UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------- ----------------
Commission file number 000-23143
PROGENICS PHARMACEUTICALS, INC.
-------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3379479
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 Old Saw Mill River Road
Tarrytown, New York 10591
---------------------------
(Address of principal executive offices)
(Zip Code)
(914) 789-2800
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
----- -----
As of June 30, 1999 there were 9,446,366 shares of common stock, par
value $.0013 per share, of the registrant outstanding.
<PAGE>
PROGENICS PHARMACEUTICALS, INC.
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets............................... 3
Condensed Statements of Operations..................... 4
Condensed Statement of Stockholders' Equity............ 5
Condensed Statements of Cash Flows..................... 6
Notes to Condensed Financial Statements................ 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.......... 10
Item 3. Quantitative and Qualitative Disclosures
about Market Risk...................................... 13
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds........ 14
Item 4. Submission of Matters to a Vote of
Security Holders....................................... 14
Item 6. Exhibits and Reports on Form 8-K................. 14
2
<PAGE>
PROGENICS PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS
AT JUNE 30, 1999 AND DECEMBER 31, 1998 (Unaudited)
June 30, December 31,
1999 1998
ASSETS: -------------- --------------
Current assets:
Cash and cash equivalents.................... $ 13,384,326 $ 14,437,263
Marketable securities - short term........... 6,721,736 10,212,876
Accounts receivable.......................... 1,439,619 1,634,480
Interest receivable ......................... 260,599 300,340
Other current assets......................... 257,222 255,522
------------- -------------
Total current assets..................... 22,063,502 26,840,481
Marketable securities.......................... 2,734,195
Fixed assets, at cost, net of accumulated
depreciation and amortization................ 1,167,992 1,045,389
Investment in joint venture.................... 100,000
Security deposits and other assets............. 13,745 13,745
------------- -------------
Total assets............................. $ 26,079,434 $ 27,899,615
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable and accrued liabilities..... $ 1,498,868 $ 1,595,665
Amount due to joint venture.................. 500,000
Capital lease obligations, current portion... 109,142 107,346
------------- -------------
Total current liabilities................. 2,108,010 1,703,011
Amount due to joint venture.................... 802,535
Capital lease obligations...................... 65,667 117,166
------------- -------------
Total liabilities......................... 2,976,212 1,820,177
------------- -------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value, 14,320,174
authorized; none issued and outstanding
Common stock - $.0013 par value, 40,000,000
authorized; issued and outstanding -
9,446,366 in 1999, 9,358,207 in 1998....... 12,272 12,166
Additional paid-in capital................... 44,705,447 44,377,193
Unearned compensation........................ (851,080) (1,111,018)
Accumulated deficit.......................... (20,724,758) (17,207,993)
Accumulated other comprehensive
(loss) income.............................. (38,659) 9,090
------------- -------------
Total stockholders' equity................ 23,103,222 26,079,438
------------- -------------
Total liabilities and
stockholders' equity.................... $ 26,079,434 $ 27,899,615
============= =============
The accompanying notes are an integral part of these statements.
3
<PAGE>
PROGENICS PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
June 30, June 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Contract research and development... $ 2,245,226 $ 3,616,038 $ 4,859,832 $ 5,329,217
Research grants..................... 211,500 580,710 423,000 580,710
Product sales....................... 16,835 29,823 34,815 36,446
Interest income..................... 289,815 294,211 593,111 663,736
------------ ------------ ------------ ------------
Total revenues................... 2,763,376 4,520,782 5,910,758 6,610,109
------------ ------------ ------------ ------------
Expenses:
Research and development............ 2,960,354 2,533,911 5,320,634 3,911,441
General and administrative.......... 1,107,930 1,151,773 1,976,668 1,936,983
Loss in joint venture............... 1,796,934 1,796,934
Interest expense.................... 15,002 9,337 28,505 18,292
Depreciation and amortization....... 155,012 82,293 304,782 164,390
------------ ------------ ------------ ------------
Total expenses................... 6,035,232 3,777,314 9,427,523 6,031,106
------------ ------------ ------------ ------------
Net income (loss)................ $(3,271,856) $ 743,468 $(3,516,765) $ 579,003
============ ============ ============ ============
Net income (loss) per share - basic.... $(0.35) $ 0.08 $(0.37) $ 0.06
======= ======= ======= ========
Net income (loss) per share - diluted.. $(0.35) $ 0.07 $(0.37) $ 0.05
======= ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
PROGENICS PHARMACEUTICALS, INC.
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER TOTAL
------------------- PAID-IN UNEARNED ACCUMULATED COMPREHENSIVE STOCKHOLDERS' COMPREHENSIVE
Shares Amount CAPITAL COMPENSATION DEFICIT INCOME (LOSS) EQUITY LOSS
---------- -------- ----------- ------------ ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1998 9,358,207 12,166 $44,377,193 ($1,111,018) ($17,207,993) $9,090 $26,079,438
Amortization of
unearned compensation 259,938 259,938
Issuance of compensatory 48,332 48,332
stock options
Sale of Common Stock
under employee stock
purchase plans and
exercise of stock
options and warrants 88,159 106 279,922 280,028
Net loss (3,516,765) (3,516,765) ($3,516,765)
Change in unrealized
gain on marketable
securities (47,749) (47,749) (47,749)
--------- ------- ----------- ------------ ------------- --------- ------------ ------------
Balance at
June 30, 1999 9,446,366 $12,272 $44,705,447 ($851,080) ($20,724,758) ($38,659) $23,103,222 ($3,564,514)
========= ======= =========== ============ ============= ========= ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
PROGENICS PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
Six months ended June 30,
----------------------------
1999 1998
------------- -------------
Cash flows from operating activities:
Net(loss) income................................ $ (3,516,765) $ 579,003
------------- -------------
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization................. 304,782 164,390
Amortization of discounts, net of
premiums, on marketable securities........... 61,733 62,889
Amortization of discount on amount due
to joint venture............................. 5,601
Loss in joint venture......................... 1,796,934
Noncash expenses incurred in
connection with issuance of common
stock, stock options and warrants............ 308,270 350,006
Changes in assets and liabilities:
Decrease (increase) in accounts
receivable.................................. 194,861 (602,322)
Decrease in prepaid expenses and other
current assets.............................. 38,041
Decrease in accounts payable and
accrued expenses............................ (77,104) (407,937)
Increase in investment in LLC............... (600,000)
Decrease in income taxes payable............ (25,000)
------------- -------------
Total adjustments..................... 2,033,118 (457,974)
------------- -------------
Net cash (used in) provided by
operating activities........................ (1,483,647) 121,029
------------- -------------
Cash flows from investing activities:
Capital expenditures............................ (447,078) (164,461)
Sale of marketable securities................... 6,955,000
Purchase of marketable securities............... (6,307,537) (8,099,171)
------------- -------------
Net cash provided by (used in)
investing activities. ...................... 200,385 (8,263,632)
------------- -------------
Cash flows from financing activities:
Proceeds from the exercise of stock options and
other adjustments to stockholders' equity...... 280,028 176,601
Payment of capital lease obligations............ (49,703) (46,075)
------------- -------------
Net cash provided by financing
activities................................. 230,325 130,526
------------- -------------
Net decrease in cash and cash
equivalents................................ (1,052,937) (8,012,077)
------------- -------------
Cash and cash equivalents at beginning
of period....................................... 14,437,263 21,737,925
------------- -------------
Cash and cash equivalents at
end of period.............................. $ 13,384,326 $ 13,725,848
============= =============
Supplemental disclosure of noncash investing
and financing activities:
Fixed assets purchased with capital leases..... $ 60,652 $ 20,743
============= =============
The accompanying notes are an integral part of these statements.
6
<PAGE>
PROGENICS PHARMACEUTICALS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Interim Financial Statements
The interim Condensed Financial Statements of Progenics Pharmaceuticals, Inc.
(the "Company") have been prepared in accordance with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
information and disclosures necessary for a presentation of the Company's
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. In the opinion of management, these
financial statements reflect all adjustments, consisting only of normal
recurring accruals, necessary for a fair presentation of the Company's
financial position, results of operation and cash flows for such periods. The
results of operations for any interim periods are not necessarily indicative of
the results for the full year. These financial statements should be read in
conjunction with the financial statements and notes thereto contained in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998.
2. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses as of June 30, 1999 and December 31, 1998
consist of the following:
June 30, December 31,
1999 1998
------------ -------------
Accounts payable $ 1,300,761 $ 1,156,442
Accrued payroll and related costs 41,107 144,615
Legal and accounting fees payable 157,000 294,608
------------ -------------
$ 1,498,868 $ 1,595,665
============ =============
3. Net Income (Loss) Per Share
The Company's basic net income (loss) per share amounts have been computed
by dividing net income (loss) by the weighted average number of common shares
outstanding during the respective periods. For the three and six months ended
June 30, 1999, the Company reported net losses and, therefore no common stock
equivalents were included in the computation of diluted per share amounts since
such inclusion would have been antidilutive. For the three and six months
ended June 30, 1998, the Company reported net income and, therefore, the
calculation of diluted per share amounts includes all common stock equivalents
with exercise prices below the average per share price of the Company's common
stock for the respective periods. The calculations of basic and diluted net
income (loss) per share are as follows:
Net Income Per
(Loss) Shares Share
(Numerator) (Denominator) Amount
------------ ------------- -------
1999:
Three months-ended June 30, 1999:
Basic and Diluted: ($3,271,856) 9,428,955 ($0.35)
Six months-ended June 30, 1999:
Basic and Diluted: ($3,516,765) 9,400,728 ($0.37)
1998:
Three months-ended June 30, 1998:
Basic: $743,468 9,020,825 $0.08
Effect of Dilutive Securities:
Options 1,672,167
Warrants 211,233
----------
Diluted: $743,468 10,904,225 $0.07
Six months-ended June 30, 1998:
Basic: $579,003 9,008,623 $0.06
Effect of Dilutive Securities:
Options 1,691,153
Warrants 213,174
----------
Diluted: $579,003 10,912,950 $0.05
7
<PAGE>
Options and warrants which have been excluded from the diluted per
share amounts because their effect would have been antidilutive include the
following:
Three Months Ended June 30,
-------------------------------------------
1999 1998
--------------------- --------------------
Wtd. Avg. Wtd. Avg.
Wtd. Avg. Exercise Wtd. Avg. Exercise
Number Price Number Price
---------- --------- --------- ---------
Options and warrants with
exercise prices below the
average fair market value
of the Company's common
stock for the respective
periods 3,027,655 $ 6.64
Options and warrants with
exercise prices above the
average fair market value
of the Company's common
stock for the respective
periods 139,527 $14.54 12,667 $18.09
Six Months Ended June 30,
-------------------------------------------
1999 1998
--------------------- --------------------
Wtd. Avg. Wtd. Avg.
Wtd. Avg. Exercise Wtd. Avg. Exercise
Number Price Number Price
---------- --------- --------- ---------
Options and warrants with
exercise prices below the
average fair market value
of the Company's common
stock for the respective
periods 3,045,487 $ 6.59
Options and warrants with
exercise prices above the
average fair market value
of the Company's common
stock for the respective
periods 83,713 $14.88 3,729 $19.06
4. Formation of PSMA Development Company LLC
On June 15, 1999, the Company and CYTOGEN Corporation ("CYTOGEN")
(collectively, the "Members") formed a joint venture in the form of a limited
liability company (the "LLC") for the purposes of conducting research,
development, manufacturing and marketing of products related to prostate-
specific membrane antigen ("PSMA"). In connection with the formation of the
LLC, the Members entered into a series of agreements, including an LLC
Agreement, a License Agreement and a Services Agreement (collectively, the
"Agreements"). Each Member made an initial capital contribution of $100,000.
In general, each Member has equal representation on the LLC's management
committee and equal voting rights and rights to profits and losses of the LLC.
Under the LLC Agreement, as long as the Company is a Member, the Company
is required to pay to the LLC $2 million in supplemental capital contributions
at certain defined dates or upon the achievement of defined milestones by the
LLC, $500,000 of which was paid during June 1999. Such payments will, in turn,
be paid by the LLC to CYTOGEN in consideration for CYTOGEN granting to the LLC,
under the License Agreement, an exclusive worldwide license under certain
patents and patent applications to make, use, develop and sell products.
During the six months ended June 30, 1999, the Company recognized its allocated
share of the LLC's loss of approximately $1.8 million, representing the present
value of the $2 million payments in connection with the LLC Agreement. The
discount on the investment in the LLC will be amortized as interest expense
over the term of the remaining payments.
8
<PAGE>
The Company will engage in a research program on behalf of the LLC under
the Services Agreement and will be compensated for its services based on agreed
upon terms. The Company is required to fund the cost of research up to $3
million. All inventions made by the Company in connection with the Services
Agreement will be assigned to the LLC for its use and benefit.
The Agreements generally terminate upon the last to expire of the patents
granted by the Members to the LLC or upon breach by either party, which is not
cured within 60 days of written notice.
The Company accounts for its investment in the LLC in accordance with the
equity method of accounting. Selected operating statement data of the LLC for
the three and six months ended June 30, 1999 are as follows:
Three Months Ended Six Months Ended
June 30, 1999 June 30, 1999
------------------ ----------------
Total expenses $ 1,796,934 $ 1,796,934
------------ ------------
Net loss ($1,796,934) ($1,796,934)
============ =============
5. Development and License Agreement with Protein Design Labs, Inc.
Effective April 30, 1999, the Company and Protein Design Labs, Inc.
("PDL") entered into a Development and License Agreement (the "License
Agreement") under which PDL agreed to develop a humanized antibody (the
"Technology") on behalf of the Company and granted to the Company an exclusive
worldwide license under certain patents and patents applications to develop,
use and sell products arising from the Technology ("Products"). PDL also
granted to the Company non-exclusive licenses to PDL technical information, as
defined, and sublicenses to PDL licenses from third parties to the extent
necessary to enable the Company to make, use and sell Products. In addition,
in June 1999 the Company exercised its right under the License Agreement to
acquire an option to obtain a sublicense to certain additional patents and paid
PDL a fee in connection therewith.
Upon the achievement by PDL of certain performance-based milestones, as
defined, the Company is required to make non-refundable payments to PDL. The
Company is also required to pay royalties based on a percentage of net sales,
as defined, of all Products for a specified period and non-refundable annual
maintenance fees under certain conditions. During the six months ended June 30,
1999, the Company recognized an expense of $667,000 in connection with the
License Agreement.
The Company has the ability to terminate the License Agreement upon 60
days prior written notice. If terminated prior to payment of the second
milestone, the Company will reimburse PDL for costs and expenses to the date of
termination. Either party may terminate the License Agreement upon 10 or 30
days written notice of default in making scheduled payments or other breach,
respectively, that is not cured by the other party. Otherwise, the License
Agreement will continue until expiration of the Company's obligation to pay
royalties to PDL.
6. Reclassifications
Certain reclassifications have been made to the 1998 Financial Statements
to conform to the 1999 presentation.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-Q constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company, or industry results, to be
materially different from any expected future results, performance, or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: technological uncertainties
related to early stage product development, uncertainties associated with
preclinical and clinical testing, risks relating to corporate collaborations,
the lack of product revenue and the uncertainty of future profitability, the
need for additional financing and other factors set forth more fully in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998 and other periodic filings with the Securities and Exchange Commission.
The following discussion should be read in conjunction with the Company's
Condensed Financial Statements and the related notes thereto.
General
Progenics is a biopharmaceutical company focusing on the development and
commercialization of innovative products for the treatment and prevention of
cancer and viral diseases. The Company commenced principal operations in late
1988 and since that time has been engaged primarily in research and development
efforts, development of its manufacturing capabilities, establishment of
corporate collaborations and raising capital. In order to commercialize the
principal products that the Company has under development, the Company will
need to address a number of technological challenges and comply with
comprehensive regulatory requirements. Accordingly, it is not possible to
predict the amount of funds that will be required or the length of time that
will pass before the Company receives revenues from sales of any of these
products. To date, product sales have consisted solely of limited revenues
from the sale of research reagents. The Company expects that sales of research
reagents in the future will not significantly increase over current levels.
The Company's other sources of revenues through June 30, 1999 have been
payments received under its collaboration agreements, research grants and
contracts related to the Company's cancer and HIV programs and interest income.
To date, a majority of the Company's expenditures have been for research
and development activities. The Company expects that its research and
development expenses will increase significantly as its programs progress and
the Company makes filings for related regulatory approvals. With the exception
of the years ended December 31, 1997 and 1998, the Company has had recurring
losses and had, at June 30, 1999, an accumulated deficit of approximately
$20,725,000. The Company has financed its operations primarily through the
private sale and issuance of equity securities, a line of credit that has since
been repaid and terminated, payments received under its collaboration with the
Bristol-Myers Squibb Company ("BMS") beginning in July 1997, payments received
under its collaboration with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche,
Inc. ("Roche") beginning in January 1998, funding under research grants and
contracts, and the proceeds of the Company's initial public offering in
November 1997 and the proceeds from the exercise of outstanding options and
warrants. The Company will require additional funds to complete the
development of its products, to fund the cost of clinical trials, and to fund
operating losses that are expected to continue for the foreseeable future. The
Company does not expect its products under development to be commercialized in
the near future.
10
<PAGE>
Results of Operations
Three Months Ended June 30, 1999 and 1998
Contract research and development revenue decreased to approximately
$2,245,000 for the three months ended June 30, 1999 from approximately
$3,616,000 for the three months ended June 30, 1998. The decrease is
attributable to the receipt by the Company of a milestone payment during the
first half of 1998 pursuant to the Company's collaboration with BMS. The
Company also received contract revenue from the National Institutes of Health
and the Department of Defense of approximately $220,000 and $123,000, for the
quarters ended June 30, 1999 and 1998, respectively. Revenues from research
grants decreased to approximately $212,000 for the three months ended June 30,
1999 from approximately $581,000 for the three months ended June 30, 1998. The
decrease resulted from the funding of a fewer number of grants in the second
quarter of 1999. Product sales decreased to approximately $17,000 for the
three months ended June 30, 1999 from approximately $30,000 for the three
months ended June 30, 1998 resulting from decreased orders for research
reagents. Interest income decreased to approximately $290,000 for the three
months ended June 30, 1999 from approximately $294,000 for the three months
ended June 30, 1998 due to the decrease in cash available for investing.
Research and development expenses increased to approximately $2,960,000
for the three months ended June 30, 1999 from approximately $2,534,000 for the
three months ended June 30, 1998. The increase was principally due to the
payment of license fees and the hiring of additional scientists as the Company
expanded its research and development programs in 1999 and the additional costs
in 1999 of conducting the Company's Phase III clinical trials, as the number of
patients enrolled in the trials increased significantly.
General and administrative expenses decreased to approximately $1,108,000
for the three months ended June 30, 1999 from approximately $1,152,000 for the
three months ended June 30, 1998. The decrease was principally due to the
decrease in legal expenses.
The Company recognized a loss in its joint venture with CYTOGEN of
approximately $1,797,000 for the three months ended June 30, 1999 as the joint
venture expensed license fees.
Interest expenses increased to approximately $15,000 for the three months
ended June 30, 1999 from approximately $9,000 for the three months ended June
30, 1998. The increase was principally due to the recognition of interest
expense as the Company discounted future capital contributions to the joint
venture.
Depreciation and amortization expense increased to approximately $155,000
for the three months ended June 30, 1999 from approximately $82,000 for the
three months ended June 30, 1998. The increase was principally due to the
purchase of additional fixed assets and leasehold improvements that are
amortized over the life of the lease that expires in December 2000.
The Company's net loss for the second quarter of fiscal 1999 was
approximately $3,272,000 compared to net income of approximately $743,000 for
the second quarter of fiscal 1998.
Six Months Ended June 30, 1999 and 1998
Contract research and development revenue decreased to approximately
$4,860,000 for the six months ended June 30, 1999 from approximately $5,329,000
for the six months ended June 30, 1998 as the Company received a milestone
payments pursuant to the BMS and Roche agreements in 1998. Revenues from
research grants decreased to approximately $423,000 for the six months ended
June 30, 1999 from approximately $581,000 for the six months ended June 30,
1998. The decrease resulted due to the funding of a fewer number of grants in
the first half of 1999. Sales of research reagents decreased to approximately
$35,000 for the six months ended June 30, 1999 from approximately $36,000 for
the six months ended June 30, 1998 as orders for such reagents remained
constant. Interest income decreased to approximately $593,000 for the six
months ended June 30, 1999 from approximately $664,000 for the six months ended
June 30, 1998 due to the decrease in cash available for investing.
11
<PAGE>
Research and development expenses increased to approximately $5,321,000
for the six months ended June 30, 1999 from approximately $3,911,000 for the
six months ended June 30, 1998. The increase was principally due to the
payment of license fees and the hiring of new scientists as the Company
expanded its research and development programs in 1999 and the additional costs
in 1999 of conducting the Company's Phase III clinical trials, as the number of
patients enrolled in the trials increased significantly.
General and administrative expenses increased to approximately $1,977,000
for the six months ended June 30, 1999 from approximately $1,937,000 for the
six months ended June 30, 1998. The increase was principally due to the hiring
of additional administrative staff.
The Company recognized a loss in its joint venture with CYTOGEN of
approximately $1,797,000 for the six months ended June 30, 1999 as the joint
venture expensed license fees.
Interest expense increased to approximately $29,000 for the six months
ended June 30, 1999 from approximately $18,000 for the six months ended June
30, 1998. The increase was principally due to the recognition of interest
expenses as the Company discounted future capital contributions to the joint
venture.
Depreciation and amortization expense increased to approximately $305,000
for the three months ended June 30, 1999 from approximately $164,000 for the
three months ended June 30, 1998. The increase was principally due to the
purchase of additional fixed assets and leasehold improvements that are
amortized over the life of the lease that expires in December 2000.
The Company's net loss for the six months ended June 30, 1999 was
approximately $3,517,000 compared to net income of approximately $579,000 for
the six months ended June 30, 1998.
Liquidity and Capital Resources
The Company has funded its operations since inception primarily through
private placements of equity securities, loans that were subsequently converted
into equity securities, a line of credit that was repaid and terminated,
payments received under collaboration agreements including those with BMS and
Roche, an initial public offering, funding under research grants and contracts,
interest on investments, and the proceeds from the exercise of outstanding
options and warrants.
At June 30, 1999, the Company had cash, cash equivalents and marketable
securities totaling approximately $22,840,000 compared with approximately
$24,650,000 at December 31, 1998. The Company's facility lease has been
extended to December 2000. In connection with the extended facility lease, the
Company expended approximately $1.2 million for equipment and leasehold
improvements during the period from January 1, 1998 to June 30, 1999 and
expects that an additional $400,000 will be spent to enhance its manufacturing
capabilities for clinical trials during the remainder of 1999. In addition,
the Company is obligated, under the terms of the joint venture with CYTOGEN, to
contribute an additional $1.5 million in license fees through December 31, 2001
and to fund research and development of up to $3.0 million.
The Company believes that its present capital resources should be
sufficient to fund operations at least through the end of 2000, based on the
Company's current operating plan. No assurance can be given that there will be
no change that would consume the Company's liquid assets before such time. The
Company will require substantial funds to conduct research and development
activities, preclinical studies, clinical trials and other activities relating
to the commercialization of any potential products. In addition, the Company's
cash requirements may vary materially from those now planned because of results
of research and development and product testing, potential relationships with
in-licensors and collaborators, changes in the focus and direction of the
Company's research and development programs, competitive and technological
advances, the cost of filing, prosecuting, defending and enforcing patent
claims, the regulatory approval process, manufacturing and marketing and other
costs associated with the commercialization of products following receipt of
regulatory approvals and other factors. The Company has no committed external
sources of capital and, as discussed above, expects no significant product
revenues for a number of years as it will take at least that much time to bring
the Company's products to the commercial marketing stage. The Company may seek
additional financing, such as through future offerings of equity or debt
securities or agreements with corporate partners and collaborators with respect
to the development of the Company's technology, to fund future operations.
There can be no assurance, however, that the Company will be able to obtain
additional funds on acceptable terms, if at all.
12
<PAGE>
Year 2000 Compliance
The "Year 2000" problem relates to many currently installed computers,
software, and other equipment that relies on embedded technology (collectively,
"Business Systems"). These Business Systems are not capable of distinguishing
21st century dates from 20th century dates. As a result, subsequent to
December 31, 1999, Business Systems used by many companies, in a very wide
variety of applications, will experience operating difficulties unless they are
modified, upgraded, or replaced to adequately process information involving,
related to or dependent upon the century change. If a Business System used by
the Company or a third party dealing with the Company fails because of the
inability of the Business System to properly read a 21st century date, the
results could have a material adverse effect on the Company. The Company
recognizes the need to ensure its operations will not be adversely impacted by
Year 2000 Business Systems failures and has established a team to address Year
2000 risk. The team is reviewing the Company's internal infrastructure and
believes that it has identified substantially all of the major Business Systems
used in connection with its internal operations. The Company has commenced the
process of identifying and correcting the major Business Systems that may need
to be modified, upgraded, or replaced, and expects to complete this process,
along with remedial actions, before the end of 1999. Costs incurred to date to
correct Year 2000 problems have been immaterial. The Company estimates the
total cost to complete any required modifications, upgrades, or replacements of
affected Business Systems will not have a material impact on the Company's
business or results of operations. This estimate is being monitored and will
be revised, if necessary, as additional information becomes available. The
Company also recognizes the risk that suppliers of products, services, and
collaborators with whom the Company transacts business on a worldwide basis may
not comply with Year 2000 requirements. The Company has initiated formal
communications with significant suppliers and collaborators to determine the
extent to which the Company is vulnerable if these third parties fail to
remediate their own Year 2000 issues. The review is ongoing and the Company is
unable to determine, at this time, the probability that any material supplier
or collaborator will not be able to correct any Year 2000 problem in a timely
manner. In the event any such third parties cannot provide the Company with
products, services, or continue the collaborations with the Company, the
Company's results of operations could be materially adversely affected. Based
on the above, the Company has yet to develop a comprehensive contingency plan
with respect to the Year 2000 problem. The Company will continue to monitor
its own Business Systems and, to the extent possible, evaluate the Business
Systems of its third party suppliers and collaborators to ensure progress on
this critical matter. However, if the Company identifies significant risks
related to the Year 2000 compliance or progress deviates from anticipated
timelines, the Company will develop contingency plans as deemed necessary at
that time.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
At June 30, 1999, the Company did not hold any market risk sensitive
instruments.
13
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
(d) As of June 30, 1999, $17,112,000 of the $17,112,000 net proceeds from the
Company's initial public offering, has been applied to research and
development and general operating expenses. With the exception of
compensation paid to the officers and certain of the directors of the
Company as employees or consultants, no amounts paid in respect of
operating expenses were paid to directors or officers of the Company or
their associates, to any person owning 10% or more of any class of equity
securities of the Company or to any affiliates of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders of the Company held on June 24, 1999 the
following directors (constituting all of the directors) were elected:
Paul J. Maddon, M.D., Ph.D.
Charles A. Baker
Kurt W. Briner
Mark F. Dalton
Stephen P. Goff, Ph.D.
Paul F. Jacobson
Ronald J. Prentki
David A. Scheinberg, M.D., Ph.D.
The voting consisted of 6,463,545 votes cast for each director and 1,825
votes withheld.
Also voted upon at the meeting was the ratification of the Board of
Director's selection of PricewaterhouseCoopers, LLP to serve as the Company's
independent auditors for the fiscal year ending December 31, 1999, which matter
was approved with 6,454,532 votes in favor and 10,838 abstentions.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
+10.33 - Development and License Agreement effective as of April 30, 1999,
between Protein Design Labs, Inc. and Registrant
+10.34 - PSMA/PSMP License Agreement, dated June 15, 1999, by and among
Registrant, CYTOGEN Corporation and PSMA Development Company LLC
+10.35 - Limited Liability Company Agreement of PSMA Development Company,
dated June 15, 1999, by and among Registrant, CYTOGEN Corporation
and PSMA Development Company LLC
27 - Financial Data Schedule
(b) Reports on Form 8-K
During the quarter ended June 30, 1999, there was no report on Form 8-K.
___________________________________
+ Confidential Treatment Requested
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PROGENICS PHARMACEUTICALS, INC.
Date: August 13, 1999 by /s/ Robert A. McKinney
-------------------------------
Robert A. McKinney
Vice President
(Duly authorized officer
of the Registrant and
Principal Financial
and Accounting Officer)
15
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------------------------------------------------------------
+10.33 Development and License Agreement effective as of April 30, 1999,
between Protein Design Labs, Inc. and Registrant
+10.34 PSMA/PSMP License Agreement, dated June 15, 1999, by and
among Registrant, CYTOGEN Corporation and PSMA Development
Company LLC
+10.35 Limited Liability Company Agreement of PSMA Development Company,
dated June 15, 1999, by and among Registrant, CYTOGEN Corporation
and PSMA Development Company LLC
27 Financial Data Schedule
___________________________________
+ Confidential Treatment Requested
<PAGE>
Exhibit 10.33
[Confidential treatment has been requested for portions of this Agreement.
The portions of this Agreement for which confidential treatment have been
requested are omitted from this document; such portions are indicated by
asterisks. The omitted material has been filed separately with the
Securities and Exchange Commission.]
DEVELOPMENT AND LICENSE AGREEMENT
between
PROTEIN DESIGN LABS, INC.
and
PROGENICS PHARMACEUTICALS, INC.
<PAGE>
This Agreement ("Agreement"), effective as of April 30, 1999 ("Effective
Date"), is made by and between PROTEIN DESIGN LABS, INC., a Delaware
corporation having offices at 34801 Campus Drive, Fremont, CA 94555
(hereinafter "PDL"), and PROGENICS PHARMACEUTICALS, INC., a Delaware
corporation having offices at 777 Old Saw Mill River Road, Tarrytown, NY 10591
(hereinafter "PROGENICS").
RECITALS
A. PROGENICS has developed a murine monoclonal antibody directed against the
CCR5 antigen and designated by PROGENICS as "PRO 140";
B. PROGENICS wishes to engage PDL to use commercially reasonable efforts to
use its technology regarding antibody humanization and, if elected by
PROGENICS, an antibody [ * * * ] prepared by PDL in order to develop a
humanized form of the foregoing murine monoclonal antibody [ * * * ]
prepared by PDL; and
C. PDL is willing to undertake such development effort and to license to
PROGENICS rights to such humanized antibody under the terms and conditions of
this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants herein contained and
intending to be legally bound, the parties agree as follows:
1. DEFINITIONS
All references to Exhibits, Articles and Sections shall be references to
Exhibits, Articles and Sections of this Agreement. Except as otherwise
expressly provided herein, the following terms in this Agreement shall have the
following meanings:
1.01 "Affiliate" means, with respect to a party hereto, any corporate or
other entity which, directly or indirectly, controls, is controlled by, or is
under common control with such party, where "control" means the ownership of
not less than 50% of the voting shares of a corporation, or 50% of the
decision-making authority as to such other unincorporated entity.
1.02 "Bulk Product" means Licensed Product supplied in a form other than
Finished Product which can be converted into Finished Product.
1.03 "Cell Line" means a cell line producing the Murine Antibody delivered
by PROGENICS pursuant to Section 2.01(a).
"[ * * * ]" means [ * * * ] transfected cell line for
production of the Humanized Antibody.
1.04 "Combination Product(s)" means any product containing both an agent
or ingredient which constitutes a Licensed Product and one or more other active
agents or ingredients which do not constitute Licensed Products.
1.05 "Finished Product(s) " means any and all Licensed Products in a form
for use by an end user and not intended for further chemical or genetic
manipulation or transformation.
1.06 "First Commercial Sale" means the last day of the calendar month
containing the first sale of a Licensed Product to an independent third party
following regulatory approval.
1.07 "Humanized Antibody(ies)" means the humanized form of the Murine
Antibody developed by PDL under this Agreement.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
<PAGE>
1.08 "IND" means an Investigational New Drug Application filed with the
U.S. Food and Drug Administration (including regulatory counterparts thereto in
other countries, as the case may be, the "FDA") or equivalent filings in
countries other than the U.S.
1.09 "Licensed Product(s)" means products, for any use, incorporating
substantially all of the Humanized Antibody or any modification, variant or
fragment of the Humanized Antibody containing at least one variable region of
the Humanized Antibody.
1.10 "Murine Antibody(ies)" means, subject to Section 2.01(b), the murine
monoclonal antibody designated as "PRO 140" directed against the Target Antigen
and selected by PROGENICS for humanization by PDL under this Agreement.
1.11 "Net Sales" means [ * * * ].
In the case of a Combination Product for which the agent or ingredient
constituting a Licensed Product and each of the other active agents or
ingredients not constituting Licensed Products have established market prices
when sold separately, Net Sales shall be determined by multiplying the Net
Sales for each such Combination Product by a fraction, the numerator of which
shall be the established market price for the Licensed Product(s) contained in
the Combination Product and the denominator of which shall be the sum of the
established market prices for the Licensed Product(s) plus the other active
agents or ingredients contained in the Combination Product. When such separate
market prices are not established, then the parties shall negotiate in good
faith to determine a fair and equitable method of calculating Net Sales for the
Combination Product in question.
In the case of Net Sales of Bulk Products, Net Sales shall be calculated by
multiplying the units of Finished Product to which such Bulk Product is
reasonably anticipated to be converted by the established market price of the
Finished Product on the date of sale of the Bulk Product. By way of example
and without limitation, units of Finished Product may be measured in grams or
doses, as appropriate.
In calculating Net Sales of Combination Products or Bulk Products as set
forth above, the deductions listed in clauses (a) through (d) of the first
paragraph of this Section 1.11 shall also be applied.
1.12 "PDL Patent Rights" means rights in or to all patents, patent
applications or improvements owned or controlled by PDL directly related to the
humanization of monoclonal antibodies and identified on Exhibit A, as well as
any patent rights directly related to the humanization of antibodies directed
against the Target Antigen resulting from or arising as a result of patent
applications filed prior to or during the term of this Agreement by PDL in the
U.S. or any foreign jurisdiction, including any addition, continuation,
continuation-in-part or division thereof or any substitute application
therefor; any patent issued with respect to such patent application, any
reissue, reexamination, extension or patent term extension of any such patent,
and any confirmation patent or registration patent or patent of addition based
on any such patent, including any supplementary protection certificates.
1.13 "PDL [ * * * ] Patent Rights" means rights in or to all patents,
patent applications or improvements owned or controlled by PDL directly related
to PDL's proprietary [ * * * ] and identified in Section 1 of Exhibit C,
resulting from or arising as a result of patent applications filed prior to or
during the term of this Agreement by PDL in the U.S. or any foreign
jurisdiction, including any addition, continuation, continuation-in-part or
division thereof or any substitute application therefor; any patent issued with
respect to such patent application, any reissue, reexamination, extension or
patent term extension of any such patent, and any confirmation patent or
registration patent or patent of addition based on any such patent, including
any supplementary protection certificates.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
2
<PAGE>
1.14 "PDL Technical Information" means any and all inventions,
discoveries, know-how, trade secrets, information, experience, technical data,
formulas, procedures, results or materials (including any biological materials
and samples) which are rightfully held by PDL at any time during the term of
this Agreement and which technical information is required or reasonably
necessary for the registration, development, manufacture, use or sale of the
Humanized Antibody or any modification, variant or fragment thereof; provided
that in no event shall PDL Technical Information include general information
related to the manufacture (e.g., cell culture, fermentation, formulation) or
purification of monoclonal antibodies except as may be agreed upon in a
separate written agreement between the parties.
1.15 "PROGENICS Technical Information" means any and all inventions,
discoveries, know-how, trade secrets, information, experience, technical data,
formulas, procedures, results or materials (including any biological materials
and samples) which are rightfully held by PROGENICS at any time during the term
of this Agreement and which technical information is required or reasonably
necessary for PDL to carry out the activities contemplated by this Agreement.
1.16 "Target Antigen" means the CCR5 antigen or such other antigen as may
be designated in accordance with Section 2.01(b).
1.17 "Third Party [ * * * ] Patent Rights" means the sublicenses
available from third parties for a Licensed Product containing [ * * * ]
prepared by PDL as identified in Section 2 of Exhibit C.
1.18 "Valid Claim" means any claim in any issued patent included in the
PDL Patent Rights which has not been disclaimed or held unenforceable or
invalid by a governmental agency or court of competent jurisdiction by a
decision beyond right of review.
2. HUMANIZATION PROGRAM; OTHER MATTERS
2.01 Delivery of Murine Antibody; [ * * * ].
(a) Promptly after execution of this Agreement, PROGENICS shall provide to
PDL a minimum of three (3) vials of the Cell Line containing approximately one
(1) milliliter each of frozen cell culture at a concentration ranging from 1 x
106 to 5 x 106 cells per milliliter, together with any PROGENICS Technical
Information which would be useful in assisting PDL to accomplish the objectives
of this Agreement.
(b) Through [ * * * ] (i.e., until midnight California time on that
date), PROGENICS shall have a one-time right, upon written notice to PDL, to
terminate the Program as it relates to the Murine Antibody. PROGENICS may, at
the time of such termination or at any other time through [ * * * ] (i.e.,
until midnight California time on that date), [ * * * ].
2.02 Humanization Program. Upon receipt of the Cell Line, subject to
Section 2.06, PDL shall promptly commence and diligently use commercially
reasonable efforts to apply its humanization technology to the Murine Antibody
selected by PROGENICS with the objective of producing a Humanized Antibody and
a cell line that expresses the Humanized Antibody (hereinafter, the "Program")
having the properties described below. The Program will be conducted as
follows:
(a) Phase IA--Humanized Antibody Development; Minimum Binding Affinity.
PDL will carry out the necessary efforts to produce a Humanized Antibody
[ * * * ] and having a binding affinity constant not less than
[ * * * ] that of the Murine Antibody (hereinafter the "Minimum Binding
Affinity") and will provide PROGENICS with [ * * * ] as well as supply a
sufficient quantity of that Humanized Antibody for evaluation to allow
PROGENICS to confirm that the Humanized Antibody meets the Minimum Binding
Affinity. PDL shall deliver a written confirmation that it believes that the
Humanized Antibody possesses the Minimum Binding Affinity together with the
evaluation materials. PROGENICS shall promptly conduct such evaluation using,
if technically possible, the method of competitive binding set forth in Queen,
et al., Proceedings of the National Academy of Sciences, USA, 86, 1030 (1989).
If it is not technically possible to use the method set forth in Queen, et al.,
the parties shall consult in good faith to agree upon a mutually acceptable
alternative method. The results of such tests shall be promptly communicated
to PDL and all written results will be provided to PDL as soon as practicable.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
3
<PAGE>
(b) Phase IB--Humanized Antibody; Verification; Minimum Anti-HIV
Activity. Promptly following delivery of the Humanized Antibody pursuant to
Section 2.02(a), PROGENICS shall also evaluate the Humanized Antibody to
determine whether such antibody also possesses anti-HIV activity not less than
[ * * * ].
In the event that the supplied Humanized Antibody does not meet both the
Minimum Binding Affinity and the Minimum Anti-HIV Activity or is, in PROGENICS'
sole discretion, not sufficiently close thereto to proceed with development,
PROGENICS shall promptly inform PDL accordingly in writing. PDL shall then use
commercially reasonable efforts to produce another Humanized Antibody in an
effort to achieve the Minimum Binding Affinity and the Minimum Anti-HIV
Activity. PROGENICS acknowledges and agrees that achievement of the Minimum
Biological Activity may require use of another IgG isotype, which isotype shall
be reasonably acceptable to PROGENICS. In any event, the quantity of Humanized
Antibody required by PROGENICS for evaluation under Phase IA and IB shall not
exceed approximately 5 mg in the aggregate.
In the event that the second Humanized Antibody does not meet the Minimum
Binding Activity and the Minimum Anti-HIV Activity or is, in PROGENICS' sole
discretion, not sufficiently close thereto to enable PROGENICS to proceed with
development, then the parties shall consult in good faith in order to determine
how to proceed with further development.
In the event that PROGENICS determines that one of the Humanized
Antibodies provided by PDL meets the Minimum Binding Affinity and the Minimum
Anti-HIV Activity, or is sufficiently close thereto to enable PROGENICS to
proceed with the Humanized Antibody under Phase II of the Program, it shall
promptly notify PDL in writing (the "Phase I Completion Notice"). At the
completion of Phase I, if requested by PROGENICS, PDL will deliver a sample of
(i) a non-optimized cell line and (ii) a DNA vector ("DNA Vector") producing
the Humanized Antibody to allow PROGENICS to conduct research while PDL
proceeds with Phase II of the Program.
(c) Phase II--Production Yields. Following the completion of Phase I and
delivery by PROGENICS of the Phase I Completion Notice, PDL shall use
commercially reasonable efforts to develop and transfer to PROGENICS
[ * * * ] which yields at least [ * * * ]. PDL will provide written
notification that the Cell Line possesses the Minimum Yield at the time that it
transfers to PROGENICS the sterile (but free of chemical sterilizers) and
mycoplasma-free [ * * * ], as well as the media to be used by PROGENICS in
order to confirm the Minimum Yield measured in the same manner as described in
Section 2.02(a) above.
2.03 Program Risks. PROGENICS acknowledges that there is no guarantee that
PDL will achieve the objectives of the Program and other requirements specified
herein and that failure to achieve any of the objectives of the Program shall
not constitute a breach of this Agreement, provided that PDL has used
commercially reasonable efforts to achieve such objectives and has otherwise
complied with the terms of this Agreement.
2.04 Updates. PDL shall consult with PROGENICS on the Program approach to
be undertaken by PDL and shall provide PROGENICS with monthly updates on the
progress of the Program. PDL shall provide PROGENICS additional information
reasonably requested with respect to the progress and status of the Program.
2.05 Information. PDL shall keep written records of its development efforts
under the Program for such period as may be specified by PDL's internal record
retention policies with respect to such information. PDL shall specify in
writing the applicable retention periods for the relevant records following
completion of the Program. PDL shall cooperate and in good faith provide
copies of or access to any information or records related to the work conducted
under the Program that may be required or reasonably necessary by PROGENICS for
patent prosecution and maintenance or regulatory submissions with respect to
Licensed Products; provided that no rights to the financial records or
information of PDL are granted under this Section 2.05.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
4
<PAGE>
2.06 [ * * * ]. PROGENICS has requested that the Licensed Product
[ * * * ] prepared by PDL. PROGENICS acknowledges and agrees that if the
Licensed Product [ * * * ] prepared by PDL, then the PDL [ * * * ]
and certain Third Party [ * * * ] as identified on Exhibit C shall be
required under this Agreement and that the additional royalties set forth in
Section 2 of Exhibit C, if applicable, shall be in addition to royalties
payable to PDL under Section 5.03(a).
3. OWNERSHIP AND PATENT RIGHTS
3.01 License Grant. Subject to the terms and conditions of this Agreement,
PDL hereby grants, and PROGENICS hereby accepts, the following licenses:
(a) an exclusive, worldwide license, including the right to grant
sublicenses, to develop, make, have made, import, use, sell, offer to sell or
have sold Licensed Products and related cell lines, including the
[ * * * ];
(b) an exclusive, worldwide, license, including the right to grant
sublicenses, under any claims in the PDL Patent Rights that relate specifically
to the Humanized Antibody or any modification, variant or fragment of the
Humanized Antibody containing at least the hypervariable region of the Murine
Antibody thereof (but not to those claims which may relate to any other
antibodies or to any modifications, variants or fragments thereof or to any
humanization technology applicable to any antibodies other than the Humanized
Antibody) to develop, make, have made, import, use, sell, offer to sell or have
sold Licensed Products;
(c) a nonexclusive, worldwide license, including the right to grant
sublicenses, to PDL Technical Information and those claims in PDL patents and
patent applications not licensed under Sections 3.01(b) and 3.01(e) solely to
the extent required or reasonably necessary to enable PROGENICS to develop,
make, have made, import, use, sell, offer to sell or have sold Licensed
Products, provided, however that the disclosure of PDL Technical Information
shall remain subject to the confidentiality obligations set forth in this
Agreement;
(d) to the extent PDL is legally permitted and if requested by PROGENICS,
a nonexclusive, worldwide sublicense under the third party patents licensed to
PDL and identified on Exhibit B solely to the extent necessary to enable
PROGENICS to develop, make, have made, import, use, sell, offer to sell or have
sold Licensed Products; and
(e) if, at the request of PROGENICS, the Licensed Product contains a
[ * * * ] prepared by PDL, (i) a nonexclusive, worldwide license,
including the right to grant sublicenses, under the [ * * * ] and (ii) to
the extent PDL is legally permitted, a nonexclusive, worldwide sublicense under
the [ * * * ], such license rights under (i) and (ii) solely to the extent
necessary to enable PROGENICS to develop, make, have made, import, use, sell,
offer to sell or have sold Licensed Products containing a [ * * * ]
prepared by PDL.
In any event, PROGENICS may terminate its rights under Sections 3.01(d) or (e)
(except to the extent expressly provided in Exhibit C) under any specific third
party license (or all such licenses) upon written notice to PDL.
3.02 PROGENICS' Ownership; Patent Prosecution.
(a) PROGENICS shall own any and all inventions, discoveries, concepts and
ideas, whether patentable or not, developed by employees or collaborators of
PROGENICS related to the Murine Antibody. Nothing contained herein shall grant
or be deemed to grant any right or license, express or implied, by PROGENICS to
PDL or any other person with respect to the Murine Antibody, PROGENICS
Technical Information or any other rights (patent or other) of PROGENICS except
to the extent required or reasonably necessary for (and then only for the
purpose of) the discharge by PDL of its obligations to PROGENICS hereunder.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
5
<PAGE>
(b) The results of pharmacological, toxicology, clinical and other tests
and evaluations relating to the Humanized Antibody shall be the property of
PROGENICS. PROGENICS agrees to provide PDL with a summary of the results of
any pharmacological, toxicology, clinical and other tests and evaluations
relating to the Humanized Antibody conducted by or for PROGENICS for use by PDL
in the prosecution or defense of PDL Patent Rights. Except as expressly
provided herein, the disclosure of such information to PDL shall be subject to
the confidentiality and non-use provisions of the confidentiality agreement
described in Article 8 hereof.
(c) PROGENICS shall have the right to seek and obtain patent protection
in relation to the subject matter of Section 3.02(a) and (b), as it deems
appropriate at its own cost, without prejudice, however, to the right of
involved PDL employees or collaborator(s), if any, to be named as inventor(s)
or co-inventor(s) in accordance with applicable patent laws. PDL shall provide
reasonably required assistance to PROGENICS, at the expense of PROGENICS, in
the event that PROGENICS wishes to seek such patent protection.
(d) PROGENICS, in the name of and with the cooperation of PDL, shall
assume the filing, prosecution and maintenance of any patent applications
directly related to the Humanized Antibody under the patents and other rights
licensed by PDL pursuant to Section 3.01(b), provided that the expenses of
filing, prosecuting and maintaining patents and patent applications hereunder
shall be borne by PROGENICS. PROGENICS shall provide PDL with reports no less
frequently than once per calendar year listing all patents and patent
applications filed, prosecuted or maintained by PROGENICS pursuant to the
provisions hereof, including identification of the patents and patent
applications by number and country, together with a brief description of the
status of the prosecution or patent. If PROGENICS determines not to file or
not to continue to prosecute and maintain any patent application pursuant to
the terms of this Section 3.02(d), for any particular invention or country,
PROGENICS shall promptly, and in any event not less than ten (10) business days
prior to the date in which a failure to file or respond would prejudice the
rights of PDL hereunder, notify PDL in writing of such determination and PDL
shall have the right, in its sole discretion, to file, prosecute and maintain
such patent application at its sole expense and PROGENICS shall cooperate with
PDL in support of such efforts.
3.03 PDL Ownership.
(a) Ownership of the PDL Patent Rights and PDL Technical Information
developed or used by PDL in furtherance of the Program conducted under this
Agreement, as well as the Humanized Antibody and cell lines, including the
[ * * * ], that express the Humanized Antibody, shall remain the property
of PDL. PDL shall own any and all inventions, discoveries, concepts and ideas,
whether patentable or not, developed by employees or collaborators of PDL
related to the Humanized Antibody, without prejudice, however, to the right of
involved PROGENICS employees or collaborators, if any, to be named as inventors
or co-inventors in accordance with applicable patent laws.
(b) Subject to Section 3.02(d), PDL shall have the right to seek and
obtain patent protection in relation to the subject matter of this Section 3.03
as it deems appropriate at its own cost, without prejudice, however, to the
right of involved PROGENICS employees or collaborator(s), if any, to be named
as inventor(s) or co-inventor(s) in accordance with applicable patent laws.
PROGENICS will provide reasonably required assistance to PDL, at the expense of
PDL, in the event that PDL wishes to seek such patent protection.
3.04 Sublicenses.
(a) PROGENICS shall have the right to grant sublicenses of its rights
under Section 3.01(a)-(d) and, if applicable, Section 3.01(e), with respect to
Licensed Products, provided that PROGENICS shall remain obligated to pay all
Milestones and royalties due to PDL with respect to the sale of Licensed
Products by its assignee or sublicensee. In addition, the grant of any
sublicenses under Section 3.01 shall be on terms and conditions which are
subject to and subordinate to the terms of this Agreement and PROGENICS shall
remain fully responsible to PDL for the performance by PROGENICS' sublicensees
of any and all such terms applicable thereto. Promptly following execution of
any sublicense hereunder, PROGENICS shall provide to PDL a copy of the
sublicense agreement.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
6
<PAGE>
(b) In the event that this Agreement is terminated by PDL for breach by
PROGENICS under Section 9.02(b), PDL agrees to enter into a license agreement
with any sublicensee of PROGENICS under this Agreement effective as of the date
of termination on substantially the same terms and conditions as this Agreement
(but in any event on terms no less favorable in any material respect to such
sublicensee than those terms pertaining prior to any such termination);
provided that such sublicensee did not cause the breach by PROGENICS resulting
in termination or is not itself in breach.
3.05 Third Party Rights.
(a) Existing Third Party Licenses Available for Sublicense. If PROGENICS
retains a sublicense under the third party licenses identified in Exhibit B or
Section 2 of Exhibit C, such sublicenses shall not include any additional
payments by or royalties from PROGENICS to PDL for the rights to such
sublicenses (other than as may be payable to such third parties by PROGENICS
through PDL as set forth in such agreements). PROGENICS understands and agrees
that the licenses granted to it under this Agreement include sublicenses by PDL
under agreements between PDL and certain third parties as set forth in Exhibit
B and, if applicable, Exhibit C. PROGENICS understands and agrees that such
sublicenses may in some respects be more restrictive than the terms and
conditions of this Agreement, acknowledges that it has received copies of such
agreements and agrees to abide by all terms and conditions of such agreements
applicable to sublicensees. During the period PROGENICS elects to retain its
rights under Section 3.01 with respect to the agreements set forth in Exhibit B
and, if applicable, Exhibit C, PDL agrees to notify PROGENICS if any
sublicensed agreement set forth in Exhibit B and, if applicable, Exhibit C, is
either (a) amended in a manner that materially affects the rights of PROGENICS
hereunder or (b) terminated. In the event of a material amendment, PDL shall
provide PROGENICS with a copy of such amended agreement or a summary of the
amended terms promptly following the effective date of such amendment. PDL
agrees not to enter into any amendment of such agreements which would
materially limit or restrict the rights of PROGENICS with respect to Licensed
Products under the agreement sublicensed, without either (i) procuring for
PROGENICS the right to enter into a sublicense directly with such licensor on
terms and conditions substantially similar to those under the applicable
sublicense hereunder (but in any event on terms no less favorable in any
material respect than those terms pertaining prior to such amendment), or (ii)
obtaining the prior written consent of PROGENICS, which consent shall not be
unreasonably withheld or delayed.
(b) Additional Third Party Licenses. PDL shall in good faith use
commercially reasonable efforts to provide to PROGENICS on or about each
anniversary of the Effective Date a list of third party licenses with respect
to which PDL has the right to grant sublicenses that PDL believes may include
claims that but for a license under such agreement would be infringed by the
making, using, importing, selling or offering for sale Licensed Products as a
result of the humanization efforts of PDL hereunder and, if elected, the
[ * * * ] prepared by PDL. Upon request from PROGENICS, PDL shall provide
a copy of the third party license agreement with respect to which PROGENICS may
desire a sublicense. If PROGENICS desires a sublicense under such third party
agreement, PDL and PROGENICS shall enter into an amendment to Exhibit B or
Exhibit C, as the case may be, to include therein such third party rights,
provided that as a condition to such amendment, PROGENICS shall pay to PDL any
fees and payments that may be required in order for PDL to grant such
sublicense (including reimbursement to PDL of a reasonable share of any of the
fees or payments previously made by PDL for its license).
3.06 [ * * * ]. If, after the Effective Date, PDL enters into an
agreement ("Third Party License") granting a license under the PDL Patent
Rights [ * * * ], to make, have made, import, use or sell an antibody
binding to the [ * * * ]. The parties agree to execute such documents as
may be reasonably necessary to carry out the purpose of this Section 3.06.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
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3.07 Diligence Obligations; Non-Humanization.
(a) For so long as PROGENICS is using commercially reasonable effort to
develop and obtain regulatory approvals for Licensed Products, PDL shall not
directly or indirectly, alone or with others, develop any product that is an
antibody or contains a variable region of an antibody directed against the
Target Antigen; provided, however, that the foregoing limitation shall not
prohibit PDL from humanizing an antibody or any modification, variant or
fragment of an antibody for and granting a license under the PDL Patents and
PDL Technical Information to a third party (to the extent such grant does not
conflict with Section 3.01) if PROGENICS has received notification from PDL
under Section 6.01(a) and PROGENICS has elected not to exercise its right to
enter into an amendment to this Agreement to obtain [ * * * ] as provided
under Section 6.01. The term "commercially reasonable efforts" as used in this
Section 3.07(a) shall mean that PROGENICS or its Affiliate or sublicensee
hereunder has: (a) either [ * * * ] or [ * * * ] hereunder; (b)
either [ * * * ] or [ * * * ] hereunder; and (c) either
[ * * * ] or [ * * * ] hereunder. PROGENICS shall provide PDL with
regular, and in any event not less than annual, written summary reports of the
development efforts on and progress of the Humanized Antibody and such further
information as PDL may reasonably request in connection with any such written
reports in order to establish satisfaction by PROGENICS of the condition to
PDL's obligation under this Section 3.07.
(b) In any event, PDL agrees that for a period of [ * * * ].
4. CERTAIN ADDITIONAL SUBLICENSE RIGHTS
4.01 [ * * * ].
4.02 [ * * * ].
4.03 [ * * * ].
5. MILESTONE PAYMENTS; ROYALTIES, REPORTS
5.01 Milestones.
(a) In consideration for the efforts and licenses granted by PDL under
Section 3.01, PROGENICS shall make payments upon the achievement of certain
Milestones as set forth in this Section 5.01(a). Except as expressly set forth
below (including as specified in the notes to the table), within thirty (30)
days after the achievement of each of the following Milestones, PROGENICS shall
make the specified non-refundable and non-creditable payment to PDL for the
corresponding Milestone as follows:
Milestone(1)(2) Milestone Payment Amount
1. Execution of this Agreement [ * * * ]
[ * * * ] [ * * * ]
(1) [ * * * ].
(2) Except as expressly provided in Section 2.01(b), Milestone payments shall
be payable only once, which shall be the first time a Milestone is achieved.
If a Milestone is skipped or avoided by advancing development of the Licensed
Product to a later development step, then the Milestone that would be
expected to occur earlier shall be deemed to have been achieved at the same
time the later Milestone is achieved, and the corresponding payments for the
Milestones achieved shall be due. References to clinical trials are
references to the most advanced clinical development stage of the Licensed
Product as specified in the protocol filed with the FDA, regardless of
therapeutic indication (e.g., a Phase I/II clinical trial shall be deemed to
trigger Milestone 7).
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
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(3) PROGENICS shall make the Milestone 1 payment to PDL within ten (10) days
after execution of this Agreement.
(4) [ * * * ].
(5) [ * * * ].
(6) [ * * * ].
(7) [ * * * ].
5.02 Payments. Payment shall be made by wire transfer to the following
account or such other account as may be specified by PDL to PROGENICS in
writing at least two (2) business days in advance of the date of payment:
[ * * * ]
5.03 Royalties to PDL.
(a) Royalties. Subject to Section 5.03(c) and, if applicable,Section 6.01,
in further consideration of the rights and licenses granted by PDL under
Section 3.01, PROGENICS shall pay to PDL a royalty of [ * * * ] on the Net
Sales of all Licensed Products sold by PROGENICS or its Affiliates or
sublicensees.
(b) Term of Royalties. Royalties payable pursuant to Section 5.03(a) shall
be payable with respect to the Net Sales of Licensed Products by PROGENICS, its
Affiliates or sublicensees in each country until the later of
[ * * * ]
(c) Royalty Reductions. The royalty payable under Section 5.03(a) shall be
subject to reduction under certain circumstances in certain countries as
described in this Section 5.03(c); provided that no royalty reduction shall
apply in the event of an amendment to this Agreement pursuant to Section 6.01.
(i) U.S. and Major Markets. In the U.S. or in any Major Market (as
defined in Section 5.01(a)) country, as the case may be, the royalty under
Section 5.03(a) shall be reduced to [ * * * ] in each such country
beginning with the first quarterly reporting period in which there is no Valid
Claim or no pending claim under PDL Patent Rights that is treated as a Valid
Claim (i.e., for purposes of this Section 5.03(c)(i), a pending claim shall be
treated as a Valid Claim so long as such pending claim shall not be pending for
a period longer than [ * * * ] from the Effective Date) in that country
that, but for the licenses granted to PROGENICS under this Agreement, would be
infringed by the manufacture, use, importation or sale of that Licensed Product
in such country or by the manufacture of that Licensed Product in the country
of manufacture.
(ii) Rest of World. In all countries other than the U.S. and the Major
Market countries ("ROW"), the royalty under Section 5.03(a) shall be reduced to
[ * * * ] in the ROW beginning with the first quarterly reporting period
in which [ * * * ] there is no Valid Claim or no pending claim under PDL
Patent Rights that is treated as a Valid Claim (i.e., for purposes of this
Section 5.03(c)(ii), a pending claim shall be treated as a Valid Claim so long
as such pending claim shall not be pending for a period longer than
[ * * * ] from the Effective Date) that, but for the licenses granted to
PROGENICS under this Agreement, would be infringed by the manufacture, use,
importation or sale of that Licensed Product in such country or by the
manufacture of that Licensed Product in the country of manufacture.
(iii) Failure to Maintain PDL Patent Rights. Notwithstanding Sections
5.03(d)(i) and (ii), the royalty under Section 5.03(a) shall be reduced to
[ * * * ] in any country beginning with the first quarterly reporting
period in which PDL fails to maintain issued patents under the PDL Patent
Rights such that as a result of the failure of PDL to maintain such issued
patents in the country in question, there is no Valid Claim that, but for the
licenses granted to PROGENICS under this Agreement would be infringed by the
manufacture, use, importation or sale of that Licensed Product in such country
or by the manufacture of that Licensed Product in the country of manufacture;
provided that a royalty reduction hereunder shall not apply with respect to any
issued patents in any country that PROGENICS elects not to maintain pursuant to
Section 3.02(d).
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
9
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(iv) Competition. In the event that sales in any given country by
independent third parties of a human or humanized antibody directed against the
Target Antigen ("Third Party Sales") exceed [ * * * ] of the aggregate
gross revenues ("Reduction Threshold") derived by or payable from or on account
of the sale of Licensed Products in that country by PROGENICS, its Affiliates
and sublicensees in any two consecutive quarterly reporting periods hereunder,
PROGENICS shall inform PDL in writing and royalties payable to PDL under
Section 5.03(a) shall be reduced to [ * * * ] on Net Sales of all Licensed
Products sold by PROGENICS or its Affiliates or sublicensees in that country
beginning with the first quarterly reporting period after the Reduction
Threshold is exceeded for two consecutive quarterly reporting periods and
continuing until the first quarterly reporting period after two consecutive
quarterly reporting periods in which Third Party Sales no longer exceed the
Reduction Threshold in that country. In addition, if in the U.S. or any
country which is a Major Market (as defined in Section 5.01(a)) Third Party
Sales of units of Licensed Products exceed [ * * * ] of the unit sales of
Licensed Products in that country by PROGENICS, its Affiliates and sublicensees
in any two consecutive quarterly reporting periods hereunder, PROGENICS shall
inform PDL in writing, and PROGENICS and PDL shall negotiate in good faith on
an equitable royalty reduction to an amount not less than [ * * * ], with
the goal of improving the competitive position of Licensed Products with
respect to "unit sales." For purposes of identifying unit sales, the parties
shall take into consideration, as applicable, varying therapeutic indications
and dosing regimens, it being the intent of the parties that unit comparisons
be made as closely as practicable on a units-per-patient basis.
5.04 Royalties to Third Parties.
(a) PROGENICS shall be solely responsible for the payment of any royalties
payable to third parties arising out of the manufacture or sale of Licensed
Products by PROGENICS, its Affiliates or sublicensees, including any royalties
payable under the third party licenses identified on Exhibit B and Exhibit C
(if the Licensed Product contains [ * * * ] prepared by PDL), which shall
be in addition to the royalties specified in Section 5.03. This shall include
all royalties payable to third parties pursuant to sublicenses granted by PDL
to PROGENICS under this Agreement, which PROGENICS shall, if possible, pay
directly to such third parties.
(b) In the event that PROGENICS has an existing sublicense from PDL
hereunder and determines that it is not possible to pay royalties directly to
third parties under such license agreements, including those identified in
Exhibit B and Exhibit C (if the Licensed Product contains [ * * * ]
prepared by PDL), PROGENICS shall promptly remit the appropriate royalty
payments to PDL and PDL shall pay the third party royalties when due under the
terms of PDL's agreement with such third party licensors.
5.05 Sales Among Affiliates and Sublicensees; Single Royalty. Sales between
and among PROGENICS and its Affiliates and sublicensees of Licensed Products
which are subsequently resold or to be resold by such Affiliates and
sublicensees shall not be subject to royalty, but in such cases royalties shall
accrue upon the occurrence of and be calculated based on any subsequent sale of
such Licensed Products to a non-Affiliate or non-sublicensee. In any event, no
provision of this Agreement shall be construed as requiring the payment of more
than a single royalty for each Net Sale of Licensed Product regardless of the
number of patentable or patented claims under PDL Patent Rights or amount of
PDL Technical Information incorporated into such Licensed Product. By way of
illustration and without limitation, Licensed Products royalties payable to PDL
of [ * * * ] (excluding royalties received by PDL payable to third party
licensors from PROGENICS) shall represent the maximum royalty payable to PDL
for licenses under the PDL Patent Rights (regardless of the subsequent issuance
of additional patents to PDL that may cover Licensed Products) and shall apply
only to Net Sales of that Licensed Product to the end user customer and not to
any earlier transfer in the chain of distribution of that Licensed Product.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
10
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5.06 Annual Maintenance Fee. In further consideration of the licenses
granted under Section 3.01, not later than ten (10) days following the
[ * * * ] anniversary of the Effective Date and not later than each
anniversary thereafter, PROGENICS shall pay PDL a nonrefundable annual
maintenance fee ("Annual Maintenance Fee") in the amount of [ * * * ]. The
Annual Maintenance Fee shall not be payable for any annual period immediately
following a year in which royalties paid to PDL by PROGENICS (net of offsets,
if any, other than the credit described in Section 5.03) under Section 5.03
hereof exceed [ * * * ]. By way of illustration and without limitation,
if PROGENICS pays the Annual Maintenance Fee in [ * * * ] and the
royalties paid to PDL in [ * * * ] exceeded [ * * * ], then no Annual
Maintenance Fee for [ * * * ] shall be payable in [ * * * ].
Notwithstanding any other provision of this Agreement or the actual Net Sales
of Licensed Products subject to reporting in any quarterly period hereunder,
PROGENICS shall have the right to report and pay a minimum royalty of at least
[ * * * ] in any reporting period.
5.07 Withholding.
(a) Payments. All amounts payable under Sections 5.01 and 5.06 shall
represent the actual proceeds to be received by PDL after any deductions or
withholding for any taxes (other than taxes based on PDL's income) that may be
applicable to the payment of any Milestone hereunder by reason of PROGENICS
having sublicensed or otherwise transferred or assigned any rights under this
Agreement to which Sections 5.01 and 5.06 pertain to a person that is not a
U.S. person for U.S. federal income tax purposes. PDL agrees to reasonably
cooperate with PROGENICS in obtaining a refund, or otherwise mitigating the
effects, of any withholding taxes covered by the foregoing sentence paid by
PROGENICS with respect to any payments to PDL hereunder. In the event that PDL
is successful in obtaining any refund, or otherwise mitigating the effects, of
tax withholding amounts paid by PROGENICS under this Agreement, PDL agrees to
promptly remit the amount of such refund or other benefit to PROGENICS.
(b) Royalty Payments. PROGENICS may withhold from royalties due to PDL
amounts for payment of any withholding tax that PROGENICS has paid to any
taxing authority with respect to royalties paid to PDL under this Agreement on
the sale or manufacture of Licensed Products. PROGENICS agrees to reasonably
cooperate with PDL in obtaining a foreign tax credit in the U.S. with respect
to taxes withheld on royalties due to PDL on the sale or manufacture of
Licensed Products.
5.08 Currency Conversion. All amounts payable to PDL under this Agreement
shall be payable in U.S. Dollars by wire transfer to a bank account designated
by PDL. In the case of royalties on sales, all amounts payable shall first be
calculated in the currency of sale and then converted into U.S. Dollars using
the average of the daily exchange rates for such currency quoted by Citibank,
N.A. for each of the last fifteen (15) banking days of each calendar quarter.
5.09 Interest on Overdue Payments. PROGENICS shall be liable for interest
on any overdue payments under Sections 5.01, 5.03 and 5.06 at the rate of ten
percent (10%) per annum, or the highest rate allowed by law, whichever is less,
commencing on the date such payments are due until paid.
5.10 Reports.
(a) Current Reports. PROGENICS agrees to make written reports and
royalty payments to PDL within forty-five (45) days after the close of each
calendar quarter during the term of this Agreement, beginning with the calendar
quarter in which the date of first sale to an independent third party occurs.
These reports shall show Net Sales of the Licensed Products by PROGENICS and
its Affiliates for the calendar quarter with respect to which the report is
delivered as well as Net Sales of the Licensed Products reported by
sublicensees in that calendar quarter on a country-by-country basis, details of
the quantities of Licensed Products sold in each country and the country of
manufacture if different, applicable offsets, withholding taxes and the net
royalty due to PDL thereon pursuant to Article 5. Concurrently with the making
of each such report, PROGENICS shall make any payment due to PDL of royalties
for the period covered by such report.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
11
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(b) Termination Report. If this Agreement terminates at any time after
royalties on Licensed Products are payable pursuant to Section 5.01, PROGENICS
also agrees to make a written report to PDL within ninety (90) days after the
date on which PROGENICS, its Affiliates or sublicensees last sell Licensed
Products stating in such report the same information required by quarterly
reports for all such Licensed Products made, sold or otherwise disposed of
which were not previously reported to PDL.
(c) Notification of Marketing Approval. PROGENICS agrees to notify PDL
in writing within sixty (60) days after the date on which PROGENICS, its
Affiliates or sublicensees obtain marketing approval of a Licensed Product in
any country. Such notice shall specify the country in which marketing approval
was obtained and the date of such approval.
5.11 Inspection PROGENICS agrees to keep accurate and complete records for
a period of at least three (3) years (or such longer period as may correspond
to PROGENICS' internal records retention policy) for each reporting period in
which Net Sales occur showing the manufacturing, sales, use and other
disposition of Licensed Products in sufficient detail to enable the royalties
payable hereunder to be determined, and further agrees to permit its books and
records to be examined by an independent accounting firm selected by PDL and
reasonably satisfactory to PROGENICS, from time-to-time to the extent
necessary, but not more than once a year. Such examination is to be made at
the expense of PDL, except in the event that the results of the audit reveal
that PROGENICS underpaid PDL by [ * * * ] or more, in which case the audit
fees shall be paid by PROGENICS. Any such discrepancies will be promptly
corrected by a payment or refund, as appropriate.
6. [ * * * ]; ROYALTY BUY DOWN; MANUFACTURING
6.01 [ * * * ]
(a) In the event that [ * * * ], PDL shall promptly notify PROGENICS
in writing [ * * * ]. PROGENICS shall have fifteen (15) days following
delivery of the written notice from PDL to notify PDL that it desires to enter
into an amendment to this Agreement [ * * * ] under the terms of this
Section 6.01. Thereafter, the parties shall negotiate in good faith on the
additional terms of such amendment as provided in Section 6.01(b). Effective
upon the execution of such amendment and the payment of the appropriate non-
refundable, non-creditable [ * * * ] fee set forth below, [ * * * ].
PROGENICS' right to enter into an amendment to this Agreement [ * * * ]
pursuant to this Section 6.01 shall terminate if PROGENICS either fails to
timely notify PDL or elects not to exercise its right as provided under this
Section 6.01 following written notification from PDL of a [ * * * ], or if
the parties fail to reach agreement on additional terms as provided in Section
6.01(b). The applicable [ * * * ] shall be determined by the time of
exercise by PROGENICS of its rights hereunder as set forth in the table below.
[ * * * ]
Effective upon the execution of an amendment including the terms set forth in
Section 6.01(b) and the payment of the applicable [ * * * ] and subject to
the remaining terms and conditions of this Agreement, [ * * * ].
(b) In the event that PROGENICS elects to exercise its rights pursuant to
Section 6.01(a), for a period of thirty (30) days from written notice of
exercise from PROGENICS hereunder, the parties shall negotiate in good faith to
reach an agreement on the additional terms of [ * * * ], which terms shall
include [ * * * ].
6.02 Royalty Buy Down. For a period of [ * * * ] from the Effective
Date, PROGENICS shall have the right to make a payment to PDL in order to
reduce the royalty payable to PDL pursuant to Section 5.03 as follows:
[ * * * ]
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
12
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6.03 Manufacturing by PDL. Upon request by PROGENICS, PDL agrees to
consider manufacturing Licensed Products for and on behalf of PROGENICS on
terms to be reasonably negotiated under a separate contract. In no event shall
this Section 6.03 be construed as an obligation on the part of either party.
If PROGENICS desires, and if legally permissible, PDL will manage, under terms
and conditions to be mutually agreed upon, a new manufacturing facility
financed by PROGENICS within or contiguous to PDL's existing manufacturing
facility.
7. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
7.01 Representations and Warranties.
(a) Each party represents and warrants to the other that it knows of no
legal reason to prevent it from entering into this Agreement.
(b) PROGENICS represents and warrants that it possesses appropriate
rights to the Murine Antibodies for PDL to undertake the Program and that the
performance of this Agreement by PDL will not infringe any patent, trade secret
or other proprietary rights of a third party with respect to the Murine
Antibodies.
(c) PDL represents and warrants that as of the Effective Date it has the
rights to grant the licenses as provided under Sections 3.01(a), (b) and (c).
(d) As of the Effective Date, PDL has not been informed by any of the
third party licensors listed on Exhibit B or Exhibit C that PDL is not entitled
to grant the sublicenses granted under this Agreement.
7.02 No Warranty of Validity, Non-Infringement. PDL makes no
representations or warranties, express or implied (except as specifically set
forth herein) with respect to any cell line (including the [ * * * ]) or
Humanized Antibody delivered to PROGENICS under this Agreement and nothing in
this Agreement shall be construed as (a) a warranty or representation by PDL as
to the validity or scope of any PDL Patent Rights; or (b) a warranty or
representation that anything made, used, sold or otherwise disposed of under
any license granted in this Agreement is or will be free from infringement of
patents, copyrights, trademarks, trade secrets or other rights of third
parties.
7.03 No Other Warranties by PDL. EXCEPT AS SPECIFICALLY SET FORTH IN
ARTICLE 7, PDL MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, WITH RESPECT TO ANY CELL LINES, ANTIBODIES, LICENSED
PRODUCTS OR OTHER MATERIALS DELIVERED TO PROGENICS UNDER THIS AGREEMENT AND PDL
FURTHER MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE, OR THAT THE USE OF ANY CELL LINES, ANTIBODIES,
LICENSED PRODUCTS OR OTHER MATERIALS DELIVERED TO PROGENICS UNDER THIS
AGREEMENT WILL NOT INFRINGE ANY THIRD PARTY RIGHTS.
7.04 No Other Warranties by PROGENICS. EXCEPT AS SPECIFICALLY SET FORTH IN
ARTICLE 7, PROGENICS MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, WITH RESPECT TO ANY CELL LINES, ANTIBODIES, PROGENICS
TECHNICAL INFORMATION OR OTHER MATERIALS DELIVERED TO PDL UNDER THIS AGREEMENT
AND PROGENICS FURTHER MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF ANY CELL LINES,
ANTIBODIES, PROGENICS TECHNICAL INFORMATION OR OTHER MATERIALS DELIVERED TO PDL
UNDER THIS AGREEMENT WILL NOT INFRINGE ANY THIRD PARTY RIGHTS.
7.05 PROGENICS Diligence. PROGENICS acknowledges the provisions of this
Article 7 and agrees that, subject to Section 7.06, it is responsible for and
has conducted its own investigation and analysis of the patent or other
proprietary rights of third parties and the possibility of infringements
thereof, that it understands the complexity and uncertainties associated with
possible claims of infringement of patent or other proprietary rights of third
parties, particularly those relating to pharmaceutical products.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
13
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7.06 Indemnification. PROGENICS shall at all times, during the term of this
Agreement and thereafter, indemnify and hold harmless PDL and its Affiliates,
sublicensees, directors, officers, agents and employees from any claim,
proceeding, loss, expense, and liability of any kind whatsoever (including but
not limited to those resulting from death, personal injury, illness or property
damage and including legal expenses and reasonable attorneys' fees) arising out
of or resulting from the development, manufacture, holding, use, testing,
advertisement, sale or other disposition by PROGENICS, its Affiliates or
sublicensees, or any distributor, customer or representative of PROGENICS or
any one in privity therewith, of any Licensed Product or of any cell lines (or
their progeny or derivatives, other biological materials, method, process,
device or apparatus) or Humanized Antibody licensed or provided by PDL to
PROGENICS hereunder; provided, however, that the foregoing indemnity obligation
shall not apply where such claim, proceeding, loss, expense or liability is the
result of the gross negligence or willful misconduct of PDL. In the event that
such claim, loss, expense or liability is the result of the gross negligence or
willful misconduct of PDL, PDL shall correspondingly indemnify PROGENICS and
its Affiliates, sublicensees, directors, officers, agents and employees.
7.07 Immunity. During the term of this Agreement and for so long as
PROGENICS is not in material breach hereof, PDL grants to PROGENICS an immunity
from suit by PDL with respect to Licensed Products under the PDL Patent Rights
and, if applicable, the PDL [ * * * ]. Nothing herein shall be construed
as a waiver of any rights of PDL at law or equity otherwise available as a
remedy to PDL for a breach of this Agreement by PROGENICS.
8. CONFIDENTIALITY
The provisions of that certain Confidentiality Agreement entered into between
PDL and PROGENICS of July 31, 1997, a copy of which is attached hereto as
Exhibit D, are incorporated by reference as if set forth in their entirety
herein. Information (as defined in the Confidentiality Agreement) furnished by
a party to the other hereunder, directly or indirectly, including without
limitation any specifications and data related to the Murine Antibody and Cell
Line and PDL's humanization technology, may be used by the party receiving such
Information, except as otherwise expressly provided, only in furtherance of the
performance of its obligations under this Agreement. In any event, the term of
the Confidentiality Agreement shall continue through the term of this
Agreement.
9. TERM AND TERMINATION
9.01 Term. Unless earlier terminated as provided in this Article 9, this
Agreement shall come into force on the date first set forth above and shall
continue until later of the expiration of the obligation to pay royalties to
PDL or to PDL's licensors as specified in Section 5.04, in accordance with
Article 5 above. Thereafter, this Agreement shall terminate and all licenses
or sublicenses granted hereunder shall become fully paid-up, irrevocable
licenses.
9.02 Termination.
(a) This Agreement may be terminated on sixty (60) days prior written
notice by PROGENICS; provided that if PROGENICS terminates this Agreement prior
to the payment of Milestone 2 for any reason other than a breach of this
Agreement by PDL, PROGENICS shall reimburse PDL within thirty (30) days of such
termination for incremental costs and non-cancellable expenses incurred by PDL
in conducting the Program to the date of termination by PROGENICS. If
PROGENICS terminates this Agreement after the payment of Milestone 2, PROGENICS
shall have no obligation to reimburse PDL for any costs or expenses incurred by
PDL in conducting the Program.
(b) If either party shall at any time default in the payment of any
royalty, or the making of any payment required by this Agreement, the other
party may, at its option, terminate this Agreement upon ten (10) days written
notice, provided that if the receiving party shall have fully cured its
default within such ten (10) day period, then the rights and licenses herein
granted shall remain in force as if no breach or default had occurred. If
either party shall at any time breach any material term, condition or agreement
herein other than failure to pay, and shall fail to have initiated and actively
pursued remedy of any such default or breach within thirty (30) days after
receipt of written notice thereof by the other party, that other party may, at
its option, cancel this Agreement and revoke any rights and licenses herein
granted and directly affected by the default or breach by notice in writing to
such effect. Such act shall not, however, prejudice the right of the party
giving notice to recover any royalty or other sums due at the time of such
cancellation, and it being understood that if within thirty (30) days after
receipt of any such notice the receiving party shall have initiated and
actively pursued remedy of its default, then the rights and licenses herein
granted shall remain in force as if no breach or default had occurred on the
part of the receiving party, unless such breach or default is not in fact
remedied within a reasonable period of time.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
14
<PAGE>
9.03 No Waiver. The right of either party to terminate this Agreement as
provided herein shall not be affected in any way by its waiver of, or failure
to take action with respect to, any previous failure to perform hereunder.
9.04 Survival. Any accrued payment and any rights or obligations under
Articles 5, 7 and 8 shall survive any termination of this Agreement.
10. MISCELLANEOUS
10.01 Force Majeure. Neither party shall be responsible to the other for
failure or delay in performing any of its obligations under this Agreement or
for other non-performance hereof provided that such delay or non-performance is
occasioned by a cause beyond the reasonable control and without fault or
negligence of such party, including, but not limited to earthquake, fire,
flood, explosion, discontinuity in the supply of power, court order or
governmental interference, act of God, strike or other labor trouble and
provided that such party will inform the other party as soon as is reasonably
practicable and that it will entirely perform its obligations immediately after
the relevant cause has ceased its effect.
10.02 Validity. Should one or several provisions of the Agreement be or
become invalid, then the parties hereto shall substitute such invalid
provisions by valid ones, which in their economic effect come so close to the
invalid provisions that it can be reasonably assumed that the parties would
have contracted this Agreement with those new provisions. In the event that
such provisions cannot be determined, the invalidity of one or several
provisions of the Agreement shall not affect the validity of the Agreement as a
whole, unless the invalid provisions are of such essential importance for this
Agreement that it is to be reasonably assumed that the parties would not have
contracted this Agreement without the invalid provisions.
10.03 Publicity. PDL and PROGENICS will issue a joint press release in the
form attached hereto as Exhibit E concerning the parties' entry into this
Agreement, identifying the parties hereto and the therapeutic area of the
Humanized Antibody hereunder, with the other contents of such release to be
reviewed and approved in advance by PDL and PROGENICS, which approval shall not
be unreasonably withheld. Except as required by law, neither party shall
publicly disclose the terms and conditions of this Agreement unless expressly
authorized to do so by the other party, which authorization shall not be
unreasonably withheld. In any event, PDL shall be entitled to disclose orally
(but not in writing) to potential collaborators or investors the aggregate
amount of Milestones payments payable hereunder, provided that in no event
shall such amounts be specified in the joint press release.
10.04 Disputes. Any claim, dispute or controversy arising out of or in
connection with or relating to failure to make a payment under this Agreement
shall be submitted by the parties for adjudication in Federal District Court in
the State of California.
10.05 Notices. Any notice or report required or permitted to be given under
this Agreement shall be in writing and shall be sent by expedited delivery or
telecopied and confirmed by mailing, as follows and shall be effective three
(3) days after such delivery:
If to PDL: Protein Design Labs, Inc.
34801 Campus Drive
Fremont, California 94555 USA
Attention: Chief Executive Officer
Fax No.: (510) 574-1500
Copy to: Protein Design Labs, Inc.
34801 Campus Drive
Fremont, California 94555 USA
Attention: General Counsel
Fax No.: (510) 574-1473
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
15
<PAGE>
If to PROGENICS: Progenics Pharmaceuticals, Inc.
777 Old Sawmill River Road
Tarrytown, NY 10591 USA
Attention: Ronald Prentki, President
Fax No.: (914) 789-2817
Copy to: Dewey Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019 USA
Attention: Donald J. Murray, Esq.
Fax No.: (212) 259-6333
10.06 Governing Law. The validity, performance, construction, and effect of
this Agreement shall be governed by the laws of the State of California which
are applicable to contracts between California residents to be performed wholly
within California.
10.07 Entire Agreement. This Agreement constitutes the entire Agreement
between the parties hereto with respect to the within subject matter and
supersedes all previous Agreements, whether written or oral. This Agreement
shall not be changed or modified orally, but only by an instrument in writing
signed by both parties.
10.08 Assignment. The rights of either party under this Agreement may not
be assigned, and the duties of either party under this Agreement may not be
delegated, without the prior written consent of the other party, which consent
shall not be unreasonably withheld; provided however, that either party may
assign this Agreement without prior written consent to an Affiliate of such
party or to a party which acquires all or substantially all of that party's
business, whether by merger, sale of assets or otherwise.
10.09 Export. Each party acknowledges that the laws and regulations of the
U.S. restrict the export and re-export of commodities and technical data of
U.S. origin. Each party agrees that it will not export or re-export restricted
commodities or the technical data of the other party in any form without the
appropriate U.S. and foreign government licenses.
10.10 Headings. Any headings and captions used in this Agreement are for
convenience and reference only and are not a part of this Agreement.
10.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and such
counterparts together shall constitute one agreement.
10.12 Independent Contractors. The relationship between PDL and PROGENICS
hereunder will be that of independent contractors and neither party shall have
the authority to bind or commit the other to any third party. Nothing in this
Agreement will be construed to create a joint venture, partnership, agency or
employer-employee relationship between the parties to this Agreement, and PDL
shall be solely responsible for all employment and withholding taxes applicable
to the services provided by its employees and contractors under this Agreement.
10.13 Other Collaborations. Except as expressly stated herein, no
provision of this Agreement shall be construed as proscribing either party
hereto from collaborating with others on the humanization of antibodies.
10.14 Updating Exhibits. At the request of PROGENICS, PDL shall update
the Exhibits to this Agreement to reflect the inclusion of additional patents
and patent applications as contemplated by this Agreement, provided that PDL
shall not be required to provide updates more frequently than semi-annually.
IN WITNESS WHEREOF, the parties hereto have duly executed this Development
and License Agreement as of the date first above written.
PROTEIN DESIGN LABS, INC. PROGENICS PHARMACEUTICALS, INC.
By: /s/ Laurence J. Korn By: /s/ Ronald J. Prentki
- -------------------------- ---------------------------
Title: Chief Executive Officer Title: President
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
16
<PAGE>
EXHIBIT A
PDL Patent Rights
The following are patents and patent applications (also known as
[ * * * ]) as of March 31, 1999 issued and filed in certain countries in
the world and licensed as part of the PDL Patent Rights under the Agreement to
the extent related to the Humanized Antibody or any modification, variant or
fragment of the Humanized Antibody:
[ * * * ]
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
<PAGE>
EXHIBIT B
Third Party Rights Sublicensed to PROGENICS as part of PDL Patent Rights
Subject to Section 5.04 and only to the extent necessary for PROGENICS to
exercise its rights under the licenses to PROGENICS under Article 3 of this
Agreement, PDL's rights under the following Agreements, to the extent PDL is
permitted to sublicense such rights to PROGENICS and as such agreements may be
amended from time to time, are sublicensed to PROGENICS:
[ * * * ]
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
<PAGE>
EXHIBIT C
[ * * * ]
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
<PAGE>
Exhibit 10.34
[Confidential treatment has been requested for portions of this Agreement. The
portions of this Agreement for which confidential treatment have been requested
are omitted from this document; such portions are indicated by asterisks. The
omitted material has been filed separately with the Securities and Exchange
Commission.]
PSMA/PSMP LICENSE AGREEMENT
Dated June 15, 1999
by and among
PROGENICS PHARMACEUTICALS, INC.,
CYTOGEN CORPORATION
and
PSMA DEVELOPMENT COMPANY LLC
<PAGE>
PSMA/PSMP LICENSE AGREEMENT
THIS PSMA/PSMP LICENSE AGREEMENT, dated June 15, 1999 (this
"Agreement"), is made by and among Progenics Pharmaceuticals, Inc., a Delaware
corporation having its place of business at 777 Old Saw Mill River Road,
Tarrytown, NY 10591 ("Progenics"), CYTOGEN Corporation, a Delaware corporation
having its place of business at 600 College Road East, CN 5308, Princeton, NJ
08540 ("CYTOGEN"), and PSMA Development Company LLC, a Delaware limited
liability company having its principal place of business at 777 Old Saw Mill
River Road, Tarrytown, NY 10591 (the "LLC").
WHEREAS, CYTOGEN has acquired certain intellectual property rights,
including patent rights, relating to PSMA and PSMP (as hereinafter defined),
and may in the future acquire additional intellectual property rights,
including patent rights, relating to therapeutics based on PSMA and/or PSMP;
WHEREAS, Progenics has certain expertise in developing
immunotherapeutics based on novel vaccine and antibody technology and may in
the future acquire intellectual property rights, including patents rights,
relating to immunotherapeutics based on PSMA and/or PSMP;
WHEREAS, Progenics and CYTOGEN wish to establish a collaboration to
pursue the development and commercialization of immunotherapeutic products or
services based on PSMA and/or PSMP and, in order to implement such
collaboration, Progenics and CYTOGEN have caused the LLC to be organized and
have each become the owner of 50% of the outstanding ownership interests
thereof;
WHEREAS, in connection with the organization of the LLC, Progenics,
CYTOGEN and the LLC have entered into a limited liability company agreement
providing for the management of the LLC and the rights and obligations of the
parties thereto;
WHEREAS, in furtherance of the collaboration, each of Progenics and
CYTOGEN desires to grant rights to the LLC with respect to intellectual
property rights now owned or hereafter acquired by Progenics or CYTOGEN in the
Field (as hereinafter defined), and Progenics, CYTOGEN and the LLC wish to
provide for certain other matters related to the collaboration in the Field, as
set forth below;
WHEREAS, CYTOGEN previously granted to Prostagen Corporation, a
Delaware corporation ("Prostagen"), an exclusive license to certain rights
related to PSMA pursuant to a PSMA Therapeutics Sublicense Agreement, dated
December 9, 1996, by and between CYTOGEN and Prostagen (the "Prostagen
Agreement");
WHEREAS, Prostagen previously granted to Northwest Clinicals LLC, a
Washington limited liability company ("NWC"), an exclusive sublicense to
produce, process or otherwise manufacture and sell PSMA and PSMP pursuant to a
PSMA Production Sublicense Agreement, dated as of July 16, 1997 (the "NWC
Agreement");
WHEREAS, prior to the date hereof and in order to facilitate the
above-referenced collaboration among the parties hereto, CYTOGEN has acquired
100% of the outstanding equity interests in Prostagen, and CYTOGEN and
Prostagen have terminated the Prostagen Agreement to the extent of the Field;
WHEREAS, CYTOGEN has agreed with Progenics to cause the NWC Agreement
to be terminated and to acquire for the LLC, at no cost to the LLC, exclusive
manufacturing rights in the Field for PSMA and PSMP, and to indemnify and hold
the LLC harmless for any cost, expense, damage or liability whatsoever related
to CYTOGEN's inability to grant to the LLC as of the date hereof manufacturing
rights in the Field to PSMA and PSMP;
WHEREAS, in order to pursue the research and development programs
contemplated by the above-referenced collaboration between Progenics and
CYTOGEN, simultaneously with the execution and delivery of this Agreement
Progenics, CYTOGEN and the LLC are entering into a Services Agreement (the
"Service Agreement") pursuant to which Progenics is agreeing to perform certain
research and development services.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
<PAGE>
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein, the parties hereto agree as follows:
1. DEFINITIONS. For the purposes of this Agreement, the following
terms, whether used in the singular or plural, shall have the following
meanings:
1.1. Affiliate. The term "Affiliate" shall mean any
person, corporation, company, partnership, joint venture and/or firm which
controls, is controlled by or is under common control with, a party. For
purposes of this definition, "control" shall mean (a) in the case of corporate
entities, direct or indirect ownership of at least 50% of the stock or
participating shares entitled to vote for the election of directors, and (b) in
the case of non-corporate entities, direct or indirect ownership of at least
50% of the equity interest with the power to direct the management and policies
of such non-corporate entity.
1.2. Commercial Sale. The term "Commercial Sale" shall
mean the commercial sale of a Licensed Product to an unrelated third party.
The sale of a Licensed Product distributed or used for clinical trials or
experimental purposes only shall not be considered a Commercial Sale.
1.3. Contract Period. The term "Contract Period" shall
mean the period beginning on the Effective Date and ending on the date on which
this Agreement shall expire or terminate in accordance with the provisions of
Section 11 hereof.
1.4. CYTOGEN. The term "CYTOGEN" shall have the meaning
set forth in the recitals of this Agreement.
1.5. CYTOGEN License. The term "CYTOGEN License" shall
mean the license granted by CYTOGEN to the LLC pursuant to Section 3.2 of this
Agreement.
1.6. CYTOGEN Technical Information. The term "CYTOGEN
Technical Information" shall mean Technical Information to the extent, but only
to the extent, used or useful in the Field in which CYTOGEN has or acquires
during the Contract Period a licensable right; provided, however, that any
Technical Information used or useful in the Field in which CYTOGEN currently
has a licensable right but which is not disclosed on Annex A hereto, and any
Technical Information used or useful in the Field in which CYTOGEN acquires a
licensable right after the date hereof, shall not be deemed to be CYTOGEN
Technical Information unless and until Progenics shall have expressly consented
in writing pursuant to Section 3.3 hereof.
1.7. Effective Date. The term "Effective Date" shall mean
the date of this Agreement, as set forth on the first page hereof.
1.8. FDA. The term "FDA" shall mean the U.S. Food and Drug
Administration.
1.9. Field. The term "Field" shall mean:
(a) any and all means of developing, making, having made,
distributing, using, offering for sale, selling, having sold, importing or
exporting any Field Immunogen and/or any vaccine incorporating a Field
Immunogen as a therapeutic, but excluding vaccines for prostate cancer that are
antigen presenting cells isolated from a patient's blood, bone marrow or spleen
and pulsed ex vivo with a Field Immunogen for return to the patient; and
(b) any and all means of developing, making, having made,
distributing, using, offering for sale, selling, having sold, importing or
exporting any Field Antibody as a therapeutic.
1.10. Field Antibody. The term "Field Antibody" shall mean
a product that incorporates a peptide that includes a complementarity
determining region of an antibody recognizing one or more Field Immunogens,
including, without limitation, antibodies, antibody fragments, antibody
derivatives such as humanized antibodies and single chain antibodies, and
conjugates of any of the foregoing, but excluding MoAb 7E11.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
2
<PAGE>
1.11. Field Immunogen. The term "Field Immunogen" shall
mean any immunogen that derives its immunogenicity wholly or in significant
part from PSMA or PSMP or mimetopes thereof, or any combination of such
immunogens.
1.12. Licensed CYTOGEN Patent. The term "Licensed CYTOGEN
Patent" shall mean any Patent in which CYTOGEN has or acquires during the
Contract Period a licensable right, to the extent, but only to the extent, any
such Patent is used or useful in the Field; provided, however, that any Patent
used or useful in the Field in which CYTOGEN currently has a licensable right
but which is not disclosed on Annex A hereto, and any Patent used or useful in
the Field in which CYTOGEN acquires a licensable right after the date hereof,
shall not be deemed to be a Licensed CYTOGEN Patent unless and until Progenics
shall have expressly consented in writing pursuant to Section 3.3 hereof. The
term "Licensed CYTOGEN Patent" shall include the rights (including Patent
rights) granted to CYTOGEN pursuant to the SKICR Agreement and Wright Agreement
as well as the other Patent rights listed on Annex A hereto.
1.13. Licensed CYTOGEN Product. The term "Licensed CYTOGEN
Product" shall mean any product, apparatus, method or service the manufacture,
use, sale, provision or practice of which would, in the absence of a license,
infringe one or more claims of a Licensed CYTOGEN Patent.
1.14. Licensed Patent. The term "Licensed Patent" shall
mean any Licensed Progenics Patent or Licensed CYTOGEN Patent.
1.15. Licensed Product. The term "Licensed Product" shall
mean any Licensed Progenics Product or Licensed CYTOGEN Product.
1.16. Licensed Progenics Patent. The term "Licensed
Progenics Patent" shall mean any Patent in which Progenics has or acquires
during the Contract Period a licensable right, to the extent, but only to the
extent, any such Patent is used or useful in the Field; provided, however, that
any Patent used or useful in the Field in which Progenics currently has a
licensable right but which is not disclosed on Annex B hereto, and any Patent
used or useful in the Field in which Progenics acquires a licensable right
after the date hereof, shall not be deemed to be a Licensed Progenics Patent
unless and until CYTOGEN shall have expressly consented in writing pursuant to
Section 3.3 hereof.
1.17. Licensed Progenics Product. The term "Licensed
Progenics Product" shall mean any product, apparatus, method or service the
manufacture, use, sale, provision or practice of which by the LLC would, in the
absence of a license, infringe one or more claims of a Licensed Progenics
Patent.
1.18. Licensed Technical Information. The term "Licensed
Technical Information" shall mean the Progenics Technical Information and the
CYTOGEN Technical Information.
1.19. Licenses. The term "Licenses" shall mean the
Progenics License and the CYTOGEN License.
1.20. LLC. The term "LLC" shall have the meaning set forth
in the recitals of this Agreement.
1.21. LLC Agreement. The term "LLC Agreement" shall mean
the Limited Liability Company Agreement, dated as of even date herewith, by and
among Progenics, CYTOGEN and the LLC, and any amendments thereto.
1.22. Major Market. The term "Major Market" shall mean any
of the United States, United Kingdom, France, Germany, Italy, Spain, Japan or
Canada.
1.23. Manufacturing Rights. The term "Manufacturing Rights"
shall have the meaning set forth in Section 4.8 hereof.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
3
<PAGE>
1.24. MoAb 7E11. The term "MoAb 7Ell" shall mean that
certain antibody to PSMA known as MoAb 7E11-C5, which such antibody is claimed
in United States Patent No 5,162,504, granted November 10, 1992, and entitled
"Monoclonal Antibodies to a New Antigenic Marker in Epithelial Prostatic Cells
and Serum of Prostate Cancer Patients." The term "MoAb 7E11" includes all
subclones claimed in such Patent.
1.25. North American Territory. The term "North American
Territory" shall mean the United States of America and Canada and their
respective territories and possessions.
1.26. NWB. The term "NWB" shall have the meaning set forth
in the recitals of this Agreement.
1.27. NWC. The term "NWC" shall have the meaning set forth
in the recitals of this Agreement.
1.28. NWC Agreement. The term "NWC Agreement" shall have
the meaning set forth in the recitals of this Agreement.
1.29. Patent. The term "Patent" shall mean (i) unexpired
letters patent (including inventor's certificates) which have not lapsed or
been held invalid or unenforceable by a court or administrative body of
competent jurisdiction from which no appeal can be taken or has been taken
within the required time period, including, without limitation, any
substitution, extension, registration, confirmation, reissue, reexamination,
renewal or any like filing thereof, and (ii) pending applications for letters
patent that have not been the subject of a rejection notice from which an
appeal cannot be taken or in respect of which the applicable period of appeal
has expired, including, without limitation, any continuation, division or
continuation-in-part thereof and any provisional applications.
1.30. Prime License. The term "Prime License" shall mean
any license, including, without limitation, the SKICR Agreement, pursuant to
which Progenics or CYTOGEN has acquired, or acquires in the future,
intellectual property rights licensed to the LLC hereunder.
1.31. Progenics. The term "Progenics" shall have the
meaning set forth in the recitals of this Agreement.
1.32. Progenics License. The term "Progenics License" shall
mean the license granted by Progenics to the LLC pursuant to Section 3.1 of
this Agreement.
1.33. Progenics Technical Information. The term "Progenics
Technical Information" shall mean Technical Information to the extent, but only
to the extent, used or useful in the Field in which Progenics has or acquires
during the Contract Period a licensable right; provided, however, that any
Technical Information used or useful in the Field in which Progenics currently
has a licensable right but which is not disclosed on Annex B hereto, and any
Technical Information used or useful in the Field in which Progenics acquires a
licensable right after the date hereof, shall not be deemed to be Progenics
Technical Information unless and until CYTOGEN shall have expressly consented
in writing pursuant to Section 3.3 hereof.
1.34. Prostagen. The term "Prostagen" shall have the
meaning set forth in the recitals of this Agreement.
1.35. Prostagen Agreement. The term "Prostagen Agreement"
shall have the meaning set forth in the recitals of this Agreement.
1.36. PSMA. The term "PSMA" shall mean prostate specific
membrane antigen as described in Cancer Research, 53:227-230 (1993) and as
described in the U.S. Patent Application Serial Nos. 08/973,337 and 08/394,152,
including continuations and continuations-in-part, allelic variations thereof
and nucleic acids encoding the same.
1.37. PSMP. The term "PSMP" shall mean prostate specific
membrane peptides, which include any peptide sequence appearing in a PSMA
protein and unique to PSMA proteins, and nucleic acids encoding the same.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
4
<PAGE>
1.38. Regulatory Authority. The term "Regulatory Authority"
shall mean the applicable governmental authority (which, in the United States,
is the FDA) that is responsible for approval for manufacturing, marketing or
importing a therapeutic agent in a particular country for human use.
1.39. Services Agreement. The term "Services Agreement"
shall have the meaning set forth in the recitals of this Agreement.
1.40. SKICR. The term "SKICR" shall mean the Sloan-
Kettering Institute for Cancer Research, a New York membership corporation
having its principal place of business at 1275 York Avenue, New York, New York
10021.
1.41. SKICR Agreement. The term "SKICR Agreement" shall
mean the Option and License Agreement, effective July 1, 1993, by and between
SKICR and CYTOGEN, as amended by amendment no. 1 thereto effective as of
November 22, 1993.
1.42. SKICR License. The term "SKICR License" shall mean
the license granted to CYTOGEN pursuant to the SKICR Agreement.
1.43. Technical Information. The term "Technical
Information" shall mean unpublished research and development information,
unpatented inventions, formulae, processes, know-how, trade secrets and
technical data.
1.44. Territory. The term "Territory" shall mean the entire
world.
1.45. [* * *]
2. REPRESENTATIONS AND WARRANTIES.
2.1. By Progenics. Progenics represents and warrants to
CYTOGEN and the LLC as follows:
2.1.1. Due Organization. Progenics is a corporation duly
organized and validly existing under the laws of the State of Delaware.
2.1.2. Power to Act. Progenics has all necessary corporate
power to enter into and perform its obligations under this Agreement and has
taken all necessary corporate action under the laws of the State of Delaware
and its certificate of incorporation and by-laws to authorize the execution of,
and performance of its obligations under, this Agreement. Progenics has the
full right, power and authority to grant all of the right, title and interest
in the license granted by Progenics under Section 3 hereof.
2.1.3. No Default. Progenics is not in default under, or in
conflict with respect to, its certificate of incorporation or by-laws or any
term or provision of any agreement, mortgage or indenture to which it is a
party or by which any of its properties are bound or any statute, rule, order,
writ, injunction, decree or regulation applicable to it or any of its
properties that will preclude the performance of its obligations under this
Agreement in any material respect.
2.1.4. No Material Contracts. Progenics is not subject to
any contract or agreement that will preclude or otherwise conflict with the
performance of its obligations under this Agreement in any material respect.
2.1.5. No Conflicts. Neither the execution nor delivery of
this Agreement, the consummation of the transactions herein contemplated nor
the fulfillment of or compliance with the terms and provisions hereof will (i)
require the consent, approval or authorization of, or notice, declaration,
filing or registration with, any governmental or regulatory authority, or
violate any provisions of law, administrative regulation or court decree
applicable to Progenics or (ii) conflict with, result in a breach of any of the
terms, conditions or provisions of or constitute a default under the
certificate of incorporation or by-laws of Progenics or of any agreement or
instrument to which it is a party or by which any of its property is bound.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
5
<PAGE>
2.1.6. Execution and Delivery; Enforceability. This
Agreement has been duly executed and delivered and constitutes the legal, valid
and binding obligation of Progenics, enforceable against it in accordance with
the terms hereof, subject, as to enforcement, to bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium and other laws relating to
or affecting creditors' rights generally and by general equitable principles.
2.1.7. Patents in the Field. To Progenics's knowledge, on
the date hereof Progenics does not have a licensable right to any Patent used
or useful in the Field except as disclosed on Annex B hereto.
2.2. By CYTOGEN. CYTOGEN represents and warrants to
Progenics and the LLC as follows:
2.2.1. Due Organization. CYTOGEN is a corporation duly
organized and validly existing under the laws of the State of Delaware.
2.2.2. Power To Act. CYTOGEN has all necessary corporate
power to enter into and perform its obligations under this Agreement and has
taken all necessary corporate action under the laws of the State of Delaware
and its certificate of incorporation and by-laws to authorize the execution of,
and performance of its obligations under, this Agreement. CYTOGEN has the full
right, power and authority to grant all of the right, title and interest in the
licenses granted, or contingent licenses that may be granted, by CYTOGEN under
Section 3 hereof.
2.2.3. No Default. CYTOGEN is not in default under, or in
conflict with respect to, its certificate of incorporation or by-laws or any
term or provision of any agreement, mortgage or indenture to which it is a
party or by which any of its properties are bound or any statute, rule, order,
writ, injunction, decree or regulation applicable to it or any of its
properties that will preclude the performance of its obligations under this
Agreement in any material respect.
2.2.4. No Material Contracts. CYTOGEN is not subject to any
contract or agreement that will preclude or otherwise conflict with the
performance of its obligations under this Agreement in any material respect.
2.2.5. No Conflicts. Neither the execution nor delivery of
this Agreement, the consummation of the transactions herein contemplated nor
the fulfillment of or compliance with the terms and provisions hereof will (i)
require the consent, approval or authorization of, or notice, declaration,
filing or registration with, any governmental or regulatory authority, or
violate any provisions of law, administrative regulation or court decree
applicable to CYTOGEN or (ii) conflict with, result in a breach of any of the
terms, conditions or provisions of or constitute a default under the
certificate of incorporation or by-laws of CYTOGEN or of any agreement or
instrument to which it is a party or by which any of its property is bound.
2.2.6. Execution and Delivery; Enforceability. This
Agreement has been duly executed and delivered and constitutes the legal, valid
and binding obligation of CYTOGEN, enforceable against it in accordance with
the terms hereof, subject, as to enforcement, to bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium and other laws relating to
or affecting creditors' rights generally and by general equitable principles.
2.2.7. SKICR and Wright Agreements. (a) Attached as Exhibit
1 is a true and complete copy of the SKICR Agreement and attached as Exhibit 2
is a true and complete copy of the [* * *] Agreement. No provision of the
SKICR Agreement or the [* * *] Agreement has been amended, modified or
waived. All of the rights granted under the SKICR Agreement and the [* * *]
Agreement to CYTOGEN are valid and enforceable, and neither this Agreement nor
the LLC Agreement contravene any provision of such agreements or give rise to a
termination right thereunder. The option described in Section III.A. of the
SKICR Agreement was duly and validly exercised by CYTOGEN in a timely manner,
the license issue fee described in Section III.B. of the SKICR Agreement was
paid by CYTOGEN in accordance with such section and the license described in
Section III.C. of the SKICR Agreement was thereupon duly and validly issued.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
6
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(b) To CYTOGEN's knowledge: (i) the representations and
warranties made by SKICR in the SKICR Agreement were true in all material
respects when made; (ii) there has occurred no act or failure to act that would
render such representations untrue in any material respect if made on and as of
the date hereof; and (iii) there exists no breach or anticipatory breach by
SKICR or [* * *] of any of its material obligations under the SKICR Agreement
or the [* * *] Agreement, respectively. Each of the SKICR Agreement and the
[* * *] Agreement is in full force and effect, and CYTOGEN has complied in
all material respects with its obligations thereunder. There does not exist
any default by CYTOGEN under such agreements that, after notice or the lapse of
time or both, would constitute a material event of default or give rise to a
right of termination thereunder. CYTOGEN has neither given nor received any
notice of termination or breach under such agreements. In the event of any
misrepresentation or breach of warranty by SKICR under the SKICR Agreement,
CYTOGEN will cooperate with all reasonable requests of the Management Committee
of the LLC regarding the assertion of any claim or cause of action against
SKICR for such misrepresentation or breach of warranty; provided, that the LLC
shall bear any and all costs, expenses, liabilities or obligations of CYTOGEN
in connection therewith or arising therefrom.
2.2.8. No Litigation, Claims or Conflicts. (a) There is no
action, suit, claim or proceeding pending or threatened against CYTOGEN or, to
CYTOGEN'S knowledge, SKICR or [* * *] with respect to any of the Licensed
CYTOGEN Patents or CYTOGEN Technical Information, either at law or in equity,
before any court or administrative agency or before any governmental
department, commission, board, bureau, agency or instrumentality, whether
United States or foreign, relating to validity, infringement, ownership or
otherwise, and neither CYTOGEN nor, to CYTOGEN's knowledge, SKICR or [* * *]
has received any notice that any person may bring such a claim, and CYTOGEN has
no belief that any basis or grounds exists for any such actions, suits or
claims.
(b) [* * *]
(c) There are no proceedings or claims pending in which CYTOGEN
or, to CYTOGEN's knowledge, SKICR or [* * *] alleges that any person is
infringing upon, or otherwise violating, any of the Licensed CYTOGEN Patents or
CYTOGEN Technical Information, nor are any proceedings threatened by CYTOGEN
or, to CYTOGEN's knowledge, SKICR or [* * *] alleging any such violation or
infringement.
2.2.9. Subsisting Rights. The Licensed CYTOGEN Patents in
existence on the Effective Date are in full force and effect, have been
maintained to date and are not invalid or unenforceable, in whole or in part.
No act has been done or omitted to be done which had or could have the effect
of impairing or dedicating to the public, or entitling any U.S. or foreign
government authority or any other person to cancel, forfeit, modify or consider
abandoned any of the Licensed CYTOGEN Patents, or give any person any rights
with respect thereto. All of CYTOGEN's rights under the SKICR Agreement and
the [* * *] Agreement, and CYTOGEN's ownership rights in the Patents listed
in paragraph 2 of Annex A hereof, are valid, enforceable and free of defects.
2.2.10. No Prior Transfer. (a) CYTOGEN has not previously
sublicensed, assigned, transferred, conveyed or otherwise encumbered its right,
title and interest in any of the Licensed CYTOGEN Patents or CYTOGEN Technical
Information other than pursuant to the Prostagen Agreement. A true and
complete copy of the NWC Agreement is attached hereto as Exhibit 2.
(b) The Prostagen Agreement has been terminated in its entirety
with respect to the Field, and except for the Manufacturing Rights, no rights
in the Field remain outstanding under the Prostagen Agreement and all rights in
the Field to Patents and Technical Information granted thereunder (other than
the Manufacturing Rights) have been reacquired by CYTOGEN.
2.2.11. Exclusive Owner, etc. CYTOGEN is the sole and
exclusive licensee of the rights licensed to CYTOGEN under the SKICR Agreement
and the [* * *] Agreement and of the rights to the Patents listed in
paragraph 2 of Annex A hereof, all of which are owned free and clear of any
liens, charges and encumbrances, and no other person, corporation or other
private or governmental entity or subdivision thereof has or shall have any
claims of ownership whatsoever with respect to such rights. There are no
judgments or settlements against or owed by CYTOGEN relating to such rights.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
7
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2.2.12. Confidentiality; Effective Waivers. (a) Neither
CYTOGEN nor, to CYTOGEN's knowledge, SKICR or [* * *] has divulged, furnished
to or made accessible to any person any trade secrets included in the Licensed
CYTOGEN Patents or CYTOGEN Technical Information without prior thereto having
obtained an agreement of confidentiality from such person.
(b) CYTOGEN and, to CYTOGEN's knowledge, SKICR and [* * *]
have obtained from all individuals who participated in any respect in the
invention or authorship of any Licensed CYTOGEN Patents or CYTOGEN Technical
Information (as employees, consultants or otherwise) effective waivers of any
and all ownership rights of such individuals in such rights and assignments to
CYTOGEN, SKICR or [* * *], as applicable, all rights with respect thereto.
2.2.13. Patent Prosecution Disclosure. CYTOGEN has disclosed
to the LLC all of the prosecution files of all of the patents and patent
applications licensed to the LLC by CYTOGEN hereunder.
2.2.14. Patents in the Field. To CYTOGEN's knowledge, on the
date hereof CYTOGEN does not have a licensable right to any Patent used or
useful in the Field except as disclosed on Annex A hereto.
3. LICENSES.
3.1. Grant by Progenics. Subject to the terms and
conditions herein contained, Progenics hereby grants to the LLC, to the extent
(but only to the extent) of the Field, the exclusive (even as to Progenics)
right and license throughout the Territory under the Licensed Progenics Patents
and the Progenics Technical Information to develop, make, have made,
distribute, use, offer for sale, sell, have sold, import or export Licensed
Progenics Products.
3.2. Grant by CYTOGEN. Subject to the terms and conditions
herein contained, CYTOGEN hereby grants to the LLC, to the extent (but only to
the extent) of the Field, the exclusive (even as to CYTOGEN) right and license
throughout the Territory under the Licensed CYTOGEN Patents and the CYTOGEN
Technical Information to develop, make, have made, distribute, use, offer for
sale, sell, have sold, import or export Licensed CYTOGEN Products; provided,
however, that until such time as the NWC Agreement is terminated in accordance
with Section 4.8 hereof, the license granted by CYTOGEN hereunder to make or
have made Licensed CYTOGEN Products is subject to the manufacturing license
granted to NWC pursuant to the NWC Agreement.
3.2.1. Limited Right to MoAb 7E11. To enable the LLC,
Affiliates of the LLC and third party sublicensees to utilize MoAb 7E11 solely
in connection with the development, manufacturing, testing and/or conducting
quality control tests on Licensed Products, CYTOGEN hereby grants to the LLC
the right to use MoAb 7E11 solely for such purposes.
3.2.2. Antibody Requirements. CYTOGEN agrees to sell to the
LLC its MoAb 7E11 needs at a purchase price not to exceed CYTOGEN's actual and
direct costs.
3.2.3. Contingent License. In the event that CYTOGEN is
unable to supply the LLC with its requirements of MoAb 7E11, CYTOGEN shall,
upon written request by the LLC, provide to the LLC, at the LLC's cost, a
viable sample of a hybridoma capable of producing MoAb 7El1, and license to the
LLC on a non-exclusive, royalty-free basis the right to use the hybridoma and
to produce and use MoAb 7E11 for the purposes set forth in Section 3.2.1
hereof.
3.3. Licensing of Additional Patents and Technical
Information. (a) If Progenics or CYTOGEN (in either case, the "Non-Offering
Party") identifies any Patent or Technical Information used or useful in the
Field in which the other party (the "Offering Party") has a licensable right
that has not theretofore been licensed to the LLC by the Offering Party, the
Non-Offering Party may request the Offering Party to offer to license such
Patent or Technical Information to the LLC pursuant to the terms of this
Agreement. Any such request shall be in writing and shall reference the rights
requested to be licensed. If so requested, the Offering Party shall make such
an offer in writing, and in connection therewith shall disclose to the Non-
Offering Party the nature of the Patent or Technical Information and the terms
on which the Offering Party owns or licenses such Patent or Technical
Information, and if such Patent or Technical Information is licensed, shall
provide to the Non-Offering Party an accurate and complete copy of the relevant
license agreement. The Offering Party shall offer to make to the LLC and the
Non-Offering Party, with respect to such Patent or Technical Information, the
representations and warranties set forth in Annex D hereto, subject to such
exceptions as shall be identified by the Offering Party.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
8
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(b) If after the date hereof Progenics or CYTOGEN (in either
case, also the "Offering Party") acquires a licensable right in any Patent or
Technical Information used or useful in the Field, the Offering Party shall
promptly thereafter offer in writing to license such Patent or Technical
Information to the LLC pursuant to the terms of this Agreement. In connection
with any such offer, the Offering Party shall disclose to the other party
(also, the "Non-Offering Party") the nature of the Patent or Technical
Information and the terms on which the Offering Party owns or licenses such
Patent or Technical Information, and if such Patent or Technical Information is
licensed, shall provide to the Non-Offering Party an accurate and complete copy
of the relevant license agreement. In addition, the Offering Party shall offer
to make to the LLC and the Non-Offering Party, with respect to such Patent or
Technical Information, the representations and warranties set forth in Annex C
hereto, subject to such exceptions as shall be identified by such party.
(c) If a license grant offer is made pursuant to Section
3.3(a) or Section 3.3(b) hereof, the Non-Offering Party shall have 30 calendar
days to determine whether to cause the LLC to accept such offer. Such offer
shall be deemed accepted by the LLC if the Non-Offering Party delivers a
written acceptance notice to the Offering Party within such 30-day period
(which shall be deemed to be the written consent contemplated by Section 1.6,
1.12, 1.16 or 1.33 hereof, as the case may be). Upon the delivery of such
acceptance notice, (i) any Patents or Technical Information subject to the
offer shall thereupon be deemed to be Licensed Progenics Patents (under Section
1.16 hereof), Progenics Technical Information (under Section 1.33 hereof),
Licensed CYTOGEN Patents (under Section 1.12 hereof) or CYTOGEN Technical
Information (under Section 1.6 hereof), as the case may be, and (ii) the
Offering Party shall be deemed to have made the representations and warranties
referred to in Sections 3.3(a) and 3.3(b) hereof, subject to the exceptions
identified by the Offering Party as described in such sections.
3.4. Sublicenses. The LLC shall have the right to grant
sublicenses of the rights granted hereunder, provided that: (i) each such
sublicensee agrees in writing to keep books and records and permit Progenics
and CYTOGEN to review such books and records pursuant to the relevant
provisions, and to comply with all terms of this Agreement expressly applicable
to a sublicensee of the LLC; and (ii) within 15 days of granting any such
sublicense the LLC shall give written notice of such grant to Progenics and
CYTOGEN and provide Progenics and CYTOGEN with a copy of such sublicense. No
consent or approval of Progenics or CYTOGEN shall be required in connection
with the granting of such sublicenses.
3.5. Guarantee of Performance of Sublicensee. The LLC
hereby unconditionally guarantees to Progenics and CYTOGEN the performance of
any of its sublicensees' financial obligations hereunder, including making all
payments due, and making all reports required, under this Agreement to be made
by reason of sales of Licensed Products by its sublicensees and their
compliance with all applicable terms of this Agreement. In any such
sublicense, the sublicensee shall agree that in the event of a breach by the
sublicensee in the observance of any applicable terms of this Agreement,
Progenics and/or CYTOGEN, as applicable, shall be entitled to proceed either
against such sublicensee or directly against the LLC, as Progenics and/or
CYTOGEN, as applicable, may determine in their respective sole discretion, to
enforce this Agreement.
3.6. Cure of Breach by Sublicensee. Upon notification to
Progenics and CYTOGEN by the LLC of the grant by the LLC of any sublicense
under this Agreement, Progenics and CYTOGEN shall become obligated to notify in
writing any such sublicensee of any breach by the LLC hereunder, or of any
purported termination by CYTOGEN or Progenics, with such notice to be sent to
such sublicensee (at the address specified by the LLC) at the same time as
notice is sent to the LLC. In the event that the LLC breaches this Agreement,
which breach remains uncured through the expiration of any applicable cure
period, any sublicensee of the LLC hereunder shall have the right, but not the
obligation, during a period of 45 days after the expiration of the aforesaid
cure period, to cure such breach in its own name, and, upon curing such breach,
such sublicensee shall have the right to be substituted for the LLC as a direct
sublicensee under the Licenses to the exclusion of, and on the same terms as,
the LLC to the extent of the sublicense. A provision to the effect of the
foregoing shall be included in any sublicense granted hereunder.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
9
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3.7 [* * *]
3.8 [* * *]
3.9. Reservation of Rights. Progenics reserves the right
to practice and use the Progenics Technical Information and to develop, make,
have made and use Licensed Progenics Products, and CYTOGEN reserves the right
to practice and use the CYTOGEN Technical Information and to develop, make,
have made and use Licensed CYTOGEN Products, in each case without cost and
subject to the confidentiality provisions of this Agreement, for non-commercial
internal research and development purposes.
3.10. No Other Rights. Except as expressly provided herein,
no right, title or interest is granted (i) by Progenics under the Licensed
Progenics Patents, the Progenics Technical Information or otherwise or (ii) by
CYTOGEN under the Licensed CYTOGEN Patents, the CYTOGEN Technical Information
or otherwise. Progenics and CYTOGEN expressly do not grant, and nothing
contained herein is intended to grant, or shall be construed as granting, any
right, title or interest outside of the Field.
3.11. Competition Not Prohibited. No license granted under
this Agreement, and no other provision contained herein, shall be deemed to
prohibit Progenics or CYTOGEN from engaging in any activity outside of the
Field, whether or not such activity is competitive with the development or
commercialization of any Licensed Product or any other activity of the LLC.
4. CERTAIN COVENANTS.
4.1. Diligence. The LLC shall use reasonable commercial
efforts consistent with its sound business judgment to promptly develop, obtain
regulatory approval for, manufacture, market and sell Licensed Products. In
the event that Progenics and/or CYTOGEN, from time to time during the term of
this Agreement, determines, in the exercise of its or their reasonable business
judgment after discussion with the LLC, that the LLC is not using reasonable
commercial efforts to develop, obtain regulatory approval for, manufacture,
market and sell a Licensed Product within the United States and at least one
other Major Market, then Progenics and/or CYTOGEN, as the case may be, shall
have the right to request that the LLC immediately undertake such efforts. In
the event that any such request is made by Progenics and/or CYTOGEN to the LLC,
and the LLC, within 90 days of such request, does not provide Progenics and/or
CYTOGEN, as the case may be, with satisfactory evidence that the LLC is
undertaking such efforts, Progenics and/or CYTOGEN, as the case may be, shall
have the right to terminate the license granted by such party to the LLC
hereunder. In the event that the LLC does not agree with any such
determination by Progenics or CYTOGEN, the LLC and Progenics and/or CYTOGEN, as
the case may be, shall resolve such matter in accordance with Section 14.11
hereof. For purposes of the foregoing, the efforts of the LLC's Affiliates and
sublicensees, and of distributors, clinical research organizations and other
third parties acting on behalf of the LLC, its Affiliates or sublicensees,
shall be deemed to be the efforts of the LLC. Notwithstanding the provisions
of this Section 4.1 neither Progenics nor CYTOGEN shall be entitled to
terminate, pursuant to this Section 4.1, the licenses granted hereunder if the
LLC's failure to use reasonable best efforts to promptly develop, obtain
regulatory approval for, manufacture, market and sell Licensed Products results
from such party's actions or omissions in its capacity as an owner of equity
interest of the LLC or from the actions or omissions of such party's
representatives in their capacity as managers of the LLC.
4.2. No Waivers or Grant of Further Rights. Neither party
hereto will, without the prior written consent of the other parties hereto,
terminate, amend, modify or grant any waivers or consents under any Prime
License with respect to the Field, or grant any further rights in the Field
except to the LLC, or take any other action with respect to the Licensed
Patents or the Licensed Technical Information that could adversely affect the
rights granted to the LLC hereunder.
4.3. Summary Reports. For so long as the LLC is developing
Licensed Products, the LLC shall keep Progenics and CYTOGEN informed through
written summary reports about the status of the development of Licensed
Products. Such reports shall be provided to Progenics and CYTOGEN on an annual
basis, with the first report due on the first anniversary of the Effective
Date.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
10
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4.4. Breach of SKICR Agreement. In the event that CYTOGEN
shall be in breach of or default under any of the material terms, conditions or
agreements contained in the SKICR Agreement or the Wright Agreement to be kept,
observed or performed by it, or receives notice of breach or termination of or
default under such agreements, it shall immediately notify the LLC thereof. If
CYTOGEN has not cured such breach or default within [* * *] after the
effective date of any notice of termination issued with respect to such breach
or default, the LLC shall have the right, but not the obligation, to cure any
such breach or default in its own name, and the LLC shall have the right to be
substituted for CYTOGEN as direct licensee in the Field under either such
agreement to the exclusion of, and on the same terms as, CYTOGEN. If the LLC
elects not to cure such breach or default or fails to cure such breach or
default within [* * *] of the notice, then Progenics shall have the right,
but not the obligation, to cure any such breach or default in its own name, [*
* *].
4.5. Acquiring Other Rights in the Field. Progenics and
CYTOGEN agree that they will not, without the prior written consent of the
other, acquire by license or otherwise intellectual property rights in the
Field unless such rights include the right to grant a sublicense of such rights
to the LLC.
4.6. Notices under Prime Licenses. Each of Progenics and
CYTOGEN shall require each licensor of any Prime License to which it is or
becomes a party to furnish copies of all notices and other communications
required or permitted under such Prime License (including without limitation
notices of breach or termination) to the LLC and, upon the request of the LLC,
to such sublicensee(s) of the LLC as the LLC shall specify. In addition, each
of Progenics and CYTOGEN will furnish copies of all notices and communications
to the LLC and, upon the request of the LLC, to such sublicensees of the LLC as
the LLC shall specify.
4.7. Compliance with Terms of Prime Licenses; Assignment.
Each of Progenics and CYTOGEN shall fulfill each of its obligations under any
Prime License to which it is a party. Without limiting the generality of the
foregoing, within 30 days of the execution of this Agreement CYTOGEN shall
notify SKICR of the execution of this Agreement and provide SKICR with the
LLC's name and address as required by Section III.D.3. of the SKICR Agreement.
Neither Progenics nor CYTOGEN will assign any interests under a Prime License
unless the assignee expressly agrees to take such interest subject to the
interest of the LLC hereunder.
4.8 [* * *]
5. ROYALTIES AND OTHER PAYMENTS. In further consideration for the
exclusive licenses granted by Progenics and CYTOGEN to the LLC pursuant to the
provisions of Sections 3.1 and 3.2 hereof, the LLC agrees to make the following
payments to Progenics and CYTOGEN as follows:
5.1. Amounts Payable with Respect to the Progenics License.
The LLC shall pay earned royalties to Progenics with respect to any sale of
Licensed Progenics Products. Such royalties shall be paid at cost -- i.e., at
the minimum royalty rate(s) required to be paid by Progenics, and at the times
any such payments are due, under any Prime License. In addition, the LLC will
pay to Progenics fees equal in amount to the minimum amount of any license,
milestone, minimum royalty or other fees required to be paid by Progenics to
any third party under any Prime License at the times any such payments are due.
Any license, milestone, minimum royalty or other fees (but excluding earned
royalties) payable by the LLC to Progenics pursuant to this Section 5.1 in
respect of a Prime License shall be discounted if Progenics has not sublicensed
to the LLC all of the intellectual property rights acquired by Progenics in
such Prime License. Such discount shall be equal to the proportionate economic
value, as agreed upon in good faith by the parties hereto at the time such
rights are sublicensed to the LLC, of the rights not so sublicensed relative to
the totality of rights licensed to Progenics in the Prime License.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
11
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5.2. Amounts Payable with Respect to the CYTOGEN License.
The LLC shall pay earned royalties to CYTOGEN with respect to any sale of
Licensed CYTOGEN Products. Such royalties shall be paid at cost -- i.e., at
the minimum royalty rate(s) required to be paid by CYTOGEN, and at the times
any such payments are due, under any Prime License. In addition, the LLC will
pay to CYTOGEN fees equal in amount to the minimum amount of any license,
milestone, minimum royalty or other fees required to be paid by CYTOGEN to any
third party under any Prime License at the times any such payments are due.
Any license, milestone, minimum royalty or other fees (but excluding earned
royalties) payable by the LLC to CYTOGEN pursuant to this Section 5.2 in
respect of a Prime License shall be discounted if CYTOGEN has not sublicensed
to the LLC all of the intellectual property rights acquired by CYTOGEN in such
Prime License. Such discount shall be equal to the proportionate economic
value, as agreed upon in good faith by the parties hereto at the time such
rights are sublicensed to the LLC, of the rights not so sublicensed relative to
the totality of rights licensed to CYTOGEN in the Prime License. In
particular, the license, milestone, minimum royalty or other fees payable by
the LLC to CYTOGEN pursuant to this Section 5.2 with respect to amounts due by
CYTOGEN to SKICR pursuant to the SKICR Agreement shall be discounted by [* *
*] to reflect the value of rights sublicensed by SKICR to CYTOGEN but not
sublicensed by CYTOGEN to the LLC.
5.3. Allocation of Royalties. If (i) any Prime License
requires the payment of royalties at a rate which varies with sales volume and
(ii) CYTOGEN or Progenics (as the case may be as to any particular Prime
License) has sublicensed rights under such Prime License to one or more persons
("Other Licensees") in addition to the LLC, then the royalty rates applicable
to the sale of Licensed Products for purposes of determining royalties payable
with respect to such Prime License shall be calculated by making an equitable
allocation (on a notional basis) of net sales by the LLC and the Other
Licensees as to each royalty rate/sales level.
6. PATENT PROSECUTION AND MAINTENANCE, ETC.
6.1. Prosecution and Maintenance. To the fullest extent
legally or contractually entitled, each of Progenics and CYTOGEN hereby grants
to the LLC the exclusive right to prepare, file or prosecute any patent
application licensed to the LLC by such party, maintain or extend the term of
any issued Patent licensed to the LLC by such party and defend against any
conflicts, oppositions or interferences involving third-party challenges to
Patents licensed to the LLC by such party. The cost of such activities shall
be borne by the LLC; provided, however, that if less than all of the rights to
any such Patent has been licensed to the LLC pursuant hereto, the LLC shall
bear only that portion of the cost of such activities as reflects the
proportionate economic value, as agreed upon in good faith by the parties
hereto, of the rights licensed to the LLC. Progenics and CYTOGEN shall
cooperate, at the LLC's expense, with all reasonable requests of the LLC in all
such activities. If at any time the LLC determines not to prepare, file or
prosecute patent applications licensed to the LLC hereunder, maintain or extend
the term of any issued Patent licensed to the LLC hereunder or defend against
any conflicts, oppositions or interferences involving third-party challenges to
any Patent licensed to the LLC hereunder, the LLC shall notify CYTOGEN (in the
case of Licensed CYTOGEN Patents) or Progenics (in the case of Licensed
Progenics Patents) of any such determination and grant back to CYTOGEN or
Progenics, as the case may be, the right to conduct any such activity. If the
right to prepare, file or prosecute any patent application licensed to the
Company hereunder, or to maintain or extend or to defend against any third-
party conflicts, oppositions or interferences involving any Patent licensed to
the LLC hereunder cannot be granted to the LLC, the party licensing such Patent
shall use commercially reasonable efforts diligently to perform, or cause to be
performed, in consultation with the LLC, such activities. The cost of such
activities shall be borne by the LLC; provided, however, that if less than all
of the rights to any such Patent has been licensed to the LLC pursuant hereto,
the LLC shall bear only that portion of the cost of such activities as reflects
the proportionate economic value, as agreed upon in good faith by the parties
hereto, of the rights licensed to the LLC.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
12
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6.2. Disclosure Regarding Patent Activities. Each party
which engages in patent activities of the nature described in section 6.1
hereof shall promptly provide the other parties hereto with all correspondence
(including any filings sent or received) and all other information concerning
such activities which comes into such party's possession, and shall
periodically update the other parties hereto on all relevant information
concerning the actions described in Section 6.1 hereof. In addition to the
foregoing, each party required to disclose information pursuant to this Section
6.2 shall provide to the other parties hereto a reasonable opportunity to
review any materials to be submitted or filed with any patent or governmental
authority or in connection with any such proceeding and to comment on such
materials and will discuss and consider such comments in good faith. The
parties hereto consent to the disclosure of such correspondence by the LLC, at
its discretion, to any and all of its Affiliates and any sublicensee, provided
that such Affiliates and sublicensees shall receive such correspondence under a
confidential disclosure agreement reasonably satisfactory in form and substance
to Progenics or CYTOGEN, as the case may be.
7. REPORTS AND ROYALTY PAYMENTS; BOOKS AND RECORDS.
7.1. Reports. On or before the last day of each February,
May, August, and November commencing with the first Commercial Sale and
thereafter throughout the Contract Period, the LLC shall furnish Progenics and
CYTOGEN with a written report, signed by an authorized officer or agent of the
LLC, showing all Commercial Sales with respect to which earned royalties are
due Progenics and/or CYTOGEN hereunder with respect to the quarters ended
December 31, March 31, June 30 and September 30, respectively.
7.2. Royalty Payments. With each such quarterly report,
the LLC shall remit to Progenics and/or CYTOGEN the total amount of earned
royalties shown thereby to be due. All payments shall be made in lawful funds
of the United States of America.
7.3. Calculation of Royalties and Other Payments. In order
to permit the LLC to calculate the amount of royalties and other payments
payable pursuant to Section 5 hereof, Progenics and CYTOGEN shall provide to
the LLC true and complete copies of all Prime Licenses. Progenics and CYTOGEN
will also furnish the LLC with a written report, signed by an authorized
officer, stating product sales by each of the other licensees (if any) covered
by such Prime License (to the extent available to, and not subject to legal or
contractual restrictions on disclosure by, Progenics or CYTOGEN, as the case
may be), and will make their respective personnel available to answer questions
and otherwise provide information with respect to any matters reasonably
necessary for the LLC to calculate amounts due by the LLC to Progenics or
CYTOGEN under Section 5 hereof.
7.4. Currency Control Restrictions. In the event that the
LLC is precluded from transferring royalties due Progenics and/or CYTOGEN
hereunder at any time during the Contract Period because the LLC has failed
after due diligence to obtain the approval of such transfer from the
appropriate governmental agency responsible for control of currency exchanges
of a particular country in which the LLC has sold Licensed Products, then the
LLC agrees (a) to deposit or to cause the deposit of such royalties to the
account of Progenics or CYTOGEN, as the case may be, in a bank in such country
designated by the beneficiary of such deposit; (b) to provide or to cause to be
provided to such beneficiary documentary evidence of such deposits; and (c) to
remit or to cause remittance of such deposits to such beneficiary immediately
upon the subsequent approval of such transfers by such governmental agency. The
LLC further agrees that the form of such depository account shall permit such
beneficiary to withdraw the deposited amounts at will, but shall permit the LLC
to withdraw the deposited amounts solely for the purpose of remitting such
amounts to such beneficiary pursuant to the provisions of this Paragraph 7.4.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
13
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7.5. Books and Records. The LLC agrees to keep adequate
and complete records showing all Commercial Sales and/or other revenues with
respect to which earned royalties and/or other payments are due Progenics
and/or CYTOGEN hereunder. Such records shall include all information necessary
to verify the total amount and computation of earned royalties and/or other
payments hereunder, and shall be open to inspection by Progenics and CYTOGEN
during reasonable business hours to the extent necessary to verify the amount
thereof. Such inspection by each of Progenics and CYTOGEN shall be made not
more often than once each calendar year at the request of Progenics and/or
CYTOGEN (unless good cause is shown by Progenics or CYTOGEN of the need for
more frequent inspection) by an auditor appointed by the requesting party and
to whom the LLC has no reasonable objection, provided that such auditor shall
be under a confidentiality obligation to the LLC to reveal only that
information, and only to the requesting party, necessary to verify the
royalties due hereunder. In addition, such inspection shall be limited to a
period not to extend beyond three years after the date of receipt by the
requesting party of a report from the LLC relating to such records pursuant to
Section 7.1 hereof. After such three-year period, any such report and the
records upon which such report was based shall be deemed presumptively correct.
The expenses of any such audit shall be borne by the party requesting the audit
unless the audit determines a discrepancy in favor of the requesting party of
at least [* * *], in which event the audit expenses shall be borne by the
LLC. Notwithstanding the foregoing, either Progenics or CYTOGEN shall, at
reasonable times and upon reasonable notice, be granted access after such
three-year period to such records (to the extent retained by the LLC) for
purposes of preparing tax returns and related materials.
8. TAXATION OF PAYMENTS. Insofar as any earned royalties which are
due Progenics or CYTOGEN hereunder are subject to taxation by any country under
the provisions of the tax laws of that country, then the LLC agrees to bear
such taxes, and Progenics and CYTOGEN hereby authorize the LLC to withhold such
taxes from the payments which are payable to Progenics and CYTOGEN in
accordance with this Agreement if the LLC is either required to do so under
such country's tax laws or directed to do so by an agency of such country's
government. Whenever the LLC deducts such tax from any payments due Progenics
or CYTOGEN, the LLC shall furnish Progenics or CYTOGEN, as the case may be,
with a tax certificate showing the payment of such tax to the government of
such country. In the event such taxes are assessed against the LLC by reason
of its failure to withhold such taxes from any payments which have been paid to
Progenics or CYTOGEN in accordance with this Agreement, then Progenics or
CYTOGEN, as the case may be, agrees to reimburse the LLC for such tax
assessment but not for any fine, penalty, fee or interest related to the LLC's
failure to withhold, pay or make timely payment of such taxes.
9. PRODUCT LIABILITY DISCLAIMERS.
9.1. Product Liability Disclaimer by Progenics. Progenics
assumes no responsibility for the manufacture, product specifications, end use
or provision of any Licensed Products that are manufactured or provided by or
for, or sold by, the LLC or any Affiliate or third-party licensee. All
warranties in connection with such Licensed Products made or provided by the
LLC or any Affiliate or third-party licensee shall not directly or impliedly
obligate Progenics in any manner whatsoever under such warranties or otherwise.
9.2. Product Liability Disclaimer by CYTOGEN. CYTOGEN
assumes no responsibility for the manufacture, product specifications, end-use
or provision of any Licensed Products that are manufactured or provided by or
for, or sold by, the LLC or any Affiliate or third-party licensee. All
warranties in connection with such Licensed Products made or provided by the
LLC or any Affiliate or third-party licensee shall not directly or impliedly
obligate CYTOGEN in any manner whatsoever under such warranties or otherwise.
9.3. Product Liability Disclaimer by the LLC. The LLC
assumes no responsibility for the manufacture or product specifications of any
products which are manufactured by or for Progenics or CYTOGEN except for the
manufacture or product specifications of materials made by or for the LLC. Any
warranties in connection with such products made by Progenics or CYTOGEN as
user of such products shall not directly or impliedly obligate the LLC.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
14
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10. INDEMNIFICATION AND INFRINGEMENT.
10.1. Indemnification.
10.1.1. By Progenics. Progenics shall indemnify, defend and
hold CYTOGEN and the LLC, their respective Affiliates and any sublicensee of
the LLC hereunder harmless from and against any and all claims, suits or
demands for liability, damages, losses, costs and expenses, including the
reasonable costs and expenses of counsel (collectively, "Losses"), arising out
of (i) any breach of the representations and warranties, or the failure to
perform when and as required any of the covenants or agreements, made by
Progenics in this Agreement or (ii) any infringement or purported infringement
of third-party intellectual property rights by practicing the Licensed
Progenics Patents or the Progenics Technical Information.
10.1.2. By CYTOGEN. CYTOGEN shall indemnify, defend and hold
Progenics and the LLC, their respective Affiliates and any sublicensee of the
LLC hereunder harmless from and against any and all Losses arising out of (i)
any breach of the representations and warranties, or the failure to perform
when and as required any of the covenants or agreements, made by CYTOGEN in
this Agreement or (ii) any infringement or purported infringement of third-
party intellectual property rights by practicing the Licensed CYTOGEN Patents
or the CYTOGEN Technical Information.
10.1.3. By the LLC. The LLC shall indemnify, defend and hold
Progenics and CYTOGEN their respective Affiliates and any sublicensee of the
LLC hereunder harmless from and against any and all Losses arising out of (i)
any breach of the representations and warranties, or the failure to perform
when and as required any of the covenants or agreements, made by the LLC in
this Agreement or (ii) any claim by a third party that any Licensed Product
made, used or sold by or on behalf of the LLC or any sublicense thereof
infringes patent rights of such third party (except insofar as any such claim
gives rise to an indemnification obligation of Progenics under Section 10.1.1
hereof or of CYTOGEN under Section 10.1.2 hereof.
10.2. Third Party Infringement of Licensed Patent Rights.
The following provisions relate to third-party infringement of any of the
Licensed Patents:
10.2.1. Infringement of Licensed Progenics Patents. In the
event that any party hereto becomes aware that any third party is infringing
any claims of any issued patent included within the Licensed Progenics Patents
sublicensed to the LLC hereunder, then such party shall immediately advise the
other parties hereto, and the parties shall consult with each other as to the
most effective way of proceeding. Under such circumstances:
(a) the LLC, as the exclusive licensee of the Licensed
Progenics Patents, shall have the right, but not the obligation, and subject to
any applicable third-party rights, to commence and prosecute an action under
the appropriate Licensed Progenics Patents against any such third-party
infringer, in which event the LLC shall bear the costs of such action and shall
be entitled to retain any recovery resulting therefrom;
(b) if the LLC declines or fails to commence and/or prosecute
such action, then Progenics shall be entitled to commence and prosecute an
action under the appropriate Licensed Progenics Patents against such third-
party infringer, in which event Progenics shall bear the costs of such action
and shall be entitled to retain any recovery resulting therefrom.
The parties hereto shall cooperate fully with each other in any
such proceedings, including joining as a necessary party (subject to
appropriate indemnification arrangements), shall consult as to litigation
strategies and other matters related to any such proceedings, and shall, among
other things, furnish information and evidence when so requested by the other,
including testimony by the requested party, its agents and employees, as may be
required by the party commencing and prosecuting such action.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
15
<PAGE>
10.2.2. Infringement of Licensed CYTOGEN Patents. In the
event that any party hereto becomes aware that any third party is infringing
any claim or claims of any issued patent included within the Licensed CYTOGEN
Patents sublicensed to the LLC hereunder, then such party shall immediately
advise the other parties hereto, and the parties shall consult with each other
as to the most effective way of proceeding. Under such circumstances:
(a) the LLC, as the exclusive licensee of the Licensed CYTOGEN
Patents, shall have the right, but not the obligation, and subject to any
applicable third-party rights, to commence and prosecute an action under the
appropriate Licensed CYTOGEN Patents against any such third-party infringer, in
which event the LLC shall bear the costs of such action and shall be entitled
to retain any recovery resulting therefrom;
(b) if the LLC declines or fails to commence and/or prosecute
such action, then CYTOGEN shall be entitled to commence and prosecute an action
under the appropriate Licensed CYTOGEN Patents against such third-party
infringer, in which event CYTOGEN shall bear the costs of such action and shall
be entitled to retain any recovery resulting therefrom.
The parties hereto shall cooperate fully with each other in any
such proceedings, consulting as to litigation strategies and other matters
related to any such proceedings, and shall, among other things, furnish
information and evidence when so requested by the other, including testimony by
the requested party, its agents and employees, as may be required by the party
commencing and prosecuting such action.
11. TERM AND TERMINATION.
11.1. Term. Unless sooner terminated in a manner herein
provided, this Agreement shall commence as of the Effective Date and shall
terminate upon the last to expire or terminate of any licensable rights to
Patents that have been licensed by Progenics or CYTOGEN to the LLC hereunder;
provided, however, that the provisions of Sections 7.1, 7.5, 9, 10, 12 and 14
hereof shall survive any such termination.
11.2. Termination. This Agreement may be terminated at any
time prior to the end of the term set forth in Section 11.1 hereof, as follows:
11.2.1. For Breach. In the event any party hereto shall
breach any of the material representations or warranties or any material term,
condition or agreement contained herein made or to be kept, observed or
performed by it, then any other party hereto may terminate this Agreement, at
its option and without prejudice to any of its other legal or equitable rights
and remedies, by giving the other parties hereto 60 days' notice in writing,
identifying with reasonable specificity the breach, unless (in the case of a
breach of any term, condition or agreement) the notified party within such 60-
day period shall have cured the breach. Notwithstanding the foregoing, if a
party hereto has given notice of the breach of another party hereto, and the
breaching party has not cured the breach within the 60-day period described
above, the third party hereto may (but shall not be obligated to), upon notice
given to the other non-breaching party hereto prior to the expiration of such
60-day period, elect to cure such breach. If the third party cures such breach
within 30 days of the expiration of the 60-day period described above, such
third party shall be substituted for the breaching party for all purposes of
this Agreement, and shall thereafter be entitled to all the rights and subject
to all the obligations of such breaching party hereunder. The breach of the
representation contained in Section 2.1.7 or 2.2.14 hereof, absent fraud, bad
faith or willful misrepresentation, shall not give rise to a termination right
under this Section 11.2.1.
11.2.2. For Bankruptcy. (a) In the event (i) a party hereto
shall suspend business, or shall file a voluntary petition or any answer
admitting the jurisdiction of the court and the material allegations of, or
shall consent to an involuntary petition pursuant to or purporting to be
pursuant to any reorganization or insolvency law of any jurisdiction, or shall
make an assignment for the benefit of creditors, or shall apply for or consent
to the appointment of a receiver or trustee of a substantial part of its
property, and (ii) no Affiliate of such party shall undertake to assume its
obligations under the provisions of this Agreement within 90 days from the date
on which such party becomes so disabled, then to the extent permitted by law
either of the other parties may thereafter immediately terminate this Agreement
by giving written notice of termination to the other parties.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
16
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(b) In the event Progenics and/or CYTOGEN, as the case may be,
terminates this Agreement under Section 11.2.2(a) or rejects this Agreement
pursuant to Section 365 of the U.S. Bankruptcy Code, all rights and licenses
granted under or pursuant to this Agreement by Progenics and/or CYTOGEN, as the
case may be, to the LLC are, and shall otherwise be deemed to be, for purposes
of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to
"intellectual property" as defined under Section 101(52) of the U.S. Bankruptcy
Code. The parties agree that the LLC, as a licensee of such rights under this
Agreement, shall retain and may fully exercise all of its rights and elections
under the U.S. Bankruptcy Code. The parties further agree that, in the event
of the commencement of a bankruptcy proceeding by or against Progenics or
CYTOGEN under the U.S. Bankruptcy Code, the LLC shall be entitled to a complete
duplicate of (or complete access to, as appropriate) any such intellectual
property and all embodiments of such intellectual property upon written request
therefor by the LLC. Such intellectual property and all embodiments thereof
shall be promptly delivered to the LLC (i) upon any such commencement of a
bankruptcy proceeding upon written request therefor by the LLC, unless
Progenics or CYTOGEN, as the case may be, elects to continue to perform all of
its obligations under this Agreement or (ii) if not delivered under (i) above,
upon the rejection of this Agreement by or on behalf of Progenics or CYTOGEN,
as the case may be, upon written request therefor by the LLC. Progenics or
CYTOGEN, as the case may be, shall not interfere with the rights of the LLC as
provided in this Agreement, or any agreement supplementary hereto, to such
intellectual property (including all such embodiments thereof), including any
right of the LLC to obtain such intellectual property (or such embodiment) from
any other entity.
11.2.3. By Progenics or the LLC Upon Termination of the SKICR
License. Either Progenics or the LLC may terminate this Agreement by giving
the other parties hereto 30 days' written notice upon the termination of the
SKICR License; provided that, without limiting the other rights and remedies of
the parties hereto, each of Progenics and CYTOGEN may seek an appropriate
remedy against the other if the other is responsible for the termination of the
SKICR License.
11.3. Accrued Rights and Obligations. Termination of this
Agreement shall not relieve any party of any rights or obligations then accrued
hereunder or which by the terms hereof extend beyond the date of such
termination.
12. EFFECT OF TERMINATION ON SUBLICENSEE. Upon termination of this
Agreement by Progenics or CYTOGEN pursuant to Section 11.2.1 or Section 11.2.2
hereof, any third-party licensee of the LLC which has not breached in any
material respect its sublicense related to the Licensed Patents or the Licensed
Technical Information shall be entitled to receive a license to the Licensed
Patents and the Licensed Technical Information directly from Progenics and
CYTOGEN granting rights substantially the same as those granted in such
sublicense and containing obligations as a licensee similar to those set forth
in this Agreement.
13. EXPORT LICENSES. This Agreement is subject to any restrictions
concerning the export of products or technical information from the United
States which may be imposed by the United States. Accordingly, each party
agrees that it will not export, directly or indirectly, any technical
information acquired under this Agreement or any products utilizing any such
technical information to any country for which the United States Government or
any agency thereof at the time of export requires an export license or other
governmental approval, without first obtaining the written consent to do so
from the Department of Commerce or other agency of the United States Government
when required by an applicable statute or regulation.
14. MISCELLANEOUS PROVISIONS.
14.1. Assignability. Except as expressly provided herein,
neither this Agreement nor any interest hereunder shall be assignable by any
party hereto without the written consent of the others, and any attempted
assignment without such consents shall be null and void. Without the consent
of any other party hereto, this Agreement may be assigned by any party hereto
to any wholly owned subsidiary of such party that agrees in writing with each
other party hereto to be jointly and severally liable with the assigning party
for the timely satisfaction of all obligations of the assigning party
hereunder; provided, however, that no such assignment shall relieve the
assigning party of its obligations hereunder. This Agreement shall be binding
upon the successors and permitted assignees of the parties. Any such successor
or permitted assignee shall be subject to the same rights and obligations as
the original party hereunder.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
17
<PAGE>
14.2. Notices. All notices and other communications
provided for hereunder shall be in writing and shall be mailed or delivered to
the business address of the respective parties aforementioned, or to such other
address or addresses as either party shall designate in writing to the others.
All such notices and communications shall be considered given and/or delivered:
(i) when given if delivered in person or sent by facsimile and acknowledged by
a responsible person at the office of the recipient; (ii) one day after being
sent by a major overnight courier; or (iii) four days after being mailed by
registered mail, return receipt requested, at the business address of the
respective parties as specified above. All notices or communications required
or permitted to be given or sent to the LLC shall also be given or sent to
Progenics (if such notice or communication is given or sent by CYTOGEN) or to
CYTOGEN (if such notice or communication is given or sent by Progenics).
14.3. Independent Contractors. No agency, partnership or
joint venture is hereby established. None of Progenics, CYTOGEN or the LLC
shall enter into, or incur, or hold itself out to third parties as having
authority to enter into or incur on behalf of the other party any contractual
obligations, expenses or liabilities whatsoever, except as expressly provided
herein.
14.4. Counterparts. This Agreement may be executed
simultaneously in multiple counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the same agreement.
14.5. Entire Understanding. This Agreement constitutes the
entire understanding between the parties hereto with respect to the subject
matter hereof. No modifications, extensions, or waiver of any provisions
hereof or any release of any right hereunder shall be valid, unless the same is
in writing, contains reference to this Agreement and sets forth the plan or
intention to modify same, and is consented to by all parties hereto.
14.6. Headings. The headings in this Agreement are intended
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
14.7. No Implied Rights. Except as expressly provided for
in this Agreement, nothing contained herein shall be construed as conferring
any license or other rights, by implication or estoppel, under any patent
(including design patent and utility model patent) or patent application, or
any copyrights, trademarks, trade names or trade dress.
14.8. No Waiver. The failure of any party hereto at any
time or times to require performance of any provision hereof shall in no manner
affect the right of such party at a later time to enforce the same. No waiver
by any party hereto of any condition, or of the breach of any provision, term,
covenant, representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such condition or of the
breach of any other provision, term, covenant, representation or warranty of
this Agreement.
14.9. Publicity. In the absence of prior written approval
of the other parties hereto, no party hereto shall originate any publicity,
news release, or other public announcement, written or oral, whether to the
public press, to stockholders or otherwise, relating to this Agreement, to any
amendment hereto or activities hereunder, unless such announcement is required
by law to be made. The party making any such announcement shall give the other
parties an opportunity to review the announcement before it is made.
14.10. Promotion and Advertising. Nothing contained in this
Agreement shall be construed as conferring on any party hereto any right to use
in advertising, publicity or other promotional activities any name, tradename,
trademark, service mark or other designation (including any contraction,
abbreviation or simulation of any of the foregoing of any other party hereto);
and, each party hereto agrees not to use any designation of any other party in
any promotional activity associated with this Agreement, or with product
licensed thereunder, without the express written approval of such other party.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
18
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14.11. Arbitration. Any dispute arising out of or relating
to any provisions of this Agreement shall be finally settled by arbitration to
be held in New York, New York, under the auspices and the current commercial
arbitration rules of the American Arbitration Association. Arbitration shall
be initiated by delivery of a notice (an "Arbitration Notice") by any party
hereto to the other parties hereto. Such arbitration shall be conducted by one
arbitrator mutually selected and approved by the parties to the dispute. If
within 20 calendar days after receipt of the Arbitration Notice the parties to
the dispute have not agreed on a mutually acceptable arbitrator, the American
Arbitration Association in New York, New York shall be retained to appoint an
arbitrator within 30 calendar days after the receipt of the Arbitration Notice.
The arbitrator's authority shall be limited to determining the issue or
question presented in each instance and shall not extend to any other aspect of
this Agreement or the parties' relationship generally. Judgment upon any award
rendered may be entered in any court having jurisdiction, or application may be
made to such court for a judicial acceptance of the award and an order of
enforcement, as the case may be.
14.12. Confidentiality.
14.12.1. As used in this Section 14.12, "Confidential
Information" means confidential and proprietary business, technical or
financial information relating to the collaboration contemplated hereby,
including the Licensed Technical Information, of any other party hereto (the
"Confidential Information").
14.12.2. In order to protect the Confidential Information of
any party hereto (in such capacity, the "Disclosing Party") that has become
available to any other party hereto (in such capacity, the "Receiving Party"),
each party hereto agrees as follows:
(a) Each party hereto agrees that it will make no use of any
Confidential Information except in furtherance of the purposes contemplated by
this Agreement.
(b) Each party hereto agrees that it will not, without the
prior written consent of the other parties hereto, disclose to any third party
Confidential Information (which for purposes of this Section 14.12.2(b) shall
include the terms or existence of this Agreement or of the LLC Agreement or the
Services Agreement or other matters relating to the collaboration contemplated
hereby and thereby) received in its capacity as a Receiving Party during the
Contract Period and for a period of five years thereafter.
(c) Notwithstanding the foregoing:
(i) Each party hereto may disclose Confidential Information to
those of its representatives, employees and agents
("Representatives") who have a need to know such
Confidential Information in relation to the matters
discussed herein and who are under obligations of
confidentiality and non-use consistent with those set forth
herein. Any unauthorized disclosure of Confidential
Information by a party's Representatives shall be a breach
by such party of this Section 14.12.
(ii) Disclosure of Confidential Information is permitted to the
extent that such disclosure is required pursuant to
applicable laws, rules or regulations or government
requirement or court order, provided however, that the
Receiving Party shall promptly notify the Disclosing Party
in writing of the existence or imposition of any such
requirement or order and cooperate with the Disclosing
Party in seeking an appropriate protective order or other
reliable assurance that confidential treatment will be
accorded the Confidential Information.
14.12.3. The provisions governing confidentiality and non-use
contained in this Section 14.12 shall not apply to any Confidential Information
which:
(a) the Receiving Party can establish was known to the
Receiving Party prior to disclosure under or in connection with this Agreement
by the Disclosing Party;
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
19
<PAGE>
(b) was in the public domain or the subject of public knowledge
at the time of disclosure under or in connection with this Agreement;
(c) becomes part of the public domain or the subject of public
knowledge through no breach by or act of default of the Receiving Party;
(d) is obtained by the Receiving Party from a third party other
than in breach of a legal or contractual obligation of confidentiality owed by
such third party to the Disclosing Party in respect thereof, the existence of
which such obligation was known or should have been known by the Receiving
Party; or
(e) the Receiving Party can establish was independently
developed by it without reference to Confidential Information received.
14.12.4. Termination of this Agreement shall not affect the
obligations concerning confidentiality and non-use of the Confidential
Information as set forth in this Section 14.12.
14.13. No Third Party Beneficiaries. This Agreement is
solely for the benefit of the parties hereto and should not be construed to
confer upon any other person any remedy, claim, liability, right of
reimbursement, claim of action or other right.
14.14. Governing Law. This Agreement shall be interpreted,
construed, and governed in accordance with the laws of the State of New York,
without reference to conflict of laws principles.
14.15. SKICR Agreement. Pursuant to Section III.D.4. of the
SKICR Agreement, the parties hereto hereby reference the SKICR Agreement and
all rights which revert to SKICR upon termination of the SKICR Agreement. In
accordance with Section III.D.8. of the SKICR Agreement, this Agreement shall
automatically be modified or terminated, in whole or in part, upon any relevant
modification, in whole or in part, of the SKICR Agreement. Such modification
or termination of this Agreement shall be consistent with and reflect the
relevant modifications or terminations of the SKICR Agreement.
14.16. Limitation on Liability. Notwithstanding any other
provision in this Agreement, the sole remedy for the breach of the
representation contained in Section 2.1.7 or 2.2.14 hereof, absent fraud, bad
faith or willful misrepresentation, is the prompt compliance with Section 3.3
hereof.
IN WITNESS WHEREOF, the parties hereto have each caused these
presents to be signed by their respective officers thereunto duly authorized.
PROGENICS PHARMACEUTICALS, INC.
By: /s/ Ronald J. Prentki
-------------------------------
Name: Ronald J. Prentki
Title: President
CYTOGEN CORPORATION
By: /s/ Donald F. Crane
-------------------------------
Name: Donald F. Crane
Title: Vice President
PSMA DEVELOPMENT COMPANY LLC
By: /s/ Ronald J. Prentki
-------------------------------
Name: Ronald J. Prentki
Title: Representative
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
20
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<PAGE>
ANNEX A
to
PSMA/PSMP
LICENSE AGREEMENT
Licensed CYTOGEN Patents as of Date Hereof
[* * *]
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
<PAGE>
ANNEX B
to
PSMA/PSMP
LICENSE AGREEMENT
Licensed Progenics Patents as of Date Hereof
[* * *]
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
<PAGE>
ANNEX C
to
PSMA/PSMP
LICENSE AGREEMENT
Representations and Warranties
1. Agreement. Attached is a true and complete copy of the [License
Agreement]. No provision of the [License Agreement] has been amended, modified
or waived by [CYTOGEN/Progenics]. To [CYTOGEN/Progenics]'s knowledge: (i) the
representations and warranties made by [the licensor] in the [License
Agreement] were true in all material respects when made; (ii) there has
occurred no act or failure to act that would render such representations untrue
in any material respect if made on and as of the date hereof, and (iii) there
exists no breach or anticipatory breach by [the licensor] of any of its
material obligations under the [License Agreement]. The [License Agreement] is
in full force and effect, and [CYTOGEN/Progenics] has complied in all material
respects with its obligations thereunder. There does not exist any default by
[CYTOGEN/Progenics] under the [License Agreement] that, after notice or the
lapse of time or both, would constitute a material event of default or give
rise to a right of termination thereunder. [CYTOGEN/Progenics] has neither
given nor received any written notice of termination or breach under the
[License Agreement]. In the event of any misrepresentation or breach of
warranty by [the licensor] under the [License Agreement], [CYTOGEN/Progenics]
will cooperate with all reasonable requests of the Management Committee of the
LLC regarding the assertion of any claim or cause of action against [the
licensor] for such misrepresentation or breach of warranty; provided, that the
LLC shall bear any and all costs, expenses, liabilities or obligations of
[CYTOGEN/Progenics] in connection therewith or arising therefrom.
2. No Litigation, Claims or Conflicts. (a) There is no action, suit,
claim or proceeding pending or threatened against [CYTOGEN/Progenics] or, to
[CYTOGEN's/Progenics'] knowledge, [the licensor] with respect to any of the
rights (including Patent rights) granted to [CYTOGEN/Progenics] pursuant to the
[License Agreement], either at law or in equity, before any court or
administrative agency or before any governmental department, commission, board,
bureau, agency or instrumentality, whether United States or foreign, relating
to validity, infringement, ownership or otherwise, and neither
[CYTOGEN/Progenics] nor, to [CYTOGEN's/Progenics'] knowledge, [the licensor]
has received any notice that any person may bring such a claim, and
[CYTOGEN/Progenics] has no belief that any basis or grounds exists for any such
actions, suits or claims.
(b) To [CYTOGEN/Progenic]'s knowledge, there is no conflict with or
violation or infringement of any rights or asserted rights of any other person
with respect to the Patent or other rights licensed to [CYTOGEN/Progenics]
under the [License Agreement]; and
(c) There are no proceedings or claims pending in which
[CYTOGEN/Progenics] or, to [CYTOGEN/Progenics]'s knowledge, any other person
alleges that any person is infringing upon, or otherwise violating, any of the
rights licensed to [CYTOGEN/Progenics] under the [License Agreement], nor are
any proceedings threatened by [CYTOGEN/Progenics] or, to [CYTOGEN/Progenics]'s
knowledge, any other person alleging any such violation or infringement.
3. Subsisting Rights. The [relevant patent rights, as applicable] in
existence on the date hereof are in full force and effect, have been maintained
to date and are not invalid or unenforceable, in whole or in part. No act has
been done or omitted to be done which had or could have the effect of impairing
or dedicating to the public, or entitling any U.S. or foreign government
authority or any other person to cancel, forfeit, modify or consider abandoned
any of the rights licensed to [CYTOGEN/Progenics] under the [License
Agreement], or give any person any rights with respect thereto. All of
[CYTOGEN/Progenics] rights under the [License Agreement] are valid, enforceable
and free of defects.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
<PAGE>
4. No Prior Transfer. [CYTOGEN/Progenics] has not previously
sublicensed, assigned, transferred, conveyed or otherwise encumbered its right,
title and interest in any of the rights granted to [CYTOGEN/Progenics] pursuant
to the [License Agreement].
5. Exclusive Owner, etc. [CYTOGEN/Progenics] is the sole and exclusive
licensee of the rights licensed to [CYTOGEN/Progenics] under the [License
Agreement], all of which are free and clear of any liens, charges and
encumbrances, and no other person, corporation or other private or governmental
entity or subdivision thereof has or shall have any claims of ownership
whatsoever with respect to such rights as so granted to [CYTOGEN/Progenics].
There are no judgments or settlements against or owed by [CYTOGEN/Progenics]
relating to such rights.
6. Confidentiality; Effective Waivers. (a) Neither [CYTOGEN/Progenics]
nor, to [CYTOGEN/Progenics] knowledge, [the licensor] has divulged, furnished
to or made accessible to any person any trade secrets included in the rights
licensed to [CYTOGEN/Progenics] under the [License Agreement] without prior
thereto having obtained an agreement of confidentiality from such person.
(b) [If applicable] The licensor or [CYTOGEN/Progenics] has obtained from
all individuals who participated in any respect in the invention or authorship
of any rights licensed to [CYTOGEN/Progenics] under the [License Agreement] (as
employees, consultants or otherwise) effective waivers of any and all ownership
rights of such individuals in such rights and assignments to the licensor or
[CYTOGEN/Progenics], as applicable, all rights with respect thereto.
7. Patent Prosecution Disclosure. [If applicable] [CYTOGEN/Progenics]
has disclosed to the LLC all of the prosecution files of all of the patents and
patent applications proposed to be licensed to the LLC by [CYTOGEN/Progenics].
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
2
<PAGE>
Exhibit 10.35
[Confidential treatment has been requested for portions of this Agreement. The
portions of this Agreement for which confidential treatment have been requested
are omitted from this document; such portions are indicated by asterisks. The
omitted material has been filed separately with the Securities and Exchange
Commission.]
LIMITED LIABILITY COMPANY AGREEMENT
OF
PSMA DEVELOPMENT COMPANY LLC
Dated June 15, 1999
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
PSMA DEVELOPMENT COMPANY LLC
This Limited Liability Company Agreement (this "Agreement") is made
this 15th day of June, 1999, by and among Progenics Pharmaceuticals, Inc., a
Delaware corporation ("Progenics"), CYTOGEN Corporation, a Delaware corporation
("CYTOGEN"), and PSMA Development Company LLC, a Delaware limited liability
company (the "Company").
EXPLANATORY STATEMENT
The parties have agreed to organize and operate the Company pursuant
to the Delaware Limited Liability Company Act (the "Act") in accordance with
the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the parties,
intending to be legally bound, agree as follows:
ARTICLE I
FORMATION AND NAME: OFFICE; PURPOSE; TERM
1.1. Organization. The parties have organized the Company pursuant
to the Act and the provisions of this Agreement and, for that purpose, have
caused a Certificate of Formation (the "Certificate"), in the form attached as
Exhibit A, to be executed and filed as required by the Act.
1.2. Name of the Company. The name of the Company shall be PSMA
Development Company LLC, and all Company business must be conducted under that
name or such other name that complies with applicable law as the Management
Committee (as hereinafter defined) may select from time to time.
1.3. Principal Place of Business. The Company's principal place of
business shall be c/o Progenics Pharmaceuticals, Inc., 777 Old Saw Mill River
Road, Tarrytown, New York 10591 or any other place of business as the
Management Committee may from time to time deem advisable.
1.4. Purpose. The purposes of the Company are to:
(i) acquire, exploit, control and distribute all
licensing/sublicensing rights regarding products in the Field, as such term is
defined in Section 1.9 of the PSMA/PSMP License Agreement, dated the date
hereof, by and among Progenics, CYTOGEN and the Company (the "PSMA/PSMP License
Agreement");
(ii) research, develop, manufacture or have manufactured,
market and promote or have marketed and promoted and otherwise commercialize
products in the Field;
(iii) raise capital for the foregoing;
(iv) engage in any and all things necessary, convenient or
incidental thereto; and
(v) engage in any other business or activity lawful under
the Act and authorized by the Management Committee.
1.5. Company Authority. The Company shall have the power and
authority to take any and all actions necessary, appropriate, convenient or
incidental to or for the furtherance of the purposes set forth herein,
including all of the powers of a limited liability company under the Act.
1.6. Term. The term of the Company (the "Term") shall commence upon
the date the Certificate is filed as required by the Act and shall be perpetual
unless terminated as provided in this Agreement.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
<PAGE>
1.7. Registered Agent. The name and address in Delaware of the
Company's registered agent upon whom and at which process against the Company
can be served is Corporation Service Company, 1013 Centre Road, Wilmington,
Delaware 19805, or such other person or such other persons as may be designated
by the Management Committee.
1.8. Members and Initial Contribution. The names, taxpayer
identification numbers and present mailing addresses of the members (the
"Members") of the Company are set forth in Schedule A attached hereto. The
initial ownership interest in the Company of each of Progenics and CYTOGEN, as
the initial Members, shall be 50%. Each Member's interest in the Company (an
"Interest") shall at all times be equal to such Member's Percentage, as defined
in Section 2.2 hereof. The Interest of each Member is subject to change from
time to time as provided herein. Each of Progenics and CYTOGEN is admitted as
a Member of the Company effective contemporaneously with the execution by such
person of this Agreement.
1.9. Additional Members. Additional persons or entities may be
admitted as Members of the Company only upon the prior written consent or
approval of the Management Committee, which may grant or withhold admission in
its sole and absolute discretion.
ARTICLE II
CAPITALIZATION
2.1. Capital Accounts.
(a) An individual capital account (the "Capital Account") shall be
maintained for each Member in accordance with the capital account maintenance
rules set forth in Treasury Regulation Section 1.704-1(b). Without limiting
the generality of the foregoing, a Member's Capital Account shall be increased
by (a) the amount of money contributed by the Member to the Company, (b) the
fair market value of property (other than Intellectual Property (as defined
below) unless all Members shall agree to assign a value to such property for
purposes of this Article II hereafter contributed by such Member to the
Company, net of liabilities secured by such property, and (c) allocations to
the Member of the Company's net income and gains (as determined for federal
income tax purposes but on the basis of the book values of the Company's
assets). A Member's Capital Account shall be decreased by (i) the amount of
money distributed to the Member, (ii) the fair market value of any property
(other than any Intellectual Property transferred previously by Progenics or
CYTOGEN to the Company without any value being reflected in the transferor
Member's Capital Account if such property is reconveyed to the transferor
Member) distributed to the Member, as determined by the distributee Member and
the Company (net of any liabilities secured by the property) after adjusting
each Member's Capital Account by such Member's share of the unrealized income,
gain, loss and deduction inherent in such property and not previously reflected
in such Capital Account, as if the property had been sold for its then fair
market value on the date of distribution, (iii) expenditures described, or
treated under Section 704(b) of the Code as described, in Section 705(a)(2)(B)
of the Code, and (iv) the Member's share of losses and deductions. For
purposes of this Agreement, "Intellectual Property" shall include inventions
(patented or unpatented), improvements, rights under patents and patent
applications, unpublished research and development information, formulae,
processes, expertise, know-how, trade secrets and technical data.
(b) This Section 2.1 and the other provisions of this Agreement
relating to maintenance of Capital Accounts are intended to comply with
Treasury Regulation Section 1.704-1(b) and shall be interpreted and applied in
a manner consistent with such Treasury Regulations. In the event the
Management Committee shall determine that it is prudent to modify the manner in
which the Capital Accounts, or any debits or credits thereto, are computed in
order to comply with such Treasury Regulations, the Management Committee may
make such modification; provided, however, that it shall not have an adverse
effect on the amounts distributable to any Member.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
2
<PAGE>
2.2. Capital Contributions.
(a) Each Member's share of Capital Contributions and each Member's
Percentage (each as defined hereinafter) shall be set forth on Schedule A,
which shall be updated by the Management Committee upon any changes in any
Member's share of total Capital Contributions. As used herein, (i) the term
"Capital Contribution" shall mean a contribution to the capital of the Company
made by a Member pursuant to this Agreement, (ii) the term "Percentage" shall
mean a Member's share of the Adjusted Capital Contributions expressed as a
percentage of the aggregate Adjusted Capital Contributions of all Members; and
(iii) the term "Adjusted Capital Contributions" shall mean a Member's Capital
Contributions as adjusted pursuant to the terms of this Agreement (but
excluding, for these purposes, in the case of Progenics, the Progenics R&D
Capital Contributions as defined in Section 2.2(d) hereof and the Supplemental
Capital Contributions as defined in Section 2.2(e) hereof and, in the case of
CYTOGEN, any [* * *] as defined in Section 2.2(e) hereof).
(b) Simultaneously herewith, the Members are contributing to the
Company cash in the amounts set forth on Schedule A.
(c) (i) The Management Committee may from time to time, in
connection with preparing the Budget (as defined hereinafter) or otherwise,
call for the Members to make additional capital contributions (the "Additional
Capital Contributions"), in which event the Management Committee shall give
notice to each Member of: (A) the total amount of the Additional Capital
Contribution being called; (B) the reason the Additional Capital Contribution
is being called; (C) each Member's proportionate share of the total Additional
Capital Contribution (determined in accordance with this Section 2.2(c); and
(D) the date the Additional Capital Contribution is due and payable, which date
shall not, without the written consent of the Members, be less than 30 nor more
than 90 calendar days after the notice has been given. A Member's share of the
total Additional Capital Contribution shall be equal to the product obtained by
multiplying the Member's Percentage and the total Additional Capital
Contribution required. A Member's share shall be payable in cash, by certified
check or wire transfer. No Additional Capital Contribution by any Member may
be made or required to be made on an in-kind or any other non-cash basis unless
consented to in writing by each of the Members. Upon payment of the Additional
Capital Contributions, the Capital Contributions of each Member shall be
adjusted.
(ii) If a Member (the "Non-Contributing Member") fails to
pay when due all or any portion of any Additional Capital Contribution called
by the Management Committee (the amount not contributed being a "Failed
Contribution"), and the other Member (the "Contributing Member") makes proper
and timely payment of its portion of the Additional Capital Contribution, then
the following adjustments shall be made:
(1) the Adjusted Capital Contributions of the Non-
Contributing Member shall automatically and without further act on the part of
any party be adjusted by reducing the amount of the Non-Contributing Member's
Adjusted Capital Contributions by 10% (the "Reduction Amount") of the amount of
the Failed Contribution and increasing the amount of the Contributing Member's
Adjusted Capital Contributions by the Reduction Amount; and
(2) the Percentages of the Members shall be adjusted
to stand in the ratio of their respective Adjusted Capital Contributions, and
Schedule A shall be amended accordingly.
(iii) If a Non-Contributing Member fails to pay when due all
or any portion of any Additional Capital Contribution called for by the
Management Committee, the Management Committee shall give notice (a "Non-
Contribution Notice") within 15 days after the date such Additional Capital
Contribution is due and payable to the Contributing Member, and the
Contributing Member shall have the option (but not the obligation) to make an
Additional Capital Contribution by reason of such default (a "Default
Contribution") to the Company in an amount not in excess of the Failed
Contribution. Any Default Contribution, if made, must be funded within 30
calendar days after delivery of the Non-Contribution Notice, or, if the
Management Committee shall fail to give the Non-Contribution Notice, within 45
calendar days after the date such Additional Capital Contribution is due and
payable.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
3
<PAGE>
(iv) Except as expressly stated herein, no Member shall be
required to contribute any additional capital to the Company, and no Member
shall have any personal liability for any debt, obligations, or liability of
the Company. The rights provided in this Section 2.2(c) shall be the exclusive
remedies available to the Company and any Contributing Member against any Non-
Contributing Member for such Non-Contributing Member's failure to pay when due
any Additional Capital Contribution called for by the Management Committee.
(d) Progenics shall be required to make additional Capital
Contributions to the Company of up to $3 million to fund the Company's research
and development programs as budgeted in the work plans (the "Work Plans")
described in Section 2 of the Services Agreement, dated as of the date hereof,
between Progenics, CYTOGEN and the Company (the "Services Agreement"), subject
to the terms and conditions described below. The amounts so funded are
referred to herein as the "Progenics R&D Capital Contributions." [* * *]
The Progenics R&D Capital Contributions shall be provided and applied when and
as needed (as determined in the reasonable discretion of the Management
Committee) to fund the Company's research and development programs through and
including the filing by the Company of an Investigational New Drug application
with the U.S. Food and Drug Administration (the "FDA") with respect to a
product under development by the Company (an "IND Filing"). Progenics shall
not be obligated to fund through Progenics R&D Capital Contributions, and
Progenics R&D Capital Contributions shall not be applied to fund (i) any
clinical development or other activities of the Company with respect to a
product beyond an IND Filing or (ii) any administrative or other non-research
and development functions, activities or expenses. During the period ending
with the discharge in full of Progenics' funding obligation under this Section
2.2(d), Progenics shall have the right to direct the application of the
Progenics R&D Capital Contributions in accordance with the Work Plans.
Notwithstanding the foregoing, if Progenics ceases to be a Member in the
Company before Progenics has funded to the Company all amounts required
pursuant to this Section 2.2(d), Progenics shall be relieved of its funding
obligation with respect to such portion of the Progenics R&D Capital
Contributions not theretofore funded.
(e) [* * *] The parties intend that such reduction in Progenics'
obligation to make Progenics R&D Capital Contributions shall reduce Progenics
R&D Capital Contributions applied to fund development of a vaccine-based
product. [* * *]
(f) Progenics shall be required to make additional Capital
Contributions (the "Supplemental Capital Contributions") to the Company in the
following amounts not later than five business days after the dates indicated:
Amount Date
$500,000 The date of this Agreement;
$500,000 On the earlier to occur of (i) the date that is six months
after the date of this Agreement or December 31, 1999;
$500,000 On the earlier to occur of (i) the date on which the
Management Committee by written resolution identifies a
lead compound for product development or (ii) December 31,
2000; and
$500,000 On the earlier to occur of (i) the date on which the FDA
approves an Investigational New Drug application with
respect to a Licensed Product (as defined in the PSMA/PSMP
License Agreement) or (ii) December 31, 2001.
Notwithstanding the foregoing, Progenics shall have no obligation to make any
Supplemental Capital Contribution if at the time any such capital contribution
is due Progenics is not a member of the Company.
(g) No Member shall be paid interest on its Capital Contributions.
Except as otherwise provided in this Agreement, no Member shall have the right
to receive any return of or on any Capital Contribution.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
4
<PAGE>
2.3. Loans. The Management Committee may, in its sole discretion,
authorize and cause the Company to borrow from any person (including a Member)
on such terms and subject to such conditions as the Management Committee shall
determine. No Member shall be required to lend funds to the Company or to
guarantee or provide security or any other form of credit support with respect
to any such borrowing.
2.4. Budget.
(a) The Management Committee shall promptly prepare a budget for the
Company's activities covering such time period as the Management Committee
shall deem appropriate. The Budget may include provisions for Additional
Capital Contributions to made by the Members. The Management Committee shall
meet to review and update the Budget on a semi-annual basis or as it may
otherwise determine to be appropriate.
(b) If at any time the Management Committee is unable to agree upon
a proposed Budget or a proposed update to the Budget (a "Budget Dispute"), such
disagreement will be resolved in accordance with the management deadlock
provisions contained in Section 4.1(f) hereof (provided that if any portion of
the Budget is not in dispute, the provisions of such undisputed portion shall
be implemented to the extent practicable). If a Budget Dispute is submitted to
arbitration, and the arbitrator determines that a Member (the "Uncooperative
Member") acted in bad faith in unreasonably withholding approval of a proposed
Budget, the Adjusted Capital Contributions of the Uncooperative Member and the
other Member shall without further act on the part of any party be adjusted by
reducing the amount of the Uncooperative Member's Adjusted Capital
Contributions by the greater of (A) [* * *] of the Uncooperative Member's
pro rata share of any Additional Capital Contribution required by the
arbitrator (if the dispute involved an Additional Capital Contribution) or (B)
[* * *] of the Uncooperative Member's Adjusted Capital Contributions, and
increasing the amount of the other Member's Adjusted Capital Contributions by
such amount.
ARTICLE III
PROFITS, LOSSES AND DISTRIBUTIONS
3.1. Allocation of Profits and Losses
(a) The Company's profits and losses (as determined for federal
income tax purposes but as adjusted under the rules of Treasury Regulation
Section 1.704-1(b)(2)(iv)) for each Fiscal Year shall be allocated to the
Members (i) first, in such amounts as will adjust the Capital Account balances
of each of the Members to be in the same proportion as the Members' respective
Percentages and (ii) thereafter, in proportion to the Members respective
Percentages.
(b) Notwithstanding Section 3.1(a) hereof, losses allocated pursuant
to Section 3.1(a) to any Member for any Fiscal Year shall not exceed the
maximum amount of loss that may be allocated to such Member without causing
such Member to have an Adjusted Capital Account Deficit (as defined
hereinafter) at the end of such Fiscal Year. Any loss in excess of the
limitation in this Section 3.1(b) shall be specially allocated solely to the
other Members to the maximum extent permitted by this Section 3.1(b).
"Adjusted Capital Account Deficit" means a deficit Capital Account balance
after that balance has been adjusted pursuant to the penultimate sentences of
Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5).
(c) Notwithstanding Section 3.1(a) hereof, the following special
allocations shall be made in the following order prior to the application of
Section 3.1(a) hereof:
(i) If there is a net decrease in Company minimum gain
("Minimum Gain") (as such decrease is determined as provided in Treasury
Regulations Sections 1.704-2(d) and 1.704-2(g)) during any Fiscal Year, certain
items of income and gain, including gross income or gain, shall be allocated to
the Members in the amounts and manner described in Treasury Regulations Section
1.704-2(f). This Section 3.1(c)(i) is intended to comply with the minimum gain
chargeback requirement relating to partnership non-recourse liabilities (as
defined in Treasury Regulations Section 1.704-2(b) and shall be so interpreted
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
5
<PAGE>
(ii) If there is a net decrease in Minimum Gain
attributable to partner non-recourse debt (determined pursuant to Treasury
Regulations Section 1.704-2(i)) during any Fiscal Year, certain items of income
and gain, including gross income or gain, shall be allocated as quickly as
possible to those Members which had a share of the Minimum Gain attributable to
the partner non-recourse debt (such share to be determined pursuant to Treasury
Regulations Section 1.704-1(i)(5)) in the amounts and manner described in
Treasury Regulations Sections 1.704-2(i) and (j). This Section 3.1(c)(ii) is
intended to comply with the minimum gain chargeback requirement relating to
partner non-recourse debt set forth in Treasury Regulations Section
1.704-2(i)(4)) and shall be so interpreted.
(iii) Deductions attributable to obligations with respect to
which a Member bears the economic risk of loss within the meaning of Treasury
Regulation Section 1.704-2(b)(4) shall be allocated to the Member or Members
that bear the economic risk of loss for such debt in accordance with the
requirements of Treasury Regulation Section 1.704-2(i)(1). "Nonrecourse
Deductions" (as such term is defined in Treasury Regulations Sections
1.704-2(b)(1) and 1.704-2(c)) of the Company shall be allocated to the Members
in proportion to their Percentages.
(iv) If one or more of the Members unexpectedly receives
any adjustment, allocation or distribution described in Treasury Regulations
Sections 1.704-1 (b)(2)(ii)(d)(4), (5) or (6), then items of income and gain
shall be specially allocated to such Members in an amount and manner sufficient
to eliminate the Adjusted Capital Account Deficit created by such adjustments,
allocations or distributions as quickly as possible, provided that an
allocation pursuant to this Section 3.1(c)(iv) shall be made only if and to the
extent that such Member would have an Adjusted Capital Account Deficit after
all other allocations provided for in this Section 3.1 have been tentatively
made as if this Section 3.1(c)(iv) were not in this Agreement. This provision
is intended to qualify as a "qualified income offset" within the meaning of
Treasury Regulations Section 1.704-1(b)(2)(ii)(d).
(v) If one or more of the Members has a deficit Capital
Account at the end of any Fiscal Year which is in excess of the sum of (i) the
amount such Member is obligated to contribute pursuant to any provision of this
Agreement and (ii) the amount such Member is deemed to be obligated to restore
pursuant to the penultimate sentences of Treasury Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be specially allocated
items of Company income and gain in the amount of such excess as quickly as
possible, provided that an allocation pursuant to this Section 3.1(c)(v) shall
be made only if and to the extent that such Member would have a deficit Capital
Account in excess of such sum after all other allocations provided for in this
Section 3.1 have been made as if Section 3.1(c)(iv) hereof and this Section
3.1(c)(v) were not in the Agreement.
(vi) The allocations set forth in Sections 3.1(b) and
3.1(c)(i)-(v) hereof (the "Regulatory Allocations") are intended to comply with
certain requirements of the Treasury Regulations. It is the intent of the
Members that, to the extent possible, all Regulatory Allocations shall be
offset either with other Regulatory Allocations or with special allocations of
other items of Company income, gain, loss or deduction pursuant to this Section
3.1(c)(vi). Therefore, the Management Committee shall make such offsetting
special allocations of Company income, gain, loss and deduction in whatever
manner they determine appropriate, so that, after such offsetting allocations
are made, each Member's Capital Account balance is, to the extent possible,
equal to the Capital Account balance such Member would have if the Regulatory
Allocations were not part of the Agreement and all Company items were allocated
pursuant to Section 3.1(a). In exercising its discretion, the Management
Committee shall take into account future Regulatory Allocations pursuant to
Sections 3.1(c)(i) and (ii) hereof that, although not yet made, are likely to
offset other Regulatory Allocations previously made under Section 3.1(c)(iii)
hereof.
(vii) If the Internal Revenue Service reallocates an item
of income, deduction or loss to a Member or an affiliate ("Affiliate") pursuant
to Section 482 of the Code or any similar rule or principle of law (a "Member
Section 482 Allocation"), and the Company has a corresponding correlative item
of deduction, loss or income (as determined under Section 1.482-1(g) of the
Regulations (the "Company Correlative Item"), such Company Correlative Item
shall be specially allocated to and reflected in the Capital Account of the
Member that received (or whose Affiliate received) such Member Section 482
Allocation, and a corresponding deemed contribution or distribution shall
likewise be credited or debited to the Capital Account of such Member.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
6
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(viii) If the Internal Revenue Service reallocates an item of
income, deduction or loss to the Company pursuant to Section 482 of the Code or
any similar rule or principle of law (a "Company Section 482 Allocation"), and
any Member has a corresponding correlative item of deduction, loss or income
(as determined under Section 1.482-1(g) of the Regulations (the "Member
Correlative Item")), such Company Section 482 Allocation shall be specially
allocated to and reflected in the Capital Account of the Member that received
(or whose Affiliate received) such Member Correlative Item, and a corresponding
deemed contribution or distribution shall likewise be credited or debited to
the Capital Account of such Member.
(ix) If any Member is required to contribute an amount to
the Company pursuant to the last sentence of Section 3.9 hereof, special
allocations of gross items of income, gain, loss and deduction shall be made to
the Members to ensure that after such contribution and all liquidating
distributions to the Members, each of the Members' Capital Account balances
will equal zero.
3.2. Allocation-Rules
(a) For purposes of determining the profits, losses or any other
items allocable to any period, profits, losses and any such other items shall
be determined on a daily, monthly or other basis, as determined by the
Management Committee using any method that is permissible under Section 706 of
the Code and the Treasury Regulations thereunder.
(b) The Members are aware of the income tax consequences of the
allocations made by this Article III and hereby agree to be bound by the
provisions of this Article III in reporting their shares of Company income and
loss for income tax purposes.
3.3. Tax Allocations: Section 704(c) of the Code
(a) In accordance with Section 704(c) of the Code and the Treasury
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Company or which has been adjusted
pursuant to Treasury Regulation Section 1.704-1 (b)(2)(iv)(f) shall, solely for
income tax purposes, be allocated among the Members so as to take account of
any variation between the adjusted basis of such property to the Company for
federal income tax purposes and its fair market value reflected in the capital
accounts initially or on adjustment, as the case may be.
(b) Any elections or other decisions relating to allocations under
this Section 3.3 shall be made by the Management Committee in any manner that
reasonably reflects the purpose and intention of this Agreement. Allocations
pursuant to this Section 3.3 are solely for purposes of federal, state and
local taxes and shall not affect, or in any way be taken into account in
computing, any Member's Capital Account or share of profits, losses, other
items or distributions pursuant to any provision of this Agreement.
3.4. Fiscal Year. The Fiscal Year of the Company for both tax and
accounting purposes (the "Fiscal Year") shall be the calendar year.
3.5. Partnership for Tax Purposes. The Members hereby agree that the
Company shall be treated as a partnership for tax purposes under the United
States federal, state and local income tax laws or other laws, and further
agree not to take any position or to make any election, in a tax return or
otherwise, inconsistent herewith,
3.6. Tax Matters.
(a) The tax matters partner ("Tax Matters Partner") for purposes of
Section 623 of the Code shall be Progenics. Unless otherwise required by law,
the Tax Matters Partner (i) shall not take any action pursuant to this Section
3.6 unless such action has been consented to by each Member and (ii) shall
perform all such duties and responsibilities as directed by each Member.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
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(b) All elections by the Company for income and franchise tax
purposes and all determinations regarding the book basis, depreciation or
amortization of any Company assets, and all other matters relating to all tax
returns (including amended returns), including the characterization and
allocation of income and loss, filed by the Company, including tax audits and
related matters and controversies, shall be made and conducted by the Tax
Matters Partner at the expense of the Company, subject to the approval of each
Member. The Tax Matters Partner shall, at the expense of the Company and
subject to the approval of each Member, cause to be prepared and filed all tax
returns (including amended returns) required to be filed by the Company;
provided, however, that CYTOGEN shall have the opportunity to review any and
all tax returns in advance of such filing. In the event of a dispute between
the Members concerning the preparation and filing of the Company's tax returns,
the Members hereby agree to submit the dispute to arbitration to one of the
major nationally-recognized certified public accounting firms, whose decision
on the matter shall be final and binding.
(c) The Tax Matters Partner shall be responsible for all
negotiations on behalf of the Company with the Internal Revenue Service or the
Departments of the Treasury or Justice or any state or local tax authority with
respect to the income tax treatment of Company items, and shall provide each
Member with the opportunity, at the expense of the Company, to participate in
any such negotiations. The Tax Matters Partner shall not bind any Member to a
settlement agreement unless each Member has given its written consent to such
agreement.
3.7. Cash Flow Distributions. Cash flow distributions of the Company
shall be made only after payment of all liabilities and expenses of the Company
and establishment of reasonable reserves. Such distributions shall be made to
the Members in accordance with their Percentages at such times and in such
amounts as determined by the Management Committee in its sole, exclusive and
complete discretion.
3.8. Liquidating Distributions Upon Dissolution. Upon dissolution of
the Company, the remaining assets shall be applied as follows:
(a) First, to payment of the liabilities of the Company owing to
third parties and then to Members, as creditors. After payment of any such
known liabilities, the Management Committee shall set up such reasonable
reserves as it deems reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Company. Such reserves shall be held in a
separate account for the purpose of paying any such contingent or unforeseen
liabilities or obligations, and, at the expiration of such period as the
Management Committee may deem advisable, such reserves shall be distributed to
the Members or their assigns in the manner set forth in Section 3.8(b) hereof.
(b) Second, to the Members in accordance with their Capital Account
balances. If such distributions are insufficient to return to any Member the
full amount of its Capital Account, such Member shall have no recourse against
any other Member. If the Management Committee determines that the Company
should distribute any of its assets in kind, such assets shall, except as set
forth in the following sentence, be distributed on the basis of their fair
market values, as determined by an appropriate appraisal procedure as set forth
or approved by the Management Committee, and the Capital Accounts of the
Members shall be adjusted prior to liquidating distributions being made to
reflect how any resulting gain or loss would have been allocated under Section
3.1 hereof if such assets had been sold. In the event of a dispute over the
proper valuation of the Company's in-kind assets, either Member shall have the
right to submit such dispute to arbitration in accordance with Section 10.2
hereof. Each Member shall have the right to require the Company to make the
distributions set forth in this Section 3.8(b) first with any in-kind assets
contributed by such Member to the Company, but only to the extent such
distributions do not exceed the amount to which such Member is entitled
pursuant to this Section 3.8(b); provided, however, that any and all
Intellectual Property transfers from a Member to the Company that were
transferred without any value being reflected in the transferor's Capital
Account shall be reconveyed to the transferor in addition to, and without
diminishing, any other distributions to which the transferor shall be entitled.
Upon the Company's dissolution, any and all rights to other Intellectual
Property, developed or acquired by the Company prior to its dissolution (such
Company developments and acquisitions collectively referred to as the "Company
Inventions"), shall be co-owned by Progenics and CYTOGEN.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
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3.9. Tax Distributions. To the extent that for any Fiscal Year the
amount of net income and gains of the Company allocated to each Member exceeds
the amount of losses of the Company allocated to that Member for that and prior
Fiscal Years reduced by the amount of net income and gains of the Company
allocated to the Members for prior Fiscal Years, the Management Committee shall
use reasonable efforts to cause the Company to distribute to each Member, as an
advance against the amounts thereafter distributable to it pursuant to Sections
3.7 and 3.8, no later than April 1 of the following year, an amount of cash
equal to (a) the amount reasonably calculated by the Management Committee to
equal the amount of the federal, state and local tax liability on that excess
(based on the highest individual or corporate marginal federal income tax rate
for that year and the percentage with respect to state and local income tax
rates for that year that the Management Committee determines appropriate), less
(b) the aggregate amount of prior distributions by the Company to that Member
for such Fiscal Year. No such distribution shall be made, however, to the
extent that distributions are restricted under the terms of any note or
agreement relating to borrowings by the Company or to the extent that the
Management Committee determines that the cash is necessary for the operation of
the business of the Company or for the establishment of reasonable reserves or
if the Company would be rendered insolvent. The Management Committee shall, to
the extent practical, make distributions under this Section 3.9 annually based
on projections of income. If upon the liquidation of the Company the aggregate
amount of distributions to any Member pursuant to this Section 3.9 exceeds the
aggregate amount that would have been distributed to that Member pursuant to
Sections 3.7 and 3.8 hereof (had there been no distributions pursuant to this
Section 3.9), then that Member shall pay to the Company an amount equal to such
excess, to be distributed to the other Member in accordance with Sections 3.7
and 3.8 hereof.
3.10. Deficit Capital Account Restoration. Except as provided in the
last sentence of Section 3.9 hereof, no Member shall have any obligation to
make Additional Capital Contributions to the Company in order to restore any
deficit Capital Account balance upon liquidation of the Company or liquidation
of such Member's Interest in the Company.
3.11. Other Distributions. Except as provided in this Agreement, no
Member shall be entitled to receive any distribution from the Company without
the consent of all other Members.
ARTICLE IV
MANAGEMENT
4.1. Management Committee
(a) Except as otherwise reserved to the Members pursuant to this
Agreement, the overall management and control of the Company shall be exercised
by the Members through a committee (the "Management Committee"). Except as
determined by the Management Committee pursuant to this Article IV or otherwise
pursuant to this Agreement, no Member shall have any right or authority to take
any action on behalf of the Company with respect to third parties.
(b) The Management Committee shall consist of four individuals
(each, a "Representative") or such other number of individuals as the
Management Committee may, from time to time determine. Of the initial members
of the Management Committee, two shall be appointed by Progenics and two shall
be appointed by CYTOGEN. The initial Representatives of the Management
Committee are:
Progenics: [* * *]
CYTOGEN: [* * *]
Each Representative shall hold office until death, resignation or removal at
the pleasure of the Member which appointed such Representative. If a vacancy
occurs on the Management Committee, the Member which appointed the vacating
Representative shall appoint such Representative's successor.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
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(c) Meetings of the Management Committee shall be held on two
Business Days (as defined herein) written notice (which may be waived and shall
be deemed to be waived by attendance at the meeting, unless an individual
objects, prior to or at the beginning of the meeting, to holding the meeting or
transacting business at the meeting). Attendance may be in person or by
conference telephone. Notwithstanding the number of Representatives on the
Management Committee, each Member's Representatives shall be required to vote
as a block ("Voting Block") on behalf of such Member. The Voting Block of a
Member's Representatives as of any given date shall equal such Member's
Percentage as of such date. The Voting Blocks shall be automatically adjusted
upon any change in Percentage of any appointing Member. Except as set forth in
the next sentence, the Management Committee shall act by vote of the
Representative(s) whose Voting Block constitutes more than [* * *] of the
aggregate Voting Blocks of all Representatives, at a meeting of the Management
Committee duly called and held.
(i) All Major Decisions (as defined hereinafter) shall be
made by a vote of the Representative(s) whose Voting Block constitutes more
than [* * *] of the aggregate Voting Blocks of all Representatives (a
"Supermajority Vote"). A "Major Decision" means decisions concerning the
merger or consolidation of the Company or the sale of all or substantially all
of the Company's assets.
(ii) The vote of each Member shall be cast by such Member's
Managing Representative (as defined hereinafter). The Management Committee may
also act by unanimous written consent of the Representatives. The
Representatives shall not be compensated for their services as such, but shall
be entitled to indemnification by the Company in accordance with Section 4.3
hereof. Any Deadlock (as defined hereinafter) of the Management Committee shall
be resolved pursuant to Section 4.1(f) hereof.
(d) Any Representative on the Management Committee (or alternatively
the Member who appointed such Representative) may appoint another
Representative on the Management Committee to act for him or her, and the
Management Committee may delegate in writing, to any of the Representatives or
to any Member or to any other agent such authority to act on its behalf or on
behalf of the Company as it shall deem appropriate.
(e) Subject to the other provisions of this Agreement and the
requirements of applicable law, the Management Committee shall have the full,
complete and exclusive power and discretion to take all action that it
considers necessary or desirable in connection with the management of the
Company, and may exercise, on behalf of the Company, all of the powers of a
limited liability company under the Act including, without limitation, the
following powers:
(i) to enter into contracts or agreements of any kind,
including selling, leasing, conveying, licensing, exchanging or otherwise
transferring or disposing of any Company property or assets, as well as
contracts of guaranty and suretyship with any person including with any Member,
Representative or affiliate of either of them without the vote of the Members;
(ii) to determine the strategies and methods for developing
and commercializing products and for exploiting the intellectual property
rights of the Company;
(iii) to establish and maintain, or cause to be maintained,
the Capital Accounts of the Members and the books and records of the Company as
required by law and by this Agreement;
(iv) to appoint such Officers (as defined hereinafter) of
the Company as the Management Committee determines desirable, and such Officers
of the Company:
(1) need not be members or Representatives;
(2) shall have the powers and duties delegated to
them by the Management Committee; and
(3) shall serve at the pleasure of the Management
Committee;.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
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(v) to employ and dismiss attorneys, accountants,
independent auditors, custodians, brokers and such other advisers or agents in
connection with any matter relating to the business of the Company (including,
without limitation, the Representatives on the Management Committee or persons
or firms affiliated with them) and to make payment for such services and other
expenses out of the funds of the Company;
(vi) to open, maintain and close bank accounts for the
Company;
(vii) to sign checks of the Company;
(viii) to admit additional members to the Company;
(ix) to call meetings of the Members of the Company;
(x) to declare and make distributions;
(xi) to permit, require or prohibit withdrawals of capital
from and Capital Contributions to the Company;
(xii) to hold part of the assets of the Company in cash
without liability for interest or the payment of expenses or the making of
distributions therewith;
(xiii) to determine the accounting period or accounting
periods to which any income, gain, obligation, loss, liability, deduction or
expense is attributable;
(xiv) to prepare, execute and file tax returns or
information returns for the Company and to make tax elections as they deem
appropriate, subject to the provisions of Section 3.6 hereof;
(xv) to incur indebtedness for any purpose;
(xvi) to make loans, including loans to Members, and to
provide indemnification or guarantee the indebtedness and obligations of
others, including Members;
(xvii) to settle, compromise, assign, pledge, transfer,
release, submit to arbitration, or stipulate to judgment, or consent to do the
same, any claim, suit, demand or judgment against the Company;
(xviii) to delegate authority to subcommittees, Members,
Representatives, Officers or other parties to take actions on behalf of the
Company consistent with the terms of this Agreement and to execute documents on
behalf of the Company in connection therewith; and
(xix) to bring, threaten to bring or prosecute, on behalf of
the Company, any claim in a judicial proceeding or arbitration forum.
(f) If, at any time the vote of the Representatives required to
approve action with respect to a particular matter has not been obtained after
comprehensive discussion between the Representatives, and such failure to
obtain the requisite vote impedes in any material respect the Company's ability
to continue its business (the "Deadlock"), the Deadlock shall first be
submitted (the "Submission") by the Management Committee (but if the Management
Committee cannot agree on the form or substance of the Submission, the
Submission may be made by any Representative) to the Chief Executive Officer of
Progenics and the Chief Executive Officer of CYTOGEN for review and discussion.
Such persons shall meet as soon as possible after the Submission is given, and
in any event within ten calendar days, and endeavor in good faith to resolve
the matter. If these officers do not, within ten calendar days after they
first meet, or within 20 calendar days after the Submission is given, mutually
resolve the Deadlock or agree on a method of resolving the Deadlock, either
Member may, within the 30 calendar day period following such 20 calendar days
after delivery of the Submission, by written notice given to the other Member
within such 30 day period, cause the Deadlock to be submitted to arbitration
pursuant to Section 10.2 hereof.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
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(g) (i) If submission of a Deadlock to the procedures
described in Section 4.1(f) does not, within the time periods specified in
Section 4.1(f) hereof, result in resolution of the Deadlock, submission of the
Deadlock to arbitration or agreement by the Members on an alternative dispute
resolution procedure, either party may elect to exercise the buy/sell right
contained in this Section 4.1(g) (the "Buy/Sell Right"). The Member electing
to exercise the Buy/Sell Right (the "Offeror") shall furnish in writing to the
other Member (the "Offeree") the Offeror's irrevocable, unconditional (except
as provided herein) and binding offer (such notice being referred to herein as
the "Exercise Notice") to purchase the Offeree's Interest or to sell the
Offeror's Interest for a cash purchase price determined in accordance with
Section 4.1(g)(ii) hereof (the "Purchase Price"). The Exercise Notice shall
set forth an amount expressed in dollars and without contingencies (the
"Valuation"), which amount shall be used to calculate, in accordance with
Section 4.1(g)(ii) hereof, the Purchase Price. The Valuation is intended to
represent the amount that would be payable for 100% of the Interests of the
Company. Within 15 calendar days after the Exercise Notice is given, the
Offeree may give notice to the Offeror of its irrevocable, unconditional
(except as provided herein) and binding election either:
(1) to purchase the entire Interest of the Offeror
for an amount in cash equal to the Purchase Price; or
(2) to sell its entire Interest to the Offeror for an
amount in cash equal to the Purchase Price.
Failure of the Offeree to give notice of its decision within such applicable
time period shall constitute a conclusive election by the Offeree to sell its
entire Interest pursuant to this Section 4.1(g)(i).
(ii) The Purchase Price shall be equal to the seller's
Percentage multiplied by the Valuation.
(iii) Subject to the provisions of Section 4.1(g)(iv)
hereof, a transfer of Interests pursuant to this Section 4.1(g) shall take
place at a closing to be held on a day other than Saturday, Sunday or any other
day on which commercial banks located in New York, New York are authorized by
law to be closed for business ("Business Day"). Such date shall be selected by
and set forth in a notice by the Offeror given promptly after the Offeree gives
notice of its election under Section 4.1(g)(i) hereof, which date shall be at
least ten days but prior to 20 days after the Offeree gives notice of its
election under Section 4.1(g)(i), at such location in New York, New York as the
Offeror selects or as otherwise agreed to by the parties. In such notice, the
purchasing Member shall additionally specify whether the purchase will be by
the Member, the Company, a combination of the Company and the Member, and/or
the designee(s) of the Company and/or the designee(s) of the Member (the
"Purchaser"). At the closing, the Purchase Price specified above shall be paid
by the Purchaser by wire transfer of immediately available federal funds to an
account designated by the selling Member. The terms of the purchase and sale
shall be unconditional, except that the selling Member shall represent and
warrant to the Purchaser that its Interest in the Company is not subject to any
legal or equitable claims (other than legal or equitable claims to such
Interest, if any, of the Purchaser pursuant to this Agreement) and shall
deliver at the closing an instrument confirming such representation and
warranty. In addition, the Purchaser shall represent and warrant to the
selling Member that it has the full right, power and authority to effectuate
the purchase and upon demand shall deliver at the closing an instrument
confirming such representation and warranty. Upon the sale of a Member's
Interest in the Company pursuant to this Section 4.1(g), the selling Member's
appointed Representatives shall be deemed to have automatically resigned from
the Management Committee.
(iv) The closing date set forth in Section 4.1(g)(iii)
hereof shall be postponed if any required regulatory filings have not been made
or any required consents or approvals (regulatory or otherwise) have not been
received by such closing date, but only until such filings have been made or
such consents have been received and, if applicable, until the expiration or
earlier termination of the applicable waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). The
Members hereby agree to use their reasonable best efforts and to cooperate with
each other to effect any such required regulatory filings, including but not
limited to, a filing under the HSR Act, if applicable, and to obtain any such
required consents or approvals, in order to close a transfer of Interests
pursuant to this Section 4.1(g).
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
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(v) The consummation of any purchase or sale of Interests
pursuant to this Section 4.1(g) shall be subject to the satisfaction of the
provisions of Section 6.2 hereof.
(h) Each of Progenics and CYTOGEN shall appoint one managing
Representative (the "Managing Representative") from the Representatives. Every
contract, agreement, certificate, document or other instrument executed by both
Managing Representatives shall be conclusive evidence in favor of every person
relying thereon or claiming thereunder that, at the time of the delivery
thereof, (1) the Company was in existence, (2) this Agreement had not been
terminated or canceled or amended in any manner so as to restrict such
authority (except as shown in any instrument duly filed under the Act) and (3)
the execution and delivery thereof was duly authorized by the Management
Committee. Any person dealing with the Company or the Management Committee
may, until and unless subsequently notified by both Managing Representatives,
rely on a certificate signed by both Managing Representatives hereunder:
(i) as to who are the Representatives and Managing
Representatives hereunder;
(ii) as to the existence or nonexistence of any fact or
facts which constitute conditions precedent to acts by the Management Committee
or are in any other manner germane to the affairs of the Company;
(iii) as to who is authorized to execute and deliver any
instrument, contract, agreement, certificate or document for the Company;
(iv) as to the authenticity of any copy of this Agreement
and amendments thereto; or
(v) as to any act or failure to act by the Company or as
to any other matter whatsoever involving the Company.
(i) The Management Committee shall establish an Intellectual
Property subcommittee, composed of such members of the Management Committee, or
such other persons, as the Management Committee may determine and with such
authority as may be delegated thereto. The Intellectual Property Committee
shall have responsibility for establishing and implementing, in consultation
with counsel, the Company's strategies for creating and/or maintaining its
patent estate.
4.2. Meetings of Members. The Members shall meet on such periodic
basis as the Management Committee may determine. Special meetings of the
Members, for any purpose or purposes, may be called by the Management Committee
or by any Member of the Company. All meetings shall be held at the Company's
principal place of business or at any other place designated by the Management
Committee, and, unless otherwise prohibited by law, may be conducted by means
of conference telephone or similar communication equipment, in the discretion
of the Management Committee. Not less than two Business Days before each
meeting, the Management Committee shall give written notice of the meeting to
each Member entitled to vote at the meeting. The notice shall state the place,
date, hour and purpose of the meeting. Notwithstanding the foregoing
provisions, each Member who is entitled to notice shall be deemed to have
waived notice if such Member attends the meeting, unless such Member objects,
prior to or at the beginning of the meeting, to holding the meeting or
transacting business at the meeting. At any such meeting of Members, the
presence in person or by proxy of the Members holding an aggregate of a
majority in Interests constitutes a quorum. A member may vote either in person
or by written proxy signed by or on behalf of the Member or by or on behalf of
the Member's duly authorized attorney-in-fact.
In lieu of holding a meeting, the Members may vote or otherwise take action by
the unanimous written consent of the Members.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
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4.3. Liability and Indemnification
(a) Except as otherwise provided by law, none of the
Representatives, any Officer or any Member designated by the Management
Committee to act on its behalf (or any officer, director, employee or affiliate
of any such Member), in each case acting in such capacity, shall be liable,
responsible or accountable in any way for damages or otherwise to the Company
or to any of the Members for (a) any act or failure to act pursuant to this
Agreement or otherwise if (i) such person acted in good faith and in a manner
it reasonably believed to be in, or not opposed to, the interests of the
Company, (ii) the conduct of such person did not constitute gross negligence,
fraud, bad faith, intentional misconduct or a knowing violation of law and
(iii) such person did not gain a financial benefit to which he or she was not
legally entitled, or (b) any losses due to the negligence or unauthorized acts
of advisers, consultants or other agents of the Company.
(b) The Company shall indemnify, defend and hold harmless each
Representative, each Officer and any Member designated to act on behalf of the
Management Committee (and any officer, director, employee and affiliate of any
such Member), in each case acting in such capacity (an "Indemnified Person"),
from and against any claims, losses, liabilities, damages, fines, penalties,
costs and expenses (including, without limitation, reasonable fees and
disbursements of counsel and other professionals) arising out of or in
connection with any act or failure to act by an Indemnified Person pursuant to
this Agreement, or the business and affairs of the Company; provided, however,
that an Indemnified Person shall not be entitled to indemnification hereunder
if it is judicially determined that (a) such Indemnified Person's actions or
omissions to act were (i) made in bad faith, (ii) constituted gross negligence,
fraud, intentional misconduct or a knowing violation of law, or (iii) were the
result of active and deliberate dishonesty, or (b) such Indemnified Person
personally gained a financial benefit to which Indemnified Person was not
legally entitled.
4.4. Duties, Right to Conduct Other Business
(a) To the extent that, at law or in equity, a Member (or any
officer, director or employee of such Member) has duties (including fiduciary
duties) and liabilities relating thereto to the Company or to the Members, (i)
the Member (or any officer, director or employee of any Member) acting under
this Agreement or otherwise shall not be liable to the Company or to any Member
for its good faith reliance on the provisions of this Agreement, and (ii) such
Member's duties and liabilities (or the duties and liabilities of any officer,
director or employee of any Member) may be expanded or restricted by the
provisions of this Agreement.
(b) For so long as Progenics and CYTOGEN are Members of the Company
and for a period of three years thereafter (unless the Company liquidates
pursuant to Article VII hereof), neither Progenics nor CYTOGEN will engage,
either directly or indirectly, in the research, development, manufacturing,
marketing or commercialization of products in the Field except for the benefit
of the LLC. Notwithstanding the foregoing, this Agreement shall not preclude
or limit, in any respect, the rights of Progenics and CYTOGEN to engage in
activities outside of the Field, whether or not such activities are competitive
with activities of the Company, and neither Progenics nor CYTOGEN shall have
any obligation to offer such business activities to the Company.
(c) For so long as Progenics and CYTOGEN are Members of the Company
and for a period of three years thereafter (unless the Company liquidates
pursuant to Article VII hereof), neither Progenics nor CYTOGEN shall solicit or
induce any person who is employed by or who is a consultant to or is otherwise
affiliated with the Company to terminate his or her employment, consultancy or
affiliation with the Company. In addition, for so long as Progenics and
CYTOGEN are Members of the Company and for a period of three years thereafter,
neither Progenics nor CYTOGEN shall solicit or induce any person who is
employed by or who is a consultant to or otherwise affiliated with the other
Member to terminate his or her employment, consultancy or affiliation with the
other Member.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
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4.5. Scientific Advisory Board
(a) The Management Committee shall be authorized to establish a
Scientific Advisory Board (the "SAB"). The SAB shall be composed of such
scientific or other personnel as the Management Committee deems advisable and
may include as members employees and consultants of the Company as well as
persons otherwise unaffiliated with the Company. The SAB shall meet at such
places and at such times as shall be determined as advisable. The Management
Committee may authorize compensation for members of the SAB in such amounts and
under such terms as the Management Committee may determine.
4.6. Research Grants. Neither Progenics nor CYTOGEN shall, so long
as such person is a member of the Company, apply to any funding source for a
Research Grant in the Field unless such application is made for the benefit of
the Company.
ARTICLE V
OFFICERS
5.1. Designation, Authority and Compensation of Officers. The
Management Committee may delegate such of its authority as it deems advisable
from time to time to officers of the Company, including, without limitation, a
president, one or more vice-presidents and/or a secretary/treasurer (an
"Officer"). The title, extent of authority, term of office and compensation of
any Officer shall be determined by the Management Committee in its sole
discretion.
5.2. Tenure of Officers. The Officers of the Company shall hold
office until their successors are chosen and qualify, unless a different term
is specified by the Management Committee in appointing the Officer, or until
the Officer's earlier death, resignation or removal. Any Officer chosen by the
Management Committee may be removed at any time by the Management Committee, in
its sole discretion, and any vacancy occurring in any office may be filled by
the Management Committee, in its sole discretion. Any Officer may resign by
delivering his or her written resignation to the Company at its principal place
of business. Such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the happening of some
other event.
ARTICLE VI
TRANSFER OF INTERESTS, WITHDRAWAL AND TERMINATION OF MEMBERS
6.1. Transfer or Withdrawal Prohibited; Change of Control of a Member
(a) Except as expressly provided herein, no Member may withdraw from
the Company or sell, assign, transfer, pledge, hypothecate, mortgage or create
a security interest, directly or indirectly ("Transfer"), in all or any portion
of its Interest without the prior written consent of the Management Committee,
which consent may be withheld in the sole and absolute discretion of the
Management Committee. Any purported withdrawal or Transfer of an Interest by a
Member without the requisite consent in writing shall be null and void, and the
Company shall be entitled to damages as a result of, and/or injunctive relief
with respect to, any attempts to withdraw or Transfer.
(b) In the event that the Management Committee consents to a
Transfer of a Member's Interest, such consent shall, unless expressly stated
otherwise, be deemed a consent only to the assignment of such Member's economic
interest in profits, losses and distributions and shall not be deemed a consent
to the admission of such assignee as a member of the Company as a substitute
for the assignor, and such assignee shall not have any of the rights of a
member of the Company, including, without limitation, voting rights, unless
otherwise stated in writing by the Management Committee. Except to the extent
that the Management Committee has consented to the admission of the assignee as
a member in the Company and/or consented to the exercise of voting rights by
the assignee, the assigning Member shall retain all voting rights in connection
with the transferred Interest.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
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(c) In the event that at any time there occurs a Change of Control
(as hereinafter defined) of a Member, such Member's Interest shall
automatically convert into an economic interest only in the profits, losses and
distributions of the Company, and such Member shall not have any other rights
of a member of the Company, including, without limitation, voting and marketing
rights. For purposes hereof, a "Change in Control" shall be deemed to have
occurred: (i) on the sale or other disposition of all or substantially all of
the Member's assets to any entity, person or related group of persons; (ii)
when there shall be consummated any consolidation, merger, reorganization or
similar corporate transaction (a "Corporate Transaction") of the Member (A) in
which the Member is not the continuing or surviving entity (other than a
consolidation or merger with a wholly owned subsidiary of the Member in which
all shares of common stock of such Member outstanding immediately prior to the
effectiveness thereof are changed into or exchanged for the same consideration)
or (B) pursuant to which the common stock of such Member would be converted
into cash, securities or other property, in each case, other than a Corporate
Transaction that is a Qualifying Corporate Transaction (as defined below);
(iii) when any person, or any persons acting together which would constitute a
"group" for purposes of Section 13(d) of the Securities Exchange Act of 1934,
as amended, together with any affiliates thereof, shall beneficially own (as
defined in Rule 13d-3 under the Exchange Act) at least 50% of the total voting
power of all classes of capital stock of the Member entitled to vote generally
in the election of directors of the Member (unless the "acquisition" is deemed
to have occurred indirectly solely as a result of the completion of a Corporate
Transaction that is not a Change in Control pursuant to clause (ii) above);
(iv) when at any time during any consecutive two-year period, individuals who
at the beginning of such period constituted the Board of Directors of the
Member (together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of the Member
was approved by a vote of 75% of the directors then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Member then in office;
or (v) when the Member is liquidated or dissolved or adopts a plan of
liquidation or dissolution. A "Qualifying Corporate Transaction" shall be any
Corporate Transaction in which the holders of common stock of the Member
immediately prior to such Corporate Transaction have, directly or indirectly,
at least (i) a majority of the total voting power of all classes of capital
stock entitled to vote generally in the election of directors of the continuing
or surviving entity immediately after such Corporate Transaction in
substantially the same proportion as their ownership of common stock before
such transaction or (ii) 25% of the total voting power of all classes of
capital stock entitled to vote generally in the election of directors of the
continuing or surviving entity immediately after such Corporate Transaction in
substantially the same proportion as their ownership of common stock before
such transaction and, in the case of this clause (ii), the other Member has
given a CIC Approval. A "CIC Approval" shall be given by the other Member if
such Member cannot conclude in good faith and in its reasonable judgment after
discussions with the parties to the Corporate Transaction that such Corporate
Transaction and any resulting change in management or leadership is reasonably
likely to disrupt or delay the commercialization of products by the LLC, or
fundamentally alter the approach, philosophy or vision of the LLC, giving due
regard to the importance of good-faith cooperation and collaboration and
single-mindedness of purpose between CYTOGEN and Progenics which has formed the
basis for the collaboration initially contemplated by the parties hereto. A
CIC Approval may not be unreasonably withheld, and failure of the other Member
to give a CIC Approval may be contested in arbitration pursuant to Article 10
hereof. Notwithstanding the foregoing, a Change of Control shall not include
any transaction the purpose of which is to reorganize the Member's corporate
structure, reincorporate the Member in another jurisdiction or undertake any
other action which does not have the purpose or effect of materially affecting
the ownership and/or control of the Member at the time of such transaction.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
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6.2. Regulatory Matters. Anything in this Article VI or elsewhere in
this Agreement to the contrary notwithstanding, no assignment, transfer,
encumbrance or other disposition of all or any part of any Member's Interest
shall be made or shall be effective unless (a) prior to the consummation
thereof, all assignees and transferees with respect thereto shall have made to
the Company in writing all of the representations required by the Management
Committee, to ensure compliance with applicable securities and other laws and
(b) if required by the Management Committee, the Company is provided with an
opinion of its legal counsel, or other legal counsel satisfactory to the
Company's counsel, stating that (i) such assignment, transfer, encumbrances or
other disposition is exempt from the Securities Act of 1933, as amended, and is
permissible under all other applicable federal and state securities laws
without registration or qualification of any security or any person and (ii)
the transaction is not prohibited under, and does not conflict with, such other
federal or state laws as the Management Committee may specify.
6.3. Default; Buyout/Liquidation Option
(a) A Member shall be in default ("Defaulting Member") under this
Agreement upon the occurrence of any of the following events ("Default"):
(i) the Bankruptcy (as defined hereinafter) or dissolution
of the Member (the Bankruptcy or dissolution of the Member shall hereinafter be
referred to as the "Dissolution"), in which event such Member shall immediately
notify the other Member ("Other Member") and the Company in writing of the
occurrence of such Dissolution.
As used herein, the term "Bankruptcy" shall mean:
(1) A Member files a voluntary petition in bankruptcy
or shall be adjudicated a bankrupt or insolvent, or shall file any petition or
answer or consent seeking any reorganization, arrangement, composition,
readjustment, liquidation or similar relief for itself under the present or
future applicable federal, state or other statute or law relating to
bankruptcy, insolvency or other relief for debtors, or shall seek or consent to
or acquiesce in the appointment of any trustee, receiver, conservator or
liquidator of said Member of all or any substantial part of its properties or
its Interest (the term "acquiesce" as used in this definition includes the
failure to file a petition or motion to vacate or discharge any order, judgment
or decree);
(2) A court of competent jurisdiction enters an
order, judgment or decree approving a petition filed against any Member seeking
a reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the present or any future federal
bankruptcy act, or any other present or future applicable federal, state or
other statute or law relating to bankruptcy, insolvency or other relief for
debtors, and such Member shall acquiesce in the entry of such order, judgment
or decree or such order, judgment or decree shall remain unvacated and unstayed
for an aggregate of 60 calendar days (whether or not consecutive) from the date
of entry thereof, or any trustee, receiver, conservator or liquidator of such
Member or of all or any substantial part of its properties or its Interest
shall be appointed without the consent or acquiescence of such Member, and such
appointment shall remain unvacated and unstayed for an aggregate of 60 calendar
days (whether or not consecutive);
(3) A Member admits in writing its inability to pay
its debts as they mature; or
(4) A Member makes an assignment for the benefit of
creditors or takes other similar action for the protection or benefit of
creditors.
(ii) the Member has breached in any material respect this
Agreement, the PSMA/PSMP License Agreement or the Services Agreement, which
breach has not been cured within 60 calendar days after the Management
Committee or non-breaching Member has given a written notice to the breaching
Member stating that a breach has occurred and identifying in reasonable detail
the relevant facts with respect to such breach.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
18
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(iii) on two occasions, an arbitrator determines that a
Member has acted in bad faith in refusing to approve a Budget pursuant to
Section 2.4(b).
(iv) so long as Progenics and CYTOGEN are the only Members
of the Company, the Member's Percentage falls below [* * *] ("Nonconforming
Percentage"), in which event (provided that at such time as any Member's
Percentage shall be reduced to zero, such Member shall cease to be a member in
the Company) the Management Committee shall immediately notify all Members in
writing of the Nonconforming Percentage. Subsequently, any further reduction
in such Member's Percentage shall constitute a separate Default again giving
rise to the options under Section 6.3(b) hereof.
The Management Committee shall promptly (but in any event within five Business
Days) give notice (a "Default Notice") to the Members of any Default under this
Section 6.3(a) of which it becomes aware. The Other Member shall be entitled
to give the Default Notice to the Defaulting Member on behalf of the Management
Committee. In any event, failure to provide notice to the Defaulting Member
does not constitute a waiver of the default.
(b) Upon the occurrence of a Default and the giving of the Default
Notice, in each case as described in Section 6.3(a) hereof, (i) all marketing
rights held by the Defaulting Party under Article IX hereof, and all rights of
Progenics (if Progenics is the Defaulting Party) under Section 2.2(d) hereof to
direct the application of the Progenics R&D Capital Contributions and to
conduct the research and development program contemplated by the Services
Agreement, shall terminate and (ii) an option to purchase all but not less than
all of the Interest of the Defaulting Member shall arise immediately in favor
of the Company and/or the Other Member. The determination as to whether the
Company will exercise the purchase option shall be made by the Other Member.
If the purchase option is not exercised within 45 calendar days from the giving
of the Default Notice, the Other Member may, but shall not be required to,
within 90 calendar days from the giving of the Default Notice, cause the
Company to be dissolved and liquidated pursuant to Article VII hereof.
(c) The purchase option arising under Section 6.3(b) hereof may be
exercised only by giving a written notice to the Defaulting Member of the
election to exercise such purchase option within the 45 calendar day time
period specified in Section 6.3(b) hereof (the "Exercise Notice").
(d) If the Company and/or the Other Member exercises the purchase
option arising under Section 6.3(b) hereof, the purchase price determination of
the Defaulting Member's Interest shall first be submitted by the Management
Committee to the Chief Executive Officer of each Member for review and
discussion. Such persons shall meet as soon as possible after the Exercise
Notice is given, and in any event within ten calendar days, and endeavor in
good faith to determine the purchase price. If these officers do not, within
ten calendar days after they first meet, or within 20 calendar days after the
Exercise Notice is given, mutually agree upon a purchase price for the
Defaulting Member's Interest, either Member may, within the 30 calendar day
period following such 20 calendar days after delivery of the Exercise Notice,
by written notice given to the other Member within such 30 day period, cause
the purchase price determination of the Defaulting Member's Interest to be
submitted to arbitration pursuant to Section 10.2 hereof. In the event such
dispute is submitted to arbitration, the purchase price for the Defaulting
Member's Interest shall be calculated by the arbitrator by multiplying the
total entity value of the Company (as determined by the arbitrator) by the
Defaulting Member's Percentage. In the event the Company and/or the Other
Member exercises the purchase option, the Company and/or the Other Member and
the Defaulting Member shall be obligated to consummate the purchase at the
purchase price determined in the manner described above.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
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(e) (i) Subject to the provisions of Section 6.3(e)(ii)
hereof, a transfer of Interests pursuant to this Section 6.3 shall take place
at a closing to be held on a Business Day at least ten calendar days but prior
to 20 calendar days after the determination of the purchase price of the
Defaulting Member's Interest pursuant to Section 6.3(d) hereof, which date
shall be determined by mutual agreement of the Members, or if no agreement can
be reached, on a date unilaterally set by the Company and/or the Other Member,
at such location in New York, New York as the Company and/or the Other Member
selects or as otherwise agreed to by the parties. In the Exercise Notice, the
Company and/or the Other Member shall additionally specify whether the purchase
will be by the Other Member, the Company, a combination of the Company and the
Other Member, and/or the designee(s) of the Company and/or the designee(s) of
the Other Member (the "Purchasing Party(ies)"). At the closing, the purchase
price specified above shall be paid by the Purchasing Party(ies) by wire
transfer of immediately available federal funds to an account designated by the
Defaulting Member. The term of the purchase and sale shall be unconditional,
except that the Defaulting Member shall be deemed to represent and warrant to
the Purchasing Party(ies) that its Interest is subject to no legal or equitable
claims (other than legal or equitable claims to such Interest, if any, of the
Purchasing Party(ies) pursuant to this Agreement) and shall deliver at the
closing an instrument confirming such representation and warranty. In
addition, the Purchasing Party(ies) shall represent and warrant to the
Defaulting Member that it has the full right, power and authority to effectuate
the purchase and upon demand shall deliver at the closing an instrument
confirming such representation and warranty. Upon the sale of a Member's
Interest pursuant to this Section 6.3, the Member's appointed Representatives
shall be deemed to have automatically resigned from the Management Committee.
(ii) The closing date set forth in Section 6.3(e)(i) hereof
shall be postponed if any required regulatory filings have not been made or any
required consents or approvals (regulatory or otherwise) have not been received
by such closing date, but only until such filings have been made or such
consents have been received and, if applicable, until the expiration or earlier
termination of the applicable waiting period under the HSR Act. The Members
hereby agree to use their reasonable best efforts and to cooperate with each
other to effect any such required regulatory filings, including but not limited
to, a filing under the HSR Act, if applicable, and to obtain any such required
consents or approvals, in order to close a transfer of Interests pursuant to
this Section 6.3.
(f) The consummation of any purchase or sale of Interests pursuant
to this Section 6.3 shall be subject to the satisfaction of the provisions of
Section 6.2 hereof.
(g) A Defaulting Member shall be liable to the Company and the Other
Member for all damages arising out of a Default and any other amounts the
Defaulting Member owes to the Company or Other Member pursuant to this
Agreement or any other agreement, and any such amounts may be offset against
any other payments otherwise due from the Purchasing Party(ies) to the
Defaulting Member hereunder. Exercise or failure to exercise any of the
options pursuant to this Section 6.3 shall not relieve the Defaulting Member of
the liabilities arising out of the Default.
ARTICLE VII
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY
7.1. Events of Dissolution. The Company shall be dissolved and
liquidated upon the first to occur of the following events:
(a) Upon the unanimous written consent of the Management Committee.
(b) Upon the termination of the Company's business as a result of
the sale by the Company of all or substantially all of its business and assets.
(c) Upon the Other Member's exercise of its right to dissolve and
liquidate the Company under Section 6.3 hereof.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
20
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7.2. Procedure for Winding Up and Dissolution. If the Company is
dissolved, the Management Committee shall wind up its affairs pursuant to the
appropriate provisions of the Act. On winding up of the Company, the assets of
the Company shall be distributed in accordance with Section 3.8 hereof.
7.3. Termination of Company. Upon the completion of the liquidation
of' the Company and the distribution of all Company assets, the Company's
affairs shall terminate and the Management Committee shall execute and file a
certificate of cancellation of the Company's Certificate, as well as any and
all other documents required to effect the termination of the Company under the
Act.
7.4. License Grants on Dissolution. Upon dissolution of the Company,
each Member (in each case, the "Grantee Member") shall be granted, at its
request, by the other Member (the "Grantor Member") a non-exclusive license,
with the right to sublicense, for use in the Field to any Intellectual Property
rights in which the Grantor Member has a licensable right ("Grantor Rights") to
the extent that the development and commercialization of any product or service
that includes or embodies a Company Invention (including developing, making,
having made, distributing, using, offering for sale, selling, having sold,
importing and exporting such products and services) would in the absence of
such non-exclusive license, infringe or conflict with such Grantor Rights.
Royalties in respect of such non-exclusive license shall be payable at cost
(calculated as described in Section 5 of the PSMA/PSMP License Agreement, and
including any milestone or other payments required to be paid to any licensor
of the Grantor Member resulting from the development or commercialization
activities of the Grantee Member relating to Company Inventions). Such non-
exclusive licenses shall contain such other commercially reasonable, fair
market value terms as the parties shall in good faith agree.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND TAX ELECTIONS
8.1. Bank Accounts. All funds of the Company shall be deposited in a
bank account or accounts opened in the Company's name. The Management
Committee shall determine the institution or institutions at which the accounts
will be opened and maintained, the types of accounts and the persons who will
have authority with respect to the accounts and the funds therein.
8.2. Fiscal Year. Pursuant to Section 3.4 hereof, the Fiscal Year of
the Company for both accounting and tax purposes shall be the calendar year.
8.3. Method of Accounting. The Company's books (for accounting
purposes) shall be maintained in accordance with generally accepted accounting
principles. The determinations of the Management Committee or the Tax Matters
Partner, as the case may be, with respect to the treatment of any item or its
allocation for federal, state or local income tax purposes shall be binding
upon all Members so long as that determination is not inconsistent with any
express provision of this Agreement, provided that any determinations made by
the Tax Matters Partner are subject to the approval of CYTOGEN.
8.4. Books and Records. The books and records of the Company shall
be maintained at the Company's expense under the supervision of the Management
Committee at such office as the Management Committee shall approve, and may be
examined and copied there by any Member or its duly authorized representatives
at reasonable times and upon reasonable notice. The Company shall furnish to
each Member, no later than 30 calendar days after the end of each of the first
three fiscal quarters, quarterly and year-to-date statements of income and a
balance sheet as of the end of that quarter. The Company shall furnish to each
Member, no later than 45 calendar days after the end of each Fiscal Year,
financial statements of the Company with respect to that year prepared by the
Company's accountant and audited by the accounting firm selected by the
Management Committee. The Company will seek to engage the services of an
independent auditing firm as its independent auditor upon terms satisfactory to
the Company. The financial statements shall include a balance sheet of the
Company as of the end of the Fiscal Year, a statement of operations, a
statement of Members' Interests and a statement of changes in cash flow of the
Company for the year. The Company shall also furnish to each Member copies of
any additional financial reports delivered by the Company to its lenders and
copies of all financial reports.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
21
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8.5. Tax Information. Not later than the date of delivery of the
annual financial statements pursuant to Section 8.4 hereof, the Management
Committee shall cause the Company's accountants to furnish to each Member any
information required by that Member to complete any income tax return that it
is required to file with respect to the year to which such financial statements
relate. The Company shall also furnish tax information to the Members on an
interim basis to the extent the Management Committee determines appropriate.
ARTICLE IX
MARKETING RIGHTS
9.1. Grant of North American Marketing Rights. Subject to the terms
and conditions described herein, the LLC hereby grants to CYTOGEN exclusive
marketing rights with respect to Licensed Products sold in the United States
and Canada (the "North American Territory"). The exercise of such rights by
CYTOGEN is conditioned on CYTOGEN's capability to perform the marketing,
detailing, distribution and other promotional and selling activities
(hereinafter, "marketing activities") required to be performed hereunder and
under the Marketing Agreement (as hereinafter defined). Such determination
shall take into consideration CYTOGEN's ability to perform the necessary sales
and marketing functions based upon an assessment of its existing sales,
marketing and distribution capabilities compared to those of other companies
promoting similar products to similar market segments, as well as such other
factors as may be reasonably relevant.
9.2. Diligence Obligations. CYTOGEN shall use diligent efforts to
market Licensed Products in the North American Territory ("Diligent Efforts").
For purposes of the foregoing, "Diligent Efforts" shall mean carrying out such
obligation in a sustained manner consistent with the efforts a party would
devote to a product of similar market potential, profit potential or strategic
value resulting from its own research efforts to which such party has exclusive
rights based on conditions then prevailing. Diligent Efforts requires: (i)
developing a strategic plan for product launch and subsequent market
penetration with defined objectives; (ii) establishing systems and protocols
reasonably designed to achieve such objectives; (iii) allocating appropriate
resources to support such systems and protocol; (iv) promptly assigning
responsibility for executing all phases of the Marketing Plan to specific
employees who are held accountable for discharging their assigned
responsibilities; and (v) monitoring on an ongoing basis the execution of the
Marketing Plan and its success and making such changes as are warranted by
market and/or operational conditions. CYTOGEN shall provide the LLC with
access to all relevant records and personnel, during normal business hours and
with reasonable advance notice, under customary confidentiality conditions, for
the purpose of determining the utilization by CYTOGEN of Diligent Efforts to
commercialize Licensed Products.
9.3. Assistance by Progenics; Contingent Grant of Rights.
(a) Subject to the terms and conditions described herein, Progenics
shall be entitled to assist CYTOGEN, under the direction of CYTOGEN, in
connection with marketing activities regarding Licensed Products in any
territory (including the North American Territory) in which CYTOGEN has been
granted or is subsequently granted marketing rights pursuant hereto. The
assistance by Progenics in marketing activities shall be conditioned upon
Progenics' capability to augment in a commercially significant manner the
marketing activities of CYTOGEN (or any other person then responsible for
marketing Licensed Products). The nature of the assistance in marketing
activities provided by Progenics will be determined in good faith by Progenics
and CYTOGEN, with the approval of the LLC, from time to time based on
Progenics' capabilities.
(b) [* * *]
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
22
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9.4. Marketing Agreement. The LLC, CYTOGEN and Progenics shall
negotiate in good faith the terms of a Product Marketing Agreement (the
"Marketing Agreement") to be entered into after the completion of Phase II
clinical trials with respect to any Licensed Product. The Marketing Agreement
shall be based on the terms set forth in this Article IX, shall include, but
not be limited to, provisions relating to marketing, sales, pricing and
distribution of Licensed Product and shall further define the rights,
responsibilities and obligations of the LLC, CYTOGEN and Progenics with respect
thereto. No term of the Marketing Agreement shall be in conflict with any
material term of this Article IX without the written agreement of the parties
hereto. Until the terms of the Marketing Agreement are agreed upon, such
parties acknowledge and agree that the terms set forth in this Article IX are
fully binding and enforceable. The Marketing Agreement shall include the
following terms in addition to the other terms described above:
(a) At least one year in advance of the anticipated commercial
launch (as determined in good faith by the LLC) of each Licensed Product in
each country in the North American Territory, CYTOGEN shall submit a plan (a
"Marketing Plan") for approval by the LLC for such commercial launch and the
subsequent period of twelve months plus any subsequent period prior to the
start of a calendar year. For each calendar year thereafter, CYTOGEN shall
submit a Marketing Plan with respect to, and at least one year prior to, such
calendar year describing in reasonable detail the marketing activities for each
such Licensed Product for approval by the LLC. The LLC's approval of any
Marketing Plan shall not be unreasonably withheld. Each Marketing Plan shall
include an overall level of anticipated product detailing, promotion, marketing
and sales efforts regarding the period covered thereby, a resource commitment
on the part of CYTOGEN with respect thereto, market and sales forecasts and
pricing analysis, a monthly budget and, with respect to commercial launch, an
estimated launch date of product marketing and promotion activities. Each
Marketing Plan shall also include the general operating guidelines and
strategies for targeting, pricing and discounting Licensed Products to
customers, a detailed budget for marketing and distribution activities and a
forecast product line contribution statement for the applicable calendar year.
(b) The LLC may from time to time review with CYTOGEN such matters
regarding marketing activities as it reasonably requests. CYTOGEN, Progenics
and the LLC agree to facilitate communication and cooperation between their
respective organizations in order to maximize the success of marketing
activities.
(c) CYTOGEN shall develop all written sales, promotion and
advertising materials relating to the commercialization of Licensed Products in
the North American Territory. The general form and content of such materials
shall be subject to annual approval of the LLC and general and specific
implementation by CYTOGEN. Ownership of all names, tradenames, trademarks,
service marks and other designations of Licensed Products (including any
related registrations) shall be vested in the LLC. In any given country, any
given Licensed Product shall be marketed under only one tradename, except as
agreed to by the LLC.
(d) The LLC shall be responsible for the cost of all advertising,
sales and promotion materials, market research and Phase IV studies ("Marketing
Materials") reasonably incurred in connection with a previously approved
Marketing Plan. The LLC will at all times own the Marketing Materials.
(e) The LLC will have responsibility for manufacturing finished
packaged product, both for sale and for promotional samples. The LLC will also
have responsibility for manufacturing clinical supplies for any Phase IV
studies. The LLC will purchase and pay for all raw (active and inactive)
materials and packaging materials (collectively, "Manufacturing Materials")
from third parties necessary to manufacture product. The LLC will at all times
have title to the Manufacturing Materials, work-in-process product and final
packaged product (collectively, "Inventory") until sale. The LLC shall have
responsibility for ensuring that sufficient Inventory is available to satisfy
sales requirements pursuant to customer orders and for procuring and paying for
space to warehouse Inventory. The LLC shall have custodial and managerial
responsibility for Inventory.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
23
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(f) CYTOGEN shall be responsible for procuring order processing and
distribution services for product. CYTOGEN shall have managerial
responsibility for order processing, including processing customer orders and
billing customers for shipments in satisfaction of their orders, and for
product distribution, including shipping product in satisfaction of customer
orders.
(g) The LLC shall be entitled to inspect and audit CYTOGEN's and
Progenics' books and records pertaining to marketing activities relating to
Licensed Products for legitimate business purposes under such terms as may be
set forth in the Marketing Agreement.
9.5. Negotiation Rights.
(a) In the event that the LLC determines to license, engage, or
otherwise contract with or authorize a person other than the LLC to engage in
marketing activities with respect to a Licensed Product in any territory other
than in the North American Territory, the LLC shall so notify CYTOGEN and
negotiate in good faith with CYTOGEN the terms of an agreement regarding
marketing activities with respect to any such Licensed Product in such
territory. As a condition to any such negotiations, CYTOGEN shall demonstrate
to the LLC's reasonable satisfaction CYTOGEN's capability to perform the
marketing activities desired by the LLC in the relevant territory. If CYTOGEN
is unable to satisfy such condition, or if CYTOGEN does not desire to, or is
unable to negotiate any such agreement, or any such agreement is subsequently
terminated, the LLC shall so notify Progenics and negotiate in good faith with
Progenics a marketing agreement as described above. As a condition to any such
negotiations, Progenics shall demonstrate to the LLC's reasonable satisfaction
Progenics' capability to perform the marketing activities desired by the LLC in
the relevant territory. Any such determination as to the capability of CYTOGEN
or Progenics shall take into consideration the relevant party's ability to
perform the necessary sales and marketing functions based upon an assessment of
such party's existing sales, marketing and distribution capabilities compared
to those of other companies promoting similar products to similar market
segments, as well as such other factors as may be reasonably relevant.
(b) If CYTOGEN elects not to exercise the marketing rights it has
been granted under Section 9.1 hereof, or such rights are terminated pursuant
to this Agreement or the Marketing Agreement, then the LLC shall so notify
Progenics, and Progenics shall be entitled to assume, on a prospective basis,
CYTOGEN's marketing rights hereunder and under the Marketing Agreement. As a
condition to any such assumption, Progenics must demonstrate to the reasonable
satisfaction of the LLC Progenics' capability to perform the marketing
activities required to be performed hereunder and under the Marketing
Agreement. Such determination shall take into consideration Progenics' ability
to perform the necessary sales, marketing and distribution functions based upon
an assessment of its existing sales and marketing capabilities compared to
those of other companies promoting similar products to similar market segments,
as well as such other factors as may be reasonably relevant. If Progenics
assumes such rights, such rights shall be terminable under the same
circumstances as such rights were terminable when held by CYTOGEN.
9.6. Marketing Compensation. CYTOGEN and Progenics shall be entitled
to compensation for marketing activities conducted pursuant hereto or to the
Marketing Agreement [* * *]. For purposes of this Section 9.6, [* * *]
as the case may be, as more specifically described in the Marketing Agreement.
9.7. Non-Transferability of Rights. The product marketing rights
granted by the LLC pursuant to this Agreement shall not be transferable,
licensable or otherwise exercisable by any person or entity other than the
party to which such rights have been granted hereby.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
24
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9.8. Termination of Rights. The rights granted by the LLC to
Progenics and CYTOGEN in Section 9.1 and 9.3 hereof shall be subject to
termination as follows:
9.8.1. Ownership Change. In the event that either Progenics' or
CYTOGEN's Interest shall at any time be less than [* * *] of all then-
outstanding Interests (any such party being referred to herein as the
"Diluted Party"), the rights granted to the Diluted Party pursuant to
Section 9.1 or 9.3 hereof, as the case may be, shall immediately
terminate. In the event that the LLC determines to issue additional
ownership interests to third-party investors, which issuance would result
in substantial dilution of Progenics's and CYTOGEN's ownership Interests,
the parties hereto agree to negotiate in good faith the provisions of this
Section 9.8.1 as it relates to any party that has not, prior to any such
additional issuance of ownership interests, become a Diluted Party.
9.8.2. Breach. In the event that either Progenics or CYTOGEN
shall breach any of the material representations or warranties or any
material terms, conditions or agreements contained herein made or to be
kept, observed and performed by it, then each of the LLC and Progenics (in
the event of a breach by CYTOGEN) or CYTOGEN (in the event of a breach by
Progenics), at its sole option and without prejudice to any of its other
legal or equitable rights and remedies, may, by giving the other parties
hereto 60 days' notice in writing, identifying with reasonable specificity
the breach, and unless (in the case of a breach of any term, condition or
agreement) the notified party within such 60-day period shall have cured
the breach, terminate the rights granted to Progenics or CYTOGEN, as the
case may be, pursuant to Sections 9.1.
9.8.3. Diligence. The LLC may terminate the rights granted to
CYTOGEN pursuant to Section 9.1 hereof as to any Licensed Product (but
only as to such Licensed Product) if CYTOGEN [* * *]
9.9. Retention of Rights. The parties hereto acknowledge and agree
that all marketing rights not expressly granted by the LLC to CYTOGEN or
Progenics pursuant to this Article IX, including without limitation product
marketing rights outside of the North American Territory, are retained by the
LLC. The LLC shall be entitled to retain or dispose of (by license, sublicense
or otherwise) any such rights in its sole discretion, and the proceeds, if any,
of any such disposition shall inure solely to the LLC.
ARTICLE X
DISPUTE RESOLUTION
10.1. Escalation Procedure. Except as provided in Section 3.6(b)
hereof and except for any Deadlock of the Management Committee which is not
resolved pursuant to Section 4.1(f) hereof (including related buy/sell
provisions in Section 4.1(g) hereof), all disputes, controversies, claims or
differences between Progenics and CYTOGEN (any such event, a "Dispute") arising
out of this Agreement, its interpretation or performance by the Members of
their respective obligations hereunder, including any questions regarding the
existence, validity or termination hereof, shall be resolved as described
below. The Dispute shall first be submitted (the "First Notice of Dispute") to
the Chief Executive Officer of each of the Members for review and discussion.
Such persons shall meet as soon as possible, and in any event within ten
calendar days after the giving of the First Notice of Dispute, and endeavor in
good faith to resolve the matter. If these officers do not reach agreement
within ten calendar days after they meet, or within 20 calendar days after the
First Notice of Dispute is given, or otherwise agree on another method of
resolving the dispute, the Dispute shall be resolved pursuant to Section 10.2
hereof.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
25
<PAGE>
10.2. Arbitration
(a) Either Member may make a demand for binding arbitration with
respect to any dispute arising hereunder by filing with the other a demand in
writing signed by an officer of the Member making such demand.
(b) The Members may agree on one arbitrator, but in the event they
cannot agree, there shall be three, one named in writing by each of the Members
within ten Business Days after demand for arbitration is given, and a third
chosen by the two appointed within ten Business Days after their appointment.
If the two arbitrators appointed by the Members do not appoint a third
arbitrator within such period, the American Arbitration Association ("AAA") in
New York, New York shall be retained to appoint a third arbitrator within ten
Business Days after the end of such period. Should either Member refuse or
neglect to join in the appointment of the arbitrator(s) or to furnish the
arbitrator(s) with any papers or information demanded, the arbitrator(s) are
empowered to proceed ex parte.
(c) Arbitration shall take place in New York, New York (or such
other location as may be agreed between Progenics and CYTOGEN) at a single
hearing before the arbitrator(s) of the matter. The arbitrator(s) shall select
such time and place promptly after his/her (or their) appointment, provided
that the time scheduled for the hearing shall not be later than 20 Business
Days after the appointment of the last arbitrator(s). The arbitrator(s) shall
give written notice thereof to each Member at least ten Business Days prior to
the date so fixed. In the event a panel of three arbitrators is necessitated
by the Members' inability to agree upon a single arbitrator, such notice of the
time and place of the hearing shall also identify the third member of the
panel. At the hearing, any relevant evidence may be offered by either Member,
and the formal rules of evidence applicable to judicial proceedings shall not
govern. Evidence may be admitted or excluded in the discretion of the
arbitrator(s). Said arbitrator(s) shall hear and determine the matter and such
determination may be based on such factors and consideration as the
arbitrator(s) deems relevant and/or appropriate. The arbitrator(s)' authority
shall be limited to determining the issue or question presented in each
instance and shall not extend to any other aspect of this Agreement or the
parties' relationship generally. In addition, the arbitrator(s) shall not
require the LLC to pursue a particular research and development program unless
the general elements thereof have been approved by the Management Committee.
The arbitrator(s) shall execute and acknowledge a binding decision in writing
setting forth the basis for their decision in reasonable detail and cause a
copy thereof to be delivered to each of the Members within ten Business Days of
the hearing date.
(d) The determination of the panel shall be by majority vote with
each arbitrator having a single vote. The decision rendered by the arbitrator
(or the majority, if more than one) shall be final, and judgment may be entered
upon it in accordance with the applicable law in any court of competent
jurisdiction.
(e) Prior to the scheduled hearing date, the Members shall agree on
procedures to be used in connection with the arbitration. To the extent the
Members cannot agree upon procedures, the arbitration shall be conducted in
accordance with the Commercial Arbitration Rules of the AAA under the auspices
of the AAA.
(f) The costs of such arbitration shall be borne by the Company;
provided, however, that if the arbitrator(s) determines that one of the Members
acted in bad faith in submitting the dispute to arbitration, such Member shall
bear all costs and expenses (including the costs and expenses of the other
Member) in connection with the arbitration proceeding.
10.3. Injunctive Relief. Notwithstanding anything herein to the
contrary, any Member may seek interim or provisional relief in the form of a
temporary restraining order, preliminary injunction or other interim equitable
relief concerning any Dispute in a court of competent jurisdiction; provided,
however, that, once the selection of the arbitrator(s) is complete, the
continuation, termination, amendment or modification of the interim or
provisional relief shall be determined by the arbitrator(s) and, after an
arbitration hearing is commenced, the action, suit or proceeding commenced in
such court seeking such interim or provisional relief shall be dismissed by the
stipulation of all Members. In the event that the Members fail to stipulate to
the dismissal of the action, the Members agree that the arbitrator(s) may
submit a stipulation dismissing the action. The arbitrator(s) may conduct any
hearings or order any discovery they deem necessary to properly review the
interim or provisional relief. This Section 10.3 shall be specifically
enforceable by each Member.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
26
<PAGE>
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Assurances. Each Member shall execute all certificates and
other documents and shall do all such filing, recording, publishing and other
acts as the Management Committee deems appropriate to comply with the
requirements of law for the formation and operation of the Company and to
comply with any laws, rules and regulations relating to the acquisition,
operation or holding of the property of the Company.
11.2. Disclaimer of Agency. This Agreement does not create any
relationship beyond the scope set forth herein, and except as otherwise
expressly provided herein, this Agreement shall not constitute any Member the
legal representative or agent of the other, nor shall any Member have the right
or authority to assume, create or incur any liability or obligation, express or
implied, against, in the name of or on behalf of any other Member of the
Company.
11.3. Entire Agreement; Amendment. This Agreement contains a complete
statement of the arrangements among the Members with respect to the Company
supersedes all prior agreements and understandings among them with respect to
the Company and may not be amended except by unanimous written agreement of the
Members.
11.4. Notices. Any notice or other communication under this Agreement
shall be in writing and shall be considered given when delivered in person or
sent by facsimile and acknowledged by a responsible person at the office of the
recipient, one day after being sent by a major overnight courier, or four days
after being mailed by registered mail, return receipt requested, to the Members
at the addresses set forth below their names on the Schedule A hereto.
11.5. Counterparts. The Members may execute this Agreement in two or
more counterparts, which shall, in the aggregate, be signed by all the Members.
Each counterpart shall be deemed an original instrument as against any Member
who has signed it.
11.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware applicable to
agreements made and to be performed in Delaware.
11.7. Binding Effect. This Agreement shall be binding on all
successors and assigns of the Members and inure to the benefit of the
respective permitted successors and assigns of the Members, except to the
extent of any express contrary provision in this Agreement.
11.8. Severability. If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in effect and shall
be enforceable to the maximum extent permitted by law, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.
11.9. Survival of Rights, Duties and Obligations. Termination of this
Agreement for any cause shall not release either Member from any liability
which at the time of termination has already accrued to the other Member hereto
or which thereafter may accrue in respect of any act or omission prior to such
termination, nor shall any such termination hereof affect in any way the
survival of and right, duty or obligation of either Member which is expressly
stated elsewhere in this Agreement to survive termination hereof.
11.10. Captions and Exhibits. Titles or captions of Sections or
Articles contained in this Agreement are inserted only as a matter of
convenience and for reference and in no way define, limit, extend or describe
the scope of this Agreement or the intent of any provision hereof. All Exhibits
and Schedules attached hereto shall be considered a part hereof as though fully
set forth herein.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
27
<PAGE>
11.11. Specific Performance. The Members acknowledge that monetary
damages may not be an adequate remedy for violations of this Agreement and that
any Member may, in its sole discretion, through arbitration or otherwise under
Article X or, in circumstances where Article X hereof is not applicable, in a
court of competent jurisdiction, apply for specific performance or injunctive
or other relief as such arbitrator or court may deem just and proper in order
to enforce this Agreement or to prevent violation hereof and, to the extent
permitted by applicable law, each Member waives any objection to the imposition
of such relief.
11.12. Assignability. Except as otherwise provided in Section 6.1
hereof, neither this Agreement nor any Interest, including the right to receive
distributions, shall be assignable by either Member without the written consent
of the other, and any attempted assignment without such consent shall be null
and void. This Agreement shall be binding upon the successors and permitted
assigns of the Members. Any such successor or permitted assign shall be subject
to the same rights and obligations as the original Member hereunder.
11.13. Confidentiality
(a) As used in this Section 11.13, "Confidential Information" means
all confidential and proprietary business, technical, or financial information
relating to the matters discussed herein.
(b) In order to protect the Confidential Information of any Member
hereto (in such capacity, the "Disclosing Member") that has become available to
any other Member hereto (in such capacity, the "Receiving Member"), each Member
agrees as follows:
(i) Each Member agrees that it will make no use of any
Confidential Information except in furtherance of the purposes contemplated by
this Agreement.
(ii) Each Member agrees that it will not, without the prior
written consent of the other Member, disclose to any third party Confidential
Information (which for purposes of this Section 11.13(b) shall include the
terms or existence of this Agreement or of the PSMA/PSMP License Agreement or
the Services Agreement or other matters relating to the collaboration
contemplated hereby and thereby) received in its capacity as Receiving Member
so long as such Member is a member of the Company and for a period of five
years thereafter.
(iii) Notwithstanding the foregoing:
(1) Each Member may disclose Confidential Information
to those of its representatives, employees and agents
("Representatives") who have a need to know such
Confidential Information in relation to the matters
discussed herein and who are under obligations of
confidentiality and non-use consistent with those set forth
herein. Any unauthorized disclosure of Confidential
Information by a Member's Representatives shall be a breach
by such Member of this Section 11.13.
(2) Disclosure of Confidential Information is
permitted to the extent that such disclosure is required
pursuant to applicable laws, rules or regulations or
government requirement or court order, provided however,
that the Receiving Member shall promptly notify the
Disclosing Member in writing of the existence or imposition
of any such requirement or order and cooperate with the
Disclosing Member in seeking an appropriate protective
order or other reliable assurance that confidential
treatment will be accorded the Confidential Information.
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
28
<PAGE>
(c) The provisions governing confidentiality and non-use contained
in this Section 11.13 shall not apply to any Confidential Information which:
(i) the Receiving Member can establish was known to the
Receiving Member prior to disclosure under or in connection
with this Agreement by the Disclosing Member;
(ii) was in the public domain or the subject of public
knowledge at the time of disclosure under or in connection
with this Agreement;
(iii) becomes part of the public domain or the subject of
public knowledge through no breach by or act of default of
the Receiving Member;
(iv) is obtained by the Receiving Member from a third party
other than in breach of a legal or contractual obligation of
confidentiality owed by such third party to the Disclosing
Member in respect thereof, the existence of which such
obligation was known or should have been known by the
Receiving Member; or
(v) the Receiving Member can establish was independently
developed by it without reference to Confidential Information
received.
(d) Termination of this Agreement shall not affect the obligations
concerning confidentiality and non-use as set forth in this Section 11.13.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the date first above written.
PROGENICS PHARMACEUTICALS, INC.
By: /s/ Ronald J. Prentki
-------------------------------
Name: Ronald J. Prentki
Title: President
CYTOGEN CORPORATION
By: /s/ Donald F. Crane
------------------------------
Name: Donald F. Crane
Title: Vice President
PSMA DEVELOPMENT COMPANY LLC
By: /s/ Ronald J. Prentki
------------------------------
Representative
By: /s/ Donald F. Crane
------------------------------
Representative
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
29
<PAGE>
SCHEDULE A
MEMBER PERCENTAGE
As of June 15, 1999
Addi-
Addi- tional
Members (Taxpayer Initial tional Contri- Adjusted
Identification Capital Capital bution Capital Percen-
Number and Contri- Contri- Percen- Adjust- Contri- tage as
Mailing Address) bution bution tage ment bution Adjusted
- ------------------ ------- ------- ------- ------- -------- --------
Progenics
Pharmaceuticals, $[* * *] 50.00%
Inc.
Tax IDN 13-
3379479
777 Old Saw Mill
River Road
Tarrytown, NY
10591
CYTOGEN
CORPORATION $[* * *] 50.00%
Tax IDN 22-
2322400
600 College Road
East
CN5308
Princeton, NJ
08540
Total $[* * *] 100.00%
__________________
* * * Confidential treatment requested; omitted material has been filed
separately with the Commission.
<PAGE>
EXHIBIT A
CERTIFICATE OF FORMATION
OF
PSMA DEVELOPMENT COMPANY LLC
Pursuant to Section 18-201 of the Delaware Limited Liability Company Act:
FIRST: The name of the limited liability company is PSMA Development Comp
any LLC.
SECOND: The address of the registered office and the name and address of the
registered agent for service of process required to be maintained by
Section 18-104 of the Delaware Limited Liability Company Act is:
Corporation Service Company
1013 Centre Road
Wilmington, Delaware 19805
IN WITNESS WHEREOF, this certificate has been subscribed this 14th
day of June, 1999, by the undersigned who affirms that the statements made
herein are true under the penalties of perjury.
By:___________________________
Name:
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Financial Statements of Progenics Pharmaceuticals, Inc. at June 30, 1999
and is qualified in its entirety by reference to such Financial
Statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 13,384,326
<SECURITIES> 9,455,931
<RECEIVABLES> 1,700,218
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 22,063,502
<PP&E> 2,865,886
<DEPRECIATION> 1,697,894
<TOTAL-ASSETS> 26,079,434
<CURRENT-LIABILITIES> 2,108,010
<BONDS> 0
0
0
<COMMON> 12,272
<OTHER-SE> 23,090,950
<TOTAL-LIABILITY-AND-EQUITY> 26,079,434
<SALES> 34,815
<TOTAL-REVENUES> 5,910,758
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,399,018
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,505
<INCOME-PRETAX> (3,516,765)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,516,765)
<EPS-BASIC> (0.37)
<EPS-DILUTED> (0.37)
</TABLE>
