<PAGE>
SECURITIES AND EXCHANGE COMMISSION Conformed
Washington, D.C. 20549 Copy
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended September 30, 1996
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from to
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Commission file number 0-14879
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CYTOGEN Corporation
------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 22-2322400
- --------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
600 College Road East, CN 5308, Princeton, NJ 08540-5308
--------------------------------------------------------
(Address of Principal Executive Offices and Zip Code)
Registrant's telephone number, including area code (609) 987-8200
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: Yes X No
--- ---.
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Class Outstanding at October 22, 1996
- ------------------------ -------------------------------
Common Stock, $.01 par value 50,150,534
Warrants to Purchase One Share of Common Stock, 4,023,595
$.01 par value
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
September 30, 1996
PART I - FINANCIAL INFORMATION
- ------ ---------------------
Item 1 - Consolidated Financial Statements
INTRODUCTORY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------
The accompanying consolidated financial statements have been prepared by
the Registrant, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and note disclosure
normally included in annual consolidated financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to those rules and regulations. It is suggested that these
condensed consolidated financial statements be read in conjunction with CYTOGEN
Corporation's (the "Company" or "CYTOGEN") audited consolidated financial
statements and notes thereto for the year ended December 31, 1995. In the
opinion of the Registrant, these consolidated financial statements contain all
adjustments necessary to present fairly the financial position of CYTOGEN as of
September 30, 1996, the results of operations for the three and nine months
ended September 30, 1996 and 1995, and the cash flows for the nine months ended
September 30, 1996 and 1995.
The results of operations for the periods ended September 30, 1996 are not
necessarily indicative of the operating results for the full year.
2
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1996 1995
-------------------- --------------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 14,478 $ 27,551
Short term investments 5,977 1,201
Restricted cash 9,850 383
Accounts receivable, net 527 284
Inventories 270 356
Other current assets 500 360
-------------------- --------------------
Total current assets 31,602 30,135
-------------------- --------------------
Property and Equipment:
Leasehold improvements 9,977 9,850
Equipment and furniture 7,022 6,535
-------------------- --------------------
16,999 16,385
Less- Accumulated depreciation and amortization (12,058) (10,923)
-------------------- --------------------
Net property and equipment 4,941 5,462
-------------------- --------------------
Other Assets 1,501 1,552
-------------------- --------------------
$ 38,044 $ 37,149
-------------------- --------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 3,534 $ 6,385
Current portion of long term liabilities 1,807 2,213
-------------------- --------------------
Total current liabilities 5,341 8,598
-------------------- --------------------
Long Term Liabilities 1,895 3,275
-------------------- --------------------
Stockholders' Equity:
Preferred stock, $.01 par value, 5,400,000 shares authorized - Series A
Preferred Stock, $.01 par value,
1,000 shares authorized and outstanding in 1996 -- --
Common stock, $.01 par value, 89,600,000 shares
authorized, 49,241,000 and 46,040,000 shares
issued and outstanding in 1996 and 1995, respectively 492 460
Additional paid-in capital 275,310 253,122
Unrealized (loss) gains on short term investments (3) 34
Accumulated deficit (244,991) (228,340)
-------------------- --------------------
Total stockholders' equity 30,808 25,276
-------------------- --------------------
$ 38,044 $ 37,149
==================== ====================
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
--------------------------------- -------------------------------
1996 1995 1996 1995
----------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
REVENUES:
Product related $ 393 $ 347 $ 1,135 $ 1,075
License and contract 795 2,445 2,804 3,237
---------- ------------- ------------ -----------
Total Revenues 1,188 2,792 3,939 4,312
---------- ------------- ------------ -----------
OPERATING EXPENSES:
Research and development 4,825 4,526 14,441 14,822
Selling and marketing 874 652 2,573 2,371
Acquisition of technology rights - - - 19,663
General and administrative 1,258 1,512 4,313 4,702
---------- ------------- ------------ -----------
Total Operating Expenses 6,957 6,690 21,327 41,558
---------- ------------- ------------ -----------
LOSS FROM OPERATIONS $ (5,769) $ (3,898) $ (17,388) $ (37,246)
---------- ------------- ------------ -----------
GAINS ON INVESTMENTS, net 313 142 1,079 518
INTEREST EXPENSE (116) (148) (342) (444)
---------- ------------- ------------ -----------
NET LOSS $ (5,572) $ (3,904) $ (16,651) $ (37,172)
========== ============= ============ ===========
NET LOSS PER COMMON SHARE $ (0.12) $ (0.12) $ (0.35) $ (1.20)
========== ============= ============ ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 48,358 33,013 47,703 30,998
========== ============= ============ ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------------------
1996 1995
-------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (16,651) $ (37,172)
-------------- ------------
Adjustments to Reconcile Net Loss to Cash Used for
Operating Activities:
Depreciation and Amortization 1,135 1,101
Imputed Interest 310 444
Amortization of Deferred Charges (17) (27)
Acquisition of Technology Rights - 19,663
Inventory Writedown - 1,144
Stock Grants - 43
Changes in Assets and Liabilities, Net of Effect
from Acquisition:
Accounts receivable, net (243) (197)
Inventories 86 (106)
Other assets (89) (375)
Accounts payable and accrued liabilities (2,851) (2,870)
Other liabilities (2,079) (2,103)
-------------- ------------
Total adjustments (3,748) 16,717
-------------- ------------
Net cash used for operating activities (20,399) (20,455)
-------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of Short Term Investments (4,813) (1,232)
(Increase) in Restricted Cash (9,467) -
Purchases of Property and Equipment (614) (475)
Net Cash Acquired in CytoRad Acquisition (See Note 8) - 10,514
-------------- ------------
Net cash (used for) provided by investing activities (14,894) 8,807
-------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Common Stock 17,370 14,309
Proceeds from Issuance of Series A Preferred Stock 4,850 -
Redemption of Common Stock - (332)
-------------- ------------
Net cash provided by financing activities 22,220 13,977
-------------- ------------
Net (Decrease) Increase in Cash and Cash Equivalents (13,073) 2,329
Cash and Cash Equivalents, Beginning of Period 27,551 7,700
-------------- ------------
Cash and Cash Equivalents, End of Period $ 14,478 $ 10,029
============== ============
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
From time to time, the term "Company" as used herein, may include CYTOGEN and
its wholly-owned subsidiaries Cellcor, Inc. ("Cellcor") and Targon Corporation
("Targon") taken as a whole, where appropriate.
(Information as of September 30, 1996 and for the three and nine months ended
September 30, 1996 and 1995 is unaudited.)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. Intercompany balances and transactions have
been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks and all
highly-liquid investments with a maturity of three months or less at the time of
purchase.
Short Term Investments
Management determines the appropriate classification of debt and equity
securities at the time of purchase and re-evaluates such designation as of each
balance sheet date. At September 30, 1996, the Company's short term investments
are classified as available for sale and are carried at fair value based on
quoted market prices. Differences between an investment's amortized cost and
fair value are charged directly to stockholders' equity, net of income taxes.
Accordingly, a net unrealized loss of approximately $3,000 has been recorded as
a separate component of stockholders' equity at September 30, 1996.
Restricted Cash
In September 1996, the Company and Elan Corporation, plc and affiliated
corporations (collectively, "Elan") created Targon, a new U.S.-based cancer
company (see Note 2). Through this collaboration, the Company received net
proceeds of $9.9 million from Elan. The uses of these funds are restricted to
Targon's operations.
6
<PAGE>
Other Assets
Other assets consist primarily of undeveloped real property with a net
book value of $1.3 million, which is valued at the lower of cost or market (see
Note 11).
Revenue Recognition
Product related revenues include product sales by CYTOGEN to its customers
and in 1996, to its European distributor, CIS biointernational ("CISbio") (see
Note 4). Product sales are recognized upon shipment of finished goods.
Beginning in October 1995, as a result of CYTOGEN's acquisition of Cellcor (see
Note 6), product related revenues also include the recovery of costs associated
with the treatment of patients who have received the autolymphocyte therapy
("ALT") for metastatic renal cell carcinoma ("mRCC") under a compassionate
protocol and in 1996, also include the cost recovery associated with the
Treatment IND program.
License and contract revenues include milestone payments and fees under
collaborative agreements with third parties, the sale of research and
manufacturing services and materials, and revenues from other miscellaneous
sources. Revenues from milestone payments are recognized when all parties
concur that the events stipulated in the agreement have been achieved. Revenues
from cost-plus contracts are recognized when the costs are incurred.
Common Stock Outstanding
As a result of the Cellcor merger, the issued and outstanding shares of
Cellcor common stock and preferred stock ("Cellcor Shares") were converted into
the right to receive shares of CYTOGEN common stock. As of September 30, 1996,
certain holders of Cellcor Shares had not yet exchanged their Cellcor Shares for
shares of CYTOGEN common stock. For accounting purposes, all Cellcor Shares
were deemed exchanged for issued and outstanding shares of CYTOGEN common stock
as of the date of the Cellcor merger. See Note 6.
New Accounting Pronouncements
The Company will be required to adopt the disclosure requirement of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," for the year ended December 31, 1996. The adoption of this
pronouncement will have no impact on the Company's statement of operations.
Reclassifications
Certain reclassifications have been reflected in the 1995 financial
statements to conform with the 1996 presentation.
2. TARGON CORPORATION:
Pursuant to agreements between the Company and Elan, Targon was
established in September 1996. Targon will focus on the development,
registration, manufacturing and commercialization of differentiated oncology
products utilizing the competencies of the Company and Elan in drug development
and manufacturing. Targon is, initially, a wholly-owned subsidiary of the
Company. At the time of the establishment of Targon, Elan purchased 932,535
shares of
7
<PAGE>
CYTOGEN's common stock for $5 million and 1,000 shares of CYTOGEN's newly
created Series A Preferred Stock for $15 million. The Company used the proceeds
of these sales to capitalize Targon. Targon used $10 million of these proceeds
to acquire certain technology from Advanced Therapeutics Systems Ltd., an
affiliate of Elan. The Series A Preferred Stock has a liquidation value of $5
million. Accordingly, for accounting purposes, the Company recorded the Series
A Preferred Stock investment as a net capital contribution of $5 million. The
Series A Preferred Stock of CYTOGEN held by Elan may, at Elan's option, be
either (i) exchanged for one-half of the Company's interest in Targon or (ii)
converted into shares of common stock of CYTOGEN. If Elan elects to exchange
the Series A Preferred Stock for one-half of the Company's interest in Targon,
then Elan will be entitled through March 31, 2003 to exercise a warrant to
purchase up to 1 million shares of CYTOGEN's common stock, at an exercise price
per share which escalates from $8.40 to $14 over the life of the warrant. If
Elan elects to convert the Series A Preferred Stock into CYTOGEN's common stock,
it will receive a number of shares which declines from 1,785,715 shares to
1,071,429 shares, depending on the time of conversion. If Elan exercises its
conversion right, then the Company will retain full ownership of Targon. Elan
must elect to exchange its Series A Preferred Stock no later than March 31,
2001. Any shares of Series A Preferred Stock not exchanged or converted by March
31, 2003 will be automatically converted into CYTOGEN's common stock on that
date. The Series A Preferred Stock has no special dividend rights, however if
dividends are declared on CYTOGEN's common stock, holders of Series A Preferred
Stock will be entitled to such dividends as they would have received had they
converted their shares of Series A Preferred Stock into common stock immediately
prior to the dividend. Each share of Series A Preferred Stock carries a
liquidation value of $5,000 per share. In connection with the formation of
Targon, the Company contributed certain technology to Targon.
3. C.R. BARD, INC.:
In August 1996, CYTOGEN entered into a co-promotion agreement (the "Co-
Promotion Agreement") with C.R. Bard, Inc. ("Bard") pursuant to which CYTOGEN
granted to Bard (i) the exclusive right to market and promote ProstaScint, an
FDA approved prostate cancer imaging product, to urologists in the U.S. and (ii)
the co-exclusive right with CYTOGEN to market and promote ProstaScint to managed
care organizations in the U.S. The Co-Promotion Agreement provides that Bard
shall make payments upon the occurrence of certain milestones which include
expansion of co-promotion rights in selected countries outside the U.S. During
the term of the Co-Promotion Agreement, Bard will receive performance-based
compensation for its services. The initial term of the Co-Promotion Agreement
is ten (10) years from the date of the product launch of ProstaScint.
4. CIS BIOINTERNATIONAL AND FAULDING:
In January 1996, CYTOGEN entered into a distribution agreement (the
"CISbio Agreement") with CISbio, granting to CISbio the exclusive right to
distribute and sell OncoScint CR/OV in all the countries of the world, except
for the U.S. and Canada. The CISbio Agreement provides for payments upon
execution of the agreement and upon achievement of a certain milestone, payments
for minimum annual purchases of the components of OncoScint CR/OV by CISbio, and
certain royalties based upon net sales, if any, of OncoScint CR/OV by CISbio.
For the nine months ended September 30, 1996, CYTOGEN recorded $244,000 in
license and product related revenues from CISbio.
8
<PAGE>
In December 1995, CYTOGEN entered into a distribution agreement (the
"Faulding Agreement") with Faulding (Canada) Inc. ("Faulding") granting to
Faulding the exclusive right to distribute and sell OncoScint CR/OV in Canada.
Faulding is currently pursuing the necessary regulatory approvals to market the
product in Canada. In addition to a one-time, up-front cash payment for
execution of the agreement, which amount was recognized by the Company in 1996,
Faulding will be required to make additional payments upon achievement of
certain milestones, payments for minimum annual purchases of OncoScint CR/OV by
Faulding, and certain royalties based upon net sales, if any, of OncoScint CR/OV
by Faulding.
5. ELAN CORPORATION:
In December 1995, CYTOGEN entered into a research and development and
option agreement (the "Elan Agreement") with Elan under which both parties will
implement a research program that combines CYTOGEN's Genetic Diversity Library
("GDL") technology with Elan's drug delivery system technology to
collaboratively develop orally administered products. Thereunder, Elan has been
granted an option for the exclusive worldwide licensing rights to any products
so developed and the Company will receive royalties based on sales, if any, of
such products. Elan will provide the funding necessary for the Company to
fulfill its obligations under the research program with aggregate payments for
work performed by CYTOGEN not to exceed $1.5 million during the first sixteen
months of the research program. For the three and nine months ended September
30, 1996, CYTOGEN recorded $344,000 and $988,000, respectively, in contract
revenues from Elan.
6. CELLCOR, INC.:
Pursuant to an Agreement and Plan of Merger dated June 15, 1995, as
amended, in October 1995, CYTOGEN completed its acquisition of Cellcor and the
related subscription offering (the "Subscription Offering"). As a result,
CYTOGEN issued (i) 4,713,564 shares of CYTOGEN common stock to acquire Cellcor
(see Note 1) and (ii) 5,144,388 shares of CYTOGEN common stock in connection
with the Subscription Offering raising a total of $20.0 million, and has
reserved for issuance up to 606,952 shares of CYTOGEN common stock issuable upon
the exercise of the options that were outstanding under the Cellcor employee
stock option plans at the time of merger. The transaction was accounted for by
using the purchase method of accounting, whereby the Company recorded a one-
time, non-cash charge of approximately $26.2 million for acquisition of
technology rights to its statement of operations during the three months ended
December 31, 1995, which charge represented the amount by which the purchase
price exceeded the fair value of net assets acquired from Cellcor.
7. DUPONT MERCK:
Pursuant to a license agreement dated as of December 20, 1994 and as
amended on March 29, 1996 (the "DP/Merck Agreement"), CYTOGEN has sub-licensed
to The DuPont Merck Pharmaceutical Company ("DuPont Merck") CYTOGEN's
manufacturing and marketing rights to Quadramet in the U.S., Canada and Latin
America (the "Territory Rights"), if and when approved for marketing in each
applicable country. CYTOGEN has retained the right to co-promote the product to
nuclear medicine specialists. Quadramet is a therapy agent for treatment of
severe pain associated with cancers that spread to the bone. CYTOGEN acquired
the Territory Rights to Quadramet from The Dow Chemical Company ("Dow") pursuant
to a license agreement, under
9
<PAGE>
which it assumed responsibility for the development and commercialization of the
product (see Note 9). The New Drug Application ("NDA") for Quadramet was
officially filed by FDA in August 1995.
Pursuant to the terms of the DP/Merck Agreement, in January 1995, CYTOGEN
received from DuPont Merck $4.0 million for the sale of 908,265 shares of
CYTOGEN common stock to DuPont Merck and $1.3 million to fund additional
clinical programs to expand the use and marketing of Quadramet, of which
$333,000 and $1.0 million were recognized as license and contract revenues
during the three and nine months ended September 30, 1995, respectively. The
remaining $333,000 was classified as deferred revenues, and was recognized in
the fourth quarter of 1995 as services under the contract were performed. For
the three and nine months ended September 30, 1996, CYTOGEN recorded $364,000
and $1.2 million, respectively, as license and contract revenues from DuPont
Merck. The DP/Merck Agreement further provides for future payments of up to
$1.8 million toward additional clinical programs, a $2.0 million milestone
payment if and when Quadramet receives FDA approval, additional payments upon
achievement of certain other milestones and royalty payments based on sales,
including guaranteed minimum payments.
8. CYTORAD INCORPORATED:
In February 1995, CYTOGEN completed its acquisition of CytoRad
Incorporated ("CytoRad") pursuant to an Agreement and Plan of Merger dated
November 15, 1994, under which CYTOGEN exchanged for each outstanding CytoRad
unit (i) 1.5 shares of CYTOGEN common stock, (ii) a warrant to acquire one share
of CYTOGEN common stock for $8.00 that expires January 31, 1997 and (iii) a
contingent value right ("CVR") to receive, under certain circumstances and at no
additional cost, up to one-half share of CYTOGEN common stock. On February 29,
1996, the Company announced that the CVRs had expired by their terms and were of
no further value. Accordingly, the Company no longer has an obligation to issue
shares of its common stock to holders of CVRs on January 31, 1997.
As a result of the merger, the Company acquired $11.7 million of CytoRad's
cash and securities, before payment of certain transaction costs. In addition,
CYTOGEN recorded approximately $19.7 million for acquisition of technology and
marketing rights as a charge to its statement of operations during the three
months ended March 31, 1995, which charge represented the amount by which the
purchase price exceeded the fair value of net assets acquired from CytoRad.
9. THE DOW CHEMICAL COMPANY:
In 1993, CYTOGEN acquired from Dow an exclusive license in the U.S. for
Quadramet. This license was amended in 1995 to expand the territory to include
Canada and Latin America, and in 1996 to expand the field to include all
osteoblastic diseases. For the three months ended September 30, 1995, upon the
filing of the NDA for Quadramet with FDA, the Company recorded a one-time
licensing fee of $2.0 million from Dow for their use of Quadramet's NDA filing
package. At the same time, the Company was required to pay to Dow $1.0 million.
The Company will be required to pay to Dow $4.0 million if and when Quadramet
receives FDA approval. The agreement provides for additional payments by the
Company upon achievement of certain milestones and royalties on net sales of the
product once commercialized, including guaranteed minimum payments.
10
<PAGE>
10. REVENUES FROM MAJOR CUSTOMERS:
Customers who contributed 10% or more of the Company's total product
related, license and contract revenues were as follows:
<TABLE>
<CAPTION>
3 Months Ended September 30, 9 Months Ended September 30,
---------------------------- ----------------------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Customer
- ------------
DuPont Merck (See Note 7) 31% 12% 29% 23%
Medi-Physics 11% 6% 11% 11%
Elan (See Note 5) 29% - 25% -
Dow (See Note 9) - 70% - 45%
</TABLE>
Medi-Physics is a chain of radiopharmacies.
11. LONG TERM LIABILITIES:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
----------- -----------
<S> <C> <C>
Due to Knoll $ 2,904,000 $ 4,237,000
Due to Chiron 428,000 785,000
Capital lease obligations 370,000 448,000
Deferred charges - 18,000
----------- -----------
3,702,000 5,488,000
Less: Current portion (1,807,000) (2,213,000)
----------- -----------
$ 1,895,000 $ 3,275,000
=========== ===========
</TABLE>
In November 1994, CYTOGEN executed a termination agreement (the "Termination
Agreement") with Knoll Pharmaceutical Company ("Knoll"). Pursuant to the
Termination Agreement, the Company has reacquired from Knoll all U.S. marketing
rights to OncoScint CR/OV (the "U.S. Rights"), which were previously granted to
Knoll. The resulting liability of CYTOGEN to Knoll will be paid over a four-
year period and without interest, as follows: $3.1 million in 1995 (which
amount has been paid); $1.6 million in 1996 (which amount was paid in July
1996); $1.6 million in 1997; and $1.7 million in 1998. Imputed interest of
$88,000 and $266,000 relating to the obligation, which was discounted based upon
a 10% interest rate, was recorded for the three and nine months ended September
30, 1996, respectively. For the three and nine months ended September 30, 1995,
imputed interest was $130,000 and $390,000, respectively.
In December 1994, the Company entered into a disengagement agreement (the
"Disengagement Agreement") with Chiron B.V., formerly EuroCetus B.V., successor
in interest to EuroCetus International, N.V. ("Chiron"). Under the
Disengagement Agreement, the Company reacquired the exclusive marketing and
distribution rights in Europe (the "European Rights"), which were previously
granted to Chiron, and purchased certain business assets relating to the
European Rights. The resulting liability of CYTOGEN to Chiron will be paid over
three years and without interest, as follows: $200,000 in 1995 (which amount
has been paid), $300,000 in 1996 (of which $200,000 has been paid) and $377,181
in 1997. Payment is secured by a mortgage covering approximately 11 acres of
undeveloped real property owned by the Company in Ewing, New Jersey.
11
<PAGE>
This obligation is non-recourse to the Company. Imputed interest of $15,000 and
$44,000 relating to the obligation, which was discounted based upon a 10%
interest rate, was recorded for the three and nine months ended September 30,
1996, respectively. For the three and nine months ended September 30, 1995,
imputed interest was $18,000 and $54,000, respectively.
12. COMMON STOCK:
Under an option agreement (the "Option") granted to Fletcher Capital Market,
Inc. ("Fletcher") in May 1994, as amended, Fletcher purchased (i) 1.8 million
shares of CYTOGEN common stock in August 1995, at an aggregate price of
approximately $7.3 million, or $4.058 per share, (ii) 500,000 shares of CYTOGEN
common stock in November 1995, at an aggregate price of $2.3 million, or $4.696
per share, and (iii) an aggregate of 1.0 million shares of CYTOGEN common stock
in January 1996, at an aggregate price of $4.7 million, or $4.70 per share.
Pursuant to an Investment Agreement between the Company and Fletcher Fund,
L.P., a Delaware limited partnership ("Fletcher Fund"), dated as of September 8,
1995 (as amended, the "Investment Agreement"), the Company sold 665,352 shares
of CYTOGEN common stock, for an aggregate purchase price of approximately $2.7
million. Under the Investment Agreement, as amended by the First Amendment to
Investment Agreement dated April 26, 1996 (the "Amendment"), the Company was
also granted the right to issue and sell to Fletcher Fund, and Fletcher Fund
will be obligated to purchase, up to 675,000 shares of CYTOGEN common stock from
time to time (collectively, the "Put Rights") at a purchase price per share
equal to 101% of the average of the daily volume weighted average price of
CYTOGEN common stock on the Nasdaq National Market ("NASDAQ") during (a) a
designated twenty-one business day period or (b) the last three business days of
said designated twenty-one business day period, whichever is less. The Put
Rights, which were originally scheduled to expire on March 29, 1996, were
extended until December 15, 1996 pursuant to the Amendment. Under certain
circumstances, Fletcher Fund will have the right to decrease or increase the
number of shares of CYTOGEN Common Stock to be purchased in connection with the
exercise of a Put Right by the Company, but in no event shall the total number
of shares sold by the Company and purchased by Fletcher Fund pursuant to the
Investment Agreement exceed 4.9% of the total number of shares of CYTOGEN common
stock outstanding, after giving effect to the proposed sale and purchase of the
shares in question. The shares to be issued and sold in this transaction were
registered pursuant to a registration statement on Form S-3 filed with the
Securities and Exchange Commission ("SEC") in April 1994. In September 1996, in
connection with the exercise of a Put Right, the Company sold 225,000 shares of
CYTOGEN common stock to Fletcher Fund at an aggregate price of $1.5 million, or
$6.529 per share.
In November 1995, the Company sold 1,256,565 shares of CYTOGEN common stock
to a European institutional investor ("the Investor") in a private placement
transaction pursuant to Regulation S of the Securities Act for an aggregate
price of $5.0 million. The Company also sold to the Investor (i ) 729,394
shares of CYTOGEN common stock in April 1996 for an aggregate price of $5.0
million, (ii) 913,909 shares of CYTOGEN common stock in October 1996 for an
aggregate price of $5.0 million pursuant to a Stock Purchase Agreement between
CYTOGEN and the Investor, dated as of August 27, 1996, as amended (the "Purchase
Agreement"), and (iii) 776,791 shares of CYTOGEN common stock in November 1996
for an aggregate price of approximately $4.0 million under the Purchase
Agreement.
12
<PAGE>
CYTOGEN and Nomura Securities International, Inc. ("Nomura") executed an
agreement effective as of February 23, 1996 that terminated the Purchase
Agreement between CYTOGEN and Nomura dated March 28, 1995. No sales of stock
occurred under the terms of the agreement.
See Notes 2, 6, 7 and 8 for information related to the Company's issuance of
common stock in connection with Targon, the Cellcor merger, DP/Merck Agreement,
and CytoRad merger.
13
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Background
Historically, CYTOGEN's revenues have resulted primarily from (i) payments
received from the sale of research services pursuant to collaborative
agreements, (ii) fees generated from the licensing of its technology and
marketing rights to its products and (iii) product related revenues on sales of
its OncoScint products in the U.S. and Western Europe.
In January 1995, CYTOGEN received from DuPont Merck $5.3 million pursuant to
the DP/Merck Agreement (see Note 7 to the Consolidated Financial Statements), of
which $1.3 million was to fund additional clinical programs to expand the use
and marketing of Quadramet and $4.0 million was to purchase 908,265 shares of
CYTOGEN common stock. In addition, for the three and nine months ended
September 30, 1996, CYTOGEN recorded $364,000 and $1.2 million, respectively, in
license and contract revenues from DuPont Merck. The NDA for Quadramet was
accepted for filing by FDA effective August 1995. The timing and outcome of
FDA's decision regarding Quadramet cannot be predicted by the Company.
In February 1995, CYTOGEN acquired CytoRad by merging CytoRad with and into a
wholly-owned subsidiary of CYTOGEN. See Note 8 to the Consolidated Financial
Statements. As a result of the merger, the Company acquired $11.7 million of
CytoRad's cash and securities, before payment of certain transaction costs. In
addition, during the three months ended March 31, 1995, the Company recorded a
one-time non-cash charge to the statement of operations of $19.7 million for the
acquisition of technology rights pertaining to the merger.
In December 1995, CYTOGEN entered into the Elan Agreement with Elan under
which Elan will provide the funding necessary for the Company to fulfill its
obligations under a research program with aggregate payments for work performed
by CYTOGEN not to exceed $1.5 million during the first sixteen months of that
research program. See Note 5 to the Consolidated Financial Statements. For the
three and nine months ended September 30, 1996, CYTOGEN recorded $344,000 and
$988,000, respectively, in contract revenues from Elan.
In 1996, the Company has created certain strategic business units ("SBUs").
The Company believes that, if successful, such SBU's will enable the Company to
leverage existing assets and capabilities to attract new collaborations and
partnerships and increase revenues. There can be no assurance as to the
strategy's success or that revenues will increase markedly.
To date, sales of OncoScint CR/OV in both the U.S. and European markets have
been limited, in part, because OncoScint CR/OV is a "technique-dependent"
product that requires a high degree of proficiency in nuclear imaging, as well
as a thorough appreciation of the information the scan can provide. In December
1995 and January 1996, CYTOGEN entered into agreements with Faulding and CISbio,
respectively, to market and distribute OncoScint CR/OV outside the U.S.
Faulding is currently pursuing the necessary regulatory approvals in Canada.
CISbio has advised the Company that, as of September 30, 1996, it had relaunched
OncoScint CR/OV in eight of the twelve European
14
<PAGE>
countries where the product has been approved for marketing, and that it is in
the process of relaunching in the rest of the countries while initiating steps
to obtain regulatory approvals for additional markets in accordance with the
terms of the CISbio Agreement. See Note 4 to the Consolidated Financial
Statements.
In August 1996, CYTOGEN entered into the Co-Promotion Agreement with Bard
pursuant to which CYTOGEN granted to Bard (i) the exclusive right to market and
promote ProstaScint to urologists in the U.S. and (ii) the co-exclusive right
with CYTOGEN to market and promote ProstaScint to managed care organizations in
the U.S. See Note 3 to the Consolidated Financial Statements. In October 1996,
ProstaScint received marketing approval from FDA. In preparation for the launch
of ProstaScint in early 1997, CYTOGEN is developing its Partners in Excellence
or PIE/TM/ Program (the "PIE Program") by establishing a network of qualified
nuclear medicine sites and physicians. Each site will be trained and certified
in acquiring, processing and interpreting antibody-derived images. ProstaScint
can be directed to such qualified sites, thus providing quality control and
support.
In October 1995, CYTOGEN completed its acquisition of Cellcor by merging
Cellcor with and into a wholly-owned subsidiary of CYTOGEN. See Note 6 to the
Consolidated Financial Statements. In the fourth quarter of 1995, Cellcor
completed patient accrual for its Phase III pivotal clinical trial using ALT to
treat metastatic kidney cancer patients. The study is expected to conclude in
the fourth quarter of 1996. If results from the trial are favorable and FDA
concurs, the Company and FDA will determine the timing and contents of the
formal application with FDA seeking marketing approval. It is likely that ALT
would qualify for a new application called a Biologics License Application
("BLA"). The BLA is a result of FDA's initiative to accelerate review and
approval of cancer products specifically for autologous cell therapies (such as
Cellcor's ALT). There can be no assurance regarding the results of the study or
the timing or outcome of FDA's review.
Cellcor has received FDA approval to proceed with a Treatment IND that allows
ALT to be available as a treatment option for patients who have no satisfactory
alternative therapy to treat their metastatic kidney cancer. The Treatment IND
also allows the Company to recover costs associated with the treatment. ALT
will be available through the Treatment IND while the Company continues to
pursue FDA approval of ALT. As a result of the Cellcor merger, beginning
October 1995, the Company's product related revenues included the cost recovery
related to the treatment of patients receiving ALT under a compassionate
protocol and in 1996, also included the cost recovery related to the Treatment
IND program. In addition, during the three months ended December 31, 1995, the
Company recorded a one-time non-cash charge to the statement of operations of
approximately $26.2 million for acquisition of Cellcor technology rights.
In September 1996, pursuant to agreements between the Company and Elan,
Targon was established. Targon will focus on the development, registration,
manufacturing and commercialization of differentiated oncology products
utilizing the competencies of the Company and Elan in drug development and
manufacturing. Targon is initially a wholly-owned subsidiary of the Company.
At the time of the establishment of Targon, Elan purchased 932,535 shares of
CYTOGEN's common stock for $5 million and 1,000 shares of CYTOGEN's newly
created Series A Preferred Stock for $15 million. The Company used the proceeds
of these sales to capitalize Targon (see Note 2 to the Consolidated Financial
Statements). In connection with the formation of
15
<PAGE>
Targon, the Company contributed certain technology to Targon. Targon used $10
million of the proceeds of the Company's investment in Targon to acquire certain
technology from Advanced Therapeutics Systems Ltd., an affiliate of Elan. The
Series A Preferred Stock has a liquidation value of $5 million. Accordingly,
for accounting purposes, the Company recorded the Series A Preferred Stock
investment as a net capital contribution of $5 million.
Results of Operations
Revenues. Total revenues for the three months ended September 30, 1996 were
$1.2 million compared to $2.8 million recorded in the same period of 1995. The
decrease is primarily attributable to a $2.0 million one-time license fee from
Dow for their use of Quadramet's NDA filing package in 1995. Year-to-date
revenues of $3.9 million were only slightly below the $4.3 million recorded in
the same period of 1995 and include additional license and contract revenues
realized in 1996 under agreements executed in the fourth quarter of 1995 and the
first quarter of 1996 with Elan and CISbio, respectively.
For the three and nine months ended September 30, 1996, product related
revenues were $393,000 and $1.1 million, respectively, compared to $347,000 and
$1.1 million recorded for the same periods of 1995. In addition to sales of
OncoScint CR/OV, the 1996 product related revenues included cost recovery
associated with the ALT Treatment, for which $66,000 and $111,000 were
recognized during the three and nine months ended September 30, 1996,
respectively. The 1995 product related revenues were from the sales of
OncoScint CR/OV.
License and contract revenues for three months ended September 30, 1996 were
$795,000 compared to $2.4 million recorded in the same period of 1995. The
decrease is primarily attributable to a one-time license fee from Dow recorded
in 1995. Year-to-date license and contract revenues of $2.8 million were only
slightly below the $3.2 million recorded in the same period of 1995 and include
revenues realized in 1996 from Elan and CISbio.
Operating Expenses. Operating expenses for the three and nine months ended
September 30, 1996 were $7.0 million and $21.3 million, respectively, compared
to $6.7 million and $41.6 million recorded in the same periods of 1995. The
year-to-date decrease from the prior year period is largely attributable to a
one-time non-cash charge of $19.7 million recorded in the three months ended
March 31, 1995 for the acquisition of technology rights associated with the
CytoRad merger. After excluding this one-time charge, year-to-date 1996
operating expenses, which included $912,000 and $2.8 million of expenses for the
three and nine months ended September 30, 1996, respectively, from Cellcor
operations, were lower than those recorded in the comparable period of 1995. The
level of current year operating expenses reflects the Company's objective to
control spending and to focus its efforts on its highest priority products and
technology, which are (i) OncoScint CR/OV, (ii) Quadramet, (iii) ProstaScint,
(iv) the GDL technology and (v) ALT therapy for mRCC.
Research and development expenses for the three and nine months ended
September 30, 1996 were $4.8 million and $14.4 million, respectively, compared
to $4.5 million and $14.8 million recorded in the same periods of 1995. These
expenses principally reflect product development efforts and support for various
ongoing clinical trials. The 1996 research and development expenses
16
<PAGE>
included $811,000 and $2.6 million of expenses for the three and nine months
ended September 30, 1996, respectively, from Cellcor operations. 1995 research
and development expenses for the three months ended September 30 included a $1.0
million milestone payment to Dow at the time of the NDA filing for Quadramet.
1995 year-to-date expenses also included a charge of $1.1 million for inventory
writedown of commercial inventory relating to OncoScint CR/OV.
Selling and marketing expenses for the three and nine months ended September
30, 1996 were $874,000 and $2.6 million, respectively, compared to $652,000 and
$2.4 million recorded in the same periods of 1995. The increase from the prior
year periods is primarily attributable to expenses associated with establishing
the PIE Program.
The acquisition of technology rights expense of $19.7 million was a one-time
non-cash charge recorded during the three months ended March 31, 1995,
representing the amount by which the purchase price exceeded the fair value of
net assets acquired in connection with the CytoRad merger.
General and administrative expenses for the three and nine months ended
September 30, 1996 were $1.3 million and $4.3 million, respectively, compared to
$1.5 million and $4.7 million recorded in the comparable periods of 1995. The
decrease from the prior year periods is primarily attributable to decreased
spending for professional and consulting services.
Other Income/Expense. Net gains on investments for the three and nine months
ended September 30, 1996 were $313,000 and $1.1 million, respectively, compared
to $142,000 and $518,000 realized in the same periods of 1995. The increase
from the prior year periods is due primarily to higher average cash and short
term investment balances for the periods.
Interest expense for the three and nine months ended September 30, 1996 was
$116,000 and $342,000, respectively, compared to $148,000 and $444,000 recorded
in the same periods of 1995. Imputed interest on liabilities associated with
CYTOGEN's termination agreements with Knoll and Chiron were $103,000 and
$310,000 for the three and nine months ended September 30, 1996, respectively,
compared to $148,000 and $444,000 recorded for the comparable periods of 1995.
Net Loss. Net loss for the three months ended September 30, 1996 was $5.6
million compared to a net loss of $3.9 million incurred in the same period of
1995. The loss per common share was $0.12 on 48.4 million average shares
outstanding compared to $0.12 on 33.0 million average shares outstanding for the
same period in 1995. For the nine months ended September 30, 1996, the net loss
was $16.7 million compared to a $37.2 million loss recorded in the comparable
period of the prior year. The loss per common share was $0.35 on 47.7 million
average shares outstanding compared to $1.20 on 31.0 million average shares
outstanding in 1995. As discussed above, the decrease in the net loss and net
loss per common share for the nine months is primarily attributable to the
charge to the statement of operations for the acquisition of technology rights
in 1995. At September 30, 1996, the Company had outstanding (i) options to
purchase up to 3.1 million shares of CYTOGEN common stock under its various
stock option plans with exercise prices ranging from $0.83 to $18.33 per share;
(ii) warrants to purchase 4.3 million shares of CYTOGEN common stock with
exercise prices ranging from $8.00 to $18.87 per share; and (iii) certain put
rights to issue and sell up to approximately 1.2 million shares of CYTOGEN
common stock, subject to adjustment. The loss per share calculation stated above
does not take into account the shares issuable in
17
<PAGE>
connection with such options, warrants and put rights as their effect is
antidilutive.
Liquidity and Capital Resources
The Company's cash, restricted cash and short term investments were $30.3
million as of September 30, 1996, compared to $29.1 million as of December 31,
1995. The cash used for operating activities and purchases of property and
equipment for the nine months ended September 30, 1996 were $20.4 million and
$614,000, respectively, compared to $20.5 million and $475,000 used in the same
period of 1995.
Historically, the Company's primary sources of cash have been proceeds from
the issuance and sale of its stock through public offerings and private
placements, product related revenues, the sale of research services, fees paid
under its license agreements and interest earned on its cash and short term
investments.
CYTOGEN Capital Stock. In January 1996, Fletcher purchased an aggregate of
1.0 million shares of CYTOGEN common stock at an aggregate price of
approximately $4.7 million, or $4.70 per share, pursuant to the Option granted
to Fletcher in May 1994, as amended. See Note 12 to the Consolidated Financial
Statements.
Effective as of February 23, 1996, CYTOGEN and Nomura executed an agreement
that terminated the Purchase Agreement between CYTOGEN and Nomura dated March
28, 1995. No sales of stock occurred under the terms of the agreement.
During 1996, CYTOGEN sold to a European institutional investor (i) 729,394
shares of common stock in April for an aggregate purchase price of $5.0 million,
(ii) 913,909 shares of common stock in October for an aggregate purchase price
of $5.0 million, and (iii) 776,791 shares of common stock in November for an
aggregate purchase price of approximately $4.0 million. See Note 12 to the
Consolidated Financial Statements.
In September 1996, CYTOGEN sold 225,000 shares of common stock to Fletcher
Fund at an aggregate price of $1.5 million or $6.529 per share, upon the
exercise of a Put Right granted to CYTOGEN pursuant to the Investment Agreement,
as amended in April 1996, between CYTOGEN and Fletcher Fund. Under the
Investment Agreement, CYTOGEN has the right until December 15, 1996 to issue and
sell to Fletcher Fund, and Fletcher Fund will be obligated to purchase, up to
450,000 additional shares of CYTOGEN common stock from time to time, subject to
adjustment. See Note 12 to the Consolidated Financial Statements.
In September 1996, at the time of the establishment of Targon (see Note 2 to
the Consolidated Financial Statements), Elan purchased 932,535 shares of CYTOGEN
common stock for $5 million and 1,000 shares of CYTOGEN's newly created Series A
Preferred Stock for $15 million. The Company used the proceeds of these sales
to capitalize Targon. Targon used $10 million of the proceeds of the Company's
investment in Targon to acquire certain technology from Advanced Therapeutics
Systems Ltd.
Product Related Revenues. OncoScint CR/OV. To date, sales of OncoScint
CR/OV have not
18
<PAGE>
been significant and are not expected to become a significant source of cash
flow in 1996. In November 1994, the Company executed the Termination Agreement
with Knoll, pursuant to which the Company is required to pay to Knoll, over a
four-year period and without interest, $3.0 million to reacquire the U.S. Rights
and $5.0 million of liabilities previously incurred under the terms of a
license, supply and marketing agreement executed in December 1991. The payment
of these liabilities will be made as follows: $3.1 million in 1995 (which amount
has been paid); $1.6 million in 1996 (which amount has been paid); $1.6 million
in 1997; and $1.7 million in 1998.
In December 1994, CYTOGEN entered into the Disengagement Agreement with
Chiron to reacquire the European Rights and purchase certain business assets
relating to the European Rights. The resulting liability of CYTOGEN to Chiron
will be paid over three years and without interest, as follows: $200,000 in
1995 (which amount has been paid); $300,000 in 1996 (of which $200,000 has been
paid); and $377,000 in 1997. Payment is secured by a mortgage covering
approximately 11 acres of undeveloped real property owned by the Company in
Ewing, New Jersey. This obligation is non-recourse to the Company.
In December 1995 and January 1996, CYTOGEN entered into agreements with
Faulding and CISbio, respectively, to market and distribute OncoScint CR/OV
outside the U.S. Faulding is currently pursuing the necessary regulatory
approvals in Canada. As described above, CISbio is actively marketing OncoScint
CR/OV in certain countries in Europe. In addition to one-time, up-front cash
payments for execution of the agreements, which amounts were recognized by the
Company in 1996, each of Faulding and CISbio will be required to make payments
upon the achievement of certain milestones, payments for the purchase of
products and royalties on net sales, if any. See Note 4 to the Consolidated
Financial Statements.
ProstaScint. In August 1996, CYTOGEN entered into the Co-Promotion Agreement
with Bard to market and promote ProstaScint, pursuant to which Bard shall make
payments upon the occurrence of certain milestones which include expansion of
co-marketing rights in selected countries outside the U.S. During the term of
the Co-Promotion Agreement, Bard will receive performance-based compensation for
its service. See Note 3 to the Consolidated Financial Statements.
In October 1996, ProstaScint was approved for marketing by FDA. CYTOGEN is
developing the PIE Program (as described above) in preparation for the
ProstaScint launch in early 1997 and significant resources might be required.
ALT. Beginning October 1995, as a result of the Cellcor merger, the
Company's product related revenues included the cost recovery related to the
treatment of patients receiving ALT under a compassionate protocol, and in 1996
also included the cost recovery associated with the Treatment IND program.
Research Services and Licenses. Pursuant to the terms of the DP/Merck
Agreement between CYTOGEN and DuPont Merck, CYTOGEN will receive from DuPont
Merck future payments of up to $1.8 million towards additional clinical
programs, a $2.0 million milestone payment if and when Quadramet receives FDA
approval and royalty payments based on sales, including guaranteed minimum
payments. For the three and nine months ended September 30, 1996, CYTOGEN
19
<PAGE>
recorded $364,000 and $1.2 million, respectively, in license and contract
revenues from DuPont Merck. See Note 7 to the Consolidated Financial Statements.
CYTOGEN acquired an exclusive license in the U.S. from Dow for Quadramet in
1993. This license was later amended in 1995 and 1996. See Note 9 to the
Consolidated Financial Statements. The Company will be required to pay to Dow
$4.0 million if and when Quadramet receives FDA approval. The agreement
provides for additional payments by the Company upon achievement of certain
milestones and royalties on net sales of the product once commercialized,
including guaranteed minimum payments.
In December 1995, the Company and Elan entered into the Elan Agreement, under
which Elan will provide the funding necessary for the Company to fulfill its
obligations under the research program, with aggregate payments for work
performed by CYTOGEN not to exceed $1.5 million during the first sixteen months
of the research program. For the three and nine months ended September 30,
1996, CYTOGEN recorded $344,000 and $988,000, respectively, in contract revenues
from Elan. See Note 5 to the Consolidated Financial Statements.
The Company's capital and operating requirements, as described above, may
further change depending upon several factors, including: (i) the amount of
resources which the Company devotes to clinical evaluations and the
establishment of manufacturing, marketing and sales capabilities; (ii) results
of preclinical testing, clinical trials and research and development activities;
and (iii) competitive and technological developments. The Company plans to
continue to control spending and expects that its cash position at September 30,
1996, together with the approximate $9.0 million received from the Investor for
sales of CYTOGEN common stock in October and November 1996, will be adequate to
support the Company's operations into 1997.
The Company's financial strategy is to meet its capital and operating
requirements through revenues from existing products, the establishment of
strategic marketing alliances and research and development partnerships, the
acquisition, in-licensing and development of other technologies, products or
services, subcontract manufacturing revenues, license and contract revenues,
sale of equity securities as market conditions permit, interest income, and a
continued commitment to control spending. Certain of these transactions may
require payments by the Company in either cash or stock in addition to the costs
associated with developing and marketing any product or technology and, if
successful, increase long term revenues. There can be no assurance as to the
strategy's success or that any resulting funds will be sufficient to meet the
Company's cash requirements through the time that product related resources are
sufficient to cover the Company's operating expenses.
The foregoing discussion contains historical information as well as forward
looking statements that involve a number of risks and uncertainties. In
addition to the risks discussed above, among other factors that could cause
actual results to differ materially from expected results are the following:
(i) the timing and results of clinical studies; (ii) market acceptance of the
Company's products, including programs designed to facilitate use of the
products, such as the PIE Program and the use of teleradiology; (iii) the
profitability of its products; (iv) the ability to attract, and the ultimate
success of strategic partnering arrangements, collaborations, and acquisition
candidates; (v) the ability of the Company and its partners to identify new
products as a result of those
20
<PAGE>
collaborations that are capable of achieving FDA approval, that are cost-
effective alternatives to existing products and that are ultimately accepted by
the key users of the product; (vi) the success of the Company's distributors in
obtaining marketing approvals in Canada and in additional European countries, in
achieving milestones and achieving sales of products resulting in royalties; and
(vii) the Company's ability to access the capital markets in the future for
continued funding of existing projects and for the pursuit of new projects.
PART II - OTHER INFORMATION
- ------- -----------------
Item 6 - Exhibits and Reports on Form 8-K
- ------
(a) Exhibits:
3.1- Certificate of Designations, Powers, Preferences and
Rights of the Series A Convertible and Exchangeable
Preferred Stock of CYTOGEN Corporation.
10.1- Securities Purchase Agreement between CYTOGEN
Corporation and Elan International Services, Ltd.,
dated as of September 26, 1996.
10.2- Warrant to purchase CYTOGEN common stock, issued to
Elan International Services, Ltd., dated September 26,
1996.
10.3- Joint Development and Operating Agreement among
CYTOGEN Corporation, Elan Corporation, plc. and Targon
Corporation dated September 26, 1996.*
10.4- Marketing and Co-Promotion Agreement between CYTOGEN
Corporation and C.R. BARD, Inc. effective August 1,
1996.*
27- Financial Data Schedule (Submitted to SEC only in
electronic format).
* CYTOGEN Corporation has requested confidential treatment of certain
provisions contained in this exhibit. The copy filed as an exhibit omits
the information subject to the confidentiality request.
(b) Reports on Form 8-K:
None
21
<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.
CYTOGEN CORPORATION
Date November 13, 1996 By /s/ T. Jerome Madison
--------------------------- --------------------------------
T. Jerome Madison
Chief Financial Officer
(Authorized Officer and Principal
Financial Officer)
22
<PAGE>
CERTIFICATE OF THE DESIGNATIONS, POWERS,
PREFERENCES AND RIGHTS
OF THE
SERIES A CONVERTIBLE AND EXCHANGEABLE PREFERRED STOCK
(par value $.01 per share)
of
CYTOGEN CORPORATION
a Delaware Corporation
____________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
____________
The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted by the Board of Directors of CYTOGEN CORPORATION, a Delaware
corporation (the "Corporation"), at a duly convened meeting on September 25,
1996:
RESOLVED, that one series of the class of authorized preferred stock,
$.01 par value, of the Corporation is hereby created and that the designations,
powers, preferences and relative, participating, optional or other special
rights of the shares of such series, and qualifications, limitations or
restrictions thereof, are hereby fixed as follows:
S1C Definitions.
"Board" shall mean the Board of Directors of the Corporation.
-----
"Business Day" shall mean any day other than Saturday, Sunday or a day
------------
on which federally chartered banks located in New York, New York are permitted
by law to be closed.
"Common Stock" shall mean, collectively, the Corporation's Common
------------
Stock and any capital stock of any class of the Corporation (other than any
preferred stock) hereafter authorized which is not limited to a fixed amount or
percentage of par or stated value in respect of the rights of the holders
thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Corporation.
1
<PAGE>
"Conversion Price" shall mean, with respect to the shares of Series A
----------------
Preferred Stock, (a) $8.40 for the period ending on September 30, 1997, (b)
$9.00 for the period commencing on October 1, 1997 and ending on March 31, 1998,
(c) $9.80 for the period commencing on April 1, 1998 and ending on September 30,
1998, (d) $11.20 for the period commencing on October 1, 1998 and ending on
September 30, 1999, (e) $12.60 for the period commencing on October 1, 1999 and
ending on September 30, 2000 and (f) $14.00 for the period commencing on October
1, 2000 and ending on March 31, 2003; provided, in each case, that such amounts
shall be subject to adjustment as provided herein, including Section 7 hereof.
"Conversion Stock" shall mean shares of the Corporation's Common
----------------
Stock; provided, that if there is a modification or change which results in
securities issuable upon conversion of the Series A Preferred Stock that are
issued by an entity other than the Corporation or there is a modification or
change in the class of securities so issuable, then the term "Conversion Stock"
shall mean one share of the security issuable upon conversion of the Series A
Preferred Stock if such security is issuable in shares, or shall mean the
smallest unit in which such security is issuable if such security is not
issuable in shares.
"Dividend Rate" shall mean, with respect to the Series A Preferred
-------------
Stock, the same rate of dividends, if any, declared and paid by the Company from
time to time in respect of its Common Stock, assuming conversion thereof into
Common Stock as set forth in Section 3(a) hereof.
"Exchange Right" shall mean the right, in exchange for delivery of all
--------------
of the outstanding shares of the Series A Preferred Stock to the Corporation, to
acquire from the Corporation, 500,000 shares of Targon Common Stock through
March 31, 1998, 400,000 shares of Targon Common Stock from and after April 1,
1998 through and including September 30, 1999, 300,000 shares of Targon Common
Stock from and after October 1, 1999 through and including September 30, 2000,
and 200,000 shares of Targon Common Stock from and after October 1, 2000 through
and including September 30, 2001.
"Excluded Stock" shall mean shares of Common Stock issued or reserved
--------------
for issuance by the Corporation as a stock dividend payable in shares of Common
Stock, or upon any subdivision or split-up of the outstanding shares of Common
Stock, or upon conversion of shares of Series A Preferred Stock.
"Fair Value" shall mean the fair value of any securities or assets as
----------
reasonably and in good faith determined by the Board.
"Junior Securities" shall mean any of the Corporation's equity
-----------------
securities (whether or not currently authorized) other than the Series A
Preferred Stock.
"Liquidation Value" of any share of Series A Preferred Stock as of any
-----------------
particular date shall be equal to $5,000 per share.
2
<PAGE>
"Market Price" of any security shall mean the average of the closing
------------
prices of such security's sales on all securities exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00, New York time, or, if on any day such security is
not quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of the 10 trading days preceding the
determination date. If at any time such security is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, the
"Market Price" shall be the Fair Value thereof.
"Person" shall mean an individual, a partnership, a corporation, an
------
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
"Preferred Issuance Price" shall mean the purchase price for the
------------------------
Series A Preferred Stock, which is $15,000 per share.
"Series A Preferred Stock" shall have the meaning given to such term
------------------------
in Section 2 hereof.
"Subsidiary" shall mean any corporation of which the shares of
----------
outstanding capital stock possessing the voting power (under ordinary
circumstances) in electing the board of directors are, at the time as of which
any determination is being made, owned by the Corporation either directly or
indirectly through subsidiaries.
"Targon" shall mean Targon Corporation, a Delaware corporation.
------
"Targon Common Stock" shall mean shares of common stock, no par value,
-------------------
of Targon.
S2C Series A Preferred Stock.
1,000 shares of the preferred stock, $.01 par value per share, of
the Corporation are hereby constituted as a series of preferred stock of the
Corporation designated as Series A Preferred Stock (the "Series A Preferred
Stock"). Such amount shall be adjusted by the Corporation in the event that any
adjustments to the Series A Preferred Stock are required as set forth herein,
including Section 7 hereof; the Corporation shall take all necessary or
appropriate actions and make all necessary or appropriate filings in connection
therewith.
3
<PAGE>
S3C Dividends.
(a)
General. The holder of each share of Series A Preferred Stock,
-------
a pari passu basis with the holders of the Common Stock, as if the Series A
Preferred Stock had been converted into Common Stock immediately prior to the
record date in respect thereof, based on the Conversion Price then in effect,
shall be entitled to receive, when and as declared by the Board out of funds
legally available for the declaration and payment of dividends, cumulative cash
dividends at the Dividend Rate for such series, payable from time to time on a
pro rata basis (treating such Series A Preferred Stock as outstanding Common
Stock solely for such purpose, as described above), to the holders of record of
such shares at the start of business on each applicable record date. Except as
set forth above, such holders shall not be entitled to receive any dividends.
(b) Payment of Dividends. If the Corporation declares a dividend, but does
--------------------
not have sufficient funds legally available for paying dividends on the Series A
Preferred Stock, the Corporation shall pay to each holder of the Series A
Preferred Stock such holder's pro rata share of the dividends accrued on such
holder's outstanding Series A Preferred Stock out of funds legally available
therefor and shall pay the remaining dividends in such installments as soon as
practicable after the Corporation has funds legally available therefor.
(c) Distribution of Partial Dividend Payments. Except as otherwise
-----------------------------------------
herein, if at any time the Corporation pays less than the total amount of
dividends otherwise payable with respect to the Series A Preferred Stock, such
payment shall be distributed ratably among the holders of Series A Preferred
Stock based upon the aggregate dividends accrued but unpaid on the shares of
Series A Preferred Stock held by each such holder.
S4C Liquidation.
Upon any liquidation, dissolution or winding up of the Corporation,
each holder of the Series A Preferred Stock, at its sole discretion, shall be
entitled to (i) receive an amount equal to the Liquidation Value per share
multiplied by the number of shares of Series A Preferred Stock held by such
holder or (ii) if all other holders of Series A Preferred Stock agree to
convert, convert all of the shares of Series A Preferred Stock then held by such
holder into shares of Common Stock, in accordance with the provisions of Section
7 hereof, effective immediately prior to the date of such liquidation, in which
case, in the case of this clause (ii), the holders of Series A Preferred Stock
shall be treated as holders of Common Stock. The Corporation shall provide
written notice of such liquidation, dissolution or winding up, not less than 30
days prior to the payment date stated therein, to each record holder of Series A
Preferred Stock.
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<PAGE>
S5C Voting Rights.
(a) No Voting. Subject to Section 5(b) hereof, the outstanding shares
---------
of Series A Preferred Stock shall not be entitled to vote on any matter as to
which stockholders of the Corporation shall be entitled to vote. Notwithstanding
the preceding sentence, holders of Series A Preferred Stock shall be entitled to
notice of any stockholders' meeting in accordance with the By-laws of the
Corporation.
(b) Special Voting Rights. The Corporation shall not, without first
---------------------
obtaining the affirmative vote or written consent of the holders of not less
than 50% of the then outstanding shares of Series A Preferred Stock, voting as a
single class:
(1) amend or repeal any provision of, or add any provision to, the
Corporation's Certificate of Incorporation or By-laws if such action would
adversely alter or change the preferences, rights, privileges or powers of,
or the restrictions provided for the benefit of, any shares of Series A
Preferred Stock in this Certificate; or
(2) increase or decrease the number of authorized shares of Series A
Preferred Stock, except as required by Section 2 hereof.
S6C Exchange.
(a) Exchange. The holders of Series A Preferred Stock shall have the
--------
right to exercise the Exchange Right in respect of all of the Series A Preferred
Stock (including any fraction of a share), so long as such Exchange Right is
exercised in respect of all shares of Series A Preferred Stock.
(b) Exchange Procedure.
------------------
(1) Before the holders of the Series A Preferred Stock shall
be entitled to exercise the Exchange Right (which shall be exercised on an
all-or-nothing basis), such holder shall surrender the certificate or
certificates, duly endorsed, at the office of the Corporation or of any
transfer agent for the Series A Preferred Stock, and shall give written
notice on or prior to September 30, 2001, to the Corporation at its
principal corporate office, of the election to exercise the Exchange Right
and shall state therein the name or names in which the certificate or
certificates for shares of Targon Common Stock are to be issued.
(2) The Exchange Right shall be deemed to have been effected
on the close of business on the date on which the certificates representing
all of the Series A Preferred Stock to be exchanged have been surrendered
at the principal corporate office of the Corporation. At such time as the
Exchange Right has been exercised, the rights of
5
<PAGE>
the holder of such Series A Preferred Stock as a holder shall cease, and
the Person or Persons in whose name or names any certificate or
certificates for shares of Targon Common Stock are to be issued by Targon,
upon instructions by the Corporation, upon the exercise of the Exchange
Right shall be deemed to have become the holder or holders of record of the
shares of the Targon Common Stock represented thereby.
(3) As soon as possible after the exercise of the Exchange
Right (but in any event within five business days in the case of clause (6)
below), the Corporation shall deliver to the holder or holders exercising
the Exchange Right:
(i) a certificate or certificates representing the number of
shares of Targon Common Stock issuable by reason of such exercise in
such name or names and such denomination or denominations as the
holder exercising the Exchange Right has specified; and
(ii) payment in an amount equal to the amount payable under
clause (6) below with respect to such exercise.
(4) The delivery of certificates for shares of Targon Common
Stock upon the exercise of the Exchange Right shall be made without charge
to the holders of such Series A Preferred Stock for any cost incurred by
the Corporation or Targon in connection with such exercise and the related
delivery of shares of Targon Common Stock. Upon exercise of each share of
Series A Preferred Stock, the Corporation shall and shall cause Targon to
take all such actions as are necessary in order to ensure that the shares
of Targon Common Stock issuable with respect to such exercise shall be
validly issued, fully paid and non-assessable.
(5) The Corporation shall not close its books against the
transfer of Series A Preferred Stock upon exercise of the Exchange Right in
any manner which interferes with the timely exercise of the Exchange Right.
The Corporation shall assist and cooperate with any holder of Series A
Preferred Stock required to make any governmental filings or obtain any
governmental approval prior to or in connection with any exercise of the
Exchange Right hereunder (including, without limitation, making any filings
required to be made by the Corporation).
(6) If any fractional interest in a share of Targon Common
Stock would, except for the provisions of this clause (6), be deliverable
upon any exercise of the Exchange Right, the Corporation, in lieu of
delivering the fractional share of Targon Common Stock therefor, shall pay
an amount to the holder thereof equal to the Market Price of such
fractional interest as of the date of the exercise of the Exchange Right.
6
<PAGE>
(7) The Corporation shall ensure that all shares of Targon
Common Stock issued upon exercise of the Exchange Right shall, when issued,
be duly and validly issued, fully paid and nonassessable and free from all
taxes, liens and charges. The Corporation shall and shall cause Targon to
take all such actions as may be necessary to ensure that all such shares of
Targon Common Stock may be so issued without violation of any applicable
law or governmental regulation or any requirements of any domestic
securities exchange or market upon which shares of Targon Common Stock may
be listed (except for official notice of issuance which shall be
immediately delivered by Targon upon each such issuance and except for
filings, notices of applicability and permissions solely within the control
of, or laws and regulations solely applicable to, the holders of Series A
Preferred Stock).
(8) If the holders of the Series A Preferred Stock shall not
have exercised the Exchange Right on or prior to March 31, 2001, such
Exchange Right shall lapse.
S7C Conversion.
(a) Conversion. All holders of Series A Preferred Stock shall have
----------
the right to convert all of the Series A Preferred Stock (including any fraction
of a share), so long as all shares of Series A Preferred Stock are converted at
the same time. The number of shares of Conversion Stock issuable upon such
conversion shall be computed by (A) multiplying the number of shares of Series A
Preferred Stock to be converted by the Preferred Issuance Price for the Series A
Preferred Stock and (B) dividing the result of the calculation in clause (A)
above by the Conversion Price for the Series A Preferred Stock then in effect.
If any holder of Series A Preferred Stock has exercised its Exchange Right, then
the conversion right set forth in this Section 7 with respect to all remaining
shares of Series A Preferred Stock shall expire.
(b) Conversion Procedure.
--------------------
(1) Before any holder of shares of the Series A Preferred
Stock shall be entitled to convert any of such shares into shares of Common
Stock, such holder shall surrender the certificate or certificates, duly
endorsed, at the office of the Corporation or of any transfer agent for the
Series A Preferred Stock, and shall give written notice, to the Corporation
at its principal corporate office, of the election to convert such shares
and shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued.
(2) Each conversion of the Series A Preferred Stock shall be
deemed to have been effected on the close of business on the date on which
the certificate or certificates representing the Series A Preferred Stock
to be converted have been
7
<PAGE>
surrendered at the principal corporate office of the Corporation. At such
time as such conversion has been effected, the rights of the holder of such
Series A Preferred Stock as a holder shall cease, and the Person or Persons
in whose name or names any certificate or certificates for shares of
Conversion Stock are to be issued upon such conversion shall be deemed to
have become the holder or holders of record of the shares of Conversion
Stock represented thereby.
(3) As soon as possible after a conversion has been effected
(but in any event within five business days in the case of clause (6)
below), the Corporation shall deliver to the converting holder:
(i) a certificate or certificates representing the number of
shares of Conversion Stock issuable by reason of such conversion in
such name or names and such denomination or denominations as the
converting holder has specified; and
(ii) payment in an amount equal to the amount payable under
clause (6) below with respect to such conversion.
(4) The issuance of certificates for shares of Conversion
Stock upon conversion of the Series A Preferred Stock shall be made without
charge to the holders of such Series A Preferred Stock for any cost
incurred by the Corporation in connection with such conversion and the
related issuance of shares of Conversion Stock. Upon conversion of each
share of Series A Preferred Stock, the Corporation shall take all such
actions as are necessary in order to ensure that the Conversion Stock
issuable with respect to such conversion shall be validly issued, fully
paid and nonassessable.
(5) The Corporation shall not close its books against the
transfer of Series A Preferred Stock or of Conversion Stock issued or
issuable upon conversion of Series A Preferred Stock in any manner which
interferes with the timely conversion of Series A Preferred Stock. The
Corporation shall assist and cooperate with any holder of Series A
Preferred Stock or Conversion Stock required to make any governmental
filings or obtain any governmental approval prior to or in connection with
any conversion of shares hereunder (including, without limitation, making
any filings required to be made by the Corporation).
(6) If any fractional interest in a share of Conversion Stock
would, except for the provisions of this clause (6), be deliverable upon
any conversion of the Series A Preferred Stock, the Corporation, in lieu of
delivering the fractional share therefor, shall pay an amount to the holder
thereof equal to the Market Price of such fractional interest as of the
date of conversion.
8
<PAGE>
(7) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Conversion Stock,
solely for the purpose of issuance upon the conversion of the Series A
Preferred Stock, such number of shares of Conversion Stock issuable upon
the conversion of all outstanding Series A Preferred Stock. All shares of
Conversion Stock which are so issuable shall, when issued, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens
and charges. The Corporation shall take all such actions as may be
necessary to ensure that all such shares of Conversion Stock may be so
issued without violation of any applicable law or governmental regulation
or any requirements of any domestic securities exchange or market upon
which shares of Conversion Stock may be listed (except for official notice
of issuance which shall be immediately delivered by the Corporation upon
each such issuance and except for filings, notices of applicability and
permissions solely within the control of, or laws and regulations solely
applicable to, the holders of Series A Preferred Stock).
(8) If the holders of the Series A Preferred Stock shall not
have exercised their right to convert or to exchange the Series A Preferred
Stock on or prior to March 31, 2003, such Series A Preferred Stock shall be
deemed automatically converted into Common Stock, pursuant to this Section
7, at the Conversion Price in effect on such date; subject to adjustment as
provided herein.
(c) Conversion Price.
----------------
(1) Changes in Common Stock. In case the Company shall at
-----------------------
any time or from time to time after the date of this Agreement (i) pay a
dividend or make any other distribution with respect to its Common Stock in
shares of Common Stock, (ii) subdivide its outstanding shares of Common
Stock into a larger number of shares of Common Stock, (iii) combine its
outstanding shares of Common Stock or (iv) issue any shares of its capital
stock or other assets in a reclassification or reorganization of the Common
Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing entity),
then the number and kind of shares of capital stock of the Company or other
assets that may be received upon the conversion of the Series A Preferred
Stock shall be adjusted to the number of shares of Conversion Stock and
amount of any such securities, cash or other property of the Company which
the holders would have owned or have been entitled to receive after the
happening of any of the events described above had the Series A Preferred
Stock been converted immediately prior to the record date (or, if there is
no record date, the effective date) for such event. An adjustment made
pursuant to this clause (1) shall become effective retroactively
immediately after the effective date in other cases. Any Conversion Stock
or other assets to be acquired as a result of such adjustment shall not be
issued prior to the effective date of such event. For the purposes of this
clause (1), the
9
<PAGE>
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company.
(2) Issuance of Rights. In case the Company shall issue, at
------------------
any time on or prior to March 31, 1998, to all holders of its Common Stock
rights, options or warrants to subscribe for or purchase, or other
securities exchangeable for or convertible into, shares of Common Stock
(any such rights, options, warrants or other securities, collectively,
"Rights") (excluding rights to purchase Common Stock pursuant to a Company
plan for reinvestment of dividends or interest) at a subscription offering,
exercise or conversion price per share (as defined below, the "offering
price per share") which, before deduction of customary discounts and
commissions, is lower than the current Market Price per share of Common
Stock on the record date of such issuance of grant, whether or not, in the
case of Rights, such Rights are immediately exercisable or convertible,
then the number of shares of Conversion Stock issuable upon conversion of
the Series A Preferred Stock shall be adjusted by multiplying the number of
shares of Conversion Stock issuable upon conversion of the Series A
Preferred Stock immediately prior to any adjustment in connection with such
issuance or grant by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding (exclusive of any treasury shares) on
the record date of issuance or grant of such Rights plus the number of
additional shares of capital stock that would be issued upon exercise of
the Rights, and the denominator of which shall be the number of shares of
Common Stock outstanding (exclusive of any treasury shares) on the record
date of issuance or grant of such Rights plus the number of shares which
the aggregate offering price (as defined below) of the total number of
shares of Common Stock so offered would purchase at the current Market
Price per share of Common Stock on the record date, less customary
discounts and commissions. Such adjustment shall be made immediately after
the record date for the issuance or granting of such Rights. For purposes
of this clause , the "offering price per share" of Common Stock shall in
the case of Rights be determined by dividing (x) the total amount received
or receivable by the Company in consideration of the issuance of such
Rights plus the total consideration payable to the Company upon exercise
thereof (the "aggregate offering price"), by (y) the total number of shares
of Common Stock covered by such Rights. In case the Company shall issue, at
any time on or after April 1, 1998, to all holders of its Common Stock any
Rights (excluding rights to purchase Common Stock pursuant to a Company
plan for reinvestment of dividends or interest), at the offering price per
share which, before deduction of customary discounts and commissions, is
lower than the current Market Price per share of Common Stock on the record
date of such issuance or grant, whether or not, in the case of Rights, such
Rights are immediately exercisable or convertible, then the holders of the
Series A Preferred Stock shall be entitled to receive all of the same
Rights pro rata as the holders of Common Stock, on an as-converted basis,
as and when distributed to the holders of Common Stock. For the purposes of
this clause (2), the number of shares of Common
10
<PAGE>
Stock at any time outstanding shall not include shares held in the treasury of
the Company. The Company shall not issue any Rights in respect of shares of
Common Stock held in the treasury of the Company.
(3) Dividends and Distributions. In case the Company shall distribute
---------------------------
to all holders of its shares of Common Stock any dividend or other distribution
of evidences of its indebtedness or other assets (in each case other than cash
dividends and other than as provided in clause (1) above in which the holders of
the Series A Preferred Stock are otherwise entitled to share, as provided
herein) or Rights, then, in each case, all holders of the Series A Preferred
Stock shall be entitled to receive all of the same dividends, distributions or
Rights, as the case may be, as the holders of Common Stock, on an as-converted
basis, as and when distributed to the holders of Common Stock, at such time, if
any, that the holders of the Series A Preferred Stock shall have elected to
convert such stock to Common Stock, as provided herein.
(4) Computations. For the purpose of any computation under clauses (1)
------------
and (2) above, the current Market Price per share of Common Stock at any date
shall be as set forth in (i) the definition of Market Value for the 10
consecutive trading days commencing 20 trading days prior to the earlier to
occur of (A) the date as of which the market price is to be computed or (B) the
last full trading day before the commencement of "ex-dividend" trading in the
Common Stock relating to the event giving rise to the adjustment required by
clause (1) or (2) or (ii) any other arm's-length adjustment formula that the
Board may use in good faith. In the event the Common Stock of the Company is not
then publicly traded or if for any other reason the current market price per
share cannot be determined pursuant to the foregoing provisions of this clause
(4) the current market price per share shall be the Fair Value thereof.
(5) Adjustment. Whenever the number of shares of Conversion Stock
----------
issuable upon exercise of the Series A Preferred Stock is adjusted as provided
under clause (1) or (2), the Conversion Price payable upon conversion of the
Series A Preferred Stock shall be adjusted by multiplying such Conversion Price
immediately prior to such adjustment by a fraction, the numerator of which shall
be the number of shares of Conversion Stock issuable upon conversion of any
shares of Series A Preferred Stock immediately prior to such adjustment, and the
denominator of which shall be the number of shares of Conversion Stock issuable
upon conversion of any shares of Series A Preferred Stock immediately
thereafter.
(6) Securities. For the purpose of this Section (7), the term "shares
----------
of Common Stock" shall mean (i) the class of stock designated as Common Stock,
par value $.01 per share, of the Company on the date of this Agreement or (ii)
any other class of stock resulting from successive changes or reclassifications
of such shares consisting
11
<PAGE>
solely of changes in par value, or from par value to no par value, or from
no par value to par value.
(7) Re-Adjustment. If, at any time after any adjustment to the
-------------
number of Shares of Conversion Stock issuable upon conversion of the Series A
Preferred Stock or the Conversion price shall have been made pursuant to
clause (5) of this Section 6, any rights, options, warrants or other securities
convertible into or exchangeable for shares of Common Stock shall have expired,
or any thereof shall not have been exercised, the Conversion Price and the
number of shares of Conversion Stock issuable upon conversion of the Preferred
Stock shall, upon such expiration, be readjusted and shall thereafter be such as
it would have been had it been originally adjusted (or had the original
adjustment not been required, as the case may be) as if (A) the only shares of
Common Stock offered were the shares of Common Stock, if any, actually issued or
sold upon the exercise of such rights, options or warrants and (B) such shares
of Common Stock, if any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the aggregate consideration, if
any, actually received by the Company for the issuance, sale or grant of all
such rights, options or warrants whether or not exercised; provided, further
that no such readjustment shall have the effect of increasing the Conversion
Price or decreasing the number of Conversion Shares issuable upon conversion of
the Series A Preferred Stock by an amount (calculated by adjusting such
increase or decrease as appropriate to account for all other adjustments
pursuant to this Section 6 following the date of the original adjustment
referred to above) in excess of the amount of the adjustment initially made in
respect of the issuance, sale or grant of such rights, options or warrants.
(d) Voluntary Adjustment by the Company. The Corporation may at its
-----------------------------------
option, at any time during the term of the Preferred Stock, reduce the then
current Conversion Price to any amount and for any period of time deemed
appropriate by the Board in its sole discretion, but subject to approval by the
holders of the majority of Series A Preferred Stock.
(e) Reorganization, Reclassification, Consolidation, Merger or Sale. Any
---------------------------------------------------------------
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Corporation's assets to another Person or
other transaction which is effected in such a manner that holders of Common
Stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for Common Stock is
referred to herein as an "Organic Change". Prior to the consummation of any
Organic Change, the Corporation shall make appropriate provisions to ensure that
each of the holders of each share of Series A Preferred Stock shall thereafter
have the right to acquire and receive, in lieu of or in addition to (as the case
may be) the shares of Conversion Stock immediately theretofore acquirable and
receivable upon the conversion of such holder's Series A Preferred Stock, such
shares of stock, securities or assets as such holder would have received in
connection with such
12
<PAGE>
Organic Change if such holder had converted its Series A Preferred Stock
immediately prior to such Organic Change. In each such case, the Corporation
shall also make appropriate provisions to ensure that the provisions of this
Section 6 hereof shall thereafter be applicable to the Series A Preferred Stock.
The Corporation shall not effect any such consolidation, merger or sale, unless
prior to the consummation thereof, the successor corporation (if other than the
Corporation) resulting from consolidation or merger or the corporation
purchasing such assets assumes by written instrument, the obligation to deliver
to each such holder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such holder may be entitled to acquire.
(f) Notices.
-------
(1) Immediately upon any adjustment of the Conversion Price for
the Series A Preferred Stock, the Corporation shall give written notice
thereof to all holders of Series A Preferred Stock setting forth in
reasonable detail and certifying the calculation of such adjustment.
(2) The Corporation shall given written notice to all holders of
Series A Preferred Stock at least 30 days prior to the date on which the
Corporation closes its books or takes a record for determining rights to
receive any dividends or distributions.
(3) The Corporation shall also give written notice to holders of
Series A Preferred Stock at least 30 days prior to the date on which any
Organic Change shall take place.
S8C Registration of Transfer.
The Corporation shall keep at its principal office a register for the
registration of the record holders of the Series A Preferred Stock. Upon the
surrender of any certificate representing Series A Preferred Stock at such
place, the Corporation shall, at the request of the record holder of such
certificate, execute and deliver (at the Corporation's expense, provided that
the holder will be responsible for any transfer taxes if the certificate is
registered in a new name) a new certificate or certificates in exchange therefor
representing in the aggregate the number of shares of the Series A Preferred
Stock represented by the surrendered certificate. Each such new certificate
shall be registered in such name and shall represent such number of shares of
the Series A Preferred Stock as is requested by the holder of the surrendered
certificate and shall be substantially identical in form to the surrendered
certificate, and dividends shall accrue on the Series A Preferred Stock
represented by such new certificate from the date to which dividends have been
fully paid on such Series A Preferred Stock represented by the surrendered
certificate.
S9C Replacement.
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<PAGE>
Upon receipt of evidence reasonably satisfactory to the Corporation
(an affidavit of the registered holder shall be satisfactory) of the ownership
and the loss, theft, destruction or mutilation of any certificate evidencing
shares of the Series A Preferred Stock, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation, or, in the case of any such mutilation upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
shares of such series represented by such lost, stolen, destroyed or mutilated
certificate, and dividends shall accrue on the Series A Preferred Stock
represented by such new certificate from the date to which dividends have been
fully paid on such lost, stolen, destroyed or mutilated certificate.
S10C Amendment and Waiver.
No amendment, modification or waiver shall be binding or effective
with respect to any provision of this Certificate of Designations hereof without
the prior written consent of the holders of 50% or greater of the Series A
Preferred Stock outstanding at the time such action is taken voting as a single
class on a Common Stock equivalent basis.
S11C Notices.
Except as otherwise expressly provided hereunder, all notices referred
to herein shall be in writing and shall be delivered by registered or certified
mail, return receipt requested and postage prepaid, or by reputable overnight
courier or telecopy service, charges prepaid, and shall be deemed to have been
given when so mailed or sent (a) to the Corporation, at its principal executive
offices and (b) to any stockholder, at such holder's address as it appears in
the stock records of the Corporation (unless otherwise indicated by any such
holder).
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<PAGE>
IN WITNESS WHEREOF, Cytogen Corporation has caused this Certificate of
Designations to be executed this 25th day of September, 1996.
CYTOGEN CORPORATION
By: /s/ T. Jerome Madison
--------------------------------
Name: T. Jerome Madison
Title: Chief Financial Officer and
Secretary
<PAGE>
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT dated as of September 26, 1996, between
Cytogen Corporation, a Delaware corporation (the "Company"), and Elan
International Services, Ltd., a Bermuda corporation (the "Purchaser").
R E C I T A L S :
A. The Company desires to sell to the Purchaser and the Purchaser
desires to purchase from the Company the shares of Common Stock and Series A
Preferred Stock (each as defined below) provided for herein, in connection with
which the Company will issue to the Purchaser the Warrant (as defined below).
B. Simultaneously with the consummation of the transactions
contemplated hereby, the Company shall capitalize Targon Corporation, a Delaware
corporation ("Targon"), with the proceeds of the sale of the Securities (as
defined below) contemplated hereby, pursuant to a Stock Subscription Agreement
dated as of the date hereof between the Company and Targon (as amended at any
time, the "Subscription Agreement").
C. In connection with such transactions, the Company has granted to
the Purchaser certain additional rights, as provided herein.
A G R E E M E N T :
The parties agree as follows:
SECTION 1. Certificate of Designations; Authorizations; Etc.
------------------------------------------------
(a) Prior to the Closing (as defined below), the Company shall
file with the Secretary of State of the State of Delaware a Certificate of
Designations (the "Certificate of Designations"), in the form attached hereto as
Exhibit A, setting forth, among other things, the designations, powers,
- ---------
preferences and rights of the Series A Preferred Stock, $.01 par value per share
(the "Series A Preferred Stock").
(b) The Company has authorized the issuance to the Purchaser of:
(i) 1,000 shares of the Company's Series A Preferred
Stock;
(ii) up to 1,000,000 shares of the Company's common stock,
par value $.01 per share (the "Common Stock"; together with the Series A
Preferred Stock, the "Securities"), issuable as provided in Section 2(b)
hereof;
(iii) up to 1,785,750 shares of Common Stock (subject to
adjustment as provided in the Certificate of Designations) issuable upon
conversion of the Series A Preferred Stock (the "Conversion Shares"); and
<PAGE>
(iv) up to 1,000,000 shares of Common Stock issuable under
the Warrant (the "Warrant Shares").
SECTION 2. Closings.
--------
(a) The closing of the transactions contemplated hereby (the
"Closing") shall occur on or prior to September 26, 1996 (the "Closing Date"),
at the offices of O'Sullivan Graev & Karabell, LLP, 30 Rockefeller Plaza, New
York, New York 10112, or such other place as the parties may agree.
(b) At the Closing, the Company shall sell to the Purchaser, and
the Purchaser shall purchase from the Company, upon the terms and subject to the
conditions set forth herein, for an aggregate purchase price for the Securities
of $20 million, (i) a number of shares of Common Stock equal to the amount
obtained by dividing (A) $5 million by (B) the amount obtained by (I)
multiplying the average of the closing prices of the Company's Common Stock on
the Nasdaq Stock Market for the 10 trading days preceding the day which is two
business days prior to the date hereof and (II) .925 (i.e., 932,535 Shares) and
(ii) 1,000 shares of Series A Preferred Stock, which shall simultaneously be
transferred, in immediately available funds by wire transfer, by the Purchaser
to Targon.
(c) At the Closing, the parties hereto shall execute and deliver
to each other, as applicable:
(i) certificates in respect of the Common Stock and Series
A Preferred Stock, which shall be duly executed and delivered by the
Company;
(ii) a Warrant in the form attached hereto as Exhibit B
---------
(as amended at any time, the "Warrant"); a Registration Rights Agreement
between the Company and the Purchaser substantially in the form attached
hereto as Exhibit C (as amended at any time, the "Cytogen Registration
---------
Rights Agreement"); a Registration Rights Agreement among Targon, the
Purchaser and the Company substantially in the form attached hereto as
Exhibit D as contemplated by the Subscription Agreement (as amended at any
---------
time, the "Newco Registration Rights Agreement"); the Joint Development and
Operating Agreement among the Company, Elan Corporation, plc and Targon (as
amended at any time, the "Development Agreement"); each of which shall be
executed and delivered by each of the parties thereto, as applicable; and
(iii) certificates as to the effectiveness of this
Agreement, the lack of breaches and defaults hereunder, the incumbency of
the officers executing the Transaction Documents (as defined below) and
such other matters as shall be customary for transactions of this type and
as may be reasonably requested by each of the parties hereto of the other.
In addition, at the Closing, the Company shall (1) cause to be
delivered to the Purchaser an opinion of counsel, from counsel and in form
reasonably satisfactory to the Purchaser, covering the due issuance of the
Common Stock and the Series A Preferred Stock and
-2-
<PAGE>
the fact that such securities (and the Common Stock underlying them), upon
issuance, will be duly and validly issued and fully-paid and non-assessable and
(2) take such further actions in order to implement the transactions
contemplated hereby and by the other Transaction Documents (or to better assure
unto the Purchaser the rights intended to be afforded hereunder) that the other
party shall reasonably request.
(d) The Common Stock issued pursuant to this Agreement shall be
registered for sale under the Securities Act of 1933, as amended (the
"Securities Act") on a registration statement on Form S-3 (or other form
satisfactory to the Purchaser).
(e) The Series A Preferred Stock, the Conversion Shares, the
Warrant and the Warrant Shares will be issued under an exemption or exemptions
from registration under the Securities Act; accordingly, the certificates
evidencing the Series A Preferred Stock, the Conversion Shares, the Warrant and
the Warrant Shares shall, upon issuance, contain the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
EFFECTIVE REGISTRATION UNDER SUCH ACT AND THE RULES AND
REGULATIONS THEREUNDER AND ALL APPLICABLE STATE SECURITIES
OR "BLUE SKY" LAWS OR AN EXEMPTION THEREFROM UNDER SUCH ACT
AND ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS."
(f) The closing under the Stock Subscription Agreement dated as
of September 26, 1996 between Targon and the Company shall occur on the Closing
Date.
SECTION 3. Exchange and Conversion of Series A Preferred Stock.
---------------------------------------------------
(a) The Company hereby grants to the Purchaser, effective on the
Closing Date, the right (the "Exchange Right") in exchange for the delivery to
the Company of all of the shares of the Company's Series A Preferred Stock, to
acquire (i) through March 31, 1998, 500,000 shares of common stock, no par
value, of Targon (the "Targon Common Stock"), which 500,000 shares of Targon
Common Stock shall initially represent 50% of the aggregate issued and
outstanding shares of Targon Common Stock, other than the shares of Targon
Common Stock, if any, issued or issuable (pursuant to options or otherwise) to
members of management or employees or directors of, or consultants to, Targon
(collectively, the "Management Shares"); thereafter, the number of shares of
Targon Common Stock that the Purchaser shall be entitled to receive upon
exercise of the Exchange Right shall be decreased (if the Exchange Right is not
exercised on or prior to the applicable date set forth below) to (A) 400,000
shares of Targon Common Stock owned by the Company from and after April 1, 1998
through and including September 30, 1999; (B) 300,000 shares of Targon Common
Stock owned by the Company
-3-
<PAGE>
from and after October 1, 1999 through and including September 30, 2000; and (C)
200,000 shares of Targon Common Stock owned by the Company from and after
October 1, 2000 through and including September 30, 2001. The Management Shares
shall result in pro rata dilution of Cytogen and Elan based on their respective
ownership interests in the Company at the time of issuance of such Management
Shares.
(b) In order to exercise the Exchange Right, the Purchaser shall
provide written notice thereof to the Company on or prior to September 30, 2001,
indicating the Purchaser's desire to so exercise such right. In such event, a
closing shall be held on a date designated by the Purchaser in accordance with
the Certificate of Designations, at which the Company shall deliver to the
Purchaser the applicable number of shares of Targon Common Stock, and the
Purchaser shall deliver to the Company all of the issued and outstanding shares
of Series A Preferred Stock referred to in Section 3(a) above, and the parties
shall exchange other customary closing documents and instruments. In the event
that the Purchaser exercises the Exchange Right, the Purchaser thereafter shall
not have the right to convert the Series A Preferred Stock into Common Stock, as
otherwise provided in the Certificate of Designations (the "Conversion Right").
(c) In the event that the Purchaser exercises the Exchange
Right, then, in such event, the Warrant (as defined below) shall immediately
become exercisable, as provided therein. The Warrant shall be exercisable
multiple times up to the number of shares of Common Stock covered thereby for
its term.
(i) In the event that the Development Agreement is
terminated, as provided in Article XIX thereof prior to the exercise of the
Exchange Right, the Exchange Right shall thereupon cease and be of no
further force and effect.
(d) At any time that the Purchaser shall not have elected the
Exchange Right, the Purchaser shall have the right to convert all of the Series
A Preferred Stock into Conversion Shares (or such Series A Preferred Stock shall
be deemed converted into Conversion Shares) in accordance with the Certificate
of Designations. If the right to convert the Series A Preferred Stock into
Conversion Shares is exercised, then:
(i) The Exchange Right shall thereupon expire and be of no
further force and effect.
(ii) Cytogen shall cause Targon (which covenant is hereby
agreed to by Targon), to convey to or as directed by the Purchaser
(including to one of the Purchaser's affiliates) all of Targon's right,
title and interest in and to the ATS Compounds (as defined in the
Development Agreement) and any development work in respect thereof and
related Technology (as defined in the Development Agreement) undertaken at
any time by or on behalf of Targon, for a payment to the Company of $10
million, which shall be paid by the Purchaser or one of its Affiliates upon
the exercise of the Conversion Right. Such transfer shall be pursuant to
documents and instruments containing customary provisions and reasonably
satisfactory to the Purchaser; it being understood that an instrument in
the form of the Technology Transfer Agreement dated
-4-
<PAGE>
as of the date hereof between Advanced Therapeutic Systems, Ltd., a Bermuda
corporation, and Targon (in relation to the transfer of the ATS Compounds
but containing appropriate conforming modifications, including the lack of
payment therefor) shall be deemed to be satisfactory. In addition, in such
event, the Purchaser shall thereafter pay or cause to be paid to Targon a
royalty of 4% of net sales of products derived from the ATS Compounds on
the terms and conditions set forth in Section 7.9(c) of the Development
Agreement (with appropriate changes to conform to the proper parties).
(e) The Purchaser and the Company shall, if required, mutually
reasonably cooperate with each other in connection with the filing of all
documents and instruments necessary or appropriate in connection with a pre-
merger notification with the Federal Trade Commission (the "FTC") and the
Department of Justice (the "DOJ") pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"). The Purchaser and the
Company shall use their respective commercially reasonable efforts promptly to
comply with all formal or informal requests for additional information by the
FTC or the DOJ in respect of such filing. It shall be a condition to the
exercise of the Exchange Right or conversion of the Series A Preferred Stock
into the Conversion Shares that the parties shall have complied with applicable
law relating thereto, including the consummation of all necessary filings under
the HSR Act, and all applicable waiting periods shall have expired.
(f) The Purchaser and the Company agree that the exercise of the
Exchange Right shall be treated by them as a redemption in payment for the
Series A Preferred Stock under Section 302(a) of the Internal Revenue Code of
1986, as amended.
SECTION 4. Representations and Warranties of the Company.
---------------------------------------------
The Company hereby represents and warrants to the Purchaser as
follows, as of the date hereof and as of the Closing Date:
4.1 Organization.
------------
The Company is a company duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all the requisite
corporate power and authority to own and lease its properties, to carry on its
business as presently conducted and as proposed to be conducted and to carry out
the transactions contemplated hereby. The Company is qualified and in good
standing to do business in the State of New Jersey and each other jurisdiction
in which the nature of the business conducted or the property owned by it
requires such qualification, except where the failure to so qualify would not
reasonably be expected to have a material adverse effect on the business of the
Company.
4.2 Capitalization.
--------------
(a) The authorized and outstanding shares of capital stock of
the Company are as of the date hereof, as set forth in the Company's latest SEC
Filings (as defined below) and except as set forth on Schedule 4.2 hereto.
------------
-5-
<PAGE>
(b) Except as set forth in the Company's latest SEC Filings and
except as set forth in Schedule 4.2, as of the Closing, there are no options,
------------
warrants or other rights outstanding to purchase, or any securities convertible
into, any of the Company's authorized and unissued capital stock. Other than as
set forth in this Agreement and as described in Schedule 4.2, there are no
------------
agreements, arrangements or understandings concerning the voting, acquisition or
disposition of any of the Company's outstanding securities to which the Company
is a party or of which it is otherwise aware, and, other than as set forth in
the Cytogen Registration Rights Agreement there are no agreements to register
any of the Company's outstanding securities under the U.S. federal securities
acts.
(c) All of the outstanding shares of capital stock of the
Company have been issued in accordance with applicable state and federal laws
and regulations governing the sale and purchase of securities and none of such
shares carries preemptive or similar rights.
4.3 Authorization of Agreement.
--------------------------
The execution, delivery and performance by the Company of this
Agreement and each other document or instrument contemplated hereby, including
without limitation, the Certificate of Designations, the Securities, the
Warrant, the Cytogen Registration Rights Agreement, the Development Agreement
and the Subscription Agreement (collectively, and together with the Targon
Registration Rights Agreement, the "Transaction Documents"), have been duly
authorized by all requisite corporate action by the Company; and this Agreement
and each other of the Transaction Documents have been duly executed and
delivered by the Company and are the valid and binding obligation of the
Company, enforceable against the Company in accordance with their respective
terms.
4.4 No Conflicts.
------------
The execution, delivery and performance by the Company of this
Agreement and each of the other Transaction Documents, the issuance, sale and
delivery of the Securities (and the issuance of any Common Stock issuable upon
the conversion or exercise thereof), and compliance with the provisions hereof
by the Company, will not (a) violate any provision of applicable law, statute,
rule or regulation applicable to the Company or any ruling, writ, injunction,
order, judgment or decree of any court, arbitrator, administrative agency or
other governmental body applicable to the Company or any of its properties or
assets or (b) conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute (with notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under, or result in the creation of, any Encumbrance (as defined
below) upon any of the properties or assets of the Company under, the
Certificate of Incorporation, as amended, the Certificate of Designations or By-
laws of the Company or any material contract to which the Company is a party,
except where such violation, conflict or breach would not, individually or in
the aggregate, have a material adverse effect on the Company. As used herein,
"Encumbrance" shall mean any liens, charges, encumbrances, equities, claims,
options, proxies, pledges, security interests, or other similar rights of any
nature, except for such conflicts, breaches or defaults which would not,
individually or in the aggregate, have a material adverse effect on the Company.
-6-
<PAGE>
4.5 Approvals.
---------
Except for (a) the filing of the Certificate of Designations on or
prior to the Closing, and (b) the filing of any notice subsequent to the Closing
which may be required under applicable federal or state securities law (which,
if required, shall be filed on a timely basis as may be so required), no permit,
authorization, consent or approval of or by, or any notification of or filing
with, any Person (governmental or private) is required in connection with the
execution, delivery or performance of this Agreement by the Company. There is no
approval of the Company's stockholders required under applicable laws,
regulations or stock exchange or listing authority rules or regulations in
connection with the execution and delivery of the Transaction Documents or the
consummation of the transactions contemplated thereby, including the issuance of
the Securities or Common Stock underlying the Securities.
4.6 Authorization of the Shares; Etc.
--------------------------------
The issuance, sale and delivery by the Company of the Securities (and
the Conversion Shares and the Warrant Shares) have been duly authorized by all
requisite corporate action of the Company, and the Securities and the Conversion
Shares and the Warrant Shares, when issued as contemplated hereby, will be
validly issued and outstanding, fully paid and nonassessable and not subject to
preemptive or any other similar rights of the stockholders of the Company or
others.
4.7 Filings.
-------
The Company has filed its annual report on Form 10-K for the year
ended December 31, 1995, its quarterly reports on Form 10-Q for the quarters
ended March 31 and June 30, 1996, its proxy materials in respect of the Annual
Meeting of Stockholders held in 1996 (collectively, including all exhibits and
schedules required to be filed in connection therewith, the "SEC Filings"), in a
timely manner and as otherwise required by applicable laws and regulations,
including the federal securities acts. The audited financial statements of the
Company for the fiscal year ended December 31, 1995 included in the SEC Filings
(the "Audited Financial Statements"), and the Company's unaudited balance sheets
for the period ending June 30, 1996, together with the accompanying statements
of operations and cash flows, including the notes thereto (the "June Financial
Statements" included in the SEC Filings; collectively, with the Audited
Financial Statements, the "Financial Statements") fairly present the financial
condition of the Company at the dates thereof and have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the period indicated (except as may be otherwise indicated in
such financial statements or the notes thereto), subject, in the case of the
June Financial Statements, to normal year-end audit adjustments (which shall not
be material in the aggregate) and the absence of footnote disclosure.
4.8 Absence of Changes.
------------------
Except as set forth on Schedule 4.8, since June 30, 1996, there has
------------
been no change in the assets, liabilities, financial condition or operating
results of the Company from that reflected on the Form 10-Q filed with the
Securities and Exchange Commission, except changes
-7-
<PAGE>
in the ordinary course of business that have not been, individually or in the
aggregate, materially adverse to the assets, properties, financial condition,
operating results or business of the Company.
4.9 Disclosure.
----------
This Agreement and the other Transaction Documents do not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements contained herein and therein not misleading. The Company
is not aware of any material contingency, event or circumstances relating to its
business or prospects, which could have a material adverse effect thereon which
should be but is not disclosed in the SEC Filings in order for the disclosure
therein relating to the Company not to be misleading in any material respect.
4.10 Brokers or Finders.
------------------
The Company has not retained any investment banker, broker or finder
in connection with the transactions contemplated by this Agreement and the other
Transaction Documents. The Company agrees to indemnify and hold the Purchaser
harmless against any liability, settlement or expense arising out of, or in
connection with, any such claim.
4.11 Stock Subscription Agreement.
----------------------------
The Subscription Agreement has been executed and delivered by each of
the parties thereto and is in full force and effect and there is no default or
breach by the Company thereunder.
4.12 Targon.
------
The Company has not caused or, to the Company's knowledge, permitted
Targon to incur any obligations or liabilities from the date of its formation
through and including the date hereof.
SECTION 5. Representations and Warranties of the Purchaser.
-----------------------------------------------
The Purchaser hereby represents and warrants to the Company as
follows:
5.1 Organization.
------------
The Purchaser is a company duly organized, validly existing and in
good standing under the laws of Bermuda and has all the requisite corporate
power and authority to own and lease its properties, to carry on its business as
presently conducted and as proposed to be conducted and to carry out the
transactions contemplated hereby. The Purchaser is qualified and in good
standing to do business in each jurisdiction in which the nature of the business
conducted or the property owned by it requires such qualification, except where
the failure to do so qualify would not reasonably be expected to have a material
adverse effect on the business of the Purchaser.
-8-
<PAGE>
5.2 General.
-------
The Purchaser has full legal right, power and authority to enter into
this Agreement and perform its obligations hereunder, which have been duly
authorized by all requisite corporate action. This Agreement is the valid and
binding obligation of the Purchaser, enforceable against it in accordance with
its terms.
5.3 No Conflicts.
------------
The execution, delivery and performance by the Purchaser of this
Agreement, the purchase and acceptance of the Securities (and the acceptance of
any Common Stock issuable upon the conversion of exercise thereof), and
compliance with the provisions hereof by the Purchaser, will not (a) violate any
provisions of applicable law, statute, rule or regulation applicable to the
Purchaser or any ruling, writ, injunction, order, judgment or decree of any
court, arbitrator, administrative agency of other governmental body applicable
to the Purchaser of any of its properties or assets or (b) conflict with or
result in any breach of any of the terms, conditions or provisions of, or
constitute (with which or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, or result in the
creation of, any Encumbrance upon any of the properties or assets of the
Purchaser under, the Certificate of Incorporation or By-laws of the Purchaser or
any material contract to which the Purchaser is a party, except where such
violation, conflict or breach would not, individually or in the aggregate, have
a material adverse effect on the Purchaser.
5.4 Approvals.
---------
No permit, authorization, consent or approval of or by, or any
notification of or filing with, any Person (governmental or private) is required
in connection with the execution, delivery or performance of this Agreement by
the Purchaser.
5.5 Investment Representations.
--------------------------
(a) The Purchaser is capable of evaluating the merits and risks
of its investment in the Company and has the capacity to protect its own
interests. The Purchaser has not been formed solely for the purpose of making
this investment and is acquiring the Securities and the underlying Common Stock
for investment for its own account, not as a nominee or agent, and not with the
view to, or for resale in connection with, any distribution of any part thereof.
The Purchaser understands that the Securities (and the Conversion Shares and the
Warrant Shares) have not been registered under the Securities Act or applicable
state and other securities laws by reason of a specific exemption from the
registration provisions of the Securities Act and applicable state and other
securities laws, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of such Purchaser's
representations as expressed herein. The Purchaser understands that no public
market now exists for any of the Securities and that there is no assurance that
a public market will ever exist for the Securities.
(b) Nothing contained in this Section 5.5 shall limit any of the
Company's representations or warranties or limit the Purchaser's recourse in
respect thereof.
-9-
<PAGE>
5.6 Brokers or Finders.
------------------
Except as previously disclosed to the Company, the Purchaser has not
retained any investment banker, broker or finder in connection with the purchase
of the Securities or the transactions contemplated by this Agreement and the
other Transaction Documents.
SECTION 6. Covenants of the Company.
------------------------
(a) From and after the date hereof, (i) the Company agrees to do
or cause to be done such further acts and things and deliver or cause to be
delivered to the Purchaser such additional assignments, agreements, powers and
instruments, as the Purchaser may reasonably require or deem advisable to carry
into effect the purposes of this Agreement and the other Transaction Documents
or better to assure and confirm unto the Purchaser its rights, powers and
remedies hereunder and thereunder.
(b) Until the earlier of the exercise or lapsing of the Exchange
Right, the Company shall not transfer, assign, sell, hypothecate or otherwise
dispose of any shares of Targon Common Stock other than to the Purchaser upon
exercise of the Exchange Right and, to secure the Company's obligations to the
Purchaser with respect to the Exchange Right, the Company is hereby delivering
to the Purchaser the certificates for such shares of Targon Common Stock,
together with a duly executed stock power in blank, to be held by the Purchaser
pending such exercise or lapsing of the Exchange Right, and the Purchaser has
filed a form UCC-1 with the Secretary of State of the State of New Jersey in
respect thereof. Upon the unexercised lapsing or termination of the Exchange
Right, such shares of Targon Common Stock shall be returned by the Purchaser to
the Company. Upon the reduction of the number of shares of Targon Common Stock
subject to the Exchange Right under Section 3(a), all shares of Targon Common
Stock no longer subject to the Exchange Right shall be returned by the Purchaser
to the Company and appropriate replacement certificate(s) shall be issued. After
the lapsing or exercise of the Exchange Right, such transfers, assignments,
sales, hypothecations or other dispositions of the Targon Common Stock shall be
governed by the Development Agreement.
SECTION 7. [Intentionally omitted].
-----------------------
SECTION 8. Closing and Survival Matters.
----------------------------
The representations herein shall survive for a period of 18 months
following the Closing.
SECTION 9. Exchanges; Lost, Stolen or Mutilated Certificates.
-------------------------------------------------
Upon surrender by the Purchaser to the Company of a certificate
representing any Securities acquired by the Purchaser hereunder, the Company at
its expense will issue in exchange therefor and deliver to the Purchaser, a new
certificate or certificates representing such Securities, in such denomination
or denominations, aggregating the number of shares or warrants underlying such
Securities represented by the certificate so surrendered, as may be requested by
the Purchaser. Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of any certificate representing any
Securities purchased or acquired by
-10-
<PAGE>
the Purchaser hereunder, and in case of any such loss, theft or destruction,
upon delivery of any indemnity agreement reasonably satisfactory to the Company,
or in case of any such mutilation, upon surrender and cancellation of such
certificate, the Company at its expense will issue and deliver to the Purchaser
a new certificate representing such Securities of the same tenor, in lieu of
such lost, stolen or mutilated certificate.
SECTION 10. Parties in Interest; Etc.
------------------------
This Agreement shall not be assigned, transferred or delegated by
either party hereto (other than in the case of the Purchaser to one or more of
its affiliates) without the prior written consent of the other party. Subject
to the preceding sentence, this Agreement shall bind and inure to the benefit of
the Company, the Purchaser and their respective successors and assigns.
SECTION 11. Entire Agreement.
----------------
This Agreement and the Transaction Documents contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with respect
thereto.
SECTION 12. Indemnification.
---------------
(a) In addition to all rights and remedies available to the
parties hereunder at law or in equity, each party (in such capacity, an
"Indemnifying Party") shall indemnify the other party, and their respective
affiliates and their respective stockholders, officers, directors, employees,
agents, representatives, successors and permitted assigns (collectively, the
"Indemnified Persons") and save and hold each of them harmless against and pay
on behalf of or reimburse such party as and when incurred for (a) any loss,
liability, demand, claim, action, cause of action, cost, damage, deficiency,
tax, penalty, fine or expense, whether or not arising out of any claims by or on
behalf of the Company or any third party, including interest, penalties,
reasonable attorneys' fees and expenses and all amounts paid in investigation,
defense or settlement of any of the foregoing (collectively, "Losses") which any
such party may suffer, sustain or become subject to, as a result of, in
connection with, relating or incidental to or by virtue of:
(i) any misrepresentation or breach of warranty on the part
of the Indemnifying Party under Sections 4 or 5 of this Agreement; or
(ii) any nonfulfillment or breach of any covenant or
agreement on the part of the Indemnifying Party under this Agreement.
(b) The maximum recovery of the Purchaser under this Section 12
shall not exceed $5 million; provided, that such amount shall be increased on a
dollar for dollar basis by the amount of the payment made by the Purchaser under
Section 3(d)(ii) above. The maximum recovery of the Company under this Section
12 shall not exceed the actual costs and expenses of the Company in negotiating,
executing and delivering this Agreement and out-of-pocket expenses incurred in
connection with the successful assertion of any claim hereunder. Neither
-11-
<PAGE>
Indemnified Party shall assert any such claim unless Losses in respect thereof,
when aggregated with all previous Losses hereunder, equal or exceeds $50,000,
but at such time that an Indemnified Party is so permitted to assert a claim,
such claim shall include all Losses covered by this indemnification.
(c) Notwithstanding the foregoing, and subject to the following
sentence, upon judicial determination, which is final and no longer appealable,
that the act or omission giving rise to the indemnification set forth above
resulted primarily out of or was based primarily upon the Indemnified Party's
gross negligence, fraud or willful misconduct (unless such action was based upon
the Indemnified Person's reliance in good faith upon any of the representations,
warranties, covenants or promises made by the Indemnifying Party herein), by the
indemnified party, the Indemnifying Party shall not be responsible for any
Losses sought to be indemnified in connection therewith, and the Indemnifying
Party shall be entitled to recover from the Indemnified Persons all amounts
previously paid in full or partial satisfaction of such indemnity, together with
all costs and expenses of the Indemnifying Party reasonably incurred in
effecting such recovery, if any.
(d) All indemnification rights hereunder shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby to the extent provided in Section 8(b) above,
irrespective of any investigation, inquiry or examination made for or on behalf
of, or any knowledge of the Indemnified Persons or the acceptance of any
certificate or opinion. All indemnification rights hereunder shall terminate 18
months after the Closing, except for claims made in writing prior to such time.
(e) If for any reason the indemnity provided for in this Section
12 is unavailable to any Indemnified Person or is insufficient to hold each such
Indemnified Person harmless from all such Losses arising with respect to the
transactions contemplated by this Agreement, then the Indemnifying Party and the
Indemnified Person shall each contribute to the amount paid or payable by such
Loss in such proportion as is appropriate to reflect not only the relative
benefits received by the Indemnifying Party on the one hand and such Indemnified
Person on the other but also the relative fault of the Indemnifying Party and
the Indemnified Person as well as any relevant equitable considerations. The
indemnity, contribution and expenses reimbursement obligations that the
Indemnifying Party has under this Section 12 shall be in addition to any
liability that the Indemnifying Party may otherwise have. The Indemnifying Party
further agrees that the indemnification and reimbursement commitments set forth
in this Agreement shall apply whether or not the Indemnified Person is a formal
party to any such lawsuits, claims or other proceedings.
SECTION 13. Notices.
-------
(a) All notices, demands and requests of any kind to be
delivered to any party in connection with this Agreement shall be in writing and
shall be deemed to have been duly given if personally delivered or if sent by
nationally-recognized overnight courier or by registered or certified airmail,
return receipt requested and postage prepaid, or by facsimile transmission,
addressed as follows:
(i) if to the Company, to:
-12-
<PAGE>
Cytogen Corporation
600 College Road East
CN 5308
Princeton, New Jersey 08540-5308
Telecopy: (609) 951-9298
Attention: President;
with a copy to:
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Telecopy: (212) 259-6333
Attention: Frederick W. Kanner, Esq.
(ii) if to the Purchaser, to:
Elan International Services, Ltd.
102 St. James Court
Flatts Smiths
SL04
Bermuda
Telecopy: (441) 292-2224
Attention: President;
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Telecopy: (212) 408-2420
Attention: David Robbins, Esq.
or to such other address as the party to whom notice is to be given may have
furnished to the other parties hereto in writing in accordance with the
provisions of this Section 13. Any such notice or communication shall be deemed
to have been received (i) in the case of personal delivery or facsimile
transmission, on the date of such delivery, (ii) in the case of nationally-
recognized overnight courier, on the next business day after the date when sent
and (iii) in the case of mailing, on the third business day following that on
which the piece of mail containing such communication is posted.
(b) Notices hereunder may be given on behalf of the parties by
their respective attorneys.
-13-
<PAGE>
SECTION 14. Amendments.
----------
This Agreement may not be modified or amended, or any of the
provisions hereof waived, except by written agreement of the Company and the
Purchaser.
SECTION 15. Counterparts and Facsimile.
--------------------------
This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement. This Agreement
may be signed and delivered to the other party by facsimile transmission; such
transmission shall be deemed a valid signature hereof.
SECTION 16. Headings.
--------
The section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 17. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York (without giving effect to principles of
conflicts of laws).
SECTION 18. Expenses.
--------
Targon shall bear and be responsible for the costs and expenses of
each of the parties incurred in connection with this Agreement and the other
Transaction Documents and the transactions contemplated hereby and thereby.
SECTION 19. Public Releases.
---------------
The parties reasonably shall agree upon the contents of a press
release or releases and other public disclosure in respect of the transactions
contemplated hereby and the other Transaction Documents and, except as
specifically may otherwise be required by applicable law, each party covenants
not to issue such release or make such disclosure absent such agreement.
SECTION 20. Certain Additional Covenants and Representations.
------------------------------------------------
(a) The Purchaser covenants that it will not transfer, assign,
sell, hypothecate or otherwise dispose of (other than to its affiliates) the
shares of Series A Preferred Stock prior to the exercise or lapsing of the
Exchange Right, without the prior written consent of the Company.
(b) Targon hereby restates and repeats for the benefit of the
Purchaser, mutatis mutandis, each of the representations and warranties made to
the Company in the Subscription Agreement.
-14-
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has duly executed this
Securities Purchase Agreement as of the date first written above.
CYTOGEN CORPORATION
By: /s/ Thomas J. McKearn
------------------------------
Name: Thomas J. McKearn
Title: Chairman, President and CEO
ELAN INTERNATIONAL SERVICES, LTD.
By: /s/ Thomas Lynch
-------------------------------
Name: Thomas Lynch
Title: Executive Vice President & CFO
Agreed to the provisions of Sections 2
(d)(iii), 18 and 21(b):
TARGON CORPORATION
By: /s/ Michael Sember
-------------------------------
Name: Michael Sember
Title: CEO & Chairman
<PAGE>
Schedule 4.2
------------
As of the date hereof, there are 48,301,195 shares of the Company's capital
stock outstanding.
<PAGE>
Schedule 4.8
------------
None.
<PAGE>
THIS WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE
STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF EFFECTIVE
REGISTRATION UNDER SUCH ACT AND THE RULES AND REGULATIONS THEREUNDER AND ALL
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS OR AN EXEMPTION THEREFROM UNDER
SUCH ACT AND ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
CYTOGEN CORPORATION
-------------------
WARRANT
NO. W-1 SEPTEMBER 26, 1996
VOID AFTER MARCH 31, 2003
(or earlier upon the occurrence of
certain events described below)
THIS CERTIFIES that, for value received, ELAN INTERNATIONAL SERVICES, LTD.,
a Bermuda corporation, or permitted assigns (collectively, the "Holder"), shall
be entitled to subscribe for and purchase from CYTOGEN CORPORATION, a Delaware
corporation (the "Company"), up to 1,000,000 shares (the "Warrant Shares"),
subject to adjustment as provided herein, of Common Stock, $.01 par value per
share, of the Company (the "Common Stock"), at the Exercise Price (as defined in
Section 2 hereof), during the Exercise Period (as defined in Section 1 hereof),
pursuant to the terms and subject to the conditions hereof. This Warrant is
being issued pursuant to the Securities Purchase Agreement dated as of September
26, 1996 (as amended from time to time, the "Purchase Agreement") between the
Company and the initial Holder. Capitalized terms used herein but not otherwise
defined herein have the meanings ascribed thereto in the Purchase Agreement.
SECTION 1. Exercise Period. This Warrant may be exercised by the Holder
---------------
at any time and from time to time after the date hereof and on or prior to March
31, 2003; provided, that the Holder shall have exercised the Exchange Right as
provided for in the Purchase Agreement on or prior to such exercise date (such
period being herein referred to as the "Exercise Period"). If the Exchange
Right is not exercised by the Holder on or prior to September 30, 2001, this
Warrant shall be automatically cancelled and become null and void by its terms
and without any action on the part of the Company, and the Company shall give
written notice to the Holder to surrender such cancelled warrant to the Company
promptly upon the cancellation of this Warrant.
<PAGE>
SECTION 2. Exercise Price. The exercise price (the "Exercise Price") for
--------------
each Warrant Share shall be $8.40 if the Exchange Right is exercised on or prior
to September 30, 1997; thereafter the Exercise Price will increase to $9.00 for
the period commencing on October 1, 1997 and ending on March 31, 1998; $9.80 for
the period commencing on April 1, 1998 and ending on September 30, 1998; $11.20
for the period commencing on October 1, 1998 and ending on September 30, 1999,
$12.60 for the period commencing on October 1, 1998 and ending on September 30,
2000 and $14.00 for the period commencing on October 1, 2000 and ending on March
31, 2003, each of such amounts being subject to adjustment pursuant to Section 5
hereof.
SECTION 3. Exercise Of Warrant; Warrant Shares.
-----------------------------------
(a) The rights represented by this Warrant may be exercised, in whole or
in any part (but not as to a fractional share of Common Stock), by (i) the
surrender of this Warrant (properly endorsed) at the office of the Company (or
at such other agency or office of the Company in the United States of America as
it may designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company), (ii) delivery to the Company of a notice
of election to exercise in the form of Exhibit A attached hereto, and (iii)
---------
payment to the Company of the aggregate Exercise Price by cash, wire transfer
funds or certified check.
(b) Each date on which this Warrant is surrendered and on which payment of
the Exercise Price is made in accordance with Section 3(a) above is referred to
herein as an "Exercise Date." Simultaneously with each exercise, the Company
shall issue and deliver a certificate or certificates for the Warrant Shares
being purchased pursuant to such exercise, registered in the name of the Holder
or the Holder's designee, to such Holder or designee, as the case may be. If
such exercise shall not have been for the full number of Warrant Shares, then
the Company shall issue and deliver to the Holder a new Warrant, registered in
the name of the Holder, of like tenor to this Warrant, for the balance of the
Warrant Shares that remain after exercise of the Warrant.
(c) The person in whose name any certificate for shares of Common Stock is
issued upon any exercise shall for all purposes be deemed to have become the
holder of record of such shares as of the Exercise Date, except that if the
Exercise Date is a date on which the stock transfer books of the Company are
closed, such person or entity shall be deemed to have become the holder of
record of such shares at the close of business on the next succeeding date on
which the stock transfer books are open. The Company shall pay all documentary,
stamp or other transactional taxes attributable to the issuance or delivery of
shares of Common Stock upon exercise of all or any part of this Warrant;
provided, however, that the Company shall not be required to pay any taxes which
- -------- -------
may be payable in respect of any transfer involved in the issuance or delivery
of any certificate for such shares in a name other than that of the Holder to
the extent such taxes would exceed the taxes otherwise payable if such
certificate had been issued to the Holder.
SECTION 4. Representations, Warranties And Covenants As To Common Stock.
------------------------------------------------------------
2
<PAGE>
STOCK. The Company represents and warrants to the Holder that all shares of
- -----
Common Stock which may be issued upon the exercise of this Warrant will, upon
issuance, be validly issued, fully paid and nonassessable, with no personal
liability attaching to the ownership thereof, and free from all taxes, liens and
charges with respect to the issue thereof. The Company covenants to the Holder
that it will from time to time take all such action as may be required to assure
that the stated or par value per share of the Common Stock is at all times no
greater than the then effective Exercise Price. The Company further covenants
and agrees that the Company will take all such action as may be required to
assure that the Company shall at all times have authorized and reserved, free
from preemptive rights, a sufficient number of shares of its Common Stock to
provide for the exercise of this Warrant. If any shares of Common Stock reserved
for the purpose of issuance upon the exercise of this Warrant require
registration with or approval of any governmental authority under any Federal or
state law before such shares may be validly issued or delivered upon exercise to
the Holder, then the Company shall in good faith and as expeditiously as
possible, at the expense of the Company, endeavor to secure such registration or
approval, as the case may be.
SECTION 5. Adjustment Of Exercise Price.
----------------------------
(a) Changes in Common Stock. In case the Company shall at any time or
-----------------------
from time to time after the date of this Agreement (i) pay a dividend or make
any other distribution with respect to its Common Stock in shares of Common
Stock, (ii) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, (iii) combine its outstanding shares of Common
Stock or (iv) issue any shares of its capital stock or other assets in a
reclassification or reorganization of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing entity), then the number and kind of shares of capital
stock of the Company or other assets that may be received upon the exercise of
this Warrant shall be adjusted to the number of the Warrant Shares and amount of
any such securities, cash or other property of the Company which the holders
would have owned or have been entitled to receive after the happening of any of
the events described above had the Warrant been exercised immediately prior to
the record date (or, if there is no record date, the effective date) for such
event. An adjustment made pursuant to this clause (a) shall become effective
retroactively immediately after the effective date in other cases. Any Warrant
Share or other assets to be acquired as a result of such adjustment shall not be
issued prior to the effective date of such event. For the purposes of this
clause (a), the number of shares of Common Stock at any time outstanding shall
not include shares held in the treasury of the Company.
(b) Issuance of Rights; Etc. In case the Company shall issue, at any time
------------------------
on or prior to March 31, 1998, to all holders of its Common Stock rights,
options or warrants to subscribe for or purchase, or other securities
exchangeable for or convertible into, shares of Common Stock (any such rights,
options, warrants or other securities, collectively, "Rights") (excluding rights
to purchase Common Stock pursuant to a Company plan for reinvestment of
dividends or interest) at a subscription offering, exercise or conversion price
per share (as defined below, the "offering price per share") which, before
deduction of customary discounts and commissions, is lower than the current
Market Price per share of Common Stock on the record date of such issuance of
grant, whether or not, in the case of Rights, such Rights are
3
<PAGE>
immediately exercisable or convertible, then the number of Warrant Shares
issuable upon exercise of this Warrant shall be adjusted by multiplying the
number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to any adjustment in connection with such issuance or grant by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
(exclusive of any treasury shares) on the record date of issuance or grant of
such Rights plus the number of additional shares of capital stock that would be
issued upon exercise of the Rights, and the denominator of which shall be the
number of shares of Common Stock outstanding (exclusive of any treasury shares)
on the record date of issuance or grant of such Rights plus the number of shares
which the aggregate offering price (as defined below) of the total number of
shares of Common Stock so offered would purchase at the current Market Price per
share of Common Stock on the record date, less customary discounts and
commissions. Market Price means the average of the closing prices on the Nasdaq
Stock Market (or other principal exchange of Cytogen's Common Stock) for the 10
trading days preceding the date of determination. Such adjustment shall be made
immediately after the record date for the issuance or granting of such Rights.
For purposes of this clause, the "offering price per share" of Common Stock
shall in the case of Rights be determined by dividing (x) the total amount
received or receivable by the Company in consideration of the issuance of such
Rights plus the total consideration payable to the Company upon exercise thereof
(the "aggregate offering price"), by (y) the total number of shares of Common
Stock covered by such Rights. In case the Company shall issue, at any time on or
after April 1, 1998, to all holders of its Common Stock any Rights (excluding
rights to purchase Common Stock pursuant to a Company plan for reinvestment of
dividends or interest) at the offering price per share which, before deduction
of customary discounts and commissions, is lower than the current Market Price
per share of Common Stock on the record date of such issuance or grant, whether
or not, in the case of Rights, such Rights are immediately exercisable or
convertible, then the Holder shall be entitled to receive all of the same Rights
pro rata as the holders of Common Stock, on an as-exercised basis, as and when
distributed to the holders of Common Stock. For the purposes of this clause (b),
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company. The Company shall not issue any
Rights in respect of shares of Common Stock held in the treasury of the Company.
(c) Dividends and Distributions. In case the Company shall distribute to
---------------------------
all holders of its shares of Common Stock any dividend or other distribution of
evidences of its indebtedness or other assets (other than as provided in clause
(a) above) or Rights, then, in each case, the Holder shall be entitled to
receive all of the same dividends, distributions or Rights, as the case may be,
as the holders of Common Stock, on an as-exercised basis, as and when the Holder
shall have elected to exercise this Warrant.
(d) Computations. For the purpose of any computation under clauses
------------
(b) and (c) above, the current Market Price per share of Common Stock at any
date shall be as set forth in (i) the definition of Market Price for the 10
consecutive trading days commencing 20 trading days prior to the earlier to
occur of (A) the date as of which the market price is to be computed or (B) the
last full trading day before the commencement of "ex-dividend" trading in the
Common stock relating to the event giving rise to the adjustment required by
clause (a) or (b) or (ii) any other arm's-length adjustment formula that the
Board of Directors of the Company may use in good faith. In the event the
Common Stock of the Company is not then publicly traded or
4
<PAGE>
if for any other reason the current market price per share cannot be determined
pursuant to the foregoing provisions of this clause (d) the current market price
per share shall be the Fair Value thereof.
(e) Adjustment. Whenever the number of Warrant Shares issuable upon
----------
exercise of this Warrant is adjusted as provided under clauses (a) or (b), the
Exercise Price shall be adjusted by multiplying such Exercise Price immediately
prior to such adjustment by a fraction, the numerator of which shall be the
number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to such adjustment, and the denominator of which shall be the number of
Warrant Shares issuable upon exercise of this Warrant immediately thereafter.
(f) Securities. For the purpose of this Section (f), the term "shares of
----------
Common Stock" shall mean (i) the class of stock designated as Common Stock, par
value $.01 per share, of the Company on the date of this Warrant or (ii) any
other class of stock resulting from successive changes or reclassifications of
such shares consisting solely of changes in par value, or from par value to no
par value, or from no par value to par value.
(g) Re-Adjustment. If, at any time after any adjustment to the number of
-------------
Warrant Shares issuable upon exercise of this Warrant or the Exercise Price
shall have been made pursuant to clause (e) of this Section 5, any rights,
options, warrants or other securities convertible into or exchangeable for
shares of Common Stock shall have expired, or any thereof shall not have been
exercised, the Exercise Price and the number of Warrant Shares issuable upon
exercise of this Warrant shall, upon such expiration, be readjusted and shall
thereafter be such as it would have been had it been originally adjusted (or had
the original adjustment not been required, as the case may be) as if (A) the
only shares of Common Stock offered were the shares of common stock, if any,
actually issued or sold upon the exercise of such rights, options or warrants
and (B) such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale or grant of all such rights, options or warrants whether or not
exercised; provided, further that no such readjustment shall have the effect of
increasing the Exercise Price or decreasing the number of Warrant Shares
issuable upon exercise of this Warrant by an amount (calculated by adjusting
such increase or decrease as appropriate to account for all other adjustments
pursuant to this Section 5 following the date of the original adjustment
referred to above) in excess of the amount of the adjustment initially made in
respect of the issuance, sale or grant of such rights, options or warrants.
(h) Voluntary Adjustment by the Company. The Company may at its option,
-----------------------------------
at any time during the term of this Warrant, reduce the then current Exercise
Price to any amount and for any period of time deemed appropriate by the Board
of Directors of the Company, in its sole discretion, but subject to approval by
the Holder.
(i) Reorganization, Reclassification, Consolidation, Merger or Sale. Any
---------------------------------------------------------------
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Company's assets to another Person or other
transaction which is effected in such a manner that holders of Common Stock are
entitled to receive (either directly or upon
5
<PAGE>
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "Organic Change". Prior to
the consummation of any Organic Change, the Company shall make appropriate
provisions to ensure that the Holder shall thereafter have the right to acquire
and receive, in lieu of or in addition to (as the case may be) the Warrant
Shares immediately theretofore acquirable and receivable upon the exercise of
this Warrant, such shares of stock, securities or assets as such holder would
have received in connection with such Organic Change if such holder had
exercised this Warrant immediately prior to such Organic Change. The Company
shall not effect any such consolidation, merger or sale, unless prior to the
consummation thereof, the successor corporation (if other than the Company)
resulting from consolidation or merger or the corporation purchasing such assets
assumes by written instrument, the obligation to deliver to each such holder
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.
(j) Notices.
-------
(1) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Holder, setting forth in
reasonable detail and certifying the calculation of such adjustment.
(2) The Company shall given written notice to the Holder at least 30
days prior to the date on which the Company closes its books or takes a record
for determining rights to receive any dividends or distributions.
(3) The Company shall also give written notice to the Holder at least
30 days prior to the date on which any Organic Change shall take place.
(k) Calculations. All calculations under this Section 5 shall be made to
------------
the nearest one-thousandth of a cent ($.001) or to the nearest one-thousandth of
a share, as the case may be.
SECTION 6. No Shareholder Rights. This Warrant shall not entitle the
---------------------
Holder to any voting rights or other rights as a shareholder of the Company.
SECTION 7. Restrictions On Transfer. Subject to the other provisions of
------------------------
this Section 7 and Section 9 of the Purchase Agreement, this Warrant and all
rights hereunder are transferable on or after September 26, 1997, in whole or in
part, at the agency or office of the Company referred to in Section 3 hereof, by
the Holder in person or by duly authorized attorney, upon (i) surrender of this
Warrant properly endorsed, and (ii) delivery of a notice of transfer in the form
of EXHIBIT B hereto; provided, however, that this Warrant and the Warrant Shares
--------- -------- -------
may be transferred to a maximum of three holders (reasonably satisfactory to the
Company) other than an Affiliate of the initial Holder. The Warrant Shares are
transferable at any time in compliance with applicable laws. Each transferee
and holder of this Warrant, by accepting or holding the same, consents that this
Warrant, when endorsed, in blank, shall be deemed negotiable, and, when so
endorsed, the holder hereof shall be treated by the Company and all other
persons dealing with this Warrant as the absolute owner hereof for any purposes
and as the
6
<PAGE>
person entitled to exercise the rights represented by this Warrant,
or to the transfer hereof on the books of the Company, any notice to the
contrary notwithstanding; provided, however, that until each such transfer is
-------- -------
recorded on such books, the Company may treat the registered holder hereof as
the owner hereof for all purposes.
SECTION 8. Lost, Stolen, Mutilated Or Destroyed Warrant. If this Warrant
--------------------------------------------
is lost, stolen, mutilated or destroyed, the Company shall, on such terms as to
indemnity or otherwise as it may in its reasonable discretion impose (which
shall, in the case of a mutilated Warrant, include the surrender thereof), issue
a new Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated or destroyed. Any such new Warrant shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant shall be at any time enforceable by
anyone.
SECTION 9. Notices. All notices or other communications which are
-------
required or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by registered mail, postage prepaid, return receipt
requested, or via facsimile, addressed as follows:
If to the Company, to:
Cytogen Corporation
600 College Road East
CN 5308
Princeton, New Jersey 08540-5308
Attention: Chief Executive Officer
Facsimile: (609) 951-9298;
With a copy to:
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Attention: Frederick W. Kanner, Esq.
Facsimile: (212) 259-6333
If to the initial Holder or any of its Affiliates, to:
Elan International Services, Ltd.
102 St. James Court
Flatts Smiths
SL04
Bermuda
Attention: President
Facsimile: (441) 292-2224
7
<PAGE>
With a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: David Robbins, Esq.
Facsimile: (212) 408-2420;
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. If mailed, as
aforesaid, any such communication shall be deemed to have been given on the
third business day following the day on which the piece of mail containing such
communication is posted.
SECTION 10. Governing Law. This Warrant shall be governed by and
-------------
construed in accordance with the laws of the State of New York (without giving
effect to principles of conflicts of laws).
SECTION 11. Headings. The headings of the various sections contained in
--------
this Warrant have been inserted for convenience of reference only and should not
be deemed to be a part of this Warrant.
SECTION 12. Execution In Counterpart. This Warrant may be executed in one
------------------------
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument and not separate Warrants.
* * * *
8
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officers as of the date first written above.
CYTOGEN CORPORATION
By: /s/ Thomas J. McKearn
-----------------------
Name: Thomas J. McKearn
Title:Chairman, President and CEO
ATTEST:
- -------
/s/ Charles Ogelsby
- -------------------------
Name: Charles Ogelsby
Title:Corporate Controller and
Assistant Secretary
<PAGE>
EXHIBIT A
---------
FORM OF NOTICE OF ELECTION TO EXERCISE
[To be executed only upon exercise
of the Warrant to which this form is attached]
To Cytogen Corporation:
The undersigned, the holder of the Warrant to which this form is attached,
hereby irrevocably elects to exercise the right represented by such Warrant to
purchase __________ shares of Common Stock of CYTOGEN CORPORATION, and herewith
tenders the aggregate payment of $_________ in the form of cash, wire transfer
funds or certified check, in full payment of the purchase price for such shares.
The undersigned requests that a certificate for such shares be issued in the
name of _______________, whose address is ________________________, and that
such certificate be delivered to ______________, whose address is
_______________.
If such number of shares is less than all of the shares purchasable under
the current Warrant, the undersigned requests that a new Warrant, of like tenor
as the Warrant to which this form is attached, representing the remaining
balance of the shares purchasable under such current Warrant be registered in
the name of _______________, whose address is _____________________________, and
that such new Warrant be delivered to ______________, whose address is
_____________________________.
Signature:___________________________________
(Signature must conform in all respects to the
name of the holder of the Warrant as specified on
the face of the Warrant)
Date:________________________________________
<PAGE>
EXHIBIT B
---------
FORM OF NOTICE OF TRANSFER
[To be executed only upon transfer
of the Warrant to which this form is attached]
For value received, the undersigned hereby sells, assigns and transfers
unto _________________________ all of the rights represented by the Warrant to
which this form is attached to purchase _________________________ shares of
Common Stock of CYTOGEN CORPORATION (the "Company"), to which such Warrant
relates, and appoints __________________________ as its attorney to transfer
such right on the books of the Company, with full power of substitution in the
premises.
Signature:___________________________________
(Signature must conform in all respects to the
name of the holder of the Warrant as specified on
the face of the Warrant)
Address:_____________________________________
_____________________________________
Date:________________________________________
Signed in the presence of:
______________________________
<PAGE>
JOINT DEVELOPMENT AND OPERATING AGREEMENT
ELAN CORPORATION, PLC
AND
CYTOGEN CORPORATION
AND
TARGON CORPORATION
SEPTEMBER 26, 1996
<PAGE>
THIS JOINT DEVELOPMENT AND OPERATING AGREEMENT is dated September 26, 1996
among CYTOGEN CORPORATION, a Delaware corporation, having its principal place of
business at 600 College Road East, Princeton, New Jersey 08540 (together with
its Subsidiaries and Affiliates (each as defined below), " Cytogen"); ELAN
CORPORATION, PLC, a public limited company incorporated under the laws of
Ireland, having its principal place of business at Monksland, Athlone, County
Westmeath, Ireland (together with its Subsidiaries and Affiliates, "ELAN"); and
TARGON CORPORATION, a Delaware corporation, having its principal place of
business at 600 College Road East, Princeton, New Jersey 08540 (the "Company").
Capitalized terms not otherwise defined herein are defined in Section 1.1
hereof.
RECITALS:
A. The Company was formed on September 25, 1996 for the purpose of
conducting research, development and commercialization of the ATS Compounds and
the Cytogen Compounds related activities. The Company has issued 1,000,000
shares of its Common Stock to Cytogen on the date hereof, constituting 100% of
the Company's issued and outstanding share capital (other than the Management
Shares). In connection with the closing of the Securities Purchase Agreement,
Cytogen has granted to Elan International Services, Ltd. ("EIS"), a Bermuda
corporation and wholly-owned subsidiary of Elan Corporation, plc, the Elan
Exchange Right, as provided in the Securities Purchase Agreement. Pursuant to
the Elan Exchange Right, the Company has granted to EIS the option to exchange
all of the issued and outstanding shares of the Cytogen's Series A preferred
Stock initially for 500,000 shares of Common Stock of the Company, initially
representing 50% of the share capital of the Company (other than Management
Shares), subject to adjustment as described in the Securities Purchase
Agreement.
B. Cytogen and Elan have agreed to cooperate in the establishment and
management of the Company for development of specific pharmaceutical compounds
(biological and otherwise) incorporating the technologies developed by the
Company, Cytogen, Elan and/or Advanced Therapeutic Systems, Ltd., a Bermuda
corporation ("ATS"), and their sale and supply, and desire that such activities
be undertaken through the Company, and for this purpose Cytogen and EIS have
agreed to participate as holders of the Common Stock of the Company (in the case
of EIS, through exercise, in EIS's discretion, of the Elan Exchange Right), for
the purposes and on the terms set out in this Agreement. In connection with the
forgoing, the Company shall acquire certain Technology and, in connection
therewith, shall agree to make certain payments to Cytogen, Elan and ATS.
C. The Company and Cytogen and Elan desire to set forth in the
Agreement certain provisions relating to (1) the research, development and
commercialization work described above and (2) the operations of the business of
the Company.
<PAGE>
AGREEMENT:
ACCORDINGLY, IT IS HEREBY AGREED AS FOLLOWS:
ARTICLE I
DEFINITIONS
1.1. In this Agreement, the following words and meanings shall, where not
inconsistent with the context, have the following meanings respectively.
"Additional Compounds" means any compound or formulation now or
hereafter owned by the Company or in which the Company has any development,
marketing or similar rights, other than the Compounds utilizing the Cytogen
Technology or the Elan Technology.
"Affiliate" means any Person other than the Company controlling,
controlled or under the common control of Elan or Cytogen, as the case may be.
For the purpose of this definition, "control" shall mean direct or indirect
ownership of 40% or more of the stock or shares entitled to vote for the
election of directors or the ability, by contract or agreement or otherwise, to
direct the management and affairs of a Person.
"Agreed" means agreed by all Parties and confirmed in writing.
"Agreement" means this agreement (which expression shall be deemed to
include the Recitals, the Schedules and Appendices hereto).
"Articles" means the certificate or articles of incorporation and
by-laws of the Company in the form attached as Exhibit D hereto.
---------
"ATS Compounds" means [INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION UNDER RULE 24b-2.]
"ATS Transfer Agreement" means the agreement dated the date hereof
between ATS and the Company pursuant to which ATS has transferred the ATS
Compounds and the related Intellectual Property to the Company.
"Business" means the business of the Company as described in Article
II and subject to the provisions of Article IV, such other business as the
Parties may agree from time to time in writing should be carried on by the
Company.
"Business Plan" means the Company's business plan in the form
attached hereto as Exhibit A or in such other form as shall be agreed to from
---------
time to time in writing by Cytogen and Elan, in conjunction with the Research
and Development Programs, for the conduct of the Business of the Company for
each Financial Year for the duration of this Agreement, which shall include, in
particular, details of the planned research and development expenses to be
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incurred in that Financial Year, which of the Shareholders shall be responsible
for the relevant research and development expenditure, and how such expenses
shall be funded.
"Common Stock" means the common stock, $01 par value per share, of the
Company.
"Compounds" means the ATS Compounds and the Cytogen Compounds,
together with any Additional Compounds hereafter acquired by the Company from
Cytogen, ATS, Elan or any other Person, or developed by the Company.
"Cytogen Compounds" means the [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.]
"Cytogen Directors" means the Directors designated by Cytogen pursuant
to the terms hereof and holding office from time to time.
"Cytogen Technology" means any intellectual property, know-how, trade
secrets, patents or patent rights or other rights relating to the Cytogen
Compounds owned by Cytogen and transferred to the Company pursuant to the
Cytogen Transfer Agreement.
"Cytogen Transfer Agreement" means the agreement dated the date hereof
between Cytogen and the Company pursuant to which Cytogen has transferred the
Cytogen Compounds and the related Intellectual Property to the Company.
"Directors" means the Cytogen Directors and the Elan Directors from
time to time and any other Director agreed to by the Cytogen Directors and the
Elan Directors from time to time.
"Elan Directors" means the Directors designated by Elan pursuant to
the terms hereof and holding office from time to time.
"Elan Exchange Right" means the right granted by Cytogen to EIS, as
set forth in the Securities Purchase Agreement, to acquire shares of Common
Stock of the Company from Cytogen, as provided for in the Securities Purchased
Agreement.
"Elan Technology" means any intellectual property, know-how, trade
secrets, patents or patent rights or other rights relating to the ATS Compounds
owned by Elan or ATS and transferred to the Company pursuant to the ATS Transfer
Agreement.
"FDA" means the U.S. Food and Drug Administration or any successor U.S
federal agency.
"Field" means the [INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION UNDER RULE 24b-2.]
"Financial Year" means initially, September 1, 1996 through December
31, 1996 and thereafter each year commencing on January 1 and expiring on
December 31 of each year.
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"Independent Third Party" means any Person other than Elan, Cytogen,
ATS or the Company, or any Affiliate of any such Person.
"INDA" means any investigational new product application in relation
to a Product or Compound.
"Loan" means any loan(s) advanced from time to time by any of the
Shareholders to the Company.
"Management Shares" means Shares issued or issuable to directors,
officers or other Persons pursuant to such plans, options, warrants,
arrangements and/or understandings as shall be satisfactory to the Shareholders.
"NDA" means a new drug application.
"Net Sales" means the [INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION UNDER RULE 24b-2]
"Party" means Elan, Cytogen or the Company, as the case may be;
"Parties" means more than one Party.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture, or
other entity of whatever nature.
"PLA" means Product License Application.
"Prime" means the prime or base rate established from time to time by
Morgan Guaranty Trust Company in New York.
"Product(s)" means depending on the context one or more formulations
of the Compounds or based, in whole or in part, on the Technology and developed
by or on behalf of the Company.
"Research and Development Programs" mean(s), depending on the
context, one or more programs of research and development work being conducted
or to be conducted by Cytogen and/or Elan for and on behalf of the Company which
have been devised by the Research Committee and approved by the Management
Committee.
"Securities Purchase Agreement" means the Securities Purchase
Agreement dated as of the date hereof between Cytogen and EIS, pursuant to which
Cytogen has agreed to issue to EIS and EIS has agreed to purchase from Cytogen
the securities set forth therein, including,
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without limitation, the Series A Preferred Stock of Cytogen, in connection with
which Cytogen has granted to EIS the Elan Exchange Right.
"Shares" means any outstanding shares of Common Stock.
"Shareholder" means Cytogen or Elan for so long as such Party or its
Affiliates owns at least 10% of the aggregate shares or, in the case Elan, has
the right to acquire such Shares in connection with the Elan Exchange Right;
"Shareholders" means both of Cytogen and Elan together.
"Subsidiary" of any Person means any other Person at least 50% of the
capital stock is owned by such first Person.
"Supply Agreements" means one or more Manufacture and Supply
Agreements to be entered into by Elan and/or Cytogen, on the one hand Company,
on the other hand, pursuant to the terms hereof to facilitate commercial
development and exploitation of Compounds or Products.
"Technology" means, collectively, the Cytogen Technology, the Elan
Technology and any intellectual property, know-how, trade secrets, patents or
patent rights or other rights relating to the Compounds and, developed or
acquired by or on behalf of the Company.
"Territory" means all of the countries of the world.
"Transfer Agreements" means the ATS Transfer Agreement and the
Cytogen Transfer Agreement.
1.2. Words importing the singular shall include the plural and vice versa.
1.3. Unless the context otherwise requires, reference to an article,
paragraph, provision, clause or schedule is an article, paragraph, provision,
clause or schedule of or to this Agreement.
1.4. Reference to a statute or statutory provision includes a reference to
it as from time to time amended, extended or re-enacted.
1.5. The headings in this Agreement are inserted for convenience only and
do not affect its construction.
ARTICLE II
THE COMPANY'S BUSINESS
2.1. The primary object of the Company and any Subsidiaries is to carry on
the business of the Field in the Territory and to achieve the objectives set out
in this Agreement.
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2.2. On the date hereof, as provided in Article V hereof, (a) Cytogen is
paying to the Company $20 million (the "Initial Capital"), in consideration of
all of the Shares. The Company hereby agrees that, unless consented to by the
Shareholders, it shall not issue any Shares other than Management Shares. Each
of the Shareholders agrees that it shall use its best efforts to cause the
Company to be bound by the provisions of this Agreement. Except as the
Shareholders may otherwise agree in writing and except as may be provided in
this Agreement, the Business Plan or any Supply Agreements, the Shareholders
shall exercise their powers in relation to the Company so as to ensure that the
business is carried on in a proper and prudent manner.
2.3. Each of Cytogen and Elan shall use all reasonable and proper means
at its disposal and within its power to maintain, extend and improve the
Business of the Company, within the limits of this Agreement, and to further the
reputation and interests of the Company.
2.4. The central management and control of the Company shall be exercised
at the principal place of business of the Company and shall be vested in the
Directors and such persons as they may delegate the exercise of their powers in
accordance with this Agreement. The Shareholders shall use their best endeavors
to ensure that the Company is treated as resident for taxation in such
jurisdiction as the Directors shall determine and that the right to use of the
Technology shall, to the maximum extent practicable, be owned and held by the
Company, or its Affiliate, or its designee.
2.5. Each of the Shareholders hereby confirms that in the event of a
dispute arising between the Company and a Shareholder, the Directors appointed
by that Shareholder shall consent to any action or proceedings taken or
initiated by the Company against that Shareholder to resolve the dispute.
ARTICLE III
ARTICLES OF THE COMPANY
3.1. In the event of any ambiguity or conflict arising between the terms
of this Agreement and those of the Company's Articles, the terms of this
Agreement shall prevail as between the Shareholders.
3.2. Subject to Section 3.1, each of the Parties hereto undertakes with
each of the other Parties fully and promptly to observe and comply with the
provisions hereof to the intent and effect that each and every provision thereof
shall be enforceable by the Parties hereto.
ARTICLE IV
WARRANTIES
4.1. The Company warrants to the Shareholders that the Recitals are true
and correct in every respect insofar as they relate the Company, and that prior
to the date hereof the
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Company has neither traded nor incurred any liabilities or obligations of any
nature whatsoever other than those imposed on the Company by virtue of its
incorporation and this Agreement.
4.2. Elan and Cytogen each warrants and undertakes to the other that the
Shares to be acquired by it in the Company, as provided herein, will be acquired
for its own absolute beneficial ownership and not on behalf of any other Person.
4.3. Elan and Cytogen each warrants and undertakes to the other (with
respect to Elan Corporation, plc and Cytogen Corporation, respectively) that
except as disclosed in writing to each other prior to the execution of this
Agreement:
(a) it is duly incorporated under the laws of its place of
incorporation;
(b) it has full authority and capacity to enter into and perform its
obligations under this Agreement (having obtained all requisite corporate and
governmental approvals);
(c) it is not engaged in any litigation or arbitration, or in any
dispute or controversy reasonably likely to lead to litigation, arbitration or
any other proceeding, which would materially affect the validity of this
Agreement, such Party's fulfillment of its respective obligations under this
Agreement or the business of the Company as contemplated herein; and
(d) that this Agreement has been fully authorized, executed and
delivered by it and that it has full legal right, power and authority to enter
into and perform this Agreement, which constitutes a valid and binding agreement
between the Parties.
ARTICLE V
CLOSING
5.1. The closing of the transactions contemplated hereby shall occur on
the date hereof, simultaneously with the execution and delivery of this
Agreement and the Securities Purchase Agreement, at the offices of counsel to
Elan in New York, New York, or at such other place as the Shareholders shall
agree upon.
5.2. At the closing, each of the parties hereto shall take or (to the
extent that the same is within such Person's powers) cause to be taken the
following steps at Directors' and Shareholder's meetings of the Company, or such
other meetings or closing, as appropriate:
(a) the adoption by the Company of the Articles in the form attached
hereto as Exhibit D and the designation and appointment of the initial
---------
Directors;
(b) the consummation of the transactions contemplated by the
Securities Purchase Agreement, including without limitation, the issuance by
Cytogen to EIS of the common stock and Series A Preferred Stock of Cytogen
issuable to EIS thereunder;
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(c) the issuance of the Shares to Cytogen and the appointment of the
initial Directors of the Company, as agreed to on the date hereof by Cytogen and
Elan;
(d) the payment by Cytogen to the Company of the Initial Capital;
(e) the execution by the Company, on the one hand, and ATS, Cytogen
and EPRC, on the other hand, of the Transfer Agreements; and
(f) the delivery of such additional documents and instruments, and
opinions of counsel and other Persons, as shall be customary in the
circumstances and reasonably requested by each of the Parties.
ARTICLE VI
CONTRIBUTIONS
6.1 The Shareholders and the Company acknowledge and agree that the
financial requirements of the Company will be borne by the Company, initially
from the Initial Capital or such other basis as may be agreed by the
Shareholders, in their sole discretion, whether by way of providing cash or
technical know-how.
6.2 Cytogen has contributed to the Company on the date hereof the
Cytogen Compounds and the Cytogen Technology (pursuant to the Cytogen Transfer
Agreement), and ATS has contributed to the Company on the date hereof the Elan
Technology and ATS Compounds (pursuant to the ATS Transfer Agreement).
6.3. The Shareholders agree that any further financing of the Company
required in respect of any research and development expenditure to be incurred
by the Company in excess of the contributions pursuant to Section 6.2 shall be
borne as the Shareholders may hereafter agree; it being understood that neither
Cytogen nor Elan shall have any obligation to contribute additional funds absent
its specific agreement in respect thereof.
ARTICLE VII
MANAGEMENT AND DIRECTION OF RESEARCH AND DEVELOPMENT
7.1 The Company's Board of Directors initially shall consist of (a)
three Directors appointed by Cytogen, (b) three Directors appointed by Elan, and
(c) one independent Director (i.e., a Person who is not affiliated with either
Cytogen or Elan). Such provisions shall remain in effect until the earlier to
occur of the termination of this Agreement and the initial public offering of
equity securities of the Company in a registered offering under the Securities
Act of 1933 and the registration of the Common Stock under the Securities Act of
1934 (an "IPO"); provided, that at such time that Elan or Cytogen owns, directly
or indirectly, fewer than 20% of
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the Shares, such Shareholder's (but not the other Shareholder's) right to
appoint Directors shall expire.
7.2. The Directors shall appoint a management committee (the "Management
Committee") to exercise certain of their functions in accordance with their
right to delegate such powers pursuant to the Articles. The Management
Committee will consist of two individuals, one of whom initially shall be
nominated by Elan and one of whom initially shall be nominated by Cytogen. Each
of the Shareholders shall be entitled to remove any of its nominees to the
Management Committee and appoint a replacement in place of any nominee so
removed.
7.3. The Management Committee shall appoint a research committee (the
"Research Committee"). The Research Committee shall consist of two individuals,
one of whom initially shall be nominated by Elan and one of whom initially shall
be nominated by Cytogen. Each of the Shareholders shall be entitled to remove
its nominee to the Research Committee and appoint a replacement in place of any
nominee so removed. The number of individuals on the Research Committee shall be
altered if agreed to by the Management Committee.
7.4. The Management Committee shall be responsible for, among other
things, devising implementing and reviewing strategy for the Business and, in
particular, devising the Company's strategy for research and development in
relation to the Field and to monitor and supervise the implementation of the
Company's strategy for research and development.
7.5. The Management Committee shall report all significant developments to
the Directors and the Shareholders on the occurrence thereof and, in addition,
shall report at quarterly intervals to the Directors and the Shareholders. In
the event of an irreconcilable dispute or deadlock among the members of the
Management Committee, the provisions of Article XXIII shall apply.
7.6. The Research Committee shall be responsible for the implementation of
the Research and Development Programs for the Company and shall meet at regular
intervals to monitor the progress of the research and development programs and
to report on its progress to the Management Committee. In the event of any
dispute among the Research Committee, the Research Committee shall refer such
dispute to the Management Committee whose decision on the dispute shall be
binding on the Research Committee. If the Management Committee fail to reach a
decision, the provisions of Article XXIII shall apply.
7.7. The Company shall, in the first instance, solicit Cytogen or Elan to
provide such research and development services as may reasonably be required by
the Company, upon such terms and conditions as may be subsequently agreed by the
Company, on the one hand, and Cytogen or Elan, on the other hand.
7.8. The Company shall pay Elan and Cytogen for any research and
development work carried out by them on behalf of the Company, as provided in
the Business Plan and otherwise agreed to by the Management Committee, on the
one hand, and Cytogen or Elan, on the other hand, subject to the proper vouching
of research and development work and expenses. The
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payments by the Company to Elan and Cytogen shall be calculated [INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.]
7.9. In consideration of the patent rights granted, or which hereafter
may be granted, by the Parties regarding the work to be completed hereunder in
connection with the development of the Compounds and the Products, the Company
shall pay to Cytogen and Elan the following amounts from time to time.
[INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.]
In the event that the provisions of this Section 7.9 are
applicable, the Company shall grant to Cytogen and Elan such audit and review
rights related to the calculation payments and challenging of such applicable
amounts as shall be reasonably customary in the pharmaceutical industry at such
time, which rights shall be set forth in a written instrument signed by the
Company.
7.10. In no event shall Cytogen or Elan have any further or additional
liability or obligation to the Company, other than as set forth in this
Agreement, by virtue of the payments provided for under Section 7.9.
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ARTICLE
PROPERTY OWNERSHIP RIGHTS
8.1. The Company shall own the legal and equitable title to the
Technology, the ATS Compounds and the Cytogen Compounds. Cytogen and Elan shall
have the sole right to license the Technology outside the Field Pursuant to and
in accordance with the provisions of this Article VIII and Section 11.2.
8.2. In the event that Cytogen or Elan wish to exploit the Technology
outside the Field, such Shareholder or Shareholders shall provide written
notice to such effect to the Company. The Company shall thereafter negotiate in
good faith with each of the Shareholders as to the terms and conditions of a
license or licenses in respect thereof, which shall be on then customary terms
and conditions. Such license or licenses may be in the form of non-exclusive
licenses to each of Cytogen and Elan or appropriate cross-licenses, or on such
other terms and conditions as the Parties shall otherwise mutually agree; it
being understood that such work which is directly related to or in furtherance
of development of the Compounds, Products or Technology shall be the property of
the Company. Such licenses may include non-exclusive license to each Cytogen and
Elan or appropriate cross-licenses among the Parties. If the Parties are unable
to agree upon the terms of any such license, such disagreement shall be referred
to an Independent Expert, as provided in Article XXII.
ARTICLE IX
PATENT RIGHTS
9.1. The Company shall have the right to obtain and prosecute patents and
patent rights relating to the Compounds, Products and Technologies, whether
within or outside the Field; rights outside the Field shall be governed by
Article VIII.
ARTICLE X
EQUIPMENT
10.1. Any equipment or other assets purchased by Cytogen and/or Elan
which is funded by the Company shall belong to the Company. The Parties shall
appropriate arrangements as regards marking of such equipment and assets,
insurance and bailment provisions.
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ARTICLE XI
EXPLOITATION OF PRODUCTS
11.1. The Company will have an exclusive entitlement to develop and/or
exploit Products in the Field. In order to commercialize the Products the
Company shall obtain marketing approval in such countries in the Territory as is
determined by the Business Plan. It may be necessary to file an INDA and perform
clinical testing in more than one country, and the Shareholders shall reasonably
agree on such testing.
11.2. In the event that the Company decides that it does not wish to
pursue the research and development and/or commercialization of a Product,
and either Elan or Cytogen wishes to pursue such research and development and/or
commercialization, the Company shall grant a license agreement in respect of
such Product to Elan and/or Cytogen, as the case may be; provided, that such
Product does not or will not compete in any material respect with any Product or
proposed Product. The Company and the relevant Shareholder shall negotiate in
good faith the terms of such a license agreement, which shall be on then-
commercially customary and reasonable terms and conditions.
11.3. The strategy for the commercialization of the Products shall be
determined by the Management Committee, subject to the supervision of the Board
of Directors.
ARTICLE XII
TECHNICAL SERVICES AND ASSISTANCE
12.1. Whenever commercially and technically feasible, the Company shall
offer to contract with Cytogen or Elan as the case may be to perform such other
services as the Company may require. In determining which party should provide
such services, the Management Committee shall in good faith take into account
the respective infrastructure and experience of Elan and Cytogen.
12.2. The Company shall if appropriate conclude an administrative support
agreement with Elan and/or Cytogen on such terms as the parties thereto shall in
good faith negotiate. The management services required shall include one or more
of the following management services which shall be requested by the Company:
(a) accounting, financial and other services;
(b) tax services;
(c) insurance services;
(d) human resources services;
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(e) legal and company secretarial services;
(f) patent and related intellectual property services; and
(g) all such other services consistent with and of the same type as
those services to be provided pursuant to this Agreement, as may be required
The foregoing list of services shall not be deemed exhaustive and
may be changed from time to time upon written request by the Company.
If Elan or Cytogen so requires, in good faith, Cytogen or Elan shall
receive, at times and for periods mutually acceptable to the parties, employees
of the other party (such employees to be acceptable to the receiving party in
the matter of qualification and competence) for instruction in respect of the
Elan Technology or the Cytogen Technology as the case may be as is necessary to
further the Research and Development Programs.
The employees received by Elan or Cytogen, as the case may be, shall
be subject to obligations of confidentiality no stringent than those set out
herein and such employees shall observe the rules, regulations and systems
adopted by the party receiving the said employees for its own employees or
visitors.
ARTICLE XIII
MANUFACTURE AND SUPPLY ARRANGEMENTS
13.1. If the Company elects to finance, develop and/or exploit the
commercial production of a Product, the Company shall enter into a Supply
Agreement with Cytogen or Elan or any Subsidiary of either to allow for the
commercial production of such Product on behalf of the Company. The Supply
Agreement shall be negotiated and agreed by the Parties as contemplated by the
Business Plan or as otherwise agreed to by the Management Committee. The terms
of the Supply Agreements shall be on normal commercial terms, and shall be
negotiated in good faith by the Parties thereto. The determination of which of
Cytogen or Elan shall be offered the first opportunity to enter into a Supply
Agreement with the Company shall be made by the Company in good faith, based
upon the relevant facts and circumstances, including the ability of Cytogen or
Elan to manufacture the relevant Products and provide infrastructure and Product
support, and the experience and reputation of such Party's in commercializing
the relevant Product.
ARTICLE XIV
AUDITORS; REGISTERED OFFICE; ACCOUNTING REFERENCE DATE
14.1. Unless otherwise agreed by the Shareholders and save as may be
provided to the contrary herein;
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(a) The auditors of the Company shall be Arthur Anderson, LLP or such
other auditors as may be chosen by Cytogen, which shall be reasonably
satisfactory to Elan. Elan shall retain the right to have an audit conducted for
their own internal purposes using another accounting.
(b) The registered office of the Company shall be at such address as
the Shareholders shall agree from time to time; and
(c) The accounting reference date of the Company shall be 31 December
in each Financial Year.
ARTICLE XV
SHARE RIGHTS AND DIRECTORS
15.1. All Shares shall be identical and shall rank pari passu, be of one
class and shall carry the same voting rights, rights to appoint and remove
Directors, rights to dividends and other rights as provided in the Articles, and
be subject to the restrictions on the transfer and distribution of assets and
other provisions set forth in the Clauses and as set forth in this Agreement.
ARTICLE XVI
PROCEEDING OF DIRECTORS AND CHAIRMAN
16.1. The initial Chairman shall be a Director designated by Elan.
16.2 The Chairman designated under Section 16.1 shall retire as Chairman
at the first Annual Stockholders Meeting of the Company. Thereafter, each
Shareholder, beginning with Cytogen, shall have the right, exercisable
alternatively, of nominating one of the Directors to be Chairman of the Company
for a period of one year. The Chairman shall hold office until the termination
of the next Annual Stockholders Meeting following his appointment. If the
Chairman is unable to attend any meeting of the Board, the Directors of the same
designation shall be entitled to appoint another Director to act as Chairman in
his place at the meeting. From and after the IPO, the Chairman shall be an
individual (who may be a Director designated by either Cytogen or Elan) who
shall be approved by the Directors, and who shall remain Chairman until his
retirement or replacement by the Directors.
16.3. In the case of an equality of votes at a meeting of the Board of the
Company, the Chairman shall not be entitled to a second or casting vote.
16.4. Any Shareholder removing a Director shall be responsible for and
shall indemnify the other Shareholder and the Company against any claim by such
Director in respect of dismissal arising from such removal.
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16.5. The Directors shall meet not less than four times in any year and
all Directors' meeting shall be held at such location as shall be designated by
the Board. The quorum for each such meetings shall be a majority of Directors,
including at least one Cytogen Director and at least one Elan Director. In the
event that a quorum cannot be convened as a result of the persistent refusal of
a Shareholders' Directors to attend a meeting (which period shall not exceed 10
days), the provisions of Article XXIII shall be applicable.
ARTICLE XVII
MATTERS REQUIRING SHAREHOLDERS' APPROVAL
17.1. Unless otherwise agreed between the Shareholders in writing, until
the earlier of the occurrence of the IPO and either Cytogen or Elan owning,
directly or indirectly, fewer than 20% of the Shares (in which case, the rights
described below shall lapse only with respect to such Shareholder and not the
other Shareholder) the Shareholders shall exercise all voting rights and other
powers of control available to them in relation to the Company to procure
(insofar as they are able by the exercise of such rights and such powers) that
neither the Company nor any Subsidiary of the Company shall without the prior
approval of the Shareholders (which may be evidenced by a vote of their
designated Directors).
(a) engage in any activity other than the Business;
(b) sell the principal assets, undertaking or business of the
Company;
(c) appoint or dismiss a Director except in accordance with the
rights conferred on the Shareholders under Article XVII to appoint and remove a
Director;
(d) create any fixed or floating charge, lien (other than a lien
arising by operation of law) or other encumbrance over the whole or any part of
the undertaking, property or assets of the Company or of any Subsidiary, except
for the purpose of securing the indebtedness of the Company to its bankers for
sums borrowed in the ordinary and proper course of the Business;
(e) borrow any sum (except from the Company's bankers in the
ordinary and proper course of the Business) in excess of a maximum aggregate sum
outstanding at any time of $15,000;
(f) make any loan or advance or give any credit (other than normal
trade credit) in excess of $15,000 to any Person, except for the purpose of
making deposits with bankers;
(g) give any guarantee or indemnity to secure the liabilities or
obligations of any Party other than those which it is usual to give in the
ordinary course of a business similar to the Business;
(h) sell, transfer, lease, assign, or otherwise dispose of part of
the undertaking, property and/or assets other than stock or assets (or any
interest therein) which are surplus to the
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requirements of the Company or any Subsidiary, or contract so to do where the
value of the undertaking property and/or assets exceed $15,000;
(i) enter into any contract, arrangement or commitment involving
expenditure on capital account or the realization of capital assets if the
amount or the aggregate amount of such expenditure or realization by the
Company, and all of the Subsidiaries of the Company would exceed $50,000 in any
one year or in relation to any one project, and for the purpose of this
paragraph the aggregate amount payable under any agreement for hire, hire
purchase or purchase on credit sale or conditional sale terms shall be deemed to
be capital expenditure incurred in the year in which such agreement is entered
into;
(j) issue any unissued shares or create or issue any new shares;
(k) alter any rights attaching to any class of share in the
capital of the Company or alter the Articles;
(l) consolidate, sub-divide or convert any of the Company's
share capital or in any way alter the rights attaching thereto;
(m) create, acquire or dispose of any Subsidiary or of any
shares in any Subsidiary;
(n) enter into any partnership or profit sharing agreement with
any Person other than arrangements with trade representatives and similar
Persons in the ordinary course of business;
(o) do or permit or suffer to be done any act or thing whereby
the Company may be wound up (whether voluntarily or compulsorily), save as
otherwise expressly provided for in this Agreement;
(p) issue any debentures or other securities convertible into
shares or debentures or any share warrants or any options in respect of Shares;
(q) enter into any material contract or transaction except in
the ordinary and proper course of the Business on arm's length terms;
(r) acquire, purchase or subscribe for any shares, debentures,
mortgages or securities (or any interest therein) in any company, trust or
other body;
(s) adopt any employee benefit program or incentive schemes;
(t) engage any new employee at remuneration which could exceed
the rate of $60,000 per annum; or
(u) pay any remuneration to Directors designated by either of
them as provided in Article VII by virtue of holding such office other than
Directors who hold executive office.
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ARTICLE XVIII
THE BUSINESS PLAN AND REVIEWS
18.1. The Directors and Shareholders shall meet together as soon as
reasonably practicable after the date hereof and thereafter prior to the
accounting reference date specified in Article XIV in any Financial Year to
agree and approve the Business Plan for the following Financial Year, or any
amendment or modification to the Business Plan, with at least one Director
appointed by each Shareholder concurring.
18.2. The Shareholders agree that the Management Committee shall submit to
the Directors on 15th May, 15th August, 15th November, and 15th February or as
soon as reasonably practicable thereafter in each Financial Year a report on the
performance of the business activities of the Company and the Directors shall
hold such meeting as may be necessary to review the performance of the Company
against the Business Plan for the relevant year of trading.
ARTICLE XIX
REVIEW AND DURATION
19.1. This Agreement shall remain in force for a period of two years from
the date hereof and thereafter, subject to the written agreement of the
Shareholders, shall be renewed for successive periods of one year.
19.2. The Shareholders shall meet together to review the performance of
the Company not less than six months prior to the expiration of the
initial two-year period and six months prior to the expiration of each
successive one-year period referred to in Section 19.1. If following such
review, either Shareholder determines that it does not wish or intend to renew
or extend this Agreement as aforesaid, such Shareholder shall forthwith serve
written notice of discontinuance upon the other Shareholder whereupon the
provisions of Article XXI shall apply.
19.3. The following provisions shall be applicable in the event of a
termination of this Agreement or failure to renew this Agreement upon an
applicable renewal date (each, a "Termination Date"):
(a) In the event that the Termination Date shall have occurred after
EIS shall have exercised the Exchange Right (as defined in the Securities
Purchase Agreement) and, accordingly, owns Shares, the provisions of Article XXI
shall be applicable and the provisions of Section 7.9(c) hereof shall survive
such termination.
(b) In the event that the Termination Date shall have occurred after
EIS shall have elected to convert its Series A Preferred Stock of Cytogen and,
accordingly, the Exchange Right shall have lapsed neither party shall have any
additional rights hereunder, except that the provisions of Section 7.9(c) hereof
shall survive such termination.
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(c) In the event that the Termination Date shall have occurred prior
to the time that the Exchange Right shall have been exercised and prior to the
time, if any, that the Series A Preferred Stock of Cytogen shall have been
converted into Cytogen Common Stock, as a result of Cytogen's exercise of its
right to terminate under Section 19.2 (or election not to continue the business
of the Company), the ATS Products shall be transferred to or as directed by Elan
in the manner described in the Securities Purchase Agreement and neither party
shall have any additional rights hereunder, except the provisions of Section
7.9(c) hereof shall survive such termination, but the royalty rate shall be [*]
rather than [*], of Net Sales. [INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION UNDER RULE 24b-2.]
(d) In the event that the Termination Date shall occurred prior to
the time that the Exchange Right shall have been exercised and prior to the
time, if any, that the Series A Preferred Stock of Cytogen shall have been
converted into Cytogen Common Stock, as a result of any reason other than
described in clause (c) above, the ATS Products shall be transferred to or as
directed by Elan in the manner described in the Securities Purchase Agreement
and neither party shall have any additional rights hereunder, except that the
provisions of Section 7.9(c) hereof shall survive such termination but the
royalty rate shall be [*], rather than [*], of Net Sales. [INFORMATION OMITTED
AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.]
ARTICLE XX
TRANSFER OF OR CHARGING OF SHARES
20.1. No Shareholder shall transfer any of its Shares or Loans to any
other Person (other than to any Affiliates, in whose hands the same restriction
on further transfer shall apply) without the prior written consent of the other.
20.2. No Shareholder shall transfer, create or dispose of any interests in
or over any of its Shares or Loans except:
(a) by a transfer of the entire and legal beneficial interest in all
its Shares and Loans; and
(b) to a transferee as permitted by this Agreement.
20.3. No Shareholder shall, except with the prior written consent of the
other Shareholder, create or permit to subsist any pledge, lien or charge over,
or grant any option or other rights or dispose of any interest in, all or any of
the Shares held by it (other than by a transfer of such Shares in accordance
with the provisions of this Agreement) or in any Loans (or
*-INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24b-2.
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part thereof) made by it to the Company unless any Person in whose favor any
such pledge, lien, or charge is created or permitted to subsist or such option
or rights are granted or such interest is disposed of shall be expressly
subject to and bound by all the limitations and provisions which are embodied in
this Agreement.
ARTICLE XXI
REALIZATION
21.1. For the purpose of Article XXI "Relevant Event" is committed or
suffered by a Shareholder if:
(a) an event specified in Section 19.3(a) shall have occurred; or
(b) it commits a material breach of its obligations under this
Agreement and, in the case of a breach capable of remedy, fails to remedy it
within 30 days of being specifically required in writing to do so by the other
Shareholder; or
(c) a distress, execution, sequestration or other process is levied
or enforced upon or sued out against a material part of its property which is
not discharged or challenged within 20 days; or
(d) it is unable to pay its debts in the normal course of business;
or
(e) it ceases or threatens to cease wholly or substantially to carry
on its business, otherwise than for the purpose of a reconstruction or
amalgamation without the prior written consent of the other Shareholder (such
consent not to be unreasonably withheld); or
(f) the appointment of a liquidator, receiver, administrator,
receiver, examiner, trustee or similar officer of such Shareholder or over all
or a substantial part of its assets;
(g) if an application or petition for bankruptcy, corporate
reorganization, composition, administration, examination, arrangement or any
other procedure similar to any of the foregoing under the law of any applicable
jurisdiction is filed and is not discharged within 30 days, or if a shareholder
applies for or consents to the appointment of a receiver, administrator,
examiner or similar officer of it or of all or a material part of its assets,
rights or revenues or the assets and/or the business of a Shareholder are for
any reason seized, confiscated or condemned; or
(h) a Person who is not a shareholder of a Shareholder or its
Affiliates on the date of this Agreement acquiring control of that Shareholder.
21.2. If either Shareholder commits or suffers a Relevant Event, the other
Shareholder shall be entitled, within three months of its becoming aware of the
occurrence of the Relevant Event, to require the defaulting Shareholder (the
"Recipient Shareholder") to sell to the non defaulting Shareholder (the
"Proposing Shareholder") all (but not less than all) of the Shares held
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or beneficially owned by the Recipient Shareholder. The Proposing Shareholder
shall notify the Recipient Shareholder of the exercise of this option by
delivering written notice to the Recipient Shareholder stating that the option
is exercised.
21.3. The Recipient Shareholder will be obliged within 60 days of receipt
of such offer to either (a) accept such offer or (b) make a written counter
offer in which the price per share must be at least 10% higher than in the offer
received from the Proposing Shareholder. The counter offer must be an offer to
purchase all (but not less than all) of the Shares of the Proposing Shareholder.
21.4. The Proposing Shareholder will be obliged within seven days from the
date on which it receives the counter offer to either (a) accept the counter
offer or (b) make a written second counter offer in which the price per share
must be at least 10% higher than the counter offer received from the Recipient
Shareholder. The second counter offer must be an offer to purchase all (but not
part only) of the shares of the Recipient Shareholder.
21.5. The Recipient Shareholder will be obliged within seven days from the
date on which it receives the second counter offer to either (a) accept the
second counter offer, or (b) to purchase all of the shares of the Proposing
Shareholder for an amount which is 10% higher than the price per share at which
the Proposing Shareholder offered to purchase the Shares of the Recipient
Shareholder in the second counter offer. The foregoing provisions relating to
bidding in 10% higher increments, as described in this Article XXI shall
continue until one of the Shareholders has elected to discontinue bidding.
21.6. Time shall be of the essence and a failure to respond to an offer or
any counter offer within the permitted time period shall be deemed to constitute
acceptance of such offer or counter offer.
21.7. The Shareholder who has accepted or is deemed to have accepted an
offer or counter offer made pursuant to the provisions of this Section 22 shall
deliver to the other Shareholder within 30 days of the date of acceptance or
deemed acceptance (or three days following the issuance of any regulatory
consent required to effect such sale) a duly executed transfer of all its shares
in favor of the other Shareholder (or as it may direct) upon full payment of the
relevant price for such shares. The Shareholders shall each use their best
endeavors to procure the issuance of any such regulatory consents as soon as
possible. The shares so transferred shall be deemed to be sold by the transferor
as beneficial owner with effect from the date of such transfer free from any
lien, charge or encumbrance with all rights attaching thereto.
21.8. In the alternative to the procedure set out in Sections 21.2 to
21.7, if either Shareholder commits or suffers a Relevant Event, the other
Shareholder shall be entitled, within three months of its becoming aware of the
occurrence of the Relevant Event, to serve a written notice ("Warning Notice")
on the other Shareholder stating that it intends to serve a Winding-Up Notice
(as hereinafter defined) on the Company. A Warning Notice may be withdrawn
before the expiry of 60 days after it has been served ("the Warning Period").
Within 30 days of the expiry of the Warning Period during which period the
relevant warning notice shall not have been withdrawn, the Party serving the
Warning Notice may at any time serve a further written notice
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<PAGE>
("the Winding-Up Notice") on the other Shareholder requiring that the Company be
wound up, whereupon the Shareholders shall be bound to take all such steps as
may be necessary to wind up the Company forthwith and in an orderly and
efficient manner.
ARTICLE XXII
EXPERT DETERMINATION
22.1. Should any dispute or difference arise between Elan and Cytogen or
between Elan or Cytogen, and the Company, during the period that this Agreement
is in force, then either Party shall forthwith give to the other notice of such
dispute or difference, and such dispute or difference shall be and is hereby
referred to such expert as the Parties in dispute may agree (the "Independent
Expert"). In the event that the parties are unable or unwilling to agree upon
an Independent Expert, or the Independent Expert declines to accept the
appointment or after the appointment is incapable of acting or dies, the
Parties, in the absence of agreement on a replacement within a period of seven
days, shall forthwith request the American Arbitration Association in New York
City to appoint a replacement to constitute the Independent Expert. The
Independent Expert shall act as an expert and not as an arbitrator. The fees of
the Independent Expert shall be shared equally between the Parties in dispute.
The Independent Expert shall be entitled to inspect and examine all
documentation and any other material which he may consider to be relevant to the
dispute. He shall afford each Party a reasonable opportunity (in writing or
orally) of stating reasons in support of such contentions as each Party may wish
to make relative to the matters under consideration. The Independent Expert
shall give notice in writing of his determination to the Parties within such
time as may be stipulated in his terms of appointment or in the absence of such
stipulation, within two weeks from the reference of the dispute or difference to
him. Any determination by the Independent Expert of a dispute of difference
shall be final and binding on the Parties unless written notice of rejection of
the determination is given by one Party to the other Party within 21 days from
the date of the relevant determination. Any such rejection shall constitute a
"Deadlock" for the purposes of Article XXI and the rejecting Party shall be
deemed to be Proposing Shareholder.
ARTICLE XXIII
PROCEDURE IN THE EVENT OF A DEADLOCK
23.1. For the purpose of this Article XXIII a "Deadlock" means any cause
where the Shareholder notifies the other Shareholder in writing that they
consider an irreconcilable deadlock has arisen at Director, Shareholder or
Management Committee level with respect to any material item or matter relating
to the Business or the Company, and identifying the matter in dispute. A
Deadlock may only arise relating to a material item or matter; all immaterial
items or matters shall not give rise thereto; a material item or matter means
one that could reasonably be expected to have a material or significant effect
on the Company's business, financial condition or prospects.
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<PAGE>
23.2. In any case of Deadlock each of the Shareholders shall within 10
days of the Deadlock arising, cause its appointees on the Board or the
Management Committee, as the case may be, to prepare and circulate to the other
Shareholder and the other Directors a memorandum or other form of statement
setting out its position on the matter in dispute and its reasons for adopting
that position. Each memorandum or statement shall be considered by the chief
executive officer of each Shareholder to which it is addressed who shall
endeavor to resolve the Deadlock. Each Shareholder agrees upon a resolution or
disposition of the matter, they shall execute a statement setting out the agreed
terms. The Shareholders shall exercise the voting rights and other powers
available to them in relation to the Company to procure that the agreed terms
are fully and promptly carried into effect.
23.3. If the Deadlock is not resolved or disposed of in accordance with
Section 23.2. within 30 days after expiry of the seven-day period, or such
longer period as the Shareholders agree in writing, and if it prevents the
Company or a Subsidiary from continuing to achieve its business purposes, either
Shareholder may (if they have not previously done so) refer the matter to an
expert pursuant to the provisions of Article XXII, and the provisions of Article
XXI shall otherwise be applicable.
ARTICLE XXIV
WINDING UP
24.1. In the event of the Company being wound up by way of the
Shareholder's voluntary winding up, the Shareholders will procure that the
liquidator is a member of the American Institute of Certified Public Accounts
("AICPA") or member of the Bar of any state acceptable to both Shareholders, or
in default of agreement, nominated by the President of the AICPA.
24.2. The Shareholders shall prove in the winding up of the Company to
the maximum extent permitted by applicable law for all sums due or to fall due
to them respectively from the Company and shall exercise all rights of set-off
and generally do all such other acts and things as may be available to them in
order to obtain the maximum receipts and recoveries.
ARTICLE XXV
CONFIDENTIALITY
25.1. The Shareholders and the Company acknowledge that it may be
necessary, from time to time, to disclose to each other confidential and
proprietary information, including without limitation, inventions, works of
authorship, trade secrets, specifications, designs, data, know-how and other
information, relating to the Field, the Products, processes, and services of the
disclosing Party.
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<PAGE>
25.2. The Shareholders and the Company agree that the information to be
disclosed by Cytogen and Elan to the Company may include trade secrets, know-how
and other proprietary information and data regarding the Technology. It is
agreed that the information to be disclosed by the Company to Cytogen and Elan
may include trade secrets, know-how and other proprietary information and data
regarding the Compounds or the Products.
25.3. The foregoing shall be referred to collectively as "Confidential
Information". Any Confidential Information revealed by a Party to another Party
shall be used by the receiving Party exclusively for the purposes of fulfilling
the receiving Party's obligations under this Agreement, and for no other
purpose.
25.4. Each Party agrees to disclose Confidential Information of another
Party only to those employees, representatives and agents requiring knowledge
thereof in connection with their duties directly related to the fulfilling of
the Party's obligations under this Agreement. Each Party further agrees to
inform all such employees, representatives and agents of the terms and
provisions of this Agreement and their duties hereunder and to obtain their
consent hereto as a condition of receiving Confidential Information. Each Party
agrees that it will exercise the same degree of care and protection to preserve
the proprietary and confidential nature of the Confidential Information
disclosed by a Party, as the receiving Party would exercise to preserve its own
proprietary and confidential information. Each Party agrees that it will, upon
request of a Party, return all documents and any copies thereof containing
Confidential Information belonging to or disclosed by, such Party.
25.5. Any breach of this Article XXV by any of the Persons informed by one
of the Shareholders is considered a breach by the Party itself.
Confidential Information shall not be deemed to include:
(a) Information that is in the public domain.
(b) Information which is made public by the disclosing Party.
(c) Information which is independently developed by a Party.
(d) Information that is published or otherwise becomes part of the
public domain without any disclosure by a Party, or on the part of a Party's
directors, officers, agents, representatives or employees.
(e) Information that becomes available to a Party on a
non-confidential basis, whether directly or indirectly, from a source other than
a Party, which source, to the best of the Party's knowledge, did not acquire
this information on a confidential basis; and
(f) Information which the receiving Party is required to disclose
pursuant to a valid order of a court or other governmental body or any political
subdivision thereof or otherwise required by law.
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<PAGE>
25.6. The provisions relating to confidentiality in this Article XXV shall
remain in effect during the term of this Agreement, and for a period of seven
years following the expiration or earlier termination of this Agreement.
25.7. The Shareholders agree that the obligations of this Article XXV are
necessary and reasonable in order to protect the Shareholders' respective
businesses, and each Party expressly agrees that monetary damages would be
inadequate to compensate a Party for any breach by the other Party of its
covenants and agreements set forth herein. Accordingly, the Shareholders agree
and acknowledge that any such violation or threatened violation will cause
irreparable injury to a Party and that, in addition to any other remedies that
may be available, in law and equity or otherwise, any Party shall be entitled to
obtain injunctive relief against the threatened breach of the provisions of this
Article XXV, or a continuation of any such breach by the other Party, specific
performance and other equitable relief to redress such breach together with its
damages and reasonable counsel fees and expenses to enforce its rights
hereunder, without the necessity of proving actual or express damages.
ARTICLE XXVI
SHAREHOLDERS' CONSENT
26.1. Where this Agreement provides that any particular transaction or
matter requires the consent, approval or agreement of any Shareholder, such
consent, approval or agreement may be given subject to such terms and conditions
as that Shareholder may impose and any breach of such terms and conditions by
any Persons subject thereto shall ipso facto be deemed to be a breach of the
terms of this Agreement.
ARTICLE XXVII
COSTS
27.1. The Company shall bear the legal and other costs of the Parties
incurred in relation to preparing and concluding this Agreement and the related
agreements and other documents.
27.2. All costs, legal fees, registration fees and other expenses,
including the costs and expenses incurred in relation to the incorporation of
the Company, shall be borne by the Company.
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<PAGE>
ARTICLE XXVIII
GENERAL
28.1. Each of the Parties hereto undertakes with the others to do all
things reasonably within its power which are necessary or desirable to give
effect to the spirit and intent of this Agreement and the Clauses.
28.2. The Parties hereto shall use their respective reasonable endeavors
to procure that any necessary third Party shall do, execute and perform all such
further deeds, documents, assurances, acts and things as any of the Parties
hereto may reasonably require by notice in writing to the others to carry the
provisions of this Agreement into full force and effect.
28.3. Where either Shareholder is required under this Agreement to
exercise its powers in relation to the Company to procure a particular matter or
thing such obligation shall be deemed to include an obligation to exercise its
powers both as a Shareholder and as a Director (where applicable) of the Company
and to procure that any Director appointed by it (whether alone or jointly with
any other Person) shall procure such matter or thing.
28.4. Neither Party to this Agreement shall be liable for delay in the
performance of any of its obligations hereunder if such delay results from
causes beyond its reasonable control, including, without limitation, acts of
God, fires, strikes, acts of war, or intervention of any relevant government
authority, but any such delay or failure shall be remedied by such Party as soon
as practicable.
28.5. Nothing contained in this Agreement is intended or is to be
construed to constitute Elan and Cytogen as partners, or Elan as an employee of
Cytogen, or Cytogen as an employee of Elan. No Party hereto shall have any
express or implied right or authority to assume or create any obligations on
behalf of or in the name of the Party or to bind the other Party to any
contract, agreement or undertaking with any third Party.
28.6. This Agreement may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original and all of which
when taken together shall constitute this Agreement.
28.7. Any notice to be given under this Agreement shall be sent in writing
by registered or recorded delivery post or telecopied to:
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Elan at:
Elan Corporation, plc
Monksland, Athlone
County Westmeath
Ireland
Attention: Chief Financial Officer
Telefax: 353-902-92427
copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, NY 10112
Attention: David Robbins, Esq.
Telefax: (212) 408-2420
Cytogen at:
Cytogen Corporation
600 College Road East
Princeton, New Jersey 08540-5308
Attention: Chief Financial Officer
Telefax: (609) 951-9298
copy to:
Dewey Ballantine
1301 Avenue of the Americas
New York, NY 10019
Attention: Frederick W. Kanner, Esq.
Telefax: (212) 259-6333
the Company at:
Targon Corporation
600 College Road East
Princeton, New Jersey 08540
Attention: Chief Executive Officer
Telefax: (609) 951-9298
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<PAGE>
copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, NY 10112
Attention: David Robins, Esq.
Telefax: (212) 408-2420
copy to:
Dewey Ballantine
1301 Avenue of the Americas
New York, NY 10019
Attention: Frederick W. Kanner, Esq.
Telefax: (212) 259-6333
or to such other address(es) as may from time to time be notified by either
Party to the other hereunder.
Any notice sent by mail shall be deemed to have been delivered within
seven working days after dispatch and any notice sent by telecopy shall be
deemed delivered within 24 hours of the time of the dispatch. Notices of change
of address shall be effective upon receipt.
28.8. This Agreement shall be governed by and construed in accordance with
the laws of Delaware and the Parties agree to submit to the jurisdiction of any
federal or state court sitting in New York City for the resolution of disputes
hereunder.
28.9. If any provision in this Agreement is agreed by the Parties to be,
deemed to be or becomes invalid, illegal, void or unenforceable under any law
that is applicable hereto, (i) such provision will be deemed amended to conform
to applicable laws so as to be valid and enforceable or, if it cannot be so
amended without materially altering the intention of the Parties, it will be
deleted, with effect from the date of such agreement or such earlier date as the
Parties may agree, and (ii) the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be impaired or affected in any
way.
28.10. No amendment, modification or addition hereto shall be effective or
binding on either Party unless set forth in writing and executed by a duly
authorized representative of both Parties.
28.11. No waiver of any right under this Agreement shall be deemed
effective unless contained in a written document signed by the Party charged
with such waiver, and no waiver of any breach or failure to perform shall be
deemed to be a waiver of any future breach or failure to perform or of any other
right arising under this Agreement.
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<PAGE>
28.12. The section headings contained in this Agreement are included for
convenience only and form no part of the agreement between the Parties. Except
as otherwise provided herein, references to articles, paragraphs, clauses and
appendices are to those contained in this Agreement.
28.13. None of the Parties may assign their rights and obligations
hereunder without the prior written consent of the other Parties. Elan and/or
Cytogen shall have the right to delegate or subcontract all or any portion of
their duties hereunder to their respective Affiliates; provided, that Elan or
Cytogen, as the case may be, guarantees the performance by such Affiliate of the
obligations of Elan or Cytogen, as the case may be under this Agreement.
28.14. No provision of this Agreement shall be construed so as to negate,
modify or affect in any way the provisions of any other agreement between the
Parties unless specifically referred to, and solely to the extent provided, in
any such other agreement.
28.15. This Agreement shall be binding upon and enure to the benefit of the
Parties hereto, their successors and permitted assigns.
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the day first set forth above.
ELAN CORPORATION, PLC
By: /s/ Donal Geaney
---------------------------------
Name: Donal Geaney
Title: CEO
CYTOGEN CORPORATION
By: /s/ Thomas J. McKearn
---------------------------------
Name: Thomas J. McKearn
Title: Chairman, President and CEO
TARGON CORPORATION
By: /s/ Michael Sember
---------------------------------
Name: Michael Sember
Title: CEO and Chairman
<PAGE>
LIST OF EXHIBITS
EXHIBIT A Business Plan of Targon Corporation
EXHIBIT B List of ATS Compounds
EXHIBIT C List of Cytogen Compounds
EXHIBIT D Certificate of Incorporation and Bylaws of Targon
Corporation
<PAGE>
MARKETING AND CO-PROMOTION AGREEMENT
------------------------------------
This Agreement (hereinafter "Agreement") effective the 1st day of
August, 1996, is between C.R. BARD, INC., a New Jersey corporation with offices
at 730 Central Avenue, Murray Hill, New Jersey 07974 (hereinafter "Bard"), and
CYTOGEN CORPORATION, a Delaware corporation with offices at 600 College Road
East, Princeton, New Jersey 08540 (hereinafter "Cytogen").
BACKGROUND
WHEREAS, Cytogen has developed and will continue to develop a line of
in vivo cancer imaging products, and
- -- ----
WHEREAS, Bard has substantial experience in marketing medical
products, and
WHEREAS, Cytogen is desirous of granting Bard the exclusive right to
market and promote "Product" in the "U.S." to "Urologists" and is further
desirous of granting Bard the co-exclusive right with Cytogen to market and
promote Product in the U.S. to "Managed Care Organizations", and
WHEREAS, Cytogen, subject to exhaustion of rights of negotiation
granted to "CIS" with respect to promotion of Product to Urologists in the
Selected Countries (exclusive of Canada), is desirous of affording Bard a right
of first offer to obtain the
<PAGE>
exclusive right to market and promote Product in one or more of the Selected
Countries (exclusive of Canada), and
WHEREAS, Cytogen, subject to exhaustion of rights of negotiation
granted to "Faulding" with respect to promotion of Product to Urologists in
Canada, is desirous of affording Bard a right of first offer to obtain the
exclusive right to market and promote Product in Canada, and
WHEREAS, Cytogen is desirous of granting Bard a right of first offer
to obtain the exclusive right to market and promote each "New Product" to
Urologists in the U.S. and is further desirous of granting Bard a right of first
offer to obtain the co-exclusive right with Cytogen to market and promote each
New Product to Managed Care Organizations in the U.S., and
WHEREAS, Cytogen, subject to exhaustion of rights of negotiation
granted to CIS with respect to promotion of New Product to Urologists in the
Selected Countries (exclusive of Canada) is desirous of granting Bard a right of
first offer to obtain the exclusive right to market and promote each New Product
to Urologists in each of the Selected Countries (exclusive of Canada) in which
Bard or any of its Affiliate(s) promote and market Product, and
2
<PAGE>
WHEREAS, Cytogen, subject to exhaustion of rights of negotiation
granted to Faulding with respect to promotion of New Product to Urologists in
Canada, is desirous of granting Bard a right of first offer to obtain the
exclusive right to market and promote each New Product to Urologists in Canada
provided Bard or any of its Affiliate(s) promote and market Product in Canada,
and
WHEREAS, Cytogen is desirous of retaining the exclusive right to
market and promote Product and each New Product to radiologists, nuclear
medicine physicians, nuclear medicine technologists and radiopharmacies and is
further desirous of retaining the exclusive right to sell Product and each New
Product to all customers.
NOW THEREFORE, in consideration of the above premises and the mutual
agreements and undertakings set forth below, Cytogen and Bard hereby agree as
follows:
ARTICLE 1. - DEFINITIONS
------------------------
1.1. AFFILIATE shall mean any corporation, company, partnership, joint
---------
venture, person and/or firm which controls, is controlled by or is under common
control with a party. For purposes of this Paragraph 1.1, control shall mean:
(i) in the case of corporate entities, direct or indirect ownership of at least
fifty percent (50%) of the stock or participating shares
3
<PAGE>
entitled to vote for the election of directors, and (ii) in the case of non-
corporate entities, direct or indirect ownership of at least fifty percent (50%)
of the equity interest or the power to direct the management and policies of
such entity.
1.2 ANTIBODY - means the monoclonal antibody 7E11-C5.3 which is produced
--------
by the hybridoma deposited with the American Type Culture Collection under ATCC
Designation HB 10494.
1.3 BARD MARKETING PLAN - shall have the meaning ascribed in Paragraph
-------------------
5.3.
1.4 BASELINE SALES - shall mean, for any given calendar year, the Net
--------------
Sales achieved during the immediately preceding calendar year, provided,
however, that for the period commencing with the day after the first anniversary
of the Product Launch Date through and including the immediately following
December 31st, the definition set forth in Exhibit A, which is attached hereto
---------
and incorporated herein, shall apply.
1.5 CIS - means CIS Biointernational, Inc., a corporation having its
---
principal place of business at B.P. 32-91192 Gef-Sur Yvette, Cedex, France.
1.6 COMMISSIONS - shall have the meaning ascribed in Paragraph 6.2 and
-----------
Exhibit A.
- ---------
4
<PAGE>
1.7 COMMISSION RATE - shall have the meanings ascribed in Exhibit A.
--------------- ---------
1.8 COMPETITIVE PRODUCT - means an in vivo nuclear imaging system which:
-------------------
(i) utilizes a targeting agent to which a radioisotope is bonded during use, and
(ii) is sold for detecting prostate cancer outside of the prostate gland, and
(iii) directly competes with Product or a New Product which Bard is obligated to
market and promote hereunder.
1.9 CYTOGEN MARKETING PLAN - shall have the meaning ascribed in Paragraph
----------------------
5.3.
1.10 DISCLOSING PARTY - shall have the meaning ascribed in Paragraph 8.1.
----------------
1.11 EFFECTIVE DATE - shall mean the date of this Agreement first written
--------------
above.
1.12 FAULDING - means Faulding (Canada), Inc., a corporation having a place
--------
of business at 334 Aime-Vincent, Vaudrevil, Quebec, Canada J72525.
1.13 FDA - shall mean the United States Food and Drug Administration.
---
5
<PAGE>
1.14 FD&C ACT - shall mean the Food Drug & Cosmetic Act as set forth in
--------
Title 21, United States Code, as amended, and the regulations promulgated
thereunder.
1.15 IMAGING PHYSICIANS - shall mean radiologists, nuclear medicine
------------------
physicians, radiology/nuclear medicine technologists and radiopharmacists.
1.16 INCREMENTAL SALES - shall mean, for any given year, that portion of
-----------------
Net Sales, if any, which exceeds Baseline Sales.
1.17 INDEMNITEE - shall have the meaning ascribed in Paragraph 9.4.
----------
1.18 INDEMNITOR - shall have the meaning ascribed in Paragraph 9.4
----------
1.19 JOINT MARKETING COMMITTEE - shall mean the Joint Marketing Committee
-------------------------
established pursuant to Section 5.1 hereof.
1.20 MANAGED CARE ORGANIZATIONS - shall mean health maintenance
--------------------------
organizations, networks of healthcare providers or other similar entities that
provide, or otherwise make available, a program of health care services to a
member/subscriber for a fixed fee.
6
<PAGE>
1.21 NET SALES - shall mean [INFORMATION OMITTED AND FILED SEPARATELY WITH
---------
THE COMMISSION UNDER RULE 24B-2.]
1.22 NEW PRODUCT - shall mean and include each in vivo prostate cancer
-----------
imaging product which does not utilize the Antibody and which, during the Term,
Cytogen or any Affiliate of Cytogen would have the right to sell in any part of
the Territory.
7
<PAGE>
1.23 PARTIAL YEAR PERIOD - shall mean the period commencing on the day
-------------------
following the first anniversary of the Product Launch Date through and including
the immediately following December 31st.
1.24 PIE SITES - mean those hospital-based nuclear medicine physicians or
---------
radiologists or department of nuclear medicine physicians or radiologists who:
(i) prior to the Effective Date, have been accepted into Cytogen's Partners In
Excellence Program and have received training and testing in the use of Product
in accordance with Cytogen's quality assurance protocols, or (ii) during the
Term, the Joint Marketing Committee determines meet the criteria set forth on
Exhibit B, which is attached hereto and incorporated herein, (as may be modified
- ---------
from time to time by the Joint Marketing Committee), and who are accepted into
Cytogen's Partners In Excellence Program and undergo training and testing in the
use of Product in accordance with Cytogen's quality assurance protocols.
1.25 PLA - means a product license application as described in 21 CFR Part
---
601.
1.26 PRODUCT - shall mean and include each in vivo prostate cancer imaging
-------
product which utilizes the Antibody and which, during the Term, Cytogen or any
Affiliate of Cytogen has or would have the right to sell in any part of the
Territory.
8
<PAGE>
1.27 PRODUCT LAUNCH DATE - shall mean the date of first commercial sale of
-------------------
Product in the Territory by Cytogen or any Affiliate of Cytogen to a non-
Affiliate of Cytogen following the receipt by Cytogen of all necessary FDA
approvals to market and promote such Product in the Territory, including,
without limitation, any necessary pre-approval of advertising or promotional
materials.
1.28 REACTION NOTICE - shall have the meaning ascribed in Paragraph 7.1.
---------------
1.29 RECEIVING PARTY - shall have the meaning ascribed in Paragraph 8.1.
---------------
1.30 SELECTED COUNTRIES - mean Australia, Canada, France, Germany, Austria,
------------------
Switzerland, Italy, Japan, Sweden, Norway, Finland, Denmark, Spain and the
United Kingdom.
1.31 SPECIFICATIONS - mean the finished product specifications and related
--------------
quality control testing protocols relating to Product, as constituted on the
Effective Date, as set forth in the PLA referred to in Paragraph 2.1(e), as may
be amended or supplemented by Cytogen during the Term.
1.32 TERM - shall mean the period commencing on the Effective Date and,
----
unless terminated earlier pursuant to
9
<PAGE>
Paragraph 3.3, Paragraph 11.1 or Article X, ending on the later of: (i) the
tenth anniversary of the Product Launch Date, or (ii) the last date of any
applicable additional term described to Paragraph 10.1 hereof.
1.33 TERRITORY - shall mean the U.S. and those Selected Countries added to
---------
the Territory by mutual written agreement of the parties pursuant to Paragraph
4.4.
1.34 UNACCEPTED 3.2 OFFER - shall have the meaning ascribed in Paragraph
--------------------
3.2.
1.35 UNACCEPTED 4.4 OFFER - shall have the meaning ascribed in Paragraph
--------------------
4.4.
1.36 UROLOGISTS - shall mean: (i) physicians who are board certified for
----------
the practice of urology, and (ii) primary care physicians who treat urological
conditions.
1.37 U.S. - means the United States of America exclusive of its territories
----
and possessions.
1.38 WAIVER NOTICE - shall have the meaning ascribed in Paragraph 4.4.
-------------
10
<PAGE>
1.39 3.2 BARD NOTICE - shall have the meaning ascribed in Paragraph 3.2.
---------------
1.40 3.2 CYTOGEN NOTICE - shall have the meaning ascribed in Paragraph 3.2.
------------------
1.41 4.4 BARD NOTICE - shall have the meaning ascribed in Paragraph 4.4.
---------------
1.42 4.4 CYTOGEN NOTICE - shall have the meaning ascribed in Paragraph 4.4.
------------------
ARTICLE 2. - REPRESENTATIONS AND WARRANTIES
-------------------------------------------
2.1. REPRESENTATIONS & WARRANTIES OF CYTOGEN - Cytogen hereby represents
---------------------------------------
and warrants to bard that:
(a) Cytogen is a corporation organized, validly existing and in good
standing under the laws of the State of Delaware, has all requisite
corporate power and authority to own and operate its property and to
carry on its business as now being conducted, and is duly qualified
and in good standing to do business in any of those jurisdictions
where it is required to be qualified as a result of ownership of
property or residence of any of its employees or agents, except for
those jurisdictions in which failure to so qualify
11
<PAGE>
would not have a material adverse effect on the business or assets of
Cytogen, and
(b) the execution and delivery of this Agreement has been duly and validly
authorized by all necessary corporate action on the part of Cytogen
and (assuming valid execution of this Agreement by Bard) this
Agreement is and shall be, during the Term, a valid and binding
obligation of Cytogen enforceable against it in accordance with its
terms, except to the extent that such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights or the
discretion of a court of competent jurisdiction as to specific
performance, and
(c) neither Cytogen nor any Affiliate of Cytogen is currently a party to
any agreement or understanding, oral or written, which is
inconsistent, in any material respect, with the rights granted to Bard
hereunder or the obligations imposed on Cytogen hereunder and, during
the Term, Cytogen and its Affiliates shall refrain from entering into
any agreement or understanding, oral or written, which would be
inconsistent, in any material respect, with the rights
12
<PAGE>
granted to Bard hereunder or the obligations imposed on Cytogen
hereunder, and
(d) prior to the Effective Date, Phase III clinical trials of the Product
which is the subject of the PLA referred to in Paragraph 2.1(e) were
completed, and
(e) a PLA on a Product, in form as constituted on the Effective Date, is
currently pending with FDA which, on July 22, 1996, received unanimous
recommendation for approval by the Medical Imaging Drug Advisory
Committee to FDA, and
(f) on the Effective Date, Cytogen owns or leases a manufacturing facility
having production capability sufficient to manufacture 400,000 units
of Product per year.
(g) Exhibit C, which is attached hereto and incorporated herein, sets
---------
forth a true, accurate and complete list of the name and address of
each PIE Site existing on the Effective Date, and
(h) prior to the Effective Date, Cytogen did not grant to any third party
any marketing, promotional or distribution rights on any in vivo
prostate cancer
13
<PAGE>
imaging product, except for the right of first negotiation to market
and promote Product and New Product in the Selected Countries
(exclusive of Canada) previously granted to CIS and the right of first
negotiation to market and promote Product and New Product in Canada
previously granted to Faulding.
2.2 REPRESENTATIONS & WARRANTIES OF BARD - Bard hereby represents and
------------------------------------
warrants to Cytogen that:
(a) Bard is a corporation organized, validly existing and in good standing
under the laws of the State of New Jersey, has all requisite corporate
power and authority to own and operate its property and to carry on
its business as now being conducted and is duly qualified and in good
standing to do business in any of those jurisdictions where it is
required to be qualified as a result of ownership of property or
residence of any of its employees or agents, except for those
jurisdiction in which failure to so qualify would not have a material
adverse effect on the business or assets of Bard, and
(b) the execution and delivery of this Agreement has been duly and validly
authorized by all necessary corporate action on the part of Bard and
(assuming valid
14
<PAGE>
execution of this Agreement by Cytogen) this Agreement is and shall
be, during the Term, a valid and binding obligation of Bard
enforceable against it in accordance with its terms, except to the
extent that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights or the discretion of a court of
competent jurisdiction as to specific performance, and
(c) neither Bard nor any Affiliate of Bard is currently a party to any
agreement or understanding, oral or written, which would prohibit or
which would limit, in any material manner, the performance of any
obligation undertaken hereunder to be performed by Bard directly or
indirectly through and of its Affiliates, and
(d) neither Bard nor any Affiliate of Bard will market or promote Product
outside of the Territory.
ARTICLE 3. - MARKETING AND PROMOTION BY BARD
3.1 GRANT OF PRODUCT MARKETING AND PROMOTION RIGHTS. Cytogen hereby grants
-----------------------------------------------
to Bard the exclusive right to market each Product in the Territory to
Urologists and the co-exclusive right with Cytogen to market each Product in the
U.S. to Managed Care
15
<PAGE>
Organizations. Subject to the provisions of Paragraph 4.4, Cytogen reserves all
other rights to market, promote and sell each Product. Cytogen covenants to
notify Bard of the existence of each Product which is different, in any material
respect, from the Product which is the subject of the PLA referred to in
Paragraph 2.1(e) within thirty (30) days of the date on which the clinical
efficacy thereof has been established and further covenants to include in its
notice a technical summary of the clinical advantages of such Product vis a vis
the Product which is the subject of the PLA referred to in Paragraph 2.1(e).
Further, Cytogen covenants to disclose to Bard, within fourteen (14) business
days of receipt of request from Bard, such other technical information relating
to each Product which is the subject of a notice issued by Cytogen pursuant to
this Paragraph 3.1 as Bard reasonably requests.
3.2. RIGHT OF FIRST OFFER - Cytogen hereby grants to Bard a right of first
--------------------
offer to obtain: (i) the exclusive right to market and promote each New Product
to Urologists in the U.S., and (ii) the co-exclusive right with Cytogen to
market and promote each New Product to Managed Care Organizations in the U.S.,
and (iii) the exclusive right to market and promote each New Product to
Urologists in each of the Selected Countries (exclusive of Canada) in which Bard
or any of its Affiliate(s) promote and market Product, subject to exhaustion of
rights of negotiation granted to CIS with respect to promotion of New Product to
Urologists in the Selected Countries (exclusive of Canada), on a country by
country basis, and (iv) the exclusive right to market and promote each New
Product to
16
<PAGE>
Urologists in Canada provided Bard or any of its Affiliate(s) promote and market
Product in Canada, subject to exhaustion of rights of negotiation granted to
Faulding with respect to promotion of New Product to Urologists in Canada.
Cytogen hereby covenants to notify Bard of the existence of each New Product
within thirty (30) days of the availability of a final report on the Phase III
clinical trials relating thereto and further covenants to include in each such
notice all technical information and data in its possession relative to the New
Product which is the subject of such notice, as well as the terms upon which
Cytogen would be willing to grant Bard such marketing and promotional rights
thereon, by country (a "3.2 Cytogen Notice"). Within sixty (60) days of receipt
by Bard of a particular 3.2 Cytogen Notice, Bard shall notify Cytogen of its
intent to negotiate with Cytogen with respect to the right to market and promote
the New Product which was the subject of such 3.2 Cytogen Notice in the U.S.
and/or in one (1) or more of the Selected Countries (a "3.2 Bard Notice"). In
the event Bard fails to respond to a particular 3.2 Cytogen Notice within sixty
(60) days of receipt thereof, Bard's right of first offer on the New Product
which was the subject of such 3.2 Cytogen Notice shall immediately be
extinguished. In the event a particular 3.2 Bard Notice indicates that Bard has
no interest in negotiating with Cytogen with respect to the New Product which
was the
17
<PAGE>
subject of the corresponding 3.2 Cytogen Notice, Bard's right of first offer on
such New Product shall immediately be extinguished. In the event a particular
3.2 Bard Notice indicates that Bard is interested in negotiating with Cytogen on
some but not all of the rights which are the subject to its right of first offer
relating to the New Product which was the subject of the corresponding 3.2
Cytogen Notice, Bard's right of first offer on such New Product shall
immediately be extinguished only to the extent such 3.2 Bard Notice indicates a
lack of interest in such rights. In the event a particular 3.2 Bard Notice
indicates that Bard is interested in negotiating with Cytogen with respect to
the grant to Bard of marketing and promotional rights on the New Product which
was the subject of the corresponding 3.2 Cytogen Notice, the parties shall meet
within ten (10) business days of Cytogen's receipt of such 3.2 Bard Notice and
shall negotiate, in good faith, the grant of rights thereon to the extent
specified therein. In the last mentioned event, if the parties fail to reach
written agreement, within ninety (90) days of Cytogen's receipt of a particular
3.2 Bard Notice, on the grant of rights specified therein, Bard shall reduce its
last offer thereon ( an "Unaccepted 3.2 Offer") to writing, shall furnish the
same to Cytogen and Cytogen shall thereafter have the right to itself market and
promote the New Product which was the subject of the Unaccepted 3.2 Offer to the
extent specified therein and shall have the right to grant any third party the
right to market and promote such New Product on
18
<PAGE>
terms no more favorable than those specified in the Unaccepted 3.2 Offer.
Cytogen covenants, from the time of issuance of a particular 3.2 Cytogen Notice
through the expiration of the ninety (90) day negotiation period thereon, to
refrain from marketing or promoting (or negotiating with any third party on
marketing or promoting) the New Product which was the subject of such 3.2
Cytogen Notice in a manner which is inconsistent with Bard's right of first
offer thereon. The restrictions in the immediately preceding sentence shall
cease in the event the negotiations between Cytogen and Bard are terminated. In
the event Cytogen, on one or more occasions, intends to offer a third party
rights on terms more favorable than those in an Unaccepted 3.2 Offer, Cytogen
shall so notify Bard setting forth such terms. Any notice issued by Cytogen
pursuant to the immediately preceding sentence shall be deemed a counter offer
which may be accepted by Bard within forty five (45) days of Bard's receipt
thereof.
3.3 MARKETING AND PROMOTION. Subject to the granting of required
-----------------------
regulatory approvals and registrations to sell Product, during the Term, Bard
shall use commercially reasonable efforts to market and promote Product to
Urologists and Managed Care Organizations in the U.S. and, subject to expansion
of the Territory pursuant to Paragraph 4.4, shall use commercially reasonable
efforts to market and promote Product to Urologists in the Territory outside the
U.S. in a manner intended to maximize
19
<PAGE>
sales and market penetration of Product at the earliest date and consistent with
the Bard Marketing Plan presented annually to the Joint Marketing Committee by
Bard pursuant to Paragraph 5.3 hereof. Promotion by Bard during the first three
(3) years following the Product Launch Date shall: (i) average at least [*]
Product presentations to Urologists per year, and (ii) include a minimum of [*]
Product presentations to Urologists per year. The parties hereby expressly
acknowledge and agree that the aforementioned presentations may be made by Bard
on Product alone or may be made in conjunction with the presentation of one or
more products of Bard and/or its Affiliates, provided however, if any such
presentation of Product is made in conjunction with one or more products of Bard
and/or its Affiliates, Bard shall assure that a fair presentation of Product is
given. In addition to Bard's expenditures for such direct marketing and
promotional presentations, Bard's marketing and promotional efforts shall
further include additional promotional expenditures (the amount of which shall
be determined by Bard in its sole judgment) for promotional brochures,
conventions and exhibits, and educational programs consistent with the Bard
Marketing Plan approved by the Joint Marketing Committee. Additionally, Bard
shall include Product in any applicable prostate disease management program
sponsored by Bard. Further, Bard hereby covenants to Cytogen that, during the
remainder of the Term following the Product Launch Date, Bard shall maintain a
sales force of not less than forty four (44) competent persons
* [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24B-
2.]
20
<PAGE>
dedicated to promoting medical products to Urologists in the U.S. on a full time
basis. In the event Bard breaches the covenant set forth in the immediately
preceding sentence and fails to cure such breach written ninety (90) days of
receipt of written demand from Cytogen, Cytogen, as its sole and exclusive
remedy, shall have the right to immediately terminate this Agreement upon notice
to Bard.
3.4 SUPPORT SERVICES - Bard, at its expense, shall develop and produce, or
----------------
cause to be developed and produced, all marketing, promotional and advertising
materials to be used in the performance of the duties described in Paragraph
3.3. Bard agrees to provide Cytogen, for its review and written approval prior
to use, with all proposed marketing, promotional and advertising materials for
Product to enable Cytogen to assure itself that such materials comply with
labeling approved by FDA and all other requirements of competent governmental
authorities in the Territory. Further, Bard agrees to provide Cytogen with the
requisite number of production samples of all materials referred to in this
Paragraph 3.4 for submission by Cytogen to FDA. Additionally, Bard, with
technical support from Cytogen as necessary, agrees to provide Urologists
located in the Territory and Managed Care Organizations located in the U.S. with
support on the clinical utility of Product.
21
<PAGE>
3.5 MARKETING AND PROMOTION BY BARD - Bard hereby covenants that Bard (and
-------------------------------
to the extent applicable Affiliates of Bard) shall market and promote Product
only: (i) for a use(s), indication(s) or application(s) which is contained in
labeling supplied by Cytogen or is contained in marketing, promotional or
advertising materials which have been approved in writing by Cytogen in advance
of use, and (ii) in a manner which is consistent, in every material respect,
with Bard's customary marketing and promotional guidelines, and (iii) in
compliance with all applicable laws and regulations governing the conduct of
employees engaged in the promotion and marketing of in vivo diagnostic products,
except where non-compliance with any such law or regulation results from
promotion of Product for a use(s), indication(s) or application(s) which is
contained in: (a) labeling supplied by Cytogen, or (b) marketing, promotional or
advertising materials which have been approved in writing by Cytogen in advance
of use.
ARTICLE 4 - CYTOGEN'S DUTIES
4.1 REGULATORY APPROVALS. Cytogen shall bear the costs, have the
--------------------
responsibility for, and use diligent efforts to, obtain and maintain all
regulatory approvals and registrations from governmental authorities necessary
in order to lawfully manufacture, market, promote and sell Product in the
Territory.
22
<PAGE>
4.2 MANUFACTURING, MARKETING AND PROMOTION. Subject to obtaining required
--------------------------------------
regulatory approvals and registrations, during the Term, Cytogen shall have the
obligation to use commercially reasonable efforts to: (i) manufacture sufficient
quantities of Product to timely fill all customer orders in the Territory, and
(ii) market and promote Product in the Territory to Imaging Physicians and in
the U.S. to Managed Care Organizations, and (iii) sell Product to customers in
the Territory, provided, however, that marketing and promotional activities by
Cytogen which are directed to Managed Care Organizations shall be coordinated
with the Joint Marketing Committee and be consistent with both the Bard
Marketing Plan and the Cytogen Marketing Plan. Cytogen agrees to cause at least
[*] PIE Sites to be operational by the Product Launch Date. Additionally,
Cytogen agrees to cause at least [*] PIE Sites to be operational not later than
the first anniversary of the Product Launch Date and to cause at least [*] PIE
Sites to be operational not later than the second anniversary of the Product
Launch Date. In the event that Cytogen achieves at least eighty percent (80%)
of any applicable milestone set forth in the immediately preceding sentence as
of the prescribed date, then Cytogen shall have an additional six (6) months to
fully achieve such milestone. Cytogen agrees that the abovereferenced PIE Sites
which are to become operational after the Product Launch Date shall be at
locations reasonably acceptable to Bard. Further, Cytogen shall cause
additional PIE Sites to become operational at times and at locations identified
* [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24B-
2.]
23
<PAGE>
by the Joint Marketing Committee and in the Cytogen Marketing Plan with the
intention of including such additional PIE Sites as marketing targets for
Product.
4.3 SUPPORT SERVICES. Cytogen shall, at its own expense, be responsible
----------------
for the manufacturing, storage, distribution and sale of Product, including,
without limitation, the entry of sales orders, invoicing and collection of sales
revenues. To the extent necessary to fulfill its obligations under Paragraphs
3.4 and 4.2, Cytogen shall: (i) develop and produce all marketing and
promotional materials for Product, and (ii) provide all customer and technical
support relating to Product.
4.4 EXPANSION OF THE TERRITORY - The parties hereby acknowledge and agree
--------------------------
that, as of the Effective Date, the Territory shall be limited to the U.S.
Cytogen hereby grants to Bard a right of first offer to expand the Territory to
include one (1) or more of the Selected Countries, subject to relinquishment by
CIS and Faulding of their respective rights of first negotiation to market and
promote Product to Urologists in the Selected Countries. In the event CIS
notifies Cytogen that it relinquishes its said right of first negotiation with
respect to one or more of the Selected Countries (other than Canada) or in the
event Faulding notifies Cytogen that it relinquishes its said right of first
negotiation with respect to Canada (a "Waiver Notice"), Cytogen, within thirty
(30) business days of its
24
<PAGE>
receipt of the Waiver Notice, shall so notify Bard and shall include in its
notice the country or countries which were the subject of the Waiver Notice, as
well as the terms and conditions upon which Cytogen would be willing to expand
the Territory to include the country or countries which were the subject of the
Waiver Notice (a "4.4 Cytogen Notice"). Within sixty (60) days of receipt by
Bard of a particular 4.4 Cytogen Notice, Bard shall issue a notice to Cytogen (a
"4.4 Bard Notice") of its intent to negotiate with Cytogen on expansion of the
Territory to include one (1) or more of the countries specified in such 4.4
Cytogen Notice. In the event Bard fails to respond to a particular 4.4 Cytogen
Notice within sixty (60) days of receipt thereof, Bard's right of first offer to
expand the Territory to include the country or countries specified in such 4.4
Cytogen Notice shall immediately be extinguished. In the event a particular 4.4
Bard Notice indicates that Bard has no interest in negotiating with Cytogen to
expand the Territory to include any of the countries specified in the
corresponding 4.4 Cytogen Notice, Bard's right of first offer to expand the
Territory to include such countries shall immediately be extinguished. In the
event a particular 4.4 Bard Notice indicates that Bard is interested in
negotiating with Cytogen to expand the Territory to include some but not all of
the countries specified in the corresponding 4.4 Cytogen Notice, Bard's right of
first offer to expand the Territory shall be extinguished only to the extent
such 4.4 Bard Notice indicates a lack of interest in negotiating with respect to
a specific
25
<PAGE>
country or countries. In the event a particular 4.4 Bard Notice indicates that
Bard is interested in negotiating with Cytogen to expand the Territory, the
parties shall meet within thirty (30) business days of Cytogen's receipt of such
4.4 Bard Notice and shall negotiate, in good faith, the expansion of the
Territory to the extent specified in the 4.4 Bard Notice. In the last mentioned
event, if the parties fail to reach written agreement, within ninety (90) days
of Cytogen's receipt of a particular 4.4 Bard Notice, on the expansion of the
Territory to include the country or countries specified therein, Bard shall
reduce its last offer thereon (an "Unaccepted 4.4 Offer") to writing, shall
furnish the same to Cytogen and Cytogen shall thereafter have the right to
itself market and promote Product to Urologists in the country or countries
which were the subject of the Unaccepted 4.4 Offer and shall have the right to
grant any third party the right to market and promote Product to Urologists in
the country or countries which were the subject of the Unaccepted 4.4 Offer on
terms no more favorable than those specified therein. Cytogen covenants, from
the time of issuance of a particular 4.4 Cytogen Notice through the expiration
of the ninety (90) day negotiation period thereon, to refrain from marketing or
promoting (or negotiating with any third party on marketing or promoting)
Product to Urologists in the country or countries which were the subject of such
4.4 Cytogen Notice, except to the extent Bard's right of first offer to expand
the Territory has been extinguished. The restrictions in the immediately
preceding
26
<PAGE>
sentence shall cease in the event negotiations between Cytogen and
Bard are terminated. In the event Cytogen, on one or more occasions, intends to
offer a third party rights on terms more favorable than those in an Unaccepted
4.4 Offer, Cytogen shall so notify Bard setting forth such terms. Any notice
issued by Cytogen pursuant to the immediately preceding sentence shall be deemed
a counter offer which may be accepted by Bard within forty five (45) days of
Bard's receipt thereof.
4.5 CHANGE IN SPECIFICATIONS - During the Term, Cytogen shall not change
------------------------
or supplement any of the Specifications where any such change or supplement
requires a PLA or PLA supplement without first consulting with Bard.
4.6 MARKETING AND PROMOTION BY CYTOGEN - Cytogen hereby covenants that
----------------------------------
Cytogen (and to the extent applicable Affiliates of Cytogen) shall market,
promote and sell Product only: (i) for a use(s), indication(s) or application(s)
which is approved by competent governmental authority in the country in which
Product is marketed, promoted or sold, and (ii) in compliance with all
applicable laws and regulations governing the conduct of employees engaged in
the promotion and marketing of in vivo diagnostic products.
27
<PAGE>
ARTICLE 5 - JOINT MARKETING COMMITTEE
5.1 FORMATION. Within thirty (30) days after the Effective Date, the
---------
parties shall establish a Joint Marketing Committee having a total membership of
four (4), of which two shall be designated by each party to this Agreement. A
Chairman shall be selected by Cytogen to preside over its meetings and to
establish the Joint Marketing Committee's agenda. The Joint Marketing Committee
shall meet on frequent basis, at least quarterly, during the Term at a time and
place to be mutually agreed upon in advance by the members of the Joint
Marketing Committee.
5.2 PURPOSE. The purpose of the Joint Marketing Committee is to co-
-------
ordinate and monitor the marketing and promotional efforts of Bard and the
marketing, promotional and sales efforts of Cytogen with respect to Product and
to assist in: (i) the development of consistent marketing strategies and
promotional materials for Product, and (ii) effective implementation of such
strategies, and (iii) the sharing of relevant market statistics and information
about Product and each party's performance under this Agreement.
5.3 REPORTING. At least sixty (60) days before the Product Launch Date,
---------
and at least sixty (60) days before each anniversary of the Product Launch Date
thereafter, each party shall deliver to the Joint Marketing Committee for its
approval an annual
28
<PAGE>
marketing plan for Product (referred to as the "Cytogen Marketing Plan", or the
"Bard Marketing Plan", as the case may be) which shall include a three (3) year
forecast of sales by units of Product, marketing goals and tactics, and the
anticipated marketing and sales resources to be allocated to the implementation
of the marketing plan. Within fifteen (15) days after the last day of each
calendar quarter following the Product Launch Date, Cytogen shall deliver a
written report to the Joint Marketing Committee setting forth: (i) the gross
sales of Product by Cytogen or any Affiliate of Cytogen during such quarter,
broken down by country within the Territory, and information detailing
deductions in arriving at Net Sales, and (ii) actual expenditures, during such
quarter, by Cytogen and any Affiliate of Cytogen for marketing, promotional and
sales efforts relative to Product, and (iii) such additional information as the
Joint Marketing Committee may reasonably request. Within fifteen (15) days after
the last day of each calendar quarter following the Product Launch Date, Bard
shall deliver a written report to the Joint Marketing Committee setting forth:
(i) actual expenditures, during such quarter, by Bard and any Affiliate of Bard,
for marketing and promotional efforts relating to Product, and (ii) the number
of Product presentations made by Bard to Urologists and Managed Care
Organizations during such quarter, and (iii) such additional information as the
Joint Marketing Committee may reasonably request. A copy of each such report
shall be sent to the President of Cytogen and the Vice President and General
29
<PAGE>
Manager of Bard's Urological Division within fifteen (15) days of the end of the
calendar quarter to which it relates.
5.4 DISPUTE RESOLUTION. In the event that the Joint Marketing Committee
------------------
is unable to reach a unanimous agreement by its members on any matter within its
purview, such dispute shall be the subject of discussion and negotiation between
the President of Cytogen and the Vice President and General Manager of Bard
Urological Division. Neither party shall pursue any of its remedies under this
Agreement, whether at law or otherwise, with respect to such dispute until at
least thirty (30) days have elapsed since the date upon which written notice of
a dispute has been delivered to the designee of each party hereto.
ARTICLE 6 - PAYMENTS
6.1 CO-PROMOTIONAL RIGHTS PAYMENT In consideration of the grant by
-----------------------------
Cytogen to Bard of the exclusive right to market and promote Product to
Urologists in the U.S. and the grant by Cytogen to Bard of the co-exclusive
right to market and promote Product to Managed Care Organization in the United
States, Bard shall pay to Cytogen [INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION UNDER RULE 24B-2.] within fifteen (15) days after notice by
Cytogen to Bard of FDA approval to market and sell Product in the U.S.
Additionally, in the event the Territory is expanded to include Japan, Bard
shall pay Cytogen [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION
UNDER RULE 24B-2.] on the
30
<PAGE>
date on which the Territory is so expanded. Further, in the event the Territory
is expanded to include four (4) of the Selected Countries (other than Japan),
Bard shall pay Cytogen [INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION UNDER RULE 24B-2.] on the date on which the Territory is so expanded.
6.2 COMMISSIONS. In consideration of the undertakings of Bard hereunder,
-----------
Cytogen agrees to pay Commissions to Bard in accordance with the provisions of
Exhibit A.
- ---------
6.3 PAYMENT OF COMMISSIONS. Bard's right to receive a Commissions under
----------------------
Paragraph 6.2 shall commence upon the first commercial sale of Product in the
Territory by Cytogen or any Affiliate of Cytogen to a non-Affiliate of Cytogen.
Cytogen shall invoice and shall cause its Affiliates to invoice customers for
Product within two (2) business days of shipment. For purposes of this
Agreement, each Product shall be deemed sold at the time of invoice. Cytogen
shall pay Bard Commissions on a quarterly basis during the Term within forty-
five (45) days after the end of each calendar quarter. All Commission payments
due hereunder shall be paid in the currency of the country in which the
applicable sales of Product are made.
6.4 QUARTERLY REPORTS. Within forty-five (45) days after the end of each
-----------------
calendar quarter, Cytogen shall provide Bard with an accurate written report
with respect to such quarter
31
<PAGE>
detailing: (i) the gross sales of Product by Cytogen or any Affiliate of Cytogen
during such quarter, by country, PIE Site, hospital or other health care
facility, and (ii) information detailing deductions from the gross sales in
arriving at Net Sales, and (iii) the calculation of Commissions payable for such
quarter. No reports shall be required under this Paragraph prior to the date of
first commercial sale of Product in the Territory.
6.5 RECORDS AND AUDIT RIGHTS. Cytogen shall maintain all reports referred
------------------------
to in Paragraph 6.4, together with supporting business records, for a period of
five (5) years. Additionally, Cytogen shall generate and maintain, for a period
of five (5) years post sale, accurate records of Net Sales, Baseline Sales and
Incremental Sales. At the request and expense of Bard, an independent auditor,
selected by Bard and acceptable to Cytogen, shall have access limited to once
per calendar year, at Cytogen's principal place of business during ordinary
business hours with reasonable notice, to records referred to in this Paragraph
6.5. If deemed necessary or desirable, in the sole opinion of the independent
auditor, the independent auditor shall, at Bard's expense, be permitted to
consult with and obtain the assistance of consultants selected by the
independent auditor and acceptable to Cytogen. Such acceptance shall not be
unreasonably withheld. Neither the independent auditor nor the selected
consultants shall disclose to Bard, or any third parties, any information
relating to the business of Cytogen other than information
32
<PAGE>
relating solely to the accuracy of the reports and payments under this
Agreement. In the event the independent auditor determines that there was an
underpayment or overpayment in Commissions, the error shall be reconciled by
payment by the appropriate party to the other within thirty (30) days of
issuance of the auditor's report. Notwithstanding the foregoing, if the auditor
determines that in any audit that there has been an underpayment of Commissions
of ten percent (10%) or more for the period examined, Cytogen hereby agrees to
reimburse Bard for its actual incurred costs in having such audit conducted.
ARTICLE 7 - ADVERSE REACTION
7.1 REPORTING. Each party agrees to report to the other party in writing
---------
any serious adverse reactions or any side effects which occur or other adverse
events with Product as promptly as possible after receipt of information of such
event (a "Reaction Notice"), but in no event later than three (3) business days
following receipt of a Reaction Notice of any event described in Paragraph
7.2(a) through 7.2(e). Any such reactions or side effects must be reported (in
full detail if requested) irrespective of whether there is a causal connection
with Product being administered or whether the causal connection is unclear or
presumed to be not likely. Additionally, each party shall report to the other
in writing, quarterly during the three (3) year period following the Product
Launch Date and annually thereafter
33
<PAGE>
during the remainder of the Term, all other unexpected non-serious adverse
events associated with Product which come to the attention of such party.
7.2 For purposes of Paragraph 7.1, a serious adverse reaction or side
effect is a reaction or side effect from Product which meets one or more of the
following criteria:
(a) a reaction or side effect that is life threatening or fatal;
(b) a reaction or side effect that resulted in hospitalization, or if
the patient was already hospitalized, a reaction or side effect
which prolonged hospitalization;
(c) a reaction or side effect that resulted in severe or permanent
disability;
(d) a reaction or side effect that involved congenital anomaly or
overdose, or cancer which was not already present at the
beginning of treatment with Product involved; or
(e) a reaction that is considered to be important, significant or
otherwise medically serious.
7.3 Each of the parties hereto shall monitor all relevant journals
and media communications for information on factors materially affecting the use
or efficacy of Product and shall promptly inform the other party of such
information. The
34
<PAGE>
informing party may provide in writing its evaluation of such information.
Either party shall promptly inform the other if it has actual knowledge of any
measures which are necessary to eliminate or minimize any risk associated with
the use of Product, provided however, neither party shall have such obligation
if any such measure would require the disclosure of any information which is
proprietary to it.
ARTICLE 8 - CONFIDENTIAL INFORMATION
8.1 NONDISCLOSURE AND NONUSE. The parties hereto agree that during the
------------------------
Term and during the five (5) year period following the expiration or termination
of this Agreement, each party shall keep completely confidential and shall not
publish or otherwise divulge or use, for its own benefit or for the benefit of
any third party, any information of a proprietary nature furnished to it (the
"Receiving Party") by the other party (the "Disclosing Party") without the prior
written approval of the Disclosing Party in each instance, except:
(a) as necessary to obtain governmental approval for the marketing of
Product;
(b) to consultants, Affiliates and agents who are obligated to
maintain it in confidence pursuant to written agreements which
are at least as stringent as the terms of this Article VIII; and
35
<PAGE>
(c) as otherwise may be required by law, regulation or judicial
order.
Information of a proprietary nature shall include, but not be limited to,
information concerning a party's products, proposed products, marketing plans,
methods of manufacture, customers or any other information or materials in
whatever form not generally known to the public.
8.2 EXCEPTIONS. Nothing in this Article 8 shall prevent disclosure or use
----------
of information which:
(a) is disclosed orally unless such oral disclosure is reduced to
writing within thirty (30) days of the oral disclosure and such
reduction to writing is marked as proprietary or confidential;
(b) is already known to the Receiving Party at the time of disclosure
by the Disclosing Party as evidenced by the Receiving Party's
business records maintained in the normal course of business;
(c) was known to the public at the time of disclosure, or
subsequently becomes so known through no act or omission of the
Receiving Party;
(d) is lawfully disclosed to the Receiving Party by a non-Affiliate
having the right to convey such information.
36
<PAGE>
ARTICLE 9 - INDEMNIFICATION
9.1 INDEMNIFICATION BY CYTOGEN. Cytogen hereby agrees to defend
--------------------------
(utilizing counsel reasonably acceptable to Bard), indemnify, save and hold
Bard, its Affiliates and their respective successors harmless from and against
all claims, damages, liabilities, losses, costs and expenses, including
reasonable attorneys' fees, which arise or result from: (i) the design or
manufacture of Product, or (ii) the promotion of Product by Cytogen or any
Affiliate of Cytogen, (iii) the breach by Cytogen of any of its representations
and warranties set forth in this Agreement, or (iv) the default by Cytogen in
the observance or performance of any obligation imposed upon it hereunder, or
(v) the use by Bard or any Affiliate of Bard of labeling supplied by Cytogen or
marketing, promotional or advertising materials approved by Cytogen in advance
of use, or (vi) the sale or use of Product. Cytogen shall have no obligation
under this Paragraph 9.1 to the extent that a particular claim, damage,
liability, loss, cost or expense arises or results from: (a) a breach by Bard or
any Affiliate of Bard of a covenant contained in Paragraph 3.5, or (b) the gross
negligence of wilful misconduct of Bard or any Affiliate of Bard.
9.2 INDEMNIFICATION BY BARD. Bard hereby agrees to defend (utilizing
-----------------------
counsel reasonably acceptable to Cytogen), indemnify, save and hold Cytogen, its
Affiliates and their respective
37
<PAGE>
successors harmless from and against all claims, damages, liabilities, losses,
costs and expenses, including reasonable attorneys' fees, which arise or result
from the breach by Bard of any of its representations and warranties set forth
in this Agreement or the default by Bard in the observance or performance of any
obligation imposed upon it hereunder. Bard shall have no obligation to Cytogen
under this Paragraph 9.2 to the extent that a particular claim, damage,
liability, loss, cost or expense falls within Cytogen's obligations under
Paragraph 9.1 or arises or results from the gross negligence or wilful
misconduct of Cytogen or any Affiliate of Cytogen.
9.3 INFRINGEMENT. Cytogen hereby agrees to defend (utilizing counsel
------------
reasonably acceptable to Bard), indemnify, save and hold Bard, its Affiliates
and their respective successors harmless from all claims, damages, liabilities,
losses, costs and expenses which arise or result from any third party claim
alleging that the manufacture, use, sale, import, promotion or marketing of
Product, alone or in combination with any other article, infringes a patent(s)
owned by or licensed to the third party claimant.
9.4 COOPERATION - As a condition precedent to the right to be indemnified
-----------
from any claim pursuant to this Article IX, the party claiming the right to be
indemnified (the "Indemnitee"): (i) shall promptly notify the other party (the
"Indemnitor") of
38
<PAGE>
the claim and shall include in its notice all information in its possession
relating to the claim, and (ii) shall fully cooperate with the Indemnitor in the
defense of such claim, and (iii) shall not settle the claim without the prior
written consent of the Indemnitor, it being expressly understood and agreed that
the Indemnitor shall have the right to settle any such claim on such terms as it
deems appropriate.
ARTICLE 10 - TERM AND TERMINATION
10.1 TERM. This Agreement shall have an initial term commencing on the
----
Effective Date and shall continue thereafter until the tenth anniversary of the
Product Launch Date, unless sooner terminated in accordance with the provisions
of Paragraph 3.3, 11.1 or this Article X. This Agreement may be renewed on the
same terms and conditions for one (1) or more additional two (2) year periods
upon mutual written agreement of the parties executed not less than ninety (90)
days prior to the expiration of the then current term.
10.2 FAILURE TO PAY COMMISSIONS. Bard may terminate this Agreement at any
--------------------------
time upon Cytogen's failure to pay Commissions due to Bard pursuant to this
Agreement and the continuation of such failure for more than thirty (30) days
after delivery of written notice to Cytogen of such failure.
39
<PAGE>
10.3 MATERIAL BREACH. Either party may terminate this Agreement upon
---------------
ninety (90) days prior written notice in the event of the other party's breach
of or default under any other material provision of this Agreement, if such
default or breach is not remedied within ninety (90) days from the date of such
notice, except where such default or breach is due to circumstances beyond the
reasonable control of the other party as described in Paragraph 11.7 hereof.
10.4 FAILURE TO MEET BASELINE SALES. In the event that Net Sales for any
------------------------------
of the four years following the second anniversary of the Product Launch Date
fail to equal or exceed the corresponding Baseline Sales: (i) the parties hereto
shall promptly meet to discuss the reasons for such failure and, with the
participation and approval of the Joint Marketing Committee, develop a plan to
achieve a level of sales in the next succeeding years in excess of Baseline
Sales, and (ii) if Net Sales in the next succeeding year also fail to equal or
exceed the Baseline Sales for such year, then either party may immediately
terminate the Agreement by providing written notice to the other party.
10.5 BANKRUPTCY. If, during the term of this Agreement, either party makes
----------
an assignment of this Agreement or generally, for the benefit of creditors, or
becomes insolvent or seeks protection under any bankruptcy, receivership, trust
deed, creditor's arrangement or composition, or if any comparable proceeding is
instituted against the other party and is not dismissed within ninety (90) days
of such institution, then the
40
<PAGE>
other party may terminate this Agreement immediately upon delivery of written
notice thereof.
10.6 EFFECTS OF TERMINATION.
----------------------
10.6.1 Breach by Cytogen - In the event this Agreement is terminated
-----------------
by Bard pursuant to Paragraph 10.2 or 10.3, Cytogen agrees to remit to Bard,
within thirty (30) days of the termination of this Agreement, a sum equal to the
amount, if any, by which monies paid by Bard to Cytogen pursuant to Paragraph
6.1 hereof exceed Commissions paid to Bard hereunder.
10.6.2 Payments - Termination of this Agreement by either party shall
--------
not prejudice the right of Bard to recover Commissions earned but unpaid at the
time of termination.
10.6.3 Marketing Rights. Upon termination of this Agreement, Bard's
----------------
rights to market and promote Product shall immediately cease and within sixty
(60) days of such termination, Bard shall deliver to Cytogen all marketing and
promotional materials with respect to Product in the possession of Bard or any
of its Affiliates.
41
<PAGE>
ARTICLE 11 - GENERAL PROVISIONS
11.1 SALE OF COMPETITIVE PRODUCT - Cytogen hereby acknowledges and agrees
---------------------------
that Bard and its Affiliates reserve the right to manufacture, have
manufactured, use, market, promote and sell any Competitive Product. However,
in the event the Urological Division of Bard sells any Competitive Product in
the U.S. during the Term, Cytogen, as its sole and exclusive remedy, shall have
the right, upon notice to Bard, to terminate this Agreement only with respect to
the U.S. Further, in the event Bard or any Affiliate of Bard sells any
Competitive Product, during the Term, in any country which constitutes a part of
the Territory (other than the U.S.), Cytogen, as its sole and exclusive remedy,
shall have the right, upon notice to Bard, to terminate this Agreement only with
respect to such country or countries. If any event referred to in this
Paragraph 11.1 occurs, Bard shall give Cytogen notice thereof within fifteen
(15) business days of the date on which the sale of the Competitive Product
occurs.
11.2 GOVERNING LAW. This Agreement shall be governed by and interpreted in
-------------
accordance with the laws of the State of New Jersey, within the United States of
America, as though all parties were resident of, and the contract was to be
performed in, New Jersey.
42
<PAGE>
11.3 ENTIRE AGREEMENT. This Agreement represents the entire Agreement and
----------------
understanding of the parties hereto with respect to the subject matter hereof,
supersedes all previous agreements and understandings related thereto and may
only be amended or modified in writing signed by an authorized representative of
the parties hereto.
11.4 ASSIGNMENT. Except as hereinafter provided, neither party may assign,
----------
transfer or otherwise dispose of any of its rights or obligations pursuant to
this Agreement without the prior written consent of the other party, which
consent shall not be unreasonably delayed or withheld. Either party may assign
this Agreement, upon notice to but without the consent of the other party, to
any person or entity which purchases substantially all of its stock or
substantially all of its cancer diagnostic assets. Additionally, Cytogen shall
have the right to delegate its obligations under Paragraph 4.2 and Article V to
an Affiliate of Cytogen. Further, Bard shall have the right to delegate its
obligations, if any, outside of the U.S. to one or more of its Affiliates.
11.5 NOTICE. All notices under this Agreement shall be in writing and
------
shall be deemed given if sent by telecopier (except for legal process),
certified or registered mail or commercial courier (return receipt or
confirmation of delivery required), or by personal delivery to the party to
receive such notices or
43
<PAGE>
other communications called for this Agreement at the following addresses (or at
such other address for a party as shall be specified by such party by like
notice):
CYTOGEN CORPORATION
600 College Road East
Princeton, New Jersey 08540
Attention: General Counsel
C.R. BARD, INC.
730 Central Avenue
Murray Hill, New Jersey 07974
Attention: General Counsel
Copy to:
BARD UROLOGICAL DIVISION
C.R. Bard Inc.
8195 Industrial Blvd.
Covington, Georgia 30209
Attention: Vice President and
General Manager
11.6 LIMITATION ON LIABILITY. In no event shall either party be liable to
-----------------------
the other for incidental or consequential damages, including, without
limitation, loss of profits or punitive damages even if such party shall have
been advised of the possibility of the same. [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24B-2.], Bard's right to monetary
damages upon a breach of this Agreement by Cytogen shall be limited to
[INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24B-
2.]. Notwithstanding anything to the contrary contained in this Agreement,
Bard's liability to Cytogen, under Article 9 or otherwise, shall be
44
<PAGE>
limited: (i) during the period from the Effective Date through the first
anniversary of the Product Launch Date, [INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION UNDER RULE 24B-2.],
(ii) from and after the first anniversary of the Product Launch Date,
[INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24B-
2.].
11.7 FORCE MAJEURE. Except for the obligation to make payments under this
-------------
Agreement, each of the parties hereto shall be excused from the performance of
its obligations hereunder in the event such performance is prevented by force
majeure, and such excuse shall continue so long as the condition constituting
45
<PAGE>
such force majeure continues and for thirty (30) days after the termination of
such condition. For the purposes of this Agreement, force majeure is defined to
include causes beyond the control of the parties hereto, including without
limitation, acts of God, acts, resolutions or laws of any government, war, war
like conditions, civil commotion, destruction of production facilities or
materials by fire, earthquake or storm, labor disturbances, epidemic and failure
of public utilities or common carriers.
11.8 PUBLICITY. Neither party shall make any press release or other
---------
similar public disclosure or announcement concerning this Agreement, without the
prior written consent of the non-disclosing party, except as otherwise required
by law. Consent will be deemed granted if no response is received from the non-
disclosing party within fifteen (15) days of its confirmed written request for
approval from the disclosing party. Notwithstanding the foregoing, in the event
such disclosure or public announcement is required to be made on a more
immediate basis in order to comply with applicable state or federal securities
laws, then approval will be deemed granted if no response is received from the
non-disclosing party within the timeframes required by law; provided, however,
that the disclosing party provides the non-disclosing party with notice of the
legally required timeframe for approval of the disclosure at the time of
providing a copy of the proposed disclosure or announcement.
46
<PAGE>
11.9 SURVIVAL OF RIGHTS. All provisions of this Agreement which by their
------------------
nature are intended or required to be observed or performed after the expiration
or termination of this Agreement, including but not limited to the provisions of
Articles 6, 8, 9, and Paragraphs 10.6.1, 10.6.2, 10.6.3, 11.2, 11.3, 11.6 and
11.9 shall survive the expiration or termination of this Agreement.
11.10 COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original and all of which shall
constitute but one and the same document.
11.11 SEVERABILITY. Any provision of this Agreement that is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
11.12 CAPTIONS - The Article and Paragraph headings of this Agreement are
--------
intended for convenience of reference only and shall not define or limit the
provisions of this Agreement.
11.13 WAIVERS - The failure of either of the parties to exercise their
-------
respective rights under this Agreement regarding any misrepresentation, breach
or default shall not prevent the party from exercising such or any other right
hereunder regarding such or any subsequent misrepresentation, breach or default.
47
<PAGE>
11.14 RELATIONSHIP OF PARTIES - It is expressly agreed that the
-----------------------
relationship of the parties herein created is that of independent contractors.
Further, it is expressly agreed that nothing contained herein is intended to
create, nor shall it be deemed or construed as creating, an agency relationship,
an employer-employee relationship or a relationship of joint ventures. Neither
party shall represent to any third party that it has authority to bind the other
in any manner.
11.15 INSURANCE - During the Term, Cytogen, at its expense, shall maintain
---------
a policy of comprehensive general liability insurance with products liability
endorsement providing coverage relating to Product on a claims made basis in a
minimum amount of five million dollars ($5,000,000) annual aggregate. Within
thirty (30) days of the Effective Date and annually thereafter, Cytogen shall
furnish Bard with a certificate evidencing such insurance coverage.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CYTOGEN CORPORATION
By: /s/ Richard J. Walsh
----------------------
Title: Vice President,
Corporate Development
C.R. BARD, INC.
By: /s/ Benson F. Smith
---------------------
Title: President and COO
48
<PAGE>
Exhibit A
---------
Commissions
-----------
[INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER RULE 24B-2.]
49
<PAGE>
Exhibit B
---------
. Approval by Cytogen Clinical Investigations/Technical Operations.
. Experience with immunoscintigraphy or similar techniques.
. State-of-the-art camera/computer system.
. Knowledgeable nuclear medicine technologists/physicians.
. Clinical study or consulting agreement.
. Access to a multispecialty physician group.
. Affiliation with a healthcare delivery system (IHN, oncology group
practice, cancer carve-out).
. Hospital with a large cancer patient pool under an indemnity contract
(Medicare/HCFA or HMO agreement).
50
<PAGE>
Exhibit C
---------
1. Brooke Army Medical Center
Ft. Sam Houston, TX 78234-6200
2. Cedars Sinai Medical Center
Los Angeles, CA 90048
3. Cleveland Clinic Foundation
Cleveland, OH 44195
4. Columbia Presbyterian
New York, NY 10032
5. George Washington University
Washington, DC 20037
6. Georgia Baptist Medical Center
Atlanta, GA 30312
7. Harper Hospital
Detroit, MI 48201
8. Harris Methodist
Fort Worth, TX 76108
9. Henry Ford Hospital
Detroit, MI 48202
10. University of Illinois
Chicago, IL 60612
11. Iowa City VAMC
Iowa City, IA 52242
12. Jersey Shore Medical Center
Neptune, NJ 07754
13. Jewish Hospital
St. Louis, MO 63110
14. Johns Hopkins Bayview
Baltimore, MD 21224-2780
15. John Peter Smith
Fort Worth, TX 76104
16. Lehigh Valley Hospital
Allentown, PA 18105
17. Louisiana State University
Shreveport, LA 71130
51
<PAGE>
18. Loyola University
Maywood, IL 60153
19. Mayo Clinic
Rochester, MN 55905
20. M.D. Anderson Cancer Center
Houston, TX 77030
21. Medical College of WI
Milwaukee, WI 53226
22. MetroHealth Medical Center
Cleveland, OH 44109
23. Memorial Medical Center
Springfield, IL 62781
24. University of Miami
Miami, FL 33136
25. Montefiore Medical Center
Bronx, NY 10467
26. Morton Plant Hospital
Clearwater, FL
27. Mount Sinai Hospital
New York, NY 10029
28. Ohio State University
Columbus, OH 43210
29. Our Lady of the Lake
Baton Rouge, LA 70808
30. Queens Medical Center
Honolulu, HI 96813
31. Scott & White Memorial
Temple, TX 76508
32. St. Francis Hospital
Topeka, KS 66606
33. St. Joseph's Hospital
Houston, TX 77002
34. St. Luke's Medical Center
Milwaukee, WI 53215
35. St. Mary's Medical Center
Saginaw, MI 48601
52
<PAGE>
36. St. Vincent's Hospital
Portland, OR
37. SUNY at Buffalo
Buffalo, NY 14214
38. Sutter General Hospital
Sacramento, CA 95816
39. Tri-City Medical Center
Oceanside, CA 92056
40. University of Washington
Seattle, WA
53
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 1996 AND THE CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1996 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 24,328,000
<SECURITIES> 5,977,000
<RECEIVABLES> 1,063,000
<ALLOWANCES> (536,000)
<INVENTORY> 270,000
<CURRENT-ASSETS> 500,000
<PP&E> 16,999,000
<DEPRECIATION> (12,058,000)
<TOTAL-ASSETS> 38,044,000
<CURRENT-LIABILITIES> 5,341,000
<BONDS> 0
0
0
<COMMON> 492,000
<OTHER-SE> 30,316,000
<TOTAL-LIABILITY-AND-EQUITY> 38,044,000
<SALES> 1,135,000
<TOTAL-REVENUES> 3,939,000
<CGS> 0
<TOTAL-COSTS> 2,830,000
<OTHER-EXPENSES> 18,497,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 342,000
<INCOME-PRETAX> (16,651,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (16,651,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,651,000)
<EPS-PRIMARY> (0.35)
<EPS-DILUTED> 0
</TABLE>
