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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the quarterly period ended September 30, 1999
Commission File Number 0-23553
PHOTOGEN TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
NEVADA 36-4010347
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7327 OAK RIDGE HIGHWAY, SUITE B
KNOXVILLE, TN 37931
(Address of principal executive offices)(Zip Code)
(423) 769-4012
(Registrant's telephone number including area code)
Check whether the issuer (1) has filed all reports required to be filed by
section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days:
YES: /x/ NO: / /
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 37,378,886 SHARES OF COMMON
STOCK, $.001 PAR VALUE PER SHARE, ISSUED AND OUTSTANDING AS OF NOVEMBER 10, 1999
AND 12,015 SHARES OF SERIES A CONVERTIBLE EXCHANGEABLE PREFERRED STOCK, $.01 PAR
VALUE PER SHARE, WERE ISSUED AND OUTSTANDING AS OF THAT DATE.
Transitional Small Business Disclosure Format:
YES: / / NO: /x/
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INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C>
PART I - FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) . . . . . . . . . . . . . . . . . . . 1
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION OR PLAN OF OPERATION . . . . . . . . . . . . . . 6
PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ITEM 5. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PHOTOGEN TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED CONDENSED BALANCE SHEETS
All amounts in $
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
(UNAUDITED) (AUDITED)
------------------ -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 817,063 $ 652,226
Interest receivable 42,938 121,471
Prepaid expenses 741,287 435,395
----------- -----------
TOTAL CURRENT ASSETS $1,601,288 $1,209,092
UNITED STATES TREASURY NOTES, TOTAL
FACE VALUE $2,210,000 and $5,660,000 $2,213,768 $5,682,105
EQUIPMENT AND LEASEHOLD IMPROVEMENTS 1,219,579 1,169,388
Intangible Assets 400,000 -
----------- -----------
TOTAL ASSETS $5,434,635 $8,060,585
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $1,038,242 $ 804,248
Current portion of obligations under
capital leases 43,883 111,769
-----------
TOTAL CURRENT LIABILITIES 1,082,125 916,017
----------- -----------
OBLIGATION UNDER CAPITAL LEASES - $ 35,990
----------- -----------
----------- -----------
SHAREHOLDERS' EQUITY
Preferred stock; par value
$.01 per share; 5,000,000
shares authorized; none issued - -
Common stock; par value $.001
per share; 150,000,000 shares
authorized; 36,917,348 shares issued and
outstanding 36,917 36,875
Additional paid-in capital 10,307,833 9,602,097
Deficit accumulated during
development stage after
recapitalization (5,999,240) (2,530,394)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 4,352,510 7,108,578
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,434,635 $ 8,060,585
----------- -----------
----------- -----------
</TABLE>
1
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PHOTOGEN TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
All amounts in $
<TABLE>
<CAPTION>
Three Three Nine Nine
Months Months Months Months Cumulative
ended ended Ended Ended Amounts
September September September September 30, From
30, 1999 30, 1998 30, 1999 1998 November 3, 1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
REVENUES
Investment Income $ 37,743 $ 126,297 $ 157,050 $ 276,479 $ 656,782
EXPENSES
General and administrative 1,647,541 703,612 3,618,896 1,604,436 6,649,022
--------- ------- --------- --------- ------------
NET LOSS ($1,609,708) ($577,315) ($3,461,846) ($1,327,157) ($5,992,240)
============ ========== =========== =========== ===========
BASIC AND DILUTED NET
LOSS PER COMMON SHARE (.04) (.02) (.09) (.04)
===== ===== ==== =====
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING 36,982,075 36,875,020 36,877,346 36,756,430
========== ========== ========== ==========
</TABLE>
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PHOTOGEN TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(UNAUDITED)
All amounts in $
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended Cumulative
September 30, 1999 September 30, 1998 Amounts From
(Unaudited) (Unaudited) November 3, 1996
(Unaudited)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) ($3,461,846) ($1,327,957) ($5,992,240)
Depreciation 154,684 57,369 320,961
United States Treasury Notes
Amortization 24,642 - 56,271
Loss on Securities - 9,238 (20,499)
Stock Option Compensation 405,778 - 451,224
Changes in operating assets and liabilities:
Prepaid expense (305,892) (91,961) (372,642)
Interest receivable 78,533 21,402 (411,583)
Accounts payable 233,994 (85,586) 1,038,242
------------ ------------ -----------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES ($2,870,107) ($1,417,495) ($4,930,266)
------------ ------------ -----------
INVESTING ACTIVITIES
Sale of marketable securities - 400,000 2,164,464
Purchase of marketable securities - - (2,182,967)
Purchase of United States Treasury Notes (1,058,353) (7,795,816) (17,619,983)
Sale of United States Treasury Notes 4,502,048 2,567,249 16,485,596
Purchase of capital assets (204,875) (290,766) (1,211,501)
Patent cost 100,000 ( 86,398) (137,335)
------------ ------------ -----------
NET CASH PROVIDED (USED)
BY INVESTING ACTIVITIES $3,138,820 ($5,205,681) ($2,301,726)
------------ ------------ -----------
FINANCING ACTIVITIES
Proceeds from issuance of common stock - 7,000,000 $6,956,313
Proceeds from capital contributions by
stockholders - - 1,911,674
Cost of recapitalization - - (371,111)
Principal payments on capital lease
obligations (103,876) (15,877) (247,821)
------------ ------------ -----------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES ($103,876) $ 6,984,123 $ 8,249,055
------------ ------------ -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $164,837 360,947 817,063
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 652,226 82,631 -
------------ ------------ -----------
CASH AND CASH
EQUIVALENTS AT END OF PERIOD $817,063 $ 443,578 $ 817,063
------------ ------------ -----------
------------ ------------ -----------
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PHOTOGEN TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
All amounts (except shares) in $
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During The
------------ Members Paid-In Development
Shares Amount Capital Capital Stage Total
------ ------ ------- ------- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
CONTRIBUTION OF CAPITAL $ 7,268 $ 7,268
NET LOSS FOR THE PERIOD -- -- (1,779) -- -- (1,779)
----------- ----------- ----------- ----------- ----------- ----------
BALANCE AT
DECEMBER 31, 1996 -- -- 5,489 -- -- 5,489
NET LOSS AND CAPITAL
CONTRIBUTIONS FOR THE
PERIOD JANUARY 1, 1997
TO MAY 15, 1997 -- -- 3,511 -- (3,511) --
----------- ----------- ----------- ----------- ----------- ----------
BALANCE AT MAY 15, 1997 $ $ -- $ 9,000 $ -- ($ 3,511) $ 5,489
ISSUANCE OF STOCK FOR CASH 6,312,833 6,313 -- 1,797,137 -- 1,803,450
EFFECT OF
RECAPITALIZATION
AND MERGER 29,687,167 29,687 ( 9,000) 1,181,500 1,732 1,203,919
COST ASSOCIATED WITH
RECAPITALIZATION
AND MERGER -- -- -- (371,111) -- (371,111)
NET LOSS FOR THE
PERIOD MAY 16, 1997
TO DECEMBER 31, 1997 -- -- -- -- ($ 554,702) (554,702)
----------- ----------- ----------- ----------- ----------- ----------
BALANCE AT
DECEMBER 31, 1997 36,000,000 36,000 -- 2,607,526 (556,481) 2,087,045
ISSUANCE OF COMMON STOCK
875,020 875 -- 6,999,125 -- 7,000,000
COST ASSOCIATED WITH
COMMON STOCK ISSUANCE
-- -- -- (50,000) -- (50,000)
OPTIONS ISSUED TO
CONSULTANTS
-- -- -- 45,446 -- 45,446
NET LOSS FOR THE YEAR ENDED
DECEMBER 31, 1998
-- -- -- -- (1,973,913) (1,973,913)
----------- ----------- ----------- ----------- ----------- ----------
BALANCE AT DECEMBER 31, 1998
OPTIONS ISSUED TO 36,875,020 36,875 -- 9,602,097 (2,530,394) 7,108,578
CONSULTANTS
STOCK ISSUED FOR PATENT -- -- -- 96,111 -- 96,111
WARRANTS ISSUED TO A
CONSULTANT -- -- -- 309,667 -- 309,667
NET LOSS FOR NINE 42,328 42 -- 299,958 -- 300,000
MONTHS ENDED
SEPTEMBER 30, 1999 -- -- -- -- (3,461,846) (3,461,846)
----------- ----------- ----------- ----------- ----------- ----------
BALANCE AT
SEPTEMBER 30, 1999 36,917,348 $ 36,917 $ -- $10,307,833 ($5,992,240) $ 4,352,510
=========== =========== =========== =========== =========== ===========
</TABLE>
4
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PHOTOGEN TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 1999
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information pursuant to Regulation S-B. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
nine months ended September 30, 1999 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1999.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION OR PLAN OF OPERATION
UNCERTAINTIES RELATING TO PHOTOGEN
Photogen Technologies, Inc. and its wholly-owned subsidiary Photogen,
Inc. are collectively referred to as "Photogen," the "Company," "we," or "us."
Portions of the discussion in this Item 2 contain forward-looking statements and
are subject to the Risk Factors described in Item 5, below.
We are a development-stage company focused on creating minimally
invasive diagnostic and therapeutic procedures based on our proprietary
excitation and other related photodynamic technologies. We have discovered new
methods for using electromagnetic energy, generated from lasers or x-rays, to
activate photoactive agents within tissue sufficient to produce a range of
beneficial therapeutic and diagnostic outcomes. These technologies involve
methods, materials and devices that may be used to produce electromagnetic
energy and photoactive agents that may destroy diseased cells, remove tissue or
identify and diagnose disease. Much of our proprietary technology is covered
under existing U.S. patents or pending applications in the U.S. and worldwide.
We have no products or operating revenues at this time.
RESULTS OF OPERATIONS
We have not completed development of any product or process at this
time. We have not generated revenues from the sale of any proposed products or
other operations, and we continue to experience losses. Our net loss for the
nine month period ended September 30, 1999 was $3,461,846, compared to a loss of
$1,327,957 for the nine month period ended September 30, 1998. Our net loss for
the three month period ended September 30, 1999 was $1,609,708, compared to a
loss of $577,135 for the three month period ended September 30, 1998. The
increase in losses is attributable primarily to expenses related to conducting
studies pursuant to preclinical research agreements and other research,
initiating supply arrangements, and other general and administrative costs.
We expect to continue to incur increasing losses for at least the next
several years as we intensify research and development, clinical testing,
regulatory approval activities and engage in the manufacture and/or sale of any
products that we may develop. In particular, we are presently a party to four
research contracts with various third parties that will require an expenditure
of a total of $658,101 over the remaining terms of those contracts for the
protocols currently under investigation. See "Plan of Operation," below.
Our revenue for the nine month period ended September 30, 1999 was
$157,050, compared to $276,479 of revenue for the nine month period ended
September 30, 1998. Our revenue for the three month period ended September
30, 1999 was $37,743, compared to $126,297 of revenue during the three months
ended September 30, 1998. The revenue resulted primarily from our investment
income on the proceeds from the sale of common stock in our 1998 private
placement. The proceeds of the sales of our common stock are invested
primarily in United States Government obligations. Because we have no
revenues from operations at this time, investment of such funds in that
manner is necessary to avoid becoming subject to the Investment Company Act
of 1940.
6
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PATENT MATTERS
We are continuing to pursue patent protection for our proprietary
technologies with the U.S. Patent and Trademark Office, and in various foreign
jurisdictions. We have filed patent applications covering inventions in the
following areas:
- Radiocontrast (x-ray contrast) agents and methods for
treating tissue using those agents
- Radiosensitizer, agents and methods for treating tissue
using a radiosensitizer
- Multiphoton activation technology
- Methods and apparatus for imaging and treating tissue using
photodynamic therapies
- Additional photodynamic therapy methods and apparatus for
topical treatment of disease
- Methods and apparatus for treatment of tissue containing an
endogenous pigment (for example, melanoma destruction)
Currently, we have been awarded two U.S. patents and received Notice of
Allowance on a third U.S. patent. We have another thirteen U.S. patent
applications pending in various stages at the U.S. Patent and Trademark Office.
We acquired certain patented technology that describes methods for using certain
particulate contrast materials used in lymphography, and we have sub-licensed
another group of nanoparticulate contrast materials. Together, these
lymphography compounds involve four patents in the U.S. and certain foreign
jurisdictions and two patent applications. See "Subsequent Developments -- New
Patent and License Acquisition," in Item 5, below.
RESEARCH AND DEVELOPMENT PROJECTS
We continue to pursue development of proprietary technologies as a
result of our research in chemistry, photochemistry, and biochemistry. Our
technologies embrace a broad definition of photodynamic therapy processes,
predominantly from the standpoint of the use of a wide spectrum of light
sources. Our technological applications are based on using ultrafast-pulsed,
near infrared light generated by ultrafast-pulsed lasers (using our proprietary
simultaneous two photon excitation and multi-photon excitation processes),
visible green light, x-rays (high energy photons), and other means. We have
been concentrating our research in the following applications: oncology,
lymphography, dermatology, ophthalmology, imaging and related fields. We will be
evaluating the data obtained from these research projects with a view to
designing future human clinical trials in one or more of these applications. We
are currently working on the following research and development projects:
1. PROSTATE, LUNG AND BREAST CANCER. In October 1998, we executed an
agreement with Massachusetts General Hospital for work that was carried out at
its Center for Imaging and Pharmaceutical Research ("CIPR") which initially
involved preclinical research on the treatment of prostate and lung cancer using
our simultaneous two-photon excitation technology. Subject to the terms of the
agreement, Massachusetts General Hospital has the right to patent any new
inventions
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arising out of that research agreement and we have the right to obtain an
exclusive license concerning any such invention. Gerald L. Wolf, Ph.D., M.D.,
was the Principal Investigator.
The CIPR research agreement was terminated in August 1999 when Dr. Wolf
joined our staff as Medical Director. As part of his employment, we granted Dr.
Wolf options to acquire 750,000 shares of common stock, 150,000 shares of which
vest over time and the balance of which vest when we achieve certain milestones
of progress toward product development, such as FDA approvals.
Dr. Wolf moved his laboratory to a Photogen sponsored facility
located at Tufts University School of Veterinary Medicine (while maintaining
an affiliation as an Professor Emeritus at Harvard Medical School) to
complete animal preclinical work on breast cancer as well as prostate and
lung cancer. His work is currently focused on preclinical research involving
radiosensitizer PH-10. Our research agreement with Tufts University has a
term through 2004 (subject to earlier termination in accordance with the
agreement), and David Ruslander, DVM, DACVIM, is the co-Principal
Investigator. Tufts will own the patent rights to any invention it or its
personnel conceives, and we have the right to an exclusive royalty bearing
license to the patented invention.
We recently demonstrated that a new class of photodynamic therapy
agents may potentially be successful radiosensitizers. A drug we call PH-10,
injected directly into a tumor grown on the side of a laboratory mouse, was
retained in the tumor for many days with small amounts of leakage and
produced enough x-ray contrast to clearly identify the tumor images on a
conventional CT scan. Dr. Wolf announced research findings in September 1999
from our work in photodynamic therapy and Dr. Wolf's interest and research
into non-invasive treatment of cancer in which we previously discovered
PH-10's ability to bond with tumor tissue and asborb x-rays. Our findings
confirmed PH-10's ability to provide enough contrast to show tumor margins
during a CT scan and maintain visibility in a tumor for several days. Our
results showed a 90% "kill" rate of cancerous tumor cells in laboratory mice
within 48 hours of treatment. This treatment consisted of a combination of
low-voltage x-ray radiation and PH-10 that was injected directly into the
tumor cells. These observations suggest a new approach to radiation therapy
which we believe could enable wider use of x-rays to treat tumors anywhere in
the body while improving the overall safety of radiation therapy. We have
applied for U.S. patents covering the use of the PH-10 compound to diagnosis
and treat disease in combination with x-rays and other electromagnetic energy.
Our work with Dr. Wolf and Tufts will also cover lymphography using
contrast agents and CT imaging. Lymphography is a procedure following the
diagnosis of cancer that is used to determine if a patient's cancer has spread
to the lymph nodes. The presence or absence of cancer in the sentinel lymph
node, the first lymph node to receive lymphatic drainage from a tumor, is an
indication of the seriousness of the disease and the ability to cure it. Under
current treatment, a malignant node or a node that is suspected of containing
cancerous cells must be surgically removed. We are providing Tufts with a new
$1.2 million Picker scanner with sophisticated imaging capabilities for the
lymphography work. Our joint venture with Elan (see "Subsequent Developments --
Elan Joint Venture" at Item 5, below) will be devoted to lymphography work.
2. OCULAR MELANOMA. In December 1998, we executed a research agreement
with Massachusetts Eye and Ear Infirmary ("MEEI"), a teaching affiliate of
Harvard Medical School. This agreement covers preclinical research to evaluate
our technology for the treatment of ocular
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melanoma. Lucy H. Young, Ph.D., M.D., is the Principal Investigator. Subject to
the terms of the agreement, MEEI has the right to patent any new inventions
arising out of this agreement, and we have the right to obtain an exclusive
license concerning any invention. While ocular melanoma is a relatively rare
disease (about 2,000 cases per year in the United States), it is the most
prominent primary cancer of the eye in adults and there are few treatments for
this condition. This research agreement will evaluate our technology as a basis
for an alternative treatment that we believe could offer advantages over current
radiotherapy or surgical treatment options. This treatment approach continues to
show effective results for small tumors in our research study. This agreement
provides that research extensions may be undertaken by MEEI by agreement with
us, and the agreement was amended June 8, 1999 to extend the term to end in
November 1999.
3. CUTANEOUS MELANOMA. In our laboratory, we performed research
assessing the use of ultra-short pulsed light to directly activate melanin and
its precursors to kill melanoma cells. We announced preliminary results of that
research in September 1998. Tumors produced in mice were treated by scanning the
affected area with light from an ultra-short pulsed laser. Tumors ranging in
size from 6 to 10 millimeters (mm) in diameter and up to 3 mm deep, when treated
with ultra-short pulsed laser light using simultaneous two photon excitation,
produced a visible "blanching" effect, resulting from the interaction between
melanin and the light. After treatment, tumor volume was reduced by 100 percent
with little or no scarring. Further research on this indication is being
deferred pending the completion and results of our ocular melanoma preclinical
research.
4. TREATMENT SYSTEMS. We have been working with a laser manufacturer
to design ultra-short pulsed laser systems for photodynamic treatment of
melanoma and age-related macular degeneration. Two prototype systems have
been assembled that include a beam scanning and focusing device. In addition,
we have developed laser control software. Our scientists are working on a
third prototype system to be used for surface treatments such as hair
removal. During the third quarter we delivered a system to a research
facility and we are currently investigating certain design and manufacturing
companies to complete assembly of our systems.
5. BARRETTS ESOPHAGUS. Barretts esophagus is a precancerous condition
of the esophagus created by chronic acid reflux. The esophagus is the
thin-walled tube that conveys food to the stomach. Because of its thin walls and
multiple tissue structures, successful photodynamic therapy must avoid
penetrating the esophagus and damaging deeper tissue layers. Problems with
conventional photodynamic therapy have included burning of the esophageal wall
caused by the laser light, and deep tissue damage creating post treatment
strictures. In our laboratory, we demonstrated selective targeting of a drug
topically applied in murine esophageal tissue. The potential benefits of this
approach in humans may be reduced treatment cost and improved safety and
efficacy. We began preclinical trials in July, 1999 in canines for treatment of
Barretts esophagus through our research agreement with the University of
Tennessee School of Veterinary Medicine. We have completed 13 treatments, the
results of which were consistent with our belief that our selective targeting
approach would lead to improved safety.
6. DRUG DEVELOPMENT. In November 1999, we announced that we had entered
into an agreement with Akorn Inc., a diagnostic and therapeutic pharmaceutical
manufacturer in which Akorn agreed to develop certain formulations of the
photoactive compound PH-10 for our use in oncology and dermatology treatments.
Akorn will also provide us with necessary background
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information for meeting regulatory requirements for Food and Drug Administration
(FDA) approval of PH-10. Akorn will develop and document raw materials,
production and testing procedures and specifications, necessary for us to use in
our new drug applications (NDAs).
7. PSORIASIS. Psoriasis is an inflammatory dermatologic condition
characterized by red scaling plaques on the skin. It is estimated that
approximately 1.5 to 2% of the U.S. population is affected by this disease,
which contributes to approximately 10 to 15% of all visits to dermatologists
and approximately $1.6 billion per year in treatment costs in the U.S.
Treatment options for psoriasis include topical agents applied to the plaques
as well as various systemic treatments, including oral steroids, antibiotics,
and vitamin D3 analogs. These treatments typically work adequately for
control of minor inflammation. However, the most severe 10-20% of cases
typically require photodynamic therapy using psoralen (a photodynamic drug)
and UV-A light (PUVA). While effective, PUVA therapy may exhibit significant
side effects, including induction of skin cancer. We believe that our
photodynamic treatment, based on a relatively benign topical photosensitizer
and green light illumination, may provide a safer, more effective alternative
to PUVA treatment. Pilot studies undertaken in our laboratories appear to
show broad applicability of such treatments to various skin disorders,
including acute psoriasis. We intend to conduct pilot studies of safety and
efficacy of psoriasis treatment on human patients exhibiting stable plaques
beginning in the first quarter of 2000.
8. WOUND HEALING/LEG ULCER STUDY. Diabetics and the elderly suffer from
wounds of the lower extremities that are slow to heal. This application of our
technology offers an opportunity for Photogen and our topical drug and
activation system. We intend to assess the feasibility of this proposed
treatment in parallel with our psoriasis work.
9. HAIR REMOVAL STUDY. In our laboratory, we are investigating the use
of ultra-short pulsed laser light to remove hair. Photogen's photochemical
approach may be the only laser procedure we know of that is useful in removing
certain kinds of hair. Based on results we obtained, we are working toward a
research contract to perform human pilot studies and develop data for our FDA
submission in this indication.
10. MACULAR DEGENERATION OF THE EYE. In October 1998, we executed a
research agreement with MEEI. Joan W. Miller, M.D. was the Principal
Investigator. This agreement had a term ending in June 1999 but was extended
through December, 1999 and covers preclinical research that evaluates the
technology for treatments of age-related macular degeneration ("AMD") of the
eye. Subject to the terms of the agreement, MEEI has the right to patent any new
inventions arising out of the agreement, and we have the right to obtain an
exclusive license concerning any such invention. We are continuing to evaluate a
number of photodynamic drugs activated with our prototype ultra fast pulsed
laser system in the belief that our proprietary activation system may improve
the overall efficacy of treatment for AMD. At the same time, three competitors
with similar procedures have announced progress in this area, and one competitor
has filed for FDA approval. This level of competition will significantly reduce
the market opportunity for a photodynamic drug and activation device to treat
AMD. We intend to complete our pre-clinical work in this area and then reassess
our interest in AMD treatment.
11. DIAGNOSTIC EXPERIMENTS. In our laboratory, we are experimenting
with the diagnostic capabilities of simultaneous two-photon excitation. We
conducted initial experiments
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on a chicken breast (used to simulate tissue). We demonstrated the capability to
retrieve signals through 5 mm of chicken breast using the common dye
fluorescein. We are attempting to improve the signal-to-noise ratio, through the
use of our proprietary modulation technologies. If successful, this improvement
could result in faster imaging, better resolution and increased depth at which
diagnosis could be conducted. Using our modulation technique, improved images
have been obtained in a model system.
We cannot guarantee that our research will lead to the development of
new patentable technology, or that commercial products will be developed from
our technologies and successfully sold. We plan to continue to pursue
preclinical and clinical testing of proposed products in the areas of chemistry,
photochemistry and biochemistry. However, we cannot assure investors that we
will receive any grant monies, will be able to successfully develop and obtain
proprietary protection for new technologies, or that we can develop products
from these technologies that can be commercialized. Other than our joint venture
with Elan, we have not entered into any collaborative agreements for the
development of any specific product and we do not expect to do so until further
research and clinical trials are concluded.
OPERATIONAL MATTERS
We are occupying approximately 4,000 square feet of office and
laboratory space in Knoxville, Tennessee. We negotiated a new lease agreement
beginning July 1999, with a term expiring May 2001, for this space at a monthly
rental of $2,700 for the facility (including certain equipment) plus charges for
utilities and similar items. We have two options to extend the lease agreement
for additional terms of one year each. We recently, through our subsidiary
Photogen, Inc., entered into a five year lease agreement for approximately 3,127
square feet of office space located in Massachusetts to be used for Photogen's
clinical trials group for an initial rental of $4,300 per month.
We have received, installed and started-up three ultra-short pulsed
laser systems required for conduct of animal studies for use in the photodynamic
treatment of melanoma and age-related macular degeneration. We also took
delivery of another laser system for use in hair removal. We have completed
development of a software package for use in the control and operation of these
laser systems.
During the third quarter, we retained a consultant and granted that
person five year warrants to acquire 1,000,000 shares of our Common Stock at an
exercise price of $9.45 per share. Half the warrants vested immediately and the
other half will vest on the consummation of certain transactions or in August
2000 (provided the consulting arrangement has not been terminated then). The
warrants carry registration rights for the underlying shares of Common Stock. We
also granted registration rights in connection with Common Stock we issued to
Alliance as part of our technology acquisition described below in Item 5.
LIQUIDITY; CAPITAL RESOURCES
We have used, and expect over the next 12 months to use, the gross
proceeds from our fourth quarter sale of common stock to Elan and the gross
proceeds remaining from the March 13, 1998 private placement for corporate
overhead and operating expenses, animal trials, the purchase
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<PAGE>
or lease of scientific and laboratory equipment and related facilities, legal
and regulatory consulting fees and for other working capital purposes, assuming
we have no revenues during that period. Our use of cash and capital resources
for the first nine months of the 1999 fiscal year averaged about $390,000 per
month. We expect our use of capital to increase as we move toward initiating
clinical trials.
We plan to raise additional capital in the fourth quarter of 1999 by
making a private placement of our Series B preferred stock to certain
accredited investors, and we have received a binding commitment from one of
our principal shareholders, Ted Tannebaum, to provide up to $4 million in
additional equity financing. Mr. Tannebaum will also make a $1,000,000 credit
facility available to us. If we utilize this credit facility, borrowings will
bear interest at 6% per year and interest only will be paid annually, with
the principal due in five years. The loan would be secured by a lien on all
of our assets.
PLAN OF OPERATION
During the next twelve months, we will focus our efforts on
completing preclinical studies, beginning human trials, preparing for the
design and assembly of laser treatment devices, hiring new employees to work
in our new facilities in Massachusetts, preparing to manufacture clinical
quantities of our drug agent, preparation of required filings to FDA and
foreign regulatory bodies. We will also continue with evaluation of
proprietary photoactive agent candidates, pursuing patent protection and
seeking potential research and development and collaboration candidates.
During the nine months ended September 30, 1999, we spent
approximately $642,370 to acquire equipment necessary to support animal
clinical trials, and on development of photoactive agents and targeting
systems. During the third quarter of 1999, we purchased approximately
$178,000 of laboratory equipment. We anticipate increased spending during the
fourth quarter for clinical equipment and clinical work provided by
third-party researchers. During the next twelve months we expect to spend
approximately $925,000 to obtain new equipment. The research contracts to
which we are currently a party in the aggregate will require us to spend
$628,101 during the next twelve months for the projects presently
contemplated under those agreements. Additional projects may be undertaken
with those institutions for compensation to be agreed upon at that time.
We presently anticipate adding five additional personnel to work in our
Massachusetts office on clinical trial design, FDA and regulatory compliance,
business development, operations and similar activities to support our current
and future projects. We will consider faster growth if that would present
opportunities to increase our product pipeline, or opportunities for more rapid
FDA approval or to attain licensing revenues. We intend to structure our
research and development and collaborative arrangements to make the fullest
possible use of personnel and facilities provided by the parties with whom we
may contract.
With the funds we will receive through our fourth quarter, 1999
financing, we believe we will have enough cash resources for our current
commitments during the next 12 months. However, as we progress toward human
clinical trials, our use of capital will increase and will continue to do so at
an accelerating pace. Greater capital resources would enable us to quicken and
expand our research and development activities over that 12-month period; and
our failure to raise
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additional capital will (absent a suitable collaborative agreement providing for
a third party to take over these functions) significantly impair our ability to
conduct further research and development activities beyond those currently
contracted for and our ability to seek regulatory approval for any possible
product resulting from that research. In any event, complete development and
commercialization of our technology will require substantial additional funds.
Accordingly, we are continuously evaluating capital formation activities and
opportunities, either as part of collaborative arrangements with third parties
or through offerings of equity or debt unrelated to collaborations. See "Risk
Factors" in Item 5, below.
YEAR 2000 ISSUES
The "Year 2000 issue" is the problem resulting from the use of a
two-digit date to identify the year in computer software. Consequently, computer
programs may not accurately reflect the appropriate date, confusing "00" as the
year 1900 rather than the year 2000. Year 2000 is a pervasive problem affecting
many information technology systems and embedded technologies (operating and
control systems that rely on embedded chip systems such as microprocessors in
communication systems) in all companies and in all industries.
We have completed assessment of the impact of Year 2000 on our
operations and important systems. We also inquired about the Year 2000 readiness
of our material vendors, research institutions under contract with us, and other
material third parties on which we rely.
With respect to our information technology systems, we believe that
with upgrades to our existing computer software, all of which should be readily
available in the market, the Year 2000 issue will not have a material adverse
affect on our financial position or results of operations. We expect to have
these upgrades completed by the end of 1999 and do not expect the cost of the
upgrades to be material (less than $5,000). With respect to embedded
technologies, we believe they are either Year 2000 compliant or will not be
materially effected by the Year 2000 problem because they do not significantly
rely upon date sensitive software.
To date, we do not believe most third parties' Year 2000 issues will
have a material adverse impact on our operations. We believe that a "worst case"
scenario would result where the systems of third parties are not timely
converted and a third party fails to remediate its own Year 2000 issues. In a
worst case scenario, we could incur an adverse affect due to interruption of
third party systems. However, we currently believe that any adverse effect would
involve primarily disruption to sponsored research operations which we believe
could be transferred to alternative third parties who were Year 2000 compliant.
Any such transfer could result in a delay of research operations. At present we
cannot estimate the likelihood or potential cost of such third party failures.
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PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
SUBSEQUENT DEVELOPMENTS
ELAN JOINT VENTURE. Shortly after the third quarter ended, we
established a joint venture with affiliates of Elan Corporation, plc ("Elan"),
an international drug delivery and biopharmaceutical health care company. This
joint venture greatly expands our lymphography research. We formed the joint
venture with Elan to develop and commercialize nanoparticulate diagnostic
imaging agents for the detection and treatment of cancer that has spread to
patients' lymph nodes. Our goal with this joint venture is to develop a
treatment that would reduce the number of lymph node surgeries by precisely
locating the nodes where cancer has spread and at the same time, if necessary,
treating the affected lymph nodes in one all-inclusive non-invasive procedure.
This approach uses a high resolution image of the lymph nodes surrounding a
primary tumor to be generated for mapping and potential diagnosis and treatment.
Potential benefits include a non-invasive procedure and use as a tool to monitor
progression of the disease.
We and Elan each contributed intellectual property and know-how to
further the goals of the venture. Our contribution includes knowledge relating
to lymphography accessed through our recent technology acquisition and licensing
agreements. Elan, through its drug delivery division Elan Pharmaceutical
Technologies, is contributing its NanoCrystal(TM) stabilized nanoparticulate
formulation technology to develop the diagnostic imaging agents. Phase II human
trials with the venture's lead candidate are expected to begin in 2000.
Elan International Services, Ltd. ("EIS") will provide us with a
credit facility to fund our share of the development costs of the joint
venture. Borrowings under this $4.8 million line of credit may be converted
by EIS into our Common Stock at a ratio of $18.15 per share. In addition, EIS
purchased $6 million of our Common Stock and a five year warrant to purchase
an additional 100,000 shares of Common Stock at an exercise price of $21.17
per share. We granted EIS certain registration rights for the Common Stock it
owns or may acquire on exercise or conversion of those instruments and the
Series A preferred stock, described below.
As part of the joint venture, EIS also purchased 12,015 shares of
our newly issued Series A preferred stock at $1,000 per share. We used the
$12,015,000 proceeds from the sale of our Series A Preferred to purchase 80.1%
of the equity of Photogen Newco Ltd. (EIS currently owns the other 19.9% of
Photogen Newco Ltd.). Photogen Newco Ltd. used the entire $15 million of
proceeds received to pay EIS a license fee of $15 million to use intellectual
property licensed by Elan Pharma International Limited to Photogen Newco Ltd.
Under the Amended and Restated Certificate of Designations, Preferences
and Rights of Series A Convertible Exchangeable Preferred Stock, EIS, as holder
of Series A Preferred, has a liquidation preference entitling it to the first
$12,015,000 of funds available for distribution to stockholders upon
liquidation. The holder of Series A Preferred has the right to convert shares of
Series A Preferred into Common Stock at any time after October 20, 2001 at a
conversion price of $21.17 per share of Common Stock. Alternatively, the holder
of Series A Preferred may exchange shares of Series A Preferred for common
shares of Photogen Newco Ltd. so that EIS owns 50% of
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the equity of Photogen Newco Ltd. Each share of Series A Preferred will be
paid a mandatory payment-in-kind dividend equal to 7%, payable in additional
shares of Series A Preferred. The payment-in-kind dividend is cumulative,
compounds on a semi-annual basis and is payable twice a year, beginning April
2000.
EIS has the right to designate a member to our Board of Directors so
long as EIS owns 10% of our Common Stock or until October, 2004. The Elan Board
nominee will be on the management slate of directors at our next annual meeting.
EIS has a preemptive right to participate in our future equity offerings to
maintain its pro rata interest in Photogen until October 2003. Also, if in our
next third-party financing we sell Common Stock at a price less than $13 per
share, we must issue additional shares to Elan so that Elan's overall price for
its Common Stock equals the effective price in that other offering.
NEW PATENT AND LICENSE ACQUISITION. In October 1999, we acquired
technology from Alliance Pharmaceutical Corp. ("Alliance") and licensed
technology from Massachusetts General Hospital intended to benefit our
programs in non-invasive lymphography and cancer treatments. From Alliance,
we acquired technology that describes methods for using certain particulate
contrast materials that follow the course of tumor cells to the appropriate
lymph node. From Massachusetts General Hospital, we have licensed and
sub-licensed a special group of nanoparticulate contrast materials, including
one compound ready for a Phase II/III clinical trial. The materials, which
will be used in lymphography and other applications, disseminate throughout
the lymphatic system to quickly locate the sentinel lymph nodes. Additional
proprietary methods and materials, co-invented and recently improved by Dr.
Gerald Wolf, Photogen's medical director, complement our use of the
radiosensitizer PH-10 by expanding our proprietary position to include
methods of administration and treatment, and additional material agents.
HENDRIX OPTION. In September 1999, we acquired an option which expires
in February 2000 from Mary J.C. Hendrix, Ph.D., professor of anatomy and cell
biology and deputy director of the University of Iowa Cancer Center, to form a
new company to carry out a joint venture. The new company would initially focus
on commercializing diagnostic and therapeutic products related to diseases such
as prostate and breast cancer.
Dr. Hendrix's research covers methods to identify the presence of
breast cancer and its growth potential, using a group of new marker proteins
which may be used in blood or serum-based diagnostics, and may eventually lead
to more effective molecular-based vaccines against tumors. Her research also
addresses an adhesion molecule that may increase survival rates for prostate
cancer patients, whose best chances of survival occur when the cancerous cells
remain localized.
If we proceed with this joint venture, the technologies and research to
be contributed by the parties would be part of a newly formed Photogen
Biotechnologies, Inc. and will include further studies intended to validate Dr.
Hendrix's initial findings. The discoveries are intended to culminate with new
non-invasive diagnostic tools and treatments for cancer and other diseases.
If we exercise the option, we will be obligated to provide at least $3
million to fund the new operation. In addition, we will contribute our
technologies related to the production of vaccines and other methods useful for
the identification of viruses. Under terms of the agreement,
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if completed, we would own 85% of Photogen Biotechnologies, Inc. stock and
appoint two of its three directors. Dr. Hendrix would own the balance and
appoint the third director.
RISK FACTORS
Photogen and its business involve a high degree of risk. You should
carefully consider the risks listed below and all of the information
contained in this Form 10-QSB and our other filings with the Securities and
Exchange Commission. The risks listed below are not all of the risks facing
Photogen. There may be additional risks and uncertainties that we currently
are not aware of or have deemed not material, all of which could have a
negative impact on our business, financial condition and results of
operations. "We" and "our" refer to Photogen Technologies, Inc. and its
wholly owned subsidiary Photogen, Inc.
This Form 10-QSB and other filings, announcements and documents of
Photogen and oral statements of our representatives contain "forward-looking
statements," within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements involve risks, uncertainties and other
factors that may cause our actual results or performance to differ materially
from any results or performance expressed or implied by those statements.
Examples of forward-looking statements include predictive statements, statements
that depend on or refer to future events or conditions, which include words such
as "expects," "anticipates," "intends," "plans," "believes," "estimates,"
"should," "may" or similar expressions, or statements that involve hypothetical
events.
Forward-looking statements discuss future events or circumstances,
including future revenues, earnings or growth rates, ongoing business strategies
or prospects, and our possible future actions. These statements are based on
current expectations and projections about future events and are subject to
risks, uncertainties, and assumptions about Photogen, economic and market
factors and the industries in which we do business, and other factors.
Forward-looking statements are not guaranties of future performance and actual
events and results may differ materially from those expressed or forecasted in
forward-looking statements. We have no specific intention to update these
statements.
The following are some of the key risk factors that may affect our
future results:
WE ARE A DEVELOPMENT STAGE COMPANY, WE HAVE CONDUCTED ONLY LIMITED STUDIES ON
OUR TECHNOLOGIES AND WE DO NOT HAVE ANY PRODUCTS OR REVENUES FROM SALES.
Our company and our technology are in an early stage of
development. We have not generated revenues from sales or operations,
and we do not expect to generate any revenues for at least several
years.
Use of our technology has been limited to laboratory
experiments or animal testing and only one compound has completed Phase
I clinical trials. We have therefore not yet conducted any
substantive studies on the effectiveness of any compound on human
subjects. The products we currently contemplate developing will require
significant additional research and development, preclinical and
clinical testing and regulatory approval before they can be
manufactured and sold. We cannot assure that we will be able to
develop our technology
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into marketable products or that the technology will be effective to
diagnosis or treat human diseases. As a result of changing economic
considerations, market, clinical or regulatory conditions, or clinical
trial results, we may shift our focus or determine not to continue one
or more of the projects we are currently pursuing.
WE HAVE A HISTORY OF LOSSES AND MAY NOT ACHIEVE OR MAINTAIN FUTURE PROFITS OR
PAYMENT OF DIVIDENDS.
We have incurred losses since the beginning of our operations.
As of September 30, 1999, we have incurred total losses of
approximately $5,992,240. We expect our losses to increase in the
future as our financial resources are used for research and
development, preclinical and clinical testing, regulatory activities,
manufacturing, marketing and other related expenses. We may not be able
to achieve or maintain profitability in the future. We have never
declared or paid any cash dividends to stockholders, and do not expect
to do so in the foreseeable future.
WE MUST OBTAIN SIGNIFICANT ADDITIONAL FINANCING.
Under the present circumstances, even with the receipt of the
maximum amount of the proceeds from our Series B Preferred private
placement (the maximum amount is $14 million), we will exhaust our
available capital by approximately the first quarter of 2002 (depending
on the pace of our spending for preclinical and clinical trials). We
will need substantial additional financing for our research, clinical
testing, product development and marketing programs. We cannot
accurately estimate the amount of additional financing required;
however, the amount could be an additional $30 - 50 million. Depending
on market conditions, we will attempt to raise additional capital
through stock and debt offerings, collaborative relationships and other
available sources. Additional funds may not be available on acceptable
terms, if at all, and existing stockholders may be diluted as a result
of those offerings.
If we sell additional equity, Elan has a preemptive right
until October 2003 to participate in that offering. If in our next
third-party financing we sell Common Stock at a price less than $13 per
share, we must issue additional shares to Elan so that Elan's overall
price for its Common Stock equals the effective price in that other
offering.
WE ARE HIGHLY DEPENDENT UPON A SMALL NUMBER OF EMPLOYEES AND CONSULTANTS WHO
PROVIDE SCIENTIFIC AND MANAGEMENT EXPERTISE.
These individuals have entered into employment or consulting
agreements, confidentiality and/or non-competition agreements with us.
We could suffer competitive disadvantage, loss of intellectual property
rights or other material adverse effects on our business and results of
operations if any employee or consultant violates or terminates these
agreements or terminates their association with us. Our growth and
future success also depends upon the continued involvement and
contribution from these individuals, as well as our ability to attract
and retain highly qualified personnel now and in the future
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OUR PROPOSED PRODUCTS ARE SUBJECT TO EXTENSIVE TESTING AND GOVERNMENT REGULATION
AND APPROVAL, INCLUDING BY THE FOOD AND DRUG ADMINISTRATION ("FDA").
Most of our proposed drug and device products have not begun,
and none has completed, the FDA's extensive approval process which must
be completed before proposed products can be manufactured or sold. This
process includes preclinical and clinical testing for effective use and
safety in animals and humans and it can be extremely costly. The time
frame necessary to perform these tasks for any individual product is
long and uncertain, and we may encounter problems or delays which we
cannot predict at this time. Even if clinical trials are successful,
our proposed products may not demonstrate sufficient effectiveness or
safety to warrant approval by the FDA or other domestic or foreign
regulatory authorities. Any regulatory approval may not cover the
clinical symptoms or indications that we may seek.
BECAUSE WE DO NOT HAVE, AND DO NOT INTEND TO DEVELOP, INTERNAL RESEARCH,
MANUFACTURING OR CLINICAL TESTING FACILITIES OR MARKETING RESOURCES FOR OUR
PROPOSED PRODUCTS, WE WILL HAVE TO RELY ON THIRD PARTIES AND COLLABORATIVE
RELATIONSHIPS.
We must continue to enter into collaborative relationships
with third parties for research and development, preclinical and
clinical testing, manufacturing, marketing and distribution of our
proposed products. We will also be dependent on third parties for the
supply of activation hardware (I.E., lasers and x-ray devices) and for
supplies of photodynamic drugs. We have several research and supply
agreements with third parties. However, we may not be able to
negotiate other acceptable collaborative and supply arrangements in
the future.
Collaborative relationships may limit or restrict our
operations or may not result in an adequate supply of necessary
resources. Our collaborative partners could also pursue alternative
technologies as a means of developing or marketing products for the
diseases targeted by our collaborative programs. Failure of a
collaborative partner to perform under its agreement or its failure to
meet regulatory standards could delay or prematurely terminate clinical
testing of our proposed products.
LOSS OF PATENT AND OTHER INTELLECTUAL PROPERTY PROTECTION WOULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
Our success will depend, in part, on our ability to obtain,
assert and defend our patents, protect trade secrets and operate
without infringing upon the intellectual property of others. Our patent
applications may not result in issued patents. Moreover, any issued
patents may not provide us with adequate protection of our intellectual
property or competitive advantages. Patented inventions may be "reverse
engineered" by our competitors, and third parties may challenge our
existing patents and seek to hold them invalid or unenforceable.
Existing or future patents or patent applications (and the products or
methods they cover) of our competitors may interfere, invalidate,
conflict or infringe with our patents or patent applications.
Similarly, our use of the methods or technologies contained in our
patents and other intellectual property may conflict or infringe the
rights of others.
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Litigation over patents and other intellectual property rights
occurs frequently in our industry, and there is a risk that we may not
prevail in that litigation. Those disputes can be expensive and time
consuming, even if we win. Intellectual property disputes are often
settled through licensing arrangements that could be costly to us. In
any intellectual property litigation, it is possible that licenses
necessary to settle the dispute would not be available, or that we
would not be able to redesign our technologies to avoid any claimed
infringement.
Confidentiality agreements covering our intellectual property
may be violated and we may not have adequate remedies for any
violation. Also, our intellectual property may in other ways become
known or be independently discovered by competitors.
To the extent we use intellectual property through licenses or
sub-licenses (as is the case for some of our lymphography technology),
our rights are subject to our performing the terms of the license or
sub-license agreement with third parties. Our rights are also subject
to the actions of third parties we may not be able to control, such as
our sub-licensor complying with the terms of its license with the
patent owner and the patent owner maintaining the patent. In some cases
where U.S. Government funding was used to support a project, certain
intellectual property is subject to the Government's "march in" rights
which include a royalty-free license under certain circumstances
pursuant to 35 U.S.C. Section 202(c).
OUR POTENTIAL MARKETS ARE EXTREMELY COMPETITIVE.
We face substantial competition from competitors with greater
financial, technical and human resources and with greater experience in
developing products, conducting preclinical or clinical testing,
obtaining regulatory approvals, manufacturing and marketing. Our
competitors include firms in the field of photodynamic therapy as well
as other fields generally relating to the diagnosis and treatment of
disease using different technologies or scientific and medical
approaches. Examples of those technologies are novel drugs and
hyperthermic and ultrasound procedures. Some of these firms have drugs
or devices that have completed or are in advanced stages of clinical
trials and regulatory approvals.
Our competitors may develop technologies and obtain patent
protection that could render our technologies or products obsolete or
less competitive or our patents invalid or unenforceable. Due to the
inherent risk of failure associated with the testing, development and
production of new and innovative technologies, our technologies and
products may be found to be ineffective, have unanticipated limitations
or otherwise be unsuccessful in the marketplace.
A SMALL GROUP OF STOCKHOLDERS CONTROLS PHOTOGEN.
A small group of our officers, directors and others control
approximately 85% of our outstanding Common Stock. Several of our
principal stockholders are also parties to a Voting Agreement
concerning the election of certain designees to the Board of Directors
of Photogen Technologies, Inc. and Photogen, Inc. This group of
stockholders can significantly influence Photogen and the direction of
our business and affairs. This
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concentration of ownership may delay or prevent a change in control of
Photogen, and may also result in a small supply of shares available for
purchase in the public securities markets. These factors may affect the
market and the market price for our Common Stock in ways that do not
reflect the intrinsic value of the stock.
OUR STOCK PRICE IS VOLATILE.
The price and trading volume of our Common Stock has
fluctuated and is likely to continue to fluctuate significantly for
reasons that may not have any relationship to our operating performance
or other factors that traditionally determine a company's value. The
following factors may have an impact on the price of our stock:
- announcements by us or others regarding scientific
discoveries, technological innovations, commercial
products, patents or proprietary rights;
- the progress of preclinical or clinical trials;
- changes in government regulation;
- public concern about the safety of devices or drugs;
- limited coverage by securities analysts;
- changes in our financial performance from period to
period; securities analysts' reports; and general
market conditions.
Our Common Stock trades in the over-the-counter bulletin board
market and is not listed or traded on any stock exchange at this time.
State securities laws may limit the extent to which brokers in a number
of states may solicit transactions in our stock.
COMPUTER PROBLEMS RESULTING FROM THE YEAR 2000 ISSUE PRESENT POTENTIAL
UNCERTAINTIES.
We may incur delays in research and other material problems if
the computer systems and other information technology systems that we
use or that are used by certain third parties upon whom we rely for
services do not accurately and adequately address the Year 2000 issue.
We may not be able to identify and address all Year 2000 issues,
including those of third parties. Failure to identify and correct
unknown Year 2000 issues by us or important third parties on whom we
rely could have a material adverse effect on our business, results of
operations and financial condition.
WE CANNOT PREDICT THE EFFECT OF CHANGES IN HEALTH CARE REIMBURSEMENT AND
LEGISLATIVE REFORM ON OUR BUSINESS.
Our success will depend, in part, on the extent to which
health insurers, managed care entities and similar organizations,
provide coverage or reimbursement for the medical procedures and
devices we plan to develop. These third-party payors are increasingly
challenging the price of medical procedures and services and
establishing guidelines that may limit physicians' selections of
innovative products and procedures. We also cannot predict the effect
of any current or future legislation or regulations relating to
third-party coverage or reimbursement on our business. We may not be
able to achieve market acceptance of our proposed products or maintain
price levels sufficient to achieve or
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maintain any profits on our proposed products if adequate reimbursement
coverage is not available.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following is a list of exhibits filed as part of this Form
10-QSB. Exhibits that were previously filed are incorporated by reference. For
exhibits incorporated by reference, the location of the exhibit in the previous
filing is indicated in parenthesis.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
3.1 Restated Articles of Incorporation of Photogen Technologies, Inc. (Filed
as exhibit 3.1 to the Company's Current Report on Form 8-K dated
June 17, 1998 and incorporated herein by reference.)
3.2 Bylaws of Photogen Technologies, Inc. (Filed as exhibit
3.2 to the Company's Registration Statement on Form
10-SB dated December 24, 1997 and incorporated herein
by reference.)
3.3 Charter of Photogen, Inc. (Filed as exhibit 3.3 to the Company's
Registration Statement on Form 10-SB dated December 24, 1997 and
incorporated herein by reference.)
3.4 Amended and Restated Bylaws of Photogen, Inc. (Filed as exhibit 3.4 to
the Company's Form 10-KSB dated March 30, 1999 and incorporated
herein by reference.)
3.5 Amended and Restated Certificate of Designations, Preferences and
Rights of Series A Preferred Stock
10.1 1998 Long Term Incentive Compensation Plan (Filed as Exhibit A to the
Company's Schedule 14-A dated April 30, 1998 and incorporated herein by
reference.)
10.2 Employment Agreement between Photogen, Inc. and Dr. Gerald L. Wolf
dated July 1, 1999.
10.3 Tufts University Sponsored Research Agreement dated August 1, 1999 by
and between Photogen, Inc. and Tufts University, a/k/a Trustees of Tufts
College
10.4 Consulting Agreement by and between Photogen Technologies, Inc. and
Farcap Group LLC effective August 9, 1999.
10.5 Warrant Agreement by and between Photogen Technologies, Inc. and
Farcap Group LLC effective August 9, 1999.
</TABLE>
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<TABLE>
<S> <C>
10.6 Agreement effective August 9, 1999 by and among Alliance
Pharmaceutical Corp., Photogen Technologies, Inc. and Gerald Wolf,
Ph.D, M.D.
10.7 License Agreement effective as of September 30, 1999 between The
General Hospital Corporation and Photogen, Inc.
10.8 Securities Purchase Agreement dated as of October 20, 1999, among
Photogen Technologies, Inc. and Elan International Services, Ltd.
10.9 Warrant to Purchase Shares of Common Stock dated October 20, 1999
between Photogen Technologies, Inc. and Elan International Services,
Ltd.
10.10 Convertible Promissory Note dated October 20, 1999 from Photogen
Technologies, Inc. to Elan International Services, Ltd.
10.11 Registration Rights Agreement dated October 20, 1999 by and among
Photogen Technologies, Inc. and Elan International Services, Ltd.
10.12 Funding Agreement dated October 20, 1999 among Elan Pharma
International Limited and Photogen Technologies, Inc.
10.13 License Agreement dated October 20, 1999 between Photogen
Technologies, Inc, Photogen Newco Ltd. and Elan Pharma International
Limited
10.14 License Agreement dated October 20, 1999 between Elan Pharma International
Limited, Photogen Newco Ltd. and Photogen Technologies, Inc.
10.15 Subscription, Joint Development and Operating Agreement dated October
20, 1999 between Elan Pharma International Limited, Elan International
Services, Ltd., Photogen Technologies, Inc. and Photogen Newco Ltd.
27 Financial Data Schedule of Photogen Technologies, Inc.
</TABLE>
(b) Reports on Form 8-K.
The following reports on Form 8-K were filed in the three month period
ended September 30, 1999:
1. Report on Form 8-K dated August 26, 1999, announcing the
appointment of Dr. Gerald Wolf as its Medical Director and a
five year research agreement with Tufts University.
2. Report on Form 8-K dated September 15, 1999 announcing
research results involving the compound PH-10.
3. Report on Form 8-K dated September 29, 1999 announcing
Photogen's acquisition of an option to form a joint venture
with Mary J.C. Hendrix, Ph.D.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Photogen Technologies, Inc.
/s/ John T. Smolik
---------------------------------------
Date: November 15, 1999 John T. Smolik, President
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
+3.1 Restated Articles of Incorporation of Photogen Technologies, Inc. (Filed
as exhibit 3.1 to the Company's Current Report on Form 8-K dated
June 17, 1998 and incorporated herein by reference.)
+3.2 Bylaws of Photogen Technologies, Inc. (Filed as exhibit 3.2 to the
Company's Registration Statement on Form 10-SB dated December 24,
1997 and incorporated herein by reference.)
+3.3 Charter of Photogen, Inc. (Filed as exhibit 3.3 to the Company's
Registration Statement on Form 10-SB dated December 24, 1997 and
incorporated herein by reference.)
+3.4 Amended and Restated Bylaws of Photogen, Inc. (Filed as exhibit 3.4 to
the Company's Form 10-KSB dated March 30, 1999 and incorporated
herein by reference.)
*3.5 Amended and Restated Certificate of Designations, Preferences and
Rights of Series A Preferred Stock
+10.1 1998 Long Term Incentive Compensation Plan (Filed as
Exhibit A to the Company's Schedule 14-A dated April
30, 1998 and incorporated herein by reference.)
*10.2 Employment Agreement between Photogen, Inc. and Dr. Gerald L. Wolf
dated July 1, 1999.
*10.3 Tufts University Sponsored Research Agreement dated August 1, 1999 by
and between Photogen, Inc. and Tufts University, a/k/a Trustees of Tufts
College
*10.4 Consulting Agreement by and between Photogen Technologies, Inc. and
Farcap Group LLC effective August 9, 1999.
*10.5 Warrant Agreement by and between Photogen Technologies, Inc. and
Farcap Group LLC effective August 9, 1999.
*10.6 Agreement effective August 9, 1999 by and among Alliance
Pharmaceutical Corp., Photogen Technologies, Inc. and Gerald Wolf,
Ph.D, M.D.
*10.7 License Agreement effective as of September 30, 1999 between The
General Hospital Corporation and Photogen, Inc.
*10.8 Securities Purchase Agreement dated as of October 20, 1999, among
Photogen Technologies, Inc. and Elan International Services, Ltd.
</TABLE>
24
<PAGE>
<TABLE>
<S> <C>
*10.9 Warrant to Purchase Shares of Common Stock dated October 20, 1999
between Photogen Technologies, Inc. and Elan International Services,
Ltd.
*10.10 Convertible Promissory Note dated October 20, 1999 from Photogen
Technologies, Inc. to Elan International Services, Ltd.
*10.11 Registration Rights Agreement dated October 20, 1999 by and among
Photogen Technologies, Inc. and Elan International Services, Ltd.
*10.12 Funding Agreement dated October 20, 1999 among Elan Pharma
International Limited and Photogen Technologies, Inc.
*10.13 License Agreement dated October 20, 1999 between Photogen
Technologies, Inc, Photogen Newco Ltd. and Elan Pharma International
Limited
*10.14 License Agreement dated October 20, 1999 between Elan Pharma International
Limited, Photogen Newco Ltd. and Photogen Technologies, Inc.
*10.15 Subscription, Joint Development and Operating Agreement dated October
20, 1999 between Elan Pharma International Limited, Elan International
Services, Ltd., Photogen Technologies, Inc. and Photogen Newco Ltd.
*27 Financial Data Schedule of Photogen Technologies, Inc.
</TABLE>
+ Incorporated by reference from the filing indicated.
* Filed herewith.
25
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF DESIGNATIONS, PREFERENCES, AND
RIGHTS
OF
SERIES A PREFERRED STOCK
OF
PHOTOGEN TECHNOLOGIES, INC.
(Pursuant to Title 7, Chapter 78 of the
Nevada Revised Statutes)
We, the undersigned, for the purpose of amending and restating the
Certificate of Designations, Preferences, and Rights of Series A Preferred
Stock of Photogen Technologies, Inc. filed October 20, 1999 with the
Secretary of State of Nevada and subject to the requirements of Title 7,
Chapter 78 of the Nevada Revised Statutes, and the acts amendatory thereof,
and hereinafter sometimes referred to as the General Corporation Law of the
State of Nevada, do hereby adopt and make the following Amended and Restated
Certificate of Designations, Preferences, and Rights of Series A Preferred
Stock of Photogen Technologies, Inc.:
FIRST: The original Certificate of Designations, Preferences,
and Rights of Series A Preferred Stock of Photogen Technologies, Inc. as
filed with the Secretary of State of Nevada and attached hereto is
hereby amended by the Amended and Restated Certificate of Designations,
Preferences, and Rights of Series A Preferred Stock of Photogen
Technologies, Inc. as set forth below.
SECOND: The sole record and beneficial holder of Series A
Preferred Stock approved the Amended and Restated Certificate of
Designations, Preferences, and Rights of Series A Preferred Stock on
October 27, 1999
THIRD: That pursuant to the authority conferred upon the Board of
Directors by the Restated Articles of Incorporation of the said
Corporation, the said Board of Directors on October 25, 1999 adopted the
following resolution, pursuant to Article Fourth of the Corporation's
Restated Articles of Incorporation and Title 7, Chapter 78 of the Nevada
Revised Statutes, amending the terms of the series of shares of Preferred
Stock designated as Series A Preferred Stock:
"RESOLVED, that pursuant to the authority vested in the
Board of Directors of the corporation by the Restated Articles of
Incorporation, the Board of Directors does hereby provide for the issuance
of a series of Preferred Stock, $0.01 par value, of the Corporation, to be
designated "Series A Preferred Stock", initially consisting of 12,015
shares, and to the extent that the designations, powers, preferences and
relative and other special rights and the qualifications, limitations
and restrictions of the Series A Preferred Stock are not stated and
expressed in the Restated Articles of Incorporation, the Board of
Directors does hereby fix and herein state and express such
designations, powers, preferences and relative and other special rights
and the qualifications, limitations and restrictions thereof, as follows
(all terms used herein which are defined in the Restated Articles of
Incorporation shall be deemed to have the meanings provided therein):
<PAGE>
1. DESIGNATION. 12,015 shares of Preferred Stock shall be
designated and known as the "SERIES A PREFERRED STOCK." Such number of
shares may be increased or decreased by resolution of the Board of
Directors after obtaining the consent of a majority in interest of the
holder(s) of the then-outstanding shares of Series A Preferred Stock;
provided, that no decrease shall reduce the number of shares of Series A
Preferred Stock to a number less than the number of shares then
outstanding plus the number of such shares issuable upon exercise of
outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Corporation.
2. DIVIDEND PROVISIONS.
a. From and after the date hereof, when and if the Board of
Directors shall declare a dividend or distribution payable with respect
to the then-outstanding shares of Common Stock of the Corporation, the
holders of the Series A Preferred Stock shall be entitled to the amount
of dividends per share in the same form as such Common Stock dividends
that would be payable on the largest number of whole shares of Common
Stock into which a holder's aggregate shares of Series A Preferred Stock
could then be converted pursuant to Section 4 hereof (such number to be
determined as of the record date for the determination of holders of
Common Stock entitled to receive such dividend).
b. In addition to Section 2(a) above, each share of Series A
Preferred Stock, for a period of six years from the date of first
issuance of the Series A Preferred Stock, shall be entitled to receive a
mandatory dividend equal to 7.0% per year of the Original Issue Price
(as defined below) thereof. Such dividend shall (1) be cumulative and
shall compound on a semi-annual basis, the first compounding to commence
six months from the date hereof and (2) be payable semi-annually solely
by the issuance of additional shares of Series A Preferred Stock, at a
price per share equal to the Original Issue Price thereof, and not in
cash. Fractional shares of Series A Preferred Stock shall be issuable
for purposes hereunder.
3. SENIORITY; LIQUIDATION PREFERENCE.
a. The Series A Preferred Stock, as to its liquidation preference,
shall rank senior to or PARI PASSU with (but as to PARI PASSU only, as
agreed to by a majority in interest of the outstanding shares of Series A
Preferred Stock) any future class or series of Preferred Stock issued by
the Company and senior to the Company's Common Stock.
b. In the event of any liquidation, dissolution or winding-up of
the affairs of the Corporation, whether voluntary or involuntary,
(collectively, a "LIQUIDATION"), before any payment of cash or
distribution of other property shall be made to the holders of the
Common Stock or any other class or series of stock subordinate in
liquidation preference to the Series A Preferred Stock, the holders of
the Series A Preferred Stock shall be entitled to receive out of the
assets of the Corporation legally available for distribution to its
shareholders, the Original Issue Price per share (as appropriately
adjusted for any combinations or divisions or similar recapitalizations
affecting the Series A Preferred Stock after issuance) and accrued and
unpaid dividends thereon (the "SERIES A LIQUIDATION PREFERENCE"). As
used herein, the "ORIGINAL ISSUE PRICE" per share is $1,000.
<PAGE>
c. If, upon any Liquidation, the assets of the Corporation
available for distribution to its shareholders shall be insufficient to pay
the holders of the Series A Preferred Stock the full amounts to which they
shall be entitled, the holders of the Series A Preferred Stock shall share
ratably in any distribution of assets in proportion to the respective amounts
which would be payable to them in respect of the shares held by them if all
amounts payable to them in respect of such were paid in full pursuant to
Section 3(b).
d. After the distributions described in Section 3(c) above have
been paid, subject to the rights of other series of preferred stock that may
from time to time come into existence, the remaining assets of the
Corporation available for distribution to shareholders shall be distributed
among the holders of Common Stock PRO RATA based on the number of shares of
Common Stock held by each.
4. CONVERSION. The holders of the Series A Preferred Stock shall have
conversion rights, through and including the Conversion Termination Date (as
defined below), as follows (the "CONVERSION RIGHTS"):
a. RIGHT TO CONVERT.
(i) Each share of Series A Preferred Stock shall be
convertible, at the option of the holder thereof, at any time that is
two years after the issuance thereof, at the office of the Corporation
or any transfer agent for such stock, into such number of fully paid and
non-assessable shares of Common Stock as is determined by dividing (x)
the sum of the Original Issue Price of such share of Series A Preferred
Stock (including all shares issued as dividends thereon) and all accrued
and unpaid dividends thereon by (y) the Series A Conversion Price (as
defined below). The "SERIES A CONVERSION PRICE" shall initially be
$21.17 and shall be subject to adjustment as set forth below in this
Section 4(a); provided, however, that the Series A Conversion Price
shall not exceed $21.17.
(ii) Before any holder of Series A Preferred Stock shall be
entitled to convert such shares into shares of Common Stock, such holder
shall surrender the certificate or certificates therefor, duly endorsed,
at the office of the Corporation or of any transfer agent for the Series
A Preferred Stock, and shall give written notice to the Corporation at
its principal corporate office, of the election to convert the same and
shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. The
Corporation shall, as soon as practicable thereafter, issue and deliver
at such office to such holder of Series A Preferred Stock, or to the
nominee or nominees of such holder, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be
entitled as set forth above. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of such
surrender of the shares of Series A Preferred Stock to be converted, and
the person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date.
<PAGE>
(iii) In the event the Corporation should at any time fix a
record date for the effectuation of a split or subdivision of the
outstanding shares of Common Stock or the determination of holders of
Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or
rights convertible into, or entitling the holder thereof to receive
directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "COMMON STOCK EQUIVALENTS") without payment of any
consideration by such holder for the additional shares of Common Stock
or the Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof) or with
payment that is less than the then-market price of the Common Stock
(including, in the case of Common Stock Equivalents, on an as-converted
basis) then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the
Series A Conversion Price of the Series A Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be increased
in proportion to such increase of the aggregate of (a) shares of Common
Stock outstanding and (b) those issuable with respect to such Common
Stock Equivalents, with the number of shares issuable with respect to
Common Stock Equivalents determined from time to time as provided in
Section 4(a)(v) below.
(iv) If the number of shares of Common Stock outstanding at
any time is decreased by a combination of the outstanding shares of
Common Stock, then, following the record date of such combination, the
Series A Conversion Price for the Series A Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be decreased
in proportion to such decrease in outstanding shares.
(v) The following provisions shall apply for purposes of this
Section 4(a):
(A) The aggregate maximum number of shares of Common
Stock deliverable upon conversion or exercise of Common Stock
Equivalents (assuming the satisfaction of any conditions to
convertibility or exercisability, including, without limitation, the
passage of time, but without taking into account potential antidilution
adjustments) shall be deemed to have been issued at the time such Common
Stock Equivalents were issued.
(B) In the event of any change in the number of shares
of Common Stock deliverable or in the consideration payable to the
Corporation upon conversion or exercise of such Common Stock Equivalents
including, but not limited to, a change resulting from the antidilution
provisions thereof, the Series A Conversion Price of the Series A
Preferred Stock, to the extent in any way affected by or computed using
such Common Stock Equivalents, shall be recomputed to reflect such
change, but no further adjustment shall be made for the actual issuance
of Common Stock or any payment of such consideration upon the exercise
of any such options or rights or the conversion or exchange of such
securities.
(C) Upon the termination or expiration of the
convertibility or exercisability of any such Common Stock Equivalents,
the Series A Conversion Price of the Series A Preferred Stock, to the
extent in any way affected by or computed using such Common Stock
Equivalents, shall be recomputed to reflect the issuance of only the
<PAGE>
number of shares of Common Stock (and Common Stock Equivalents which
remain convertible or exercisable) actually issued upon the conversion
or exercise of such Common Stock Equivalents.
5. EXCHANGE RIGHT. Provided that (a) all shares of Series A Preferred
Stock initially issued and sold by the Corporation to EIS have not been
converted and (b) the Exchange Termination Date (as defined below) shall not
have occurred, the holders of the Series A Preferred Stock (acting by act of
the majority holders thereof) shall have the right to exchange all of their
shares of Series A Preferred Stock (the "EXCHANGE RIGHT") of the Corporation
for such number of shares of Common Shares (as adjusted for any combinations
or divisions or similar recapitalizations) of PHOTOGEN NEWCO LTD., a Bermuda
exempted limited liability company ("NEWCO") held by the Corporation, so
that, after giving effect to the exercise of the Exchange Right, EIS and the
Corporation will each hold 50% of the total outstanding share capital of
Newco assuming that neither EIS nor the Corporation has sold any shares of
Newco; provided, that if EIS exercises the Exchange Right prior to a date
that is three years after the date hereof, the Corporation shall deliver to
Newco for exchange the number of Common Shares of Newco that would otherwise
be delivered to EIS pursuant to this Section 5, and EIS shall receive from
Newco, upon the exchange of such Common Shares, a number of shares of a
newly-created non-voting convertible preferred stock of Newco equal to such
number of Common Shares delivered to Newco by the Corporation. Such
non-voting preferred stock shall be convertible into Common Shares of Newco
on a one-for-one basis at any time after such three-year period.
Upon exercise of the Exchange Right, the shares of Series A
Preferred Stock originally purchased from the Corporation, but not including
any of the accrued and unpaid dividends thereon, shall be canceled and shall
no longer be entitled to any rights in the Corporation.
If any shares of the Series A Preferred Stock are converted
pursuant to Section 4(a), to shares of Common Stock, the Exchange Right with
respect to the shares of Series A Preferred Stock originally purchased from
the Corporation, but not including any of the accrued and unpaid dividends
thereon, shall be canceled and shall no longer be entitled to any rights in
the Corporation.
In order to exercise the Exchange Right, the holders shall provide
written notice thereof to the Corporation, setting forth (a) the fact that
such holders intend to exercise the Exchange Right, and (b) the proposed date
for such exercise (the "EXERCISE DATE"), which shall be between 10 and 30
days after the date of such notice, PROVIDED, HOWEVER, that if the
Corporation shall deliver the holders a written request to delay the date for
such exercise by no more than 45 days, the Exercise Date will be as set forth
in that request. During the period after the receipt of such written request,
and before the Exercise Date, the holders shall negotiate with the
Corporation in good faith an alternative mechanism for the transfer of the
Common Shares or Preferred Stock of Newco that will reduce the Corporation's
tax liability, provided that the holders shall not be required to agree to
any transaction which is financially disadvantageous to them. On the
Exercise Date, (y) the holders shall tender their shares of Series A
Preferred Stock
<PAGE>
to the Corporation for cancellation, and (z) the Corporation shall cause to
be delivered to EIS, acting on behalf of such holders, such shares of Newco.
The holders and the Corporation shall take all other necessary or appropriate
actions in connection with or to effect such closing.
6. TERMINATION DATE.
a. The rights of the holders to convert the shares of Series A
Preferred Stock into shares of Common Stock, shall terminate and be of no
further force and effect on the date that is six years after the date of the
first issuance of any shares of Series A Preferred Stock hereunder (the
"CONVERSION TERMINATION DATE").
b. The rights of the holders to exercise the Exchange Right shall
terminate and be of no further force and effect on the date that is six
years after the date of the first issuance of any shares of the Series A
Preferred Stock hereunder (the "EXCHANGE TERMINATION DATE").
7. OTHER DISTRIBUTIONS. On or prior to the Conversion Termination
Date, in the event the Corporation shall declare a distribution payable in
securities of other persons, evidences of indebtedness issued by the
Corporation or other persons, assets (excluding cash dividends) or options or
rights not referred to in Section 4, then, in each such case for the purpose
of this Section 7, the holders of the Series A Preferred Stock shall be
entitled to a proportionate share of any such distribution as though they
were the holders of the number of shares of Common Stock of the Corporation
into which their shares of Series A Preferred Stock would be convertible as
of the record date fixed for the determination of the holders of Common Stock
of the Corporation entitled to receive such distribution.
8. RECAPITALIZATIONS. On or prior to the Conversion Termination Date,
if at any time or from time to time there shall be a recapitalization of the
Common Stock (other than a subdivision, combination or merger or sale of
assets provided for in Section 3 or Section 4 hereof) provision shall be made
so that the holders of the Series A Preferred Stock shall thereafter be
entitled to receive upon conversion of the Series A Preferred Stock the
number of shares of stock or other securities or property of the Corporation
or otherwise, to which a holder of Common Stock deliverable upon conversion
would have been entitled on such recapitalization. In any such case,
appropriate adjustment shall be made in the application of the provisions of
Section 4 with respect to the rights of the holders of the Series A Preferred
Stock after the recapitalization to the end that the provisions of Section 4
(including adjustment of the Series A Conversion Price then in effect and the
number of shares purchasable upon conversion of the Series A Preferred Stock)
shall be applicable after that event as nearly equivalent as may be
practicable.
9. NO IMPAIRMENT. The Corporation will not, by amendment of its
Articles of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issuance or sale of
securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith assist in
the carrying out of all the provisions hereof and in the taking of all such
action as may be necessary or appropriate in order to protect the Series A
Conversion Rights and Exchange Right of the holders of the Series A Preferred
Stock against impairment.
10. NO FRACTIONAL SHARES AND CERTIFICATE AS TO ADJUSTMENTS.
<PAGE>
a. No fractional shares shall be issued upon the conversion of
any share or shares of the Series A Preferred Stock, and the number of shares
of Common Stock to be issued shall be rounded to the nearest whole share.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the aggregate number of shares of Series A
Preferred Stock each holder is at the time converting into Common Stock and
the aggregate number of shares of Common Stock issuable to each such holder
upon such conversion. No fractional shares shall be issued upon the
conversion of any share or shares of the Series A Preferred Stock, and the
number of shares of Common Stock to be issued shall be rounded to the nearest
whole share. Whether or not fractional shares are issuable upon such
conversion shall be determined on the basis of the total number of shares of
Series A Preferred Stock the holder is at the time converting into Common
Stock and the number of shares of Common Stock issuable upon such aggregate
conversion.
b. Upon the occurrence of each adjustment or readjustment of the
Series A Conversion Price pursuant to Section 4, the Corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of shares of
Series A Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at
any time of any holder of Series A Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustment
and readjustment, (ii) the Series A Conversion Price at the time in effect,
and (iii) the number of shares of Common Stock and the amount, if any, of
other property which at the time would be received upon the conversion of a
share of Series A Preferred Stock.
11. RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred Stock, such number of its
shares of Common Stock that shall from time to time be sufficient to effect
the conversion of all outstanding shares of the Series A Preferred Stock; and
if at any time the number of authorized but unissued shares of Common Stock
not otherwise reserved for issuance shall not be sufficient to effect the
conversion of all then outstanding shares of the Series A Preferred Stock, in
addition to such other remedies as shall be available to the holders of such
Series A Preferred Stock, the Corporation will take such corporate action
that may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes, including without limitation, engaging
in best efforts to obtain the requisite shareholder approval of any necessary
amendment to its Articles of Incorporation.
12. NOTICES. Any notice required by the provisions hereof to be given
to the holders of shares of Series A Preferred Stock shall be deemed given on
the date of service if served personally on the party to whom notice is to be
given, or on the date of transmittal of services by facsimile transmission to
the party to whom notice is to be given, and addressed to each holder of
record at his address appearing on the books of the Corporation.
<PAGE>
13. VOTING RIGHTS. Subject to Section 14 below, holders of Series A
Preferred Stock shall not be entitled to vote, including with respect to the
election of directors of the Corporation.
14. PROTECTIVE PROVISIONS. Subject to the rights of any series of
preferred stock that may from time to time come into existence, so long as
any shares of Series A Preferred Stock are outstanding, the Corporation shall
not without first obtaining the approval (by vote or written consent, as
provided by law) of the holders of at least a majority of the
then-outstanding shares of Series A Preferred Stock, voting separately as a
series:
a. amend its Restated Articles of Incorporation so as to affect
adversely the shares of Series A Preferred Stock or any holder thereof
(including by creating any additional classes or series of preferred stock
with a liquidation preference senior to or PARI PASSU with the Series A
Preferred Stock); or
b. change the rights of the holders of the Series A Preferred
Stock in any other respect.
15. STATUS OF CONVERTED STOCK. In the event any shares of Series A
Preferred Stock shall be converted pursuant to Section 4 or exchanged
pursuant to Section 5 hereof, the shares so converted or exchanged shall be
canceled and shall not be reissuable by the Corporation. The Restated
Articles of Incorporation of the Corporation shall be appropriately amended
to effect the corresponding reduction in the Corporation's authorized capital
stock."
<PAGE>
IN WITNESS WHEREOF, said Photogen Technologies, Inc. has caused
this Amended Certificate of Designation to be signed by John Smolik, its
President and Timothy Scott, its Assistant Secretary this 2nd day of
November, 1999.
PHOTOGEN TECHNOLOGIES, INC.
By: /s/ John Smolik
------------------
Name: John Smolik
Title: President
By: /s/ Timothy Scott
------------------
Name: Timothy Scott
Title: Assistant Secretary
<PAGE>
STATE OF Tennessee )
----------------
)SS.
COUNTY OF Knox )
---------------
On this 2nd day of November, 1999, personally appeared before me, a
Notary Public in and for the State and County aforesaid, John Smolik, known
to me to be the person described in and did say that he is the President of
Photogen Technologies, Inc., a Nevada corporation, and that the foregoing
Amended and Restated Certificate of Designations, Preferences, and Rights of
Series A Preferred Stock was signed on behalf of said corporation by
authority of its board of directors, and said John Smolik acknowledged to me
that said instrument to be the free act and deed of said corporation.
WITNESS my hand and official seal, the day and year first above
written.
/s/
---------------------------------------
Notary Public
(Notarial Seal)
STATE OF Tennessee )
----------------
)SS.
COUNTY OF Knox )
---------------
On this 2nd day of November, 1999, personally appeared before me, a
Notary Public in and for the State and County aforesaid, Timothy Scott, known
to me to be the person described in and did say that he is the Assistant
Secretary of Photogen Technologies, Inc., a Nevada corporation, and that the
foregoing Amended and Restated Certificate of Designations, Preferences, and
Rights of Series A Preferred Stock was signed on behalf of said corporation
by authority of its board of directors, and said Timothy Scott acknowledged
to me that said instrument to be the free act and deed of said corporation.
WITNESS my hand and official seal, the day and year first above
written.
/s/
---------------------------------------
Notary Public
(Notarial Seal)
<PAGE>
Exhibit 10.2
CONFIDENTIAL TREATMENT HAS BEEN [???????????????????]
PORTIONS OF THIS EXHIBIT PURSUANT TO RULE [?????????]
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("AGREEMENT") is made effective as of the
1st day of July, 1999, by and between Photogen, Inc., a Tennessee corporation
("COMPANY"), and Gerald L. Wolf, Ph.D., M.D. ("EMPLOYEE").
RECITALS
A. Employee has substantial experience in development of medical
devices, therapeutic procedures, and medical diagnostics; and
B. Employee is the owner/inventor of certain intellectual
properties; and
C. The Company desires to retain Employee and Employee hereby
agrees to serve in such capacity to assist it in various research projects,
developing product inventions and related matters, as hereinafter provided;
subject to the terms of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises herein and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. Definitions. The following terms have the meanings set forth
below:
(a) "COMPETITIVE BUSINESS" means engaging in the research,
development, sale, lease, marketing, financing or distribution of technology,
products or services similar to or competitive with the Company's products or
services in the Field anywhere in the world.
(b) "CONFIDENTIAL INFORMATION" means any and all
information that has or could have value or utility to the Company or any of
its affiliates, whether or not reduced to written or other tangible form and
all copies thereof, relating to the Company's or its affiliates' private or
proprietary matters, confidential matters or trade secrets (including
information developed by or at the direction of Employee). For purposes of
illustration, Confidential Information may be contained in various media,
including, without limitation, records of research data and observations,
records and results of preclinical and clinical trials, patent applications,
regulatory filings, computer programs, manuals, plans, drawings, designs,
specifications, supply and customer lists, internal financial data and other
documents and records of the Company or its affiliates, whether or not
labeled or identified as "Confidential," or information prepared in full or
in part by Employee.
(i) Confidential Information includes, but is not limited
to, the following: (A) the Company's Technical Information; (B) except to the
extent publicly disclosed by the Company without any fault by Employee or any
other person or entity, information relating to
<PAGE>
the Company's Patents; (C) business information, such as information
concerning any products, customers, suppliers, production, developments,
costs, purchasing, pricing, profits, markets, sales, accounts, customers,
financing, acquisitions, strategic alliances or collaborations, expansions;
and (D) other information relating to the Company's or any of its affiliates'
business practices, strategies or policies.
(ii) Confidential Information does not include information
that is or becomes generally known to the public or in the industry without
any fault by Employee or any other person or entity, or if the Company ceases
to have a legally protectable interest in it.
(c) "DEVELOPMENTS" means any and all Patents and Technical
Information that during the Term of this Agreement and for twelve (12) months
after termination (regardless of the reason for termination), Employee
conceives, reduces to practice, discovers or makes, alone or with others (i)
by use of the Company's equipment, facilities, Confidential Information,
Technical Information, Research Materials or other intellectual property,
through a Research Project sponsored or funded by the Company or otherwise at
Company's expense; or (ii) which are directly or indirectly related to or
result from the Employment Services.
(d) "FIELD" means the use of electromagnetic energy
(including light generated by ultra fast lasers or other sources, x-rays and
other sources of radiation), alone or in combination with photoactive
compounds or targeting agents, to treat, diagnose or image human or animal
tissue and/or disease.
(e) "PATENTS" means patents, patent applications, and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, and
all improvements and inventions related thereto.
(f) "RESEARCH MATERIALS" means and includes, without
limitation, photoactive compounds, targeting agents, lasers, software and
other materials provided to the Employee by the Company or used by the
Employee in providing his Employment Services.
(g) "TECHNICAL INFORMATION" means technical information or
other intellectual property (whether or not subject to patent or other
registration with any governmental office), including research and
development, methods, trade secrets, know-how, formulas, compositions,
protocols, processes and techniques, discoveries, machines, inventions,
ideas, computer programs (including software and data used in all such
programs), drawings, and specifications, including information relating to
Patents.
2. EMPLOYMENT SERVICES.
(a) During the Term of this Agreement, Employee shall use
his best efforts to and shall devote a minimum of 75% of his working time to
competently and faithfully promote the Company's interests, develop the
Company's products and to perform the following services (collectively, the
"EMPLOYMENT SERVICES"):
<PAGE>
(i) direct the scientific and medical activities for
specific research projects mutually agreed to between the Company and
Employee, including but not limited to the following: (A) sentinel lymph node
mapping, (B) enhanced radiation therapy through the use of radiosensitizers,
(C) photodynamic therapy of deep tissue cancer, and (D) other research
projects assigned by the Company (individually and collectively, "RESEARCH
PROJECTS");
(ii) design, implement and complete certain experiments
related to the Company's Research Projects;
(iii) develop new product inventions for the Company;
(iv) design and assist in human clinical trials undertaken
by the Company;
(v) assist the Company in obtaining patent or other
protection for any technologies developed by Employee and arising out of his
Employment Services;
(vi) assist the Company in obtaining licenses to
technologies developed by third parties;
(vii) assist Company in working with outside preclinical
and clinical researchers and research organizations; and
(viii) perform such other duties assigned to Employee from
time to time by the Company's Chief Executive Officer and/or Board of
Directors.
(b) Employee will perform the Employment Services
substantially in the Boston, Massachusetts area. Employee may also be
required to travel from time to time to Knoxville, Tennessee and elsewhere as
reasonably necessary to perform the Employment Services.
3. COMPENSATION.
(a) Company shall pay Employee an annual base gross salary
as set forth in Exhibit A, payable in accordance with normal Company payroll
procedures and subject to deductions and withholdings required by law or by
agreement with Employee. Company will reimburse Employee for reasonable and
necessary business expenses in accordance with Company's policies.
(b) Concurrently with the execution of this Agreement,
Company and Employee will execute an Incentive Stock Option Award Agreement
("Award Agreement") providing for the Company to grant Employee a total of
750,000 options to acquire Company common stock, pursuant to Company's 1998
Long Term Incentive Compensation Plan. The options will vest in accordance
with and in all other respects be subject to the provisions of the
<PAGE>
Award Agreement.
(c) Employee will be eligible to participate in and receive
benefits provided under Company's insurance and benefit plans as set forth on
Exhibit A, in accordance with their respective provisions. Company reserves
the right to amend all insurance and benefit plans at any time as necessary
to accomplish Company's business objectives.
4. COVENANTS AND REPRESENTATIONS. Employee represents and
warrants to, and covenants with, the Company as follows:
(a) During the Term, Employee will render services (similar
to the Employment Services or otherwise) in the Field only to the Company and
will not enter into any other agreement, arrangement, understanding, or other
relationship pursuant to which Employee is obligated to render advice and
services in the Field to any third party, except to the extent set forth in
paragraph 4(b), below.
(b) Employee is under no contractual or other obligation or
restriction which is inconsistent with Employee's obligations under this
Agreement or the performance of the Employment Services. Employee's
pre-existing relationships with commercial, educational or other research
institutions are listed in Exhibit B. Except for professorships at
Massachusetts General Hospital/Harvard Medical School and Tufts University
Veterinary School and affiliations as a consultant with Biovector
Technologies, Inc., Employee will terminate all employment, consulting and
similar affiliations with commercial entities in the Field. Employee may act
as a consultant or member of a scientific advisory board working outside the
Field. Employee will arrange to perform any responsibilities to third parties
in a manner that will not conflict with Employee's responsibilities under
this Agreement. Employee agrees to indemnify, defend and hold Company and its
affiliates, directors, officers, employees and independent contractors
harmless from all claim, allegation, loss, liability (including settlement
payments), expenses (including reasonable attorneys' fees and expenses) any
of them incurs that arise out of or relate to (i) any wrongful act or
omission of Employee while he is engaged in such activities with third
parties, or (ii) the acts or omissions of those third parties.
(c) The performance of the Employment Services does not and
will not breach any agreement which obligates Employee to keep in confidence
any confidential or proprietary information of any third party or to refrain
from competing, directly or indirectly, with the business of any third party.
Employee shall not disclose to Company or use in providing Employment
Services hereunder any confidential or proprietary information of any third
party.
(d) In performing the Employment Services, Employee shall
comply with all legal and regulatory requirements established by the Food &
Drug Administration and other applicable governmental authorities.
5. ROYALTIES.
<PAGE>
(a) Exhibit C hereto is a correct and complete list of all
royalties, development payments or similar compensation right to which
Employee is entitled relating to any existing Patents and Technical
Information in the Field of which the Employee is the joint or sole inventor,
any licenses with respect to inventions in the Field to which Employee is a
party (whether as licensee or licensor), and any agreements granting Employee
development or similar rights with respect to Patents or Technical
Information in the Field (collectively, the "ROYALTIES"). Employee represents
and warrants to Company that he is the lawful owner of the Royalties listed
on Exhibit C, free and clear of any liens, claims, security interests,
restrictions, options or similar rights, or any other encumbrance, except as
stated in Exhibit C.
(b) Employee agrees to use all of the Royalties (on an
after-tax basis) to fund his purchase of common stock from Photogen
Technologies, Inc. upon exercise of options granted pursuant to the Award
Agreement. Employee will use all such Royalties for the purpose of effecting
such exercises and purchases as soon as practicable after any part of such
options vest in accordance with the Award Agreement.
6. OWNERSHIP OF DEVELOPMENTS
(a) Employee hereby assigns and transfers to the Company
all of Employee's right, title and interest in and to all Developments for
the Company's ownership and use without restriction or additional
compensation. Employee agrees to sign and deliver to the Company (during and
after the Term) other documents the Company considers necessary or desirable
to evidence its ownership of Developments. All copyrightable works that are
Developments, whether or not works made for hire (as defined in 17 U.S.C.
Section 101), shall be owned by the Company and it may file and own the same
as the author throughout the world. If the Company is unable for any reason
to secure Employee's signature on any document necessary or desirable to
apply for, prosecute, obtain, or enforce any patent, trademark, service mark,
copyright, or other right or protection relating to any Development, Employee
hereby irrevocably designates and appoints the Company and each of its duly
authorized officers and agents, as Employee's agent and attorney-in-fact to
act for and in Employee's behalf, name and stead to execute and file any such
document and to do all other lawfully permitted acts to further the
prosecution, issuance, and enforcement of patents, trademarks, service marks,
copyrights, or other rights or protections with the same force and effect as
if personally executed and delivered by Employee. Employee agrees that this
power of attorney is irrevocable and is coupled with an interest and thereby
survives Employee's death or disability.
(b) Employee shall keep and maintain complete written
records of all Developments, Technical Information and of all work or
investigations done or carried out by Employee. Employee agrees to promptly
and fully disclose in writing to the Company's President, all Developments
and Technical Information. These records shall be works made for hire, and
shall remain the exclusive property of Company. Employee may keep one copy of
these records in Employee's files during the Term of this Agreement solely
for reference purposes; however, all originals of such records shall be
turned over to the Company promptly and regularly and no less frequently than
monthly.
<PAGE>
7. CONFIDENTIALITY.
(a) The Company has developed and will develop Confidential
Information over a substantial period of time and at substantial expense. The
Confidential Information is of great importance to the Company's business.
During the Term, Employee may develop, become aware of, or have access to the
Confidential Information. Employee acknowledges the Company is and shall at
all times remain the sole owner of the Confidential Information.
(b) During the Term and at all times thereafter, Employee
will hold in trust, keep confidential and not disclose, directly or
indirectly, to any third parties or make any use of Confidential Information
for any purpose except for the benefit of the Company in the performance of
the Employment Services, and then only in a manner consistent with the
Company's instructions. Upon termination of the Term (regardless of the
reason for termination), Employee will immediately return to the Company all
tangible Confidential Information and any other material made or derived from
Confidential Information, including information stored in electronic format
and handwritten notes, which is in Employee's possession or control or which
Employee delivered to others. Employee may disclose the Confidential
Information to a governmental authority if required by law to do so or by
order of a court of competent jurisdiction, provided that in either case such
disclosure is subject to all applicable governmental or judicial protection
available for like material, reasonable advance notice is given to the
Company before any such disclosure is made and Employee cooperates with the
Company to obtain such confidential protection.
(c) During the Term and thereafter, Employee shall exercise
all commercially reasonable precautions to physically protect the integrity
and confidentiality of the Confidential Information. Employee will not remove
any Confidential Information or copies thereof from the Company's premises or
the other places Employee is authorized to perform the Employment Services to
the extent necessary to perform such Employment Services, and then only with
the Company's prior written consent.
(d) Employee will comply with Company's policies concerning
publication with respect to his work for the Company.
8. NONCOMPETITION; NONSOLICITATION.
(a) During the Term, and for 24 months after termination of
the Term, the Employee agrees not to, directly or indirectly, (i) own,
manage, control, participate in, consult with, be employed by, render
services for, any person or entity engaged in a Competitive Business or in
any manner or in any capacity (except as owner of 2% or less of stock of a
publicly registered and traded entity) engage in any Competitive Business,
(ii) solicit, induce or attempt to influence any other person or entity to
engage in any Competitive Business or to curtail or cease any business or
business relationship with the Company, its affiliates, employees or
independent contractors, (iii) solicit any other employee or independent
contractor to
<PAGE>
terminate any employment or engagement with the Company and engage in a
Competitive Business, or (iv) disparage the Company, its affiliates,
employees, independent contractors or their services or products.
(b) The Company consents to Employee performing services
for the entities listed in paragraph 4(b), provided that (i) Employee keeps
the Company advised on a current basis of his activities for such other
entities (or, to the extent Employee is unable to keep the Company advised
because of a confidentiality agreement with such other entity, Employee will
disclose as much information as possible without breaching the
confidentiality agreement and seek the other entity's permission to make
further limited disclosure to the Company), (ii) Employee strictly observes
the confidentiality obligations in paragraph 7, above, and (iii) Employee
uses his best efforts to assure that those other entities do not obtain any
interest in Developments or the Company's Patents. Upon written notice by one
party hereto to the other of a conflict situation, Employee and the Company
will negotiate in good faith for a period of 30 days (or longer by mutual
agreement) to modify Employee's responsibilities under this Agreement or to
develop other protections and procedures to minimize the possibility of
competitive conflict, the disclosure of Confidential Information and
uncertainty as to the Company's ownership of Developments or the Company's
Patents. If Employee and the Company are unable to agree on such
modifications, either of them may terminate this Agreement upon written
notice to the other.
9. TERM AND TERMINATION.
(a) Unless terminated earlier pursuant to paragraph 9(b)
below, this Agreement shall be in effect for an initial term of three years
beginning on the effective date hereof (the "INITIAL TERM"). This Agreement
will be renewed for successive renewal terms lasting for one year (the
"RENEWAL TERMS") unless one party notifies the other in writing at least
fifteen (15) days prior to the beginning of any Renewal Term of its or his
intention not to renew this Agreement. The Initial Term and any Subsequent
Renewal Terms are collectively referred to as the "TERM."
(b) This Agreement and Employee's employment by the Company
may be terminated before the expiration of any Term as follows:
(i) By the Company in the event:
(1) Employee commits a material breach of this
Agreement where such breach, if curable, is
not remedied to the Company's reasonable
satisfaction within thirty (30) days after
written notice to Employee (and termination
shall be effective as of the end of such
30-day period); or
(2) Employee is convicted for committing an act
of fraud, embezzlement, theft or another
act constituting a felony (and
<PAGE>
termination shall be effective upon written
notice to Employee); or
(3) Employee dies or becomes mentally or
physically disabled such that the Employee
cannot, in the opinion of an independent
physician selected by the Company, perform
the Employment Services (with reasonable
accommodation to the extent required by
law) for a period of 12 months (and
termination shall be effective on the date
Employee dies or upon written notice the
Company has determined he is disabled under
the foregoing criteria);
in which case: (A) the Company shall pay Employee
his base salary and any other amounts required by
applicable law to be paid through the effective date
of termination but the Company shall have no other
obligations under this Agreement as of the effective
date of the termination, and (B) the Company shall
permit the Employee or his beneficiary to exercise
vested options to acquire Company stock in
accordance with and subject to the Award Agreement.
(ii) By the Company in the event the Company is
dissatisfied in its reasonable judgment with the Employee's performance of the
Employment Services or the results thereof which, if curable, are not remedied
to the Company's reasonable satisfaction within sixty (60) days after specific
written notice thereof has been delivered to the Employee (and termination
shall be effective as of the end of such 60-day period); in which case the
Company shall:
(1) Pay the Employee a severance payment in 12
monthly installments equal to the amount of
gross salary the Employee would have
received for 12 months following
termination if Employee remained employed
by the Company,
(2) Continue (or pay the cost of premiums to
continue) for 12 months the Employee's
coverage under the medical and dental
insurance programs Employee participated in
immediately prior to termination,
(3) Permit the Employee or his beneficiary to
exercise vested options to acquire Company
stock in accordance with and subject to the
Award Agreement, and
(4) Pay Employee a royalty of [****] of the
Company's Net Sales Price on U.S. Patent
Nos. [****] and [****] and related
foreign patents pursuant to the terms of
Exhibit D hereto.
(iii) By the Employee, provided the Employee shall give the
Company at least 60 days prior written notice thereof (and termination shall be
effective as of the end of such 60-
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES ACT
OF 1934, AS AMENDED.
<PAGE>
day or longer period); in which case (A) the Company shall pay Employee his
base salary and any other amounts required by applicable law to be paid
through the effective date of termination but the Company shall have no other
obligations under this Agreement as of the effective date of the termination,
and (B) the Company shall permit the Employee to exercise vested options to
acquire Company stock in accordance with and subject to the Award Agreement.
(c) The Company's President shall have the authority
to exercise the Company's right to terminate the Employee's employment
pursuant to paragraphs 1(b)(i) and 1(b)(ii), above. If the Employee disagrees
with the President's decision, the Employee shall notify the Company's
Chairman of the Board in writing (a "NOTICE OF OBJECTION") within 10 days of
the effective date of termination. Promptly upon receipt of the Employee's
Notice of Objection, the Chairman shall convene a special meeting of the
Board of Directors to be held within 20 days of the Chairman's receipt of the
Notice of Objection, for the purpose of reviewing the decision of the
President. In connection with the special Board meeting, the Employee may
submit a reasonable amount of written materials and may make an oral
presentation to the directors lasting not more than three hours (which can be
extended by the Board for good cause). Promptly after the Employee's
presentation, the Board will meet in executive session. With the approval of
the Board (other than the President) the President may participate in
discussions during the executive session and may be counted to determine the
presence of a quorum, but he may not vote. Unless the Board ratifies and
confirms the President's decision concerning the Employee's termination by a
vote of two-thirds of the directors present, excluding the President, the
termination shall not be effective and the Employee shall be reinstated as an
employee under this Agreement. If the President's decision is ratified by
such two-thirds vote, the termination shall be final and shall be effective
as of the date originally determined by the President (and no options shall
vest nor salary or benefits accrue during the notice and hearing procedures
described in this paragraph 9(c)). The Board shall not issue findings of fact
or an opinion in connection with its decision, and it shall be entitled to
all of the rights and protections afforded directors acting in their
capacities as such under the Nevada General Corporation Law.
(d) Notwithstanding anything to the contrary, the
obligations under this Agreement which by their terms survive termination,
including, without limitation, the applicable Royalties, Developments,
Confidentiality, Noncompetition, and Nonsolicitation provisions of this
Agreement as set forth in paragraphs 5, 6, 7 and 8 hereof, shall survive
termination; and the representations and warranties, including without
limitation the provisions of paragraph 4 hereof, shall survive termination.
Upon termination, and in any case upon the Company's request, Employee shall
return immediately to the Company all Confidential Information and copies
thereof and not retain any copies thereof.
10. MISCELLANEOUS.
(a) This Agreement and the rights and obligations hereunder
may not be assigned, delegated or transferred by Employee without the prior
written consent of the Company. The Company may assign this Agreement to an
affiliate of the Company or to an acquirer or successor in connection with
the merger, consolidation, or sale of all or substantially
<PAGE>
all of its assets, and this Agreement shall inure to the benefit of the
Company's assignee.
(b) This Agreement may not be amended or modified, or any
provision hereof waived, except by a written instrument duly signed by both
parties contemporaneously or after the date of this Agreement. This Agreement
(together with the Award Agreement and the Agreement regarding certain
conditions) constitutes the entire agreement between the parties concerning
the subject matter hereof and thereof, and supersedes all prior written or
oral negotiations, representations and agreements.
(c) The Employee acknowledges that a breach of paragraphs
5, 6, 7 or 8 would cause the Company and its affiliates irreparable harm.
Accordingly, in the event of a breach or threatened breach by the Employee of
any of the provisions of paragraphs 5, 6, 7 or 8, the Employee agrees that
the Company shall be entitled to injunctive relief restraining the Employee
and any individual or entity from participating in such breach or threatened
breach. The Employee waives any provision of law requiring the Company to
post a bond for any such injunctive relief. Nothing herein shall be construed
as prohibiting the Company from pursuing any other remedies available at law
or in equity for any breach or threatened breach of this Agreement.
(d) Any waiver of a breach of any provision of this
Agreement shall not operate as a waiver of any other breach of such provision
or any other provision, nor shall any failure to enforce any provision hereof
operate as a waiver of such provision or of any other provision.
(e) If any provision of this Agreement is deemed in a final
order by a court of competent jurisdiction to be unenforceable or invalid,
the enforceability and validity of all other provisions shall not be affected
and that court shall modify the unenforceable or invalid provision to the
extent necessary to render it enforceable and valid and that provision shall
be enforced as modified. Employee agrees that the time period and scope of
the covenants in paragraphs 6, 7 and 8 of this Agreement are reasonable and
appropriate under the circumstances of the Company's business.
IN WITNESS WHEREOF, Employee and the President of the Company
have signed this Agreement as of the Effective Date.
COMPANY Address: 7327 Oak Ridge Highway
Suite B
Photogen, Inc. Knoxville, TN 37931
Telephone: 423/769-4011
Telecopier: 423/769-4013
By: /S/John T. Smolik E-mail:
--------------------------------- [email protected]
John T. Smolik, President
<PAGE>
EMPLOYEE
By: /s/Gerald L. Wolf
-----------------------------
Gerald L. Wolf, Ph.D, M.D.
Address: 3 Gable Ridge Road
Westborough, MA 01581-2216
Telephone:_______________
Telecopier:______________
E-mail: _________________
<PAGE>
EXHIBIT A
TITLE AND COMPENSATION
Title: Medical Director
Gross Salary: Starting salary of $190,000 per year. Salary
subject to periodic review.
Bonus/Options: Bonus will be available and paid at the discretion
of the Board or its Compensation Committee.
Benefits: Medical/Dental/Term Life Insurance
Long term disability insurance
Paid vacation (3 weeks)
Benefit programs will be developed and implemented
as approved by the Board 401(k) salary deferral plan
(non-contributory by Company
<PAGE>
EXHIBIT B
EMPLOYEE'S PREEXISTING RELATIONSHIPS
<TABLE>
<CAPTION>
SUBJECT TO WRITTEN
AGREEMENT
(Y OR N)
IF "YES" ATTACH A
ENTITY SUMMARY OF RELATIONSHIP COPY OF AGREEMENT
(REDACTED AS
NECESSARY)
<S> <C> <C>
[****]
</TABLE>
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES ACT
OF 1934, AS AMENDED.
<PAGE>
EXHIBIT C
EMPLOYEE'S INTELLECTUAL PROPERTY
<TABLE>
<CAPTION>
DESCRIPTION STATUS
<S> <C>
[****]
</TABLE>
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES ACT
OF 1934, AS AMENDED.
<PAGE>
EXHIBIT D
ROYALTY CALCULATIONS
TERMS OF [****] ROYALTY TO EMPLOYEE
1. DEFINITIONS
1.1 The term "Accounting Period" shall mean each six month
period ending June 30 and December 31 of each year.
1.2 The term "Affiliate" shall mean any corporation or
other legal entity controlling, controlled by or under common control with,
Company. The term "Control" means possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of an
entity, whether through the ownership of voting securities, by contract or
otherwise.
1.3 The term "First Commercial Sale" shall mean in each
country the first sale of a Product by Company, its Affiliates or
Sublicensees to a final customer who will be the end user of the Product.
1.4 The term "Net Sales Price" shall mean the Gross Sales
Price as defined in (b) below actually received in cash by Company or any of
its Affiliates or Sublicensees ("Sellers") for the sale or distribution of a
Product to a final customer who will be the end user of the Product and is
not an Affiliate or Sublicensee ("Customer"), less (to the extent
appropriately documented) the following amounts actually paid out by Company,
its Affiliate or Sublicensee or credited against the amounts received by them
from the sale or distribution of a Product:
(a) credits and allowances for price adjustment, rejection,
or return of Products previously sold;
(b) rebates, customary trade, quantity and cash discounts
to purchasers and non-affiliated brokers' or agents' for commissions allowed
and taken; provided, however, that such broker's or agent's commissions not
to exceed 10%; and further, provided, that the term "non-affiliated brokers'
or agents'" does not include distributors;
(c) amounts for transportation, insurance, handling or
shipping charges to purchasers;
(d) taxes, duties and other governmental charges levied on
or measured by the sale of Products, whether absorbed by a Seller or paid by
the purchaser so long as a Seller's price
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES ACT
OF 1934, AS AMENDED.
<PAGE>
EXHIBIT D CONTINUES
is reduced thereby, but not franchise or income taxes of any kind whatsoever;
(e) for any sale in which the United States government on
the basis of its royalty-free license pursuant to 35 U.S.C. Section 202(c) to
any Patent Rights requires that the Gross Sales Price of any Product subject
to such Patent Rights, be reduced by the amount of such royalty owed Employee
pursuant to paragraph 2.1, the amount of such royalty;
(f) the "Gross Sales Price" shall be the gross billing
price of any Product sold in a bona fide sale to a bona fide Customer by a
Seller. None of the Sellers shall sell any Product for consideration other
than cash or a receivable payable in cash. Transfer of a Product within
Company or between Company and an Affiliate or Sublicensee for sale by the
transferee shall not be considered a sale, commercial use or disposition for
the purpose of this Exhibit D; in the case of such transfer the Gross Sales
Price shall be based on sale of the Product by the transferee.
1.5 The term "Patent Rights" shall mean U.S. Patent Nos.
5,114,703 and 5,496,536 relating to percutaneous lymphography, or the
equivalent of such patents issued in any foreign jurisdiction, together with
the inventions described and or claimed therein. The term shall include any
division or continuation or the equivalent thereof issuing thereon or
reissue, reexamination or extension thereof. Patent Rights shall also include
those claims in any continuation-in-part of the aforementioned patents which
claim an invention described or claimed in said patents.
1.6 The term "Product" shall mean any article, device,
composition, method or service, the manufacture, use, or sale of which,
absent the licenses granted herein, would infringe a Valid Claim of any
Patent Right.
1.7 The term "Sublicensee" shall mean any non-Affiliate
third party licensed by Company or by an Affiliate to make, have made, use or
sell any Product. As used in this Agreement, "Sublicensee" shall include any
third party to whom Company has granted, directly or indirectly, the right to
distribute a Product, provided that such third party has the responsibility
in whole or in part for marketing and/or promotion of the Product within the
territory for which such distribution rights are granted.
1.8 The term "Valid Claim" shall mean any claim of any
Patent Right (i) that has not been finally rejected, (ii) that has not been
declared invalid by a patent office or court of competent jurisdiction in any
unappealed and unappealable decision or (iii) as to which patent protection
has not expired.
2. ROYALTY
2.1 Upon the occurrence of the condition specified in Section
9(b)(ii) of the Employment Agreement, Company shall pay Employee a royalty as
follows: Beginning with the
<PAGE>
EXHIBIT D CONTINUES
First Commercial Sale in any country, Company shall pay Employee a royalty of
[****] of the Net Sales Price on all sales of Products by a Seller anywhere in
the world so long as the Product, its manufacture, use or sale is covered by
a Valid Claim of any Patent Right owned by or licensed exclusively to Company.
2.2 If a Seller sells any Product in a bona fide sale as a
component of a combination of active functional elements, the Gross Sales
Price of the Product shall be determined by multiplying the Gross Sales Price
of the combination by the fraction A over A + B, in which "A" is the Gross
Sales Price of the Product portion of the combination when sold separately
during the Accounting Period in the country in which the sale was made, and
"B" is the Gross Sales Price of the other active elements of the combination
sold separately during said Accounting Period in said country. In the event
that no separate sale of either such Product or active elements of the
combination is made during said Accounting Period in said country, the Gross
Sales Price of the Product shall be determined by multiplying the Gross Sales
Price of such combination by the fraction C over C + D, in which "C" is the
standard fully-absorbed cost of the Product portion of such combination, and
"D" is the sum of the standard fully-absorbed costs of the other active
elements component(s), such costs being arrived at using the standard
accounting procedures of Company which will be in accord with United States
generally accepted accounting principles.
2.3 If a Seller commercially uses or disposes of any
Product by itself (as opposed to a use or disposition of the Product as a
component of a combination of active functional elements) other than in a
bona fide sale to a bona fide Customer, the Gross Sales Price hereunder shall
be the price which would be then payable in an arm's length transaction with
such a Customer. If a Seller commercially uses or disposes of any Product as
a component of a combination of active functional elements other than in a
bona fide sale to a bona fide Customer, the Gross Sales Price of the Product
shall be determined in accordance with paragraph (c) above, using as the
Gross Sales Price of the combination that price which would be then payable
in an arm's length transaction. A "commercial use or disposition" of a
Product does not include (i) the use of a Product for research, clinical
testing or educational purposes for which no payment is made to or received
by the Company or (ii) a disposition of a Product which, in the opinion of
the Company, is damaged, obsolete or not usable for the purposes intended and
for which no payment is made to or received by the Company.
2.4 In the event that the royalty paid to Employee is a
significant factor in the return realized by Company so as to diminish
Company's capability to respond to competitive pressures in the market,
Employee agrees to consider a reasonable reduction in the royalty paid to
Employee as to each such Product for the period during which such market
condition exists. Factors determining the size of the reduction will include
profit margin on Product and on analogous or competitive products, prices of
competitive products, total prior sales by Company, and Company's
expenditures in Product development.
- -----------------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES ACT
OF 1934, AS AMENDED.
<PAGE>
EXHIBIT D CONTINUES
2.5 The payments due under this Exhibit D shall, if overdue,
bear interest until payment at a per annum rate equal to one percent (1%) above
the prime rate in effect at the Bank of Boston on the due date, not to exceed
the maximum permitted by law. The payment of such interest shall not preclude
Employee from exercising any other rights it may have as a consequence of the
lateness of any payment.
3. REPORTS AND PAYMENTS
3.1 Company shall keep, and shall cause each of its
Affiliates and Sublicensees, if any, to keep full and accurate books of
accounts on both the cash and accrual basis, containing all particulars that
may be necessary for the purpose of calculating all royalties payable to
Employee. Such books of account shall be kept at their principal place of
business and, with all necessary supporting data shall, during all reasonable
times for the three (3) years next following the end of the calendar year to
which each shall pertain be open for inspection at reasonable times upon
reasonable prior notice by Employee or its designee at Employee's expense for
the purpose of verifying royalty statements or compliance with this Exhibit D.
3.2 In each year the amount of royalty due shall be
calculated semiannually as of the end of each Accounting Period and shall be
paid semiannually within the sixty (60) days next following such date, every
such payment to be supported by the accounting prescribed in paragraph 6.3
and to be made in United States currency. Whenever conversion from any
foreign currency shall be required, such conversion shall be at the rate of
exchange thereafter published in The Wall Street Journal for the business day
closest to the end of the applicable Accounting Period.
3.3 With each semiannual payment, Company shall deliver to
Employee a full and accurate accounting to include the following information
and such other reasonable additional information relevant to the calculation
of royalty payments as may be requested by Employee from time to time:
(a) Quantity of each Product sold or leased (by country) by
Company, and its Affiliates or Sublicensees;
(b) Total billings for each Product (by country);
(c) Names and addresses of all Sublicensees of Company; and
(d) Total royalties payable to Employee.
<PAGE>
Exhibit 10.3
CONFIDENTIAL TREATMENT HAS BEEN SOUGHT FOR
PORTIONS OF THIS EXHIBIT PURSUANT TO RULE 24B-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
TUFTS UNIVERSITY
SPONSORED RESEARCH AGREEMENT
This Agreement is entered into as of August 1, 1999, (the "Effective
Date"), by and between Photogen, Inc. ("Sponsor"), a Tennessee corporation,
having its principal place of business at 7327 Oak Ridge Highway, Knoxville,
Tennessee 37931 and Tufts University, a/k/a Trustees of Tufts College, a
Massachusetts not-for-profit corporation ("Tufts"). Sponsor and Tufts are
sometimes referred to as a "Party" or collectively, as the "Parties."
WHEREAS, Sponsor desires to have Tufts undertake a research program in
accordance with the scope of work described in Section 1 and Protocols attached
hereto; and
WHEREAS, the performance of such research is of mutual interest to
Sponsor and Tufts, and is consistent with the instructional, scholarship, and
research objectives of Tufts as a non-profit, tax-exempt, educational
institution;
NOW, THEREFORE, the Parties agree as follows:
1. THE RESEARCH. Tufts, through the Principal Investigator (as
defined below) agrees to use its reasonable efforts to perform in a
timely and expeditious manner one or more research projects pursuant
and limited to one or more protocols to be agreed upon by the Parties
(the "Research"). The first phase of the Research will consist of
research pursuant to the terms of the protocol dated August 1, 1999
attached hereto as Exhibit A ("Protocol-1"). Additional phases of the
Research will be conducted pursuant to mutually agreed upon protocols
which shall be subject in all respects to this Agreement and shall be
designated by consecutive numbers (e.g., Protocol-2, Protocol-3, etc.).
Revised budgets shall be mutually agreed upon for such additional
protocols and shall form the basis for an amendment to this Agreement.
2. THE TERM. The term of this Agreement and the Research shall be from
August 1, 1999 through August 1, 2004, unless sooner terminated in
accordance with the terms hereof.
3. TERMINATION. This Agreement and the Research may be terminated as set
forth below, in which case Sponsor's payment obligations will be
adjusted as provided for in Section 5.
(a) In the event that either Party materially defaults in the due
performance of its respective obligations under this
Agreement, or in the event that any representation or warranty
by either Party in this Agreement or in the documentation or
data produced through the Research proves to be materially
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<PAGE>
false or misleading, and such default or breach is not cured
within thirty (30) days after written notice by the other
Party, then the non- defaulting Party may elect to terminate
the Research and this Agreement by giving written notice to
the defaulting Party, and this Agreement shall terminate upon
the defaulting Party's receipt of said notice. (Termination
for Cause).
(b) Tufts shall promptly advise Sponsor if for any reason David
Ruslander, DVM, DACVIM will not be available as the Principal
Investigator. If the Parties cannot agree on a qualified
scientist as a replacement as provided in Section 4 hereof,
either Party may terminate the Research and this Agreement as
provided in said Section 4 hereto.
(c) Notwithstanding anything in this Agreement to the contrary,
either Party may terminate this Agreement, without cause and
without liability except as provided hereinafter, on 90 days'
prior written notice to the other Party, in which event this
Agreement and the Research shall terminate on the 90th day
after delivery of such notice (Termination Without Cause). In
the event of such termination, Sponsor shall have an
obligation to continue for up to four (4) months beyond such
termination, salary support at the pretermination level of all
Ph.D., M.D., D.V.M. or equivalent personnel who have been
committed to the Research on half-time or greater basis,
provided Tufts uses reasonable efforts to reduce such costs to
Sponsor.
(d) The Parties recognize that the results of any particular
research cannot be guaranteed even through the use of Tufts's
reasonable efforts; therefore, it is specifically agreed that
the failure of Tufts to achieve specific research results or
to reach specific research milestones shall not constitute a
default or breach of this Agreement. Further, the Parties
agree that obligations under Sections 6, 7, 8, 10, 11, 12, 13,
15, 16, and 22 survive any termination of this Agreement or
the Research.
4. CERTAIN PERSONNEL. The Research will be under the overall direction of
David M. Ruslander, DVM, DACVIM (the "Principal Investigator") for
Tufts. Gerald L. Wolf, Ph.D., M.D. will serve as Co-Principal
Investigator contingent upon his appointment by Tufts as a Research
Professor. If Principal Investigator withdraws from or is unable to
serve as Principal Investigator for any reason, Tufts will endeavor to
obtain a successor to the satisfaction of Sponsor, in its sole
discretion, but if Tufts is not able to do so within a reasonable
period of time not to exceed six (6) months, then either Party may
terminate the Research and this Agreement by written notice to the
other any time after the expiration of that six (6)-month period and
before Tufts has notified the Sponsor of the appointment of such
successor. In addition to the Principal Investigator, Tufts shall use
all reasonable efforts to provide the personnel identified on Exhibit B
hereto who shall work under the supervision of the Principal
Investigator on the Research, who together with the Principal
Investigator are hereafter sometimes referred to as the
"Investigators."
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<PAGE>
In the event such personnel shall terminate their status as
Investigators on the Research, the Principal Investigator jointly with
Sponsor shall appoint replacements as Investigators on the Research.
Each Party will obtain written agreements from those of its employees,
independent contractors, consultants and similar persons involved in
the Research (in the case of Tufts, all Investigators) causing such
persons to be bound by the provisions of Sections 7, 8, 10 and 12 of
this Agreement.
5. PAYMENTS BY SPONSOR.
(a) INITIAL PAYMENT. To fund Protocol-1 of the Research, Sponsor
agrees to make payments to Tufts in an aggregate amount during
the performance of Protocol-1 of the Research of $[****] (the
"Initial Protocol Payment") upon the schedule of payments
hereafter provided. The Parties estimate that the Initial
Protocol Payment should be sufficient to support the costs of
Protocol-1 of the Research for the performance of the
Research. Sponsor shall not be liable for any payment in
excess of the Initial Protocol Payment with respect to
Protocol-1 except as mutually agreed upon by the Parties
hereto in writing, nor shall Tufts be obligated to spend finds
on Protocol-1 of the Research other than those provided by
Sponsor. Tufts shall not be required to specifically account
to Sponsor for the application of the payments made by Sponsor
to Tufts hereunder nor be required to refund any portion of
any of those payments which are made except as provided in
this Section 5. Payments with respect to Protocol-1 shall be
made to Tufts by the Sponsor according to the following
schedule:
<TABLE>
<CAPTION>
AMOUNT DATE
<S> <C>
$[****] August 31, 1999
$[****] By December 31, 1999
$[****] By April 30, 2000
$[****] By August 31, 2000
</TABLE>
Checks shall be made payable to Trustees of Tufts College and
shall be sent to Sponsored Program Accounting, 200 Harrison
Avenue, Boston, MA, 02111, Attention: Mr. Robert Gawlak,
Manager, with each payment including the title of the Research
and the name of the Principal Investigator for identification
purposes. If Sponsor terminates Research under Section 3
hereof, Sponsor agrees
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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<PAGE>
that, in addition to payment of the portions of the Initial
Protocol Payments payable up through the effective termination
date, Sponsor will reimburse Tufts for non-cancelable expenses
related to the Research and budgeted to be spent after the
termination date, which expenses shall be deemed to include
any fellowships or post-doctoral associate appointments, but
shall not exceed the total amount committed under this
Agreement. Any funds paid by Sponsor in excess of the amount
due hereunder will be returned to Sponsor by Tufts.
All funds provided by Sponsor under this Agreement may be used
at the discretion of Tufts in support of the work for the
Research. Any changes to the above payment schedule must be
agreed to in writing by the Parties.
(b) SUBSEQUENT PAYMENTS. The cost for subsequent work pursuant to
other protocols must receive the mutual written agreement of
the Parties.
6. EQUIPMENT. In addition to the Initial Protocol Payment, Sponsor will
lease the equipment and provide the services described in Exhibit C
(the "Equipment") and make the required lease payments, including
service contracts, and any balloon, final or buy-out payments (the
"Lease Payments") over the five year term of this Agreement. Sponsor
shall make such Lease Payments even if this Agreement is terminated by
Tufts for Cause or by Sponsor without Cause. If this Agreement is
terminated (i) by Sponsor for Cause or (ii) by Tufts without Cause,
then Tufts may elect on thirty (30) days' written notice to Sponsor to
make all remaining Lease Payments and Tufts shall indemnify and hold
Sponsor harmless from such remaining Lease Payments. In either such
event, at the end of the five year term of this Agreement, title to the
Equipment and title to any other equipment purchased by Tufts in the
performance of the Research shall vest in Tufts. If Tufts does not
elect to make such Lease Payments, as provided above, then Sponsor
shall continue to be obligated for such Lease Payments; provided,
however, that Sponsor shall take possession of and remove the Equipment
listed in Exhibit C from the premises at Tufts and shall indemnify and
hold Tufts harmless from such remaining Lease Payments.
7. INTELLECTUAL PROPERTY RIGHTS OF THE PARTIES. Neither Party (nor any
Investigator) shall have any claim by virtue of this Agreement or the
Research to any right, title or interest in any Invention, Trade Secret
or Patent Rights (defined below) or any other intellectual property
rights (a) issued to, owned or controlled by the other Party (or any
Party in the case of an Investigator) prior to the date hereof, or (b)
after the date hereof except any new Inventions, Trade Secrets or
Patent Rights conceived and reduced to practice, constructively or
actually in the performance of the Research and as specifically set
forth in Section 8 below.
-4-
<PAGE>
8. INVENTIONS; PATENTING; LICENSES.
(a) The term "Invention" means a patentable discovery or invention
conceived and reduced to practice, constructively or actually
in the performance of the Research, including any novel
process, method, formula, machine, manufacture, composition of
matter or technology. The term "Sponsor Trade Secret" means
non-patented know-how, compositions, protocols, formulas,
processes and techniques, discoveries, machines, ideas,
compilations of information, computer programs (including
software and data used in all such programs), drawings,
specifications and technical information owned or developed by
Sponsor or its employees. The term "Patent Rights" means
patent applications and patent disclosures claiming an
Invention, together with all letters patent, reissuances,
continuations, divisionals, those claims in any continuations
in part of any patent application which claim an Invention
described in said patent application, revisions, extensions,
and reexaminations thereof.
(b) Inventions, Patent Rights and Sponsor Trade Secrets arising
out of the Research during the term of this Agreement and for
a period of 12 months thereafter if directly related to the
Research shall be owned as follows:
(1) Tufts will own all such Inventions it, the Principal
Investigator or any other Tuft's Investigator
independently conceives (a "Tufts' Invention") and
all corresponding Patent Rights, subject to the
license if Sponsor exercises its option described in
subsection 8(f) below;
(2) Tufts and Sponsor will jointly own all such
Inventions jointly conceived by Tufts, the Principal
Investigator or any other Investigator together with
Sponsor (a "Joint Invention") and all corresponding
Patent Rights, subject to the license if Sponsor
exercises its option described in subsection 8(f)
below; and
(3) Sponsor will own all Inventions and Sponsor Trade
Secrets Sponsor independently conceives or owns and
all corresponding Patent Rights.
(c) With respect to a Tufts' Invention, Tufts will use its best
efforts, consistent with its current practices to cause all
Investigators to report such Invention and assign all of their
right, title and interest therein to Tufts; and with respect
to Joint Inventions, the Sponsor will cause its personnel and
Tufts will use its best efforts to cause each Investigator to
report such Invention and assign all of their right, title and
interest therein to Sponsor and Tufts as appropriate. Sponsor
and Tufts shall promptly advise the other in writing of each
Tufts' Invention or Joint Invention and shall cause their
Investigators and personnel, as applicable, to maintain
current and reasonably detailed records (in accordance with
customary academic research practice) as to possible Tufts and
Joint Inventions, which shall
-5-
<PAGE>
be open to inspection by the other Party with reasonable
advance notice. The Parties shall discuss for up to 90 days
after the date an Invention is disclosed by one Party to the
other Party whether patent applications pertaining to such
Tufts or Joint Invention should be filed and in which
countries. All of the foregoing shall constitute proprietary
information subject to Section 10.
(d) Patent applications relating to Tufts' Inventions shall be
filed by Tufts at Tufts' sole discretion, and patent
applications relating to Joint Inventions shall be filed as
agreed by the Parties. All prosecution and maintenance costs
pertaining to patent applications covering a Tufts' or Joint
Invention that are filed by mutual agreement of the Parties
(including preparation, filing, prosecution, issuance and
maintenance costs) shall be borne by Sponsor. Tufts may select
counsel for such Tufts' or Joint Inventions, subject to
consultation with Sponsor. If Tufts declines to pursue filing
a patent application, Sponsor may select counsel. Tufts agrees
to cause Patent counsel selected by it to promptly provide
Sponsor with copies of all documents relating to the patent
application, to be available to Sponsor for consultation and
suggestions and for Sponsor to be otherwise fully informed
regarding all matters relating to the patent application and
its prosecution. If within the 90-day period provided for in
subsection 8(c) above, one Party states in writing that it is
not interested in filing patent applications on either a
Tufts' Invention or a Joint Invention (a "declining Party")
and the other Party (a "prosecuting Party") is interested in
filing such applications, the prosecuting Party shall be free
to select its own counsel, at its own expense, to file such
applications in the name(s) of the Parties to whom the
Inventors would be obliged to assign their rights and the
declining Party shall render the prosecuting Party, at the
prosecuting Party's expense, all necessary assistance in order
to facilitate filing and licensing of such Joint Inventions.
If Sponsor is the declining Party, Sponsor shall thereby have
waived its rights under subsection 8(f) below.
(e) The Parties agree to cooperate and work together in good faith
to effect the provisions of this Section 8. Each Party agrees
to execute and deliver (or cause to be executed and delivered)
all assignments and other instruments of transfer necessary to
effect the provisions of this Section 8.
(f) As to all Patent Rights relating to a Tufts' Invention or a
Joint Invention (except as waived by Sponsor in subsection
8(d) above), Tufts hereby grants Sponsor for the twelve (12)
months next following the first filing of patent applications
in any jurisdiction relating to such Invention, the
irrevocable first option to obtain a license granting Sponsor
the following rights and containing the following terms:
(1) Sponsor shall for the life of all patent rights,
unless sooner terminated by either Party in
accordance with the terms of such a license
agreement, have a world-wide, exclusive (subject only
to subsection 8(i) below), royalty-bearing license
granting Sponsor the right to use the Invention, to
design,
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<PAGE>
make, have made, market lease, offer for sale, sell,
import and distribute products embodying or produced
through the use of the Invention, itself or through
third Parties by way of sublicense, and in all other
respects to use, sublicense, and commercialize the
Invention and any such product under all Patent
Rights. Pursuant to such license, Sponsor shall use
reasonable efforts to commercialize such products in
accordance with time limits and objectives consistent
with the market potential of the Invention and the
capacity and resources of the Sponsor. Sponsor will
be free to design the products, and select pricing
and marketing methods in its discretion.
(2) Sponsor shall pay Tufts a reasonable royalty of an
amount consistent with industry standards for such
Invention.
(3) Sponsor will use all reasonable efforts to defend,
through counsel selected by it, at its expense all
challenges to Patent Rights, including alleged
infringements, and Tufts will cooperate with Sponsor
in that regard, including joining any infringement
suit as a plaintiff (or counter or cross plaintiff)
if required by law.
(4) Sponsor may abandon the license at any time by
express written notice to Tufts, in which case all
rights will revert back to Tufts and all license and
royalty obligations of Sponsor shall terminate.
(5) In addition to the foregoing, any other commercially
reasonable terms standard for agreements between
universities and industry not inconsistent with the
foregoing.
(g) Sponsor may exercise the subsection 8(f) option by giving
written notice of exercise to Tufts during said twelve-month
period. Thereafter, Tufts and Sponsor each agree to negotiate
in good faith and to enter into a license agreement
incorporating the foregoing terms within six (6) months after
notice of exercise. If Sponsor elects not to give written
notice of exercise during such 12-month period, Tufts may
grant a license to such Invention and Patent Rights to any
other person or entity.
(h) To the best of its knowledge, Tufts is not prohibited or
prevented from granting such a license to Sponsor and such
license will not conflict with any agreement or court order by
which it is bound. Tufts agrees, during the term of the
Research hereunder, not to enter into any agreement with any
third party to fund Principal Investigator to conduct the
Research and not to enter into an agreement with a third party
under terms that will prevent Tufts from granting to the
Sponsor the license contemplated under subsection 8(f) above
or which would conflict with such license to Sponsor. Tufts
will use reasonable efforts consistent with
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<PAGE>
academic practice to monitor the activities of the Principal
Investigator in order to avoid conflicting activities that
would prevent Tufts from granting such a License.
(i) It is understood that Tufts may reserve the right to use a
Tufts' Invention or Joint Invention (as defined in this
Agreement) only for non-commercial research, clinical and
educational purposes, and that if federal funding supports the
Invention, Sponsor's license will be subject to the rights,
conditions and limitations imposed by U.S. law including
without limitation the royalty-free non- exclusive license
granted to the U.S. government (see 35 USC sec. 202 et. seq.
and regulations pertaining thereto). Tufts represents,
warrants and agrees with Sponsor that no federal funds will be
used to support the Research as of the date of this Agreement
and, if any such funds will be used in the future, Tufts will
give Sponsor at least 120 days' prior written notice of
Tufts's acceptance of federal funds.
9. REPORTS. Progress reports by the Principal Investigator shall be:
submitted to Sponsor each ninety (90) days after the Effective Date,
and a final Research Report shall be submitted after completion of the
Research with respect to each Protocol. Interim written progress
reports may be provided on a mutually agreed schedule.
10. CONFIDENTIALITY.
(a) Subject to the provisions of Section 12 Sponsor and Tufts each
agree that all Intellectual Property and all information
concerning research by the Parties shall be held by each Party
in confidence and not disclosed by a Party, or used by a Party
for any purpose other than the uses permitted under this
Agreement. Tufts agrees that all information disclosed to
Tufts' Principal and other Investigators concerning any
proprietary technology belonging to Sponsor that is identified
in writing by Sponsor as being confidential ("Sponsor
Confidential Information") shall be held by Tufts in
confidence and not disclosed by Tufts or used by it for any
purpose except to perform the Research in compliance with this
Agreement.
(b) Notwithstanding the foregoing, neither Party receiving
information ("Recipient") is required to keep confidential any
information received from the other Party ("Discloser") that:
(1) at the date of its disclosure by Discloser to Recipient
was known to Recipient; or (2) at the date of disclosure by
Discloser to Recipient was, or thereafter becomes through no
fault of Recipient, generally available to the public; or (3)
after its disclosure by Discloser to Recipient is also
received by the Recipient in good faith from a third Party not
under any duty to Discloser not to disclose it; or (4) after
its disclosure by Discloser to Recipient is independently
developed by employees of Recipient having no access to or
knowledge of it, which fact is supportable by documentary
evidence. Each Party agrees not to make any use or disclosure
in reliance on the exceptions of the immediately preceding
sentence unless it has given the other Party thirty (30) days'
prior
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<PAGE>
written notice of the reasons why the notifying Party believes
an exception applies.
(c) Sponsor agrees not to disclose any Sponsor Confidential
Information to Tufts' employees other than the Principal or
other Investigator(s), so as to provide for appropriate
control of the information.
11. USE OF NAMES. Sponsor agrees not to use the name of Tufts or any Tufts
participant in the Research in any form of publicity or disclosure
without Tufts' prior written consent, which may be withheld or
withdrawn in Tufts' discretion at any time; provided, however, Tufts
will make no objection to any proper reference by Sponsor to published
technical publications by such participants; and, subject to
confidentiality requirements and the conditions of the final sentence
of Section 10(b), above, Tufts will make no objection to Sponsor's
making such other disclosures as in the reasonable opinion of legal
counsel are required as a matter of law and such general disclosures of
this Agreement as may be desired by Sponsor for purposes of grant
solicitations from governmental authorities. The foregoing
notwithstanding, (a) Tufts and the Principal Investigator shall
acknowledge Sponsor's support of the Research in their respective
reports and publications, (b) Sponsor may disclose the existence and
describe the terms of, and may file a copy of this Agreement (redacted
to the extent Sponsor deems appropriate to ensure confidentiality) as
an exhibit to its press releases, reports and governmental filings,
including reports and filings with the U.S. Securities and Exchange
Commission and relevant foreign government authorities; and (c) Sponsor
may make reference to technical publications by the Principal
Investigator or his co-authors. Any publicity or governmental filings
of this Agreement pursuant to this Section 11 shall describe the
relationship of the Parties accurately and appropriately, including the
fact that the Research is being undertaken by Tufts in conjunction with
Sponsor.
12. PUBLICATION.
(a) The Research may be worthy of written or oral publication in
scholarly journals or at meetings. Such presentation or
publication shall be jointly authored by the Principal
Investigator and Sponsor's scientists in accordance with their
respective scientific contributions to the Research, if
applicable (otherwise, by the originating person). Prior to
publication, each Party will give the other the opportunity to
review and comment on any intended public disclosure covering
the Research, but in no event shall publication be permitted
without the express written approval of the Party from which
the results originated in accordance with prevailing academic
practice.
(b) In order to give Sponsor an opportunity to protect against
loss of confidentiality or patent rights as a result of
publication, the Principal Investigator and/or Tufts shall
submit copies of drafts of any article, abstract, submission
for publication or presentation on the Research conducted
which is written by any Investigator to
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<PAGE>
Sponsor for review and comment at least thirty (30) days prior
to the anticipated date of submission for publication or
presentation. In the absence of Sponsor's notice to the
contrary, Tufts shall be free to submit such drafts for
publication or presentation. If Sponsor notifies Tufts in
writing within such 30 day period that it needs additional
time to seek patent protection for the information, then Tufts
and the Principal Investigator, as the case may be, agree to
defer publication or presentation until such patent
application has been filed, or an additional 30 days,
whichever is sooner.
13. NO TUFTS' WARRANTIES. TUFTS MAKES NO REPRESENTATIONS AND EXTENDS
NO WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER,
INCLUDING WITHOUT LIMITATION, TO CONDITION OR RESULTS OF THE RESEARCH
OR ANY INVENT IONS OR PRODUCTS, WHETHER TANGIBLE OR INTANGIBLE,
CONCEIVED, DISCOVERED, OR DEVELOPED UNDER THIS AGREEMENT; OR THE
OWNERSHIP, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OF THE
RESEARCH OR ANY SUCH MENTION OR PRODUCTS. Without limitation of the
foregoing generality, nothing contained herein or in any disclosure of
the Research made by or on behalf of Tufts shall be construed as
extending any representation or warranty with respect to the Research
or the results to be obtained by the use of the Research or any
products resulting therefrom, or that anything made, used, to sold by
use of the Research or any part thereof, alone or in combination, will
be free from infringement of patents of third Parties. TUFTS SHALL NOT
BE LIABLE TO SPONSOR OR ANY OTHER PARTY, REGARDLESS OF THE FORM OR
THEORY OF ACTION (WHETHER CONTRACT, TORT, INCLUDING NEGLIGENCE; STRICT
LIABILITY, OR OTHERWISE), FOR ANY DAMAGES, INCLUDING WITHOUT
LIMITATION, ANY DIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE,
OR OTHER DAMAGES ARISING OUT OF OR RELATED TO THE RESEARCH, OR ANY
PRODUCTS OR SERVICES FURNISHED OR NOT FURNISHED TUFTS, EVEN IF TUFTS
HAS BEEN ADVISED OF THE POSSIBILITY THEREOF.
14. FORCE MAJEURE. Tufts shall not be considered in breach of this
Agreement to the extent any failure to perform any term or provision is
caused by any reason beyond Tufts' reasonable control, or by reason of
any of the following circumstances: labor or employee disturbances or
disputes of any kind; accidents; laws, rules or regulations of any
government (including, without limitation, export and import
regulations); failure of any government approval required; disease;
failure of utilities, mechanical breakdowns, material shortages or
other similar occurrences; civil disorders or commotions acts of
aggression, vandalism or other similar occurrences; or fire, floods,
earthquakes, or acts of God.
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15. INDEMNITY.
(a) INDEMNITY. Sponsor agrees to exonerate, indemnify, and hold
harmless Tufts, its trustees, officers, employees, students
and agents, from all costs, expenses (including attorneys'
fees), interest, losses, obligations, liabilities, and damages
paid or liability for which is incurred by any of said Parties
("Losses"), and which arise out of or are in connection with
or are for the purpose of avoiding any and all claims,
demands, actions, causes of action, suits, appeals, and
proceedings ("Claims"), all whether groundless or not, or the
settlement thereof, based on any actual or alleged injuries,
damages' or liability of any kind whatsoever (including,
without limitation, personal injury, death, property damage,
breach of warranty, or breach of contract) arising, directly
or indirectly, out of any one or more of: any breach of
Sponsor of its representations, warranties, or agreements
hereunder; or any manufacture, marketing, possession, use,
sale, or other disposition by Sponsor, its licensees, or
anyone else claiming by, through, or under any of them, of any
products made by use of any of the Research or Tufts
Intellectual Property or any products furnished to Sponsor by
Tufts pursuant to this Agreement or in connection with any
license granted to Sponsor hereunder or referred to herein
(whether same occurs during or after the Research); or any
acquisition, possession, disclosure, or use of any of the
Research or Tufts Intellectual Property by Sponsor, its
licensees, or anyone else claiming by, through, or under any
of them; or the presence of Sponsor's officers, agents,
employees, invitees, or property or any thereof on Tufts'
premises or the installation, presence, or operation of the
Equipment prior to title vesting in Tufts; or the removal and
disposal of current Tufts' equipment under this Agreement. The
obligations of Sponsor under this Section 15 shall apply in
full force whether or not the Claims and any Losses resulted
or are alleged to have resulted in whole or in part from the
negligent acts or omissions of Tufts or any other Party
indemnified under this Section or from acts of omissions of
Tufts or such other Party for which they or any of them would
otherwise be liable on any other theory, including, without
limitation, any theory of warranty (whether express or
implied) or strict liability.
(b) DEFENSE; SETTLEMENT. Sponsor shall defend and control
negotiation of settlement of any Claim, with counsel of
Sponsor's choosing approved in advance by Tufts, which
approval shall not be unreasonably withheld. Tufts agrees to
cooperate fully in the defense of any Claim and may
participate in the defense with counsel of Tufts' choosing,
such separate counsel to be at Tufts' expense unless a
conflict of interest exists between Sponsor and Tufts with
respect to the defense, in which case Tufts' separate counsel
shall be at the Sponsor's expense. Any settlement by which
Tufts would incur any obligation or liability, whether for the
payment of money, the taking of any action, the refraining
from any action, or otherwise, shall require the advance
written consent of Tufts, which may be withheld in the sole
discretion of Tufts without relieving Sponsor of any of its
indemnification or other obligations hereunder.
-11-
<PAGE>
16. INSURANCE.
(a) COVERAGE. Not later than thirty (30) days before the time
when Sponsor or any licensee of Sponsor or anyone claiming by,
through, or under any of them, shall make, use, or sell any
products made by use of any of the Research or Tufts
Intellectual Property or any products furnished to Sponsor by
Tufts pursuant to this Agreement or in connection with any
license granted to Sponsor hereunder, and at all times
thereafter until the expiration of all applicable statutes of
limitation pertaining to any manufacture, marketing,
possession, use, sale or other disposition of any of the
aforesaid products, Sponsor will, at Sponsor's expense, obtain
and maintain in full force and effect, comprehensive general
liability insurance, including product liability insurance,
protecting Tufts against all claims suits, obligations,
liabilities, and damages, based upon or arising out of actual
or alleged bodily injury, personal injury, death, or any other
damage to or loss of persons or property, caused by any such
manufacture' marketing, possession, use, sale, or other
disposition. Such insurance policy or policies shall be issued
by companies rated by A. M. Best as A VIII or better (or
other' companies acceptable to Tufts), shall name Tufts as an
additional named insured, shall have limits of at least
$1,000,000 per occurrence with an aggregate of at least
$3,000,000, shall be non-cancelable except upon thirty (30)
days' prior written notice to Tufts, and shall provide that as
to any loss covered hereby and also by any policies obtained
by Tufts itself, Sponsor's policies shall provide primary
coverage for Tufts and Tufts ' policies shall be considered
excess coverage for Tufts.
(b) CERTIFICATES; POLICIES. Sponsor will forthwith after the
obtaining of such insurance required by Subsection 16(a),
obtain and deliver to Tufts certificates of and copies of, and
at all times thereafter, deliver without further demand
replacement certificates and copies of, all such insurance
policies that are in force and effect. As often as is
reasonably requested by Tufts, Sponsor will furnish to Tufts a
complete list, statement, and description of all insurance
called for in this Section, together with certificates and
copies of policies from each insurance company issuing any
thereof, that such insurance is in full force and effect, that
all premiums have been paid, and that such insurance will not
be canceled except upon thirty (30) days' prior written notice
to Tufts.
17. ASSIGNMENTS. Neither Party shall assign this Agreement to another
without the prior written consent of the other Party hereto. Subject to
the foregoing, this Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors and
permitted assigns.
-12-
<PAGE>
18. INDEPENDENT INQUIRY. As between the Parties hereto, Sponsor, Tufts, and
the entities and individuals participating in the Research shall all be
free to engage in similar research and inquiries made independently
under other grants, contracts, or agreements with or involving Parties
other than those to this Agreement; provided, however, that the
confidentiality provisions of Section 10 shall be complied with
notwithstanding the foregoing.
19. NOTICES. All notices, requests, consents or other communications under
this Agreement that are required to be in writing shall be delivered by
courier, return receipt requested, or mailed by certified or registered
mail, return receipt requested, charges and postage pre-paid, addressed
to the Parties as follows
If to Sponsor: John T. Smolik
Photogen, Inc.
7327 Oak Ridge Highway
Suite B
Knoxville, TN 37931
With a Copy to: Grippo & Elden
227 West Monroe Street
Suite 3600
Chicago, IL 60606
Attn.: Theodore W. Grippo
If to Tufts: Associate Provost for Research
136 Harrison Avenue (75K-1520)
Boston, MA 02111
With a Copy to: Gail Zamarchi
Contract Officer
Tufts University School of Veterinary Medicine
200 Westboro Road
N. Grafton, MA 01536
or to such other address or addresses as may from time to time be given
in writing by either Party to the other pursuant to the terms hereof.
20. DATA. The original data generated as a result of the Research shall be
provided to Sponsor promptly. Sponsor agrees to hold any data so
disclosed in confidence provided Sponsor may use such data as it deems
advisable, seeking regulatory approvals or for any other purposes,
except to the extent that such use infringes upon a patent owned or
controlled by Tufts not licensed to Sponsor. However, this provision
shall not be interpreted to restrict Tufts's publication rights under
Section 12 of this Agreement. The Principal Investigator shall keep
reasonable and customary records of the Research and
-13-
<PAGE>
related data sufficient for Sponsor's regulatory approval activities
and shall make such records available to Sponsor on reasonable request.
21. APPROVALS. Tufts represents and warrants to Sponsor that this Agreement
and the Research have received the required approvals of Tufts
University and that no other approvals are required to authorize the
execution and effectiveness of this Agreement. Sponsor represents and
warrants to Tufts that this Agreement and the Research have been
approved by its Board of Directors.
22. OTHER PROVISIONS.
(a) INDEPENDENT CONTRACTORS. The Parties hereto shall be
independent contractors with respect to each other, and
neither shall be deemed to be the agent, principal, employee,
servant, joint venturer, or partner of the other for any
purpose.
(b) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Massachusetts without regard to conflict of law rules or
principles. Tufts and Sponsor each irrevocably consent and
submit to the jurisdiction of the courts of the state of New
York and the United States District Court for the District of
Manhattan, New York.
(c) SOLE AGREEMENT. This Agreement and any Exhibits and Protocols
attached hereto (each of which is hereby made part hereof by
this reference) constitute the entire agreement between the
Parties concerning the subject matter hereof and all prior
negotiations, representations, warranties, agreements, and
understandings related thereto are superseded hereby.
(d) SEVERABILITY. If any provision of this Agreement shall to any
extent be found to be invalid or unenforceable, the remainder
of this Agreement shall not be affected thereby, and any such
invalid or unenforceable provision shall be reformed so as to
be valid and enforceable to the fullest extent permitted by
law.
(e) HEADINGS. Headings of Articles, Sections, and subsections
included herein for convenience for reference only and shall
not be used to construe this Agreement.
(f) FINANCIAL CONFIDENTIALITY. Both Parties agree to keep the
financial terms of this Agreement confidential, unless
required by law to be disclosed.
(g) SPONSOR REPRESENTATIONS. Sponsor represents and warrants to
Tufts that:
(1) Sponsor is a corporation organized and existing under
the laws of the state of Tennessee and has the power
and authority to enter into this Agreement.
-14-
<PAGE>
(2) Sponsor has taken all necessary corporate action to
authorize its execution and delivery of this
Agreement by the representatives of Sponsor who
carried out such execution and deliver, and to
authorize the performance by Sponsor of its
obligations hereunder.
(3) Execution and delivery of this Agreement and its
performance by Sponsor will not result in any breach
or violation of, or constitute a default under, any
agreement, instrument, judgment, or order to which
Sponsor is a party or by which it is bound.
23. INVESTIGATORS JOIN INTO AGREEMENT. Each person engaged by Tufts as an
Investigator hereby joins into this Agreement and agrees to become
bound to all terms applicable to him or her and in particular, Sections
4, 7, 8, 10, and 12.
-15-
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have hereunder executed and
delivered this Agreement to be effective as the date hereof.
TUFTS UNIVERSITY Photogen, Inc.
By: /s/ Margaret E. Newell By: /s/ John T. Smolik
------------------------------ --------------------------------
John T. Smolik
Margaret E. Newell Chairman and President
- --------------------------------- ------------------------------------
Typed Name
8/19/99
------------------------------------
Associate Provost for Research Date
- ---------------------------------
Title
8/18/99
- ---------------------------------
Date
Agreed to and Accepted by the following Investigator(s) as his or her interests
and obligations may appear in the Agreement:
Name(s)
Date: 8/11/99 /s/ David Ruslander
----------------------- --------------------------------
Date: _______________________ ________________________________
Date: _______________________ ________________________________
-16-
<PAGE>
Exhibit 10.4
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is entered into
effective as of August 9, 1999 (the "Effective Date"), by and between
Photogen Technologies, Inc. (the "Company") and Farcap Group LLC
("Consultant").
RECITALS
--------
WHEREAS, Consultant is involved and has experience in the
investment field including financial investments, mergers and acquisitions,
corporate development and corporate communications with the investment
community;
WHEREAS, the Company needs advice and consulting services
in areas of Consultant's expertise; and
WHEREAS, Consultant is willing to provide such consulting
services pursuant to the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises
herein set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as
follows:
AGREEMENT
---------
1. CONSULTING SERVICES.
(A) During the Consulting Term (defined below), Consultant
shall make himself available at the Company's request to provide the Company
with advisory and consulting services including:
(1) advising the Company regarding its
corporate development strategy;
(2) advising the Company regarding the
coordination of its corporate
communications with the investment
community (not including financial public
relations services); and
(3) to the extent desired by the Company,
assist the Company in analyzing
investment, acquisition or merger
proposals presented through Consultant
and advise the Company during the
Company's negotiation thereof.
<PAGE>
(B) Consultant agrees to use his best efforts and to be
available to provide sufficient time to effectively and competently deliver
such services. To that end, Consultant will make himself available to the
Company for not less than 20 hours per month and/or 200 hours per year for
such services.
2. CONSULTING TERM. The term of this Agreement (the "Consulting
Term") shall be two (2) years commencing on the date hereof (the "Effective
Date"); provided, however, that either party may terminate this Agreement
effective on or after August 9, 2000 by giving the other party thirty days'
prior written notice of such termination.
3. COMPENSATION. As full compensation for all services rendered
and to be rendered by the Consultant, Consultant shall be entitled to
purchase, at $0.001 per warrant, warrants to purchase 1,000,000 shares of
common stock of the Company. The warrants shall be governed by the form of
warrants attached hereto as Exhibit A and shall include the following terms
and conditions:
(A) The exercise price per share shall be equal to the fair
market value of a share of common stock on the Effective Date, which shall be
determined by averaging the closing bid price of a share of common stock (as
reported on the OTC Bulletin Board or The Nasdaq Stock Market, as the case
may be) during the (20) trading days immediately preceding the Effective Date;
(B) Warrants to purchase 500,000 shares shall vest and become
exercisable immediately upon the Effective Date;
(C) Warrants to purchase 500,000 shares shall vest and become
exercisable upon the earlier of (1) the consummation of a Value-added
Transaction (as defined below) resulting from Consultant's services, or (2)
August 9, 2000 unless either Consultant or the Company has terminated this
Agreement effective on August 9, 2000 in accordance with provisions of
Section 2 of this Agreement. For purpose of this section, a "Value-added
Transaction" means any transaction involving the Company initiated by
Consultant and accepted in writing by the Company as a Value-added
Transaction. The Company shall be free of any liability to Consultant for the
Company's failure to accept a transaction initiated by Consultant as a
Value-added Transaction.
(D) The shares underlying the Warrants shall have the
registration rights set forth in the Registration Rights Agreement in the
form attached to this Agreement as Exhibit B.
4. EXPENSES. Consultant shall be entitled to reimbursement by the
Company of any reasonable expenses incurred in the performance of his
consulting services under this Agreement; provided that the Consultant shall
obtain the prior approval from the Company's President for expenditures in
excess of $250 per month and shall submit an itemized account of
<PAGE>
all reimbursable expenses incurred .
5. INDEPENDENT CONTRACTOR. The Consultant shall be an independent
contractor under this Agreement and shall not be an agent or employee of the
Company. Consultant (and its Affiliates (as hereafter defined) or agents)
shall not hold itself (or themselves) out as an agent, employee, partner or
joint venture of or with the Company. The Consultant and its Affiliates shall
have no power or authority to bind or obligate the Company in any manner for
any purpose. Nothing herein shall be construed as establishing a partnership,
joint venture or agency relationship between the Company and the Consultant
(and its Affiliates or agents). The term Affiliate means any entity
controlled by, controlling or under common control with the Consultant.
6. CONFIDENTIAL INFORMATION. During the Consulting Term and at
all times thereafter, Consultant will hold in trust, keep confidential, and
not disclose, directly or indirectly, to any third parties, or make any use
of, the Company's Confidential Information (defined below) for any purpose
except for the benefit of Company in the performance of Consultant's duties
under this Agreement. "Confidential Information" means all information,
communications, data, reports, records or materials obtained from the
Company, which is not in the public domain. Confidential Information is not
meant to include information which: a) at the time of the disclosure is in
the public domain; b) after disclosure becomes part of the public domain
through no act or omission by the Consultant; c) as shown by written records
(i) was prior to disclosure in the possession of the undersigned, or (ii) is
subsequent to disclosure developed by the Consultant independently of any
disclosure by the Company; d) is rightfully received by Consultant from third
parties who were entitled to receive such information; or e) is obligated to
be disclosed pursuant to applicable law, regulation or legal process.
7. NON-COMPETITION. During the Consulting Term and for a period
of twelve months thereafter, Consultant shall not, directly or indirectly,
(A) engage in any Competitive Business (defined below), (B) disparage
Company, its Affiliates, employees, technology or products, or (C) solicit,
induce or attempt to influence any other Company employee or other person or
entity to engage in any Competitive Business or to curtail or cease any
business or business relationship with Company, its Affiliates, or employees.
"Competitive Business" means owning, managing, controlling, participating in,
consulting with, being employed by, or rendering services for any person or
entity, or in any manner or in any capacity (except as a 5% or less
stockholder of a publicly traded company), that engages in the design,
development, manufacture, sale, lease, marketing, financing or distribution
of products or services in the field of photo-dynamic therapy anywhere in the
world. Because the Company's business and proposed business is national and
international in scope, the Consultant agrees that the geographic scope and
time period covered by this covenant is reasonable.
8. REPRESENTATION, WARRANTIES AND COVENANTS. Consultant hereby
represents and warrants to and covenants with the Company as follows:
<PAGE>
(A) Consultant has full right, power and authority to enter
into this Agreement and perform the services and provide the advice
contemplated hereunder during the Consulting Term and the execution of this
Agreement and the performance of its obligations hereunder will not conflict
with or violate any agreement, duty, rule, regulation or law to which
Consultant is subject or by which he is bound.
(B) Consultant will not distribute to third parties any
written materials relating to the Company, its products, its future prospects
or otherwise, other than (1) materials prepared by the Company for
distribution by the Consultant to third parties, (2) materials filed with the
Securities and Exchange Commission by the Company, (3) materials on the
Company's web site placed thereon by the Company, or (4) materials which have
received the prior written approval of the Company for distribution by the
Consultant.
(C) Consultant is not a party to any action or the subject of
any disciplinary proceedings, inquiries, investigation proceedings, or orders
by the Securities and Exchange Commission, any state, regulatory authority,
the NASD, or any court or arbitration panel.
(D) Consultant will perform services hereunder in full
compliance with all applicable laws. Consultant will not provide any advice
or services hereunder which require the Consultant to be licensed under any
law, rule or regulation unless he is so licensed and in good standing.
9. INDEMNIFICATION. The Company will indemnify Consultant and
hold Consultant harmless from and against any actual or potential liability
resulting from Consultant's engagement by the Company under this Agreement in
accordance with the terms of the indemnification agreement, the form of which
is attached hereto as Exhibit C, which agreement is incorporated into this
Agreement by this reference and is part of this Agreement as if set forth in
full herein.
10. MISCELLANEOUS.
(A) This Agreement, including Exhibits A, B and C, constitutes
the entire agreement between the parties with respect to the subject matter
hereof and it supersedes all prior negotiations, representations,
understandings, verbal or written agreements, none of which prior matters
shall be binding upon the parties.
(B) This Agreement, including Exhibits A, B and C, may only be
modified in writing signed by the parties.
(C) This Agreement, including Exhibits A, B and C, shall be
governed by the internal laws of the State of Tennessee without regard to
conflict of law provisions thereof.
(D) Any controversy or claim arising out of or relating to
this Agreement, or
<PAGE>
the alleged breach thereof, or relating to Consultant's activities or
remuneration under this Agreement, shall be settled by binding arbitration in
Chicago, Illinois, in accordance with the applicable rules of the American
Arbitration Association, and judgment on the award rendered by the
arbitrator(s) shall be binding on the parties and may be entered in any court
having jurisdiction thereof.
(E) This Agreement shall be binding upon the successors and
assigns of the parties.
(F) All notices, requests, and other communications hereunder
shall be deemed to be duly given if sent by U.S. mail, postage prepaid,
addressed to the other party at the address as set forth herein below:
To Company:
Photogen Technologies, Inc.
7327 Oak Ridge Highway, Suite B
Knoxville, TN 37931
Attention: John T. Smolik, President
Phone: (423) 769-4011 Fax 423 769-4012
With copy to
Theodore W. Grippo, Esq.
Grippo & Elden
227 West Monroe Street, Suite 3600
Chicago, IL 60606
Phone: (312) 704-7720 Fax (312) 558-1195
To Consultant:
Farcap Group LLC
c/o Mark A. Klein, Esq.
Freshman, Marantz, Orlanski, Cooper & Klein
9100 Wilshire Boulevard
Eighth Floor, East Tower
Beverly Hills, CA 90212
Phone: (310) 285-1635 Fax: (310) 274-8357
(G) No waiver of any term or provision of this Agreement shall
be deemed to be a waiver of any subsequent breach or any other term or
provision hereof.
<PAGE>
(H) The Consultant shall be permitted to pursue and
participate in other consulting, financial or investment activities for
parties and concerns other than the Company so long as such activities do not
violate the provisions of Section 7 of this Agreement.
(I) If any provision of this Agreement is deemed to be
unenforceable or invalid, the enforceability and validity of all other
provisions hereof shall not be affected thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
PHOTOGEN TECHNOLOGIES, INC.
By: /s/ John T. Smolik
------------------------------
John T. Smolik, President
FARCAP GROUP LLC
By: /s/ Yale Farar
------------------------------
Yale Farar, Manager
<PAGE>
Exhibit A
Warrant Agreement
<PAGE>
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
August 9, 1999
FARCAP GROUP, LLC
Dear Sirs:
This will confirm that in consideration of your agreement to
consult with us under that certain Consulting Agreement entered into as of
the date hereof and your purchase of warrants (the "Warrants") to purchase an
aggregate of 1,000,000 shares (the "Warrant Shares") of Common Stock, $0.001
par value ("Common Stock"), of Photogen Technologies, Inc. a Nevada
corporation (the "Company"), the Company covenants and agrees with you as
follows:
1. CERTAIN DEFINITIONS. As used in this Agreement,
the following terms shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the
Securities Act.
"COMMON STOCK" shall mean the Common Stock, $0.001 par value,
of the Company, as constituted as of the date of this Agreement.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"REGISTRATION EXPENSES" shall mean the expenses so
described in Section 8.
"RESTRICTED STOCK" shall mean the Warrant Shares, excluding
Warrant Shares which have been (a) registered under the Securities Act
pursuant to an effective registration statement filed thereunder and
disposed of in accordance with the registration statement covering them
or (b) publicly sold pursuant to Rule 144 under the Securities Act.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the
time.
<PAGE>
"SELLING EXPENSES" shall mean the expenses so described in
Section 8.
2. RESTRICTIVE LEGEND. Each certificate representing
Warrant Shares shall, except as otherwise provided in this Section 2 or in
Section 3, be stamped or otherwise imprinted with a legend substantially in
the following form:
"THE SECURITIES EVIDENCED OR CONSTITUTED HEREBY HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE
SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE
REGISTRATION PROVISIONS OF SAID ACT HAVE BEEN COMPLIED WITH OR
UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED."
A certificate shall not bear such legend if in the opinion of counsel
satisfactory to the Company the securities being sold thereby may be publicly
sold without registration under the Securities Act.
3. NOTICE OF PROPOSED TRANSFER. Prior to any proposed
transfer of any Warrant Shares (other than under the circumstances described
in Sections 4, 5 or 6), the holder thereof shall give written notice to the
Company of its intention to effect such transfer. Each such notice shall
describe the manner of the proposed transfer and, if requested by the
Company, shall be accompanied by an opinion of counsel reasonably
satisfactory to the Company to the effect that the proposed transfer may be
effected without registration under the Securities Act, whereupon the holder
of such stock shall be entitled to transfer such stock in accordance with the
terms of its notice; PROVIDED, HOWEVER, that no such opinion of counsel shall
be required for a transfer to one or more partners of the transferror (in the
case of a transferror that is a partnership) or to an affiliate of the
holder. Each certificate for Warrant Shares transferred as above provided
shall bear the legend set forth in Section 2, except that such certificate
shall not be such legend if (i) such transfer is in accordance with the
provisions of Rule 144 (or any other rule permitting public sale without
registration under the Securities Act) or (ii) the opinion of counsel
referred to above is to the further effect that the transferee and any
subsequent transferee (other than an affiliate of the Company) would be
entitled to transfer such securities in a public sale without registration
under the Securities Act. The restrictions provided for in this Section 3
shall not apply to securities which are not required to bear the legend
prescribed by Section 2 in accordance with the provisions of that Section.
4. REQUIRED REGISTRATION. (a) At any time after August 9,
1999 the holders of Restricted Stock constituting at least 50% of the total
shares of Restricted Stock then outstanding may request the Company to
register under the Securities Act all or any portion of the shares of
Restricted Stock held by such requesting holder or holders for
<PAGE>
sale in the manner specified in such notice, PROVIDED that the shares of
Restricted Stock for which registration has been requested shall constitute
at least 100,000 shares of Restricted Stock if such holder or holders shall
request the registration of less than all shares of Restricted Stock then
held by such holder or holders (or any lesser number if the reasonably
anticipated aggregate price to the public of such public offering would
exceed $500,000). For purposes of the Section 4 and Sections 5, 6, 13(a) and
13(d), the term "Restricted Stock" shall be deemed to include the number of
shares of Restricted Stock which would be issuable to a holder of Warrant
Shares upon exercise of Warrants held by such holder at such time; PROVIDED,
HOWEVER, that the only securities which the Company shall be required to
register pursuant hereto shall be shares of Common Stock; and PROVIDED,
FURTHER, HOWEVER, that, in any underwritten public offering contemplated by
this Section 4 or Sections 5 and 6, the holders of Warrant Shares shall be
entitled to sell their Warrants to the underwriters for exercise and sale of
the shares of Common Stock issued upon exercise thereof. Notwithstanding
anything to the contrary contained herein, no request may be made under this
Section 4 (i) within 120 days after the effective date of a registration
statement filed by the Company covering a firm commitment underwritten public
offering in which the holders of Restricted Stock shall have been entitled to
join pursuant to Sections 5 or 6 and in which there shall have been
effectively registered all shares of Restricted Stock as to which
registration shall have been requested, or (ii) at a time when the board of
directors of the Company determines in good faith and without regard to the
expenses involved or liabilities inherent in the process that it would not be
in the Company's best interests to effect a registration at that time.
(b) Following receipt of any notice under this Section 4, the
Company shall immediately notify all holders of Restricted Stock from whom
notice has not been received and shall use its reasonable efforts to register
under the Securities Act, for public sale in accordance with the method of
disposition specified in such notice from requesting holders, the number of
shares of Restricted Stock specified in such notice (and in all notices
received by the Company from other holders within 30 days after the giving of
such notice by the Company). If such method of disposition shall be an
underwritten public offering, the holders of a majority of the shares of
Restricted Stock to be sold in such offering may designate the managing
underwriter of such offering, subject to the approval of the Company, which
approval shall not be unreasonably withheld or delayed. The Company shall be
obligated to register Restricted Stock pursuant to this Section 4 on one
occasion only; PROVIDED, HOWEVER, that such obligation shall be deemed
satisfied only when a registration statement covering all shares of
Restricted Stock specified in notices received as aforesaid, for sale in
accordance with the method of disposition specified by the requesting
holders, shall have become effective and, if such method of disposition is a
firm commitment underwritten public offering, all such shares shall have been
sold pursuant thereto.
(c) The Company shall be entitled to include in any registration
statement referred to in this Section 4, for sale in accordance with the
method of disposition
<PAGE>
specified by the requesting holders, shares of Common Stock to be sold by the
Company for its own account, except as and to the extent that, in the opinion
of the managing underwriter (if such method of disposition shall be an
underwritten public offering), such inclusion would adversely affect the
marketing of the Restricted Stock to be sold. Except for registration
statements on Form S-4, S-8 or any successor thereto, the Company will not
file with the Commission any other registration statement with respect to its
Common Stock, whether for its own account or that of other stockholders, from
the date of receipt of a notice from requesting holders pursuant to this
Section 4 until the completion of the period of distribution of the
registration contemplated thereby.
5. INCIDENTAL REGISTRATION. If the Company at any time
(other than pursuant to Section 4 or Section 6) proposes to register any of
its securities under the Securities Act for sale to the public, whether for
its own account or for the account of other security holders or both (except
with respect to registration statements on Forms S-4, S-8 or another form not
available for registering the Restricted Stock for sale to the public), each
such time it will give written notice to all holders of outstanding
Restricted Stock of its intention so to do. Upon the written request of any
such holder, received by the Company within 30 days after the giving of any
such notice by the Company, to register any of its Restricted Stock (which
request shall state the intended method of disposition thereof), the Company
will use its reasonable efforts to cause the Restricted Stock as to which
registration shall have been so requested to be included in the securities to
be covered by the registration statement proposed to be filed by the Company,
all to the extent requisite to permit the sale or other disposition by the
holder (in accordance with its written request) of such Restricted Stock so
registered. In the event that any registration pursuant to this Section 5
shall be, in whole or in part, an underwritten public offering of Common
Stock, the number of shares of Restricted Stock to be included in such an
underwriting may be reduced (pro rata among the requesting holders based upon
the number of shares of Restricted Stock owned by such holders) if and to the
extent that the managing underwriter shall be of the opinion that such
inclusion would adversely affect the marketing of the securities to be sold
by the Company therein, PROVIDED, HOWEVER, that such number of shares of
Restricted Stock shall not be reduced if any shares are to be included in
such underwriting for the account of any person other than the Company or
requesting holders of Restricted Stock, and PROVIDED, FURTHER, HOWEVER, that
in no event may less than one-third of the total number of shares of Common
Stock to be included in such underwriting be made available for shares of
Restricted Stock. Notwithstanding the foregoing provisions, the Company may
withdraw any registration statement referred to in this Section 5 or exclude
any Restricted Stock for which the board of directors of the Company
determines in good faith and without regard to the expenses involved or
liabilities inherent in the process that it would not be in the Company's
best interests to effect a registration without thereby incurring any
liability to the holders of Restricted Stock.
6. REGISTRATION ON FORM S-3. If at any time (i) a holder
or holders of Warrant Shares or Restricted Stock request that the Company
file a registration statement on Form S-3 or any successor thereto for a
public offering of all or any portion o f the
<PAGE>
shares of Restricted Stock held by such requesting holder or holders, the
reasonably anticipated aggregate price to the public of which would exceed
$100,000, and (ii) the Company is a registrant entitled to use Form S-3 or
any successor thereto to register such shares, then the Company shall use its
reasonable efforts to register under the Securities Act on Form S-3 or any
successor thereto, for public sale in accordance with the method of
disposition specified in such notice, the number of shares of Restricted
Stock specified in such notice. Whenever the Company is required by this
Section 6 to use its reasonable efforts to effect the registration of
Restricted Stock, each of the procedures and requirements of Section 4
including but not limited to the requirement that the Company notify all
holders of Restricted Stock from whom notice has not been received and
provide them with the opportunity to participate in the offering) shall apply
to such registration, PROVIDED, HOWEVER, that there shall be no limitation on
the number of registrations on Form S-3 which may be requested and obtained
under this Section 6, and PROVIDED, FURTHER, HOWEVER, that the requirements
contained in the first sentence of Section 4(a) shall not apply to any
registration on Form S-3 which may be requested and obtained under this
Section 6. Notwithstanding anything to the contrary contained herein, no
request may be made under this Section 6 at a time when the board of
directors of the Company determines in good faith and without regard to the
expenses involved or liabilities inherent in the process that it would not be
in the Company's best interests to effect a registration at that time.
7. REGISTRATION PROCEDURES. If and whenever the Company is
required by the provisions to Sections 4, 5 or 6 to use its reasonable
efforts to effect the registration of any shares of Restricted Stock under
the Securities Act, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration
statement (which, in the case of an underwritten public offering pursuant to
Section 4, shall be on Form S-1 or other form of general applicability
satisfactory to the managing underwriter selected as therein provided) with
respect to such securities and use its reasonable efforts to cause such
registration statement to become and remain effective for the period of the
distribution contemplated thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for the period specified in paragraph (a) above and comply with the
provisions of the Securities Act with respect to the disposition of all
Restricted Stock covered by such registration statement in accordance with
the sellers' intended method of disposition set forth in such registration
statement for such period;
(c) furnish to each seller of Restricted Stock and to each
underwriter such number of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in
<PAGE>
order to facilitate the public sale or other disposition of the Restricted
Stock covered by such registration statement;
(d) use its reasonable efforts to register or qualify the
Restricted Stock covered by such registration statement under the securities
or "blue sky" laws of such jurisdictions as the sellers of Restricted Stock
or, in the case of an underwritten public offering, the managing underwriter
reasonably shall request; PROVIDED, HOWEVER, that the Company shall not for
any such purpose be required to qualify generally to transact business as a
foreign corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction;
(e) use its reasonable efforts to list the Restricted Stock
covered by such registration statement with any securities exchange on which
the Common Stock of the Company is then listed;
(f) immediately notify each seller of Restricted Stock and
each underwriter under such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event of which the Company has knowledge as a
result of which the prospectus contained in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
(g) if the offering is underwritten and at the request of
any seller of Restricted Stock, the Company shall use its reasonable efforts
to furnish on the date that Restricted Stock is delivered to the underwriters
for sale pursuant to such registration: (i) an opinion dated such date of
counsel representing the Company for the purposes of such registration,
addressed to the underwriters and to such seller, stating that such
registration statement has become effective under the Securities Act and that
(A) to the best knowledge of such counsel, no stop order suspending the
effectiveness thereof has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the Securities Act,
(B) the registration statement, the related prospectus and each amendment or
supplement thereof comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need not express
any opinion as to financial statements contained therein) and (C) to such
other effects as reasonably may be requested by counsel for the underwriters
or by such seller or its counsel and (ii) a letter dated such date from the
independent public accountants retained by the Company, addressed to the
underwriters and to such seller, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion
of such accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to
the period
<PAGE>
ending no more than five business days prior to the date of such letter) with
respect to such registration as such underwriters reasonably may request; and
(h) make available for inspection by each seller of
Restricted Stock, any underwriter participating in any distribution pursuant
to such registration statement, and any attorney, accountant or other agent
retained by such seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement.
For purposes of Section 7(a) and 7(b) and of Section 4(c),
the period of distribution of Restricted Stock in a firm commitment
underwritten public offering shall be deemed to extend until each underwriter
has completed the distribution of all securities purchased by it, and the
period of distribution of Restricted Stock in any other registration shall be
deemed to extend until the earlier of the sale of all Restricted Stock
covered thereby and 120 days after the effective date thereof.
In connection with each registration hereunder, the sellers
of Restricted Stock will furnish to the Company in writing such information
with respect to themselves and the proposed distribution by them as
reasonably shall be necessary in order to assure compliance with federal and
applicable state securities laws.
In connection with each registration pursuant to Sections
4, 5 or 6 covering an underwritten public offering, the Company and each
seller agree to enter into a written agreement with the managing underwriter
selected in the manner herein provided in such form and containing such
provisions as are customary in the securities business for such an
arrangement between such underwriter and companies of the Company's size and
investment stature.
8. EXPENSES. All expenses incurred by the Company in
complying with Sections 4, 5 and 6, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel to the Company and independent public accountants for the Company,
fees and expenses (including counsel fees) incurred in connection with
complying with state securities or "blue sky" laws, fees of the National
Association of Securities Dealers, Inc., transfer taxes, fees of transfer
agents and registrars and costs of issuance but excluding any Selling
Expenses, are called "Registration Expenses". All underwriting discounts and
selling commissions and finders fees applicable to the sale of Restricted
Stock and fees and disbursements of counsel for the holders of "Restricted
Stock" are called "Selling Expenses".
The Company will pay all Registration Expenses in
connection with each registration statement under Sections 4, 5 or 6. All
Selling Expenses in connection with each registration statement under
Sections 4, 5 or 6 shall be borne by the participating sellers in proportion
to the number of shares sold by each, or by such participating sellers other
than the Company (except to the extent the Company shall be a seller) as
<PAGE>
they may agree.
9. INDEMNIFICATION AND CONTRIBUTION. (a) In the event of a
registration of any of the Restricted Stock under the Securities Act pursuant
to Sections 4, 5 or 6, the Company will indemnify and hold harmless each
seller of such Restricted Stock thereunder, each underwriter of such
Restricted Stock thereunder and each other person, if any, who controls such
seller or underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several to which such
seller, underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Restricted Stock was
registered under the Securities Act pursuant to Sections 4, 5 or 6, any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and will reimburse each such seller, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action, PROVIDED, HOWEVER, that the Company will not be
liable in any such case if and to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by any such seller, any such
underwriter or any such controlling person in writing specifically for use in
such registration statement or prospectus.
(b) In the event of a registration of any of the Restricted
Stock under the Securities Act pursuant to Sections 4, 5 or 6, each seller of
such Restricted Stock thereunder, severally and not jointly, will indemnify
and hold harmless the Company, each person, if any, who controls the Company
within the meaning of the Securities Act, each officer of the Company who
signs the registration statement, each director of the Company, each
underwriter and each person who controls any underwriter within the meaning
of the Securities Act, against all losses, claims, damages or liabilities,
joint or several, to which the Company or such officer, director, underwriter
or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the registration
statement under which such Restricted Stock was registered under the
Securities Act pursuant to Sections 4, 5 or 6, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Company and
each such officer, director, underwriter and controlling person for any legal
or other expenses
<PAGE>
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that such
seller will be liable hereunder in any such case if and only to the extent
that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining
to such seller, as such, furnished in writing to the Company by such seller
specifically for use in such registration statement or prospectus; and
PROVIDED, FURTHER, HOWEVER, that the liability of each seller hereunder shall
be limited to the proportion of any such loss, claim, damage, liability or
expense which is equal to the proportion that the public offering price of
the shares sold by such seller, under such registration statement bears to
the total public offering price of all securities sold thereunder, but not in
any event to exceed the proceeds received by such seller from the sale of
Restricted Stock covered by such registration statement.
(c) Promptly after receipt by an indemnified party
hereunder of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party hereunder, notify the indemnifying party in writing thereof, but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to such indemnified party other than under this
Section 9 and shall only relieve it from any liability which it may have to
such indemnified party under this Section 9 if and to the extent the
indemnifying party is prejudiced by such omission. In case any such action
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such indemnified
party, and, after notice from the indemnifying party to such indemnified
party of its election so to assume and undertake the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this
Section 9 for any legal expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected; PROVIDED, HOWEVER,
that, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded based on written advice of counsel that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified
party reasonably may be deemed to conflict with the interests of the
indemnifying party, the indemnified party shall have the right to select a
separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred. In no event shall any
indemnifying party be liable in respect of any amounts paid in settlement of
any action unless the indemnifying party shall have approved the terms of
such settlement; provided that such consent shall not be unreasonably
withheld.
<PAGE>
(d) In order to provide for just and equitable contribution
to joint liability under the Securities Act in any case in which either (i)
any holder of Restricted Stock exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for indemnification
pursuant to this Section 9 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the
fact that this Section 9 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of any such
selling holder or any such controlling person in circumstances for which
indemnification is provided under this Section 9; then, and in each such
case, the Company and such holder will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after
contribution from others) in such proportion so that such holder is
responsible for the portion represented by the percentage that the public
offering price of its Restricted Stock offered by the registration statement
bears to the public offering price of all securities offered by such
registration statement, and the Company is responsible for the remaining
portion; PROVIDED, HOWEVER, that, in any such case, (A) no such holder will
be required to contribute any amount in excess of the public offering price
of all such Restricted Stock offered by it pursuant to such registration
statement; and (B) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled
to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
10. CHANGES IN COMMON STOCK. If, and as often as, there is
any change in the Common Stock by way of a stock split, stock dividend,
combination or reclassification, or through a merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue with respect to the Common Stock as
so changed.
11. RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Stock to the public without
registration, at all times after 90 days after any registration statement
covering a public offering of securities of the Company under the Securities
Act shall have become effective, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act;
(b) use its reasonable efforts to file with the Commission
in a timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act; and
(c) furnish to each holder of Restricted Stock forthwith
upon request a written
<PAGE>
statement by the Company as to its compliance with the reporting requirements
of such Rule 144 and of the Securities Act and the Exchange Act, a copy of
the most recent annual or quarterly report of the Company, and such other
reports and documents so filed by the Company as such holder may reasonably
request in availing itself of any rule or regulation of the Commission
allowing such holder to sell any Restricted Stock without registration.
12. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to you as follows:
(a) The execution, delivery and performance of this
Agreement by the Company have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any court or
other agency of government, the Charter or By-laws of the Company or any
provision of any indenture, agreement or other instrument to which it or any
or its properties or assets is bound, conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
such indenture, agreement or other instrument or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon
any of the properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms.
13. MISCELLANEOUS.
(a) All covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure
to the benefit of the respective successors and assigns of the parties hereto
(including without limitation transferees of any Warrant Shares or Restricted
Stock), whether so expressed or not; PROVIDED, HOWEVER, that registration
rights conferred herein on the holders of Warrant Shares or Restricted Stock
shall only issue to the benefit of a transferee of Warrant Shares or
Restricted Stock if (i) there is transferred to such transferee at least 5%
of the total shares of Restricted Stock issued pursuant to the Warrants to
the direct or indirect transferror of such transferee or (ii) such transferee
is a partner, shareholder or affiliate of a party hereto.
(b) All notices, requests, consents and other
communications hereunder shall be in writing and shall be mailed by certified
or registered mail, return receipt requested, postage prepaid, or by
facsimile, in the case of non U.S. residents, addressed as follows:
if to the Company or any other party hereto, at the address
of such party set forth in the Consulting Agreement;
if to any subsequent holder of Warrant Shares or Restricted
Stock, to it of
<PAGE>
such address as may have been furnished to the Company in
writing by such holder;
or, in any case, at such other address or addresses as shall have been
furnished in writing to the Company (in the case of a holder of Warrant
Shares or Restricted Stock) or to the holders of Warrant Shares or Restricted
Stock (in the case of the Company) in accordance with the provisions of this
paragraph.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of Tennessee and for all purposes shall
be construed in accordance with the internal laws of said State, PROVIDED,
HOWEVER, that if, as a result of the Company's incorporation in the State of
Nevada the laws of that State should govern a particular issue, the internal
laws of the State of Nevada shall govern that issue.
(d) This Agreement may not be amended or modified, and no
provision hereof may be waived, without the written consent of the Company
and the holders of at least two-thirds of the outstanding shares of
Restricted Stock.
(e) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(f) The obligations of the Company to register shares of
Restricted Stock under Sections 4, 5 or 6 shall terminate on the sixth
anniversary of the date of this Agreement.
(g) If requested in writing by the underwriters for the
underwritten public offering of securities of the Company, each holder of
Restricted Stock who is a party to this Agreement shall agree not to sell
publicly any shares of Restricted Stock or any other shares of Common Stock
(other than shares of Restricted Stock or other shares of Common Stock being
registered n such offering) without the consent of such underwriters, for a
period of not more than 120 days following the effective date of the
registration statement relating to such offering; PROVIDED, HOWEVER, that all
persons entitled to registration rights with respect to shares of Common
Stock who are not parties to this Agreement, all other persons selling shares
of Common Stock in such offering and all executive officers and directors of
the Company shall also have agreed not to sell publicly their Common Stock
under the circumstances and pursuant to the terms set forth in this Section
13(g).
(h) Notwithstanding the provisions of Section 7(a), the
Company's obligation to file a registration statement, or cause such
registration statement to become and remain effective, shall be suspended for
a period not to exceed 90 days in any 24-month period if there exists at the
time material non-public information relating to the Company which, in the
reasonable opinion of the Company, should not be disclosed.
(i) If any provision of this Agreement shall be held to be
illegal, invalid or
<PAGE>
unenforceable, such illegality, invalidity or unenforceability shall attach
only to such provision and shall not in any manner affect or render illegal,
invalid or unenforceable any other provision of this Agreement, and this
Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
Please indicate your acceptance of the foregoing by signing
and returning the enclosed counterpart of this letter, whereupon this
Agreement shall be a binding agreement between the Company and you.
Very truly yours,
PHOTOGEN TECHNOLOGIES, INC.
By John Smolik
----------------------------
President
By /s/ Eric Wachter
---------------------------
Secretary
AGREED TO AND ACCEPTED as of the date first above written.
FARCAP GROUP, LLC
By: /s/ Yale Farar
------------------------------
Yale Farar, Manager
<PAGE>
Exhibit C
Indemnity Agreement
The Company agrees to indemnify and hold harmless Farcap Group, LLC,
its agents and controlling persons (within the meaning of Section 15 of the
Securities Act of 1933, as amended, or Section 20 of the Securities Exchange
Act of 1934, as amended) (Farcap and each such other person are collectively
and individually referred to below as an "Indemnified Party") from and
against any and all loss, claim, damage, liability and expense whatsoever, as
incurred, including, without limitation, reasonable costs of any
investigation, legal and other fees and expenses incurred in connection with,
and any amounts paid in settlement of, any action, suit or proceeding or any
claim asserted, to which the Indemnified Party may become subject under any
applicable federal or state law (whether in tort, contract or on any other
basis) or otherwise, and related to the performance by the Indemnified Party
of the services contemplated by the Consulting Agreement to which this
Schedule is attached (the "Consulting Agreement") and will reimburse the
Indemnified Party for all expenses (including legal fees and expenses) as and
when they are incurred in connection with the investigation of, preparation
for or defense of any pending or threatened claim or any action or proceeding
arising therefrom, whether or not the Indemnified Party is a party and
whether or not such claim, action or proceeding is initiated or brought by
the Company. The Company will not be liable under the foregoing
indemnification provision to the extent that any loss, claim, damage,
liability or expense is found in a final judgment by a court or arbitrator,
not subject to appeal or further appeal, to have resulted from the
Indemnified Party's bad faith or willful misconduct. The Company also agrees
that the Indemnified Party shall have no liability (whether direct or
indirect, in contract, tort or otherwise) to the Company related to, or
arising out of, the engagement of the Indemnified Party pursuant to, or the
performance by the Indemnified Party of the services contemplated by, the
Consulting Agreement except to the extent that any loss, claim, damage,
liability or expense is found in a final judgment by a court or arbitrator,
not subject to appeal or further appeal, to have resulted from the
Indemnified Party's bad faith or willful misconduct.
If, and only if, the indemnity provided above shall be unenforceable
or unavailable for any reason whatsoever, the Indemnified Party shall be
entitled to receive from the Company, or its successors and assigns,
contribution for all such indemnifiable losses, claims, damages, liabilities
and expenses (including, without limitation, all indemnifiable costs of any
investigation, legal or other fees and expenses incurred in connection with,
and any amounts paid in settlement of, any action, suit or proceeding or any
claim asserted) so that the Indemnified Party ultimately bears only such
proportion as is appropriate to reflect the relative fault of the Company on
the one hand and the Indemnified Party on the other in connection with the
acts or omissions which resulted in such losses, claims, damages, liabilities
or expenses; provided that in no event shall the Company contribute less than
the amount necessary to ensure that all Indemnified Persons, in the
aggregate, are not liable for any liabilities and expenses in excess of the
value of the warrants actually received by Consultant pursuant to the
Consulting Agreement.
The Indemnified Party will give prompt written notice to the Company
of any claim for
<PAGE>
which it seeks indemnification hereunder, but the omission to so notify the
Company will not relieve the Company from any liability which it may
otherwise have hereunder except to the extent that the Company is damaged or
prejudiced by such omission or from any liability it may have other than
under this Exhibit C. The Company shall have the right to assume the defense
of any claim, lawsuit or action (collectively an "action") for which the
Indemnified Party seeks indemnification hereunder, subject to the provisions
stated herein with counsel reasonably satisfactory to the Indemnified Party.
After notice from the Company to the Indemnified Party of its election so to
assume the defense thereof, and so long as the Company performs its
obligations pursuant to such election, the Company will not be liable to the
Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation. The Indemnified Party shall have the right
to employ separate counsel in any such action and to participate in the
defense thereof at its own expense; PROVIDED, HOWEVER, that the reasonable
fees and expenses of such counsel shall be at the expense of the Company if
the named parties to any such action (including any impleaded parties)
include both the Indemnified Party and the Company and the Indemnified Party
shall have reasonably concluded, based on written advice of counsel, that
there may be one or more legal defenses available to the Indemnified Party
which are different from, or in conflict with, any legal defenses which may
be available to the Company (in which event the Company shall not have the
right to assume the defense of such action on behalf of the Indemnified
Party, it being understood, however, that the Company shall not be liable for
the reasonable fees and expenses of more than one separate firm of attorneys
for all Indemnified Parties in each jurisdiction in which counsel is needed).
In addition to the Company's other obligations hereunder and without
limitation, the Company agrees to pay monthly, upon receipt of itemized
statements therefor, all reasonable fees and expenses of counsel incurred by
an Indemnified Party in defending any claim of the type set forth in the
preceding paragraphs or in producing documents, assisting in answering any
interrogatories, giving any deposition testimony or otherwise becoming
involved in any action or response to any claim relating to the engagement
referred to herein, or any of the matters enumerated in the preceding
paragraphs, whether or not any claim is made against an Indemnified Party or
an Indemnified Party is named as a party to any such action. In no event
shall any indemnifying party be liable in respect of any amounts paid in
settlement of any action unless the indemnifying party shall have approved
the terms of such settlement; provided that such consent shall not be
unreasonably withheld.
<PAGE>
Exhibit 10.5
EXHIBIT A - WARRANT AGREEMENT
PHOTOGEN TECHNOLOGIES, INC.
and
FARCAP GROUP, LLC
----------------------------
WARRANT AGREEMENT
Dated as of August 9 , 1999
<PAGE>
WARRANT AGREEMENT dated as of August 9, 1999, between
PHOTOGEN TECHNOLOGIES, INC. , a Nevada corporation (the "Company"), and
FARCAP GROUP, LLC, a Nevada Limited Liability Company (the "Holder").
WHEREAS, the Company proposes to sell Common Stock Purchase
Warrants, as hereinafter described (the "Warrants"), for $0.001, to purchase
up to an aggregate of 1,000,000 shares of Common Stock, par value $0.001 per
share (the "Common Stock"), of the Company (the Common Stock issuable on
exercise of the Warrants being referred to herein as the "Warrant Shares"),
each Warrant entitling the holder thereof to purchase one Warrant Share.
NOW, THEREFORE, in consideration of the premises and the
payment by Holder of $1,000.00, receipt of which is hereby acknowledge by the
Company, and the mutual agreements herein set forth, the parties hereto agree
as follows:
SECTION 1. WARRANT CERTIFICATES. The certificates
evidencing the Warrants (the "Warrant Certificates") to be delivered pursuant
to this Agreement shall be in registered form only and shall be substantially
in the form set forth in Annex A and B attached hereto.
SECTION 2. EXECUTION OF WARRANT CERTIFICATES. Warrant
Certificates shall be signed on behalf of the Company by its Chairman of the
Board or its President or a Vice President and by its Secretary or an
Assistant Secretary under its corporate seal. Each such signature upon the
Warrant Certificates may be in the form of a facsimile signature of the
present or any future Chairman of the Board, President, Vice President,
Secretary or Assistant Secretary and may be imprinted or otherwise reproduced
on the Warrant Certificates and for that purpose the Company may adopt and
use the facsimile signature of any person who shall have been Chairman of the
Board, President, Vice President, Secretary or Assistant Secretary,
notwithstanding the fact that at the time the Warrant Certificates shall be
countersigned and delivered or disposed of he shall have ceased to hold such
office. The seal of the Company may be in the form of a facsimile thereof and
may be impressed, affixed, imprinted or otherwise reproduced on the Warrant
Certificates.
Any Warrant Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such
Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such officer.
SECTION 3. REGISTRATION. The Company shall number and
register the Warrant Certificates in a register as they are issued by the
Company. The Company may deem and treat the registered holder(s) of the
Warrant Certificates as the absolute owner(s) thereof (notwithstanding any
notation of ownership or other writing thereon made by anyone), for all
purposes, and the Company shall not be affected by any notice to the contrary.
SECTION 4. REGISTRATION OF TRANSFERS AND EXCHANGES. The
Company shall from time to time register the transfer of any outstanding
Warrant Certificates upon the records to be maintained by it for that
purpose, upon surrender thereof accompanied (if so required by it) by a
written instrument or instruments of transfer duly executed by the registered
holder or holders
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thereof or by the duly appointed legal representative thereof or by a duly
authorized attorney. Upon any such registration of transfer, a new Warrant
Certificate shall be issued to the transferee(s) and the surrendered Warrant
Certificate shall be canceled by the Company. Canceled Warrant Certificates
shall thereafter be disposed of in a manner satisfactory to the Company.
The Holder agrees that each certificate representing
Warrant Shares will bear the following legend:
"The securities evidenced or constituted hereby have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. Such securities may not be
sold, transferred, pledged or hypothecated unless the
registration provisions of said Act have been complied with or
unless the Company has received an opinion of counsel
reasonably satisfactory to the Company that such registration
is not required."
Warrant Certificates may be exchanged at the option of the
holder(s) thereof, when surrendered to the Company at its office for another
Warrant Certificate or other Warrant Certificates of like tenor and
representing in the aggregate a like number of Warrants. Warrant Certificates
surrendered for exchange shall be canceled by the Company.
SECTION 5. TERMS OF WARRANTS, EXERCISE OF WARRANTS. Subject
to the terms of this Agreement and the Warrant Certificates set forth as
Annex A and B, respectively, the Warrant holder shall have the right,
commencing at the opening of business on the respective dates set forth on
the Warrant Certificates and until 5:00 p.m., Pacific time on August 9, 2004
(the "Exercise Period"), to receive from the Company the number of fully paid
and nonassessable Warrant Shares which the Warrant holder may at the time be
entitled to receive on exercise of such Warrants and payment of the Exercise
Price in cash then in effect for such Warrant Shares. Each Warrant not
exercised prior to 5:00 p.m., Pacific time, on August 9, 2004 shall become
void and all rights thereunder and all rights in respect thereof under this
agreement shall cease as of such time. No adjustments as to dividends payable
in cash will be made upon exercise of the Warrants.
A Warrant may be exercised upon surrender to the Company at
its principal office of the certificate or certificates evidencing the
Warrants to be exercised with the form of election to purchase on the reverse
thereof duly filled in and signed, and upon payment to the Company of the
exercise price (the "Exercise Price") which is set forth in the form of
Warrant Certificates attached hereto as Annex A and B as adjusted as herein
provided, for the number of Warrant Shares in respect of which such Warrants
are then exercised. Payment of the aggregate Exercise Price shall be made in
cash or by certified or official bank check payable to the order of the
Company.
Upon such surrender of Warrants and payment of the Exercise
Price the Company shall issue and cause to be delivered with all reasonable
dispatch to or upon the written order of the Warrant holder in the name of the
holder, a certificate or certificates for the number of full Warrant Shares
issuable upon the exercise of such Warrants together with cash as provided in
Section 11; PROVIDED, HOWEVER, that if any consolidation, merger or lease or
sale of assets is proposed to be
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effected by the Company as described in subsection (m) of Section 10 hereof,
or a tender offer or an exchange offer for shares of Common Stock of the
Company shall be made, upon such surrender of Warrants and payment of the
Exercise Price as aforesaid, the Company shall, as soon as possible, but in
any event not later than two business days thereafter, issue and cause to be
delivered the full number of Warrant Shares issuable upon the exercise of
such Warrants in the manner described in this sentence together with cash as
provided in Section 11. Such certificate or certificates shall be deemed to
have been issued to the holder of record of such Warrant Shares as of the
date of the surrender of such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the
holders thereof, either in full or from time to time in part and, in the
event that a certificate evidencing Warrants is exercised in respect of fewer
than all of the Warrant Shares issuable on such exercise at any time prior to
the date of expiration of the Warrants, a new certificate evidencing the
remaining Warrant or Warrants will be issued pursuant to the provisions of
this Section.
All Warrant Certificates surrendered upon exercise of
Warrants shall be canceled by the Company. Such canceled Warrant Certificates
shall then be disposed of by the Company.
SECTION 6. PAYMENT OF TAXES. The Company will pay all
documentary stamp taxes attributable to the initial issuance of Warrant
Shares upon the exercise of Warrants; PROVIDED, HOWEVER, that the Company
shall not be required to pay any tax or taxes which may be payable in respect
of any transfer involved in the issue of any Warrant Certificates or any
certificates for Warrant Shares in a name other than that of the registered
holder of a Warrant Certificate surrendered upon the exercise of a Warrant,
and the Company shall not be required to issue or deliver such Warrant
Certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
SECTION 7. MUTILATED OR MISSING WARRANT CERTIFICATES. In
case any of the Warrant Certificates shall be mutilated, lost, stolen or
destroyed, the Company may, in its discretion, issue in exchange and
substitution for and upon cancellation of the mutilated Warrant Certificate,
or in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory
to the Company of such loss, theft or destruction of such Warrant Certificate
and indemnity, if requested, also satisfactory to them. Applicants for such
substitute Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may
prescribe.
SECTION 8. RESERVATION OF WARRANT SHARES. The Company will
at all times reserve and keep available, free from preemptive rights, out of
the aggregate of its authorized but unissued Common Stock or its authorized
and issued Common Stock held in its treasury, for the purpose of enabling it
to satisfy any obligation to issue Warrant Shares upon exercise of Warrants,
the maximum number of shares of Common Stock which may then be deliverable
upon the exercise of all outstanding Warrants.
The Company or, if appointed, the transfer agent for the
Common Stock (the
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"Transfer Agent") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times
to reserve such number of authorized shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent and with every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Company will supply such Transfer Agent with
duly executed certificates for such purposes and will provide or otherwise
make available any cash which may be payable as provided in Section 11. The
Company will furnish such Transfer Agent a copy of all notices of adjustments
and certificates related thereto, transmitted to each holder pursuant to
Section 12 hereof.
Before taking any action which would cause an adjustment
pursuant to Section 10 hereof to reduce the Exercise Price below the then par
value (if any) of the Warrant Shares, the Company will take any corporate
action which may, in the opinion of its counsel (which may be counsel
employed by the Company), be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares at the Exercise
Price as so adjusted.
The Company covenants that all Warrant Shares which may be
issued upon exercise of Warrants will, upon issue, be fully paid,
nonassessable, free of preemptive rights and free from all taxes, liens,
charges and security interests with respect to the issue thereof.
SECTION 9. OBTAINING STOCK EXCHANGE LISTINGS. The Company
will from time to time take all action which may be necessary so that the
Warrant Shares, immediately upon their issuance upon the exercise of
Warrants, will be listed on the principal securities exchanges and markets
within the United States of America, if any, on which other shares of Common
Stock are then listed.
SECTION 10. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF
WARRANT SHARES ISSUABLE. The Exercise Price and the number of Warrant Shares
issuable upon the exercise of each Warrant are subject to adjustment from
time to time upon the occurrence of the events enumerated in this Section 10.
For purposes of this Section 10, "Common Stock" means shares now or hereafter
authorized of any class of common stock of the Company and any other stock of
the Company, however designated, that has the right (subject to any prior
rights of any class or series of preferred stock) to participate in any
distribution of the assets or earnings of the Company without limit as to per
share amount.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK.
If the Company:
(1) pays a dividend or makes a distribution
on its Common Stock in shares of its Common Stock;
(2) subdivides its outstanding shares of
Common Stock into a greater number of shares;
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(3) combines its outstanding shares of Common
Stock into a smaller number of shares;
(4) makes a distribution on its Common Stock in
shares of its capital stock other than Common Stock; or
(5) issues by reclassification of its Common
Stock any shares of its capital stock;
then the Exercise Price in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any Warrant thereafter
exercised may receive the aggregate number and kind of shares of capital
stock of the Company which he would have owned immediately following such
action if such Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution and immediately after
the effective date in the case of a subdivision, combination or
reclassification.
If after an adjustment a holder of a Warrant upon exercise
of it may receive shares of two or more classes of capital stock of the
Company, the Company shall determine the allocation of the adjusted Exercise
Price between the classes of capital stock. After such allocation, the
exercise privilege and the Exercise Price of each class of capital stock
shall thereafter be subject to adjustment on terms comparable to those
applicable to Common Stock in this Section.
Such adjustment shall be made successively whenever any
event listed above shall occur.
(b) ADJUSTMENT FOR RIGHTS ISSUE.
If the Company distributes any rights, options or warrants
to all holders of its Common Stock entitling them for a period expiring
within 60 days after the record date mentioned below to purchase shares of
Common Stock at a price per share less than the current market price per
share on that record date, the Exercise Price shall be adjusted in accordance
with the formula:
O + N x P
-----
E' = E x M
------------
O + N
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
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O = the number of shares of Common Stock outstanding on the record
date.
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the current market price per share of Common Stock on the record
date.
The adjustment shall be made successively whenever any such
rights, options or warrants are issued and shall become effective immediately
after the record date for the determination of stockholders entitled to
receive the rights, options or warrants. If, at the end of the period during
which such rights, options or warrants are exercisable, not all rights,
options or warrants shall have been exercised, the Exercise Price shall be
immediately readjusted to what it would have been if "N" in the above formula
had been the number of shares actually issued.
This subsection (b) does not apply to any of the
transactions described in subsction (a) of this Section.
(c) ADJUSTMENT FOR OTHER DISTRIBUTIONS.
If the Company distributes to all holders of its Common
Stock any of its assets or debt securities or any rights or warrants to
purchase debt securities, assets or other securities of the Company, the
Exercise Price shall be adjusted in accordance with the formula:
E' = E x M - F
---------
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the current market price per share of Common Stock on the record
date mentioned below.
F = the fair market value on the record date of the assets,
securities, rights or warrants applicable to one share of
Common Stock. The Board of Directors shall determine the fair
market value.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the
distribution.
This subsection (c) does not apply to cash dividends or cash
distributions paid out of consolidated current or retained earnings as shown on
the books of the Company prepared in
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accordance with generally accepted accounting principles. Also, this
subsection does not apply to any transaction in subsection (a) or rights,
options or warrants referred to in subsection (b) of this Section 10.
(d) ADJUSTMENT FOR COMMON STOCK ISSUE.
If the Company issues shares of Common Stock for a
consideration per share less than the current market price per share on the
date the Company fixes the offering price of such additional shares, the
Exercise Price shall be adjusted in accordance with the formula:
P
---
E' = E x O + M
---------
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the issuance
of such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the current market price per share on the date of issuance of such
additional shares.
A = the number of shares outstanding immediately after the issuance of
such additional shares.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
(1) any of the transactions described in
subsections (a), (b) or (c) of this Section 10,
(2) the exercise of Warrants, or the conversion or
exchange of other securities convertible or exchangeable for Common
Stock,
(3) Common Stock issued to the Company's employees
under bona fide employee benefit plans adopted by the Board of
Directors and approved by the holders of Common Stock when required by
law, if such Common Stock would otherwise be covered by this subsection
(d) (but only to the extent that the aggregate number of shares
excluded
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hereby and issued after the date of this Warrant Agreement shall not
exceed 5% of the Common Stock outstanding at the time of the
adoption of each such plan, exclusive of antidilution adjustments
thereunder),
(4) Common Stock upon the exercise of rights
or warrants issued to the holders of Common Stock,
(5) Common Stock issued to shareholders of any
person which merges into the Company in proportion to their stock
holdings of such person immediately prior to such merger, upon
such merger,
(6) Common Stock issued in a bona fide public
offering pursuant to a firm commitment underwriting or
(7) Common Stock issued in a bona fide private
placement (except to the extent that any discount from the current
market price attributable to restrictions on transferability of the
Common Stock, as determined in good faith by the Board of Directors and
described in a Board resolution which shall be filed with the Trustee,
shall exceed 25%).
(e) ADJUSTMENT FOR CONVERTIBLE SECURITIES ISSUE.
If the Company issues any securities convertible into or
exchangeable for Common Stock (other than securities issued in transactions
described in subsections (b) and (c) of this Section 10) for a consideration
per share of Common Stock initially deliverable upon conversion or exchange
of such securities less than the current market price per share on the date
of issuance of such securities, the Exercise Price shall be adjusted in
accordance with this formula:
P
---
E' = E x O + M
--------
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the current market price per share on the date of issuance of
such securities.
D = the maximum number of shares deliverable upon conversion or
in exchange for such
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securities at the initial conversion or exchange rate.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or
exchange of such securities have not been issued when such securities are no
longer outstanding, then the Exercise Price shall promptly be readjusted to
the Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion or exchange of such securities.
This subsection (e) does not apply to:
(1) any of the transaction referred to in
subsection (a), (b), (c) or (d) of this Section 10.
(2) convertible securities issued to shareholders
of any person which merges into the Company, or with a subsidiary of
the Company, in proportion to their stock holdings of such person
immediately prior to such merger, upon such merger,
(3) convertible securities issued in a bona fide
public offering pursuant to a firm commitment underwriting or
(4) convertible securities issued in a bona fide
private placement (except to the extent that any discount from the
current market price attributable to restrictions on transferability of
Common Stock issuable upon conversion, as determined in good faith by
the Board of Directors and described in a Board resolution, shall
exceed 25% of the then current market price).
(f) CURRENT MARKET PRICE.
In subsections (b), (c), (d) and (e) of this Section 10 the
current market price per share of Common Stock on any date shall be the fair
market value per Warrant Share which shall mean (i) if the Common Stock is in
the over-the-counter market and not in The Nasdaq National Market nor on any
national securities exchange, the average of the per share closing bid price
on the 20 consecutive trading days immediately preceding the date in
question, as reported by The Nasdaq Small Cap Market (or an equivalent
generally accepted reporting service if quotations are not reported on The
Nasdaq Small Cap Market), or (ii) if the Common Stock is traded in The Nasdaq
National Market or on a national securities exchange, the average for the 20
consecutive trading days immediately preceding the date in question of the
daily per share closing prices in The Nasdaq National Market or on the
principal stock exchange on which it is listed, as the case may be. For
purposes of clause (i) above, if trading in the Common Stock is not reported
by The Nasdaq Small Cap Market, the applicable bid price referred to in said
clause shall be the lowest bid price as reported on the OTC Electronic
Bulletin Board of the National Association of Securities Dealers, Inc. or, if
not reported thereon, as reported in the "pink sheets" published by National
Quotation Bureau, Incorporated, and, if such securities are not so reported,
shall be the price of a share of
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Common Stock determined by the Company's Board of Directors in good faith.
The closing price referred to in clause (ii) above shall be the last reported
sale price or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices, in either case in The
Nasdaq National Market or on the national securities exchange on which the
Common Stock is then listed. in accordance with the first paragraph of
Section 5 of this Agreement.
(g) CONSIDERATION RECEIVED.
For purposes of any computation respecting consideration
received pursuant to subsections (d) and (e) of this Section 10, the
following shall apply:
(1) in the case of the issuance of shares of Common
Stock for cash, the consideration shall be the amount of such cash,
provided that in no case shall any deduction be made for any
commissions, discounts or other expenses incurred by the Company for
any underwriting of the issue or otherwise in connection therewith;
(2) in the case of the issuance of shares of Common
Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market
value thereof as determined in good faith by the Board of Directors
(irrespective of the accounting treatment thereof), whose determination
shall be conclusive, and described in a Board resolution, a copy of
which shall be mailed to each holder; and
(3) in the case of the issuance of securities
convertible into or exchangeable for shares, the aggregate
consideration received therefor shall be deemed to be the consideration
received by the Company for the issuance of such securities plus the
additional minimum consideration, if any, to be received by the Company
upon the conversion or exchange thereof (the consideration in each case
to be determined in the same manner as provided in clauses (1) and (2)
of this subsection).
(h) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED.
No adjustment in the Exercise Price need be made unless the
adjustment would require an increase or decrease of at least 1% in the
Exercise Price. Any adjustments that are not made shall be carried forward
and taken into account in any subsequent adjustment.
All calculations under this Section shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be.
(i) WHEN NO ADJUSTMENT REQUIRED.
No adjustment need be made for a transaction referred to in
subsections (a), (b), (c), (d) or (e) of this Section 10 if Warrant holders
are to participate in the transaction on a basis and with notice that the
Board of Directors determines to be fair and appropriate in light of the
basis and notice on which holders of Common Stock participate in the
transaction.
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No adjustment need be made for rights to purchase Common
Stock pursuant to a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value or
no par value of the Common Stock.
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue
on the cash.
(j) NOTICE OF ADJUSTMENT.
Whenever the Exercise Price is adjusted, the Company shall
provide the notices required by Section 12 hereof.
(k) VOLUNTARY REDUCTION.
The Company from time to time may reduce the Exercise Price
by any amount for any period of time if the period is at least 20 days and if
the reduction is irrevocable during the period; PROVIDED, HOWEVER, that in no
event may the Exercise Price be less than the par value of a share of Common
Stock.
Whenever the Exercise Price is reduced, the Company shall
mail to Warrant holders a notice of the reduction. The Company shall mail the
notice at least 15 days before the date the reduced Exercise Price takes
effect. The notice shall state the reduced Exercise Price and the period it
will be in effect.
A reduction of the Exercise Price does not change or adjust
the Exercise Price otherwise in effect for purposes of subsections (a), (b),
(c), (d) and (e) of this Section 10.
(l) NOTICE OF CERTAIN TRANSACTIONS.
If the Company:
(1) takes any action that would require an
adjustment in the Exercise Price pursuant to subsections (a), (b),
(c), (d) or (e) of this Section 10 and if the Company does not
arrange for Warrant holders to participate pursuant to subsection
(i) of this Section 10;
(2) takes any action that would require a
supplemental Warrant Agreement pursuant to subsection (m) of this
Section 10; or
(3) liquidates or dissolves,
then the Company shall mail to Warrant holders a notice stating the proposed
record date for a dividend or distribution or the proposed effective date of
a subdivision, combination, reclassification, consolidation, merger,
transfer, lease, liquidation or dissolution. The Company shall
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mail the notice at least 20 days before such date. Failure to mail the notice
or any defect in it shall not affect the validity of the transaction.
(m) REORGANIZATION OF COMPANY.
If the Company consolidates or merges with or into, or
transfers or leases all or substantially all its assets to, any person, upon
consummation of such transaction the Warrants shall automatically become
exercisable for the kind and amount of securities, cash or other assets which
the holder of a Warrant would have owned immediately after such transaction
if the holder had exercised the Warrant immediately before the effective date
of such transaction. Concurrently with the consummation of such transaction,
the corporation formed by or surviving any such consolidation or merger if
other than the Company, or the person to which such sale or conveyance shall
have been made, shall enter into a supplemental Warrant Agreement so
providing and further providing for adjustments which shall be as nearly
equivalent as may be practical to the adjustments provided for in this
Section. The successor Company shall mail to Warrant holders a notice
describing the supplemental Warrant Agreement.
If the issuer of securities deliverable upon exercise of
Warrants under the supplemental Warrant Agreement is an Affiliate of the
formed, surviving, transferee or lessee corporation, that issuer shall join
in the supplemental Warrant Agreement.
If this subsection (m) applies, subsections (a), (b), (c),
(d) and (e) of this Section 10 do not apply.
(n) WHEN ISSUANCE OR PAYMENT MAY BE DEFERRED.
In any case in which this Section 10 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the holder of any Warrant exercised after such record
date the Warrant Shares and other capital stock of the Company, if any,
issuable upon such exercise over and above the Warrant Shares and other
capital stock of the Company, if any, issuable upon such exercise on the
basis of the Exercise Price and (ii) paying to such holder any amount in cash
in lieu of a fractional share pursuant to Section 11; PROVIDED, HOWEVER, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional Warrant
Shares, other capital stock and cash upon the occurrence of the event
requiring such adjustment.
(o) ADJUSTMENT IN NUMBER OF SHARES.
Upon each adjustment of the Exercise Price pursuant to this
Section 10, each Warrant outstanding prior to the making of the adjustment in
the Exercise Price shall thereafter evidence the right to receive upon
payment of the adjusted Exercise Price that number of shares of Common Stock
(calculated to the nearest hundredth) obtained from the following formula:
N' = N x E
-------
E'
<PAGE>
where:
N' = the adjusted number of Warrant Shares issuable upon exercise
of a Warrant by payment of the adjusted Exercise Price.
N = the number or Warrant Shares previously issuable upon
exercise of a Warrant by payment of the Exercise Price prior
to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(p) FORM OF WARRANTS.
Irrespective of any adjustments in the Exercise Price or
the number or kind of shares purchasable upon the exercise of the Warrants,
Warrants theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in the Warrants initially
issuable pursuant to this Agreement.
SECTION 11. FRACTIONAL INTERESTS. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If
more than one Warrant shall be presented for exercise in full at the same
time by the same holder, the number of full Warrant Shares which shall be
issuable upon the exercise thereof shall be computed on the basis of the
aggregate number of Warrant Shares purchasable on exercise of the Warrants so
presented. If any fraction of a Warrant Share would, except for the
provisions of this Section 11, be issuable on the exercise of any Warrants
(or specified portion thereof), the Company shall pay an amount in cash equal
to the Exercise Price on the day immediately preceding the date the Warrant
is presented for exercise, multiplied by such fraction.
SECTION 12. NOTICES TO WARRANT HOLDERS. Upon any adjustment
of the Exercise Price pursuant to Section 10, the Company shall promptly
thereafter (i) cause to be given to each of the registered holders of the
Warrant Certificates at his address appearing on the Warrant register a
certificate of a firm of independent public accountants of recognized
standing selected by the Board of Directors of the Company (who may be the
regular auditors of the Company) setting forth the Exercise Price after such
adjustment and setting forth in reasonable detail the method of calculation
and the facts upon which such calculations are based and setting forth the
number of Warrant Shares (or portion thereof) issuable after such adjustment
in the Exercise Price, upon exercise of a Warrant and payment of the adjusted
Exercise Price, which certificate shall be conclusive evidence of the
correctness of the matters set forth therein, by first-class mail, postage
prepaid. Where appropriate, such notice may be given in advance and included
as a part of the notice required to be mailed under the other provisions of
this Section 12.
In case:
<PAGE>
(a) the Company shall authorize the issuance to all holders
of shares of Common Stock of rights, options or warrants to subscribe for or
purchase shares of Common Stock or of any other subscription rights or
warrants; or
(b) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or assets
(other than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends payable in shares of Common Stock or
distributions referred to in subsection (a) of Section 10 hereof); or
(c) of any consolidation or merger to which the Company is
a party and for which approval of any shareholders of the Company is
required, or of the conveyance or transfer of the properties and assets of
the Company substantially as an entirety, or of any reclassification or
change of Common Stock issuable upon exercise of the Warrants (other than a
change in par value, or from par value to no par value, or from no par value
to par value, or as a result of a subdivision or combination), or a tender
offer or exchange offer for shares of Common Stock; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(e) the Company proposes to take any action (other than
actions of the character described in Section 10(a)) which would require an
adjustment of the Exercise Price pursuant to Section 10; then the Company
shall cause to be given to each of the registered holders of the Warrant
Certificates at his address appearing on the Warrant register, at least 20
days (or 10 days in any case specified in clauses (a) or (b) above) prior to
the applicable record date hereinafter specified, or promptly in the case of
events for which there is no record date, by first-class mail, postage
prepaid, a written notice stating (i) the date as of which the holders of
record of shares of Common Stock to be entitled to receive any such rights,
options, warrants or distribution are to be determined, or (ii) the initial
expiration date set forth in any tender offer or exchange offer for shares of
Common Stock, or (iii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective or consummated, and the date as of which it is expected that
holders of record of shares of Common Stock shall be entitled to exchange
such shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up. The failure to give the notice required by this
Section 12 or any defect therein shall not affect the legality or validity of
any distribution, right, option, warrant, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the
Warrant Certificates shall be construed as conferring upon the holders
thereof the right to vote or to consent or to receive notice as shareholders
in respect of the meetings of shareholders or the election of Directors of
the Company or any other matter, or any rights whatsoever as shareholders of
the Company.
SECTION 13. NOTICES TO COMPANY. Any notice or demand
authorized by this Agreement to be given or made by the Company or by the
registered holder of any Warrant Certificate to or on the Company shall be
sufficiently given or made when and if deposited in the mail, first class or
registered, postage prepaid, addressed (until another address is filed in
writing by
<PAGE>
the Company), as follows:
Photogen Technologies, Inc.
7327 Oak Ridge Highway, Suite B
Knoxville, TN 37931
Attention: John T. Smolik, President
With copy to
Theodore W. Grippo, Esq.
Grippo & Elden
227 West Monroe Street, Suite 3600
Chicago, IL 60606
In case the Company shall fail to maintain such office or
agency or shall fail to give such notice of the location or of any change in
the location thereof, presentations may be made and notices and demands may
be served at the principal office of the Transfer Agent.
SECTION 14. SUPPLEMENTS AND AMENDMENTS. The Company and the
Warrant holders may from time to time supplement or amend this Agreement with
the approval of all holders of Warrant Certificates.
SECTION 15. SUCCESSORS. All the covenants and provisions
of this Agreement by or for the benefit of the Company or the Holder shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 16. TERMINATION. This Agreement shall terminate at
5:00 p.m., Pacific time on August 9, 2004. Notwithstanding the foregoing,
this Agreement will terminate on any earlier date if all Warrants have been
exercised.
SECTION 17. GOVERNING LAW; JURISDICTION AND VENUE. This
Agreement and each Warrant Certificate issued hereunder shall be deemed to be
a contract made under the laws of the State of Tennessee and for all purposes
shall be construed in accordance with the internal laws of said State,
PROVIDED, HOWEVER, that if, as a result of the Company's incorporation in the
State of Nevada the laws of that State should govern a particular issue, the
internal laws of the State of Nevada shall govern that issue.
SECTION 18. TRANSFERABILITY AND NONNEGOTIABILITY OF
WARRANT. The Warrants may not be transferred or assigned in whole or in part
without compliance with all applicable federal and state securities laws by
the transferor and the transferee. Subject to compliance with such laws,
title to the Warrants may be transferred by endorsement (by the Holder
executing the Assignment Form annexed to the Warrant Certificate) and
delivery in the same manner as a negotiable instrument transferable by
endorsement and delivery.
SECTION 19. EXCHANGE OF WARRANT UPON A TRANSFER. On
surrender of theWarrant Certicate for exchange, properly endorsed on the
Assignment Form and subject to the provisions of
<PAGE>
this Agreement with respect to compliance with applicable securities laws and
with the limitations on assignments and transfers and contained in Section
18, the Company at its expense shall issue to or on the order of the Holder a
new Warrant Certificate of like tenor, in the name of the Holder or as the
Holder may direct, for the number of shares issuable upon exercise hereof.
SECTION 20. COMPLIANCE WITH SECURITIES LAWS. The Holder
agrees that the Holder will not offer, sell or otherwise dispose of this
Warrant or any shares of Common Stock to be issued upon exercise hereof
except under circumstances that will not result in a violation of the federal
or any state securities laws. Prior to any proposed transfer of this Warrant,
the holder thereof shall give written notice to the Company of its intention
to effect such transfer. Each such notice shall describe the manner of the
proposed transfer and, if requested by the Company, shall be accompanied by
an opinion of counsel satisfactory to the Company to the effect that the
proposed transfer may be effected without registration under the Securities
Act, whereupon the holder shall be entitled to transfer this Warrant in
accordance with the terms of its notice; provided, however, that no such
opinion of counsel shall be required for a transfer to one or more partners
of the transferor (in the case of a transferor that is a partnership) or to
an affiliated corporation (in the case of a transferor that is a
corporation). Each Warrant transferred as above provided shall bear the
legend set forth at the beginning of the form Warrant Certificates annexed
hereto as Annex A and B, as the case may be .
SECTION 21. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any person or corporation other than
the Company, the Holder and the registered holders of the Warrant
Certificates any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Holder and the registered holders of the Warrant
Certificates.
SECTION 22. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
PHOTOGEN TECHNOLOGIES, INC.
By: /s/ John T. Smolik
----------------------------
John T. Smolik, President
[Seal]
Attest: /s/ Eric Wachter
----------------------------
Secretary
FARCAP GROUP, LLC
<PAGE>
By: /s/ Yale Farar
-------------------------
Yale Farar, Manager
<PAGE>
Annex A
[Form of Warrant Certificate # 1]
THE SECURITIES EVIDENCED OR CONSTITUTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS THE REGISTRATION PROVISIONS OF SAID ACT HAVE BEEN
COMPLIED WITH OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
EXERCISABLE ON OR BEFORE August 9, 2004
No. 1 500,000 Warrants
Warrant Certificate
PHOTOGEN TECHNOLOGIES, INC.
This Warrant Certificate certifies that FARCAP GROUP, LLC,
or registered assigns, is the registered holder of Warrants expiring August
9, 2004 (the "Warrants") to purchase Common Stock, par value $0.001 per share
(the "Common Stock"), of PHOTOGEN TECHNOLOGIES, INC., a Nevada corporation
(the "Company"). Each Warrant entitles the holder upon exercise to receive
from the Company at any time after the earlier of (1) the consummation of a
Value-added Transaction (as defined in that that certain Consulting Agreement
dated August 9, 1999 by and between the Company and Farcap Group, LLC, (the
"Consulting Agreement") or (2) August 9, 2000, and on or before 5:00 p.m.
Pacific Time on August 9, 2004, one fully paid and nonassessable share of
Common Stock (a "Warrant Share") at the initial exercise price (the "Exercise
Price") of $9.45 payable in lawful money of the United States of America upon
surrender of this Warrant Certificate and payment of the Exercise Price at
the office of the Company, but only subject to the conditions set forth
herein and in the Warrant Agreement referred to herein. The Exercise Price
and number of Warrant Shares issuable upon exercise of the Warrants are
subject to adjustment upon the occurrence of certain events set forth in the
Warrant Agreement. Notwithstanding anything herein to the contrary, the right
to exercise these Warrants shall terminate and be of no further force and
effect if either Farcap or the Company shall terminate the Consulting
Agreement effective on August 9, 2000 in accordance with provisions of
Section 2 of the Consulting Agreement.
No Warrant may be exercised after 5:00 p.m., Pacific Time
on August 9, 2004, and to the extent not exercised by such time such Warrants
shall become void.
This Warrant Certificate shall be governed and construed in
accordance with the internal laws of the State of Tennessee, PROVIDED,
HOWEVER, that if, as a result of the Company's
<PAGE>
incorporation in the State of Nevada the laws of that State should govern a
particular issue, the internal laws of the State of Nevada shall govern that
issue.
Any controversy or claim arising out of or relating to this
Agreement, or the alleged breach thereof, shall be settled by binding
arbitration in Chicago, Illinois in accordance with the applicable rules of
the American Arbitration Association, and judgment on the award rendered by
the arbitrator(s) shall be binding on the parties and may be entered in any
court having jurisdiction thereof.
The Warrants evidenced by this Warrant Certificate are part
of a duly authorized issue of Warrants expiring August 9, 2004 entitling the
holder on exercise to receive shares of Common Stock, par value $0.01 per
share, of the Company (the "Common Stock"), and are issued or to be issued
pursuant to a Warrant Agreement dated as of August 9, 1999 (the "Warrant
Agreement"), duly executed and delivered by the Company to Farcap Group Ltd.
(the "Holder"), which Warrant Agreement is hereby incorporated by reference
in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company, the Holder and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder and
any transferee of the registered Holder) of the Warrants. A copy of the
Warrant Agreement may be obtained by the holder hereof upon written request
to the Company.
Warrants may be exercised at any time on or before August
9, 2004. The holder of Warrants evidenced by this Warrant Certificate may
exercise them by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed,
together with payment of the Exercise Price in cash at the office of the
Company. In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued to the holder hereof or his assignee
a new Warrant Certificate evidencing the number of Warrants not exercised. No
adjustment shall be made for any dividends on any Common Stock issuable upon
exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price set forth on the face hereof may, subject
to certain conditions, be adjusted. If the Exercise Price is adjusted, the
Warrant Agreement provides that the number of shares of Common Stock issuable
upon the exercise of each Warrant shall be adjusted. No fractions of a share
of Common Stock will be issued upon the exercise of any Warrant, but the
Company will pay the cash value thereof determined as provided in the Warrant
Agreement.
Warrant Certificates, when surrendered at the office of the
Company by the registered holder thereof may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, but without
payment of any service charge, for another Warrant Certificate or Warrant
Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
<PAGE>
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Company a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company may deem and treat the registered holder(s)
thereof as the absolute owner(s) of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone), for the
purpose of any exercise hereof, of any distribution to the holder(s) hereof,
and for all other purposes, and the Company shall not be affected by any
notice to the contrary. Neither the Warrants nor this Warrant Certificate
entitles any holder hereof to any rights of a stockholder of the Company.
IN WITNESS WHEREOF, PHOTOGEN TECHNOLOGIES, INC. has caused
this Warrant Certificate to be signed by its President and by its Secretary,
and has caused its corporate seal to be affixed hereunto or imprinted hereon.
Dated: August 9, 1999
PHOTOGEN TECHNOLOGIES, INC.
By /s/ John T. Smolik
-------------------------
President
By /s/ Eric Wachter
-------------------------
Secretary
<PAGE>
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive ________ shares of
Common Stock and herewith tenders payment for such shares to the order of
PHOTOGEN TECHNOLOGIES, INC. in the amount of $_______ in accordance with the
terms hereof. The undersigned requests that a certificate for such shares be
registered in the name of _______________, whose address is _______________
____________________________________________________________ and that such
shares be delivered to _____________________________________ whose address is
___________________________________________________________________________.
If said number of shares is less than all of the shares of Common Stock
purchasable hereunder, the undersigned requests that a new Warrant
Certificate representing the remaining balance of such shares be registered
in the name of ____________________________________, whose address is _______
_______________________________________________________________ and that such
Warrant Certificate be delivered to ______________________________, whose
address is _____________________________________________.
Signature:
Date:
<PAGE>
Annex B
[Form of Warrant Certificate # 2]
THE SECURITIES EVIDENCED OR CONSTITUTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS THE REGISTRATION PROVISIONS OF SAID ACT HAVE BEEN
COMPLIED WITH OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
EXERCISABLE ON OR BEFORE August 9, 2004
No. 2 500,000 Warrants
Warrant Certificate
PHOTOGEN TECHNOLOGIES, INC.
This Warrant Certificate certifies that FARCAP GROUP, LLC,
or registered assigns, is the registered holder of Warrants expiring August
9, 2004 (the "Warrants") to purchase Common Stock, par value $0.001 per share
(the "Common Stock"), of PHOTOGEN TECHNOLOGIES, INC., a Nevada corporation
(the "Company"). Each Warrant entitles the holder upon exercise to receive
from the Company at any time after August 9, 1999 and on or before 5:00 p.m.
Pacific Time on August 9, 2004, one fully paid and nonassessable share of
Common Stock (a "Warrant Share") at the initial exercise price (the "Exercise
Price") of $9.45 payable in lawful money of the United States of America upon
surrender of this Warrant Certificate and payment of the Exercise Price at
the office of the Company, but only subject to the conditions set forth
herein and in the Warrant Agreement referred to herein. The Exercise Price
and number of Warrant Shares issuable upon exercise of the Warrants are
subject to adjustment upon the occurrence of certain events set forth in the
Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., Pacific Time
on August 9, 2004, and to the extent not exercised by such time such Warrants
shall become void.
This Warrant Certificate shall be governed and construed in
accordance with the internal laws of the State of Tennessee, PROVIDED,
HOWEVER, that if, as a result of the Company's incorporation in the State of
Nevada the laws of that State should govern a particular issue, the internal
laws of the State of Nevada shall govern that issue.
Any controversy or claim arising out of or relating to this
Agreement, or the alleged breach thereof, shall be settled by binding
arbitration in Chicago, Illinois in accordance with the applicable rules of
the American Arbitration Association, and judgment on the award
<PAGE>
rendered by the arbitrator(s) shall be binding on the parties and may be
entered in any court having jurisdiction thereof.
The Warrants evidenced by this Warrant Certificate are part
of a duly authorized issue of Warrants expiring August 9, 2004 entitling the
holder on exercise to receive shares of Common Stock, par value $0.01 per
share, of the Company (the "Common Stock"), and are issued or to be issued
pursuant to a Warrant Agreement dated as of August 9, 1999 (the "Warrant
Agreement"), duly executed and delivered by the Company to Farcap Group Ltd.
(the "Holder"), which Warrant Agreement is hereby incorporated by reference
in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company, the Holder and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder and
any transferee of the registered Holder) of the Warrants. A copy of the
Warrant Agreement may be obtained by the holder hereof upon written request
to the Company.
Warrants may be exercised at any time on or before August
9, 2004. The holder of Warrants evidenced by this Warrant Certificate may
exercise them by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed,
together with payment of the Exercise Price in cash at the office of the
Company. In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued to the holder hereof or his assignee
a new Warrant Certificate evidencing the number of Warrants not exercised. No
adjustment shall be made for any dividends on any Common Stock issuable upon
exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price set forth on the face hereof may, subject
to certain conditions, be adjusted. If the Exercise Price is adjusted, the
Warrant Agreement provides that the number of shares of Common Stock issuable
upon the exercise of each Warrant shall be adjusted. No fractions of a share
of Common Stock will be issued upon the exercise of any Warrant, but the
Company will pay the cash value thereof determined as provided in the Warrant
Agreement.
Warrant Certificates, when surrendered at the office of the
Company by the registered holder thereof may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, but without
payment of any service charge, for another Warrant Certificate or Warrant
Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Company a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in
<PAGE>
connection therewith.
The Company may deem and treat the registered holder(s)
thereof as the absolute owner(s) of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone), for the
purpose of any exercise hereof, of any distribution to the holder(s) hereof,
and for all other purposes, and the Company shall not be affected by any
notice to the contrary. Neither the Warrants nor this Warrant Certificate
entitles any holder hereof to any rights of a stockholder of the Company.
IN WITNESS WHEREOF, PHOTOGEN TECHNOLOGIES, INC. has caused
this Warrant Certificate to be signed by its President and by its Secretary,
and has caused its corporate seal to be affixed hereunto or imprinted hereon.
Dated: August 9, 1999
PHOTOGEN TECHNOLOGIES, INC.
By
-------------------------
President
By
-------------------------
Secretary
<PAGE>
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive ________ shares of
Common Stock and herewith tenders payment for such shares to the order of
PHOTOGEN TECHNOLOGIES, INC. in the amount of $_______ in accordance with the
terms hereof. The undersigned requests that a certificate for such shares be
registered in the name of _______________, whose address is ________________
__________________________________________________________ and that such
shares be delivered to ___________________________________ whose address is
___________________________________________________________________________.
If said number of shares is less than all of the shares of Common Stock
purchasable hereunder, the undersigned requests that a new Warrant
Certificate representing the remaining balance of such shares be registered
in the name of __________________________________, whose address is
__________ _______________________________________________________________
and that such Warrant Certificate be delivered to
_________________________________, whose address
is_____________________________________________.
Signature:
Date:
<PAGE>
Exhibit 10.6
CONFIDENTIAL TREATMENT HAS BEEN SOUGHT FOR
PORTIONS OF THIS EXHIBIT PURSUANT TO RULE 24B-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
AGREEMENT
This Agreement ("Agreement") is entered into effective as of
August 9, 1999 by and among Alliance Pharmaceutical Corp. (as successor to
Fluoromed Pharmaceuticals, Inc.) ("Alliance "), Photogen Technologies, Inc.
("Photogen"), and Gerald Wolf, Ph.D., M.D. ("Dr. Wolf").
RECITALS
Dr. Wolf entered into an exclusive License Agreement dated
January 21, 1989 with Fluoromed Pharmaceuticals, Inc., a copy of which is
attached as Exhibit A hereto (the "1989 License Agreement"), granting the
licensee an exclusive license to utilize, manufacture, sell, license and
sublicense and otherwise treat as its exclusive property, inventions relating to
the use of various compounds as contrast agents for imaging the lymph nodes
and/or lymphatic system, together with all related technical information,
know-how, patents, and related patent rights.
The inventions are now covered by two United States patents,
U.S. Patents No. [****] and No. [****] (respectively, the "[****] Patent" and
the "[****] Patent") and all corresponding or related foreign patents and patent
applications as more fully described in Exhibit B hereto (the "Patents");
Photogen desires to acquire the Patents and to grant Alliance
an exclusive license to use the Patents in the field of Ultrasound. The term
"Ultrasound" means: percutaneous lymphography utilizing the ultrasonic modality;
the practice of the Patents using materials intended to change the acoustic
properties of the lymph node so as to identify its location or image the
intranodal architecture via the ultrasonic modality following percutaneous
administration; such materials will usually be composed of a relatively
insoluble gas such as hexafluorine contained within a biologically compatible
matrix. Photogen also desires to acquire all of Dr. Wolf's Know-How and
Improvements in all fields other than the field of Ultrasound. The term
"Know-How" means any and all rights to any discovery, invention (whether or not
patentable), know-how, substances, data including clinical trial data,
techniques, processes,
- ------------
[****] REPRESENTS MATERIALS WHICH HAS BEEN REDACTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
-1-
<PAGE>
systems, formulations and designs relating to the Patents. The term
"Improvements" means any improvements to the Patents developed by either
Alliance or Dr. Wolf subsequent to the execution of the 1989 License Agreement.
Alliance desires to sell to Photogen all of its right, title
and interest in the Patents, subject to an exclusive license from Photogen to
use the same in the field of Ultrasound and Alliance's retention of the Know-How
and Improvements described in Exhibit C hereafter (the "Retained Technology"),
all as set forth below. Dr. Wolf desires that all of his right, title and
interest in the Patents and all his Know-How and Improvements related to the
Patents other than his Know-How and Improvements related to the Patents in the
field of Ultrasound shall be transferred to and vested in Photogen at the
Closing and that all of his right, title and interest, if any, in his Know-How
and Improvements related to the Patents in the field of Ultrasound shall be
transferred to and vested in Alliance at the Closing.
AGREEMENT
Now, therefore, in consideration of the mutual promises herein
and for other legally sufficient consideration, the parties hereby agree as
follows:
1. As of the Closing (defined below) the effectiveness of the
1989 License Agreement shall be suspended and have no force and effect except as
provided in Section 10 below.
2. As of the Closing, Alliance and Dr. Wolf hereby release and
discharge one another (and their employees, directors, agents and other
affiliates) from all known and unknown claims, demands, allegations,
liabilities, expenses (including attorneys' fees and expenses) and losses any of
them may have incurred through the date of this Agreement arising out of or
relating to the 1989 License Agreement and the transactions contemplated in the
1989 License Agreement. This release shall not be construed or admissible in any
proceeding as an admission by any party of the validity of any such claims.
3. As of the Closing, Alliance hereby assigns, transfers and
conveys to Photogen all of it its right, title and interest in and to the
Patents; Alliance, however, retains the Retained Technology.
4. As of the Closing, Dr. Wolf hereby assigns all of his
right, title and interest in and to the 1989 License Agreement, the Patents and
all Know-How and Improvements related thereto to Photogen, other than Know-How
and Improvements in the field of Ultrasound. As of the Closing, Dr. Wolf hereby
assigns to Alliance all of his right, title and interest in and to all Know-How
and Improvements in the field of Ultrasound.
5. As of the Closing, Photogen grants Alliance an exclusive,
paid-up, royalty-free, world-wide perpetual license, with all rights to
sublicense or assign it rights under
-2-
<PAGE>
this license, under the Patents to develop, make, have made, import, use, offer
for sale and sell products solely in the field of Ultrasound. It is expressly
understood and agreed that Alliance shall have no rights under the Patents in
any field other than Ultrasound.
6. Alliance represents and warrants to, and covenants with Dr.
Wolf only with respect to Section 6(j) and with Photogen and Dr. Wolf with
respect to Sections 6(a) through 6(i), that the same are true, correct and
complete as of the date hereof and will be true, correct and complete at and as
of the Closing. For purposes of this Agreement, the knowledge of Alliance means
actual knowledge without obligation of investigation.
(a) No consent or waiver of any third party is
necessary for Alliance to execute and deliver this Agreement and to perform all
of its obligations hereunder.
(b) Exhibit B hereto sets forth an accurate and
complete list and description of the Patents (all U.S. patents and patent
applications and all corresponding or related foreign patents and patent
applications). Alliance is the co-owner with Dr. Wolf of the [****] Patent
and the EPO Patent, free and clear of any lien, encumbrance or claim of any
third party (except for the 1989 License Agreement and a lien held by the
Imperial Bank which will be released at Closing). There are no liens,
encumbrances or claims of any third party on Alliance's rights in the 1989
License Agreement.
(c) Alliance has no interest in the [****] Patent,
other than through the 1989 License Agreement.
(d) To Alliance's knowledge, neither the Patents nor
any products, methods or other inventions related thereto, interferes,
infringes, misappropriates or conflicts with the intellectual property rights,
contract or other rights of any third party. To Alliance's knowledge, there are
no pending or threatened, claims or proceedings either against Alliance or
relating to the Patents. To Alliance's knowledge, no third party has interfered
with, infringed upon, misappropriated or otherwise come into conflict with the
Patents. Alliance warrants and represents that all granted patents listed in
Exhibit B are in full force and effect and that all maintenance fees or other
fees associated with maintaining the Patents are current as of the Closing.
(e) As of the date of this Agreement, Alliance has not
licensed or permitted any other person or entity to use the Patents outside the
field of ultrasound.
- ------------
[****] REPRESENTS MATERIALS WHICH HAS BEEN REDACTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
-3-
<PAGE>
(f) Alliance is an "Accredited Investor" as defined
under the Securities Act of 1933 (the "Securities Act"). Alliance is acquiring
the Photogen shares referred to in Sections 9(b)(i) and 9(b)(ii), below, for its
own account for the purpose of investment and not with a view to the sale or
distribution thereof; and, in any event, Alliance will not sell or otherwise
transfer any of the Photogen shares except pursuant to a registration statement
effective under the Securities Act or a valid exemption from registration under
the Securities Act. Alliance agrees that the certificates representing those
Photogen shares will bear a legend consistent with the foregoing.
(g) Alliance has been furnished with a copy of
Photogen's most recent Form 10-KSB and Form 10-QSB report, and has had access to
the business records of Photogen and all such additional information and
documents as Alliance has requested. Alliance has been afforded an opportunity
to ask questions of and receive answers from representatives of Photogen
concerning the terms and conditions of this Agreement and the purchase of
Photogen shares.
(h) There are no claims for brokerage commissions or
finder's fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of Alliance, and Alliance agrees to indemnify and hold Photogen and
Dr. Wolf harmless against any damages incurred as a result of any such claims.
(i) Alliance is the successor in interest to all
right, title and interest of Fluoromed Pharmaceuticals Inc. with respect to
the 1989 License Agreement and the Patents. Alliance is also the owner by
assignment of all of David Long's right, title and interest in the [****]
Patent and all corresponding and related foreign patents and applications,
including the EPO Patent.
(j) Alliance is not now and never has been obligated
to pay a royalty or other payment to Dr. Wolf pursuant to the terms of the 1989
License Agreement.
7. Photogen hereby represents and warrants to Alliance that:
(a) Photogen is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and is
qualified to do business as a foreign corporation in each jurisdiction where
failure to qualify would have a materially adverse effect on the business and
properties of Photogen.
(b) Photogen has full power to execute, deliver and
perform this Agreement. This Agreement when executed and delivered will be a
legal, valid and, assuming due execution by the other parties hereto and
thereto, binding obligation of Photogen, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium, reorganization
or similar laws affecting creditors' rights generally, and to general equitable
principles.
- ---------------
[****] REPRESENTS MATERIALS WHICH HAS BEEN REDACTED PURSUANT TO
RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT, AS AMENDED
-4-
<PAGE>
(c) When issued in accordance with the terms of this
Agreement, the Photogen shares will be duly authorized, validly issued and
outstanding, fully paid and non-assessable, and the certificates representing
the same will be duly and validly authorized, executed and delivered by
Photogen. Photogen has authorized and reserved for issuance sufficient shares of
its common stock to fulfill its obligations to issue any Contingent Shares
referred to in Section 9(b)(ii). The Contingent Shares will, upon issuance in
accordance with the terms of this Agreement, be duly authorized, validly issued
and outstanding, fully paid and nonassessable, and the certificates representing
the same will be duly and validly authorized, executed and delivered by
Photogen.
(d) Assuming that Alliance's representations and
warranties contained in Section 6 of this Agreement are and continue to be true
and correct, the offer, issuance and sale to Alliance of the Photogen shares and
the Contingent Shares are and will be exempt from the registration requirements
of the Securities Act, and from all applicable state securities laws.
(e) There are no claims for brokerage commissions of
finder's fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement made by or on behalf of
Photogen. Photogen agrees to indemnify and hold Alliance harmless against any
damages incurred as a result of any such claim.
8. Except in the field of Ultrasound, Alliance will promptly
refer to Photogen any request or inquiry received from a third party regarding
the Patents or products utilizing the same.
9. As of the Closing, Photogen will deliver or caused to be
delivered a total of [****] of value to Alliance as follows:
(a) Photogen will deliver or caused to be delivered to
Alliance a total of [****] in cash as follows: (i) [****] at the Closing, (ii)
[****] on December 31, 1999, and (iii) [****] on March 31, 2000.
(b) (i) At the Closing, Photogen will deliver to
Alliance [****] shares of the common stock of Photogen based on a "current
market price" (the average closing bid price of the stock for the 20 trading
days prior to the date of determination (I.E., August 9, 1999) as quoted on the
over-the-counter bulletin board market or on any exchange on which the common
stock is listed) of $9.45 per share discounted by 25% to $7.0875.
- ------------
[****] REPRESENTS MATERIALS WHICH HAS BEEN REDACTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
-5-
<PAGE>
(ii) If on the first anniversary of the date of this
Agreement the aggregate current market price of the Photogen shares delivered
pursuant to the previous sentence is not at least [****], Photogen will, within
30 days of such first anniversary date, deliver additional shares of Photogen
common stock so that the current market price of the additional common stock
(discounted by 25%) together with the other Photogen common stock delivered to
Alliance at Closing equals [****] (the "Contingent Shares"). For example, if the
current market price of Photogen common stock on the first anniversary of this
Agreement is $6.00 per share, Photogen will deliver to Alliance an additional
[****] shares of Photogen common stock, determined as follows: (i) $6.00 x
[****] = [****] (the current market value of the original shares on the first
anniversary date of this Agreement); (ii) [****] - [****] = [****] (the value
Photogen must provide Alliance to equal [****] in value); (iii) $6.00 x .75 =
$4.50 (the current market price discounted by 25%); (iv) [****] / $4.50 = [****]
(the number of additional shares Photogen must provide). Fractional share
amounts shall be rounded up or down to the nearest whole share.
10. Photogen may cure any default in either of the [****]
payments due on December 31, 1999 and March 31, 2000 pursuant to Section
9(a)(ii) or 9(a)(iii) by paying to Alliance within 30 days of the due date the
amount due for that installment plus interest from the date due until paid at
the prime rate as published in The Wall Street Journal. Cure will restore all of
Photogen 's rights under this Agreement. If Photogen fails to cure a default in
either the December 31, 1999, March 31, 2000 payments, or fails to issue the
Contingent Shares if required to do so, within 30 days of the first anniversary
date of this Agreement, the 1989 License Agreement will be effective and will
continue in full force and effect in accordance with its terms with Photogen ,
as assignee of Dr. Wolf, the licensor. The 1989 License Agreement will not be
effective for any other reason; and if Photogen makes both payments due on
December 31, 1999 and March 31, 2000, and issues the Contingent Shares as
required hereunder or the Contingent Shares are not required to be issued, the
1989 License Agreement shall become null and void without any further action on
the part of Photogen or Alliance.
11. The closing and consummation of the transactions herein
that are to be completed at the Closing shall take place as soon as practicable
after the date of this Agreement, but in no event later than 60 days after the
date hereof. The Closing shall be deemed complete upon the delivery of the cash
called for by Section 9(a)(i) and the delivery of the stock called for by
Section 9(b)(i) (the "Closing").
- ------------
[****] REPRESENTS MATERIALS WHICH HAS BEEN REDACTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
-6-
<PAGE>
12. Photogen grants Alliance "piggy back" registration rights
for those Photogen shares delivered to Alliance pursuant to Sections 9(b)(i) and
9(b)(ii) above, as more fully set forth in Exhibit D attached hereto.
13. The parties hereto agree to take all actions and do all
things necessary and appropriate to fully consummate the transactions
contemplated by this Agreement, including to vest in any party the intellectual
property rights conveyed hereby, promptly upon the request of any party entitled
to such action. Such further actions shall include executing and delivering any
further instruments, documents or agreements, in recordable form as appropriate,
containing commercially reasonable and customary terms for such matters that are
reasonably satisfactory to the parties and their counsel.
14. This Agreement and the recitals and exhibits hereto (all
of which are incorporated herein by reference): (i) contain the entire agreement
and understanding between the parties concerning the subject matter hereof and
supersede and replace all prior or other contemporaneous negotiations,
representations, arrangements, proposed agreements and agreements, written or
oral, with respect to such subject matter (none of which prior or
contemporaneous communications shall be binding upon the parties); (ii) may be
amended or modified only by a written instrument dated after the date hereof and
signed by the parties or their successors in interest; (iii) shall be
interpreted, enforced and governed by the laws of the State of Massachusetts,
without regard to its conflict of laws provisions; (iv) shall be construed as if
the parties jointly prepared them and any uncertainty or ambiguity shall not be
interpreted against any one party; and (v) may be executed in counterparts which
when taken together constitute the entire agreement between the parties hereto,
and each counterpart shall bind the party executing it (and any party may become
bound hereunder by executing this Agreement and delivering it by facsimile).
15. A communication relating to this Agreement shall have
legal effect only if it is in writing, and shall be deemed duly given three
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
beneath its signature below. Any party may deliver any written communication
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, or ordinary mail), but no such communication shall be
deemed to have been duly given unless and until it actually is received by the
individual for whom it is intended. Any party may change the name and address to
which communications hereunder are to be delivered by giving the other parties
notice in the manner herein set forth.
16. Photogen may file and refer to this Agreement with its
Securities and Exchange Commission or stock exchange filings; however, Photogen
will provide a copy thereof to Alliance prior to such filing and, if
appropriate, seek confidential treatment of some portion thereof if requested by
Alliance. Any press release or publicity concerning this transaction shall be
subject to the prior approval of Alliance, which approval shall not be
unreasonably withheld.
-7-
<PAGE>
17. Alliance will indemnify and hold Photogen and Dr. Wolf
harmless from any actual or alleged claim or liability arising out of any
product made, distributed or used resulting from the exclusive license granted
under the Patents by Photogen to Alliance in the Ultrasound Field.
[The signature page follows]
-8-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first set forth above.
Alliance Pharmaceutical Corp., for
itself and as successor to
Fluoromed Pharmaceuticals, Inc.
By: Theodore D. Roth
-------------------------------
Its: President and COO
-------------------------------
3040 Science Park Rd.
San Diego, CA 92121
Phone: 858/410-5275
Fax: 858/410-5343
Photogen Technologies, Inc.
/s/ Gerald L. Wolf By: /s/ John Smolik
- ----------------------------- -------------------------------
Gerald L. Wolf, Ph.D., M.D. Its: President
-------------------------------
3 Gable Ridge Road 7327 Oak Ridge Highway, Suite B
Westboro, MA 01581-2216 Knoxville, TN 37931
Phone: 508/898-3053 Phone: 423/769-4011
Fax: 508/898-3578 Fax: 423/769-4013
-9-
<PAGE>
EXHIBITS
A 1989 License Agreement
B The Patents
C Retained Technology
D Registration Rights
-10-
<PAGE>
EXHIBIT A
<PAGE>
EXHIBIT B
THE PATENTS
The Patents means the patent family containing the patents
and/or applications listed below including all extensions, continuations,
continuations-in-part, divisionals, patents-of-addition, reexaminations,
reissues, supplementary protection certificates and any additional foreign
counterparts of such patents and patent applications and any patents issuing
thereon and extensions of any patents listed below:
(a) [****]
(b) [****]
(c) [****]
(d) The following additional patents or patent applications:
[****]
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
EXHIBIT C
THE RETAINED TECHNOLOGY
Alliance hereby retains the following technology:
(a) All Know-How and Improvements in the field of Ultrasound
currently owned, licensed or controlled by Alliance relating
to the Patent;
(b) All Know-How and Improvements currently owned, licensed or
controlled by Alliance relating to Alliance's products known
as "IMAGENT LN" and "OXYGENT;"
(c) For avoidance of doubt, the Retained Technology, however, does
not include any and all Know-How and Improvements known to
Gerald L. Wolf, Ph.D., M.D. relating to the Patents in all
fields other than Ultrasound.
<PAGE>
EXHIBIT D
REGISTRATION UNDER THE SECURITIES ACT OF 1933
PIGGYBACK REGISTRATION
(a) If at any time after August 9, 1999,
Photogen Technologies, Inc. ("Photogen") proposes to register any common stock
under the Securities Act of 1933 (the "Securities Act") on any form for the
general registration of securities under the Securities Act, whether or not for
its own account (other than a registration on a form relating to (i) a
registration of a stock option, stock purchase or compensation or incentive plan
or stock issued or issuable pursuant to any such plan, or a dividend investment
plan; (ii) a registration of stock proposed to be issued in exchange for
securities or assets of, or in connection with a merger or consolidation with,
another corporation; or (iii) a registration of stock proposed to be issued in
exchange for other securities of Photogen) in a manner which would permit
registration of common stock for sale to the public under the Securities Act (a
"Piggyback Registration"), it will at such time give prompt written notice to
Alliance of its intention to do so and of its rights under this Exhibit D. Upon
the written request of Alliance made within 15 days after the receipt of any
such notice (which request shall specify the common stock intended to be
disposed of by Alliance, Photogen will include in the Registration Statement the
common stock which Photogen has been so requested to register by Alliance
pursuant to Section 12 of the Agreement to which this is Exhibit D.
(b) If, at any time after giving written notice
of its intention to register any securities but prior to the effective date of
the Registration Statement filed in connection with such registration, Photogen
shall determine for any reason not to register such securities, Photogen may, at
its election, give written notice of such determination to Alliance and,
thereupon shall be relieved of its obligation to register any common stock in
connection with such registration. All reasonable efforts obligations of
Photogen pursuant hereto shall cease if Photogen determines to terminate any
registration where common stock is being registered pursuant to this Exhibit D.
(c) If a Piggyback Registration requested
pursuant hereto involves an underwritten offering, then, (i) Alliance must sell
its common stock to the underwriters selected by Photogen on the same terms and
conditions as apply to other selling shareholders or Photogen, if there are no
selling shareholders; and (ii) Alliance may elect in writing, not later than
five (5) Business Days prior to the effectiveness of the Registration Statement
filed in connection with such registration, not to register such securities in
connection with such registration.
(d) Photogen will pay all Registration Expenses
in connection with each registration of common stock requested pursuant hereto,
except for the fees and
-1-
<PAGE>
disbursements of any counsel retained by Alliance and Alliance's pro rata share
of any filing fees or other expenses directly and solely resulting from the
inclusion of the common stock in the Registration Statement, including
underwriting discounts and commissions.
(e) If a registration pursuant hereto involves
an underwritten offering and the managing underwriter advises Photogen in
writing that, in its opinion, the number of shares of common stock requested to
be included in such registration would have a material adverse effect on such
offering, including an adverse decrease in the price at which such securities
can be sold, then the amount of common stock to be offered for the account of
Alliance shall be eliminated entirely or reduced pro rata as to all Selling
Stockholders on the basis of the relative number of shares of common stock each
such Selling Stockholder has requested to be included in such registration, to
the extent necessary to reduce the total amount of common stock to be included
in such offering to the amount recommended by such managing underwriter;
provided, however, that no securities may be offered in such registration for
the account of persons other than Photogen by virtue of their also having
"piggyback" registration rights, or otherwise, unless the common stock requested
to be included by Alliance in such registration are so included on a pro rata
basis.
(f) The Piggyback Registration rights granted to
Alliance hereunder shall terminate in all events one year after the issuance of
the Contingent Shares if any; otherwise, after one year after the date hereof.
(g) If and whenever Photogen is required
pursuant hereto to use its reasonable efforts to effect the registration of the
common stock under the Securities Act, Photogen will, as expeditiously as
possible:
(1) prepare and file with the SEC a Registration
Statement which includes the common stock
and use its reasonable efforts to cause such
Registration Statement to become and remain
effective until the distribution described
in the registration statement has been
completed or until Alliance can sell all
such common stock pursuant to Rule 144;
(2) prepare and file with the SEC such
amendments and supplements to such
Registration Statement and the Prospectus
used in connection therewith as may be
necessary to keep such Registration
Statement effective and to comply with the
provisions of the Securities Act with
respect to the sale or other disposition of
common stock covered by such Registration
Statement whenever Alliance shall desire to
sell or otherwise dispose of the same, but
only to the extent provided herein;
-2-
<PAGE>
(3) furnish (and to each underwriter, if any, of
common stock) such number of copies of a
Prospectus, including a preliminary
Prospectus, in conformity with the
requirements of the Securities Act, and such
other documents, as Alliance may reasonably
request in order to facilitate the public
sale or other disposition of the common
stock;
(4) use its reasonable efforts to register or
qualify the common stock covered by such
registration statement under such state
securities or blue sky laws of such
jurisdiction as Alliance shall reasonably
request and do any and all other acts and
things which may be necessary under such
securities or blue sky laws to enable
Alliance to consummate the public sale or
other disposition in such jurisdictions of
the common stock, except that Photogen shall
not for any purpose be required to consent
generally to service of process or qualify
to do business as a foreign corporation in
any jurisdiction wherein it is not so
qualified;
(5) before filing the Registration Statement or
Prospectus or amendments or supplements
thereto, furnish to counsel selected by
Alliance copies of such documents proposed
to be filed which shall be subject to the
reasonable approval of such counsel;
(6) enter into and perform its obligations under
an underwriting agreement, in usual and
customary form, with the managing
underwriter of such offer;
(7) notify Alliance at any time when a
Prospectus relating to any common stock
covered by such Registration Statement is
required to be delivered under the
Securities Act, of the happening of any
event as a result of which the Prospectus
included in such Registration Statement, as
then in effect, includes an untrue statement
of a material fact or omits to state a
material fact required to be stated therein
or necessary to make the statements therein
not misleading in light of the circumstances
then existing and promptly file such
amendments and supplements as may be
necessary so that, as thereafter delivered
to Alliance, such Prospectus shall not
include an untrue statement of a material
fact or omit to state a material fact
required to be stated therein or necessary
to make the statements therein not
misleading in light of the circumstances
then existing and use its best efforts to
cause each such amendment and supplement to
become effective;
-3-
<PAGE>
(8) furnish at the request of Alliance on the
date that such common stock is delivered to
the underwriters for sale in connection with
a registration pursuant hereto an opinion,
dated such date, of the counsel representing
Photogen, for purposes of such registration,
in form and substance as is customarily
given by Photogen counsel to the
underwriters in an underwritten public offer
addressed to the underwriters, if any, and
to Alliance, and (ii) a letter dated such
date, from the independent certified public
accountants of Photogen, in form and
substance as is customarily given by
independent certified public accountants to
underwriters in an underwritten public
offer, addressed to the underwriters and to
Alliance; and
(9) use its reasonable efforts to cause all such
common stock to be listed on any securities
exchange or Nasdaq market, if any, on which
Photogen's common stock is then listed.
(h) Photogen may require each seller of common
stock as to which any registration is being effected to furnish to Photogen such
information regarding the distribution of such securities and such other
information as may otherwise be required to be included in such Registration
Statement, as Photogen may from time to time reasonably request in writing.
(i) Alliance agrees by acquisition of such
common stock that, upon receipt of any notice from Photogen of the happening of
any event of the kind described in paragraph (g)(7) hereof, Alliance will
forthwith discontinue disposition of such common stock covered by such
Registration Statement or Prospectus until Alliance's receipt of the copies of
the supplemented or amended Prospectus, or until it is advised in writing by
Photogen that the use of the applicable Prospectus may be resumed, and has
received copies of any additional or supplemental filings which are incorporated
by reference in such Prospectus, and, if so directed by Photogen, Alliance will
deliver to Photogen (at Photogen's expense) all copies, other than permanent
file copies then in Alliance's possession, of the Prospectus covering such
common stock current at the time of receipt of such notice.
(j) In the event Common stock are registered
pursuant hereto:
(1) To the extent permitted by law, Photogen
will indemnify and hold harmless Alliance of
common stock which is included in a
Registration Statement filed pursuant to the
provisions of this Agreement and any
underwriter (within the meaning of the
Securities Act) with respect to the common
stock, and each officer, director, employee
and agent thereof and each person, if any,
who otherwise controls Alliance or
underwriter (within the meaning of the
Securities Act), against any losses or
claims, damages,
-4-
<PAGE>
expenses or liabilities, joint or several,
to which they may become subject under the
Securities Act, the Exchange Act or other
federal or state law, or otherwise, insofar
as such losses, claims, damages, expenses or
liabilities (or actions in respect thereof)
arise out of or are based upon any untrue or
allegedly untrue statement of any material
fact contained in the Registration Statement
for the Common stock, including any
preliminary Prospectus or final Prospectus
contained therein or any amendments or
supplements thereto, or any document
incident to the registration or
qualification of any common stock, or arise
out of or are based upon the omission or
alleged omission to state therein a material
fact required to be stated therein or
allegedly necessary to make the statements
therein not misleading or arise out of any
violation or alleged violation by Photogen
of the Securities Act, the Exchange Act, any
state securities law or any rule or
regulation promulgated under the Securities
Act, the Exchange Act or any state
securities law; and will reimburse Alliance,
any underwriter, officer, director,
employee, agent or controlling person for
any legal or other expenses reasonably
incurred by them in connection with
investigating or defending any such loss,
claim, damage, liability or action;
provided, however, that the indemnity
agreement contained herein shall not apply
to amounts paid in settlement of any such
loss, claim, damage, expense, liability or
action if such settlement is effected
without the written consent of Photogen,
which shall not be unreasonably withheld,
nor shall Photogen be liable under hereunder
to Alliance, such underwriter, officer,
director, employee, agent or controlling
person for any such loss, claim, damage,
expense, liability or action to the extent
that it arises out of, or is based upon, an
untrue statement or allegedly untrue
statement or omission or alleged omission
made in connection with such Registration
Statement, preliminary Prospectus, final
Prospectus, or amendments or supplements
thereto, in reliance upon and in conformity
with information furnished in writing
expressly for use in connection with such
registration by Alliance, such underwriter,
officer, director, employee, agent or such
controlling person.
(2) To the extent permitted by law, Alliance's
common stock which is included in a
Registration Statement filed pursuant to the
provisions of this Agreement will indemnify
and hold harmless Photogen, each of its
employees, agents, directors and officers,
each person, if any, who controls Photogen
within the meaning of the Securities Act,
and any underwriter (within the meaning of
the
-5-
<PAGE>
Securities Act) against any losses, claims,
damages, expenses or liabilities to which
Photogen or any such person or underwriter
may become subject, under the Securities
Act, the Exchange Act or other federal or
state law or otherwise, insofar as such
losses, claims, damages, expenses or
liabilities (or actions in respect thereof)
arise out of, or are based upon any untrue
or allegedly untrue statement of any
material fact contained in a Registration
Statement for the common stock, including
any preliminary Prospectus or final
Prospectus contained herein or any
amendments or supplements thereto, or any
document incident to the registration or
qualification of any Common stock, or arise
out of or are based upon the omission or
alleged omission to state therein a material
fact required to be stated therein or
allegedly necessary to make the statements
therein not misleading; in each case to the
extent that such untrue statement or
allegedly untrue statement or omission or
alleged omission was made in such
Registration Statement, preliminary
Prospectus, final Prospectus or amendments
or supplements thereto, in reliance upon and
in conformity with information furnished in
writing by Alliance expressly for use in
connection with such registration; provided,
however, that the indemnity agreement
contained hereunder shall not apply to
amounts paid in settlement of any such loss,
claim, damage, expense, liability or action
if such settlement is effected without the
written consent of Alliance, which shall not
be unreasonably withheld; and Alliance will
reimburse Photogen or any such person or
underwriter for any legal or other expenses
reasonably incurred by Photogen or any such
person or underwriter in connection with
investigating or defending such loss, claim,
damage, liability, expense or action.
(3) Promptly after receipt by an indemnified
party hereunder of notice of the
commencement of any action, such indemnified
party will, if a claim in respect thereof is
to be made against any indemnifying party
hereunder, notify the indemnifying party in
writing of the commencement thereof and
generally summarize such action. The
indemnifying party shall have the right to
participate in and to assume the defense
thereof with counsel mutually satisfactory
to the parties. An indemnifying party shall
not have the right to direct the defense of
such an action on behalf of an indemnified
party if such indemnified party has
reasonably concluded that there may be
defenses available to it that are different
from or additional to those available to the
indemnifying party; provided, however, that
in such event, the indemnifying party shall
bear the fees and expenses
-6-
<PAGE>
of only one (1) separate counsel for all
indemnified parties, such separate counsel
to be reasonably satisfactory to the
indemnifying party. The failure to notify an
indemnifying party promptly of the
commencement of any such action if
prejudicial to the ability to defend such
action, shall relieve such indemnifying
party of any liability to the indemnified
party hereunder, but the omission so to
notify the indemnifying party will not
relieve such party of any liability that
such party may have to any indemnified party
otherwise than under this Section.
(4) To the extent permitted by law, the
indemnification provided for hereunder will
remain in full force and effect regardless
of any investigation made by or on behalf of
the indemnified party or any officer,
director or controlling person (within the
meaning of the Securities Act) of such
indemnified party and will survive the
transfer of securities.
(5) If for any reason the foregoing indemnity is
unavailable to, or is insufficient to hold
harmless an indemnified party, then the
indemnifying party shall contribute to the
amount paid or payable by the indemnified
party as a result of such losses, claims,
damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the
relative benefits received by the
indemnifying party on the one hand and the
indemnified party on the other or (ii) if
the allocation provided by clause (i) above
is not permitted by applicable law, or
provides a lesser sum to the indemnified
party than the amount hereinafter
calculated, in such proportion as is
appropriate to reflect not only the relative
benefits received by the indemnifying party
on the one hand and the indemnified party on
the other but also the relative fault of the
indemnifying party and the indemnified party
as well as any other relevant equitable
considerations. Notwithstanding the
foregoing, no underwriter, if any, shall be
required to contribute any amount in excess
of the amount by which the total price at
which the securities underwritten by it and
distributed to the public were offered to
the public exceeds the amount of any damages
which underwriter has otherwise been
required to pay by reason of such untrue or
alleged untrue statement or omission or
alleged omission. No person guilty of
fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from
any person who was not guilty of such
fraudulent misrepresentation. The obligation
of any underwriters to contribute pursuant
to this provision shall be several in
-7-
<PAGE>
proportion to their respective underwriting
commitments and not joint.
(k) Alliance agrees, if requested by the
managing underwriters in an underwritten offering, not to effect any public sale
or distribution of any securities of Photogen of the same class as the
securities included in such Registration Statement, including a sale pursuant to
Rule 144 under the Securities Act (except as part of such underwritten
registration), during the 10-day period prior to, and during the 90-day period
beginning on, the closing date of the underwritten offering made pursuant to
such Registration Statement, to the extent timely notified in writing by the
managing underwriters.
(l) With a view to making available to Alliance
the benefits of Rule 144 promulgated under the Securities Act and any other rule
or regulation of the SEC that may at any time permit Alliance to sell its common
stock of Photogen to the public without registration, Photogen shall:
(1) make available adequate current public
information as contemplated by Rule
144 (c)(1) or (2);
(2) file with the SEC in a timely manner all
reports and other documents required of
Photogen under the Securities Act and the
Exchange Act; and
(3) furnish to Alliance owning any common stock
upon request (i) a written statement by
Photogen that it has complied with the
reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) a
copy of the most recent annual or quarterly
report of Photogen and such other reports
and documents so filed by Photogen, and
(iii) such other information as may be
reasonably required in availing Alliance of
any rule or regulation of the SEC which
permits the selling of any such common stock
without registration.
-8-
<PAGE>
Exhibit 10.7
CONFIDENTIAL TREATMENT HAS BEEN SOUGHT FOR
PORTIONS OF THIS EXHIBIT PURSUANT TO RULE 24B-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
LICENSE AGREEMENT
THIS AGREEMENT, effective as of September 30, 1999 ("EFFECTIVE
DATE") between THE GENERAL HOSPITAL CORPORATION, a not-for-profit corporation
doing business as Massachusetts General Hospital, having a place of business
at Fruit Street, Boston, Massachusetts 02114 ("GENERAL") and PHOTOGEN, Inc.,
a Tennessee corporation having offices at 7327 Oak Ridge Highway, Knoxville,
Tennessee 37931 ("COMPANY").
RECITALS
WHEREAS, under research programs funded by GENERAL and the U.S.
Government, GENERAL through research conducted by Gerald L. Wolf, Ph.D., M.D.
("Dr. Wolf") has developed an invention pertaining to Enhanced Radiation
Therapy;
WHEREAS, GENERAL has prepared and filed a U.S. Patent Application
No. [****] covering said invention and all of Dr. Wolf's right, title and
interest in said application has been assigned to GENERAL;
WHEREAS, Nycomed Imaging AS, a Norwegian corporation, having a place
of business at Nycoveien 2, Post Office Box 4220, Torshov N-0401, Oslo,
Norway ("NYCOMED") through research funded by NYCOMED and conducted at
General by Dr. Wolf and at NYCOMED by [****], [****] and [****] have
developed patentable information entitled [****].
WHEREAS, NYCOMED has prepared and filed a US provisional patent
application entitled [****], and a provisional British patent application
entitled [****], covering said patentable information (copies of which are
attached as Exhibits A-1 and A-2 hereto) and all of Dr. Wolf's rights, title
and interest have been assigned to GENERAL, and [****], [****] and [****]
rights, title and interest therein have been assigned to NYCOMED (copies of
such assignment documents are attached as Exhibit B hereto). These patent
applications cover a compound closely related to [****] for both imaging and
therapy;
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
WHEREAS, GENERAL and NYCOMED have agreed, if feasible to unite the
above patent applications into a single PCT filing listing all the above
inventors;
WHEREAS, GENERAL and NYCOMED have agreed, if feasible to unite the
above patent applications into a single PCT filing listing all the above
inventors;
WHEREAS, NYCOMED has appointed GENERAL as its agent, to act on
NYCOMED'S behalf in licensing and sublicensing NYCOMED's intellectual
property rights described above in the fourth and fifth Recitals of the
Agreement to COMPANY, pursuant to the Invention and License Administration
Agreement attached as Exhibit C hereto;
WHEREAS, NYCOMED has a worldwide, exclusive license, with
sublicensing rights, under the [****] Agreement, dated [****] between [****]
and Nycomed Imaging AS (hereinafter the [****] Agreement), solely to
manufacture, use, sell or otherwise dispose of human ethical pharmaceutical
products containing the diagnostic imaging compound [****] (now known as
[****]) under the [****]Intellectual Property (as defined in the [****]
Agreement which includes US Patent [****] issued [****] and other patent
rights as described in Schedule 2 of the [****] Agreement). The [****]
Agreement is set forth in Exhibit D hereto.
WHEREAS, NYCOMED has developed know-how and improvements to the
rights licensed to Nycomed with respect to [****] under the [****] Agreement,
including Phase I and Phase II clinical trial data;
WHEREAS, NYCOMED has appointed GENERAL as its agent pursuant to the
Invention and License Administration Agreement attached as Exhibit hereto to
sublicense all of its rights under the [****] Agreement with respect to [****]
(described in the seventh Recital to this Agreement to COMPANY) and to
sublicense all of Nycomed's know-how and improvements to said rights
(described in the eighth Recital to this Agreement) to Company;
WHEREAS, GENERAL and NYCOMED each hereby represent to the COMPANY
that, to the best of their respective knowledge and belief, subject to the
rights of the U.S. Government, GENERAL and NYCOMED are the respective owners
of all right, title and interest in the patent application(s) (and the
inventions covered thereby) described in the second Recital in this Agreement
in the case of GENERAL and in the fourth Recital to this Agreement in the
case of NYCOMED, and each has the right, ability and authority to grant the
license hereinafter described;
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
WHEREAS, as a center for research and education, GENERAL is
interested in licensing PATENT RIGHTS and thus benefitting the public and
GENERAL by facilitating the dissemination of the results of its research in
the form of useful products, but is without capacity to commercially develop,
manufacture, and distribute any such product; and
WHEREAS, COMPANY desires to commercially develop, manufacture, use
and distribute such products throughout the world;
NOW THEREFORE, in consideration of the premises and of the faithful
performance of the covenants herein contained, the parties hereto agree as
follows:
1. DEFINITIONS
1.1 The term "ACCOUNTING PERIOD" shall mean each six month period ending
June 30 and December 31 of each year during the Term of this Agreement.
1.2 The term "AFFILIATE" shall mean any corporation or other legal entity
controlling, controlled by or under common control with, COMPANY, in
the case of a COMPANY AFFILIATE and with GENERAL, in the case of a
GENERAL AFFILIATE. The term "control" means possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of an entity, whether through the ownership of
voting securities, by contract or otherwise.
1.3 The term "FIRST COMMERCIAL SALE" shall mean in each country the first
sale of a PRODUCT to a final customer who will be the end user of the
PRODUCT.
1.4 The term "LICENSE FIELD" shall mean the research, development,
manufacture and commercialization of diagnostic imaging agents for
medical location, treatment and diagnosis of tumors and other diseased
tissues or other material in human, animal or plant life. The term
"[****] LICENSE FIELD" shall mean the research, development,
manufacture and commercialization of human ethical pharmaceutical
products containing the diagnostic imaging compound [****].
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
1.5 The term "NET SALES PRICE" shall mean the GROSS SALES PRICE as
defined in (b) below actually received in cash by COMPANY or any of
its AFFILIATES or the COMPANY's immediate SUBLICENSEE (collectively,
sometimes hereafter "SELLERS" or individually, a "SELLER") for the
sale or distribution of a PRODUCT by a SELLER, less (to the extent
appropriately documented) the following amounts actually paid out by
SELLER or credited against the amounts received by such SELLER from
the sale or distribution of a PRODUCT:
(a) (i) credits and allowances for price adjustment, rejection,
or return of PRODUCTS previously sold;
(ii) rebates, customary trade, quantity and cash discounts
and non-affiliated brokers' or agents' for
commissions allowed and taken; provided, however,
that such broker's or agent's commissions shall not
exceed [****]%; and further, provided, that the term
"non-affiliated brokers' or agents'" does not include
distributors;
(iii) amounts for transportation, insurance, handling or
shipping charges;
(iv) taxes, duties and other governmental charges levied
on or measured by the sale of PRODUCTS, whether
absorbed by a SELLER or paid by the purchaser so long
as a SELLER's price is reduced thereby, but not
franchise or income taxes of any kind whatsoever;
(v) for any sale in which the United States government on
the basis of its royalty-free license pursuant to 35
U.S.C. Section 202(c) to any PATENT RIGHTS requires
that the GROSS SALES PRICE of any PRODUCT subject to
such PATENT RIGHTS be reduced by the amount of such
royalty owed GENERAL pursuant to paragraph 3.1, the
amount of such royalty.
(b) For any bona fide sale by a SELLER, the GROSS SALES PRICE shall
be the gross billing price of the PRODUCT. None of the PRODUCTS
shall be sold for consideration other than cash or a receivable
payable in cash.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
(c) If a SELLER sells any PRODUCT in a bona fide sale as a
component of a combination of active functional elements, the
GROSS SALES PRICE of the
<PAGE>
PRODUCT shall be determined by multiplying the GROSS SALES
PRICE of the combination by the fraction A over A + B, in which
"A" is the GROSS SALES PRICE of the PRODUCT portion of the
combination when sold separately during the ACCOUNTING PERIOD
in the country in which the sale was made, and "B" is the GROSS
SALES PRICE of the other active elements of the combination
sold separately during said ACCOUNTING PERIOD in said country.
In the event that no separate sale of either such PRODUCT or
active elements of the combination is made during said
ACCOUNTING PERIOD in said country, the GROSS SALES PRICE of the
PRODUCT shall be determined by multiplying the GROSS SALES
PRICE of such combination by the fraction C over C + D, in
which "C" is the standard fully-absorbed cost of the PRODUCT
portion of such combination, and "D" is the sum of the standard
fully-absorbed costs of the other active elements component(s),
such costs being arrived at using the standard accounting
procedures of COMPANY which will be in accord with United
States generally accepted accounting principles.
(d) If a SELLER commercially uses or disposes of any PRODUCT by
itself (as opposed to a use or disposition of the PRODUCT as a
component of a combination of active functional elements) other
than in a bona fide sale, the GROSS SALES PRICE hereunder shall
be the price which would be then payable in an arm's length
transaction. If a SELLER commercially uses or disposes of any
PRODUCT as a component of a combination of active functional
elements other than in a bona fide sale, the GROSS SALES PRICE
of the PRODUCT shall be determined in accordance with paragraph
(c) above, using as the GROSS SALES PRICE of the combination
that price which would be then payable in an arm's length
transaction. A "commercial use or disposition" of a PRODUCT
does not include (i) the use of a PRODUCT for research,
clinical testing or educational purposes for which no payment
is made to or received by the Company or (ii) a disposition of
a PRODUCT which, in the opinion of the COMPANY, is damaged,
obsolete or not usable for the purposes intended and for which
no payment is made to or received by the COMPANY.
(e) Transfer of a PRODUCT within COMPANY or between COMPANY and an
AFFILIATE or the COMPANY's immediate SUBLICENSEE for sale by
the transferee shall not be considered a sale, commercial use
or disposition for the purpose of the foregoing paragraphs; in
the case of such transfer the GROSS SALES PRICE shall be based
on sale of the PRODUCT by the transferee.
1.6 (a) The term "GENERAL PATENT RIGHTS" shall mean the [****],
and the equivalent of such application filed in any foreign
jurisdictions, together with the inventions described and
claimed therein. The term "GENERAL PATENT
<PAGE>
RIGHTS" shall also include any division, continuation or
Letters Patent or the equivalent thereof issuing thereon or
reissue, reexamination or extension thereof of any of the above
patent applications or patents as well as any claims in any
continuation-in-part of the aforementioned patent applications
which claim an invention described or claimed in said patent
applications or patents.
(b) The term "JOINT PATENT RIGHTS" shall mean [****] and the
equivalent of such applications filed in any foreign
jurisdictions, together with the inventions described and
claimed therein. The term "JOINT PATENT RIGHTS"shall also
include any division, continuation or Letters Patent or the
equivalent thereof issuing thereon or reissue, reexamination
or extension thereof of any of the above patent applications
or patents as well as any claims in any continuation-in-part
of the aforementioned patent applications which claim an
invention described or claimed in said patent applications or
patents.
(c) The term "[****] PATENT RIGHTS" shall mean [****]
(d) The term "PATENT RIGHTS" shall mean any GENERAL PATENT RIGHTS,
JOINT PATENT RIGHTS or [****] PATENT RIGHTS.
1.7 The term "PRODUCT" shall mean any article, device, composition,
method or service, the manufacture, use, or sale of which, absent
the licenses granted herein, would infringe a VALID CLAIM of any
PATENT RIGHT.
1.8 The term "SUBLICENSEE" shall mean any third party licensed by
COMPANY to make, have made, use, market, distribute, lease, import,
offer to sell and sell any PRODUCT.
1.9 The term "VALID CLAIM" shall mean any claim of any PATENT RIGHT (i)
that has not been finally rejected, (ii) that has not been declared
invalid by a patent office or court of competent jurisdiction in any
unappealed and unappealable decision or (iii) as to which patent
protection has not expired.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
2. LICENSE
2.1 In connection with the license granted in Section 2.2, GENERAL
and NYCOMED, each represents and warrants to COMPANY that, to the
best of their respective knowledge, based on a review of their
respective files and documents as of the EFFECTIVE DATE
<PAGE>
hereof, it (I.E., GENERAL and NYCOMED, each with respect to
themselves only) is not prohibited or prevented from granting the
following license to COMPANY.
2.2 GENERAL hereby grants to COMPANY to the extent not prohibited by
contractual obligations to any other sponsor of research at GENERAL
and pursuant to the Invention and License Administration Agreement
(and said grant is joined into by NYCOMED to the extent necessary)
and COMPANY accepts, subject only to the terms of this Agreement and
the rights reserved in Section 2.3. below.
(a) (i) on behalf of GENERAL and NYCOMED, an [****]
royalty-bearing license in the LICENSE FIELD under
GENERAL PATENT RIGHTS and JOINT PATENT RIGHTS to
make, have made, use, market, distribute, lease,
import, offer to sell, and sell PRODUCTS; and
(ii) on behalf of NYCOMED, an exclusive, worldwide,
royalty-bearing sublicense in the [****] LICENSE
FIELD under [****] PATENT RIGHTS to make, have made,
use, market, distribute, lease, import, offer to
sell, and sell PRODUCTS.
(b) to the extent an exclusive license is not available to COMPANY in
a country (other than the United States) which prohibits the
granting of an exclusive license as a matter of law,
(i) on behalf of GENERAL and NYCOMED, a non-exclusive,
royalty-bearing license in the LICENSE FIELD under
GENERAL PATENT RIGHTS and JOINT PATENT RIGHTS; and
(ii) on behalf of NYCOMED, a [****], royalty-bearing
sublicense in the [****] LICENSE FIELD under [****]
PATENT RIGHTS,
in either case, to make, have made, use, market,
distribute, lease, import, offer to sell and sell
PRODUCTS;
(c) the right to sublicense PATENT RIGHTS exclusively licensed or
sublicensed to COMPANY including the right to grant
SUBLICENSEES the right to further sublicense.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
The above licenses and sublicenses to make, have made, use, market,
distribute, lease, import, offer to sell and sell PRODUCTS includes the
right to grant to the CUSTOMER the right to use a purchased PRODUCT in
a method coming within the scope of PATENT RIGHTS.
2.3 It is understood that the granting of any license hereunder
is subject to GENERAL's and GENERAL's AFFILIATES' right to make and
to use the subject matter described and claimed in GENERAL PATENT
RIGHTS OR JOINT PATENT RIGHTS for all uses other than Commercial
Purposes, and that if federal funding supported the GENERAL PATENT
RIGHTS OR JOINT PATENT RIGHTS, COMPANY's license will be subject to
the rights, conditions and limitations imposed by U.S. law including
without limitation the royalty-free non-exclusive license granted to
the U.S. Government (see 35 U.S.C. Section 202 ET SEQ. and
regulations pertaining thereto). For the purposes of this Section,
"Commercial Purposes" shall mean use of the subject matter described
and claimed in PATENT RIGHTS in any product, or for the purpose of
producing a product, which is made, sold, leased or otherwise
commercially distributed.
2.4 Subject to confidential treatment under Section 10, within three (3)
months of EFFECTIVE DATE, GENERAL, Dr. Wolf and NYCOMED shall
disclose all know-how relating to [****], including [****] data,
pre-clinical safety toxicity information, results of human clinical
trials and IND information regarding [****] to COMPANY and provide
all technological information with respect to prosecution of patent
applications included in PATENT RIGHTS which GENERAL and/or NYCOMED
are not prohibited from disclosing to COMPANY.
2.5 GENERAL shall have the right to license any GENERAL PATENT RIGHTS OR
JOINT PATENT RIGHTS to any other party for the purpose of
manufacturing, using or selling any PRODUCT outside of the LICENSE
FIELD.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
2.6 It is understood that nothing herein shall be construed to grant
COMPANY a license express or implied under any patent owned solely
or jointly by GENERAL or NYCOMED other than the PATENT RIGHTS
expressly licensed hereunder.
3. COMPANY OBLIGATIONS
3.1 COMPANY shall itself, or through its AFFILIATES or SUBLICENSEES, use
reasonable efforts to develop and make commercially available a
PRODUCT for commercial sale and distribution throughout the world in
the LICENSE FIELD and the
<PAGE>
[****] LICENSE FIELD; provided, however, that the final decision as
to where the PRODUCT will be distributed shall vest in the COMPANY.
Such efforts shall consist of achieving the following objectives
within the time period designated below:
(a) within [****] months after the EFFECTIVE DATE, complete all
animal toxicity tests required in connection with seeking to
obtain U.S. Food and Drug Administration approval of clinical
evaluations of a PRODUCT.
(b) within [****] months after obtaining FDA approval in (a) above,
initiate and thereafter diligently pursue clinical evaluations
of a PRODUCT and in connection therewith take all actions
necessary under the Food, Drug and Cosmetic Act (21 USC
301-391);
(c) within [****] months after obtaining FDA approval in (b)
above, file documents with the FDA to obtain approval to
manufacture such a PRODUCT for commercial sale and to inform
GENERAL of such determination;
(d) within [****] months after the EFFECTIVE DATE initiate and
thereafter diligently pursue clinical evaluations of a PRODUCT
in either the European Community or Japan;
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
GENERAL shall not unreasonably withhold its consent to any revision
in such time periods whenever requested in writing by COMPANY and
supported by reasonable evidence of technical difficulties or delays
in animal or clinical studies, regulatory processes or other events
that the parties could not have reasonably avoided or anticipated.
Failure to achieve one or more of the above objectives within the
above stated time periods or within any extension granted by GENERAL
shall result in GENERAL having the right to cancel upon sixty (60)
days prior written notice any [****] license granted hereunder, or
to convert any [****]license to a [****] license; provided that
COMPANY does not demonstrate to GENERAL's satisfaction, which shall
not be unreasonably withheld, during said sixty (60) day period, its
ability to cure such failure(s) within a reasonable time period
thereafter and that such objectives are in fact materially achieved
in such time period; further, provided, that COMPANY makes no
representation or warranty that it can achieve success in the
development or marketing of any PRODUCTS, the profitability of
PRODUCTS or the amount of royalties payable to GENERAL hereunder.
3.2 At intervals no longer than every six (6) months, COMPANY shall
report in writing to GENERAL on progress made toward the foregoing
objectives.
3.3 This Agreement shall not be deemed to prohibit COMPANY from
developing, making, using, marketing or otherwise distributing or
promoting products competitive (as hereafter defined) with the
PRODUCTS, provided that COMPANY shall not disparage any of the
PRODUCTS or the PATENT RIGHTS and that COMPANY remains in compliance
with the milestones of Article 3.1. When COMPANY does so develop,
make, use, market or otherwise distribute or promote products
competitive with the PRODUCTS, any licenses granted hereunder shall
become non-exclusive. For purposes of this Section, the term
"competitive" is limited to a product, method or service that is in
direct competition with a PRODUCT and not a product, method or
service that is an alternative to a PRODUCT.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
3.4 The COMPANY shall mark all PRODUCTS with the appropriate patent
words and numbers as contemplated by Section 287(a) of the U.S.
Patent Code. GENERAL and NYCOMED each agree to require all of their
respective licensees in all fields under all patents relating to
this Agreement to similarly mark all of their PRODUCTS under such
patents as contemplated under said Section 287(a) and in compliance
with applicable laws.
4. FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS
4.1 Notwithstanding anything to the contrary in this Agreement, [****]
or [****] successor in interest to the [****] Agreement, has the
sole and exclusive right to take any action that it considers
appropriate in connection with the prosecution and maintenance of
the `Nano Patents' (as that term is defined in the [****] Agreement)
as provided in Section 4.5 of the [****] Agreement. It is understood
that [****] can take actions that NYCOMED cannot control including
abandonment of patents without the requirement to notify NYCOMED or
GENERAL.
4.2 In accordance with the Invention and License Administration
Agreement (Exhibit C), GENERAL shall be responsible for the
preparation, filing, prosecution and maintenance of all patent
applications and patents included in GENERAL PATENT RIGHTS and JOINT
PATENT RIGHTS and shall, after the EFFECTIVE DATE promptly and
diligently pursue such activities in the United States and foreign
jurisdictions mutually agreeable to the parties (such agreement not
to be unreasonably withheld) ("Patent Activities"). GENERAL may
select patent counsel and other advisors to assist in such Patent
Activities, subject to COMPANY approving same (which approval shall
not be unreasonably withheld). So long as COMPANY holds an exclusive
license hereunder to the GENERAL PATENT RIGHTS and the JOINT PATENT
RIGHTS, such patent counsel and advisors shall be advised by
GENERAL, to the extent consistent with their obligations to GENERAL,
to be promptly available to COMPANY and/or its counsel for
information and advice regarding such Patent Activities. COMPANY
shall reimburse GENERAL for all reasonable costs ("Costs") incurred
by GENERAL for the preparation, filing, prosecution and maintenance
of all PATENT RIGHTS as follows:
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
(a) Subject to paragraph 4.3, for all Costs incurred by GENERAL
from and after the EFFECTIVE DATE, COMPANY shall reimburse
GENERAL within thirty (30) days of receipt of invoices from
GENERAL;
(b) For all Costs incurred by GENERAL prior to the EFFECTIVE
DATE, not to exceed [****], COMPANY shall reimburse GENERAL
upon execution of this Agreement.
4.3 NYCOMED shall provide to GENERAL and COMPANY all documentation
pertaining to the filing and prosecution of JOINT PATENT RIGHTS
within 30 days of the signing of this Agreement.
4.4 With respect to any GENERAL or JOINT PATENT RIGHT, each document or
a draft thereof, including all related correspondence and memoranda
pertaining to the filing, prosecution, or maintenance of such
GENERAL or JOINT PATENT RIGHT, including but not limited to each
patent application, office action, response to office action,
request for terminal disclaimer, and request for reissue or
reexamination of any patent issuing from such application shall be
provided to COMPANY as follows: Documents received from or delivered
to any patent office and counsel's analysis thereof, if any, shall
be provided promptly to the COMPANY upon receipt or preparation by
counsel. For a document to be filed in any patent office, a draft of
such document shall be provided sufficiently prior to its filing, to
the parties hereto to allow for review and comment by the other
party. The parties hereto shall maintain all such documents in
accordance with Article 10 hereof, and each party hereto shall take
whatever other steps are necessary to preserve the attorney-client
privilege of any such document, including limiting photocopies and
internal disclosure. If as a result of the review of any such
document, COMPANY shall elect not to pay or continue to pay the
Costs for such GENERAL or JOINT PATENT RIGHT, COMPANY shall so
notify GENERAL within thirty (30) days of COMPANY's receipt of such
document and COMPANY shall thereafter be relieved of the obligation
to pay any additional Costs regarding such GENERAL or JOINT PATENT
RIGHT incurred after the receipt of such notice by GENERAL. Such
U.S. or foreign patent application or patent shall thereupon cease
to be a GENERAL or JOINT PATENT RIGHT hereunder and GENERAL shall be
free without further obligations to COMPANY to license the rights to
that particular U.S. patent application or patent to any
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
other party on any terms; provided, however, that the foregoing
shall not apply if COMPANY indicates that its election not to pay or
continue to pay such Costs is based upon a good faith objection to
the reasonableness of such Costs or the quality of services being
performed, in which event the dispute shall be resolved as provided
in paragraph 12.9 hereafter if such dispute cannot first be resolved
in discussions with GENERAL's patent counsel.
4.5 COMPANY acknowledges that patent counsel selected by GENERAL as
provided hereinabove shall have a fiduciary duty to GENERAL;
however, so long as COMPANY is an exclusive licensee hereunder of
the GENERAL and JOINT PATENT RIGHTS and so long as COMPANY is
obligated to pay the costs and fees of such counsel, such counsel
shall to the extent consistent with his obligations to GENERAL, be
available to discuss patent matters with the COMPANY's counsel.
4.6 In the event that GENERAL shall fail or refuse to diligently pursue
its responsibilities in GENERAL's name described in paragraph 4.2,
then COMPANY shall, upon 60 days notice with a right to cure by
GENERAL during said notice period, have the right at its expense but
in GENERAL's and NYCOMED's name to take over such responsibilities
and to select patent counsel and advisors to assist it in such
matters. In such event, COMPANY shall be bound by the other
provisions of this Article 4.
5. ROYALTIES
5.1 Beginning with the FIRST COMMERCIAL SALE in any country, on all
sales of PRODUCTS anywhere in the world by COMPANY, its AFFILIATES
or SUBLICENSEES, COMPANY shall pay GENERAL royalties in accordance
with the following schedule, such undertaking and schedule having
been agreed to for the purpose of reflecting and advancing the
mutual convenience of the parties. For each PRODUCT sold by COMPANY
or its AFFILIATES and SUBLICENSEES;
(a) Subject to subparagraph 5.1(i) below, [****] of the NET SALES
PRICE of a PRODUCT having both a diagnostic and therapeutic
application so long as such PRODUCT, its manufacture, use
or sale is covered by a VALID CLAIM of any PATENT RIGHT
licensed exclusively to COMPANY;
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
(b) Subject to subparagraph 5.1(i) below, [****] of the NET SALES
PRICE of a PRODUCT having both a diagnostic and therapeutic
application so long as such PRODUCT, its manufacture, use
or sale is covered by a VALID CLAIM of any PATENT RIGHT
licensed non-exclusively to COMPANY in the country in
question;
(c) Subject to subparagraph 5.1(i) below, [****] of the NET SALES
PRICE of a PRODUCT having only a diagnostic application so
long as such PRODUCT, its manufacturer, use or sale is
covered by a VALID CLAIM of any PATENT RIGHT licensed
exclusively to COMPANY;
(d) Subject to subparagraph 5.1(i) below, [****] of the NET SALES
PRICE of a PRODUCT having only a diagnostic application so
long as such PRODUCT, its manufacturer, use or sale is
covered by a VALID CLAIM of any PATENT RIGHT licensed
non-exclusively to COMPANY in the country in question;
(e) Subject to subparagraph 5.1(i) below, [****] of the NET SALES
PRICE of a PRODUCT having only a therapeutic application so
long as such PRODUCT, its manufacturer, use or sale is
covered by a VALID CLAIM of any PATENT RIGHT licensed
exclusively to COMPANY;
(f) Subject to subparagraph 5.1(i) below, [****] of the NET SALES
PRICE of a PRODUCT having only a therapeutic application so
long as such PRODUCT, its manufacturer, use or sale is
covered by a VALID CLAIM of any PATENT RIGHT licensed
non-exclusively to COMPANY in the country in question;
(g) In the event that more than one royalty rate under
paragraph 5.1 is applicable to a PRODUCT, the highest of
the applicable royalties shall apply;
(h) Only one royalty under paragraph 5.1 shall be due and
payable to GENERAL by COMPANY for any PRODUCT regardless of
the number of PATENT RIGHTS covering such PRODUCT; and
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FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
(i) Royalties payable hereunder shall be offset by all filing,
prosecution and maintain costs and attorney's fees paid by
the COMPANY with respect to PATENT RIGHTS pursuant to
Article 4 of this Agreement ("Costs"), through the end of
the COMPANY's immediately preceding fiscal year end on the
following basis: GENERAL and NYCOMED will share [****] of
such Costs; COMPANY will share the [****] of such
Costs; provided, however, that the aggregate offset against
royalties payable hereunder when combined with the
deductions against royalty payments under Section 7.4,
shall not exceed in any one calendar year, [****] of
royalties payable under this Agreement. Such Costs that are
not used to offset royalties hereunder because of
insufficient NET SALES shall be carried forward to future
years for offset, limited as provided in the previous
sentence, against royalties otherwise due in such future
years.
5.2 If any license or sublicense granted pursuant to Article 2 shall be
or become non-exclusive and GENERAL shall license or sublicense on
behalf of NYCOMED any PATENT RIGHT to another licensee or
sublicensee for the purpose of making, using or selling PRODUCTS in
the LICENSE FIELD or the [****] LICENSE FIELD and accept a royalty
or royalties more favorable to such licensee or sublicensee than
herein provided for COMPANY, GENERAL shall give written notice
thereof to COMPANY and as of the EFFECTIVE DATE of such more
favorable royalty or royalties, COMPANY's obligation hereunder to
pay royalty or royalties to GENERAL shall be revised to the more
favorable rate.
5.3 In addition to the payments provided for in paragraph 5.1, COMPANY
shall pay GENERAL the following amounts upon the occurrence of the
following events:
(a) [****] upon the issuance by the United States Patent and
Trademark Office of a notice of allowance covering a
material portion of the claims in GENERAL or JOINT PATENT
RIGHTS;
(b) [****] upon filing with the FDA of the first NDA, 510(k),
PMA or PMA Supplement, or comparable application with
respect to a PRODUCT; and
(c) [****] upon approval by the FDA of the first NDA, 510(k),
PMA or PMA Supplement, or comparable application with
respect to a PRODUCT.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
5.4 In the event that the royalty paid to GENERAL is a significant
factor in the return
<PAGE>
realized by COMPANY so as to diminish COMPANY's capability to
respond to competitive pressures in the market, GENERAL agrees to
consider a reasonable reduction in the royalty paid to GENERAL as to
each such PRODUCT for the period during which such market condition
exists. Factors determining the size of the reduction will include
profit margin on PRODUCT and on analogous or competitive products,
prices of competitive products, total prior sales by COMPANY, and
COMPANY's expenditures in PRODUCT development.
5.5 In addition to the royalties provided for above, COMPANY shall pay
GENERAL [****] of any and all non-royalty income (as defined in
accordance with United States generally accepted accounting
principles), including without limitation license and sublicense
fees and milestone payments, received from COMPANY AFFILIATES and
SUBLICENSEES in consideration for the sublicensing by COMPANY of any
right, license or sublicense granted to it hereunder.
5.6 The payments due under this Agreement shall, if overdue, bear
interest until payment at a per annum rate equal to one percent (1%)
above the prime rate in effect at the Bank of Boston on the due
date, not to exceed the maximum permitted by law. The payment of
such interest shall not preclude GENERAL from exercising any other
rights it may have as a consequence of the lateness of any payment.
6. REPORTS AND PAYMENTS
6.1 COMPANY shall keep, and shall cause each of its AFFILIATES and
SUBLICENSEES, if any, to keep full and accurate books of accounts on
both the cash and accrual basis, containing all particulars that may
be necessary for the purpose of calculating all royalties payable to
GENERAL. Such books of account shall be kept at their principal
place of business and, with all necessary supporting data shall,
during all reasonable times for the three (3) years next following
the end of the calendar year to which each shall pertain be open for
inspection at reasonable times upon reasonable prior notice by
GENERAL or its designee at GENERAL's expense for the purpose of
verifying royalty statements or compliance with this Agreement.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
6.2 In each year the amount of royalty due shall be calculated
semiannually as of the end of each ACCOUNTING PERIOD and shall be
paid semiannually within the sixty (60) days next following such
date, every such payment to be supported by the accounting
prescribed in paragraph 6.3 and to be made in United States
currency. Whenever conversion from any foreign currency shall be
required, such conversion shall be at the rate of exchange
thereafter published in the Wall Street Journal for the business day
closest to the end of the applicable ACCOUNTING PERIOD.
6.3 With each semiannual payment, COMPANY shall deliver to GENERAL a
full and accurate accounting to include the following information
and such other reasonable additional information relevant to the
calculation of royalty payments as may be requested by GENERAL from
time to time:
(a) Quantity of each PRODUCT sold or leased (by country) by COMPANY,
and its AFFILIATES or SUBLICENSEES;
(b) Total billings for each PRODUCT (by country);
(c) Names and addresses of all SUBLICENSEES of COMPANY; and
(d) Total royalties payable to GENERAL.
7. INFRINGEMENT
7.1 Notwithstanding anything to the contrary in this Agreement, [****]
or [****] successor in interest to the [****] Agreement, has the
sole and exclusive right to take, at its sole discretion and at its
own expense, any action that it considers appropriate in connection
with any actual or threatened infringement of the [****] PATENT
RIGHTS to defend the validity and enforceability of such property in
any litigation as provided in Section 5.1 of the [****] Agreement.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
7.2 COMPANY, to the extent it has an exclusive license regarding PATENT
RIGHTS, shall have first obligation to protect the GENERAL PATENT
RIGHTS and JOINT PATENT RIGHTS from infringement and prosecute
infringers in the LICENSE FIELD when, in its judgement, such action
may be reasonably necessary, proper and justified. GENERAL and
NYCOMED may join COMPANY in such action or if COMPANY fails to take
such action, GENERAL may separately initiate such action, at its
discretion and at its own expense.
7.3 If GENERAL shall have supplied COMPANY with written evidence
demonstrating prima facie infringement of a claim of a GENERAL
PATENT RIGHT or JOINT PATENT RIGHT by a third party in the LICENSE
FIELD, GENERAL may by notice request COMPANY to take steps to
protect the GENERAL PATENT RIGHT or JOINT PATENT RIGHT. COMPANY
shall notify GENERAL within three (3) months of the receipt of such
notice whether COMPANY intends to prosecute the alleged
infringement. If COMPANY notifies GENERAL that it intends to so
prosecute, COMPANY shall, within three (3) months of its notice to
GENERAL either (i) cause infringement to terminate or (ii) initiate
legal proceedings against the infringer. No settlement, consent
judgment or other voluntary final disposition of any suit by either
COMPANY or GENERAL shall be entered into without the mutual consent
of COMPANY and GENERAL, which consent shall not be unreasonably
withheld.
7.4 If COMPANY elects to commence an action as described above, COMPANY
may deduct from its royalty payments to GENERAL with respect to the
GENERAL PATENT RIGHTS or JOINT PATENT RIGHTS subject to suit an
amount not exceeding [****]percent [****] of COMPANY's expenses and
costs of such action, including reasonable attorneys' fees;
provided, however, that such reduction together with the offset
against royalty payable under Section 5.1(i) shall not exceed [****]
percent [****] of the total royalty due to GENERAL with respect to
the NET SALES of PRODUCTS utilizing the GENERAL PATENT RIGHTS or
JOINT PATENT RIGHTS subject to suit for each calendar year. If such
[****] percent [****] of COMPANY's expenses and costs and offset
under Section 5.1(i) exceeds the amount of royalties deducted by
COMPANY for
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
any calendar year, COMPANY may to that extent reduce the royalties
due to GENERAL from COMPANY in succeeding calendar years, but never
by more than [****] percent [****] of the total royalty due GENERAL
in any one year with respect to the GENERAL PATENT RIGHTS or JOINT
PATENT RIGHTS subject to suit. In the event that COMPANY shall
recover its expenses and costs, by settlement or judgment of such
action, the same will be shared equally by the COMPANY and GENERAL,
to the extent necessary for GENERAL to recoup the royalty payments
which GENERAL contributed to the cost of such action pursuant to
this Section.
7.5 For the purpose of the proceedings referred to in this Article 7,
GENERAL, NYCOMED and COMPANY shall permit the use of their names and
shall execute such documents and carry out such other acts as may be
necessary to prosecute or defend any such proceeding, including
joining into such proceeding. The party initiating or carrying on
such legal proceedings shall keep the other party informed of the
progress of such proceedings and said other party shall be entitled
to counsel in such proceedings but at its own expense, said expenses
to be off-set against any damages received by the party bringing
suit in accordance with the foregoing paragraph 7.3.
7.6 In the event a party hereto shall initiate or carry on legal
proceedings to enforce any GENERAL PATENT RIGHT or JOINT PATENT
RIGHT against any alleged infringer, the other party (including
NYCOMED) shall fully cooperate with and supply all assistance
reasonably requested by the party initiating or carrying on such
proceedings. The party which institutes any suit to protect or
enforce a GENERAL PATENT RIGHT or JOINT PATENT RIGHT shall have sole
control of that suit and subject to paragraph 7.3 shall bear the
reasonable expenses (excluding legal fees) incurred by said other
party in providing such assistance and cooperation as is requested
pursuant to this paragraph. The party initiating or carrying on
such legal proceedings shall keep the other party informed of the
progress of such proceedings and said other party shall be entitled
to counsel in such proceedings but at its own expense. Any award
paid by third parties as the result of such proceedings (whether by
way of settlement or otherwise) shall first be applied as provided
in Section 7.3, if applicable, to reimbursement of the unreimbursed
legal fees and expenses incurred by either party and then the
remainder shall be divided between the parties as follows:
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
(a) (i) If the amount is based on lost profits, COMPANY
shall receive an amount equal to the damages the
court determines COMPANY has suffered as a result
of the infringement less the amount of any royalties
that would have been due GENERAL on sales of PRODUCT
lost by COMPANY as a result of the infringement had
COMPANY made such sales; and
(ii) GENERAL shall receive an amount equal to the royalties
it would have received if such sales had been made by
COMPANY; and
(b) As to awards other than those based on lost profits,
[****]percent to the party initiating such proceedings and
[****]percent to the other party.
8. INDEMNIFICATION
8.1 (a) COMPANY shall indemnify, defend and hold harmless GENERAL,
NYCOMED and their trustees, officers, medical and professional
staff, employees, and agents and their respective successors,
heirs and assigns including claims by NYCOMED against GENERAL
and claims by GENERAL against NYCOMED (the "Indemnitees"),
against any liability, damage, loss or expense (including
reasonable attorney's fees and expenses of litigation) incurred
by or imposed upon the Indemnitees or any one of them in
connection with any claims, suits, actions, demands or
judgments (i) arising out of any theory of product liability
(including, but not limited to, actions in the form of tort,
warranty, or strict liability) concerning any PRODUCT, process
or service made, used or sold by the COMPANY, its AFFILIATE, or
a SUBLICENSEE or agent of the COMPANY pursuant to a license or
sublicense granted under this Agreement, (ii) arising out of
the maintenance or enforcement of [****] PATENT RIGHTS and
including its related US Patent [****], (iii) the maintenance
and enforcement of the [****] Agreement, or (iv) the
infringement of the [****] PATENT RIGHTS upon the rights of
third parties.
(b) COMPANY's indemnification under (a) above shall not apply to
any liability, damage, loss or expense to the extent that it is
directly attributable to the negligent activities or omissions,
reckless misconduct or intentional misconduct of any of the
Indemnitees.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
(c) COMPANY agrees, at its own expense to provide attorneys
reasonably acceptable to GENERAL to defend against any actions
brought or filed against any party indemnified hereunder with
respect to the subject of indemnity contained herein, whether
or not such actions are rightfully brought.
(d) This paragraph 8.1 shall survive expiration or termination of
this Agreement.
8.2 (a) Beginning at such time as any such PRODUCT, process or service
is being commercially distributed or sold (other than for the
purpose of obtaining regulatory approvals) by COMPANY or by an
agent, SUBLICENSEE or AFFILIATE of COMPANY, COMPANY shall, at
its sole cost and expense, procure and maintain commercial
general liability insurance in amounts not less than $2,000,000
per incident and $2,000,000 annual aggregate and naming the
Indemnitees as additional insureds. Such commercial general
liability insurance shall provide (i) product liability
coverage and (ii) broad form contractual liability coverage for
COMPANY's indemnification under paragraph 8.1 of this
Agreement. If COMPANY elects to self-insure all or part of the
limits described above (including deductibles or retentions
which are in excess of $250,000 annual aggregate) such
self-insurance program must be acceptable to GENERAL and the
Risk Management Foundation. The minimum amounts of insurance
coverage required under this paragraph 8.2 shall not be
construed to create a limit of COMPANY's liability with respect
to its indemnification under paragraph 8.1 of this Agreement.
(b) COMPANY shall provide GENERAL with written evidence of such
insurance upon request of GENERAL. COMPANY shall provide
GENERAL with written notice at least fifteen (15) days prior to
the cancellation, non-renewal or material change in such
insurance; if COMPANY does not obtain replacement insurance
providing comparable coverage prior to the expiration of such
fifteen (15) day period, GENERAL shall have the right to
terminate this Agreement effective at the end of such fifteen
(15) day period without notice or any additional waiting
periods.
(c) COMPANY shall maintain such commercial general liability
insurance beyond the expiration or termination of this
Agreement during (i) the period that any such PRODUCT, process,
or service is being commercially distributed or sold (other
than for the purpose of obtaining regulatory approvals) by
COMPANY or by an agent, SUBLICENSEE or AFFILIATE of COMPANY and
(ii) a reasonable period after the period referred to in (c)
(i) above which in no event shall be less than six (6) years.
<PAGE>
(d) This paragraph 8.2 shall survive expiration or termination of
this Agreement.
9. TERMINATION
9.1 Unless otherwise terminated as provided for in this Agreement, a
license or sublicense to PATENT RIGHTS granted hereunder will
continue on a country by country basis:
(a) for [****] after the date COMPANY, its agents, AFFILIATES, or
SUBLICENSEES shall last sell any PRODUCT in such country, it
being understood that GENERAL shall have the right to terminate
such license or sublicense upon written notice in any country
in the event that after the FIRST COMMERCIAL SALE of a PRODUCT
in such country there is a continuous [****] period in which no
PRODUCT is sold in such country, provided such sale is not
prevented by force majeure, government regulation or
intervention, or institution of a law suit by any third party,
or that COMPANY can show to the reasonable satisfaction of
GENERAL that it is using substantial economic and other assets
and efforts to effect sales in such country, or
(b) until the last to expire of all PATENT RIGHTS, the claims of
which but for this Agreement would be infringed by the
manufacture, use or sale of any PRODUCT in the applicable
country, whichever shall first occur.
9.2 If either party shall fail to materially perform any of its
obligations under this Agreement (except the COMPANY obligations
specified in Article 3 herein, which are to be governed as to
termination and cancellation of any license or sublicense by the
provisions of Article 3), the nondefaulting party may give written
notice of the default to the defaulting party. Unless such default
is corrected within thirty (30) days after such notice, the
notifying party may terminate this Agreement and the license or
sublicense hereunder upon an additional thirty (30) days prior
written notice, provided that only one such an additional thirty
(30) day grace period shall be available in any twelve (12) month
period with respect to a default of any applicable provision
hereunder. Thereafter notice of default of said provision shall
constitute termination.
9.3 In the event that any license or sublicense granted to COMPANY under
this Agreement is terminated, all sublicenses under such license or
sublicense shall at the option of GENERAL terminate at the time of
termination of the COMPANY's license or sublicense; provided,
however, that GENERAL and such SUBLICENSEES shall be free to
negotiate a new license or sublicense relationship between them. All
SUBLICENSE Agreements between COMPANY and a SUBLICENSEE shall
provide the foregoing provisions. In the event that COMPANY, due to
the provisions of this Section finds difficulty in establishing
sublicenses after demonstrated good faith efforts to do so,
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT, AS AMENDED
<PAGE>
GENERAL agrees to establish reasonable objective standards for the
continuity of sublicenses in the event of the termination of a
license or sublicense granted to COMPANY.
9.4 Upon termination of any license or sublicense granted hereunder
COMPANY shall pay GENERAL all royalties due or accrued on (i) the
sale of PRODUCT up to and including the date of termination and (ii)
for twelve (12) months following the date of termination for the
sale of PRODUCT manufactured prior to the termination date.
10. CONFIDENTIALITY
10.1 GENERAL and COMPANY recognize that performance under this Agreement
may involve the exchange and/or development or discovery of
proprietary information, confidential business, technical and
scientific information or trade secrets (collectively, "proprietary
information"). Accordingly, each party agrees to use reasonable
efforts, no less than those used for its own information of similar
nature, to retain in confidence all proprietary information of the
other party identified as confidential at the time of disclosure and
not to disclose such information to any other person or entity, nor
use such information without written permission of the party owning
such information, except in accordance with the terms of this
Agreement. The obligations of this paragraph shall be binding upon
the parties for a period of 5 years from the date of each disclosure
10.2 The term "proprietary information" as used herein shall not include
any information which the recipient clearly shows by appropriate
documentation:
(a) Was at the time of receipt both lawfully and independently
known to the receiving party, its agents, or employees;
(b) Without breach of this Agreement by the receiving party has
been published or is otherwise within the public knowledge or
is generally known to the public at the time of disclosure;
(c) Becomes known or available to the receiving party without
restriction from a source other than the disclosing party,
provided that such source has an unqualified right to disclose
such information without restriction;
(d) Becomes a part of the public domain after disclosure without
breach of this Agreement by the receiving party; or
(e) Is required by law to be disclosed, in which case the receiving
party will give the disclosing party prompt written notice of
the required disclosure. The disclosing
<PAGE>
party may, in good faith and at its own expense, contest
disclosure or seek confidential treatment and the receiving
party shall cooperate with the disclosing party in all
reasonable respects.
11. GENERAL'S REPRESENTATIONS AND WARRANTIES
GENERAL represents and warrants to COMPANY as follows:
11.1 GENERAL is the owner by assignment from Dr. Wolf of his entire
right, title and interest in the GENERAL PATENT RIGHTS and the JOINT
PATENT RIGHTS.
11.2 Pursuant to Exhibit C, GENERAL has been approved by NYCOMED to
license or sublicense NYCOMED's rights in PATENT RIGHTS which are
described in paragraph 1.6.
11.3 To the best of GENERAL's knowledge, no person or entity, other than
GENERAL, the U.S. Government pursuant to 35 U.S.C. Section 202(c),
NYCOMED and [****] or [****] successor in interest in the [****]
Agreement, has any right, title or interest in the PATENT RIGHTS.
11.4 GENERAL has full right, power and authority to grant the license
under the PATENT RIGHTS granted to COMPANY under Section 2.2 of this
Agreement and to otherwise enter into this Agreement.
11.5 This Agreement is legally binding on GENERAL and does not conflict
with or breach any other Agreement to which GENERAL is a party.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
11.6 As of the EFFECTIVE DATE, GENERAL has no notice or actual knowledge
(without having conducted any due diligence) that the GENERAL PATENT
RIGHTS or JOINT PATENT RIGHTS conflict with or infringe the rights
of any other person or entity (other than NYCOMED, [****] or its
successor in interest) or that the rights of any other person or
entity conflict with or infringe the GENERAL PATENT RIGHTS or JOINT
PATENT RIGHTS.
12. MISCELLANEOUS
12.1 This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and, supersedes all prior
agreements, representations and negotiations concerning such subject
matter (none of which prior matters shall be binding on the
parties). OTHER THAN WARRANTIES EXPRESSLY SET FORTH IN THIS
AGREEMENT, NEITHER GENERAL NOR COMPANY MAKES ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR ANY IMPLIED WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT WITH RESPECT TO
ANY PRODUCT, PATENT, TRADEMARK, SOFTWARE, TRADE SECRET, TANGIBLE
RESEARCH PROPERTY, INFORMATION OR DATA AND EACH PARTY HEREBY
DISCLAIMS THE SAME.
12.2 In order to facilitate implementation of this Agreement, GENERAL and
COMPANY are designating the following individuals to act on their
behalf with respect to this Agreement for the matter indicated below:
(a) with respect to all royalty payments, any correspondence
pertaining to any PATENT RIGHT, or any notice of the use of
GENERAL's name, for GENERAL, the Director, Office of Corporate
Sponsored Research and Licensing, and for COMPANY, John T.
Smolik; provided that correspondence relating to the billing of
patent costs shall be copied to, for GENERAL, the Business
Manager, Office of Technology Affairs; and for COMPANY, John T.
Smolik.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
(b) any amendment of or waiver under this Agreement, any written
notice including progress reports or other communication
pertaining to the Agreement: for GENERAL, the Director, Office
Corporate Sponsored Research and Licensing; and for COMPANY,
John T. Smolik.
(c) the above designations may be superseded from time to time by
alternative designations made by: for GENERAL, the President or
the Senior Vice President, Office of Corporate Sponsored
Research and Licensing; and for COMPANY, Eric A. Wachter.
12.3 This Agreement may be amended and any of its terms or conditions may
be waived only by a written instrument executed by the parties or,
in the case of a waiver, by the party waiving compliance. The
failure of either party at any time or times to require performance
of any provision hereof shall in no manner affect its rights at a
later time to enforce the same. No waiver by either party of any
condition shall be deemed as a further or continuing waiver of such
condition or term or of any other condition or term.
12.4 This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors
and permitted assigns.
12.5 Any delays in or failures of performance by either party under this
Agreement shall not be considered a breach of this Agreement if and
to the extent caused by occurrences beyond the reasonable control of
the party affected, including but not limited to: Acts of God; acts,
regulations or laws of any government; strikes or their concerted
acts of worker; fires; floods; explosions; riots; wars; rebellion;
and sabotage. Any time for performance hereunder shall be extended
by the actual time of delay caused by such occurrence.
12.6 Neither party shall use the name of the other party or of any staff
member, officer, employee or student of the other party or any
adaptation thereof in any advertising, promotional or sales
literature, publicity or in any document employed to obtain funds or
financing without the prior written approval of the party or
individual whose name is to be used. For GENERAL, such approval
shall be obtained from the Director of Public Affairs and for
COMPANY from John T. Smolik. The foregoing, however, shall not
restrict the COMPANY's obligation to make all disclosures and
filings required by the Securities and Exchange Commission or any
stock exchange on which the COMPANY's stock is listed.
12.7 This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the Commonwealth of Massachusetts.
<PAGE>
12.8 This Agreement shall not be assignable by GENERAL without COMPANY's
prior written consent except for the right to receive royalties or
other payments payable herein. COMPANY may at its own discretion and
without approval by GENERAL transfer its interest or any part
thereof under this Agreement to a wholly-owned subsidiary or any
assignee or purchaser of the portion of its business associated with
the manufacture and sale of PRODUCT. In the event of any such
transfer, the transferee shall assume and be bound by the provisions
of this Agreement. Otherwise this Agreement shall be assignable by
COMPANY only with the consent in writing of GENERAL.
12.9 For any and all claims, disputes, or controversies arising under,
out of, or in connection with this Agreement, except issues relating
to the validity, construction or effect of any PATENT RIGHT, which
the parties shall be unable to resolve within sixty (60) days, the
party raising such dispute shall promptly advise the other party of
such claim, dispute, or controversy in a writing which describes in
reasonable detail the nature of such dispute. By not later than five
(5) business days after the recipient has received such notice of
dispute, each party shall have selected for itself a representative
who shall have the authority to bind such party and shall
additionally have advised the other party in writing of the name and
title of such representative. By not later than ten (10) business
days after the date of such notice of dispute, such representatives
shall agree upon a third party which is in the business of providing
Alternative Dispute Resolution (ADR) services (hereinafter, "ADR
Provider") and shall schedule a date with such ADR Provider to
engage in mediation as an ADR. All parties to this Agreement shall
be equally responsible for all costs and fees of the ADR.
Thereafter, the representatives of the parties shall engage in good
faith in an mediation/ADR process under the auspices of the selected
ADR Provider. If within the aforesaid thirty (30) business days
after the date of the notice of dispute the representatives of the
parties have not been able to agree upon an ADR Provider and
schedule a date to engage in ADR, or if they have not been able to
resolve the dispute within thirty (30) business days after the
termination of ADR, the parties shall have the right to pursue any
other remedies legally available to resolve such dispute in either
the Courts of the State of Illinois or in the United States District
Court for the Northern District of Illinois, in either case sitting
in Chicago, to whose jurisdiction for such purposes GENERAL and
COMPANY hereby irrevocably consents and submits. Notwithstanding the
foregoing, nothing in this Paragraph shall be construed to waive any
rights or timely performance of any obligations existing under this
Agreement.
<PAGE>
12.10 The parties acknowledge and incorporate the Recitals into the body
of this Agreement and GENERAL and NYCOMED each acknowledge and agree
that all statements of fact in said Recitals attributable or
relating to them constitute representations of fact which COMPANY
may rely upon as an inducement to entering into this Agreement.
12.11 If any provision(s) of this Agreement are or become invalid, are
ruled illegal by any court of competent jurisdiction or are deemed
unenforceable under then current applicable law from time to time in
effect during the term hereof, it is the intention of the parties
that the remainder of this agreement shall not be effected thereby.
It is further the intention of the parties that in lieu of each such
provision which is invalid, illegal or unenforceable, there be
substituted or added as part of this Agreement a provision which
shall be as similar as possible in economic and business objectives
as intended by the parties to such invalid, illegal or enforceable
provision, but shall be valid, legal and enforceable.
12.12 All notices and other communications between the parties in
connection with this Agreement shall be in writing and such notices,
communications and all payments hereunder shall be deemed
sufficiently given when delivered by messenger or overnight courier
providing for receipted delivery, transmitted by fax with
confirmation of transmission or sent by prepaid United States mail
or other recognized carrier, addressed as follows:
If to COMPANY:
John T. Smolik
President, CEO
Photogen, Inc.
7327 Oak Ridge Highway
Knoxville, TN 37931
Fax number: (423) 769-4013
If to GENERAL:
Director, Office of Corporate Sponsored Research and Licensing
Massachusetts General Hospital
13th Street, Building 149
Suite 1101
Charleston, MA 02129
Fax number: (617) 726-1668
Either party may change its address by written notice given to the other party.
12.13 The COMPANY hereby waives its right to bring any claim, suit or
action against GENERAL or any of its affiliates for any liability
arising out of NYCOMED's
<PAGE>
maintenance or enforcement of the [****] Agreement or the [****]
PATENT RIGHTS, or NYCOMED's failure to meet any of its obligations
under this Agreement.
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
THE PARTIES have duly executed this Agreement as of the date first
shown above written.
PHOTOGEN, INC. THE GENERAL HOSPITAL CORPORATION
BY: /s/ John Smolik BY: /s/
----------------------------- ----------------------------
TITLE: President TITLE: Associate Director, CSRL
----------------------------- ----------------------------
DATE: 10/20/99 DATE: 10/21/99
----------------------------- ----------------------------
The undersigned, Gerald L. Wolf, Ph.D., M.D., has reviewed the
foregoing Agreement, hereby acknowledges the terms and conditions of the
foregoing Agreement, insofar as such terms and conditions have any
application to him and consents to the same.
DATE: 10/20/99 /s/ Gerald L. Wolf
----------------------------- ----------------------------
Gerald L. Wolf, Ph.D., M.D.
<PAGE>
The undersigned, ___________________, PRESIDENT of NYCOMED and the duly
authorized representative of NYCOMED, confirms, represents and agrees that
NYCOMED has appointed GENERAL its agent pursuant to Exhibit C for purposes of
licensing and sublicensing all of NYCOMED's right, title, and interest in the
JOINT PATENT RIGHTS and in the [****] PATENT RIGHTS as described in this
Agreement. NYCOMED agrees to comply with Sections 2.4, 4.3, 7.5, 7.6 of this
Agreement and NYCOMED acknowledges and agrees with Section 12.10 of this
Agreement.
Date: 10/20/99
---------------------------
/s/
- -----------------------------------
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
EXHIBIT 10.8
CONFIDENTIAL TREATMENT HAS BEEN SOUGHT FOR
PORTIONS OF THIS EXHIBIT PURSUANT TO RULE 24B-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of
October 20, 1999, among PHOTOGEN TECHNOLOGIES, INC., a Nevada corporation (the
"COMPANY"), and ELAN INTERNATIONAL SERVICES, LTD., a Bermuda exempted limited
liability company ("EIS"), and a wholly owned subsidiary of ELAN CORPORATION,
PLC, an Irish public limited company ("ELAN").
R E C I T A L S:
A. The Company desires to issue and sell to EIS, and EIS
desires to purchase from the Company, (i) 12,015 shares of a newly-created
series of the Company's Preferred Stock, par value U.S.$.01 per share, captioned
"Series A Convertible Exchangeable Preferred Stock" (the "SERIES A PREFERRED
STOCK"), (ii) 461,538 shares of the Company's Common Stock, par value U.S.$.001
per share ((the "COMMON STOCK"); together with the Series A Preferred Stock, the
"SHARES") (subject to adjustment, as described in Section 1(f) below) and (iii)
a warrant (the "WARRANT") in the form attached hereto as EXHIBIT A to purchase
up to 100,000 shares of Common Stock subject to the conditions contained
herein and therein. In addition, EIS has agreed to lend certain funds to the
Company pursuant to a convertible promissory note in the form attached hereto as
EXHIBIT B (as amended at any time, the "NOTE"; together with the Shares and the
Warrant, the "SECURITIES"), with a maximum aggregate principal amount of
U.S.$$4,806,000, amounts in respect of which shall be disbursed in accordance
with its terms and subject to the conditions contained herein and therein. The
rights, preferences and privileges of the Series A Preferred Stock are as set
forth in the Certificate of Designations, Preferences and Rights (the
"CERTIFICATE OF DESIGNATIONS"), the form of which is attached hereto as EXHIBIT
C.
B. The Company and EIS have previously formed PHOTOGEN NEWCO LTD., a Bermuda
exempted limited liability company incorporated under the laws of Bermuda
("NEWCO"), and pursuant to the terms of a Subscription, Joint Development and
Operating Agreement, dated as of the date hereof (as amended at any time, the
"JDOA"), simultaneously with the transactions contemplated by this Agreement,
(i) the Company shall acquire 12,000 common shares of Newco, par value U.S.$1.00
per share ("NEWCO COMMON STOCK"), representing 100% of the outstanding shares of
such class of stock and (ii) EIS shall acquire 2,980 non-voting convertible
preferred shares of Newco, par value of U.S.$1.00 ("NEWCO PREFERRED STOCK")
representing, on a fully diluted basis 19.9% of the outstanding shares of such
class of stock.. Additionally, as of the date hereof, Newco has entered into
license agreements with (i) ELAN PHARMA INTERNATIONAL LIMITED, an Irish private
limited company ("EPIL"), (such agreement, as amended at any time, the "ELAN
LICENSE AGREEMENT"), and (ii) the Company (such agreement, as amended at any
time, the "COMPANY LICENSE AGREEMENT" and, together with the Elan License
Agreement, the "LICENSE AGREEMENTS").
<PAGE>
C. The Company and EIS are executing and delivering on the
date hereof a Registration Rights Agreement, in the form attached hereto as
EXHIBIT D (as amended at any time, the "COMPANY REGISTRATION RIGHTS AGREEMENT"),
in respect of the Common Stock issued or issuable upon (i) conversion of the
Series A Preferred Stock and the Note and (ii) exercise of the Warrant, the
Common Stock being purchased hereunder, and any other Common Stock issued to EIS
or any of its affiliates or permitted transferees upon any stock split, stock
dividend, recapitalization or similar event affecting the Securities. The
Company, EIS and Newco are also executing and delivering on the date hereof a
Registration Rights Agreement in the form attached hereto as EXHIBIT E (as
amended at any time, the "NEWCO REGISTRATION RIGHTS AGREEMENT"). Additionally,
the Company and EIS are executing and delivering on the date hereof a Funding
Agreement in the form attached hereto as EXHIBIT F (the "FUNDING AGREEMENT;"
and, together with this Agreement, the Certificate of Designations, the JDOA,
the Company Registration Rights Agreement, the Newco Registration Rights
Agreement, the License Agreements and each other document or instrument executed
and delivered in connection with the transactions contemplated hereby and by the
JDOA, the "TRANSACTION DOCUMENTS").
A G R E E M E N T:
The parties hereto agree as follows:
SECTION 1. CLOSING.
(a) TIME AND PLACE. The closing of the transactions
contemplated hereby (the "CLOSING") shall occur on the date hereof (the "CLOSING
DATE"), at the offices of Brock Silverstein LLC, 800 Third Avenue, 21st Floor,
New York, NY 10022.
(b) ISSUANCE OF SECURITIES. At the Closing, the Company shall
issue and sell to EIS, and EIS shall purchase from the Company: (i) 12,015
shares of Series A Preferred Stock, (ii) 461,538 shares of Common Stock and
(iii) the Warrant.
(c) PURCHASE PRICE. The purchase price (the "PURCHASE PRICE")
for the Securities shall be U.S.$18,015,000.
(d) CONVERTIBLE NOTE FACILITY. EIS shall lend up to
U.S.$4,806,000 to the Company pursuant to the terms and conditions of the Note.
(e) DELIVERY. At the Closing:
(i) EIS shall pay the Purchase Price by wire transfer to an
account designated by the Company and the parties hereto shall execute
and deliver to each other, as applicable: (A) a certificate or
certificates for the Series A Preferred Stock and the Common Stock; (B)
the Warrant, (C) the Note; (D) the Company Registration Rights Agreement;
(E) the Newco Registration Rights Agreement; (F) the JDOA; (G) the
Certificate of Designations, as filed with the Secretary of State of the
State of Nevada; (H) the License Agreements; (I) the Funding Agreement;
(J) certificates as to the
<PAGE>
incumbency of the officers of the Company executing any of the
Transaction Documents; and (K) any other documents or instruments
reasonably requested by a party hereto; and
(ii) The Company shall cause to be delivered to EIS an opinion
of counsel in the form attached hereto as EXHIBIT G.
(f) COMMON STOCK PURCHASE PRICE ADJUSTMENT. In the event that
the effective price per share of the Common Stock in the Company's next
BONA FIDE third party financing (other than the Company's presently
contemplated Series B Preferred Stock private placement and of the
Company's existing options and/or warrants or the exercise thereof) is
less than U.S.$13.00, the Company shall, upon consummation of such
financing, cause to be issued to EIS that number of additional shares of
Common Stock such that, after giving effect to such issuance, the average
price per share paid by EIS for its aggregate ownership of Common Stock
in the Company, including such additional Shares, shall be equal to the
effective price per share in such BONA FIDE financing.
(g) EXEMPTION FROM REGISTRATION. The Securities and any
underlying shares of Common Stock will be issued under an exemption or
exemptions from registration under the Securities Act of 1933, as amended
(the "SECURITIES ACT"). Accordingly, the certificates evidencing the
Series A Preferred Stock and the Common Stock, the Warrant, the Note and
any shares of Common Stock or other securities issuable upon the
exercise, conversion or exchange of any of the Securities shall, upon
issuance, contain a legend, substantially in the form as follows:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS AND NO INTEREST MAY BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR THIS
CORPORATION RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES SATISFACTORY TO THIS CORPORATION THAT REGISTRATION IS
NOT REQUIRED UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
ALSO SUBJECT TO THE RESTRICTIONS CONTAINED IN THAT CERTAIN
SECURITIES PURCHASE AGREEMENT, DATED AS OF OCTOBER __, 1999, BY
AND BETWEEN PHOTOGEN TECHNOLOGIES, INC. AND ELAN INTERNATIONAL
SERVICES, LTD.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company hereby represents and warrants to EIS, as of the date hereof, as
follows:
(a) ORGANIZATION. The Company is duly organized, and validly
existing under the laws of the state of Nevada and has all requisite corporate
power and authority to own and lease
<PAGE>
its properties, to carry on its business as presently conducted and as
proposed to be conducted and to consummate the transactions contemplated
hereby. The Company is duly qualified as a foreign corporation and in good
standing to do business in each jurisdiction in which the nature of the
business conducted or the property owned by it requires such qualification,
except where the failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect on the business, assets,
liabilities (contingent or otherwise), operations, condition (financial or
otherwise), or prospects of the Company (a "COMPANY MATERIAL ADVERSE EFFECT").
(b) CAPITALIZATION. As of the Closing Date, the Company has
reserved a sufficient number of shares of Common Stock (i) for issuance upon
conversion of the Series A Preferred Stock being purchased hereunder by EIS
(including dividends in-kind thereon), (ii) for issuance upon exercise of the
Warrant and (iii) for issuance upon conversion of the Note (including interest
payable thereon). The Shares, when issued against payment therefor in
accordance with this Agreement, will be duly and validly issued, fully paid and
nonassessable, and will not be issued in violation of any preemptive or similar
rights. The shares of Common Stock underlying the Series A Preferred Stock, the
Warrant and the Note (the "UNDERLYING SHARES"), when issued upon conversion or
exercise in accordance with the terms thereof, will be duly and validly issued,
fully paid and nonassessable, and will not be issued in violation of any
preemptive or similar rights.
(c) AUTHORIZATION OF TRANSACTION DOCUMENTS. The Company has full
corporate power and authority to execute and deliver this Agreement and each of
the other Transaction Documents to which it is a party, and to perform its
obligations hereunder and thereunder. The execution, delivery and performance
by the Company of this Agreement and each of the other Transaction Documents to
which it is a party, including the issuance and sale of the Securities, have
been duly authorized by all requisite corporate action by the Company and, when
executed and delivered by the Company, this Agreement and each of the other
Transaction Documents to which it is a party will be the valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms.
(d) NO VIOLATION. The execution, delivery and performance by the
Company of this Agreement and each other Transaction Document to which it is a
party, including the issuance and sale of the Securities, and compliance with
the provisions hereof and thereof by the Company, does not conflict with or
constitute or result in a breach of or default under (or an event which with
notice or passage of time or both would constitute a default) or give rise to
any right of termination, cancellation or acceleration under (i) the Restated
Articles of Incorporation, as amended, or by-laws, of the Company, (ii)
applicable law, statute, rule or regulation, or any ruling, writ, injunction,
order, judgment or decree of any court, arbitrator, administrative agency or
other governmental body applicable to the Company or any of its properties or
assets, or (iii) any contract filed or required by applicable law to be filed as
an exhibit to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1998 (the "1998 FORM 10-KSB"), except where such breach, default,
termination, cancellation or acceleration would not, individually or in the
aggregate, have a Company Material Adverse Effect
(e) APPROVALS. No material permit, authorization, consent,
approval, or order of or by, or any notification of or filing with, any person
or entity (governmental or otherwise) is required in connection with the
execution, delivery or performance of this Agreement or the
<PAGE>
Transaction Documents, including the issuance and sale of the Securities, by
the Company, other than the filing of a Form D by the Company pursuant to
Regulation D under the Securities Act ("REGULATION D") and the filing of the
Certificate of Designations by the Company with the State of Nevada.
(f) SEC FILINGS. The Company has filed with the Securities and
Exchange Commission (the "SEC") all forms, reports, schedules, statements,
exhibits and other documents (collectively, the "SEC FILINGS") required to be
filed by the Company on or before the date hereof. At the time filed, the SEC
Filings, including without limitation, any financial statements, exhibits and
schedules included therein or documents incorporated therein by reference (i)
did 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 (ii) complied in all material respects with the applicable
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), as the case may be.
(g) FINANCIAL STATEMENTS. The audited balance sheets of the
Company at December 31, 1998 and 1997, together with the related statements of
operations, stockholders' equity (deficit) and cash flows for each of the two
years ended December 31, 1998, 1997, together with the reports and opinions
thereon of BDO Seidman, LLP, contained in the 1998 Form 10-KSB, comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulation of the SEC with respect thereto, and fairly
present, in all material respects, the financial position of the Company and the
results of its operations and its cash flows at such dates and for the years
then ended and were prepared in conformity in all material respects with
generally accepted accounting principles applied on a consistent basis.
(h) LITIGATION. There is no legal, administrative, arbitration or
other action or proceeding or governmental or investigation pending, or to the
Company's knowledge, threatened against the Company, or any director, officer or
employee of the Company that challenges the validity or performance of this
Agreement or the other Transaction Documents to which the Company is a party.
(i) ABSENCE OF CERTAIN EVENTS. Since December 31, 1998, except
as contemplated by the Transaction Documents or as set forth on SCHEDULE 2(i)
hereto, (A) the Company has not (i) made, paid or declared any dividend or
distribution to any equity holder (in such capacity) or redeemed any of its
capital stock, (ii) varied its business plan or practices, in any material
respect, from past practices, (iii) entered into any financing, joint venture,
license or similar arrangement that would limit or restrict its ability to
perform its obligations hereunder and under each of the other Transaction
Documents to which it is a party, or (iv) suffered or permitted to be incurred
any liability or obligation or any lien or encumbrance against any of its
properties or assets that would limit or restrict its ability to perform its
obligations hereunder and under each of the other Transaction Documents to which
it is a party, and (B) there has not been any change or development which has
had, or in the Company's reasonable judgement is likely to have, a Company
Material Adverse Effect except as disclosed on Schedule 2 (i) hereto.
(j) DISCLOSURE. The representations and warranties set forth
herein and in the
<PAGE>
other Transaction Documents, when viewed collectively, do not contain any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements contained herein not misleading in light of
the circumstances in which they were made.
(k) BROKERS OR FINDERS. There have been no investment bankers,
brokers or finders used by the Company in connection with the transactions
contemplated by the Transaction Documents and no persons or entities are
entitled to a fee or compensation in respect thereof.
SECTION 3. REPRESENTATION AND WARRANTIES OF EIS. EIS hereby
represents and warrants to the Company, as of the date hereof, as follows:
(a) ORGANIZATION. EIS is duly organized, validly existing and in
good standing under the laws of Bermuda and has all requisite corporate power
and authority to own and lease its properties, to carry on its business as
presently conducted and as proposed to be conducted and to consummate the
transactions contemplated hereby. EIS is duly qualified as a foreign
corporation and in good standing to do business in each jurisdiction in which
the nature of the business conducted or the property owned by it requires such
qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on the
business, assets, liabilities (contingent or otherwise), operations, condition
(financial or otherwise), or prospects of EIS (an "EIS MATERIAL ADVERSE
EFFECT").
(b) AUTHORIZATION OF TRANSACTION DOCUMENTS. EIS has full
corporate power and authority to execute and deliver this Agreement and each of
the other Transaction Documents to which it is a party, and to perform its
obligations hereunder and thereunder. The execution, delivery, and performance
by EIS of this Agreement and each other Transaction Document to which it is a
party, including the purchase and acceptance of the Securities, have been duly
authorized by all requisite corporate action by EIS and, when executed and
delivered by EIS, this Agreement and each of the other Transaction Documents to
which it is a party, will be the valid and binding obligations of EIS,
enforceable against it in accordance with their respective terms.
(c) NO VIOLATION. The execution, delivery and performance by EIS
of this Agreement and each other Transaction Document to which it is a party,
including the purchase and acceptance of the Securities, and compliance with
provisions hereof and thereof by EIS, will not conflict with or constitute or
result in a breach of or default under (or an event which with notice or passage
of time or both would constitute a default) or give rise to any right of
termination, cancellation or acceleration under (i) the by-laws of EIS, (ii)
applicable law, statute, rule or regulation, or any ruling, writ, injunction,
order, judgment or decree of any court, arbitrator, administrative agency or
other governmental body applicable to EIS or any of its properties or assets, or
(iii) any material contract to which EIS is a party, except where such breach,
default, termination, cancellation or acceleration would not, individually or in
the aggregate, have an EIS Material Adverse Effect.
(d) APPROVALS. Except for consent required under the Mergers and
Takeovers (Control) Acts 1978-1996 (Ireland), no material permit, authorization,
consent, approval or order of or by, or any notification of or filing with, any
person or entity (governmental or otherwise) is required in connection with the
execution, delivery or performance of this Agreement or the Transaction
<PAGE>
Documents by EIS.
(e) INVESTMENT REPRESENTATIONS.
(i) EIS is sophisticated in transactions of this type
and capable of evaluating the merits and risks of the transactions
described herein and in the other Transaction Documents to which it is a
party, and has the capacity to protect its own interests. EIS has not
been formed solely for the purpose of entering into the transactions
described herein and therein and is acquiring the Securities (and the
Underlying Shares) for investment for its own account, not as a nominee
or agent, and not with the view to, or for resale, distribution or
fractionalization thereof, in whole or in part, and no other person
(other than Elan) has a direct or indirect interest, beneficial or
otherwise in the Securities (or the Underlying Shares); provided,
however, that EIS shall be permitted to convert or exchange such
Securities in accordance with their terms.
(ii) EIS has not and does not intend to enter into any
contract, undertaking, agreement or arrangement with any person or entity
to sell, transfer or pledge the Securities (or the Underlying Shares).
(iii) EIS acknowledges its understanding that the private
placement and sale of the Securities (and the Underlying Shares) is
exempt from registration under the Securities Act by virtue of the
provisions of Regulation D and Section 4(2) of the Securities Act. In
furtherance thereof, EIS represents and warrants that it is an
"accredited investor" as that term is defined in Regulation D, has the
financial ability to bear the economic risk of its investment, has
adequate means for providing for its current needs and personal
contingencies and has no need for liquidity with respect to its
investment in the Company.
(iv) EIS agrees that it shall not sell or otherwise
transfer any of the Securities (or the Underlying Shares) without
registration under the Securities Act or pursuant to an opinion of
counsel reasonably satisfactory to the Company that an exemption from
registration is available, and fully understands and agrees that it must
bear the total economic risk of its purchase for an indefinite period of
time because, among other reasons, none of the Securities (or the
Underlying Shares) have been registered under the Securities Act or under
the securities laws of any applicable state or other jurisdiction and,
therefore, cannot be resold, pledged, assigned or otherwise disposed of
unless subsequently registered under the Securities Act and under the
applicable securities laws of such states or jurisdictions or an
exemption from such registration is available. EIS understands that the
Company is under no obligation to register the Securities (or the
Underlying Shares) on its behalf with the exception of certain
registration rights with respect to certain of the Securities (and the
Underlying Shares), as provided in the Company Registration Rights
Agreement. EIS understands the lack of liquidity and restrictions on
transfer of the Securities (and the Underlying Shares) and that this
investment is suitable only for a person or entity of adequate financial
means that has no need for liquidity of this investment and that can
afford a total loss of its investment.
(f) LITIGATION. There is no legal, administrative, arbitration
or other action or
<PAGE>
proceeding or governmental investigation pending, or to EIS's knowledge
threatened, against EIS that challenges the validity or performance of this
Agreement or the other Transaction Documents to which EIS is a party.
(g) BROKERS OR FINDERS. There have been no investment bankers,
brokers or finders used by EIS in connection with the transactions contemplated
by the Transaction Documents and no persons or entities are entitled to a fee or
compensation in respect thereof.
SECTION 4. COVENANTS OF THE PARTIES.
(a) CERTAIN COVENANTS. From and after the Closing Date for so
long as the Note and until the earlier to occur of the exercise or expiration of
the EIS Exchange Right (as such term is defined in Section 6 hereof), the
Company shall not without the prior written consent of EIS: (i) sell,
transfer, encumber, pledge or otherwise affect, in any respect, (A) any shares
of Newco Common Stock owned by the Company, including, without limitation, those
shares of Newco Common Stock transferable to EIS upon exercise by EIS of the EIS
Exchange Right, or (B) affect, in any respect, the Company's ability to permit
EIS to exercise the EIS Exchange Right in full, as provided herein or (ii) enter
into any material transaction with a director, officer or more than 20%
beneficial owner of Common Stock on other than an arm's length basis.
(b) FULLY-DILUTED STOCK OWNERSHIP. Notwithstanding any other
provision of this Agreement, in the event that EIS shall have determined that at
any time it (together with its affiliates, if applicable) holds or has the right
to receive Common Stock (or securities or rights, options or warrants
exercisable, exchangeable or convertible for or into Common Stock) representing
in the aggregate in excess of 19.9% of the Company's outstanding Common Stock on
a fully diluted basis (assuming the exercise, exchange or conversion of such
securities beneficially owned by EIS or its affiliates, but not the exercise,
exchange or conversion of any other similar securities) or EIS has otherwise
determined that Elan would be required to equity account for its investment in
Photogen, EIS shall have the right, in its sole discretion, rather than
acquiring such securities from the Company, to exchange such number of
securities, as are necessary so that Elan shall not have to equity account, for
non-voting, convertible preferred stock of the Company (which shall be
reasonably satisfactory to each of the Company and EIS), which equity securities
shall be entitled to all of the other rights and benefits of the Common Stock.
In the event that EIS shall undertake to exercise such right, EIS shall retain
the additional rights to (i) exchange such new class of equity security for
Common Stock, in its discretion at any time and (ii) assign all or a portion of
such new class of equity security to its affiliates, in its discretion at any
time. Each of the Company and EIS shall use commercially reasonable effort to
effect such transactions and any required subsequent conversions or adjustments
to such securities, on a quarterly basis, within 15 business days of the end of
each of EIS' fiscal quarters.
(c) USE OF PROCEEDS. The Company shall use the proceeds of (i)
the issuance and sale of the Series A Preferred Stock solely to meet its initial
capitalization obligations to Newco as described in the JDOA, and (ii) the
issuance and funding of the Note solely to meet its developmental funding
commitments to Newco, as described in the Funding Agreement; and, in each case,
for no other purpose.
(d) CONFIDENTIALITY; NON-DISCLOSURE.
<PAGE>
(i) Subject to clauses (ii) and (iii) below, from and
after the date hereof, neither the Company nor EIS (nor their
respective affiliates) shall disclose to any person or entity this
Agreement or the other Transaction Documents or the contents thereof
or the parties thereto, except that such parties may make such
disclosure (x) to their directors, officers, employees and advisors,
so long as they shall have advised such persons of the obligation of
confidentiality herein and for whose breach or default the disclosing
party shall be responsible, (y) as required by applicable law, rule,
regulation or judicial or administrative process, provided that the
disclosing party uses reasonable efforts to obtain an order or ruling
protecting the confidentiality of confidential information of the
other party contained herein or therein or (z) to the NASDAQ Stock
Market. The parties shall be entitled to seek injunctive or other
equitable relief in respect of any breach or threatened breach of the
foregoing covenant without the requirement of posting a bond or other
collateral.
(ii) Prior to issuing any press release or public
disclosure in respect of this Agreement or the transactions
contemplated hereby, the party proposing such issuance, shall obtain
the consent of the other party to the contents thereof, which consent
shall not be unreasonably withheld or delayed; it being understood
that if such second party shall not have responded to such consent
request within five business days, such consent shall be deemed given.
(e) FURTHER ASSURANCES. From and after the date hereof, each of
the parties hereto agree to do or cause to be done such further acts and things
and deliver or cause to be delivered to each other such additional assignments,
agreements, powers and instruments, as each may reasonably require or deem
advisable to carry into effect the purposes of this Agreement and the other
Transaction Documents.
SECTION 5. STANDSTILL.
(a) Provided that nothing contained herein will prevent or
prohibit EIS from purchasing Voting Stock (as defined below) of the Company
pursuant to subsection 5(b) or from acquiring Voting Stock pursuant to the
conversion of the Series A Preferred Stock or the Note or the exercise of the
Warrant in accordance with their respective terms, EIS will not, directly or
indirectly, without the prior consent of the Board of Directors of the Company
(the "BOARD"), (i) acquire (or offer or agree to acquire) any Voting Stock; or
(ii) enter into any merger, consolidation or similar transaction with the
Company, unless, in the case of each of (i) and (ii), such transaction has been
approved by the Board; provided, that the foregoing restrictions shall not be
applicable in the event that any unaffiliated third party takes any such actions
(in the case of share ownership, acquiring at least [****] % of the outstanding
Common Stock, directly or indirectly). Notwithstanding the foregoing, EIS will
not be obligated to dispose of any Voting Stock it owns if its percentage
ownership is increased as a result of a decrease in the number of shares of
Voting Stock outstanding.
(b) The provisions of this Section 5 will terminate: (i) if EIS
owns less than
- -----------------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES ACT
OF 1934, AS AMENDED.
<PAGE>
[****]% of the outstanding Voting Stock; (ii) if any person or group,
excluding EIS, any affiliate of Elan, or any group that includes Elan or any
such affiliate, makes a BONA FIDE offer to acquire Voting Stock which would,
if successful, result in the bidder's beneficial ownership of at least [****]
% of the then outstanding Voting Stock; or (iii) upon the second anniversary
of the date of this Agreement.
(c) The Company will give EIS prompt notice of the receipt by
the Company of any written notice couched in such terms as to put the Company
reasonably on notice of the likelihood that a person or group has acquired or
is proposing to acquire an aggregate position of at least [****]% of the
outstanding Voting Stock, the Company receiving any BONA FIDE offer to
purchase or acquire [****]% or more of the Voting Stock or all or
substantially all of the assets of the Company, and any Board determination
to seek an acquirer for in excess of [****]% of the Voting Stock.
(d) EIS will cause its affiliates and associates to comply with
the provisions of this Section 5, whether directly or indirectly, individually
or as part of a "group" (as such term is defined in Rule 13d-5 under the
Exchange Act). When used in this Section 5, the term EIS includes EIS together
with its affiliates and associates.
For purposes of this Section 5, the term "VOTING STOCK" means the
Common Stock and any preferred stock of the Company possessing voting rights and
eligible to participate in votes of all of the Company's shareholders pursuant
to the Company's Restated Articles of Incorporation and Nevada law, and includes
any options, convertible securities or other rights to acquire such stock.
SECTION 6. CERTAIN RIGHTS OF EIS. (a) PREEMPTIVE RIGHT. Until the
fourth anniversary of the date hereof, EIS shall have the right (but not the
obligation) to participate in any equity, warrant, or convertible or
exchangeable for equity financing consummated by the Company, in order for EIS
to maintain its PRO RATA interest in the Company, based on the actual number of
shares of Common Stock outstanding on the date of such financing is consummated
(without, however, giving effect to the shares of Common Stock underlying the
Series A Preferred Stock); provided, however, that such right shall not apply to
any public offering, offering under an option plan, or asset or company
acquisition paid for, in whole or in part, in shares of stock. Such right shall
be exercised by EIS within 15 days of receipt of notice of such financing from
the Company. Such participation by EIS shall be on the same terms and
conditions offered to any other potential investor in such offering.
- ------------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
(b) COMPANY BOARD OF DIRECTORS. For so long as (i) EIS and/or its
affiliates or subsidiaries collectively own securities that represent ownership
of at least 10% of the Common Stock (or securities convertible, exchangeable or
exercisable for or into the Common Stock) on a fully diluted basis or (ii) until
the date that is five years after the date hereof, EIS shall be entitled to
nominate one director (the "EIS DIRECTOR") for election to the Company's Board,
which nominee shall be a member of the senior management of Elan, or otherwise
shall be acceptable to the Company. In connection with the foregoing, the
Company will take all necessary and/or appropriate steps to effect such
appointment, including the inclusion of the designated EIS Director on the
recommended slate of directors presented at any regular or special meeting of
the stockholders of the Company at which directors of the Company are to be
elected. Prior to such election, the designated EIS Director shall be entitled
to be an observer at the meetings of the Company's board of directors.
(c) CONVERSION AND EXCHANGE RIGHTS. The Certificate of
Designations sets forth certain rights of the holders of shares of Series A
Preferred Stock to convert such shares of preferred stock into newly issued
shares of Common Stock, or to exchange such shares of Series A Preferred Stock,
subject to the provisions in Section 5 of the Certificate of Designations, for
certain shares (i) of Newco Common Stock owned by the Company or (ii) non-voting
convertible preferred stock of Newco (the "EIS EXCHANGE RIGHT"), both on the
terms and conditions set forth therein.
SECTION 7. PLEDGE OF NEWCO STOCK. In order to secure the
Company's obligations pursuant to the EIS Exchange Right, the Company hereby
pledges, assigns and sets over to EIS, all of the Company's right, title and
interest in and to all shares of Newco Common Stock deliverable by the Company
upon exercise of the EIS Exchange Right (including stock distributions and
dividends thereon) (if EIS elects the option in Section 6(c)(i)) for such period
of time as the EIS Exchange Right shall be exercisable. The Company shall cause
to be delivered to EIS all of the certificates together with duly executed stock
power in favor of EIS evidencing such shares, and cause to be filed with the
Secretary of State of Nevada an appropriate UCC-1 financing statement in respect
of such pledge, assignment or setting over, and take all other necessary,
appropriate and customary actions in connection therewith. Such pledge shall be
governed by the applicable provisions of the Nevada Uniform Commercial Code.
Upon exercise of the EIS Exchange Right, EIS shall be entitled to keep and
retain such share certificates, which shall then be owned by EIS in accordance
with the terms thereof. Until EIS exercises the EIS Exchange Right, the Company
shall retain all rights in and to the pledged Newco Common Stock (including
without limitation all voting, dividend, liquidation and other rights), subject
only to this pledge and the JDOA.
SECTION 8. SURVIVAL AND INDEMNIFICATION. (a) SURVIVAL. The
representations and warranties of the Company and EIS contained herein shall
survive for a period of 24 months from and after the date hereof.
(b) INDEMNIFICATION. In addition to all rights and remedies
available to the parties hereto at law or in equity, the parties (each, in such
capacity, "INDEMNIFYING PARTY"; together, "INDEMNIFYING PARTIES") shall
indemnify each other as corporate entities (EIS and the Company),
<PAGE>
its stockholders, officers, directors and assigns, their affiliates, and its
affiliates' stockholders, officers, directors, employees, agents,
representatives, successors and assigns (collectively, the "INDEMNIFIED
PERSON"), and save and hold each Indemnified Person harmless from and against
and pay on behalf of or reimburse each such Indemnified Person, as and when
incurred, for any and all loss, liability, demand, claim, action, cause of
action, cost, damage, deficiency, tax, penalty, fine or expense, whether or
not arising out of any claims by or on behalf of such Indemnified Person or
any third party, including interest, penalties, reasonable attorneys' fees
and expenses and all amounts paid in investigation, defense or settlement of
any of the foregoing (collectively, "LOSSES"), that any such Indemnified
Person may suffer, sustain incur or become subject to, as a result of, in
connection with, relating or incidental to or by virtue of:
(i) any misrepresentation or breach of warranty on the
part of the Indemnifying Party in the case of the Company under
Section 2 of this Agreement or in the case of EIS under Section 3 of
this Agreement or any of the other Transaction Documents (as limited
thereby) (it being understood that the Company shall not be
responsible for any such misrepresentation or breach of warranty by
Newco); or
(ii) any nonfulfillment, default or breach of any
covenant or agreement on the part of the Indemnifying Party under
Section 4 of this Agreement or any of the other Transaction Documents.
(c) MAXIMUM RECOVERY. Notwithstanding anything in this
Agreement to the contrary, in no event shall the Indemnifying Parties be liable
in the case of the Company for indemnification under this Section 8 in an amount
in excess of the aggregate of the purchase price paid for the Shares and the
Warrant and the amounts advanced and not repaid under the Note or in the case of
EIS for indemnification hereunder in an amount in excess of such same aggregate.
No Indemnified Person shall assert any such claim unless Losses in respect
thereof incurred by any Indemnified Person, when aggregated with all previous
Losses hereunder, equal or exceed U.S.$50,000, but at such time that an
Indemnified Person is entitled to assert a claim, such claim shall include all
Losses covered by this Section 8.
(d) EXCEPTION. Notwithstanding the foregoing, upon judicial
determination that is final and no longer appealable, that the act or omission
giving rise to the indemnification set forth above resulted primarily out of or
was based primarily upon the Indemnified Person's negligence (unless such
Indemnified Person's negligence was based upon the Indemnified Person's reliance
in good faith upon any of the representations, warranties, covenants or promises
made by the Indemnifying Party herein) the Indemnifying Party shall not be
responsible for any Losses sought to be indemnified in connection therewith, and
the Indemnifying Party shall be entitled to recover from the Indemnified Person
all amounts previously paid in full or partial satisfaction of such indemnity,
together with all costs and expenses (including reasonable attorneys fees) of
the Indemnifying Party reasonably incurred in connection with the Indemnified
Persons claim for indemnity, together with interest at the rate per annum
publicly announced by Morgan Guaranty Trust Company as its prime rate from the
time of payment of such amounts to
<PAGE>
the Indemnified Person until repayment to the Indemnifying Party.
(e) INVESTIGATION. All indemnification rights hereunder shall
survive the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby to the extent provided in Section 8(g) below,
irrespective of any investigation, inquiry or examination made for or on behalf
of, or any knowledge of the Indemnified Person or the acceptance of any
certificate or opinion.
(f) CONTRIBUTION. If the indemnity provided for in this Section
8 shall be, in whole or in part, unavailable to any Indemnified Person, due to
Section 8(b) being declared unenforceable by a court of competent jurisdiction
based upon reasons of public policy, so that Section 8(b) shall be insufficient
to hold each such Indemnified Person harmless from Losses which would otherwise
be indemnified hereunder, then the Indemnifying Party and the Indemnified Person
shall each contribute to the amount paid or payable for such Loss in such
proportion as is appropriate to reflect not only the relative benefits received
by the Indemnifying Party on the one hand and the Indemnified Person on the
other, but also the relative fault of the Indemnifying Party and be in addition
to any liability that the Indemnifying Party may otherwise have. The indemnity,
contribution and expense reimbursement obligations that the Indemnifying Party
has under this Section 8 shall survive the expiration of the Transaction
Documents. The parties hereto further agree that the indemnification and
reimbursement commitments set forth in this Agreement shall apply whether or not
the Indemnified Person is a formal party to any such lawsuit, claims or other
proceedings.
(g) LIMITATION. No claim shall be brought by an Indemnified
Person in respect of any misrepresentation or breach of warranty under this
Agreement after 24 months from the date hereof; and any claim for
nonfulfillment, default or breach of any covenant or any misrepresentation shall
be brought within one year of the date of that such Indemnified Person became
aware or should have become aware of the nonfulfillment, default or breach.
Except as set forth in the previous sentence and in Section 8(c) above, this
Section 8 is not intended to limit the rights or remedies otherwise available to
any party hereto with respect to this Agreement or the Transaction Documents.
SECTION 9. NOTICES. All notices, demands and requests of any
kind to be delivered to any party in connection with this Agreement shall be in
writing and shall be deemed to have been duly given if personally or hand
delivered or if sent by an internationally-recognized overnight delivery or by
registered or certified mail, return receipt requested and postage prepaid, or
by facsimile transmission addressed as follows:
(i) if to the Company, to:
Photogen Technologies, Inc.
7327 Oak Ridge Highway, Suite B
Knoxville, Tennessee 37931
Attention: Chief Executive Officer
Facsimile: 423-769-4013
<PAGE>
with a copy to:
Grippo & Elden
Suite 3600
227 West Monroe Street
Chicago, IL 60606
Attn: Theodore Grippo, Esq.
Facsimile: 312-558-1195
(ii) if to EIS, to:
Elan International Services, Ltd.
Flatts, Smiths Parish
Bermuda, FL 04
Attention: Director
Facsimile: 441-292-2224
with a copy to:
Brock Silverstein LLC
800 Third Avenue, 21st Floor
New York, New York 10022
Attention: David Robbins, Esq.
Facsimile: 212-371-5500
or to such other address as the party to whom notice is to be given may have
furnished to the other party hereto in writing in accordance with provisions of
this Section 9. Any such notice or communication shall be deemed to have been
effectively given (i) in the case of personal or hand delivery, on the date of
such delivery, (ii) in the case of an internationally-recognized overnight
delivery service, on the second business day after the date when sent, (iii) in
the case of mailing, on the fifth business day following that day on which the
piece of mail containing such communication is posted, and (iv) in the case of
facsimile transmission, on the date of telephone confirmation of receipt.
SECTION 10. ENTIRE AGREEMENT. This Agreement and the other
Transaction Documents contain the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings among the parties with respect thereto.
SECTION 11. AMENDMENTS. This Agreement may not be modified or
amended, or any of the provisions hereof waived, except by written agreement of
the Company and EIS dated after the date hereof.
SECTION 12. COUNTERPARTS AND FACSIMILE. The Transaction
Documents may be executed in any number of counterparts, and each such
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement. Each of
<PAGE>
the Transaction Documents may be signed and delivered to the other party by
facsimile transmission; such transmission shall be deemed a valid signature.
SECTION 13. HEADINGS. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of the Agreement.
SECTION 14. GOVERNING LAW; ARBITRATION. This Agreement shall
be governed by and construed in accordance with the substantive (as opposed
to procedural) laws of the State of New York, without giving effect to
principles thereof relating to conflicts of laws. Any dispute under this
Agreement shall be settled by binding arbitration, conducted in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
by one arbitrator appointed in accordance with said rules. Such arbitrator
shall be reasonably satisfactory to each of the parties hereto; provided,
that if the parties are unable to agree upon the identity of such arbitrator
within 15 days of demand by any party, then any party shall have the right to
petition a presiding justice of the Supreme Court of New York, New York
County, to appoint an arbitrator. The arbitration shall be held in New York,
New York. The arbitrator shall determine what discovery will be permitted,
consistent with the goal of limiting the cost and time which the parties must
expend for discovery; provided the arbitrator shall permit such discovery as
he deems necessary to permit an equitable resolution of the dispute. Any
written evidence originally in a language other than English shall be
submitted in English translation accompanied by the original or a true copy
thereof. The costs of the arbitration, including administrative and
arbitrator's fees, shall be shared equally by the parties and each party
shall bear its own costs and attorneys' and witness' fees incurred in
connection with the arbitration. In rendering judgement, the arbitrator
shall be instructed by the parties that he shall be permitted to select
solely from between the proposals for resolution of the relevant issue
presented by each party, and not any other proposal. A disputed performance
or suspended performances pending the resolution of the arbitration must be
completed within 30 days following the final decision of the arbitrators or
such other reasonable period as the arbitrator determines in a written order.
The parties will co-operate and use reasonable efforts to ensure that any
arbitration any arbitration hereunder shall be completed swiftly and in any
event within one year from the filing of notice of a request for such
arbitration. The arbitration proceedings and the decision shall not be made
public without the joint consent of the parties and each party shall maintain
the confidentiality of such proceedings and decision unless otherwise
permitted by the other party. The parties agree that the decision shall be
the sole, exclusive and binding remedy between them regarding any and all
disputes, controversies, claims and counterclaims presented to the
arbitrator. Application may be made to any court having jurisdiction over the
party (or its assets) against whom the decision is rendered for a judicial
recognition of the decision and an order of enforcement.
SECTION 15. EXPENSES. Each of the parties shall be responsible
for its own costs and expenses incurred in connection with the transactions
contemplated hereby and by the other Transaction Documents.
<PAGE>
SECTION 16. ASSIGNMENTS AND TRANSFERS. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. This
Agreement, the shares of Series A Preferred Stock and Common Stock being
purchased hereunder by EIS, the Warrant, the Note, and the shares of Common
Stock underlying the Series A Preferred Stock, the Warrant and the Note may be
transferred by EIS to its affiliates and subsidiaries, as well as any special
purpose financing or similar vehicle established by EIS, provided, however, that
EIS shall remain liable for its obligations hereunder after any such assignment.
Other than as set forth above, no party shall transfer or assign this Agreement,
the shares of Series A Preferred Stock and Common Stock being purchased
hereunder by EIS, the Warrant, the Note, and the shares of Common Stock
underlying the Series A Preferred Stock, the Warrant and the Note, or any
interest therein, without the prior written consent of the other party.
SECTION 17. SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not be in any way affected or impaired thereby.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has duly executed this
Agreement as of the date first written above.
PHOTOGEN TECHNOLOGIES, INC.
By: /s/ John Smolik
---------------------------------
Name: John Smolik
Title: President
ELAN INTERNATIONAL SERVICES, LTD.
By: /s/ Kevin Insley
---------------------------------
Name: Kevin Insley
Title: President
Exhibits Submitted Separately
Schedule 2(I)
[****]
______________
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO
RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED.
<PAGE>
EXHIBIT 10.9
EXECUTION COPY
THIS WARRANT CERTIFICATE AND THE SECURITIES REPRESENTED BY THIS WARRANT
CERTIFICATE AND THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY SECURITIES LAWS OF A STATE OR OTHER JURISDICTION AND
MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
(OTHER THAN TO AN AFFILIATE OR AS OTHERWISE PERMITTED BY THIS WARRANT
CERTIFICATE PURSUANT TO WHICH THEY WERE ISSUED) EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES OR BLUE SKYLAWS, OR (ii) TO THE EXTENT APPLICABLE, RULE 144
UNDER THE SECURITIES ACT (OR ANY SIMILAR RULE UNDER THE SECURITIES ACT RELATING
TO THE DISPOSITION OF SECURITIES) TOGETHER WITH AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR
APPLICABLE STATE SECURITIES LAWS.
PHOTOGEN TECHNOLOGIES, INC.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
THIS CERTIFIES THAT, for value received, ELAN INTERNATIONAL SERVICES,
LTD., a Bermuda exempted limited liability company, or its permitted transferees
and successors as provided herein (each, a "HOLDER"), is entitled to subscribe
for and purchase up to 100,000 shares, as adjusted pursuant to Section 4 (the
"SHARES"), of the fully paid and nonassessable common stock, par value $.001
(the "COMMON STOCK"), of PHOTOGEN TECHNOLOGIES, INC., a Nevada corporation (the
"COMPANY"), at the price of U.S.$21.17 per share (such price, and such other
prices that shall result from time to time, from the adjustments specified in
Section 4, the "WARRANT PRICE"), subject to the provisions and upon the terms
and conditions hereinafter set forth.
1. TERM. Subject to the limitations set forth in Sections 3 and 4,
the purchase right represented by this Warrant is exercisable, in whole or in
part, at any time, and from time to time, from and after the date hereof and
until 5:00 p.m. Eastern Standard Time, October 20, 2004. To the extent not
exercised at 5:00 p.m. Eastern Standard Time on October 20, 2004, this Warrant
shall completely and automatically terminate and expire, and thereafter it shall
be of no
<PAGE>
force or effect.
2. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT. (a) The
purchase right represented by this Warrant may be exercised by the Holder, in
whole or in part and from time to
3
<PAGE>
time, by the surrender of this Warrant (with the notice of exercise form
attached hereto as ANNEX A duly executed) at the principal office of the
Company and by the payment to the Company of an amount, in cash or other
immediately available funds, equal to the then-applicable Warrant Price per
Share multiplied by the number of Shares then being purchased.
<PAGE>
(b) The persons or entities in whose name(s) any certificate(s)
representing Shares shall be issuable upon exercise of this Warrant shall be
deemed to have become the holder(s) of record of, and shall be treated for all
purposes as the record holder(s) of, the Shares represented thereby (and such
Shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is properly exercised and
full payment for the Shares acquired pursuant to such exercise is made. Upon
any exercise of the rights represented by this Warrant, certificates for the
Shares purchased shall be delivered to the holder hereof as soon as possible and
in any event within 30 days of receipt of such notice and payment, and unless
this Warrant has been fully exercised or expired, a new Warrant representing the
portion of Shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be issued to the holder hereof as soon as
possible and in any event within such 30-day period.
3. STOCK FULLY PAID, RESERVATION OF SHARES. All Shares that may be
issued upon the exercise of this Warrant will, upon issuance, be duly and
validly authorized and issued, fully paid and nonassessable, and will be free
from all transfer taxes, liens and charges with respect to the issue thereof and
assuming payment of the Warrant Price for all Shares so purchased, legally and
validly owned by the Holder. During the period within which this Warrant may be
exercised, the Company will at all times have authorized, and reserved for the
purpose of the issue upon the exercise of the purchase rights evidenced by this
Warrant, a sufficient number of shares of its Common Stock to provide for the
exercise of the rights represented by this Warrant.
4. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and
kind of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to the adjustment from time to time upon the occurrence
of certain events, as follows:
(a) RECLASSIFICATION, ETC. In case of any reclassification,
reorganization, change or conversion of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value) of other shares or securities of the Company, or (ii) any
consolidation of the Company with or into another entity (other than a merger
or consolidation with another entity in which the Company is the acquiring and
the surviving entity and that does not result in any reclassification or change
of outstanding securities issuable upon exercise of this Warrant), or (iii) any
sale of all or substantially all the assets of the Company, then the Company, or
such successor or purchasing entity, as the case may be, shall duly execute and
deliver to the holder of this Warrant a new Warrant or a supplement hereto (in
form and substance reasonably satisfactory to the holder of this Warrant), so
that the Holder shall have the right to receive, at a total purchase price not
to exceed that payable upon the exercise of the unexercised portion of this
Warrant, and in lieu of the shares of Common Stock theretofore issuable upon the
exercise of this Warrant, the kind and amount of shares of stock and other
securities, receivable upon such reclassification, reorganization, change or
conversion by a holder of the number of shares of Common Stock then purchasable
under this Warrant. Such new Warrant shall provide for adjustments that shall
be as nearly equivalent as may be practicable to the adjustments provided for in
this Section 4. The provisions of this Section 4(a)
<PAGE>
shall similarly attach to successive reclassifications, reorganizations,
changes, and conversions.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at any
time during which this Warrant remains outstanding and unexpired shall subdivide
or combine its Common Stock, (i) in the case of a subdivision, the Warrant Price
shall be proportionately decreased and the number of Shares purchasable
hereunder shall be proportionately increased, and (ii) in the case of a
combination, the Warrant Price shall be proportionately increased and the number
of Shares purchasable hereunder shall be proportionately decreased.
(c) NO IMPAIRMENT. The Company will not, by amendment of its
Articles of Incorporation or bylaws or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the Holder against impairment.
(d) NOTICE OF ADJUSTMENTS. Whenever the Warrant Price or the number
of Shares purchasable hereunder shall be adjusted pursuant to this Section 4,
the Company shall prepare a certificate setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated. Such certificate shall be signed by its
chief financial officer and shall be delivered to the Holder.
(e) FRACTIONAL SHARES. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall make a cash payment therefor based on the fair market
value of the Common Stock on the date of exercise as reasonably determined in
good faith by the Company's Board of Directors.
(f) CUMULATIVE ADJUSTMENTS. No adjustment in the Warrant Price shall
be required under this Section 4 until cumulative adjustments result in a
concomitant change of 1% or more of the Warrant Price or in the number of shares
of Common Stock purchasable upon exercise of this Warrant as in effect prior to
the last such adjustment; provided, however, that any adjustment that by reason
of this Section 4 are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
4 shall be made to the nearest cent or to the nearest one-hundredth of a share,
as the case may be.
5. COMPLIANCE WITH SECURITIES ACT; DISPOSITION OF WARRANT OR SHARES
OF COMMON STOCK. (a) The Holder, by acceptance hereof, agrees that this
Warrant and the Shares to be issued upon exercise hereof are being acquired for
investment and that such holder will not offer, sell or otherwise dispose of
this Warrant or any Shares to be issued upon exercise hereof except under
circumstances which will not result in a violation of applicable securities
laws. Upon exercise of this Warrant, unless the Shares being acquired are
registered under the Securities Act of 1933, as amended (the "ACT"), or an
exemption from the registration requirements of such Act is available, the
Holder shall confirm in writing, by executing an instrument in form reasonably
<PAGE>
satisfactory to the Company, that the Shares so purchased are being acquired for
investment and not with a view toward distribution or resale. This Warrant and
all Shares issued upon exercise of this Warrant (unless registered under the
Act) shall be stamped or imprinted with a legend in substantially the following
form:
THIS WARRANT CERTIFICATE AND THE SECURITIES REPRESENTED BY THIS WARRANT
CERTIFICATE AND THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY SECURITIES LAWS OF A STATE OR OTHER JURISDICTION AND
MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
(OTHER THAN TO AN AFFILIATE OR AS OTHERWISE PERMITTED BY THIS WARRANT
CERTIFICATE PURSUANT TO WHICH THEY WERE ISSUED) EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES OR BLUE SKYLAWS, OR (ii) TO THE EXTENT APPLICABLE, RULE 144
UNDER THE SECURITIES ACT (OR ANY SIMILAR RULE UNDER THE SECURITIES ACT RELATING
TO THE DISPOSITION OF SECURITIES) TOGETHER WITH AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR
APPLICABLE STATE SECURITIES LAWS.
(b)(i) This Warrant may be transferred or assigned, in whole or in
part, (a) by EIS to its affiliates and subsidiaries, as well as any special
purpose financing or similar vehicle. Other than as set forth above, this
Warrant may not be transferred or assigned by either party without the prior
written consent of the other. Subject to the foregoing, this Warrant and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns; provided,
however that the transferor and the Company shall continue to be liable and
obligated for their respective obligations hereunder after any such assignment.
(ii) With respect to any offer, sale or other disposition of this
Warrant or any Shares acquired pursuant to the exercise of this Warrant prior to
registration of such Shares, the Holder shall give written notice to the Company
prior thereto, describing briefly the manner thereof, together with a written
opinion of such holders counsel, if requested by the Company, to the effect that
such offer, sale or other disposition may be effected without registration or
qualification (under the Securities Act as then in effect or any federal or
state law then in effect) of this Warrant or such Shares and indicating whether
or not under the Act certificates for this Warrant or such Shares to be sold or
otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to ensure compliance with the Act.
Promptly upon receiving such written notice and reasonably satisfactory opinion,
if so requested, the Company, as promptly as practicable, shall notify such
Holder that such Holder may sell or otherwise dispose of this Warrant or such
Shares, all in accordance with the terms of the notice delivered to the Company.
Each certificate representing this Warrant or the Shares thus
<PAGE>
transferred shall bear a legend as to the applicable restrictions on
transferability in order to insure compliance with the Securities Act, unless
in the aforesaid opinion of counsel for the Holder such legend is not
required in order to insure compliance with the Securities Act. The Company
may issue stop transfer instructions to its transfer agent in connection with
such restrictions.
(iii) The shares of Common Stock underlying this Warrant are entitled
to the benefit of certain registration rights as set forth in a Registration
Rights Agreement dated as of the date hereof between the Company and the initial
Holder named herein.
6. RIGHTS AS SHAREHOLDERS. No Holder, as such, shall be entitled to
vote or receive dividends or be deemed the holder of Shares or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder, as such, any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to
receive notice of meetings, or to receive dividends or subscription rights or
otherwise until this Warrant is exercised and the Shares purchasable upon the
exercise hereof shall have become deliverable, as provided herein.
7. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Holder as follows:
(a) The Company has all requisite corporate power and authority to
authorize and execute this Warrant and the certificates evidencing the Shares
and to perform all obligations and undertakings under this Warrant and the
certificates evidencing the Shares;
(b) This Warrant has been duly authorized and executed by the Company
and is a valid and binding obligation of the Company enforceable in accordance
with its terms;
(c) The Shares have been duly authorized and reserved for issuance by
the Company and, when issued in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable; and
(d) The execution and delivery of this Warrant are not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Certificate of
Incorporation or bylaws, as amended, and do not and will not constitute a
default under, any indenture, mortgage, contract or other instrument of which
the Company is a party or by which it is bound.
8. MISCELLANEOUS. (a) This Warrant may not be modified or amended,
or any provisions hereof waived, except by written agreement of the Company and
the Holder.
(b) Any notice, request or other document required or permitted to be
given or
<PAGE>
delivered to the Holder or the Company shall (i) be in writing, (ii) be
delivered personally or sent by mail or overnight courier to the intended
recipient to Holder at its address as shown on the books of the Company or to
the Company at the address indicated therefor on the signature page of this
Warrant, unless the recipient has given notice of another address, and (iii)
be effective on receipt if delivered personally, two business days after
dispatch if mailed, and one business day after dispatch if sent by overnight
courier service.
(c) The Company covenants to the Holder that upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon receipt of a bond or indemnity reasonably satisfactory to the
Company, or in the case of any such mutilation upon surrender and cancellation
of such Warrant, the Company will make and deliver a new Warrant, of like tenor,
in lieu of the lost, stolen, destroyed or mutilated Warrant.
(d) The descriptive headings of the several sections and paragraphs
of this Warrant are inserted for convenience only and do not constitute a part
of this Warrant.
(e) This Warrant shall be governed by and construed in accordance
with the substantive (as opposed to procedural) laws of the State of New York,
without giving effect to the principles thereof relating to conflicts of laws.
(f) This Warrant may be executed in any number of counterparts, and
each such counterpart hereof shall be deemed to be an original instrument, but
all such counterparts together shall constitute one Warrant. This Warrant may
be signed and delivered to the other party by a facsimile transmission; such
transmission shall be deemed a valid signature.
(g) Each of the parties shall be responsible for its own costs and
expenses incurred in connection with the transactions contemplated hereby.
[Signature page follows]
<PAGE>
IN WITNESS WHEREOF, the Company has executed this Warrant as of the
20th day of October, 1999.
PHOTOGEN TECHNOLOGIES, INC.
By: /s/ JOHN SMOLIK
-------------------------
Name: John Smolik
Title: President
<PAGE>
ANNEX A
NOTICE OF EXERCISE
To: Photogen Technologies, Inc.
1. The undersigned hereby elects to purchase _____ shares of Common Stock of
Photogen Technologies, Inc. pursuant to the terms of the attached Warrant, and
tenders herewith full payment of the purchase price of such shares, in cash or
other immediately available funds.
2. Please issue a certificate or certificates representing said shares in the
name of the undersigned or in such other name or names as are specified below:
- ----------------------------------------
(Name)
- ----------------------------------------
(Address)
3. The undersigned represents that the aforesaid shares are being acquired for
the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares.
Signature:
Name:
Address:
Social Security or taxpayer identification
number:
<PAGE>
EXHIBIT 10.10
EXECUTION COPY
THIS CONVERTIBLE PROMISSORY NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS ALSO SUBJECT
TO THE RESTRICTIONS CONTAINED IN THAT CERTAIN SECURITIES PURCHASE AGREEMENT,
DATED OCTOBER 20, 1999, BY AND BETWEEN PHOTOGEN TECHNOLOGIES, INC. AND ELAN
INTERNATIONAL SERVICES, LTD.
PHOTOGEN TECHNOLOGIES, INC.
CONVERTIBLE PROMISSORY NOTE
U.S. $4,806,000 OCTOBER 20, 1999
NEW YORK, NEW YORK
The undersigned, PHOTOGEN TECHNOLOGIES, INC., a Nevada
corporation with offices at 7327 Oak Ridge Highway, Suite B, Knoxville,
Tennessee 37931 (the "COMPANY"), unconditionally promises to pay to ELAN
INTERNATIONAL SERVICES, LTD., a Bermuda exempted limited liability company
("EIS"), or its permitted assigns, transferees and successors as provided herein
(collectively, the "HOLDER"), on October 20, 2005 (the "MATURITY DATE"), at such
place as may be designated by the Holder to the Company, the principal amount
outstanding hereunder (not to exceed U.S.$4,806,000), together with interest
thereon accrued at a rate PER ANNUM equal to 8.0%, from and after the date of
the initial disbursement of funds hereunder (the "ORIGINAL ISSUE DATE"),
compounded on a semi-annual basis, the initial such compounding to commence on
the date that is 180 days from and after the Original Issue Date and thereafter
on each 180 day anniversary (each such date, a "COMPOUNDING DATE").
SECTION 1. SECURITIES PURCHASE AGREEMENT AND FUNDING AGREEMENT.
This Note is issued pursuant to a Securities Purchase
Agreement dated as of the date hereof, by and between the Company and EIS (as
amended at any time, the "SECURITIES PURCHASE AGREEMENT"), and is intended to be
afforded the benefits thereof, including the representations and warranties set
forth therein. The Company shall use the proceeds of the issuance and sale of
this Note solely in accordance with the provisions set forth therein and as
<PAGE>
required therein and in a certain Funding Agreement, dated as of the date hereof
(as amended at any time, the "FUNDING AGREEMENT"), by and among Elan Pharma
International Limited, an Irish private limited company and the parent
corporation of EIS, EIS and the Company, and as described in Section 6 below.
Capitalized terms used but not otherwise defined herein shall, unless otherwise
indicated, have the meanings given such terms in the Securities Purchase
Agreement.
SECTION 2. DISBURSEMENTS.
(a) From and after the date hereof and until October 20, 2002,
disbursements shall be made by the Holder to the Company hereunder in minimum
increments of U.S.$500,000 (except in the event that an amount less than
U.S.$500,000 shall be remaining and available for funding hereunder, in which
case such lesser amount may be funded hereunder); provided, that the Company
shall deliver notice of a request therefor to the Holder in the form attached
hereto as EXHIBIT A (the "DISBURSEMENT NOTICE"), together with an Officer's
Certificate confirming that as of such date no Event of Default exists
hereunder; the Holder shall, subject to the terms and conditions hereof, fund
such amount within 10 business days of the receipt of the Disbursement Notice,
subject to the receipt by the Holder of any required approvals under the Mergers
and Takeovers (Control) Acts 1978-1996. A "business day" is any day that
commercial banks are open for the transaction of business in the City of New
York.
(b) Subject to the remainder of this Section 2, if the Holder and
the Company agree to extend the Research and Development Term (as defined in the
JDOA), then disbursements shall be made by the Holder to the Company hereunder
until the end of the Research and Development Term.
(c) Disbursements shall be made hereunder only if EIS agrees to
provide the corresponding Subsequent Funding under Section 1.2 of the Funding
Agreement.
(d) The Holder shall not be required to disburse more than a
maximum principal amount hereunder, excluding accruals of interest, of
U.S.$4,806,000.
SECTION 3. PAYMENTS AND COVENANTS.
(a) Unless earlier converted in accordance with the terms of Section 4
below, or prepaid in accordance with the terms hereof, the entire outstanding
principal amount of this Note, together with any accrued and unpaid interest
thereon, shall be due and payable on the Maturity Date.
(b) Accrued interest hereon shall not be paid in cash, but shall be
capitalized and added to the principal amount outstanding hereunder on each
Compounding Date.
SECTION 4. CONVERSION.
(a) CONVERSION RIGHT.
(i) From and after the Original Issue Date and until this Note
is repaid in full, the Holder shall have the right from time to time, in its
sole discretion, to convert all or any portion of the outstanding principal
amount and accrued and unpaid interest then-outstanding hereunder,
<PAGE>
(the "CONVERSION RIGHT"), into such number of shares of Common Stock that
shall be obtained by dividing the sum of the outstanding principal amount and
all accrued and unpaid interest by $18.15, subject to adjustment as provided
below in this Section (the "CONVERSION PRICE").
(ii) The Holder shall be entitled to exercise a Conversion
Right upon at least five days' prior written notice to the Company, such notice
to be in the form attached hereto as EXHIBIT B. Within 10 days of the conversion
date specified in such notice, the Company shall issue stock certificates to EIS
representing the aggregate number of shares of Common Stock due to EIS as a
result of such conversion.
(b) RECLASSIFICATION, ETC. In case of (i) any reclassification,
reorganization, change or conversion of securities of the class issuable upon
conversion of the outstanding principal amount and accrued and unpaid interest
then-outstanding hereunder (other than a change in par value, or from par value
to no par value), or (ii) any consolidation of the Company with or into another
entity (other than a merger or consolidation with another entity in which the
Company is the surviving entity and that does not result in any reclassification
or change of the class of securities issuable upon the conversion of the
outstanding principal amount and accrued and unpaid interest then-outstanding
hereunder), or (iii) any sale of all or substantially all the assets of the
Company (excluding the transactions contemplated by the Transaction Documents),
then the Company, or such successor or purchasing entity, as the case may be,
shall duly execute and deliver to the Holder a new Note or a supplement hereto
(in form and substance reasonably satisfactory to the Holder of this Note), so
that the Holder shall have the right to receive, in lieu of the shares of Common
Stock otherwise issuable upon the conversion of such outstanding principal
amount and accrued and unpaid interest then-outstanding hereunder, the kind and
amount of shares of stock and other securities, money and property receivable
upon such reclassification, reorganization, change, merger, consolidation or
conversion by a holder of the number of shares of Common Stock then issuable
under this Note. Such new Note shall provide for adjustments that shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 4. The provisions of this Section 4(b) shall similarly attach to
successive reclassifications, reorganizations, changes, mergers, consolidations,
transfers or conversions.
(a) NO IMPAIRMENT. The Company will not, by amendment of its
Articles of Incorporation or bylaws or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 4 and in the
taking of all such action as may be necessary or appropriate in order to
protect the rights of EIS against impairment. This provision shall not
restrict the Company from otherwise amending and/or restating its Articles of
Incorporation in accordance with Nevada General Corporation Act.
(b) NOTICE OF ADJUSTMENTS. Whenever the consideration issuable upon a
conversion hereunder shall be changed pursuant to this Section 4, the Company
shall prepare a certificate setting forth, in reasonable detail, the event
requiring the change and the kind and amount of shares of stock and other
securities, money and property subsequently issuable upon a conversion hereof.
Such certificate shall be signed by its chief financial officer and shall be
delivered to
<PAGE>
EIS.
(c) FRACTIONAL SHARES; ROUNDING. No fractional shares of Common Stock
will be issued in connection with any exercise hereunder, but in lieu of such
fractional shares the Company shall make a cash payment therefor based on the
applicable Conversion Price. All calculations under this Section 4 shall be made
to the nearest cent or to the nearest one-hundredth of a share, as the case may
be.
SECTION 5. EXCHANGE RIGHT.
In the event that EIS shall exercise the EIS Exchange Right, EIS shall,
at its option, (i) cause to be paid to the Company, within 30 days of such
exercise, an amount equal to 30.1% of the aggregate amount of the Development
Funding (as such term is defined in the Funding Agreement) to date provided by
each of the parties to Newco, in accordance with the terms of the Funding
Agreement, but not including any interest thereon, from and after the date
hereof and until the date of such exercise, or (ii) offset against the amount
payable under this Note an amount equal to 30.1% of the total amount of
Development Funding provided by each of the parties to Newco, in accordance with
the terms of the Funding Agreement, from and after the date hereof and until the
date of the exercise of the Exchange Right, against the principal amount
outstanding hereunder, if any, or (iii) effect a combination of (i) and (ii)
above if applicable.
SECTION 6. USE OF PROCEEDS.
The Company shall use the proceeds of this Note solely for
developmental funding of Newco; provided, that the Board of Directors of Newco
has determined that such developmental funding is necessary (which approval
shall in all events include the consent of all directors designated by the
Company and at least one director designated by EIS) and that the parties
thereto are in continuing agreement as to the Business Plan. Accordingly, total
disbursements hereunder shall not exceed the amount of Development Funding
funded by the Company to Newco pursuant to the Funding Agreement.
SECTION 7. EVENTS OF DEFAULT.
The occurrence of any of the following events shall constitute
an event of default (an "EVENT OF DEFAULT"):
(a) a default in the payment of the principal amount of this
Note, when and as the same shall become due and payable;
(b) a default in the payment of any accrued and unpaid interest on
this Note, when and as the same shall become due and payable;
(c) a material breach by the Company of its obligations under any
of the Transaction Documents, which breach remains uncured 60 days after written
notice thereof by EIS;
(d) a distress, execution, sequestration or other process is
levied or enforced upon the Company or sued out against a material part of its
property which is not discharged or challenged within 60 days;
<PAGE>
(e) the Company is unable to pay its debts in the normal course
of business;
(f) the Company ceases wholly or substantially to carry on its
business, otherwise than for the purpose of a reconstruction or amalgamation,
without the prior written consent of the EIS Director (such consent not to be
unreasonably withheld);
(g) the appointment of a liquidator, receiver, administrator,
examiner, trustee or similar officer of the Company or over all or substantially
all of its assets under the law; or
(h) any other termination of the JDOA.
SECTION 8. REMEDIES IN THE EVENT OF DEFAULT.
(a) In the case of any Event of Default by the Company, the Holder, may
in its sole discretion, demand that the aggregate amount of funds advanced to
the Company under this Note and outstanding hereunder and accrued and unpaid
interest thereon shall, in addition to all other rights and remedies of the
Holder hereunder and under applicable law, be and become immediately due and
payable upon written notice delivered by the Holder to the Company.
Notwithstanding the preceding sentence, the rights of the Holder as set forth in
Section 4 hereunder shall survive any such acceleration and payment. If the
Holder shall accelerate and be paid and thereafter elect to exercise the
Conversion Right, within 15 days thereafter the Holder shall pay to the Company
in cash the Conversion Price then applicable to the shares of Common Stock so
issuable to the Holder under such Conversion Right.
(b) The Company hereby waives demand and presentment for payment,
notice of nonpayment, protest and notice of protest, diligence, filing suit, and
all other notice and promises to pay the Holder its costs of collection of all
amounts due hereunder, including reasonable attorneys' fees.
(c) In the case of any Event of Default under this Note by the Company
this Note shall continue to bear interest after such default at the interest
rate otherwise in effect hereunder plus 3% PER ANNUM (but in any event not in
excess of the maximum rate of interest permitted by applicable law).
SECTION 9. MISCELLANEOUS.
(a) EIS may assign this Note to its affiliates and subsidiaries, as
well as any special purpose financing or similar vehicle established by EIS or
its affiliates. This Note and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns; provided, however, that EIS and the Company shall remain
liable for their respective obligations hereunder after any such assignment.
<PAGE>
(b) All notices, demands and requests of any kind to be delivered to
any party in connection with this Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered or if sent by
nationally-recognized overnight courier or by registered or certified mail,
return receipt requested and postage prepaid, or by facsimile transmission,
addressed as follows:
(i) if to the Company:
Photogen Technologies, Inc.
7327 Oak Ridge Highway, Suite B
Knoxville, Tennessee 37931
Attention: Chief Executive Officer
Facsimile: (423) 769-4013
with a copy to:
Grippo & Elden
Suite 3600
227 West Monroe Street
Chicago, Illinois 60606
Attn: Theodore Grippo, Esq.
Facsimile: (312) 558-1195
(ii) if to EIS, to:
Elan International Services, Ltd.
102 St. James Court
Flatts, Smiths Parish
Bermuda FL04
Attention: President
Fax: (441) 292-2224
with a copy to:
Brock Silverstein LLC
800 Third Avenue
New York, New York 10022
Attention: David Robbins, Esq.
Fax: (212) 371-5500
Each party, by written notice given to the other in accordance with this Section
9(b) may change the address to which notices, other communication or documents
are to be sent to such party. All notices, other communications or documents
shall be deemed to have been duly given when received. Any such notice or
communication shall be deemed to have been effectively given, (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the second business day after the
date when sent, (c)
<PAGE>
in the case of mailing, on the fifth business day following that day on which
the piece of mail containing such communication is posted, and (d) in the
case of facsimile transmission, on the date of transmission.
(a) This Note may not be modified or amended, or any of the provisions
hereof waived, except by written agreement of the Company and EIS.
(b) This Note shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to principles thereof
relating to conflicts of laws.
(c) This Note may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute one note. The Note may be signed and
delivered to the other party by a facsimile transmission; such transmission
shall be deemed a valid signature.
(d) Each of the parties shall be responsible for its own costs and
expenses incurred in connection with the transactions contemplated hereby.
<PAGE>
IN WITNESS WHEREOF, the Company and EIS have executed this
Note on the date first above written.
PHOTOGEN TECHNOLOGIES, INC.
By: /s/ John Smolik
------------------------------
Name: John Smolik
Title: President
ELAN INTERNATIONAL SERVICES, LTD.
By: /s/ Kevin Insley
------------------------------
Name: Kevin Insley
Title: Kevin Insley
<PAGE>
EXHIBIT A
NOTICE OF REQUEST FOR DISBURSEMENT
Date:
To: Elan International Services, Ltd.
From: Photogen Technologies, Inc.
Re: Disbursement Request
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Pursuant to the terms of the Convertible Promissory Note (the "Note")
issued by Photogen Technologies, Inc. (the "Company") to Elan International
Services, Ltd. ("EIS"), dated ______, 1999, the Company hereby notifies EIS of
its request for a disbursement thereunder in the amount of $_________. Please
provide funding in the requested amount to the Company in accordance with the
following wire instructions
[
]
Sincerely,
PHOTOGEN TECHNOLOGIES, INC.
By:
----------------------------------
Name:
Title:
<PAGE>
EXHIBIT B
NOTICE OF ELECTION TO EXERCISE A CONVERSION RIGHT
Date:
To: Photogen Technologies, Inc.
From: Elan International Services, Ltd.
Re: Exercise of a Conversion Right
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Pursuant to the terms of the Convertible Promissory Note (the "Note")
issued by Photogen Technologies, Inc. (the "Company") to Elan International
Services, Ltd. ("EIS"), dated ___________, 1999, specifically Section 4 thereof,
EIS hereby notifies the Company of its intention to exercise a right of
conversion.
Pursuant to Section 4 of the Note, EIS hereby elects to convert
[$__________]* in aggregate principal amount and all accrued and unpaid interest
thereon for shares of the Company's Common Stock, par value $.001 per share,
effective [__________, ____]
We have instructed our attorneys to contact the Company to discuss the
timing and documentation of the conversion.
Sincerely,
ELAN INTERNATIONAL SERVICES, LTD.
By:
----------------------------------
Name:
Title:
- -----------------------
* Amount must represent one or more tranches drawn down by the Company under
the Note.
<PAGE>
EXHIBIT 10.11
EXECUTION COPY
PHOTOGEN NEWCO LTD.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is
made as of October 20, 1999 by and among PHOTOGEN NEWCO LTD., a Bermuda
exempted limited liability company (the "COMPANY"), PHOTOGEN TECHNOLOGIES,
INC., a Nevada corporation ("PHOTOGEN"), and ELAN INTERNATIONAL SERVICES,
LTD., a Bermuda exempted limited liability company ("EIS").
R E C I T A L S:
A. Pursuant to a Subscription, Joint Development and
Operating Agreement dated as of the date hereof by and among the Company,
Photogen, ELAN PHARMA INTERNATIONAL LIMITED, an Irish public limited company
and EIS (the "JDOA"), Photogen has acquired certain common shares, par value
$1.00 per share (the "COMMON SHARES"), and EIS has acquired certain
convertible preferred shares, par value $1.00 per share (the "PREFERRED
SHARES") of the Company.
B. The execution of the JDOA has occurred on the date
hereof and it is a condition to the closing of the transactions contemplated
thereby that the parties execute and deliver this Agreement.
C. The parties desire to set forth herein their agreement
on the terms and subject to the conditions set forth herein related to the
granting of certain registration rights to the Holders (as defined below)
relating to the Common Shares held and the Common Shares issuable upon
conversion of Preferred Shares by such Holders.
A G R E E M E N T:
The parties hereto agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement,
the following terms shall have the following respective meanings:
"COMMISSION" shall mean the U.S. Securities and Exchange
Commission.
"EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect from time to time.
"HOLDERS" or "HOLDERS OF REGISTRABLE SECURITIES" shall mean
Photogen, EIS and any Person who shall have acquired Registrable Securities
from either Photogen or EIS as
1
<PAGE>
permitted herein, either individually or jointly, as the case may be, in a
transaction pursuant to which registration rights are transferred pursuant to
Section 10 hereof.
"PERSON" shall mean an individual, a partnership, a
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental or quasi-governmental entity,
or any department, agency or political subdivision thereof.
"REGISTRABLE SECURITIES" means (i) any Common Shares
subscribed for pursuant to the JDOA; (ii) any Common Shares issuable upon
conversion the Preferred Shares; and (iii) any Common Shares issued or
issuable in respect of the securities referred to in clause (i) and (ii)
above upon any stock split, stock dividend, recapitalization or similar
event; excluding in all cases, however, any Registrable Securities that may
be sold under Rule 144 promulgated under the Securities Act, without being
subject to the volume limitations under Rule 144, and Registrable Securities
sold by a Person in a transaction (including a transaction pursuant to a
registration statement under this Agreement and a transaction pursuant to
Rule 144 promulgated under the Securities Act) in which registration rights
are not transferred pursuant to Section 10 hereof.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer
to a registration effected by preparing and filing a registration statement
in compliance with the Securities Act.
"REGISTRATION EXPENSES" shall mean all expenses, other than
Selling Expenses, incurred by the Company in complying with Sections 2 or 3
hereof, including without limitation, all registration, qualification and
filing fees, exchange listing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, the
expense of any special audits incident to or required by any such
registration.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SELLING EXPENSES" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders and the costs and fees of any accountants,
attorneys or other experts retained by the Holders or Holder.
2. DEMAND REGISTRATIONS.
(a) REQUESTS FOR REGISTRATION From and after the occurrence
of the initial public offering of the Company's Common Shares under the
Securities Act, any Holder or Holders who collectively hold Registrable
Securities representing at least 5% of the Registrable Securities then
outstanding shall have the right at any time from time to time (subject to
the limitations below), to request registration under the Securities Act of
all or part of their Registrable Securities on Form S-3 (or any successor
form to Form S-3 or any similar short-form registration statement (each, a
"Demand Registration"); provided, that the Company qualifies under the
Securities Act for registration on Form S-3. The request for the Demand
Registration shall specify the
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approximate number of Registrable Securities requested to be registered,
which must have a minimum expected aggregate offering price to the public of
at least $2,000,000. Within 10 days after receipt of any such request, the
Company will give written notice of such requested registration to all other
Holders of Registrable Securities. The Company shall include such other
Holders' Registrable Securities in such offering if they have responded
affirmatively within 10 days after the receipt of the Company's notice. EIS
shall be permitted to at least one Demand Registration; provided, however,
that the Holders in aggregate will be entitled to request only one Demand
Registration hereunder within any 12-month period. A registration will not
count as a permitted Demand Registration until it has become effective
(unless such Demand Registration has not become effective due solely to the
fault of the Holders requesting such registration, including a request by
such Holders that such registration be withdrawn).
(b) PRIORITY ON DEMAND REGISTRATIONS. If a Demand
Registration is an underwritten offering and the managing underwriters advise
the Company in writing that in their opinion the number of Registrable
Securities and, if permitted hereunder, other securities requested to be
included in such offering, exceeds the number of Registrable Securities and
other securities, if any, which can be sold in such offering without
adversely affecting the marketability of the offering, the Company will
include in such registration:
(i) first, the Registrable Securities requested to be
included in such registration by the Holders (or, if necessary, such
Registrable Securities PRO RATA among the Holders thereof based upon
the number of Registrable Securities owned by each such Holder)
together with any securities held by third parties holding a similar,
previously granted right to be included in such registration; and
(ii) thereafter, other securities requested to be
included in such registration.
(c) RESTRICTIONS ON DEMAND REGISTRATION. The Company may
postpone for up to six months in any 12-month period, the filing or the
effectiveness of a registration statement for a Demand Registration if the
Company determines in good faith that such Demand Registration would
reasonably be expected to have a material adverse effect on any proposal or
plan by the Company to engage in any financing, acquisition or disposition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or similar transaction or would require
disclosure of any information that the board of directors of the Company
determines in good faith the disclosure of which would be detrimental to the
Company; provided, however, that in such event, the Holders initially
requesting such Demand Registration will be entitled to withdraw such request
and, if such request is withdrawn, such Demand Registration will not count as
a permitted Demand Registration hereunder and the Company will pay any
Registration Expenses in connection with such registration.
(d) SELECTION OF UNDERWRITERS. The Holders will have the
right to select the investment banker(s) and manager(s) to administer an
offering pursuant to the Demand Registration, subject to the Company's prior
written approval, which will not be unreasonably withheld or delayed.
(e) OTHER REGISTRATION RIGHTS. Except as provided in this
Agreement, so long as
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any Holder owns any Registrable Securities, the Company will not grant to any
Persons the right to request the Company to register any equity securities of
the Company, or any securities convertible or exchangeable into or
exercisable for such securities, which conflicts with the rights granted to
the Holders hereunder, without the prior written consent of the Holders of at
least 50% of the Registrable Securities; provided, however, that the Company
may grant rights to other Persons demand and piggyback registrations so long
as the Holders of Registrable Securities are entitled to participate in any
such registrations with such Persons PRO RATA on the basis of the number of
shares owned by each such Holder.
3. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. At any time the Company shall
propose to register Common Shares under the Securities Act (other than in a
registration statement on Form S-3 relating to sales of securities to
participants in a Company dividend reinvestment plan, or Form S-4 or S-8 or
any successor form or in connection with an acquisition or exchange offer or
an offering of securities solely to the existing shareholders or employees of
the Company) (each, a "Piggyback Registration"), the Company will give prompt
written notice to all Holders of Registrable Securities of its intention to
effect such a registration and, subject to Section 3(b) and the other terms
of this Agreement, will include in such registration all Registrable
Securities which are permitted under applicable securities laws to be
included in the form of registration statement selected by the Company and
with respect to which the Company has received written requests for inclusion
therein within 10 days after the receipt of the Company's notice.
(b) PRIORITY ON PIGGYBACK REGISTRATIONS. If a Piggyback
Registration is to be an underwritten offering, and the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering without adversely affecting the marketability of the
offering, the Company will include in such registration:
(i) first, the securities the Company proposes
to sell;
(ii) any securities having the right to be
included in such registration prior to the securities of the
Holders;
(iii) the Registrable Securities requested to be
included in such registration by the Holders and any securities
requested to be included in such registration by any other Person
having equal priority to registration with the Holders, PRO RATA among
the Holders of such Registrable Securities and such other Persons, on
the basis of the number of shares owned by each of such Holders; and
(iv) thereafter, other securities requested to be
included in such registration.
The Holders of any Registrable Securities included in such
an underwritten offering must execute an underwriting agreement, in customary
form and in form and substance satisfactory to the managing underwriters.
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(c) RIGHT TO TERMINATE REGISTRATION. If, at any time after
giving written notice of its intention to register any of its securities as
set forth in Section 3(a) and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register such securities, the Company may, at
its election, give written notice of such determination to each Holder of
Registrable Securities and thereupon be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith as provided herein).
(d) SELECTION OF UNDERWRITERS. The Company will have the
right to select the investment banker(s) and manager(s) to administer an
offering pursuant to a Piggyback Registration.
4. EXPENSES OF REGISTRATION. Except as otherwise
provided herein or as may otherwise be prohibited by applicable law, all
Registration Expenses incurred in connection with all registrations pursuant
to Section 3 shall be borne by the Company; provided that, and
notwithstanding anything herein contained to the contrary, the Company shall
not have any obligation pursuant to the provisions hereof unless and until
the Company is able to satisfy (after taking into account such obligations)
the requirements of Section 39A (2A) of the Bermuda Companies Act of 1981 (or
any successor legislation). All Registration Expenses incurred in connection
with all registrations pursuant to Section 3 and all Selling Expenses
relating to securities registered on behalf of the Holders of Registrable
Securities shall be borne by such Holders.
5. HOLDBACK AGREEMENTS.
(a) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior
to and during the 180-day period beginning on the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration
(except as part of such underwritten registration or pursuant to registration
statements on Form S-4 or Form S-8 or any successor form), unless the
underwriters managing the registered public offering otherwise agree, and
(ii) to use reasonable efforts to cause each holder of at least 5% (on a
fully-diluted basis) of its outstanding Common Shares, or any securities
convertible into or exchangeable or exercisable for Common Shares, purchased
from the Company at any time after the date of this Agreement (other than in
a registered public offering) to agree not to effect any public sale or
distribution (including sales pursuant to Rule 144) of any such securities
during such periods (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree.
(b) Each Holder agrees, if requested by the managing
underwriter or underwriters in an underwritten offering of securities of the
Company, not to effect any offer, sale, distribution
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or transfer, including a sale pursuant to Rule 144 (or any similar provision
then effect) under the Securities Act (except as part of such underwritten
registration), during the seven-day period prior to, and during the 180-day
period (or such shorter period as may be agreed to in writing by the Company
and the Holders of at least 50% of the Registrable Securities) following the
effective date of such Registration Statement to the extent timely notified
in writing by the managing underwriter or underwriters.
6. REGISTRATION PROCEDURES. Whenever the Holders of
Registrable Securities have requested that any Registrable Securities be
registered pursuant to this Agreement, the Company will use all reasonable
efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of distribution thereof,
and pursuant thereto the Company will as expeditiously as possible:
(a) subject to Section 2(c) hereof, prepare and file with
the Commission a registration statement on any form for which the Company
qualifies with respect to such Registrable Securities and use all reasonable
efforts to cause such registration statement to become effective (provided
that before filing a registration statement or prospectus or any amendments
or supplements thereto, the Company will (i) furnish to the counsel selected
by the Holders copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel, and (ii) notify each
Holder of Registrable Securities covered by such registration of any stop
order issued or threatened by the Commission);
(b) subject to Section 2(c) hereof, prepare and file with
the Commission such amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be necessary to keep
such registration statement effective for a period equal to the shorter of
(i) six months and (ii) the time by which all securities covered by such
registration statement have been sold, and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement;
(c) furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as such
seller may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller;
(d) use all reasonable efforts to register or qualify such
Registrable Securities under the securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 6(d), (ii)
subject itself to taxation in any jurisdiction, or (iii) consent to general
service of process in any such jurisdiction);
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(e) notify each seller of such Registrable Securities, at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such seller,
the Company will prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus will not contain an untrue statement of a
material fact or omit to state any fact necessary to make the statements
therein not misleading; provided, however, that the Company shall not be
required to amend the registration statement or supplement the Prospectus for
a period of up to six months if the board of directors determines in good
faith that to do so would reasonably be expected to have a material adverse
effect on any proposal or plan by the Company to engage in any financing,
acquisition or disposition of assets (other than in the ordinary course of
business) or any merger, consolidation, tender offer or similar transaction
or would require the disclosure of any information that the board of
directors determines in good faith the disclosure of which would be
detrimental to the Company, it being understood that the period for which the
Company is obligated to keep the Registration Statement effective shall be
extended for a number of days equal to the number of days the Company delays
amendments or supplements pursuant to this provision. Upon receipt of any
notice pursuant to this Section 6(e), the Holders shall suspend all offers
and sales of securities of the Company and all use of any prospectus until
advised by the Company that offers and sales may resume, and shall keep
confidential the fact and content of any notice given by the Company pursuant
to this Section 6(e);
(f) cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued by the Company
are then listed;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the Holders of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities;
(i) make available for inspection by a representative of
the Holders of Registrable Securities included in the registration statement,
any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained
by any such seller or underwriter, all pertinent financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors, employees and independent accountants to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration statement;
(j) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months beginning with the
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first day of the Company's first full calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any Common Shares included in such registration statement
for sale in any jurisdiction, use all reasonable efforts promptly to obtain
the withdrawal of such order; and
(l) if the registration is an underwritten offering, use
all reasonable efforts to obtain a so-called "cold comfort" letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by cold comfort letters.
7. OBLIGATIONS OF HOLDERS. Whenever the Holders of
Registrable Securities sell any Registrable Securities pursuant to a Demand
Registration or a Piggyback Registration, such Holders shall be obligated to
comply with the applicable provisions of the Securities Act, including the
prospectus delivery requirements thereunder, and any applicable state
securities or blue sky laws.
8. INDEMNIFICATION. (a) The Company agrees to
indemnify, to the fullest extent permitted by applicable law, each Holder of
Registrable Securities, its officers and directors and each Person who
controls such Holder (within the meaning of the Securities Act) against all
losses, claims, damages, liabilities, expenses or any amounts paid in
settlement of any litigation, investigation or proceeding commenced or
threatened (collectively, "CLAIMS") to which each such indemnified party may
become subject under the Securities Act insofar as such Claim arose out of
(i) any untrue or alleged untrue statement of material fact contained, on the
effective date thereof, in any registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or (ii)
any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in any information
furnished in writing to the Company by such Holder expressly for use therein,
by such Holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such Holder with a sufficient number of copies of the same or by
such Holder's failure to comply with applicable securities laws. In
connection with an underwritten offering, the Company will indemnify the
underwriters, their officers and directors and each Person who controls the
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the Holders of
Registrable Securities.
(b) In connection with any registration statements in which a
Holder of Registrable Securities is participating, each such Holder will furnish
to the Company in writing
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<PAGE>
such customary information as the Company reasonably requests for use in
connection with any such registration statement or prospectus (the "SELLER'S
INFORMATION") and, to the fullest extent permitted by applicable law, will
indemnify the Company, its directors and officers and each Person who
controls the Company (within the meaning of the Securities Act) against any
and all Claims to which each such indemnified party may become subject under
the Securities Act insofar as such Claim arose out of (i) any untrue or
alleged untrue statement of material fact contained, on the effective date
thereof, in any registration statement, prospectus or preliminary prospectus
or any amendment thereof or supplement thereto regarding Seller's
Information, (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein regarding Seller's Information not misleading or (iii) any
failure to comply with applicable securities laws; provided that with respect
to a Claim arising pursuant to clause (i) or (ii) above, the material
misstatement or omission is contained in such Seller's Information; provided,
further, that the obligation to indemnify will be individual to each Holder
and will be limited to the amount of proceeds received by such Holder from
the sale of Registrable Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder will
(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (but the failure to provide such
notice shall not release the indemnifying party of its obligation under
paragraphs (a) and (b), unless and then only to the extent that, the
indemnifying party has been prejudiced by such failure to provide such
notice) and (ii) unless in such indemnified party's reasonable judgment,
based on written advice of counsel, a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. An indemnifying
party who is not entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more than one counsel
for all parties indemnified by such indemnifying party with respect to such
claim, unless in the reasonable judgment of any indemnified party, based on
written advice of counsel, a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to
such claim.
(d) The indemnifying party shall not be liable to indemnify
an indemnified party for any settlement, or consent to judgment of any such
action effected without the indemnifying party's written consent (but such
consent will not be unreasonably withheld). Furthermore, the indemnifying
party shall not, except with the prior written approval of each indemnified
party, consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant
or plaintiff to each indemnified party of a release from all liability in
respect of such claim or litigation without any payment or consideration
provided by each such indemnified party.
(e) If the indemnification provided for in this Section 8
is unavailable to an indemnified party under clauses (a) and (b) above in
respect of any losses, claims, damages or liabilities referred to therein,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities in such proportion as
is appropriate to reflect not only the relative benefits received by the
Company, the underwriters, the sellers of
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Registrable Securities and any other sellers participating in the
registration statement from the sale of shares pursuant to the registered
offering of securities for which indemnity is sought but also the relative
fault of the Company, the underwriters, the sellers of Registrable Securities
and any other sellers participating in the registration statement in
connection with the statement or omission which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company, the
underwriters, the sellers of Registrable Securities and any other sellers
participating in the registration statement shall be deemed to be based on
the relative relationship of the total net proceeds from the offering (before
deducting expenses) to the Company, the total underwriting commissions and
fees from the offering (before deducting expenses) to the underwriters and
the total net proceeds from the offering (before deducting expenses) to the
sellers of Registrable Securities and any other sellers participating in the
registration statement. The relative fault of the Company, the underwriters,
the sellers of Registrable Securities and any other sellers participating in
the registration statement shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the sellers of Registrable
Securities and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(f) The indemnification provided for under this Agreement
will remain in full force and effect regardless of any investigation made by
or on behalf of the indemnified party or any officer, director or controlling
person of such indemnified party and will survive the transfer of the
Registrable Securities.
9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No
Holder may participate in any registration hereunder which is underwritten
unless such Holder (a) agrees to sell such Holder's securities on the basis
provided in any underwriting arrangements approved by the Holder or Holders
entitled hereunder to approve such arrangements, (b) as expeditiously as
possible notifies the Company of the occurrence of any event as a result of
which any prospectus contains an untrue statement of material fact or omits
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading and (c) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.
10. TRANSFER OF REGISTRATION RIGHTS. The rights
granted to any Holder under this Agreement may be assigned to any permitted
transferee of Registrable Securities, in connection with any transfer or
assignment of Registrable Securities by a Holder; provided, however, that:
(a) such transfer is otherwise effected in accordance with applicable
securities laws, (b) if not already a party hereto, the assignee or
transferee agrees in writing prior to such transfer to be bound by the
provisions of this Agreement applicable to the transferor, (c) such
transferee shall own Registrable Securities representing at least 5% of the
Common Shares (as adjusted for any combinations, consolidations, stock
distributions, stock dividends or other recapitalizations with respect to
such shares), and (d) Photogen or EIS, as applicable, shall act as agent and
representative for such Holder for the giving and receiving of notices
hereunder.
11. INFORMATION BY HOLDER. Each Holder shall furnish
to the Company such
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written information regarding such Holder and any distribution proposed by
such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement and shall promptly notify the
Company of any changes in such information.
12. EXCHANGE ACT COMPLIANCE. The Company shall comply
with all of the reporting requirements of the Exchange Act then applicable to
it and shall comply with all other public information reporting requirements
of the Commission which are conditions to the availability of Rule 144 for
the sale of the Registrable Securities. The Company shall cooperate with each
Holder in supplying such information as may be necessary for such Holder to
complete and file any information reporting forms presently or hereafter
required by the Commission as a condition to the availability of Rule 144.
13. TERMINATION OF REGISTRATION RIGHTS. All
registration rights granted under this Agreement shall terminate and be of no
further force and effect, as to any particular Holder, at such time as all
Registrable Securities held by such Holder are eligible to be sold under the
volume limitations of Rule 144 within a three-month period without compliance
with the registration requirements of the Securities Act pursuant to Rule 144
(including Rule 144(k)) promulgated thereunder or have been resold pursuant
to a registration statement hereunder.
14. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company will not
hereafter enter into any agreement with respect to its securities which is
inconsistent with or violates the rights granted to the Holders of
Registrable Securities in this Agreement without the prior written consent of
a majority in interest of such Registrable Securities.
(b) REMEDIES. Any Person having rights under any provision
of this Agreement will be entitled to enforce such rights specifically to
recover damages caused by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. The parties hereto
agree and acknowledge that money damages may not be an adequate remedy for
any breach of the provisions of this Agreement and that any party may in its
sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or other security) for specific performance and for
other injunctive relief in order to enforce or prevent violation of the
provisions of this Agreement; provided, however, that in no event shall any
Holder have the right to enjoin, delay or interfere with any offering of
securities by the Company.
(c) AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may be amended or waived only with
the prior written consent of the Company and Holders of at least 50% of the
Registrable Securities; provided, however, that without the prior written
consent of all the Holders, no such amendment or waiver shall reduce the
foregoing percentage required to amend or waive any provision of this
Agreement.
(d) SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Agreement by or on behalf of any of the parties hereto will bind and
inure to the benefit of the respective
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successors and assigns of the parties hereto, and shall inure to the benefit
and be enforceable by each Holder of Registrable Securities from time to
time. In addition, whether or not any express assignment has been made, the
provisions of this Agreement which are for the benefit of Holders of
Registrable Securities are also for the benefit of, and enforceable by, any
permitted transferee of Registrable Securities, in accordance with Section 10
hereof.
(e) SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
(f) COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken
together will constitute one and the same Agreement.
(g) DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
(h) GOVERNING LAW. All questions concerning the
construction, validity and interpretation of this Agreement will be governed
by the laws of the State of New York without regard to principles of
conflicts of laws.
(i) NOTICES. All notices, demands and requests of any kind
to be delivered to any party in connection with this Agreement shall be in
writing and shall be deemed to have been duly given if personally delivered
or if sent by nationally-recognized overnight courier or by registered or
certified airmail, return receipt requested and postage prepaid or by
facsimile transmission, addressed as follows:
(i) if to the Company, to:
Photogen Newco Ltd.
c/o Conyers Dill & Pearman
Clarendon House
Church Street, P.O. Box HM 666
Hamilton HM CX, Bermuda
Attention: David J. Doyle
Facsimile: (441) 292-4720
with a copy to each of Photogen, EIS and their
respective counsel at the addresses indicated below
(ii) if to Photogen, to:
Photogen Technologies, Inc.
12
<PAGE>
7327 Oak Ridge Highway, Suite B
Knoxville, Tennessee 37931
Attention: Chief Executive Officer
Facsimile: 423-769-4013
with a copy to:
Grippo & Elden
Suite 3600
227 West Monroe Street
Chicago, Illinois 60606
Attn: Theodore Grippo, Esq.
Facsimile: 312-558-1195
(iii) if to EIS, to:
Elan International Services, Ltd.
Flatts, Smiths Parish
Bermuda, FL 04
Facsimile: (441) 292-2224
Attention: President
with a copy to:
Brock Silverstein LLC
800 Third Avenue
New York, New York 10022
Facsimile: (212) 371-5500
Attention: David Robbins, Esq.
(j) ENTIRE AGREEMENT. This Agreement constitutes the full
and entire understanding and agreement between the parties with regard to the
subject matter hereof.
[Signature page follows]
13
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.
PHOTOGEN NEWCO LTD.
By: /s/ John Smolik
-------------------------------
Name: John Smolik
Title: President
PHOTOGEN TECHNOLOGIES, INC.
By: /s/ John Smolik
-------------------------------
Name: John Smolik
Title: President
ELAN INTERNATIONAL SERVICES, LTD.
By: /s/ Kevin Insley
-------------------------------
Name: Kevin Insley
Title: President
<PAGE>
EXHIBIT 10.12
CONFIDENTIAL TREATMENT HAS BEEN SOUGHT FOR
PORTIONS OF THIS EXHIBIT PURSUANT TO RULE 24B-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
EXECUTION COPY
FUNDING AGREEMENT
AMONG
ELAN PHARMA INTERNATIONAL LIMITED
AND
ELAN INTERNATIONAL SERVICES, LTD.
AND
PHOTOGEN TECHNOLOGIES, INC.
<PAGE>
INDEX
CLAUSE 1 SUBSEQUENT FUNDING
CLAUSE 2 TERMINATION
CLAUSE 3 GENERAL
3
<PAGE>
FUNDING AGREEMENT made this 20th day of October, 1999
AMONG:
(1) ELAN PHARMA INTERNATIONAL LIMITED, a public limited company
incorporated under the laws of Ireland, and having its registered
office at WIL House, Shannon Business Park, County Clare, Ireland
("ELAN");
(2) ELAN INTERNATIONAL SERVICES, LTD., a exempted limited liability
company incorporated under the laws of Bermuda, and having its
registered office at Clarendon House, 2 Church St., Hamilton, Bermuda
("EIS"); and
(3) PHOTOGEN TECHNOLOGIES, INC. a corporation incorporated under the
laws of Nevada and having its principal place of business at 7327 Oak
Ridge Highway, Suite B, Knoxville, Tennessee 37931, United States of
America ("PHOTOGEN").
RECITALS:
A. EIS and Photogen have formed a Bermuda exempted limited liability
company to be known as Photogen Newco Ltd. ("NEWCO").
B. Elan is beneficially entitled to the use of certain patents which
have been granted or are pending in relation to nanoparticulate medical
diagnostic imaging agents.
C. Photogen is beneficially entitled to the use of certain patents that
have been granted or are pending in relation to nanoparticulate medical
diagnostic imaging agents.
D. As of the date hereof, Elan has entered into a license agreement
with Newco, and Photogen has entered into a license agreement with
Newco, in connection with the license to Newco of the Elan Intellectual
Property and the Photogen Intellectual Property, respectively.
E. Elan and Photogen have agreed to co-operate in the research and
development of a business for the research, development and
commercialization of the Products based on their respective
technologies.
F. As of the date hereof, Elan, EIS, Photogen and Newco have entered
into a Subscription, Joint Development and Operating Agreement, dated
as of the date hereof (the "JDOA") for the purpose of recording the
terms and conditions of the research, development and commercialization
and governing certain aspects of the affairs of and their dealings with
Newco. The parties have agreed that capitalized terms when used in the
Recitals hereto and in this Agreement shall bear the same meanings as
ascribed to such terms in the JDOA.
4
<PAGE>
CLAUSE 1
SUBSEQUENT FUNDING
1.1 It is estimated that Newco will require an additional [****] to
commence development of the Products based upon the Photogen
Intellectual Property, the Elan Intellectual Property and/or the
Newco Technology (the "SUBSEQUENT FUNDING"). Within 36 months of the
Closing Date, EIS and Photogen may provide to Newco, by way of an
unconditional contribution to Newco of surplus or such other funding
mechanism or loan as may be agreed by EIS and Photogen up to an
aggregate maximum amount of [****], such funding to be provided on a
PRO RATA basis in accordance with their respective ownership
interest in Newco taking into account the non-voting preferred stock
of Newco held by EIS (i.e., initially, 80.1% by Photogen and 19.9%
by EIS).
1.2 The Subsequent Funding shall be provided by EIS and Photogen, each
in its sole discretion, at such times that shall be necessary for the
development of the Products as provided in the Business Plan or as
otherwise approved by the Newco Directors, including the EIS Director
(or after the Exchange Right by a majority of the EIS Directors). The
Subsequent Funding shall be funded on the following terms:
1.2.1 The minimum amount of each disbursement of the Subsequent
Funding shall be U.S.$[****] (except in the event that an
amount less than U.S.$[****] remains available for funding, in
which case such lesser amount may be funded), allocated
between EIS and Photogen as provided in Section 1.1 above;
1.2.2 There shall be no Event of Default (as defined in the Note)
under the Note on the date of the Subsequent Funding (except
to the extent that any Event of Default has been waived by
EIS);
1.2.3 Such funding shall be provided in accordance with the
Business Plan and the Research and Development Plan or as
otherwise approved by the Newco Board of Directors (including
at least one Newco Director designated by EIS and all of the
Newco Directors designated by Photogen); and
1.2.4 Such funding shall be subject to the receipt by Elan or
EIS of any required approvals under the Mergers and Takeovers
(Control) Acts 1978-1996 (the "IRISH MERGERS ACT").
1.2.5 Photogen's share of all or part of the Subsequent
Funding may, at its option, be provided under the Note or out
of its own funds.
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
5
<PAGE>
EXCHANGE ACT OF 1934, AS AMENDED.
6
<PAGE>
1.3 In the event that Elan or EIS is unable to obtain approval under
the Irish Mergers Act within three months after a determination of the
necessity of such funding by the Newco Directors, the parties hereto
shall work together in good faith, each in its sole discretion, to
agree on an alternative funding mechanism. If any party hereto is
unable to make its required funding contribution the other party's
funding contribution shall be correspondingly suspended.
1.4 Each request for Subsequent Funding shall be delivered from the
Management Committee to each of the Stockholders upon 15 business days'
prior written notice, which notice shall set forth:
(i) the amount of the Subsequent Funding requested;
(ii) the date requested to fund such amount (which with
respect to Photogen, shall not be a date earlier than Photogen
receives a disbursement under the Note to permit funding of
its share of the Subsequent Funding, if applicable); and
(iii) a reasonably detailed narrative and summary of the uses and
application thereof.
CLAUSE 2
TERMINATION
2.1 This Agreement shall govern the funding methodology of EIS and
Photogen with respect to Newco until terminated by written agreement of
all Parties hereto.
CLAUSE 3
GENERAL
3.1 GOOD FAITH:
Each of the Parties hereto acknowledges that funding hereunder shall be
undertaken only at the discretion, subject to the foregoing, of each
funding party and undertakes with the others to do all things
reasonably within its power that are necessary or desirable to give
effect to the spirit and intent of this Agreement.
3.2 FURTHER ASSURANCE:
At the request of any of the Parties, the other Party or Parties shall
(and shall use reasonable efforts to procure that any other necessary
parties shall) execute and perform
7
<PAGE>
all such documents, acts and things as may reasonably be required
subsequent to the signing of this Agreement for assuring to or
vesting in the requesting Party the full benefit of the terms hereof.
3.3 RELIANCE ON REPRESENTATIONS AND WARRANTIES:
Each of the Parties hereto hereby acknowledges that in entering into
this Agreement it has not relied on any representation or warranty
except as expressly set forth herein or in any document referred to
herein.
3.4 FORCE MAJEURE:
Neither Party to this Agreement shall be liable for delay in the
performance of any of its obligations hereunder if such delay is caused
by or results from causes beyond its reasonable control, including
without limitation, acts of God, fires, strikes, acts of war (whether
war be declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances or intervention of any
relevant government authority, but any such delay or failure shall be
remedied by such Party as soon as practicable.
3.5 RELATIONSHIP OF THE PARTIES:
Nothing contained in this Agreement is intended or is to be construed
to constitute Elan or EIS, on one hand, and Photogen, on the other
hand, as partners, or Elan or EIS as an employee or agent of Photogen,
or Photogen as an employee or agent of Elan or EIS.
No Party hereto shall have any express or implied right or authority to
assume or create any obligations on behalf of or in the name of another
Party or to bind another Party to any contract, agreement or
undertaking with any third Party.
3.6 COUNTERPARTS:
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of
which when taken together shall constitute this Agreement.
3.7 NOTICES:
Any notice to be given under this Agreement shall be sent in writing by
registered or recorded delivery post or reputable overnight courier
such as Federal Express or telecopied to:
Elan at:
Lincoln House, Lincoln Place, Dublin 2
Ireland
8
<PAGE>
Attention: Vice President & General Counsel
Elan Pharmaceutical Technologies,
a division of Elan Corporation, plc
Telephone: 353-1-709-4000
Fax: 353-1-709-4124
EIS at:
Elan International Services, Ltd.
102 St. James Court
Flatts, Smiths FL04
Bermuda
Attention: President
Telephone: 441-292-9169
Fax: 441-292-2224
with a copy to:
Brock Silverstein LLC
800 Third Avenue, 21st Floor
New York, NY 10022
Attention: David Robbins, Esq.
Telephone 212-371-2000
Fax: 212-371-5500
Photogen at:
7327 Oak Ridge Highway, Suite B
Knoxville, Tennessee 37931
Attention: Chief Executive Officer
Telephone: 423-769-4012
Facsimile: 423-769-4013
with a copy to:
Grippo & Elden
Suite 3600
227 West Monroe Street
Chicago, IL 60606
Attn: Theodore Grippo, Esq.
Telephone: (312) 704-7733
Facsimile: 312-558-1195
9
<PAGE>
or to such other address(es) as may from time to time be notified by
any Party to the others hereunder.
Any notice sent by mail shall be deemed to have been delivered within
three working days after dispatch or delivery to the relevant courier
and any notice sent by telecopy shall be deemed to have been delivered
upon confirmation of receipt by telephone. Notices of change of address
shall be effective upon receipt.
3.8 GOVERNING LAW:
This Agreement shall be governed by and construed in accordance with
the substantive (as opposed to procedural) laws of the State of New
York, without giving effect to principles thereof relating to conflicts
of laws. Any dispute hereunder shall be resolved in a forum set forth
in the Securities Purchase Agreement.
3.9 SEVERABILITY:
If any provision in this Agreement is agreed by the Parties to be,
deemed to be or is or becomes invalid, illegal, void or unenforceable
under any law that is applicable hereto, such provision will be deemed
amended to conform to applicable laws so as to be valid and enforceable
or, if it cannot be so amended without materially altering the
intention of the Parties, it will be deleted, with effect from the date
of such agreement or such earlier date as the Parties may agree, and
the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be impaired or affected in any way.
3.10 AMENDMENTS:
No amendment, modification or addition hereto shall be effective or
binding on any Party unless set forth in writing and executed by a duly
authorized representative of all Parties after the date hereof.
3.11 WAIVER:
No waiver of any right under this Agreement shall be deemed effective
unless contained in a written document signed by the Party charged with
such waiver, and no waiver of any breach or failure to perform shall be
deemed to be a waiver of any future breach or failure to perform or of
any other right arising under this Agreement.
3.12 ASSIGNMENT:
None of the Parties shall be permitted to assign its rights or
obligations hereunder without the prior written consent of the other
Parties except as follows:
3.12.1 Elan, EIS and/or Photogen shall have the right to assign their
rights and
10
<PAGE>
obligations hereunder to their Affiliates provided, however,
that such assignment does not result in adverse tax
consequences for any other Parties.
3.12.2 Elan and EIS shall have the right to assign their
rights and obligations hereunder to a special purpose
financing or similar vehicle established by Elan or EIS.
2.11.3 Elan, EIS and/or Photogen shall have the right to
assign or otherwise transfer their rights and obligations
hereunder in connection with a sale of all or substantially
all of the assets of such Party to which the Transaction
Documents relate, whether by merger, sale of stock, sale of
assets or otherwise.
2.11.4 Notwithstanding the above, if an assignment takes
place, the assignor shall continue to be liable for its
rights and obligations hereunder.
3.13 WHOLE AGREEMENT/NO EFFECT ON OTHER AGREEMENTS:
This Agreement and the other Transaction Documents set forth all of the
agreements and understandings between the Parties with respect to the
subject matter hereof, and supersedes and terminates all prior
agreements and understandings between the Parties with respect to the
subject matter hereof. There are no agreements or understandings with
respect to the subject matter hereof, either oral or written, between
the Parties other than as set forth in this Agreement and the other
Transaction Documents.
No provision of this Agreement shall be construed so as to negate,
modify or affect in any way the provisions of any other agreement
between any of the Parties unless specifically referred to, and solely
to the extent provided herein. In the event of a conflict between the
provisions of this Agreement and the provisions of the License
Agreements, the terms of this Agreement shall prevail unless this
Agreement specifically provide otherwise.
3.14 SUCCESSORS:
This Agreement shall be binding upon and inure to the benefit of the
Parties hereto, their successors and permitted assigns.
[Signature Page Follows]
11
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this
Funding Agreement on the day first set forth above.
SIGNED
BY: /s/ Kevin Insley
-------------------------------------
for and on behalf of
ELAN PHARMA INTERNATIONAL LIMITED
in the presence of: /s/
----------------
SIGNED
BY: /s/ Kevin Insley
-------------------------------------
for and on behalf of
ELAN INTERNATIONAL SERVICES, LTD.
in the presence of: /s/
-----------------
SIGNED
BY: /s/ John Smolik
-------------------------------------
for and on behalf of
PHOTOGEN TECHNOLOGIES, INC.
in the presence of: /s/
-----------------
<PAGE>
Exhibit 10.13
CONFIDENTIAL TREATMENT HAS BEEN SOUGHT FOR
PORTIONS OF THIS EXHIBIT PURSUANT TO RULE 24B-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
EXECUTION COPY
LICENSE AGREEMENT
BETWEEN
PHOTOGEN TECHNOLOGIES, INC.
AND
PHOTOGEN NEWCO LTD.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS
2. ELAN LICENSE TO NEWCO
3. INTELLECTUAL PROPERTY
4. [****]/AFTER ACQUIRED TECHNOLOGY
5. FINANCIAL PROVISIONS
6. RIGHT OF INSPECTION AND AUDIT
7. REPRESENTATIONS AND WARRANTIES
8. TERM AND TERMINATION
9. CONFIDENTIAL INFORMATION
10. GOVERNING LAW AND ARBITRATION
11. IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE
12. ASSIGNMENT
13. NOTICES
14. MISCELLANEOUS
</TABLE>
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
THIS AGREEMENT made this 20th October 1999
BETWEEN:
(1) PHOTOGEN TECHNOLOGIES, INC., a corporation duly incorporated and
validly existing under the laws of Nevada and having its principal
place of business at 7327 Oak Ridge, Knoxville, TN. 37931, United
States of America; and
(2) PHOTOGEN NEWCO, LTD., an exempted limited liability company
incorporated under the laws of Bermuda and having its registered
office at Clarendon House, 2 Church Street, Hamilton, Bermuda
("NEWCO"); and
(3) ELAN PHARMA INTERNATIONAL LIMITED incorporated under the laws of
Ireland, and having its registered office at WIL House, Shannon
Business Park, Shannon, County Clare, Ireland ("EPIL").
RECITALS:
A. Simultaneously herewith, Photogen, Elan, EIS, and Newco are entering
into the JDOA for the purpose of recording the terms and conditions of
the joint venture and of regulating their relationship with each other
and certain aspects of the affairs of, and their dealings with Newco.
B. Newco desires to enter into this Agreement with Photogen so as to
permit Newco to utilize the Photogen Intellectual Property in making,
having made, importing, using, offering for sale and selling the
Products in the Field in the Territory.
C. Simultaneously herewith Newco and Elan are entering into the Elan
License Agreement relating to Newco's use of the Elan Intellectual
Property.
1 DEFINITIONS
1.1 In this Agreement unless the context otherwise requires:
"AFFILIATE" shall mean any corporation or entity controlling,
controlled or under the common control of Elan or Photogen, as the case
may be. For the purpose of this definition, "control" shall mean direct
or indirect ownership of fifty percent (50%) or more of the stock or
shares entitled to vote for the election of directors. Newco is not an
Affiliate of Photogen, Elan or EIS.
"AGREEMENT" shall mean this license agreement (which expression shall
be deemed to include the Recitals and Schedules hereto).
<PAGE>
"ALLIANCE" shall mean Alliance Pharmaceutical Corp., whose principal
place of business is at 3040 Science Park Road, San Diego, California.
"ALLIANCE AGREEMENT" shall mean the Agreement dated 9 August 1999,
between Alliance, Photogen and Dr. Gerald Wolf ("DR WOLF"), which
agreement, inter alia, assigned the Method Patents from Alliance and
Dr. Wolf to Photogen.
"[****]"
"[****]"
"BUSINESS PLAN" shall have the meaning, as such term is defined in
the JDOA.
"COMPOUNDS" shall mean the [****].
"CONFIDENTIAL INFORMATION" shall have the meaning, as such term is
defined in Clause 9.
"CONTROL" shall mean the ability to grant a license or sublicense as
contemplated herein without violating the terms of any agreement with
any third party.
"DEFINITIVE DOCUMENTS" shall mean the definitive agreements relating to
the transaction between the Parties and Elan including finance, stock
purchase, research and license agreements.
"ELAN " shall mean EPIL (a wholly owned subsidiary of Elan Corporation,
Plc., which owns the Nanocrystal-TM- technology formerly Controlled by
NanoSystems LLC, formerly a subsidiary of the Eastman Kodak Company)
and Affiliates and subsidiaries of Elan Corporation, Plc. within the
division of Elan Corporation, Plc. carrying on business as Elan
Pharmaceutical Technologies but shall not include Affiliates and
subsidiaries (present or future) of Elan Corporation Plc within the
division of Elan Corporation, Plc carrying on business as Elan
Pharmaceuticals which incorporates, inter alia, Targon Corporation,
Athena Neurosciences, Inc., Elan Pharmaceuticals, Inc., Elan
Diagnostics, Carnrick Laboratories, and Elan Europe Limited.
"EIS" shall mean Elan International Services, Limited, an exempted
limited liability company incorporated under the laws of Bermuda and
having its registered office at Clarendon House, 2 Church Street,
Hamilton, Bermuda and a subsidiary of Elan.
"EFFECTIVE DATE" shall mean the date of this Agreement.
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
"ELAN INTELLECTUAL PROPERTY" shall mean the Elan Know-How, the Elan
Patents and the Elan Improvements, as such terms are defined in the
Elan License Agreement.
"ELAN LICENSE" shall have the meaning set forth in Clause 2.1 of the
Elan License Agreement.
"ELAN LICENSE AGREEMENT" shall mean that certain license agreement, of
even date herewith, entered into between EPIL and Newco.
"ELAN PATENTS" shall have the meaning as such term is defined in the
Elan License Agreement.
"FIELD" shall mean the research, development, manufacture and
commercialization of nanoparticulate x-ray, CT, and/or MRI diagnostic
imaging agents using radio-opaque molecules containing Iodine that
passively target to lymphnodes involved in a disease state following
parenteral administration to a mammal to locate, diagnose and/or treat
cancer and/or other diseases.
For the avoidance of doubt, the Field does not include:
(iv) active targeting agents, including but not limited to
monoclonal antibodies, short-chain antibodies or any other
active targeting agents including protein, peptide or
peptidomimetic targeting agents; or
(ii) ultrasound diagnostic imaging agents.
"GENERAL NYCOMED AGREEMENT" shall mean the License Agreement dated 30
September, 1999 between The General Hospital Corporation (acting, inter
alia, as agent for Nycomed) and Photogen which agreement licenses,
inter alia, certain rights with respect to the Compounds [****] and
[****] to Photogen.
"GENERAL NYCOMED PATENTS" shall mean the patents included in the
GenNyc Intellectual Property.
"GENNYC INTELLECTUAL PROPERTY" shall mean all the rights to and under
the General Patent Rights, the Joint Patent Rights and the [****]
Patent Rights (as those terms are defined in the General Nycomed
Agreement) which were licensed to Photogen pursuant to the General
Nycomed Agreement.
The primary examples of GenNyc Intellectual Property existing as of the
Effective Date are set forth on Schedule 2, which listing is not
necessarily exhaustive.
- ----------------
<PAGE>
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
"IN-LICENSE AGREEMENTS" shall mean collectively the General Nycomed
Agreement and the Alliance Agreement.
"JDOA" shall mean that certain joint development and operating
agreement, of even date herewith, by and between Elan, Photogen, EIS
and Newco.
"KNOW-HOW" shall mean information and know-how, whether patentable or
not, including but not limited to any and all discoveries, inventions,
substances, data, techniques, processes, systems, formulations, designs
and commercial information relating to design, development,
manufacture, assembly, use or sale.
"LICENSED TECHNOLOGIES" shall mean the Elan Intellectual Property, the
Photogen Intellectual Property and the GenNyc Intellectual Property.
"LICENSES" shall mean the Elan License, the Photogen License and the
General Nycomed Sublicense.
"MANAGEMENT COMMITTEE" shall have the meaning, as such term is
defined in the JDOA.
"METHOD PATENTS" shall mean the patent family that contains the [****]
Patent, the [****] Patent, [****] and others as described in Exhibit B
of the Alliance Agreement.
"NEWCO INTELLECTUAL PROPERTY" shall mean all Patent Rights and Know-How
and other intellectual property arising pursuant to the Project by any
person, that does not constitute Elan Intellectual Property or Photogen
Intellectual Property and any technology licensed or acquired by Newco
from a third party.
For avoidance of doubt, Newco Intellectual Property includes that
portion of all improvements developed pursuant to the Project relating
solely and specifically to Product(s).
"NEWCO PATENTS" shall mean any and all Patent Rights now existing,
currently pending or hereafter filed or obtained relating to the Newco
Intellectual Property.
"NYCOMED" shall mean Nycomed Imaging AS doing business as Nycomed
Amersham, whose principal place of business is at 101 Carnegie Center,
Princeton, NJ 08540, USA.
"PARTY" shall mean Photogen or Newco, as the case may be, and
"PARTIES" shall mean Photogen and Newco.
- ----------------
<PAGE>
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
"PATENT RIGHTS" shall mean any and all patents and patent applications,
including all divisonals, continuations, continuations-in-part,
extensions, patents-of-additions, re-examinations, re-issues,
supplementary protection certificates and foreign counterparts of such
patents and patent applications and any patents issuing thereon and
extensions thereon.
"PHOTOGEN" shall mean Photogen Technologies, Inc. and its
Affiliates, excluding Newco.
"PHOTOGEN INTELLECTUAL PROPERTY" shall mean the Photogen Know-How, the
Photogen Patents and the Photogen Improvements.
"PHOTOGEN KNOW-HOW" shall mean any and all rights owned, licensed or
Controlled by Photogen to Know-How other than Know-How included in the
GenNyc Intellectual Property, relating to medical diagnostic imaging
agents, methods of treatment using medical diagnostic imaging agents
and related compositions.
The primary examples of the Photogen Know-How existing as of the
Effective Date are set forth on Schedule 1 attached hereto, which
listing is not necessarily exhaustive, and includes Know-How owned,
licensed or Controlled by Photogen related to the Method Patents.
"PHOTOGEN LICENSE" shall have the meaning set forth in Clause 2.1.
"PHOTOGEN PATENTS" shall mean any and all Patent Rights owned or
Controlled by Photogen other than Patent Rights included in the GenNyc
Intellectual Property, now existing, currently pending or hereafter
filed by Photogen relating to nanoparticulate medical diagnostic
imaging agents including medical diagnostic imaging agents, methods of
treatment using medical diagnostic imaging agents and related
compositions.
The primary examples of Photogen Patents existing as of the Effective
Date are set forth on Schedule 1 attached hereto, which listing is not
necessarily exhaustive, and includes the Method Patents.
"PHOTOGEN IMPROVEMENTS" shall mean improvements relating to the
Photogen Patents and/or the Photogen Know-How, developed (i) by
Photogen not pursuant to the Project, (ii) by Photogen pursuant to the
Project except for that portion of improvements relating solely and
specifically to Product(s) (iii) by Newco or Elan or by a third party
(under contract with Newco) pursuant to the Project except for that
portion of improvements relating solely and specifically to Product(s),
and/or (iv) jointly by any combination of Photogen, Elan or Newco
pursuant to the Project except for that portion of improvements
relating solely and specifically to Product(s), except as limited by
agreements with unaffiliated third parties.
Subject to third party agreements with unaffiliated third parties,
Photogen Improvements
<PAGE>
shall constitute part of Photogen Intellectual Property and be
included in the license of the Photogen Intellectual Property
pursuant to Clause 2.1 solely for the purposes set forth therein. If
the inclusion of a Photogen Improvement in the license of Photogen
Intellectual Property is restricted or limited by a third party
agreement, Photogen shall use reasonable commercial efforts to
minimize any such restriction or limitation.
"PRODUCT" shall mean a formulation containing one or more x-ray, CT,
and/or MRI Compounds in nanoparticulate form developed by or on behalf
of Newco pursuant to the Project.
"PHOTOGEN TRADEMARK(S)" shall mean one or more trademarks, trade names,
or service marks that are owned or licensed by or on behalf of Photogen
which Photogen may nominate and approve in writing from time to time
and Newco may accept for use in connection with the sale or promotion
of the Products by Newco
"PROJECT" shall mean all activities as undertaken by Elan, Photogen and
Newco in order to develop the Products.
"R&D COMMITTEE" shall have the meaning, as such term is defined in
the JDOA.
"R&D PLAN" shall have the meaning, as such term is defined in the
JDOA.
"R&D PROGRAM" shall mean any research and development program
commenced by Newco pursuant to the Project.
"TERM" shall have the meaning set forth in Clause 8.
"TERRITORY" shall mean all the countries of the world.
"UNITED STATES DOLLAR" and "US$" shall mean the lawful currency for the
time being of the United States of America.
1.2 In this Agreement:
1.2.1 The singular includes the plural and vice versa, and the
masculine includes the feminine and vice versa and the neuter
includes the masculine and the feminine.
1.2.2 Any reference to a Clause or Schedule shall, unless otherwise
specifically provided, be to a Clause or Schedule of this
Agreement.
1.2.3 The headings of this Agreement are for ease of reference only
and shall not affect its construction or interpretation.
<PAGE>
2. PHOTOGEN LICENSE TO NEWCO
2.1 Photogen hereby grants to Newco for the Term an [****] license
(including the right to grant sublicenses under Clause 2.7) (the
"PHOTOGEN LICENSE") of the Photogen Intellectual Property solely in the
Field to make, have made, import, use, offer for sale and sell the
Products in the Field in the Territory.
2.2 Photogen hereby grants to Newco for the Term an [****] sublicense
(including the right to grant sublicenses under Clause 2.7) (the
"GENERAL NYCOMED SUBLICENSE") of all Photogen's rights to the GenNyc
Intellectual Property solely in the Field solely to make, have made,
import, use, offer for sale and sell the Products in the Field in the
Territory.
2.3 Save only the specific royalty obligations of Photogen to Nycomed under
Clause 5.1(c) and Clause 5.1(d) of the General Nycomed Agreement in
respect of Newco's sales of Products as a "SUB-LICENSEE" as defined in
the General Nycomed Agreement for which Newco will be responsible,
Photogen shall be responsible for payments related to the financial
provisions and obligations of any third party agreement with respect to
the Photogen Intellectual Property to which it is a party on the
Effective Date (including amendments thereto) (the "PHOTOGEN EFFECTIVE
DATE AGREEMENTS"), including without limitation, any royalty or other
compensation obligations triggered thereunder on the Effective Date, or
triggered thereunder after the Effective Date.
For the avoidance of doubt, royalties, milestones or other payments
which arise from the process of the commercialization or exploitation
of products under the Photogen Effective Date Agreements (for example,
a milestone payment payable upon successful completion of Phase II
clinical trials, the filing of an NDA application, obtaining NDA
approval, or first commercial sale) shall be payments for which
Photogen will be responsible under this Clause 2.3.
2.4 To the extent royalty or other compensation obligations that are
payable to third parties with respect to the Photogen Intellectual
Property would be triggered after the Effective Date under any third
party agreement entered into by Photogen after the Effective Date (the
"PHOTOGEN POST-EFFECTIVE DATE AGREEMENTS"), by a proposed use of such
Photogen Intellectual Property in connection with the Project, Photogen
will inform Newco of such royalty or compensation obligations. [****]
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
For the avoidance of doubt, royalties, milestones or other payments
which arise from the process of the commercialization or exploitation
of products under the Photogen Post-Effective Date Agreements (for
example, a milestone payment payable upon successful completion of
Phase II clinical trials, the filing of an NDA application, obtaining
NDA approval, or first commercial sale) shall be payments for which
Newco will be responsible under this Clause 2.4.
2.5 Elan shall be a third party beneficiary under this Agreement and shall
have the right to cause Newco to enforce Newco's rights under this
Agreement against Photogen.
2.6 Notwithstanding anything contained in this Agreement to the contrary,
Photogen shall have the right outside the Field and subject to the
non-competition provisions of Clause 4 to exploit and grant licenses
and sublicenses of the Photogen Intellectual Property. For the
avoidance of doubt, Newco shall have no right to use the Photogen
Intellectual Property outside the Field.
2.7 Newco shall not be permitted to assign or sublicense any of its rights
under the Photogen Intellectual Property without the prior written
consents of Photogen and Elan, which consents shall not be unreasonably
withheld or delayed.
2.8 Any agreement between Newco and any permitted third party for the
development or exploitation of the Photogen Intellectual Property shall
require such third party to maintain the confidentiality of all
information concerning the Photogen Intellectual Property.
Insofar as the obligations owed by Newco to Photogen are concerned, Newco
shall remain responsible for all acts and omissions of any permitted
sub-licensee, including Elan, as if they were acts and omissions by Newco.
3 INTELLECTUAL PROPERTY
3.1 OWNERSHIP OF INTELLECTUAL PROPERTY:
3.1.1 Newco shall own the Newco Intellectual Property.
3.1.2 Photogen shall own the Photogen Intellectual Property.
3.2 TRADEMARKS:
3.2.1 Photogen hereby grants to Newco for the Term a [****]
license in the Territory to
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FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER
<PAGE>
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
use and display the Photogen Trademarks to promote, offer
for sale and sell the Products in the Field in the
Territory and the following provisions shall apply as
regards the use of the Photogen Trademarks by Newco
hereunder:
(1) Newco shall ensure that each reference to and use of
a Photogen Trademark by Newco is in a manner approved
by Photogen and accompanied by an acknowledgement, in
a form approved by Photogen, that the same is a
trademark (or registered trademark) of Photogen.
From time to time, upon the reasonable request of
Photogen, Newco shall submit samples of the Product
to Photogen or its duly appointed agent to ensure
compliance with quality standards and specifications.
Photogen, or its duly appointed agent, shall have the
right to inspect the premises of Newco where the
Product is manufactured, held or stored, and Newco
shall permit such inspection, upon advance notice at
any reasonable time, of the methods and procedures
used in the manufacture, storage and sale of the
Product. Newco shall not sell or otherwise dispose of
any Product under the Photogen Trademarks that fails
to comply with the quality standards and
specifications referred to in this Clause 3.2, as
determined by Photogen.
(2) Newco shall not use an Photogen Trademark in any way
which might materially prejudice its distinctiveness
or validity or the goodwill of Photogen therein.
(3) The parties recognize that the Photogen Trademarks
have considerable goodwill associated therewith.
Newco shall not use in relation to the Products any
trademarks other than the Photogen Trademarks (except
the Photogen Trademarks (as defined in the Photogen
License Agreement) licensed to Newco under the
Photogen License Agreement) without obtaining the
prior consent in writing of Photogen, which consent
may not be unreasonably withheld. However, such use
must not conflict with the use and display of the
Photogen Trademark and such use and display must be
approved by Photogen.
(4) Newco shall not use in the Territory any trademarks
or trade names so resembling the Photogen Trademark
as to be likely to cause confusion or deception.
(5) Newco shall promptly notify Photogen in writing of
any alleged infringement or unauthorised use of which
it becomes aware by a third party of the Photogen
Trademarks and provide Photogen with any applicable
evidence of infringement or unauthorised use.
(6) Newco shall favourably consider promoting and using
the Photogen
<PAGE>
Trademarks in each country of the Territory and
provide proof of such use upon request by Photogen.
(7) Newco shall not be permitted to assign or sublicense
any of its rights under the Photogen Trademarks
without the prior written consent of Photogen, which
consent shall not be unreasonably withheld or
delayed.
3.2.2 Photogen shall, [****], file and prosecute applications to
register and maintain registrations of the Photogen Trademarks
in the Territory. Newco shall reasonably co-operate with
Photogen in such efforts. In the event Photogen decides not to
file or prosecute such Photogen Trademark, Newco may request
Photogen to do the same at Newco's expense, and Photogen shall
file or prosecute such Photogen Trademark at Newco's request
and expense unless Photogen believes such action is without
merit.
3.2.3 Photogen will be entitled to conduct all enforcement
proceedings relating to the Photogen Trademarks and shall
at its [****] discretion decide what action, if any, to
take in respect to any enforcement proceedings of the
Photogen Trademarks or any other claim or counter-claim
brought in respect to the use or registration of the
Photogen Trademarks. Any such proceedings shall be
conducted at Photogen's [****] and for its own benefit.
Newco and Elan shall reasonably cooperate with Photogen in
such efforts. In the event Photogen decides not to engage
in enforcement proceedings of the Photogen Trademarks Newco
may request Photogen to do the same at Newco's expense
unless Photogen believes the basis for such enforcement
proceedings is without merit. In such a case, Photogen
shall have the sole discretion not to engage in any such
enforcement proceedings.
3.2.4 Newco shall promptly notify Photogen in writing in the
event that any Photogen Trademark has been challenged by a
third party in a judicial or administrative proceeding in a
country in the Territory as infringing on the rights of a
third party and Photogen shall have the first right to
decide whether or not to defend such allegations, or to
adopt an alternative mark, or allow Newco to adopt an
alternative mark. If Photogen decides not to defend the
Photogen Trademark, then Newco may request Photogen to
defend the Photogen Trademark, at Newco's expense, unless
such requested defense is believed by Photogen to be
unsubstantiated and without merit. In such a case, Photogen
may elect not initiate defence proceedings.
3.2.5 Save where Newco adopts its own mark under Clause 3.2.4, Newco
will have no ownership rights in respect of the Photogen
Trademarks or of the goodwill
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES
<PAGE>
EXCHANGE ACT OF 1934, AS AMENDED.
associated therewith, and Newco hereby acknowledges that,
except as expressly provided in this Agreement, it shall
not acquire any rights in respect thereof and that all such
rights and goodwill are, and will remain, vested in
Photogen.
3.2.6 Nothing in this Agreement shall be construed as a warranty on
the part of Photogen regarding the Photogen Trademarks,
including without limitation, that use of the Photogen
Trademarks in the Territory will not infringe the rights of
any third parties. Accordingly, Newco acknowledges and agrees
that Photogen makes no such warranty.
3.2.7 Photogen assumes no liability to Newco or to any third parties
with respect to the quality, performance or characteristics of
any of the goods manufactured or sold by Newco under the
Photogen Trademarks pursuant to this Agreement.
4 [****]/AFTER ACQUIRED TECHNOLOGY
4.1 [****]
[****]
4.2 If, after the Effective Date, Photogen acquires know-how or patent
rights relating to the Field, or acquires or merges with a third
party entity that has know-how or patent rights relating to the
Field, Photogen shall offer to license such know-how and patent
rights to Newco (subject to existing contractual obligations), on
[****] terms on an arm's length basis for a [****] period under the
prevailing circumstances.
If Newco determines that Newco should not acquire such license,
Photogen shall be free to fully exploit such know-how and patent rights
with the Photogen Intellectual Property then licensed to Newco, whether
inside or outside the Field, and to grant to third parties licenses and
sublicenses with respect thereto.
5 FINANCIAL PROVISIONS
5.1 MILESTONE PAYMENTS AND ROYALTIES:
Prior to the commercialization of the Products, the Management
Committee shall consider and if appropriate, determine reasonable
royalties and milestone payments with respect to the commercialization
of the Products by Newco that shall be payable by Newco to Elan and
Photogen, and shared by Elan and Photogen [****] (whether common stock
and/or preferred stock) in Newco.
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<PAGE>
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
At such time, the Management Committee will agree to an appropriate
definition of "Net Sales" as such term is used in this Agreement.
5.2 Payment of any royalties pursuant to Clause 5.1 shall be made quarterly
in arrears during each Financial Year within 30 days after the expiry
of the calendar quarter. The method of payment shall be by wire
transfer to an account specified by Photogen. Each payment made to
Photogen shall be accompanied by a true accounting of all Products sold
by Newco's permitted sublicensees, if any, during such quarter.
Such accounting shall show, on a country-by-country and
Product-by-Product basis, Net Sales (and the calculation thereof) and
each calculation of royalties with respect thereto, including the
calculation of all adjustments and currency conversions.
5.3 Newco shall maintain and keep clear, detailed, complete, accurate and
separate records for a period of [****]:
5.3.1 to enable any royalties on Net Sales that shall have accrued
hereunder to be determined; and
5.3.2 to enable any deductions made in the Net Sales calculation to be
determined.
5.4 All payments due hereunder shall be made in United States Dollars.
Payments due on Net Sales of any Product for each calendar quarter made
in a currency other than United States Dollars shall first be
calculated in the foreign currency and then converted to United States
Dollars on the basis of the exchange rate in effect on the last working
day for such quarter for the purchase of United States Dollars with
such foreign currency quoted in the Wall Street Journal (or comparable
publication if not quoted in the Wall Street Journal) with respect to
the currency of the country of origin of such payment, determined by
averaging the rates so quoted on each business day of such quarter.
5.5 If, at any time, legal restrictions in the Territory prevent the prompt
payment when due of royalties or any portion thereof, the Parties shall
meet to discuss suitable and reasonable alternative methods of paying
Photogen the amount of such royalties. In the event that Newco is
prevented from making any payment under this Agreement by virtue of the
statutes, laws, codes or government regulations of the country from
which the payment is to be made, then such payments may be paid by
depositing them in the currency in which they accrue to Photogen's
account in a bank acceptable to Photogen in the country the currency of
which is involved or as otherwise agreed by the Parties.
5.6 Photogen and Newco agree to co-operate in all respects necessary to
take advantage of any double taxation agreements or similar agreements
as may, from time to time, be available.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER
<PAGE>
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
5.7 Any taxes payable by Photogen on any payment made to Photogen pursuant
to this Agreement shall be for the account of Photogen. If so required
by applicable law, any payment made pursuant to this Agreement shall be
made by Newco after deduction of the appropriate withholding tax, in
which event the Parties shall co-operate to obtain the appropriate tax
clearance as soon as is practicable. On receipt of such clearance,
Newco shall forthwith arrange payment to Photogen of the amount so
withheld.
6 RIGHT OF INSPECTION AND AUDIT
6.1 [****] during each Financial Year, or more often not to exceed
quarterly as reasonably requested by Photogen, Newco shall permit
Photogen or its duly authorised representatives, upon reasonable notice
and at any reasonable time during normal business hours, to have access
to inspect and audit the accounts and records of Newco and any other
book, record, voucher, receipt or invoice relating to the calculation
of the royalty payments on Net Sales submitted to Photogen.
Any such inspection of Newco's records shall be at the expense of
Photogen, except that if any such inspection reveals a deficiency in
the amount of the royalty actually paid to Photogen hereunder in any
Financial Year of [****]% or more of the amount of any royalty actually
due to Photogen hereunder, then the expense of such inspection shall be
borne [****] by Newco. Any amount of deficiency shall be paid promptly
to Photogen by Newco.
If such inspection reveals a surplus in the amount of royalties
actually paid to Photogen by Newco, Photogen shall reimburse Newco the
surplus within 15 days after determination.
6.2 In the event of any unresolved dispute regarding any alleged deficiency
or overpayment of royalty payments hereunder, the matter will be
referred to an independent firm of chartered or public accountants
chosen by agreement of Elan and Photogen for a resolution of such
dispute. Any decision by the said firm of chartered accountants shall
be binding on the Parties.
7 REPRESENTATIONS AND WARRANTIES
7.1 Photogen represents and warrants to Newco and Elan as of the
Effective Date, as set forth below:
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER
<PAGE>
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
7.1.1 Photogen has the right to grant the Photogen License and
the General Nycomed Sublicense;
7.1.2 there are no agreements between Photogen and any third parties
that conflict with the Photogen License and/or the General
Nycomed Sublicense;
7.1.3 to Photogen's knowledge, there is no agreement to which
Photogen is a party, or otherwise, or by which it is bound
that restricts the use by Newco of the Photogen License or the
General Nycomed Sublicense;
7.1.4 the patents and patent applications included in the Photogen
Patents and, to Photogen's knowledge, the General Nycomed
Patents, are free and clear of encumbrances and liens except
for the lien on the Method Patents in favour of Imperial Bank
which Alliance is obliged to discharge and remove pursuant to
the Alliance Agreement and, if not released by the Effective
Date, Photogen will use its continuing best efforts to procure
that Alliance shall discharge its obligations to Imperial Bank
and obtain all releases relevant hereto; and
7.1.5 to the best of Photogen's knowledge, there are no proceedings
or threatened proceedings or substantive grounds for
proceedings against Photogen in connection with the Photogen
Intellectual Property or, to Photogen's knowledge, the General
Nycomed Sublicense in relation to the Field or, to Photogen's
knowledge, against General Nycomed or Alliance in connection
with the General Nycomed Sublicense or the Method Patents in
relation to the Field;
7.1.6 to Photogen's best knowledge there is no infringement by third
parties of any Photogen Intellectual Property or, to
Photogen's knowledge, the General Nycomed Patents;
7.1.7 to Photogen' s knowledge, there is no patent of others which
contains claims that they dominate the Photogen Patents or the
General Nycomed Patents;
7.1.8 to Photogen's knowledge, neither the Photogen Patents nor the
General Nycomed Patents nor any products, methods, or other
inventions related thereto interferes, infringes,
misappropriates or conflicts with the intellectual property
rights, contact or other rights of any third party;
7.1.9 Photogen has paid all payments due to relevant third parties
which have become payable on or prior to the date hereof
relating to the Photogen Intellectual Property.
7.2 Photogen further agrees and represents and warrants to Newco and
Elan as follows:
7.2.1 as of the Effective Date, each of the In-License Agreements is
valid and in full
<PAGE>
force and effect;
7.2.2 as of the Effective Date, there are no existing or claimed
defaults by Photogen, and to Photogen's best knowledge by any
other party, under any of the In-License Agreements and no
event, act or omission has occurred which (with or without
notice, lapse of time or the happening or occurrence of any
other event) would result in a default under the In-License
Agreements by Photogen, or to Photogen's best knowledge by any
other party except Alliance's obligation to Photogen to
discharge the lien on the Method Patents as described in
Clause 7.1.4;
7.2.3 during the Term, Photogen will fully comply with all of the
terms and conditions of the In-License Agreements. Photogen
will enforce its rights under the In-License Agreements and
Photogen will not assign its rights under the In-License
Agreements; and
7.2.4 during the Term, Photogen will keep Newco and Elan reasonably
fully informed with respect to Photogen's transactions,
arrangements and business under the In-License Agreements that
relate to Newco and/or the transactions contemplated
hereunder, and Photogen shall provide Newco and Elan with any
written notices delivered by any party thereunder that relate
to Newco and/or the transactions contemplated hereunder, or
that may affect Newco;
7.2.5 Photogen to warrant to Newco in identical terms to any and all
warranties provided to Photogen in the In-License Agreements.
7.2.6 The phrase "TO PHOTOGEN'S KNOWLEDGE" in this Clause 7 is to
Photogen's actual knowledge based on reasonable investigation.
7.3 During the Term, Photogen shall not amend, modify, or waive any of its
rights under the In-License Agreements without the prior written
consent of the Management Committee (by the unanimous vote of its
members).
For the avoidance of doubt, Photogen shall not terminate any of its
rights under the In-License Agreements without the prior written
consent of the Management Committee (by the unanimous vote of its
members).
7.4 Photogen shall indemnify and hold harmless Newco and Elan against all
costs, claims and liabilities in respect of any claims or proceedings
which may be taken by a third party against Newco and/or Elan, or which
may arise in any way, in relation to or in connection with the
In-License Agreements except for any wilful wrongful act of Elan or
Newco.
In addition, Photogen shall indemnify and hold harmless Newco and Elan
against all costs, claims and liabilities in respect of any claims or
proceedings which may be taken by a third party against Newco and/or
Elan that any Product infringes the patent rights of
<PAGE>
such third party by virtue of the Photogen Patents or the General
Nycomed Patents.
For the avoidance of doubt, the provisions of Clause 7.9 shall not
exclude or limit Newco's and Elan's rights to be fully indemnified by
Photogen hereunder against the full extent of any third party claim,
whether or not such third party claim, includes a claim for the
recovery of consequential loss or incidental or punitive loss or damage
(whether for loss of profits or otherwise).
7.5 In addition to any other indemnities provided for herein, Photogen
shall indemnify and hold harmless Elan, Newco and its Affiliates and
their respective employees, agents, officers and directors from and
against any claims, losses, liabilities or damages (including
reasonable attorney's fees and expenses) incurred or sustained by Elan
or Newco arising out of or in connection with any:
7.5.1 breach of any representation, covenant, warranty or
obligation by Photogen hereunder; or
7.5.2 act or omission on the part of Photogen or any of its
respective employees, agents, officers and directors in the
performance of this Agreement.
7.6 In addition to any other indemnities provided for herein, Newco shall
indemnify and hold harmless Photogen and its Affiliates and their
respective employees, agents, officers and directors from and against
any claims, losses, liabilities or damages (including reasonable
attorney's fees and expenses) incurred or sustained by Photogen arising
out of or in connection with any:
7.6.1 breach of any representation, covenant, warranty or
obligation by Newco hereunder; or
7.6.2 act or omission on the part of Newco or any of its agents or
employees in the performance of this Agreement.
7.7 The Party seeking an indemnity shall:
7.7.1 fully and promptly notify the other Party of any claim or
proceeding, or threatened claim or proceeding;
7.7.2 permit the indemnifying Party to take full care and control
of such claim or proceeding;
7.7.3 co-operate in the investigation and defence of such claim
or proceeding;
7.7.4 not compromise or otherwise settle any such claim or
proceeding without the prior written consent of the other
Party, which consent shall not be unreasonably
<PAGE>
withheld conditioned or delayed; and
7.7.5 take all reasonable steps to mitigate any loss or liability in
respect of any such claim or proceeding.
7.8 EXCEPT AS SET FORTH IN THIS CLAUSE 7, PHOTOGEN IS GRANTING THE LICENSE
HEREUNDER ON AN "AS IS" BASIS WITHOUT REPRESENTATION OR WARRANTY
WHETHER EXPRESS OR IMPLIED INCLUDING WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR INFRINGEMENT OF THIRD PARTY
RIGHTS, AND ALL SUCH WARRANTIES ARE EXPRESSLY DISCLAIMED.
7.9 EXCEPT AS SET FORTH IN CLAUSE 7.4, NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THIS AGREEMENT, PHOTOGEN AND NEWCO SHALL NOT BE LIABLE TO
THE OTHER BY REASON OF ANY REPRESENTATION OR WARRANTY, CONDITION OR
OTHER TERM OR ANY DUTY OF COMMON LAW, OR UNDER THE EXPRESS TERMS OF
THIS AGREEMENT, FOR ANY CONSEQUENTIAL, SPECIAL OR INCIDENTAL OR
PUNITIVE LOSS OR DAMAGE (WHETHER FOR LOSS OF PROFITS OR OTHERWISE) AND
WHETHER OCCASIONED BY THE NEGLIGENCE OF THE RESPECTIVE PARTIES, THEIR
EMPLOYEES OR AGENTS OR OTHERWISE.
7.10 On the Effective Date, Newco shall open a special purpose account (the
"SPECIAL PURPOSE ACCOUNT") with Bank of Bermuda and Photogen shall
lodge $100,000 to the Special Purpose Account which will be held by
Newco and applied by Newco to discharge the financial obligations of
Photogen to Alliance set forth in the Alliance Agreement, subject to
the following conditions:
7.10.1 each payment shall be made by Newco to Alliance from the
Special Purpose Account upon a determination by the Management
Committee that the relevant payment is due and owing to
Alliance in accordance with the Alliance Agreement;
7.10.2 each payment shall be made by Newco to Alliance within the
payment period specified for the relevant payment in the
Alliance Agreement;
7.10.3 in the event of a dispute within the Management Committee as
to whether any payment described in this Clause 7.10 should be
made to Alliance in accordance with the Alliance Agreement,
the representatives of Elan and Photogen on the Management
Committee will use best efforts to resolve such dispute
swiftly PROVIDED THAT in the event that any such dispute is
not settled within the Management Committee within 5 days,
Elan shall have absolute discretion and full signing authority
to forthwith make the relevant payment from the Special
Purpose Account to Alliance;
<PAGE>
7.10.4 all interest which is paid by Bank of Bermuda to Newco on the
Special Purpose Account shall promptly be paid by Newco to
Photogen.
7.11 On the Effective Date, Photogen will deliver to Newco a fully executed
irrevocable Letter of Direction to its transfer agent, Harris Trust and
Savings Bank, to issue and deliver that number of shares of common
stock of Photogen in the name of Alliance if and to the extent that the
formula set forth in Section 9(b) of the Alliance Agreement (a copy of
which will be attached to the Letter of Direction) requires the
issuance of such contingent shares.
The Letter of Direction shall be delivered by Newco to Harris Trust and
Savings Bank hereunder upon a determination by the Management Committee
that Photogen is obliged to deliver the shares of common stock of
Photogen to Alliance in accordance with the formula set forth in
Section 9(b) of the Alliance Agreement.
In the event of a dispute within the Management Committee as to whether
the Letter of Direction should be delivered by Newco to Harris Trust
and Savings Bank hereunder, the representatives of Elan and Photogen on
the Management Committee will use best efforts to resolve such dispute
swiftly PROVIDED THAT in the event that any such dispute is not settled
within the Management Committee within 5 days, Elan shall have absolute
discretion to cause Newco to deliver the Letter of Direction to Harris
Trust and Savings Bank for the purposes contemplated herein.
If the Management Committee determines that the formula set forth in
Section 9(b) of the Alliance Agreement does not call for the issuance
of any contingent shares to Alliance, Newco shall promptly return the
Letter of Direction to Photogen.
8. TERM AND TERMINATION
8.1 The term of this Agreement shall commence as of the Effective Date and
shall, subject to the rights of termination outlined in this Clause 8,
expire on a Product-by-Product basis and on a country-by-country basis
on the last to occur of:
8.1.1 [****] starting from the date of the launch of the Product in
the country concerned; or
8.1.2 the date of expiration of the last to expire of the patents
included in the Elan Patents and the Elan Improvements and/or
the Photogen Patents and the Photogen Improvements
("THE TERM")
<PAGE>
8.2 If either Party commits a Relevant Event, the other Party shall have,
in addition to all other legal and equitable rights and remedies
hereunder, the right to terminate this
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SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
Agreement upon 30 days' prior written notice to the defaulting Party.
8.3 For the purpose of this Clause 8, a "RELEVANT EVENT" is committed or
suffered by a Party if:
8.3.1 it commits a material breach of its obligations under
this Agreement and fails to remedy it within 60 days of being
specifically required in writing to do so by the other Party;
provided, that if the breaching Party has proposed a course of
action to rectify the breach and is acting in good faith to
rectify same but has not cured the breach by the 60th day,
such period shall be extended by such period as is reasonably
necessary to permit the breach to be rectified;
8.3.2 a distress, execution, sequestration or other process is
levied or enforced upon or sued out against a material part of
its property which is not discharged or challenged within 30
days;
8.3.3 it is unable to pay its debts in the normal course
of business;
8.3.4 it ceases wholly or substantially to carry on its
business, otherwise than for the purpose of a reconstruction
or amalgamation, without the prior written consent of the
other Party (such consent not to be unreasonably withheld);
8.3.5 the appointment of a liquidator, receiver, administrator,
examiner, trustee or similar officer of such Party or over all
or substantially all of its assets under the law of any
applicable jurisdiction, including without limitation, the
United States of America, Bermuda or Ireland;
8.3.6 an application or petition for bankruptcy, corporate
re-organisation, composition, administration, examination,
arrangement or any other procedure similar to any of the
foregoing under the law of any applicable jurisdiction,
including without limitation, the United States of America,
Bermuda or Ireland, is filed, and is not discharged within 60
days, or a Party applies for or consents to the appointment of
a receiver, administrator, examiner or similar officer of it
or of all or a material part of its assets, rights or revenues
or the assets and/or the business of a Party are for any
reason seized, confiscated or condemned.
8.4 Upon expiration or termination of the Agreement:
8.4.1. any sums that were due from Newco to Photogen on Net
Sales in the Territory or in such particular country or
countries in the Territory (as the case may be) prior to the
expiration or termination of this Agreement as set forth
herein shall be paid in full within 60 days after the
expiration or termination of this Agreement for the Territory
or for such particular country or countries in the Territory
(as the case may be);
<PAGE>
8.4.2 any provisions that expressly survive termination or
expiration of this Agreement, including without limitation
this Clause 8, shall remain in full force and effect;
8.4.3 all representations, warranties and indemnities shall
insofar as are appropriate remain in full force and effect;
8.4.4 the rights of inspection and audit set out in Clause 6
shall continue in force for a period of one year; and
8.4.5 all rights and licenses granted pursuant to this Agreement
and to the Photogen Intellectual Property pursuant to the
JDOA (including the rights of Newco pursuant to Clause
11 of the JDOA) shall cease for the Territory or for such
particular country or countries in the Territory (as the case
may be) and shall revert to or be transferred to Photogen, and
Newco shall not thereafter use in the Territory or in such
particular country or countries in the Territory (as the case
may be) any rights covered by this Agreement;
8.4.6 subject to Clause 8.4.7 and to such license, if any, granted
by Newco to Photogen pursuant to the provisions of Clause 12
of the JDOA, all rights to Newco Intellectual Property shall
be transferred to and jointly owned by Photogen and Elan and
may be exploited by both Elan and Photogen separately
pursuant to a perpetual [****], world-wide fully paid
license granted to each of Elan and Photogen with the
right to sublicense;
8.4.7 the rights of permitted third party sub-licensees in and to
the Photogen Intellectual Property shall survive the
termination of the license and sublicense agreements
granting said intellectual property rights to Newco; and
Newco, Elan and Photogen shall in good faith agree upon
the form most advantageous to Elan and Photogen in which
the rights of Newco under any such licenses and sublicenses
are to be held (which form may include continuation of
Newco solely as the holder of such licenses or assignment
of such rights to a third party or parties, including an
assignment to both Elan and Photogen).
Any sublicense agreement between Newco and such permitted
sublicensee shall permit an assignment of rights by Newco and
shall contain appropriate confidentiality provisions.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
9 CONFIDENTIAL INFORMATION
9.1 The Parties agree that it will be necessary, from time to time, to
disclose to each other confidential and proprietary information,
including without limitation, inventions, works of authorship, trade
secrets, specifications, designs, data, know-how and other proprietary
information relating to the Field, the Products, processes, services
and business of the disclosing Party.
The foregoing shall be referred to collectively as "CONFIDENTIAL
INFORMATION".
9.2 Any Confidential Information disclosed by one Party to another Party
shall be used by the receiving Party exclusively for the purposes of
fulfilling the receiving Party's obligations under this Agreement and
the JDOA and for no other purpose.
9.3 Each Party shall disclose Confidential Information of the other Party
only to those employees, representatives and agents requiring knowledge
thereof in connection with fulfilling the Party's obligations under
this Agreement. Each Party further agrees to inform all such employees,
representatives and agents of the terms and provisions of this
Agreement and their duties hereunder and to obtain their agreement
hereto as a condition of receiving Confidential Information. Each Party
shall exercise the same standard of care as it would itself exercise in
relation to its own confidential information (but in no event less than
a reasonable standard of care) to protect and preserve the proprietary
and confidential nature of the Confidential Information disclosed to it
by the other Party. Each Party shall, upon request of the other Party,
return all documents and any copies thereof containing Confidential
Information belonging to, or disclosed by, such other Party.
9.4 Any breach of this Clause 9 by any person informed by one of the
Parties is considered a breach by the Party itself.
9.5 Confidential Information shall not be deemed to include:
9.5.1 information that is in the public domain;
9.5.2 information which is made public through no breach of this
Agreement;
9.5.3 information which is independently developed by a Party as
evidenced by such Party's records;
9.5.4 information that becomes available to a Party on a
non-confidential basis, whether directly or indirectly, from a
source other than a Party, which source did not acquire this
information on a confidential basis; or
9.5.5 information which the receiving Party is required to disclose
pursuant to:
<PAGE>
(i) a valid order of a court or other governmental
body; or
(ii) any other requirement of law;
provided that if the receiving Party becomes legally required
to disclose any Confidential Information, the receiving Party
shall give the disclosing Party prompt notice of such fact so
that the disclosing Party may obtain a protective order or
other appropriate remedy concerning any such disclosure. The
receiving Party shall fully co-operate with the disclosing
Party in connection with the disclosing Party's efforts to
obtain any such order or other remedy. If any such order or
other remedy does not fully preclude disclosure, the receiving
Party shall make such disclosure only to the extent that such
disclosure is legally required.
9.6 The provisions relating to confidentiality in this Clause 9 shall
remain in effect during the term of this Agreement, and for a period of
[****] following the expiration or earlier termination of this
Agreement.
9.7 The Parties agree that the obligations of this Clause 9 are necessary
and reasonable in order to protect the Parties' respective businesses,
and each Party agrees that monetary damages would be inadequate to
compensate a Party for any breach by the other Party of its covenants
and agreements set forth herein.
Accordingly, the Parties agree that any such violation or threatened
violation shall cause irreparable injury to a Party and that, in
addition to any other remedies that may be available, in law and equity
or otherwise, each Party shall be entitled to obtain injunctive relief
against the threatened breach of the provisions of this Clause 9, or a
continuation of any such breach by the other Party, specific
performance and other equitable relief to redress such breach together
with its damages and reasonable counsel fees and expenses to enforce
its rights hereunder, without the necessity of proving actual or
express damages.
10 GOVERNING LAW AND ARBITRATION
10.1 This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
10.2 The Parties will attempt in good faith to resolve any dispute
arising out of or relating to this Agreement promptly by negotiation
between executives of the Parties. In the event that such
negotiations do not result in a mutually acceptable resolution, the
Parties agree to consider other dispute resolution mechanisms
including mediation.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
In the event that the Parties fail to agree on a mutually acceptable
dispute resolution mechanism within 180 days of written notice of a
dispute by one Party to the other Party, any such dispute shall be
finally settled by arbitration pursuant to Clause 10.3.
10.3 Save any dispute under Clause 6.2 which will be resolved in accordance
with the provisions of Clause 6.2, any dispute under this Agreement
which is not settled by mutual consent under Clause 10.2 shall be
finally settled by binding arbitration, conducted in accordance with
the Commercial Arbitration Rules of the American Arbitration
Association by one arbitrator appointed in accordance with said rules.
Such arbitrator shall be reasonably satisfactory to each of the
Parties; provided, that if the Parties are unable to agree upon the
identity of such arbitrator within 15 days of demand by either Party,
then either Party shall have the right to petition a presiding justice
of the Supreme Court of New York, New York County, to appoint an
arbitrator.
The arbitration shall be held in New York, New York.
The arbitrator shall determine what discovery will be permitted,
consistent with the goal of limiting the cost and time which the
Parties must expend for discovery; provided the arbitrator shall permit
such discovery as he deems necessary to permit an equitable resolution
of the dispute.
Any written evidence originally in a language other than English shall
be submitted in English translation accompanied by the original or a
true copy thereof.
The costs of the arbitration, including administrative and arbitrator's
fee, shall be shared equally by the Parties and each Party shall bear
its own costs and attorneys' and witness' fees incurred in connection
with the arbitration.
In rendering judgement, the arbitrator shall be instructed by the
Parties that he shall be permitted to select solely from between the
proposals for resolution of the relevant issue presented by each Party,
and not any other proposal.
A disputed performance or suspended performances pending the resolution
of the arbitration must be completed within 30 days following the final
decision of the arbitrator or such other reasonable period as the
arbitrator determines in a written order.
The Parties will co-operate and use reasonable efforts to ensure that
any arbitration any arbitration hereunder shall be completed swiftly
and in any event within one year from the filing of notice of a request
for such arbitration.
The arbitration proceedings and the decision shall not be made public
without the joint consent of the Parties and each Party shall maintain
the confidentiality of such proceedings and decision unless otherwise
permitted by the other Party.
<PAGE>
The Parties agree that the decision shall be the sole, exclusive and
binding remedy between them regarding any and all disputes,
controversies, claims and counterclaims presented to the arbitrator.
Application may be made to any court having jurisdiction over the Party
(or its assets) against whom the decision is rendered for a judicial
recognition of the decision and an order of enforcement.
11 IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE
Neither Photogen nor Newco shall be liable for delay in the performance
of any of its obligations hereunder if such delay results from causes
beyond its reasonable control, including, without limitation, acts of
God, fires, strikes, acts of war, intervention of a government
authority, but any such delay or failure shall be remedied by such
Party as soon as practicable.
12 ASSIGNMENT
This Agreement may not be assigned by either Party without the prior
written consent of the other, save that either Party may assign this
Agreement to its Affiliates or subsidiaries without such prior written
consent provided that such assignment does not have any adverse tax
consequences on the other Party and that the assignee shall be
obligated to the other Party for all of the assignor Party's
obligations hereunder which assignee shall be capable of fulfilling
such obligations.
13 NOTICES
13.1 Any notice to be given under this Agreement shall be sent in writing in
English by registered airmail or telefaxed to the following addresses:
If to Newco at:
Clarendon House,
2 Church Street,
Hamilton,
Bermuda,
Attention: Secretary
Telephone: 441 292 9169
Fax: 441 292 2224
with a copy to Elan at:
Elan Corporation, plc
Lincoln House,
<PAGE>
Lincoln Place,
Dublin 2,
Ireland.
Attention: Vice President, General Counsel,
Elan Pharmaceutical Technologies,
a division of Elan Corporation, plc
Telephone: + 353 1 709 4000
Telefax: + 353 1 709 4124
If to Photogen at:
7327 Oak Ridge,
Knoxville,
TN. 3793
USA.
Attn: Chief Executive Officer
Telephone 001 423 769 4011
Fax: 001 423 769 4013
with a copy to:
Grippo & Elden
Suite 3600
227 West Monroe
Chicago
Illinois 60606
USA
Attention: Theodore W Grippo
Telephone 001 312 704 7720
Fax: 001 312 558 1195
If to Elan at:
Elan Corporation, plc
Lincoln House,
Lincoln Place,
Dublin 2,
Ireland.
Attention: Vice President, General Counsel,
Elan Pharmaceutical Technologies,
a division of Elan Corporation, plc
Telephone: + 353 1 709 4000
<PAGE>
Telefax: + 353 1 709 4124
or to such other address(es) and telefax numbers as may from time to
time be notified by either Party to the other hereunder.
13.2 Any notice sent by mail shall be deemed to have been delivered within
seven 7 working days after dispatch and any notice sent by telex or
telefax shall be deemed to have been delivered within twenty 24 hours
of the time of the dispatch. Notice of change of address shall be
effective upon receipt.
14 MISCELLANEOUS
14.1 WAIVER:
No waiver of any right under this Agreement shall be deemed effective
unless contained in a written document signed by the Party charged with
such waiver, and no waiver of any breach or failure to perform shall be
deemed to be a waiver of any other breach or failure to perform or of
any other right arising under this Agreement.
14.2 SEVERABILITY:
If any provision in this Agreement is agreed by the Parties to be, or
is deemed to be, or becomes invalid, illegal, void or unenforceable
under any law that is applicable hereto:
14.2.1 such provision will be deemed amended to conform to applicable
laws so as to be valid and enforceable; or
14.2.2 if it cannot be so amended without materially altering the
intention of the Parties, it will be deleted, with effect from
the date of such agreement or such earlier date as the Parties
may agree, and the validity, legality and enforceability of
the remaining provisions of this Agreement shall not be
impaired or affected in any way.
14.3 FURTHER ASSURANCES:
At the request of any of the Parties, the other Party or Parties shall
(and shall use reasonable efforts to procure that any other necessary
parties shall) execute and perform all such documents, acts and things
as may reasonably be required subsequent to the signing of this
Agreement for assuring to or vesting in the requesting Party the full
benefit of the terms hereof.
14.4 SUCCESSORS:
<PAGE>
This Agreement shall be binding upon and enure to the benefit of the
Parties hereto, their successors and permitted assigns.
14.5 NO EFFECT ON OTHER AGREEMENTS/CONFLICT:
No provision of this Agreement shall be construed so as to negate,
modify or affect in any way the provisions of any other agreement
between the Parties unless specifically referred to, and solely to the
extent provided herein.
In the event of a conflict between the provisions of this Agreement and
the provisions of the JDOA, the terms of the JDOA shall prevail unless
this Agreement specifically provides otherwise.
14.6 AMENDMENTS:
No amendment, modification or addition hereto shall be effective or
binding on any Party unless set forth in writing after the Effective
Date and executed by a duly authorised representative of each Party.
14.7 COUNTERPARTS:
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of
which when taken together shall constitute this Agreement.
14.8 GOOD FAITH:
Each Party undertakes to do all things reasonably within its power
which are necessary or desirable to give effect to the spirit and
intent of this Agreement.
14.9 NO RELIANCE:
Each Party hereby acknowledges that in entering into this Agreement it
has not relied on any representation or warranty save as expressly set
out herein or in any document referred to herein.
14.10 RELATIONSHIP OF THE PARTIES:
Nothing contained in this Agreement is intended or is to be construed
to constitute Photogen and Newco as partners, or Photogen as an
employee of Newco, or Newco as an employee of Photogen.
Neither Party hereto shall have any express or implied right or
authority to assume or create any obligations on behalf of or in the
name of the other Party or to bind the other
<PAGE>
Party to any contract, agreement or undertaking with any third party.
SCHEDULE I
----------
PHOTOGEN PATAENTS AND PHOTOGEN KNOW-HOW
PHOTOGEN PATENTS
----------------
[****]
PHOTOGEN KNOW-HOW
-----------------
[****]
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
SCHEDULE 2
GENNYC INTELLECTUAL PROPERTY
[****]
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
IN WITNESS WHEREOF the Parties hereto have executed this Agreement.
SIGNED BY /s/ John Smolik
for and on behalf of
PHOTOGEN TECHNOLOGIES, INC
SIGNED BY /s/ John Smolik
For and on behalf of
PHOTOGEN NEWCO LIMITED
AGREED TO AND ACCEPTED BY /s/ Kevin Insley
ELAN PHARMA INTERNATIONAL LIMITED
<PAGE>
Exhibit 10.14
CONFIDENTIAL TREATMENT HAS BEEN SOUGHT FOR
PORTIONS OF THIS EXHIBIT PURSUANT TO RULE 24B-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
EXECUTION COPY
LICENSE AGREEMENT
BETWEEN
ELAN PHARMA INTERNATIONAL LIMITED
AND
PHOTOGEN NEWCO LTD.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS
2. ELAN LICENSE TO NEWCO
3. INTELLECTUAL PROPERTY
4. [****]/AFTER ACQUIRED TECHNOLOGY
5. FINANCIAL PROVISIONS
6. RIGHT OF INSPECTION AND AUDIT
7. REPRESENTATIONS AND WARRANTIES
8. TERM AND TERMINATION
9. CONFIDENTIAL INFORMATION
10. GOVERNING LAW AND ARBITRATION
11. IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE
12. ASSIGNMENT
13. NOTICES
14. MISCELLANEOUS
</TABLE>
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
THIS AGREEMENT made this 20th October 1999
BETWEEN:
(1) ELAN PHARMA INTERNATIONAL LIMITED incorporated under the laws of
Ireland, and having its registered office at WIL House, Shannon
Business Park, Shannon, County Clare, Ireland ("EPIL");
(2) PHOTOGEN NEWCO, LTD., an exempted private limited liability
company incorporated under the laws of Bermuda and having its
registered office at Clarendon House, 2 Church Street, Hamilton,
Bermuda ("NEWCO"); and
(3) PHOTOGEN TECHNOLOGIES, INC., a corporation duly incorporated and
validly existing under the laws of Nevada and having its principal
place of business at 7327 Oak Ridge, Knoxville, TN. 37931, United
States of America.
RECITALS:
A. Simultaneously herewith, Photogen, Elan, EIS, and Newco are
entering into the JDOA for the purpose of recording the terms
and conditions of the joint venture and of regulating their
relationship with each other and certain aspects of the affairs
of, and their dealings with Newco.
B. Newco desires to enter into this Agreement with Elan so as to
permit Newco to utilize the Elan Intellectual Property in
making, having made, importing, using, offering for sale and
selling the Products in the Field in the Territory.
C. Simultaneously herewith Newco and Photogen are entering into
the Photogen License Agreement relating to Newco's use of the
Photogen Intellectual Property.
1 DEFINITIONS
1.1 In this Agreement unless the context otherwise requires:
"AFFILIATE" shall mean any corporation or entity controlling,
controlled or under the common control of Elan or Photogen, as the case
may be. For the purpose of this definition, "control" shall mean direct
or indirect ownership of fifty percent (50%) or more of the stock or
shares entitled to vote for the election of directors. Newco is not an
Affiliate of Photogen, Elan or EIS.
"AGREEMENT" shall mean this license agreement (which expression shall
be deemed to
<PAGE>
include the Recitals and Schedules hereto).
"BUSINESS PLAN" shall have the meaning, as such term is defined in
the JDOA.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
"CHANGE OF CONTROL OF PHOTOGEN/NEWCO" shall mean circumstances where:
(i) a Technological Competitor of Elan shall, directly or
indirectly, acquire 10% or more of the voting stock of Photogen
or Newco, or otherwise control or influence in any material
respect their management or business or otherwise have entered
into any joint venture, collaborative, license or other
arrangement with Photogen or Newco, as the case may be, to such
an extent that such a Technological Competitor of Elan is
materially engaged or involved with the business or development
of Photogen or Newco, as the case may be; or
(ii) any person other than a Technological Competitor of Elan shall,
after the Effective Date, directly or indirectly, acquire 20% or
more of the then voting stock of Photogen or Newco, or otherwise
merge, consolidate or enter into any similar transaction (or
binding agreement in respect thereof) with Photogen or Newco.
"COMPOUNDS" shall mean the [****].
"CONFIDENTIAL INFORMATION" shall have the meaning, as such term is
defined in Clause 9.
"CONTROL" shall mean the ability to grant a license or sublicense as
contemplated herein without violating the terms of any agreement with
any third party.
"DEFINITIVE DOCUMENTS" shall mean the definitive agreements relating to
the transaction between the Parties and Photogen including finance,
stock purchase, research and license agreements.
"ELAN" shall mean EPIL (a wholly owned subsidiary of Elan Corporation,
Plc., which owns the Nanocrystal-TM- technology formerly Controlled
by NanoSystems LLC, formerly a subsidiary of the Eastman Kodak Company)
and Affiliates and subsidiaries of Elan Corporation, Plc. within the
division of Elan Corporation, Plc. carrying on business as Elan
Pharmaceutical Technologies but shall not include Affiliates and
subsidiaries (present or future) of Elan Corporation Plc within the
division of Elan Corporation, Plc carrying on business as Elan
Pharmaceuticals which incorporates, inter alia, Targon Corporation,
Athena Neurosciences, Inc., Elan Pharmaceuticals, Inc., Elan
Diagnostics, Carnrick Laboratories, and Elan Europe Limited.
"EIS" shall mean Elan International Services, Limited, a exempted
private limited liability company incorporated under the laws of
Bermuda and having its registered office at Clarendon House, 2 Church
Street, Hamilton, Bermuda and a subsidiary of Elan Corporation, Plc..
"EFFECTIVE DATE" shall mean the date of this Agreement.
<PAGE>
"ELAN INTELLECTUAL PROPERTY" shall mean the Elan Know-How, the Elan
Patents and the Elan Improvements.
For the avoidance of doubt, Elan Intellectual Property shall exclude
(i) Elan's patent rights and know-how relating to drug delivery devices
including parenteral administration of a diagnostic imaging agent via a
drug delivery device such as Medipad
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
and (ii) inventions, patents and know-how owned, licensed or Controlled
by Axogen Limited and Neuralab Limited, and by all Affiliates and
subsidiaries (present or future) of Elan Corporation, Plc. within the
division of Elan Corporation, Plc carrying on business as Elan
Pharmaceuticals which incorporates, inter alia, Targon Corporation,
Athena Neurosciences, Inc., Elan Pharmaceuticals, Inc., Elan
Diagnostics, Carnrick Laboratories, and Elan Europe Limited.
"ELAN KNOW-HOW" shall mean any and all rights owned, or Controlled by
Elan to any Know-How relating to nanoparticulate medical diagnostic
imaging agents including, without limitation, [****]
The primary examples of the Elan Know-How existing as of the Effective
Date are set forth on Schedule 1 , which listing is not necessarily
exhaustive.
"ELAN LICENSE" shall have the meaning set forth in Clause 2.1.
"ELAN PATENTS" shall mean any and all Patent Rights owned or Controlled
by Elan, now existing, currently pending or hereafter filed by Elan
relating to nanoparticulate medical diagnostic imaging agents
including, without limitation, [****]. Representative Elan Patents
existing as of the Effective Date are set forth in Schedule 1.
"EPIL PATENTS" shall mean the Elan Patents owned by EPIL.
"ELAN IMPROVEMENTS" shall mean improvements relating to the Elan
Patents and/or the Elan Know-How , developed (i) by Elan not pursuant
to the Project, (ii) by Elan pursuant to the Project except for that
portion of improvements relating solely and specifically to Product(s)
(iii) by Newco or Photogen or by a third party (under contract with
Newco) pursuant to the Project except for that portion of improvements
relating solely and specifically to Product(s), and/or (iv) jointly by
any combination of Elan, Photogen or Newco pursuant to the Project
except for that portion of improvements relating solely and
specifically to Product(s), except as limited by agreements with
unaffiliated third parties.
Subject to third party agreements with unaffiliated third parties, Elan
Improvements shall constitute part of Elan Intellectual Property and be
included in the license of the Elan Intellectual Property pursuant to
Clause 2.1 solely for the purposes set forth therein. If the inclusion
of a Elan Improvement in the license of Elan Intellectual Property is
restricted or limited by a third party agreement, Elan shall use
reasonable commercial efforts to minimize any such restriction or
limitation.
"ELAN TRADEMARK(S)" shall mean one or more trademarks, trade names, or
service marks that are owned or licensed by or on behalf of Elan which
Elan may nominate and approve in writing from time to time and Newco
may accept for use in connection with the sale or promotion of the
Products by Newco.
<PAGE>
"FIELD" shall mean the research, development, manufacture and
commercialization of nanoparticulate x-ray, CT, and/or MRI diagnostic
imaging agents using radio-opaque molecules containing Iodine that
passively target to lymphnodes involved in a disease state following
parenteral administration to a mammal to locate, diagnose and/or treat
cancer and/or other diseases.
For the avoidance of doubt, the Field does not include:
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
(xv) active targeting agents, including but not limited to
monoclonal antibodies, short-chain antibodies or any other active
targeting agents including protein, peptide or peptidomimetic
targeting agents; or
(ii) ultrasound diagnostic imaging agents.
"KNOW-HOW" shall mean information and know-how, whether patentable or
not, including but not limited to any and all discoveries, inventions,
substances, data, techniques, processes, systems, formulations, designs
and commercial information relating to design, development,
manufacture, assembly, use or sale.
"LICENSED TECHNOLOGIES" shall mean the Elan Intellectual Property, the
Photogen Intellectual Property and the GenNyc Intellectual Property.
"LICENSES" shall mean the Elan License, the Photogen License and the
General Nycomed Sublicense.
"JDOA" shall mean that certain joint development and operating
agreement, of even date herewith, by and between Elan, Photogen, EIS
and Newco.
"MANAGEMENT COMMITTEE" shall have the meaning, as such term is defined
in the JDOA.
"NEWCO INTELLECTUAL PROPERTY" shall mean all Patent Rights and Know-How
and other intellectual property arising pursuant to the Project by any
person, that does not constitute Elan Intellectual Property or Photogen
Intellectual Property and any technology licensed or acquired by Newco
from a third party.
For avoidance of doubt, Newco Intellectual Property includes that
portion of all improvements developed pursuant to the Project relating
solely and specifically to Product(s).
"NEWCO PATENTS" shall mean any and all Patent Rights now existing,
currently pending or hereafter filed or obtained relating to the Newco
Intellectual Property.
"PARTY" shall mean Elan or Newco, as the case may be, and "PARTIES"
shall mean Elan and Newco.
"PATENT RIGHTS" shall mean any and all patents and patent applications,
including all divisonals, continuations, continuations-in-part,
extensions, patents-of-additions, re-examinations, re-issues,
supplementary protection certificates and foreign counterparts of such
patents and patent applications and any patents issuing thereon and
extensions thereon.
"PHOTOGEN" shall mean Photogen Technologies, Inc. and its
Affiliates, excluding Newco.
<PAGE>
"PHOTOGEN INTELLECTUAL PROPERTY" shall mean the Photogen Know-How, the
Photogen Patents and the Photogen Improvements, as such terms are
defined in the Photogen License Agreement.
"PHOTOGEN LICENSE" shall mean have the meaning set forth in Clause 2.1
of the Photogen License Agreement.
"PHOTOGEN LICENSE AGREEMENT" shall mean that certain license agreement,
of even date herewith, entered into between Photogen and Newco.
"PHOTOGEN PATENTS" shall have the meaning as such term is defined in
the Photogen License Agreement.
"PHOTOGEN IMPROVEMENTS" shall have the meaning as such term is defined
in the Photogen License Agreement.
"PRODUCT" shall mean a formulation containing one or more x-ray, CT,
and/or MRI Compounds in nanoparticulate form developed by or on behalf
of Newco pursuant to the Project.
"PROJECT" shall mean all activities as undertaken by Elan, Photogen and
Newco in order to develop the Products.
"R&D COMMITTEE" shall have the meaning, as such term is defined in the
JDOA.
"R&D PLAN" shall have the meaning, as such term is defined in the JDOA.
"R&D PROGRAM" shall mean any research and development program commenced
by Newco pursuant to the Project.
"[****]"
"TECHNOLOGICAL COMPETITOR OF ELAN" shall mean a company, corporation or
person listed in Schedule 2 and successors thereof or any additional
broad-based technological competitor of Elan added to such Schedule
from time to time upon mutual agreement of the Parties.
"TERM" shall have the meaning set forth in Clause 8.
"TERRITORY" shall mean all the countries of the world.
"UNITED STATES DOLLAR" and "US$" shall mean the lawful currency for the
time being of the United States of America.
<PAGE>
1.2 In this Agreement:
1.2.1 The singular includes the plural and vice versa, and the
masculine includes the feminine and vice versa and the neuter
includes the masculine and the feminine.
1.2.2 Any reference to a Clause or Schedule shall, unless
otherwise specifically provided, be to a Clause or Schedule
of this Agreement.
1.2.3 The headings of this Agreement are for ease of reference
only and shall not affect its construction or interpretation.
2. ELAN LICENSE TO NEWCO
2.1. Elan hereby grants to Newco for the Term an [****] license
(including the right to grant sublicenses under Clause 2.5) (the
"ELAN LICENSE") of the Elan Intellectual Property solely in the
Field to make, have made, import, use, offer for sale and sell
the Products in the Field in the Territory, subject to any
contractual obligations that Elan has as of the Effective Date,
including but not limited to the [****].
[*****]
[*****]
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<PAGE>
2.2 To the extent royalty or other compensation obligations that
are payable to third parties with respect to the Elan
Intellectual Property would be triggered after the Effective
Date under any third party agreement entered into by Elan after
the Effective Date (the "ELAN POST-EFFECTIVE DATE AGREEMENTS"),
by a proposed use of such Elan Intellectual Property in
connection with the Project, Elan will inform Newco of such
royalty or compensation obligations. [****]
[****]
2.3 Photogen shall be a third party beneficiary under this Agreement
and shall have the right to cause Newco to enforce Newco's
rights under this Agreement against Elan.
2.4 Notwithstanding anything contained in this Agreement to the
contrary, Elan shall have the right outside the Field and
subject to the non-competition provisions of Clause 4 to exploit
and grant licenses and sublicenses of the Elan Intellectual
Property.
For the avoidance of doubt, Newco shall have no right to use the Elan
Intellectual Property outside the Field.
2.5 Newco shall not be permitted to assign or sublicense any of its
rights under the Elan Intellectual Property without the prior
written consents of Elan and Photogen, which consents shall not
be unreasonably withheld or delayed PROVIDED THAT Elan shall in
all cases, in its sole discretion, be entitled to withhold its
consent in the case of a proposed sublicense to any
Technological Competitor to Elan.
2.6 Any agreement between Newco and any permitted third party for
the development or exploitation of the Elan Intellectual
Property shall require such third party to maintain the
confidentiality of all information concerning the Elan
Intellectual Property.
Insofar as the obligations owed by Newco to Elan are concerned, Newco
shall remain responsible for all acts and omissions of any permitted
sub-licensee, including Photogen, as if they were acts and omissions
by Newco.
3 INTELLECTUAL PROPERTY
3.1 OWNERSHIP OF INTELLECTUAL PROPERTY:
3.1.1 Newco shall own the Newco Intellectual Property.
3.1.2 Elan shall own the Elan Intellectual Property.
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<PAGE>
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
3.2 TRADEMARKS:
3.2.1 Elan hereby grants to Newco for the Term a [****]
license in the Territory to use and display the Elan
Trademarks to promote, offer for sale and sell the Products
in the Field in the Territory and the following provisions
shall apply as regards the use of the Elan Trademarks by
Newco hereunder:
(1) Newco shall ensure that each reference to and use
of an Elan Trademark by Newco is in a manner approved
by Elan and accompanied by an acknowledgement, in a
form approved by Elan, that the same is a trademark
(or registered trademark) of Elan.
From time to time, upon the reasonable request of Elan,
Newco shall submit samples of the Product to Elan or
its duly appointed agent to ensure compliance with
quality standards and specifications. Elan, or its
duly appointed agent, shall have the right to inspect
the premises of Newco where the Product is manufactured,
held or stored, and Newco shall permit such inspection,
upon advance notice at any reasonable time, of the
methods and procedures used in the manufacture, storage
and sale of the Product. Newco shall not sell or
otherwise dispose of any Product under the Elan
Trademarks that fails to comply with the quality
standards and specifications referred to in this
Clause 3.2, as determined by Elan.
(2) Newco shall not use an Elan Trademark in any way
which might materially prejudice its distinctiveness
or validity or the goodwill of Elan therein.
(3) The parties recognize that the Elan Trademarks
have considerable goodwill associated therewith.
Newco shall not use in relation to the Products any
trademarks other than the Elan Trademarks (except the
Photogen Trademarks (as defined in the Photogen
License Agreement) licensed to Newco under the
Photogen License Agreement) without obtaining the
prior consent in writing of Elan, which consent may
not be unreasonably withheld. However, such use must
not conflict with the use and display of the Elan
Trademark and such use and display must be approved
by Elan.
(4) Newco shall not use in the Territory any
trademarks or trade names so resembling the Elan
Trademark as to be likely to cause confusion or
deception.
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PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.
<PAGE>
(5) Newco shall promptly notify Elan in writing of any
alleged infringement or unauthorised use of which it
becomes aware by a third party of the Elan Trademarks
and provide Elan with any applicable evidence of
infringement or unauthorised use.
(6) Newco shall favourably consider promoting and using the
Elan Trademarks in each country of the Territory and
provide proof of such use upon request by Elan.
(7) Newco shall not be permitted to assign or sublicense any
of its rights under the Elan Trademarks without the prior
written consent of Elan, which consent shall not be
unreasonably withheld or delayed.
3.2.2 Elan shall, [****], file and prosecute applications to
register and maintain registrations of the Elan Trademarks
in the Territory. Newco shall reasonably cooperate with
Elan in such efforts. In the event Elan decides not to file
or prosecute such Elan Trademark, Newco may request Elan to
do the same at Newco's expense, and Elan shall file or
prosecute such Elan Trademark at Newco's request and
expense unless Elan believes such action is without merit.
3.2.3 Elan will be entitled to conduct all enforcement
proceedings relating to the Elan Trademarks and shall at
[****] discretion decide what action, if any, to take in
respect to any enforcement proceedings of the Elan
Trademarks or any other claim or counter-claim brought in
respect to the use or registration of the Elan Trademarks.
Any such proceedings shall be conducted at Elan's [****]
and for its own benefit. Newco and Photogen shall
reasonably cooperate with Elan in such efforts. In the
event Elan decides not to engage in enforcement proceedings
of the Elan Trademarks Newco may request Elan to do the
same at Newco's expense unless Elan believes the basis for
such enforcement proceedings is without merit. In such a
case, Elan shall have the sole discretion not to engage in
any such enforcement proceedings.
3.2.4 Newco shall promptly notify Elan in writing in the event
that any Elan Trademark has been challenged by a third
party in a judicial or administrative proceeding in a
country in the Territory as infringing on the rights of a
third party and Elan shall have the first right to decide
whether or not to defend such allegations, or to adopt an
alternative mark, or allow Newco to adopt an alternative
mark. If Elan decides not defend the Elan Trademark, then
Newco may request Elan to defend the Elan Trademark, at
Newco's expense, unless such requested defense is believed
by Elan to be unsubstantiated and without merit. In such a
case, Elan may elect not initiate defence proceedings.
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<PAGE>
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
3.2.5 Save where Newco adopts its own mark under Clause 3.2.4,
Newco will have no ownership rights in respect of the Elan
Trademarks or of the goodwill associated therewith, and
Newco hereby acknowledges that, except as expressly
provided in this Agreement, it shall not acquire any rights
in respect thereof and that all such rights and goodwill
are, and will remain, vested in Elan.
3.2.6 Nothing in this Agreement shall be construed as a warranty
on the part of Elan regarding the Elan Trademarks,
including without limitation, that use of the Elan
Trademarks in the Territory will not infringe the rights of
any third parties. Accordingly, Newco acknowledges and
agrees that Elan makes no such warranty.
3.2.7 Elan assumes no liability to Newco or to any third parties
with respect to the quality, performance or characteristics
of any of the goods manufactured or sold by Newco under the
Elan Trademarks pursuant to this Agreement.
4 [****]/AFTER ACQUIRED TECHNOLOGY
4.1 [****]
[****]
[****]
4.2 If, after the Effective Date, Elan acquires know-how or patent
rights relating to the Field, or acquires or merges with a third party
entity that has know-how or patent rights relating to the Field, Elan
shall offer to license such know-how and patent rights to Newco
(subject to existing contractual obligations), on [****] terms on an
arm's length basis for a [****] period under the prevailing
circumstances.
If Newco determines that Newco should not acquire such license, Elan
shall be free to fully exploit such know-how and patent rights with the
Elan Intellectual Property then licensed to Newco, whether inside or
outside the Field, and to grant to third parties licenses and
sublicenses with respect thereto.
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<PAGE>
5 FINANCIAL PROVISIONS
5.1 LICENSE FEE:
In consideration of the license by EPIL to Newco of the EPIL Patents
under Clause 2, Newco shall pay to EPIL a non-refundable license fee of
$15 million in cash (the "LICENSE FEE"), the receipt of which is hereby
acknowledged by EPIL.
The License Fee shall not be subject to future performance
obligations of Elan to Newco or Photogen and shall not be
applicable against future services provided by Elan to Newco
or Photogen.
5.2 MILESTONE PAYMENTS AND ROYALTIES:
Prior to the commercialization of the Products, the Management
Committee shall consider and if appropriate, determine reasonable
royalties and milestone payments with respect to the commercialization
of the Products by Newco that shall be payable by Newco to Elan and
Photogen, and shared by Elan and Photogen [****] with Elan's and
Photogen's [****] in Newco.
At such time, the Management Committee will agree to an appropriate
definition of "Net Sales" as such term is used in this Agreement.
5.3 Payment of any royalties pursuant to Clause 5.2 shall be made
quarterly in arrears during each Financial Year within 30 days after
the expiry of the calendar quarter. The method of payment shall be by
wire transfer to an account specified by Elan. Each payment made to
Elan shall be accompanied by a true accounting of all Products sold by
Newco's permitted sublicensees, if any, during such quarter.
Such accounting shall show, on a country-by-country and
Product-by-Product basis, Net Sales (and the calculation thereof) and
each calculation of royalties with respect thereto, including the
calculation of all adjustments and currency conversions.
5.4 Newco shall maintain and keep clear, detailed, complete, accurate
and separate records for a period of [****]:
5.4.1 to enable any royalties on Net Sales that shall have accrued
hereunder to be determined; and
5.4.2 to enable any deductions made in the Net Sales calculation to
be determined.
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<PAGE>
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
5.5 All payments due hereunder shall be made in United States Dollars.
Payments due on Net Sales of any Product for each calendar quarter made
in a currency other than United States Dollars shall first be
calculated in the foreign currency and then converted to United States
Dollars on the basis of the exchange rate in effect on the last working
day for such quarter for the purchase of United States Dollars with
such foreign currency quoted in the Wall Street Journal (or comparable
publication if not quoted in the Wall Street Journal) with respect to
the currency of the country of origin of such payment, determined by
averaging the rates so quoted on each business day of such quarter.
5.6 If, at any time, legal restrictions in the Territory prevent the
prompt payment when due of royalties or any portion thereof, the
Parties shall meet to discuss suitable and reasonable alternative
methods of paying Elan the amount of such royalties. In the event that
Newco is prevented from making any payment under this Agreement by
virtue of the statutes, laws, codes or government regulations of the
country from which the payment is to be made, then such payments may be
paid by depositing them in the currency in which they accrue to Elan's
account in a bank acceptable to Elan in the country the currency of
which is involved or as otherwise agreed by the Parties.
5.7 Elan and Newco agree to co-operate in all respects necessary to
take advantage of any double taxation agreements or similar agreements
as may, from time to time, be available.
5.8 Any taxes payable by Elan on any payment made to Elan pursuant to
this Agreement shall be for the account of Elan. If so required by
applicable law, any payment made pursuant to this Agreement shall be
made by Newco after deduction of the appropriate withholding tax, in
which event the Parties shall co-operate to obtain the appropriate tax
clearance as soon as is practicable. On receipt of such clearance,
Newco shall forthwith arrange payment to Elan of the amount so
withheld.
6 RIGHT OF INSPECTION AND AUDIT
6.1 [****] during each Financial Year, or more often not to exceed
quarterly as reasonably requested by Elan, Newco shall permit Elan or
its duly authorised representatives, upon reasonable notice and at any
reasonable time during normal business hours, to have access to inspect
and audit the accounts and records of Newco and any other book, record,
voucher, receipt or invoice relating to the calculation of the royalty
payments on Net Sales submitted to Elan.
Any such inspection of Newco's records shall be at the expense of Elan,
except that if any such inspection reveals a deficiency in the amount
of the royalty actually paid to Elan
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<PAGE>
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TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
hereunder in any Financial Year quarter of [****]% or more of
the amount of any royalty actually due to Elan hereunder, then
the expense of such inspection shall be borne [****] by Newco.
Any amount of deficiency shall be paid promptly to Elan by
Newco.
If such inspection reveals a surplus in the amount of royalties
actually paid to Elan by Newco, Elan shall reimburse Newco the surplus
within [****] days after determination.
6.2 In the event of any unresolved dispute regarding any alleged
deficiency or overpayment of royalty payments hereunder, the matter
will be referred to an independent firm of chartered or public
accountants chosen by agreement of Photogen and Elan for a resolution
of such dispute. Any decision by the said firm of chartered accountants
shall be binding on the Parties.
7 REPRESENTATIONS AND WARRANTIES
7.1 Elan represents and warrants to Newco and Photogen, as of the date
of the letter agreement and will so represent and warrant as of the
Effective Date, as set forth below:
7.1.1 Elan has the right to grant the Elan License;
7.1.2 there are no agreements between Elan and any third parties
that conflict with the Elan License.
7.2 In addition to any other indemnities provided for herein, Elan
shall indemnify and hold harmless Newco and its Affiliates and their
respective employees, agents, officers and directors from and against
any claims, losses, liabilities or damages (including reasonable
attorney's fees and expenses) incurred or sustained by Newco arising
out of or in connection with any:
7.2.1 breach of any representation, covenant, warranty or obligation
by Elan hereunder; or
7.2.2 act or omission on the part of Elan or any of its respective
employees, agents, officers and directors in the performance
of this Agreement.
7.3 In addition to any other indemnities provided for herein, Newco
shall indemnify and hold harmless Elan and its Affiliates and their
respective employees, agents, officers and directors from and against
any claims, losses, liabilities or damages (including reasonable
attorney's fees and expenses) incurred or sustained by Elan arising out
of or in connection with any:
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<PAGE>
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
7.3.1 breach of any representation, covenant, warranty or obligation
by Newco hereunder; or
7.3.2 act or omission on the part of Newco or any of its agents or
employees in the performance of this Agreement.
7.4 The Party seeking an indemnity shall:
7.4.1 fully and promptly notify the other Party of any claim or
proceeding, or threatened claim or proceeding;
7.4.2 permit the indemnifying Party to take full care and control of
such claim or proceeding;
7.4.3 co-operate in the investigation and defence of such claim or
proceeding;
7.4.4 not compromise or otherwise settle any such claim or
proceeding without the prior written consent of the other
Party, which consent shall not be unreasonably withheld
conditioned or delayed; and
7.4.5 take all reasonable steps to mitigate any loss or liability in
respect of any such claim or proceeding.
7.5 EXCEPT AS SET FORTH IN THIS CLAUSE 7, ELAN IS GRANTING THE LICENSE
HEREUNDER ON AN "AS IS" BASIS WITHOUT REPRESENTATION OR WARRANTY
WHETHER EXPRESS OR IMPLIED INCLUDING WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR INFRINGEMENT OF THIRD PARTY
RIGHTS, AND ALL SUCH WARRANTIES ARE EXPRESSLY DISCLAIMED.
7.6 NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, ELAN
AND NEWCO SHALL NOT BE LIABLE TO THE OTHER BY REASON OF ANY
REPRESENTATION OR WARRANTY, CONDITION OR OTHER TERM OR ANY DUTY OF
COMMON LAW, OR UNDER THE EXPRESS TERMS OF THIS AGREEMENT, FOR ANY
CONSEQUENTIAL, SPECIAL OR INCIDENTAL OR PUNITIVE LOSS OR DAMAGE
(WHETHER FOR LOSS OF PROFITS OR OTHERWISE) AND WHETHER OCCASIONED BY
THE NEGLIGENCE OF THE RESPECTIVE PARTIES, THEIR EMPLOYEES OR AGENTS OR
OTHERWISE.
8. TERM AND TERMINATION
8.1 The term of this Agreement shall commence as of the Effective Date
and shall, subject to the rights of termination outlined in this Clause
8, expire on a Product-by-Product basis and on a country-by-country
basis on the last to occur of:
<PAGE>
8.1.1 [****] years starting from the date of the launch of the
Product in the country concerned; or
7.0.2 the date of expiration of the last to expire of the
patents included in the Elan Patents and the Elan Improvements
and/or the Photogen Patents and the Photogen Improvements.
("THE TERM")
8.2 If either Party commits a Relevant Event, the other Party shall
have, in addition to all other legal and equitable rights and remedies
hereunder, the right to terminate this Agreement upon 30 days' prior
written notice to the defaulting Party.
8.3 For the purpose of this Clause 8, a "RELEVANT EVENT" is committed
or suffered by a Party if:
8.3.1 it commits a material breach of its obligations under
this Agreement and fails to remedy it within 60 days of being
specifically required in writing to do so by the other Party;
provided, that if the breaching Party has proposed a course of
action to rectify the breach and is acting in good faith to
rectify same but has not cured the breach by the 60th day,
such period shall be extended by such period as is reasonably
necessary to permit the breach to be rectified;
8.3.2 a distress, execution, sequestration or other process is
levied or enforced upon or sued out against a material part of
its property which is not discharged or challenged within 30
days;
8.3.3 it is unable to pay its debts in the normal course of
business;
8.3.4 it ceases wholly or substantially to carry on its
business, otherwise than for the purpose of a reconstruction
or amalgamation, without the prior written consent of the
other Party (such consent not to be unreasonably withheld);
8.3.5 the appointment of a liquidator, receiver,
administrator, examiner, trustee or similar officer of such
Party or over all or substantially all of its assets under the
law of any applicable jurisdiction, including without
limitation, the United States of America, Bermuda or Ireland;
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<PAGE>
8.3.6 an application or petition for bankruptcy, corporate
re-organisation, composition, administration, examination,
arrangement or any other procedure similar to any of the
foregoing under the law of any applicable jurisdiction,
including without limitation, the United States of America,
Bermuda or Ireland, is filed, and is not discharged within
60 days, or a Party applies for or consents to the
appointment of a receiver, administrator, examiner or
similar officer of it or of all or a material part of its
assets, rights or revenues or the assets and/or the
business of a Party are for any reason seized, confiscated
or condemned.
8.4 Elan shall be entitled to forthwith terminate this Agreement in the
event of a Change of Control of Photogen/Newco.
8.5 Upon expiration or termination of the Agreement:
8.5.1. any sums that were due from Newco to Elan on Net Sales
in the Territory or in such particular country or countries in
the Territory (as the case may be) prior to the expiration or
termination of this Agreement as set forth herein shall be
paid in full within 60 days after the expiration or
termination of this Agreement for the Territory or for such
particular country or countries in the Territory (as the case
may be);
8.5.2 any provisions that expressly survive termination or
expiration of this Agreement, including without limitation
this Clause 8, shall remain in full force and effect;
8.5.3 all representations, warranties and indemnities shall insofar
as are appropriate remain in full force and effect;
8.5.4 the rights of inspection and audit set out in Clause 6 shall
continue in force for a period of one year; and
8.5.5 all rights and licenses granted pursuant to this
Agreement and to the Elan Intellectual Property pursuant to
the JDOA (including the rights of Newco pursuant to Clause 11
of the JDOA) shall cease for the Territory or for such
particular country or countries in the Territory (as the case
may be) and shall revert to or be transferred to Elan, and
Newco shall not thereafter use in the Territory or in such
particular country or countries in the Territory (as the case
may be) any rights covered by this Agreement;
<PAGE>
8.5.6 subject to Clause 8.5.7 and to such license, if any,
granted by Newco to Elan pursuant to the provisions of
Clause 12 of the JDOA, all rights to Newco Intellectual
Property shall be transferred to and jointly owned by
Photogen and Elan and may be exploited by both Elan and
Photogen separately pursuant to a perpetual[****],
world-wide fully paid license granted to each of Elan and
Photogen with the right to sublicense;
8.5.7 the rights of permitted third party sub-licensees in and to
the Elan Intellectual Property shall survive the
termination of the license and sublicense agreements
granting said intellectual property rights to Newco; and
Newco, Elan and Photogen shall in good faith agree upon the
form most advantageous to Elan and Photogen in which the
rights of Newco under any such licenses and sublicenses are
to be held (which form may include continuation of Newco
solely as the holder of such licenses or assignment of such
rights to a third party or parties, including an assignment
to both Elan and Photogen).
Any sublicense agreement between Newco and such permitted
sublicensee shall permit an assignment of rights by Newco and
shall contain appropriate confidentiality provisions.
9 CONFIDENTIAL INFORMATION
9.1 The Parties agree that it will be necessary, from time to time, to
disclose to each other confidential and proprietary information,
including without limitation, inventions, works of authorship, trade
secrets, specifications, designs, data, know-how and other proprietary
information relating to the Field, the Products, processes, services
and business of the disclosing Party.
The foregoing shall be referred to collectively as "CONFIDENTIAL
INFORMATION".
9.2 Any Confidential Information disclosed by one Party to another Party
shall be used by the receiving Party exclusively for the purposes of
fulfilling the receiving Party's obligations under this Agreement and
the JDOA and for no other purpose.
9.3 Each Party shall disclose Confidential Information of the other Party
only to those employees, representatives and agents requiring knowledge
thereof in connection with fulfilling the Party's obligations under
this Agreement. Each Party further agrees to inform all such employees,
representatives and agents of the terms and provisions of this
Agreement and their duties hereunder and to obtain their agreement
hereto as a condition of receiving Confidential Information. Each Party
shall exercise the same standard of care as it would itself exercise in
relation to its own confidential information (but in no
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SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
event less than a reasonable standard of care) to protect and
preserve the proprietary and confidential nature of the Confidential
Information disclosed to it by the other Party. Each Party shall,
upon request of the other Party, return all documents and any copies
thereof containing Confidential Information belonging to, or
disclosed by, such other Party.
9.4 Any breach of this Clause 9 by any person informed by one
of the Parties is considered a breach by the Party itself.
9.5 Confidential Information shall not be deemed to include:
9.5.1 information that is in the public domain;
9.5.2 information which is made public through no breach
of this Agreement;
9.5.3 information which is independently developed by a
Party as evidenced by such Party's records;
9.5.4 information that becomes available to a Party on a
non-confidential basis, whether directly or indirectly,
from a source other than a Party, which source did not
acquire this information on a confidential basis; or
9.5.5 information which the receiving Party is required to
disclose pursuant to:
(i) a valid order of a court or other governmental
body; or
(ii) any other requirement of law;
provided that if the receiving Party becomes legally
required to disclose any Confidential Information,
the receiving Party shall give the disclosing Party
prompt notice of such fact so that the disclosing
Party may obtain a protective order or other
appropriate remedy concerning any such disclosure.
The receiving Party shall fully co-operate with the
disclosing Party in connection with the disclosing
Party's efforts to obtain any such order or other
remedy. If any such order or other remedy does not
fully preclude disclosure, the receiving Party shall
make such disclosure only to the extent that such
disclosure is legally required.
9.6 The provisions relating to confidentiality in this Clause 9 shall
remain in effect during the term of this Agreement, and for a
period of [****] following the expiration or earlier termination
of this Agreement.
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<PAGE>
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
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<PAGE>
9.7 The Parties agree that the obligations of this Clause 9
are necessary and reasonable in order to protect the Parties'
respective businesses, and each Party agrees that monetary
damages would be inadequate to compensate a Party for any
breach by the other Party of its covenants and agreements set
forth herein.
Accordingly, the Parties agree that any such violation or
threatened violation shall cause irreparable injury to a Party
and that, in addition to any other remedies that may be
available, in law and equity or otherwise, each Party shall be
entitled to obtain injunctive relief against the threatened
breach of the provisions of this Clause 9, or a continuation of
any such breach by the other Party, specific performance and
other equitable relief to redress such breach together with its
damages and reasonable counsel fees and expenses to enforce its
rights hereunder, without the necessity of proving actual or
express damages.
9.8 For the avoidance of doubt, all confidential information of Newco
received by Elan hereunder shall not be disclosed by Elan to
Affiliates and/or subsidiaries (present or future) of Elan
Corporation, Plc. within the division of Elan Corporation, Plc.
carrying on business as Elan Pharmaceuticals which
incorporates, inter alia, Targon Corporation, Athena
Neurosciences, Inc., Elan Pharmaceuticals, Inc., Elan
Diagnostics, Carnrick Laboratories, and Elan Europe Limited.
10 GOVERNING LAW AND ARBITRATION
10.1 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
10.2 The Parties will attempt in good faith to resolve any dispute
arising out of or relating to this Agreement promptly by negotiation
between executives of the Parties. In the event that such
negotiations do not result in a mutually acceptable resolution, the
Parties agree to consider other dispute resolution mechanisms
including mediation.
In the event that the Parties fail to agree on a mutually
acceptable dispute resolution mechanism within 180 days of written
notice of a dispute by one Party to the other Party, any such dispute
shall be finally settled by arbitration pursuant to Clause 10.3.
10.3 Save any dispute under Clause 6.2 which will be resolved in
accordance with the provisions of Clause 6.2, any dispute under this
Agreement which is not settled by mutual consent under Clause 10.2
shall be finally settled by binding arbitration, conducted in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association by one arbitrator appointed in accordance
with said rules. Such arbitrator shall be reasonably satisfactory to
each of the Parties; provided, that if the Parties are unable to
agree upon the identity of such arbitrator within 15 days of demand
by either Party, then either Party shall have the right to petition a
presiding justice of the Supreme Court of New York, New York County,
to appoint an arbitrator.
<PAGE>
The arbitration shall be held in New York, New York.
The arbitrator shall determine what discovery will be permitted,
consistent with the goal of limiting the cost and time which the
Parties must expend for discovery; provided the arbitrator shall
permit such discovery as he deems necessary to permit an equitable
resolution of the dispute.
Any written evidence originally in a language other than English
shall be submitted in English translation accompanied by the original
or a true copy thereof.
The costs of the arbitration, including administrative and
arbitrator's fee, shall be shared equally by the Parties and each
Party shall bear its own costs and attorneys' and witness' fees
incurred in connection with the arbitration.
In rendering judgement, the arbitrator shall be instructed by the
Parties that he shall be permitted to select solely from between the
proposals for resolution of the relevant issue presented by each
Party, and not any other proposal.
A disputed performance or suspended performances pending the
resolution of the arbitration must be completed within 30 days
following the final decision of the arbitrator or such other
reasonable period as the arbitrator determines in a written order.
The Parties will co-operate and use reasonable efforts to ensure that
any arbitration any arbitration hereunder shall be completed swiftly
and in any event within one year from the filing of notice of a
request for such arbitration.
The arbitration proceedings and the decision shall not be made public
without the joint consent of the Parties and each Party shall
maintain the confidentiality of such proceedings and decision unless
otherwise permitted by the other Party.
The Parties agree that the decision shall be the sole, exclusive and
binding remedy between them regarding any and all disputes,
controversies, claims and counterclaims presented to the arbitrator.
Application may be made to any court having jurisdiction over the
Party (or its assets) against whom the decision is rendered for a
judicial recognition of the decision and an order of enforcement.
11 IMPOSSIBILITY OF PERFORMANCE - FORCE MAJEURE
Neither Elan nor Newco shall be liable for delay in the performance
of any of its obligations hereunder if such delay results from causes
beyond its reasonable control, including, without limitation, acts of
God, fires, strikes, acts of war, intervention of a government
authority, but any
<PAGE>
such delay or failure shall be remedied by such Party as
soon as practicable.
12 ASSIGNMENT
This Agreement may not be assigned by either Party without the prior
written consent of the other, save that either Party may assign this
Agreement to its Affiliates or subsidiaries without such prior
written consent and that Elan may assign this Agreement to any
off-balance sheet special purpose entity established by Elan or EIS
without such prior written consent; provided that such assignment
does not have any adverse tax consequences on the other Party and
that the assignee shall be obligated to the other Party for all of
the assignor Party's obligations hereunder which assignee shall be
capable of fulfilling such obligations.
13 NOTICES
13.1 Any notice to be given under this Agreement shall be sent in
writing in English by registered airmail or telefaxed to the
following addresses:
If to Newco at:
Clarendon House,
2 Church Street,
Hamilton,
Bermuda
Attention: Secretary
Telephone: 441 292 9169
Fax: 441 292 2224
with a copy to Elan at:
Elan Corporation, plc
Lincoln House,
Lincoln Place,
Dublin 2,
Ireland.
Attention: Vice President, General Counsel,
Elan Pharmaceutical Technologies,
a division of Elan Corporation, plc
Telephone: + 353 1 709 4000
Telefax: + 353 1 709 4124
If to Photogen at:
7327 Oak Ridge,
Knoxville,
TN. 3793
<PAGE>
USA.
Attn: Chief Executive Officer
Telephone 001 423 769 4011
Fax: 001 423 769 4013
with a copy to:
Grippo & Elden
Suite 3600
227 West Monroe
Chicago
Illinois 60606
USA
Attention: Theodore W Grippo
Telephone 001 312 704 7720
Fax: 001 312 558 1195
If to Elan at:
Elan Corporation, plc
Lincoln House,
Lincoln Place,
Dublin 2,
Ireland.
Attention: Vice President, General Counsel,
Elan Pharmaceutical Technologies,
a division of Elan Corporation, plc
Telephone: + 353 1 709 4000
Telefax: + 353 1 709 4124
or to such other address(es) and telefax numbers as may from
time to time be notified by either Party to the other hereunder.
13.2 Any notice sent by mail shall be deemed to have been
delivered within seven 7 working days after dispatch and any
notice sent by telex or telefax shall be deemed to have been
delivered within twenty 24 hours of the time of the dispatch.
Notice of change of address shall be effective upon receipt.
14 MISCELLANEOUS
14.1 WAIVER:
<PAGE>
No waiver of any right under this Agreement shall be deemed
effective unless contained in a written document signed by the Party
charged with such waiver, and no waiver of any breach or failure to
perform shall be deemed to be a waiver of any other breach or
failure to perform or of any other right arising under this Agreement.
14.2 SEVERABILITY:
If any provision in this Agreement is agreed by the Parties to be,
or is deemed to be, or becomes invalid, illegal, void or
unenforceable under any law that is applicable hereto:
14.2.1 such provision will be deemed amended to conform to
applicable laws so as to be valid and enforceable; or
14.2.2 if it cannot be so amended without materially altering
the intention of the Parties, it will be deleted, with
effect from the date of such agreement or such earlier
date as the Parties may agree, and the validity, legality
and enforceability of the remaining provisions of this
Agreement shall not be impaired or affected in any way.
14.3 FURTHER ASSURANCES:
At the request of any of the Parties, the other Party or Parties shall
(and shall use reasonable efforts to procure that any other necessary
parties shall) execute and perform all such documents, acts and things
as may reasonably be required subsequent to the signing of this
Agreement for assuring to or vesting in the requesting Party the full
benefit of the terms hereof.
14.4 SUCCESSORS:
This Agreement shall be binding upon and enure to the benefit of the
Parties hereto, their successors and permitted assigns.
14.5 NO EFFECT ON OTHER AGREEMENTS/CONFLICT:
No provision of this Agreement shall be construed so as to negate,
modify or affect in any way the provisions of any other agreement
between the Parties unless specifically referred to, and solely to the
extent provided herein.
In the event of a conflict between the provisions of this Agreement and
the provisions of the JDOA, the terms of the JDOA shall prevail unless
this Agreement specifically provides otherwise.
14.6 AMENDMENTS:
<PAGE>
No amendment, modification or addition hereto shall be effective or
binding on any Party unless set forth in writing after the Effective
Date and executed by a duly authorised representative of each Party.
14.7 COUNTERPARTS:
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of
which when taken together shall constitute this Agreement.
14.8 GOOD FAITH:
Each Party undertakes to do all things reasonably within its power
which are necessary or desirable to give effect to the spirit and
intent of this Agreement.
14.9 NO RELIANCE:
Each Party hereby acknowledges that in entering into this Agreement it
has not relied on any representation or warranty save as expressly set
out herein or in any document referred to herein.
14.10 RELATIONSHIP OF THE PARTIES:
Nothing contained in this Agreement is intended or is to be construed
to constitute Elan and Newco as partners, or Elan as an employee of
Newco, or Newco as an employee of Elan.
Neither Party hereto shall have any express or implied right or
authority to assume or create any obligations on behalf of or in the
name of the other Party or to bind the other Party to any contract,
agreement or undertaking with any third party.
<PAGE>
SCHEDULE 1
ELAN PATENTS AND ELAN KNOW-HOW
REPRESENTATIVE ELAN PATENTS
[****]
ELAN KNOW-HOW
[****]
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
SCHEDULE 2
TECHNOLOGICAL COMPETITIORS OF ELAN
[****]
(including any and all divisions or subsidiaries of such entities and
successor entities).
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
IN WITNESS WHEREOF the Parties hereto have executed this Agreement.
SIGNED BY /s/ Kevin Insley
-----------------------------------------
for and on behalf of
ELAN PHARMA INTERNATIONAL LIMITED
SIGNED BY /s/ John Smolik
------------------------------------------
for and on behalf of
PHOTOGEN NEWCO LTD.
AGREED TO AND ACCEPTED BY
PHOTOGEN TECHNOLOGIES, INC /s/ John Smolik
<PAGE>
Exhibit 10.15
CONFIDENTIAL TREATMENT HAS BEEN SOUGHT FOR
PORTIONS OF THIS EXHIBIT PURSUANT TO RULE 24B-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
EXECUTION COPY
SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT
ELAN PHARMA INTERNATIONAL LIMITED
ELAN INTERNATIONAL SERVICES, LTD.
AND
PHOTOGEN TECHNOLOGIES, INC.
AND
PHOTOGEN NEWCO LTD.
<PAGE>
INDEX
-----
<TABLE>
<S> <C>
CLAUSE 1 DEFINITIONS
CLAUSE 2 BUSINESS
CLAUSE 3 REPRESENTATIONS AND WARRANTIES
CLAUSE 4 AUTHORIZATION AND CLOSING
CLAUSE 5 DIRECTORS; MANAGEMENT AND R&D COMMITTEES
CLAUSE 6 THE BUSINESS PLAN AND REVIEWS
CLAUSE 7 RESEARCH AND DEVELOPMENT
CLAUSE 8 COMMERCIALIZATION
CLAUSE 9 SUBLICENSE AND ASSIGNMENT RIGHTS
CLAUSE 10 OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS/[****]
CLAUSE 11 INTELLECTUAL PROPERTY RIGHTS
CLAUSE 12 CROSS LICENSING/EXPLOITATION OF PRODUCTS OUTSIDE FIELD
CLAUSE 13 REGULATORY
CLAUSE 14 MANUFACTURING
CLAUSE 15 TECHNICAL SERVICES AND ASSISTANCE
</TABLE>
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
<TABLE>
<S> <S>
CLAUSE 16 AUDITORS, BANKERS, REGISTERED OFFICE,
ACCOUNTING REFERENCE DATE; SECRETARY; COUNSEL
CLAUSE 17 TRANSFER OF SHARES; RIGHTS OF FIRST OFFER; TAG ALONG RIGHTS
CLAUSE 18 MATTERS REQUIRING PARTICIPANTS' APPROVAL
CLAUSE 19 DISPUTES
CLAUSE 20 TERMINATION
CLAUSE 21 SHARE RIGHTS
CLAUSE 22 CONFIDENTIALITY
CLAUSE 23 COSTS
CLAUSE 24 GENERAL
</TABLE>
<PAGE>
THIS SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT made this 20th
day of October, 1999
BETWEEN:
(1) ELAN PHARMA INTERNATIONAL LIMITED, a public limited company
incorporated under the laws of Ireland, and having its registered
office at WIL House, Shannon Business Park, Shannon, County Clare,
Ireland ("EPIL");
(2) ELAN INTERNATIONAL SERVICES, LTD., an exempted limited liability
company incorporated under the laws of Bermuda, and having its
registered office at Clarendon House, 2 Church St., Hamilton, Bermuda
("EIS");
(3) PHOTOGEN TECHNOLOGIES, INC. a corporation duly incorporated and
validly existing under the laws of Nevada and having its principal
place of business at 7327 Oak Ridge, Knoxville, TN. 37931, United
States of America ("Photogen"); and
(4) PHOTOGEN NEWCO LTD. an exempted limited liability company incorporated
under the laws of Bermuda, and having its registered office at
Clarendon House, 2 Church St., Hamilton, Bermuda ("NEWCO").
RECITALS:
A. Newco desires to issue and sell to Photogen and Photogen desires to
purchase from Newco, for aggregate consideration of $12,015,000, 12,000
ordinary shares of Newco's common stock, par value $1.00 per share (the
"COMMON STOCK"). Additionally, Newco desires to issue and sell to EIS
and EIS desires to purchase from Newco, for aggregate consideration of
$2,985,000, 2,980 shares of Newco's non-voting convertible preferred
stock, par value $1.00 per share (the "PREFERRED STOCK").
B. As of the date hereof, EPIL has entered into a license agreement with
Newco, and Photogen has entered into a license agreement with Newco, in
connection with the license to Newco of the Elan Intellectual Property
and the Photogen Intellectual Property, respectively (each as defined
below).
<PAGE>
C. Elan and Photogen have agreed to co-operate in the research,
development and commercialization of the Products (as defined below)
based on their respective technologies.
D. Elan and Photogen have agreed to enter into this Agreement for the
purpose of recording the terms and conditions regulating their
relationship with each other, with respect to the Licensed Technologies
and with Newco.
NOW IT IS HEREBY AGREED AS FOLLOWS:
CLAUSE 1
DEFINITIONS
1.1 In this Agreement, the following terms shall, where not
inconsistent with the context, have the following meanings
respectively.
"AFFILIATE" shall mean any corporation or entity controlling,
controlled or under the common control of Elan or Photogen, as the case
may be. For the purpose of this definition, "control" shall mean direct
or indirect ownership of fifty percent (50%) or more of the stock or
shares entitled to vote for the election of directors. Newco is not an
Affiliate of Elan or EIS.
"AGREEMENT" shall mean this agreement (which expression shall be deemed
to include the Recitals and the Schedules hereto).
"ALLIANCE" shall mean Alliance Pharmaceutical Corp., whose principal
place of business is at 3040 Science Park Road, San Diego, California.
"ALLIANCE AGREEMENT" shall mean the Agreement dated 9 August 1999,
between Alliance, Photogen and Dr. Gerald Wolf ("DR WOLF"), which
agreement, inter alia, assigned the Method Patents from Alliance and
Dr. Wolf to Photogen.
"BOARD" shall mean the board of directors of Newco.
"BUSINESS" shall mean the business specified in the Business Plan.
"BUSINESS PLAN" shall mean the business plan and program of development
to be agreed by Elan and Photogen pursuant to Clause 6, that shall
contain, among other things, to the extent practicable, the research
and development objectives, desired Product specifications, clinical
indications, preliminary clinical trial designs (Phase I/II),
development timelines, budgeted costs and the relative responsibilities
of Photogen and Elan as it relates to the implementation of the
<PAGE>
R&D Plan.
"CERTIFICATE OF DESIGNATIONS" shall mean that certain certificate of
designations, preferences and rights of Series A Preferred Stock of
Photogen issued on the date hereof.
"CLOSING DATE" shall mean the date upon which the Transaction Documents
are executed and delivered by the Parties and the transactions effected
thereby are closed.
"COMMON STOCK EQUIVALENTS" shall mean any options, warrants, rights or
any other securities convertible, exercisable or exchangeable, in whole
or in part, for or into Common Stock.
"COMPOUNDS" shall mean the diagnostic imaging agents compounds [****].
"CONTROL" shall mean the ability to grant a license or sublicense as
contemplated herein without violating the terms of any agreement with
any third party.
"DIRECTORS" shall mean, at any time, the directors of Newco.
"EIS DIRECTOR" has the meaning set forth in Clause 5.
"ELAN" shall mean EPIL (a wholly owned subsidiary of Elan Corporation,
plc., which owns the Nanocrystal-TM- technology formerly controlled by
NanoSystems LLC, formerly a subsidiary of the Eastman Kodak Company)
and Affiliates and subsidiaries of Elan Corporation, plc. within the
division of Elan Corporation, plc. carrying on business as Elan
Pharmaceutical Technologies ("EPT") but shall not include Affiliates
and subsidiaries (present or future) of Elan Corporation plc. within
the division of Elan Corporation, Plc carrying on business as Elan
Pharmaceuticals which incorporates, inter alia, Targon Corporation,
Athena Neurosciences, Inc., Elan Pharmaceuticals, Inc., Elan
Diagnostics, Carnrick Laboratories, and Elan Europe Limited.
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
"ELAN IMPROVEMENTS" shall mean improvements relating to the Elan
Patents and/or the Elan Know-How , developed (i) by Elan not pursuant
to the Project, (ii) by Elan pursuant to the Project except for that
portion of improvements relating solely and specifically to Product(s)
(iii) by Newco or Photogen or by a third party (under contract with
Newco) pursuant to the Project except for that portion of improvements
relating solely and specifically to Product(s), and/or (iv) jointly by
any combination of Elan, Photogen or Newco pursuant to the Project
except for that portion of improvements relating solely and
specifically to Product(s), except as limited by agreements with
unaffiliated third parties.
Subject to third party agreements with unaffiliated third parties, Elan
Improvements shall constitute part of Elan Intellectual Property and be
included in the license of the Elan Intellectual Property pursuant to
Clause 3.1 solely for the purposes set forth therein. If the inclusion
of a Elan Improvement in the license of Elan Intellectual Property is
restricted or limited by a third party agreement, Elan shall use
reasonable commercial efforts to minimize any such restriction or
limitation.
"ELAN INTELLECTUAL PROPERTY" shall mean the Elan Know-How, the Elan
Patents and the Elan Improvements.
For the avoidance of doubt, Elan Intellectual Property shall exclude
(i) Elan's patent rights and know-how relating to drug delivery devices
including parenteral administration of a diagnostic imaging agent via a
drug delivery device such as Medipad and (ii) inventions, patents and
know-how owned, licensed or Controlled by Axogen Limited and Neuralab
Limited, and by all Affiliates and subsidiaries (present or future) of
Elan Corporation, plc. within the division of Elan Corporation, plc.
carrying on business as Elan Pharmaceuticals which incorporates, inter
alia, Targon Corporation, Athena Neurosciences, Inc., Elan
Pharmaceuticals, Inc., Elan Diagnostics, Carnrick Laboratories, and
Elan Europe Limited.
"ELAN KNOW-HOW" shall mean any and all rights owned, or Controlled by
Elan to any Know-How relating to nanoparticulate medical diagnostic
imaging agents including, without limitation, [****]
The primary examples of the Elan Know-How existing as of the date
hereof are set forth on Schedule 1 of the Elan License Agreement, which
listing is not necessarily exhaustive.
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
"ELAN LICENSE AGREEMENT" shall mean the license agreement between Elan
and
<PAGE>
Newco, of even date herewith, attached hereto in Schedule 1.
"ELAN PATENTS" shall mean any and all Patent Rights owned or Controlled
by Elan, now existing, currently pending or hereafter filed by Elan
relating to nanoparticulate medical diagnostic imaging agents
including, without limitation, [****]. Representative Elan Patents
existing as of the date hereof are set forth in Schedule 1 of the Elan
License Agreement.
"ENCUMBRANCE" shall mean any liens, charges, encumbrances, equities,
claims, options, proxies, pledges, security interests, or other similar
rights of any nature.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXCHANGE RIGHT" has the meaning assigned to such term in Section 5.a
of the Certificate of Designations in effect on the date hereof.
"FIELD" shall mean the research, development, manufacture and
commercialization of nanoparticulate x-ray, CT, and/or MRI diagnostic
imaging agents using radio-opaque molecules containing Iodine that
passively target to lymphnodes involved in a disease state following
parenteral administration to a mammal to locate, diagnose and/or treat
cancer and/or other diseases.
For the avoidance of doubt, the Field does not include:
(1) active targeting agents, including but not limited to
monoclonal antibodies, short-chain antibodies or any other
active targeting agents including protein, peptide or
peptidomimetic targeting agents; or
(2) ultrasound diagnostic imaging agents.
"FINANCIAL YEAR" shall mean each year commencing on January 1 (or in
the case of the first Financial Year, the date hereof) and expiring on
December 31 of each year.
"FULLY DILUTED COMMON STOCK" shall mean all of the issued and
outstanding Common Stock, assuming the conversion, exercise or exchange
of all outstanding Common Stock Equivalents.
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2
<PAGE>
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
"FUNDING AGREEMENT" shall mean the Funding Agreement, dated as of the
date hereof, among EIS, Elan and Photogen.
"GENERAL NYCOMED AGREEMENT" shall mean the License Agreement between
The General Hospital Corporation (acting, inter alia, as agent for
Nycomed) and Photogen which agreement sublicenses or licenses, as
applicable, inter alia, certain rights with respect to the Compounds
[****] and [****] to Photogen.
"GENERAL NYCOMED PATENTS" shall mean the patents included in the GenNyc
Intellectual Property.
"GENNYC INTELLECTUAL PROPERTY" shall mean all the rights to and under
the General Patent Rights, the Joint Patent Rights and the [****]
Patent Rights (as those terms are defined in the General Nycomed
Agreement) which are licensed or sublicensed as applicable to Photogen
pursuant to the General Nycomed Agreement.
The primary examples of GenNyc Intellectual Property existing as of the
date hereof are set forth on Schedule 2 of the Photogen License
Agreement, which listing is not necessarily exhaustive.
"KNOW-HOW" shall mean information and know-how, whether patentable or
not, including but not limited to any and all discoveries, inventions,
substances, data, techniques, processes, systems, formulations, designs
and commercial information relating to design, development,
manufacture, assembly, use or sale.
"LICENSE AGREEMENTS" shall mean the Elan License Agreement and the
Photogen License Agreement.
"LICENSED TECHNOLOGIES" shall mean the Elan Intellectual Property,
the Photogen Intellectual Property and the GenNyc Intellectual
Property.
"METHOD PATENTS" shall mean the patent family that contains the [****]
Patent, the [****] Patent, [****] and others as described in Exhibit B
of the Alliance Agreement.
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
"NEWCO INTELLECTUAL PROPERTY" shall mean all Patent Rights and Know-How
and other intellectual property arising pursuant to the Project by any
person, that does not constitute Elan Intellectual Property or Photogen
Intellectual Property and any technology licensed or acquired by Newco
from a third party.
For avoidance of doubt, Newco Intellectual Property includes all
improvements developed pursuant to the Project and relating solely and
specifically to Product(s).
"NEWCO MEMORANDUM OF ASSOCIATION AND BYE-LAWS" shall mean the
Memorandum of Association and Bye-Laws of Newco.
"NEWCO PATENTS" shall mean any and all Patent Rights now existing,
currently pending or hereafter filed or obtained relating to the Newco.
"NOTE" shall mean that certain convertible promissory note, of even
date herewith, by and between Photogen and EIS.
"NYCOMED" shall mean Nycomed Imaging AS doing business as Nycomed
Amersham, whose principal place of business is at 101 Carnegie Center,
Princeton, NJ 08540, USA.
"PARTICIPANT" shall mean Photogen or Elan, as the case may be, and
"PARTICIPANTS" shall mean both of the Participants together as the
context requires;
"PARTY" shall mean Elan, Photogen, or Newco, as the case may be, and
"PARTIES" shall mean all three together.
"PATENT RIGHTS" shall mean any and all patents and patent applications,
including all divisionals, continuations, continuations-in-part,
extensions, patents-of-additions, re-examinations, re-issues,
supplementary protection certificates and foreign counterparts of such
patents and patent applications and any patents issuing thereon and
extensions thereon.
"PERMITTED TRANSFEREE" shall mean any Affiliate or subsidiary of Elan,
EIS or Photogen, to whom this Agreement may be assigned, in whole or in
part, pursuant to the terms hereof or in the case of Elan/EIS, a
special purpose financing or similar vehicle created by Elan or EIS.
"PERSON" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental entity or
authority or other entity of whatever nature.
<PAGE>
"PHOTOGEN" shall mean Photogen and its Affiliates, excluding Newco.
"PHOTOGEN DIRECTORS" has the meaning set forth in Clause 5.
"PHOTOGEN IMPROVEMENTS" shall mean improvements relating to the
Photogen Patents and/or the Photogen Know-How, developed (i) by
Photogen not pursuant to the Project, (ii) by Photogen pursuant to the
Project except for that portion of improvements relating solely and
specifically to Product(s) (iii) by Newco or Elan or by a third party
(under contract with Newco) pursuant to the Project except for that
portion of improvements relating solely and specifically to Product(s),
and/or (iv) jointly by any combination of Photogen, Elan or Newco
pursuant to the Project except for that portion of improvements
relating solely and specifically to Product(s), except as limited by
agreements with unaffiliated third parties.
Subject to third party agreements with unaffiliated third parties,
Photogen Improvements shall constitute part of Photogen Intellectual
Property and be included in the license of the Photogen Intellectual
Property pursuant to Clause 4.1 solely for the purposes set forth
therein. If the inclusion of a Photogen Improvement in the license of
Photogen Intellectual Property is restricted or limited by a third
party agreement, Photogen shall use reasonable commercial efforts to
minimize any such restriction or limitation.
"PHOTOGEN INTELLECTUAL PROPERTY" shall mean the Photogen Know-How,
the Photogen Patents and the Photogen Improvements.
"PHOTOGEN KNOW-HOW" shall mean any and all rights owned, licensed or
Controlled by Photogen to Know-How, relating to medical diagnostic
imaging agents, methods of treatment using medical diagnostic imaging
agents and related compositions.
The primary examples of the Photogen Know-How existing as of the date
hereof are set forth on Schedule 1 of the Photogen License Agreement,
which listing is not necessarily exhaustive, and includes Know-How
owned, licensed or Controlled by Photogen related to the Method
Patents.
"PHOTOGEN LICENSE AGREEMENT" shall mean the license agreement between
Photogen and Newco, of even date herewith, attached hereto in Schedule
2.
"PHOTOGEN PATENTS" shall mean any and all Patent Rights owned or
Controlled by Photogen other than Patent Rights included in the GenNyc
Intellectual Property, now existing, currently pending or hereafter
filed by Photogen relating to
<PAGE>
nanoparticulate medical diagnostic imaging agents including medical
diagnostic imaging agents, methods of treatment using medical
diagnostic imaging agents and related compositions.
The primary examples of Photogen Patents existing as of the date hereof
are set forth on Schedule 1 of the Photogen License Agreement, which
listing is not necessarily exhaustive, and includes the Method Patents.
"PHOTOGEN SECURITIES PURCHASE AGREEMENT" shall mean that certain
securities purchase agreement, of even date herewith, by and between
Photogen and EIS.
"PRODUCT" shall mean a formulation containing one or more x-ray, CT,
and/or MRI Compounds in nanoparticulate form developed by or on behalf
of Newco pursuant to the Project.
"PROJECT" shall mean all activities as undertaken by Elan, Photogen and
Newco in order to develop the Products.
"R&D PLAN" shall mean the program of work, including the budget, agreed
by the Management Committee as part of the Business Plan and such
further research and development work as may be agreed by the
Management Committee from time to time.
"R&D PROGRAM" shall mean any research and development program
commenced by Newco pursuant to the Project.
"R&D TERM" shall mean the period commencing on the Closing Date and
continuing for a period of [****] thereafter, or as extended by
agreement of the Participants.
"REGISTRATION RIGHTS AGREEMENTS" shall mean the Registration Rights
Agreements of even date herewith relating to Newco and Photogen,
respectively.
"REGULATORY APPLICATION" shall mean any regulatory application or any
other application for marketing approval for a Product, which Newco
will file in any country of the Territory, including any supplements or
amendments thereto.
"REGULATORY APPROVAL" shall mean the final approval to market a Product
in any country of the Territory, and any other approval which is
required to launch the Product in the normal course of business.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2
<PAGE>
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
"RHA" shall mean any relevant government health authority (or
successor agency thereof) in any country of the Territory whose
approval is necessary to market a Product in the relevant country of
the Territory.
[****]
[****]
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SHARES" shall mean the shares of Common Stock and shares of Preferred
Stock of Newco.
"STOCKHOLDER" shall mean any of EIS, Photogen, any Permitted Transferee
or any other Person who subsequently becomes bound by this Agreement as
a holder of the Shares, and "STOCKHOLDERS" shall mean all of the
Stockholders together.
"SUBSIDIARY" shall mean any company that is a subsidiary of Newco
within the meaning of applicable laws.
"TECHNOLOGICAL COMPETITOR OF ELAN" shall mean a company, corporation or
person listed in Schedule 3 and successors thereof or any additional
broad-based technological competitor of Elan added to such Schedule
from time to time upon mutual agreement of the Parties.
"TERM" shall mean the term of this Agreement.
"TERRITORY" shall mean all of the countries of the world.
"TRANSACTION DOCUMENTS" shall mean this Agreement, the Funding
Agreement, Elan License Agreement, the Photogen License Agreement, the
Note, the Warrant, the Photogen Securities Purchase Agreement, the
Registration Rights Agreements, the Certificate of Designations and
associated documentation of even date herewith, by and between
Photogen, Elan, EIS and Newco, as applicable.
"UNITED STATES DOLLAR" and "US$" and "$" shall mean the lawful
currency of the United States of America.
[****]
<PAGE>
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
[****]
1.2 In addition, the following definitions have the meanings in the
Clauses corresponding thereto, as set forth below.
<TABLE>
<CAPTION>
DEFINITION CLAUSE
<S> <C>
"AAA" 20.6
"Buyout Option" 20.4
"Closing" 4.3
"Common Stock" Recital A
"Confidential Information" 22.1
"Co-sale Notice" 17.5
"Junior Securities" 21.1
"Management Committee" 5.2.1
"Notice of Exercise" 17.4
"Notice of Intention" 17.4
"Offered Shares" 17.4
"Offer Price" 17.4
"Preferred Stock" Recital A
"Proposing Participant" 20.4
"Proposing Participant Price: 20.6
"Purchase Price" 20.6
"R&D Committee" 5.2.2
"Recipient Participant" 20.4
"Recipient Participant Price" 20.6
"Remaining Stockholders" 17.5
"Relevant Event" 20.2
"Selling Stockholder" 17.4
"Tag-Along Right" 17.5
"Transaction Proposal" 17.4
"Transfer" 17.1
"Transferee Terms" 17.5
"Transferring Stockholder" 17.5
</TABLE>
1.3 Words importing the singular shall include the plural and vice versa.
1.4 Unless the context otherwise requires, reference to a recital,
article, paragraph, provision, clause or schedule is to a recital,
article, paragraph, provision, clause or schedule of or to this
Agreement.
1.5 Reference to a statute or statutory provision includes a reference to
it as from time to time amended, extended or re-enacted.
<PAGE>
1.6 The headings in this Agreement are inserted for convenience only and
do not affect its construction.
1.7 Unless the context or subject otherwise requires, references to words
in one gender include references to the other genders.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
1.8 Capitalized terms used but not defined herein shall have the meanings
ascribed in the Transaction Documents, if defined therein.
CLAUSE 2
BUSINESS
2.1 This Agreement shall regulate the business of the
development, testing, registration, manufacture,
commercialization and licensing of Products in the Territory
and to achieve the other objectives set out in this Agreement.
The focus of the Business will be to develop the Products using
the Elan Intellectual Property, the Photogen Intellectual
Property and the Newco Intellectual Property to agreed upon
specifications and timelines.
2.2 The central management and control of Newco shall be exercised in
Bermuda and shall be vested in the Directors and such Persons as they
may delegate the exercise of their powers in accordance with the Newco
Memorandum of Association and Bye-Laws. The Stockholders shall use
their best endeavors to ensure that to the extent required pursuant to
the laws of Bermuda, and to ensure the sole residence of Newco in
Bermuda, all meetings of the Directors are held in Bermuda or other
jurisdictions outside the United States and generally to ensure that
Newco is treated as resident for taxation purposes in Bermuda.
2.3 Additional diagnostic imaging agent(s) may be selected from the
Elan Intellectual Property or the Photogen Intellectual
Property in the Field during the Term or from Newco
Intellectual Property and designated as Compound(s) by the
unanimous vote of the Management Committee. In such case, the
Parties shall negotiate in good faith such amendments as are
required to this Agreement, such as amending the provisions
regulating non-competition.
<PAGE>
CLAUSE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF NEWCO: Newco hereby represents and
warrants to each of the Stockholders as follows, as of the date hereof:
3.1.1 ORGANIZATION: Newco is an exempted company duly organized,
validly existing and in good standing under the laws of
Bermuda, and has all the requisite corporate power and
authority to own and lease its properties, to carry on its
business as presently conducted and as proposed to be
conducted.
3.1.2 CAPITALIZATION: As of the date hereof, the authorized capital
stock of Newco consists of 12,000 shares of Common Stock and
12,000 shares of Preferred Stock. Prior to the date hereof, no
shares of capital stock of Newco have been issued.
3.1.3 AUTHORIZATION: The execution, delivery and performance by
Newco of this Agreement, including the issuance of the
Shares, have been duly authorized by all requisite
corporate actions; this Agreement has been duly executed
and delivered by Newco and is the valid and binding
obligation of Newco, enforceable against it in accordance
with its terms except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of
general application affecting the enforcement of creditors'
rights generally, and except as enforcement of rights to
indemnity and contribution hereunder may be limited by
United States federal or state securities laws or
principles of public policy. The Shares, when issued as
contemplated hereby, will be validly issued and
outstanding, fully paid and non-assessable and not subject
to preemptive or any other similar rights of the
Stockholders or others.
3.1.4 NO CONFLICTS: The execution, delivery and performance by Newco
of this Agreement, the issuance, sale and delivery of the
Shares, and compliance with the provisions hereof by Newco,
will not:
(i) violate any provision of applicable law, statute,
rule or regulation applicable to Newco or any ruling,
writ, injunction, order, judgment or decree of any
court, arbitrator, administrative agency or other
governmental body applicable to Newco or any of its
properties or assets;
<PAGE>
(ii) conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute
(with notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or
acceleration) under its charter or organizational
documents or any material contract to which Newco is a
party, except where such violation, conflict or breach
would not, individually or in the aggregate, have a
material adverse effect on Newco; or
(iii) result in the creation of, any Encumbrance upon any of
the properties or assets of Newco.
3.1.5 APPROVALS: As of the date hereof, no permit, authorization,
consent or approval of or by, or any notification of or filing
with, any Person is required in connection with the execution,
delivery or performance of this Agreement by Newco. Newco has
full authority to conduct its business as contemplated in the
Business Plan and the Transaction Documents.
3.1.6 DISCLOSURE: This Agreement does not contain any untrue
statement of a material fact or omit to state any material
fact necessary to make the statements contained herein not
misleading. Newco is not aware of any material contingency,
event or circumstance relating to its business or prospects,
which could have a material adverse effect thereon, in order
for the disclosure herein relating to Newco not to be
misleading in any material respect.
3.1.7 NO BUSINESS; NO LIABILITIES: Newco has not conducted any
business or incurred any liabilities or obligations prior to
the date hereof, except solely in connection with its
organization and formation.
3.2 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS: Each of the
Stockholders hereby severally represents and warrants to Newco as
follows as of the date hereof:
3.2.1 ORGANIZATION: Such Stockholder is a corporation duly organized
and validly existing under the laws of its jurisdiction of
organization and has all the requisite corporate power and
authority to own and lease its respective properties, to carry
on its respective business as presently conducted and as
proposed to be conducted and to carry out the transactions
contemplated hereby.
3.2.2 AUTHORITY: Such Stockholder has full legal right, power
and authority to enter into this Agreement and to perform
its obligations hereunder, which have been duly authorized
by all requisite corporate action. This Agreement is the
valid and binding obligation of such Stockholder,
<PAGE>
enforceable against it in accordance with its terms except
as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general
application affecting the enforcement of creditors' rights
generally, and except as enforcement of rights to indemnity
and contribution hereunder may be limited by United States
federal or state securities laws or principles of public
policy.
3.2.3 NO CONFLICTS: The execution, delivery and performance by such
Stockholder of this Agreement, purchase of the Shares, and
compliance with the provisions hereof by such Stockholder will
not:
(i) violate any provision of applicable law, statute,
rule or regulation known by and applicable to such
Stockholder or any ruling, writ, injunction, order,
judgment or decree of any court, arbitrator,
administrative agency or other governmental body
applicable to such Stockholder or any of its
properties or assets;
(ii) conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute
(with notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or
acceleration) under the charter or organizational
documents of such Stockholder or any material contract
to which such Stockholder is a party, except where
such violation, conflict or breach would not,
individually or in the aggregate, have a material
adverse effect on such Stockholder; or
(iii) result in the creation of, any Encumbrance upon any of
the properties or assets of such Stockholder.
3.2.4 APPROVALS: As of the date hereof, no permit, authorization,
consent or approval of or by, or any notification of or filing
with, any Person is required in connection with the execution,
delivery or performance of this Agreement by such Stockholder.
3.2.5 INVESTMENT REPRESENTATIONS: Such Stockholder is
sophisticated in transactions of this type and capable of
evaluating the merits and risks of its investment in Newco.
Such Stockholder has not been formed solely for the purpose
of making this investment and such Stockholder is acquiring
the Common Stock and Preferred Stock for investment for its
own account, not as a nominee or agent, and not with the
view to, or for resale in connection with, any distribution
of any part thereof. Such Stockholder understands that the
Shares have not been registered under the Securities
<PAGE>
Act or applicable state and foreign securities laws by
reason of a specific exemption from the registration
provisions of the Securities Act and applicable state and
foreign securities laws, the availability of which depends
upon, among other things, the bona fide nature of the
investment intent and the accuracy of such Stockholders'
representations as expressed herein. Such Stockholder
understands that no public market now exists for any of the
Shares and that there is no assurance that a public market
will ever exist for such Shares.
CLAUSE 4
AUTHORIZATION AND CLOSING
4.1 Newco has authorized the issuance to (i) EIS of 2,980 shares of
Preferred Stock and (ii) Photogen of 12,000 shares of Common Stock,
issuable as provided in Clause 4.3 hereof.
4.2 Photogen and EIS hereby subscribe for the number of Shares set forth in
Clause 4.1 and shall pay to Newco in consideration therefor, by wire
transfer of immediately available funds (to a bank account established
by Newco in connection with Completion) the subscription amounts each
as provided in Clause 4.4.1.
4.3 The closing (the "CLOSING") shall take place at the offices of Brock
Silverstein LLC at 800 Third Avenue, New York, New York 10022 on the
date hereof or such other places if any, as the Parties may agree and
shall occur contemporaneously with the closing under the Photogen
Securities Purchase Agreement.
4.4 At the Closing, each of the Stockholders shall take or (to the extent
within its powers) cause to be taken the following steps at directors
and shareholder meetings of Newco, or such other meetings or locations,
as appropriate:
4.4.1 Newco shall issue and sell to EIS, and EIS shall purchase from
Newco, upon the terms and subject to the conditions set forth
herein, 2,980 shares of Preferred Stock for an aggregate
purchase price of $2,985,000. Newco shall issue and sell to
Photogen, and Photogen shall purchase from Newco, upon the
terms and conditions set forth herein, (i) 12,000 shares of
Common Stock for an aggregate purchase price of $12,015,000.
4.4.2 the Parties shall execute and deliver to each other, as
applicable, certificates in respect of the Common Stock and
Preferred Stock described above and any other certificates,
resolutions or documents which the
<PAGE>
Parties shall reasonably require;
4.4.3. the adoption by Newco of Newco=s Memorandum of Association
and Bye-Laws;
4.4.4. the appointment of Kevin Insley, John Smolik and Eric
Wachter as Directors of Newco;
4.4.5. the resignation of all directors and the secretary of Newco
holding office prior to the execution of this Agreement and
delivery of written confirmation under seal by each Person
so resigning that he has no claim or right of action
against Newco and that Newco is not in any way obligated or
indebted to him; and
4.4.6. the transfer to Newco of the share register.
4.5 EXEMPTION FROM REGISTRATION:
The Shares will be issued under an exemption or exemptions from
registration under the Securities Act. Accordingly, the certificates
evidencing the Shares shall, upon issuance, contain the following
legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY SECURITIES LAWS OF A STATE OR OTHER
JURISDICTION AND MAY NOT UNDER ANY CIRCUMSTANCES BE
SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF (OTHER
THAN TO AN AFFILIATE OF THE ORIGINAL HOLDER OR AS
OTHERWISE PERMITTED IN THE AGREEMENT PURSUANT TO
WHICH THEY WERE ISSUED) EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY
LAWS, OR (ii) TO THE EXTENT APPLICABLE, RULE 144
UNDER THE SECURITIES ACT (OR ANY SIMILAR RULE UNDER
THE SECURITIES ACT RELATING TO THE DISPOSITION OF
SECURITIES) TOGETHER WITH AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE CORPORATION THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR
APPLICABLE STATE SECURITIES LAWS.
<PAGE>
4.6. Newco shall use reasonable efforts to file any documents that require
filing with the Registrar of Companies in Bermuda within the prescribed
time limits. EIS and Photogen shall provide all reasonable co-operation
to Newco in relation to the matters set forth in this Clause 4.6.
4.7. In the event that EIS exercises the Exchange Right prior to the
third anniversary of the Closing Date as set forth in Section 5 of
the Certificate of Designations, and Photogen is required to
transfer to EIS any shares of Common Stock, Newco shall,
immediately upon such exercise, take all necessary steps to ensure
that each share to be transferred by Photogen to EIS upon
exercise of the Exchange Right is duly and validly issued and
that EIS has full legal right, title and interest in and to such
shares of Preferred Stock thereby exchanged. The Parties
acknowledge that such Shares have been pledged to EIS pursuant to
the Photogen Securities Purchase Agreement and that EIS has
physical possession of such Shares; upon such exercise, EIS shall
be entitled to keep and retain such shares, which shall be owned
by EIS as provided above. In connection with the foregoing,
Newco and the Participants shall take all necessary or
appropriate steps to ensure such ownership by EIS.
CLAUSE 5
DIRECTORS; MANAGEMENT AND R&D COMMITTEES
5.1. DIRECTORS:
5.1.1 Prior to the exercise of the Exchange Right, the Board shall
be composed of three Directors.
Photogen shall have the right to nominate two directors of
Newco, ("PHOTOGEN DIRECTORS") and EIS shall have the right to
nominate one Director of Newco ("EIS DIRECTOR") which
Director, [****]. To the extent required by applicable Bermuda
law, in the event that the EIS Director is not a resident of
Bermuda, at least one Photogen Director shall be a resident of
Bermuda
[****]
[****]
5.1.2 If EIS removes the EIS Director, or Photogen removes any of
the Photogen Directors, EIS or Photogen, as the case may be,
shall indemnify the other Stockholder against any claim by
such removed Director arising
<PAGE>
from such removal.
5.1.3 The Directors shall meet not less than three times in each
Financial Year and all Board meetings shall be held in Bermuda
to the extent required pursuant to the laws of Bermuda or to
ensure the sole residence of Newco in Bermuda provided that
Directors may attend such meetings telephonically.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
5.1.4 At any such meeting, the presence of the EIS Director and at
least one of the Photogen Directors shall be required to
constitute a quorum and, subject to Clause 18 hereof, the
affirmative vote of a majority of the Directors present at a
meeting at which such a quorum is present shall constitute an
action of the Directors. In the event of any meeting being
inquorate, the meeting shall be adjourned for a period of
seven days. A notice shall be sent to the EIS Director and the
Photogen Directors specifying the date, time and place where
such adjourned meeting is to be held and reconvened.
5.1.5 [****]
(i) [****]
(ii) [****]
(in each case the "CHAIRMAN STATUS BOARD MEETING")
[****]
If the chairman is unable to attend any meeting of the Board
held prior to the Chairman Status Board Meeting, the Photogen
Directors shall be entitled to appoint another Photogen
Director to act as chairman in his place at the meeting.
If the chairman of Newco is unable to attend any meeting of
the Board held after the Chairman Status Board Meeting, the
Directors shall be entitled to appoint another Director to act
as chairman of Newco in his place at the meeting.
5.1.6 In case of an equality of votes at a meeting of the Board, the
chairman of Newco shall not be entitled to a second or casting
vote. In the event of continued deadlock, the Board shall
resolve the deadlock pursuant to the provisions set forth in
Clause 19.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
5.2 MANAGEMENT AND R&D COMMITTEES:
5.2.1 The Board shall appoint a management committee (the
"MANAGEMENT COMMITTEE") to consist of four members, two of
whom shall be nominated by Elan and two of whom shall be
nominated by Photogen, and each of whom shall be entitled to
one vote, whether or not present at any Management Committee
meeting. Decisions of the Management Committee shall require
the approval of all four members of the Management Committee.
Elan and Photogen shall be entitled to remove any of their
nominees to the Management Committee and appoint a replacement
in place of any nominees so removed. The number of members of
the Management Committee may be altered if agreed to by a
majority of the Directors and of the shareholders of Newco;
provided that, each of Elan and Photogen shall be entitled to
appoint an equal number of members to the Management
Committee. The Management Committee shall be responsible for,
INTER ALIA, devising, implementing and reviewing strategy for
the Project.
5.2.2 The Management Committee shall appoint a research and
development committee (the "R&D COMMITTEE"), which shall be
comprised of four members, two of whom shall be nominated by
Elan and two of whom shall be nominated by Photogen, and each
of whom shall have one vote, whether or not present at an R&D
Committee meeting during which research and development issues
are discussed. Decisions of the R&D Committee shall require
approval of all four members of the R&D Committee.
Elan and Photogen shall be entitled to remove any of their
nominees to the R&D Committee and appoint a replacement in
place of any nominees so removed. The number of members of the
R&D Committee may be altered if agreed to by a majority of the
directors and shareholders of Newco provided that each of Elan
and Photogen shall be entitled to appoint an equal number of
members to the R&D Committee.
5.2.3 The R&D Committee shall be responsible for:-
(i) designing that portion of the Business Plan that
relates to the Project for consideration by the
Management Committee;
(ii) establishing a joint Project team consisting of an
equal number of team members from Elan and Photogen,
including one Project leader from each of Elan and
Photogen; and
<PAGE>
(iii) implementing such portion of the Business Plan that
relates to the Project, as approved by the Management
Committee.
5.2.4 In the event of any dispute amongst the R&D Committee, the R&D
Committee shall refer such dispute to the Management Committee
whose decision on the dispute shall be binding on the R&D
Committee.
If the Management Committee cannot resolve the matter, the
dispute will be referred to a designated senior officer of
each of Elan and Photogen, and thereafter, in the event of
continued deadlock, pursuant to the deadlock provisions to be
set forth in Clause 19, involving inter alia, the referral of
the dispute to an expert, whose decision, however, will
ultimately be non-binding on the Participants. This process
shall also apply to any dispute within the Management
Committee.
Any ultimate deadlock within the Management Committee or the
Board (subject to applicable laws and the bye-laws of Newco)
will be settled by binding arbitration pursuant to Clause 24.
5.2.5 Elan and Photogen shall permit Newco or its duly authorized
representative on reasonable notice and at any reasonable
time during normal business hours to have access to inspect
and audit the accounts and records of Elan or Photogen and any
other book, record, voucher, receipt or invoice relating to
the calculation or the cost of the R&D Program and to the
accuracy of the reports which accompanied them. Any such
inspection of Elan's or Photogen's records, as the case may
be, shall be at the expense of Newco, except that if such
inspection reveals an overpayment in the amount paid to Elan
or Photogen, as the case may be, for the R&D Program hereunder
in any Financial Year of [****]% or more of the amount due to
Elan or Photogen, as the case may be, then the expense of such
inspection shall be borne [****] by Elan or Photogen, as the
case may be, instead of by Newco. Any surplus over the sum
properly payable by Newco to Elan or Photogen, as the case may
be, shall be paid promptly by Elan or Photogen, as the case
may be, to Newco. If such inspection reveals a deficit in the
amount of the sum properly payable to Elan or Photogen, as
the case may be, by Newco, Newco shall pay the deficit to Elan
or Photogen, as the case may be.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER
<PAGE>
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
CLAUSE 6
THE BUSINESS PLAN AND REVIEWS
6.1 The Directors shall meet together as soon as reasonably practicable
after the Closing Date hereof and shall agree upon and approve the
Business Plan for the current Financial Year within 60 days of the
Closing Date.
6.2 The Business Plan shall be reviewed and agreed by the unanimous
approval of the EIS Director and of Photogen Directors on a quarterly
basis.
6.3. Neither Participant shall be obliged to provide funding to Newco in the
absence of quarterly approval of the Business Plan and a determination
by each Participant, in its sole discretion, that Subsequent Funding
(as such term is defined in the Funding Agreement) shall be provided
for the development of the Products.
CLAUSE 7
RESEARCH AND DEVELOPMENT WORK
7.1 Subject to the provisions of Clause 6.3, Elan and Photogen, at Newco's
request, may undertake research and development work related to the
development and commercialization of the Products, at the request of
Newco and as articulated in the Business Plan, in furtherance of the
development and commercialisation of the Products and cultivation of
patent rights and know-how related to the Elan Intellectual Property,
Photogen Intellectual Property and Newco Intellectual Property.
7.2 The cost of such development work shall be Elan's and Photogen's, as
the case may be, [****] costs in respect thereof, [****] of such costs.
Research and development work that is sub-contracted by Elan or
Photogen to third party providers shall be charged by Elan or Photogen
to Newco at the amount invoiced by the relevant third party provider.
7.3 [****]
- ----------------
<PAGE>
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
CLAUSE 8
COMMERCIALIZATION
8.1 Newco shall diligently pursue the research, development, prosecution
and commercialization of the Products, as provided in the Business
Plan.
8.2 [****]
[****]
If Newco has not entered into an agreement with a third party within
the 6 month period described above, the Elan/Newco Option shall be
deemed to have re-commenced upon the same terms as set forth herein.
CLAUSE 9
SUBLICENSE AND ASSIGNMENT RIGHTS
9.1 Newco shall not be permitted to assign, license or sublicense any of
its rights in respect of the Newco Intellectual Property without the
prior written consent of Elan and Photogen, as the case may be, which
consent will not be unreasonably withheld or delayed; PROVIDED THAT
Elan shall in all cases, in its sole discretion, be entitled to
withhold its consent in the case of a proposed sublicense to any
Technological Competitor to Elan.
9.3 The Parties acknowledge and agree to be bound by the provisions of
Clause 2.5 of the Elan License Agreement and the provisions of Clause
2.7 of the Photogen License Agreement which set forth the agreement
between the Parties thereto in relation to sub-licensing of the Elan
Intellectual Property and the Photogen Intellectual Property
respectively.
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[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
CLAUSE 10
OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS /[****]
10.1 The Parties acknowledge and agree to be bound by the provisions of
Clause 3.1 of the Elan License Agreement and Clause 3.1 of the Photogen
License Agreement which set forth the agreement between the parties
thereto in relation to the ownership of the Elan Intellectual Property,
the Photogen Intellectual Property and the Newco Intellectual property
respectively.
10.2 The Parties acknowledge and agree to be bound by the provisions the
provisions of Clause 4 of the Elan License Agreement and the provisions
of Clause 4 of the Photogen License Agreement which set forth the
agreement between the parties thereto in relation to the [****]
obligations of Elan and Photogen, respectively.
CLAUSE 11
INTELLECTUAL PROPERTY RIGHTS
11.1 Subject to Clause 11.8 herein, Elan has the sole and exclusive right,
at its sole discretion and at its cost and expense, to prepare, file,
prosecute, enforce, maintain, and protect against infringement or
unauthorized use of all such Elan Patent Rights, and any other Elan
Intellectual Property.
11.2 Subject to Clause 11.8 herein, Photogen, at its cost and expense, shall
prepare, file, prosecute, enforce, maintain, and protect against
infringement or unauthorized use of all such Photogen Patent Rights,
and any other Photogen Intellectual Property.
11.3 Title and all other ownership rights to the GynNyc Intellectual
Property, including the Patent Rights, shall be governed by the General
Nycomed Agreement
11.4 Newco, at its cost and expense, shall prepare, file, prosecute and
maintain and protect against infringement of all patents and patent
applications relating to Newco Intellectual Property. Newco shall
timely appraise both Photogen and Elan in writing of any such activity
prior to occurrence of the same.
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
11.5 In the event that a Party informs the other Parties that it does not
intend to file patent applications on patentable inventions and
discoveries within the Photogen or Elan Intellectual Property as the
case may be, in the Field in one or more countries in the Territory or
fails to file such an application within a reasonable period of time,
Newco shall have the option at its expense to file and prosecute such
patent application(s) in the joint names of Newco and the Party not
intending or failing to so file. Upon written request from Newco, such
Party shall execute all documents, forms and declarations and to do all
things as shall be reasonably necessary to enable Newco to exercise
such option.
11.6 In the event that Newco informs both Elan and Photogen that it does not
intend to file an application on the Newco Intellectual Property in or
outside the Field, Elan shall have the right to file and prosecute such
inventions that Elan invents solely and Photogen shall have the right
to file and prosecute such patent applications on inventions which
Photogen invents solely and Elan and Photogen agree to negotiate in
good faith on the course of action to be taken with respect to Newco
Intellectual Property that both Elan and Photogen invent.
11.7 The Parties shall promptly inform each other in writing of any alleged
infringement of any patents within the Elan Patents, the Photogen
Patents or the Newco Patents or the GenNyc Intellectual Property or any
alleged misappropriation of trade secrets within the Elan Intellectual
Property, the Photogen Intellectual Property by a third party of which
it becomes aware and provide the others with any available evidence of
such infringement or misappropriation.
11.8 Newco shall have the right to enforce at its own expense and for its
own benefit the Elan Patents and the Photogen Patents or
misappropriation of the Elan Intellectual Property and the Photogen
Intellectual Property, against any third party infringement or
misappropriation, insofar as such infringements or misappropriation
relates solely to the Field. In the event that Newco takes such action,
Newco shall do so at its own cost and expense. At Newco's request, the
Parties shall cooperate with such action. Any recovery remaining after
the deduction by Newco of the reasonable expenses (including attorney's
fees and expenses) incurred in relation to such infringement proceeding
shall belong to Newco. Should Newco decide not to pursue such
infringers, within a reasonable period but in any event within sixty
(60) days after receiving written notice of such alleged infringement
or misappropriation either Party may in its discretion initiate such
proceedings in its own name, at its expense and for its own benefit,
and at such Party's request, Newco shall cooperate with such action.
<PAGE>
Alternatively, the Parties may agree to institute such proceedings in
their joint names and shall reach agreement as to the proportion in
which they shall share the proceeds of any such proceedings, and the
expense of any costs not recovered, or the costs or damages payable to
the third party. If the infringement of the Elan Patents or the
Photogen Patents affects both the Field as well as other products being
developed or commercialized by Photogen or Elan or its commercial
partners outside the Field, Photogen or Elan shall endeavor to agree as
to the manner in which the proceedings should be instituted and as to
the proportion in which they shall share the proceeds of any such
proceedings, and the expense of any costs not recovered, or the costs
or damages payable to the third party.
11.9 Newco shall have the first right but not the obligation to bring suit
or otherwise take action against any alleged infringement of the Newco
Patents or alleged misappropriation of the Newco Intellectual Property.
If any such alleged infringement or misappropriation occurs that gives
rise to a cause of action both inside and outside the Field, Newco, in
consultation with the other Parties, shall determine the cause of
action to be taken. In the event that Newco takes such action, Newco
shall do so at its own cost and expense and all damages and monetary
award recovered in or with respect to such action shall be the property
of Newco. Newco shall keep Elan and Photogen informed of any action in
a timely manner so as to enable Photogen and Elan to provide input in
any such action and Newco shall reasonably take into consideration any
such input. At Newco's request, the Parties shall cooperate with any
such action at Newco=s cost and expense.
11.10 In the event that Newco does not bring suit or otherwise take action
against all infringement of the Newco Patents or misappropriation of
the Newco Intellectual Property (i) if only one Party determines to
pursue such suit or take such action at its own cost and expense, it
shall be entitled to all damages and monetary award recovered in or
with respect to such action and (ii) if the other Parties pursue such
suit or action outside of Newco, they shall negotiate in good faith an
appropriate allocation of costs, expenses and recovery amounts.
In the event that a claim is or proceedings are brought against Newco
by a third party alleging that the sale, distribution or use of a
Product in the Territory or use of the Elan Intellectual Property or
the Photogen Intellectual Property, as the case may be, infringes the
intellectual property rights of such Party, Newco shall promptly advise
the other Parties of such threat or suit.
11.11 All actions of Newco required under this Clause 11 shall be
determined by the unanimous action of the Management Committee.
<PAGE>
CLAUSE 12
CROSS-LICENSES / EXPLOITATION OF NEWCO INTELLECTUAL OUTSIDE THE FIELD
12.1 Solely for the purpose of and insofar as is necessary, in each case,
for Elan to perform its obligations under the Elan License Agreement,
Newco shall grant to Elan a [****] worldwide, [****], fully paid-up
license for the term of the License Agreements:
12.1.1 to use the Newco Intellectual Property in the Field, and
12.1.2 subject to the terms and conditions of the Photogen License
Agreement, a [****] to use the Photogen Intellectual Property
in the Field, and subject to the terms and conditions of the
Photogen License Agreement and the General Nycomed Agreement,
the GenNyc Intellectual Property in the Field.
12.2 Solely for the purpose of and insofar as is necessary, in each case,
for Photogen to perform its obligations to Newco under the Photogen
License Agreement, Newco shall grant to Photogen a [****] worldwide,
[****], fully paid-up license for the term of the License Agreements:
12.2.1 to use the Newco Intellectual Property in the Field, and
12.2.2 subject to the terms and conditions of the Elan License
Agreement, a sublicense to use the Elan Intellectual Property
in the Field.
12.3 Elan shall be entitled to exploit the Newco Intellectual Property
outside the Field subject to the Parties negotiating a license
agreement in good faith (including all material provisions thereof,
including as to whether the license should be exclusive or
non-exclusive), pursuant to which Newco will grant Elan a license under
the Newco Intellectual Property outside the Field on a Product by
Product basis. The financial terms of the said license agreement shall
have regard, inter alia, to:
12.3.1 the amount of monies expended by Newco in developing the
Newco Intellectual Property;
- ----------------
<PAGE>
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
12.3.2 the materiality of the Newco Intellectual Property by
comparison to the further research and development work to be
conducted, and of the Elan Intellectual Property and the
Photogen Intellectual Property; and
12.3.3 the financial return likely to be earned by Elan from the
proposed exploitation outside the Field; and
12.3.4 the impact of the proposed exploitation of the Newco
Intellectual Property outside the Field on the exploitation of
the Newco Intellectual Property within the Field.
12.4 Photogen shall be entitled to exploit the Newco Intellectual Property
outside the Field subject to the Parties negotiating a license
agreement in good faith (including all material provisions thereof,
including as to whether the license should be exclusive or
non-exclusive), pursuant to which Newco will grant Photogen a license
under the Newco Intellectual Property outside the Field on a Product by
Product basis. The financial terms of the said license agreement shall
have regard, inter alia, to:
12.4.1 the amount of monies expended by Newco in developing the Newco
Intellectual Property;
12.4.2 the materiality of the Newco Intellectual Property by
comparison to the further research and development work to be
conducted, and of the Elan Intellectual Property and the
Photogen Intellectual Property; and
12.4.3 the financial return likely to be earned by Photogen from the
proposed exploitation outside the Field; and
12.4.4 the impact of the proposed exploitation of the Newco
Intellectual Property outside the Field on the exploitation of
the Newco Intellectual Property within the Field.
CLAUSE 13
REGULATORY
13.1 Newco shall keep the other Parties promptly and fully advised of
Newco's regulatory activities, progress and procedures. Newco shall
inform the other Parties of any dealings it shall have with an RHA, and
shall furnish the other Parties with copies of all correspondence
relating to the Products. The Parties
<PAGE>
shall collaborate to obtain any required regulatory approval of the RHA
to market the Products.
13.2 Newco shall, at its own cost, file, prosecute and maintain any and all
Regulatory Applications for the Products in the Territory in accordance
with the Business Plan.
13.3 Subject to Clause 13.5, and subject to a determination by Newco that
one or more Regulatory Approvals should be held in the name of Newco's
commercial partner such as a sub-licensee, any and all Regulatory
Approvals obtained hereunder for any Product shall remain the property
of Newco, provided that Newco shall allow Elan and Photogen access
thereto to enable Elan and Photogen to fulfill their respective
obligations and exercise their respective rights under this Agreement.
Newco shall maintain such Regulatory Approvals at its own cost.
13.4 It is hereby acknowledged that there are inherent uncertainties
involved in the registration of pharmaceutical products with the RHA's
insofar as obtaining approval is concerned and such uncertainties form
part of the business risk involved in undertaking the form of
commercial collaboration as set forth in this Agreement.
13.5 All Regulatory Approvals and the DMF (Drug Master File) relating to
the Elan Intellectual Property shall be processed by and be the
absolute property of Elan.
<PAGE>
CLAUSE 14
MANUFACTURING
Elan shall have the [****] right to manufacture and supply, and/or subcontract
the manufacture and supply of the Products.
A supply agreement with Elan shall be subject to negotiation and mutual
agreement by the Parties not later than the date of completion of Phase III (as
such term is commonly used in connection with FDA applications) of the R&D Plan.
The terms of the said supply agreements shall be on [****] terms, and shall be
negotiated in good faith by the Parties thereto.
[****]
[****]
CLAUSE 15
TECHNICAL SERVICES AND ASSISTANCE
15.1 Whenever commercially and technically feasible, Newco shall contract
with Photogen or Elan, as the case may be, to perform such other
services as Newco may require, other than those specifically dealt with
hereunder or in the License Agreements. In determining which Party
should provide such services, the Management Committee shall take into
account the respective infrastructure, capabilities and experience of
Elan and Photogen. There shall be no obligation upon either of Photogen
or Elan to perform such services.
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
15.2 Newco shall, if the Participants so agree, conclude an administrative
support agreement with Elan and/or Photogen on such terms as the
Parties thereto shall in good faith negotiate. The administrative
services shall include one or more of the following administrative
services as requested by Newco:
15.2.1 accounting, financial and other services;
15.2.2 tax services;
15.2.3 insurance services;
15.2.4 human resources services;
15.2.5 legal and company secretarial services;
15.2.6 patent and related intellectual property services; and
15.2.7 all such other services consistent with and of the same type
as those services to be provided pursuant to this Agreement,
as may be required.
The foregoing list of services shall not be deemed exhaustive and may
be changed from time to time upon written request by Newco.
15.3. The Parties agree that each Party shall effect and maintain
comprehensive general liability insurance in respect of all clinical
trials and other activities performed by them on behalf of Newco. The
Stockholders and Newco shall ensure that the industry standard
insurance policies shall be in place for all activities to be carried
out by Newco.
15.4 If Elan or Photogen so requires, Photogen or Elan, as the case may be,
shall receive, at times and for periods mutually acceptable to the
Parties, employees of the other Party (such employees to be acceptable
to the receiving Party in the matter of qualification and competence)
for instruction in respect of the Elan Intellectual Property or the
Photogen Intellectual Property, as the case may be, as necessary to
further the Project.
15.5 The employees received by Elan or Photogen, as the case may be, shall
be subject to obligations of confidentiality no less stringent than
those set out in Clause 22 and such employees shall observe the rules,
regulations and systems adopted by the Party receiving the said
employees for its own employees or visitors.
<PAGE>
CLAUSE 16
AUDITORS, BANKERS, REGISTERED OFFICE,
ACCOUNTING REFERENCE DATE; SECRETARY; COUNSEL
Unless otherwise agreed by the Stockholders and save as may be provided to the
contrary herein:
16.1 the auditors of Newco shall be [****];
16.2 the bankers of Newco shall be [****] or such other bank as may be
mutually agreed from time to time;
16.3 the accounting reference date of Newco shall be December 31st in
each Financial Year; and
16.4 the secretary of Newco shall be [****] or such other Person as may
be appointed by the Directors from time to time.
CLAUSE 17
TRANSFERS OF SHARES;
RIGHT OF FIRST OFFER; TAG ALONG RIGHTS
GENERAL:
17.1. No Stockholder shall, directly or indirectly, sell or otherwise
transfer (each, a "TRANSFER") any Shares held by it except in as
expressly permitted by and accordance with the terms of this Agreement.
Newco shall not, and shall not permit any transfer agent or registrar
for any Shares to, transfer upon the books of Newco any Shares from any
Stockholder to any transferee, in any manner, except in accordance with
this Agreement, and any purported transfer not in compliance with this
Agreement shall be void.
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
During the R&D Term, no Stockholder shall, directly or indirectly, sell
or otherwise Transfer any of its legal and/or beneficial interest in
the Shares held by it to any other Person. After completion of the R&D
Term, a Stockholder may Transfer Shares provided such Stockholder
complies with the provisions of Clauses 17.2 and 17.3.
Notwithstanding anything contained herein to the contrary, at all
times, EIS and/or Photogen shall have the right to Transfer any Shares
to their Affiliates provided, however, that such assignment does not
result in adverse tax consequences for any other Parties. EIS shall
have the right to Transfer any Shares to an Affiliate or special
purpose financing or similar entity established by Elan or EIS;
provided, that such Affiliates or special purpose financing or similar
entity shall agree to be expressly subject to and bound by all the
limitations and provisions which are embodied in this Agreement.
17.2 No Stockholder shall, except with the prior written consent of the
other Stockholder, create or permit to subsist any Encumbrance over or
in, all or any of the Shares held by it (other than by a Transfer of
such Shares in accordance with the provisions of this Agreement).
17.3 No Stockholder shall, except with the prior written consent of the
other Stockholder, create or permit to subsist any pledge, lien or
charge over, or grant any option or other rights in all or any of the
Shares held by it (other than by a Transfer of such Shares in
accordance with the provisions of this Agreement) made by it to Newco
unless any Person in whose favour any such pledge, lien, or charge is
created or permitted to subsist or such option or rights are granted or
such interest is disposed of shall be expressly subject to and bound by
all the limitations and provisions which are embodied in this
Agreement.
17.4 RIGHTS OF FIRST OFFER:
If at any time after the end of the R&D Term a Stockholder shall desire
to Transfer any Shares owned by it (a "SELLING STOCKHOLDER"), in any
transaction or series of related transactions other than a Transfer to
an Affiliate or subsidiary or in the case of EIS to a special purpose
financing or similar entity established by EIS, then such Selling
Stockholder shall deliver prior written notice of its desire to
Transfer (a "NOTICE OF INTENTION") (i) to Newco and (ii) to the
Stockholders who are not the Selling Stockholder (and any transferee
thereof permitted hereunder, if any), as applicable, setting forth such
Selling Stockholder's desire to make such Transfer, the number of
Shares proposed to be transferred (the "OFFERED SHARES") and the
proposed form of transaction (the "TRANSACTION PROPOSAL"), together
with any available documentation relating thereto, if any, and the
price at which such Selling Stockholder proposes to Transfer the
Offered
<PAGE>
Shares (the "OFFER PRICE"). The "Right of First Offer" provided for
in this Clause 17 shall be subject to any "Tag Along Right"
benefiting a Stockholder which may be provided for by Clause 17,
subject to the exceptions set forth therein.
Upon receipt of the Notice of Intention, the Stockholders who are not
the Selling Stockholder shall have the right to purchase at the Offer
Price the Offered Shares, exercisable by the delivery of notice to the
Selling Stockholder (the "NOTICE OF EXERCISE"), with a copy to Newco,
within 10 business days from the date of receipt of the Notice of
Intention. If no such Notice of Exercise has been delivered by the
Stockholders who are not the Selling Stockholder within such
10-business day period, or such Notice of Exercise does not relate to
all of the Offered Shares covered by the Notice of Intention, then the
Selling Stockholder shall be entitled to Transfer all of the Offered
Shares to the intended transferee. In the event that all of the Offered
Shares are not purchased by the non-selling Stockholders, the Selling
Stockholder shall sell the available Offered Shares within 30 days
after the delivery of such Notice of Intention on terms no more
favorable to a third party than those presented to the non-selling
Stockholders. If such sale does not occur, the Offered Shares shall
again be subject to the Right of First Offer set forth in Clause 17.4.
In the event that any of the Stockholders who are not the Selling
Stockholder exercise their right to purchase all of the Offered Shares
(in accordance with this Clause 17), then the Selling Stockholder shall
sell all of the Offered Shares to such Stockholder(s), in the amounts
set forth in the Notice of Intention, after not less than 10 business
days and not more than 25 business days from the date of the delivery
of the Notice of Exercise. In the event that more than one of the
Stockholders who are not the Selling Stockholders wish to purchase the
Offered Shares, the Offered Shares shall be allocated to such
Stockholders on the basis of their pro rata equity interests in Newco.
The rights and obligations of each of the Stockholders pursuant to the
Right of First Offer provided herein shall terminate upon the date that
the Common Stock is registered under Section 12(b) or 12(g) of the
Exchange Act.
At the closing of the purchase of all of the Offered Shares by the
Stockholders who are not the Selling Stockholder (scheduled in
accordance with Clause 17), the Selling Stockholder shall deliver
certificates evidencing the Offered Shares being sold, duly endorsed,
or accompanied by written instruments of transfer in form reasonably
satisfactory to the Stockholders who are not the Selling Stockholder,
duly executed by the Selling Stockholder, free and clear of any adverse
claims, against payment of the purchase price therefor in cash, and
such other customary documents as shall be necessary in connection
therewith.
<PAGE>
17.5 TAG ALONG RIGHTS:
Subject to Clause 17.4, a Stockholder (the "TRANSFERRING STOCKHOLDER")
shall not Transfer (either directly or indirectly), in any one
transaction or series of related transactions, to any Person or group
of Persons, any Shares, unless the terms and conditions of such
Transfer shall include an offer to the other Stockholders (the
"REMAINING STOCKHOLDERS"), to sell Shares at the same price and on the
same terms and conditions as the Transferring Stockholder has agreed to
sell its Shares (the "TAG ALONG RIGHT").
In the event a Transferring Stockholder proposes to Transfer any Shares
in a transaction subject to this Clause 17.5, it shall notify, or cause
to be notified, the Remaining Stockholders in writing of each such
proposed Transfer. Such notice shall set forth: (i) the name of the
transferee and the amount of Shares proposed to be transferred, (ii)
the proposed amount and form of consideration and terms and conditions
of payment offered by the transferee (the "TRANSFEREE TERMS") and (iii)
that the transferee has been informed of the Tag Along Right provided
for in this Clause 17, if such right is applicable, and the total
number of Shares the transferee has agreed to purchase from the
Stockholders in accordance with the terms hereof.
The Tag Along Right may be exercised by each of the Remaining
Stockholders by delivery of a written notice to the Transferring
Stockholder (the "CO-SALE NOTICE") within 10 business days following
receipt of the notice specified in the preceding subsection. The
Co-sale Notice shall state the number of Shares owned by such Remaining
Stockholder which the Remaining Stockholder wishes to include in such
Transfer; provided, however, that without the written consent of the
Transferring Stockholder, the amount of such securities belonging to
the Remaining Stockholder included in such Transfer may not be greater
than such Remaining Stockholder's percentage beneficial ownership of
Fully Diluted Common Stock multiplied by the total number of shares of
Common Stock to be sold by both the Transferring Stockholder and all
Remaining Stockholders. Upon receipt of a Co-sale Notice, the
Transferring Stockholder shall be obligated to transfer at least the
entire number of Shares set forth in the Co-sale Notice to the
transferee on the Transferee Terms; provided, however, that the
Transferring Stockholder shall not consummate the purchase and sale of
any Shares hereunder if the transferee does not purchase all such
Shares specified in all Co-sale Notices. If no Co-sale Notice has been
delivered to the Transferring Stockholder prior to the expiration of
the 10 business day period referred to above and if the provisions of
this Section have been complied with in all respects, the Transferring
Stockholder shall have the right for a 30 day calendar day period to
Transfer Shares to the transferee on the Transferee Terms without
further notice to any other party, but after such 30-day period, no
such Transfer may be made without again giving notice to the Remaining
Stockholders of the proposed Transfer and
<PAGE>
complying with the requirements of this Clause 17.
At the closing of any Transfer of Shares subject to this Clause 17, the
Transferring Stockholder, and the Remaining Stockholder, in the event
such Tag Along Right is exercised, shall deliver certificates
evidencing such securities as have been Transferred by each, duly
endorsed, or accompanied by written instruments of transfer in form
reasonably satisfactory to the transferee, free and clear of any
adverse claim, against payment of the purchase price therefor.
Notwithstanding the foregoing, this Clause 17 shall not apply to any
sale of Common Stock pursuant to an effective registration statement
under the Securities Act in a bona fide public offering.
CLAUSE 18
MATTERS REQUIRING PARTICIPANTS' APPROVAL
18.1 In consideration of Photogen and Elan agreeing to enter into the
License Agreements, the Parties hereby agree that Newco shall not
without the prior approval of the EIS Director and all of the Photogen
Directors:
18.1.1. make a material Newco determination outside the ordinary
course of business, including, among other things,
acquisitions or dispositions of intellectual property and
licenses or sublicenses, changes in the Business or the Newco
budget; entry into joint ventures and similar arrangements as
they relate to the Licensed Technologies and changes to the
Business Plan as they relate to the Licensed Technologies;
18.1.2. issue any unissued Shares or unissued Common Stock
Equivalents, or create or issue any new shares (including a
split of the Shares) or Common Stock Equivalents, except as
expressly permitted by the Newco Memorandum of Association
and Bye-Laws (it being agreed that Newco shall not issue
additional shares of authorized but unissued shares of
Preferred Stock without the prior approval of the EIS
Director and all of the Photogen Directors except to the
extent provided for in the Transaction Documents);
18.1.3. alter any rights attaching to any class of share in the
capital of Newco or alter the Newco Memorandum of Association
and Bye-Laws;
18.1.4. consolidate, sub-divide or convert any of Newco's share
capital or in
<PAGE>
any way alter the rights attaching thereto;
18.1.5. dispose of all or substantially all of the assets of Newco;
18.1.6. do or permit or suffer to be done any act or thing whereby
Newco may be wound up (whether voluntarily or compulsorily),
save as otherwise expressly provided for in this Agreement;
18.1.7. enter into any contract or transaction except in
the ordinary and proper course of the Business on
arm's length terms;
18.1.8. licence or sub-licence any of the Elan Intellectual
Property, Photogen Intellectual Property, Newco
Intellectual Property;
18.1.9. amend or vary the terms of the Photogen License Agreement
or the Elan License Agreement;
18.1.10. permit a person other than Newco to own a regulatory
approval relating to the Product(s);
18.1.11. approve, amend or vary the Business Plan or the Newco
budget;
18.1.12. alter the number of Directors; and
18.1.13. whether any shares of Newco shall be registered for public
trading with any governmental authority for public trading
in any securities market other than pursuant to demand
registration under the Registration Rights agreement
applicable to Newco.
CLAUSE 19
DISPUTES
19.1 Should any dispute or difference arise between Elan and Photogen, or
between Elan or Photogen and Newco, during the period that this
Agreement is in force, other than a dispute or difference relating to
(i) the interpretation of any provision of this Agreement, (ii) the
interpretation or application of law, or (iii) the ownership of any
intellectual property, then any Party may forthwith give notice to the
other Parties that it wishes such dispute or difference to be referred
to the chief executive officer of Photogen and the President of EPT.
<PAGE>
19.2 In any event of a notice being served in accordance with Clause 19.1,
each of the Participants shall within 14 days of the service of such
notice prepare and circulate to the chief executive officer of each
Participant a memorandum or other form of statement setting out its
position on the matter in dispute and its reasons for adopting that
position. Each memorandum or statement shall be considered by the chief
executive officers of the Participants who shall endeavor to resolve
the dispute. If the chief executive officers of the Participants agree
upon a resolution or disposition of the matter, they shall each sign a
statement which sets out the terms of their agreement. The Participants
agree that they shall exercise the voting rights and other powers
available to them in relation to Newco to procure that the agreed terms
are fully and promptly carried into effect.
19.3 In the event the chief executive officers of the Participants are
unable to resolve a dispute or difference when it is referred to them
under Clause 19.1 which relates to the interpretation of this Agreement
or any other Transaction Document or the compliance of the Parties with
their legal obligations thereunder, such dispute or difference shall be
referred to arbitration in accordance with Clause 24.8.3 hereof. If the
dispute or difference does not relate to the interpretation of this
Agreement or any other Transaction Document or the compliance of the
Parties with their legal obligations thereunder, the provisions of
Clause 24.8.2 shall govern.
CLAUSE 20
TERMINATION
20.1 This Agreement shall govern the operation and existence of
Newco until:
20.1.1 terminated by written agreement of all Parties hereto; or
20.1.2 otherwise terminated in accordance with this Clause 20.
20.2 For the purpose of this Clause 20, a "RELEVANT EVENT" is committed
or suffered by a Participant if:
20.2.1 it commits a material breach of its obligations under this
Agreement or the applicable License and fails to remedy it
within 60 days of being specifically required in writing to do
so by the other Participant; provided, however, that if the
breaching Participant has proposed a course of action to
rectify the breach and is acting in good faith to rectify same
but has not cured the breach by the 60th day, such period
shall be extended by such period as is reasonably necessary to
permit the breach to be rectified; or
20.2.2 a distress, execution, sequestration or other process is
levied or enforced
<PAGE>
upon or sued out against substantially all of its assets
which is not discharged or challenged within 30 days; or
20.2.3 it is unable to pay its debts in the normal course of
business; or
20.2.4 it ceases wholly or substantially to carry on its business,
otherwise than for the purpose of a reconstruction or
amalgamation, without the prior written consent of the other
Participant (such consent not to be unreasonably withheld); or
20.2.5 the appointment of a liquidator, receiver, administrator,
examiner, trustee or similar officer of such Participant or
over all or substantially all of its assets under the law of
any applicable jurisdiction, including without limitation, the
United States of America, Bermuda or Ireland; or
20.2.6 an application or petition for bankruptcy, corporate
re-organization, composition, administration, examination,
arrangement or any other procedure similar to any of the
foregoing under the law of any applicable jurisdiction,
including without limitation, the United States of America,
Bermuda or Ireland, is filed, and is not discharged within 60
days, or a Participant applies for or consents to the
appointment of a receiver, administrator, examiner or similar
officer of it or of all or a material part of its assets,
rights or revenues or the assets and/or the business of a
Participant are for any reason seized, confiscated or
condemned.
20.4 If either Participant commits or suffers a Relevant Event, the other
Participant shall be entitled, within three months of the occurrence of
the Relevant Event, to require the defaulting Participant (the
"RECIPIENT PARTICIPANT") to sell on reasonable terms of payment to the
non-defaulting Participant (the "PROPOSING PARTICIPANT") all (but not
some only) of the Shares, held or beneficially owned by the Recipient
Participant for an amount equal to [****]% of the fair market value of
the Shares of the Recipient Participant (the "BUYOUT OPTION").
20.5 The Proposing Participant shall notify the Recipient Participant of the
exercise of the Buyout Option, no later than 30 business days prior to
the proposed exercise thereof, by delivering written notice to the
Recipient Participant stating that the Buyout Option is exercised and
the price at which the Proposing Participant is willing to purchase the
Shares of the Recipient Participant.
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
20.6 In the event that the Participants do not agree upon a purchase price
for the Shares within five Business Days following the receipt by the
Recipient Participant of written notice from the Proposing Participant
pursuant to Clause 20.5 above, the Proposing Participant may contact
the American Arbitration Association ("AAA"), sitting in New York City
and request that an independent US-based arbitrator who is expert in
valuation and the pharmaceutical/biotechnology industry be appointed
within 10 Business Days. The AAA shall endeavor to select an arbitrator
who is technically knowledgeable in the pharmaceutical/biotechnology
industry (and who directly and through his affiliates, has no business
relationship with, or shareholding in, either the Proposing Participant
or the Recipient Participant). Promptly upon being notified of the
arbitrator's appointment, the Proposing Participant and the Recipient
Participant shall submit to the arbitrator details of their assessment
of the fair market value for the Shares of the Recipient Participant
together with such information as they think necessary to validate
their assessment. The arbitrator shall notify the Recipient Participant
of [****]% of the fair market value assessed by the Proposing
Participant (the "PROPOSING PARTICIPANT PRICE") and shall notify the
Proposing Participant of [****]% of the fair market value assessed by
the Recipient Participant (the "RECIPIENT PARTICIPANT PRICE"). The
Proposing Participant and the Recipient Participant shall then be
entitled to make further submissions to the arbitrator within five
Business Days explaining why the Recipient Participant Price or the
Proposing Participant Price, as the case may be, is unjustified. The
arbitrator shall thereafter meet with the Proposing Participant and the
Recipient Participant and shall thereafter choose either the Recipient
Participant Price or the Proposing Participant Price (but not any other
price) as the purchase price for the Shares (the "PURCHASE PRICE") on
the basis of which price the expert determines to be closer to [****]%
of the fair market value for the Shares of the Recipient Participant.
The arbitrator shall use his best efforts to determine the Purchase
Price within 30 Business Days of his appointment. The Proposing
Participant and the Recipient Participant shall bear the costs of the
arbitrator equally provided that the arbitrator may, in his discretion,
allocate all or a portion of such costs to one Party. Any decision of
the arbitrator shall be final and binding.
20.7 The Proposing Participant shall purchase the Shares of the Recipient
Participant by delivery of the Purchase Price in cash no later than the
15th Business Day following determination of the Purchase Price by the
expert.
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
20.8 The Shares of the Recipient Participant so transferred shall be sold by
the transferor as beneficial owner with effect from the date of such
transfer free from any lien, charge or encumbrance with all rights and
restrictions attaching thereto. If the Proposing Participant elects to
purchase the Shares of the Recipient Participant, the Shares of the
Recipient Participant shall be sold by the Recipient Participant as
beneficial owner for a price equal to [****]% of the Purchase Price
with effect from the date specified by the Proposing Participant in its
notice of election free from any lien, charge or encumbrance together
with all rights attaching thereto.
20.9 If the Proposing Participant exercises the Buyout Option, both parties
will negotiate in good faith to agree to additional reasonable
provisions and/or amendments to the License Agreements to protect the
intellectual property rights of the Recipient Party.
20.10 If either Participant commits a Relevant Event, the other Stockholder
shall have in addition to all other legal and equitable rights and
remedies hereunder, the right to terminate this Agreement upon 30 days'
written notice.
20.11 In the event of a termination of the Elan License Agreement and/or the
Photogen License Agreement, both parties will negotiate in good faith
to determine whether this Agreement should be terminated and if so,
which provisions should survive termination.
20.12 The provisions of Clauses 1.1, 3, 6, 5.1, 10, 19, 20 and 22 shall
survive the termination of this Agreement under this Clause 20.10 or by
mutual consent pursuant to Clause 20.1 in accordance with their terms;
all other terms and provisions of this Agreement shall cease to have
effect and be null and void upon the termination of this Agreement
under this Clause 20.10 or by mutual consent pursuant to Clause 20.1.
CLAUSE 21
SHARE RIGHTS
[****]
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
CLAUSE 22
CONFIDENTIALITY
22.1 The Parties and/or Newco acknowledge and agree that it may be
necessary, from time to time, to disclose to each other
confidential and/or proprietary information, including without
limitation, inventions, works of authorship, trade secrets,
specifications, designs, data, know-how and other information,
relating to the Field, the Products, present or future products,
the Newco Intellectual Property, the Elan Intellectual Property or
the Photogen Intellectual Property, as the case may be, methods,
compounds, research projects, work in process, services, sales
suppliers, customers, employees and/or business of the disclosing
Party, whether in oral, written, graphic or electronic form
(collectively "CONFIDENTIAL INFORMATION").
22.2 Any Confidential Information revealed by a Party to another Party shall
be maintained as confidential and shall be used by the receiving Party
exclusively for the purposes of fulfilling the receiving Party's rights
and obligations under this Agreement, and for no other purpose.
Confidential Information shall not include:
22.2.1 information that is generally available to the public;
22.2.2 information that is made public by the disclosing Party;
22.2.3 information that is independently developed by the receiving
Party, as evidenced by such Party's records, without the aid,
application or use of the disclosing Party's Confidential
Information;
22.2.4 information that is published or otherwise becomes part of the
public domain without any disclosure by the receiving Party,
or on the part of the receiving Party's directors, officers,
agents, representatives or employees;
22.2.5 information that becomes available to the receiving Party on a
non-confidential basis, whether directly or indirectly, from a
source other than the disclosing Party, which source did not
acquire this information on a confidential basis;
22.2.6 information which the receiving Party is required to disclose
pursuant to:
(i) a valid order of a court or other governmental body
or any political
<PAGE>
subdivision thereof or as otherwise required by law,
rule or regulation;
(ii) other requirement of law; provided, however, that
if the receiving Party becomes legally required
to disclose any Confidential Information, the
receiving Party shall give the disclosing Party
prompt notice of such fact so that the
disclosing Party may obtain a protective order
or confidential treatment or other appropriate
remedy concerning any such disclosure. The
receiving Party shall fully co-operate with the
disclosing Party in connection with the
disclosing Party's efforts to obtain any such
order or other remedy. If any such order or
other remedy does not fully preclude
disclosure, the receiving Party shall make such
disclosure only to the extent that such
disclosure is legally required;
22.2.7 information which was already in the possession of the
receiving Party at the time of receiving such information, as
evidenced by its records, provided such information was not
previously provided to the receiving party from a source which
was under an obligation to keep such information confidential;
or
22.2.8 information that is the subject of a written permission to
disclose, without restriction or limitation, by the disclosing
Party.
22.3 Each Party agrees to disclose Confidential Information of another Party
only to those employees, representatives and agents requiring knowledge
thereof in connection with their duties directly related to the
fulfilling of the Party's obligations under this Agreement, so long as
such persons are under an obligation of confidentiality no less
stringent than as set forth herein. Each Party further agrees to inform
all such employees, representatives and agents of the terms and
provisions of this Agreement and their duties hereunder and to obtain
their consent hereto as a condition of receiving Confidential
Information. Each Party agrees that it will exercise a reasonable
degree of care and protection to preserve the proprietary and
confidential nature of the Confidential Information disclosed by a
Party. Each Party agrees that it will, upon request of another Party,
return all documents and any copies thereof containing Confidential
Information belonging to or disclosed by such other Party. Each Party
shall promptly notify the other Parties upon discovery of any
unauthorized use or disclosure of the other Parties' Confidential
Information.
22.4 Notwithstanding the above, each Party may use or disclose Confidential
Information disclosed to it by another Party to the extent such use or
disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, complying with
patent applications, prosecuting or defending
<PAGE>
litigation, complying with applicable governmental regulations or
otherwise submitting information to tax or other governmental
authorities, conducting clinical trials, or granting a permitted
sub-license or otherwise exercising its rights hereunder; provided,
that if a Party is required to make any such disclosure of the
other Party's Confidential Information, other than pursuant to a
confidentiality agreement, such Party shall inform the third party
recipient of the terms and provisions of this Agreement and their
duties hereunder and shall obtain their commitment to abide by the
provisions of Clause 22 as a condition of releasing to the third
party recipient the Confidential Information.
22.5 Any breach of this Clause 22 by any employee, representative or
agent of a Party is considered a breach by the Party itself.
22.6 The provisions relating to confidentiality in this Clause 22 shall
remain in effect during the Term and for a period of [****] following
the termination of this Agreement.
22.7 The Parties agree that the obligations of this Clause 22 are necessary
and reasonable in order to protect the Parties= respective businesses,
and each Party expressly agrees that monetary damages would be
inadequate to compensate a Party for any breach by the other Party of
its covenants and agreements set forth herein. Accordingly, the Parties
agree and acknowledge that any such violation or threatened violation
will cause irreparable injury to a Party and that, in addition to any
other remedies that may be available, in law or in equity or otherwise,
any Party shall be entitled to obtain injunctive relief against the
threatened breach of the provisions of this Clause 22, or a
continuation of any such breach by the other Party, specific
performance and other equitable relief to redress such breach together
with its damages and reasonable counsel fees and expenses to enforce
its rights hereunder, without the necessity of proving actual or
express damages.
CLAUSE 23
COSTS
22.1 Each Stockholder shall bear its own legal and other costs incurred in
relation to preparing and concluding this Agreement and the Transaction
Documents.
22.2 All other costs, legal fees, registration fees and other expenses
relating to the transactions contemplated hereby, including the costs
and expenses incurred in relation to the incorporation of Newco, shall
be borne by Newco.
<PAGE>
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
CLAUSE 24
GENERAL
24.1 GOOD FAITH:
Each of the Parties hereto undertakes with the others to do all things
reasonably within its power that are necessary or desirable to give
effect to the spirit and intent of this Agreement.
24.2 FURTHER ASSURANCE:
At the request of any of the Parties, the other Party or Parties shall
(and shall use reasonable efforts to procure that any other necessary
parties shall) execute and perform all such documents, acts and things
as may reasonably be required subsequent to the signing of this
Agreement for assuring to or vesting in the requesting Party the full
benefit of the terms hereof.
24.3 NO REPRESENTATION:
Each of the Parties hereto hereby acknowledges that in entering into
this Agreement it has not relied on any representation or warranty
except as expressly set forth herein or in any document referred to
herein.
24.4 FORCE MAJEURE:
Neither Party to this Agreement shall be liable for delay in the
performance of any of its obligations hereunder if such delay is caused
by or results from causes beyond its reasonable control, including
without limitation, acts of God, fires, strikes, acts of war (whether
war be declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances or intervention of any
relevant government authority, but any such delay or failure shall be
remedied by such Party as soon as practicable.
24.5 RELATIONSHIP OF THE PARTIES:
Nothing contained in this Agreement is intended or is to be construed
to constitute Elan/EIS and Photogen as partners, or Elan/EIS as an
employee or agent of Photogen, or Photogen as an employee or agent of
Elan/EIS.
<PAGE>
No Party hereto shall have any express or implied right or authority to
assume or create any obligations on behalf of or in the name of another
Party or to bind another Party to any contract, agreement or
undertaking with any third Party.
24.6 COUNTERPARTS:
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of
which when taken together shall constitute this Agreement.
24.7 NOTICES:
Any notice to be given under this Agreement shall be sent in writing by
registered or recorded delivery post or reputable overnight courier
such as Federal Express or telecopied to:
Elan/EIS at:
Lincoln House, Lincoln Place, Dublin 2, Ireland
Attention: Vice President & General Counsel
Elan Pharmaceutical Technologies,
a division of Elan Corporation, plc
Telephone: 353-1-709-4000
Fax: 353-1-709-4124
and
Elan International Services, Ltd.
102 St. James Court
Flatts, Smiths FL04
Bermuda
Attention: President
Telephone: 441-292-9169
Fax: 441-292-2224
Photogen at:
7327 Oak Ridge
Knoxville
TN3793
USA
<PAGE>
Attention: Chief Executive Officer
Telephone: 001 423 769 4011
Fax: 001 423 769 4013
with a copy to:
Grippo & Elden
Suite 3600
227 West Monroe
Chicago
Illinois 60606
USA
Attention: Theodore W Grippo
Telephone 001 312 704 7720
Fax: 001 312 558 1195
Newco at:
102 St. James Court
Flatts, Smiths FL04
Bermuda
Attention: Secretary
Telephone: 441-292-9169
Fax: 441-292-2224
or to such other address(es) as may from time to time be notified by
any Party to the others hereunder.
Any notice sent by mail shall be deemed to have been delivered within
three Business Days after dispatch or delivery to the relevant courier
and any notice sent by telecopy shall be deemed to have been delivered
upon confirmation of receipt. Notices of change of address shall be
effective upon receipt. Notices by telecopy shall also be sent by
another method permitted hereunder.
24.8 GOVERNING LAW; ARBITRATION
24.8.1. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
24.8.2. The Parties will attempt in good faith to resolve any
dispute arising out of or relating to this Agreement
promptly by negotiation between executives of the Parties.
In the event that such negotiations do not result in a
mutually acceptable resolution, the Parties agree to
consider other dispute resolution mechanisms
<PAGE>
including mediation.
In the event that the Parties fail to agree on a mutually
acceptable dispute resolution mechanism within 90 days of
written notice of a dispute by one Party to the other
Party, any such dispute shall be finally settled by
arbitration pursuant to Clause 24.8.3.
24.8.3 Any dispute under this Agreement (including any ultimate
deadlock within the Management Committee or the Board
(subject to applicable laws and the Newco Memorandum of
Association and Bye-Laws)) which is not settled by mutual
consent under Clause 24.8.2 shall be finally settled by
binding arbitration, conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association by one arbitrator appointed in accordance with
said rules. Such arbitrator shall be reasonably
satisfactory to each of the Parties; provided, that if the
Parties are unable to agree upon the identity of such
arbitrator within [****] days of demand by either Party,
then either Party shall have the right to petition a
presiding justice of the Supreme Court of New York, New
York County, to appoint an arbitrator.
The arbitration shall be held in New York, New York.
The arbitrator shall determine what discovery will be
permitted, consistent with the goal of limiting the cost
and time which the Parties must expend for discovery;
provided the arbitrator shall permit such discovery as he
deems necessary to permit an equitable resolution of the
dispute.
Any written evidence originally in a language other than
English shall be submitted in English translation
accompanied by the original or a true copy thereof.
The costs of the arbitration, including administrative and
arbitrator's fees, shall be shared equally by the Parties
and each Party shall bear its own costs and attorneys' and
witness' fees incurred in connection with the arbitration.
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
In rendering judgement, the arbitrator shall be instructed
by the Parties that he shall be permitted to select solely
from between the proposals for resolution of the relevant
issue presented by each Party, and not any other proposal.
A disputed performance or suspended performances pending
the resolution of the arbitration must be completed within
30 days following the final decision of the arbitrators or
such other reasonable period as the arbitrator determine in
a written opinion.
Any arbitration under this Agreement shall be completed
within one year from the filing of notice of a request for
such arbitration.
The arbitration proceedings and the decision shall not be
made public without the joint consent of the Parties and
each Party shall maintain the confidentiality of such
proceedings and decision unless otherwise permitted by the
other Party.
The Parties agree that the decision shall be the sole,
exclusive and binding remedy between them regarding any and
all disputes, controversies, claims and counterclaims
presented to the arbitrator. Application may be made to any
court having jurisdiction over the Party (or its assets)
against whom the decision is rendered for a judicial
recognition of the decision and an order of enforcement.
24.9 SEVERABILITY:
If any provision in this Agreement is agreed by the Parties to be,
deemed to be or becomes invalid, illegal, void or unenforceable under
any law that is applicable hereto, such provision will be deemed
amended to conform to applicable laws so as to be valid and enforceable
or, if it cannot be so amended without materially altering the
intention of the Parties, it will be deleted, with effect from the date
of such agreement or such earlier date as the Parties may agree, and
the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be impaired or affected in any way.
24.10 AMENDMENTS:
No amendment, modification or addition hereto shall be effective or
binding on any Party unless set forth in writing and executed by a duly
authorized representative of all Parties.
24.11 WAIVER:
No waiver of any right under this Agreement shall be deemed effective
unless contained in a written document signed by the Party charged with
such waiver,
<PAGE>
and no waiver of any breach or failure to perform shall be deemed to
be a waiver of any future breach or failure to perform or of any
other right arising under this Agreement.
24.12 ASSIGNMENT:
None of the Parties shall be permitted to assign its rights or
obligations hereunder without the prior written consent of the other
Parties except as follows:
24.12.1 Elan, EIS and/or Photogen shall have the right to
assign their rights and obligations hereunder to their
Affiliates provided, however, that such assignment does
not result in adverse tax consequences for any other
Parties.
24.12.2 Elan and EIS shall have the right to assign their
rights and obligations hereunder to a special purpose
financing or similar entity established by Elan or EIS
which assignee shall be capable of fulfilling such
obligations.
24.13 WHOLE AGREEMENT/NO EFFECT ON OTHER AGREEMENTS:
This Agreement (including the Schedules attached hereto) and the
Transaction Documents set forth all of the agreements and
understandings between the Parties with respect to the subject matter
hereof, and supersedes and terminates all prior agreements and
understandings between the Parties with respect to the subject matter
hereof. There are no agreements or understandings with respect to the
subject matter hereof, either oral or written, between the Parties
other than as set forth in this Agreement and the Transaction
Documents.
In the event of any ambiguity or conflict arising between the terms of
this Agreement and those of the Newco Memorandum of Association and
Bye-Laws, the terms of this Agreement shall prevail.
No provision of this Agreement shall be construed so as to negate,
modify or affect in any way the provisions of any other agreement
between any of the Parties unless specifically referred to, and solely
to the extent provided herein. In the event of a conflict between the
provisions of this Agreement and the provisions of the License
Agreements, the terms of this Agreement shall prevail unless this
Agreement specifically provide otherwise.
24.14 SUCCESSORS:
<PAGE>
This Agreement shall be binding upon and inure to the benefit of the
Parties hereto, their successors and permitted assigns.
<PAGE>
SCHEDULE 1
ELAN LICENSE AGREEMENT
<PAGE>
SCHEDULE 2
PHOTOGEN LICENSE AGREEMENT
<PAGE>
SCHEDULE 3
TECHNOLOGICAL COMPETITORS OF ELAN
[****]
(including any and all divisions or subsidiaries of such entities and
successor entities).
- ----------------
[****] REPRESENTS MATERIAL WHICH HAS BEEN REDACTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day
first set forth above.
SIGNED
BY: /s/ Kevin Insley
--------------------------------
for and on behalf of
ELAN PHARMA INTERNATIONAL LIMITED
in the presence of:
------------------------------
SIGNED
BY: /s/ Kevin Insley
--------------------------------
for and on behalf of
ELAN INTERNATIONAL SERVICES, LTD.
in the presence of:
------------------------------
SIGNED
BY: /s/ John Smolik
--------------------------------
for and on behalf of
PHOTOGEN TECHNOLOGIES, INC.
in the presence of: /s/
-----------------------------
SIGNED
BY: /s/ John Smolik
--------------------------------
for and on behalf of
PHOTOGEN NEWCO LTD.
in the presence of:
-----------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 817,063
<SECURITIES> 2,213,768
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,601,288
<PP&E> 1,503,267
<DEPRECIATION> (283,688)
<TOTAL-ASSETS> 5,434,635
<CURRENT-LIABILITIES> 1,082,125
<BONDS> 0
0
0
<COMMON> 36,917
<OTHER-SE> 4,315,593
<TOTAL-LIABILITY-AND-EQUITY> 5,434,635
<SALES> 0
<TOTAL-REVENUES> 157,050
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,618,896
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,461,846
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,461,846
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,461,846
<EPS-BASIC> (.09)
<EPS-DILUTED> (.09)
</TABLE>
