As filed with the Securities and Exchange Commission on July 19, 1999
Registration No. 333-
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CYTOGEN CORPORATION
(Exact name of registrant as specified in its charter)
2835
Delaware (Primary Standard 22-2322400
(State or other jurisdiction Industrial Classification (I.R.S. Employer
of incorporation or organization) Code Number) Identification No.)
600 College Road East CN 5308
Princeton, New Jersey 08540-5308
(609) 750-8200
(Address, including zip code and
telephone number, including area code, of
registrant's principal executive offices)
Donald F. Crane, Jr., Esq.
Vice President and General Counsel
CYTOGEN Corporation
600 College Road East CN 5308
Princeton, New Jersey 08540-5308
(609) 750-8200
(Name, address, including zip code, and
telephone number, including area code, of
agent for service)
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: |_|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_| ____________
If this Form is a post effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_| ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_| ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
================================================================================
Proposed Maximum
Title of Each Class of Aggregate Offering Amount of
Securities To Be Registered Price (1) Registration Fee
Common Stock ($.01 par value per share) $5,000,000 $1,390
================================================================================
(1)Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457(o). Includes preferred stock purchase rights pursuant to Cytogen
Corporation's Shareholder Rights Agreement.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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Subject to Completion, dated July 19, 1999
PROSPECTUS
Shares
CYTOGEN CORPORATION
Common Stock
This prospectus relates to the sale by CYTOGEN Corporation of up to
3,500,000 shares of our common stock. We plan to offer these shares to The State
of Wisconsin Investment Board (the "Principal Offeree").
Our common stock is listed on the Nasdaq Stock Market under the symbol
"CYTO." The last sales price of our common stock as reported by the Nasdaq on
July 16, 1999 was $1.813 per share.
Investing in the common stock involves certain risks which are
described in the "Risk Factors" section beginning on page 6 of this prospectus.
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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Per Share Total
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Public offering price................. $5,000,000
Underwriting Discount.................
Proceeds to the Company...............
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CYTOGEN's principal executive offices are located at 600 College Road East,
CN 5308, Princeton, New Jersey 08540-5308, (609) 750-8200.
_________________ ____, 1999
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TABLE OF CONTENTS
Page
Prospectus Summary...................................................... 3
Risk Factors............................................................ 6
Price Range of Our Common Stock......................................... 19
Dividend Policy......................................................... 19
Use of Proceeds......................................................... 19
Where You Can Find More Information..................................... 20
Plan of Distribution.................................................... 22
Legal Matters........................................................... 24
Experts................................................................. 24
--------------------------
ProstaScint and OncoScint are registered trademarks of CYTOGEN. PIE is a
trademark of CYTOGEN, pending registration. Quadramet is a trademark of Dow,
licensed to CYTOGEN.
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
It is not complete and may not contain all the information that you should
consider before investing in the common stock. You should read the entire
prospectus carefully, including the "Risk Factors" section.
The Company
CYTOGEN Corporation ("CYTOGEN" or the "Company") is a biopharmaceutical
company engaged in the development, commercialization and marketing of products
to improve diagnosis and treatment of prostate disease, of products for unmet
needs in the broader urological and oncology markets. CYTOGEN was incorporated
in Delaware in 1981. Unless the context otherwise indicates, as used herein, the
term "Company" refers to CYTOGEN and its subsidiaries, taken as a whole.
Our Products
We introduced to the market during 1997 our two principal products, each of
which have been approved by the U.S. Food and Drug Administration ("FDA"):
- ProstaScint(R) (kit for the preparation of Indium In111 Capromab
Pendetide).
ProstaScint has been approved as a diagnostic imaging agent for
prostate cancer, the most frequently diagnosed malignancy and
second leading cause of cancer death in men.
- Quadramet(R) Samarium Sm153 Lexidronam Injection).
Quadramet has been approved for the treatment of bone pain due to
cancers that have spread to the skeleton and that can be
visualized on a bone scan.
Our OncoScint(R) CR/OV imaging agent is also approved and marketed as a
diagnostic imaging agent for colorectal and ovarian cancer.
We believe that our products represent a significant improvement over
existing technologies because our products provide improved diagnostic
information and/or treatment in a site-specific manner with relatively low
levels of toxicity.
We also develop other products and technologies, both directly and through
subsidiaries, and have engaged in development efforts with other parties.
Our primary products in development are:
- Vaccines for prostate and other cancers utilizing the Company's
proprietary prostate specific membrane technology, or PSMA, in a
collaboration with Progenics Pharmaceuticals, Inc.;
- Other potential diagnostic and therapeutic applications of PSMA; and
- A bioinformatics platform designed to offer a database mapping
interaction between proteins to be accessed by a computer program for
use in drug discovery and research.
Research and Development
Historically, we have emphasized research and development of a broad array
of potential products, based on monoclonal antibodies and other technologies.
Having identified and commercialized products which we believe have substantial
potential, we have:
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- Conducted or sponsored clinical studies to evaluate existing
products in additional indications;
- Focused on development of technology with near term commercial
significance; o Reviewed all current research and development programs
to assess their commercial potential; and
- Recently curtailed basic research expenditures in order to allocate
resources toward implementing our business strategy.
Business Strategy
Our business strategy is directed primarily toward prostate and urological
diseases and, when opportunities arise, in the broader field of oncology and in
diagnostics. We plan to focus our efforts in areas in which we have experience.
Our approach calls for:
- Devoting our primary efforts to the marketing of ProstaScint and
Quadramet to increase revenue and achieve profitability;
- Expanding the use of ProstaScint and other products into foreign
markets;
- Developing products utilizing our proprietary technology;
- Expanding our current product portfolio through the continued
in-licensing of additional products and related technologies, in the
same manner as Quadramet;
- Establishing strategic alliances;
- Acquiring other companies with related or complementary products,
technologies and/or services.
We cannot predict, however, whether we can accomplish these objectives or
whether accomplishment of these objectives will lead to new commercially viable
products or technologies. In addition, our efforts to develop or acquire new
products depend on our available resources, our ability to commit resources to
potential products or strategic activities without unduly impacting current
operations or financial results, and whether or not such activities in the near
term would affect the marketing of our products or the efforts of management to
commercialize the Company successfully.
Restructuring Activities
During 1998 and early 1999, we reviewed our assets and business prospects
to determine which projects demonstrated adequate potential for a continued
investment of corporate resources. As a result of this review, we:
- Terminated our ALT program.
Our subsidiary Cellcor, Inc. ("Cellcor") had been developing
Autologous Lymphocyte Therapy ("ALT") for the treatment of
metastatic renal cell carcinoma ("mRCC"), a life threatening
kidney cancer for which there are no adequate therapies. We had
planned to submit a Biologics License Application for ALT.
Cellcor completed pivotal Phase III clinical trials of ALT in
mRCC patients in January 1997. Although we believe the results of
the trials are favorable, ALT was not considered a priority for
allocation of available resources. We halted our preparation for
submission of the Biologics License Application and closed our
Cellcor facility in September 1998.
- Sold our interest in Targon Corporation.
Our review determined that the projects under development by
Targon Corporation ("Targon") were not consistent with our
corporate strategies. During August 1998, we sold our interest in
Targon to our partner in the venture, Elan Corporation plc
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("Elan") for $2 million in cash. In addition, we received $2
million from Elan in exchange for a convertible promissory note.
- Sold our manufacturing facility.
We determined that outsourcing manufacturing of the Company's
products would be more economical and consistent with our
strategies. During early January, 1999, we sold our manufacturing
facility to Bard Bio Pharma L.P., a subsidiary of Norwalk, CT
based pharmaceutical company Purdue Pharma L.P. We received $3.9
million in cash for the assets in the facility, and the lease to
the building. We also signed an agreement with Purdue to share
space in the building to continue to manufacture our ProstaScint
and OncoScint products at the same location. Employees involved
in manufacturing currently remain CYTOGEN employees, but Purdue
will pay for their labor costs except while they are working on
our products.
- Reduced expenses.
We have downsized the workforce by eliminating positions which
were no longer critical to our strategic plans and have curtailed
expenses for basic research.
Recent Developments
On June 15, 1999, we reacquired the rights for immune therapy to our
prostate specific membrane antigen ("PSMA") technology by acquiring Prostagen,
Inc., which had sublicensed PSMA from us for prostate cancer immune therapy in
1996. We also acquired other assets held by Prostagen, including approximately
$550,000 in cash, a minority ownership in Northwest Biotherapeutics, Inc., which
is developing PSMA for cell therapy, and a contract with Velos, Inc. for
marketing a cancer patient software management program for hospitals and health
care payors. In exchange, we issued 2.5 million shares of our common stock,
valued at $1.00 per share, and will issue up to an additional $4.5 million worth
of our common stock (valued at the time of issuance) if milestones are achieved
in the PSMA development program.
On June 15, 1999, we also entered a joint venture with Progenics
Pharmaceuticals, Inc. to develop PSMA for immune therapy, emphasizing cancer
vaccines for prostate and possibly other cancers. The project will be owned
equally by us and Progenics. Progenics will fund development through the filing
of an Investigational New Drug Application with the U.S. Food and Drug
Administration. We believe this first step will last approximately two years.
After and if that step is achieved successfully, we and Progenics will share the
costs of clinical trials. We will have exclusive North American marketing rights
on products developed by the venture. We will receive $2 million in payments for
licensing this technology to the venture. $500,000 has been received and the
balance will be paid in installments through December 31, 2001. We can not give
any assurance that this program will result in products reaching the market or
being successful.
In June of 1999, we reacquired rights to our ProstaScint and OncoScint
products in Canada, which had been licensed to Faulding (Canada), Inc. We also
agreed with Berlex Laboratories, Inc., the North American marketing partner for
our Quadramet product, that we would market Quadramet in Canada. We did not pay
for either of these agreements. OncoScint and Quadramet are approved by the
Canadian Health Care Branch; ProstaScint is under expedited review. We believe
these products may be marketed to major cancer centers in Canada and will not
require the same level of resources as for U. S. marketing. However, we can not
be certain that ProstaScint will be approved in Canada, that these products will
be reimbursable under the Canadian health care system, or that they will be
accepted by physicians.
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RISK FACTORS
Prospective investors in the common stock offered hereby should carefully
consider the following risk factors, in addition to the other information
contained in this prospectus. This prospectus contains forward-looking
statements which involve risks and uncertainties. Our actual results could
differ materially from those anticipated in these forward-looking statements as
a result of certain factors, including those set forth in the following risk
factors and elsewhere in this prospectus.
History of Operating Losses and Accumulated Deficit
We have a history of operating losses as follows:
Operating Net Profit (Loss) to
Losses Common Stockholders
Three months
ended March 31, 1999 ($ 1,694,000) $ 1,657,000
Year Ended December 31, 1998 ($ 15,915,000) ($ 13,271,000)
Year Ended December 31, 1997 ($ 31,027,000) ($ 32,064,000)
The operating losses were due in part to limited revenues and to various
expenditures, including:
- Research and development activities;
- Acquiring of complementary products and technologies;
- Seeking regulatory approvals for our products;
- Preclinical and clinical studies related to our products;
- Preparing of submissions to the United States Food and Drug
Administration;
- Developing of sales, marketing, manufacturing and distribution
channels;
- Developing of internal manufacturing capabilities relating to
ProstaScint; and
- General and administrative expenses.
We expect to incur operating losses in the future due primarily to:
- Continuing product development;
- Acquiring, developing and commercializing complementary products
and technologies; and
- Expansion of our sales and marketing activities.
As of March 31, 1999, we had an accumulated deficit of approximately $300
million.
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Uncertainty of Profitability
Our ability to achieve and maintain profitability is highly dependent upon
the successful commercialization of our products, including Quadramet and
ProstaScint. Our profitability may also depend on success with PSMA and with
AxCell Biosciences. There can be no assurance that we will ever be able to
successfully commercialize our products or that we will ever achieve
profitability.
Fluctuating Results of Operations
Our results of operations have fluctuated on an annual and quarterly basis
and may fluctuate significantly from period to period in the future, due to,
among other factors:
- Variations in revenue from sales of and royalties from our
products;
- Timing of regulatory approvals and other regulatory announcements
relating to our products;
- Variations in our marketing, manufacturing and distribution
channels;
- Timing of the acquisition and successful integration of
complementary products and technologies;
- Timing of new product announcements and introductions by the
Company and its competitors, and
- Product obsolescence resulting from new product introductions.
Many of these factors, and others not listed above, are outside our
control. Due to one or more of these factors, our results of operations may fall
below the expectations of securities analysts and investors in one or more
future quarters. If this happens, the market price of our common stock could be
materially and adversely affected.
Need for Additional Capital
We have incurred negative cash flows from operations since inception, and
have expended, and will need to expend, substantial funds to complete our
planned product development efforts, including:
- Acquisition of products and complementary technologies;
- Research and development;
- Clinical studies and regulatory activities; and
- Expansion of our marketing, sales and distribution activities.
In addition to the above requirements, we expect that we will require additional
capital either in the form of debt or equity, irrespective of whether and when
we reach profitability, for the following activities:
- Working capital;
- Acquisitions of additional products and technologies; and
- Further product development.
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Our future capital requirements and the adequacy of our available funds
depend on numerous factors, including:
- Successful commercialization of our products;
- Acquisition of complementary products and technologies;
- Magnitude, scope and results of our product development efforts;
- Progress of preclinical studies and clinical trials;
- Progress of regulatory affairs activities;
- Costs of filing, prosecuting, defending and enforcing patent claims
and other intellectual property rights;
- Competing technological and market developments; and
- Expansion of strategic alliances for the sale, marketing and
distribution of our products.
We currently expect that our existing cash, together with decreased
operating costs, and revenues generated by product sales and royalties, and the
proceeds from this offering, will be adequate to fund our operations into 2000.
We can not give assurance that we will not consume our available capital
resources before that time. If we experience unanticipated cash requirements, we
may require additional capital to:
- Fund operations;
- Continue research and development programs;
- Continue pre-clinical and clinical testing of potential products;
or
- Commercialize any products that may be developed.
Possible Unavailability of Other Financing
There can be no assurance we will be able to obtain additional financing on
acceptable terms, if at all. We may seek to raise additional capital through
public or private offerings of equity or debt or through collaborative
agreements, strategic alliances with corporate partners and others, or through
other contractual arrangements with third parties. We may receive additional
funds upon the exercise of common stock purchase warrants and stock options, but
there can be no assurance that any warrants or stock options will be exercised
or that the amounts received will be sufficient to meet our capital needs. If
adequate funds are not available, we may be required to delay, further scale
back or eliminate one or more of our development programs or certain aspects of
our operations, or to obtain funds by entering into arrangements with
collaborative partners or others that may require us to relinquish rights to
certain of our products, product candidates, technologies or potential markets,
that we would otherwise not relinquish. If adequate funds are not available, our
business, financial condition and results of operations will be materially and
adversely affected.
Possible Dilution or Requirement to Comply with Covenants
Additional equity financing may result in substantial dilution to
shareholders, and debt financing may limit our ability to declare dividends, or
may require us to comply with covenants that would alter the way we conduct
business.
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Dependence on Market Acceptance of ProstaScint and Quadramet for Revenues
None of our products has a significant history of revenues. ProstaScint and
Quadramet were introduced to the market during the first half of 1997 and are
expected to account for a significant percentage of our product-related revenues
in the foreseeable future. For the year ended December 31, 1998, revenues from
ProstaScint and Quadramet accounted for over 91% of our product related
revenues.
Because these products contribute the majority of our revenues, our
business, financial condition and results of operations depend on their
acceptance as safe, effective and cost efficient alternatives to other available
treatment and diagnostic protocols by the medical community, including:
- health care providers, such as hospitals and physicians
- third-party payors, including Medicare, Medicaid, private insurance
carriers and health maintenance organizations
Market Acceptance of ProstaScint
ProstaScint is marketed in the United States by the urological division of
C. R. Bard, Inc. ("BARD"), with CYTOGEN retaining co-marketing rights. We
believe that efforts to market ProstaScint to physicians and hospitals have been
well received, based on increasing sales, statements by physicians to our
employees as to the benefits of ProstaScint and presentations on ProstaScint by
physicians at medical association meetings. However, training by physicians,
technicians and other health care professionals is required before certain of
our products can be used for diagnosis or therapy. In order to use ProstaScint,
our customers, including technologists and physicians, must successfully
complete our Partners in Excellence Program ("PIE(TM) Program"), a proprietary
training program designed to promote the correct acquisition and interpretation
of ProstaScint images. This approach is, therefore, technique dependent and
requires a learning commitment on the part of users. There can be no assurance
that additional physicians will make this commitment or otherwise accept this
product as part of their treatment practices.
CYTOGEN has a program dedicated to providing information to and resolving
issues with managed care organization ("MCOs") relating to reimbursement. BARD
is obligated to market ProstaScint to MCOs, but has not yet implemented a
significant program in this area. Failure to market ProstaScint to MCOs could
hinder acceptance or reimbursement, although we cannot quantify what impact, if
any, this marketing effort could have on sales of ProstaScint.
Market Acceptance of Quadramet
Berlex Laboratories, Inc. ("Berlex") is responsible for the marketing of
Quadramet in the United States, including marketing to MCOs, by an agreement
entered in October 1998. Their marketing efforts began in the first quarter of
1999. We can not give any assurance that Berlex will be able to successfully
market Quadramet, or that this agreement will be profitable for the Company.
CYTOGEN recently obtained marketing rights to Quadramet in Canada, but has not
yet implemented a selling program. We can not give any assurance that the
product can be marketed effectively in Canada, or that it will contribute
significantly to the Company's revenues.
We have licensed the rights to Quadramet from The Dow Chemical Company
("Dow"). Such rights are currently limited to North and Latin America with
respect to currently approved indications. We also hold a license from Dow for
use of Quadramet in treatment of refractory rheumatoid arthritis in North and
Latin America and in other countries, including European countries and Japan.
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There can be no assurance that Quadramet will be accepted in the United States
and Canada, where the product is currently approved. We also can not give any
assurance that Quadramet will be accepted in any markets outside the United
States and Canada, or approved for additional indications in any locations, due
to the influence of established medical practices and other social and economic
factors beyond our control.
Accordingly, there can be no assurance that ProstaScint or Quadramet will
achieve market acceptance on a timely basis, or at all. The failure of
ProstaScint or Quadramet to achieve market acceptance would have a material
adverse effect on the Company's business, financial condition and results of
operations.
Risks Relating to Potential Additional Cuts in Company Programs
We are reviewing and prioritizing programs, and there can be no assurance
that we will not cut programs to conserve capital. After reviewing and
prioritizing our business opportunities, we have ceased various developmental
and research programs, including submission of a Biologics License Application
for ALT. In addition, we have ceased basic research in our Genetic Diversity
Library ("GDL") program. Any additional cuts would increase our dependence on
our remaining programs, and would increase the risk from such programs to the
Company as a whole, which could materially and adversely affect our chances of
obtaining profitability. While we plan to allocate our resources to those
programs with the greatest potential to contribute to a sound financial and
operating position, there can be no assurance that we will be successful in
doing so.
Dependence on our Collaborative Partners
Our success depends in significant part upon the success of our
collaborative partners. We have entered into the following agreements for the
sales, marketing, distribution and manufacture of our products, product
candidates and technologies:
- Sub-license and marketing agreement with Berlex relating
to the Quadramet technology that we have licensed from
Dow. Berlex is responsible for marketing, selling and
arranging manufacturing and distribution of Quadramet in
the United States, Canada, and Latin America. This
agreement expires on the later of December 20, 2014 or
upon the expiration of the patents covering Quadramet.
- Co-promotion agreement with BARD, granting BARD's
Urological Division the exclusive right to market
ProstaScint to urologists; and
- Agreement for manufacture of Quadramet by The DuPont
Pharmaceuticals Company (formerly the radiopharmaceuticals
division of the DuPont Merck Company, "DuPont").
- A joint venture with Progenics Pharmaceuticals, Inc. for
the development of PSMA for immunotherapy for prostate and
other cancers.
Because our collaborative partners are responsible for certain of our sales,
marketing, manufacturing and distribution activities, these activities are
outside our direct control. There can be no assurance that our partners will
perform their obligations under these arrangements with the Company. In the
event that our collaborative partners do not successfully market and sell our
products, or breach their obligations under the above agreements, the successful
commercialization of Quadramet and ProstaScint would not be achieved or would be
delayed, and new product development could be inhibited, which could have a
material adverse effect on our business, financial condition and results of
operations.
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There can be no assurance that we will be able to maintain our existing
collaborative arrangements; if they expire or are terminated, there can be no
assurance that they will be renewed, or that new arrangements will be available
on acceptable terms, if at all. In addition, there can be no assurance that any
new arrangements or renewals of existing arrangements will be successful, that
the parties to any new or renewed agreements will perform their obligations
thereunder, or that any potential collaborators will not compete with us.
There can also be no assurance that our existing or future collaborations
will lead to the development of product candidates or technologies with
commercial potential, that we will be able to obtain proprietary rights or
licenses for proprietary rights for our product candidates or technologies
developed in connection with these arrangements, or that we will be able to
ensure the confidentiality of proprietary rights and information developed in
such arrangements or prevent the public disclosure thereof.
Limited Sales, Marketing and Distribution Capabilities
We have limited internal sales, marketing and distribution capabilities. We
depend on Berlex for the sales, marketing and distribution of Quadramet in the
United States, and on BARD for the sale and marketing of ProstaScint. In
locations outside the United States, we have not established a selling presence.
If we are unable to establish and maintain significant sales, marketing and
distribution efforts, either internally or through arrangements with third
parties, our business, financial condition and results of operations could be
materially adversely effected.
We have limited marketing history for our products:
- ProstaScint was approved for marketing by the FDA in
October 1996, and commercially launched in February 1997.
ProstaScint sales have experienced growth since product
launch. However, there can be no assurance that such
growth will continue; and
- Quadramet was approved for marketing by the FDA in March 1997 and
launched by DuPont in June 1997. Quadramet sales during the
period from initial launch were below the levels of minimum
royalty payments we recorded under our agreement with DuPont.
Growth during early months was limited by the need for hospitals
to obtain license amendments under federal and state law to
receive and handle this new radioactive product. In addition,
initial marketing efforts by DuPont were directed primarily to
nuclear medicine physicians who directly administer the product
to patients. While we believe this approach was necessary to
generate product understanding, marketing to primary caregivers
for likely candidates for treatment with Quadramet is necessary
for extensive penetration into the market. Berlex maintains a
sales force which calls on the physician oncological community;
however, there is no significant experience with sales efforts
for Quadramet and there can be no assurance that sales efforts
will be successful.
The failure of our marketing efforts to achieve commercial success would
have a material adverse effect on our business and results of operations.
Risks Associated with Manufacturing; Third-Party Manufacturers' Dependence on
Single Source Suppliers; Need to Comply with Manufacturing Regulations
Our products must be manufactured either internally or through third-party
manufacturers in compliance with regulatory requirements and at acceptable
costs.
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While we believe that our manufacturing operations currently address our
needs for the production of our products, there can be no assurance that we will
be able to continue to manufacture, arrange for manufacture on a commercially
reasonable basis, or successfully outsource the manufacturing of our products.
If we are unable to successfully manufacture or arrange for the manufacture of
our products and product candidates, there would be a material adverse effect on
our business, financial condition and results of operations.
Quadramet is manufactured by DuPont pursuant to an agreement with both
Berlex and CYTOGEN. Certain components of Quadramet, particularly Samarium-153
and EDTMP, are provided to DuPont by outside suppliers. Due to radioactive
decay, Samarium-153 must be produced on a weekly basis. On one occasion, DuPont
was unable to manufacture Quadramet on a timely basis due to the failure of a
supplier to provide Samarium-153. If DuPont cannot obtain sufficient quantities
of such components on commercially reasonable terms, or in a timely manner, it
would be unable to manufacture Quadramet on a timely and cost-effective basis
which could have a material adverse effect on our business, financial condition
and results of operations. Alternative sources for these components may not be
readily available. If DuPont were to lose its sources of supply for such
components, production of Quadramet would be interrupted, which could have a
material adverse effect on our business, financial condition and results of
operations.
The Company and its third party manufacturers are required to adhere to FDA
regulations setting forth requirements for current Good Manufacturing Practices
("cGMP") and similar regulations in other countries, which include extensive
testing, control and documentation requirements. Ongoing compliance with cGMP,
labeling and other applicable regulatory requirements is monitored through
periodic inspections and market surveillance by state and federal agencies,
including the FDA, and by comparable agencies in other countries. Failure of the
Company and its third-party manufacturers to comply with applicable regulations
could result in sanctions being imposed on us, including fines, injunctions,
civil penalties, failure of the government to grant premarket clearance or
premarket approval of drugs, delays, suspension or withdrawal of approvals,
seizures or recalls of products, operating restrictions and criminal
prosecutions.
Risks Associated with Reimbursement by Third-Party Payors
Our business, financial condition and results of operations will continue
to be affected by the efforts of governments and other third-party payors to
contain or reduce the costs of healthcare through various means. There have
been, and we expect that there will continue to be, a number of federal and
state proposals to implement government control of pricing and profitability of
therapeutic and diagnostic imaging agents such as our products. In addition, an
emphasis on managed increases possible pressure on pricing of these products.
While we cannot predict whether such legislative or regulatory proposals will be
adopted or the effects such proposals or managed care efforts may have on our
business, the announcement of such proposals and the adoption of such proposals
or efforts could have a material adverse effect on our business, financial
condition and results of operations. Further, to the extent such proposals or
efforts have a material adverse effect on other companies that are prospective
corporate partners for the Company, our ability to establish strategic alliances
may be materially and adversely affected.
Sales of our products depend in part on the availability of reimbursement
to the consumer from third-party payors, including Medicare, Medicaid, and
private health insurance plans. Third-party payors are increasingly challenging
the prices charged for medical products and services. There can be no assurance
that our products will be considered cost-effective and that reimbursement to
consumers will continue to be available, or will be sufficient to allow us to
sell our products on a competitive basis. Approval of our products for
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reimbursement by a third party payor may depend on a number of factors,
including the payor's determination that our products are clinically useful and
cost-effective, medically necessary and not experimental or investigational.
Reimbursement is determined by each payor individually and in specific cases.
The reimbursement process can be time consuming and costly. If we cannot secure
adequate third party reimbursement for our products, there would be a material
adverse effect on our business, financial condition and results of operations.
Intense Competition in the Biotechnology and Pharmaceutical Industries
The biotechnology and pharmaceutical industries are subject to intense
competition from large pharmaceutical, biotechnology and other companies, as
well as universities and research institutions.
Many of these competitors have, compared to us, substantial advantages with
respect to their:
- Financial, marketing, sales, manufacturing, distribution and
technological resources;
- Sales and marketing expertise;
- Distribution channels;
- Experience in establishing third-party reimbursement for their
products;
- Research and development expertise;
- Experience in conducting clinical trials;
- Experience in regulatory matters;
- Manufacturing efficiency; and
- Name recognition.
Due to this intensely competitive environment, there can be no assurance
that we will be able to compete effectively against such existing or potential
competitors or that competition will not have a material adverse effect on our
business, financial condition and results of operations.
Quadramet competes with other more traditional treatments or therapies,
such as:
- External beam radiation;
- Chemotherapy agents;
- Narcotic analgesics; and
- Radiopharmaceuticals.
In addition, certain of our competitors may be in the process of seeking
FDA or foreign regulatory approval for their own products, which compete
directly or indirectly with ours.
We are highly dependent upon proprietary technology and seek to protect
such technology through a combination of patents, licenses and trade secrets. We
have applied for, obtained and licensed patents for certain proprietary aspects
of our technology and processes in the U.S. and other countries. We are
particularly dependent upon the enforceability of our license with Dow with
respect to Quadramet. There can be no assurance that our owned and licensed
patents will prove to be enforceable or that additional patents will be issued.
Neither can assurance be given that the technologies we use do not infringe upon
the proprietary rights of others, although we are not aware of any such
infringement or any adverse claim. Insofar as we rely in part on trade secrets
and unpatented know-how to maintain our competitive position, there can be no
assurance that others will not independently develop similar or superior
technologies or that our trade secrets and know-how will not become known to
others. We could incur substantial costs in seeking enforcement of our patents
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against infringement or preventing unauthorized use of our trade secrets by
others, or in defending patent infringement claims brought against the Company.
Our success depends, in part, on our ability, and the ability of our
collaborators or licensors, to obtain protection for products and technologies
under United States and foreign patent laws, to preserve trade secrets, and to
operate without infringing the proprietary rights of third parties. Because of
the substantial length of time and expense associated with development of new
products, the biopharmaceutical industry places considerable importance on
obtaining, and maintaining, patent and trade secret protection for new
technologies, products and processes. We have obtained rights to certain patents
and patent applications and may obtain or seek rights from third parties to
additional patents and patent applications. There can be no assurance that
patent applications relating to our products or technologies will result in
patents being issued, that any issued patents will afford us adequate
protection, or that such patents will not be challenged, invalidated, infringed
or circumvented. Furthermore, there can be no assurance that others have not
developed, or will not develop, similar products or technologies that will
compete with ours without infringing upon our intellectual property rights.
Legal standards relating to the scope of claims and the validity of patents
in the biopharmaceutical industry are uncertain and still evolving, and no
assurance can be given as to the degree of protection that will be afforded any
patents we are issued or license from others. There can be no assurance that, if
challenged by others in litigation, the patents we have been assigned or have
licensed from others will not be found invalid. There can be no assurance that
our activities would not infringe patents owned by others. Defense and
prosecution of patent matters can be expensive and time-consuming and,
regardless of whether the outcome is favorable to us, can result in the
diversion of substantial financial, management and other resources. An adverse
outcome could:
- Subject us to significant liability to third parties;
- Require us to cease any related research and development activities
and product sales; or
- Require us to obtain licenses from third parties.
No assurance can be given that any licenses required under any such patents
or proprietary rights would be made available on terms acceptable to us, if at
all. Moreover, the laws of certain countries may not protect our proprietary
rights to the same extent as United States law.
Our success also depends on the skill, knowledge, and experience of our
scientific and technical personnel. To help protect our rights, we require all
employees, consultants, advisors and collaborators to enter into confidentiality
agreements that require disclosure, and in most cases, assignment to us, of
their ideas, developments, discoveries and inventions, and that prohibit the
disclosure of confidential information to anyone outside the Company. There can
be no assurance, however, that these agreements will provide adequate protection
for our trade secrets, know-how or other proprietary information in the event of
any unauthorized use or disclosure.
Product Development
Product development involves a high degree of risk. There can be no
assurance that the product candidates we develop, pursue or offer will prove to
be safe and effective, will receive the necessary regulatory approvals or will
ultimately achieve market acceptance. These product candidates will require
substantial additional investment, laboratory development, clinical testing and
regulatory approvals prior to their commercialization. There can be no assurance
that we will not experience difficulties that could delay or prevent the
successful development, introduction and marketing of new products. If we are
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unable to successfully develop and commercialize products on a timely basis or
at all, or achieve market acceptance of such products, there could be a material
adverse effect on our business, financial condition and results of operations.
Before we obtain regulatory approvals for the commercial sale of any of our
products under development, we must demonstrate through preclinical studies and
clinical trials that the product is safe and efficacious for use in each target
indication. The results from preclinical studies and early clinical trials may
not be predictive of results that will be obtained in large-scale testing, and
there can be no assurance that the our clinical trials will demonstrate the
safety and efficacy of any products or will result in marketable products. A
number of companies in the biotechnology industry have suffered significant
setbacks in advanced clinical trials, even after promising results in earlier
trials. In addition, there can be no assurance that product issues will not
arise following successful clinical trials and FDA approval.
The rate of completion of clinical trials also depends on the rate of
patient enrollment. Patient enrollment depends on many factors, including the
size of the patient population, the nature of the protocol, the proximity of
patients to clinical sites and the eligibility criteria for the study. Delays in
planned patient enrollment may result in increased costs and delays, which could
have a material adverse effect on our business, financial condition and results
of operations.
Government Regulation
Any products tested, manufactured or distributed by us or on our behalf
pursuant to FDA clearances or approvals are subject to pervasive and continuing
regulation by numerous regulatory authorities, including primarily the FDA.
Changes in existing requirements or adoption of new requirements or policies
could adversely affect our ability to comply with regulatory requirements. If we
fail to comply with regulatory requirements, there could be a material adverse
effect on our business, financial condition and results of operations. There can
be no assurance that we will not be required to incur significant costs to
comply with laws and regulations in the future or that laws or regulations will
not have a material adverse effect upon our business, financial condition and
results of operations.
Numerous federal, state and local governmental authorities (each a
"Regulatory Agency"), principally the FDA, and similar agencies in other
countries, regulate the preclinical testing, clinical trials, manufacture and
promotion of any compounds we or our collaborative partners develop and the
manufacturing and marketing of any resulting drugs. The drug development and
regulatory approval process is lengthy, expensive, uncertain and subject to
delays.
- Any compound we or our collaborative partners develop must
receive Regulatory Agency approval before it may be
marketed as a drug in a particular country.
- The regulatory process, which includes preclinical testing
and clinical trials of each compound in order to establish
its safety and efficacy, varies from country to country,
can take many years and requires the expenditure of
substantial resources.
- In all circumstances, approval of the use of previously
unapproved radioisotopes in certain of our products
requires approval of either the Nuclear Regulatory
Commission or equivalent state regulatory agencies. A
radioisotope is an unstable form of an element which
undergoes radioactive decay, thereby emitting radiation
which may be used, for example, to image or destroy
harmful growths or tissue. There can be no assurance that
such approvals will be obtained on a timely basis, or at
all.
- Data obtained from preclinical and clinical activities are
susceptible to varying interpretations which could delay,
limit or prevent Regulatory Agency approval.
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- Delays or rejections may be encountered based upon changes
in Regulatory Agency policy during the period of drug
development and/or the period of review of any application
for Regulatory Agency approval for a compound. These
delays could adversely affect the marketing of any
products we or our collaborative partners develop, impose
costly procedures upon our activities, diminish any
competitive advantages we or collaborative partners may
attain and adversely affect our ability to receive
royalties.
There can be no assurance that, even after such time and expenditures,
Regulatory Agency approvals will be obtained for any compounds developed by or
in collaboration with the Company. Moreover, if Regulatory Agency approval for a
drug is granted, such approval may entail limitations on the indicated uses for
which it may be marketed that could limit the potential market for any such
drug. Furthermore, if and when such approval is obtained, the marketing,
manufacture, labeling, storage and record keeping related to our products would
remain subject to extensive regulatory requirements. Discovery of previously
unknown problems with a drug, its manufacture, or its manufacturer may result in
restrictions on such drug, manufacture or manufacturer, including withdrawal of
the drug from the market. Failure to comply with regulatory requirements could
result in fines, suspension of regulatory approvals, operating restrictions and
criminal prosecution.
The U. S. Food, Drug and Cosmetics Act requires that our products be
manufactured in FDA registered facilities subject to inspection. The
manufacturer must be in compliance with current good manufacturing practices,
or, cGMP, which imposes certain procedural and documentation requirements upon
us, and our manufacturing partners with respect to manufacturing and quality
assurance activities. Noncompliance with cGMP can result in, among other things,
fines, injunctions, civil penalties, recalls or seizures of products, total or
partial suspension of production, failure of the government to grant premarket
clearance or premarket approval for drugs, withdrawal of marketing approvals and
criminal prosecution. If we or our manufacturing partners were to fail to comply
with the requirements of cGMP, there could be a material adverse effect on the
Company's business, financial condition and results of operations.
Attraction and Retention of Key Personnel
We are highly dependent on the principal members of our management and
scientific staff, the loss of whose services might significantly delay or
prevent the achievement of research, development or strategic objectives. Our
success depends on our ability to retain key employees and to attract additional
qualified employees. Competition for such personnel is intense, and there can be
no assurance that we will be able to retain existing personnel and to attract,
assimilate or retain additional highly qualified employees in the future.
We have an employment agreement with our President and Chief Executive
Officer, H. Joseph Reiser, Ph.D., which provides for bonuses and vesting of
options for the purchase of shares of common stock based on continued employment
and on the achievement of performance objectives defined by the Board of
Directors. We do not have employment agreements with our other key personnel. If
we are unable to hire and retain personnel in key positions, there could be a
material adverse effect on the Company's business, financial condition and
results of operations.
Potential Inadequacy of Product Liability Insurance
Our business is subject to product liability risks inherent in the testing,
manufacturing and marketing of our products. There can be no assurance that
product liability claims will not be asserted against us, our collaborators or
licensees. While we currently maintain product liability insurance in amounts we
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believe are adequate, there can be no assurance that such coverage will be
adequate to protect us against future product liability claims or that product
liability insurance will be available to us in the future on commercially
reasonable terms, if at all. Furthermore, there can be no assurance that we will
be able to avoid significant product liability claims and adverse publicity.
Consequently, a product liability claim or other claim with respect to uninsured
or underinsured liabilities could have a material adverse effect on our
business, financial condition and results of operations.
Environmental Regulation
We are subject to a variety of local, state and federal government
regulations relating to:
- Storage;
- Discharge;
- Handling;
- Emission;
- Generation;
- Manufacture; and
- Disposal
of toxic, infectious or other hazardous substances used to manufacture our
products. If we fail to comply with these regulations, we could be subject to
significant liabilities, which could have a material adverse effect on our
business, financial condition and results of operations.
Volatility of Stock Price
The market prices for securities of biotechnology and pharmaceutical
companies have historically been highly volatile, and the market has from time
to time experienced significant price and volume fluctuations that are unrelated
to the operating performance of particular companies. The market price of our
common stock has fluctuated over a wide range and may continue to fluctuate for
various reasons, including, but not limited to, announcements concerning the
Company or our competitors regarding:
- Results of clinical trials;
- Technological innovations or new commercial products;
- Changes in governmental regulation or the status of our regulatory
approvals or applications;
- Changes in earnings;
- Changes in health care policies and practices;
- Developments or disputes concerning proprietary rights;
- Litigation or public concern as to safety of the our potential
products; and
- Changes in general market conditions.
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Impact of Anti-takeover Provisions on the Market Price of Common Stock
We have adopted various anti-takeover provisions which may affect the
market price of the common stock.
Our Board of Directors has the authority, without further action by the
holders of common stock, to issue from time to time, up to 5,200,000 additional
shares of preferred stock in one or more classes or series, and to fix the
rights and preferences of such preferred stock. Pursuant to these provisions, we
have implemented a Stockholder Rights Plan by which one preferred stock purchase
right is attached to each share of common stock, as a means to deter coercive
takeover tactics and to prevent an acquirer from gaining control of the Company
without some mechanism to secure a fair price for all of our stockholders if an
acquisition was completed. These rights will be exercisable if a person or group
acquires beneficial ownership of 20% or more of our common stock and can be made
exercisable by action of our Board of Directors if a person or group commences a
tender offer which would result in such person or group beneficially owning 20%
or more of our common stock. Each right will entitle the holder to buy one
one-thousandth of a share of a new series of junior participating preferred
stock for $20. If any person or group becomes the beneficial owner of 20% or
more of CYTOGEN 's common stock (with certain limited exceptions), then each
right not owned by the 20% stockholder will entitle its holder to purchase, at
the right's then current exercise price, common shares having a market value of
twice the exercise price. In addition, if after any person has become a 20%
stockholder, we are involved in a merger or other business combination
transaction with another person, each right will entitle its holder (other than
the 20% stockholder) to purchase, at the right's then current exercise price,
common shares of the acquiring company having a value of twice the right's then
current exercise price.
We are subject to provisions of Delaware corporate law which, subject to
certain exceptions, will prohibit us from engaging in any "business combination"
with a person who, together with affiliates and associates, owns 15% or more of
our common stock (an "Interested Stockholder") for a period of three years
following the date that such person became an Interested Stockholder, unless the
business combination is approved in a prescribed manner.
These provisions of the Stockholder Rights Plan, our Certificate of
Incorporation, and of Delaware law may have the effect of delaying, deterring or
preventing a change in control of the Company, may discourage bids for the
common stock at a premium over market price and may adversely affect the market
price, and the voting and other rights of the holders, of the common stock.
Impact of Shares Eligible for Future Sale on the Market Price of the Common
Stock
A large number of shares of common stock already outstanding, or issuable
upon exercise of options and warrants, are eligible for resale, which may
adversely affect the market price of the common stock. As of March 31, 1999, the
Company had 65,112,000 shares of common stock outstanding. An additional
7,446,099 shares of common stock are issuable upon the exercise of outstanding
options and warrants (including 300,000 shares issuable upon exercise of
warrants granted to Kingsbridge and the May Davis Group, Inc., placement agent
for the Equity Line Agreement. Substantially all of such shares subject to
outstanding options and warrants will, when issued upon exercise thereof, be
available for immediate resale in the public market pursuant to currently
effective registration statements under the Securities Act of 1933, as amended,
or pursuant to Rule 701 promulgated thereunder.
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PRICE RANGE OF OUR COMMON STOCK
Our common stock is currently quoted on the Nasdaq Stock Market under
the symbol "CYTO." For each quarter since the beginning of 1996, the high and
low sale prices for our common stock, as reported by Nasdaq, were as follows:
1996 High Low
- ---- ---- ---
First Quarter................................................ 10 5 1/8
Second Quarter............................................... 9 1/2 5 13/16
Third Quarter................................................ 9 5 3/16
Fourth Quarter............................................... 7 1/8 4 7/16
1997
- ----
First Quarter................................................ 6 1/2 4 3/4
Second Quarter............................................... 6 5/16 4 11/16
Third Quarter................................................ 5 1/16 3 5/8
Fourth Quarter............................................... 4 3/4 1 7/16
1998
- ----
First Quarter................................................ 2 7/16 1 1/4
Second Quarter............................................... 2 5/8
Third Quarter................................................ 2 9/16 3/4
Fourth Quarter............................................... 1 7/8 11/16
1999
- ----
First Quarter................................................ 1 1/2 14/16
Second Quarter............................................... 2 7/8
DIVIDEND POLICY
We have never paid or declared any cash dividends on our common stock. We
currently intend to retain any future earnings for our business and, therefore,
do not anticipate paying cash dividends in the foreseeable future. Future
dividends, if any, will depend on, among other things, our results of
operations, capital requirements, restrictions in loan agreements and on such
other factors as our Board of Directors, in its discretion, may consider
relevant.
USE OF PROCEEDS
We intend to use substantially all of the proceeds from the sale of common
stock hereunder for general corporate purposes.
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Important Factors Regarding Forward Looking Statements
Certain discussions set forth above regarding the development and
commercialization of our products and technologies are forward looking
statements that are subject to risks and uncertainties. The statements under
this caption are intended to serve as cautionary statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Certain statements in
this prospectus are forward-looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended. The Company's actual results could differ materially from those
anticipated in such forward-looking statements as a result of certain factors,
including those discussed in Risk Factors, listed below or discussed elsewhere
in this prospectus, and in the Company's filings with the Securities and
Exchange Commission:
(i) the Company's ability to continue as a going concern if the Company is
unable to raise sufficient funds or generate sufficient cash flows from
operations to cover the cost of its operations; (ii) the Company's ability to
access the capital markets in the near term and in the future for continued
funding of existing projects and for the pursuit of new projects; (iii) the
Company's ability to complete its restructuring plans timely and in a way that
permits the Company to operate effectively; (iv) the ability to attract and
retain personnel needed for business operations and strategic plans; (v) the
timing and results of clinical studies, and regulatory approvals; (vi) market
acceptance of the Company's products, including programs designed to facilitate
use of the products, such as the PIE Program; (vii) demonstration over time of
the efficacy and safety of the Company's products; (vii) the degree of
competition from existing or new products; (ix) the decision by the majority of
public and private insurance carriers on whether to reimburse patients for the
Company's products; (x) the profitability of its products; (xi) the ability to
attract, and the ultimate success of, strategic partnering arrangements,
collaborations, and acquisition candidates; (xii) the ability of the Company and
its partners to identify new products as a result of those 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; and (xiii) the success of the Company in establishing marketing
programs and in obtaining marketing approvals in Canada and in European
countries, in achieving milestones and achieving sales of products resulting in
royalties; and (xiv) the ability to protect and practice the Company's
intellectual property, including patents and know-how.
Any forward-looking statements are made as of the date of this prospectus
and the Company assumes no obligation to update any such forward-looking
statements or to update the factors which could cause actual results to differ
materially from those anticipated in such forward-looking statements.
WHERE YOU CAN FIND MORE INFORMATION
The Company has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement on Form S-3 under the
Securities Act with respect to the shares of common stock offered hereby. This
prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto. For further information with
respect to the Company and the common stock offered hereby, reference is made to
the Registration Statement and the exhibits and schedules filed therewith.
Statements contained in this prospectus as to the contents of any contract or
any other document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference. A copy of the Registration Statement may be
inspected without charge at the offices of the Commission in Washington, D.C.
20549, and copies of all or any part of the Registration Statement may be
obtained from the Public Reference Section of the Commission, Washington, D.C.
20549 upon the payment of the fees prescribed by the Commission. The Commission
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maintains a Web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants, such as the
Company, that file electronically with the Commission. The Company also
maintains a Web site (http://www.cytogen.com).
Plan of Distribution
We plan to offer shares of common stock registered hereby directly to The
State of Wisconsin Investment Board at a discount of % from the public offering
price.
Our common stock is listed on the Nasdaq Stock Market under the symbol
"CYTO."
We will bear all expenses of registering the common stock hereunder.
The terms of any sales of any of the common stock registered hereby will be
set forth in a final prospectus filed with the Securities and Exchange
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission by the Company
and are incorporated herein by reference in this Prospectus and made a part
hereof (i) the Company's Annual Report on Form 1O-K for the year ended December
31, 1998; (ii) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999; and (ii) all documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering of the Common Stock shall be deemed
to be incorporated by reference in this Prospectus and to be a part hereof from
the date of filing such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference, other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests for such documents
should be submitted in writing to Cytogen Corporation, Attention: Investor
Relations, 600 College Road East, CN 5308, Princeton New Jersey 08540-5308,
Telephone:(609) 750-8224.
--------------------
No person has been authorized in connection with the offering made hereby
to give any information. or make any representation not contained in this
Prospectus and, if given or made, such information or representation must not be
relied upon as having been authorized by the Company or any other person. This
Prospectus does not constitute an offer to sell or solicitation of any offer to
buy any of the Securities offered hereby in any jurisdiction in which it is
unlawful to make such offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information contained herein is correct as of any date
subsequent to the date hereof
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LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Donald F. Crane, Jr., esq.
EXPERTS
The audited consolidated financial statements of the Company as of December
31, 1998 and 1997, and for each of the three years in the period ended December
31, 1998 incorporated by reference in this Prospectus and registration statement
have been audited by Arthur Andersen LLP, independent public accounts, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
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Shares
CYTOGEN CORPORATION
Common Stock
--------------------
PROSPECTUS
--------------------
_________ __, 1999
<PAGE>
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution
The following is an itemized statement of the estimated amounts of all
expenses payable by the Registrant in connection with the registration of the
common stock offered hereby, other than underwriting discounts and commissions:
Registration Fee-Securities and Exchange Commission................ $ 1,955
Blue Sky fees and expenses......................................... -
Accountants' fees and expenses..................................... 5,000
Legal fees and expenses............................................ 10,000
Printing and engraving expenses.................................... -
Transfer agent and registrar fees.................................. 250
Miscellaneous...................................................... 500
Total......................................................... $17,705
=======
ITEM 15. Indemnification of Directors and Officers
Section 145(a) of the General Corporation Law of the State of Delaware (the
"DGCL") provides that a Delaware corporation may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no cause to believe his conduct was unlawful.
Section 145(b) of the DGCL provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted under similar standards, except that no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation unless and
only to the extent that the court in which such action or suit was brought shall
determine that despite the adjudication of liability, such person is fairly and
reasonably entitled to be indemnified for such expenses which the court shall
deem proper.
Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action, suit
or proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue, or matter therein, he shall be indemnified against any expenses
actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section145 shall not be deemed exclusive of any
rights to which the indemnified party may be entitled; and that the corporation
may purchase and maintain insurance on behalf of a director or officer of the
corporation against any liability asserted against him or incurred by him in any
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such capacity or arising out of his status as such whether or not the
corporation would have the power to indemnify him against such liabilities under
Section 145.
Section 102(b)(7) of the DGCL provides that a corporation in its original
certificate of incorporation or an amendment thereto validly approved by
stockholders may eliminate or limit personal liability of members of its board
of directors or governing body for breach of a director's fiduciary duty.
However, no such provision may eliminate or limit the liability of a director
for breaching his duty of loyalty, failing to action good faith, engaging in
intentional misconduct or knowingly violating a law, paying a dividend or
approving a stock repurchase which was illegal, or obtaining an improper
personal benefit. A provision of this type has no effect on the availability of
equitable remedies, such as injunction or rescission, for breach of fiduciary
duty. The Company's Restated Certificate of Incorporation contains such a
provision.
The Company's Certificate of Incorporation and By-Laws provide that the
Company shall indemnify officers and directors and, to the extent permitted by
the Board of Directors, employees and agents of the Company, to the full extent
permitted by and in the manner permissible under the laws of the State of
Delaware. In addition, the By-Laws permit the Board of Directors to authorize
the Company to purchase and maintain insurance against any liability asserted
against any director, officer, employee or agent of the Company arising out of
his capacity as such.
ITEM 16. Exhibits and Financial Statement Schedules
(a) Exhibits
3.1 -- Certificate of Incorporation of the Registrant, restated and
amended. Filed as an exhibit to Form 10-Q Quarterly Report for the
quarter ended June 30, 1996 (Commission File No. 0-14879) and
incorporated herein by reference.
3.2 -- By-Laws of the Registrant, as amended. Filed as an exhibit to
Form S-4 Registration Statement (No. 33-88612) and incorporated
herein by reference.
4.1 -- Specimen Certificate for common stock of the Registrant. Filed as
an exhibit to Amendment No. 1 to Form S-1 Registration Statement
(No. 33-5533) and incorporated herein by reference.
5.1 -- Opinion of Donald F. Crane, Jr., esq. Filed herewith.
10.1 -- Stock Exchange Agreement between the Registrant and Prostagen, Inc.
Filed herewith.
10.2 -- Limited Liability Company Agreement of PSMA Development Company LLC,
dated June 15, 1999. Filed herewith. Confidential treatment has been
requested. The copy filed as an exhibit omits the information subject
to the confidentiality request.
10.3 -- PSMA/PSMP License Agreement by and among Progenics Pharmaceuticals,
Inc., Cytogen Corporation, PSMA Development Company LLC dated June 15,
1999. Filed herewith. The copy filed as an exhibit omits the
information subject to the confidentiality request.
21.1 -- List of Subsidiaries. Filed as an exhibit to Form 10-K Annual
Report for the year ended December 31, 1998 (Commission File No.
0-14879)and incorporated herein by reference.
23.1 -- Consent of Arthur Andersen LLP. Filed herewith.
II-2
<PAGE>
23.2 -- Consent of counsel as to legal opinion (included in Exhibit 5.1)
24.1 -- Power of Attorney (included on page II-5)
- -----------------
ITEM 17. Undertakings
The undersigned Registrant hereby undertakes to provide to the
underwriters, at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at the time shall be deemed to be the initial bona fide
offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Princeton, State of New
Jersey, on July 19,1999.
CYTOGEN CORPORATION
By: /s/ H. Joseph Reiser
-----------------------
H. Joseph Reiser
Chief Executive Officer
and President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints H. Joseph Reiser, Jane M. Maida, or Donald F.
Crane, Jr., and each of them, as his or hers true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) and supplements to this
registration statement or any prospectus included herein, and to file the same,
with the Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons on July 19,
1999 in the capacities indicated:
Signature Title Date
- --------- ----- ----
/s/ H. Joseph Reiser Chief Executive Officer and July 19, 1999
- -----------------------
H. Joseph Reiser President (Principal Executive
Officer and Director)
/s/ Jane M. Maida Chief Accounting Officer July 19, 1999
- -----------------
Jane M. Maida (Principal Accounting Officer)
/s/ John E. Bagalay, Jr. Director July 19, 1999
- ------------------------
John E. Bagalay, Jr.
/s/ Ronald J. Brenner Director July 19, 1999
- ---------------------
Ronald J. Brenner
/s/ Stephen K. Carter Director July 19, 1999
- ---------------------
Stephen K. Carter
/s/ James A. Grigsby Chairman July 19, 1999
- ---------------------
James A. Grigsby
II-4
<PAGE>
/s/ Robert F. Hendrickson Director July 19, 1999
- --------------------------
Robert F. Hendrickson
II-5
EXHIBIT 5.1
July 19, 1999
Cytogen Corporation
600 College Road East
Princeton, New Jersey 08540
Ladies and Gentlemen:
The undersigned has acted as counsel to Cytogen Corporation, a Delaware
corporation (the "Company"), in connection with the preparation and filing by
the Company of a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Act"), for the
registration of up to $5 million in shares of common stock, $.01 par value per
share (the "Common Stock"), of the Company.
I have examined and am familiar with originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and officers of the Company and such other
instruments as I have deemed necessary or appropriate as a basis for the
opinions expressed below, including the Registration Statement, the Restated
Certificate of Incorporation of the Company and the By-laws of the Company.
Based on the foregoing, I am of the opinion that the Common Stock issuable
under the Registration Statement has been duly authorized and reserved for
issuance and, when duly issued and delivered, will be validly issued, fully paid
and nonassessable.
I hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement. In giving such consent, I do not thereby admit
that we come within the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Securities and Exchange
Commission thereunder.
I express no opinion as to the laws of any jurisdiction other than the
general corporate laws of the State of Delaware and the federal law of the
United States of America. The foregoing opinion is rendered as of the date
hereof, and I assume no obligation to update such opinion to reflect any facts
or circumstances which may hereafter come to my attention or any changes in the
law which may hereafter occur.
Very truly yours,
/s/ Donald F. Crane
-------------------------
Donald F. Crane, Jr.
Exhibit 10.1
STOCK EXCHANGE AGREEMENT
among
CYTOGEN CORPORATION
and
THE STOCKHOLDERS AND DEBTHOLDERS
OF PROSTAGEN, INC.
Dated as of June 15, 1999
<PAGE>
Table of Contents
ARTICLE I SALE AND PURCHASE OF SHARES.........................................1
Section 1.1. Closing.....................................................1
Section 1.2. Deliveries by the Sellers...................................1
Section 1.3. Deliveries by the Purchaser.................................1
Section 1.4. Other Closing Matters.......................................2
Section 1.5. Post Closing Adjustment.....................................2
Section 1.6. Contingent Payments.........................................4
Section 1.7. Cancellation................................................5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLERS......................5
Section 2.1. Organization................................................5
Section 2.2. Capitalization..............................................6
Section 2.3. Binding Nature of this Agreement............................6
Section 2.4. Consents and Approvals; No Violations.......................7
Section 2.5. Financial Statements........................................7
Section 2.6. Absence of Certain Changes..................................8
Section 2.7. No Undisclosed Liabilities..................................8
Section 2.8. Litigation..................................................9
Section 2.9. No Default..................................................9
Section 2.10.Permits; Compliance with Applicable Law.....................9
Section 2.11.Taxes and Tax Returns.......................................9
Section 2.12.Employee Benefit Plans.....................................13
Section 2.13.Intellectual Property......................................15
Section 2.14.Transactions with Affiliates...............................15
Section 2.15.Contracts..................................................15
Section 2.16.Labor Relations............................................16
Section 2.17.Environmental..............................................16
Section 2.18.Ownership of Assets........................................18
Section 2.19.Insurance..................................................18
Section 2.20.Real Property..............................................18
Section 2.21.Share Ownership............................................19
Section 2.22.Investment.................................................19
Section 2.23.Accredited Investor........................................19
Section 2.24.No Misleading Statements...................................20
Section 2.25.No Exclusive Manufacturing Rights..........................20
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PURCHASER .................20
Section 3.1. Organization...............................................20
Section 3.2. Capitalization.............................................20
Section 3.3. Authority Relative to this Agreement.......................21
Section 3.4. Consents and Approvals; No Violations......................21
Section 3.5. SEC Reports; Financial Statements..........................22
Section 3.6. Absence of Certain Changes.................................22
ii
<PAGE>
ARTICLE IV COVENANTS.........................................................22
Section 4.1. Further Assurances.........................................23
Section 4.2. Brokers or Finders.........................................23
Section 4.3. Performance of Obligations.................................23
Section 4.4. Tax Covenants..............................................23
Section 4.5. Employees; Releases........................................23
Section 4.6. NWB Board..................................................24
Section 4.7. Lockup.....................................................24
ARTICLE V SURVIVAL; INDEMNIFICATION..........................................24
Section 5.1. Survival Periods...........................................24
Section 5.2. Indemnification............................................25
Section 5.3. Indemnification Amounts....................................25
Section 5.4. Claims.....................................................26
Section 5.5. Indemnification with Respect to Taxes......................27
Section 5.6. Exclusive Remedy...........................................28
ARTICLE VI MISCELLANEOUS.....................................................28
Section 6.1. Notices....................................................28
Section 6.2. Headings...................................................29
Section 6.3. Counterparts...............................................29
Section 6.4. Entire Agreement; Assignment...............................29
Section 6.5. Governing Law..............................................29
Section 6.6. Specific Performance.......................................30
Section 6.7. Publicity..................................................30
Section 6.8. Binding Nature; No Third Party Beneficiaries...............30
Section 6.9. Severability...............................................30
Section 6.10.Interpretation.............................................30
Section 6.11.Payment of Expenses........................................30
Exhibits
Exhibit A: Allocation
Exhibit B: Registration Rights Agreement
iii
<PAGE>
STOCK EXCHANGE AGREEMENT, dated as of June 15, 1999 among Cytogen
Corporation, a Delaware corporation (the "Purchaser"), and the stockholders and
the holders of certain rights to receive cash (the "Debtholders", and,
collectively, the "Sellers") of Prostagen, Inc., a Delaware corporation (the
"Company").
WHEREAS, the Purchaser has agreed to acquire from the stockholders, and the
stockholders have agreed to sell to the Purchaser, all of the outstanding shares
of common stock, par value $0.001 per share, of the Company (the "Company
Shares"), and the Debtholders have agreed to cancel such debt, in each case in
exchange for shares of common stock, par value $.01 per share (the "Purchaser
Shares"), of the Purchaser, on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
SALE AND PURCHASE OF SHARES
Section 1.1. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") is taking place simultaneously with the execution of
this Agreement, at the offices of Dewey Ballantine LLP, 1301 Avenue of the
Americas, New York, New York. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
Section 1.2. Deliveries by the Sellers. At the Closing, the Sellers shall
deliver or cause to be delivered to the Purchaser the following:
(a) Certificates for all of the outstanding Company Shares, duly endorsed
in blank, or accompanied by stock powers duly executed in blank, with any
necessary stock transfer tax stamps attached or provided for;
(b) Cancelled demand promissory notes held by Max Link, S. Leslie Misrock
and CC Consulting A/S and a release to the Company of the funds held pursuant to
the escrow agreement in favor of Alan Fox;
(c) a certificate of exemption from withholding as provided in Section
1445(b) of the Code (as hereinafter defined) and Treasury Regulation 1.1445-2
(the "FIRPTA Certificate"); and
(d) such other duly executed documents and certificates as the Purchaser
may reasonably request.
Section 1.3. Deliveries by the Purchaser.
(a) At the Closing, or as promptly as practicable thereafter, but not later
than three Nasdaq trading days after the Closing Date, the Purchaser shall
deliver or cause to be delivered to the Sellers certificates representing a
<PAGE>
number of the Purchaser Shares equal to $2 million divided by the Conversion
Number. Such Purchaser Shares shall be allocated among the Sellers in accordance
with Exhibit A to this Agreement.
(i) If the Purchaser Market Value (as defined below) is greater than or
equal to $1-1/32, then the Conversion Number shall be the Purchaser Market
Value.
(ii) If the Purchaser Market Value is less than $1-1/32 and greater than
$31/32, then the Conversion Number shall be $1.
(iii) If the Purchaser Market Value is less than or equal to $31/32 and
greater than $.50, then the Conversion Number shall be the Purchaser Market
Value.
(iv) If the Purchaser Market Value is less than or equal to $.50, then the
Conversion Number shall be $.50.
(v) The Purchaser Market Value shall equal the average of the closing price
of the Purchaser Shares, as reported by Nasdaq, for the ten trading days ending
on the second trading day prior to the Closing Date.
(b) Notwithstanding anything in this Section 1.3 to the contrary, the
Purchaser shall not be required to deliver any fractional Purchaser Shares. In
lieu thereof, amounts delivered under this Section 1.3 to any Company
shareholder shall be rounded to the nearest whole share.
Section 1.4. Other Closing Matters.
(a) The management of Purchaser shall consider the election of S. Leslie
Misrock and Alan Fox to the Purchaser's Board of Directors.
(b) At the Closing, the Purchaser and S. Leslie Misrock, Esq., as
representative for the Sellers (the "Representative"), shall execute the
Registration Rights Agreement in the form of Exhibit B hereto. The Sellers, and
each of them, irrevocably appoint the Representative as their attorney-in-fact
to act for them and in their name in connection with all matters relating to
this Stock Exchange Agreement and the Registration Rights Agreement.
Section 1.5. Post Closing Adjustment. (a) If the Closing Date Cash (as
defined below) is less than $550,000, the Sellers shall pay the difference to
the Purchaser. If the Closing Date Liabilities (as defined below) are more than
$25,000, the Sellers shall pay the difference to the Purchaser. Any payment
shall be accompanied by interest on such amount from the Closing Date to the
date of payment at a floating rate equal to the publicly announced prime lending
rate of Citibank, N.A. Any payment by the Sellers under this Section 1.5 shall
be paid in the Purchaser Shares valued at the Conversion Number.
2
<PAGE>
(b) As promptly as practicable following the Closing Date, but in no event
more than 45 days following the Closing Date, the Purchaser shall prepare and
deliver to the Representative a consolidated balance sheet setting forth the
total assets and total liabilities of the Company and its subsidiaries as of the
Closing Date (the "Closing Date Balance Sheet"), in accordance with clause (f)
below. The Representative and his accountants will be entitled to observe the
preparation of the Closing Date Balance Sheet and shall be granted such
information and access as they may reasonably request in connection therewith.
(c) Unless within 20 days after its receipt of the Closing Date Balance
Sheet, the Representative shall deliver to the Purchaser a statement describing
its objections thereto, the amounts determined in accordance with clause (b)
shall be final and binding for purposes of this Section 1.5.
(d) If the Representative shall deliver the statement referred to in clause
(c) above, the Representative and the Purchaser will use reasonable efforts to
resolve any disputes, but if a final resolution is not reached within 20 days
after the Representative has submitted its objections, any remaining disputes
will be resolved by the Reviewing Accountants. The Reviewing Accountants shall
be instructed to resolve any matters in dispute as promptly as practicable. The
determination of the Reviewing Accountants will be final and binding for
purposes of this Section 1.5.
(e) The Purchaser, on the one hand, and the Sellers, on the other hand,
shall each pay one-half of the fees and expenses of the Reviewing Accountants
and shall cooperate, including by furnishing any information reasonably
requested, with each other and such accounting firm in the resolution of any
disputes. The Sellers shall satisfy such obligation to pay one-half of the
Reviewing Accountant's fees and expenses by causing the Representative to
deliver to the Purchaser a number of Purchaser Shares (rounded to the nearest
whole share) equal to the Seller's portion of such fees and expenses divided by
the Conversion Number.
(f) "Closing Date Cash" will be equal to (i) the total cash and cash
equivalents less (ii) the total current liabilities, in each case set forth on
the Closing Date Balance Sheet finally determined in accordance with this
Section 1.5. "Closing Date Liabilities " will be equal to the total liabilities
(other than current liabilities) set forth on the Closing Date Balance Sheet
finally determined in accordance with this Section 1.5, plus the total amount of
all other liabilities (other than current liabilities reflected on such balance
sheet, and other than contingent liabilities). The Closing Date Balance Sheet
shall be prepared in accordance with U.S. generally accepted accounting
principles ("GAAP") applied on a basis consistent with the accounting principles
used in preparation of the audited balance sheets delivered pursuant to Section
2.5 hereof and in all respects as if the Closing Date were the end of a fiscal
year. The Closing Date Balance Sheet need not include any information which
would not affect the calculation of the Closing Date Cash or the Closing Date
Liabilities.
3
<PAGE>
Section 1.6. Contingent Payments.
(a) The Purchaser shall deliver to the Representative a number of Purchaser
Shares equal to $2 million divided by the Conversion Number (recomputed as of
the date of payment) on the earlier of (x) five days following the filing of a
New Drug Application or Biologic License Application, as the case may be, for
dendritic cell therapy by Northwest Biotherapeutics, Inc. ("NWB") or (y) January
1, 2002.
(b) The Purchaser shall deliver to the Representative a number of Purchaser
Shares equal to $2 million divided by the Conversion Number (recomputed as of
the date of payment) on the earlier of (x) five days following the demonstrated
efficacy of immunotherapy (vaccine or radioimmunotherapy) at the end of Phase II
clinical trials, as evidenced solely by commencement of Phase III clinical
trials or (y) January 1, 2004.
(c) Notwithstanding the foregoing, (1) no payment shall be made under
clause (a)(x) of this Section 1.6 unless at the scheduled time of such payment
the dendritic cell therapy program is continuing and (2) no payment shall be
made under clause (a)(y) or of this Section 1.6 unless at the scheduled time of
such payment the dendritic cell therapy program is continuing and safety has
been demonstrated in clinical trials.
(d) Notwithstanding the foregoing, (1) no payment shall be made under
clause (b)(x) of this Section 1.6 unless at the scheduled time of such payment
the immunotherapy (vaccine or radioimmunotherapy) program is continuing and (2)
no payment shall be made under clause (b)(y) of this Section 1.6 unless at the
scheduled time of such payment the immunotherapy (vaccine or radioimmunotherapy)
program is continuing and safety has been demonstrated in clinical trials.
(e) On the date the payment contemplated by Section 1.6(b) is due, the
Purchaser shall deliver to the Representative a number of Purchaser Shares equal
to $500,000 divided by the Conversion Number at such time as the exclusive
manufacturing right relating to Prostate Specific Membrane Antigen ("PSMA")
granted to Northwest Clinicals LLC ("NWC") shall have been cancelled or made
non-exclusive. Any amount payable pursuant to this Section 1.6(e) shall be
decreased by (x) any amounts paid, payable or which would be payable to any
third party, including NWC, in connection with any such manufacturing right or
the cancellation thereof and (y) with respect to arrangements between NWB, on
the one hand, and the Purchaser or the Company, or both, on the other hand, that
are made with the approval of S. Leslie Misrock, such approval not to be
unreasonably withheld, the excess, if any, of the net present value of the
royalty payments under the license agreement between the Company and the
Purchaser relating to PSMA over the net present value of the royalty payments
under the sublicense relating to such license, between the Company and NWB (net
present value to be calculated using the publicly announced prime rate of
Citibank, N.A.).
(f) On or before the date which is six months from the Closing Date, the
Purchaser shall pay, as set forth in this Section 1.6(f), an amount, if any,
equal to (i) $450,000 divided by the Conversion Number less (ii) the amount of
4
<PAGE>
Unsettled Liabilities. Unsettled Liabilities shall mean any amounts paid,
payable or which would be payable by the Company in respect of the lease on the
Company's office and other space in Allandale, New Jersey. In order to prevent
any double-counting, amounts paid by the Sellers pursuant to Section 1.5
attributable to the matters covered by this Section 1.6(e) shall reduce the
amount of the Unsettled Liabilities on a dollar-for-dollar basis. The first
$60,000 of such payment, if any, shall be paid in cash to S. Leslie Misrock. The
balance, if any, of such payment shall be paid to the Representative in
Purchaser Shares valued at the Conversion Number.
(g) It is understood that certain persons who are not parties to this
Agreement will be entitled to payments under this Section 1.6, as set forth in
Exhibit A. In order to prevent any double-counting, any payments under this
Section 1.6 shall be reduced by such payments.
Section 1.7. Cancellation. Effective as of immediately prior to the
Closing, all rights of the Sellers (or any affiliates) under (a) any option,
warrant or right to acquire any securities of the Company and (b) any notes,
bonds, indentures or other evidences of indebtedness, are hereby cancelled, with
no further obligations of the Company, the Purchaser or any affiliate
thereunder.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers severally and not jointly represent and warrant to the
Purchaser as follows, except as set forth in the disclosure schedule being
delivered by the Sellers to the Purchaser concurrently herewith (the "Disclosure
Schedule"):
Section 2.1. Organization. Each of the Company and its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has all requisite corporate power
and authority and all necessary governmental approvals to own, lease and operate
its properties and assets and to carry on its business as now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority, and governmental approvals would not have a Material
Adverse Effect on the Company. As used herein with respect to an entity,
"Material Adverse Effect" shall mean an event, change or effect which,
individually or together with all other events, changes or effects, has had, or
is reasonably likely to have, a material adverse effect on the financial
condition, assets, liabilities, results of operations or business of that entity
and its subsidiaries taken as a whole. The Company and each of its subsidiaries
is duly qualified or licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or licensed and in good
standing would not in the aggregate have a Material Adverse Effect on the
Company. The Company has delivered to the Purchaser true and complete copies of
its and its subsidiaries certificate of incorporation and bylaws, or similar
organizational documents. Notwithstanding anything herein to the contrary, NWC
5
<PAGE>
shall not be considered a subsidiary of the Company. S. Leslie Misrock does not
have knowledge that were NWC a subsidiary of the Company, that any of the
representations and warranties herein, if made by the Company with regard to
NWC, would be untrue.
Section 2.2. Capitalization. (a) The authorized capital stock of the
Company consists of 12,000,000 Shares and no preferred shares. As of the date
hereof 3,850,000 Shares are issued and outstanding. On the date hereof,
1,250,000 of such Shares are being contributed to the Company. All of the
outstanding shares of the Company's capital stock are duly authorized, validly
issued, fully paid and non-assessable. Except as set forth above (i) there are
no shares of capital stock of the Company authorized, issued or outstanding and
(ii) there are no options, warrants, calls, pre-emptive rights, subscriptions or
other rights, agreements, arrangements or commitments of any character, relating
to the issued or unissued capital stock of the Company or any of its
subsidiaries, obligating the Company or any of its subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock of, or other equity interest in, the Company or any of its
subsidiaries or securities convertible into or exchangeable for such shares or
equity interests, or obligating the Company or any of its subsidiaries to grant,
extend or enter into any such option, warrant, call, subscription or other
right, agreement, arrangement or commitment and (iii) there are no outstanding
obligations of the Company or any of its subsidiaries to vote or to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company, or any
subsidiary or affiliate of the Company or to provide funds to make any
investment (in the form of a loan, capital contribution or otherwise) in any
subsidiary or any other entity. Other than Shares, no securities of the Company
have the right to vote.
(b) The Company has delivered to the Purchaser true and complete copies of
all instruments governing or defining rights under the Shares. The Company has
delivered a true and complete list of all holders of securities of the Company.
All such securities were issued in compliance with all applicable law, including
federal and state securities laws.
(c) All of the outstanding shares of capital stock of each of the Company's
subsidiaries are owned by the Company, directly or indirectly, and all such
shares have been validly issued and are fully paid and nonassessable and free of
preemptive rights and are owned by either the Company or one of its subsidiaries
free and clear of all liens, charges, claims or encumbrances. The Company owns
___ shares of common stock of NWB, free and clear of any liens, claims or
encumbrances. The Sellers have delivered to the Purchaser a certificate setting
forth the number of shares of NWB common stock outstanding as of the date hereof
on a fully diluted basis. The Company does not, directly or indirectly, have any
equity or ownership interest in any other business, other than its subsidiaries.
Section 2.3. Binding Nature of this Agreement. (a) Such Seller has full
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
6
<PAGE>
delivered by such Seller and is a valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its terms.
(b) The Board of Directors of the Company has taken all necessary action to
approve this Agreement and the transactions contemplated hereby for purposes of
Section 203 of the Delaware General Corporation Law and the certificate of
incorporation and bylaws of the Company.
Section 2.4. Consents and Approvals; No Violations. Neither the execution,
delivery or performance of this Agreement by the Sellers nor the consummation by
the Sellers of the transactions contemplated hereby nor compliance by the
Sellers or the Company with any of the provisions hereof will (i) conflict with
or result in any breach of any provision of the certificate of incorporation or
the bylaws (or similar organizational instrument) of the Company or of any of
its subsidiaries, (ii) require any filing with, or permit, authorization,
consent or approval of, any court, tribunal, administrative agency or commission
or other governmental or other regulatory authority or agency (a "Governmental
Entity") or any other person or entity, (iii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration), result in the termination of or a right of termination or
cancellation of, modification of any benefit under, accelerate the performance
required by, result in the triggering of any payment or other material
obligation pursuant to, result in the creation of any lien, security interest,
charge or encumbrance upon any of the material properties of the Sellers, the
Company or its subsidiaries under, or result in being declared void, voidable or
without further binding effect any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract, permit, deed of trust
agreement or other instrument or commitment obligation to which the Sellers, the
Company or any of its subsidiaries is a party or by which any of them or any of
their properties or assets may be bound or affected or (iv) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Sellers,
the Company, any of its subsidiaries or any of their properties or assets,
excluding from the foregoing clauses (ii), (iii) and (iv) such violations,
breaches or defaults which would not, in the aggregate, have a Material Adverse
Effect.
Section 2.5. Financial Statements. Section 2.5 of the Disclosure Schedule
sets forth the consolidated balance sheets, income statements and statements of
cash flow of the Company and its consolidated subsidiaries at and for the years
ended December 31, 1997 and 1998 and the three month period ended March 31, 1999
(collectively, the "Financial Statements"). Each of the balance sheets
(including the related notes) included in the Financial Statements fairly
presents in all material respects the financial position of the Company and its
consolidated subsidiaries as of the respective dates thereof and each of the
statements of income and cash flow (including the related notes) included in the
Financial Statements fairly presents in all material respects the results of
operations of the Company and its consolidated subsidiaries for the respective
periods then ended, except as otherwise noted therein. The consolidated balance
sheet of the Company and its consolidated subsidiaries as of March 31, 1999 is
sometimes referred to as the "Company Balance Sheet" and such date as the
"Balance Sheet Date." Each of the Financial Statements has been (i) prepared in
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accordance with GAAP consistently applied during the periods involved, except as
otherwise noted therein and (ii) prepared in accordance with the books and
records of the Company. The Company maintains adequate books and records in
accordance with GAAP.
Section 2.6. Absence of Certain Changes. Since the Balance Sheet Date, (a)
each of the Company and its subsidiaries has operated in the ordinary and usual
course of business, (b) there have not occurred any events, changes or effects
which have had or which could reasonably be likely to have a Material Adverse
Effect, and, neither the Company nor any of its subsidiaries has taken, or
agreed to take, any action to:
(i) amend its Certificate of Incorporation or By-laws or similar
organizational documents, or alter through merger, liquidation, reorganization,
restructuring or in any other fashion, the corporate structure or ownership of
the Company or any subsidiary;
(ii) (A) declare, set aside or pay any dividend or other distribution with
respect to its capital stock, (B) redeem, purchase or otherwise acquire directly
or indirectly any of its securities, (C) issue, sell, pledge, dispose of or
encumber any securities (or any rights to acquire such securities) or (D) split,
combine or reclassify its outstanding capital stock;
(iii) acquire or agree to acquire, any assets or securities either by
purchase, merger or otherwise;
(iv) transfer, lease, license, sell, mortgage, pledge, dispose of, or
encumber any assets or securities, or authorize, propose or announce an
intention to authorize or propose, or enter into an agreement with respect to,
any merger, consolidation or business combination or license or sublicense any
Intellectual Property or otherwise dispose of any Intellectual Property or any
interest therein;
(v) modify, amend or terminate any of its material contracts or engagement
with any third party, or waive, release or assign any material rights or claims,
or modify or amend the terms of any outstanding securities;
(vi) make (or permit to be made) any Tax election or settle or compromise
any liability for taxes; or
(vii) enter into an agreement, contract, commitment or arrangement to do
any of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing.
Section 2.7. No Undisclosed Liabilities. There are no liabilities, debts,
obligations or claims (absolute, contingent, known, unknown or otherwise)
against the Company or its subsidiaries, except liabilities, debts, obligations
or claims (a) reflected or reserved in Company Balance Sheet or (b) which were
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incurred after the Balance Sheet Date in the ordinary course of business. For
purposes of this Agreement, incurred in the ordinary course of business (or
similar formulations) shall mean (x) in accordance with the terms of a contract
listed in Section 2.7(x) of the Company Disclosure Schedule or (y) comparable in
nature and magnitude to those payments made in the prior year, as evidenced by
the general ledger delivered to the Purchaser prior to the date hereof.
Section 2.8. Litigation. There is no suit, claim, action, proceeding or
investigation pending or, to the best knowledge of the Company or any Seller,
threatened against the Company or any of its subsidiaries that would be
reasonably likely to have a Material Adverse Effect, and there is no basis
therefor, and neither the Company nor any of its subsidiaries is subject to any
outstanding order, writ, injunction or decree that would be reasonably likely to
have a Material Adverse Effect or that restricts the Company or any of its
subsidiaries in any material respect.
Section 2.9. No Default. There exists no default or violation (and no event
has occurred which with notice or lapse of time would constitute a default or
violation or loss of material benefits) of any term, condition or provision of
(i) any note, bond, mortgage, indenture, contract, agreement, permit, license,
lease, purchase order, sales order, arrangement or other commitment or
obligation to which the Company or any subsidiary is a party or may be subject
or (ii) any order, writ, injunction, decree, statute, treaty, rule or regulation
applicable to the Company or any subsidiary, except for violations or defaults
which would not have a Material Adverse Effect.
Section 2.10. Permits; Compliance with Applicable Law. (a) To the knowledge
of the Company or any Seller, the Company does not require any permits,
licenses, variances, exemptions, orders, approvals or authorizations of any
Governmental Entity to conduct the business of the Company and its subsidiaries,
as presently conducted, in a lawful manner, other than those that it possesses.
All such permits have been legally obtained and maintained and are in full force
and effect.
(b) To the knowledge of the Company or any Seller, the business of the
Company and its subsidiaries is being and has been conducted in compliance with
all permits, orders, writs, judgments, injunctions, decrees and settlements and
all applicable laws, ordinances, codes, rules, regulations and policies of any
Governmental Entity.
Section 2.11. Taxes and Tax Returns.
(a) Definitions:
"Code" means the Internal Revenue Code of 1986, as amended. All citations
to provisions of the Code, or to the Treasury Regulations promulgated
thereunder, shall include any amendments thereto and any substitute or successor
provisions thereto.
"Taxes" means any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions, levies and
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liabilities, including, without limitation, taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, gains, franchise, withholding, payroll, recapture,
employment, excise, unemployment, insurance, social security, business license,
occupation, business organization, stamp, environmental and property taxes,
together with all interest, penalties and additions imposed with respect to such
amounts. For purposes of this Agreement, "Taxes" also includes any obligations
under any agreements or arrangements with any person with respect to the
liability for, or sharing of, Taxes (including, without limitation, pursuant to
Treas. Reg. ss. 1.1502-6 or comparable provisions of state, local or foreign Tax
law) and including, without limitation, any liability for Taxes as a transferee
or successor, by contract or otherwise.
"Taxable Period" means any taxable year or any other period that is treated
as a taxable year (or other period, or portion thereof, in the case of a Tax
imposed with respect to such period or portion thereof, e.g., a quarter) with
respect to which any Tax may be imposed under any applicable statute, rule, or
regulation.
"Tax Reserve" shall have the meaning set forth in Section 2.11(c).
"Tax Return" means any report, return, election, notice, estimate,
declaration, information statement and other forms and documents (including,
without limitation, all schedules, exhibits and other attachments thereto)
relating to and filed or required to be filed with a taxing authority in
connection with any Taxes (including, without limitation, estimated Taxes).
(b) All Tax Returns required to be filed by or with respect to the Company
or any of its subsidiaries for all Taxable Periods have been timely filed. All
such Tax Returns (i) were prepared in the manner required by applicable law,
(ii) are true, correct and complete in all respects, and (iii) accurately
reflect the liability for Taxes of the Company and each of its subsidiaries. All
Taxes shown to be payable on such Tax Returns, and all assessments of Tax made
against the Company or any of its subsidiaries with respect to such Tax Returns,
have been paid when due. No adjustment relating to any such Tax Return has been
proposed or threatened formally or informally by any taxing authority and no
basis exists for any such adjustment.
(c) The Company and each of its subsidiaries have (i) timely paid or caused
to be paid all Taxes that are or were due, whether or not shown (or required to
be shown) on a Tax Return and (ii) provided a sufficient reserve for the payment
of all Taxes not yet due and payable (without regard to deferred Tax assets and
liabilities) (the "Tax Reserve") on the Financial Statements for the Taxable
Period ended December 31, 1998 There are no Taxes that would be due if asserted
by a taxing authority, except with respect to which the Company and each of its
subsidiaries are maintaining adequate reserves.
(d) The Company and each of its subsidiaries have complied (and until the
Closing Date will comply) in all material respects with the provisions of the
Code relating to the withholding and payment of Taxes, including, without
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limitation, the withholding and reporting requirements under Code sections 1441
through 1464, 3401 through 3406, and 6041 through 6049, as well as similar
provisions under any other laws, and have, within the time and in the manner
prescribed by law, withheld from employee wages and paid over to the proper
governmental authorities all amounts required.
(e) To the knowledge of the Company or any Seller, none of the Tax Returns
of the Company or any of its subsidiaries has been or is currently being
examined by the Internal Revenue Service (the "IRS") or relevant state, local or
foreign taxing authorities. To the knowledge of the Company or any Seller, there
are no examinations or other administrative or court proceedings relating to
Taxes in progress or pending, nor has the Company or any of its subsidiaries
received a revenue agent's or similar report asserting a Tax deficiency.
(f) To the knowledge of the Company or any Seller, no material claim has
ever been made in writing by any taxing authority with respect to the Company or
any of its subsidiaries in a jurisdiction where the Company or any such
subsidiary does not file Tax Returns that the Company or any such subsidiary is
or may be subject to taxation by that jurisdiction. There are no security
interests on any of the assets of the Company or any of its subsidiaries that
arose in connection with any failure (or alleged failure) to pay any Taxes and,
except for liens for real and personal property Taxes that are not yet due and
payable, there are no liens for any Tax upon any asset of the Company or any of
its subsidiaries.
(g) The Company and each of its subsidiaries have made available (or, in
the case of Tax Returns filed after the date hereof, will make available at such
time and place as Purchaser may request) to Purchaser complete and accurate
copies of such Tax Returns, and amendments thereto, filed by the Company and/or
its subsidiaries as Purchaser may request. Since the date of the most recent
Financial Statement, neither the Company nor any subsidiary thereof has incurred
any liability for Taxes that would result in a material decrease in the net
worth of the Company or any such subsidiary.
(h) Neither the Company nor any of its subsidiaries is, or has been, a
party to any agreement relating to allocating or sharing the payment of, or
liability for, Taxes with respect to any Taxable Period.
(i) Neither the Company nor any of its subsidiaries has distributed the
stock of any corporation in a transaction satisfying the requirements of Section
355 of the Code since April 16, 1997. The stock of neither the Company nor any
of its subsidiaries has been distributed in a transaction satisfying the
requirements of Section 355 of the Code since April 16, 1997.
(j) There is no contract, agreement, plan or arrangement covering any
person that, individually or collectively, could give rise to, nor will the
consummation of the transactions contemplated hereby obligate the Company or any
of its subsidiaries or Purchaser to make, the payment of any amount that would
not be deductible by the Company or any of its subsidiaries by reason of Section
280G of the Code.
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(k) Neither the Company nor any of its subsidiaries has executed any
outstanding waivers or comparable consents regarding the application of the
statute of limitations with respect to any Taxes or Tax Returns. No extension of
time with respect to any date on which a Tax Return was or is to be filed by the
Company or any of its subsidiaries is in force. Neither the Company nor any of
its subsidiaries has granted a power of attorney to any person with respect to
any Taxable Period.
(l) All options to acquire stock of the Company or any of its subsidiaries
granted under any stock option plan of the Company or any such subsidiary
qualify under Section 162(m)(4) of the Code as an exception from "applicable
employer remuneration," and as such, no deduction of the Company or any such
subsidiary relating to such options would be disallowed by reason of Section
162(m) of the Code.
(m) The Company is the common parent of an affiliated group (within the
meaning of Code section 1504(a)) that files a consolidated U.S. federal income
tax return and includes the corporations listed as "subsidiaries" in Section
2.2(b) of the Disclosure Schedule.
(n) Neither the Company nor any of its subsidiaries owns an interest in a
partnership or could be treated as a partner in a partnership for U.S. federal
income tax purposes.
(o) Neither the Company nor any of its subsidiaries has been a member of an
(i) affiliated group (within the meaning of Section 1504 of the Code) or (ii)
affiliated, combined, consolidated, unitary, or similar group for state, local
or foreign Tax purposes, other than the group of which the Company is the common
parent.
(p) There are no outstanding options, warrants, securities convertible into
stock, or other contractual obligations that might be treated for federal income
tax purposes as stock or another equity interest in the Company or any of its
subsidiaries.
(q) Neither the Company nor any of its subsidiaries has agreed or is
required to include in income any adjustment under either Section 481(a) or
Section 482 of the Code (or an analogous provision of state, local, or foreign
law) by reason of a change in accounting method or otherwise.
(r) To the knowledge of the Company or any Seller, there are no proposed
reassessments of any property owned by the Company or any of its subsidiaries or
other proposals that could increase the amount of any Tax to which the Company
or any of its subsidiaries could be subject.
(s) Neither the Company nor any of its subsidiaries has any deferred income
reportable for a period ending after the Closing Date but that is attributable
to a transaction (e.g., an installment sale) occurring in, or resulting from a
change of accounting method for, a period ending on or prior to the Closing
Date.
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(t) None of the indebtedness of the Company or any of its subsidiaries
constitutes "corporate acquisition indebtedness" (as defined in Section 279(b)
of the Code) or other indebtedness with respect to which any interest deductions
may be disallowed under Section 279 of the Code or otherwise.
(u) Neither the Company nor any of its subsidiaries has an overall foreign
loss within the meaning of Section 904 of the Code. Neither the Company nor any
of its subsidiaries has consented to have provisions of Section 341(f)(2) of the
Code applied to it. Neither the Company nor any of its subsidiaries has, during
the five-year period ending on the Closing Date, been a personal holding company
within the meaning of Section 541 of the Code.
Section 2.12. Employee Benefit Plans.
(a) Section 2.12 of the Company Disclosure Schedule sets forth each
material pension, retirement, profit sharing, medical, dental, health,
disability, life, death benefit, group insurance, deferred compensation, stock
option, stock purchase, restricted stock, bonus or incentive, severance pay,
employment or termination, and other employee benefit or compensation plan,
trust, arrangement, contract, agreement, policy or commitment, including,
without limitation, each "employee benefit plan" as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")
whether formal or informal, written or oral under which (i) current or former
employees, directors or independent contractors of the Company or any of its
subsidiaries participate or are entitled to participate by reason of their
relationship with the Company or any of its subsidiaries, (ii) to which the
Company or any of its subsidiaries is a party or a sponsor thereof or by which
the Company or any of its subsidiaries is currently bound or (iii) with respect
to which the Company or any of its subsidiaries has any obligation to make
payments or contributions, (the "Benefit Plans").
(b) Each Benefit Plan has at all times been operated and administered in
compliance in all material respects with its terms, the applicable requirements
of ERISA and the Code and all other applicable laws, ach Benefit Plan that is
intended to be tax qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS stating that it is so qualified and
that any trust associated with such Benefit Plan is tax exempt under Section
501(a) of the Code, and, to the knowledge of the Company or any Seller, there is
no reason why the qualified status of any such Benefit Plan or trust would be
denied or revoked, whether retroactively or prospectively.
(c) No pending or, to the knowledge of the Company or any Seller,
threatened disputes, lawsuits, claims (other than routine claims for benefits),
investigations, audits or complaints to, or by, any person or governmental
entity have been filed or are pending with respect to the Benefit Plans or the
Company or any of its Subsidiaries in connection with any Benefit Plan or the
fiduciaries or administrators thereof (other than routine claims for benefits).
With respect to each Benefit Plan, there has not occurred, and no person or
entity is contractually bound to enter into, any nonexempt "prohibited
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transaction" within the meaning of Section 4975 of the Code or Section 406 of
ERISA, nor any transaction that would result in a civil penalty being imposed
under Section 409 or 502(i) of ERISA, except as would not have a Material
Adverse Effect.
(d) Neither the Company, its Subsidiaries, nor any trade or business
(whether or not incorporated) which, together with the Company or any of its
Subsidiaries, would be deemed a "single employer" under Section 4001(b) of ERISA
(an "ERISA Affiliate") has or at any time within the applicable statute of
limitations period has had (i) any liability, contingent or otherwise, under
Title IV of ERISA or Section 412 of the Code, (ii) an obligation to contribute
to any "multiemployer plan" (as defined in Section 3(37) of ERISA).
(e) All material contributions or payments made or deemed to have been made
with respect to each Benefit Plan that is a deferred compensation plan,
including any pension plan, are presently, and have been during the years to
which they relate, fully deductible pursuant to Section 404 of the Code and are
not presently, and have never been during the years to which they relate,
subject to any material excise tax under Section 4972 of the Code. All material
contributions to and payments with respect to or under the Benefit Plans that
are required to be made with respect to periods ending on or before the Closing
Date have been made or accrued before the Closing Date by the Company in all
material respects in accordance with the appropriate plan documents, financial
statement, actuarial report, collective bargaining agreements or insurance
contracts or arrangements.
(f) No Benefit Plan that is an "employee welfare benefit plan" under
Section 3(1) of ERISA (a "Welfare Plan") is partially or fully funded through a
trust. No Welfare Plan providing medical or death benefits (whether or not
insured) with respect to current or former employees of the Company continues
such coverage or provides such benefits beyond their date of retirement or other
termination of service (other than coverage mandated by Section 601 of ERISA,
the cost of which is fully paid by the former employee or his or her
dependents).
(g) With respect to each Benefit Plan, the Company has made available to
Purchaser complete and correct copies of the following documents, to the extent
in each case that such documents exist or are required by law: (1) current plan
documents, subsequent plan amendments, or any and all other documents that
establish or describe the existence of the plan, trust, arrangement, contract,
policy or commitment; (2) the most recent tax qualified determination letters,
if any, received from or applications pending with the IRS; and (3) the three
most recent Form 5500 Annual Reports, including related schedules and audited
and financial statements and opinions of independent certified public
accountants.
(h) The execution of, and performance of the transactions contemplated in,
this Agreement will not (either alone or upon the occurrence of any additional
or subsequent events) constitute an event under any plan, policy, arrangement or
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agreement or any trust or loan that will or would reasonably be expected to
result in any material payment (whether of severance pay or otherwise),
acceleration of, forgiveness of indebtedness owing from, vesting of,
distribution of, or increase in or obligation to fund, any benefits with respect
to any current or former employee, director or consultant of the Company.
Section 2.13. Intellectual Property. Set forth in Section 2.13 of the
Company Disclosure Schedule is a list (the "Listed Intellectual Property
Rights") of certain U.S. and foreign, registered and unregistered, patents,
patent applications, trademarks, trade names, copyrights, copyright
registrations, technology (including software), trade secrets, know-how,
inventions, data, processes and other intellectual property rights
(collectively, "Intellectual Property Rights") used by the Company. No claims
are pending or, to the Company's or S. Leslie Misrock's actual knowledge,
threatened, by any person as to the use of any Intellectual Property Rights or
infringement of the rights of others by the Company or any subsidiary and, to
the actual knowledge of the Company or any Seller, the use by the Company and
its subsidiaries of all Intellectual Property Rights and the conduct of the
Company's business does not infringe on the rights of any person and there is no
basis for any such claim. To the actual knowledge of the Company or S. Leslie
Misrock, no third person is infringing on the Listed Intellectual Property
Rights. The Company and its subsidiaries have not taken any action to impair any
Listed Intellectual Property Rights, including by granting any licenses,
sublicenses, liens or encumbrances. The Company has not entered into any
agreement to indemnify any other person against any charge of infringement of
any third party intellectual property right. All employees, agents, consultants
or contractors who have contributed to or participated in the creation or
development of any Intellectual Property Rights on behalf of the Company, its
subsidiaries or any predecessor in interest thereto either: (i) is a party to a
"work-for-hire" agreement under which the Company and its subsidiaries are
deemed to be the original owner/author of all property rights therein or (ii)
has executed an assignment or any agreement to assign in favor of the Company or
its subsidiaries (or such predecessor in interest, as applicable) of all right,
title and interest in such material. Listed Intellectual Property Rights include
the NWB License, the NWB/NWC License and the Velos License.
Section 2.14. Transactions with Affiliates. No present or former officer,
director, stockholder or other affiliate of the Company has (i) any interest in
the assets, properties or rights used in the business of the Company or its
subsidiaries (other than solely through the ownership of Shares), (ii) any
contract, arrangement, agreement or understanding with the Company or its
subsidiaries (iii) engaged in any transactions with the Company since the
Balance Sheet Date.
Section 2.15. Contracts.
(i) Section 2.15 of the Disclosure Schedule sets forth a complete and
accurate list of each of the contracts to which the Company or any subsidiary is
a party or is bound.
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(b) Each such contract or agreement is legal, valid, binding and
enforceable against the Company or its subsidiaries, and to the knowledge of the
Company or any Seller, against each other party thereto, is in full force and
effect and will continue to be so legal, valid, binding, enforceable and in full
force and effect following the Closing. Neither the Company or the applicable
subsidiary, nor to the knowledge of the Company or any Seller, any other party,
is in breach or default, and no event has occurred which would constitute (with
or without notice or lapse of time or both) a breach or default (or give rise to
any right of termination, modification, cancellation or acceleration) or
modification of benefits under any such contract.
(c) The Company has delivered or made available for review by the Purchaser
true and complete copies of each such contract or agreement. Since the Balance
Sheet Date, there has been no material modification, breach or termination of
any such contract or agreement.
Section 2.16. Labor Relations. (a) There is no unfair labor practice,
charge or complaint or other proceeding pending or, to the best knowledge of the
Company or any Seller, threatened, against the Company or any subsidiary before
the National Labor Relations Board or any other Governmental Entity.
(b) There is no labor strike, slowdown or stoppage pending or, to the best
knowledge of the Company or any Seller, threatened, against or affecting the
Company or any subsidiary, nor has there been any such activity within the past
two years.
(c) There are no pending collective bargaining negotiations relating to the
employees of the Company or any subsidiary.
(d) (i) there are no agreements with, or pending petitions for recognition
of, a labor union or association as the exclusive bargaining agent for any or
all of the employees of the Company or any subsidiary, (ii) no such petitions
have been pending within the past five years and (iii) to the best knowledge of
the Company or any Seller, there has not been any general solicitation of
representation cards by any union seeking to represent the employees of the
Company or any subsidiary as their exclusive bargaining agent at any time within
the past five years.
Section 2.17. Environmental. (a) Except to the extent that any of the
following would not be reasonably likely to have a Material Adverse Effect on
the Company: (i) the Company and its subsidiaries comply (which compliance
includes, without limitation, the possession by the Company and its subsidiaries
of all permits and other government authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof) and at
all times have complied with all applicable Environmental Laws (as defined
below), (ii) no Hazardous Substances (as defined below) are present at any of
the properties currently owned, leased, operated or otherwise used by the
Company or its subsidiaries (including soils, ground water, surface water,
buildings or other structures), (iii) no Hazardous Substances have been disposed
on or released or discharged from, onto or under any of the properties currently
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owned, leased, operated or otherwise used by the Company or its subsidiaries
(including soils, ground water, surface water, buildings or other structures)
during the period of ownership, lease, operation or use by the Company or any
subsidiary or, to the actual knowledge of the Company or any Seller, at any
other time, (iv) none of the Company or its subsidiaries disposed of or released
or discharged Hazardous Substances from, onto or under or adjacent to any of the
properties (including soils, ground water, surface water, buildings or other
structures) formerly owned, leased, operated or otherwise used by the Company or
any subsidiary, and to the actual knowledge of the Company and any Seller, no
Hazardous Substances were present at or disposed on or released or discharged by
any other person or entity from, onto or under or adjacent to any of the
properties (including soils, ground water, surface water, buildings or other
structures) formerly owned, leased, operated or otherwise used by the Company or
any subsidiary during the period of ownership, lease, operation or use by the
Company or any subsidiary, (v) none of the Company or its subsidiaries are
subject to any liability or obligation in connection with Hazardous Substances
present at any location owned, leased, operated or otherwise used by any third
party, (vi) none of the Company or its subsidiaries or, to the actual knowledge
of the Company or any Seller, any person or entity whose liability under any
Environmental Law the Company has or may have retained or assumed either
contractually or by operation of law, has received any notice, demand, letter,
claim or request for information alleging that any of the Company, its
subsidiaries or, to the actual knowledge of the Company or any Seller, any
person or entity whose liability under any Environmental Law the Company has or
may have retained or assumed either contractually or by operation of law, is or
may be in violation of or liable under any Environmental Law, (vii) none of the
Company or its subsidiaries is subject to any order, decree, injunction or other
directive of any governmental authority and none of the Company or its
subsidiaries is subject to any indemnity or other agreement with any person or
entity relating to Hazardous Substances and (viii) there are no circumstances or
conditions involving any of Company and its subsidiaries or, to the actual
knowledge of the Company or any Seller, any assets (including real property) or
businesses previously owned, leased, operated or otherwise used by Company or
any subsidiary or any assets (including real property) or businesses of any
predecessors of the Company or any subsidiary that would reasonably be expected
to result in any damages to the Company or any subsidiary arising under or
pursuant to Environmental Law or in any restriction on the ownership, use or
transfer of any of the assets of the Company or its subsidiaries arising under
or pursuant to any Environmental Law.
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(b) As used herein, the term "Environmental Law" means any international,
national, provincial, regional, federal, state, municipal or local law,
regulation, order, judgement, decree, permit, authorization, opinion, common or
decisional law (including, without limitation, principles of negligence and
strict liability) or agency requirement relating to the protection,
investigation or restoration of the environment (including, without limitation,
natural resources) or the health or safety of human or other living organisms,
including, without limitation, the manufacture, introduction into commerce,
export, import, handling, use, presence, disposal, release or threatened release
of any Hazardous Substance or noise pollution, odor pollution, wetlands,
pollution, or contamination.
(c) As used herein, the term "Hazardous Substance" means any element,
compound, substance or other material (including any pollutant, contaminant,
hazardous waste, hazardous substance, chemical substance, or product) that is
listed, classified or regulated pursuant to any Environmental Law, including,
without limitation, any petroleum product, by-product or additive, asbestos,
presumed asbestos-containing material, asbestos-containing material, medical
waste, biological waste, chloroflourocarbon, hydrochloroflourocarbon,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
material or radon.
Section 2.18. Ownership of Assets. The assets, properties and rights of the
Company and its subsidiaries are held by the Company or its subsidiaries free
and clear of any liens, claims or encumbrances, other than Permitted Liens.
"Permitted Liens" means (i) liens for current taxes not yet due and payable or
(ii) mechanics', carriers', workers' and other similar liens arising or incurred
in the ordinary course of business, which, individually or in the aggregate, are
not substantial in amount, do not materially detract from the value of or
materially interfere with the present use of any of the assets subject thereto
or materially impair the conduct of the business of the Company and its
subsidiaries.
Section 2.19. Insurance. The insurance policies of the Company and its
subsidiaries are current, are in full force and effect, all premiums due thereon
have been paid, and the Company and its subsidiaries have complied in all
material respects with the provisions of such policies, and all such policies
either specifically include the Company as a named insured or include omnibus
named insured language which generally includes the Company. No proceeding is
pending or, to the best knowledge of the Company or any Seller, threatened, to
revoke, cancel or limit such policies and no notice of cancellation of any of
such policies has been received by the Company or any subsidiary. Each of the
Company and its subsidiaries is in compliance with all warranties contained in
all insurance policies.
Section 2.20. Real Property. Each of the Company and its subsidiaries have
good and marketable title to, or a valid leasehold interest in, all of their
real properties, and, other than the properties in which they hold leasehold
interests, own such properties free and clear of all liens, claims and
encumbrances, other than Permitted Liens. All real property owned or leased by
the Company or any subsidiary is set forth on Section 2.20 of the Company
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Disclosure Schedule. The Company and its subsidiaries are in compliance with the
terms of all leases to which they are a party and all such leases are in full
force and effect.
Section 2.21. Share Ownership. Such Seller owns the number of Shares set
forth opposite such Seller's name on Exhibit A, free and clear of all liens,
claims and encumbrances, including any restrictions on or sharing of rights to
vote or dispose of such shares. Such Shares are the only equity interests in the
Company or any subsidiary beneficially owned by such Seller. No other person
beneficially owns any equity interest in the Company or any subsidiary of the
Company or has any right to acquire or vote any such equity interest.
Section 2.22. Investment. Such Seller is acquiring the Purchaser Shares for
investment and not with a view toward, or for sale in connection with, any sale
or distribution thereof. Such Seller agrees that neither the Purchaser Shares
nor any interest therein may be offered, sold, transferred, pledged,
hypothecated or otherwise disposed of except pursuant to (i) an effective
registration statement under the Securities Act and any applicable state
securities laws or (ii) an exemption from the registration requirements of the
Securities Act and any applicable state securities laws, such exemption to be
evidenced by such documentation as the Purchaser may reasonably request,
including an opinion of counsel (which counsel and opinion shall be reasonably
satisfactory to the Purchaser) that such transfer is not in violation of the
Securities Act and any applicable state laws. The Sellers understand that the
certificates to be issued to the Sellers hereunder will be subject to stop
transfer instructions and bear a legend substantially as follows:
"The security represented by this certificate was issued in a transaction
which was not registered under the Securities Act of 1933 or the securities laws
of any state and neither the security nor any interest therein may be offered,
sold, transferred, pledged, hypothecated or otherwise disposed of except
pursuant to (i) an effective registration statement under the Securities Act and
any applicable state securities laws or (ii) an exemption from the registration
requirements of the Securities Act and any applicable state securities laws,
such exemption to be evidenced by such documentation as the issuer may
reasonably request, including an opinion of counsel (which counsel and opinion
shall be reasonably satisfactory to the issuer) that such transfer is not in
violation of the Securities Act and any applicable state laws."
Section 2.23. Accredited Investor. Such Seller is an "accredited investor"
within the meaning of Rule 501 under the Securities Act, provided that in the
case of the Seller identified in Section 2.23 of the Company Disclosure
Schedule, such Seller has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of the
transactions contemplated hereby, including an investment in Purchaser Shares.
Such Seller has been given an adequate opportunity to investigate the Purchaser
and has been given access to all information he deems appropriate. Without
limiting the generality of the foregoing, such Seller acknowledges that the
Purchaser has furnished (or made available to) such Seller the Purchaser's
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Annual Report on Form 10-K for the year ended December 31, 1998 and all filings
under the Exchange Act or the Securities Act since such date, a brief
description of the Purchaser Shares, any material changes in the Purchaser's
affairs not disclosed in such documents and adequate information regarding the
Purchaser and the transactions contemplated hereby, in each case a reasonable
time prior to the date hereof.
Section 2.24. No Misleading Statements. The representations and warranties
made by the Sellers in or pursuant to this Agreement do not include any untrue
statement of a material fact or omit to state any material fact.
Section 2.25. No Exclusive Manufacturing Rights. The Company has not
granted exclusive manufacturing rights to any person or entity with regard to
any immunotherapy technologies, except for the NWC License.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants as of the date hereof and as of the
Closing Date to the Sellers as follows, except as set forth in the disclosure
schedule being delivered by the Purchaser to the Sellers concurrently herewith
(the "Purchaser Disclosure Schedule"):
Section 3.1. Organization. Each of the Purchaser and its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has all requisite corporate power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power, authority, and governmental approvals would not have a Material Adverse
Effect on the Purchaser. The Purchaser and each of its subsidiaries is duly
qualified or licensed to do business and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified or licensed and in good standing would
not in the aggregate have a Material Adverse Effect on the Purchaser.
Section 3.2. Capitalization. (a) The authorized capital stock of the
Purchaser consists of 89,600,000 Purchaser Shares and 5,400,000 preferred
shares. As of May 31, 1999, 65,122,000 Purchaser Shares were issued and
outstanding and an aggregate of 8,128,464 Shares were issuable pursuant to
outstanding options, warrants or convertible notes. All the outstanding shares
of the Purchaser's capital stock are, and all the Purchaser Shares which may be
issued pursuant to the exercise of outstanding options to purchase Purchaser
Shares will be, when issued in accordance with the respective terms thereof,
duly authorized, validly issued, fully paid and non-assessable. Except as set
forth above and in the Purchaser's filings with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"),
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(i) there are no shares of capital stock of the Purchaser authorized, issued or
outstanding and (ii) there are no options, warrants, calls, pre-emptive rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character, relating to the issued or unissued capital stock of the Purchaser or
any of its subsidiaries, obligating the Purchaser or any of its subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock of, or other equity interest in, the Purchaser or any of its
subsidiaries or securities convertible into or exchangeable for such shares or
equity interests, or obligating the Purchaser or any of its subsidiaries to
grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment and (iii) there are no
outstanding obligations of the Purchaser or any of its subsidiaries to vote or
to repurchase, redeem or otherwise acquire any shares of capital stock of the
Purchaser, or any subsidiary or affiliate of the Purchaser or to provide funds
to make any investment (in the form of a loan, capital contribution or
otherwise) in any subsidiary or any other entity. Other than the Purchaser
Shares, no securities of the Purchaser have the right to vote. The Purchaser has
delivered to the Company true and complete copies of all instruments governing
or defining rights under the Purchaser Shares.
(b) The Purchaser Shares to be issued pursuant to Section 1.3 hereof have
been duly authorized and, upon issuance in accordance with the terms hereof,
shall be validly issued, fully paid and nonassessable.
Section 3.3. Authority Relative to this Agreement. The Purchaser has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery by
the Purchaser of this Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly and validly authorized by its Board of
Directors and no other corporate action on the part of the Purchaser is
necessary to authorize the execution and delivery by the Purchaser of this
Agreement and the consummation by it of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Purchaser and is a
valid and binding obligation of the Purchaser, enforceable against the Purchaser
in accordance with its terms.
Section 3.4. Consents and Approvals; No Violations. Neither the execution,
delivery or performance of this Agreement by the Purchaser nor the consummation
by the Purchaser of the transactions contemplated hereby nor compliance by the
Purchaser with any of the provisions hereof will (i) conflict with or result in
any breach of any provision of the certificate of incorporation or the bylaws
(or similar organizational instrument) of the Purchaser or of any of its
subsidiaries, (ii) require any filing with, or permit, authorization, consent or
approval of, any Governmental Entity or any other person or entity, (iii) result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration), result in the termination of or a right of
termination or cancellation of, modification of any benefit under, accelerate
the performance required by, result in the triggering of any payment or other
material obligation pursuant to, result in the creation of any lien, security
interest, charge or encumbrance upon any of the material properties of the
Purchaser or its subsidiaries under, or result in being declared void, voidable
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or without further binding effect any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, license, contract, permit, deed of
trust agreement or other instrument or commitment obligation to which the
Purchaser or any of its subsidiaries is a party or by which any of them or any
of their properties or assets may be bound or affected or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Purchaser, any of its subsidiaries or any of their properties or assets,
excluding from the foregoing clauses (ii), (iii) and (iv) such violations,
breaches or defaults which would not, in the aggregate, have a Material Adverse
Effect on the Purchaser.
Section 3.5. SEC Reports; Financial Statements.
(a) The Purchaser has filed with the SEC all forms, reports, schedules,
statements and other documents required to be filed by it since January 1, 1996
(collectively, the "Purchaser SEC Documents"). As of the date of filing, the
Purchaser SEC Documents (a) do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading and (b) complied in all material respects
with the applicable requirements of the Exchange Act and the Securities Act, as
the case may be, and the applicable rules and regulations of the SEC thereunder.
(b) Each of the balance sheets (including the related notes) included in
the Purchaser SEC Documents fairly presents in all material respects the
financial position of the Purchaser and its consolidated subsidiaries as of the
respective dates thereof and each of the statements of income and cash flow
(including the related notes) included in the Purchaser SEC Documents fairly
presents in all material respects the results of operations of the Purchaser and
its consolidated subsidiaries for the respective periods then ended, except as
otherwise noted therein. The audited consolidated balance sheet of the Purchaser
and its consolidated subsidiaries as of December 31, 1998 is sometimes referred
to as the "Purchaser Balance Sheet" and such date as the "Balance Sheet Date."
Each of the Purchaser financial statements included in the Purchaser SEC
Documents has been (i) prepared in accordance with GAAP consistently applied
during the periods involved, except as otherwise noted therein or in the notes
thereto and (ii) prepared in accordance with the books and records of the
Purchaser.
Section 3.6. Absence of Certain Changes. Since the Balance Sheet Date, (a)
each of the Purchaser and its subsidiaries has operated in the ordinary and
usual course of business and (b) there have not occurred any events, changes or
effects which have had or which could reasonably likely to have, in the
aggregate, a Material Adverse Effect on the Purchaser.
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ARTICLE IV
COVENANTS
Section 4.1. Further Assurances. From time to time after the Closing,
without additional consideration, each of the parties hereto will (or, if
appropriate, cause their affiliates to) promptly execute and deliver such
further instruments and take such other action as may be necessary to make
effective the transactions contemplated by this Agreement.
Section 4.2. Brokers or Finders. Each party hereto represents, as to itself
and its affiliates that no agent, broker, investment banker, financial advisor
or other firm or person is or will be entitled to any broker's or finder's fee
or any other commission or similar fee in connection with any of the
transactions contemplated by this Agreement, other than Gerard Klauer Mattison &
Co., Inc. in the case of the Sellers.
Section 4.3. Performance of Obligations. The Sellers shall cause the
Company to timely perform its obligations under this Agreement.
Section 4.4. Tax Covenants.
(a) All transfer, documentary, sales, use, registration and other such
Taxes (including, without limitation, all applicable real estate transfer or
gains Taxes and stock transfer Taxes), any penalties, interest and additions to
Tax and fees incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Sellers. Each party to this Agreement
shall cooperate in the timely making of all filings, returns, reports and forms
as may be required in connection therewith.
(b) All contracts, agreements, or intercompany accounting systems under
which the Company or any of its subsidiaries may at any time have an obligation
to share the payment of any portion of a Tax (or any amount calculated with
reference to any portion of a Tax) shall be terminated with respect to the
Company and each such subsidiary as of the Closing Date, and the Company and
each such subsidiary shall thereafter be released from any liability thereunder.
(c) If any Seller receives any written notice from any taxing authority
proposing any adjustment to any Tax relating to the Company or any of its
subsidiaries, the Seller shall give prompt written notice thereof to the
Purchaser and the Company, which notice shall describe in detail each proposed
adjustment.
Section 4.5. Employees; Releases.
(a) The Company has terminated all of its employees, agents, consultants,
independent contractors, and satisfied all of its liabilities and obligations to
such employees, agents, consultants, independent contractors, prior to the
Closing including, any liability related to outstanding options to purchase
Company Shares, any severance or change in control payments or any contributions
that are or will be required to be made to any Benefit Plan in accordance with
the terms of such plan for the plan year in which the Closing Date occurs, or
any prior plan year.
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(b) Each Seller hereby releases, effective as of the Closing, the Company
(and its subsidiaries, affiliates, officers, directors and other employees) from
all liabilities and obligations it may owe such Sellers, including any
liabilities and obligations based on any facts or circumstances existing on or
prior to the Closing. Each Seller represents that it has no outstanding
indemnity claim against the Company and knows of no basis for any such claim.
The Company hereby releases, effective as of the Closing, each Seller from all
liabilities and obligations it may owe the Company, including any liabilities
and obligations based on any facts or circumstances existing on or prior to the
Closing. Each Seller represents that it knows of no liability or obligation it
may owe the Company, other than as set forth in Section 4.5(y) of the Company
Disclosure Schedule. Nothing in this Section 4.5 shall decrease or impair any
liability any Seller may have to the Purchaser and no Seller shall be entitled
to indemnification or other payment from the Company in respect of any matter
for which the Purchaser may be entitled to indemnification hereunder.
(c) The Company has provided any required notice under the Worker
Adjustment and Retraining Notification Act, as amended (the "WARN Act"), and any
similar state statute, and to otherwise comply with any such statute with repect
to any "plant closing" or "mass layoff" (as defined in the WARN Act), or similar
event affecting employees of the Company and occurring on or prior to the
Closing Date. The Sellers shall indemnify and hold harmless the Purchaser with
respect to any liability under the WARN Act or similar statute arising from the
actions of the Company on or prior to the Closing Date.
Section 4.6. NWB Board. The Sellers shall use their reasonable best efforts
to cause H. Joseph Reiser, PhD. to be appointed to the Board of Directors of NWB
as promptly as practicable.
Section 4.7. Lockup. No Purchaser Shares or any interest therein may be
offered, sold, transferred, pledged, hypothecated or otherwise disposed of by
(a) Messrs. Misrock and Fox prior to one year from the Closing Date and
thereafter only pursuant to the Purchaser's policy regarding trading by officers
and directors or (b) any other Seller prior to one year from the Closing Date.
ARTICLE V
SURVIVAL; INDEMNIFICATION
Section 5.1. Survival Periods. (a) All representations and warranties of
the parties contained in this Agreement, the Disclosure Schedule or any
certificate delivered in connection herewith shall survive until the first
anniversary of the Closing Date, and, if notice of a claim is provided by such
date, shall survive until the final resolution thereof, provided, that the
representations and warranties contained in Section 2.21 [share ownership] (the
"Listed Representations") shall survive the Closing without limitation, and
provided further, that the representations and warranties contained in Section
2.11 shall survive until 90 days after the expiration of the applicable statute
of limitations for the assessment of Taxes, including all extensions. All
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covenants and agreements hereunder shall survive without limit (unless by their
terms they are to survive for a shorter period).
(b) For purposes of this Agreement, a party's representations and
warranties shall be deemed to include such party's Disclosure Schedule and all
other documents or certificates delivered by or on behalf of such party in
connection with this Agreement. None of the Closing, any party's waiver of any
condition to Closing or any party's knowledge of any breach prior to the Closing
shall constitute a waiver of any rights such party may have hereunder.
Section 5.2. Indemnification. Subject to the other provisions of this
Article V, from and after the Closing:
(a) The Sellers shall indemnify and hold harmless the Purchaser, its
affiliates and the Purchaser's and its affiliates employees, officers,
directors, agents and other representatives from and against any costs or
expenses (including reasonable attorneys', experts' and consultants' fees),
judgments, fines, penalties, losses, claims, liabilities and damages
(collectively, "Damages") that are the result of, arise out of or relate to (i)
any breach of any representation or warranty or failure to perform any covenant
made by or on behalf of the Company or the Sellers under this Agreement and (ii)
any liability or obligation that is the result of, arises out of or relates to,
any fact or circumstance existing at or prior to the Closing Date, other than
liabilities or obligations disclosed to the Purchaser prior to the date hereof.
To the extent any Seller makes a representation, warranty or covenant as to
himself, such indemnity obligation will be allocated to such Seller. All other
indemnity obligations shall be allocated among the Sellers pro rata in
accordance with their receipt of Purchaser shares as set forth on the attached
Exhibit A. In the absence of manifest error, any determination by the Purchaser
as to such allocations shall be final and binding.
(b) The Purchaser shall indemnify and hold harmless the Sellers from and
against any Damages that are the result of, arise out of or relate to any breach
of any representation or warranty or the failure to perform any covenant made by
or on behalf of the Purchaser under this Agreement.
(c) The persons to whom indemnification is provided hereunder are referred
to herein as the "Indemnified Parties" and the persons providing indemnification
are referred to as the "Indemnifying Parties."
Section 5.3. Indemnification Amounts. (a) Notwithstanding any provision to
the contrary contained in this Agreement, the Sellers shall not be obligated to
indemnify the Purchaser for Damages pursuant to this Article V to the extent
they are the result of any breach of any representation or warranty made by or
on behalf of the Company or the Sellers (other than Damages resulting from the
breach of any of the Listed Representations, as to which there shall be no
limitation) unless and until the dollar amount of all Damages shall equal in the
aggregate $5,000, in which case the Sellers will be obligated to indemnify the
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Purchaser for the total amount of Damages including any amounts which would
otherwise not be required to be paid by reason of this Section 5.3(a).
Notwithstanding any provision to the contrary contained in this Agreement, the
Sellers' indemnity obligations hereunder shall be limited to the return of the
Purchaser Shares received by such Sellers, valued at the prices contemplated by
Article I hereof (on a first-in-first-out basis). For purposes of this Article
V, all materiality, Material Adverse Effect and similar qualifications in any
representation, warranty, covenant or other provision hereof shall be ignored.
(b) Notwithstanding any provision to the contrary contained in this
Agreement, the Purchaser shall not be obligated to indemnify the Sellers for any
Damages pursuant to this Article V to the extent they are the result of any
breach of any representation or warranty made by or on behalf of the Purchaser,
unless and until the dollar amount of all such Damages shall equal in the
aggregate $5,000, in which case the Purchaser will be obligated to indemnify the
Sellers for the total amount of Damages including any amounts which would
otherwise not be required to be paid by reason of this Section 5.3(b).
Notwithstanding any provision to the contrary contained in this Agreement, the
Purchaser shall not be obligated to indemnify the Sellers for Damages pursuant
to this Article V in an amount exceeding the consideration paid or to be paid by
the Purchaser pursuant to Article I hereof, valued at the prices contemplated by
Article I hereof (on a first-in-first-out basis).
Section 5.4. Claims. (a) If an Indemnified Party intends to seek
indemnification pursuant to this Article V, such Indemnified Party shall
promptly notify the Indemnifying Party in writing of such claim. The Indemnified
Party will provide the Indemnifying Party with prompt notice of any third party
claim in respect of which indemnification is sought. The failure to provide
either such notice will not affect any rights hereunder except to the extent the
Indemnifying Party is materially prejudiced thereby.
(b) If such claim involves a claim by a third party against the Indemnified
Party, the Indemnifying Party may, within ten days after receipt of such notice
and upon notice to the Indemnified Party, assume, through counsel of its own
choosing and at its own expense, the settlement or defense thereof, and the
Indemnified Party shall cooperate with it in connection therewith, provided,
that the Indemnified Party may participate in such settlement or defense through
counsel chosen by it. If the Indemnified Party reasonably determines that
representation by the Indemnifying Party's counsel of both the Indemnifying
Party and the Indemnified Party may present such counsel with a conflict of
interest, then the Indemnifying Party shall pay the reasonable fees and expenses
of the Indemnified Party's counsel. Notwithstanding anything in this Section 5.4
to the contrary, the Indemnifying Party may not, without the consent of the
Indemnified Party, settle or compromise any action or consent to the entry of
any judgment, such consent not to be unreasonably withheld. So long as the
Indemnifying Party is contesting any such claim in good faith, the Indemnified
Party shall not pay or settle any such claim without the Indemnifying Party's
consent, such consent not to be unreasonably withheld. If the Indemnifying Party
is not contesting such claim in good faith (including if it does not notify the
Indemnified Party of its assumption of the defense of such claim within the ten
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day period set forth above), then the Indemnified Party may conduct and control,
through counsel of its own choosing and at the expense of the Indemnifying
Party, the settlement or defense thereof, and the Indemnifying Party shall
cooperate with it in connection therewith. The failure of the Indemnified Party
to participate in, conduct or control such defense shall not relieve the
Indemnifying Party of any obligation it may have hereunder.
Section 5.5. Indemnification with Respect to Taxes.
(a) Notwithstanding any other provision in this Article V, the Sellers
shall indemnify, defend and hold harmless the Purchaser and, after the Effective
Time, the Company and each of its subsidiaries, and their respective officers,
directors, employees, affiliates, controlling persons, agents and
representatives, and their respective successors and assigns (each, a "Tax
Indemnitee") from and against, and shall reimburse each Tax Indemnitee for, any
and all Taxes (including, without limitation, reasonable expenses of
investigation and reasonable attorneys' and accountants' fees and expenses in
connection with any action, suit or proceeding) actually incurred or suffered at
any time by any Tax Indemnitee arising out of or attributable to (i) any
misrepresentation, inaccuracy or breach of any representation, warranty,
covenant, agreement or promise related to Taxes by the Sellers and/or the
Company and/or any of its subsidiaries contained in this Agreement (or in any
certificate, document, list or schedule delivered to the Purchaser by the
Sellers or the Company or any of its subsidiaries hereunder), (ii) any and all
unpaid Taxes for any Taxable Period ending on or before the Closing Date, except
to the extent that such Taxes are specifically set forth in the reserve for
Taxes accrued on the Financial Statements for the period ended December 31, 1998
(iii) any and all unpaid Taxes, whether determined on a separate, consolidated,
combined, group or unitary basis, including any penalties and interest in
respect thereof, of the Company or any of its subsidiaries (A) pursuant to
Treas. Reg. ss.1.1502-6 or any comparable provision of state, local, or foreign
law with respect to any Taxable Period beginning before the Closing Date and (B)
pursuant to any guaranty, indemnification, Tax sharing, or similar agreement
made on or before the Closing Date relating to the sharing of liability for, or
payment of, Taxes or (iv) any and all Taxes, whether payable before, on, or
after the Closing Date, arising out of or attributable to the cancellation of
promissory notes obligations of the Company and/or any waiver of rights by an
employee or option holder of the Company.
(b) Any Tax or other amount for which indemnification is provided under
this Agreement shall be (i) increased to take account of any Tax detriment
incurred by any Tax Indemnitee arising from the receipt or accrual of indemnity
payments hereunder (i.e., grossed-up for any Tax incurred on such payment,
accrual, and/or increase) and (ii) reduced to take account of any Tax benefit
attributable to the items to which such payments relate.
(c) The indemnitor and its duly appointed representatives shall have the
sole right to negotiate, resolve, settle, or contest any claim for Tax made by a
taxing authority with respect to which the indemnitor has agreed to indemnify a
Tax Indemnitee under this Section 5.5 and with respect to which the indemnitor
has acknowledged in writing such indemnification obligation; provided, however,
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that the indemnitor shall not initiate any claim, settle any issue, file any
amended Tax Return, take or advocate any position or otherwise take any action
that could adversely affect the Tax Indemnitee or any of its affiliates without
the written consent of the Tax Indemnitee, which consent shall not be
unreasonably withheld. If the indemnitor does not assume the defense of a claim
for the Tax made by a taxing authority with respect to which the indemnitor has
indemnified a Tax Indemnitee under this Section 5.5, the Tax Indemnitee may
defend the same at the reasonable expense of the indemnitor in such manner as it
may deem appropriate, including, but not limited to, settling such audit or
proceeding with the consent of the indemnitor, which consent shall not be
unreasonably withheld.
Section 5.6. Exclusive Remedy. Following the Closing, the provisions of
this Article V shall be the exclusive remedy for the matters covered hereby,
provided that nothing herein shall relieve any party from any liability for
fraud. Following the Closing, (i) all notices to the Sellers may be made to the
Representative, (ii) all notices from the Sellers shall be made by the
Representative and (iii) the Representative shall have the power to act for the
Sellers in all matters related to this Agreement.
ARTICLE VI
MISCELLANEOUS
Section 6.1. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given upon receipt by the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to the Purchaser, to:
Cytogen Corporation
600 College Road East
CN 5308
Princeton, New Jersey 08540
Attention: Donald F. Crane, Jr.
Telecopier: (609) 987-1229
with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Attention: Frederick W. Kanner
Telecopier: (212) 259-6333
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(b) if to the Sellers to:
S. Leslie Misrock, Esq., as Representative
1155 Avenue of the Americas
New York, New York 10036
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036-8299
Attention: Edward Brodsky
Telecopier: (212) 969-2900
Section 6.2. Headings. The headings herein are inserted for convenience
only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
Section 6.3. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same instrument.
Section 6.4. Entire Agreement; Assignment. (a) This Agreement and the
exhibits and schedules hereto and the documents and certificates delivered in
connection herewith, and the Confidentiality Agreement and Registration Rights
Agreement, constitute the entire agreement among the parties hereto with respect
to the subject matter hereof, and supersedes all prior and contemporaneous
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
(b) This Agreement shall not be assigned by a party hereto by operation of
law or otherwise; provided, that the Purchaser may assign its rights and
obligations hereunder to any wholly owned subsidiary of the Purchaser, but no
such assignment shall relieve the Purchaser of its obligations hereunder if such
assignee does not perform such obligations.
Section 6.5. Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York, without regard to any
applicable conflicts of law principles. The parties hereto expressly and
irrevocably (i) consent to the exclusive jurisdiction of the federal and state
courts sitting in New York, (ii) agree not to bring any action related to this
Agreement or the transactions contemplated hereby in any other court (except to
enforce the judgement of such courts), (iii) agree not to object to venue in
such courts or to claim that such forum is inconvenient and (iv) agree that
notice or the service of process in any proceeding shall be properly served or
29
<PAGE>
delivered if delivered in the manner contemplated by Section 6.1 hereof. Final
judgement by such courts shall be conclusive and may be enforced in any manner
permitted by law.
Section 6.6. Specific Performance. The parties hereto agree that if any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine,
and that the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
Section 6.7. Publicity. Except as otherwise required by law or the rules
and regulations of any national securities exchange, no party hereto shall issue
any press release or otherwise make any public statement with respect to the
transactions contemplated by this Agreement without prior consultation with the
other parties hereto.
Section 6.8. Binding Nature; No Third Party Beneficiaries. This Agreement
shall be binding upon and inure solely to the benefit of each party hereto and
their permitted successors and assigns, and nothing in this Agreement, express
or implied, is intended to or shall confer upon any other person or persons any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 6.9. Severability. This Agreement shall be deemed severable; the
invalidity or unenforceability of any term or provision of this Agreement shall
not affect the validity or enforceability of this Agreement or of any other term
hereof, which shall remain in full force and effect.
Section 6.10. Interpretation. As used in this Agreement, (a) "including"
(or similar terms) shall be deemed followed by "without limitation" and shall
not be deemed to be limited to matters of a similar nature to those enumerated,
(b) "contract" shall include any note, bond, mortgage, indenture, contract,
agreement, permit, license, sublicense, lease, purchase order, sales order,
arrangement or other commitment, obligation or understanding, (c) "subsidiary"
of any person means another person, an amount of the voting securities, other
voting ownership or voting partnership interests of which is sufficient to elect
at least a majority of its Board of Directors or other governing body (or, if
there are no such voting interests, 50% or more of the equity interests of
which) is owned directly or indirectly by such first person, (d) "ordinary
course of business" (or similar terms) shall be deemed followed by "consistent
with past practice" and (e) "assets" shall include "rights," including rights
under contracts. In determining whether a fact, event or other item has a
Material Adverse Effect, such fact, event or other item shall be considered
individually and in the aggregate with all other facts, events or other items.
Section 6.11. Payment of Expenses. Whether or not the transactions
contemplated by this Agreement shall be consummated, each party hereto shall pay
its own expenses incident to preparing for, entering into and carrying out this
Agreement. The Sellers shall be responsible for all of their own and the
30
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Company's expenses in connection with this Agreement and the transactions
contemplated hereby (including the negotiation and investigation hereof),
including legal, investment banking and accounting fees and expenses.
31
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
CYTOGEN CORPORATION
By: /s/
------------------------
Joseph Reiser, Ph.D.
President and CEO
SELLERS:
/s/
---------------------------
S. Leslie Misrock
/s/
---------------------------
Alan Fox
By: S. Leslie Misrock, as Agent
/s/
---------------------------
Max Link
By: S. Leslie Misrock, as Agent
CC CONSULTING A/S
By: /s/
------------------------
S. Leslie Misrock, as Agent
MISROCK HOLDINGS LP
By: /s/
------------------------
S. Leslie Misrock
General Partner
32
Exhibit 10.2
LIMITED LIABILITY COMPANY AGREEMENT
OF
PSMA DEVELOPMENT COMPANY LLC
Dated June 15, 1999
<PAGE>
TABLE OF CONTENTS
ARTICLE I FORMATION AND NAME: OFFICE; PURPOSE; TERM..........................1
1.1. Organization..........................................................1
1.2. Name of the Company...................................................1
1.3. Principal Place of Business...........................................1
1.4. Purpose...............................................................1
1.5. Company Authority.....................................................2
1.6. Term..................................................................2
1.7. Registered Agent......................................................2
1.8. Members and Initial Contribution......................................2
1.9. Additional Members....................................................2
ARTICLE II CAPITALIZATION.....................................................2
2.1. Capital Accounts......................................................2
2.2. Capital Contributions.................................................3
2.3. Loans.................................................................6
2.4. Budget................................................................6
ARTICLE III PROFITS, LOSSES AND DISTRIBUTIONS.................................7
3.1. Allocation of Profits and Losses......................................7
3.2. Allocation-Rules......................................................9
3.3. Tax Allocations: Section 704(c) of the Code...........................9
3.4. Fiscal Year..........................................................10
3.5. Partnership for Tax Purposes.........................................10
3.6. Tax Matters..........................................................10
3.7. Cash Flow Distributions..............................................11
3.8. Liquidating Distributions Upon Dissolution...........................11
3.9. Tax Distributions....................................................11
3.10. Deficit Capital Account Restoration.................................12
3.11. Other Distributions.................................................12
ARTICLE IV MANAGEMENT........................................................12
4.1. Management Committee.................................................12
4.2. Meetings of Members..................................................18
4.3. Liability and Indemnification........................................18
4.4. Duties, Right to Conduct Other Business..............................19
4.5. Scientific Advisory Board............................................20
4.6. Research Grants......................................................20
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ARTICLE V OFFICERS...........................................................20
5.1. Designation, Authority and Compensation of Officers..................20
5.2. Tenure of Officers...................................................20
ARTICLE VI TRANSFER OF INTERESTS, WITHDRAWAL AND TERMINATION OF MEMBERS......20
6.1. Transfer or Withdrawal Prohibited; Change of Control of a Member.....20
6.2. Regulatory Matters...................................................22
6.3. Default; Buyout/Liquidation Option...................................22
ARTICLE VII DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY..........26
7.1. Events of Dissolution................................................26
7.2. Procedure for Winding Up and Dissolution.............................26
7.3. Termination of Company...............................................26
7.4. License Grants on Dissolution........................................26
ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND TAX ELECTIONS....................27
8.1. Bank Accounts........................................................27
8.2. Fiscal Year..........................................................27
8.3. Method of Accounting.................................................27
8.4. Books and Records....................................................27
8.5. Tax Information......................................................27
ARTICLE IX MARKETING RIGHTS..................................................28
9.1. Grant of North American Marketing Rights.............................28
9.2. Diligence Obligations................................................28
9.3. Assistance by Progenics; Contingent Grant of Rights..................28
9.4. Marketing Agreement..................................................29
9.5. Negotiation Rights...................................................30
9.6. Marketing Compensation...............................................31
9.7. Non-Transferability of Rights........................................31
9.8. Termination of Rights................................................31
9.9. Retention of Rights..................................................32
ARTICLE X DISPUTE RESOLUTION.................................................32
10.1. Escalation Procedure................................................32
10.2. Arbitration.........................................................32
10.3. Injunctive Relief...................................................34
ARTICLE XI MISCELLANEOUS PROVISIONS..........................................34
11.1. Assurances..........................................................34
11.2. Disclaimer of Agency................................................34
ii
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11.3. Entire Agreement; Amendment.........................................34
11.4. Notices.............................................................34
11.5. Counterparts........................................................35
11.6. Governing Law.......................................................35
11.7. Binding Effect......................................................35
11.8. Severability........................................................35
11.9. Survival of Rights, Duties and Obligations..........................35
11.10. Captions and Exhibits..............................................35
11.11. Specific Performance...............................................35
11.12. Assignability......................................................35
11.13. Confidentiality....................................................36
iii
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
PSMA DEVELOPMENT COMPANY LLC
This Limited Liability Company Agreement (this "Agreement") is
made this 15th day of June, 1999, by and among Progenics Pharmaceuticals, Inc.,
a Delaware corporation ("Progenics"), CYTOGEN Corporation, a Delaware
corporation ("CYTOGEN"), and PSMA Development Company LLC, a Delaware limited
liability company (the "Company").
EXPLANATORY STATEMENT
The parties have agreed to organize and operate the Company
pursuant to the Delaware Limited Liability Company Act (the "Act") in accordance
with the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the
parties, intending to be legally bound, agree as follows:
ARTICLE I.........
FORMATION AND NAME: OFFICE; PURPOSE; TERM
1.1. Organization. The parties have organized the Company pursuant to the
Act and the provisions of this Agreement and, for that purpose, have caused a
Certificate of Formation (the "Certificate"), in the form attached as Exhibit A,
to be executed and filed as required by the Act.
1.2. Name of the Company. The name of the Company shall be PSMA Development
Company LLC, and all Company business must be conducted under that name or such
other name that complies with applicable law as the Management Committee (as
hereinafter defined) may select from time to time.
1.3. Principal Place of Business. The Company's principal place of business
shall be c/o Progenics Pharmaceuticals, Inc., 777 Old Saw Mill River Road,
Tarrytown, New York 10591 or any other place of business as the Management
Committee may from time to time deem advisable.
1.4. Purpose. The purposes of the Company are to:
(i) acquire, exploit, control and distribute all licensing/sublicensing
rights regarding products in the Field, as such term is defined in Section 1.9
of the PSMA/PSMP License Agreement, dated the date hereof, by and among
Progenics, CYTOGEN and the Company (the "PSMA/PSMP License Agreement");
<PAGE>
(ii) research, develop, manufacture or have manufactured, market and
promote or have marketed and promoted and otherwise commercialize products in
the Field;
(iii) raise capital for the foregoing;
iv) engage in any and all things necessary, convenient or incidental
thereto; and
(v) engage in any other business or activity lawful under the Act and
authorized by the Management Committee.
1.5. Company Authority. The Company shall have the power and authority to
take any and all actions necessary, appropriate, convenient or incidental to or
for the furtherance of the purposes set forth herein, including all of the
powers of a limited liability company under the Act.
1.6. Term. The term of the Company (the "Term") shall commence upon the
date the Certificate is filed as required by the Act and shall be perpetual
unless terminated as provided in this Agreement.
1.7. Registered Agent. The name and address in Delaware of the Company's
registered agent upon whom and at which process against the Company can be
served is Corporation Service Company, 1013 Centre Road, Wilmington, Delaware
19805, or such other person or such other persons as may be designated by the
Management Committee.
1.8. Members and Initial Contribution. The names, taxpayer identification
numbers and present mailing addresses of the members (the "Members") of the
Company are set forth in Schedule A attached hereto. The initial ownership
interest in the Company of each of Progenics and CYTOGEN, as the initial
Members, shall be 50%. Each Member's interest in the Company (an "Interest")
shall at all times be equal to such Member's Percentage, as defined in Section
2.2 hereof. The Interest of each Member is subject to change from time to time
as provided herein. Each of Progenics and CYTOGEN is admitted as a Member of the
Company effective contemporaneously with the execution by such person of this
Agreement.
1.9. Additional Members. Additional persons or entities may be admitted as
Members of the Company only upon the prior written consent or approval of the
Management Committee, which may grant or withhold admission in its sole and
absolute discretion.
ARTICLE II
CAPITALIZATION
2.1. Capital Accounts. (a) An individual capital account (the "Capital
Account") shall be maintained for each Member in accordance with the capital
account maintenance rules set forth in Treasury Regulation Section 1.704-1(b).
Without limiting the generality of the foregoing, a Member's Capital Account
shall be increased by (a) the amount of money contributed by the Member to the
Company,
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<PAGE>
(b) the fair market value of property (other than Intellectual Property (as
defined below) unless all Members shall agree to assign a value to such property
for purposes of this Article II hereafter contributed by such Member to the
Company, net of liabilities secured by such property, and (c) allocations to the
Member of the Company's net income and gains (as determined for federal income
tax purposes but on the basis of the book values of the Company's assets). A
Member's Capital Account shall be decreased by (i) the amount of money
distributed to the Member, (ii) the fair market value of any property (other
than any Intellectual Property transferred previously by Progenics or CYTOGEN to
the Company without any value being reflected in the transferor Member's Capital
Account if such property is reconveyed to the transferor Member) distributed to
the Member, as determined by the distributee Member and the Company (net of any
liabilities secured by the property) after adjusting each Member's Capital
Account by such Member's share of the unrealized income, gain, loss and
deduction inherent in such property and not previously reflected in such Capital
Account, as if the property had been sold for its then fair market value on the
date of distribution, (iii) expenditures described, or treated under Section
704(b) of the Code as described, in Section 705(a)(2)(B) of the Code, and (iv)
the Member's share of losses and deductions. For purposes of this Agreement,
"Intellectual Property" shall include inventions (patented or unpatented),
improvements, rights under patents and patent applications, unpublished research
and development information, formulae, processes, expertise, know-how, trade
secrets and technical data.
(b) This Section 2.1 and the other provisions of this Agreement relating to
maintenance of Capital Accounts are intended to comply with Treasury Regulation
Section 1.704-1(b) and shall be interpreted and applied in a manner consistent
with such Treasury Regulations. In the event the Management Committee shall
determine that it is prudent to modify the manner in which the Capital Accounts,
or any debits or credits thereto, are computed in order to comply with such
Treasury Regulations, the Management Committee may make such modification;
provided, however, that it shall not have an adverse effect on the amounts
distributable to any Member.
2.2. Capital Contributions. (a) Each Member's share of Capital
Contributions and each Member's Percentage (each as defined hereinafter) shall
be set forth on Schedule A, which shall be updated by the Management Committee
upon any changes in any Member's share of total Capital Contributions. As used
herein, (i) the term "Capital Contribution" shall mean a contribution to the
capital of the Company made by a Member pursuant to this Agreement, (ii) the
term "Percentage" shall mean a Member's share of the Adjusted Capital
Contributions expressed as a percentage of the aggregate Adjusted Capital
Contributions of all Members; and (iii) the term "Adjusted Capital
Contributions" shall mean a Member's Capital Contributions as adjusted pursuant
to the terms of this Agreement (but excluding, for these purposes, in the case
of Progenics, the Progenics R&D Capital Contributions as defined in Section
2.2(d) hereof and the Supplemental Capital Contributions as defined in Section
2.2(e) hereof and, in the case of CYTOGEN, any [CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED] as defined in Section 2.2(e) hereof).
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(b) Simultaneously herewith, the Members are contributing to the Company
cash in the amounts set forth on Schedule A.
(c) (i) The Management Committee may from time to time, in connection with
preparing the Budget (as defined hereinafter) or otherwise, call for the Members
to make additional capital contributions (the "Additional Capital
Contributions"), in which event the Management Committee shall give notice to
each Member of: (A) the total amount of the Additional Capital Contribution
being called; (B) the reason the Additional Capital Contribution is being
called; (C) each Member's proportionate share of the total Additional Capital
Contribution (determined in accordance with this Section 2.2(c); and (D) the
date the Additional Capital Contribution is due and payable, which date shall
not, without the written consent of the Members, be less than 30 nor more than
90 calendar days after the notice has been given. A Member's share of the total
Additional Capital Contribution shall be equal to the product obtained by
multiplying the Member's Percentage and the total Additional Capital
Contribution required. A Member's share shall be payable in cash, by certified
check or wire transfer. No Additional Capital Contribution by any Member may be
made or required to be made on an in-kind or any other non-cash basis unless
consented to in writing by each of the Members. Upon payment of the Additional
Capital Contributions, the Capital Contributions of each Member shall be
adjusted.
(ii) If a Member (the "Non-Contributing Member") fails to pay when due all
or any portion of any Additional Capital Contribution called by the Management
Committee (the amount not contributed being a "Failed Contribution"), and the
other Member (the "Contributing Member") makes proper and timely payment of its
portion of the Additional Capital Contribution, then the following adjustments
shall be made:
(1) the Adjusted Capital Contributions of the Non-Contributing Member shall
automatically and without further act on the part of any party be adjusted by
reducing the amount of the Non-Contributing Member's Adjusted Capital
Contributions by 10% (the "Reduction Amount") of the amount of the Failed
Contribution and increasing the amount of the Contributing Member's Adjusted
Capital Contributions by the Reduction Amount; and
(2) the Percentages of the Members shall be adjusted to stand in the ratio
of their respective Adjusted Capital Contributions, and Schedule A shall be
amended accordingly.
(iii) If a Non-Contributing Member fails to pay when due all or any portion
of any Additional Capital Contribution called for by the Management Committee,
the Management Committee shall give notice (a "Non-Contribution Notice") within
15 days after the date such Additional Capital Contribution is due and payable
to the Contributing Member, and the Contributing Member shall have the option
(but not the obligation) to make an Additional Capital Contribution by reason of
such default (a "Default Contribution") to the Company in an amount not in
excess of the Failed Contribution. Any Default Contribution, if made, must be
4
<PAGE>
funded within 30 calendar days after delivery of the Non-Contribution Notice,
or, if the Management Committee shall fail to give the Non-Contribution Notice,
within 45 calendar days after the date such Additional Capital Contribution is
due and payable.
(iv) Except as expressly stated herein, no Member shall be required to
contribute any additional capital to the Company, and no Member shall have any
personal liability for any debt, obligations, or liability of the Company. The
rights provided in this Section 2.2(c) shall be the exclusive remedies available
to the Company and any Contributing Member against any Non-Contributing Member
for such Non-Contributing Member's failure to pay when due any Additional
Capital Contribution called for by the Management Committee.
(d) Progenics shall be required to make additional Capital Contributions to
the Company of up to [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED] to fund the
Company's research and development programs as budgeted in the work plans (the
"Work Plans") described in Section 2 of the Services Agreement, dated as of the
date hereof, between Progenics, CYTOGEN and the Company (the "Services
Agreement"), subject to the terms and conditions described below. The amounts so
funded are referred to herein as the "Progenics R&D Capital Contributions."
[CONFIDENTIAL TREATMENT HAS BEEN REQUESTED] The Progenics R&D Capital
Contributions shall be provided and applied when and as needed (as determined in
the reasonable discretion of the Management Committee) to fund the Company's
research and development programs through and including the filing by the
Company of an Investigational New Drug application with the U.S. Food and Drug
Administration (the "FDA") with respect to a product under development by the
Company (an "IND Filing"). Progenics shall not be obligated to fund through
Progenics R&D Capital Contributions, and Progenics R&D Capital Contributions
shall not be applied to fund (i) any clinical development or other activities of
the Company with respect to a product beyond an IND Filing or (ii) any
administrative or other non-research and development functions, activities or
expenses. During the period ending with the discharge in full of Progenics'
funding obligation under this Section 2.2(d), Progenics shall have the right to
direct the application of the Progenics R&D Capital Contributions in accordance
with the Work Plans. Notwithstanding the foregoing, if Progenics ceases to be a
Member in the Company before Progenics has funded to the Company all amounts
required pursuant to this Section 2.2(d), Progenics shall be relieved of its
funding obligation with respect to such portion of the Progenics R&D Capital
Contributions not theretofore funded.
(e) [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED] The parties intend that
such reduction in Progenics' obligation to make Progenics R&D Capital
Contributions shall reduce Progenics R&D Capital Contributions applied to fund
development of a vaccine-based product. [CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED]
(f) Progenics shall be required to make additional Capital Contributions
(the "Supplemental Capital Contributions") to the Company in the following
amounts not later than five business days after the dates indicated:
5
<PAGE>
Amount Date
- ------ ----
$500,000 The date of this Agreement;
$500,000 On the earlier to occur of (i) the date that is six months after
the date of this Agreement or December 31, 1999;
$500,000 On the earlier to occur of (i) the date on which the Management
Committee by written resolution identifies a lead compound for
product development or (ii) December 31, 2000; and
$500,000 On the earlier to occur of (i) the date on which the FDA
approves an Investigational New Drug application with respect to
a Licensed Product(as defined in the PSMA/PSMP License Agreement)
or (ii) December 31, 2001.
Notwithstanding the foregoing, Progenics shall have no obligation to make any
Supplemental Capital Contribution if at the time any such capital contribution
is due Progenics is not a member of the Company.
(g) No Member shall be paid interest on its Capital Contributions. Except
as otherwise provided in this Agreement, no Member shall have the right to
receive any return of or on any Capital Contribution.
2.3. Loans. The Management Committee may, in its sole discretion, authorize
and cause the Company to borrow from any person (including a Member) on such
terms and subject to such conditions as the Management Committee shall
determine. No Member shall be required to lend funds to the Company or to
guarantee or provide security or any other form of credit support with respect
to any such borrowing.
2.4. Budget. (a) The Management Committee shall promptly prepare a budget
for the Company's activities covering such time period as the Management
Committee shall deem appropriate. The Budget may include provisions for
Additional Capital Contributions to made by the Members. The Management
Committee shall meet to review and update the Budget on a semi-annual basis or
as it may otherwise determine to be appropriate.
(b) If at any time the Management Committee is unable to agree upon a
proposed Budget or a proposed update to the Budget (a "Budget Dispute"), such
disagreement will be resolved in accordance with the management deadlock
provisions contained in Section 4.1(f) hereof (provided that if any portion of
the Budget is not in dispute, the provisions of such undisputed portion shall be
implemented to the extent practicable). If a Budget Dispute is submitted to
arbitration, and the arbitrator determines that a Member (the "Uncooperative
Member") acted in bad faith in unreasonably withholding approval of a proposed
Budget, the Adjusted Capital Contributions of the Uncooperative Member and the
other Member shall without further act on the part of any party be adjusted by
reducing the amount of the Uncooperative Member's Adjusted Capital Contributions
by the greater of (A) [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED] of the
6
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Uncooperative Member's pro rata share of any Additional Capital Contribution
required by the arbitrator (if the dispute involved an Additional Capital
Contribution) or (B) [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED] of the
Uncooperative Member's Adjusted Capital Contributions, and increasing the amount
of the other Member's Adjusted Capital Contributions by such amount.
ARTICLE III
PROFITS, LOSSES AND DISTRIBUTIONS
3.1. Allocation of Profits and Losses. (a) The Company's profits and losses
(as determined for federal income tax purposes but as adjusted under the rules
of Treasury Regulation Section 1.704-1(b)(2)(iv)) for each Fiscal Year shall be
allocated to the Members (i) first, in such amounts as will adjust the Capital
Account balances of each of the Members to be in the same proportion as the
Members' respective Percentages and (ii) thereafter, in proportion to the
Members respective Percentages.
(b) Notwithstanding Section 3.1(a) hereof, losses allocated pursuant to
Section 3.1(a) to any Member for any Fiscal Year shall not exceed the maximum
amount of loss that may be allocated to such Member without causing such Member
to have an Adjusted Capital Account Deficit (as defined hereinafter) at the end
of such Fiscal Year. Any loss in excess of the limitation in this Section 3.1(b)
shall be specially allocated solely to the other Members to the maximum extent
permitted by this Section 3.1(b). "Adjusted Capital Account Deficit" means a
deficit Capital Account balance after that balance has been adjusted pursuant to
the penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5).
(c) Notwithstanding Section 3.1(a) hereof, the following special
allocations shall be made in the following order prior to the application of
Section 3.1(a) hereof:
(i) If there is a net decrease in Company minimum gain ("Minimum Gain") (as
such decrease is determined as provided in Treasury Regulations Sections
1.704-2(d) and 1.704-2(g)) during any Fiscal Year, certain items of income and
gain, including gross income or gain, shall be allocated to the Members in the
amounts and manner described in Treasury Regulations Section 1.704-2(f). This
Section 3.1(c)(i) is intended to comply with the minimum gain chargeback
requirement relating to partnership non-recourse liabilities (as defined in
Treasury Regulations Section 1.704-2(b) and shall be so interpreted
(ii) If there is a net decrease in Minimum Gain attributable to partner
non-recourse debt (determined pursuant to Treasury Regulations Section
1.704-2(i)) during any Fiscal Year, certain items of income and gain, including
gross income or gain, shall be allocated as quickly as possible to those Members
which had a share of the Minimum Gain attributable to the partner non-recourse
debt (such share to be determined pursuant to Treasury Regulations Section
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<PAGE>
1.704-1(i)(5)) in the amounts and manner described in Treasury Regulations
Sections 1.704-2(i) and (j). This Section 3.1(c)(ii) is intended to comply with
the minimum gain chargeback requirement relating to partner non-recourse debt
set forth in Treasury Regulations Section 1.704-2(i)(4)) and shall be so
interpreted.
(iii) Deductions attributable to obligations with respect to which a Member
bears the economic risk of loss within the meaning of Treasury Regulation
Section 1.704-2(b)(4) shall be allocated to the Member or Members that bear the
economic risk of loss for such debt in accordance with the requirements of
Treasury Regulation Section 1.704-2(i)(1). "Nonrecourse Deductions" (as such
term is defined in Treasury Regulations Sections 1.704-2(b)(1) and 1.704-2(c))
of the Company shall be allocated to the Members in proportion to their
Percentages.
(iv) If one or more of the Members unexpectedly receives any adjustment,
allocation or distribution described in Treasury Regulations Sections 1.704-1
(b)(2)(ii)(d)(4), (5) or (6), then items of income and gain shall be specially
allocated to such Members in an amount and manner sufficient to eliminate the
Adjusted Capital Account Deficit created by such adjustments, allocations or
distributions as quickly as possible, provided that an allocation pursuant to
this Section 3.1(c)(iv) shall be made only if and to the extent that such Member
would have an Adjusted Capital Account Deficit after all other allocations
provided for in this Section 3.1 have been tentatively made as if this Section
3.1(c)(iv) were not in this Agreement. This provision is intended to qualify as
a "qualified income offset" within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(d).
(v) If one or more of the Members has a deficit Capital Account at the end
of any Fiscal Year which is in excess of the sum of (i) the amount such Member
is obligated to contribute pursuant to any provision of this Agreement and (ii)
the amount such Member is deemed to be obligated to restore pursuant to the
penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5), each such Member shall be specially allocated items of Company
income and gain in the amount of such excess as quickly as possible, provided
that an allocation pursuant to this Section 3.1(c)(v) shall be made only if and
to the extent that such Member would have a deficit Capital Account in excess of
such sum after all other allocations provided for in this Section 3.1 have been
made as if Section 3.1(c)(iv) hereof and this Section 3.1(c)(v) were not in the
Agreement.
(vi) The allocations set forth in Sections 3.1(b) and 3.1(c)(i)-(v) hereof
(the "Regulatory Allocations") are intended to comply with certain requirements
of the Treasury Regulations. It is the intent of the Members that, to the extent
possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of Company
income, gain, loss or deduction pursuant to this Section 3.1(c)(vi). Therefore,
the Management Committee shall make such offsetting special allocations of
Company income, gain, loss and deduction in whatever manner they determine
appropriate, so that, after such offsetting allocations are made, each Member's
Capital Account balance is, to the extent possible, equal to the Capital Account
balance such Member would have if the Regulatory Allocations were not part of
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the Agreement and all Company items were allocated pursuant to Section 3.1(a).
In exercising its discretion, the Management Committee shall take into account
future Regulatory Allocations pursuant to Sections 3.1(c)(i) and (ii) hereof
that, although not yet made, are likely to offset other Regulatory Allocations
previously made under Section 3.1(c)(iii) hereof.
(vii) If the Internal Revenue Service reallocates an item of income,
deduction or loss to a Member or an affiliate ("Affiliate") pursuant to Section
482 of the Code or any similar rule or principle of law (a "Member Section 482
Allocation"), and the Company has a corresponding correlative item of deduction,
loss or income (as determined under Section 1.482-1(g) of the Regulations (the
"Company Correlative Item"), such Company Correlative Item shall be specially
allocated to and reflected in the Capital Account of the Member that received
(or whose Affiliate received) such Member Section 482 Allocation, and a
corresponding deemed contribution or distribution shall likewise be credited or
debited to the Capital Account of such Member.
(viii) If the Internal Revenue Service reallocates an item of income,
deduction or loss to the Company pursuant to Section 482 of the Code or any
similar rule or principle of law (a "Company Section 482 Allocation"), and any
Member has a corresponding correlative item of deduction, loss or income (as
determined under Section 1.482-1(g) of the Regulations (the "Member Correlative
Item")), such Company Section 482 Allocation shall be specially allocated to and
reflected in the Capital Account of the Member that received (or whose Affiliate
received) such Member Correlative Item, and a corresponding deemed contribution
or distribution shall likewise be credited or debited to the Capital Account of
such Member.
(ix) If any Member is required to contribute an amount to the Company
pursuant to the last sentence of Section 3.9 hereof, special allocations of
gross items of income, gain, loss and deduction shall be made to the Members to
ensure that after such contribution and all liquidating distributions to the
Members, each of the Members' Capital Account balances will equal zero.
3.2. Allocation-Rules. (a) For purposes of determining the profits, losses
or any other items allocable to any period, profits, losses and any such other
items shall be determined on a daily, monthly or other basis, as determined by
the Management Committee using any method that is permissible under Section 706
of the Code and the Treasury Regulations thereunder.
(b) The Members are aware of the income tax consequences of the allocations
made by this Article III and hereby agree to be bound by the provisions of this
Article III in reporting their shares of Company income and loss for income tax
purposes.
3.3. Tax Allocations: Section 704(c) of the Code. (a) In accordance with
Section 704(c) of the Code and the Treasury Regulations thereunder, income,
gain, loss and deduction with respect to any property contributed to the capital
of the Company or which has been adjusted pursuant to Treasury Regulation
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Section 1.704-1 (b)(2)(iv)(f) shall, solely for income tax purposes, be
allocated among the Members so as to take account of any variation between the
adjusted basis of such property to the Company for federal income tax purposes
and its fair market value reflected in the capital accounts initially or on
adjustment, as the case may be.
(b) Any elections or other decisions relating to allocations under this
Section 3.3 shall be made by the Management Committee in any manner that
reasonably reflects the purpose and intention of this Agreement. Allocations
pursuant to this Section 3.3 are solely for purposes of federal, state and local
taxes and shall not affect, or in any way be taken into account in computing,
any Member's Capital Account or share of profits, losses, other items or
distributions pursuant to any provision of this Agreement.
3.4. Fiscal Year. The Fiscal Year of the Company for both tax and
accounting purposes (the "Fiscal Year") shall be the calendar year.
3.5. Partnership for Tax Purposes. The Members hereby agree that the
Company shall be treated as a partnership for tax purposes under the United
States federal, state and local income tax laws or other laws, and further agree
not to take any position or to make any election, in a tax return or otherwise,
inconsistent herewith,
3.6. Tax Matters. (a) The tax matters partner ("Tax Matters Partner") for
purposes of Section 623 of the Code shall be Progenics. Unless otherwise
required by law, the Tax Matters Partner (i) shall not take any action pursuant
to this Section 3.6 unless such action has been consented to by each Member and
(ii) shall perform all such duties and responsibilities as directed by each
Member.
(b) All elections by the Company for income and franchise tax purposes and
all determinations regarding the book basis, depreciation or amortization of any
Company assets, and all other matters relating to all tax returns (including
amended returns), including the characterization and allocation of income and
loss, filed by the Company, including tax audits and related matters and
controversies, shall be made and conducted by the Tax Matters Partner at the
expense of the Company, subject to the approval of each Member. The Tax Matters
Partner shall, at the expense of the Company and subject to the approval of each
Member, cause to be prepared and filed all tax returns (including amended
returns) required to be filed by the Company; provided, however, that CYTOGEN
shall have the opportunity to review any and all tax returns in advance of such
filing. In the event of a dispute between the Members concerning the preparation
and filing of the Company's tax returns, the Members hereby agree to submit the
dispute to arbitration to one of the major nationally-recognized certified
public accounting firms, whose decision on the matter shall be final and
binding.
(c) The Tax Matters Partner shall be responsible for all negotiations on
behalf of the Company with the Internal Revenue Service or the Departments of
the Treasury or Justice or any state or local tax authority with respect to the
income tax treatment of Company items, and shall provide each Member with the
opportunity, at the expense of the Company, to participate in any such
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negotiations. The Tax Matters Partner shall not bind any Member to a settlement
agreement unless each Member has given its written consent to such agreement.
3.7. Cash Flow Distributions. Cash flow distributions of the Company shall
be made only after payment of all liabilities and expenses of the Company and
establishment of reasonable reserves. Such distributions shall be made to the
Members in accordance with their Percentages at such times and in such amounts
as determined by the Management Committee in its sole, exclusive and complete
discretion.
3.8. Liquidating Distributions Upon Dissolution. Upon dissolution of the
Company, the remaining assets shall be applied as follows:
(a) First, to payment of the liabilities of the Company owing to third
parties and then to Members, as creditors. After payment of any such known
liabilities, the Management Committee shall set up such reasonable reserves as
it deems reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Company. Such reserves shall be held in a separate account
for the purpose of paying any such contingent or unforeseen liabilities or
obligations, and, at the expiration of such period as the Management Committee
may deem advisable, such reserves shall be distributed to the Members or their
assigns in the manner set forth in Section 3.8(b) hereof.
(b) Second, to the Members in accordance with their Capital Account
balances. If such distributions are insufficient to return to any Member the
full amount of its Capital Account, such Member shall have no recourse against
any other Member. If the Management Committee determines that the Company should
distribute any of its assets in kind, such assets shall, except as set forth in
the following sentence, be distributed on the basis of their fair market values,
as determined by an appropriate appraisal procedure as set forth or approved by
the Management Committee, and the Capital Accounts of the Members shall be
adjusted prior to liquidating distributions being made to reflect how any
resulting gain or loss would have been allocated under Section 3.1 hereof if
such assets had been sold. In the event of a dispute over the proper valuation
of the Company's in-kind assets, either Member shall have the right to submit
such dispute to arbitration in accordance with Section 10.2 hereof. Each Member
shall have the right to require the Company to make the distributions set forth
in this Section 3.8(b) first with any in-kind assets contributed by such Member
to the Company, but only to the extent such distributions do not exceed the
amount to which such Member is entitled pursuant to this Section 3.8(b);
provided, however, that any and all Intellectual Property transfers from a
Member to the Company that were transferred without any value being reflected in
the transferor's Capital Account shall be reconveyed to the transferor in
addition to, and without diminishing, any other distributions to which the
transferor shall be entitled. Upon the Company's dissolution, any and all rights
to other Intellectual Property, developed or acquired by the Company prior to
its dissolution (such Company developments and acquisitions collectively
referred to as the "Company Inventions"), shall be co-owned by Progenics and
CYTOGEN.
3.9. Tax Distributions. To the extent that for any Fiscal Year the amount
of net income and gains of the Company allocated to each Member exceeds the
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amount of losses of the Company allocated to that Member for that and prior
Fiscal Years reduced by the amount of net income and gains of the Company
allocated to the Members for prior Fiscal Years, the Management Committee shall
use reasonable efforts to cause the Company to distribute to each Member, as an
advance against the amounts thereafter distributable to it pursuant to Sections
3.7 and 3.8, no later than April 1 of the following year, an amount of cash
equal to (a) the amount reasonably calculated by the Management Committee to
equal the amount of the federal, state and local tax liability on that excess
(based on the highest individual or corporate marginal federal income tax rate
for that year and the percentage with respect to state and local income tax
rates for that year that the Management Committee determines appropriate), less
(b) the aggregate amount of prior distributions by the Company to that Member
for such Fiscal Year. No such distribution shall be made, however, to the extent
that distributions are restricted under the terms of any note or agreement
relating to borrowings by the Company or to the extent that the Management
Committee determines that the cash is necessary for the operation of the
business of the Company or for the establishment of reasonable reserves or if
the Company would be rendered insolvent. The Management Committee shall, to the
extent practical, make distributions under this Section 3.9 annually based on
projections of income. If upon the liquidation of the Company the aggregate
amount of distributions to any Member pursuant to this Section 3.9 exceeds the
aggregate amount that would have been distributed to that Member pursuant to
Sections 3.7 and 3.8 hereof (had there been no distributions pursuant to this
Section 3.9), then that Member shall pay to the Company an amount equal to such
excess, to be distributed to the other Member in accordance with Sections 3.7
and 3.8 hereof.
3.10. Deficit Capital Account Restoration. Except as provided in the last
sentence of Section 3.9 hereof, no Member shall have any obligation to make
Additional Capital Contributions to the Company in order to restore any deficit
Capital Account balance upon liquidation of the Company or liquidation of such
Member's Interest in the Company.
3.11. Other Distributions. Except as provided in this Agreement, no Member
shall be entitled to receive any distribution from the Company without the
consent of all other Members.
ARTICLE IV
MANAGEMENT
4.1. Management Committee. (a) Except as otherwise reserved to the Members
pursuant to this Agreement, the overall management and control of the Company
shall be exercised by the Members through a committee (the "Management
Committee"). Except as determined by the Management Committee pursuant to this
Article IV or otherwise pursuant to this Agreement, no Member shall have any
right or authority to take any action on behalf of the Company with respect to
third parties.
(b) The Management Committee shall consist of four individuals (each, a
"Representative") or such other number of individuals as the Management
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Committee may, from time to time determine. Of the initial members of the
Management Committee, two shall be appointed by Progenics and two shall be
appointed by CYTOGEN. The initial Representatives of the Management Committee
are:
Progenics: [CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED]
CYTOGEN: [CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED]
Each Representative shall hold office until death, resignation or removal at the
pleasure of the Member which appointed such Representative. If a vacancy occurs
on the Management Committee, the Member which appointed the vacating
Representative shall appoint such Representative's successor.
(c) Meetings of the Management Committee shall be held on two Business Days
(as defined herein) written notice (which may be waived and shall be deemed to
be waived by attendance at the meeting, unless an individual objects, prior to
or at the beginning of the meeting, to holding the meeting or transacting
business at the meeting). Attendance may be in person or by conference
telephone. Notwithstanding the number of Representatives on the Management
Committee, each Member's Representatives shall be required to vote as a block
("Voting Block") on behalf of such Member. The Voting Block of a Member's
Representatives as of any given date shall equal such Member's Percentage as of
such date. The Voting Blocks shall be automatically adjusted upon any change in
Percentage of any appointing Member. Except as set forth in the next sentence,
the Management Committee shall act by vote of the Representative(s) whose Voting
Block constitutes more than [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED] of the
aggregate Voting Blocks of all Representatives, at a meeting of the Management
Committee duly called and held.
(i) All Major Decisions (as defined hereinafter) shall be made by a vote of
the Representative(s) whose Voting Block constitutes more than [CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED] of the aggregate Voting Blocks of all
Representatives (a "Supermajority Vote"). A "Major Decision" means decisions
concerning the merger or consolidation of the Company or the sale of all or
substantially all of the Company's assets.
(ii) The vote of each Member shall be cast by such Member's Managing
Representative (as defined hereinafter). The Management Committee may also act
by unanimous written consent of the Representatives. The Representatives shall
not be compensated for their services as such, but shall be entitled to
indemnification by the Company in accordance with Section 4.3 hereof. Any
Deadlock (as defined hereinafter) of the Management Committee shall be resolved
pursuant to Section 4.1(f) hereof.
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(d) Any Representative on the Management Committee (or alternatively the
Member who appointed such Representative) may appoint another Representative on
the Management Committee to act for him or her, and the Management Committee may
delegate in writing, to any of the Representatives or to any Member or to any
other agent such authority to act on its behalf or on behalf of the Company as
it shall deem appropriate.
(e) Subject to the other provisions of this Agreement and the requirements
of applicable law, the Management Committee shall have the full, complete and
exclusive power and discretion to take all action that it considers necessary or
desirable in connection with the management of the Company, and may exercise, on
behalf of the Company, all of the powers of a limited liability company under
the Act including, without limitation, the following powers:
(i) to enter into contracts or agreements of any kind, including selling,
leasing, conveying, licensing, exchanging or otherwise transferring or disposing
of any Company property or assets, as well as contracts of guaranty and
suretyship with any person including with any Member, Representative or
affiliate of either of them without the vote of the Members;
(ii) to determine the strategies and methods for developing and
commercializing products and for exploiting the intellectual property rights of
the Company;
(iii) to establish and maintain, or cause to be maintained, the Capital
Accounts of the Members and the books and records of the Company as required by
law and by this Agreement;
(iv) to appoint such Officers (as defined hereinafter) of the Company as
the Management Committee determines desirable, and such Officers of the Company:
(1) need not be members or Representatives;
(2) shall have the powers and duties delegated to them by the
Management Committee; and
(3) shall serve at the pleasure of the Management Committee;.
(v) to employ and dismiss attorneys, accountants, independent auditors,
custodians, brokers and such other advisers or agents in connection with any
matter relating to the business of the Company (including, without limitation,
the Representatives on the Management Committee or persons or firms affiliated
with them) and to make payment for such services and other expenses out of the
funds of the Company;
(vi) to open, maintain and close bank accounts for the Company;
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(vii) to sign checks of the Company;
(viii) to admit additional members to the Company;
(ix) to call meetings of the Members of the Company;
(x) to declare and make distributions;
(xi) to permit, require or prohibit withdrawals of capital from and Capital
Contributions to the Company;
(xii) to hold part of the assets of the Company in cash without liability
for interest or the payment of expenses or the making of distributions
therewith;
(xiii) to determine the accounting period or accounting periods to which
any income, gain, obligation, loss, liability, deduction or expense is
attributable;
(xiv) to prepare, execute and file tax returns or information returns for
the Company and to make tax elections as they deem appropriate, subject to the
provisions of Section 3.6 hereof;
(xv) to incur indebtedness for any purpose;
(xvi) to make loans, including loans to Members, and to provide
indemnification or guarantee the indebtedness and obligations of others,
including Members;
(xvii) to settle, compromise, assign, pledge, transfer, release, submit to
arbitration, or stipulate to judgment, or consent to do the same, any claim,
suit, demand or judgment against the Company;
(xviii) to delegate authority to subcommittees, Members, Representatives,
Officers or other parties to take actions on behalf of the Company consistent
with the terms of this Agreement and to execute documents on behalf of the
Company in connection therewith; and
(xix) to bring, threaten to bring or prosecute, on behalf of the Company,
any claim in a judicial proceeding or arbitration forum.
(f) If, at any time the vote of the Representatives required to approve
action with respect to a particular matter has not been obtained after
comprehensive discussion between the Representatives, and such failure to obtain
the requisite vote impedes in any material respect the Company's ability to
continue its business (the "Deadlock"), the Deadlock shall first be submitted
(the "Submission") by the Management Committee (but if the Management Committee
cannot agree on the form or substance of the Submission, the Submission may be
made by any Representative) to the Chief Executive Officer of Progenics and the
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Chief Executive Officer of CYTOGEN for review and discussion. Such persons shall
meet as soon as possible after the Submission is given, and in any event within
ten calendar days, and endeavor in good faith to resolve the matter. If these
officers do not, within ten calendar days after they first meet, or within 20
calendar days after the Submission is given, mutually resolve the Deadlock or
agree on a method of resolving the Deadlock, either Member may, within the 30
calendar day period following such 20 calendar days after delivery of the
Submission, by written notice given to the other Member within such 30 day
period, cause the Deadlock to be submitted to arbitration pursuant to Section
10.2 hereof.
(g) (i) If submission of a Deadlock to the procedures described in Section
4.1(f) does not, within the time periods specified in Section 4.1(f) hereof,
result in resolution of the Deadlock, submission of the Deadlock to arbitration
or agreement by the Members on an alternative dispute resolution procedure,
either party may elect to exercise the buy/sell right contained in this Section
4.1(g) (the "Buy/Sell Right"). The Member electing to exercise the Buy/Sell
Right (the "Offeror") shall furnish in writing to the other Member (the
"Offeree") the Offeror's irrevocable, unconditional (except as provided herein)
and binding offer (such notice being referred to herein as the "Exercise
Notice") to purchase the Offeree's Interest or to sell the Offeror's Interest
for a cash purchase price determined in accordance with Section 4.1(g)(ii)
hereof (the "Purchase Price"). The Exercise Notice shall set forth an amount
expressed in dollars and without contingencies (the "Valuation"), which amount
shall be used to calculate, in accordance with Section 4.1(g)(ii) hereof, the
Purchase Price. The Valuation is intended to represent the amount that would be
payable for 100% of the Interests of the Company. Within 15 calendar days after
the Exercise Notice is given, the Offeree may give notice to the Offeror of its
irrevocable, unconditional (except as provided herein) and binding election
either:
(1) to purchase the entire Interest of the Offeror for an amount in cash
equal to the Purchase Price; or
(2) to sell its entire Interest to the Offeror for an amount in cash equal
to the Purchase Price.
Failure of the Offeree to give notice of its decision within such applicable
time period shall constitute a conclusive election by the Offeree to sell its
entire Interest pursuant to this Section 4.1(g)(i).
(ii) The Purchase Price shall be equal to the seller's Percentage
multiplied by the Valuation.
(iii) Subject to the provisions of Section 4.1(g)(iv) hereof, a transfer of
Interests pursuant to this Section 4.1(g) shall take place at a closing to be
held on a day other than Saturday, Sunday or any other day on which commercial
banks located in New York, New York are authorized by law to be closed for
business ("Business Day"). Such date shall be selected by and set forth in a
notice by the Offeror given promptly after the Offeree gives notice of its
election under Section 4.1(g)(i) hereof, which date shall be at least ten days
but prior to 20 days after the Offeree gives notice of its election under
Section 4.1(g)(i), at such location in New York, New York as the Offeror selects
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or as otherwise agreed to by the parties. In such notice, the purchasing Member
shall additionally specify whether the purchase will be by the Member, the
Company, a combination of the Company and the Member, and/or the designee(s) of
the Company and/or the designee(s) of the Member (the "Purchaser"). At the
closing, the Purchase Price specified above shall be paid by the Purchaser by
wire transfer of immediately available federal funds to an account designated by
the selling Member. The terms of the purchase and sale shall be unconditional,
except that the selling Member shall represent and warrant to the Purchaser that
its Interest in the Company is not subject to any legal or equitable claims
(other than legal or equitable claims to such Interest, if any, of the Purchaser
pursuant to this Agreement) and shall deliver at the closing an instrument
confirming such representation and warranty. In addition, the Purchaser shall
represent and warrant to the selling Member that it has the full right, power
and authority to effectuate the purchase and upon demand shall deliver at the
closing an instrument confirming such representation and warranty. Upon the sale
of a Member's Interest in the Company pursuant to this Section 4.1(g), the
selling Member's appointed Representatives shall be deemed to have automatically
resigned from the Management Committee.
(iv) The closing date set forth in Section 4.1(g)(iii) hereof shall be
postponed if any required regulatory filings have not been made or any required
consents or approvals (regulatory or otherwise) have not been received by such
closing date, but only until such filings have been made or such consents have
been received and, if applicable, until the expiration or earlier termination of
the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"). The Members hereby agree to use their
reasonable best efforts and to cooperate with each other to effect any such
required regulatory filings, including but not limited to, a filing under the
HSR Act, if applicable, and to obtain any such required consents or approvals,
in order to close a transfer of Interests pursuant to this Section 4.1(g).
(v) The consummation of any purchase or sale of Interests pursuant to this
Section 4.1(g) shall be subject to the satisfaction of the provisions of Section
6.2 hereof.
(h) Each of Progenics and CYTOGEN shall appoint one managing Representative
(the "Managing Representative") from the Representatives. Every contract,
agreement, certificate, document or other instrument executed by both Managing
Representatives shall be conclusive evidence in favor of every person relying
thereon or claiming thereunder that, at the time of the delivery thereof, (1)
the Company was in existence, (2) this Agreement had not been terminated or
canceled or amended in any manner so as to restrict such authority (except as
shown in any instrument duly filed under the Act) and (3) the execution and
delivery thereof was duly authorized by the Management Committee. Any person
dealing with the Company or the Management Committee may, until and unless
subsequently notified by both Managing Representatives, rely on a certificate
signed by both Managing Representatives hereunder:
(i) as to who are the Representatives and Managing Representatives
hereunder;
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(ii) as to the existence or nonexistence of any fact or facts which
constitute conditions precedent to acts by the Management Committee or are in
any other manner germane to the affairs of the Company;
(iii) as to who is authorized to execute and deliver any instrument,
contract, agreement, certificate or document for the Company;
(iv) as to the authenticity of any copy of this Agreement and amendments
thereto; or
(v) as to any act or failure to act by the Company or as to any other
matter whatsoever involving the Company.
(i) The Management Committee shall establish an Intellectual Property
subcommittee, composed of such members of the Management Committee, or such
other persons, as the Management Committee may determine and with such authority
as may be delegated thereto. The Intellectual Property Committee shall have
responsibility for establishing and implementing, in consultation with counsel,
the Company's strategies for creating and/or maintaining its patent estate.
4.2. Meetings of Members. The Members shall meet on such periodic basis as
the Management Committee may determine. Special meetings of the Members, for any
purpose or purposes, may be called by the Management Committee or by any Member
of the Company. All meetings shall be held at the Company's principal place of
business or at any other place designated by the Management Committee, and,
unless otherwise prohibited by law, may be conducted by means of conference
telephone or similar communication equipment, in the discretion of the
Management Committee. Not less than two Business Days before each meeting, the
Management Committee shall give written notice of the meeting to each Member
entitled to vote at the meeting. The notice shall state the place, date, hour
and purpose of the meeting. Notwithstanding the foregoing provisions, each
Member who is entitled to notice shall be deemed to have waived notice if such
Member attends the meeting, unless such Member objects, prior to or at the
beginning of the meeting, to holding the meeting or transacting business at the
meeting. At any such meeting of Members, the presence in person or by proxy of
the Members holding an aggregate of a majority in Interests constitutes a
quorum. A member may vote either in person or by written proxy signed by or on
behalf of the Member or by or on behalf of the Member's duly authorized
attorney-in-fact.
In lieu of holding a meeting, the Members may vote or otherwise take action by
the unanimous written consent of the Members.
4.3. Liability and Indemnification. (a) Except as otherwise provided by
law, none of the Representatives, any Officer or any Member designated by the
Management Committee to act on its behalf (or any officer, director, employee or
affiliate of any such Member), in each case acting in such capacity, shall be
liable, responsible or accountable in any way for damages or otherwise to the
Company or to any of the Members for (a) any act or failure to act pursuant to
this Agreement or otherwise if (i) such person acted in good faith and in a
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manner it reasonably believed to be in, or not opposed to, the interests of the
Company, (ii) the conduct of such person did not constitute gross negligence,
fraud, bad faith, intentional misconduct or a knowing violation of law and (iii)
such person did not gain a financial benefit to which he or she was not legally
entitled, or (b) any losses due to the negligence or unauthorized acts of
advisers, consultants or other agents of the Company.
(b) The Company shall indemnify, defend and hold harmless each
Representative, each Officer and any Member designated to act on behalf of the
Management Committee (and any officer, director, employee and affiliate of any
such Member), in each case acting in such capacity (an "Indemnified Person"),
from and against any claims, losses, liabilities, damages, fines, penalties,
costs and expenses (including, without limitation, reasonable fees and
disbursements of counsel and other professionals) arising out of or in
connection with any act or failure to act by an Indemnified Person pursuant to
this Agreement, or the business and affairs of the Company; provided, however,
that an Indemnified Person shall not be entitled to indemnification hereunder if
it is judicially determined that (a) such Indemnified Person's actions or
omissions to act were (i) made in bad faith, (ii) constituted gross negligence,
fraud, intentional misconduct or a knowing violation of law, or (iii) were the
result of active and deliberate dishonesty, or (b) such Indemnified Person
personally gained a financial benefit to which Indemnified Person was not
legally entitled.
4.4. Duties, Right to Conduct Other Business. (a) To the extent that, at
law or in equity, a Member (or any officer, director or employee of such Member)
has duties (including fiduciary duties) and liabilities relating thereto to the
Company or to the Members, (i) the Member (or any officer, director or employee
of any Member) acting under this Agreement or otherwise shall not be liable to
the Company or to any Member for its good faith reliance on the provisions of
this Agreement, and (ii) such Member's duties and liabilities (or the duties and
liabilities of any officer, director or employee of any Member) may be expanded
or restricted by the provisions of this Agreement.
(b) For so long as Progenics and CYTOGEN are Members of the Company and for
a period of three years thereafter (unless the Company liquidates pursuant to
Article VII hereof), neither Progenics nor CYTOGEN will engage, either directly
or indirectly, in the research, development, manufacturing, marketing or
commercialization of products in the Field except for the benefit of the LLC.
Notwithstanding the foregoing, this Agreement shall not preclude or limit, in
any respect, the rights of Progenics and CYTOGEN to engage in activities outside
of the Field, whether or not such activities are competitive with activities of
the Company, and neither Progenics nor CYTOGEN shall have any obligation to
offer such business activities to the Company.
(c) For so long as Progenics and CYTOGEN are Members of the Company and for
a period of three years thereafter (unless the Company liquidates pursuant to
Article VII hereof), neither Progenics nor CYTOGEN shall solicit or induce any
person who is employed by or who is a consultant to or is otherwise affiliated
with the Company to terminate his or her employment, consultancy or affiliation
with the Company. In addition, for so long as Progenics and CYTOGEN are Members
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of the Company and for a period of three years thereafter, neither Progenics nor
CYTOGEN shall solicit or induce any person who is employed by or who is a
consultant to or otherwise affiliated with the other Member to terminate his or
her employment, consultancy or affiliation with the other Member.
4.5. Scientific Advisory Board. The Management Committee shall be
authorized to establish a Scientific Advisory Board (the "SAB"). The SAB shall
be composed of such scientific or other personnel as the Management Committee
deems advisable and may include as members employees and consultants of the
Company as well as persons otherwise unaffiliated with the Company. The SAB
shall meet at such places and at such times as shall be determined as advisable.
The Management Committee may authorize compensation for members of the SAB in
such amounts and under such terms as the Management Committee may determine.
4.6. Research Grants. Neither Progenics nor CYTOGEN shall, so long as such
person is a member of the Company, apply to any funding source for a Research
Grant in the Field unless such application is made for the benefit of the
Company.
ARTICLE V
OFFICERS
5.1. Designation, Authority and Compensation of Officers. The Management
Committee may delegate such of its authority as it deems advisable from time to
time to officers of the Company, including, without limitation, a president, one
or more vice-presidents and/or a secretary/treasurer (an "Officer"). The title,
extent of authority, term of office and compensation of any Officer shall be
determined by the Management Committee in its sole discretion.
5.2. Tenure of Officers. The Officers of the Company shall hold office
until their successors are chosen and qualify, unless a different term is
specified by the Management Committee in appointing the Officer, or until the
Officer's earlier death, resignation or removal. Any Officer chosen by the
Management Committee may be removed at any time by the Management Committee, in
its sole discretion, and any vacancy occurring in any office may be filled by
the Management Committee, in its sole discretion. Any Officer may resign by
delivering his or her written resignation to the Company at its principal place
of business. Such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the happening of some other
event.
ARTICLE VI
TRANSFER OF INTERESTS, WITHDRAWAL AND TERMINATION OF MEMBERS
6.1. Transfer or Withdrawal Prohibited; Change of Control of a Member. (a)
Except as expressly provided herein, no Member may withdraw from the Company or
sell, assign, transfer, pledge, hypothecate, mortgage or create a security
interest, directly or indirectly ("Transfer"), in all or any portion of its
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Interest without the prior written consent of the Management Committee, which
consent may be withheld in the sole and absolute discretion of the Management
Committee. Any purported withdrawal or Transfer of an Interest by a Member
without the requisite consent in writing shall be null and void, and the Company
shall be entitled to damages as a result of, and/or injunctive relief with
respect to, any attempts to withdraw or Transfer.
(b) In the event that the Management Committee consents to a Transfer of a
Member's Interest, such consent shall, unless expressly stated otherwise, be
deemed a consent only to the assignment of such Member's economic interest in
profits, losses and distributions and shall not be deemed a consent to the
admission of such assignee as a member of the Company as a substitute for the
assignor, and such assignee shall not have any of the rights of a member of the
Company, including, without limitation, voting rights, unless otherwise stated
in writing by the Management Committee. Except to the extent that the Management
Committee has consented to the admission of the assignee as a member in the
Company and/or consented to the exercise of voting rights by the assignee, the
assigning Member shall retain all voting rights in connection with the
transferred Interest.
(c) In the event that at any time there occurs a Change of Control (as
hereinafter defined) of a Member, such Member's Interest shall automatically
convert into an economic interest only in the profits, losses and distributions
of the Company, and such Member shall not have any other rights of a member of
the Company, including, without limitation, voting and marketing rights. For
purposes hereof, a "Change in Control" shall be deemed to have occurred: (i) on
the sale or other disposition of all or substantially all of the Member's assets
to any entity, person or related group of persons; (ii) when there shall be
consummated any consolidation, merger, reorganization or similar corporate
transaction (a "Corporate Transaction") of the Member (A) in which the Member is
not the continuing or surviving entity (other than a consolidation or merger
with a wholly owned subsidiary of the Member in which all shares of common stock
of such Member outstanding immediately prior to the effectiveness thereof are
changed into or exchanged for the same consideration) or (B) pursuant to which
the common stock of such Member would be converted into cash, securities or
other property, in each case, other than a Corporate Transaction that is a
Qualifying Corporate Transaction (as defined below); (iii) when any person, or
any persons acting together which would constitute a "group" for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended, together with
any affiliates thereof, shall beneficially own (as defined in Rule 13d-3 under
the Exchange Act) at least 50% of the total voting power of all classes of
capital stock of the Member entitled to vote generally in the election of
directors of the Member (unless the "acquisition" is deemed to have occurred
indirectly solely as a result of the completion of a Corporate Transaction that
is not a Change in Control pursuant to clause (ii) above); (iv) when at any time
during any consecutive two-year period, individuals who at the beginning of such
period constituted the Board of Directors of the Member (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the stockholders of the Member was approved by a vote of 75% of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
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Directors of the Member then in office; or (v) when the Member is liquidated or
dissolved or adopts a plan of liquidation or dissolution. A "Qualifying
Corporate Transaction" shall be any Corporate Transaction in which the holders
of common stock of the Member immediately prior to such Corporate Transaction
have, directly or indirectly, at least (i) a majority of the total voting power
of all classes of capital stock entitled to vote generally in the election of
directors of the continuing or surviving entity immediately after such Corporate
Transaction in substantially the same proportion as their ownership of common
stock before such transaction or (ii) 25% of the total voting power of all
classes of capital stock entitled to vote generally in the election of directors
of the continuing or surviving entity immediately after such Corporate
Transaction in substantially the same proportion as their ownership of common
stock before such transaction and, in the case of this clause (ii), the other
Member has given a CIC Approval. A "CIC Approval" shall be given by the other
Member if such Member cannot conclude in good faith and in its reasonable
judgment after discussions with the parties to the Corporate Transaction that
such Corporate Transaction and any resulting change in management or leadership
is reasonably likely to disrupt or delay the commercialization of products by
the LLC, or fundamentally alter the approach, philosophy or vision of the LLC,
giving due regard to the importance of good-faith cooperation and collaboration
and single-mindedness of purpose between CYTOGEN and Progenics which has formed
the basis for the collaboration initially contemplated by the parties hereto. A
CIC Approval may not be unreasonably withheld, and failure of the other Member
to give a CIC Approval may be contested in arbitration pursuant to Article 10
hereof. Notwithstanding the foregoing, a Change of Control shall not include any
transaction the purpose of which is to reorganize the Member's corporate
structure, reincorporate the Member in another jurisdiction or undertake any
other action which does not have the purpose or effect of materially affecting
the ownership and/or control of the Member at the time of such transaction.
6.2. Regulatory Matters. Anything in this Article VI or elsewhere in this
Agreement to the contrary notwithstanding, no assignment, transfer, encumbrance
or other disposition of all or any part of any Member's Interest shall be made
or shall be effective unless (a) prior to the consummation thereof, all
assignees and transferees with respect thereto shall have made to the Company in
writing all of the representations required by the Management Committee, to
ensure compliance with applicable securities and other laws and (b) if required
by the Management Committee, the Company is provided with an opinion of its
legal counsel, or other legal counsel satisfactory to the Company's counsel,
stating that (i) such assignment, transfer, encumbrances or other disposition is
exempt from the Securities Act of 1933, as amended, and is permissible under all
other applicable federal and state securities laws without registration or
qualification of any security or any person and (ii) the transaction is not
prohibited under, and does not conflict with, such other federal or state laws
as the Management Committee may specify.
6.3. Default; Buyout/Liquidation Option. (a) A Member shall be in default
("Defaulting Member") under this Agreement upon the occurrence of any of the
following events ("Default"):
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(i) the Bankruptcy (as defined hereinafter) or dissolution of the Member
(the Bankruptcy or dissolution of the Member shall hereinafter be referred to as
the "Dissolution"), in which event such Member shall immediately notify the
other Member ("Other Member") and the Company in writing of the occurrence of
such Dissolution.
As used herein, the term "Bankruptcy" shall mean:
(1) A Member files a voluntary petition in bankruptcy or shall be
adjudicated a bankrupt or insolvent, or shall file any petition or answer or
consent seeking any reorganization, arrangement, composition, readjustment,
liquidation or similar relief for itself under the present or future applicable
federal, state or other statute or law relating to bankruptcy, insolvency or
other relief for debtors, or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver, conservator or liquidator of said Member
of all or any substantial part of its properties or its Interest (the term
"acquiesce" as used in this definition includes the failure to file a petition
or motion to vacate or discharge any order, judgment or decree);
(2) A court of competent jurisdiction enters an order, judgment or decree
approving a petition filed against any Member seeking a reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under the present or any future federal bankruptcy act, or any other
present or future applicable federal, state or other statute or law relating to
bankruptcy, insolvency or other relief for debtors, and such Member shall
acquiesce in the entry of such order, judgment or decree or such order, judgment
or decree shall remain unvacated and unstayed for an aggregate of 60 calendar
days (whether or not consecutive) from the date of entry thereof, or any
trustee, receiver, conservator or liquidator of such Member or of all or any
substantial part of its properties or its Interest shall be appointed without
the consent or acquiescence of such Member, and such appointment shall remain
unvacated and unstayed for an aggregate of 60 calendar days (whether or not
consecutive);
(3) A Member admits in writing its inability to pay its debts as they
mature; or
(4) A Member makes an assignment for the benefit of creditors or takes
other similar action for the protection or benefit of creditors.
(ii) the Member has breached in any material respect this Agreement, the
PSMA/PSMP License Agreement or the Services Agreement, which breach has not been
cured within 60 calendar days after the Management Committee or non-breaching
Member has given a written notice to the breaching Member stating that a breach
has occurred and identifying in reasonable detail the relevant facts with
respect to such breach.
(iii) on two occasions, an arbitrator determines that a Member has acted in
bad faith in refusing to approve a Budget pursuant to Section 2.4(b).
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(iv) so long as Progenics and CYTOGEN are the only Members of the Company,
the Member's Percentage falls below [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]
("Nonconforming Percentage"), in which event (provided that at such time as any
Member's Percentage shall be reduced to zero, such Member shall cease to be a
member in the Company) the Management Committee shall immediately notify all
Members in writing of the Nonconforming Percentage. Subsequently, any further
reduction in such Member's Percentage shall constitute a separate Default again
giving rise to the options under Section 6.3(b) hereof.
The Management Committee shall promptly (but in any event within five Business
Days) give notice (a "Default Notice") to the Members of any Default under this
Section 6.3(a) of which it becomes aware. The Other Member shall be entitled to
give the Default Notice to the Defaulting Member on behalf of the Management
Committee. In any event, failure to provide notice to the Defaulting Member does
not constitute a waiver of the default.
(b) Upon the occurrence of a Default and the giving of the Default Notice,
in each case as described in Section 6.3(a) hereof, (i) all marketing rights
held by the Defaulting Party under Article IX hereof, and all rights of
Progenics (if Progenics is the Defaulting Party) under Section 2.2(d) hereof to
direct the application of the Progenics R&D Capital Contributions and to conduct
the research and development program contemplated by the Services Agreement,
shall terminate and (ii) an option to purchase all but not less than all of the
Interest of the Defaulting Member shall arise immediately in favor of the
Company and/or the Other Member. The determination as to whether the Company
will exercise the purchase option shall be made by the Other Member. If the
purchase option is not exercised within 45 calendar days from the giving of the
Default Notice, the Other Member may, but shall not be required to, within 90
calendar days from the giving of the Default Notice, cause the Company to be
dissolved and liquidated pursuant to Article VII hereof.
(c) The purchase option arising under Section 6.3(b) hereof may be
exercised only by giving a written notice to the Defaulting Member of the
election to exercise such purchase option within the 45 calendar day time period
specified in Section 6.3(b) hereof (the "Exercise Notice").
(d) If the Company and/or the Other Member exercises the purchase option
arising under Section 6.3(b) hereof, the purchase price determination of the
Defaulting Member's Interest shall first be submitted by the Management
Committee to the Chief Executive Officer of each Member for review and
discussion. Such persons shall meet as soon as possible after the Exercise
Notice is given, and in any event within ten calendar days, and endeavor in good
faith to determine the purchase price. If these officers do not, within ten
calendar days after they first meet, or within 20 calendar days after the
Exercise Notice is given, mutually agree upon a purchase price for the
Defaulting Member's Interest, either Member may, within the 30 calendar day
period following such 20 calendar days after delivery of the Exercise Notice, by
written notice given to the other Member within such 30 day period, cause the
purchase price determination of the Defaulting Member's Interest to be submitted
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to arbitration pursuant to Section 10.2 hereof. In the event such dispute is
submitted to arbitration, the purchase price for the Defaulting Member's
Interest shall be calculated by the arbitrator by multiplying the total entity
value of the Company (as determined by the arbitrator) by the Defaulting
Member's Percentage. In the event the Company and/or the Other Member exercises
the purchase option, the Company and/or the Other Member and the Defaulting
Member shall be obligated to consummate the purchase at the purchase price
determined in the manner described above.
(e) (i) Subject to the provisions of Section 6.3(e)(ii) hereof, a transfer
of Interests pursuant to this Section 6.3 shall take place at a closing to be
held on a Business Day at least ten calendar days but prior to 20 calendar days
after the determination of the purchase price of the Defaulting Member's
Interest pursuant to Section 6.3(d) hereof, which date shall be determined by
mutual agreement of the Members, or if no agreement can be reached, on a date
unilaterally set by the Company and/or the Other Member, at such location in New
York, New York as the Company and/or the Other Member selects or as otherwise
agreed to by the parties. In the Exercise Notice, the Company and/or the Other
Member shall additionally specify whether the purchase will be by the Other
Member, the Company, a combination of the Company and the Other Member, and/or
the designee(s) of the Company and/or the designee(s) of the Other Member (the
"Purchasing Party(ies)"). At the closing, the purchase price specified above
shall be paid by the Purchasing Party(ies) by wire transfer of immediately
available federal funds to an account designated by the Defaulting Member. The
term of the purchase and sale shall be unconditional, except that the Defaulting
Member shall be deemed to represent and warrant to the Purchasing Party(ies)
that its Interest is subject to no legal or equitable claims (other than legal
or equitable claims to such Interest, if any, of the Purchasing Party(ies)
pursuant to this Agreement) and shall deliver at the closing an instrument
confirming such representation and warranty. In addition, the Purchasing
Party(ies) shall represent and warrant to the Defaulting Member that it has the
full right, power and authority to effectuate the purchase and upon demand shall
deliver at the closing an instrument confirming such representation and
warranty. Upon the sale of a Member's Interest pursuant to this Section 6.3, the
Member's appointed Representatives shall be deemed to have automatically
resigned from the Management Committee.
(ii) The closing date set forth in Section 6.3(e)(i) hereof shall be
postponed if any required regulatory filings have not been made or any required
consents or approvals (regulatory or otherwise) have not been received by such
closing date, but only until such filings have been made or such consents have
been received and, if applicable, until the expiration or earlier termination of
the applicable waiting period under the HSR Act. The Members hereby agree to use
their reasonable best efforts and to cooperate with each other to effect any
such required regulatory filings, including but not limited to, a filing under
the HSR Act, if applicable, and to obtain any such required consents or
approvals, in order to close a transfer of Interests pursuant to this Section
6.3.
(f) The consummation of any purchase or sale of Interests pursuant to this
Section 6.3 shall be subject to the satisfaction of the provisions of Section
6.2 hereof.
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(g) A Defaulting Member shall be liable to the Company and the Other Member
for all damages arising out of a Default and any other amounts the Defaulting
Member owes to the Company or Other Member pursuant to this Agreement or any
other agreement, and any such amounts may be offset against any other payments
otherwise due from the Purchasing Party(ies) to the Defaulting Member hereunder.
Exercise or failure to exercise any of the options pursuant to this Section 6.3
shall not relieve the Defaulting Member of the liabilities arising out of the
Default.
ARTICLE VII
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY
7.1. Events of Dissolution. The Company shall be dissolved and liquidated
upon the first to occur of the following events:
(a) Upon the unanimous written consent of the Management Committee.
(b) Upon the termination of the Company's business as a result of the sale
by the Company of all or substantially all of its business and assets.
(c) Upon the Other Member's exercise of its right to dissolve and liquidate
the Company under Section 6.3 hereof.
7.2. Procedure for Winding Up and Dissolution. If the Company is dissolved,
the Management Committee shall wind up its affairs pursuant to the appropriate
provisions of the Act. On winding up of the Company, the assets of the Company
shall be distributed in accordance with Section 3.8 hereof.
7.3. Termination of Company. Upon the completion of the liquidation of' the
Company and the distribution of all Company assets, the Company's affairs shall
terminate and the Management Committee shall execute and file a certificate of
cancellation of the Company's Certificate, as well as any and all other
documents required to effect the termination of the Company under the Act.
7.4. License Grants on Dissolution. Upon dissolution of the Company, each
Member (in each case, the "Grantee Member") shall be granted, at its request, by
the other Member (the "Grantor Member") a non-exclusive license, with the right
to sublicense, for use in the Field to any Intellectual Property rights in which
the Grantor Member has a licensable right ("Grantor Rights") to the extent that
the development and commercialization of any product or service that includes or
embodies a Company Invention (including developing, making, having made,
distributing, using, offering for sale, selling, having sold, importing and
exporting such products and services) would in the absence of such non-exclusive
license, infringe or conflict with such Grantor Rights. Royalties in respect of
such non-exclusive license shall be payable at cost (calculated as described in
Section 5 of the PSMA/PSMP License Agreement, and including any milestone or
other payments required to be paid to any licensor of the Grantor Member
resulting from the development or commercialization activities of the Grantee
Member relating to Company Inventions). Such non-exclusive licenses shall
contain such other commercially reasonable, fair market value terms as the
parties shall in good faith agree.
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ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND TAX ELECTIONS
8.1. Bank Accounts. All funds of the Company shall be deposited in a bank
account or accounts opened in the Company's name. The Management Committee shall
determine the institution or institutions at which the accounts will be opened
and maintained, the types of accounts and the persons who will have authority
with respect to the accounts and the funds therein.
8.2. Fiscal Year. Pursuant to Section 3.4 hereof, the Fiscal Year of the
Company for both accounting and tax purposes shall be the calendar year.
8.3. Method of Accounting. The Company's books (for accounting purposes)
shall be maintained in accordance with generally accepted accounting principles.
The determinations of the Management Committee or the Tax Matters Partner, as
the case may be, with respect to the treatment of any item or its allocation for
federal, state or local income tax purposes shall be binding upon all Members so
long as that determination is not inconsistent with any express provision of
this Agreement, provided that any determinations made by the Tax Matters Partner
are subject to the approval of CYTOGEN.
8.4. Books and Records. The books and records of the Company shall be
maintained at the Company's expense under the supervision of the Management
Committee at such office as the Management Committee shall approve, and may be
examined and copied there by any Member or its duly authorized representatives
at reasonable times and upon reasonable notice. The Company shall furnish to
each Member, no later than 30 calendar days after the end of each of the first
three fiscal quarters, quarterly and year-to-date statements of income and a
balance sheet as of the end of that quarter. The Company shall furnish to each
Member, no later than 45 calendar days after the end of each Fiscal Year,
financial statements of the Company with respect to that year prepared by the
Company's accountant and audited by the accounting firm selected by the
Management Committee. The Company will seek to engage the services of an
independent auditing firm as its independent auditor upon terms satisfactory to
the Company. The financial statements shall include a balance sheet of the
Company as of the end of the Fiscal Year, a statement of operations, a statement
of Members' Interests and a statement of changes in cash flow of the Company for
the year. The Company shall also furnish to each Member copies of any additional
financial reports delivered by the Company to its lenders and copies of all
financial reports.
8.5. Tax Information. Not later than the date of delivery of the annual
financial statements pursuant to Section 8.4 hereof, the Management Committee
shall cause the Company's accountants to furnish to each Member any information
required by that Member to complete any income tax return that it is required to
file with respect to the year to which such financial statements relate. The
Company shall also furnish tax information to the Members on an interim basis to
the extent the Management Committee determines appropriate.
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ARTICLE IX
MARKETING RIGHTS
9.1. Grant of North American Marketing Rights. Subject to the terms and
conditions described herein, the LLC hereby grants to CYTOGEN exclusive
marketing rights with respect to Licensed Products sold in the United States and
Canada (the "North American Territory"). The exercise of such rights by CYTOGEN
is conditioned on CYTOGEN's capability to perform the marketing, detailing,
distribution and other promotional and selling activities (hereinafter,
"marketing activities") required to be performed hereunder and under the
Marketing Agreement (as hereinafter defined). Such determination shall take into
consideration CYTOGEN's ability to perform the necessary sales and marketing
functions based upon an assessment of its existing sales, marketing and
distribution capabilities compared to those of other companies promoting similar
products to similar market segments, as well as such other factors as may be
reasonably relevant.
9.2. Diligence Obligations. CYTOGEN shall use diligent efforts to market
Licensed Products in the North American Territory ("Diligent Efforts"). For
purposes of the foregoing, "Diligent Efforts" shall mean carrying out such
obligation in a sustained manner consistent with the efforts a party would
devote to a product of similar market potential, profit potential or strategic
value resulting from its own research efforts to which such party has exclusive
rights based on conditions then prevailing. Diligent Efforts requires: (i)
developing a strategic plan for product launch and subsequent market penetration
with defined objectives; (ii) establishing systems and protocols reasonably
designed to achieve such objectives; (iii) allocating appropriate resources to
support such systems and protocol; (iv) promptly assigning responsibility for
executing all phases of the Marketing Plan to specific employees who are held
accountable for discharging their assigned responsibilities; and (v) monitoring
on an ongoing basis the execution of the Marketing Plan and its success and
making such changes as are warranted by market and/or operational conditions.
CYTOGEN shall provide the LLC with access to all relevant records and personnel,
during normal business hours and with reasonable advance notice, under customary
confidentiality conditions, for the purpose of determining the utilization by
CYTOGEN of Diligent Efforts to commercialize Licensed Products.
9.3. Assistance by Progenics; Contingent Grant of Rights.(a) Subject to the
terms and conditions described herein, Progenics shall be entitled to assist
CYTOGEN, under the direction of CYTOGEN, in connection with marketing activities
regarding Licensed Products in any territory (including the North American
Territory) in which CYTOGEN has been granted or is subsequently granted
marketing rights pursuant hereto. The assistance by Progenics in marketing
activities shall be conditioned upon Progenics' capability to augment in a
commercially significant manner the marketing activities of CYTOGEN (or any
other person then responsible for marketing Licensed Products). The nature of
the assistance in marketing activities provided by Progenics will be determined
in good faith by Progenics and CYTOGEN, with the approval of the LLC, from time
to time based on Progenics' capabilities.
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(b) [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]
9.4. Marketing Agreement. The LLC, CYTOGEN and Progenics shall negotiate in
good faith the terms of a Product Marketing Agreement (the "Marketing
Agreement") to be entered into after the completion of Phase II clinical trials
with respect to any Licensed Product. The Marketing Agreement shall be based on
the terms set forth in this Article IX, shall include, but not be limited to,
provisions relating to marketing, sales, pricing and distribution of Licensed
Product and shall further define the rights, responsibilities and obligations of
the LLC, CYTOGEN and Progenics with respect thereto. No term of the Marketing
Agreement shall be in conflict with any material term of this Article IX without
the written agreement of the parties hereto. Until the terms of the Marketing
Agreement are agreed upon, such parties acknowledge and agree that the terms set
forth in this Article IX are fully binding and enforceable. The Marketing
Agreement shall include the following terms in addition to the other terms
described above:
(a) At least one year in advance of the anticipated commercial launch (as
determined in good faith by the LLC) of each Licensed Product in each country in
the North American Territory, CYTOGEN shall submit a plan (a "Marketing Plan")
for approval by the LLC for such commercial launch and the subsequent period of
twelve months plus any subsequent period prior to the start of a calendar year.
For each calendar year thereafter, CYTOGEN shall submit a Marketing Plan with
respect to, and at least one year prior to, such calendar year describing in
reasonable detail the marketing activities for each such Licensed Product for
approval by the LLC. The LLC's approval of any Marketing Plan shall not be
unreasonably withheld. Each Marketing Plan shall include an overall level of
anticipated product detailing, promotion, marketing and sales efforts regarding
the period covered thereby, a resource commitment on the part of CYTOGEN with
respect thereto, market and sales forecasts and pricing analysis, a monthly
budget and, with respect to commercial launch, an estimated launch date of
product marketing and promotion activities. Each Marketing Plan shall also
include the general operating guidelines and strategies for targeting, pricing
and discounting Licensed Products to customers, a detailed budget for marketing
and distribution activities and a forecast product line contribution statement
for the applicable calendar year.
(b) The LLC may from time to time review with CYTOGEN such matters
regarding marketing activities as it reasonably requests. CYTOGEN, Progenics and
the LLC agree to facilitate communication and cooperation between their
respective organizations in order to maximize the success of marketing
activities.
(c) CYTOGEN shall develop all written sales, promotion and advertising
materials relating to the commercialization of Licensed Products in the North
American Territory. The general form and content of such materials shall be
subject to annual approval of the LLC and general and specific implementation by
CYTOGEN. Ownership of all names, tradenames, trademarks, service marks and other
designations of Licensed Products (including any related registrations) shall be
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vested in the LLC. In any given country, any given Licensed Product shall be
marketed under only one tradename, except as agreed to by the LLC.
(d) The LLC shall be responsible for the cost of all advertising, sales and
promotion materials, market research and Phase IV studies ("Marketing
Materials") reasonably incurred in connection with a previously approved
Marketing Plan. The LLC will at all times own the Marketing Materials.
(e) The LLC will have responsibility for manufacturing finished packaged
product, both for sale and for promotional samples. The LLC will also have
responsibility for manufacturing clinical supplies for any Phase IV studies. The
LLC will purchase and pay for all raw (active and inactive) materials and
packaging materials (collectively, "Manufacturing Materials") from third parties
necessary to manufacture product. The LLC will at all times have title to the
Manufacturing Materials, work-in-process product and final packaged product
(collectively, "Inventory") until sale. The LLC shall have responsibility for
ensuring that sufficient Inventory is available to satisfy sales requirements
pursuant to customer orders and for procuring and paying for space to warehouse
Inventory. The LLC shall have custodial and managerial responsibility for
Inventory.
(f) CYTOGEN shall be responsible for procuring order processing and
distribution services for product. CYTOGEN shall have managerial responsibility
for order processing, including processing customer orders and billing customers
for shipments in satisfaction of their orders, and for product distribution,
including shipping product in satisfaction of customer orders.
(g) The LLC shall be entitled to inspect and audit CYTOGEN's and Progenics'
books and records pertaining to marketing activities relating to Licensed
Products for legitimate business purposes under such terms as may be set forth
in the Marketing Agreement.
9.5. Negotiation Rights. (a) In the event that the LLC determines to
license, engage, or otherwise contract with or authorize a person other than the
LLC to engage in marketing activities with respect to a Licensed Product in any
territory other than in the North American Territory, the LLC shall so notify
CYTOGEN and negotiate in good faith with CYTOGEN the terms of an agreement
regarding marketing activities with respect to any such Licensed Product in such
territory. As a condition to any such negotiations, CYTOGEN shall demonstrate to
the LLC's reasonable satisfaction CYTOGEN's capability to perform the marketing
activities desired by the LLC in the relevant territory. If CYTOGEN is unable to
satisfy such condition, or if CYTOGEN does not desire to, or is unable to
negotiate any such agreement, or any such agreement is subsequently terminated,
the LLC shall so notify Progenics and negotiate in good faith with Progenics a
marketing agreement as described above. As a condition to any such negotiations,
Progenics shall demonstrate to the LLC's reasonable satisfaction Progenics'
capability to perform the marketing activities desired by the LLC in the
relevant territory. Any such determination as to the capability of CYTOGEN or
Progenics shall take into consideration the relevant party's ability to perform
30
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the necessary sales and marketing functions based upon an assessment of such
party's existing sales, marketing and distribution capabilities compared to
those of other companies promoting similar products to similar market segments,
as well as such other factors as may be reasonably relevant.
(b) If CYTOGEN elects not to exercise the marketing rights it has been
granted under Section 9.1 hereof, or such rights are terminated pursuant to this
Agreement or the Marketing Agreement, then the LLC shall so notify Progenics,
and Progenics shall be entitled to assume, on a prospective basis, CYTOGEN's
marketing rights hereunder and under the Marketing Agreement. As a condition to
any such assumption, Progenics must demonstrate to the reasonable satisfaction
of the LLC Progenics' capability to perform the marketing activities required to
be performed hereunder and under the Marketing Agreement. Such determination
shall take into consideration Progenics' ability to perform the necessary sales,
marketing and distribution functions based upon an assessment of its existing
sales and marketing capabilities compared to those of other companies promoting
similar products to similar market segments, as well as such other factors as
may be reasonably relevant. If Progenics assumes such rights, such rights shall
be terminable under the same circumstances as such rights were terminable when
held by CYTOGEN.
9.6. Marketing Compensation. CYTOGEN and Progenics shall be entitled to
compensation for marketing activities conducted pursuant hereto or to the
Marketing Agreement [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]. For purposes of
this Section 9.6, [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED] as the case may
be, as more specifically described in the Marketing Agreement.
9.7. Non-Transferability of Rights. The product marketing rights granted by
the LLC pursuant to this Agreement shall not be transferable, licensable or
otherwise exercisable by any person or entity other than the party to which such
rights have been granted hereby.
9.8. Termination of Rights. The rights granted by the LLC to Progenics and
CYTOGEN in Section 9.1 and 9.3 hereof shall be subject to termination as
follows:
9.8.1. Ownership Change. In the event that either Progenics' or
CYTOGEN's Interest shall at any time be less than [CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED] of all then-outstanding Interests (any
such party being referred to herein as the "Diluted Party"), the
rights granted to the Diluted Party pursuant to Section 9.1 or 9.3
hereof, as the case may be, shall immediately terminate. In the event
that the LLC determines to issue additional ownership interests to
third-party investors, which issuance would result in substantial
dilution of Progenics's and CYTOGEN's ownership Interests, the parties
hereto agree to negotiate in good faith the provisions of this Section
9.8.1 as it relates to any party that has not, prior to any such
additional issuance of ownership interests, become a Diluted Party.
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9.8.2. Breach. In the event that either Progenics or CYTOGEN
shall breach any of the material representations or warranties or any
material terms, conditions or agreements contained herein made or to
be kept, observed and performed by it, then each of the LLC and
Progenics (in the event of a breach by CYTOGEN) or CYTOGEN (in the
event of a breach by Progenics), at its sole option and without
prejudice to any of its other legal or equitable rights and remedies,
may, by giving the other parties hereto 60 days' notice in writing,
identifying with reasonable specificity the breach, and unless (in the
case of a breach of any term, condition or agreement) the notified
party within such 60-day period shall have cured the breach, terminate
the rights granted to Progenics or CYTOGEN, as the case may be,
pursuant to Sections 9.1.
9.8.3. Diligence. The LLC may terminate the rights granted to
CYTOGEN pursuant to Section 9.1 hereof as to any Licensed Product (but
only as to such Licensed Product) if CYTOGEN [CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED]
9.9. Retention of Rights. The parties hereto acknowledge and agree that all
marketing rights not expressly granted by the LLC to CYTOGEN or Progenics
pursuant to this Article IX, including without limitation product marketing
rights outside of the North American Territory, are retained by the LLC. The LLC
shall be entitled to retain or dispose of (by license, sublicense or otherwise)
any such rights in its sole discretion, and the proceeds, if any, of any such
disposition shall inure solely to the LLC.
ARTICLE X
DISPUTE RESOLUTION
10.1. Escalation Procedure. Except as provided in Section 3.6(b) hereof and
except for any Deadlock of the Management Committee which is not resolved
pursuant to Section 4.1(f) hereof (including related buy/sell provisions in
Section 4.1(g) hereof), all disputes, controversies, claims or differences
between Progenics and CYTOGEN (any such event, a "Dispute") arising out of this
Agreement, its interpretation or performance by the Members of their respective
obligations hereunder, including any questions regarding the existence, validity
or termination hereof, shall be resolved as described below. The Dispute shall
first be submitted (the "First Notice of Dispute") to the Chief Executive
Officer of each of the Members for review and discussion. Such persons shall
meet as soon as possible, and in any event within ten calendar days after the
giving of the First Notice of Dispute, and endeavor in good faith to resolve the
matter. If these officers do not reach agreement within ten calendar days after
they meet, or within 20 calendar days after the First Notice of Dispute is
given, or otherwise agree on another method of resolving the dispute, the
Dispute shall be resolved pursuant to Section 10.2 hereof.
10.2. Arbitration. (a) Either Member may make a demand for binding
arbitration with respect to any dispute arising hereunder by filing with the
other a demand in writing signed by an officer of the Member making such demand.
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(b) The Members may agree on one arbitrator, but in the event they cannot
agree, there shall be three, one named in writing by each of the Members within
ten Business Days after demand for arbitration is given, and a third chosen by
the two appointed within ten Business Days after their appointment. If the two
arbitrators appointed by the Members do not appoint a third arbitrator within
such period, the American Arbitration Association ("AAA") in New York, New York
shall be retained to appoint a third arbitrator within ten Business Days after
the end of such period. Should either Member refuse or neglect to join in the
appointment of the arbitrator(s) or to furnish the arbitrator(s) with any papers
or information demanded, the arbitrator(s) are empowered to proceed ex parte.
(c) Arbitration shall take place in New York, New York (or such other
location as may be agreed between Progenics and CYTOGEN) at a single hearing
before the arbitrator(s) of the matter. The arbitrator(s) shall select such time
and place promptly after his/her (or their) appointment, provided that the time
scheduled for the hearing shall not be later than 20 Business Days after the
appointment of the last arbitrator(s). The arbitrator(s) shall give written
notice thereof to each Member at least ten Business Days prior to the date so
fixed. In the event a panel of three arbitrators is necessitated by the Members'
inability to agree upon a single arbitrator, such notice of the time and place
of the hearing shall also identify the third member of the panel. At the
hearing, any relevant evidence may be offered by either Member, and the formal
rules of evidence applicable to judicial proceedings shall not govern. Evidence
may be admitted or excluded in the discretion of the arbitrator(s). Said
arbitrator(s) shall hear and determine the matter and such determination may be
based on such factors and consideration as the arbitrator(s) deems relevant
and/or appropriate. The arbitrator(s)' authority shall be limited to determining
the issue or question presented in each instance and shall not extend to any
other aspect of this Agreement or the parties' relationship generally. In
addition, the arbitrator(s) shall not require the LLC to pursue a particular
research and development program unless the general elements thereof have been
approved by the Management Committee. The arbitrator(s) shall execute and
acknowledge a binding decision in writing setting forth the basis for their
decision in reasonable detail and cause a copy thereof to be delivered to each
of the Members within ten Business Days of the hearing date.
(d) The determination of the panel shall be by majority vote with each
arbitrator having a single vote. The decision rendered by the arbitrator (or the
majority, if more than one) shall be final, and judgment may be entered upon it
in accordance with the applicable law in any court of competent jurisdiction.
(e) Prior to the scheduled hearing date, the Members shall agree on
procedures to be used in connection with the arbitration. To the extent the
Members cannot agree upon procedures, the arbitration shall be conducted in
accordance with the Commercial Arbitration Rules of the AAA under the auspices
of the AAA.
(f) The costs of such arbitration shall be borne by the Company; provided,
however, that if the arbitrator(s) determines that one of the Members acted in
bad faith in submitting the dispute to arbitration, such Member shall bear all
costs and expenses (including the costs and expenses of the other Member) in
connection with the arbitration proceeding.
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10.3. Injunctive Relief. Notwithstanding anything herein to the contrary,
any Member may seek interim or provisional relief in the form of a temporary
restraining order, preliminary injunction or other interim equitable relief
concerning any Dispute in a court of competent jurisdiction; provided, however,
that, once the selection of the arbitrator(s) is complete, the continuation,
termination, amendment or modification of the interim or provisional relief
shall be determined by the arbitrator(s) and, after an arbitration hearing is
commenced, the action, suit or proceeding commenced in such court seeking such
interim or provisional relief shall be dismissed by the stipulation of all
Members. In the event that the Members fail to stipulate to the dismissal of the
action, the Members agree that the arbitrator(s) may submit a stipulation
dismissing the action. The arbitrator(s) may conduct any hearings or order any
discovery they deem necessary to properly review the interim or provisional
relief. This Section 10.3 shall be specifically enforceable by each Member.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Assurances. Each Member shall execute all certificates and other
documents and shall do all such filing, recording, publishing and other acts as
the Management Committee deems appropriate to comply with the requirements of
law for the formation and operation of the Company and to comply with any laws,
rules and regulations relating to the acquisition, operation or holding of the
property of the Company.
11.2. Disclaimer of Agency. This Agreement does not create any relationship
beyond the scope set forth herein, and except as otherwise expressly provided
herein, this Agreement shall not constitute any Member the legal representative
or agent of the other, nor shall any Member have the right or authority to
assume, create or incur any liability or obligation, express or implied,
against, in the name of or on behalf of any other Member of the Company.
11.3. Entire Agreement; Amendment. This Agreement contains a complete
statement of the arrangements among the Members with respect to the Company
supersedes all prior agreements and understandings among them with respect to
the Company and may not be amended except by unanimous written agreement of the
Members.
11.4. Notices. Any notice or other communication under this Agreement shall
be in writing and shall be considered given when delivered in person or sent by
facsimile and acknowledged by a responsible person at the office of the
recipient, one day after being sent by a major overnight courier, or four days
after being mailed by registered mail, return receipt requested, to the Members
at the addresses set forth below their names on the Schedule A hereto.
34
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11.5. Counterparts. The Members may execute this Agreement in two or more
counterparts, which shall, in the aggregate, be signed by all the Members. Each
counterpart shall be deemed an original instrument as against any Member who has
signed it.
11.6. Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of Delaware applicable to agreements made
and to be performed in Delaware.
11.7. Binding Effect. This Agreement shall be binding on all successors and
assigns of the Members and inure to the benefit of the respective permitted
successors and assigns of the Members, except to the extent of any express
contrary provision in this Agreement.
11.8. Severability. If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in effect and shall be
enforceable to the maximum extent permitted by law, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.
11.9. Survival of Rights, Duties and Obligations. Termination of this
Agreement for any cause shall not release either Member from any liability which
at the time of termination has already accrued to the other Member hereto or
which thereafter may accrue in respect of any act or omission prior to such
termination, nor shall any such termination hereof affect in any way the
survival of and right, duty or obligation of either Member which is expressly
stated elsewhere in this Agreement to survive termination hereof.
11.10. Captions and Exhibits. Titles or captions of Sections or Articles
contained in this Agreement are inserted only as a matter of convenience and for
reference and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof. All Exhibits and Schedules
attached hereto shall be considered a part hereof as though fully set forth
herein.
11.11. Specific Performance. The Members acknowledge that monetary damages
may not be an adequate remedy for violations of this Agreement and that any
Member may, in its sole discretion, through arbitration or otherwise under
Article X or, in circumstances where Article X hereof is not applicable, in a
court of competent jurisdiction, apply for specific performance or injunctive or
other relief as such arbitrator or court may deem just and proper in order to
enforce this Agreement or to prevent violation hereof and, to the extent
permitted by applicable law, each Member waives any objection to the imposition
of such relief.
11.12. Assignability. Except as otherwise provided in Section 6.1 hereof,
neither this Agreement nor any Interest, including the right to receive
distributions, shall be assignable by either Member without the written consent
of the other, and any attempted assignment without such consent shall be null
and void. This Agreement shall be binding upon the successors and permitted
35
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assigns of the Members. Any such successor or permitted assign shall be subject
to the same rights and obligations as the original Member hereunder.
11.13. Confidentiality. (a) As used in this Section 11.13, "Confidential
Information" means all confidential and proprietary business, technical, or
financial information relating to the matters discussed herein.
(b) In order to protect the Confidential Information of any Member hereto
(in such capacity, the "Disclosing Member") that has become available to any
other Member hereto (in such capacity, the "Receiving Member"), each Member
agrees as follows:
(i) Each Member agrees that it will make no use of any Confidential
Information except in furtherance of the purposes contemplated by this
Agreement.
(ii) Each Member agrees that it will not, without the prior written consent
of the other Member, disclose to any third party Confidential Information (which
for purposes of this Section 11.13(b) shall include the terms or existence of
this Agreement or of the PSMA/PSMP License Agreement or the Services Agreement
or other matters relating to the collaboration contemplated hereby and thereby)
received in its capacity as Receiving Member so long as such Member is a member
of the Company and for a period of five years thereafter.
(iii) Notwithstanding the foregoing:
(1) Each Member may disclose Confidential Information to those of its
representatives, employees and agents ("Representatives") who
have a need to know such Confidential Information in relation to
the matters discussed herein and who are under obligations of
confidentiality and non-use consistent with those set forth
herein. Any unauthorized disclosure of Confidential Information
by a Member's Representatives shall be a breach by such Member of
this Section 11.13.
(2) Disclosure of Confidential Information is permitted to the extent
that such disclosure is required pursuant to applicable laws,
rules or regulations or government requirement or court order,
provided however, that the Receiving Member shall promptly notify
the Disclosing Member in writing of the existence or imposition
of any such requirement or order and cooperate with the
Disclosing Member in seeking an appropriate protective order or
other reliable assurance that confidential treatment will be
accorded the Confidential Information.
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(c) The provisions governing confidentiality and non-use contained in this
Section 11.13 shall not apply to any Confidential Information which:
(i) the Receiving Member can establish was known to the
Receiving Member prior to disclosure under or in connection
with this Agreement by the Disclosing Member;
(ii) was in the public domain or the subject of public knowledge
at the time of disclosure under or in connection with this
Agreement;
(iii)becomes part of the public domain or the subject of public
knowledge through no breach by or act of default of the
Receiving Member;
(iv) is obtained by the Receiving Member from a third party other
than in breach of a legal or contractual obligation of
confidentiality owed by such third party to the Disclosing
Member in respect thereof, the existence of which such
obligation was known or should have been known by the
Receiving Member; or
(v) the Receiving Member can establish was independently
developed by it without reference to Confidential
Information received.
(d) Termination of this Agreement shall not affect the obligations
concerning confidentiality and non-use as set forth in this Section 11.13.
37
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IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the date first above written.
PROGENICS PHARMACEUTICALS, INC.
By: /s/ Ronald Prentki
Name: Ronald Prentki
Title President
CYTOGEN CORPORATION
By: /s/ Donald F. Crane, Jr.
Name: Donald F. Crane, Jr.
Title Vice President General Counsel and
Corporate Secretary
PSMA DEVELOPMENT COMPANY LLC
By: /s/ Ronald Prentki
Managing Representative
By: /s/ Donald F. Crane, Jr.
Managing Representative
38
Exhibit 10.3
PSMA/PSMP LICENSE AGREEMENT
Dated June 15, 1999
by and among
PROGENICS PHARMACEUTICALS, INC.,
CYTOGEN CORPORATION
and
PSMA Development Company LLC
<PAGE>
TABLE OF CONTENTS
Page
1. DEFINITIONS.......................................................2
1.1. Affiliate..........................................................2
1.2. Commercial Sale....................................................2
1.3. Contract Period....................................................2
1.4. CYTOGEN............................................................2
1.5. CYTOGEN License....................................................2
1.6. CYTOGEN Technical Information......................................2
1.7. Effective Date.....................................................3
1.8. FDA................................................................3
1.9. Field..............................................................3
1.10. Field Antibody....................................................3
1.11. Field Immunogen...................................................3
1.12. Licensed CYTOGEN Patent...........................................3
1.13. Licensed CYTOGEN Product..........................................3
1.14. Licensed Patent...................................................4
1.15. Licensed Product..................................................4
1.16. Licensed Progenics Patent.........................................4
1.17. Licensed Progenics Product........................................4
1.18. Licensed Technical Information....................................4
1.19. Licenses..........................................................4
1.20. LLC...............................................................4
1.21. LLC Agreement.....................................................4
1.22. Major Market......................................................4
1.23. Manufacturing Rights..............................................4
1.24. MoAb 7E11.........................................................4
1.25. North American Territory..........................................5
1.26. NWB...............................................................5
1.27. NWC...............................................................5
1.28. NWC Agreement.....................................................5
1.29. Patent............................................................5
1.30. Prime License.....................................................5
1.31. Progenics.........................................................5
1.32. Progenics License.................................................5
1.33. Progenics Technical Information...................................5
1.34. Prostagen.........................................................5
1.35. Prostagen Agreement...............................................6
1.36. PSMA..............................................................6
1.37. PSMP..............................................................6
1.38. Regulatory Authority..............................................6
1.39. Services Agreement................................................6
1.40. SKICR.............................................................6
1.41. SKICR Agreement...................................................6
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1.42. SKICR License.....................................................6
1.43. Technical Information.............................................6
1.44. Territory.........................................................6
1.45 [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]
2. REPRESENTATIONS AND WARRANTIES....................................6
2.1. By Progenics.......................................................6
2.2. By CYTOGEN.........................................................7
3. LICENSES.........................................................10
3.1. Grant by Progenics................................................10
3.2. Grant by CYTOGEN..................................................10
3.3. Licensing of Additional Patents and Technical Information.........11
3.4. Sublicenses.......................................................12
3.5. Guarantee of Performance of Sublicensee...........................12
3.6. Cure of Breach by Sublicensee.....................................12
3.7. [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]
3.8. [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]
3.9. Reservation of Rights.............................................12
3.10. No Other Rights..................................................13
3.11. Competition Not Prohibited.......................................13
4. CERTAIN COVENANTS................................................13
4.1. Diligence.........................................................13
4.2. No Waivers or Grant of Further Rights.............................13
4.3. Summary Reports...................................................14
4.4. Breach of SKICR Agreement.........................................14
4.5. Acquiring Other Rights in the Field...............................14
4.6. Notices under Prime Licenses......................................14
4.7. Compliance with Terms of Prime Licenses; Assignment...............14
4.8. [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]
5. ROYALTIES AND OTHER PAYMENTS.....................................15
5.1. Amounts Payable with Respect to the Progenics License.............15
5.2. Amounts Payable with Respect to the CYTOGEN License...............15
5.3. Allocation of Royalties...........................................15
6. PATENT PROSECUTION AND MAINTENANCE, ETC..........................16
6.1. Prosecution and Maintenance.......................................16
6.2. Disclosure Regarding Patent Activities............................16
7. REPORTS AND ROYALTY PAYMENTS; BOOKS AND RECORDS..................17
7.1. Reports...........................................................17
7.2. Royalty Payments..................................................17
7.3. Calculation of Royalties and Other Payments.......................17
7.4. Currency Control Restrictions.....................................17
7.5. Books and Records.................................................17
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8. TAXATION OF PAYMENTS.............................................18
9. PRODUCT LIABILITY DISCLAIMERS....................................18
9.1. Product Liability Disclaimer by Progenics.........................18
9.2. Product Liability Disclaimer by CYTOGEN...........................18
9.3. Product Liability Disclaimer by the LLC...........................18
10. INDEMNIFICATION AND INFRINGEMENT.................................19
10.1. Indemnification..................................................19
10.2. Third Party Infringement of Licensed Patent Rights...............19
11. TERM AND TERMINATION.............................................20
11.1. Term.............................................................20
11.2. Termination......................................................20
11.3. Accrued Rights and Obligations...................................22
12. EFFECT OF TERMINATION ON SUBLICENSEE.............................22
13. EXPORT LICENSES..................................................22
14. MISCELLANEOUS PROVISIONS.........................................22
14.1. Assignability....................................................22
14.2. Notices..........................................................22
14.3. Independent Contractors..........................................23
14.4. Counterparts.....................................................23
14.5. Entire Understanding.............................................23
14.6. Headings.........................................................23
14.7. No Implied Rights................................................23
14.8. No Waiver........................................................23
14.9. Publicity........................................................23
14.10. Promotion and Advertising.......................................24
14.11. Arbitration.....................................................24
14.12. Confidentiality.................................................24
14.13. No Third Party Beneficiaries............................... ....25
14.14. Governing Law...................................................25
14.15. SKICR Agreement.................................................26
14.16. Limitation on Liability.........................................26
iii
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PSMA/PSMP LICENSE AGREEMENT
THIS PSMA/PSMP LICENSE AGREEMENT, dated June 15, 1999 (this
"Agreement"), is made by and among Progenics Pharmaceuticals, Inc., a Delaware
corporation having its place of business at 777 Old Saw Mill River Road,
Tarrytown, NY 10591 ("Progenics"), CYTOGEN Corporation, a Delaware corporation
having its place of business at 600 College Road East, CN 5308, Princeton, NJ
08540 ("CYTOGEN"), and PSMA Development Company LLC, a Delaware limited
liability company having its principal place of business at 777 Old Saw Mill
River Road, Tarrytown, NY 10591 (the "LLC").
WHEREAS, CYTOGEN has acquired certain intellectual property
rights, including patent rights, relating to PSMA and PSMP (as hereinafter
defined), and may in the future acquire additional intellectual property rights,
including patent rights, relating to therapeutics based on PSMA and/or PSMP;
WHEREAS, Progenics has certain expertise in developing
immunotherapeutics based on novel vaccine and antibody technology and may in the
future acquire intellectual property rights, including patents rights, relating
to immunotherapeutics based on PSMA and/or PSMP;
WHEREAS, Progenics and CYTOGEN wish to establish a
collaboration to pursue the development and commercialization of
immunotherapeutic products or services based on PSMA and/or PSMP and, in order
to implement such collaboration, Progenics and CYTOGEN have caused the LLC to be
organized and have each become the owner of 50% of the outstanding ownership
interests thereof;
WHEREAS, in connection with the organization of the LLC,
Progenics, CYTOGEN and the LLC have entered into a limited liability company
agreement providing for the management of the LLC and the rights and obligations
of the parties thereto;
WHEREAS, in furtherance of the collaboration, each of
Progenics and CYTOGEN desires to grant rights to the LLC with respect to
intellectual property rights now owned or hereafter acquired by Progenics or
CYTOGEN in the Field (as hereinafter defined), and Progenics, CYTOGEN and the
LLC wish to provide for certain other matters related to the collaboration in
the Field, as set forth below;
WHEREAS, CYTOGEN previously granted to Prostagen Corporation,
a Delaware corporation ("Prostagen"), an exclusive license to certain rights
related to PSMA pursuant to a PSMA Therapeutics Sublicense Agreement, dated
December 9, 1996, by and between CYTOGEN and Prostagen (the "Prostagen
Agreement");
WHEREAS, Prostagen previously granted to Northwest Clinicals
LLC, a Washington limited liability company ("NWC"), an exclusive sublicense to
produce, process or otherwise manufacture and sell PSMA and PSMP pursuant to a
PSMA Production Sublicense Agreement, dated as of July 16, 1997 (the "NWC
Agreement");
WHEREAS, prior to the date hereof and in order to facilitate
the above-referenced collaboration among the parties hereto, CYTOGEN has
<PAGE>
acquired 100% of the outstanding equity interests in Prostagen, and CYTOGEN and
Prostagen have terminated the Prostagen Agreement to the extent of the Field;
WHEREAS, CYTOGEN has agreed with Progenics to cause the NWC
Agreement to be terminated and to acquire for the LLC, at no cost to the LLC,
exclusive manufacturing rights in the Field for PSMA and PSMP, and to indemnify
and hold the LLC harmless for any cost, expense, damage or liability whatsoever
related to CYTOGEN's inability to grant to the LLC as of the date hereof
manufacturing rights in the Field to PSMA and PSMP;
WHEREAS, in order to pursue the research and development
programs contemplated by the above-referenced collaboration between Progenics
and CYTOGEN, simultaneously with the execution and delivery of this Agreement
Progenics, CYTOGEN and the LLC are entering into a Services Agreement (the
"Service Agreement") pursuant to which Progenics is agreeing to perform certain
research and development services.
NOW, THEREFORE, in consideration of the foregoing premises
and the mutual covenants contained herein, the parties hereto agree as follows:
1. DEFINITIONS. For the purposes of this Agreement, the following terms,
whether used in the singular or plural, shall have the following meanings:
1.1. Affiliate. The term "Affiliate" shall mean any person, corporation,
company, partnership, joint venture and/or firm which controls, is controlled by
or is under common control with, a party. For purposes of this definition,
"control" shall mean (a) in the case of corporate entities, direct or indirect
ownership of at least 50% of the stock or participating shares entitled to vote
for the election of directors, and (b) in the case of non-corporate entities,
direct or indirect ownership of at least 50% of the equity interest with the
power to direct the management and policies of such non-corporate entity.
1.2. Commercial Sale. The term "Commercial Sale" shall mean the commercial
sale of a Licensed Product to an unrelated third party. The sale of a Licensed
Product distributed or used for clinical trials or experimental purposes only
shall not be considered a Commercial Sale.
1.3. Contract Period. The term "Contract Period" shall mean the period
beginning on the Effective Date and ending on the date on which this Agreement
shall expire or terminate in accordance with the provisions of Section 11
hereof.
1.4. CYTOGEN. The term "CYTOGEN" shall have the meaning set forth in the
recitals of this Agreement.
1.5. CYTOGEN License. The term "CYTOGEN License" shall mean the license
granted by CYTOGEN to the LLC pursuant to Section 3.2 of this Agreement.
1.6. CYTOGEN Technical Information. The term "CYTOGEN Technical
Information" shall mean Technical Information to the extent, but only to the
extent, used or useful in the Field in which CYTOGEN has or acquires during the
Contract Period a licensable right; provided, however, that any Technical
Information used or useful in the Field in which CYTOGEN currently has a
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licensable right but which is not disclosed on Annex A hereto, and any Technical
Information used or useful in the Field in which CYTOGEN acquires a licensable
right after the date hereof, shall not be deemed to be CYTOGEN Technical
Information unless and until Progenics shall have expressly consented in writing
pursuant to Section 3.3 hereof.
1.7. Effective Date. The term "Effective Date" shall mean the date of this
Agreement, as set forth on the first page hereof.
1.8. FDA. The term "FDA" shall mean the U.S. Food and Drug Administration.
1.9. Field. The term "Field" shall mean:
(a) any and all means of developing, making, having made, distributing,
using, offering for sale, selling, having sold, importing or exporting any Field
Immunogen and/or any vaccine incorporating a Field Immunogen as a therapeutic,
but excluding vaccines for prostate cancer that are antigen presenting cells
isolated from a patient's blood, bone marrow or spleen and pulsed ex vivo with a
Field Immunogen for return to the patient; and
(b) any and all means of developing, making, having made, distributing,
using, offering for sale, selling, having sold, importing or exporting any Field
Antibody as a therapeutic.
1.10. Field Antibody. The term "Field Antibody" shall mean a product that
incorporates a peptide that includes a complementarity determining region of an
antibody recognizing one or more Field Immunogens, including, without
limitation, antibodies, antibody fragments, antibody derivatives such as
humanized antibodies and single chain antibodies, and conjugates of any of the
foregoing, but excluding MoAb 7E11.
1.11. Field Immunogen. The term "Field Immunogen" shall mean any immunogen
that derives its immunogenicity wholly or in significant part from PSMA or PSMP
or mimetopes thereof, or any combination of such immunogens.
1.12. Licensed CYTOGEN Patent. The term "Licensed CYTOGEN Patent" shall
mean any Patent in which CYTOGEN has or acquires during the Contract Period a
licensable right, to the extent, but only to the extent, any such Patent is used
or useful in the Field; provided, however, that any Patent used or useful in the
Field in which CYTOGEN currently has a licensable right but which is not
disclosed on Annex A hereto, and any Patent used or useful in the Field in which
CYTOGEN acquires a licensable right after the date hereof, shall not be deemed
to be a Licensed CYTOGEN Patent unless and until Progenics shall have expressly
consented in writing pursuant to Section 3.3 hereof. The term "Licensed CYTOGEN
Patent" shall include the rights (including Patent rights) granted to CYTOGEN
pursuant to the SKICR Agreement and Wright Agreement as well as the other Patent
rights listed on Annex A hereto.
1.13. Licensed CYTOGEN Product. The term "Licensed CYTOGEN Product" shall
mean any product, apparatus, method or service the manufacture, use, sale,
provision or practice of which would, in the absence of a license, infringe one
or more claims of a Licensed CYTOGEN Patent.
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1.14. Licensed Patent. The term "Licensed Patent" shall mean any Licensed
Progenics Patent or Licensed CYTOGEN Patent.
1.15. Licensed Product. The term "Licensed Product" shall mean any Licensed
Progenics Product or Licensed CYTOGEN Product.
1.16. Licensed Progenics Patent. The term "Licensed Progenics Patent" shall
mean any Patent in which Progenics has or acquires during the Contract Period a
licensable right, to the extent, but only to the extent, any such Patent is used
or useful in the Field; provided, however, that any Patent used or useful in the
Field in which Progenics currently has a licensable right but which is not
disclosed on Annex B hereto, and any Patent used or useful in the Field in which
Progenics acquires a licensable right after the date hereof, shall not be deemed
to be a Licensed Progenics Patent unless and until CYTOGEN shall have expressly
consented in writing pursuant to Section 3.3 hereof.
1.17. Licensed Progenics Product. The term "Licensed Progenics Product"
shall mean any product, apparatus, method or service the manufacture, use, sale,
provision or practice of which by the LLC would, in the absence of a license,
infringe one or more claims of a Licensed Progenics Patent.
1.18. Licensed Technical Information. The term "Licensed Technical
Information" shall mean the Progenics Technical Information and the CYTOGEN
Technical Information.
1.19. Licenses. The term "Licenses" shall mean the Progenics License and
the CYTOGEN License.
1.20. LLC. The term "LLC" shall have the meaning set forth in the recitals
of this Agreement.
1.21. LLC Agreement. The term "LLC Agreement" shall mean the Limited
Liability Company Agreement, dated as of even date herewith, by and among
Progenics, CYTOGEN and the LLC, and any amendments thereto.
1.22. Major Market. The term "Major Market" shall mean any of the United
States, United Kingdom, France, Germany, Italy, Spain, Japan or Canada.
1.23. Manufacturing Rights. The term "Manufacturing Rights" shall have the
meaning set forth in Section 4.8 hereof.
1.24. MoAb 7E11. The term "MoAb 7Ell" shall mean that certain antibody to
PSMA known as MoAb 7E11-C5, which such antibody is claimed in United States
Patent No 5,162,504, granted November 10, 1992, and entitled "Monoclonal
Antibodies to a New Antigenic Marker in Epithelial Prostatic Cells and Serum of
Prostate Cancer Patients." The term "MoAb 7E11" includes all subclones claimed
in such Patent.
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1.25. North American Territory. The term "North American Territory" shall
mean the United States of America and Canada and their respective territories
and possessions.
1.26. NWB. The term "NWB" shall have the meaning set forth in the recitals
of this Agreement.
1.27. NWC. The term "NWC" shall have the meaning set forth in the recitals
of this Agreement.
1.28. NWC Agreement. The term "NWC Agreement" shall have the meaning set
forth in the recitals of this Agreement.
1.29. Patent. The term "Patent" shall mean (i) unexpired letters patent
(including inventor's certificates) which have not lapsed or been held invalid
or unenforceable by a court or administrative body of competent jurisdiction
from which no appeal can be taken or has been taken within the required time
period, including, without limitation, any substitution, extension,
registration, confirmation, reissue, reexamination, renewal or any like filing
thereof, and (ii) pending applications for letters patent that have not been the
subject of a rejection notice from which an appeal cannot be taken or in respect
of which the applicable period of appeal has expired, including, without
limitation, any continuation, division or continuation-in-part thereof and any
provisional applications.
1.30. Prime License. The term "Prime License" shall mean any license,
including, without limitation, the SKICR Agreement, pursuant to which Progenics
or CYTOGEN has acquired, or acquires in the future, intellectual property rights
licensed to the LLC hereunder.
1.31. Progenics. The term "Progenics" shall have the meaning set forth in
the recitals of this Agreement.
1.32. Progenics License. The term "Progenics License" shall mean the
license granted by Progenics to the LLC pursuant to Section 3.1 of this
Agreement.
1.33. Progenics Technical Information. The term "Progenics Technical
Information" shall mean Technical Information to the extent, but only to the
extent, used or useful in the Field in which Progenics has or acquires during
the Contract Period a licensable right; provided, however, that any Technical
Information used or useful in the Field in which Progenics currently has a
licensable right but which is not disclosed on Annex B hereto, and any Technical
Information used or useful in the Field in which Progenics acquires a licensable
right after the date hereof, shall not be deemed to be Progenics Technical
Information unless and until CYTOGEN shall have expressly consented in writing
pursuant to Section 3.3 hereof.
1.34. Prostagen. The term "Prostagen" shall have the meaning set forth in
the recitals of this Agreement.
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1.35. Prostagen Agreement. The term "Prostagen Agreement" shall have the
meaning set forth in the recitals of this Agreement.
1.36. PSMA. The term "PSMA" shall mean prostate specific membrane antigen
as described in Cancer Research, 53:227-230 (1993) and as described in the U.S.
Patent Application Serial Nos. 08/973,337 and 08/394,152, including
continuations and continuations-in-part, allelic variations thereof and nucleic
acids encoding the same.
1.37. PSMP. The term "PSMP" shall mean prostate specific membrane peptides,
which include any peptide sequence appearing in a PSMA protein and unique to
PSMA proteins, and nucleic acids encoding the same.
1.38. Regulatory Authority. The term "Regulatory Authority" shall mean the
applicable governmental authority (which, in the United States, is the FDA) that
is responsible for approval for manufacturing, marketing or importing a
therapeutic agent in a particular country for human use.
1.39. Services Agreement. The term "Services Agreement" shall have the
meaning set forth in the recitals of this Agreement.
1.40. SKICR. The term "SKICR" shall mean the Sloan-Kettering Institute for
Cancer Research, a New York membership corporation having its principal place of
business at 1275 York Avenue, New York, New York 10021.
1.41. SKICR Agreement. The term "SKICR Agreement" shall mean the Option and
License Agreement, effective July 1, 1993, by and between SKICR and Cytogen, as
amended by amendment no. 1 thereto effective as of November 22, 1993.
1.42. SKICR License. The term "SKICR License" shall mean the license
granted to Cytogen pursuant to the SKICR Agreement.
1.43. Technical Information. The term "Technical Information" shall mean
unpublished research and development information, unpatented inventions,
formulae, processes, know-how, trade secrets and technical data.
1.44. Territory. The term "Territory" shall mean the entire world.
1.45. [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]
2. REPRESENTATIONS AND WARRANTIES.
-------------------------------
2.1. By Progenics. Progenics represents and warrants to CYTOGEN and the LLC
as follows:
2.1.1. Due Organization. Progenics is a corporation duly organized and
validly existing under the laws of the State of Delaware.
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2.1.2. Power to Act. Progenics has all necessary corporate power to enter
into and perform its obligations under this Agreement and has taken all
necessary corporate action under the laws of the State of Delaware and its
certificate of incorporation and by-laws to authorize the execution of, and
performance of its obligations under, this Agreement. Progenics has the full
right, power and authority to grant all of the right, title and interest in the
license granted by Progenics under Section 3 hereof.
2.1.3. No Default. Progenics is not in default under, or in conflict with
respect to, its certificate of incorporation or by-laws or any term or provision
of any agreement, mortgage or indenture to which it is a party or by which any
of its properties are bound or any statute, rule, order, writ, injunction,
decree or regulation applicable to it or any of its properties that will
preclude the performance of its obligations under this Agreement in any material
respect.
2.1.4. No Material Contracts. Progenics is not subject to any contract or
agreement that will preclude or otherwise conflict with the performance of its
obligations under this Agreement in any material respect.
2.1.5. No Conflicts. Neither the execution nor delivery of this Agreement,
the consummation of the transactions herein contemplated nor the fulfillment of
or compliance with the terms and provisions hereof will (i) require the consent,
approval or authorization of, or notice, declaration, filing or registration
with, any governmental or regulatory authority, or violate any provisions of
law, administrative regulation or court decree applicable to Progenics or (ii)
conflict with, result in a breach of any of the terms, conditions or provisions
of or constitute a default under the certificate of incorporation or by-laws of
Progenics or of any agreement or instrument to which it is a party or by which
any of its property is bound.
2.1.6. Execution and Delivery; Enforceability. This Agreement has been duly
executed and delivered and constitutes the legal, valid and binding obligation
of Progenics, enforceable against it in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally and by general equitable principles.
2.1.7. Patents in the Field. To Progenics's knowledge, on the date hereof
Progenics does not have a licensable right to any Patent used or useful in the
Field except as disclosed on Annex B hereto.
2.2. By CYTOGEN. CYTOGEN represents and warrants to Progenics and the LLC
as follows:
2.2.1. Due Organization. CYTOGEN is a corporation duly organized and
validly existing under the laws of the State of Delaware.
2.2.2. Power To Act. CYTOGEN has all necessary corporate power to enter
into and perform its obligations under this Agreement and has taken all
necessary corporate action under the laws of the State of Delaware and its
certificate of incorporation and by-laws to authorize the execution of, and
performance of its obligations under, this Agreement. CYTOGEN has the full
right, power and authority to grant all of the right, title and interest in the
licenses granted, or contingent licenses that may be granted, by CYTOGEN under
Section 3 hereof.
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2.2.3. No Default. CYTOGEN is not in default under, or in conflict with
respect to, its certificate of incorporation or by-laws or any term or provision
of any agreement, mortgage or indenture to which it is a party or by which any
of its properties are bound or any statute, rule, order, writ, injunction,
decree or regulation applicable to it or any of its properties that will
preclude the performance of its obligations under this Agreement in any material
respect.
2.2.4. No Material Contracts. CYTOGEN is not subject to any contract or
agreement that will preclude or otherwise conflict with the performance of its
obligations under this Agreement in any material respect.
2.2.5. No Conflicts. Neither the execution nor delivery of this Agreement,
the consummation of the transactions herein contemplated nor the fulfillment of
or compliance with the terms and provisions hereof will (i) require the consent,
approval or authorization of, or notice, declaration, filing or registration
with, any governmental or regulatory authority, or violate any provisions of
law, administrative regulation or court decree applicable to CYTOGEN or (ii)
conflict with, result in a breach of any of the terms, conditions or provisions
of or constitute a default under the certificate of incorporation or by-laws of
CYTOGEN or of any agreement or instrument to which it is a party or by which any
of its property is bound.
2.2.6. Execution and Delivery; Enforceability. This Agreement has been duly
executed and delivered and constitutes the legal, valid and binding obligation
of CYTOGEN, enforceable against it in accordance with the terms hereof, subject,
as to enforcement, to bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally and by general equitable principles.
2.2.7. SKICR and Wright Agreements. (a) Attached as Exhibit 1 is a true and
complete copy of the SKICR Agreement and attached as Exhibit 2 is a true and
complete copy of the [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED] Agreement. No
provision of the SKICR Agreement or the [CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED] Agreement has been amended, modified or waived. All of the rights
granted under the SKICR Agreement and the [CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED] Agreement to CYTOGEN are valid and enforceable, and neither this
Agreement nor the LLC Agreement contravene any provision of such agreements or
give rise to a termination right thereunder. The option described in Section
III.A. of the SKICR Agreement was duly and validly exercised by CYTOGEN in a
timely manner, the license issue fee described in Section III.B. of the SKICR
Agreement was paid by CYTOGEN in accordance with such section and the license
described in Section III.C. of the SKICR Agreement was thereupon duly and
validly issued.
(b) To CYTOGEN's knowledge: (i) the representations and warranties made by
SKICR in the SKICR Agreement were true in all material respects when made; (ii)
there has occurred no act or failure to act that would render such
representations untrue in any material respect if made on and as of the date
hereof; and (iii) there exists no breach or anticipatory breach by SKICR or
[CONFIDENTIAL TREATMENT HAS BEEN REQUESTED] of any of its material obligations
under the SKICR Agreement or the [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]
Agreement, respectively. Each of the SKICR Agreement and the [CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED] Agreement is in full force and effect, and CYTOGEN
has complied in all material respects with its obligations thereunder. There
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does not exist any default by CYTOGEN under such agreements that, after notice
or the lapse of time or both, would constitute a material event of default or
give rise to a right of termination thereunder. CYTOGEN has neither given nor
received any notice of termination or breach under such agreements. In the event
of any misrepresentation or breach of warranty by SKICR under the SKICR
Agreement, CYTOGEN will cooperate with all reasonable requests of the Management
Committee of the LLC regarding the assertion of any claim or cause of action
against SKICR for such misrepresentation or breach of warranty; provided, that
the LLC shall bear any and all costs, expenses, liabilities or obligations of
CYTOGEN in connection therewith or arising therefrom.
2.2.8. No Litigation, Claims or Conflicts. (a) There is no action, suit,
claim or proceeding pending or threatened against CYTOGEN or, to CYTOGEN'S
knowledge, SKICR or [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]with respect to
any of the Licensed CYTOGEN Patents or CYTOGEN Technical Information, either at
law or in equity, before any court or administrative agency or before any
governmental department, commission, board, bureau, agency or instrumentality,
whether United States or foreign, relating to validity, infringement, ownership
or otherwise, and neither CYTOGEN nor, to CYTOGEN's knowledge, SKICR or
[CONFIDENTIAL TREATMENT HAS BEEN REQUESTED] has received any notice that any
person may bring such a claim, and CYTOGEN has no belief that any basis or
grounds exists for any such actions, suits or claims.
(b) [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]
(c) There are no proceedings or claims pending in which CYTOGEN or, to
CYTOGEN's knowledge, SKICR or [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]
alleges that any person is infringing upon, or otherwise violating, any of the
Licensed CYTOGEN Patents or CYTOGEN Technical Information, nor are any
proceedings threatened by CYTOGEN or, to CYTOGEN's knowledge, SKICR or
[CONFIDENTIAL TREATMENT HAS BEEN REQUESTED] alleging any such violation or
infringement.
2.2.9. Subsisting Rights. The Licensed CYTOGEN Patents in existence on the
Effective Date are in full force and effect, have been maintained to date and
are not invalid or unenforceable, in whole or in part. No act has been done or
omitted to be done which had or could have the effect of impairing or dedicating
to the public, or entitling any U.S. or foreign government authority or any
other person to cancel, forfeit, modify or consider abandoned any of the
Licensed CYTOGEN Patents, or give any person any rights with respect thereto.
All of CYTOGEN's rights under the SKICR Agreement and the [CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED] Agreement, and CYTOGEN's ownership rights in the
Patents listed in paragraph 2 of Annex A hereof, are valid, enforceable and free
of defects.
2.2.10. No Prior Transfer. (a) CYTOGEN has not previously sublicensed,
assigned, transferred, conveyed or otherwise encumbered its right, title and
interest in any of the Licensed CYTOGEN Patents or CYTOGEN Technical Information
other than pursuant to the Prostagen Agreement. A true and complete copy of the
NWC Agreement is attached hereto as Exhibit 2.
(b) The Prostagen Agreement has been terminated in its entirety with
respect to the Field, and except for the Manufacturing Rights, no rights in the
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Field remain outstanding under the Prostagen Agreement and all rights in the
Field to Patents and Technical Information granted thereunder (other than the
Manufacturing Rights) have been reacquired by CYTOGEN.
2.2.11. Exclusive Owner, etc. CYTOGEN is the sole and exclusive licensee of
the rights licensed to CYTOGEN under the SKICR Agreement and the [CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED] Agreement and of the rights to the Patents listed
in paragraph 2 of Annex A hereof, all of which are owned free and clear of any
liens, charges and encumbrances, and no other person, corporation or other
private or governmental entity or subdivision thereof has or shall have any
claims of ownership whatsoever with respect to such rights. There are no
judgments or settlements against or owed by CYTOGEN relating to such rights.
2.2.12. Confidentiality; Effective Waivers. (a) Neither CYTOGEN nor, to
CYTOGEN's knowledge, SKICR or [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED] has
divulged, furnished to or made accessible to any person any trade secrets
included in the Licensed CYTOGEN Patents or CYTOGEN Technical Information
without prior thereto having obtained an agreement of confidentiality from such
person.
(b) CYTOGEN and, to CYTOGEN's knowledge, SKICR and [CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED] have obtained from all individuals who participated in any
respect in the invention or authorship of any Licensed CYTOGEN Patents or
CYTOGEN Technical Information (as employees, consultants or otherwise) effective
waivers of any and all ownership rights of such individuals in such rights and
assignments to CYTOGEN, SKICR or [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED], as
applicable, all rights with respect thereto.
2.2.13. Patent Prosecution Disclosure. CYTOGEN has disclosed to the LLC all
of the prosecution files of all of the patents and patent applications licensed
to the LLC by CYTOGEN hereunder.
2.2.14. Patents in the Field. To CYTOGEN's knowledge, on the date hereof
CYTOGEN does not have a licensable right to any Patent used or useful in the
Field except as disclosed on Annex A hereto.
3. LICENSES.
---------
3.1. Grant by Progenics. Subject to the terms and conditions herein
contained, Progenics hereby grants to the LLC, to the extent (but only to the
extent) of the Field, the exclusive (even as to Progenics) right and license
throughout the Territory under the Licensed Progenics Patents and the Progenics
Technical Information to develop, make, have made, distribute, use, offer for
sale, sell, have sold, import or export Licensed Progenics Products.
3.2. Grant by CYTOGEN. Subject to the terms and conditions herein
contained, CYTOGEN hereby grants to the LLC, to the extent (but only to the
extent) of the Field, the exclusive (even as to CYTOGEN) right and license
throughout the Territory under the Licensed CYTOGEN Patents and the CYTOGEN
Technical Information to develop, make, have made, distribute, use, offer for
sale, sell, have sold, import or export Licensed CYTOGEN Products; provided,
however, that until such time as the NWC Agreement is terminated in accordance
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with Section 4.8 hereof, the license granted by CYTOGEN hereunder to make or
have made Licensed CYTOGEN Products is subject to the manufacturing license
granted to NWC pursuant to the NWC Agreement.
3.2.1. Limited Right to MoAb 7E11. To enable the LLC, Affiliates of the LLC
and third party sublicensees to utilize MoAb 7E11 solely in connection with the
development, manufacturing, testing and/or conducting quality control tests on
Licensed Products, CYTOGEN hereby grants to the LLC the right to use MoAb 7E11
solely for such purposes.
3.2.2. Antibody Requirements. CYTOGEN agrees to sell to the LLC its MoAb
7E11 needs at a purchase price not to exceed CYTOGEN's actual and direct costs.
3.2.3. Contingent License. In the event that CYTOGEN is unable to supply
the LLC with its requirements of MoAb 7E11, CYTOGEN shall, upon written request
by the LLC, provide to the LLC, at the LLC's cost, a viable sample of a
hybridoma capable of producing MoAb 7El1, and license to the LLC on a
non-exclusive, royalty-free basis the right to use the hybridoma and to produce
and use MoAb 7E11 for the purposes set forth in Section 3.2.1 hereof.
3.3. Licensing of Additional Patents and Technical Information. (a) If
Progenics or CYTOGEN (in either case, the "Non-Offering Party") identifies any
Patent or Technical Information used or useful in the Field in which the other
party (the "Offering Party") has a licensable right that has not theretofore
been licensed to the LLC by the Offering Party, the Non-Offering Party may
request the Offering Party to offer to license such Patent or Technical
Information to the LLC pursuant to the terms of this Agreement. Any such request
shall be in writing and shall reference the rights requested to be licensed. If
so requested, the Offering Party shall make such an offer in writing, and in
connection therewith shall disclose to the Non-Offering Party the nature of the
Patent or Technical Information and the terms on which the Offering Party owns
or licenses such Patent or Technical Information, and if such Patent or
Technical Information is licensed, shall provide to the Non-Offering Party an
accurate and complete copy of the relevant license agreement. The Offering Party
shall offer to make to the LLC and the Non-Offering Party, with respect to such
Patent or Technical Information, the representations and warranties set forth in
Annex D hereto, subject to such exceptions as shall be identified by the
Offering Party.
(b) If after the date hereof Progenics or CYTOGEN (in either case, also the
"Offering Party") acquires a licensable right in any Patent or Technical
Information used or useful in the Field, the Offering Party shall promptly
thereafter offer in writing to license such Patent or Technical Information to
the LLC pursuant to the terms of this Agreement. In connection with any such
offer, the Offering Party shall disclose to the other party (also, the
"Non-Offering Party") the nature of the Patent or Technical Information and the
terms on which the Offering Party owns or licenses such Patent or Technical
Information, and if such Patent or Technical Information is licensed, shall
provide to the Non-Offering Party an accurate and complete copy of the relevant
license agreement. In addition, the Offering Party shall offer to make to the
LLC and the Non-Offering Party, with respect to such Patent or Technical
Information, the representations and warranties set forth in Annex C hereto,
subject to such exceptions as shall be identified by such party.
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(c) If a license grant offer is made pursuant to Section 3.3(a) or Section
3.3(b) hereof, the Non-Offering Party shall have 30 calendar days to determine
whether to cause the LLC to accept such offer. Such offer shall be deemed
accepted by the LLC if the Non-Offering Party delivers a written acceptance
notice to the Offering Party within such 30-day period (which shall be deemed to
be the written consent contemplated by Section 1.6, 1.12, 1.16 or 1.33 hereof,
as the case may be). Upon the delivery of such acceptance notice, (i) any
Patents or Technical Information subject to the offer shall thereupon be deemed
to be Licensed Progenics Patents (under Section 1.16 hereof), Progenics
Technical Information (under Section 1.33 hereof), Licensed CYTOGEN Patents
(under Section 1.12 hereof) or CYTOGEN Technical Information (under Section 1.6
hereof), as the case may be, and (ii) the Offering Party shall be deemed to have
made the representations and warranties referred to in Sections 3.3(a) and
3.3(b) hereof, subject to the exceptions identified by the Offering Party as
described in such sections.
3.4. Sublicenses. The LLC shall have the right to grant sublicenses of the
rights granted hereunder, provided that: (i) each such sublicensee agrees in
writing to keep books and records and permit Progenics and CYTOGEN to review
such books and records pursuant to the relevant provisions, and to comply with
all terms of this Agreement expressly applicable to a sublicensee of the LLC;
and (ii) within 15 days of granting any such sublicense the LLC shall give
written notice of such grant to Progenics and CYTOGEN and provide Progenics and
CYTOGEN with a copy of such sublicense. No consent or approval of Progenics or
CYTOGEN shall be required in connection with the granting of such sublicenses.
3.5. Guarantee of Performance of Sublicensee. The LLC hereby
unconditionally guarantees to Progenics and CYTOGEN the performance of any of
its sublicensees' financial obligations hereunder, including making all payments
due, and making all reports required, under this Agreement to be made by reason
of sales of Licensed Products by its sublicensees and their compliance with all
applicable terms of this Agreement. In any such sublicense, the sublicensee
shall agree that in the event of a breach by the sublicensee in the observance
of any applicable terms of this Agreement, Progenics and/or CYTOGEN, as
applicable, shall be entitled to proceed either against such sublicensee or
directly against the LLC, as Progenics and/or CYTOGEN, as applicable, may
determine in their respective sole discretion, to enforce this Agreement.
3.6. Cure of Breach by Sublicensee. Upon notification to Progenics and
CYTOGEN by the LLC of the grant by the LLC of any sublicense under this
Agreement, Progenics and CYTOGEN shall become obligated to notify in writing any
such sublicensee of any breach by the LLC hereunder, or of any purported
termination by CYTOGEN or Progenics, with such notice to be sent to such
sublicensee (at the address specified by the LLC) at the same time as notice is
sent to the LLC. In the event that the LLC breaches this Agreement, which breach
remains uncured through the expiration of any applicable cure period, any
sublicensee of the LLC hereunder shall have the right, but not the obligation,
during a period of 45 days after the expiration of the aforesaid cure period, to
cure such breach in its own name, and, upon curing such breach, such sublicensee
shall have the right to be substituted for the LLC as a direct sublicensee under
the Licenses to the exclusion of, and on the same terms as, the LLC to the
extent of the sublicense. A provision to the effect of the foregoing shall be
included in any sublicense granted hereunder.
3.7 [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]
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3.8 [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]
3.9. Reservation of Rights. Progenics reserves the right to practice and
use the Progenics Technical Information and to develop, make, have made and use
Licensed Progenics Products, and CYTOGEN reserves the right to practice and use
the CYTOGEN Technical Information and to develop, make, have made and use
Licensed CYTOGEN Products, in each case without cost and subject to the
confidentiality provisions of this Agreement, for non-commercial internal
research and development purposes.
3.10. No Other Rights. Except as expressly provided herein, no right, title
or interest is granted (i) by Progenics under the Licensed Progenics Patents,
the Progenics Technical Information or otherwise or (ii) by CYTOGEN under the
Licensed CYTOGEN Patents, the CYTOGEN Technical Information or otherwise.
Progenics and CYTOGEN expressly do not grant, and nothing contained herein is
intended to grant, or shall be construed as granting, any right, title or
interest outside of the Field.
3.11. Competition Not Prohibited. No license granted under this Agreement,
and no other provision contained herein, shall be deemed to prohibit Progenics
or CYTOGEN from engaging in any activity outside of the Field, whether or not
such activity is competitive with the development or commercialization of any
Licensed Product or any other activity of the LLC.
4. CERTAIN COVENANTS.
------------------
4.1. Diligence. The LLC shall use reasonable commercial efforts consistent
with its sound business judgment to promptly develop, obtain regulatory approval
for, manufacture, market and sell Licensed Products. In the event that Progenics
and/or CYTOGEN, from time to time during the term of this Agreement, determines,
in the exercise of its or their reasonable business judgment after discussion
with the LLC, that the LLC is not using reasonable commercial efforts to
develop, obtain regulatory approval for, manufacture, market and sell a Licensed
Product within the United States and at least one other Major Market, then
Progenics and/or CYTOGEN, as the case may be, shall have the right to request
that the LLC immediately undertake such efforts. In the event that any such
request is made by Progenics and/or CYTOGEN to the LLC, and the LLC, within 90
days of such request, does not provide Progenics and/or CYTOGEN, as the case may
be, with satisfactory evidence that the LLC is undertaking such efforts,
Progenics and/or CYTOGEN, as the case may be, shall have the right to terminate
the license granted by such party to the LLC hereunder. In the event that the
LLC does not agree with any such determination by Progenics or CYTOGEN, the LLC
and Progenics and/or CYTOGEN, as the case may be, shall resolve such matter in
accordance with Section 14.11 hereof. For purposes of the foregoing, the efforts
of the LLC's Affiliates and sublicensees, and of distributors, clinical research
organizations and other third parties acting on behalf of the LLC, its
Affiliates or sublicensees, shall be deemed to be the efforts of the LLC.
Notwithstanding the provisions of this Section 4.1 neither Progenics nor CYTOGEN
shall be entitled to terminate, pursuant to this Section 4.1, the licenses
granted hereunder if the LLC's failure to use reasonable best efforts to
promptly develop, obtain regulatory approval for, manufacture, market and sell
Licensed Products results from such party's actions or omissions in its capacity
as an owner of equity interest of the LLC or from the actions or omissions of
such party's representatives in their capacity as managers of the LLC.
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4.2. No Waivers or Grant of Further Rights. Neither party hereto will,
without the prior written consent of the other parties hereto, terminate, amend,
modify or grant any waivers or consents under any Prime License with respect to
the Field, or grant any further rights in the Field except to the LLC, or take
any other action with respect to the Licensed Patents or the Licensed Technical
Information that could adversely affect the rights granted to the LLC hereunder.
4.3. Summary Reports. For so long as the LLC is developing Licensed
Products, the LLC shall keep Progenics and CYTOGEN informed through written
summary reports about the status of the development of Licensed Products. Such
reports shall be provided to Progenics and CYTOGEN on an annual basis, with the
first report due on the first anniversary of the Effective Date.
4.4. Breach of SKICR Agreement. In the event that CYTOGEN shall be in
breach of or default under any of the material terms, conditions or agreements
contained in the SKICR Agreement or the Wright Agreement to be kept, observed or
performed by it, or receives notice of breach or termination of or default under
such agreements, it shall immediately notify the LLC thereof. If CYTOGEN has not
cured such breach or default within [CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED]after the effective date of any notice of termination issued with
respect to such breach or default, the LLC shall have the right, but not the
obligation, to cure any such breach or default in its own name, and the LLC
shall have the right to be substituted for CYTOGEN as direct licensee in the
Field under either such agreement to the exclusion of, and on the same terms as,
CYTOGEN. If the LLC elects not to cure such breach or default or fails to cure
such breach or default within [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED] of the
notice, then Progenics shall have the right, but not the obligation, to cure any
such breach or default in its own name, [CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED]
4.5. Acquiring Other Rights in the Field. Progenics and CYTOGEN agree that
they will not, without the prior written consent of the other, acquire by
license or otherwise intellectual property rights in the Field unless such
rights include the right to grant a sublicense of such rights to the LLC.
4.6. Notices under Prime Licenses. Each of Progenics and CYTOGEN shall
require each licensor of any Prime License to which it is or becomes a party to
furnish copies of all notices and other communications required or permitted
under such Prime License (including without limitation notices of breach or
termination) to the LLC and, upon the request of the LLC, to such sublicensee(s)
of the LLC as the LLC shall specify. In addition, each of Progenics and CYTOGEN
will furnish copies of all notices and communications to the LLC and, upon the
request of the LLC, to such sublicensees of the LLC as the LLC shall specify.
4.7. Compliance with Terms of Prime Licenses; Assignment. Each of Progenics
and CYTOGEN shall fulfill each of its obligations under any Prime License to
which it is a party. Without limiting the generality of the foregoing, within 30
days of the execution of this Agreement CYTOGEN shall notify SKICR of the
execution of this Agreement and provide SKICR with the LLC's name and address as
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required by Section III.D.3. of the SKICR Agreement. Neither Progenics nor
CYTOGEN will assign any interests under a Prime License unless the assignee
expressly agrees to take such interest subject to the interest of the LLC
hereunder.
4.8 [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]
5. ROYALTIES AND OTHER PAYMENTS. In further consideration for the exclusive
licenses granted by Progenics and CYTOGEN to the LLC pursuant to the provisions
of Sections 3.1 and 3.2 hereof, the LLC agrees to make the following payments to
Progenics and CYTOGEN as follows:
5.1. Amounts Payable with Respect to the Progenics License. The LLC shall
pay earned royalties to Progenics with respect to any sale of Licensed Progenics
Products. Such royalties shall be paid at cost -- i.e., at the minimum royalty
rate(s) required to be paid by Progenics, and at the times any such payments are
due, under any Prime License. In addition, the LLC will pay to Progenics fees
equal in amount to the minimum amount of any license, milestone, minimum royalty
or other fees required to be paid by Progenics to any third party under any
Prime License at the times any such payments are due. Any license, milestone,
minimum royalty or other fees (but excluding earned royalties) payable by the
LLC to Progenics pursuant to this Section 5.1 in respect of a Prime License
shall be discounted if Progenics has not sublicensed to the LLC all of the
intellectual property rights acquired by Progenics in such Prime License. Such
discount shall be equal to the proportionate economic value, as agreed upon in
good faith by the parties hereto at the time such rights are sublicensed to the
LLC, of the rights not so sublicensed relative to the totality of rights
licensed to Progenics in the Prime License.
5.2. Amounts Payable with Respect to the CYTOGEN License. The LLC shall pay
earned royalties to CYTOGEN with respect to any sale of Licensed CYTOGEN
Products. Such royalties shall be paid at cost -- i.e., at the minimum royalty
rate(s) required to be paid by CYTOGEN, and at the times any such payments are
due, under any Prime License. In addition, the LLC will pay to CYTOGEN fees
equal in amount to the minimum amount of any license, milestone, minimum royalty
or other fees required to be paid by CYTOGEN to any third party under any Prime
License at the times any such payments are due. Any license, milestone, minimum
royalty or other fees (but excluding earned royalties) payable by the LLC to
CYTOGEN pursuant to this Section 5.2 in respect of a Prime License shall be
discounted if CYTOGEN has not sublicensed to the LLC all of the intellectual
property rights acquired by CYTOGEN in such Prime License. Such discount shall
be equal to the proportionate economic value, as agreed upon in good faith by
the parties hereto at the time such rights are sublicensed to the LLC, of the
rights not so sublicensed relative to the totality of rights licensed to CYTOGEN
in the Prime License. In particular, the license, milestone, minimum royalty or
other fees payable by the LLC to CYTOGEN pursuant to this Section 5.2 with
respect to amounts due by CYTOGEN to SKICR pursuant to the SKICR Agreement shall
be discounted by [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED] to reflect the
value of rights sublicensed by SKICR to CYTOGEN but not sublicensed by CYTOGEN
to the LLC.
5.3. Allocation of Royalties. If (i) any Prime License requires the payment
of royalties at a rate which varies with sales volume and (ii) CYTOGEN or
Progenics (as the case may be as to any particular Prime License) has
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sublicensed rights under such Prime License to one or more persons ("Other
Licensees") in addition to the LLC, then the royalty rates applicable to the
sale of Licensed Products for purposes of determining royalties payable with
respect to such Prime License shall be calculated by making an equitable
allocation (on a notional basis) of net sales by the LLC and the Other Licensees
as to each royalty rate/sales level.
6. PATENT PROSECUTION AND MAINTENANCE, ETC.
----------------------------------------
6.1. Prosecution and Maintenance. To the fullest extent legally or
contractually entitled, each of Progenics and CYTOGEN hereby grants to the LLC
the exclusive right to prepare, file or prosecute any patent application
licensed to the LLC by such party, maintain or extend the term of any issued
Patent licensed to the LLC by such party and defend against any conflicts,
oppositions or interferences involving third-party challenges to Patents
licensed to the LLC by such party. The cost of such activities shall be borne by
the LLC; provided, however, that if less than all of the rights to any such
Patent has been licensed to the LLC pursuant hereto, the LLC shall bear only
that portion of the cost of such activities as reflects the proportionate
economic value, as agreed upon in good faith by the parties hereto, of the
rights licensed to the LLC. Progenics and CYTOGEN shall cooperate, at the LLC's
expense, with all reasonable requests of the LLC in all such activities. If at
any time the LLC determines not to prepare, file or prosecute patent
applications licensed to the LLC hereunder, maintain or extend the term of any
issued Patent licensed to the LLC hereunder or defend against any conflicts,
oppositions or interferences involving third-party challenges to any Patent
licensed to the LLC hereunder, the LLC shall notify CYTOGEN (in the case of
Licensed CYTOGEN Patents) or Progenics (in the case of Licensed Progenics
Patents) of any such determination and grant back to CYTOGEN or Progenics, as
the case may be, the right to conduct any such activity. If the right to
prepare, file or prosecute any patent application licensed to the Company
hereunder, or to maintain or extend or to defend against any third-party
conflicts, oppositions or interferences involving any Patent licensed to the LLC
hereunder cannot be granted to the LLC, the party licensing such Patent shall
use commercially reasonable efforts diligently to perform, or cause to be
performed, in consultation with the LLC, such activities. The cost of such
activities shall be borne by the LLC; provided, however, that if less than all
of the rights to any such Patent has been licensed to the LLC pursuant hereto,
the LLC shall bear only that portion of the cost of such activities as reflects
the proportionate economic value, as agreed upon in good faith by the parties
hereto, of the rights licensed to the LLC.
6.2. Disclosure Regarding Patent Activities. Each party which engages in
patent activities of the nature described in section 6.1 hereof shall promptly
provide the other parties hereto with all correspondence (including any filings
sent or received) and all other information concerning such activities which
comes into such party's possession, and shall periodically update the other
parties hereto on all relevant information concerning the actions described in
Section 6.1 hereof. In addition to the foregoing, each party required to
disclose information pursuant to this Section 6.2 shall provide to the other
parties hereto a reasonable opportunity to review any materials to be submitted
or filed with any patent or governmental authority or in connection with any
such proceeding and to comment on such materials and will discuss and consider
such comments in good faith. The parties hereto consent to the disclosure of
such correspondence by the LLC, at its discretion, to any and all of its
Affiliates and any sublicensee, provided that such Affiliates and sublicensees
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shall receive such correspondence under a confidential disclosure agreement
reasonably satisfactory in form and substance to Progenics or CYTOGEN, as the
case may be.
7. REPORTS AND ROYALTY PAYMENTS; BOOKS AND RECORDS.
------------------------------------------------
7.1. Reports. On or before the last day of each February, May, August, and
November commencing with the first Commercial Sale and thereafter throughout the
Contract Period, the LLC shall furnish Progenics and CYTOGEN with a written
report, signed by an authorized officer or agent of the LLC, showing all
Commercial Sales with respect to which earned royalties are due Progenics and/or
CYTOGEN hereunder with respect to the quarters ended December 31, March 31, June
30 and September 30, respectively.
7.2. Royalty Payments. With each such quarterly report, the LLC shall remit
to Progenics and/or CYTOGEN the total amount of earned royalties shown thereby
to be due. All payments shall be made in lawful funds of the United States of
America.
7.3. Calculation of Royalties and Other Payments. In order to permit the
LLC to calculate the amount of royalties and other payments payable pursuant to
Section 5 hereof, Progenics and CYTOGEN shall provide to the LLC true and
complete copies of all Prime Licenses. Progenics and CYTOGEN will also furnish
the LLC with a written report, signed by an authorized officer, stating product
sales by each of the other licensees (if any) covered by such Prime License (to
the extent available to, and not subject to legal or contractual restrictions on
disclosure by, Progenics or CYTOGEN, as the case may be), and will make their
respective personnel available to answer questions and otherwise provide
information with respect to any matters reasonably necessary for the LLC to
calculate amounts due by the LLC to Progenics or CYTOGEN under Section 5 hereof.
7.4. Currency Control Restrictions. In the event that the LLC is precluded
from transferring royalties due Progenics and/or CYTOGEN hereunder at any time
during the Contract Period because the LLC has failed after due diligence to
obtain the approval of such transfer from the appropriate governmental agency
responsible for control of currency exchanges of a particular country in which
the LLC has sold Licensed Products, then the LLC agrees (a) to deposit or to
cause the deposit of such royalties to the account of Progenics or CYTOGEN, as
the case may be, in a bank in such country designated by the beneficiary of such
deposit; (b) to provide or to cause to be provided to such beneficiary
documentary evidence of such deposits; and (c) to remit or to cause remittance
of such deposits to such beneficiary immediately upon the subsequent approval of
such transfers by such governmental agency. The LLC further agrees that the form
of such depository account shall permit such beneficiary to withdraw the
deposited amounts at will, but shall permit the LLC to withdraw the deposited
amounts solely for the purpose of remitting such amounts to such beneficiary
pursuant to the provisions of this Paragraph 7.4.
7.5. Books and Records. The LLC agrees to keep adequate and complete
records showing all Commercial Sales and/or other revenues with respect to which
earned royalties and/or other payments are due Progenics and/or CYTOGEN
hereunder. Such records shall include all information necessary to verify the
total amount and computation of earned royalties and/or other payments
hereunder, and shall be open to inspection by Progenics and CYTOGEN during
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reasonable business hours to the extent necessary to verify the amount thereof.
Such inspection by each of Progenics and CYTOGEN shall be made not more often
than once each calendar year at the request of Progenics and/or CYTOGEN (unless
good cause is shown by Progenics or CYTOGEN of the need for more frequent
inspection) by an auditor appointed by the requesting party and to whom the LLC
has no reasonable objection, provided that such auditor shall be under a
confidentiality obligation to the LLC to reveal only that information, and only
to the requesting party, necessary to verify the royalties due hereunder. In
addition, such inspection shall be limited to a period not to extend beyond
three years after the date of receipt by the requesting party of a report from
the LLC relating to such records pursuant to Section 7.1 hereof. After such
three-year period, any such report and the records upon which such report was
based shall be deemed presumptively correct. The expenses of any such audit
shall be borne by the party requesting the audit unless the audit determines a
discrepancy in favor of the requesting party of at least [CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED], in which event the audit expenses shall be borne by the
LLC. Notwithstanding the foregoing, either Progenics or CYTOGEN shall, at
reasonable times and upon reasonable notice, be granted access after such
three-year period to such records (to the extent retained by the LLC) for
purposes of preparing tax returns and related materials.
8. TAXATION OF PAYMENTS. Insofar as any earned royalties which are due
Progenics or CYTOGEN hereunder are subject to taxation by any country under the
provisions of the tax laws of that country, then the LLC agrees to bear such
taxes, and Progenics and CYTOGEN hereby authorize the LLC to withhold such taxes
from the payments which are payable to Progenics and CYTOGEN in accordance with
this Agreement if the LLC is either required to do so under such country's tax
laws or directed to do so by an agency of such country's government. Whenever
the LLC deducts such tax from any payments due Progenics or CYTOGEN, the LLC
shall furnish Progenics or CYTOGEN, as the case may be, with a tax certificate
showing the payment of such tax to the government of such country. In the event
such taxes are assessed against the LLC by reason of its failure to withhold
such taxes from any payments which have been paid to Progenics or CYTOGEN in
accordance with this Agreement, then Progenics or CYTOGEN, as the case may be,
agrees to reimburse the LLC for such tax assessment but not for any fine,
penalty, fee or interest related to the LLC's failure to withhold, pay or make
timely payment of such taxes.
9. PRODUCT LIABILITY DISCLAIMERS.
------------------------------
9.1. Product Liability Disclaimer by Progenics. Progenics assumes no
responsibility for the manufacture, product specifications, end use or provision
of any Licensed Products that are manufactured or provided by or for, or sold
by, the LLC or any Affiliate or third-party licensee. All warranties in
connection with such Licensed Products made or provided by the LLC or any
Affiliate or third-party licensee shall not directly or impliedly obligate
Progenics in any manner whatsoever under such warranties or otherwise.
9.2. Product Liability Disclaimer by CYTOGEN. CYTOGEN assumes no
responsibility for the manufacture, product specifications, end-use or provision
of any Licensed Products that are manufactured or provided by or for, or sold
by, the LLC or any Affiliate or third-party licensee. All warranties in
connection with such Licensed Products made or provided by the LLC or any
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Affiliate or third-party licensee shall not directly or impliedly obligate
CYTOGEN in any manner whatsoever under such warranties or otherwise.
9.3. Product Liability Disclaimer by the LLC. The LLC assumes no
responsibility for the manufacture or product specifications of any products
which are manufactured by or for Progenics or CYTOGEN except for the manufacture
or product specifications of materials made by or for the LLC. Any warranties in
connection with such products made by Progenics or CYTOGEN as user of such
products shall not directly or impliedly obligate the LLC.
10. INDEMNIFICATION AND INFRINGEMENT.
---------------------------------
10.1. Indemnification.
10.1.1. By Progenics. Progenics shall indemnify, defend and hold CYTOGEN
and the LLC, their respective Affiliates and any sublicensee of the LLC
hereunder harmless from and against any and all claims, suits or demands for
liability, damages, losses, costs and expenses, including the reasonable costs
and expenses of counsel (collectively, "Losses"), arising out of (i) any breach
of the representations and warranties, or the failure to perform when and as
required any of the covenants or agreements, made by Progenics in this Agreement
or (ii) any infringement or purported infringement of third-party intellectual
property rights by practicing the Licensed Progenics Patents or the Progenics
Technical Information.
10.1.2. By CYTOGEN. CYTOGEN shall indemnify, defend and hold Progenics and
the LLC, their respective Affiliates and any sublicensee of the LLC hereunder
harmless from and against any and all Losses arising out of (i) any breach of
the representations and warranties, or the failure to perform when and as
required any of the covenants or agreements, made by CYTOGEN in this Agreement
or (ii) any infringement or purported infringement of third-party intellectual
property rights by practicing the Licensed CYTOGEN Patents or the CYTOGEN
Technical Information.
10.1.3. By the LLC. The LLC shall indemnify, defend and hold Progenics and
CYTOGEN their respective Affiliates and any sublicensee of the LLC hereunder
harmless from and against any and all Losses arising out of (i) any breach of
the representations and warranties, or the failure to perform when and as
required any of the covenants or agreements, made by the LLC in this Agreement
or (ii) any claim by a third party that any Licensed Product made, used or sold
by or on behalf of the LLC or any sublicense thereof infringes patent rights of
such third party (except insofar as any such claim gives rise to an
indemnification obligation of Progenics under Section 10.1.1 hereof or of
CYTOGEN under Section 10.1.2 hereof.
10.2. Third Party Infringement of Licensed Patent Rights. The following
provisions relate to third-party infringement of any of the Licensed Patents:
10.2.1. Infringement of Licensed Progenics Patents. In the event that any
party hereto becomes aware that any third party is infringing any claims of any
issued patent included within the Licensed Progenics Patents sublicensed to the
LLC hereunder, then such party shall immediately advise the other parties
hereto, and the parties shall consult with each other as to the most effective
way of proceeding. Under such circumstances:
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(a) the LLC, as the exclusive licensee of the Licensed Progenics Patents,
shall have the right, but not the obligation, and subject to any applicable
third-party rights, to commence and prosecute an action under the appropriate
Licensed Progenics Patents against any such third-party infringer, in which
event the LLC shall bear the costs of such action and shall be entitled to
retain any recovery resulting therefrom;
(b) if the LLC declines or fails to commence and/or prosecute such action,
then Progenics shall be entitled to commence and prosecute an action under the
appropriate Licensed Progenics Patents against such third-party infringer, in
which event Progenics shall bear the costs of such action and shall be entitled
to retain any recovery resulting therefrom.
The parties hereto shall cooperate fully with each other in any such
proceedings, including joining as a necessary party (subject to appropriate
indemnification arrangements), shall consult as to litigation strategies and
other matters related to any such proceedings, and shall, among other things,
furnish information and evidence when so requested by the other, including
testimony by the requested party, its agents and employees, as may be required
by the party commencing and prosecuting such action.
10.2.2. Infringement of Licensed CYTOGEN Patents. In the event that any
party hereto becomes aware that any third party is infringing any claim or
claims of any issued patent included within the Licensed CYTOGEN Patents
sublicensed to the LLC hereunder, then such party shall immediately advise the
other parties hereto, and the parties shall consult with each other as to the
most effective way of proceeding. Under such circumstances:
(a) the LLC, as the exclusive licensee of the Licensed CYTOGEN Patents,
shall have the right, but not the obligation, and subject to any applicable
third-party rights, to commence and prosecute an action under the appropriate
Licensed CYTOGEN Patents against any such third-party infringer, in which event
the LLC shall bear the costs of such action and shall be entitled to retain any
recovery resulting therefrom;
(b) if the LLC declines or fails to commence and/or prosecute such action,
then CYTOGEN shall be entitled to commence and prosecute an action under the
appropriate Licensed CYTOGEN Patents against such third-party infringer, in
which event CYTOGEN shall bear the costs of such action and shall be entitled to
retain any recovery resulting therefrom.
The parties hereto shall cooperate fully with each other in any such
proceedings, consulting as to litigation strategies and other matters related to
any such proceedings, and shall, among other things, furnish information and
evidence when so requested by the other, including testimony by the requested
party, its agents and employees, as may be required by the party commencing and
prosecuting such action.
11. TERM AND TERMINATION.
---------------------
11.1. Term. Unless sooner terminated in a manner herein provided, this
Agreement shall commence as of the Effective Date and shall terminate upon the
last to expire or terminate of any licensable rights to Patents that have been
licensed by Progenics or CYTOGEN to the LLC hereunder; provided, however, that
the provisions of Sections 7.1, 7.5, 9, 10, 12 and 14 hereof shall survive any
such termination.
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11.2. Termination. This Agreement may be terminated at any time prior to
the end of the term set forth in Section 11.1 hereof, as follows:
11.2.1. For Breach. In the event any party hereto shall breach any of the
material representations or warranties or any material term, condition or
agreement contained herein made or to be kept, observed or performed by it, then
any other party hereto may terminate this Agreement, at its option and without
prejudice to any of its other legal or equitable rights and remedies, by giving
the other parties hereto 60 days' notice in writing, identifying with reasonable
specificity the breach, unless (in the case of a breach of any term, condition
or agreement) the notified party within such 60-day period shall have cured the
breach. Notwithstanding the foregoing, if a party hereto has given notice of the
breach of another party hereto, and the breaching party has not cured the breach
within the 60-day period described above, the third party hereto may (but shall
not be obligated to), upon notice given to the other non-breaching party hereto
prior to the expiration of such 60-day period, elect to cure such breach. If the
third party cures such breach within 30 days of the expiration of the 60-day
period described above, such third party shall be substituted for the breaching
party for all purposes of this Agreement, and shall thereafter be entitled to
all the rights and subject to all the obligations of such breaching party
hereunder. The breach of the representation contained in Section 2.1.7 or 2.2.14
hereof, absent fraud, bad faith or willful misrepresentation, shall not give
rise to a termination right under this Section 11.2.1.
11.2.2. For Bankruptcy. (a) In the event (i) a party hereto shall suspend
business, or shall file a voluntary petition or any answer admitting the
jurisdiction of the court and the material allegations of, or shall consent to
an involuntary petition pursuant to or purporting to be pursuant to any
reorganization or insolvency law of any jurisdiction, or shall make an
assignment for the benefit of creditors, or shall apply for or consent to the
appointment of a receiver or trustee of a substantial part of its property, and
(ii) no Affiliate of such party shall undertake to assume its obligations under
the provisions of this Agreement within 90 days from the date on which such
party becomes so disabled, then to the extent permitted by law either of the
other parties may thereafter immediately terminate this Agreement by giving
written notice of termination to the other parties.
(b) In the event Progenics and/or CYTOGEN, as the case may be, terminates
this Agreement under Section 11.2.2(a) or rejects this Agreement pursuant to
Section 365 of the U.S. Bankruptcy Code, all rights and licenses granted under
or pursuant to this Agreement by Progenics and/or CYTOGEN, as the case may be,
to the LLC are, and shall otherwise be deemed to be, for purposes of Section
365(n) of the U.S. Bankruptcy Code, licenses of rights to "intellectual
property" as defined under Section 101(52) of the U.S. Bankruptcy Code. The
parties agree that the LLC, as a licensee of such rights under this Agreement,
shall retain and may fully exercise all of its rights and elections under the
U.S. Bankruptcy Code. The parties further agree that, in the event of the
commencement of a bankruptcy proceeding by or against Progenics or CYTOGEN under
the U.S. Bankruptcy Code, the LLC shall be entitled to a complete duplicate of
(or complete access to, as appropriate) any such intellectual property and all
embodiments of such intellectual property upon written request therefor by the
LLC. Such intellectual property and all embodiments thereof shall be promptly
delivered to the LLC (i) upon any such commencement of a bankruptcy proceeding
upon written request therefor by the LLC, unless Progenics or CYTOGEN, as the
case may be, elects to continue to perform all of its obligations under this
Agreement or (ii) if not delivered under (i) above, upon the rejection of this
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Agreement by or on behalf of Progenics or CYTOGEN, as the case may be, upon
written request therefor by the LLC. Progenics or CYTOGEN, as the case may be,
shall not interfere with the rights of the LLC as provided in this Agreement, or
any agreement supplementary hereto, to such intellectual property (including all
such embodiments thereof), including any right of the LLC to obtain such
intellectual property (or such embodiment) from any other entity.
11.2.3. By Progenics or the LLC Upon Termination of the SKICR License.
Either Progenics or the LLC may terminate this Agreement by giving the other
parties hereto 30 days' written notice upon the termination of the SKICR
License; provided that, without limiting the other rights and remedies of the
parties hereto, each of Progenics and CYTOGEN may seek an appropriate remedy
against the other if the other is responsible for the termination of the SKICR
License.
11.3. Accrued Rights and Obligations. Termination of this Agreement shall
not relieve any party of any rights or obligations then accrued hereunder or
which by the terms hereof extend beyond the date of such termination.
12. EFFECT OF TERMINATION ON SUBLICENSEE. Upon termination of this
Agreement by Progenics or CYTOGEN pursuant to Section 11.2.1 or Section 11.2.2
hereof, any third-party licensee of the LLC which has not breached in any
material respect its sublicense related to the Licensed Patents or the Licensed
Technical Information shall be entitled to receive a license to the Licensed
Patents and the Licensed Technical Information directly from Progenics and
CYTOGEN granting rights substantially the same as those granted in such
sublicense and containing obligations as a licensee similar to those set forth
in this Agreement.
13. EXPORT LICENSES. This Agreement is subject to any restrictions
concerning the export of products or technical information from the United
States which may be imposed by the United States. Accordingly, each party agrees
that it will not export, directly or indirectly, any technical information
acquired under this Agreement or any products utilizing any such technical
information to any country for which the United States Government or any agency
thereof at the time of export requires an export license or other governmental
approval, without first obtaining the written consent to do so from the
Department of Commerce or other agency of the United States Government when
required by an applicable statute or regulation.
14. MISCELLANEOUS PROVISIONS.
--------------------------
14.1. Assignability. Except as expressly provided herein, neither this
Agreement nor any interest hereunder shall be assignable by any party hereto
without the written consent of the others, and any attempted assignment without
such consents shall be null and void. Without the consent of any other party
hereto, this Agreement may be assigned by any party hereto to any wholly owned
subsidiary of such party that agrees in writing with each other party hereto to
be jointly and severally liable with the assigning party for the timely
satisfaction of all obligations of the assigning party hereunder; provided,
however, that no such assignment shall relieve the assigning party of its
obligations hereunder. This Agreement shall be binding upon the successors and
permitted assignees of the parties. Any such successor or permitted assignee
shall be subject to the same rights and obligations as the original party
hereunder.
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14.2. Notices. All notices and other communications provided for hereunder
shall be in writing and shall be mailed or delivered to the business address of
the respective parties aforementioned, or to such other address or addresses as
either party shall designate in writing to the others. All such notices and
communications shall be considered given and/or delivered: (i) when given if
delivered in person or sent by facsimile and acknowledged by a responsible
person at the office of the recipient; (ii) one day after being sent by a major
overnight courier; or (iii) four days after being mailed by registered mail,
return receipt requested, at the business address of the respective parties as
specified above. All notices or communications required or permitted to be given
or sent to the LLC shall also be given or sent to Progenics (if such notice or
communication is given or sent by CYTOGEN) or to CYTOGEN (if such notice or
communication is given or sent by Progenics).
14.3. Independent Contractors. No agency, partnership or joint venture is
hereby established. None of Progenics, CYTOGEN or the LLC shall enter into, or
incur, or hold itself out to third parties as having authority to enter into or
incur on behalf of the other party any contractual obligations, expenses or
liabilities whatsoever, except as expressly provided herein.
14.4. Counterparts. This Agreement may be executed simultaneously in
multiple counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same agreement.
14.5. Entire Understanding. This Agreement constitutes the entire
understanding between the parties hereto with respect to the subject matter
hereof. No modifications, extensions, or waiver of any provisions hereof or any
release of any right hereunder shall be valid, unless the same is in writing,
contains reference to this Agreement and sets forth the plan or intention to
modify same, and is consented to by all parties hereto.
14.6. Headings. The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
14.7. No Implied Rights. Except as expressly provided for in this
Agreement, nothing contained herein shall be construed as conferring any license
or other rights, by implication or estoppel, under any patent (including design
patent and utility model patent) or patent application, or any copyrights,
trademarks, trade names or trade dress.
14.8. No Waiver. The failure of any party hereto at any time or times to
require performance of any provision hereof shall in no manner affect the right
of such party at a later time to enforce the same. No waiver by any party hereto
of any condition, or of the breach of any provision, term, covenant,
representation or warranty contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such condition or of the breach of any other
provision, term, covenant, representation or warranty of this Agreement.
14.9. Publicity. In the absence of prior written approval of the other
parties hereto, no party hereto shall originate any publicity, news release, or
other public announcement, written or oral, whether to the public press, to
stockholders or otherwise, relating to this Agreement, to any amendment hereto
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or activities hereunder, unless such announcement is required by law to be made.
The party making any such announcement shall give the other parties an
opportunity to review the announcement before it is made.
14.10. Promotion and Advertising. Nothing contained in this Agreement shall
be construed as conferring on any party hereto any right to use in advertising,
publicity or other promotional activities any name, tradename, trademark,
service mark or other designation (including any contraction, abbreviation or
simulation of any of the foregoing of any other party hereto); and, each party
hereto agrees not to use any designation of any other party in any promotional
activity associated with this Agreement, or with product licensed thereunder,
without the express written approval of such other party.
14.11. Arbitration. Any dispute arising out of or relating to any
provisions of this Agreement shall be finally settled by arbitration to be held
in New York, New York, under the auspices and the current commercial arbitration
rules of the American Arbitration Association. Arbitration shall be initiated by
delivery of a notice (an "Arbitration Notice") by any party hereto to the other
parties hereto. Such arbitration shall be conducted by one arbitrator mutually
selected and approved by the parties to the dispute. If within 20 calendar days
after receipt of the Arbitration Notice the parties to the dispute have not
agreed on a mutually acceptable arbitrator, the American Arbitration Association
in New York, New York shall be retained to appoint an arbitrator within 30
calendar days after the receipt of the Arbitration Notice. The arbitrator's
authority shall be limited to determining the issue or question presented in
each instance and shall not extend to any other aspect of this Agreement or the
parties' relationship generally. Judgment upon any award rendered may be entered
in any court having jurisdiction, or application may be made to such court for a
judicial acceptance of the award and an order of enforcement, as the case may
be.
14.12. Confidentiality.
----------------
14.12.1. As used in this Section 14.12, "Confidential Information" means
confidential and proprietary business, technical or financial information
relating to the collaboration contemplated hereby, including the Licensed
Technical Information, of any other party hereto (the "Confidential
Information").
14.12.2. In order to protect the Confidential Information of any party
hereto (in such capacity, the "Disclosing Party") that has become available to
any other party hereto (in such capacity, the "Receiving Party"), each party
hereto agrees as follows:
(a) Each party hereto agrees that it will make no use of any Confidential
Information except in furtherance of the purposes contemplated by this
Agreement.
(b) Each party hereto agrees that it will not, without the prior written
consent of the other parties hereto, disclose to any third party Confidential
Information (which for purposes of this Section 14.12.2(b) shall include the
terms or existence of this Agreement or of the LLC Agreement or the Services
Agreement or other matters relating to the collaboration contemplated hereby and
thereby) received in its capacity as a Receiving Party during the Contract
Period and for a period of five years thereafter.
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(c) Notwithstanding the foregoing:
(i) Each party hereto may disclose Confidential Information to
those of its representatives, employees and agents
("Representatives") who have a need to know such
Confidential Information in relation to the matters
discussed herein and who are under obligations of
confidentiality and non-use consistent with those set forth
herein. Any unauthorized disclosure of Confidential
Information by a party's Representatives shall be a breach
by such party of this Section 14.12.
(ii) Disclosure of Confidential Information is permitted to the
extent that such disclosure is required pursuant to
applicable laws, rules or regulations or government
requirement or court order, provided however, that the
Receiving Party shall promptly notify the Disclosing Party
in writing of the existence or imposition of any such
requirement or order and cooperate with the Disclosing Party
in seeking an appropriate protective order or other reliable
assurance that confidential treatment will be accorded the
Confidential Information.
14.12.3. The provisions governing confidentiality and non-use contained in
this Section 14.12 shall not apply to any Confidential Information which:
(a) the Receiving Party can establish was known to the Receiving Party
prior to disclosure under or in connection with this Agreement by the Disclosing
Party;
(b) was in the public domain or the subject of public knowledge at the time
of disclosure under or in connection with this Agreement;
(c) becomes part of the public domain or the subject of public knowledge
through no breach by or act of default of the Receiving Party;
(d) is obtained by the Receiving Party from a third party other than in
breach of a legal or contractual obligation of confidentiality owed by such
third party to the Disclosing Party in respect thereof, the existence of which
such obligation was known or should have been known by the Receiving Party; or
(e) the Receiving Party can establish was independently developed by it
without reference to Confidential Information received.
14.12.4. Termination of this Agreement shall not affect the obligations
concerning confidentiality and non-use of the Confidential Information as set
forth in this Section 14.12.
14.13. No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and should not be construed to confer upon any
other person any remedy, claim, liability, right of reimbursement, claim of
action or other right.
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14.14. Governing Law. This Agreement shall be interpreted, construed, and
governed in accordance with the laws of the State of New York, without reference
to conflict of laws principles.
14.15. SKICR Agreement. Pursuant to Section III.D.4. of the SKICR
Agreement, the parties hereto hereby reference the SKICR Agreement and all
rights which revert to SKICR upon termination of the SKICR Agreement. In
accordance with Section III.D.8. of the SKICR Agreement, this Agreement shall
automatically be modified or terminated, in whole or in part, upon any relevant
modification, in whole or in part, of the SKICR Agreement. Such modification or
termination of this Agreement shall be consistent with and reflect the relevant
modifications or terminations of the SKICR Agreement.
14.16. Limitation on Liability. Notwithstanding any other provision in this
Agreement, the sole remedy for the breach of the representation contained in
Section 2.1.7 or 2.2.14 hereof, absent fraud, bad faith or willful
misrepresentation, is the prompt compliance with Section 3.3 hereof.
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IN WITNESS WHEREOF, the parties hereto have each
caused these presents to be signed by their respective
officers thereunto duly authorized.
PROGENICS PHARMACEUTICALS, INC.
By: /s/ Ronald Prentki
Name: Ronald Prentki
Title: President
CYTOGEN CORPORATION
By: /s/ Donald F. Crane, Jr.
Name: Donald F. Crane, Jr.
Title: Vice President General Counsel
and Corporate Secretary
PSMA DEVELOPMENT COMPANY LLC
By: /s/ Donald F. Crane, Jr.
Name: Donald F. Crane, Jr.
Title: Vice President General Counsel
and Corporate Secretary
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this S-3 registration statement of our report dated January 29,
1999 included in CYTOGEN Corporation's Form 10-K for the year ended December 31,
1998 and to all references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Philadelphia, PA
July 19, 1999
