilities. Such insurance shall have both foreign and domestic
coverage with the coverage applying worldwide regardless of where a claim is
filed, except for the countries/territories of Cuba, Vietnam, Campuchea, Laos,
North Korea and Outer Mongolia. MBI shall have the option to self-insure its
obligations under this Agreement so long as MBI's net worth, as determined in
accordance with generally acceptable accounting principles consistently applied,
exceeds $50,000,000. MBI shall furnish a certificate of insurance or of
self-insurance to Mallinckrodt evidencing the foregoing coverage and required
limits of liability prior to the Launch Date.
(b) Prior to the Launch Date, Mallinckrodt shall maintain comprehensive
general liability insurance, including products liability insurance, with
minimum limits of $5,000,000 combined for bodily injury and property damage
liabilities. Such insurance shall have both foreign and domestic coverage with
the coverage applying worldwide regardless of where a claim is filed, except for
the countries/territories of Cuba, Vietnam, Campuchea, Laos, North Korea and
Outer Mongolia. Mallinckrodt shall have the option to self-insure its
obligations under this Agreement. Mallinckrodt shall furnish a certificate of
insurance or of self-insurance to MBI evidencing the foregoing coverage and
required limits of liability prior to the Launch Date.
2.12 Inspection and Payment for Samples and Research and Trial Quantities.
(a) Mallinckrodt shall have the right during normal business hours to
inspect (x) upon not less than 10 business days prior notice and not more
frequently than once during each calendar quarter, MBI's business and financial
records relating to the manufacture, use or sale of ALBUNEX in the Territory,
the Additional Territory, [omitted; filed separately with the Commission] or any
other obligation of MBI under this Agreement, and (y) upon not less than 5
business days prior notice, MBI's facilities and operations, and any other
scientific data and information relating to ALBUNEX, or the manufacture, use or
sale of ALBUNEX in the Territory, the Additional Territory, [omitted; filed
separately with the Commission], in order to insure that ALBUNEX is being
manufactured in compliance with current Good Manufacturing Practices and that
the other terms and conditions of this Agreement are being met, provided,
however, Mallinckrodt shall have the right to conduct such inspection without
prior notice to MBI no more frequently than once per calendar quarter.
Mallinckrodt's right of inspection shall not extend to MBI's business and
financial records relating to the Nycomed Agreement or the Shionogi Agreement.
(b) Mallinckrodt may, but shall not be obligated to, sample any shipment
of ALBUNEX to verify the accuracy of MBI's certificate described in Section
2.04(e). In connection with the marketing and promotion of ALBUNEX, Mallinckrodt
may, but shall not be obligated to, provide samples of ALBUNEX to customers or
potential customers free of charge.
(c) Mallinckrodt shall be obligated to pay MBI for any sample of ALBUNEX
used for the purposes described in Section 2.12(b) on the same basis as any
other ALBUNEX sold to Mallinckrodt under this Agreement.
(d) Mallinckrodt shall pay MBI for ALBUNEX used for research, including,
but not limited to, preclinical and clinical studies, on the same basis as any
other ALBUNEX sold to Mallinckrodt under this Agreement, with the exception that
the price of ALBUNEX consisting of a formulation or configuration for an
indication not yet approved for sale shall be the sum of [omitted; filed
separately with the Commission], all such calculations to be performed on a
per-vial basis in accordance with U.S. generally accepted accounting principles.
Within the first 60 days after the start of each MBI fiscal year, MBI shall
calculate the price under this exception on the basis of its costs during its
preceding fiscal year, and the price thus calculated shall remain in effect
until MBI recalculates the price the next fiscal year. For the first fiscal year
in which MBI provides such ALBUNEX, however, MBI shall calculate the price on
the basis of its reasonable estimate of its costs per vial [omitted; filed
separately with the Commission], taking into account Mallinckrodt's reasonable
estimate of its demand for such ALBUNEX through the period ending 60 days after
the close of the current fiscal year (or if for any reason Mallinckrodt fails to
provide such an estimate within 30 days after MBI's request, MBI's own
reasonable estimate of Mallinckrodt's demand). Mallinckrodt shall have a right
of audit once each fiscal year regarding MBI's calculation of the price similar
in scope to the right of audit afforded MBI under Section 2.14(c). MBI will use
its best efforts to meet Mallinckrodt's forecast demand for ALBUNEX used for
research.
2.13 Final Quality Control, Testing and Release. MBI shall perform the
final quality control testing, further processing, labeling of final containers,
and final release on ALBUNEX.
2.14 Price.
(a) Mallinckrodt shall deliver to MBI, within 60 days after the start of
each calendar quarter, a true and accurate report of the Average Selling Price
of each Albunex Product sold during the preceding calendar quarter. This report
shall include all relevant details, including gross sales, all adjustments used
to derive Net Sales and number of vials shipped to purchasers. In addition,
Mallinckrodt shall provide MBI with monthly sales reports no later than 30 days
after the end of each month. Each monthly sales report shall include, by Albunex
Product, (i) the total number of vials sold by package configuration, (ii) the
number of new accounts, (iii) the number of repeat orders and (iv) the total
United States dollar value of monthly end-user sales. Mallinckrodt may omit from
any monthly sales report the number of new accounts and the number of repeat
orders if that information is not readily available to Mallinckrodt at that
time. If Mallinckrodt omits any such information for this reason, Mallinckrodt
shall promptly provide the information to MBI at its request if and when the
information becomes readily available to Mallinckrodt.
(b) Mallinckrodt shall pay MBI for each order of ALBUNEX shipped to
Mallinckrodt by MBI an amount equal to sum of the separately calculated amounts
for each Albunex Product included in the shipment determined by multiplying the
number of vials of each such Albunex Product in the shipment by 40% of the
Average Selling Price for that Albunex Product during the calendar quarter
preceding the calendar quarter of shipment. (If the Average Selling Price for
that quarter is not yet known, the Average Selling Price for second calendar
quarter preceding the calendar quarter of shipment shall be used.) With respect
to vials of an Albunex Product intended for sale in a country where vials of
that product have not previously been sold (and for which there is thus no
Average Selling Price for the preceding calendar quarter), Mallinckrodt and MBI
shall consult in good faith regarding the price to be paid by Mallinckrodt until
an Average Selling Price is determined. Payments shall be made in United States
dollars and shall be due no later that 60 days after the date of MBI's shipment.
(c) Mallinckrodt shall keep full, true and accurate books of account
containing all particulars which may be necessary for the purpose of determining
the Average Selling Price of each Albunex Product. Mallinckrodt agrees, at the
request of MBI and at MBI's expense, to permit an independent certified
accountant selected by MBI and reasonably acceptable to Mallinckrodt, access
upon at least 10 business days prior notice and no more than once a calendar
quarter to such books of account for the purpose of verifying the reports
described in Section 2.14(a). Such accountant shall not be entitled to disclose
any information relating to the business of Mallinckrodt except that which
should be properly contained in any statement required in Section 2.14(a).
(d) Mallinckrodt shall inform MBI of Mallinckrodt's proposed initial
pricing of each new Albunex Product. If the proposed intial price of any new
Albunex Product is less than [omitted; filed separately with the Commission],
MBI may decline to manufacture that product for Mallinckrodt upon written notice
to Mallinckrodt. Similarly, if the Average Selling Price of any existing Albunex
Product is less than [omitted; filed separately with the Commission], MBI may
decline to continue to manufacture that product for Mallinckrodt upon 60 days'
prior written notice to Mallinckrodt. If MBI declines to manufacture any new
Albunex Product, Mallinckrodt may exercise any one of the options under Section
2.14(d)(1) by written notice to MBI delivered not more than 60 days after
Mallinckrodt's receipt of MBI's notice that MBI declines to manufacture that
product. If MBI declines to manufacture any existing Albunex Product,
Mallinckrodt may exercise any one of the options under Sections 2.14(d)(1) or
(2), as applicable, by written notice to MBI not more than 60 days after
Mallinckrodt's receipt of MBI's notice that MBI declines to continue to
manufacture that product.
(1) In the case of a new Albunex Product, or in the case of an
existing Albunex Product which is not described in Section 2.14(d)(2):
(A) Mallinckrodt may manufacture the Albunex Product in
question, and, with respect to any calendar quarter, pay MBI a
royalty equal to 40% of the amount determined by multiplying that
product's Average Selling Price during the quarter by the number of
vials of that product sold during that quarter, less (i)
Mallinckrodt's fully allocated manufacturing cost for that Albunex
Product determined using U.S. generally accepted accounting
principles, and (ii) until fully recovered, one-half of
Mallinckrodt's Start-up Costs not included in (i); but in no event
shall such royalty be less than 5% or more than 10%. On 90 days'
notice to Mallinckrodt at any time after the Average Selling Price
of that Albunex Product has been at least [omitted; filed
separately with the Commission], MBI may terminate Mallinckrodt's
right to manufacture under this Section 2.14(d)(1)(A) and begin
manufacturing that Albunex Product itself as provided generally in
this Agreement (i.e., not as provided in Section 2.14(d)(1)(B)).
Mallinckrodt shall pay the royalty described in this Section
2.14(d)(1)(A) pursuant to the procedures set forth in Sections
7.01(c)(2)(E) (payment terms) and (F) (currency). Mallinckrodt
agrees, at the request of MBI and at MBI's expense, to permit an
independent certified accountant selected by MBI and reasonably
acceptable to Mallinckrodt, access upon at least 10 business days'
prior notice and no more than once a calendar quarter, to audit and
verify Mallinckrodt's costs and calculations under (i) and (ii)
above. If Mallinckrodt exercises its option under this Section
2.14(d)(1)(A), it may not later exercise its option under Section
2.14(d)(1)(B) but may later exercise its option under Section
2.14(d)(1)(C);
(B) Mallinckrodt may require MBI to manufacture the Albunex
Product in question (notwithstanding MBI's notice to Mallinckrodt
that MBI declines to manufacture or to continue to manufacture that
product), and agrees that, notwithstanding Section 2.14(b), the
price to be paid by Mallinckrodt to MBI for that Albunex Product
shall be the lesser of [omitted; filed separately with the
Commission]. Mallinckrodt shall pay this amount in United States
dollars no later than 60 days after the date of MBI's shipment, and
MBI shall maintain full, true and accurate books of account
containing all particulars which may be necessary for the purpose
of determining the alternative prices described in this Section
2.14(d)(1)(B). On 90 days' notice to Mallinckrodt at any time after
the Average Selling Price of that Albunex Product has been at least
[omitted; filed separately with the Commission], MBI may terminate
Mallinckrodt's right to require MBI to manufacture under this
Section 2.14(d)(1)(B) and begin manufacturing that Albunex Product
itself as provided generally in this Agreement (i.e., not as
provided in this Section 2.14(d)(1)(B)). MBI agrees, at the request
of Mallinckrodt and at Mallinckrodt's expense, to permit an
independent certified accountant selected by Mallinckrodt and
reasonably acceptable to MBI, access upon at least 10 business
days' prior notice and no more than once a calendar quarter, to
audit and verify MBI's costs. If Mallinckrodt exercises its option
under this Section 2.14(d)(1)(B), it may later exercise either of
its options under Sections 2.14(d)(1)(A) and (C); or
(C) If the Albunex Product in question is a new product,
Mallinckrodt may cancel or postpone launch of the commercial sale
of that product, and if the Albunex Product in question is an
existing product, Mallinckrodt may cancel or suspend the commercial
sale of that Albunex Product (in either case without being in
breach or default under this Agreement or losing exclusivity as a
result). If Mallinckrodt exercises its option under this Section
2.14(d)(1)(C), it may later exercise either of its options under
Sections 2.14(d)(1)(A) and (B).
(2) In the case of an existing Albunex Product the Net Sales of
which during each of [omitted; filed separately with the Commission] in
which its Average Selling Price was less than [omitted; filed separately
with the Commission] represent less than [omitted; filed separately with
the Commission] in the same territory of all identical Albunex Products
(except in respect of labelling):
(A) Mallinckrodt may manufacture the Albunex Product in
question, and pay MBI no royalty. On 90 days' notice to
Mallinckrodt at any time after the Average Selling Price of that
Albunex Product has been at least [omitted; filed separately with
the Commission], MBI may terminate Mallinckrodt's right to
manufacture under this Section 2.14(d)(2)(A) and begin
manufacturing that Albunex Product itself as provided generally in
this Agreement (i.e., not as provided in Section 2.14(d)(2)(B)). If
Mallinckrodt exercises its option under this Section 2.14(d)(2)(A),
it may not later exercise its option under Sections 2.14(d)(2)(B)
but may later exercise its option under Section 2.14(d)(2)(C);
(B) Mallinckrodt may require MBI to manufacture the Albunex
Product in question (notwithstanding MBI's notice to Mallinckrodt
that MBI declines to continue to manufacture that product), and
agrees that, notwithstanding Section 2.14(b), the price to be paid
by Mallinckrodt to MBI for that product shall be the lesser of
[omitted; filed separately with the Commission]. Mallinckrodt shall
pay this amount in United States dollars no later than 60 days
after the date of MBI's shipment, and MBI shall maintain full, true
and accurate books of account containing all particulars which may
be necessary for the purpose of determining the alternative prices
described in this Section 2.14(d)(2)(B). On 90 days' notice to
Mallinckrodt at any time after the Average Selling Price of that
Albunex Product has been at least [omitted; filed separately with
the Commission], MBI may terminate Mallinckrodt's right to require
MBI to manufacture under this Section 2.14(d)(2)(B) and begin
manufacturing that Albunex Product itself as provided generally in
this Agreement (i.e., not as provided in this Section
2.14(d)(2)(B)). MBI agrees, at the request of Mallinckrodt and at
Mallinckrodt's expense, to permit an independent certified
accountant selected by Mallinckrodt and reasonably acceptable to
MBI, access upon at least 10 business days' prior notice and no
more than once a calendar quarter, to audit and verify MBI's costs.
If Mallinckrodt exercises its option under this Section
2.14(d)(2)(B), it may later exercise either of its options under
Sections 2.14(d)(1)(A) and (C); or
(C) Mallinckrodt may cancel or suspend the commercial sale of
the Albunex product in question (without being in breach or default
under this Agreement or losing exclusivity as a result). If
Mallinckrodt exercises its option under this Section 2.14(d)(2)(C),
it may later exercise either of its options under Sections
2.14(d)(2)(A) and (B).
2.15 Funding of Further ALBUNEX Development.
(a) Mallinckrodt shall pay MBI $20 million for the further development
of ALBUNEX, as follows:
(1) $1 million on the first day of each of the four quarters (each
of three calendar months), beginning with the quarter starting on the
first day of the first calendar month beginning after the Effective
Date;
(2) $1.25 million on the first day of each of the next eight
quarters, beginning with the quarter starting on the first anniversary
of the first day of the first calendar month beginning after the
Effective Date; and
(3) $1.5 million on the first day of each of the next four
quarters, beginning with the quarter starting on the third anniversary
of the first day of the first calendar month beginning after the
Effective Date.
Consistent with the guiding principles described in Section 2.16(b), the Joint
Steering Committee, by a unanimous vote of its members and written notice to
Mallinckrodt, may direct the acceleration of these payments at any time by
increasing the amount of the next payment or payments that Mallinckrodt is
required to make and reducing the last payment that Mallinckrodt is otherwise
required to make by the same amount as the aggregate increase (and if the
aggregate increase exceeds the amount of the last payment that Mallinckrodt is
required to make, reducing the amount of each prior payment in turn, beginning
with the next-to-last payment that Mallinckrodt is required to make and
proceeding in reverse chronological order, until the aggregate reductions equal
the aggregate increase). Payment shall be made by wire transfer to an account
designated by MBI. Mallinckrodt representatives on the Joint Steering Committee
shall not be required to (but may) vote in favor of any acceleration proposed by
the MBI representatives on the Committee. Any dispute regarding acceleration
shall not be subject to Section 2.16(c).
(b) MBI shall spend at least $10 million on clinical trials to support
regulatory filings in the United States for cardiac indications of ALBUNEX and
the related compilation, analysis and presentation of clinical results and other
ancillary activities, as directed by the Joint Steering Committee.
(c) After MBI has spent $10 million in accordance with Section 2.15(b),
as demonstrated by the submission of appropriate cost reports to Mallinckrodt,
MBI and Mallinckrodt shall share equally in the costs, up to a maximum of $5
million on a combined basis (i.e., $2.5 million for each party), of any
additional clinical trials in the United States for cardiac indications of
ALBUNEX which the Joint Steering Committee, by a unanimous vote of its members,
may direct to be performed. MBI shall submit cost reports to Mallinckrodt on a
monthly basis, and Mallinckrodt shall reimburse MBI for one-half of the total
amount shown on each cost report no later than 30 days after receipt of the
report (up to a maximum aggregate reimbursement of $2.5 million). After $4
million has been spent on additional clinical trials, MBI and Mallinckrodt shall
consult with one another regarding the desirability of increasing the maximum
amount to be spent under this Section 2.15(c). Neither party shall be required
to agree to an increase in the maximum amount. Any dispute regarding an increase
in the maximum shall not be subject to Section 2.16(c).
(d) MBI shall spend at least $10 million on ALBUNEX development,
including, but not limited to, the development of new ALBUNEX indications,
products and processes, related preclinical and clinical studies and trials,
intellectual property protection, ALBUNEX manufacturing maintenance and
development (including manufacturing overhead) and compliance with FDA and state
regulatory requirements (including required filings and submissions and
necessary validations, qualifications and other approvals and proceedings).
(e) MBI shall keep true and accurate records of its expenditures
described in Sections 2.15(b), (c) and (d). Mallinckrodt shall have a right of
audit regarding these expenditures similar in frequency and scope to the right
of audit afforded MBI in Section 2.14(c).
2.16 Joint Steering Committee. MBI and Mallinckrodt shall establish a
joint steering committee (the "Joint Steering Committee") to review, on a
quarterly basis (or more frequently as requested by either party), clinical
trial programs relating to the development and regulatory approval of ALBUNEX,
with a particular emphasis on reviewing the design and implementation of
clinical trials and any Investigational Device Exemption or Investigational New
Drug applications to the FDA (including related amendments and other ancillary
filings) and corresponding filings with foreign equivalents of the FDA. The
Committee is intended to provide a mechanism to enable the parties to share
their expertise and concerns relating to clinical programs, regulatory affairs
and cost-effectiveness and reimbursement issues, and shall have significant
authority and flexibility in determining the objectives, number, design and
other features of clinical trials, with a view to maximizing the return on
development costs and expediting commercialization. The Committee shall consist
of equal numbers of MBI and Mallinckrodt representatives and shall adopt
procedures to govern its activities substantially in the form described on
Appendix 7.
(a) The Joint Steering Committee shall have the authority to specify the
clinical trials and other activities required to be performed under Section
2.15(b) and the additional clinical trials required to be performed under
Section 2.15(c), and MBI shall not make any expenditure under either of those
Sections without the Committee's prior authorization. The Committee shall have
no authority regarding the allocation or expenditure of the $10 million that MBI
is required to spend under Section 2.15(d) (or any other expenditures by MBI).
(b) The Joint Steering Committee's decisions shall be guided by the
following principles, emphasizing both quality and speed:
(1) it is very important to bring a product to market in the
shortest possible time consistent with the prevailing regulatory climate
(but the quality of the clinical program, including clinical utility and
cost-effectiveness, is equally important);
(2) it is important that clinical studies be conducted and
their results presented in a thorough, well-organized and professional
manner; and
(3) the Committee's decisions should be made with a sense of
urgency consistent with the prevailing regulatory climate, applying the
standard of a prudent businessman who has a lead over his competitors
and wants to maintain that lead, and with a view towards operating by
consensus and in a manner intended to emphasize partnership and a
commonality of interests.
(c) In the event of a dispute over a matter within the Joint Steering
Committee's purview that cannot be resolved by the Committee, MBI and
Mallinckrodt shall attempt to resolve the dispute informally in light of the
guiding principles in Section 2.16(b). If MBI and Mallinckrodt are unable to
resolve the dispute, they shall each designate as a referee an unaffiliated
person with senior-level credentials in the medical, scientific, clinical and
administrative areas relevant to the Committee's activities, and the two
referees shall attempt to resolve the dispute. If they are unable to do so
within a reasonable period, they shall jointly appoint a third person with
similar qualifications to act as an arbitrator. In reaching a decision, the
arbitrator shall take into account such matters as he considers appropriate, and
may require the parties to provide a written statement or oral presentation in
support of their respective positions. The arbitrator's decision shall be
binding on MBI and Mallinckrodt. During the pendency of the dispute, (i)
Mallinckrodt shall not withhold (and neither the referees nor any arbitrator
appointed by them shall have authority to excuse or delay) any payments due from
Mallinckrodt to MBI under this Agreement and (ii) MBI shall deposit all payments
received from Mallinckrodt under Section 2.15 during the pendency of the dispute
in a segregated account in MBI's name. This account may be invested in
short-term U.S. Treasury obligations or in any other manner approved by
Mallinckrodt (which shall not unreasonably withhold its approval), and MBI may
transfer the earnings to its general operating accounts. MBI and Mallinckrodt
shall each pay the fees and expenses of its own referee and one-half of the fees
and expenses of any arbitrator that the two referees appoint.
(d) The authority of the Joint Steering Committee shall cease, and the
Joint Steering Committee shall be disbanded, on the later of (i) the date that
the FDA approves an intravenous myocardial perfusion indication of ALBUNEX for
sale in the United States or (ii) that date that MBI has expended, in accordance
with the direction of the Joint Steering Committee (by a unanimous vote of its
members), the $10 million that MBI is required to spend under Section 2.15(b)
and the $5 million that MBI may be required to spend under Section 2.15(c) (as
this latter amount may be increased by agreement of the parties).
2.17 Additional Payments. Mallinckrodt shall make the following
payments to MBI:
(a) $3 million on the date when [omitted; filed separately with the
Commission];
(b) $4 million upon [omitted; filed separately with the Commission];
(c) $2 million upon the earlier of [omitted; filed separately with the
Commission]; and
(d) $3 million upon [omitted; filed separately with the Commission].
Article 3
Distribution Rights
3.01 Appointment as Distributor and Sales Representative. MBI
hereby appoints Mallinckrodt, and
Mallinckrodt hereby accepts appointment, as:
(a) the exclusive distributor and exclusive sales representative for
ALBUNEX to be sold in and throughout the Territory;
(b) the exclusive distributor and exclusive sales representative for
ALBUNEX to be sold in and throughout the Additional Territory, subject to
Section 3.02(a);
(c) [omitted; filed separately with the Commission]; and
(d) [omitted; filed separately with the Commission].
Subject to the limitations contained in Sections 9.01(a) and (b) and 9.06, the
appointments pursuant to this Section 3.01 are non-cancellable during the term
of this Agreement.
3.02 Qualifications on Exclusivity. Mallinckrodt's appointment under
Sections 3.01(b), (c), and (d) as the exclusive distributor and exclusive sales
representative for ALBUNEX sold in the Additional Territory, [omitted; filed
separately with the Commission], respectively, is subject to the following
qualifications:
(a) At MBI's option, Mallinckrodt's appointment under Section 3.01(b) as
the exclusive distributor and exclusive sales representative for ALBUNEX sold in
the Additional Territory shall become co-exclusive if Mallinckrodt fails to
achieve any of the non-monetary performance milestones listed on Appendix 8A;
(b) [Omitted; filed separately with the Commission]; and
(c) [Omitted; filed separately with the Commission].
MBI may exercise any of these options at any time after Mallinckrodt's failure
to achieve any of the applicable performance milestones within the time required
for performance (as that time may be extended in accordance with the notes to
Appendices 8A, 8B and 8C), and if MBI does so, Mallinckrodt's appointment as the
exclusive distributor and exclusive sales representative for ALBUNEX sold in the
affected territory shall become co-exclusive in (and only in) the affected
territory upon MBI's written notice to that effect to Mallinckrodt. In this
event, MBI may (i) directly, or through an Affiliate of MBI, make, sell and
distribute ALBUNEX for its own account in the affected territory or (ii) license
its right to do so to a single third party, in either case subject to
Mallinckrodt's continuing rights under this Agreement in the affected territory.
In either case:
(w) MBI shall continue to sell to Mallinckrodt pursuant to the
terms of Article 2 a reasonable quantity of ALBUNEX to ensure that
Mallinckrodt has adequate inventories of ALBUNEX to satisfy reasonably
foreseeable demand in the affected territory;
(x) all of Section 2.04(f) except the first sentence shall
terminate in respect of the affected territory;
(y) the the following provisions shall terminate in respect of the
affected territory on the date that Mallinckrodt begins to manufacture
ALBUNEX for commercial sale in the affected territory: the first two
sentences of Section 2.03; Sections 2.04(c), (e), (g), (i)(a) and (j);
Sections 2.05(b), (c) and (d); Section 2.06(a); Sections 2.07 and 2.08;
Section 2.09(c); Sections 2.10 and 2.11; Sections 2.12(a), (b) and (c);
Sections 2.13 and 2.14; Sections 3.05, 3.06 and Section 3.07; and
Sections 7.04 and 7.05; and
(z) MBI shall be relieved of its obligation to sell ALBUNEX to
Mallinckrodt for sale in the affected territory on the date that
Mallinckrodt begins to manufacture ALBUNEX for sale in the affected
territory.
3.03 [Omitted; filed separately with the Commission.]
(a) [Omitted; filed separately with the Commission.]
(b) [Omitted; filed separately with the Commission.]
(c) [Omitted; filed separately with the Commission.]
(d) [Omitted; filed separately with the Commission.]
(e) [Omitted; filed separately with the Commission.]
(f) [Omitted; filed separately with the Commission.]
3.04 [Omitted; filed separately with the Commission.]
(a) [Omitted; filed separately with the Commission.]
(b) [Omitted; filed separately with the Commission.]
(1) [Omitted; filed separately with the Commission.]
(2) [Omitted; filed separately with the Commission.]
(3) [Omitted; filed separately with the Commission.]
(4) [Omitted; filed separately with the Commission.]
(5) [Omitted; filed separately with the Commission.]
[Omitted; filed separately with the Commission.]
(c) [Omitted; filed separately with the Commission.]
(d) [Omitted; filed separately with the Commission.]
3.05 Duties of MBI.In addition to its other duties hereunder, MBI shall:
(a) Use reasonable efforts to assist in Mallinckrodt's promotion of
ALBUNEX throughout the Territory, the Additional Territory, [omitted; filed
separately with the Commission], in support of Mallinckrodt's respective
marketing plans for those territories;
(b) Provide such technical assistance to Mallinckrodt in the marketing,
sale and distribution of ALBUNEX in the Territory, the Additional Territory,
[omitted; filed separately with the Commission], as Mallinckrodt requests,
including the dedication at any given time of up to a maximum of 10 MBI
employees as technical sales specialists. Each such request shall specify the
nature and extent of the assistance required, and shall be reasonable in respect
of the type of assistance requested and the resources, time and cost required to
render that assistance. MBI shall advise Mallinckrodt if MBI considers
Mallinckrodt's request unreasonable, and the parties shall attempt in good faith
to resolve their differences;
(c) Provide assistance as reasonably requested by Mallinckrodt with
respect to customer service activities including technical support services and
sales administrative support services; and
(d) Provide support and assistance in establishing efficient
communications between Mallinckrodt and MBI for shipping information, invoicing,
complaints and customer relations information including support of computer
communications systems for information flow.
3.06 Duties of Mallinckrodt. In addition to its other duties hereunder,
Mallinckrodt shall:
(a) Treat ALBUNEX as an important contrast product in the same manner
Mallinckrodt traditionally markets its important contrast line of products for
purposes of Mallinckrodt's pre-marketing, marketing, sales and distribution
efforts and expenditures. Mallinckrodt's marketing, sales and distribution
efforts regarding ALBUNEX shall place emphasis on all relevant clinical
indications of ALBUNEX, market segments and appropriate geographical regions in
the Territory, the Additional Territory, [omitted; filed separately with the
Commission], and the recruitment of medical and scientific opinion leaders;
(b) Provide an adequate sales organization and facilities to assure
adequate sales representation, prompt handling of inquiries and orders, and
attention to customer service requirements for ALBUNEX in support of the
activities described in Section 3.06(a);
(c) Comply with applicable laws and governmental regulations affecting
the sale and distribution of ALBUNEX in the Territory, the Additional Territory,
[omitted; filed separately with the Commission], with the assistance of MBI, if
so requested by Mallinckrodt;
(d) Provide support and assistance in establishing efficient
communications between Mallinckrodt and MBI for shipping information, invoicing,
complaints and customer relations information including support of computer
communication systems for information flow;
(e) Provide sales order entry and technical assistance including
customer service; and
(f) Provide such technical assistance to MBI in the development of
ALBUNEX as MBI requests. Each such request shall specify the nature and extent
of the assistance required, and shall be reasonable in respect of the type of
assistance requested and the resources, time and cost required to render that
assistance. Mallinckrodt shall advise MBI if Mallinckrodt considers MBI's
request unreasonable, and the parties shall attempt in good faith to resolve
their differences.
3.07 Marketing.
(a) At least two senior level representatives designated by MBI and at
least two senior level representatives designated by Mallinckrodt shall meet no
less frequently than quarterly to discuss Mallinckrodt's marketing plans and
strategy for ALBUNEX and the implementation and efficacy of those plans.
Promptly after the plan is approved internally each year, Mallinckrodt shall
provide MBI with an appropriately detailed summary of Mallinckrodt's annual
marketing and sales plan for ALBUNEX for MBI's internal use.
(b) Mallinckrodt shall, from time to time and in its sole discretion,
establish the prices at which ALBUNEX shall be sold by it or its Affiliates.
Terms of all sales, including but not limited to credit, billing and shipments,
shall be established by Mallinckrodt in its sole discretion.
Article 4
Payments
4.01 Milestone Payments. Subject to the limitations, terms and
conditions contained in this Agreement, Mallinckrodt shall pay to MBI (i) the
sum of $6,000,000 United States dollars by cashier's check or by wire transfer
in immediately available funds upon execution of this Agreement and (ii) the
following amounts by cashiers' check or by wire transfer in immediately
available funds if, and only if, the particular stated milestone is achieved by
MBI:
(a) Phase III of Human Clinical Trials. $3,333,000 due in 4 successive
quarterly installments of $833,250 each, with the first quarterly installment
payable 30 days after the date MBI provides Mallinckrodt written notice
accompanied by supporting documentation that MBI has commenced the initial Phase
III of the first Human Clinical Trials for ALBUNEX with an indication as set
forth in Appendix 4;
(b) FDA Application. $3,333,000 due in 4 successive quarterly
installments of $833,250 each, with the first quarterly installment payable 30
days after the date MBI provides Mallinckrodt written notice accompanied by
supporting documentation that MBI has submitted to the FDA either its initial
PMA application or its initial NDA application for ALBUNEX;
(c) FDA Acceptance of Application. $3,334,000 due in 4 successive
quarterly installments of $833,500 each, with the first quarterly installment
payable 30 days after the date MBI provides Mallinckrodt written notice
accompanied by supporting documentation that the FDA has accepted either MBI's
initial PMA application or initial NDA application for ALBUNEX;
(d) FDA Approval. $8,000,000 due in 4 successive quarterly installments
of $2,000,000 each, with the first quarterly installment payable 30 days after
the date MBI provides Mallinckrodt written notice accompanied by a copy of the
FDA initial approval letter that the FDA has issued its initial approval letter
for ALBUNEX with an indication as set forth in Appendix 4; and
(e) First Commercial Shipment. $3,000,000 due in 4 successive quarterly
installments of $750,000 each, with the first quarterly installment payable 30
days after the date Mallinckrodt accepts MBI's first commercial shipment of
ALBUNEX under Article 2.
In no event shall Mallinckrodt be obligated to make payments except with respect
to the first instance in which a particular milestone is achieved.
4.02 Initial Marketing Payment.
(a) In addition to the other amounts due under Article 4, Mallinckrodt
shall pay MBI an amount of United States dollars equal to the amount of Net
Sales of ALBUNEX in the Territory for the 365-day period commencing on the
Launch Date.
(b) Mallinckrodt shall deliver to MBI within 60 days after the end of
such 365-day period, as the case may be, a true and accurate report, covering
such period in sufficient detail to accurately account for gross sales and all
adjustments used to derive aggregate Net Sales subject to this Section 4.02.
(c) Simultaneously with the delivery of the report described in Section
4.02(b), Mallinckrodt shall pay MBI the amount described in Section 4.02(a) for
such period covered by the report. The payment shall be made in United States
dollars.
(d) Notwithstanding anything in this Section 4.02 to the contrary,
Mallinckrodt shall not be obligated to pay in excess of $30,000,000 pursuant to
this Section 4.02 regardless of the amount of Net Sales during the 365-day
period commencing on the Launch Date.
4.03 Feinstein Royalties.
(a) Provided that MBI has timely made all prior royalty payments to Dr.
Stephen B. Feinstein pursuant to the License Agreement dated November 5, 1986,
as amended ("Feinstein License"), Mallinckrodt shall pay to MBI in trust for
further payment by MBI to Dr. Stephen B. Feinstein an amount equal to one-half
of MBI's royalty obligations to Dr. Stephen B. Feinstein pursuant to the
Feinstein License attributable to Net Sales of ALBUNEX, up to a maximum of 3% of
Net Sales of ALBUNEX; provided, however, that Mallinckrodt shall pay to MBI for
MBI's account a royalty of 3% on the first $66,666,666.67 of Net Sales of
ALBUNEX in the United States, and shall pay to MBI a royalty of 3% on the next
$33,333,333.33 of Net Sales of ALBUNEX in the United States, of which MBI shall
pay one-half to Dr. Stephen B. Feinstein and the other one-half shall be for
MBI's account. As of the date that Mallinckrodt begins to manufacture ALBUNEX
for commercial sale following the earlier of (i) termination of this Agreement
pursuant to which the licenses granted in this Agreement by MBI to Mallinckrodt
survive such termination pursuant to Section 14.03 or (ii) the exercise by MBI
of its rights pursuant to Sections 9.01(a) or (b) and the satisfaction of the
conditions contained in Section 9.03, Mallinckrodt's obligation to pay MBI
pursuant to the foregoing sentence shall increase (in the case of (ii), in
respect of the affected territory only) to an amount equal to the total of MBI's
royalty obligation pursuant to the Feinstein License attributable to Net Sales
of ALBUNEX, up to a maximum of 6% of Net Sales of ALBUNEX. If Mallinckrodt loses
exclusivity in the Additional Territory [omitted; filed separately with the
Commission], Mallinckrodt's obligation to pay MBI shall similarly increase in
respect of the affected territory as of the date that Mallinckrodt begins to
manufacture ALBUNEX for commercial sale in that territory. All payments to MBI
pursuant to this Section 4.03(a) (i) shall be made not later than 5 business
days prior to the due date of the payment by MBI to Dr. Steven B. Feinstein
under the Feinstein License, (ii) to the extent payable to Dr. Steven B.
Feinstein, shall be held by MBI in a segregated trust account held for the
benefit of Dr. Steven B. Feinstein, and (iii) shall be remitted by MBI from such
trust account to Dr. Steven B. Feinstein on or before the due date of such
payment under the Feinstein License.
(b) MBI understands that Mallinckrodt may wish to approach Dr. Steven B.
Feinstein and discuss with him the possibility of a direct license to
Mallinckrodt in the event there is a termination of the Feinstein License.
Mallinckrodt shall advise MBI in advance if it desires to hold such discussions
with Dr. Steven B. Feinstein and MBI shall be permitted to participate in such
discussions, provided, however, MBI shall not be obligated to pay any additional
consideration to Dr. Steven B. Feinstein or to undertake any other additional
financial obligation.
Article 5
Confidentiality
5.01 General. At all times during the term of this Agreement and
thereafter, MBI and Mallinckrodt shall keep confidential, not use and not
disclose to third parties any and all of the Confidential Information of the
other party (Mallinckrodt Confidential Information in MBI's case and MBI
Confidential Information in Mallinckrodt's case), except as expressly authorized
by prior written consent of the other party or as provided in this Agreement,
and except to those of its employees as necessary for the performance of this
Agreement so long as such employee has signed a confidentiality and non-use
agreement with terms no less restrictive than set out herein.
5.02 Exceptions to Confidentiality. The obligation of confidentiality
and restriction on use imposed by Article 5 shall not apply to any Confidential
Information that:
(a) Was in the public domain prior to the date of this Agreement or
subsequently came into the public domain through no fault of such party; or
(b) Was lawfully received by such party from a third party free of any
obligation of confidence to such third party; or
(c) Was already in the possession of such party prior to receipt
thereof, directly or indirectly, from the other party; or
(d) Is required to be disclosed in a judicial or administrative
proceeding after all reasonable legal remedies for maintaining such information
in confidence have been exhausted; or
(e) Is subsequently and independently developed by employees,
consultants or agents of the disclosing party without reference to the
Confidential Information disclosed.
5.03 Regulatory. MBI and Mallinckrodt are permitted to provide to
governmental personnel and agencies, including but not limited to the FDA, all
materials required by such personnel or agency in conjunction with an inspection
of MBI's or Mallinckrodt's facilities, or any governmental submission, report,
license, application or similar item, by MBI or Mallinckrodt, including but not
limited to all documentation and test results relating to ALBUNEX, and samples
of ALBUNEX.
5.04 Consultants or Laboratories. MBI or Mallinckrodt may employ the
services of consultants or laboratories as part of the goods and services to be
provided pursuant to this Agreement if each such consultant or laboratory signs
a confidentiality agreement no less restrictive than the confidentiality and
non-use provisions in this Agreement. MBI and Mallinckrodt may disclose the
terms of this Agreement to their respective attorneys, accountants, lenders,
insurance brokers and underwriters, and investment bankers, or as required by
law.
5.05 Publications. Each party (the "Disclosing Party") shall submit to
the other (the "Receiving Party") at least 90 days prior to submission or
disclosure to any third party, all manuscripts, abstracts, articles, memorandum
or other similar documents relating to ALBUNEX proposed to be published,
disclosed or discussed in any scientific, trade, industry or other publication,
meeting or forum. The Reviewing Party shall notify the Disclosing Party if, in
the reasonable judgment of the Reviewing Party, the proposed disclosure would
violate the terms of this Article 5. Thereafter, the Disclosing Party shall not
disclose, publish or otherwise make public, the proposed disclosure and shall
take all reasonable steps to prevent such disclosure or publication.
Article 6
Representations, Warranties and Covenants
6.01 Representations, Warranties and Covenants of Mallinckrodt.
Mallinckrodt hereby covenants, represents and warrants to MBI that:
(a) Neither the execution and delivery by it of this Agreement nor the
consummation of the transactions contemplated hereby will violate any law or
regulation, or conflict with or result in a breach of or default under any
agreement, license, instrument, judgment, decree or order to which it is a party
or by which it is bound.
(b) No approval or consent of any governmental agency or instrumentality
is required for the authorization, execution, or delivery by it of this
Agreement.
(c) Neither this Agreement nor any document or certificate furnished to
MBI by Mallinckrodt pursuant to this Agreement contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading.
(d) The execution and delivery of this Agreement and the performance by
Mallinckrodt of its obligations hereunder are within Mallinckrodt's corporate
power, have been duly authorized by proper corporate action on the part of
Mallinckrodt and are not in violation of the Certificate of Incorporation or
By-Laws of Mallinckrodt.
(e) Except as permitted by this Agreement (as provided in Sections
7.01(c)), during the term hereof Mallinckrodt shall neither manufacture ALBUNEX
nor purchase ALBUNEX from anyone other than MBI.
6.02 Representations, Warranties and Covenants of MBI. MBI
covenants, represents and warrants to Mallinckrodt that:
(a) Neither the execution and delivery by it of this Agreement nor the
consummation of the transactions contemplated hereby will violate any law or
regulation, or conflict with or result in a breach of or default under any
agreement, license, instrument, judgment, decree or order to which it is a party
or by which it is bound.
(b) No approval or consent of any governmental agency or instrumentality
is required for the authorization, execution, or delivery by it of this
Agreement.
(c) Neither this Agreement nor any document or certificate furnished to
Mallinckrodt by MBI pursuant to this Agreement contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading. All product and testing
data, and all Know-how and other data and information supplied by MBI with
respect to or in connection with ALBUNEX is and will be accurate and does not
and will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make it not misleading.
(d) The execution and delivery of this Agreement and the performance by
MBI of its obligations hereunder are within MBI's corporate power, have been
duly authorized by proper corporate action on the part of MBI and are not in
violation of the Certificate of Incorporation or By-Laws of MBI.
(e) Except as provided in Sections 3.01, 9.01(a), (b) and 9.06, (i)
Mallinckrodt shall have the exclusive non-cancellable distributorship and
exclusive non-cancellable sales representation of ALBUNEX in the Territory, the
Additional Territory, [omitted; filed separately with the Commission] and (ii)
MBI has not appointed, and will not appoint any other distributor,
representative or agent to sell or distribute ALBUNEX in the Territory, the
Additional Territory, [omitted; filed separately with the Commission].
(f) To the best of MBI's knowledge, ALBUNEX can now and hereafter be
manufactured, used and sold in the Territory, the Additional Territory,
[omitted; filed separately with the Commission] without substantial risk of
infringement of any right, interest, or patent of any third party.
(g) MBI owns or controls the Technology Rights and, to the best of MBI's
knowledge, the patents and patent applications now contained in the Technology
Rights are of sufficient scope to protect ALBUNEX, its production, use and sale,
and any patents, including patents issuing on any of such patent applications,
are, or will be upon issuance, reasonably enforceable.
(h) There is no claim, suit, proceeding or other investigation pending
or, to the best knowledge of MBI, threatened against MBI in connection with the
research, development, manufacture, sale, use or distribution of ALBUNEX, or
which would prevent the performance of this Agreement.
(i) All ALBUNEX sold by MBI to Mallinckrodt pursuant to Article 2 will
be manufactured or produced in a good and workmanlike manner, in compliance with
then-current FDA Good Manufacturing Practices, and shall be merchantable, and be
fit for the purposes for which it was produced.
(j) All ALBUNEX sold by MBI to Mallinckrodt pursuant to Article 2: (i)
will be manufactured or produced in compliance with the Occupational Safety and
Health Act, as amended, and the Fair Labor Standards Act, as amended; (ii) will
not be adulterated or misbranded within the meaning of the Federal Food Drug &
Cosmetic Act, and will not be articles which may not, under the provisions of
Sections 404 or 505 of such Act, or any similar state or local laws, be
introduced into interstate commerce; (iii) will comply with all other applicable
standards which are necessary for the manufacture, use or sale of ALBUNEX
including, but not limited to, all rights in patents, trademarks, FDA approvals,
registrations or permits, and all other regulatory permits, approvals and
licenses necessary for the manufacture, use or sale of ALBUNEX; and (iv) use
only USP Human Serum Albumin that is 100% tested and certified AIDS and
Hepatitis B free.
Article 7
License of Technology
7.01 Technology Rights.
(a) MBI hereby grants to Mallinckrodt a license of, including the right
to sublicense others under, the Technology Rights and Know-how, in order to
test, evaluate and develop ALBUNEX covered thereby, and to use, sell, offer to
sell and otherwise commercialize ALBUNEX in the Territory, the Additional
Territory, [omitted; filed separately with the Commission]. Subject only to the
limitations contained in Sections 9.01(a) and (b), 9.06 and 14.03(b) and MBI's
utilization of the Technology Rights and Know-how to perform its obligations
pursuant to this Agreement (including MBI's right to manufacture ALBUNEX), this
license from MBI is exclusive, perpetual and non-cancellable:
(1) in the Territory;
(2) in the Additional Territory, subject to Section 3.02(a);
(3) [omitted; filed separately with the Commission]; and
(4) [omitted; filed separately with the Commission].
(b) MBI hereby grants to Mallinckrodt and to its Affiliates and
sublicensees the right to grant irrevocable licenses to end users of ALBUNEX, to
use ALBUNEX obtained directly or indirectly from Mallinckrodt, its Affiliates or
its sublicensees for any purpose within the Technology Rights or the Know-how.
Subject only to (i) the limitations contained in Sections 9.01(a) and (b), 9.06
and 14.03(b), (ii) MBI's utilization of the Technology Rights and Know-how to
perform its obligations pursuant to this Agreement (including MBI's right to
manufacture ALBUNEX) and (iii) the same qualifications described in Sections
7.01(a)(2)-(4), this license from MBI is exclusive, perpetual and
non-cancellable.
(c) MBI hereby grants to Mallinckrodt a license of, including the right
to sublicense Affiliates under, the Technology Rights and Know-how in order to
manufacture and have manufactured ALBUNEX in the Territory, the Additional
Territory, [omitted; filed separately with the Commission]. Subject only to (i)
the limitations contained in Sections 9.01(a) and (b), 9.06 and 14.03(b), (ii)
MBI's utilization of the Technology Rights and Know-how to perform its
obligations under this Agreement and (iii) the same qualifications described in
Sections 7.01(a)(2)-(4), this license from MBI is exclusive, perpetual and
non-cancellable. Notwithstanding the foregoing, Mallinckrodt may not exercise
the license under this Section 7.01(c) except as provided in Sections 7.01(c)(1)
and (2).
(1)Mallinckrodt Manufacturing. Mallinckrodt may use the
manufacturing license granted pursuant to this Section 7.01(c) to
manufacture ALBUNEX only under the following circumstances and subject
to the conditions and limitations set forth below and in Section
7.01(c)(2):
(A) MBI Co-Marketing. If MBI exercises either of its options
under Sections 9.01(a) and (b) in respect of any territory, or if
Mallinckrodt loses exclusivity in the Additional Territory,
[omitted; filed separately with the Commission], as the case may
be, pursuant to Section 3.02 and MBI exercises its right under that
Section directly or indirectly to sell ALBUNEX in the affected
territory for its own account or to license its right to do so to a
third party, Mallinckrodt may manufacture ALBUNEX in any quantities
for sale in that territory; and no royalty shall be payable to MBI
in respect of Net Sales in that territory of ALBUNEX manufactured
after MBI's exercise of the option in question;
(B) Mallinckrodt Terminates. If Mallinckrodt properly
terminates this Agreement pursuant to Sections 14.02(b), (c) or
(e), Mallinckrodt may manufacture ALBUNEX in any quantities. With
respect to any calendar quarter, Mallinckrodt shall pay MBI a
royalty in respect of each Albunex Product manufactured by
Mallinckrodt after the date of termination equal to 40% of the
product determined by multiplying that Albunex Product's Average
Selling Price during the quarter by the number of vials of that
product sold during that quarter, less (i) Mallinckrodt's fully
allocated manufacturing cost for such ALBUNEX determined using U.S.
generally accepted accounting principles, and (ii) until fully
recovered, one-half of Mallinckrodt's Start-up Costs not included
in (i). Mallinckrodt may also recover Damages resulting from any
breach or default of MBI which occasions the termination. If and
when any such Damages are awarded to Mallinckrodt in arbitration
proceedings pursuant to Section 12.01 or are agreed to by MBI,
Mallinckrodt may recover such Damages separately or as a deduction
from royalties to MBI. Mallinckrodt shall not have any royalty
obligation under this Section 7.01(c)(1)(B) in respect of sales of
Albunex Products after the later of the third anniversary of the
date that the FDA approves an intravenous myocardial perfusion
indication of ALBUNEX for sale in the United States or July 1,
2003.
(C) MBI Terminates. If MBI properly terminates this Agreement
pursuant to Section 14.02(b), (d) or (f), Mallinckrodt may
manufacture ALBUNEX in any quantities. With respect to any calendar
quarter, Mallinckrodt shall pay MBI a royalty in respect of each
Albunex Product manufactured by Mallinckrodt after the date of
termination equal to 20% of the product determined by multiplying
that Albunex Product's Average Selling Price during the quarter by
the number of vials of that product sold during the quarter.
Mallinckrodt's royalty obligation under this Section 7.01(c)(1)(C)
shall continue through the expiration date of the last patent
relating to ALBUNEX, on a country-by-country basis. MBI may also
recover Damages resulting from any breach or default of
Mallinckrodt which occasions the termination. Notwithstanding the
authorization to manufacture under this Section 7.01(c)(1)(C), if
MBI has terminated this Agreement pursuant to Sections 14.02(b) or
(d) and if Mallinckrodt fails to make any royalty payment due to
MBI under this Agreement when due (and does not cure its default
within 10 days), the manufacturing license granted to Mallinckrodt
under this Section 7.01(c) shall automatically terminate.
(D) MBI Failure to Meet Orders.
(i) General. Notwithstanding any other provision of this
Agreement, if as a result of manufacturing problems, lack of
manufacturing capacity, Force Majeure, or any other reason,
MBI fails or refuses for each of two consecutive calendar
quarters to deliver at least 75% of the required quantity of
any Albunex Product complying with MBI's Manufacturing
Obligations in timely satisfaction of Mallinckrodt's firm
orders for that product for those quarters, Mallinckrodt may
manufacture that Albunex Product in quantities which, when
added to the quantities of conforming products that MBI
reasonably may be expected to deliver in timely satisfaction
of Mallinckrodt's firm orders, satisfies Mallinckrodt's
requirements for that Albunex Product as disclosed by its
Forecasts. After validation and FDA approval of Mallinckrodt's
manufacturing facility or facilities, in order for
Mallinckrodt to become entitled to manufacture under this
Section 7.01(c)(1)(D), it must begin manufacturing within six
months of the occurrence of the condition specified above
(i.e., it cannot decline to manufacture and invoke the
occurrence of the condition specified above as permitting
manufacturing at a much later date).
(ii) Procedures Respecting MBI's Right to Resume Full
Manufacturing. Mallinckrodt may continue to manufacture such
Albunex Product under this Section 7.01(c)(1)(D) until MBI is
able once again to deliver conforming products in timely
satisfaction of Mallinckrodt's firm orders. No sooner than 10
days prior to the end of the calendar quarter in which
Mallinckrodt becomes authorized under this Section
7.01(c)(1)(D) to manufacture any Albunex Product, MBI may
certify that it is able to deliver conforming products in
timely satisfaction of what Mallinckrodt's firm orders to MBI
would be if Mallinckrodt were not authorized under this
Section to manufacture that Albunex Product. Following such
certification, Mallinckrodt may continue to manufacture that
Albunex Product in quantities consistent with the quantities
that it had been manufacturing prior to receipt of MBI's
certification (and consistent with Mallinckrodt's firm orders
to MBI in accordance with Section 7.01(c)(1)(D)(iii)).
Mallinckrodt shall cease to be authorized to manufacture that
Albunex Product under this Section 7.01(c)(1)(D) after the
last day of the calendar quarter after the calendar quarter in
which MBI gives its certification to Mallinckrodt, and the
parties shall return to the status quo ante regarding their
respective manufacturing rights and duties. Notwithstanding
the foregoing time limitations (which are intended to permit
Mallinckrodt to operate its manufacturing facility for at
least two consecutive calendar quarters before MBI resumes
manufacturing Mallinckrodt's entire ALBUNEX demand), the
parties may agree to permit MBI to resume manufacturing at an
earlier date.
(iii) Procedures Respecting Mallinckrodt's Forecasts and Firm
Orders. During the period of Mallinckrodt's manufacturing
under this Section 7.01(c)(1)(D), Mallinckrodt shall continue
to deliver Forecasts in accordance with Section 2.05(b),
provided that these Forecasts shall separately state the
quantities of each Albunex Product that Mallinckrodt expects
to manufacture itself and the quantities of each Albunex
Product that it expects to purchase from MBI each calendar
quarter. The quantities that Mallinckrodt expects to purchase
from MBI each calendar quarter shall be the maximum amount
that MBI can reasonably be expected under the circumstances to
deliver in timely satisfaction of Mallinckrodt's firm order
for the quarter. (As provided in Section 2.05(b),
Mallinckrodt's forecast of its purchases from MBI for the
first two calendar quarters of each Forecast shall be
considered firm orders for those quarters.)
(iv) Royalty. The royalty payable to MBI in respect of ALBUNEX
manufactured by Mallinckrodt under this Section 7.01(c)(1)(D)
shall be determined as follows:
(a) Low Volume. If Mallinckrodt manufactures ALBUNEX
pursuant to this Section 7.01(c)(1)(D) for (1) no longer
than two consecutive full calendar quarters and during
such time manufactures 50% or less of its total firm
orders or for (2) longer than two consecutive full
calendar quarters but in any given full calendar quarter
manufactures less than 25% of its firm order for that
quarter, then, with respect to such two-quarter period
(plus any prior "stub" period) or such quarter, as the
case may be, Mallinckrodt shall pay MBI a royalty in
respect of each Albunex Product manufactured by
Mallinckrodt during such period equal to 40% of the
product determined by multiplying that Albunex Product's
Average Selling Price during the quarter of sale by the
number of vials of that product sold, less (i)
Mallinckrodt's fully allocated manufacturing cost for
such ALBUNEX determined using U.S. generally accepted
accounting principles, and (ii) until fully recovered,
one-half of Mallinckrodt's Start-up Costs not included in
(i); but in no event shall such royalty be less than 5%
or more than 10%.
(b) High Volume. In respect of ALBUNEX manufactured by
Mallinckrodt pursuant to this Section 7.01(c)(1)(D)
during any full calendar quarter (or prior "stub period)
not described in Section 7.01(c)(1)(D)(iv)(a),
Mallinckrodt shall pay MBI a royalty in respect of each
Albunex Product manufactured by Mallinckrodt during such
period equal to 40% of the product determined by
multiplying that Albunex Product's Average Selling Price
during the quarter of sale by the number of vials of that
product sold, regardless of when sold, less (i)
Mallinckrodt's fully allocated manufacturing cost for
such ALBUNEX determined using U.S. generally accepted
accounting principles, and (ii) until fully recovered,
one-half of Mallinckrodt's Start-up Costs not included in
(i); but in no event shall such royalty be less than 10%
or more than 20%.
(c) "Three Strikes." Notwithstanding the royalty
provisions of Sections 7.01(c)(1)(D)(iv)(a) and (b),
Mallinckrodt shall not be required to make any payment
described in those Sections to MBI after the third
occurrence of an event giving rise to Mallinckrodt's
manufacturing rights under this Section 7.01(c)(1)(D) (a
"Strike") provided that, in addition to MBI's failure to
deliver at least 75% of Mallinckrodt's firm order for any
given two consecutive quarters, if with respect to either
of such quarters MBI nevertheless timely delivers 150% of
the amount of the estimated forecast for such quarter
appearing in the Forecast provided to MBI on the first
day of the quarter starting six months prior to the start
of the quarter in question, then the occurrence shall not
count as one of the three Strikes excusing Mallinckrodt's
obligation to pay a royalty under this Section
7.01(c)(1)(D). Only two consecutive quarters in which MBI
has both failed to deliver at least 75% of Mallinckrodt's
firm orders and failed to deliver 150% of the applicable
forecasts shall count as a Strike. After a Strike, the
next Strike cannot occur until MBI has again begun
manufacturing Mallinckrodt's entire ALBUNEX demand
pursuant to Section 7.01(c)(1)(D)(ii).
Example: On January 1, 1996, Mallinckrodt issues the
following Forecast (only quarters necessary to the
example are provided):
Q1 January 1, 1996 1,000 (firm order)
Q2 April 1, 1996 2,000 (firm order)
Q3 July 1, 1996 3,000
Q4 October 1, 1996 8,000
On April 1, 1996, Mallinckrodt issues the following
Forecast:
Q2 April 1, 1996 2,000 (firm order)
Q3 July 1, 1996 8,000 (firm order)
Q4 October 1, 1996 10,000
On July 1, 1996, Mallinckrodt issues the following
Forecast:
Q3 July 1, 1996 8,000 (firm order)
Q4 October 1, 1996 20,000 (firm order)
MBI timely delivers:
Q1 1,000
Q2 1,800
Q3 5,000
Q4 11,000
With respect to Q1, MBI has delivered 100% of the firm
order.
With respect to Q2, MBI has delivered 1,800 of 2,000
ordered (90%). It has therefore not failed to deliver at
least 75% of the firm order for that quarter. MBI has not
earned a quarter toward the entitlement to manufacture or
toward a Strike.
With respect to Q3, MBI has delivered 5,000 of 8,000
ordered (62.5%). It has therefore failed to deliver at
least 75% of the firm order for that quarter. It has,
however, delivered 5,000/3,000, or 167%, of the forecast
for that quarter appearing in the Forecast delivered six
months earlier. Therefore no Strike has occurred.
With respect to Q4, MBI has delivered 11,000 of 20,000
ordered (55%). It has therefore failed to deliver at
least 75% of the firm order for that quarter. It has also
delivered only 11,000/10,000, or 110%, of the forecast
for that quarter appearing in the Forecast delivered six
months earlier.
Thus, Mallinckrodt may manufacture makeup quantities
under Section 7.01(c)(1)(D) because MBI failed to deliver
at least 75% of the firm orders for two consecutive
months. A Strike has not occurred for purposes of Section
7.01(c)(1)(D)(iv)(c), however, because MBI did not fail
to deliver 150% of the applicable forecast for two
consecutive quarters.
If MBI had delivered 4,000 in Q3, MBI would have
delivered 4,000/3,000, or 133%, of the forecast for that
quarter appearing in the Forecast delivered six months
earlier. In that case, assuming Q4 orders and deliveries
as in the example, by the end of Q4 Mallinckrodt could
manufacture makeup quantities, as before, and a Strike
would have occurred for purposes of Section
7.01(c)(1)(D)(iv)(c) because MBI would have failed the
"150% test" in two consecutive quarters.
(v) Sole Remedy; Damages. With the exception of the recovery
of Damages, Mallinckrodt's right to manufacture ALBUNEX under
the circumstances described in Section 7.01(c)(1) (D) shall be
its sole remedy for MBI's failure or refusal to supply ALBUNEX
pursuant to Mallinckrodt's firm orders.
(vi) Adjustments. If it is not clear during any period whether
the "low volume" or "high volume" royalty provisions of this
Section 7.01(c)(1)(D) apply at the time payment is required,
Mallinckrodt shall make its best estimate as to which applies
and make the appropriate payment. If it appears at a later
date that Mallinckrodt's estimate was incorrect, Mallinckrodt
shall pay any additional amounts owed or receive a credit on
future payments due, as the case may be.
(E) [Omitted; filed separately with the Commission.]
(F) Low Price. If MBI declines to manufacture or to continue
to manufacture any new or existing Albunex Product and
Mallinckrodt elects to manufacture that product pursuant to
Section 2.14(d)(1), Mallinckrodt may manufacture as provided in
that Section (and to the extent further provided in this Section
7.01(c)(1) and Section 7.01(c)(2)).
(G) Other Agreement. If MBI and Mallinckrodt execute a written
agreement which permits or requires Mallinckrodt to manufacture
ALBUNEX, Mallinckrodt may manufacture ALBUNEX in the quantities
and on the terms agreed on, and such written agreement shall be
deemed an amendment of this Agreement.
(2) Other Conditions. The manufacturing license granted to
Mallinckrodt in this Section 7.01(c) is also subject to the
following conditions and limitations:
(A) Start-up Costs. As used in Sections 7.01(c)(1) and
2.14(d)(1)(A), "Start-up Costs" means Mallinckrodt's reasonable and
appropriate pre-operating and start-up costs to initiate the
manufacture of ALBUNEX, including "one-time" costs which are
incurred during the validation process and "one-time" costs which
are incurred once the validation process is complete and prior to
the point that each production for commercial sale begins. These
costs include, among other costs, costs associated with
qualification, validation, hiring and quality control.
Mallinckrodt's "Start-up Costs" shall also be considered to include
amounts reimbursed to MBI pursuant to Section 7.01(c)(2)(H) and
Mallinckrodt's reasonable and appropriate shut-down costs in the
event that Mallinckrodt is manufacturing ALBUNEX under Sections
7.01(c)(1)(D), 2.14(d)(1)(A) or 2.14(d)(2)(A) and then is required
to shut down its ALBUNEX manufacturing line by reason of MBI's
resumption of full manufacturing pursuant to Sections
7.01(c)(1)(D)(ii), 2.14(d)(1)(A) or 2.14(d)(2)(A), as the case may
be. All Start-up Costs shall be determined in accordance with U.S.
generally accepted accounting principles. The maximum cumulative
Start-up Costs that may be taken into account for purposes of
Sections 7.01(c)(1) and 2.14(d)(1) may not exceed $10 million.. To
the extent that Start-up Costs have been deducted from royalties
owed under this Section 7.01(c), they may not deducted a second
time if Mallinckrodt later becomes entitled to manufacture owing to
the occurrence of another (or a repeat of the same) circumstance
described in Section 7.01(c). At MBI's option, it may pay all or
some of such Start-up Costs directly to Mallinckrodt at any time,
and Mallinckrodt shall not be entitled to deduct costs thus paid
from royalties owed under this Section 7.01(c).
(B) Effect of Arbitration on Termination. This Agreement shall
not be deemed terminated by a party pursuant to Sections 14.02(b),
(c), (d), (e) or (f) if the other party is disputing the propriety
of termination (including but not limited to whether a cure has
been effected or reasonable steps have been taken to cure and have
been diligently pursued, where applicable) and such party has
timely filed or served the appropriate instrument to invoke an
arbitration proceeding under Section 12.01 of this Agreement. Such
filing or service shall be deemed timely if it takes place (i) in
the case of a 14.02(b) termination, within 30 days of the notice
described in the first clause of that Section, or (ii) in the case
of a Section 14.02(c), (d), (e) or (f) termination, prior to the
expiration of the applicable remedial period. In the case of a
Section 14.02(b) termination in which the arbitrators rule in favor
of the party seeking termination, if the termination is based on
dissolution, ceasing business operations, or liquidation, the
agreement shall be deemed terminated; if the termination is based
on any other termination event described in that Section, the
unsuccessful party shall have 60 days to dismiss the proceeding or
discharge the the assignee, as the case may be. In the case of a
Section 14.02(c), (d), (e), or (f) termination, the unsuccessful
party shall have the full applicable remedial period from the date
of the arbitrators' decision to effect a cure, provided that any
additional arbitration over whether the cure is effective in such
case shall stay termination for no more than 30 days unless the
arbitrators rule otherwise before that period of time expires. In
the case of a Section 14.02(c) or (d) termination, following the
arbitrators' decision the unsuccessful party may not further
forestall termination by claiming a good faith dispute.
(C) Damages. As used in this Section 7.01(c), "Damages" means
actual damages and does not include incidental, consequential, or
punitive damages, but (notwithstanding this limitation) does
include lost profits on sales of ALBUNEX for the period beginning
with the accrual of Mallinckrodt's right to manufacture under
Section 7.01(c)(1) and ending with the time it is lawfully
permitted to operate an ALBUNEX manufacturing facility capable of
producing the Albunex Product in question to meet Mallinckrodt's
requirements, but in no event for a period extending beyond five
years after the Effective Date.
(D) Parties' Respective Duties and Rights. Mallinckrodt shall
have the same duties and obligations in respect of the ALBUNEX that
it manufactures under this Section 7.01(c) that MBI has under
Section 2.02, Sections 2.04(a), (b), (d), (i)(b) and (k), Section
2.06(b), and Sections 6.02(i) and (j) in respect of the ALBUNEX
that it manufactures, and MBI shall have the right, upon not less
than five business days' prior notice, to inspect Malinckrodt's
facilities and operations, in order to insure that ALBUNEX is being
manufactured in compliance with Good Manufacturing Practices and
that the other terms and conditions of this Agreement are being
met.
(E) Payment Terms. No later than 45 days after the end of each
calendar quarter (except the fourth quarter), Mallinckrodt shall
estimate its Net Sales for the quarter as accurately as reasonably
possible and make an estimated royalty payment to MBI on the basis
of its estimated Net Sales for the quarter. No later than 60 days
after the end of each calendar year, Mallinckrodt shall report its
actual Net Sales for the year to MBI and calculate the actual
royalty for the year payable to MBI. Mallinckrodt shall pay to MBI
with this report the amount by which the actual royalty for the
year payable to MBI exceeds the aggregate amount of Mallinckrodt's
estimated royalty payments for the first three quarters, or, if
Mallinckrodt has overpaid, it shall receive an appropriate credit
against future amounts due.
(F) Currency. All royalty payments shall be made in United
States dollars. Mallinckrodt's reports to MBI under Section
7.01(c)(2)(E) shall state the amount of all Net Sales by month. For
Net Sales in a currency other than United States dollars, the
amount of such Net Sales shall be computed using the average of the
daily exchange rates for the month of sale, as reported by Reuters
Ltd. Money 2000 System MBI shall have a right of audit regarding
the royalties payable by Mallinckrodt similar in frequency and
scope to the right of audit afforded MBI in Section 2.14(c).
(G) MBI Retention of Manufacturing Rights. Except as provided in
this Section 7.01(c) and Section 2.05(c), during the term of this
Agreement MBI shall retain, as between it and Mallinckrodt, the
exclusive right to manufacture ALBUNEX in the Territory, the
Additional Territory, [omitted; filed separately with the
Commission].
(H) Reasonable Assistance. MBI shall render reasonable assistance
to Mallinckrodt in developing a manufacturing capacity pursuant to
license granted in this Section 7.01(c). MBI's assistance shall be
provided at Mallinckrodt's sole expense, including, but not limited
to, reimbursement of MBI for travel expenses, direct labor costs of
MBI personnel, equipment and any other related expenses.
(I) Limited Validation Manufacturing. Mallinckrodt may manufacture
ALBUNEX for the limited purpose of validating its manufacturing
facility or facilities and producing stability studies for or
meeting other requirements of the FDA and foreign equivalents of the
FDA.
(J) Wrongful Production of ALBUNEX by Mallinckrodt. Mallinckrodt
shall pay a royalty of 40% of Net Sales of any and all ALBUNEX it
manufactures and sells in violation of this Section 7.01(c).
(K) Albumin. At Mallinckrodt's request after it becomes authorized
to manufacture any Albunex Product under Sections 7.01(c)(1)(D) or
(F), or at Mallinckrodt's request in connection with the limited
validation manufacturing authorized under Section 7.01(c)(2)(I), MBI
shall authorize its vendor to use a portion of the vendor's
allocation of USP Human Serum Albumin to MBI to sell to Mallinckrodt
to manufacture the Albunex Product in question in the authorized
quantities or to manufacture ALBUNEX as reasonably required in
connection with Mallinckrodt's limited validation manufacturing.
7.02MBI Trademarks.
(a)MBI hereby grants to Mallinckrodt and to its Affiliates and
sublicensees a royalty-free right and license in perpetuity to use any MBI
Trademark on or in connection with the manufacture, advertising, distribution,
or sale of ALBUNEX made by or on behalf of Mallinckrodt, its Affiliates or
sublicensees in the Territory, the Additional Territory, [omitted; filed
separately with the Commission]. Prior to the exercise by MBI of its rights
under Sections 9.01(a) or (b) or 9.06, and subject to the limitations of Section
14.03 and the same qualifications described in Sections 7.01(a)(2)-(4), this
license is non-cancellable and is exclusive with respect to all others including
MBI.
(b)Mallinckrodt hereby grants to MBI and to its Affiliates and
sublicensees a royalty-free right and license in perpetuity to use any trademark
other than the trademark "Mallinckrodt" that Mallinckrodt uses to market and
sell ALBUNEX in the Territory, the Additional Territory, [omitted; filed
separately with the Commission]. MBI agrees not to utilize such license in the
Additional Territory, [omitted; filed separately with the Commission] prior to
Mallinckrodt's loss of exclusivity in that territory pursuant to Sections
3.02(a), (b) or (c), as the case may be, or otherwise to utilize such license
until the first to occur of (i) MBI's exercise of its rights under Sections
9.01(a) or (b) or 9.06 or (ii) the occurrence of any of the conditions described
in Sections 14.03(b), (c) and (d).
(c)Mallinckrodt and MBI undertake that the quality of goods sold and
offered for sale under the MBI Trademarks or trademarks licensed by Mallinckrodt
to MBI pursuant to Section 7.02(b) (collectively the "Trademarks") shall conform
to the standards approved by the appropriate regulatory authorities in the
Territory, the Additional Territory, [omitted; filed separately with the
Commission], respectively. Mallinckrodt and MBI also undertake to use all
reasonable efforts to ensure that the said standards conform to the standards of
quality for said goods approved in writing by the other party.
(d)The licensor party shall have the right of access through a duly
authorized agent to the licensee party's business premises at reasonable
intervals and during ordinary business hours for the purpose of inspecting
and/or testing the goods sold or offered for sale under the Trademarks upon
written request to Mallinckrodt or MBI, as the case may be.
(e)The Trademarks shall be used only in accordance with generally
accepted trademark practices. Any usage by the licensee party in advertising,
promotional materials or otherwise shall be submitted to the licensor party for
informational purposes. Mallinckrodt or MBI, as the case may be, will take into
account the comments of the licensor party.
(f)Mallinckrodt or MBI, as the case may be, agrees to notify the
licensor party in writing of any conflicting uses of and applications for
registration of the Trademarks or of any acts of infringement or of unfair
competition involving the Trademarks promptly after such matters are brought to
its attention or it has knowledge thereof.
7.03Technology Transfer and Improvements.
(a)MBI shall from time to time provide, or cause to be provided, to
Mallinckrodt copies of all pharmacological, toxicological, and clinical data and
reports, stability data, manufacturing, quality control, and other information,
Know-how, technology and discoveries of Know-how relating to ALBUNEX now or
hereafter known to, or possessed, acquired or developed by MBI which are needed
or helpful to manufacture, have manufactured, use or sell ALBUNEX in the
Territory, the Additional Territory, [omitted; filed separately with the
Commission]. All such items known to, possessed, acquired or developed by MBI,
regardless if transferred to Mallinckrodt, shall be deemed to be included in the
licenses granted pursuant to Section 7.01 without any further action required by
MBI. All information described in this Section 7.03(a) shall be regarded as
Confidential Information.
(b)MBI shall promptly notify and make available to Mallinckrodt all of
MBI's improvements to ALBUNEX (including additional indications), its method of
use and its method of manufacture, and all of such improvements, regardless if
transferred to Mallinckrodt, shall be deemed to be included in the licenses
granted pursuant to Section 7.01 without any further action required by MBI.
7.04Ancillary Devices. Mallinckrodt and MBI agree that any device, tool
or similar item related to or helpful in the sale, use or application of ALBUNEX
that is not covered by the Technology Rights or Know-how that is now or
hereinafter owned or controlled by either of them (an "Ancillary Device") shall
be discussed with the other party. Prior to disclosure or discussion with third
parties, each agrees to negotiate in good faith with the other the opportunity
of marketing the Ancillary Device in connection with the sale of ALBUNEX and the
possibility of an economic arrangement similar to that for ALBUNEX established
pursuant to this Agreement.
7.05Competing Products.
(a)Mallinckrodt shall promptly notify MBI of an opportunity for
Mallinckrodt to acquire, purchase, or license from a third party any technology
relating to products described in Sections 1.04(c) or (d), and which is not
covered by any Technology Rights, or which does not incorporate, is not covered
by or is not made by the use of Know-how (the "Mallinckrodt Purchased Competing
Technology"). Mallinckrodt shall license its rights to the Purchased Competing
Technology to MBI upon MBI's satisfactory undertaking of 40% of all past,
present and future costs and expenses (including future royalties or other
payments) incurred or to be incurred by Mallinckrodt in connection with or
arising out of the acquisition, purchase or license of the Mallinckrodt
Purchased Competing Technology. Such license shall provide for an economic
arrangement similar to that for ALBUNEX established pursuant to this Agreement.
If MBI does not satisfactorily undertake within a reasonable time to pay 40% of
all such costs and expenses, Mallinckrodt may utilize its rights to the
Mallinckrodt Purchased Competing Technology in any manner whatsoever free and
clear of any restraints or obligations imposed by this Agreement; without
limitation, it may manufacture or purchase from others any products made by
using the Mallinckrodt Purchased Competing Technology.
(b)MBI shall promptly notify Mallinckrodt of an opportunity for MBI to
acquire, purchase, or license from a third party of any technology relating to
products described in Sections 1.04(c) or (d), and which is not covered by any
Technology Rights, or which does not incorporate, is not covered by or is not
made by the use of Know-how (the "MBI Purchased Competing Technology"). MBI
shall license its rights to the MBI Purchased Competing Technology to
Mallinckrodt upon Mallinckrodt's satisfactory undertaking of 60% of all past,
present and future costs and expenses (including future royalties or other
payments) incurred or to be incurred by MBI in connection with or arising out of
the acquisition, purchase or license of the MBI Purchased Competing Technology.
Such license shall provide for an economic arrangement similar to that for
ALBUNEX established pursuant to this Agreement. If Mallinckrodt does not
satisfactorily undertake within a reasonable time to pay 60% of all such costs
and expenses, MBI may utilize its rights to the MBI Purchased Competing
Technology in any manner whatsoever free and clear of any restraints or
obligations imposed by this Agreement; without limitation, it may manufacture or
purchase from others any products made by using the MBI Purchased Competing
Technology.
(c)Mallinckrodt shall promptly notify MBI of Mallinckrodt's development
through its own resources of any technology relating to products described in
Sections 1.04(c) and (d), which is not covered by any Technology Rights, or
which does not incorporate, is not covered by or is not made by the use of
Know-how (the "Developed Competing Technology"). Mallinckrodt shall either (i)
license the Developed Competing Technology to MBI, or (ii) pay a royalty to MBI
of 10% of net sales of such products. Such license shall provide for an economic
arrangement similar to that for ALBUNEX established pursuant to this Agreement,
provided, however, Mallinckrodt and MBI shall negotiate in good faith as to
which party shall have the right to manufacture any product resulting from the
Developed Competing Technology.
(d)Notwithstanding the foregoing, Mallinckrodt shall have no obligation
under this Section 7.05 if Mallinckrodt does not use or plan to use the
Mallinckrodt Purchased Competing Technology or the Developed Competing
Technology, or if MBI does not use or plan to use the MBI Purchased Competing
Technology, to compete with ALBUNEX in the market for in vivo contrast agents
for ultrasound and echocardiography diagnostic imaging.
Article 8
Patents
8.01Patent Expenses.
(a)Mallinckrodt shall be responsible for the expenses of the maintenance of
(x) U.S. Patent No. 4,573,203 entitled "Contact (sic) Agents for Ultrasound
Imaging" issued February 25, 1986, and (y) U.S. Patent No. 4,572,203 entitled
"Contrast Agents for Ultrasonic Imaging" issued January 12, 1988, a continuation
in part of U.S. Patent No. 4,572,203, and any current continuing applications or
future applications thereof in the United States of America or Canada, and of
the continuation and maintenance of the 3 U.S. pending patent applications of
Dr. Kenneth Widder assigned to MBI in the United States of America or Canada.
(b)With respect to any other patent filings, Mallinckrodt and MBI shall
notify the other of any potentially patentable invention relating to ALBUNEX
covering any portion of the Know-how or Technology Rights. The parties
thereafter shall meet and discuss the appropriateness and strategy of filing
patent applications in any country of the Territory, the Additional Territory,
[omitted; filed separately with the Commission].
(c)If MBI, in its reasonable discretion, determines to file any patent
application in the Territory, the Additional Territory, [omitted; filed
separately with the Commission] covering any portion of the Know-how or
Technology Rights, MBI shall be responsible for prosecution and maintenance of
the patent application, but Mallinckrodt shall be responsible for the payment of
all maintenance fees for the resulting patent (if issued). (If a third party is
contractually required by an agreement with MBI to pay any such maintenance
fees, however, Mallinckrodt shall have no obligation to pay them unless MBI
gives Mallinckrodt written notice at least 30 days before payment is due that
the third party has not yet paid them, in which case Mallinckrodt shall pay the
maintenance fees on or before the date due if MBI requests (unless, in the
meanwhile, the third party pays them).
(d)If MBI does not file a particular patent application in the
Territory, the Additional Territory, [omitted; filed separately with the
Commission] covering any portion of the Know-how or Technology Rights,
Mallinckrodt may request MBI to do so, and if MBI declines Mallinckrodt's
request (either by informing Mallinckrodt to that effect or by failing to
respond to Mallinckrodt's request within 30 days after receipt of the request),
Mallinckrodt may file, prosecute and maintain that patent application. MBI shall
provide Mallinckrodt with sufficient information (to the extent in MBI's
possession or under its control) and other cooperation (including necessary
signatures of MBI employees) to permit Mallinckrodt to do so. If Mallinckrodt
does so, it shall be responsible for the payment of all maintenance fees of the
resulting patent (if issued).
(e)MBI and Mallinckrodt shall each cooperate and render reasonable
assistance to the other in connection with the activities contemplated by this
Section 8.01.
8.02Patent Infringement.
(a)Mallinckrodt's Right To Enforce. Mallinckrodt shall have the right,
with respect to any injury or loss suffered or threatened to be suffered by
Mallinckrodt as a result of the infringement or threatened infringement of MBI's
patents relating to ALBUNEX in the Territory, the Additional Territory,
[omitted; filed separately with the Commission], to enforce MBI's affected
patents and prosecute infringers, if MBI elects not to bring suit covering such
injury or loss within 3 months after the earlier of (i) the date that MBI learns
of any such patent infringement other than by written notice from Mallinckrodt
or (ii) the date that Mallinckrodt gives MBI written notice of any such patent
infringement.
(b)Cooperation. In the event either party hereto shall initiate or carry
on legal proceedings to enforce patents against an alleged infringer, the other
party hereto shall fully cooperate with the party initiating or carrying on such
proceedings.
(c)Litigation Procedures. Either party shall have the right during the
time that this Agreement is in effect, and subject to its terms (including, but
not limited to, Sections 8.01 and 8.02(a)), to sue infringers of patents and
either party shall permit the use of its name in all such suits, shall sign all
necessary papers, take all rightful oaths, and upon reasonable request shall
assist the other party in such suits at its own expense.
(d)Litigation by Mallinckrodt. In the event Mallinckrodt shall institute
suit or legal proceedings to enforce any patent, MBI shall be entitled to be
represented by counsel of its own choosing, at its sole expense. From any
recovery awarded or settlement reached as a result of such suit or legal
proceedings, Mallinckrodt (i) may deduct the full amount of its expenses of
prosecuting the same (including attorneys' fees and court costs); (ii) shall pay
to MBI, to the extent possible after payment of (i) above, the full amount of
MBI's cost of participating in the same; (iii) shall pay to MBI, after full
payment of (i) and (ii) above, (A) 40% of any remainder to the extent the
recovery relates to the period prior to MBI's exercise of its options under
Sections 9.01(a) or (b) or 9.06, and (B) 50% of any remainder to the extent the
recovery or settlement relates to any period thereafter in which Mallinckrodt's
licenses under this Agreement had not terminated under Section 14.03(b) (with
the exception in either case that to the extent that the recovery or settlement
is in respect of Mallinckrodt's injuries or losses regarding ALBUNEX
manufactured by Mallinckrodt [omitted; filed separately with the Commission],
the amount payable to MBI under this Section 8.02(d)(iii) shall be a percentage
of the remainder determined in a manner consistent with the royalty payable by
Mallinckrodt in respect of Net Sales of such ALBUNEX [omitted; filed separately
with the Commission], as the case may be); and (iv) may retain the balance.
Mallinckrodt shall not discontinue or settle any such suit or other legal
proceedings brought by it without obtaining the prior concurrence of MBI, which
shall not be unreasonably withheld and giving MBI a timely opportunity to
continue such proceedings in its own name, under its sole control at its sole
expense, provided that Mallinckrodt's reasonable litigation expenses (including
attorneys fees and court costs) shall be reimbursed by MBI.
(e)Litigation by MBI. In the event MBI shall institute suit or legal
proceedings to enforce any patent and the suit or legal proceedings are, in
whole or in part, in respect of any injury or loss suffered or threatened to be
suffered by Mallinckrodt as a result of the infringement or threatened
infringement of MBI's patents relating to ALBUNEX in the Territory, the
Additional Territory, [omitted; filed separately with the Commission],
Mallinckrodt shall be entitled to be represented by counsel of its own choosing,
at its sole expense. From any recovery awarded or settlement reached as a result
of such suit or legal proceedings, MBI (i) may deduct the full amount of its
expenses of prosecuting the same (including attorneys' fees and court costs);
(ii) shall pay to Mallinckrodt, to the extent possible after payment of (i)
above, the full amount of Mallinckrodt's cost of participating in the same;
(iii) shall pay to Mallinckrodt, after full payment of (i) and (ii) above, (A)
60% of any remainder to the extent the recovery or settlement relates to the
period prior to MBI's exercise of its options under Sections 9.01(a) or (b) or
9.06 and is in respect of Mallinckrodt's injuries or losses, and (B) 50% of any
remainder to the extent the recovery or settlement relates to any period
thereafter in which Mallinckrodt's licenses under this Agreement had not
terminated under Section 14.03(b) and is in respect of Mallinckrodt's injuries
or losses (with the exception in either case that to the extent that the
recovery or settlement is in respect of Mallinckrodt's injuries or losses
regarding ALBUNEX manufactured by Mallinckrodt [omitted; filed separately with
the Commission], the amount payable to Mallinckrodt under this Section
8.02(e)(iii) shall be the remainder less a percentage of the remainder
determined in a manner consistent with the royalty payable by Mallinckrodt in
respect of Net Sales of such ALBUNEX [omitted; filed separately with the
Commission], as the case may be); and (iv) may retain the balance. MBI shall not
discontinue or settle any such suit or other legal proceedings brought by it
without obtaining the prior concurrence of Mallinckrodt, which shall not be
unreasonably withheld, and giving Mallinckrodt a timely opportunity to continue
such proceedings in its own name, under its sole control, and at its sole
expense, provided that MBI's reasonable litigation expenses (including attorneys
fees and court costs) shall be reimbursed by Mallinckrodt.
8.03Payments to Third Parties. In the event that the manufacture, use or
sale of ALBUNEX, in Mallinckrodt's and MBI's reasonable judgment present
potential infringement problems with respect to any patent owned by a third
party, and in Mallinckrodt's and MBI's reasonable judgment it is commercially
reasonable to secure a license thereunder, Mallinckrodt and MBI shall attempt to
secure a license thereunder for Mallinckrodt and MBI. Any royalty obligations
respecting such third party patents shall be paid 60% by Mallinckrodt and 40% by
MBI except if any claim of infringement by such third party would fall within
the scope of Section 8.04(a), in which event MBI shall pay 100% of such royalty
obligations.
8.04Patent Indemnification.
(a)MBI shall indemnify and hold harmless Mallinckrodt against any and
all Losses based on and resulting from any claim of infringement of any patent
of a third party in the United States of America, Canada, [omitted; filed
separately with the Commission], Australia or New Zealand and which claim arises
from Mallinckrodt's manufacture, use or sale of ALBUNEX pursuant to this
Agreement.
(b)With respect to any other Losses based on and resulting from any
claim of infringement of any patent in a country in the Territory, the
Additional Territory, [omitted; filed separately with the Commission] (other
than a country named or referred to Section 8.04(a)) and which claim arose from
Mallinckrodt's manufacture, use or sale of ALBUNEX pursuant to this Agreement,
Mallinckrodt shall be responsible for 60% of any such Loss and MBI shall be
responsible for 40% of any such Loss (with the exception that if any such Loss
is in respect of ALBUNEX manufactured by Mallinckrodt [omitted; filed separately
with the Commission], MBI shall be responsible for a percentage of the Loss
determined in a manner consistent with the royalty payable by Mallinckrodt in
respect of Net Sales of such ALBUNEX [omitted; filed separately with the
Commission], as the case may be and Mallinckrodt shall be responsible for the
remainder of the Loss).
(c)In the event any third party asserts any claim with respect to any
matter as to which the indemnities in this Section 8.04 relate, the party
against whom the claim is asserted shall give prompt notice to the other party.
The party who has the responsibility to pay the entire potential Loss or the
greatest share of the potential Loss, as the case may be (the "Indemnifying
Party"), shall have the right at its election to take over the defense or
settlement of the third party claim at its own expense by giving prompt notice
to the other party (the "Indemnified Party"). If the Indemnifying Party does not
give such notice and does not proceed diligently so to defend the third party
claim within 30 days after receipt of the notice of the third party claim, the
Indemnifying Party shall be bound by any defense or settlement that the
Indemnified Party may make as to those claims, and shall reimburse the
Indemnified Party for its Losses and expenses related to the defense or
settlement of the third party claim. The Indemnifying Party shall be bound by
any settlement that the Indemnified Party may make, however, only if the
Indemnified Party gives the Indemnifying Party at least 15 days prior written
notice of the settlement and either (i) the Indemnifying Party does not object
to the proposed settlement by written notice to the Indemnified Party within 10
days after receipt of the Indemnified Party's notice or (ii) if the Indemnifying
Party does timely object to the proposed settlement, the Indemnifying Party does
not at the same time agree to (A) undertake the further defense of the third
party claim, (B) indemnify the Indemnified Party for any Loss in excess of its
proposed settlement and (C) reimburse the Indemnified Party for its reasonable
expenses related to the defense of the third party claim. Upon request of the
Indemnified Party, the Indemnified Party shall be consulted from time to time
and be informed of the status of the third party claim. The parties shall
cooperate in defending against any asserted third party claims. For purposes of
this Section 8.04, the indemnification of the Indemnified Party shall also
include the indemnification of the Indemnified Party's employees, agents,
Affiliates, and third parties performing services for the Indemnified Party.
Article 9
Rights To Acquire ALBUNEX
9.01 Negotiations to Acquire ALBUNEX. Except as provided in Section
3.02, for a period (the "Exclusive Period") commencing with the execution of
this Agreement and ending on the earlier of:
(1) the date specified for closing of MBI's repurchase of the
Repurchasable Shares if MBI (A) exercises the Stock Repurchase Option
and (B) tenders the full purchase price of the Repurchasable Shares on
that date (regardless of whether Mallinckrodt or any Affiliate of
Mallinckrodt fails to close the sale of its Repurchasable Shares), or
(2) the later of (A) the third anniversary of the date that the FDA
approves an intravenous myocardial perfusion indication of ALBUNEX for
sale in the United States or (B) July 1, 2003,
MBI shall not sell or otherwise dispose of (by license or otherwise) any of its
rights, assets or technology relating to ALBUNEX or MBI's interest in any
Technology Rights or Know-How. During the Exclusive Period either MBI or
Mallinckrodt may initiate good faith discussions regarding the acquisition by
Mallinckrodt of any of the foregoing. If at the end of the Exclusive Period
Mallinckrodt and MBI have not agreed to such an acquisition, MBI shall have the
following options separately as to each of the Territory, the Additional
Territory, [omitted; filed separately with the Commission]:
(a) Subject to the right of Mallinckrodt to continue to distribute and
sell ALBUNEX in the same territory pursuant to the licenses granted in Article
7, MBI may co-market and distribute ALBUNEX in a particular territory under the
MBI label and for its own account and may do so in the same manner (including,
but not limited to, the use of distributors or sales representatives), on a
country-by-country basis, as Mallinckrodt from time to time may market and
distribute ALBUNEX in that territory;
(b) Subject to the right of Mallinckrodt to continue to distribute and
sell ALBUNEX in the same territory pursuant to this Agreement and Mallinckrodt's
right of first refusal under Section 9.04:
(1) If the Exclusive Period ends on the date specified for closing of
MBI's purchase of the Repurchasable Shares, as described in Section
9.01(1), then until the later of the third anniversary of the date that
the FDA approves an intravenous myocardial perfusion indication of
ALBUNEX for sale in the United States or July 1, 2003, MBI may sell or
dispose of (which sale or disposition may take the form, among others,
of a merger or a sale of all of the stock of MBI or all of the
ALBUNEX-related assets, but may not take the form of a license or
sublicense) to a single transferee, other than pursuant to an assignment
permitted in Section 16.02(d), in a single transaction, all but not less
than all, of MBI's rights, assets and technology relating to ALBUNEX in
all territories (i.e., the transfer may not be on a
territory-by-territory basis) and all, but not less than all, of MBI's
interest in any Technology Rights or Know-how as it relates to all
territories, and such transferee shall not be subject to the any of the
limitations and restrictions on MBI under this Section 9.01 or to
Mallinckrodt's right of first refusal under Section 9.04; or
(2) If the Exclusive Period ends on the later of the third anniversary
of the date that the FDA approves an intravenous myocardial perfusion
indication of ALBUNEX for sale in the United States or July 1, 2003, as
described in Section 9.01(2), or if the Exclusive Period ended on the
date specified for closing of MBI's repurchase of the Repurchasable
Shares, then as of the later of the third anniversary of the date that
the FDA approves an intravenous myocardial perfusion indication of
ALBUNEX for sale in the United States or July 1, 2003,, MBI may sell or
dispose of (by license or otherwise) to a single transferee, other than
pursuant to an assignment permitted in Article 16.02(d), in a single
transaction, all but not less than all, of MBI's rights, assets and
technology relating to ALBUNEX in a particular territory and all, but
not less than all, of MBI's interest in any Technology Rights or
Know-how as it relates to that territory, and such transferee shall not
be subject to the any of the limitations and restrictions on MBI under
this Section 9.01 or to Mallinckrodt's right of first refusal under
Section 9.04; or
(c) MBI may continue its existing relationship with Mallinckrodt
pursuant to the terms of this Agreement in a particular territory, subject to
MBI's option to exercise its rights under Sections 9.01(a) or (b) at a later
time.
The exercise of option (a) by MBI at any time in respect of a particular
territory shall not preclude MBI from exercising option (b) at a later time in
respect of that territory.
MBI's options under this Section 9.01 shall be in addition to its rights
under Section 3.02 in respect of the Additional Territory, [omitted; filed
separately with the Commission], which MBI may exercise at any time during the
Exclusive Period in accordance with the terms of Section 3.02.
9.02 Option To Repurchase Stock. During the period beginning on (i) the
later of (A) July 1, 2000 or (B) the date that the FDA approves an intravenous
myocardial perfusion indication of ALBUNEX for sale in the United States and
ending on (ii) the later of (C) one day prior to the third anniversary of the
date that the FDA approves an intravenous myocardial perfusion indication of
ALBUNEX for sale in the United States or (D) June 30, 2003, MBI shall have the
option (the "Stock Repurchase Option") to repurchase from Mallinckrodt and its
Affiliates all (but not less than all) of the following MBI securities (the
"Repurchasable Shares") which Mallinckrodt and its Affiliates may own at the
time, if any: (I) shares of Common Stock (as "Common Stock" is defined in the
1995 Investment Agreement) and (II) MBI securities issued in respect of shares
of Common Stock by reason of a stock split, stock dividend, recapitalization or
similar event. The Stock Repurchase Option shall be exercisable as follows:
(a) MBI may exercise the Stock Repurchase Option only by written notice
of exercise to Mallinckrodt specifying the date on which closing of MBI's
repurchase shall occur, which may not be less than 10 or more than 30 days after
the date of MBI's notice. (Because the Stock Repurchase Option is intended to
permit MBI to terminate the Exclusive Period earlier than it would otherwise
terminate, MBI may exercise the Stock Repurchase Option even if, at the time of
exercise, Mallinckrodt and its Affiliates do not own any Repurchasable Shares.
If MBI exercises the Stock Repurchase Option in this event, Mallinckrodt shall
have no obligations under Section 9.02(c) other than its obligation to provide
MBI with Mallinckrodt's certification of the amount described in Section
9.02(b)(3).)
(b) The purchase price of the Repurchasable Shares shall be the sum of:
(1) $45,000,000; plus
(2) an amount (which shall not be less than zero) equal to:
(A) one-half of the aggregate amounts paid by Mallinckrodt to
MBI pursuant to the Nycomed Territory Agreement (other than
amounts in respect of ALBUNEX purchases or sales) for the purpose
of acquiring rights in the Nycomed territory; minus
(B) [omitted; filed separately with the Commission] (in
respect of MBI's granting Mallinckrodt its distribution and other
rights under this Agreement in the countries other than the
People's Republic of China, Australia and New Zealand which
constitute the Additional Territory); minus
(3) the aggregate net proceeds of sale realized by Mallinckrodt and
its Affiliates from the sale of Repurchasable Shares prior to the date
specified for closing of MBI's repurchase.
(c) The closing of MBI's repurchase of the Repurchasable Shares shall
take place at MBI's principal office, unless MBI and Mallinckrodt agree on a
different location. At closing, (i) MBI shall pay the full purchase price of the
Repurchasable Shares by certified or cashier's check or checks, wire transfer of
immediately available funds to an account or accounts designated by Mallinckrodt
at least two business days prior to the closing or cancellation of any
undisputed indebtedness of Mallinckrodt to MBI under this Agreement (or by any
combination of these ways as MBI determines), and (ii) Mallinckrodt shall
deliver the stock certificate or certificates representing the Repurchasable
Shares, duly endorsed for transfer in blank or accompanied by appropriate
instruments of assignment duly signed in blank. MBI and Mallinckrodt shall also
provide customary and appropriate representations to one another regarding the
purchase and sale of the Repurchasable Shares and any additional documentation
reasonably requested by the other party (for example, Mallinckrodt may request
an opinion of counsel to MBI that MBI's purchase of the Repurchasable Shares has
been duly authorized by MBI's board of directors and that MBI's purchase is in
compliance with all applicable laws). In addition, Mallinckrodt shall provide
MBI with Mallinckrodt's certification of the amount described in Section
9.02(b)(3).
9.03 Prior Notification. If MBI exercises its options under either
Sections 9.01(a) or (b), MBI shall provide to Mallinckrodt, at no cost to
Mallinckrodt and sufficiently in advance, all necessary technical information,
licenses, patents, permits and assistance to enable Mallinckrodt to
independently manufacture, use, produce and commercially sell ALBUNEX in the
affected territory at a date not later than the earlier of the commencement of
production or sale of ALBUNEX by MBI pursuant to Section 9.01(a), or by a third
party purchasing under Section 9.01(b). In such an event:
(w) MBI shall supply to Mallinckrodt pursuant to the terms of Article 2
a reasonable quantity of ALBUNEX to ensure that Mallinckrodt has adequate
inventories of ALBUNEX to satisfy reasonably foreseeable demand in the
affected territory;
(x) all of Section 2.04(f) except the first sentence shall terminate in
respect of the affected territory;
(y) the following provisions shall terminate in respect of the affected
territory on the date Mallinckrodt begins to manufacture ALBUNEX for
commercial sale in the affected territory: the first two sentences of
Section 2.03; Sections 2.04(c), (e), (g), (i)(a) and (j); Sections
2.05(b), (c) and (d); Section 2.06(a); Sections 2.07 and 2.08; Section
2.09(c); Sections 2.10 and 2.11; Sections 2.12(a), (b) and (c); Sections
2.13 and 2.14; Sections 3.05, 3.06 and Section 3.07; and Sections 7.04 and
7.05; and
(z) MBI shall be relieved of its obligation to sell ALBUNEX to
Mallinckrodt for sale in the affected territory on the date that
Mallinckrodt begins to manufacture ALBUNEX for sale in the affected
territory.
9.04 Mallinckrodt's Right of First Refusal. MBI grants Mallinckrodt a
right of first refusal to purchase MBI's rights, assets and technology relating
to ALBUNEX in each of the Territory, the Additional Territory, [omitted; filed
separately with the Commission], and MBI's interest in any Technology Rights or
Know-how (collectively, in respect of any particular territory, the "Assets"),
as follows:
(a) If MBI proposes to sell the Assets, MBI shall give Mallinckrodt
written notice of MBI's intention (the "Sales Notice"), providing all relevant
details and copies of all relevant documents, including but not limited to any
letter of intent and any draft or executory sales agreement.
(b) Mallinckrodt shall have 45 days from the date it receives MBI's
Sales Notice in which to exercise its right of first refusal to purchase the
Assets specified in the Sales Notice, at the purchase price and on the terms
specified in the Sales Notice, by giving MBI written notice to that effect. If
Mallinckrodt notifies MBI that Mallinckrodt declines to exercise its right of
first refusal, or if Mallinckrodt fails to exercise its right of first refusal
in a timely manner, MBI may proceed to sell the Assets to the purchaser
identified in the Sales Notice but only at a purchase price and on terms at
least as favorable to MBI as those specified in the Sales Notice. If MBI fails
to consummate such sale within 75 days of the Sale Notice, then the provisions
of this Section 9.04 shall thereafter apply to any subsequent proposed
disposition of the Assets.
(c) If the purchase price specified in the Sales Notice includes any
property other than money, MBI and Mallinckrodt shall jointly determine the
value of this other property. If they are unable to agree on its value within 45
days from the date Mallinckrodt receives MBI's Sales Notice, they shall each
promptly select a nationally or regionally recognized investment banking firm or
consulting firm, and these 2 firms shall select a third such firm (the
"Valuation Firm") to determine the value of this other property. The Valuation
Firm's determination shall be conclusive. MBI and Mallinckrodt shall use their
best efforts to ensure that the Valuation Firm makes its determination not later
than 5 business days after its selection. The period in which Mallinckrodt may
exercise its right of first refusal shall be extended to 5 business days after
the Valuation Firm's determination. MBI and Mallinckrodt shall each pay the fees
of the firm that it selects and one-half of the fees of the Valuation Firm.
(d) In the case of a proposed sale of the Assets relating to the
Territory, Mallinckrodt shall have a credit against the purchase price specified
in MBI's Sales Notice equal to:
(1) the sum of the payments by Mallinckrodt pursuant to Sections
4.01 and 4.02 less
(2) an amount equal to 40% of Net Sales in the Territory prior to
the date of Mallinckrodt's receipt of the Sales Notice (if such
difference is less than zero, there shall be no credit).
(e) [Omitted; filed separately with the Commission]:
(1) [omitted; filed separately with the Commission]
(2) [omitted; filed separately with the Commission]
(f) [Omitted; filed separately with the Commission]:
(1) [omitted; filed separately with the Commission]
(2) [omitted; filed separately with the Commission]
(g) If Mallinckrodt exercises its right of first refusal, closing of its
purchase shall take place on the date and at the location that the parties agree
on, but no later than 75 days after the date of Mallinckrodt's notice to MBI
exercising Mallinckrodt's right of first refusal.
9.05 Mallinckrodt Abandonment of ALBUNEX.
(a) Mallinckrodt shall be deemed to have abandoned ALBUNEX if all of the
following conditions occur after the Launch Date:
(1) ALBUNEX may be lawfully sold in the United States of America in
interstate commerce, without any threat of infringement upon any third
party rights, any threat of any action by any regulatory agency,
including but not limited to the FDA, or any threat of product recall,
or any danger to the safety of the users of ALBUNEX or the public
generally;
(2) MBI has supplied and continues to offer to supply, ALBUNEX
in sufficient quantities to Mallinckrodt conforming to the Product
Specifications; and
(3) Mallinckrodt has failed to offer at least one Albunex Product
for sale in the ordinary course of business for a continuous period of
not less than 180 days.
(b) Upon satisfaction of all the conditions described in Section 9.05(a)
and receipt by Mallinckrodt of the following:
(1) Payment by cashier's check or by wire transfer in immediately
available funds an amount equal to the sums previously paid by
Mallinckrodt to MBI pursuant to Sections 4.01, 4.02 and 10.01; and
(2) An Unconditional Waiver and Release pursuant to which MBI
waives any and all rights, claims, damages or other remedies against
Mallinckrodt relating to or out of this Agreement, in a form
satisfactory to counsel for Mallinckrodt;
this Agreement shall terminate.
9.06 Mallinckrodt Failure to Expend Adequate Resources.
(a) Mallinckrodt shall be deemed to have failed to commit adequate
resources to the marketing, sale or distribution of ALBUNEX if all of the
following conditions occur:
(1) Prior to the Launch Date Mallinckrodt fails to spend at least
$500,000 in out of pocket costs in the pre-marketing, marketing, sales,
distribution, or promotion of ALBUNEX, including but not limited to
advertising, marketing literature, symposia, focus groups, product
promotion, trade and industry shows, and the recruitment of medical and
scientific opinion leaders;
(2) During the first year following the Launch Date Mallinckrodt
fails to spend at least $500,000 in out of pocket costs in the
marketing, sales, distribution, or promotion of ALBUNEX, including but
not limited to advertising, marketing literature, symposia, focus
groups, product promotion, trade and industry shows, and the recruitment
of medical and scientific opinion leaders; and
(3) Mallinckrodt fails to spend such amounts within the 180 day
period beginning on the date MBI notifies Mallinckrodt in writing that
Mallinckrodt has failed to spend the such amounts.
(b) Upon satisfaction of all the conditions described in Section 9.06(a)
and receipt by Mallinckrodt of payment by cashier's check or by wire transfer in
immediately available funds in an amount equal to one-half of the sums
previously paid by Mallinckrodt to MBI pursuant to Sections 4.01, 4.02 and
10.01, subject to the right of Mallinckrodt to continue to distribute and sell
ALBUNEX in the Territory pursuant to this Agreement, the provisions of Article 2
shall terminate and MBI may co-market and distribute ALBUNEX in the Territory
under the MBI label and for its own account and may do so in the same manner
(including, but not limited to, the use of distributors or sales
representatives), on a country-by-country basis, as Mallinckrodt from time to
time may market and distribute ALBUNEX in the Territory.
Article 10
Payments to Key Employees
10.01 Key Employee Payments.
(a) Subject to the terms and conditions of this Section 10.01, during
the 2 year period commencing on the Launch Date of ALBUNEX by Mallinckrodt if
the first commercial sale of ALBUNEX after the Launch Date actually occurs,
Mallinckrodt shall, at times to be agreed to by the parties, pay to MBI an
aggregate of $2,500,000 upon accomplishment of the milestones described in
Section 10.01(b). Mallinckrodt and MBI agree that a minimum payment shall be due
by the due date of MBI's tax return for MBI's tax year in which the first
commercial sale of ALBUNEX after the Launch Date actually occurs (including
extensions thereof as are actually obtained by MBI) of an amount equal to that
which is certified by MBI's independent public accountants to be the increase in
MBI's actual federal and state income tax liability, if any, due on such date as
a result of MBI's accrual into income of the full amount to be paid by
Mallinckrodt under this Section 10.01 provided that no such minimum payment
shall be due prior to the first actual commercial sale of ALBUNEX after the
Launch Date. MBI shall advise Mallinckrodt of this amount no later than 30 days
prior to the filing of MBI's return and shall afford Mallinckrodt a reasonable
opportunity to verify the accuracy of such amount. The amounts paid by
Mallinckrodt to MBI shall be distributed by MBI to such employees of MBI as
shall be mutually agreed to by MBI and Mallinckrodt.
(b) The portion of the $2,500,000 attributable to the accomplishment of
the applicable milestone shall be determined as follows:
Amount Milestone
$400,000 Commencement of initial Phase III
of the first Human Clinical Trials
for ALBUNEX as described in
Appendix 4 [Section 4.01(a)].
$400,000 MBI's submission to the FDA either
its initial PMA application or its
initial NDA application for
ALBUNEX [Section 4.01(b)].
$400,000 FDA's acceptance of either MBI's
initial PMA application or initial
NDA application for ALBUNEX
[Section 4.01(c)].
$950,000 FDA's issuance of its initial
approval letter for ALBUNEX with
the specifications at least equal
to those set forth in Appendix 4
[Section 4.01(d)].
$350,000 Mallinckrodt's acceptance of MBI's
first commercial shipment of
ALBUNEX under Article 2 [Section
4.01(e)].
The foregoing amounts relating to any particular milestone shall be due and
payable so long as the stated milestone is achieved by MBI and the first
commercial sale of ALBUNEX after the Launch Date actually occurs. If any
particular milestone is not achieved, then Mallinckrodt shall have no obligation
to pay the amount related to such milestone. In no event shall Mallinckrodt be
obligated to make payments except with respect to the first instance in which a
particular milestone is achieved and then only if the first commercial sale of
ALBUNEX after the Launch Date actually occurs.
(c) As each milestone is achieved by MBI, the amount related to such
milestone will accrue and bear interest at the from time to time prime rate of
interest of Citibank, N.A. commencing on the date the related payment under
Section 4.01 is due until the amount is paid. Notwithstanding anything in this
Section 10.01 to the contrary, Mallinckrodt shall have no obligation to make any
payments under this Section 10.01, including interest, unless and until
Mallinckrodt or its Affiliates makes its first commercial sale of ALBUNEX after
the Launch Date.
(d) Notwithstanding anything to the contrary in this Section 10.01, no
MBI employee shall be a third party beneficiary to this Section 10.01 and shall
not be entitled to bring suit to enforce this Section 10.01.
10.02 Supplemental Payments. In the event Mallinckrodt purchases MBI's
assets as described in the first paragraph of Section 9.01, Mallinckrodt shall
pay an aggregate of $2,500,000 to key MBI employees as designated by
Mallinckrodt and MBI in portions upon achievement of ALBUNEX objectives to be
agreed to by MBI and Mallinckrodt. Furthermore, upon such purchase by
Mallinckrodt, Mallinckrodt agrees to employ the key employees of MBI on mutually
agreeable terms. Notwithstanding anything to the contrary in this Section 10.02,
no MBI employee shall be a third party beneficiary to this Section 10.02 and
shall not be entitled to bring suit to enforce this Section 10.02.
Article 11
Commercial Viability
11.01 Determination of Commercial Viability. If the commercial viability
of ALBUNEX is seriously jeopardized such that the continued development of
ALBUNEX will not result in a commercially viable product to Mallinckrodt, then
Mallinckrodt shall initiate good faith discussions with MBI to terminate this
Agreement effective with the date such discussions are initiated, provided
however, that if such discussions do not result in resolution of the matter,
they shall be subject to arbitration under Article 12 to determine if the
commercial viability of ALBUNEX is seriously jeopardized such that the continued
development of ALBUNEX will not result in a commercially viable product to
Mallinckrodt. If such arbitrators determine that the commercial viability of
ALBUNEX is so jeopardized, then Mallinckrodt shall have the immediate right to
terminate this Agreement effective with the date such discussions were
initiated. This Section 11.01 shall be effective until the FDA permits the
marketing of ALBUNEX with the indications set forth in Appendix 4.
11.02 Payments Pending Resolution of Commercial Viability. Mallinckrodt
shall continue to make any quarterly payments for milestones described in
Section 4.01 which have occurred prior to the date that discussions under
Section 11.01 are initiated. Except as provided in this Section 11.02,
Mallinckrodt, at its sole discretion, may suspend all or any portion of the
payments due under Article 4 which are attributable to events occurring on or
after the date that discussions under Section 11.01 are initiated. The parties
agree that a decision of the arbitrators required under Section 11.01 shall be
rendered within 90 days after the appointment of such arbitrators and further
agree to instruct the arbitrators accordingly and act expeditiously in the
presentation of the dispute to the arbitrator. In the event that a decision of
the arbitrators is not rendered within such 90 day period, then upon execution
of a mutually acceptable escrow agreement with an independent escrow agent,
Mallinckrodt shall make all payments due under Article 4 which are attributable
to events occurring on or after the date that discussions under Section 11.01
are initiated to the independent escrow agent to be held in trust pending the
decision of arbitrators. If the arbitrators determine that the commercial
viability of ALBUNEX is seriously jeopardized such that the continued
development of ALBUNEX will not result in a commercially viable product to
Mallinckrodt, then all amounts held in trust by the independent escrow agent,
together with any interest earned thereon, shall be promptly returned to
Mallinckrodt. If the arbitrators do not determine that the commercial viability
of ALBUNEX is seriously jeopardized such that the continued development of
ALBUNEX will not result in a commercially viable product to Mallinckrodt, then
all amounts held in trust by the independent escrow agent, together with any
interest earned thereon, shall be promptly paid to MBI.
Article 12
Dispute Resolution
12.01 Arbitration. Except as otherwise provided in Sections 2.16(c) and
12.02, any claim, dispute, question or controversy arising out of or relating to
this Agreement or any amendment or modification hereto, or breach thereof
("Dispute"), shall be settled by binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association ("AAA") in
the County of St. Louis, Missouri, pursuant to the award of a panel of three
arbitrators, and judgement upon the award may be entered in any court having
jurisdiction thereof. The Expedited Rules of the AAA shall apply.
12.02 Injunctions. The parties recognize and agree that arbitration is
inadequate to enforce (a) the confidential restrictions contained in Article 5
and the provisions in Articles 2 or 6 regarding compliance with governmental
health and safety laws and regulations a breach of which would pose an imminent
danger to public health and safety, (b) the provisions requiring arbitration,
(c) the sale of ALBUNEX by Mallinckrodt in the continents of Europe, Asia,
Africa or Australia other than as and when permitted by this Agreement or (d) a
decision of the arbitrator under Section 2.16(c) (an "Event"), a violation of
which will cause irreparable harm and unascertainable damages. The parties agree
that an aggrieved party shall be entitled as a matter of right to an injunction
from a court of competent jurisdiction restraining any actual or threatened
Event. The rights to injunctive relief shall be in addition to and not in lieu
of the right to arbitrate Disputes.
12.03 Costs and Missouri Courts. The fees and expenses of the arbitrators
shall be shared equally by Mallinckrodt and MBI. Mallinckrodt and MBI consent to
the jurisdiction of the United States District Court for the Eastern District of
Missouri, and if such District Court shall not have jurisdiction in the matter
for any reason, to the jurisdiction of the Circuit Court of the State of
Missouri for the 21st Judicial Circuit, for all purposes in connection with this
Agreement, including entry of judgment relating to any award of the arbitrators.
The arbitration and any award rendered pursuant thereto shall be governed by,
construed and enforced in accordance with the laws of the State of Missouri.
Article 13
Indemnification
13.01 Indemnification by MBI. MBI shall indemnify and hold harmless
Mallinckrodt against any and all Losses based on or resulting from (a) any
breach of the representations and warranties of MBI contained herein; (b) any
breach of any warranty by MBI (express or implied) relating to ALBUNEX; (c) any
or all claims arising from the use of ALBUNEX provided by MBI to Mallinckrodt
pursuant to Article 2, including, but not limited to, any claim for death or
personal injury or damage or loss of property which shall have been caused or
alleged to have been caused by any negligence on the part of MBI or its agents,
any defect in design, materials or workmanship used in ALBUNEX or any claim
under a theory of strict liability; (d) any inaccuracies contained in the
Product Literature based on information provided by MBI or any other information
supplied by MBI with ALBUNEX; (e) any governmental recall of ALBUNEX due to or
arising out of an act or omission of MBI, or, (f) in the event that ALBUNEX
(other than ALBUNEX manufactured by a party other than MBI or an Affiliate of
MBI) is found not to comply with any governmental regulations, for any costs or
expenses incurred by Mallinckrodt to bring ALBUNEX into compliance with such
regulations after consultation with MBI, including, but not limited, any costs
and expenses of securing any required governmental permits. Notwithstanding the
foregoing, MBI shall not be liable for any of Mallinckrodt's lost profits as a
result of a breach of Sections 6.02(i) or (j).
13.02 Indemnification by Mallinckrodt. Mallinckrodt shall indemnify and
hold harmless MBI against any and all Losses sustained by MBI resulting from,
arising out of or connected with (i) any inaccuracy in, breach of or
nonfulfillment of, any representation, warranty, covenant or agreement made by,
or other obligation of, Mallinckrodt contained in this Agreement or (ii) any or
all claims arising from the use of ALBUNEX manufactured by Mallinckrodt or
acquired by Mallinckrodt from a third party (e.g., Hafslund Nycomed AS),
including, but not limited to, any claim for death or personal injury or damage
or loss of property which shall have been caused or alleged to have been caused
(with respect to ALBUNEX so manufactured or acquired) by (A) any negligence on
the part of Mallinckrodt, its agents or supplier or suppliers of ALBUNEX, (B)
any defect in design, materials or workmanship used in such ALBUNEX or (C) any
claim under a theory of strict liability.
13.03 Procedures. In the event any third party asserts any claim with
respect to any matter as to which the indemnities in this Agreement relate, the
party against whom the claim is asserted (the "Indemnified Party") shall give
prompt notice to the other party (the "Indemnifying Party"), and the
Indemnifying Party shall have the right at its election to take over the defense
or settlement of the third party claim at its own expense by giving prompt
notice to the Indemnified Party. If the Indemnifying Party does not give such
notice and does not proceed diligently so to defend the third party claim within
30 days after receipt of the notice of the third party claim, the Indemnifying
Party shall be bound by any defense or settlement that the Indemnified Party may
make as to those claims and shall reimburse the Indemnified Party for its Losses
and expenses related to the defense or settlement of the third party claim. The
parties shall cooperate in defending against any asserted third party claims.
For purposes of this Article 13, the indemnification of the Indemnified Party
shall also include the indemnification of the Indemnified Party's employees,
agents, Affiliates, and third parties performing services for the Indemnified
Party, and the reference to this Agreement includes any certificate, schedule,
list, summary or other information provided or delivered to a party by the
Indemnifying Party or its agents and affiliates in connection with this
Agreement.
Article 14
Term and Termination
14.01 Term. Unless sooner terminated pursuant to the provisions of this
Agreement, the term of this Agreement shall continue for the life of the last
patent relating to ALBUNEX to expire.
14.02 Termination. This Agreement may be terminated:
(a) At any time by mutual written consent of MBI and Mallinckrodt; or
(b) By either party by notice to the other in the event such other party
shall dissolve, cease active business operations or liquidate unless this
Agreement shall have been assigned to a successor or transferee pursuant to
Section 16.02, or in the event such other party shall have been determined to be
insolvent by a court of competent jurisdiction, or insolvency or reorganization
proceedings shall have been commenced by such other party, or such proceedings
shall have been brought against such other party and remained undismissed for a
period of 60 days or such other party shall have made a general assignment for
the benefit of creditors, or a receiver of all or substantially all of such
other party's assets shall have been appointed and not discharged within 60
days; or
(c) By Mallinckrodt if MBI shall fail to timely make any payment
required by this Agreement and such payment shall not have been made within 30
days after receipt of written demand therefore from Mallinckrodt unless MBI is,
in good faith, contesting or disputing its obligation to make any such payment
or disputing the amount thereof; or
(d) By MBI if Mallinckrodt shall fail to timely make any payment
required by this Agreement and such payment shall not have been made within 30
days after receipt of written demand therefore from MBI unless Mallinckrodt is,
in good faith, contesting or disputing its obligation to make any such payment
or disputing the amount thereof; or
(e) By Mallinckrodt by notice to MBI in the event of a breach or default
by MBI of any material obligation, covenant, agreement, condition,
representation or warranty in this Agreement (other than (i) a breach or default
covered by Section 14.02(c) or (ii) a breach or default of any of MBI's
Manufacturing Obligations) if Mallinckrodt shall have given written notice to
MBI of such breach or default and such breach or default shall not have been
remedied within 60 days after receipt of such written notice and, if not
remedied by MBI within the 60 day period, reasonable steps shall not have been
undertaken to remedy such breach or default within such period and shall not
have been diligently pursued thereafter; or
(f) By MBI by notice to Mallinckrodt in the event of a breach or default
by Mallinckrodt of any material obligation, covenant or agreement in this
Agreement (other than (i) a breach or default covered by Section 14.02(d), (ii)
a breach or default under Section 7.01(c)(2)(D) or (iii) a failure to achieve
any non-monetary performance milestone listed on Appendix 8A, Appendix 8B or
Appendix 8C) if MBI shall have given written notice to Mallinckrodt of such
breach or default and such breach or default shall not have been remedied within
60 days after receipt of such written notice and, if not remedied by
Mallinckrodt with the 60-day period, reasonable steps shall not have been
undertaken to remedy such breach or default within such period and shall not
have been diligently pursued thereafter.
14.03 Survival of Mallinckrodt Licenses and Right of First Refusal.
(a) If this Agreement terminates by the expiration of its term under
Section 14.01, the licenses granted to Mallinckrodt by MBI under this Agreement,
and the license granted to MBI by Mallinckrodt in Section 7.02(b), shall survive
and continue as perpetual, irrevocable, paid-up, royalty-free non-exclusive
licenses.
(b) If this Agreement terminates by the written consent of the parties
pursuant to Section 14.02(a), the licenses granted to Mallinckrodt by MBI under
this Agreement, the license granted to MBI by Mallinckrodt in Section 7.02(b),
Mallinckrodt's royalty obligations under Section 7.01(c), Mallinckrodt's right
of first refusal under Section 9.04, and the other provisions of this Agreement
shall survive as MBI and Mallinckrodt may agree.
(c) If this Agreement terminates following notice from Mallinckrodt
pursuant to Sections 14.02(b), (c) or (e):
(1) the licenses granted to Mallinckrodt by MBI under this Agreement
shall survive and continue as perpetual and irrevocable licenses but
shall become non-exclusive as of the latest of (A) the third anniversary
of the date that the FDA approves an intravenous myocardial perfusion
indication of ALBUNEX for sale in the United States, (B) July 1, 2003 or
(C) the date of termination of this Agreement;
(2) Mallinckrodt's right of first refusal under Section 9.04 shall
survive;
(3) Mallinckrodt's royalty obligations under Sections 7.01(c) [omitted;
filed separately with the Commission] shall survive and continue until
the expiration of the last patent relating to ALBUNEX to expire (except
as otherwise provided in Section 7.01(c));
(4) MBI's Stock Repurchase Option shall terminate; and
(5) the license granted to MBI by Mallinckrodt in Section 7.02(b) shall
survive and continue as a perpetual, irrevocable, paid-up, royalty-free
license.
(d) If this Agreement terminates following notice from MBI pursuant to
Sections 14.02(b), (d) or (f):
(1) subject to Section 7.01(c)(1)(C) the licenses granted to
Mallinckrodt by MBI under this Agreement shall survive and continue as
perpetual and irrevocable licenses but shall become non-exclusive;
(2) Mallinckrodt's right of first refusal under Section 9.04 shall
terminate;
(3) Mallinckrodt's royalty obligations under Sections 7.01(c) [omitted;
filed separately with the Commission] shall survive and continue until
the expiration of the last patent relating to ALBUNEX to expire;
(4) the license granted to MBI by Mallinckrodt in Section 7.02(b) shall
survive and continue as a perpetual, irrevocable, paid-up, royalty-free
license; and
(5) Sections 2.15, 2.16 and 2.17 shall survive.
14.04 Effect of Termination. Warranty, confidentiality and indemnification
obligations of the parties, Article 12, Sections 4.03(a), 7.02(c) through (f),
and 8.02 shall survive termination.
Article 15
Force Majeure
The obligations of each party to perform under this Agreement shall be
subject to any delays caused by Force Majeure, if and only if the party affected
shall have used reasonable efforts to avoid such Force Majeure and to remedy it
promptly if it shall have occurred.
Article 16
Miscellaneous
16.01 Relationship of the Parties. The relationship hereby established
between Mallinckrodt and MBI is solely that of independent contractors and this
Agreement shall not create an agency, partnership, joint venture or
employer/employee relationship, and nothing hereunder shall be deemed to
authorize either party to act for, represent or bind the other or any of its
Affiliates except as expressly provided in this Agreement.
16.02 Assignment. This Agreement shall be assignable by either party only
with the written consent of the other party which shall not be unreasonably
withheld, except that (a) either party may assign this Agreement, without such
consent, to the purchaser or transferee of all its assets, or of all the assets
of its business to which this Agreement relates subject to the limitations on
transfer of MBI assets described in Article 9, (b) Mallinckrodt may assign this
Agreement to an Affiliate with a net worth of not less than $10,000,000 without
the consent of MBI, (c) if permitted by the substantive laws of the State of
Missouri, Mallinckrodt may assign a limited interest in this Agreement, or a
part of this Agreement, as it relates to one or more countries in any territory,
to an Affiliate organized under the laws of the country or one of the countries
in question, and (d) MBI may assign this Agreement to a subsidiary all of whose
stock is owned by MBI. No assignment pursuant to clauses (b), (c) or (d) shall
relieve the assignor from any liability under this Agreement, and the assignor
shall guarantee the assignee's full and prompt performance of all of its
obligations. MBI shall not subcontract or delegate performance of all or any
part of the work called for under this Agreement without the express prior
written consent of Mallinckrodt which consent shall not be unreasonably withheld
except that it may subcontract its manufacturing obligations under Article 2 to
Mallinckrodt.
16.03 Notice. All notices, communications, demands and payments required
or permitted to be given or made hereunder or pursuant hereto shall be in
writing and sent by receipt by certified or registered mail, postage prepaid,
overnight messenger service, telecopier or personal delivery as follows:
If to Mallinckrodt:
Mallinckrodt Medical, Inc.
675 McDonnell Blvd.
St. Louis, Missouri 63134
Attention: Vice President - Ultrasound Imaging
Telecopier: (314) 895-7281
with a copy to:
Mallinckrodt Medical, Inc.
675 McDonnell Blvd.
St. Louis, Missouri 63134
Attention: Vice President and General Counsel
Telecopier: (314) 895-7181
If to MBI:
Molecular Biosystems, Inc.
10030 Barnes Canyon Road
San Diego, California 92121
Attention: Chief Operating Officer
Telecopier: (619) 452-6187
with a copy to:
Craig P. Colmar, Esq.
Johnson and Colmar
Suite 1000
300 South Wacker Drive
Chicago, Illinois 60606
Telecopier: (312) 922-9283
All notices sent by certified or registered mail shall be considered to have
been given two business days after being deposited in the mail. All notices sent
by overnight messenger service, telecopier or personal delivery shall be
considered to have been given when actually received by the intended recipient.
Either party may change the address designated by notifying the other party in
writing.
16.04 Governing Law. This Agreement is deemed to have been entered into in
the State of Missouri, and its interpretation, construction, and the remedies
for its enforcement or breach are to be applied pursuant to and in accordance
with the substantive laws of the State of Missouri.
16.05 Validity of Agreement. If any provision of this Agreement is,
becomes, or is deemed invalid or unenforceable in any jurisdiction, such
provision shall be deemed amended to conform to applicable law so as to be
valid, legal and enforceable in such jurisdiction so deeming. The validity,
legality and enforceability of such provision shall not in any way be affected
or impaired thereby in any other jurisdiction. If such provision cannot be so
amended without materially altering the intention of the parties, it shall be
stricken in the jurisdiction so deeming, and the remainder of this Agreement
shall remain in full force and effect.
16.06 Waiver. No waiver of any right under this Agreement shall be deemed
effective unless contained in a writing signed by the party charged with such
waiver, and no waiver of any right arising from any breach or failure to perform
shall be deemed to be a waiver of any future such right or of any other right
arising under this Agreement. No failure on the part of any party to exercise,
and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall an single or partial exercise of any such right,
power or remedy by a party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law.
16.07 Entire Agreement. This Agreement together with (i) the Investment
Agreement dated as of December 7, 1988 between MBI and Mallinckrodt and (ii) the
1995 Investment Agreement set forth and constitute the entire agreement between
the parties hereto with respect to the subject matter hereof, and supersedes any
and all prior agreements, promises, understandings, promises and representations
made by either party to the other concerning the subject matter hereof and the
terms applicable hereto. Mallinckrodt shall not be bound by and expressly
objects to any provisions additional to or at variance with the terms hereof
that may appear in MBI's quotation, acknowledgement, confirmation, invoice or in
any other prior or later communication from MBI to Mallinckrodt unless such
provision is expressly agreed to in writing by Mallinckrodt referring to this
Section 16.07 signed by the President, Chief Operating Officer or a Vice
President of Mallinckrodt. MBI shall not be bound by and expressly objects to
any provisions additional to or at variance with the terms hereof that may
appear in Mallinckrodt's quotation, acknowledgement, confirmation, invoice or in
any other prior or later communication from Mallinckrodt to MBI unless such
provision is expressly agreed to in writing by MBI referring to this Section
16.07 signed by the President of MBI.
16.08 Headings and References; Incorporation of Exhibits. The headings
contained in this Agreement are inserted for convenience of reference only and
shall not be a part, control or affect the meaning hereof. All references herein
to Articles and Sections are to the Articles and Sections of this Agreement. All
references herein to Appendices are to the Appendices hereto, each of which
shall be incorporated into and deemed a part of this Agreement.
16.09 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but which together shall constitute
one and the same instrument.
16.10 Time Is of the Essence. Mallinckrodt and MBI acknowledge that the
successful commercialization of ALBUNEX is dependent upon the expeditious entry
of ALBUNEX into the market, and consequently, agree that time is of the essence
for purposes of this Agreement.
16.11 Setoff. If within 30 days after receipt of written demand any amount
required to be paid hereunder is not paid and unless the payor is, in good
faith, contesting or disputing its obligation to make any such payment or
disputing the amount thereof, the payee may set-off any and all amounts owed by
the payee to the payor against any and all amounts owed by the payor to the
payee.
16.12 Interest on Late Payments. If any payment due under this Agreement
is not paid in full when due, interest shall accrue on the unpaid amount from
the date due until paid at a fluctuating rate equal at all times to the rate
2.0% above the rate the First National Bank of Chicago publishes or announces as
its prime or equivalent rate of interest.
16.13 Payment for Inventory. As of the Effective Date, Mallinckrodt shall
pay MBI for Mallinckrodt's inventory of ALBUNEX at the price of [omitted; filed
separately with the Commission] per vial for 10 ml. vials and [omitted; filed
separately with the Commission] per vial for 20 ml. vials. The term
"Mallinckrodt's inventory" means all ALBUNEX, wherever located, which (i) as of
the Effective Date is in the possession of Mallinckrodt or an Affiliate of
Mallinckrodt, in the possession of MBI, or in transit from MBI to Mallinckrodt
or an Affiliate, which (ii) MBI manufactured for Mallinckrodt based on its
orders and forecasts, which (iii) has not yet been sold to a purchaser other
than Mallinckrodt or an Affiliate of Mallinckrodt and which (iv) conforms to the
Product Specifications. Mallinckrodt shall not owe MBI any additional amounts
under Section 2.14 in respect of this inventory.
16.14 HSR Filings. MBI and Mallinckrodt shall each comply with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"Hart-Scott-Rodino Act"), by filing a premerger notification with the U.S.
Department of Justice and the U.S. Federal Trade Commission as promptly as
practicable after signing this Agreement, and shall respond promptly to any
inquires from the Department of Justice or the Federal Trade Commission as a
result of these filings.
16.15 Effective Date. To the extent that this Agreement is a restatement
of the Current Distribution Agreement, this Agreement shall be deemed to have
been effective since December 7, 1988. To the extent that this Agreement is an
amendment of the Current Distribution Agreement, (i) Sections 16.14 and 16.15
shall be effective as of the date that this Agreement is signed and (ii) all of
the other changes to the Current Distribution Agreement made by this Agreement
shall become effective if and when all applicable waiting periods under the
Hart-Scott Rodino Act have expired or have otherwise terminated (the "Effective
Date"), without the necessity of any further action by the parties. Until the
occurrence of the Effective Date, the Current Distribution Agreement (with the
addition of Sections 16.14 and 16.15) shall remain in effect. MBI acknowledges
that Mallinckrodt has previously made all of the payments that Mallinckrodt was
required to make under Sections 4.01 and 10.01 and that Mallinckrodt has not
failed to commit adequate resources to the marketing, sale or distribution of
ALBUNEX, as described in Section 9.06(a).
IN WITNESS WHEREOF, the parties hereunto have executed this Agreement as
to be effective as of the date first written above.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
THE PARTIES.
Molecular Biosystems, Inc.
By /s/ Kenneth J. Widder
Kenneth J. Widder, M.D.
Chairman and Chief
Executive Officer
Mallinckrodt Medical, Inc.
By /s/ Robert G. Moussa
Name:Robert G. Moussa
Title: President and
Chief Executive Officer
<PAGE>
<TABLE>
APPENDIX 1
TRADEMARK LOG
<CAPTION>
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
1ST USE
TRADEMARK COUNTRY MATTER STATUS SERIAL FILING PUB. REG. NO. REG. FIRST IN RENEWAL
NUMBER NUMBER DATE DATE DATE USE COMMERCE DATE
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALBUNEX U.S.A 24008.00 Registered 73/622,872 05/26/87 03/29/88 1,492,866 06/21/88 1/22/87 1/22/87 06/21/08
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX Japan 24008.40 Pending
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX Taiwan 24008.41 Filing
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX South Korea 24008.42 Pending 94/47609 12/31/93
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX Japan (Engli 24008.43 Registered 63-142487 12/16/88 11/15/90 2,329,969 08/30/91 08/30/2001
& Katakana)
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX & DESIGN United State 24018.00 Allowed 74/397,650 02/14/95
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX & DESIGN Argentina 24018.40 Registered 06/24/93 1,512,708 03/31/94 03/31/04
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX & DESIGN Brazil 24018.41 Pending
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX & DESIGN Canada 24018.42 Allowed 731,046 02/24/94 05/20/94
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX & DESIGN Chile 24018.53 Pending 306,383 05/03/95
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX & DESIGN Colombia 24018.43 Pending
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX & DESIGN Costa Rica 24018.44 Pending 07/05/93
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX & DESIGN Dominican 24018.45 Registered 09/14/2013
Republic
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX & DESIGN Ecuador 24018.46 Pending 06/25/93
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX & DESIGN El Salvador 24018.47 Published 09/20/93 02/27/95
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX & DESIGN Honduras 24018.48 Pending 06/15/93
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX & DESIGN Mexico 24018.49 Pending 07/12/93
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX & DESIGN Panama 24018.54 Pending 076237 06/30/95
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX & DESIGN Peru 24018.50 Registered 033661 12/17/93 11/30/2003
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX & DESIGN Venezuela 24018.51 Published 13116-94 07/20/93 01/09/95
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
ALBUNEX & DESIGN Guatemala 24018.52 Pending 12/20/93
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
- ---------------- ------------ --------- ---------- ----------- -------- -------- ------------ -------- ------- --------- ----------
</TABLE>
<PAGE>
APPENDIX 2
PATENT LOG
<TABLE>
<CAPTION>
- ---------- -------- -------------- -------------- -------- ------------ ---------- ------------- -------- ------------------
INTEREST FIRST SUBJECT MATTER COUNSEL REFERENCE COUNTRY OR STATUS APPLICATION APPLI- PATENT NO ISSUE/
LICENSOR) INVENTOR (PROJECT CODE) DOCKET NUMBER REGION NUMBER CATION PUBL. NO. (PUBL.
DATE DATE)
- ---------- -------- -------------- -------------- -------- ------------ ---------- ------------- -------- -----------------
ULTRASOUND ** ULTRASOUND ** ULTRASOUND ** ULTRASOUND * * ULTRASOUND * * * ULTRASOUND ** ULTRASOUND **
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Licensee Feinstein ALBUNEX (150) 24843-20029.00 ALB-1-US1 US ISSUED 461,664 01/27/83 4,672,203 02/26/88
(Feinstein
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20029.42 ALB-1-AT1 AUSTRIA ISSUED 84/4A9004 01/26/84 397,034b 01/25/94
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
UIA-1 ALB-1-AU1 AUSTRALIA ISSUED 84/26769 01/26/84 571863 08/16/88
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20029.44 ALB-1-BR1 BRAZIL ABANDONED P18404941 09/26/84
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20029.45 ALB-1-CA1 CANADA ISSUED 446,243 01/27/84 1221759 05/12/87
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-.20029.47 ALB-1-DE1 GERMANY ISSUED P3490013.6 01/26/84 3490013 03/15/90
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
UIA-1 ALB-1-EP1 EUROPE ISSUED 849003217 01/26/84 EP135563 08/29/90
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
UIA-1 ALB-1-FR1 FRANCE ISSUED 8401207 01/26/84 2,541,108 04/03/92
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-28052.00 ALB-1-GB1 GREAT BRITIAN ISSUED (TER 8423446 01/26/84 2,143,327 10/22/86
GRANTED) EXTENSION
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
UIA-1 ALB-1-IL1 ISRAEL ISSUED 70784 01/26/84 70784 04/01/88
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
UIA-1 ALB-1-JP1 JAPAN ISSUED (TER 84/501032 01/26/84 1598466 05/28/96
ALLOWED) EXTENSION
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20029.50 ALB-1-NL1 NETHERLANDS PENDING 8420041 01/26/84 191079 12/19/94
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
UIA-1 ALB-1-SE1 SWEDEN ISSUED (TER 8404797-6 01/26/84 8404797-6 03/16/92
PENDING) EXTENSION
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20029.40 ALB-1-WO1 PCT PUBLISHED US 84/00135 01/27/83 (84/02838)(08/02/84
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
ALBUNEX UIA-2 ALB-1-US2 US ISSUED(CIP 805,975 05/12/86 4,718,433 01/12/88
OF ALB-1-US
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
UIA-2/3 ALB-1-AU2 AUSTRALIA ISSUED 86/66097 12/05/86 575735 08/04/88
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20030.41 ALB-1-CA2 CANADA ISSUED 524,419 12/03/86 1274773 10/02/90
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
UIA-2/3 ALB-1-EP2 EUROPE ISSUED 86116943.1 12/05/86 (224934) 01/29/92)
(IN OPPOSIT
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20030.42 ALB-1-JP2 JAPAN ISSUED 86/289108 12/05/86 1677653 07/13/92
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
ALB-1-NL2 NETHERLANDS ISSUED 86/16943.1 12/05/86 0224934
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
ALBUNEX UIA-3 ALB-1-US3 US ISSUED (CIP 103,807 10/01/87 4,774,968 10/04/88
OF ALB-1-US
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
ASSIGNEE WIDDER ALBUNEX (150) 24843-20018.00 ALB-2-US1 US ISSUED (TER 139,576 12/29/87 4,844,882 07/04/89
EXTENSION
PE`NDING)
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.52 ALB-2-AT1 AUSTRIA ALLOWED 88/120371.5 12/06/88 0324938 11/18/93
(IN OPPOSIT
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.40 ALB-2-AU1 AUSTRALIA ISSUED 88/25581 11/30/88 603178 03/19/91
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.53 ALB-2-BE1 BELGIUM PENDING 88120371.5 12/15/93
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.41 ALB-2-CA1 CANADA ISSUED 581,985 11/02/88 1,325,590 12/28/93
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.61 ALB-2-CH1 SWITZERLAND PENDING 88120371.5 12/06/88
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.42 ALB-2-CN1 CHINA GRANTED 88105824.5 12/28/88 88105824.604/07/95
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.55 ALB-2-DE1 GERMANY PENDING 88120371.5 12/06/88
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.43 ALB-2-DK1 DENMARK PENDING 88/7216 12/23/88
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.44 ALB-2-EP1 EUROPE ALLOWED 88120371.5 12/06/88 0 324 938 11/18/93
(IN OPPOSIT
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.45 ALB-2-FI1 FINLAND ISSUED (TER 886016 12/28/88 93698 04/05/95
PENDING) EXTENSION
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.54 ALB-2-FR1 FRANCE PENDING 88120371.5 12/06/88
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.56 ALB-2-GB1 GREAT BRITIAN PENDING 88120371.5 12/06/88
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.46 ALB-2-IE1 IRELAND ISSUED 3127/88 10/14/88 61591 11/16/94
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.47 ALB-2-IL1 ISRAEL ALLOWED? 88039 10/13/88 139,576? 10/16/92?
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.57 ALB-2-IT1 ITALY PENDING 88120371.5 12/06/88
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.48 ALB-2-JP1 JAPAN PUBLISHED 63-323826 12/23/88 (6-62445) (08/17/94
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.49 ALB-2-KR1 SOUTH KOREA PENDING 88/17665 12/28/88
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.58 ALB-2-LU1 LUXEMBOURG PENDING 88120371.5 12/06/88
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.59 ALB-2-NL1 NETHERLANDS PENDING 88120371.5 12/06/88
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.50 ALB-2-NO1 NORWAY PENDING 885796 12/28/88
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.60 ALB-2-SE1 SWEDEN PENDING 88120371.5 12/06/88
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20018.51 ALB-2-TW1 TAIWAN ISSUED 77109126 12/29/88 037100 02/01/90
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
ASSIGNEE WIDDER ALBUENX (150) ALB-3-US1 US ABANDONED 139,577 12/29/87
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
ASSIGNEE CERNY ALBUNEX (150) 24843-20019.00 ALB-4-US1 US ISSUED 244,844 09/14/88 4,957,656 09/18/90
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.40 ALB-4-AU1 AUSTRALIA ISSUED 41312 09/13/89 617,216 03/18/92
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.61 ALB-4-AT1 AUSTRIA PENDING 89116982.3 09/13/89
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.52 ALB-4-BE1 BELGIUM ISSUED 89116982.3 09/13/89 359,246 03/24/93
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.41 ALB-4-CA1 CANADA ALLOWED 610,631 09/07/89
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.62 ALB-4-CH1 SWITZERLAND ISSUED 89116982.3 09/13/89 359,246 03/24/93
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.54 ALB-4-DE1 GERMANY ISSUED 89116982.3 09/13/89 359,246 03/24/93
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.42 ALB-4-DK1 DENMARK PENDING 89/4511 09/13/89
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.43 ALB-4-EP1 EUROPE ISSUED 89116982.3 09/13/89 359,246 B103/24/93
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.60 ALB-4-ES1 SPAIN ISSUED 89116982.3 09/13/89 359,246 03/24/93
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.44 ALB-4-FI1 FINLAND ISSUED 894335 09/13/89 359,246 03/24/93
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.53 ALB-4-FR1 FRANCE ISSUED 89116982.3 09/13/89 359,246 03/24/93
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.55 ALB-4-GB1 GREAT BRITIAN ISSUED 89116982.3 09/13/89 359,246 03/24/93
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.56 ALB-4-GR1 GREECE ISSUED 89116982.3 09/13/89 9/0400599 03/26/93
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.45 ALB-4-IE1 IIRELAND ISSUED 89/2837 09/04/89 62602 02/01/95
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.46 ALB-4-IL1 ISRAEL ISSUED 91593 09/11/89 244,844 06/16/93
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.57 ALB-4-IT1 ITALY ISSUED 89116982.3 09/13/89 359,246 03/24/93
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.47 ALB-4-JP1 JAPAN GRANTED 01-237390 09/12/89 7-20545 (03/08/95
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.48 ALB-4-KR1 SOUTH KOREA PENDING 89/13246 09/12/89
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.58 ALB-4-LU1 LUXEMBOURG ISSUED 89116982.3 09/13/89 359,246 03/24/93
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.59 ALB-4-NL1 NETHERLANDS ISSUED 89116982.3 09/13/89 359,246 03/24/93
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.49 ALB-4-NO1 NORWAY PENDING 893671 09/13/89
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.61 ALB-4-SE1 SWEDEN ISSUED 89116982.3 09/13/89 359,246 03/24/93
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20019.50 ALB-4-TW1 TAIWAN ISSUED 7810-6958 09/08/89 152186 02/21/91
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
ASSIGNEE LAMBERT FS (880) 24843-20010.00 AGM-1-US1 US ABANDONED F 08/086,717 07/02/93
(COMPOSITIONS) AGM-1-US2
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20010.41 AGM-1-EP1 EUROPE PENDING 94304902.3 07/04/94 (633,030) (01/11/95
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20010.42 AGM-1-IL1 ISRAEL PENDING 110185 07/01/94
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20010.43 AGM-1-MX1 MEXICO PENDING 845069 07/01/94
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20010.46 AGM-1-TW1 TAIWAN PENDING 83107084 08/01/94
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20010.40 AGM-1-WO1 PCT (DESIG. A PENDING 94/07533 07/01/94 (95/01187)(01/12/95
CONTRACT STAT
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
24843-20010.44 AGM-1-ZA1 SOUTH AFRICA PENDING 944810 07/04/94
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
PENDING
FS 24843-20010.01 AGM-1-US2 US (CON OF 08/220,264 03/30/94
(ADDED INVENTOR AGM-1-US1
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
ALLOWED
FS 24843-20010.20 AGM-1-US3 US (CIP OF 08/187,656 01/26/94
(PROCESS) AGM-1-US1
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
PENDING
FS 24843-20010.21 AGM-1-US4 US (CIP OF 08/290,024 08/12/94
(COMPOSITIONS) AGM-1-US3
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
PENDING
24843-20010.22 AGM-1-US5 US (CIP OF 08/290,022 08/12/94
AGM-1-US2
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
NOT TO BE
FS 24843-20010.24 AGM-1-US6 US FILED (CIP
OF AGM-1-US
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
NOT TO BE
FS 24843-20010.23 AGM-1-US7 US FILED (CIP
AGM-1-US5
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
PENDING
FS (METHOD 24843-20010.10 AGM-1-US8 US (DIV. OF 06/06/95
(OF MAKING) AGM-1-US
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
PENDING
FS (METHOD 24843-20010.11 AGM-1-US9 US (DIV. OF 06/06/95
OF IMAGING) AGM-1-US
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
ASSIGNEE LOHRMANN FS (880) 24843-20021.00 AGM-2-US1 US PENDING 08/284,782 08/02/94
(FLUORINATED
SHELLS)
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
PENDING
24843-20021.10 AGM-2-US2 US (DIV. OF 05/22/95
AGM-2-US
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
PENDING
24843-20021.11 AGM-2-US3 US (DIV. OF 05/22/95
AGM-2-US
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
ASSIGNEE JABLONSKI FS 24843-30040.00 AGM-5-US1 US PROVISIONAL 06/08/95
GAS EXCHANGE
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
ASIGNEE JABLONSKI FS 24843-20040.00 AGM-5-US1 US PENDING 06/07/95
(GAS EXCHANGE)
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
ASSIGNEE HASHIMOTO FS (BLOCK 24843-20032.00 BCP-1-US1 US PENDING 06/0695
COPOLYMER SHELL
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
ASSIGNEE LOHRMANN FS (HYDROPHOBIZ 24843-20036.00 DPM-1-US1 US PENDING 06/07/95
SHELL)
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
- ---------- --------- --------------- --------------- --------- ------------- ----------- -------------- -------- -------------------
</TABLE>
<PAGE>
Appendix 3
MBI Cardiac Indications
(Section 2.01(d))
Intravenous Indication
Albunex is indicated for IV administration to enhance image contrast in
diagnostic echocardiography.
Clinical Applications
1. Cardiac Performance
Albunex can enhance visualization of endocardial borders enabling more
reliable and complete measurement of cardiac structure and calculation
of performance indices including stroke volume and ejection fraction.
Wall thickness and wall motion can be more easily evaluated.
2. Detection of Physiological Defects
Contrast enhancement can be utilized to examine the physical size and
shape of the various cardiac structures and their ability to perform
intended physiological functions including:
o valvular performance including quantitation of regurgitant
fraction in conjunction with valvuloplasty particularly flow
distribution
o size and shape of the heart as well as individual chambers
and structures
o intracardiac shunts that permit leakage between the chambers
o dyskinetic regions of the heart wall; and
o enhancement of color flow doppler for low flow states and in
areas of turbulence.
3. Assessment of Myocardial Perfusion
Contrast enhancement of blood flowing to the heart muscle may enable
ultrasonic evaluation of perfusion.
Intra Arterial Administration Indication
Albunex is indicated for the intra-arterial administration in contrast
ultrasound in patients requiring perfusion assessment of the myocardium.
Clinical Applications
To evaluate myocardial perfusion before and after angioplasty, coronary
thrombolysis, or intraoperatively during coronary by-pass grafting.
<PAGE>
Appendix 4
Current ALBUNEX Indication
(Section 2.01(c), 4.01(a) and (d), 12.01)
Opacification of right and left chambers of the heart after intravenous
administration.
<PAGE>
Appendix 5
Current Product Specifications
(Section 2.02)
STANDARD OPERATING PROCEDURE Page 1 of 10
DOCUMENT: 195
- --------------------------------------------------------------------------------
EFFEC. DATE REV. NO. DOCUMENT NO.
1/1/88 011 195
- --------------------------------------------------------------------------------
NAME
Final Product Release Protocol
- -------------------------------------------------------------------------------
DISTRIBUTION IMMEDIATE CHANGE REQUEST (CR) ATTACHED
Normal
- --------------------------------------------------------------------------------
WRITTEN BY: AUTHORIZATION SIGNATURES:
NAME: RESEARCH:
DATE: DATE:
PRODUCT DEVELOPMENT:
DATE:
QUALITY ASSURANCE:
DATE:
- --------------------------------------------------------------------------------
CR NUMBERS INCORPORATED IN THIS EDITION
- --------------------------------------------------------------------------------
SUMMARY OF CHANGES
New
- --------------------------------------------------------------------------------
INSTRUCTIONS
<PAGE>
STANDARD OPERATING PROCEDURE Page 2 of 10
DOCUMENT: 195
- --------------------------------------------------------------------------------
EFFEC. DATE REV. NO. DOCUMENT NO.
1/1/88 001 195
- --------------------------------------------------------------------------------
NAME
Final Product Release Protocol
- --------------------------------------------------------------------------------
SUBJECT
Albunex (TM), Echocardiography Contrast Microspheres For Investigational Use
FINAL PRODUCT RELEASE PROTOCOL
PURPOSE
To Document the final product release testing criteria performed to assure the
safety and uniformity of the investigational agent.
<PAGE>
STANDARD OPERATING PROCEDURE Page 3 of 10
DOCUMENT: 195
- --------------------------------------------------------------------------------
EFFEC. DATE REV. NO. DOCUMENT NO.
1/1/88 001 195
- --------------------------------------------------------------------------------
NAME
Final Product Release Protocol
- --------------------------------------------------------------------------------
3.0 Release Protocol
Source and lot of Albumin (Human) used in this lot of Albunex(TM)
Source:
Lot No.:
Exp. Date:
Attach certificate of analysis from manufacturer.
<PAGE>
STANDARD OPERATING PROCEDURE Page 4 of 10
DOCUMENT: 195
- --------------------------------------------------------------------------------
EFFEC. DATE REV. NO. DOCUMENT NO.
1/1/88 001 195
- --------------------------------------------------------------------------------
NAME
Final Product Release Protocol
- --------------------------------------------------------------------------------
3.1 Sterility (SOP 184)
Performed by:
Date Started:
Result: / / Pass / / Fail
<PAGE>
STANDARD OPERATING PROCEDURE Page 5 of 10
DOCUMENT: 195
- --------------------------------------------------------------------------------
EFFEC. DATE REV. NO. DOCUMENT NO.
1/1/88 001 195
- --------------------------------------------------------------------------------
NAME
Final Product Release Protocol
- --------------------------------------------------------------------------------
3.2 Pyrogenicity (SOP 183)
Performed by:
Date Started:
Result: / / Pass / / Fail
<PAGE>
STANDARD OPERATING PROCEDURE Page 6 of 10
DOCUMENT: 195
- --------------------------------------------------------------------------------
EFFEC. DATE REV. NO. DOCUMENT NO.
1/1/88 001 195
- --------------------------------------------------------------------------------
NAME
Final Product Release Protocol
- --------------------------------------------------------------------------------
3.3 General Safety (SOP 186)
Performed by:
Date Started:
Result: / / Pass / / Fail
<PAGE>
STANDARD OPERATING PROCEDURE Page 7 of 10
DOCUMENT: 195
- --------------------------------------------------------------------------------
EFFEC. DATE REV. NO. DOCUMENT NO.
1/1/88 001 195
- --------------------------------------------------------------------------------
NAME
Final Product Release Protocol
- --------------------------------------------------------------------------------
3.4 Physical Appearance
After 8 hours undisturbed at room temperature:
Describe:
Free of extraneous particulate matter:
/ / Yes / / No
Observed by: Date:
After inverting vial 20 times:
Describe:
<PAGE>
STANDARD OPERATING PROCEDURE Page 8 of 10
DOCUMENT: 195
- --------------------------------------------------------------------------------
EFFEC. DATE REV. NO. DOCUMENT NO.
1/1/88 001 195
- --------------------------------------------------------------------------------
NAME
Final Product Release Protocol
- --------------------------------------------------------------------------------
3.5 pH
Value:
Specification: (6.4 - 7.4)
Performed: Date:
<PAGE>
STANDARD OPERATION PROCEDURE Page 9 of 10
DOCUMENT: 195
- --------------------------------------------------------------------------------
EFFEC. DATE REV. NO. DOCUMENT NO.
1/1/88 001 195
- --------------------------------------------------------------------------------
NAME
Final Product Release Protocol
- --------------------------------------------------------------------------------
3.6 Coulter Counter Analysis
-----------------------------------------------------------------------
Test Result Specification Pass/Fail
-----------------------------------------------------------------------
Concentration (3-5 x 108/mL)
-----------------------------------------------------------------------
Mean Diameter (3-5 microns)
-----------------------------------------------------------------------
Size Distribution (95% 10.1 microns)
-----------------------------------------------------------------------
Maximum Size (32 microns)
-----------------------------------------------------------------------
Performed by: Date:
<PAGE>
Appendix 6
Quality Assurance
(Section 2.04(e))
Certificates of Analysis
Certificates of Analysis must contain the following information:
1. It must identify the issuing organization and contain the
signature and title of the person authorized to release
product to the market. The site Quality Manager of first line
designee is an appropriate level of signature.
2. It must clearly identify the product name, catalog or identifying
number, lot or batch number, and the date of issuance.
3. It must address each and every quality characteristic listed in the
specification.
4. It must clearly list the quality characteristic, the
conformance requirement, and the actual results obtained.
Certificates which only carry such statements as "a typical
analysis is...", or refer to product literature for normal
values with statements as "this lot meets the nominal values
listed in product bulletin..." are not acceptable.
An acceptable visual layout example is attached.
<PAGE>
* * * Example Certificate of Analysis Format * * *
[Prepare On Issuing Organization Letterhead]
Certificate of Analysis
Product Name: Date:
Catalog Number: Lot Number:
QUALITY CONFORMANCE
CHARACTERISTICS REQUIREMENTS RESULTS
Appearance comparable to standard
(Conforms)
pH 3.8 - 7.4
Reconstitution suspends within 2 minutes
(conforms)
Radiochemical Purity 90% minimum %
Supernatant 10% minimum activity %
Particle Size 90% between 10 - 90um %
0% greater than 150um %
Aggregated Albumin 1.75 - 2.25 mg/vial mg/vial
Soluble Albumin 0.6 +/- 0.2mg/vial mg/vial
Weight Variation 100 - 125 mg/vial mg/vial
Bacterial Endotoxins not more than 175 USP
endotoxin units/dose Eu/dose
Safety negative
Bio Assay 90% minimum to lung %
Residual Moisture 10% minimum %
Sterility negative
Expiration Date 1 year from date of manufacture
Signature of Authorized
Quality Department Representative
<PAGE>
Appendix 7
Joint Steering Committee Procedures
(Section 2.16)
1. The Joint Steering Committee (the "Committee") shall be composed of four
members, two to be appointed by MBI and two to be appointed by
Mallinckrodt.
2. To be binding on the parties, all decisions of the Committee must be voted
on by all four members of the Committee.
3. Any member of the Committee may cast his or her vote by proxy given to
another member of the Committee.
4. The time and place of meetings of the Committee shall be determined by
mutual agreement of MBI and Mallinckrodt. In the event of a dispute, the
decision as to time and place will alternate between the parties. Formal
notice of the meeting shall be delivered to each member of the Committee
at least 10 business days in advance of the meeting. Meetings of the
Committee may be held by teleconference.
5. Written minutes of each meeting of the Committee shall be kept by a member
of the Committee to be elected by all members of the Committee. All
decisions of the Committee shall be recorded in the minutes of each
meeting. Minutes shall be approved by all members of the Committee.
6. Each party shall bear the expenses of its representatives with respect
to attendance at meetings of the Committee.
7. Either MBI or Mallinckrodt can submit proposals to the Committee. Each
proposal must be in detail and delivered at least five business days prior
to the meeting at which the party submitting the proposal requests it to
be considered.
8. All protocols for a clinical trial for which the Committee has authority
shall be submitted to all members at least 10 business days before the
meeting of the Committee at which the clinical trial will be discussed.
9. The Committee shall have the authority to appoint working groups comprised
of employees of one or both of the parties to accomplish specific tasks in
furtherance of fulfilling the Committee's objectives.
10. The Committee shall develop master development plans for the ALBUNEX
currently being marketed by Mallinckrodt and for the product which MBI has
currently code-named FS069, and shall update and amend these plans as
circumstances change.
<PAGE>
Appendix 8A
Performance Milestones for the Additional Territory
(Section 3.02(a))
a. The Joint Steering Committee (the "Committee") shall establish a master
development plan for ALBUNEX in the major countries of the Additional
Territory, which shall include a timetable for its development.
Mallinckrodt shall complete such studies according to that timetable.
Mallinckrodt shall propose said development plan, which shall include a
reasonable development timetable, to the Committee within 9 months of the
Effective Date, and shall support the development plan within the
Committee.
b. Mallinckrodt will initiate meetings with appropriate regulatory agencies,
if any, within 6 months of formal establishment of master development
plan.
c. Mallinckrodt shall initiate the commercial launch of ALBUNEX in two major
countries of the Additional Territory, to be designated by the Committee,
within three months of approval in each designated country, respectively.
Appendix 8B
[Omitted; filed separately with the Commission.]
Appendix 8C
[Omitted; filed separately with the Commission.]
Notes to Appendices 8A, 8B, & 8C
1. Any delay caused by the FDA or its foreign equivalent will extend the time
to complete the milestone in question by the time to remedy the regulatory
situation.
2. Mallinckrodt may opt to extend a given milestone one time only for up to 6
months, upon 10 days' written notice to MBI prior to the projected
completion date of the milestone and a concurrent payment of [omitted;
filed separately with the Commission] per month of the extension.
Investment Agreement
This Agreement is entered into as of September 7, 1995 by Molecular
Biosystems, Inc., a Delaware corporation with an address at 10030 Barnes Canyon
Road, San Diego, California 92121 ("MBI"), and Mallinckrodt Medical, Inc., a
Delaware corporation with an address at 675 McDonnell Boulevard, Post Office Box
5840, St.
Louis, Missouri 63134 ("Mallinckrodt").
Recitals
Concurrently with entering into this Agreement, MBI and Mallinckrodt are
entering into an Amended and Restated Distribution Agreement (the "Amended and
Restated Distribution Agreement") amending and restating the Distribution
Agreement that they entered into as of December 7, 1988.
In connection with (and as a condition of) the parties' entering into
the Amended and Restated Distribution Agreement, Mallinckrodt will make an
additional equity investment in MBI on the terms and subject to the conditions
of this Agreement.
Now, therefore, in consideration of their mutual promises, the parties
agree as follows:
Article 1
Definitions
As used in this Agreement, the following terms shall have the meanings
specified below:
1.01 Affiliate shall mean, with respect to a corporation, association,
partnership, individual, trust or unincorporated organization, any other
corporation, association, partnership, individual, trust or unincorporated
organization that, directly or indirectly, controls, is controlled by or is
under common control with such corporation, association, partnership,
individual, trust or unincorporated organization.
1.02 Agreement shall mean this Investment Agreement, as amended from
time to time.
1.03 Balance Sheet shall mean the March 31, 1995 consolidated balance
sheet of MBI.
1.04 Balance Sheet Date shall mean March 31, 1995.
1.05 business day shall mean any day of the week except Saturday, Sunday
and any legal holiday observed by a national banking association or one of the
parties.
1.06 Closing shall mean the closing of the transaction contemplated by
this Agreement. The date of Closing shall be the "Effective Date" as defined in
Section 16.15 of the Amended and Restated Distribution Agreement, at such time
and place as Mallinckrodt and MBI may agree.
1.07 Commission shall mean the Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act.
1.08 Common Stock shall mean the shares of MBI common stock, par value
$.01 per share, issued to Mallinckrodt pursuant to this Agreement. Shares of MBI
common stock constituting shares of "Common Stock" shall cease to be shares of
Common Stock if and when they cease to be owned by Mallinckrodt or an Affiliate
of Mallinckrodt.
1.09 Distribution Agreement shall mean the Distribution Agreement dated
as of December 7, 1988 between MBI and Mallinckrodt, as amended and restated by
the Amended and Restated Distribution Agreement.
1.10 Exchange Act shall mean the Securities Exchange Act of 1934, as
amended, or any similar successor Federal statute, and the rules and regulations
of the Commission issued under such Act, as they each may, from time to time, be
in effect.
1.11 Holder or Holders shall mean the owner or owners of Registrable
Shares.
1.12 Mallinckrodt shall mean Mallinckrodt Medical, Inc., a Delaware
corporation.
1.13 MBI shall mean Molecular Biosystems, Inc., a Delaware corporation.
1.14 MBI Securities shall mean shares of MBI common stock or securities
convertible into shares of MBI common stock. Stock options granted under a Stock
Option Plan (or under any other stock option plan that MBI may adopt in the
future) shall not be considered "MBI Securities."
1.15 1988 Investment Agreement shall mean the Investment Agreement dated
as of December 7, 1988 entered into by MBI and Mallinckrodt, Inc. (to which
Mallinckrodt is the successor in interest), pursuant to which MBI issued to
Mallinckrodt 181,818 shares of MBI common stock.
1.16 1995 Form 10-K shall mean MBI's annual report on Form 10-K for the
fiscal year ended March 31, 1995, as filed with the Commission.
1.17 Other Common Stock shall mean (i) all MBI Securities issued in
respect of shares of Common Stock (because of stock splits, stock dividends,
reclassifications, recapitalizations or similar events), (ii) all MBI Securities
that Mallinckrodt acquires pursuant to Sections 6.02, 6.03 or 6.04 and (iii) all
MBI Securities issued in respect of MBI Securities that Mallinckrodt acquires
pursuant to Sections 6.02, 6.03 or 6.04 (because of stock splits, stock
dividends, reclassifications, recapitalizations or similar events). MBI
Securities constituting "Other Common Stock" shall cease to be Other Common
Stock if and when they cease to be owned by Mallinckrodt or an Affiliate of
Mallinckrodt.
1.18 Other MBI Securities shall mean all MBI Securities that
Mallinckrodt acquires other than shares of Common Stock or Other Common Stock.
MBI Securities constituting "Other MBI Securities" shall cease to be Other MBI
Securities if and when they cease to be owned by Mallinckrodt or an Affiliate of
Mallinckrodt.
1.19 Person shall mean a corporation, association, partnership,
individual, trust, unincorporated organization and a government agency or
political subdivision thereof.
1.20 Registrable Shares shall mean (i) all shares of Common Stock, (ii)
all shares of Other Common Stock and (iii) all Other MBI Securities.
1.21 Registration Expenses shall mean the expenses described in Section
8.05 of this Agreement.
1.22 Registration Statement shall mean a registration statement filed by
MBI with the Commission for a public offering and sale of MBI Securities (other
than a registration statement on Form S-8 or Form S-4, or their successors, or
any other form for a limited purpose, or any registration statement covering
only securities proposed to be issued in exchange for securities or assets of
another corporation).
1.23 Securities Act shall mean the Securities Act of 1933, as amended,
or any similar successor Federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
1.24 Stock Option Plans shall mean MBI's 1993 Stock Option Plan, 1993
Outside Directors Stock Option Plan, 1984 Incentive Stock Option Plan, 1984
Nonstatutory Stock Option Plan and Pre-1984 Nonstatutory Stock Option Plan, each
as amended to date and as it may be amended in the future.
1.25 Subsidiary shall mean as of a particular date any corporation more
than 50% of whose outstanding stock having ordinary voting power for the
election of directors shall at the time be owned or controlled by Mallinckrodt
or MBI or by a Subsidiary of either party.
Article 2
Purchase and Sale of Common Stock
2.01 Common Stock. At the Closing, MBI will issue and sell, and
Mallinckrodt will purchase, the Common Stock subject to the terms and conditions
set forth in this Agreement.
2.02 Purchase Price. The aggregate purchase price of the Common Stock
shall be $13,000,000 United States dollars in immediately available funds to be
delivered by Mallinckrodt to MBI at the Closing. The number of shares
constituting the Common Stock shall be equal to the aggregate purchase price of
the Common Stock divided by the purchase price per share (ignoring any
fractional share otherwise issuable). The purchase price per share shall be the
greater of (i) $10.00 or (ii) the product determined by multiplying (A) the
average (mean) of the closing price of MBI common stock on the New York Stock
Exchange on the five most recent trading days preceding the date of this
Agreement by (B) 1.40.
2.03 Stock Certificate. At the Closing, MBI shall deliver to
Mallinckrodt one stock certificate registered in Mallinckrodt's name
representing the Common Stock.
Article 3
Representations and Warranties
In order to induce Mallinckrodt to purchase the Common Stock described
in Article 2, MBI represents and warrants to Mallinckrodt that, except as
disclosed on any Appendix to this Agreement, as of the date of this Agreement:
3.01 Organization, Subsidiary. MBI is a corporation legally organized,
validly existing and in good standing under the laws of the State of Delaware
and has all necessary corporate power and authority to carry on its business as
now conducted and as proposed to be conducted and to own or lease and operate
its properties. MBI has two Subsidiaries, Syngene, Inc. and Scan
Pharmaceuticals, Inc., each of which is a corporation legally organized, validly
existing and in good standing under the laws of the State of Delaware and has
all necessary corporate power and authority to carry on its business as now
conducted and as proposed to be conducted and to own, lease and operate its
properties. MBI owns all of the issued and outstanding stock of Syngene, Inc.
and Scan Pharmaceuticals, Inc. free and clear of all liens, claims, security
interest or encumbrances. MBI and its two Subsidiaries are duly licensed or
qualified to do business and are in good standing in every jurisdiction in which
the nature of their business or the ownership of their properties require such
qualification. Except for the stock of Syngene, Inc. and Scan Pharmaceuticals
and cash equivalents and marketable securities held for investment purposes, MBI
does not control, or have any contract or commitment to own or control, any
capital stock, bonds or other securities of and does not have a proprietary
interest in, any corporation, partnership, proprietorship or other business
organization. MBI has delivered to Mallinckrodt complete and correct copies of
MBI's Certificate of Incorporation and By-Laws as amended and in effect on the
date hereof.
3.02 Authorization and Binding Effect. The execution and delivery of
this Agreement and the performance by MBI of its obligations hereunder are
within MBI's corporate power, have been duly authorized by proper corporate
action on the part of MBI, are not in violation of, or constitute a default
under, any existing law, rule or regulation of any governmental agency or
authority, any order or decision of any court, the Certificate of Incorporation
or By-Laws of MBI or the terms of any agreement, restriction or undertaking to
which MBI is a party or by which it is bound, and except for the notification
required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, do not require the approval or consent of or notice to the shareholders
of MBI, any governmental body, agency or authority or any other person or
entity.
3.03 Consolidated Financial Statements; Other Information. MBI has
previously delivered to Mallinckrodt true, accurate and complete copies of the
following documents, including the exhibits and schedules thereto:
(a) The 1995 Form 10-K, which incorporates by reference (to MBI's
1995 Annual Report to Shareholders, which was filed as Exhibit 13 to the
1995 Form 10-K) the audited consolidated balance sheets of MBI as of
March 31, 1995 and 1994, and the audited consolidated statements of
operations, cash flows and shareholders' equity for the years ended
March 31, 1995, 1994 and 1993 (together, the "Financial Statements"),
certified by Arthur Andersen LLP, which were prepared in accordance with
generally accepted principles of accounting consistently applied
throughout the periods involved, and, in all material respects, are
correct and complete and fairly present the financial condition of MBI
as of those dates and the results of its operations for the years then
ended;
(b) MBI's quarterly report on Form 10-Q for the quarterly period
ended June 30, 1995, as filed with the Commission (the "June 30, 1995
Form 10-Q"), which includes as Item 1 MBI's unaudited consolidated
balance sheet dated June 30, 1995 and unaudited consolidated statements
of operations and cash flows for the three months ended June 30, 1995.
These financial statements were prepared in accordance with generally
accepted accounting principles consistent with the Financial Statements
and, in all material respects, fairly present the financial position of
MBI as of June 30, 1995 and the results of its operations for the
three-month period ended June 30, 1995; and
(c) The proxy statement in definitive form for MBI's 1995 annual
meeting of shareholders to be held on September 7, 1995, as filed with
the Commission (the "1995 Proxy Statement").
Except for the 1995 Form 10-K and the June 30, 1995 Form 10-Q, MBI has
not filed any reports or registration statements with the Commission since March
31, 1995. MBI has timely filed all reports and other documents required to be
filed by it under the Exchange Act, the Securities Act, and any applicable state
securities or corporation statutes and regulations. The documents provided
pursuant to this Section 3.03 did not contain at the time of filing thereof any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.04 Litigation. Except as set forth in the 1995 Form 10-K and June 30,
1995 Form 10-Q, there are no judicial or administrative actions, suits,
proceedings or, to the best of MBI's knowledge, investigations pending or, to
the best of MBI's knowledge, threatened, against MBI or in respect to the
business, condition, properties, assets or operations of MBI or which question
the validity of this Agreement or of any action taken or to be taken pursuant to
or in connection with the provisions of this Agreement, and to the best of MBI's
knowledge, no facts exist which would constitute a basis for any such action,
suit, proceeding or investigation, which if concluded adversely against MBI
would have a materially adverse effect on the business or financial condition of
MBI.
3.05 Real and Personal Property. Except as disclosed in Note 5 to the
Financial Statements and, in the case of real property, except for recorded
covenants, conditions and restrictions existing at the time of MBI's acquisition
of the property, all real and personal property that MBI owns is owned free and
clear of all mortgages, security interests, claims, restrictions and
encumbrances, and there exists no restrictions on the use of such property . To
the best of MBI's knowledge, all material contracts, agreements, leases and
commitments with respect to real or personal property to which MBI is a party
are legally valid and binding and in full force and effect, and there are no
material defaults thereunder. None of the rights of MBI under any such leasehold
or other interest in such property will be materially impaired by the
consummation of the transaction contemplated by this Agreement. MBI enjoys
peaceful and undisturbed possession under all material leases under which it
operates.
3.06 Condition of Real and Personal Property. All buildings and other
structures and all machinery, equipment, tools, dies, fixtures, vehicles, spare
parts and other properties owned, leased or used by MBI are, to the best of
MBI's knowledge, in good operating condition and repair and are adequate and
sufficient for all material operations conducted by it. To the best of MBI's
knowledge, none of the real or personal properties owned, leased, occupied or
operated by MBI, or the ownership, leasing, occupancy or operation thereof, is
in violation of any law or any zoning, environmental or other ordinance, code,
rule or regulation, where such violation would have a materially adverse effect
on the business or financial condition of MBI, and no notice from any
governmental body or other person has been served upon MBI or, to the best of
MBI's knowledge, upon any property owned, leased, occupied or operated by MBI,
claiming any material violation of any such law, ordinance, code, rule or
regulation or requiring, or calling attention to the need for, any work,
repairs, construction, alterations or installation on or in connection with such
property which has not been complied with, where failure to comply therewith
would have a materially adverse effect on the business or financial condition of
MBI.
3.07 Material Contracts. The contracts listed as Exhibits 10.1-10.52 on
the list of exhibits under Part II, Item 14(a)(3) of the 1995 Form 10-K, and
filed as Exhibits 10.1-10.52 to the 1995 Form 10-K, were all of the contracts
required to be listed pursuant to the Commission's instructions for the
completion of Form 10-K and filed as exhibits pursuant to Item 601(b)(10) of the
Commission's Regulation S-K. Except as disclosed in the June 30, 1995 Form 10-Q
and except for MBI's employment contract with its new president and chief
operating officer, MBI has not entered into any contract since March 31, 1995
which is required to be filed as an exhibit to a quarterly report on Form 10-Q
or an annual report on Form 10-K. To the best of MBI's knowledge, all of the
contracts filed as exhibits to the 1995 Form 10-K or disclosed in the June 30,
1995 Form 10-Q or Appendix 3.07 are in full force and effect and except as
disclosed on Appendix 3.07, to the best of MBI's knowledge, all parties to such
contracts have performed all obligations required to be performed by them to
date, are not in default and do not have a right of rescission. No employees of
MBI are covered by any collective bargaining agreement.
3.08 Taxes. MBI has filed when due all federal, state and local income
and other tax returns, reports and declarations which are required to have been
filed by it and has, to the best of MBI's knowledge, paid all taxes which have
become due pursuant thereto and all other taxes, assessments and other
governmental charges imposed by law upon it or any of its properties, assets,
income, receipts, payrolls, transactions, capital, net worth or franchises other
than those not delinquent. All such tax returns are complete and correct in all
material respects as filed. To the best of MBI's knowledge, there is no tax lien
upon any property or asset of MBI, whether owned or leased, except for liens for
taxes not yet payable. To the extent that tax liabilities have accrued on or
before the Balance Sheet Date but have not become payable, to the best of MBI's
knowledge, they have been adequately reflected as liabilities on the Balance
Sheet and adequate provision for payment thereof has been made. There have been
no examinations by any state or federal taxing authority of the books and
financial statements of MBI. The accruals and reserves for federal, state or
local taxes, as shown on the Balance Sheet are adequate in the opinion of MBI.
MBI has not granted any waiver of any statute of limitation with respect to, or
any extension of a period for the assessment of, any federal, state or local
tax. To the best of MBI's knowledge, MBI has withheld and duly paid to the
appropriate governmental authority all taxes required to be withheld by it
pursuant to any ordinance, statute or other law.
3.09 Capitalization. The total number of shares of capital stock, all of
which is voting common stock of one class and not divided into any series or
other subdivisions, and the par value thereof which MBI is authorized to issue
and the number of such shares which are issued and outstanding as of July 17,
1995 (i.e., the record date for purposes of determining the shareholders
entitled to vote at MBI's 1995 annual meeting of shareholders) are as follows:
Authorized Shares Par Value Per Share Issued and Outstanding Shares
20,000,000 $.01 12,171,975
The issued and outstanding shares of MBI common stock have been duly and validly
issued and are fully paid and nonassessable, and the Common Stock, when issued,
will be duly and validly issued and fully paid and nonassessable. MBI holds no
shares of its common stock in its treasury. Except for stock options granted
under a Stock Option Plan, there are no outstanding options, warrants or other
rights in existence, other than under this Agreement, to acquire from MBI any of
its shares of capital stock. Since the Balance Sheet Date there have been no
dividends or other distributions declared or paid in respect of the shares of
capital stock of MBI.
3.10 Compliance with Instruments, Laws; Governmental Authorizations. MBI
is not: (i) in violation of any term or provision of its Certificate of
Incorporation or By-Laws or, to the best of MBI's knowledge, any governmental
license or permit; or (ii) in violation or default under (and no act or omission
by MBI has occurred which, with the giving of notice or the passage of time,
would constitute a default under) any material contract, agreement or other
instrument to which MBI is a party or by which it is bound; or (iii) to the best
of MBI's knowledge, subject to enforcement or threat of enforcement or in
violation of any statute, law, ordinance, rule, regulation, judgment, order,
decree, permit, concession, grant, franchise, license or other governmental
authorization or approval which is material to MBI's business or the penalties
or other sanctions for the violation of which reasonably could be expected to
have a material adverse effect on MBI's business or financial condition. All
material permits, concessions, grants, franchises, licenses and other
governmental authorizations and approvals necessary for the conduct of the
business of MBI have been duly obtained and are in full force and effect, and,
to the best of MBI's knowledge, there are no proceedings pending or threatened
which may result in the revocation, cancellation or suspension, or any adverse
modification, of any permit, concession, grant, franchise, license or other
governmental authorization which would have a materially adverse effect on the
business or financial condition of MBI. There have been no material citations,
fines or penalties heretofore assessed against MBI and, to the best of MBI's
knowledge, MBI has complied in all material respects with any and all federal,
state or local laws, including but not limited to laws relating to air or water
pollution, solid waste disposal or other environmental protection matters, or
relating to occupation, health or safety, and, to the best of MBI's knowledge,
no such citations, fines or penalties which are material in amount have been
assessed or have been threatened since the Balance Sheet Date or are now being
threatened.
3.11 Patents, Trademarks and Technology Rights.
(a) All of MBI's United States and foreign patents, trademarks, trade
names, service marks and copyrights relating to ALBUNEX (as "ALBUNEX" is defined
in Section 1.04 of the Amended and Restated Distribution Agreement), and all of
MBI's pending United States and foreign applications for patents, trademarks,
trade names, service marks, trade designations and copyrights relating to
ALBUNEX, are described in Appendix 3.11.
(b) To the best of MBI's knowledge, MBI and its successors and assigns
have a right (i) to practice all ALUNEX-related processes and process steps as
now practiced or planned to be practiced by MBI, and (ii) to make, use and sell
throughout the world ALBUNEX-related intermediate and other products now made,
used or sold or planned to be made, used or sold by MBI without substantial risk
of infringement of any right, interest, or patent of any third party.
(c) MBI owns and possesses, or is licensed as to, all patents,
trademarks, copyrights and such pending applications therefore and trade
secrets, technologies, know-how, processes and other proprietary rights
necessary for conducting its ALBUNEX-related business operations.
(d) MBI does not have knowledge of, or any reason to believe that there
exists, any contest, litigation, infringement, fraud, misappropriation, or
misuse pending or threatened in respect of any patent, trademark, trade name,
service mark, copyright, application therefor, or any license or agreement
therefor (including, but not limited, to the License Agreement dated as of
November 5, 1986 between MBI and Steven B. Feinstein, M.D., as amended) which is
necessary for the conduct of its ALBUNEX-related business.
3.12 Certain Transactions. To the best of MBI's knowledge, no Affiliate
of MBI owns or controls, directly or indirectly in whole or in part, any
property, asset or right, tangible or intangible (including but not limited to,
any patent, trademark, service mark, trade name, brand name, copyright, or
pending application for any patent, trademark, service mark, or copyright,
invention, process, know-how, formula, design or trade secret), which is
associated with any property, asset or right owned by MBI or which MBI is
presently operating or using or the use of which is necessary for its business.
3.13 Absence of Changes. Since the Balance Sheet Date, except as
disclosed in the 1995 Form 10-K, the June 30, 1995 Form 10-Q or Appendix 3.13,
MBI has conducted its operations in the ordinary course of business and there
has been no material adverse change in MBI's financial condition, assets,
business, results of operations or prospects.
3.14 Restrictions on Personnel. No officer or employee of MBI has
entered into any agreement which is now in effect with any person, corporation,
partnership or business organization other than MBI (a) requiring such officer
or employee to assign any interest in any invention or trade secrets developed
while employed by MBI or (b) containing any prohibition or restriction of
competition or solicitation of customers which if enforced against such officer
or employee would have a materially adverse affect on the business or financial
condition of MBI.
3.15 Disclosure. Neither this Article 3 (when read in conjunction with
the Appendices to this Agreement) nor any Appendix to this Agreement, nor the
1995 Form 10-K, June 30, 1995 Form 10-Q or 1995 Proxy Statement, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein and therein in the context in
which they were made not misleading.
3.16 Brokers. This Agreement was not induced or procured through any
person, firm or corporation acting as a broker or finder for MBI except for
Vector Securities International, Inc. MBI agrees to hold Mallinckrodt harmless
from any loss, damage, cost or expense resulting from any claim by any person,
firm or corporation, including Vector Securities International, Inc. and Lazard
Freres & Co., based upon any such person, firm or corporation having acted as a
broker or finder for MBI in connection with the transaction contemplated by this
Agreement.
Article 4
Conditions Precedent to Purchase of Common Stock
The obligation of Mallinckrodt to purchase the Common Stock described in
Article 2 is, at the option of Mallinckrodt, subject to the satisfaction of the
following conditions:
4.01 Opinion of Counsel. Mallinckrodt shall have received an opinion,
addressed to Mallinckrodt and dated as of the Closing, from Johnson and Colmar,
counsel for MBI, satisfactory in substance and form to Mallinckrodt and its
counsel.
4.02 Representations and Warranties True and Correct. The
representations and warranties in Article 3 hereof shall be true and correct as
of the date of Closing as if they were made on and as of the date of Closing
(with the exception, in the case of the representation and warranty in Section
3.09 regarding MBI's issued and outstanding shares of common stock, for any
changes since July 17, 1995 resulting from the issuance of shares of common
stock pursuant to (i) the exercise of a stock option granted under a Stock
Option Plan or (ii) the exercise of a stock purchase warrant described in
Appendix 3.09). Mallinckrodt shall have received from MBI's Chairman of the
Board and Chief Executive Officer, or its Vice President - Finance and Chief
Financial Officer or its Vice President - Legal Affairs and General Counsel an
officer's certificate to the foregoing effect dated as of the Closing.
4.03 Closing Certificates. Mallinckrodt shall have received copies,
certified by the Secretary or an Assistant Secretary of MBI to be true and
correct and in full force and effect, of (i) the Certificate of Incorporation
and By-Laws of MBI; (ii) resolutions of the Board of Directors of MBI
authorizing the issuance of the Common Stock, the execution and delivery of this
Agreement and any other documents to be executed by or on behalf of MBI pursuant
to this Agreement; and (iii) a statement containing the names and titles of the
officer or officers of MBI authorized to sign this Agreement and other documents
required by this Agreement, together with true signatures of such officers.
4.04 Proceedings Satisfactory to Mallinckrodt. All proceedings taken in
connection with the transaction contemplated by this Agreement and all
instruments, authorizations and other documents applicable thereto shall be
satisfactory in form and content to Mallinckrodt and Mallinckrodt shall have
received copies of all such documents reasonably required by it.
Article 5
Affirmative Covenants
During the term of this Agreement, MBI covenants that it will:
5.01 Annual Audited Consolidated Financial Statements. Furnish to
Mallinckrodt within 90 days after the end of each fiscal year of MBI an audited
consolidated balance sheet of MBI as of the close of such fiscal year and
related audited consolidated statements of operations, cash flows and
shareholders' equity for such year, setting forth in each case in comparative
form corresponding figures from the preceding annual audit, all in reasonable
detail, prepared in accordance with generally accepted principles of accounting
applied on a consistent basis, certified with an unqualified opinion by a
nationally recognized or major regional independent certified public accountant
selected by MBI. The annual audited financial statements shall be furnished in
consolidated form for MBI and all Subsidiaries which it may have at the time.
5.02 SEC Reports. Furnish to Mallinckrodt, promptly upon filing, copies
as filed with the Commission of (i) MBI's annual reports on Form 10-K, (ii)
MBI's quarterly reports on Form 10-Q, (iii) MBI's current reports on Form 8-K
and (iv) all other reports filed pursuant to the Exchange Act.
5.03 Audit Reports. Furnish to Mallinckrodt, promptly upon receipt, (i)
copies of all detailed audit reports submitted to MBI by independent accountants
in connection with each annual audit of the books of MBI and (ii) copies of any
and all management reports and recommendations given by its independent
accountants to MBI if such management reports and recommendations relate to or
question the viability of MBI to conduct its business as an on-going concern or
indicate a material weakness in internal controls.
5.04 Books and Records. Keep proper, complete and accurate books of
record and account and, at Mallinckrodt's request, meet with Mallinckrodt from
time to time at a reasonably convenient time and place for both parties to
discuss the financial condition of MBI.
Article 6
Anti-Dilution Rights and Limitations on Ownership
6.01 Anti-Dilution Rights. If at any time MBI agrees to sell MBI
Securities in a private placement or a public offering, Mallinckrodt shall have
the right, but not the obligation, to acquire all or any portion of a number of
MBI Securities sufficient for Mallinckrodt to maintain after the private
placement or public offering the same percentage of ownership of issued and
outstanding shares of MBI common stock that Mallinckrodt possessed immediately
prior to the private placement or public offering (the "Pre-Offering
Percentage"). For this purpose: (i) the issued and outstanding shares of MBI
common stock shall be determined assuming the conversion of all issued and
outstanding MBI Securities convertible into shares of MBI common stock; and (ii)
Mallinckrodt's Pre-Offering Percentage shall be determined solely in respect of
shares of Common Stock and Other Common Stock owned by Mallinckrodt and its
Affiliates and shall not take into account any Other MBI Securities which
Mallinckrodt or an Affiliate of Mallinckrodt may own.
6.02 Private Placement. With respect to a private placement, MBI shall
within five (5) business days after the closing of the private placement notify
Mallinckrodt in writing of the private placement and the number of MBI
Securities which Mallinckrodt is entitled to purchase under Section 6.01 (which
shall be of the same character as the MBI Securities which MBI sold in the
private placement) and provide Mallinckrodt with copies of all relevant
documentation. Mallinckrodt shall have twenty (20) business days from the date
of receipt of MBI's notice in which to advise MBI whether or to what extent
Mallinckrodt elects to exercise its rights under Section 6.01. If Mallinckrodt
does not respond, or if Mallinckrodt indicates that it will not exercise its
rights, Mallinckrodt shall be considered irrevocably to have waived its rights
under Section 6.01 with respect to the private placement. If Mallinckrodt timely
advises MBI that Mallinckrodt will exercise its rights under Section 6.01,
Mallinckrodt shall have the right to acquire all or any portion of the number of
MBI Securities which it would be necessary for Mallinckrodt to purchase in order
to maintain Mallinckrodt's Pre-Offering Percentage, at a price per share,
payable at the closing of Mallinckrodt's purchase, equal to the average (mean)
of the closing price of MBI common stock on the New York Stock Exchange on the
five most recent trading days preceding the date of closing of the private
placement (or if the MBI Securities which Mallinckrodt is entitled to purchase
are not shares of MBI common stock, at the price specified in the private
placement agreement entered into between MBI and the purchaser). Closing of
Mallinckrodt's purchase shall take place at MBI's principal office, unless MBI
and Mallinckrodt agree on a different location, at a mutually convenient date
and time as soon as practicable after Mallinckrodt advises MBI that Mallinckrodt
will exercise its rights under Section 6.01. At closing, Mallinckrodt and MBI
shall provide customary and appropriate representations to one another regarding
the purchase and sale of the MBI Securities being purchased by Mallinckrodt
(with MBI making substantially the same representations to Mallinckrodt that MBI
made to the purchaser or purchasers in the private placement) and shall also
provide any additional documentation reasonably requested by the other party
(for example, an appropriate opinion of counsel).
6.03 Public Offering. If at any time MBI proposes to register any MBI
Securities under the Securities Act in connection with a public offering, MBI
shall notify Mallinckrodt no later than five (5) business days after MBI has
determined to do so, and shall provide Mallinckrodt with a copy of any letter of
intent. Mallinckrodt shall have twenty (20) business days from the date of
receipt of MBI's notice in which to advise MBI whether Mallinckrodt elects to
exercise its rights under Section 6.01. If Mallinckrodt does not respond or if
Mallinckrodt indicates that it will not exercise its rights, Mallinckrodt shall
be considered irrevocably to have waived its rights under Section 6.01 with
respect to the public offering. If Mallinckrodt timely advises MBI that
Mallinckrodt desires to retain its rights under Section 6.01, then when MBI
files a registration statement containing a preliminary prospectus with the
Commission, MBI shall provide Mallinckrodt with copies of the preliminary
prospectus and all subsequent amendments. Mallinckrodt shall have twenty (20)
business days from its receipt of the preliminary prospectus in which to
exercise its rights under Section 6.01(b) by making an offer, based on the price
and the other terms contained in the final prospectus, to acquire all or any
portion of the MBI Securities to be offered in the public offering which it
would be necessary for Mallinckrodt to purchase in order to maintain
Mallinckrodt's Pre-Offering Percentage. No such offer to buy shall be accepted
prior to the time that the registration statement becomes effective. The
registration statement shall indicate that Mallinckrodt has anti-dilution rights
to purchase MBI Securities on the terms offered to the public.
6.04 Stock Options. With respect to the issuance of shares of MBI common
stock pursuant to the exercise of stock options granted under a Stock Option
Plan, or under any other stock option plan or any stock-based incentive
compensation plan that MBI may adopt in the future, Mallinckrodt shall have the
right, in respect of each fiscal year of MBI beginning with its fiscal year
ending March 31, 1996, to purchase from MBI all or any portion of the number of
shares of MBI common stock which it would be necessary for Mallinckrodt to
purchase in order to maintain the same percentage of ownership of issued and
outstanding shares of MBI common stock that Mallinckrodt possessed as of the
last day of that fiscal year without regard to shares of MBI common stock issued
pursuant to the exercise of stock options during that fiscal year (or in the
case of MBI's fiscal year ending March 31, 1996, after the date of this
Agreement). For this purpose: (i) the issued and outstanding shares of MBI
common stock as of the last day of MBI's fiscal year shall be determined
assuming the conversion of all issued and outstanding MBI Securities convertible
into shares of MBI common stock; and (ii) Mallinckrodt's percentage of ownership
shall be determined solely in respect of shares of Common Stock and Other Common
Stock owned by Mallinckrodt and its Affiliates and shall not take into account
any Other MBI Securities which Mallinckrodt or an Affiliate of Mallinckrodt may
own. MBI shall notify Mallinckrodt no later than 20 business days after the end
of each fiscal year of MBI of the shares of MBI common stock which Mallinckrodt
is entitled to purchase under this Section 6.04 in respect of that fiscal year.
Mallinckrodt shall have twenty (20) business days from the date of receipt of
MBI's notice in which to advise MBI whether or to what extent Mallinckrodt
elects to exercise its rights under this Section 6.04. If Mallinckrodt does not
respond, or if Mallinckrodt indicates that it will not exercise its rights,
Mallinckrodt shall be considered irrevocably to have waived its rights under
this Section 6.04 with respect to the fiscal year in question. If Mallinckrodt
timely advises MBI that Mallinckrodt will exercise its rights, Mallinckrodt
shall have the right to acquire all or any portion of the number of shares of
MBI common stock which it is entitled to purchase at a price per share equal to
the market price on the date Mallinckrodt advises MBI that it will exercise its
rights. Closing shall be as soon as practicable after Mallinckrodt advises MBI
that it will exercise its rights under this Section 6.04. At closing,
Mallinckrodt and MBI shall provide customary and appropriate representations to
one another regarding the purchase and sale of the MBI common stock being
purchased by Mallinckrodt and shall also provide any additional documentation
reasonably requested by the other party (for example, an appropriate opinion of
counsel)
6.05 Limitations. Notwithstanding the preceding provisions of this
Article 6, the number of MBI Securities or shares of MBI common stock which
Mallinckrodt shall be entitled to purchase under Sections 6.01 and 6.04 shall be
a whole number (obtained by rounding up any fraction equal to or greater than
one-half and rounding down any fraction less than one-half), and Mallinckrodt
may exercise its rights under Sections 6.01 and 6.04 only in respect of a whole
number of MBI Securities or shares of MBI common stock. MBI shall not be
required to transfer any MBI Securities to Mallinckrodt under this Article 6 if
to do so would result in the violation of any applicable law, rule or
regulation. Mallinckrodt's rights under Sections 6.01 and 6.04 shall terminate
if and when Mallinckrodt and Affiliates of Mallinckrodt at any time cease to own
in the aggregate at least 70% of the largest number of shares of MBI common
stock and other MBI securities which, at any preceding time, constituted shares
of Common Stock and Other Common Stock. Mallinckrodt's rights under Section 6.01
shall also terminate if and when, on each of any two consecutive occasions after
the fourth anniversary of the date of this Agreement that Mallinckrodt is
entitled to exercise its rights under Section 6.01, Mallinckrodt fails to
purchase at least 50% of the MBI Securities which it is entitled to purchase.
Mallinckrodt's rights under Section 6.04 shall also terminate if and when, in
respect of each of any two consecutive fiscal years of MBI beginning on or after
April 1, 1999, Mallinckrodt fails to purchase at least 50% of the shares of MBI
common stock which it is entitled to purchase under Section 6.04. Any such
termination of Mallinckrodt's rights under Sections 6.01 or 6.04 shall not
require notice or other action by MBI.
6.06 Limitations on Mallinckrodt's Ownership. During the term of this
Agreement neither Mallinckrodt nor any of its Affiliates shall directly or
indirectly acquire any Other MBI Securities (except by way of stock dividends,
stock splits, or similar events affecting holders of MBI Securities generally)
if the effect of the acquisition would be to increase the aggregate voting power
in the election of directors of all MBI Securities owned by Mallinckrodt and its
Affiliates to more than fifteen percent (15%) of the total combined voting power
of all MBI Securities then outstanding. Notwithstanding this limitation:
(a) Mallinckrodt or any of its Affiliates may acquire Other MBI
Securities if any of the following events occur:
(1) A tender or exchange offer is made by any Person or 13D
Group (other than Mallinckrodt, an Affiliate of Mallinckrodt or an
Affiliate of or Person acting in concert with Mallinckrodt or an
Affiliate of Mallinckrodt) to acquire MBI Securities such that, if
added to the MBI Securities already owned by that Person or 13D
Group, would represent more than fifteen percent (15%) of the
total combined voting power of all MBI Securities issued and
outstanding; or
(2) There is public disclosure or Mallinckrodt otherwise
learns that MBI Securities representing more than fifteen percent
(15%) of the total combined voting power of all MBI Securities
issued and outstanding have been acquired or are proposed to be
acquired by any Person or 13D Group; or
(3) Any Person or 13D Group shall beneficially own MBI
Securities representing more than fifteen percent (15%) of the
total combined voting power of all issued and outstanding MBI
Securities.
(b) Neither Mallinckrodt nor any of its Affiliates shall be
required to dispose of any shares of MBI Securities if their aggregate
percentage ownership is increased as a result of MBI's recapitalization
or any other action taken by MBI.
As used herein, "13D Group" means any group of Persons formed for the purpose of
acquiring, holding, voting or disposing of securities that would be required
under Section 13(d) of the Exchange Act and the related rules and regulations
(as now in effect, and based on present legal interpretations) to file a
statement on Schedule 13D or 13G with the Commission as a "person" within the
meaning of Section 13(d)(3) of the Exchange Act if the group beneficially owned
common stock representing more than five percent (5%) of the total combined
voting power of all MBI Securities then issued and outstanding.
6.07 Receipt of Offer To Acquire Control. In the event that MBI's board
of directors receives an offer from a third party to acquire control of MBI
through the acquisition of voting MBI Securities, or in the event that MBI's
chief executive officer or chief operating officer receives such an offer which
he intends to present to MBI's board, MBI shall promptly notify Mallinckrodt of
the offer and disclose to Mallinckrodt all material details concerning the
offer. To the extent that neither the third party nor MBI has made any public
disclosure regarding the third party's offer or its terms, Mallinckrodt shall
treat all information about the offer that it receives from MBI as confidential.
If the third party has not set a deadline for MBI's response to the third
party's offer, MBI shall permit Mallinckrodt a reasonable period of time under
the circumstances (but not more than 10 business days) in which to present MBI
with a competitive offer. If the third party has set a deadline for MBI's
response, MBI may set a deadline for Mallinckrodt's response no earlier than (i)
48 hours prior to the deadline for MBI's response if MBI's deadline is at least
10 business days from the date of MBI's notice to Mallinckrodt of the third
party's offer or (ii) 24 hours prior to the deadline for MBI's response if MBI's
deadline is less than 10 days from the date of MBI's notice to Mallinckrodt of
the third party's offer. Mallinckrodt's offer to MBI in no event shall be for a
lesser amount of voting MBI Securities or for a lower value than that of the
third party's offer.
Article 7
Rights of First Refusal
7.01 General Limitation on Transfer. Except for (i) sales by
Mallinckrodt and its Affiliates under the Commission's Rule 144 which do not
exceed 25,000 shares in the aggregate during any 90-day period and (ii)
transfers to an Affiliate of Mallinckrodt pursuant to Section 7.06, Mallinckrodt
shall not directly or indirectly offer for sale or transfer any Registrable
Shares without offering MBI a right of first refusal as provided in this Article
7. Mallinckrodt and its Affiliates may sell Registrable Shares under Rule 144 in
excess of 25,000-share limit on aggregate sales during any 90-day period if (and
only if) MBI does not exercise its right of first refusal in respect of the
shares in excess of the limit.
7.02 Transfer Notice. Mallinckrodt shall give MBI written notice of
Mallinckrodt's intention to sell Registrable Shares (the "Transfer Notice"),
specifying the number of Registrable Shares proposed to be sold or transferred
and whether the shares are to be sold under Rule 144, in a privately negotiated
sale or in connection with a tender or exchange offer pursuant to Regulation 14D
of the Exchange Act. For this purpose, Mallinckrodt's request for registration
pursuant to Sections 8.01 or 8.02 shall be considered a Transfer Notice in
respect of all of the Registrable Shares that Mallinckrodt has requested to be
registered. If the shares are to be sold in a privately negotiated sale, the
Transfer Notice shall also specify the proposed purchaser or transferee and the
proposed price. The proposed price of a bona fide third party tender or exchange
offer pursuant to Regulation 14D shall be considered the cash price offered, in
the case of a cash offer, or the cash price plus the value of the offered
securities, in the case of a partial cash and exchange offer, or the value of
the offered securities in an exchange offer, without regard to any provisions
with respect to proration or any conditions to the offeror's obligation to
purchase. If the Transfer Notice is in respect of Registrable Shares that
Mallinckrodt has requested to be registered pursuant to Sections 8.01 or 8.02,
the proposed price shares shall be considered (i) the price at which shares of
MBI common stock are sold to the underwriters (net of underwriters' discounts
and commissions), in the case of a Transfer Notice in connection with a
registration for an underwritten public offering, or (ii) the closing price of
MBI common stock on the New York Stock Exchange on the last trading day
preceding the day that the registration statement is declared effective by the
Commission, in the case of a Transfer Notice in connection with a registration
which is not for an underwritten public offering.
7.03 Exercise by MBI. Except as qualified under Sections 7.04(b) and
7.05(a), MBI shall have fifteen (15) business days from the date of the Transfer
Notice (or sixty (60) days from the date of the Transfer Notice if the Transfer
Notice discloses that Mallinckrodt intends to sell or transfer more than 50% of
its aggregate Registrable Shares) in which to exercise its right of first
refusal, by written notice to Mallinckrodt, with respect to all (or in the case
of (i) a sale in the open market pursuant to Rule 144 or (ii) a Transfer Notice
in respect of Registrable Shares that Mallinckrodt has requested to be
registered pursuant to Sections 8.01 or 8.02, all or a portion) of the
Registrable Shares specified in the Transfer Notice. (In the case of a tender or
exchange offer pursuant to Regulation 14D, however, MBI shall have until no
later than 48 hours prior to the latest time by which Registrable Shares must be
tendered in order to be accepted or to qualify for any proration). The purchase
price shall be the proposed price specified in Section 7.02 and shall be paid in
cash.
7.04 Valuation. Except where property or securities offered in exchange
for Registrable Shares has a readily ascertainable fair market value, the
following procedures shall be followed with respect to a Transfer Notice which
includes any property other than cash:
(a) The value of the offered securities or property shall be
determined by MBI and Mallinckrodt jointly, or if they are unable to
agree, the determination shall be made by a nationally or regionally
recognized investment banking or consulting firm selected by two such
firms respectively chosen by MBI and Mallinckrodt, and its determination
shall be conclusive. MBI and Mallinckrodt shall use their best efforts
to cause this determination to be made no later than fifteen (15) days
after the date of the Transfer Notice, and MBI and Mallinckrodt shall
each pay one-half of fees of the firm making the determination; and
(b) The period in which MBI may exercise its right of first
refusal shall be extended to the date five (5) business days after the
date that the value of the offered securities or property is determined
as provided in subparagraph (a).
7.05 Closing.
(a) If MBI exercises its right of first refusal, the closing of
its purchase of the Registrable Shares with respect to which it has
exercised its right of first refusal shall take place within thirty (30)
calendar days after the date that MBI gives notice of its exercise, or
within 10 days after the price is determined (in the case of MBI's
exercise of its right of first refusal in respect of Registrable Shares
that Mallinckrodt has requested to be registered pursuant to Sections
8.01 or 8.02), or within twenty (20) calendar days after MBI has
obtained any necessary government approval or nonobjection, if any,
whichever is later. MBI shall make application for any necessary
governmental approval as soon as practicable after exercising its right
of first refusal; and
(b) If MBI does not timely exercise its right of first refusal in
respect of shares to be sold in a privately negotiated sale or in
connection with a tender or exchange offer, Mallinckrodt shall be free
during the ninety (90) days following the expiration of MBI's right of
first refusal to sell the Registrable Shares specified in the Transfer
Notice to the proposed purchaser or transferee identified in the notice
at the price specified in the notice or at any greater price. MBI's
right of first refusal shall survive with respect to any such
Registrable Shares that are not sold by Mallinckrodt to the proposed
purchaser or transferee during this 90-day period. If MBI does not
timely exercise its right of first refusal in respect of all of the
Registrable Shares to be sold under Rule 144, Mallinckrodt shall be free
to sell the remaining shares specified in its Transfer Notice under Rule
144 at any time following the expiration of MBI's right of first
refusal. If MBI does not timely exercise its right of first refusal in
respect of all of the Registrable Shares that Mallinckrodt has requested
to be registered in accordance with Sections 8.01 or 8.02, the remaining
shares shall be subject to registration in accordance with Article 8.
7.06 Survival. MBI's right of first refusal granted under Section 7.01
shall survive the term of this Agreement.
7.07 Transfers to Affiliates. Mallinckrodt may transfer all or any
shares of Common Stock or Other Common Stock to an Affiliate of Mallinckrodt if,
prior to the transfer, (i) the Affiliate provides MBI with the Affiliate's
written acknowledgement that it will be bound by the restrictions in this
Article 7 as if it were Mallinckrodt and (ii) Mallinckrodt provides MBI with an
opinion of counsel, satisfactory to MBI in its reasonable discretion, to the
effect that the shares may be transferred to the Affiliate without registration
under the Securities Act or the securities laws of any state.
Article 8
Registration Rights
8.01 Piggy-back Registration. If at any time MBI proposes to register
any of its common stock under the Securities Act in connection with the public
offering of such securities on a form that would also permit the registration of
the Registrable Shares, MBI shall, at such time, promptly give the Holders
written notice of such determination. Upon the written request of any Holder
given within 20 business days after receipt of any such notice by the Holder,
MBI shall use its best efforts (subject to MBI's right to decide for any reason
not to proceed with the public offering and MBI's exercise of its right of first
refusal under Section 7.01) to cause to be registered under the Securities Act
all of the Registrable Shares that each such Holder has requested be registered.
If the registration of which MBI gives notice is for a registered public
offering involving an underwriting, then MBI shall so advise the Holders as a
part of such written notice. In such event, the right of any Holder to
registration pursuant to this Section 8.01 shall be conditioned upon such
Holder's agreeing to participate in such underwriting and the inclusion of such
Holder's Registrable Shares in the underwriting to the extent provided herein.
All Holders proposing to distribute their securities through such underwriting
shall (together with MBI and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form, and upon the terms agreed upon between MBI and the underwriter, with the
underwriter selected for such underwriting by MBI. Notwithstanding any other
provision of this Section 8.01, if the underwriter reasonably determines that
inclusion of such shares will jeopardize the success of the offering, then the
underwriter may exclude some or all Registrable Shares from such registration
and underwriting in accordance with the provisions of this Section 8.01. MBI
shall so advise all Holders and the other holders distributing their securities
through such underwriting, and the number of Registrable Shares and other
securities that may be included in the registration and underwriting shall be
allocated among the Holders and the other holders (excluding MBI), in
proportion, as nearly as practicable, to the respective amounts of securities
proposed for inclusion in such registration by each such Holder and other
holders at the time of filing the Registration Statement; provided, however, in
no event shall the number of Registrable Shares included in the offering be
reduced below 25% of the aggregate number of Registrable Shares that all Holders
request MBI to include in the offering. If any Holder or other holder
disapproves of the terms of any such underwriting, then he may elect to withdraw
therefrom by written notice to MBI and the underwriter. Any securities excluded
or withdrawn from such underwriting shall be withdrawn from such registration.
Subject to the foregoing, MBI and the underwriter selected by MBI shall make all
determinations with respect to the timing, pricing and other matters relating to
the offering.
8.02 Demand Registration.
(a) At any time after the fourth anniversary of the date of this
Agreement, Holders of Registrable Shares shall have the right to request
MBI to use its best efforts to effect a registration of the Holders'
Registrable Shares under the Securities Act on the Commission's Form
S-3, subject to the following limitations and conditions and the
limitation in Section 8.02(c):
(1) Each request for registration shall be in writing and
shall specify the number and character of the Registrable Shares
requested to be registered and the intended method of disposition
of those shares.
(2) MBI shall not be required to effect more than three
registrations under this Section 8.02.
(3) MBI shall not be required to effect a registration
pursuant to this Section 8.02 unless the number of Registrable
Shares requested to be registered (taking into account Registrable
Shares requested to be registered following MBI's notice to all
Holders in accordance with Section 8.02(b)) constitute at least
10% of the outstanding Registrable Shares.
(4) MBI shall not be required to effect a registration
pursuant to this Section 8.02 within 180 days after the effective
date of the last registration pursuant to this Section 8.02.
(5) MBI shall not be required to effect a registration for
the period (not exceeding 120 days) specified in the certificate
signed by the president of MBI and delivered to the requesting
Holder or Holders stating that, in the good faith judgment of
MBI's Board of Directors, it would be detrimental to MBI and its
shareholders for a registration statement to be filed prior to the
expiration of the specified period. MBI may not exercise this
deferral right more frequently than once during any 12-month
period.
If for any reason MBI cannot qualify for registration on Form S-3,
MBI shall effect the registration on Form S-1 or other appropriate
form, in which case this Section 8.02(a) shall apply in all
respects as if the term "Form S-3" were replaced by the term "Form
S-1" or the designation of the other form.
(b) MBI shall give written notice to all Holders of Registrable
Shares of the receipt of a request for registration pursuant to Section
8.02(a) and shall provide a reasonable opportunity for all other Holders
to participate in the registration.
(c) The sale or other disposition of Registrable Shares registered
under this Section 8.02 shall be subject to the limitation that during
each calendar month beginning with the calendar month in which the
registration statement covering those Registrable Shares is declared
effective by the Commission, each Holder may not sell or otherwise
dispose of more than one-twelfth (1/12) of the Holder's Registrables
Shares which were covered by that registration statement.
8.03 Obligations of MBI. Whenever required under Sections 8.01 or 8.02
that MBI use its best efforts to effect the registration of any Registrable
Shares, MBI shall, as expeditiously as possible:
(a) Prepare and file with the Commission a Registration Statement
with respect to such Registrable Shares and use its best efforts to
cause such Registration Statement to become and remain effective;
(b) Prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in
connection with such Registration Statement as may be necessary to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement;
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements
of the Securities Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Shares
owned by them;
(d) Use its best efforts to register and qualify the securities
covered by such Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably appropriate
for the distribution of the securities covered by the Registration
Statement, provided that MBI shall not be required in connection
herewith or as a condition thereto to qualify to do business or to file
a general consent to service of process in any such states or
jurisdictions. The Holders shall pay all of the expenses of qualifying
in jurisdictions where MBI's underwriters have not requested
qualification; and
(e) Furnish, at the request of the Holders on the date that such
Registrable Shares are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Shares are not being sold
through underwriters, on the date the Registration Statement with
respect to such Registrable Shares becomes effective (i) an a opinion
dated such date, of independent counsel representing MBI for the
purposes of such registration, addressed to the underwriters, if any,
and to the Holders stating that such Registration Statement has become
effective under the Securities Act and covering substantially the same
matters with respect to the Registration Statement (and the prospectus
included therein) as are customarily covered (at the time of such
registration) in the opinions of issuer's counsel delivered to
underwriters in connection with underwritten public offerings of
securities; and (ii) a letter dated such date from the independent
certified public accountant of MBI, addressed to the underwriters, if
any, and the Holders, stating that they are independent certified public
accountants within the meaning of the Securities Act and that, in the
opinion of such accountants, the financial statements and other
financial data of MBI included in the Registration Statement or the
prospectus, or any amendment or supplement thereto, comply as to form in
all material respects with the applicable accounting requirements of the
Securities Act. Such opinion of counsel shall additionally cover such
other legal matters with respect to the registration in respect of which
such opinion is being given as the Holders may reasonably request. Such
letter from the independent certified public accountants shall
additionally cover such other financial matters (including information
as to the period ending not more than five business days prior to the
day of such letter) with respect to the registration in respect of which
such letter is being given as the Holders may reasonably request.
8.04 Holders' Obligation to Furnish Information. It shall be a condition
precedent to the obligation of MBI to take any action pursuant to this Article 8
that the Holders shall furnish to MBI such information regarding them, the
Registrable Shares held by them and the intended method of disposition of such
securities as MBI shall reasonably request and as shall be required in
connection with the action to be taken by MBI.
8.05 Expenses of Registration. All expenses incurred in connection with
all registrations pursuant to Section 8.01 (excluding underwriters' discounts
and commissions), including, without limitation, all registration and
qualification fees, printers' and accounting fees, and fees and disbursements of
counsel for MBI shall be borne by MBI. All expenses incurred in connection with
all registrations pursuant to Section 8.02, including, without limitation, all
registration and qualification fees, printers' and accounting fees, and
reasonable fees and disbursements of counsel for MBI shall be borne by the
Holders whose Registrable Shares are included in the registration (in proportion
to such shares).
8.06 Indemnification. In the event any Registrable Shares are included
in a Registration Statement under this Article 8:
(a) To the extent permitted by law, MBI shall indemnify and hold
harmless each Holder requesting or joining in a registration, and each
person, if any, who controls such Holder within the meaning of the
Securities Act, against any losses, claims, damages or liabilities,
joint or several, (including reasonable counsel fees) to which such
person may become subject under the Securities Act, the Exchange Act,
state securities laws, or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based on any untrue or alleged untrue statement of any material fact
contained in such Registration Statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
arise out of any violation by MBI of any rule or regulation promulgated
under the Securities Act applicable to MBI and relating to any action or
inaction required of MBI in connection with any such registration; and
MBI will reimburse each such Holder or controlling person for any legal
or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in
this Section 8.06 shall not apply to any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in connection with such Registration Statement,
preliminary prospectus, final prospectus, or amendments or supplements
thereto, in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by any
such Holder or controlling person;
(b) To the extent permitted by law, each Holder requesting or
joining in a registration will indemnify and hold harmless MBI, each of
its directors, each of its officers who have signed the Registration
Statement, each person, if any, who controls MBI within the meaning of
the Securities Act, and each agent and any underwriter for MBI (within
the meaning of the Securities Act) against any losses, claims, damages
or liabilities (including reasonable counsel fees), to which MBI or any
such director, officer, controlling person, agent, or underwriter may
become subject under the Securities Act, the Exchange Act, state
securities laws or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise from or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in such Registration Statement, including any preliminary
prospectus or final prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was made in such Registration Statement, preliminary or final
prospectus, or any amendment or supplement thereto, in reliance upon and
in conformity with written information furnished by such Holder
expressly for use in connection with such registration; and each such
Holder will reimburse any legal or other expenses reasonably incurred by
MBI or any such director, officer, controlling person, agent, or
underwriter in connection with investigating or defending any such loss,
claim, damage, liability or action; and
(c) Promptly after receipt by an indemnified party under this
Section 8.06 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party under this Section 8.06, notify the
indemnifying party in writing of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties. The failure to notify an
indemnifying party promptly of the commencement of any action, if
prejudicial to his ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section 8.06, but the omission so to notify the indemnifying party will
not relieve him of any liability that he may have to any indemnified
party otherwise than under this Section 8.06.
8.07 Reports Under Exchange Act. With a view to making available to the
Holders the benefits of Rule 144 promulgated under the Securities Act and any
other rule or regulation of the Commission that may at any time permit a Holder
to sell securities of MBI to the public without registration, MBI agrees to use
its best efforts to:
(a) File with the Commission in a timely manner all reports and
other documents required of MBI under the Securities Act and the
Exchange Act; and
(b) Furnish to any Holder so long as such Holder owns any
Registrable Shares upon request at any time a written statement by MBI
that it has complied with the reporting requirements of Rule 144 and of
the Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of MBI on Form 10-K or Form 10-Q, and such
other reports and documents so filed by MBI as may be reasonably
requested availing any Holder of any rule or regulation of the
Commission permitting the selling of any such securities without
registration.
8.08 Certain Limitations in Connection with Future Grants of
Registration Rights; Priority with Other Shares Entitled to Registration Rights.
MBI shall not enter into any agreement with any holder or prospective holder of
any securities of MBI providing for the granting to such holder of registration
rights unless such agreement includes a provision that, in the case of a public
offering involving an underwritten registered offering, protects the Holders if
marketing factors require a limitation on the number of securities to be
included in the underwriting in the manner in which the Holders are protected
under Section 8.01.
Article 9
Representations of Mallinckrodt
To induce MBI to sell the Common Stock described in Article 2,
Mallinckrodt represents and warrants to MBI as follows:
9.01 Investment Purpose. Mallinckrodt is acquiring the shares of Common
Stock issued pursuant to this Agreement for purposes of investment and not with
a view to the sale or other distribution thereof as such terms are defined in
the Securities Act, as amended, and the regulations of the Commission
promulgated thereunder. Mallinckrodt acknowledges that (i) these shares have not
been registered under the Securities Act, as amended, or the securities laws of
any state and that (ii) the transfer of any of these shares is subject to the
restrictions and limitations of this Agreement.
9.02 Authorization and Binding Effect. The execution and delivery of
this Agreement and the performance by Mallinckrodt of its obligations hereunder
are within Mallinckrodt's corporate power, have been duly authorized by proper
corporate action on the part of Mallinckrodt, are not in violation of, or in
default under, any existing law, rule or regulation of any governmental agency
or authority, any order or decision of any court, the Certificate of
Incorporation or By-Laws of Mallinckrodt or the terms of any agreement,
restriction or undertaking to which Mallinckrodt is a party or by which it is
bound, and except for the notification required by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, do not require the approval or
consent of or notice to the shareholders of Mallinckrodt, any governmental body,
agency or authority or any other person or entity.
9.03 Brokers. This Agreement was not induced or procured through any
person, firm or corporation acting as a broker or finder for Mallinckrodt.
Mallinckrodt agrees to hold MBI harmless from any loss, damage, cost or expense
resulting from any claim by any person, firm or corporation based upon any such
person, firm or corporation having acted as a broker or finder for Mallinckrodt
or any other Person in connection with the transaction contemplated by this
Agreement.
Article 10
Miscellaneous
10.01 Survival of Representations and Warranties. MBI's representations
and warranties contained in Article 3 hereof shall survive the Closing for a
period of 2 years from the date of Closing, provided, however, MBI's
representations and warranties contained in Sections 3.02 and 3.09 shall survive
indefinitely.
10.02 Amendment of 1988 Investment Agreement. The 1988 Investment
Agreement is amended as ollows, effective as of Closing:
(a) Sections 1.08 ("Common Stock"), 1.13 ("Holder" or "Holders")
and 1.19 ("Registrable Shares") of the 1988 Investment Agreement are
amended to read the same as Sections 1.08. 1.11 and 1.20, respectively,
of this Agreement;
(b) Provisions reading the same as Sections 1.14 ("MBI
Securities"), 1.17 ("Other Common Stock") and 1.18 ("Other MBI
Securities") of this Agreement are added to the 1988 Investment Agreement
as Sections 1.26, 1.27 and 1.28, respectively;
(c) Articles 5 ("Affirmative Covenants"), 6 ("Anti-Dilution Rights
and Limitations on Ownership"), 7 ("Rights of First Refusal") and 8
("Registration Rights") of the 1988 Investment Agreement are amended to
read the same as Articles 5, 6, 7 and 8, respectively, of this Agreement
(with the exception that the reference to the 1988 Investment Agreement in
Section 6.06 of this Agreement shall be considered a reference to this
Agreement); and
(d) A provision reading the same as Section 10.11 ("Term")of this
Agreement is added to the 1988 Investment Agreement as Section 10.12.
10.03 Assignment. This Agreement shall be assignable by either party only
with the written consent of the other party, except that either party may assign
this Agreement, without such consent, to the purchaser of all its assets, or of
all the assets of its business to which the Distribution Agreement relates, and
Mallinckrodt may assign this Agreement or its rights hereunder to any Affiliate
of Mallinckrodt.
10.04 Notice. All notices, communications, demands and payments required
or permitted to be given or made hereunder or pursuant hereto shall be sent by
certified or registered mail, postage prepaid, overnight messenger services,
telecopier or personal delivery as follows:
If to Mallinckrodt:
Mallinckrodt Medical, Inc.
675 McDonnell Boulevard
St. Louis, Missouri 63134
Attention: Vice President - Ultrasound Imaging
Telecopier: (314) 895-7281
with a copy to:
Mallinckrodt Medical, Inc.
675 McDonnell Boulevard
St. Louis, Missouri 63134
Attention: Vice President and General Counsel
Telecopier: (314) 895-7181
If to MBI:
Molecular Biosystems, Inc
10030 Barnes Canyon Road
San Diego, California 92121
Attention: Chief Operating Officer
Telecopier: (619) 452-6187
with a copy to:
Craig P. Colmar, Esq.
Johnson and Colmar
300 South Wacker Drive
Suite 1000
Chicago, Illinois 60606
Telecopier: (312) 922-9283
All notices sent by certified or registered mail shall be considered to have
been given two business days after being deposited in the mail. All notices sent
by overnight messenger service, telecopier or personal delivery shall be
considered to have been given when actually received by the intended recipient.
Either party may change the address designated by notifying the other party in
writing.
10.05 Governing Law. This Agreement is deemed to have been entered into in
the State of Missouri, and its interpretation, construction, and the remedies
for its enforcement or breach are to be applied pursuant to and in accordance
with the laws of the State of Missouri.
10.06 Validity of Agreement. If any provision of this Agreement is,
becomes, or is deemed invalid or unenforceable in any jurisdiction, such
provision shall be deemed amended to conform to applicable law so as to be
valid, legal and enforceable in such jurisdiction so deeming. The validity,
legality and enforceability of such provision shall not in any way be affected
or impaired thereby in any other jurisdiction. If such provision cannot be so
amended without materially altering the intention of the parties, it shall be
stricken in the jurisdiction so deeming, and the remainder of this Agreement
shall remain in full force and effect.
10.07 Waiver. No waiver of any right under this Agreement shall be deemed
effective unless contained in a writing signed by the party charged with such
waiver, and no waiver of any right arising from any breach or failure to perform
shall be deemed to be a waiver of any future such right or of any other right
arising under this Agreement.
10.08 Entire Agreement. This Agreement, together with the Distribution
Agreement and the 1988 Investment Agreement, set forth and constitute the entire
agreement between the parties hereto with respect to the subject matter hereof,
and supersede any and all prior agreements, understandings, promises and
representations made by either party to the other concerning the subject matter
hereof and the terms applicable hereto.
10.09 Headings and References; Incorporation of Exhibits. The headings
contained in this Agreement are inserted for convenience of reference only and
shall not be a part, control or affect the meaning hereof. All references herein
to Articles and Sections are to the Articles and Sections of this Agreement
(unless specifically referring to Articles or Sections of the 1988 Investment
Agreement or the Distribution Agreement). All references herein to Appendices
are to the Appendices hereto, each of which shall be incorporated into and
deemed a part of this Agreement. An exception in any Appendix to any particular
representation and warranty in Article 3 shall be considered an exception to all
other applicable representations and warranties in Article 3.
10.10 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but which together shall constitute
one and the same instrument.
10.11 Legends. The stock certificate delivered at the Closing in
accordance with Section 2.03, and each stock certificate representing any shares
of Other Common Stock which MBI may issue to Mallinckrodt or an Affiliate of
Mallinckrodt, shall bear a legend substantially to the effect that the shares
represented by the certificate have not been registered under the Securities
Act, as amended, or the securities laws of any state and that (ii) the transfer
of any of these shares is subject to the restrictions and limitations of this
Agreement. MBI shall remove the former legend if and when the shares represented
by the certificate have been registered under the Securities Act in accordance
with Article 8 or become freely salable under the Commission's Rule 144(k). Each
such stock certificate shall also bear a legend to the effect that the shares
represented by the certificate, while owned of record by Mallinckrodt or an
Affiliate of Mallinckrodt, constitute "Repurchasable Shares" as defined in
Section 9.02 of the Amended and Restated Distribution Agreement.
10.12 Term. The term of this Agreement shall continue until the later of
(i) the date that MBI exercises either of its options under Sections 9.01(a) or
(b) of the Distribution Agreement in respect of each affected territory or (ii)
the date that Mallinckrodt and its Affiliates cease to own any shares of Common
Stock or Other Common Stock.
Molecular Biosystems, Inc.
By /s/ Kenneth J. Widder
Kenneth J. Widder, M.D.
Chairman and Chief
Executive Officer
Mallinckrodt Medical, Inc.
By /s/ Robert G. Moussa
Name: Robert G. Moussa
Title:President and
Chief Executive Officer
<PAGE>
Appendix 3.07
(Material Contracts)
No exceptions.
<PAGE>
Appendix 3.13
(Absence of Changes)
No exceptions.
Amendment No. 3 to
License and Cooperative Development Agreement
This Amendment (the "Amendment") made as of October 24, 1995, by and
between Nycomed Imaging AS, a Norwegian corporation ("Nycomed"), and Molecular
Biosystems, Inc., a Delaware corporation ("MBI"), to the License and Cooperative
Development Agreement dated as of December 31, 1987 between MBI and Nycomed's
predecessor in interest, Nycomed AS, as amended by (i) the Amendment dated
February 16, 1989 and (ii) the Amendment dated June 15, 1989 (as amended, the
"License Agreement").
Witnesseth that:
WHEREAS, Nycomed desires to transfer back to MBI, by means of
terminating, all of Nycomed's rights under the License Agreement to test,
evaluate and develop Licensed Products and to make, have made, use and sell
Licensed Products in the Territory, except for certain rights retained for the
limited purposes described in the following recital, and MBI desires to
reacquire these rights, on the terms and subject to the conditions of this
Amendment; and
WHEREAS, the parties contemplate that MBI will seek a new strategic
partner to act as its licensee in the Territory. The parties have agreed that
while MBI seeks such a partner (and in the subsequent transition), Nycomed will
continue the clinical trials, product registrations and other development work
currently in progress in connection with Licensed Products which it undertook in
the License Agreement. The parties have also agreed that, at MBI's option,
Nycomed will manufacture certain Licensed Products for sale in the Territory by
MBI or its licensees under a separate supply agreement.
NOW, THEREFORE in consideration of the covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Effect of this Amendment.
Except as specifically terminated or modified by this Amendment,
the provisions of the License Agreement shall continue in effect; provided,
however, that in the event of any inconsistency or conflict between the License
Agreement and this Amendment, the provisions of this Amendment shall govern.
Capitalized terms which are used in this Amendment without definition shall have
the same meanings that they have in the License Agreement.
2. Termination of License. Except for continuing on a nonexclusive basis
for the limited purpose and limited duration of (i) enabling Nycomed to perform
its obligations under Section 4 of this Amendment and (ii) enabling Nycomed to
manufacture Infoson in accordance with the Supply Agreement (as defined in
Section 5 of this Amendment), the license granted in Section II.A of the License
Agreement is terminated as of the date of this Amendment.
3. Payments by MBI. MBI shall pay Nycomed as follows:
3.1 Fixed Payment Upon Execution. Upon execution of this Amendment,
MBI shall pay to Nycomed $700,000.
3.2 Additional Fixed Payment. MBI shall pay an additional
$2,000,000 to Nycomed upon the earlier of (i) March 31, 1996 or (ii) the
execution by MBI of a definitive agreement with a licensee or strategic
partner covering the grant by MBI of rights to the Technology Rights
and/or Licensed Products ("License Rights") in a portion or all of the
Territory.
3.3 Additional Payment. In addition to the foregoing fixed payments
aggregating $2,700,000, MBI shall pay to Nycomed 45% of any amounts in
excess of $2,700,000 received by MBI in either up-front, milestone or
similar payments from third parties in consideration for MBI's grant of
License Rights in a portion or all of the Territory at any time after the
date of this Amendment. MBI shall make each such payment within 30 days
of its receipt of the payment from the third party and shall furnish
Nycomed with a copy of the relevant provisions of the agreement pursuant
to which such third party has made the payment to MBI; if Nycomed
requests, MBI shall furnish a copy of such agreement to an independent
third party acceptable to both MBI and Nycomed for purposes of verifying
the amount of MBI's payments. If payments are made to MBI by a third
party which has rights to Licensed Products in other countries in
addition to the Territory and such payments are contingent upon the
transfer to such third party of License Rights in a portion or all of the
Territory, an appropriate portion of any such contingent payments that
are not specified as payment for License Rights in the Territory shall be
characterized as payments for License Rights in the Territory for
purposes of sharing 45% with Nycomed, taking into account the market
value of the portion of the Territory in which such third party has
License Rights in relation to the market value of all other countries in
which such third party has such rights.
3.4 Change of Control Payment.
3.4.1If prior to the execution of a definitive agreement
between MBI and a strategic partner for License Rights in the
Territory to both (i) Albunex(R) (including the formulation
developed by Nycomed and known as "Infoson") ("Albunex") and (ii)
the product consisting of sonicated albumin microspheres containing
perfluoropropane which MBI has code-named "FS069" ("FS069"), there
is a "Change of Control" of MBI (as defined in Section 3.4.4 of
this Amendment, MBI shall pay to Nycomed, within 30 days after the
Change of Control, [omitted; filed separately with the Commission]
(to reflect the value of the two products as part of the overall
value of MBI) if such Change of Control occurs on or before the
second anniversary of the date of this Amendment, or [omitted;
filed separately with the Commission] if such Change of Control
occurs thereafter.
3.4.2If License Rights to either Albunex or FS069 (but not
both) have been granted by MBI to a strategic partner and a Change
of Control then takes place on or before the second anniversary of
the date of this Amendment, MBI shall pay to Nycomed, within 30
days after the Change of Control, [omitted; filed separately with
the Commission] for the product which was not previously licensed.
3.4.3If License Rights to either Albunex or FS069 (but not
both) have been granted by MBI to a strategic partner and a Change
of Control then takes place after the second anniversary of the
date of this Amendment, MBI shall pay to Nycomed, within 30 days
after the Change of Control, [omitted; filed separately with the
Commission] for FS069 if FS069 is the remaining unlicensed product,
or [omitted; filed separately with the Commission] for Albunex if
Albunex is the remaining unlicensed product.
3.4.4A "Change of Control" for purposes of this Section 3.4
shall mean the acquisition by any corporation (or by any other
person or group) of more than 50% of the combined voting power of
MBI's outstanding Common Stock and its other outstanding securities
ordinarily entitled to vote in elections of directors (whether by
MBI's issuance or repurchase of its capital stock, any
reorganization, recapitalization, reclassification or similar event
with respect to MBI's capital stock, any transfer by stockholders
of MBI of shares of capital stock held by such stockholders, any
merger or consolidation of MBI into or with another entity, or any
transfer or sale of substantially all the assets of MBI).
3.5 Royalty. During the remaining term of the License
Agreement, MBI shall pay to Nycomed a royalty equal to 2.5% of the Net
Selling Price of Licensed Products sold in the Territory by MBI or its
licensees on sales of up to (and including) $30 million in any one year,
and 3.5% of the Net Selling Price of Licensed Products on sales above $30
million in any one year. A separate royalty shall be payable in respect
of each Licensed Product.
3.5.1Definition of Net Selling Price. For purposes of this
Amendment, "Net Selling Price" shall mean the gross selling price
of any Licensed Product sold by MBI, its Affiliates, sublicensees,
distributors, representatives, or agents to an unrelated third
party for use in the Territory less allowances for spoiled,
damaged, outdated or returned products, and less trade, quantity
and cash discounts allowed, and less all sales and excise taxes,
duties paid, transportation and handling charges. Notwithstanding
the foregoing, discounts in excess of a commercially reasonable
discount for the distribution of a Licensed Product independent of
the distribution of other products will be disregarded regardless
of whether the Licensed Product is distributed independently or in
connection with another product.
3.5.2Reporting; Payment. During any period that MBI is
obligated to pay royalties to Nycomed under this Section 3.5, MBI
shall calculate and pay the royalties quarterly, within 60 days
after the end of each calendar quarter. MBI shall also provide
Nycomed, within such 60-day period, with a written report for that
quarter with adequate detail to support the calculation of the
royalty. Royalties hereunder shall be paid in U.S. Dollars, and
calculations based on sales in other currencies shall be made based
on the exchange rates published in The Wall Street Journal (the New
York foreign exchange selling rates for trading among banks in
amounts of $1 million or more) for the last business day in the
applicable calendar quarter.
3.5.3MBI Records; Accounting Review. MBI shall keep full, true
and accurate books of account containing all particulars which may
be necessary for the purpose of showing the royalties payable to
Nycomed pursuant to this Section 3.5. Said books and the supporting
data shall be open and accessible at all reasonable times during
the term of the Agreement to the inspection of an independent
certified accountant or other appropriately certified agent
retained by Nycomed and reasonably acceptable to MBI for the
purpose of verifying MBI's royalty statements, or MBI's compliance
in other respects with the royalty provisions of this Section 3.5.
MBI may take reasonable steps to provide Nycomed's agent only such
information as is necessary for such verification, and Nycomed's
agent shall report to Nycomed only such information as is required
by Nycomed to confirm MBI's compliance with the terms of this
Section 3.5. Nycomed and its agent shall keep any information so
obtained confidential.
3.6 Certain Proprietary Rights. As provided below in Section
8.7.3 of this Amendment, Section VI.J is being terminated by this
Amendment. As additional consideration for the termination of
Nycomed's license and other amendments to the Agreement described
herein, MBI hereby acknowledges that as a result of the settlement
in this Agreement, it has no rights to receive or license any New
Developments, Assisted New Developments or Joint Developments from
Nycomed, and MBI waives and releases any claims related to (i) the
failure, if any, of Nycomed to develop or provide New Developments,
Assisted New Developments or Joint Developments prior to the date
of this Amendment, and (ii) any such New Developments, Assisted New
Developments or Joint Developments that may have been developed or
provided by Nycomed.
4. Continuing Development Work by Nycomed.
4.1 Nycomed shall continue the product registration work for the
Licensed Products in the Territory specifically listed in Exhibit A to
this Amendment (Summary of Registration Status of July 1, 1995) for a
period which shall terminate on the first to occur of (i) the approval by
the regulatory authority in each of the respective countries, as to the
work in that country, or (ii) Nycomed's receipt of notice from MBI to
terminate all such registration activities. Nycomed shall use its best
efforts to obtain the regulatory approvals promptly but shall not be
obligated to undertake any new regulatory filings in addition to those
listed in Exhibit A. In addition, Nycomed shall not be obligated to
initiate any new studies which may be requested by any regulatory
authorities as a condition to regulatory approval.
4.2 Nycomed shall continue the specific clinical trials for the
Licensed Products in the Territory which are described in detail in
Exhibit B to this Amendment, for a period which will terminate on the
earlier of (i) the completion of the clinical trials listed in Exhibit B
or (ii) Nycomed's receipt of notice from MBI to terminate all such
activities. Nycomed shall use its best efforts to complete such trials on
the time schedule listed for each trail in Exhibit B but shall not be
obligated to undertake any trials in addition to those so listed.
4.3 Nycomed's retained license for this continuing development work
shall terminate when its obligations under this Section 4 are completed.
4.4 Additionally, Nycomed shall immediately provide to MBI all
information (or appropriate summaries thereof) in Nycomed's possession
related to mean size and/or concentration of microspheres used or useful
in manufacturing Infoson and intended to increase Infoson's efficacy.
4.5 Nycomed shall take all necessary or appropriate actions to
permit MBI or any licensee or assignee of rights through MBI to reference
or otherwise receive the benefit of all regulatory applications,
registrations or approvals filed or obtained by Nycomed.
5. Supply Agreement. At MBI's option, exercisable at any time from the
date of this Amendment through March 31, 1996, MBI and Nycomed shall enter into
a supply agreement for Infoson substantially in the form of the supply agreement
attached as Exhibit C to this Amendment (the "Supply Agreement"), on economic
terms to be negotiated.
6. Trademark Assignment. Upon the effective date of this Amendment,
Nycomed shall assign to MBI all of Nycomed's rights to the trademark "Infoson"
(the " Trademark") and agrees to execute and file, if necessary, all appropriate
Trademark assignment documentation in all relevant jurisdictions. MBI will grant
a limited license to Nycomed to use the Trademark to the extent that use of the
Trademark by Nycomed is necessary or helpful for Nycomed's performance of its
activities pursuant to Section 4 of this Amendment.
7. Other Agreements. Nycomed and MBI agree that the Investment Agreement
dated December 31, 1987 between Nycomed AS and MBI, as amended by an Amendment
dated February 16, 1989 (as amended, the "Investment Agreement"), and the
related Registration Agreement dated December 31, 1987 (the "Registration
Agreement") are hereby terminated and of no further force or effect.
8. Other Provisions of the License Agreement. Nycomed and MBI agree
that the following provisions of the License Agreement shall be terminated or
modified as of the date of this Amendment as follows:
8.1 Section II.A. Nycomed's retained license under Section II.A of
the License Agreement for the purpose of enabling Nycomed to manufacture
Infoson in accordance with the Supply Agreement shall terminate on the
earlier of (i) the expiration without having been exercised of MBI's
option under Section 5 of this Amendment to require Nycomed to enter into
the Supply Agreement or (ii) if MBI exercises its option, the expiration
or termination of the Supply Agreement (as the term of the supply
agreement may be renewed or extended).
8.2 Section II.E. Section II.E of the License Agreement("Trademark
License") is terminated.
8.3 Section II.F. Section II.F of the License Agreement
("Technology Transfer") is terminated except to the extent that any
Technical Data is necessary or helpful for Nycomed's performance of its
activities pursuant to Section 4 of this Amendment or for the manufacture
of Infoson in accordance with the Supply Agreement. MBI shall have no
obligation to transfer Technical Data for the latter purpose unless and
until MBI and Nycomed enter into the Supply Agreement.
8.4 Article III. Article III of the License Agreement ("Other
Territories") is terminated.
8.5 Article IV. Article IV of the License Agreement ("Payments")
is terminated.
8.6 Article V. Article V of the License Agreement ("Royalties,
Records and Reports") is terminated.
8.7 Article VI. Article VI of the License Agreement ("Joint
Development, Product Specification and Labeling") is terminated as
follows:
8.7.1 Sections VI.A, VI.C, VI.D, VI.E and VI.F.of the License
Agreement ("Clinical Trials," "Access to Clinical Centers," "Mutual
Assistance" and "Revisions to Specifications," respectively) are
terminated except to the extent that the parties' performance of
their respective obligations under those sections is necessary or
helpful for Nycomed's performance of its activities pursuant to
Section 4 of this Amendment.
8.7.2 Sections VI.B, VI.G, VI.H and VI.I of the License
Agreement ("MBI Product Development, Pre-Marketing and
Pre-Production Activities; Access to Clinical Data and Benefits of
Pre-marketing Activities," "Changes in the LICENSED PRODUCT,"
"Identification of MBI," "Interruption in NYCOMED's Ability to
Supply" and "Assistance in Addressing Insufficient Capacity,"
respectively) are terminated.
8.7.3 Section VI.J of the License Agreement("Improvements")is
terminated.
8.8 Section IX.A. Section IX.A of the License Agreement is amended
to read as follows:
This Agreement, unless earlier terminated as provided
herein, shall expire in accordance with the period
specified in Article VIII, above.
8.9 Section IX.D. Section IX.D of the License Agreement is amended
to read as follows:
The termination of this License and Cooperative
Development Agreement shall terminate all sublicenses
made by NYCOMED hereunder, and the termination of any
license granted to Nycomed under this Agreement shall
terminate all sublicenses made by NYCOMED under that
license.
8.10 Section IX.E. Section IX.E of the License Agreement is amended
to read as follows:
MBI's responsibilities and obligations to report to
Nycomed and to pay royalties to NYCOMED as to any
Licensed Product sold by MBI or sublicensees or to pay to
Nycomed any outstanding amounts, due and payable under
this License Agreement prior to termination hereof, shall
survive such termination.
8.11 Section IX.F. Section IX.F of the License Agreement is
terminated.
8.12 Article XI.Article XI of the License Agreement("Infringement")
is terminated as follows:
8.12.1 Sections XI.A, XI.B, XI.C, XI.D and XI.F of the License
Agreement ("NYCOMED's Right to Enforce," "Cooperation," "Litigation
Procedures," "Litigation by NYCOMED" and "Infringement; Invalidity;
Competitive Third-Party Marketing," respectively) are terminated.
8.12.2 Section XI.E of the License Agreement ("Indemnification
by MBI") is terminated in respect of all infringement claims except
infringement claims arising from Nycomed's manufacture of Infoson
in accordance with the Supply Agreement (if MBI and Nycomed enter
into the Supply Agreement).
8.13 Article XII. Article XII of the License Agreement ("NYCOMED's
Efforts") is terminated.
8.14 Article XIV. Article XIV of the License Agreement ("Scope of
Agreement") is amended to read as follows:
This Agreement shall include and shall not be effective
without Appendices I and II, which are incorporated
herein by reference.
9. Waiver of Claims. MBI and Nycomed each waive and release any claims
that it may have against the other as of the date of this Amendment under or
relating to the License Agreement (including, but not limited to, claims in
respect of New Developments developed by the other party prior to the date of
this Amendment), the Investment Agreement or the Registration Agreement. The
parties acknowledge that MBI's waiver and release in this Section 9 is provided,
in addition to the payments that MBI is required to make to Nycomed under
Sections 3.1, 3.2 and 3.3 of this Amendment, in consideration of the covenants
and agreements of Nycomed set forth herein.
10. Confidentiality. MBI and Nycomed agree to consult with the other
as to the content of any public announcement of this Amendment prior to such
announcement.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
and duly executed this Amendment as of the day and year first written above.
NYCOMED IMAGING AS
By: /s/ T. Talseth
Name: T. Talseth
Title: President
MOLECULAR BIOSYSTEMS, INC.
By: /s/ Kenneth J. Widder
Name: Kenneth J. Widder, M.D.
Title: Chairman and Chief
Executive Officer
<PAGE>
EXHIBIT A
INFOSON (Albunex)
REGULATORY STATUS
1 July 1995
Page 1 of 1
<TABLE>
<CAPTION>
============================ ----------------------- ------------------------ ------------------------- ====================
COUNTRY SUBMITTED APPROVED AUTHORIZED MARKETED
============================ ----------------------- ------------------------ ------------------------- ====================
<S> <C> <C> <C> <C>
Austria 01.07.93
Finland 17.12.92 16.01.95 16.01.95
Norway 29.03.94
Sweden 03.11.92 28.01.94 28.01.94
Switzerland 01.12.92
UK 11.09.92 25.02.93 21.07.94
============================ ======================= ======================== ========================= ====================
Belgium 27.09.94
Denmark 21.09.94
France 22.09.94
Germany 20.09.94
Greece 22.09.94
Ireland 27.09.94
Italy 27.09.94
Luxembourg 26.09.94
The Netherlands 22.09.94
Spain 22.09.94
============================ ======================= ======================== ========================= ====================
The Multi-State Procedure started 15.10.94 in the EEC countries listed above
============================ ======================= ======================== ========================= ====================
USA 14.09.90 05.08.94
============================ ======================= ======================== ========================= ====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
CENTRAL CLINCIAL TRIALS-NOT INCLUDED IN 1st FILE INFOSON EXHIBIT B
====================================================================================================================================
ONGOING TRIALS
========= --------------------------------------------- ------------------- ----------------------- ---------------- ===============
Trial No. Indication/Application No. of Patents No of Patients Estimated date Estimated Date
Enrolled Planned to be Enrolled patent inclusion Final Report
complete
========= --------------------------------------------- ------------------- ----------------------- ---------------- ===============
<S> <C> <C> <C> <C> <C>
IAXH026 Myocardial Contrast Enhancement, I.C. 11 25 Terminated IQ96
Injection
========= --------------------------------------------- ------------------- ----------------------- ---------------- ===============
IAXH032 Heart Chamber Opacification and I.V. Safety 20 20 Complete IQ96
========= --------------------------------------------- ------------------- ----------------------- ---------------- ===============
AXU033b Fallopian Tube Patency Tot. 033b/048 221 Tot. 033b/048 221 Complete Oct. 95
========= --------------------------------------------- ------------------- ----------------------- ---------------- ===============
AXH038 Heart Chamber Opacification and I.V. Safety 30 30 Complete IQ96
========= --------------------------------------------- ------------------- ----------------------- ---------------- ===============
AXH041 Heart Chamber Opacification and I.V. Safety 24 67 Terminated IIQ96
========= --------------------------------------------- ------------------- ----------------------- ---------------- ===============
AXV042 Cardia Doppler/Mitral Regurgitation 45 45 Complete Oct. 95
========= --------------------------------------------- ------------------- ----------------------- ---------------- ===============
AXH044 Heart Chamber Opacification and I.V. Safety 9 50 IQ96 IIIQ96
========= --------------------------------------------- ------------------- ----------------------- ---------------- ===============
AXV045 Arterial Stenosis and Organ Perfusion 10 10 Complete IV95
========= --------------------------------------------- ------------------- ----------------------- ---------------- ===============
AXU057 Bladder Reflux 2 10 IVQ95 IQ96
========= --------------------------------------------- ------------------- ----------------------- ---------------- ===============
AXU048 Fallopian Tube Patency See AXU033b
========= ============================================= =================== ======================= ================ ===============
AXH049 Heart Chamber Opacification and I.V. Safety 13 50 Terminated IQ96
Cardiac Doppler
========= ============================================= =================== ======================= ================ ===============
</TABLE>
<PAGE>
<TABLE>
CENTRAL CLINICAL TRIALS-NOT INCLUDED IN 1st FILE INFOSON
ONGOING TRIALS
<CAPTION>
============ ------------------------------------- ---------------- -------------------------- ---------------------- ==============
Trial No. Indication/Application No. of Patents No. of Patens Planned to Estimate Date Patent Estimate date
Enrolled be Enrolled Inclusion Complete Final Report
============ ------------------------------------- --------------- -------------------------- --------------------- ==============
<S> <C> <C> <C> <C>
AX11050 Heart Chamber Opacification and 30 30 Complete IVQ95
I.V. Safety Stress-Echocardiography
============ ------------------------------------- ---------------- -------------------------- ---------------------- ==============
AXH051 Arterial Stenosis and Organ 3 18 IVQ95 IIQ96
Perfusion
============ ------------------------------------- ---------------- -------------------------- ---------------------- ==============
AXH055 Myocardia Contract Enhancement, 10 10 Complete Oct. 95
I.V. Injection
============ ===================================== ================ ========================== ====================== ==============
AXU056 Fallopian Tube Patency 16 Max. 120 Dec. 95 March 96
============ ===================================== ================ ========================== ====================== ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOCAL CLINICAL TRIALS INFOSON
ONGOING TRIALS
============== ------------------------------------- ----------------- ---------------------- --------------------- ==============
Trial No. Indication/Application No. of Patents No. of Patents Planned Estimate Date Patent Estimate Date
Enrolled to be Enrolled Inclusion Complete Final Report
============== ------------------------------------- ----------------- ---------------------- --------------------- ==============
<S> <C> <C> <C> <C> <C>
AXH01 Mammary Graft, I.V. Injection 30 30 Complete 4Q95
============== ------------------------------------- ----------------- ---------------------- --------------------- ==============
AXH003 Heart Chamber Opacification, LV 73 120 Terminated 2Q96
Function, I.V. Inj.
============== ------------------------------------- ----------------- ---------------------- --------------------- ==============
AXH004 Lad, Cor. Sinus, I.V. Inj./Tee 9 30 IQ96 2Q96
============== ------------------------------------- ----------------- ---------------------- --------------------- ==============
AXH06 Heart Chamber Opacification, L.V. 5 30 2Q96 4Q96
Function I.V. Inj.
============== ===================================== ================= ====================== ===================== ==============
AXH501 Heart Chamber Opacification, L.V. 35 50 4Q96 IQ96
Function, I.V., Inj.
============== ===================================== ================= ====================== ===================== ==============
</TABLE>
<PAGE>
===============================================================================
EXHIBIT C
FORM OF
SUPPLY AGREEMENT
This Supply Agreement (the "Agreement") is made as of ,1995by and between
Nycomed Imagining A.S., a Norwegian Corporation ("Nycomed"), and Molecular
Biosystems, Inc., a Delaware Corporation ("MBI").
WHEREAS, Nycomed and MBI are parties to a License and Cooperative
Development Agreement dated December 31, 1987, as amended (the "License
Agreement") pursuant to which Nycomed has engaged in development work on the
Licensed Products as defined therein (including ALBUNEX), and Nycomed has
developed a manufacturing capability for the Licensed Products;
WHEREAS, the License Agreement has been amended by an Amendment of even
date herewith, pursuant to which Nycomed has transferred back to MBI the
marketing rights for the Licensed Products in the Territory, but the parties
desire that Nycomed manufacture and supply the Licensed Products to MBI or its
licensee in the Territory, on the terms provided in this Supply Agreement;
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Definitions.
1.1. "Agreement" shall mean this Supply Agreement, as it may be amended
from time to time.
1.2. "License Agreement" shall mean the License and Cooperative
Development Agreement date December 31, 1987, as amended by an Amendment dated
June 15, 1989 and by Amendment No. 2 of even date herewith.
1.3. "Licensed Product" shall mean the product for ultrasound imaging
contrast covered by, or sold for use in, or manufactured according to a process
covered by any pending claim in any pending patent application or by, a claim in
any unexpired patent which claim, or a claim corresponding thereto in any other
patent, has not been declared invalid by a court of competent jurisdiction,
which patent application or patent is included in the Technology Rights and that
meets the specifications for the Albunex product described by Nycomed as
"Infoson.' For purposes of this Agreement, "Licensed Products" does not include
FS069.
1.4. "Technology Rights" shall mean the following:
1. those patents and patent applications as currently set forth in
Appendix I to the License Agreement, together with any patent which may be
issued thereunder, and any divisional, continuation or continuation-in-part
applications based thereon, and any patents resulting from any of said
applications and any reissues or extensions based on any of such patents;
2. any foreign patent applications claiming subject matter embodied
in the aforesaid patents and patent applications, which have been or will be
filed in the countries of the Territory as hereinafter defined together with any
patent which may be issued thereunder, any divisional, continuation or
continuation-in-part applications based thereon, and any patents resulting from
any of said applications and any reissues or extensions based on any of such
patents;
3. any other patents or patent applications, or trade secrets or
know-how presently owned by, being developed or subsequently developed or
acquired by MBI which relate directly to the design, manufacture or use of
microspheres for ultrasound imaging contract in vascular applications.
1.5. "Territory" shall mean those countries set forth in Appendix II to
the License Agreement, their Territories and Possessions, as amended from time
to time pursuant to Article VIII of the License Agreement.
2. Term of this Agreement. This Agreement shall commence on the
effective date hereof and shall continue for an initial term ending on the
second anniversary of the first commercial sale of the Licensed Products in the
Territory. [Renewal provisions to be discussed.]
3. Supply of Licensed Products. MBI shall purchase from Nycomed, and
Nycomed shall supply to MBI, all MBI's requirements of the Licensed Products for
use or sale in the Territory, including quantities for research, development and
clinical trials as well as for commercial purposes after approval for marketing
the Licensed Products has been obtained, and including all quantities required
by any licensees of MBI in the Territory.
In the event of any significant interruption in Nycomed's ability to supply the
Licensed Products to MBI hereunder, Nycomed shall, promptly after such
interruption, use reasonable efforts to provide all necessary information and
appropriate raw materials to permit MBI to manufacture the Licensed Products for
its requirements in the Territory so long as such interruption continues. When
Nycomed can once again supply MBI's requirements, MBI shall once again purchase
such requirements from Nycomed.
4. Price. The price of the License Product to MBI shall be Nycomed's full
manufacturing cost plus %. Nycomed shall prepare and submit to MBI no later than
the time Licensed Products are first supplied under this Agreement, a
calculation of its full manufacturing cost, including [definition of full
manufacturing cost to be discussed].
In the event of increases or decreases in Nycomed's full manufacturing cost,
Nycomed shall provide MBI with notice of not less than 30 days of such increase
or decrease, along with an explanation of the reasons for the increase or
decrease and a calculation of the new full manufacturing cost figures.
5. Specifications. The Licensed Products to be supplied by Nycomed to MBI
hereunder shall conform to the specifications established by mutual agreement of
Nycomed and MBI, as modified from time to time to meet the requirements of the
relevant governmental authorities. The Licensed Products shall also conform to
the specifications set forth in applicable regulatory filings relating to the
Licensed Products in the countries included in the Territory. Once the necessary
governmental approvals are obtained, the parties shall set forth the agreed
specifications in an Exhibit A to be attached to this Agreement, entitled
"Specifications for Licensed Products". Exhibit A shall also contain any agreed
quality control tests and inspection procedures and shall be amended from time
to time to reflect any change in the mutual agreements of the parties or in the
regulatory requirements.
6. Non-Conforming Substances. MBI may reject and shall not be obligated to
pay for, or if payment has been made then MBI shall receive a credit for, any
substances that do not conform to the specifications and performance
requirements set forth in Exhibit A. MBI shall promptly notify Nycomed of any
substances that MBI is rejecting as non-conforming or defective substances to
Nycomed at Nycomed's expense. Any such notice of rejection shall be in writing
and shall specify the lot number of the nonconforming or defective mature of the
substance. MBI shall be deemed to have accepted any substances delivered to it
unless it gives notice of rejection within 90 days of receipt.
Notwithstanding the provisions of the foregoing paragraph, if the nonconformity
or defect is not readily apparent by physical inspection or is not revealed by
applicable acceptance tests at the time the substance is delivered to MBI, MBI
may revoke its acceptance by giving Nycomed prompt notice upon discovery of such
nonapparent nonconformity or defect. Any such notice shall be in writing and
shall specify the nonconforming or defective nature of the substance.
Nycomed shall promptly deliver to MBI a quantity of Licensed Products which
conform to the specifications and which is equal in amount to he amount of
substance that has been rejected.
MBI shall have the option at any time to take batch specimens and to conduct its
own tests and confirm that the substance conforms to the specifications prior to
shipment by Nycomed.
In the event that Nycomed and MBI disagree as to the conformity of substances to
the specifications and performance requirements set forth in Exhibit A, the
dispute shall be referred for a final resolution to a mutually acceptable
independent laboratory.
7. Facility Access. Upon request by MBI from time to time and upon
reasonable notice and during normal business hours, Nycomed will grant access to
its facilities and records to MBI's manufacturing, quality control and
compliance inspectors. Nycomed shall allow such inspectors to inspect the
manufacturing and quality control testing operations, compliance procedures and
records relating to the Licensed Products, as well as inventory levels, to
insure that Nycomed can meet MBI's reasonable future requirements for the
Licensed Products, is manufacturing the Licensed Products in conformity with
applicable laws and regulations, and is otherwise satisfying its obligations
under this Agreement. Such inspections shall be conducted so as not to
unreasonably interfere with Nycomed's operations and after notice of at least 30
business days.
8. Orders and Deliveries. At least 90 days before the start of each
calendar quarter, MBI shall provide Nycomed with a written estimate of the
amounts of the Licensed Products it will desire for shipment during such quarter
and during each of the next five quarters (each such six-quarter estimate after
the first one shall contain a revision of the estimate previously made with
respect to the first five quarters).
MBI shall submit firm orders for the Licensed Products at least 90 days prior to
requested shipment date. If the total of MBI's firm orders for shipment in any
quarter exceeds % of its original estimate for the quarter or exceeds % of the
total of its order for shipment during the preceding quarter, Nycomed may extend
the shipment date for the excess by such reasonable period as is required by
Nycomed for the manufacture thereof.
The terms of all sales of Licensed Products hereunder shall be F.O.B. Nycomed's
place of manufacture, and MBI shall reimburse Nycomed for the cost of freight
and insurance and shall bear the cost of customs duty with respect to
importation of Licensed Products into any designated country for shipment.
9. Terms of Payment. Payment for all quantities of Licensed Products
supplied hereunder shall be made by MBI within 30 days after receipt of
Nycomed's invoice. Nycomed shall invoice MBI for Licensed Products supplied
hereunder upon the date of shipment.
10. Taxes. MBI shall be responsible for the payment of all taxes,
imports, levies and assessments based upon its sale of distribution of the
Licensed Products in the Territory, including obtaining authorization for,
and paying all the fees associated with, the export and transshipment of the
Licensed Products.
Nycomed shall be responsible for the payment of all taxes, levies and
assessments based upon its manufacture and delivery of the Licensed Products to
MBI, and all taxes based upon Nycomed's revenue or income associated with the
transactions contemplated by this Agreement.
In the event that either party is required to pay any taxes, imports, levies or
assessments for which the other is responsible under this Agreement, the
responsible party shall promptly reimburse the other party for such payment upon
request.
11. Manufacturing Practices. Nycomed shall comply with all laws,
regulations, standards and practices required in the countries where MBI will
market and sell the Licensed Products supplied hereunder, and the Licensed
Products shall not be adulterated or misbranded when delivered to MBI.
Authorized representatives of any government agency or safety standards
organization shall be allowed access to Nycomed's facilities for the purpose of
inspection during normal business hours pursuant to applicable law and
regulations.
12. Force Majeure. Nycomed and MBI shall not be liable for failure to make
or take, or delay in making or taking, any delivery due to war, strikes, labor
trouble, floods, fires shortages or interruption or transportation or any other
cause beyond their respective control, but they shall make every effort to
remove any such cause of their failure or delay as soon as possible.
13. Royalty. MBI shall pay to Nycomed royalties as provided in the
Amendment to the License Agreement with respect to MBI's sale of all Licensed
Products supplied by Nycomed.
14. Arbitration. If any dispute arises and cannot be resolved after good
faith efforts between the parties with respect to the interpretation or
implementation of any provision in this Agreement, then the parties agrees to
submit to arbitration in order to resolve such differences; provided, however
that disputes concerning the conformity of substances to specifications shall be
resolved as provided in Section 6 above. Any such arbitration shall be conducted
in London, England, UK, in accordance with the arbitration rules there and then
obtaining of the International Chamber of Commerce.
15. Default. If either party fails or neglects to perform covenants or
provisions of this Agreement and if such fault is not corrected within 60 days
after receiving written notice form the other party with respect to such
default, such other party shall have the right to terminate this Agreement at
any time by giving written notice to the party in default.
16. Bankruptcy. Either party may terminate this Agreement if, at any time,
the other party shall file in any court pursuant to any statute of the United
States or of any individual state of foreign country, a petition in bankruptcy
or insolvency or for reorganization or for an arrangement or for the appointment
of a receiver or trustee of the party or of its assets, or if the other party
shall be served with an involuntary petition against it filed in any insolvency
proceeding, and such petition shall not be dismissed within 60 days after the
filing thereof, or if the other party shall propose to be a party to any
dissolution or liquidation, or if the other party shall make an assignment for
the benefit of creditors.
17. General Provisions.
17.1. Amendment. All amendments or modifications of this Agreement
shall be in writing and shall be signed by each of the parties hereto.
17.2. Waiver. Any waiver of any right, power or privilege hereunder
must be in writing and signed by the party being charged with the waiver. No
delay on the part of any party hereto in exercising any right, power, or
privilege hereunder shall operate as a wavier of any other right, power or
privilege hereunder, nor shall nay single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power, or privilege.
17.3. Notices. Any notice required or permitted to be given by this
Agreement shall be given in writing and shall be delivered personally or sent by
overnight courier, by facsimile with confirmation by first class mail, or by
certified mail, return receipt requested. Notices delivered personally or sent
by overnight courier or by facsimile with confirmation by first class mail shall
be effective on the date received, while notices sent by certified mail, return
receipt requested shall be deemed to have been received and to be effective five
business days after deposit into the mails. Notices shall be given to the
parties at the following respective addresses or to such other addresses as any
parties shall designate in writing:
If to Nycomed: Postal Address:
Nycomed Imagining A.S.
Post Office Box 4220 Torshov
N-0401 Oslo, Norway
Attention: Tore Talseth, President
Address:
Nycovein 1-2
Oslo, Norway
If to MBI: Molecular Biosystems, Inc.
10030 Barnes Canyon Road
San Diego, California 92121
USA
Attention: Kenneth Widder, Chairman
17.4. Successors and Assigns. This Agreement and each of its
provisions shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors or to any assignee of substantially all
of the goodwill and business and assets of a party hereto and shall be
assignable by MBI without Nycomed's consent to a purchaser or licensee of MBI's
rights to sell Licensed Products in the Territory.
17.5. Governing Law. This Agreement shall be governed by and shall
be construed in accordance with the laws of the State of California, USA.
17.6. Severability. In the event that any provision of this
Agreement is held unenforceable or in conflict with the law of any jurisdiction,
it .is the intention of the parties that the validity of the remaining
provisions hereof shall not be effected by such holding./
17.7. Counterparts. This Agreement may be executed in two or more
counterparts, all of which together shall constitute a single instrument.
MOLECULAR BIOSYSTEMS, INC. NYCOMED IMAGING, A.S.
By: By:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of Molecular Biosystems, Inc. dated December
31, 1995 and is qualifed in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> DEC-31-1995
<CASH> 2,231
<SECURITIES> 18,889
<RECEIVABLES> 376
<ALLOWANCES> 0
<INVENTORY> 697
<CURRENT-ASSETS> 31,892
<PP&E> 13,592
<DEPRECIATION> 6,566
<TOTAL-ASSETS> 47,728
<CURRENT-LIABILITIES> 6,203
<BONDS> 8,183
<COMMON> 133
0
0
<OTHER-SE> 33,209
<TOTAL-LIABILITY-AND-EQUITY> 47,728
<SALES> 506
<TOTAL-REVENUES> 1,943
<CGS> 1,311
<TOTAL-COSTS> 18,456
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 596
<INCOME-PRETAX> (16,297)
<INCOME-TAX> 0
<INCOME-CONTINUING> (16,297)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,297)
<EPS-PRIMARY> (1.300)
<EPS-DILUTED> 0.000
</TABLE>
