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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------
FORM 8-K
CURRENT REPORT
-----------------------------------
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): MAY 14, 1996
SONUS PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in charter)
DELAWARE 0-26866 95-4343413
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
22026 20TH AVENUE, S.E., SUITE 102, BOTHELL, WASHINGTON 98021
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (206) 487-9500
NOT APPLICABLE
(Former name or former address, if changed, since last report)
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ITEM 5. OTHER EVENTS
On May 14, 1996, SONUS Pharmaceuticals, Inc. (the "Company" or "SONUS") and
Abbott Laboratories, Inc. ("Abbott") entered into a strategic alliance agreement
focusing on the clinical development, marketing and sale of EchoGen(R) Emulsion,
a proprietary ultrasound contrast agent developed by SONUS, for cardiology and
radiology uses. Under the agreement, SONUS has primary responsibility for
clinical development, regulatory affairs, and medical and technical support of
EchoGen, and Abbott has primary responsibility for United States marketing and
sales. SONUS has retained certain co-promotion rights to EchoGen in the United
States.
Under the agreement, Abbott has agreed to pay SONUS $31 million in
up-front, clinical support and milestone payments. After the United States Food
and Drug Administration has approved the marketing of EchoGen, for which there
can be no assurance, SONUS will receive 47 percent of net EchoGen revenues in
the United States -- a portion of which SONUS must use to fund its obligations
under the agreement. The agreement spans the life of the patents relating to
EchoGen. In addition, Abbott has purchased, for $4 million, warrants to acquire
500,000 shares of SONUS common stock, equal to about six percent (6%) of the
company's outstanding common stock. The warrants are exercisable over five years
at $16 per share. Abbott can acquire the rights to additional indications for
EchoGen by making additional clinical support payments.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements
Not Applicable
(b) Pro Forma Financial Information
Not Applicable
(c) Exhibits
<TABLE>
<CAPTION>
Number Description
------ -----------
<S> <C>
10.25 Agreement between Abbott Laboratories, Inc. and
SONUS Pharmaceuticals, Inc., dated May 14, 1996.
99.1 Press Release, dated May 15, 1996.
</TABLE>
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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 hereunto duly authorized.
SONUS PHARMACEUTICALS, INC.
Date: June 12, 1996 By: /s/ Gregory Sessler
--------------------------------------
Gregory Sessler,
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description Page No.
- - -------------- ----------- --------
<S> <C> <C>
10.25 Agreement between Abbott Laboratories,
Inc. and SONUS Pharmaceuticals, Inc.,
dated May 14, 1996.
99.1 Press Release, dated May 15, 1996.
</TABLE>
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AGREEMENT
BETWEEN
ABBOTT LABORATORIES
AND
SONUS PHARMACEUTICALS, INC.
<PAGE> 2
TABLE OF CONTENTS
ABBOTT LABORATORIES
AND
SONUS PHARMACEUTICALS, INC.
<TABLE>
<CAPTION>
Page
<S> <C>
1. DEFINITIONS................................................................................... 2
2. RESEARCH AND DEVELOPMENT...................................................................... 6
3. ALLOCATION OF PRODUCT RIGHTS AND RESPONSIBILITIES............................................. 8
4. CANADA AND LATIN AMERICA AND OTHER TERRITORIES................................................ 22
5. LICENSES...................................................................................... 23
6. LAUNCH BUDGETS; REIMBURSEMENT PAYMENTS........................................................ 24
7. REVENUE PAYMENTS.............................................................................. 26
8. WARRANT....................................................................................... 28
9. BUYOUT OPTION................................................................................. 28
10. RIGHT OF FIRST REFUSAL FOR ADDITIONAL PRODUCTS................................................ 29
11. REPRESENTATIONS AND WARRANTIES................................................................ 30
12. TERM AND TERMINATION.......................................................................... 32
13. INDEMNIFICATION............................................................................... 36
14. LIMITATION OF LIABILITY....................................................................... 37
15. CONFIDENTIAL INFORMATION...................................................................... 37
16. NON-COMPETE................................................................................... 39
17. FORCE MAJEURE................................................................................. 39
18. NOTICES....................................................................................... 40
19. ASSIGNMENT.................................................................................... 40
20. SUCCESSORS AND ASSIGNS........................................................................ 41
21. ALTERNATIVE DISPUTE RESOLUTION................................................................ 41
</TABLE>
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<TABLE>
<S> <C>
22. PUBLICITY..................................................................................... 42
23. RELATIONSHIP OF PARTIES....................................................................... 42
24. APPENDICES AND EXHIBITS....................................................................... 43
25. HEADINGS...................................................................................... 43
26. WAIVER........................................................................................ 43
27. SEVERABILITY.................................................................................. 43
28. ENTIRE AGREEMENT; AMENDMENT................................................................... 43
29. APPLICABLE LAW................................................................................ 44
30. COUNTERPARTS.................................................................................. 44
</TABLE>
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APPENDICES
INDICATIONS Appendix 1.6
LICENSED PATENTS Appendix 1.13
RESEARCH AND DEVELOPMENT PLAN Appendix 2.2
R&D PAYMENT SCHEDULE Appendix 2.3
NET SALES FORECAST Appendix 3.2B
SPECIFICATIONS Appendix 3.4
TRADEMARKS Appendix 3.9
ALTERNATIVE DISPUTE RESOLUTION Appendix 21
EXHIBITS
WARRANT CERTIFICATE FORM Exhibit A
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AGREEMENT
THIS AGREEMENT dated May 14, 1996 ("Effective Date"), by and between
Abbott Laboratories, an Illinois corporation with principal offices at 100
Abbott Park Road, Abbott Park, Illinois 60064-3500 ("ABBOTT") and SONUS
Pharmaceuticals, Inc., a Delaware corporation with principal offices at 22026
20th Avenue, S.E., Suite 102, Bothell, Washington 98021 ("SONUS").
RECITALS
WHEREAS, SONUS has developed and holds patents and patent applications
on an ultrasound contrast agent, trademarked "EchoGen"; and
WHEREAS, SONUS and ABBOTT have previously entered into a Development
and Supply Agreement, dated May 6, 1993 ("Supply Agreement"), whereby ABBOTT
assisted in the manufacturing scale-up of and agreed to manufacture the
ultrasound contrast agent for SONUS; and
WHEREAS, SONUS is currently conducting clinical studies for use in
obtaining Federal Food and Drug Administration approval of the ultrasound
contrast agent; and
WHEREAS, SONUS desires to grant, and ABBOTT desires to obtain, certain
exclusive marketing rights, subject to limited SONUS co-promotion rights, to the
ultrasound contrast agent in accordance with the terms and conditions of this
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants set forth below, ABBOTT and SONUS mutually agree as
follows:
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1. DEFINITIONS
In addition to the terms defined in the provisions of the Agreement,
the following terms shall have the meaning ascribed below:
1.1 "Affiliate" means any entity which controls, is controlled by or is
under common control with another entity. An entity is deemed to be in control
of another entity (controlled entity) if the former owns directly or indirectly
at least the lesser of (a) fifty percent (50%), or (b) the maximum percentage
allowed by law in the country of the controlled entity, of the outstanding
voting equity of the controlled entity.
1.2 "Agreement" means this Agreement, as may be amended, including all
Appendices and Exhibits attached hereto.
1.3 "Average Unit Selling Price" means Net Sales for a period divided
by the number of Units of Product shipped by ABBOTT and its Affiliates in the
Territory for the same period, less returned goods, inventory outdates, recalls
and/or withdrawals of Product.
1.4 "Confidential Information" means information disclosed in writing
by one party to the other pursuant to this Agreement and identified as
"CONFIDENTIAL" as well as information disclosed orally to the extent such oral
disclosure is reduced to writing and is identified as "CONFIDENTIAL" and which
is provided to the other party within thirty (30) days after oral disclosure.
"Confidential Information" does not include any of such information which:
(A) is known to the receiving party before receipt thereof
under this Agreement, or is independently developed by the receiving party
without recourse to the other party's Confidential Information, as evidenced by
the receiving party's written records;
(B) is disclosed to the receiving party without restriction
after full execution of this Agreement by a Third Party having a legal right to
make such disclosure; or
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(C) is or becomes part of the public domain through no breach
of this Agreement.
1.5 "FDA" means the United States Food and Drug Administration or any
successor entity thereto.
1.6 "Field" means diagnostic ultrasound pharmaceuticals for all current
and future markets for the indications set forth in Appendix 1.6, as such
indications are approved by the FDA.
1.7 "Finished Goods Inventory" means the Product inventory status
whereby the Product has completed production and testing procedures and is ready
for sale to Third Party customers.
1.8 "Finished Product" means Units of the Product tested and ready for
sale, either supplied to ABBOTT by SONUS, or manufactured by ABBOTT for SONUS.
1.9 "First Shipment Date" means the date of the first shipment of
Product by ABBOTT to a Third Party, as evidenced by an ABBOTT sales invoice
generated and sent to a Third Party, but in no event more than ninety (90) days
after FDA approval of the Product.
1.10 "GMP" means current good manufacturing practices as established by
the FDA and as practiced by the industry in which the parties operate.
1.11 "Improvements" means any and all developments, inventions or
discoveries in the Field relating to the Licensed Patents or Know-How and
developed, or acquired with the right to sublicense, by SONUS during the term of
this Agreement and shall include, but not be limited to, developments intended
to enhance the safety and efficacy of the Product.
1.12 "Know-How" means that proprietary technology of SONUS relating to
the Product including, but not limited to, manufacture or product techniques,
formulations or production technology, methods of synthesis or other processes.
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1.13 "Licensed Patents" means:
(A) the patents and patent applications set forth in Appendix
1.13 and any patents or patent applications covering the Product now owned or
hereafter acquired by SONUS or under which SONUS has the right to grant
sublicenses during the term of this Agreement in the Territory including any
covering Improvements;
(B) all patents arising from such applications identified in
(A) and any divisions, continuations, and continuations-in-part identified in
(A);
(C) any extension, renewal, re-examination or reissue of a
patent identified in (A) or (B).
1.14 "NDA" means an application filed with the FDA for approval by the
FDA of the sale of the Product in the United States of America, whether such
application is characterized as a New Drug Application or otherwise.
1.15 "Net Sales" means the gross sales of the Product in all of its
final packaged forms shipped by ABBOTT and its Affiliates in the Territory,
less:
(A) allowances and adjustments separately and actually
credited or payable, including credit for damaged, outdated and returned
products;
(B) trade discounts earned or granted;
(C) cash discounts actually allowed;
(D) transportation charges (including insurance costs),
handling charges, sales taxes, excise taxes and duties, and other similar
charges invoiced to customers;
(E) wholesaler chargebacks; and
(F) rebates and management fees earned or granted.
Net Sales shall be calculated in accordance with ABBOTT's standard
internal policies and procedures. Any discount, allowance, rebate, management
fee or wholesaler chargeback for the
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Product which is given to a customer due to the purchase of a product other than
the Product or due to the purchase of any service, shall not be taken into
consideration for the calculation of Net Sales.
1.16 "Product" means a colloidal dispersion ultrasound contrast agent
suitable for intravenous administration containing the active ingredient
dodecafluoropentane which is covered by one or more claims of the Licensed
Patents regardless of form, dose or package. Without limiting the generality of
the foregoing, "Product" shall include: (i) a complete product with kit,
including one or more vials of EchoGen(R) together with a kit including a
syringe, tubing and other accessories as may be included in the final package;
(ii) one or more vials of EchoGen(R) without any kit; and (iii) a kit only,
consisting of a syringe, tubing and other accessories as are included in the
final package, but not including any EchoGen(R).
1.17 "Supply Agreement" means the Contrast Agent Development and Supply
Agreement between ABBOTT and SONUS dated May 6, 1993, as amended and as may be
amended by the parties.
1.18 "Territory" means the continental United States, Alaska, Hawaii
and Puerto Rico, but does not include its other territories, commonwealths or
possessions.
1.19 "Third Party" means any individual, corporation, partnership,
trust or other business organization or entity, and any other recognized
organization other than the parties hereto and their Affiliates.
1.20 "Unit" means a single vial of the Product or a combination of a
single vial with a kit which is in final salable form.
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2. RESEARCH AND DEVELOPMENT
2.1 Responsibilities. SONUS shall use reasonable commercial best
efforts to carry out and perform the research and development to obtain prompt
FDA approval of the Product for use in the Field. SONUS shall be solely
responsible for all research and development, for clinical research, and for the
securing of regulatory approval of the Product in the Territory. SONUS shall use
its reasonable commercial best efforts to achieve each milestone of the Plan (as
defined below) and complete each phase of the research and development in order
to obtain FDA approval of the Product for marketing in the Territory.
2.2 Research and Development Plan. SONUS shall be responsible for
preparing a research and development plan to include all the necessary research,
development, clinical research and regulatory filings to support an NDA and
obtain FDA approval of the Product in the Territory. The research and
development plan and milestone timetable shall be attached to this Agreement as
Appendix 2.2 ("Plan"). Such Plan shall be updated quarterly by SONUS and SONUS
shall submit to ABBOTT a quarterly status report summarizing the completion or
phase of completion of each key milestone in the Plan. During the period of time
covered by the Plan, ABBOTT and SONUS shall meet at least quarterly at times and
places mutually agreed upon to discuss the status of the Plan.
2.3 Research and Development Payments. ABBOTT shall provide to SONUS
(A) thirty million dollars ($30,000,000) to support completion of the Plan,
including any related general needs by SONUS, and (B) one million dollars
($1,000,000) as payment for the grant of the licenses under the Licensed Patents
and Know-How in Article 5 and the trademark license in Section 3.9. These
payments shall be nonrefundable, shall be paid by ABBOTT to SONUS in the amounts
and at the times set forth on the schedule in Appendix 2.3. The quarterly
milestone
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payments set forth in Appendix 2.3 shall be paid to SONUS within fifteen (15)
days of receipt of the appropriate quarterly report described above in Section
2.2.
2.4 Additional Clinical Research. ABBOTT shall have no obligation to
provide financial support for research and development, including clinical
research, to be conducted by SONUS except for the amounts payable by ABBOTT as
set forth in Section 2.3 and Article 7. SONUS shall promptly notify ABBOTT in
writing if SONUS desires that ABBOTT fund expenditures for clinical research in
addition to that set forth in the Plan to support research and development for
ultrasound diagnostic applications for the following indications for the
Product: [*]. Such notice from SONUS shall include a budget for clinical
research and a preliminary clinical plan. ABBOTT shall communicate its
decision whether or not to financially participate in such clinical research
within ninety (90) days of receipt of the budget and clinical plan from SONUS.
ABBOTT shall be under no obligation to financially support such additional
clinical research. If ABBOTT desires to participate in such additional
clinical research, ABBOTT shall reimburse SONUS for its documented incremental
costs and expenses incurred associated with the additional clinical research
which are costs and expenses in excess of SONUS' budget for clinical research
as described in Sections 2.2 and 3.6 and which are mutually agreed by the
parties. In addition, the definition of the "Field" set forth in Section 1.6
shall be expanded to include the indication(s) funded by ABBOTT. SONUS shall
reimburse ABBOTT fifty percent (50%) of such costs and expenses funded by ABBOTT
by either, at the option of SONUS (i) reimbursing ABBOTT such costs and expenses
with interest at the prime rate of interest within five (5) years of the date
such costs and expenses are paid by ABBOTT, or (ii) reducing the percentage
amounts payable by ABBOTT to SONUS as provided in Article 7 at such dates and in
*Confidential Portions omitted and filed separately with the Commission.
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such amounts as is mutually agreed by the parties. If ABBOTT determines not
to provide additional financial support for such additional clinical research
and SONUS proceeds with the additional research and development, then the
parties shall negotiate in good faith to modify the percentage allocations of
Revenue Payments allocable to such additional indications under Section 7.1
below to reflect the amount of the expenditures to be made by SONUS for such
additional clinical research related to such additional indications, together
with such other factors as are appropriate. If the parties agree to a reasonable
modification of the percentage allocation of Revenue Payments as set forth
above, the definition of "Field" set forth in Section 1.6 shall be expanded to
include such additional indications. The provisions of this Section 2.4 shall
apply only with respect to the new indications for the Product specified above
and shall not apply to any new product which is subject to Section 10 below.
2.5 FDA Approval. If SONUS does not receive FDA approval to market the
Product within four (4) years of the date of the NDA filing, then ABBOTT may,
but does not have any obligation to, pursue such FDA approval of the Product. If
ABBOTT determines to pursue FDA approval, then SONUS shall promptly, upon
written request from ABBOTT, deliver to ABBOTT all NDA documentation, clinical
study data and supplies. ABBOTT may conduct any necessary research or clinical
studies to obtain such FDA approval of the Product. All reasonable costs
incurred by ABBOTT in pursuing such FDA approval shall be deducted from any
payments due SONUS under this Agreement.
3. ALLOCATION OF PRODUCT RIGHTS AND RESPONSIBILITIES
3.1 Premise. Under this Article 3, ABBOTT and SONUS agree to a division
of responsibilities regarding the Product and, under Article 7, accordingly
agree to a division of revenue generated by sales of the Product. If there is a
material change in the division of such responsibilities, whether by the
agreement of the parties or by operation of this Agreement, then
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the parties shall negotiate in good faith toward a corresponding change in the
division of revenue under Article 7.
3.2 Marketing and Sales.
(A) ABBOTT shall have the exclusive right and the associated
responsibilities for the marketing and sales of the Product in the Territory,
which shall include responsibility for distribution, order entry, invoicing and
collection regarding sales of the Product. ABBOTT shall use its reasonable
commercial best efforts to optimize sales, profitability, and market share in
the Territory. The efforts of ABBOTT shall be evidenced by carrying out those
specific tasks as mutually agreed to by the parties. ABBOTT shall prepare pre-
and post-launch marketing plans which shall be reviewed and approved by SONUS
prior to implementation, such approval not to be unreasonably withheld.
(B) SONUS shall have the right to co-promote (as defined
herein) the Product at its own expense in the Territory only under the following
circumstances:
(i) at any time after the first anniversary of the
First Shipment Date, if ABBOTT's Net Sales to Third Parties are below fifty
percent (50%) of the mutually agreed Net Sales forecast attached as Appendix
3.2B for any two consecutive quarters. SONUS shall notify ABBOTT in writing
within thirty (30) days of receipt of the applicable second quarterly Net Sales
report, as set forth in Section 7.1, of its intention to co-promote the Product.
SONUS' right to co-promote would be effective thirty (30) days after the date of
ABBOTT's receipt of notice from SONUS. If SONUS does not so inform ABBOTT, then
SONUS shall have waived its right to co-promote the Product with regard to that
specific failure of ABBOTT to meet its Net Sales forecast for such two (2)
consecutive quarters. The Net Sales forecast shall be adjusted as mutually
agreed by the parties to reflect the actual time that FDA approval is obtained
and the actual indications approved.
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(ii) at any time after the third anniversary of the
First Shipment Date, SONUS may, at its expense, co-promote and sell the Product
in the Territory in order to increase sales, profitability and market share
above the existing Net Sales forecast, for new indications, market segment
customers, or customer locations in a manner designed as complementary to
ABBOTT's sales and marketing efforts. All SONUS deployment and promotional plans
and budgets must be reviewed and approved by ABBOTT prior to implementation,
such approval not to be unreasonably withheld. SONUS shall notify ABBOTT in
writing ninety (90) days prior to commencing such co-promotion of the Product.
(iii) at any time for new indications or new market
segments for which ABBOTT has declined to support research, development or
clinical research after timely notice by SONUS as set forth in Section 2.4.
(C) SONUS' rights to co-promote the Product as set forth in
subsections 3.2(B)(i), (ii), and (iii) do not include the right of SONUS to
sublicense, transfer, or grant, directly or indirectly, such rights to a Third
Party except as set forth in Article 19. For purposes of this Agreement,
"co-promotion" means the detailing of the Product to a Third Party customer
including providing promotional materials and technical assistance but does not
include accepting sales orders. SONUS shall inform all such customers to place
all sales resulting from SONUS' co-promotion of the Product directly with ABBOTT
and provide the necessary sales processing information to the customer.
3.3 Raw Materials, Quality Control. SONUS shall be responsible for
procurement of all raw materials necessary for the manufacture of the Product as
well as quality control of the raw materials. SONUS shall handle raw materials
in accordance with the applicable provisions of the Supply Agreement.
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3.4 Product Manufacture.
(A) ABBOTT and SONUS have previously entered into the Supply
Agreement under which ABBOTT has agreed to manufacture the Product for SONUS.
SONUS may purchase Product under the Supply Agreement to fulfill ABBOTT's
purchase orders under Section 3.5. All manufacturing of the Product by ABBOTT
for sale in the Territory by ABBOTT shall be in accordance with the terms of the
Supply Agreement and the specifications for the Product in effect under the
Supply Agreement ("Specifications") attached hereto as Appendix 3.4. The parties
agree to negotiate in good faith an amendment to the Supply Agreement to include
within the terms of the Supply Agreement the purchase and sale of the kits
consisting of syringes, tubing and other accessories as are included in the
final package of the complete Product, including the pricing and other terms and
conditions of sale which are consistent with the Supply Agreement and the
general custom and practice within the industry regarding such materials.
(B) The Supply Agreement shall govern ABBOTT's manufacture of
all Product provided to SONUS for sale by SONUS outside the Territory and SONUS'
right to manufacture or have manufactured the Product by a Third Party. SONUS
shall give ABBOTT reasonable prior notice in writing if SONUS decides to
manufacture or have manufactured by a Third Party the Product for purchase by
ABBOTT under this Agreement. Upon such notice, ABBOTT and SONUS shall enter into
good faith negotiations to reach agreement on the terms and conditions for a
Third Party manufacturer for the Product to be purchased by ABBOTT.
(C) All Product manufactured by SONUS or by a Third Party
shall conform with the Specifications. Any Third Party manufacturer appointed by
SONUS to manufacture the Product must be approved by the FDA and have a
reasonable history and record of conforming with current GMP.
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(D) If any of the provisions of the Supply Agreement and this
Agreement are inconsistent, then the provisions of this Agreement shall control
for purposes of the manufacture and supply of Product subject to this Agreement.
3.5 Product Forecasts, Orders and Rejected Product.
(A) Not later than one hundred twenty (120) days prior to the
First Shipment Date, and thereafter, at least thirty (30) days prior to the
first day of each calendar quarter, ABBOTT shall furnish to SONUS a rolling
forecast of the quantities of the Product ABBOTT intends to order for sale in
the Territory during the twelve (12) month period commencing with that calendar
quarter. The first three (3) months of such forecast shall constitute a firm
order and a binding commitment of ABBOTT to purchase such quantities as
evidenced by purchase orders received from ABBOTT in accordance with Section
3.5(B). The balance of each such forecast shall merely represent reasonable
estimates, not purchase commitments for the Product.
(B) ABBOTT shall place each purchase order with SONUS for
Product to be delivered hereunder thirty (30) days prior to the delivery date
specified in each respective purchase order. SONUS may reject any purchase order
which exceeds one hundred fifty percent (150%) of the most current forecast
underlying such purchase order. No rejection shall be effective unless in
writing and delivered to ABBOTT within ten (10) days of SONUS' receipt of
ABBOTT's purchase order. ABBOTT shall be obligated to purchase all Product
ordered and delivered by the specified delivery date provided that, if Product
is manufactured by a Third Party manufacturer and not by ABBOTT, such Product
meets the Specifications.
(C) If the Product is manufactured solely by SONUS or a Third
Party and if SONUS is unable to meet its supply obligations under any purchase
order, then SONUS shall give prompt written notice to ABBOTT. In such event, if
SONUS fails, or notifies ABBOTT that it will fail, to supply any amount of
Product for a ninety (90) day period, then ABBOTT
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may (i) set up a manufacturing source, at the reasonable expense of SONUS, and
manufacture or have the Product manufactured by a Third Party at the reasonable
expense of SONUS for the time period of such failure or one hundred eighty (180)
days, whichever is longer, or (ii) terminate this Agreement in accordance with
Section 12.2(D). The rights of ABBOTT to terminate the Agreement pursuant to
this Section 3.5(C) will not apply if ABBOTT is in default of the Supply
Agreement, unless ABBOTT's default or inability to supply is directly or
indirectly due to SONUS, including, but not limited to, SONUS' failure to supply
raw materials to ABBOTT as required under the Supply Agreement and this
Agreement.
(D) If the Product is manufactured solely by ABBOTT and if
ABBOTT is unable to meet its supply obligations under any purchase order, then
ABBOTT shall give prompt written notice to SONUS. In such event, if ABBOTT
fails, or notifies SONUS that it will fail, to supply any amount of Product for
a ninety (90) day period, then SONUS may (i) set up a manufacturing source, at
the reasonable expense of ABBOTT, and manufacture or have the Product
manufactured, by a Third Party at the reasonable expense of ABBOTT for the time
period of such failure or one hundred eighty (180) days, whichever is longer, or
(ii) terminate this Agreement in accordance with Section 12.2(D).
Notwithstanding the foregoing, SONUS shall not have the right to terminate this
Agreement if the cause of ABBOTT's inability to supply is directly or indirectly
due to SONUS, including, but not limited to, SONUS' failure to supply raw
materials to ABBOTT as required under the Supply Agreement and this Agreement.
(E) If SONUS and ABBOTT are both manufacturing or otherwise
supplying Finished Product to ABBOTT for sale in the Territory and either ABBOTT
or SONUS ("Non- Performing Party") notifies the other party ("Other Party") that
the NonPerforming Party is unable to supply Product to the Other Party or either
fails to supply Product pursuant to this Section 3.5, and is unable to correct
such failure within ninety (90) days of written notice thereof
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from the Other Party, then the right of Non-Performing Party to manufacture or
otherwise supply Product to the Other Party under the Supply Agreement shall
cease until such time as the Non- Performing Party notifies the other that it is
again able to supply Product.
(F) For Product provided by SONUS to ABBOTT which SONUS has
sourced from a party other than ABBOTT, ABBOTT shall notify SONUS in writing of
any claim relating to damaged, defective or nonconforming Product or any
shortage in quantity of any shipment of Product within thirty (30) days of
receipt of such Product by ABBOTT. In the event of such rejection or shortage,
SONUS shall replace the rejected Product or make up the shortage within thirty
(30) days of receiving such notice, at no additional cost to ABBOTT, and shall
make arrangements with ABBOTT for the return of any rejected Product at the
expense of SONUS. For Products provided by SONUS to ABBOTT which SONUS has
sourced from ABBOTT, ABBOTT shall accept such Products as conforming upon
delivery to ABBOTT.
(G) In the event that SONUS is unable to provide raw material
under the Supply Agreement for a period of ninety (90) days or longer, then
ABBOTT shall have the right to purchase the raw materials from a Third Party at
SONUS' expense or manufacture the raw materials or have a Third Party
manufacture the raw materials at SONUS' expense.
3.6 Clinical Research, Regulatory Affairs, Technical Marketing/Medical
Support.
(A) SONUS shall be responsible for all ongoing product
development, clinical research and regulatory filings and affairs beyond the
responsibilities set forth in Section 2.3 in support of expanded label
indications in the Field. SONUS shall also be responsible for all FDA
communications, including review of promotional materials, and all FDA
requirements regarding the Product (except those communications and requirements
specifically associated with GMP applicable to the manufacture of the Product by
ABBOTT as addressed in the Supply Agreement). ABBOTT will forward all adverse
drug events to SONUS for handling by SONUS,
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including any required reporting to the FDA. Each party shall promptly notify
the other party of all communications from and to the FDA regarding the Product.
(B) SONUS shall be responsible for all medical and technical
support in the Field in the Territory, including those specific tasks mutually
agreed to by the parties. This support shall be designed to fit with the Product
positioning and ABBOTT's promotional plan.
3.7 Product Recalls. In the event (A) any government authority issues a
request, directive or order that the Product be recalled, or (B) a court of
competent jurisdiction orders such a recall, or (C) ABBOTT and SONUS, after
consultation with each other, determine that the Product should be recalled, the
parties shall take all appropriate corrective actions, and shall cooperate in
the investigations surrounding the recall. ABBOTT shall handle notification of
customers and return of Product from customers. SONUS shall handle all FDA
communications and requests regarding any recalls. If such recall results from
any cause or event arising from a sole responsibility of SONUS as set forth in
this Agreement or in the Supply Agreement or is solely attributable to SONUS,
SONUS shall be responsible for all expenses of the recall and ABBOTT may deduct
any such expenses borne by ABBOTT from any payment due to SONUS under this
Agreement. If such recall results from a sole responsibility of ABBOTT as set
forth in this Agreement or in the Supply Agreement or is solely attributable to
ABBOTT, ABBOTT shall be responsible for the expenses of recall and shall
reimburse SONUS for expenses incurred by SONUS for such recall. In the event
that the recall results from any cause(s) or event(s) arising from a joint
responsibility of the parties or partially from a responsibility of SONUS and
partially from a responsibility of ABBOTT, SONUS and ABBOTT shall be jointly
responsible for expenses of the recall in proportion to each such party's
proximate fault with respect to the recall. For the purpose of this Agreement,
the expenses of recall shall include, without limitation, the expenses of
notification and destruction or return of the recalled Product, cost for
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the Product recalled, legal expenses, inventory write-offs and penalties
resulting from third party contracts.
3.8 Patents.
(A) SONUS shall be responsible for and shall diligently carry
out and shall bear all costs (including attorney fees) for the preparation,
filing, prosecution, maintenance, and extensions, if any, of all patents or
patent applications under the Licensed Patents. In addition, SONUS shall
promptly advise ABBOTT of all material correspondence, filings and notices of
action between SONUS and the United States Patent and Trademark Office ("PTO")
concerning the Licensed Patents. If SONUS elects not to prepare and file a
patent application covering an Improvement referenced under Section 3.8(B) or
discontinues the prosecution of any patent application or maintenance of any
patent under the Licensed Patents, then SONUS shall promptly notify ABBOTT and
supply ABBOTT with copies of all written communications with the PTO. In the
event that ABBOTT reasonably determines that the failure of SONUS to pursue the
filing and prosecution of the patent application would adversely affect the
rights of ABBOTT under this Agreement, ABBOTT may, but does not have the
obligation to, file or continue prosecution of such application or maintain such
patent at its own expense. If ABBOTT so elects, then SONUS shall be responsible
for the reasonable costs incurred by ABBOTT in connection with such filing or
prosecution and shall promptly reimburse ABBOTT for such costs upon notice by
ABBOTT.
(B) SONUS shall promptly notify ABBOTT of any Improvements and
of any efforts by SONUS to patent Improvements in the Territory including, but
not limited to designation of the countries in which any patent application in
respect thereof is to be filed. Any patent application in respect of such
Improvement and any patent issued therefrom shall become part of the Licensed
Patents and Appendix 1.13 shall be modified to reflect the addition to Licensed
Patents. If any Improvement is not patented, it shall become part of the
Know-How.
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(C) If either ABBOTT or SONUS has knowledge of any
infringement or likely infringement of a Licensed Patent or unauthorized use of
Know-How in the Territory, then the party having such knowledge shall promptly
inform the other party in writing, and the parties shall promptly consult with
one another regarding the action to be taken. Unless the parties otherwise
mutually agree, SONUS shall prosecute such suit, and each party shall cooperate
with the other party in the prosecution thereof and SONUS shall have the right
to determine the strategy of the prosecution of such suit. Notwithstanding the
foregoing, if ABBOTT is participating in the prosecution, ABBOTT shall be
entitled to have input in the strategy of prosecution. SONUS shall have the
right to determine the counsel to be retained by the parties in connection with
such action or claim, which counsel shall be reasonably satisfactory to ABBOTT.
SONUS may seek the assistance and participation of ABBOTT in the action or
claim. If SONUS requests ABBOTT's participation, (i) ABBOTT shall participate in
the prosecution if the action or claim involves an infringement by a Third
Party's product, or potential product, which substantially falls within the
definition of Product in Section 1.16, and (ii) ABBOTT may participate if ABBOTT
determines that it would be in ABBOTT's interests to participate if the action
or claim does not directly involve an infringement by a Third Party's product,
or potential product, which substantially falls within the definition of Product
in Section 1.16. Notwithstanding the foregoing, in the event that the action or
claim involves an infringement by a Third Party's product, or potential product,
which substantially falls within the definition of Product in Section 1.16,
ABBOTT shall have the right to participate, on an equal basis with SONUS, in the
prosecution of such action or claim. If SONUS prosecutes such claim without the
participation of ABBOTT, the costs and expenses incurred in connection with such
action or claim shall be borne by SONUS. However, if Abbott participates in the
action or claim, the costs and expenses incurred in connection with such action
or claim shall be shared equally by
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SONUS and ABBOTT. If ABBOTT does not participate in the prosecution of the
action or claim, or unless otherwise provided in this Section 3.8(C), any offer
of settlement and any settlement shall be in SONUS' discretion, provided that
any offer of settlement or settlement does not conflict with licenses granted
under Article 5. If ABBOTT participates in the prosecution of the action or
claim and/or if the action or claim involves an infringement by a Third Party's
product, or potential product, which substantially falls within the definition
of Product in Section 1.16, any offer of settlement and any settlement shall be
subject to the prior approval of both ABBOTT and SONUS. Each party agrees not to
unreasonably withhold its approval of any such settlement. If ABBOTT does not
participate in the prosecution of the action or claim, any recovery of damages
or other payments received in connection with such action or claim shall be
realized by SONUS. However, any recovery of damages or other payments received
in connection with such action for which ABBOTT participates in the prosecution
shall be allocated between and disbursed to ABBOTT and SONUS as follows: (i)
first, to reimburse ABBOTT and SONUS for their respective costs and expenses
incurred in connection with such action, and (ii) the balance of recovery or
other payments to be divided equally between ABBOTT and SONUS. In the event that
the recovery of damages is not sufficient to cover costs and expenses incurred
by the parties in connection with such action, each party shall be reimbursed on
a pro rata basis according to each party's percentage of the total costs and
expenses incurred by the parties together. ABBOTT may, but does not have the
obligation to, participate in the prosecution of any infringement action outside
the Territory. However, if ABBOTT does participate in any action and prosecution
outside the Territory, ABBOTT shall be entitled to share in the proceeds or
recovery of damages or other payments received in connection with such action
outside the Territory. Such amounts shall be allocated between and disbursed to
ABBOTT and SONUS as follows: (i) first, to reimburse ABBOTT for ABBOTT's costs
and expenses
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<PAGE> 23
incurred in connection with such action, (ii) second, to reimburse SONUS for
SONUS' costs and expenses incurred in connection with such action, and (iii) the
balance of recovery or other payments to be divided equally between ABBOTT and
SONUS.
(D) If a claim or suit is brought against ABBOTT alleging: (i)
infringement of any patent or unauthorized use of any Know-How owned by a Third
Party by reason of ABBOTT's exercise of its licenses hereunder; or (ii) an
interest in any patent under the Licensed Patents, ABBOTT shall promptly give
written notice to SONUS. SONUS, within a reasonable time after such notice, but
not longer than sixty (60) days, shall advise ABBOTT of SONUS' decision on the
intended disposition of such claim or suit. If SONUS elects not to dispose of
the claim or defend the suit, ABBOTT may do so. The parties will furnish each
other with reasonable assistance regarding such claim or suit as may be
requested by the other party. Any offer of settlement or settlement of the claim
or suit by one party shall have the prior written approval of the other party,
such approval not to be unreasonably withheld. ABBOTT shall have the right to
settle such claim or suit by payment in any form. If any amounts are paid or
payable to a Third Party by ABBOTT or any damages and/or costs are awarded
against ABBOTT in such suit, then at the time of payment, such amounts, damages
and costs may be off set against any Revenue Payment due in such year or,
necessary, in succeeding years to SONUS.
3.9 Trademarks
(A) Grant of License. SONUS hereby grants to ABBOTT a
non-exclusive license (the "Trademark License") in the Territory to use the
SONUS trademarks) set forth in Appendix 3.9 on all labels, advertisements,
promotional materials and literature for the Product.
(B) Reservation of Rights. SONUS expressly reserves the right
to use and license third parties to use the SONUS trademark(s) in a manner not
inconsistent with this Agreement.
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(C) Acknowledgement. ABBOTT acknowledges that the SONUS
trademark(s) are owned exclusively by SONUS and that ABBOTT has no right, title
or interest in and to the SONUS trademark(s), except the rights conferred by
this Agreement and that all goodwill associated with the SONUS trademark(s)
inures to the benefit of SONUS.
(D) Registration. SONUS agrees to maintain the SONUS
trademark(s) in the United States at its own expense including the preparation
and recordation of registered user agreements and/or licenses necessary or
reasonably deemed necessary by ABBOTT in order to comply with local laws.
(E) Use of Trademark(s). The Products shall bear the trademark
EchoGen(R) or such other trademarks as mutually agreed to by the parties. ABBOTT
shall at all times properly use the SONUS trademark(s) to indicate brand names
by using the SONUS trademark(s) in conjunction with the common name for the
Product, e.g. "ECHOGEN(R) emulsion." However, in written copy or package inserts
ABBOTT may display, where appropriate, the symbol and common name at the first
or most prominent reference to the trademark. The trademark registration symbol
"(R)" or "(TM)" shall be used to indicate registration status. Wherever the
SONUS trademark(s) are used, attribution shall be given to SONUS
Pharmaceuticals, Inc. as the owner of the SONUS trademark(s) at least once per
publication as used in the public domain.
(F) Infringements. ABBOTT shall promptly call to the attention
of SONUS the use by any Third Party of the SONUS trademark(s) or any trademark
similar to the mark covered by this Agreement, of which it may become aware and
which it may consider to be an infringement or passing off of the SONUS
trademark(s) or unfair competition. SONUS shall have the right to decide whether
or not to bring proceedings against Third Parties. Such proceedings shall be at
the expense of SONUS. ABBOTT shall cooperate fully with SONUS to whatever extent
is deemed reasonably necessary by SONUS to prosecute such action. In the
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<PAGE> 25
event that SONUS recovers damages from prosecution of such action, SONUS shall
retain amounts received for such damages except that ABBOTT shall be entitled to
reimbursement of its costs, expenses, and attorneys' fees attributable to such
action. SONUS shall not settle or compromise any suit for infringement without
the express approval of ABBOTT, such approval not to be unreasonably withheld.
In the event SONUS decides not to prosecute, and ABBOTT reasonably determines
that the failure to prosecute would adversely affect the rights of ABBOTT under
this Agreement, ABBOTT shall have the right, but not the obligation, to
prosecute such action at its own expense. SONUS shall cooperate fully with
ABBOTT to whatever extent is deemed reasonably necessary by ABBOTT to prosecute
such action. In the event that ABBOTT recovers damages from prosecution of such
action, ABBOTT shall retain amounts received for such damages except that SONUS
shall be entitled to reimbursement of its costs, expenses, and attorneys' fees
attributable to such action. ABBOTT shall not settle or compromise any suit for
infringement without the express approval of SONUS.
(G) Term. The initial term of this Trademark License shall be
the Term specified in Article 12 of this Agreement. Upon expiration of such
Term, ABBOTT shall have a right to renew the Trademark License at a mutually
agreeable reasonable royalty rate.
(H) Termination. Upon termination of this Agreement, ABBOTT
shall discontinue all use of the SONUS trademark(s) and shall not thereafter
adopt a mark which is confusingly similar.
(I) Copies. Within ten (10) days after the Effective Date,
SONUS shall provide ABBOTT photocopies of its applicable trademarks
applications/registrations in the Territory.
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4. CANADA AND LATIN AMERICA AND OTHER TERRITORIES
4.1 Canada and Latin America. If SONUS receives a bona fide offer from
a Third Party for the right to market and sell the Product in Canada and/or
Latin America prior to December 31, 1996, then within a reasonable time, not to
exceed sixty (60), SONUS shall give written notice to ABBOTT of the details of
the offer and ABBOTT shall have the opportunity to meet, or offer terms more
favorable than, such Third Party offer within sixty (60) days of such notice. If
either (A) ABBOTT meets or offers terms more favorable than such Third Party
offer and SONUS fails to enter into an agreement with ABBOTT with respect to
such marketing rights, or (B) whether or not there is a Third Party offer, the
parties do not enter into a binding commitment for ABBOTT to acquire marketing
rights in Canada and/or Latin America prior to December 31, 1996, then the
payment in Appendix 2.3 due to SONUS upon First Shipment Date shall be decreased
by[*]. SONUS may, at its option, substitute for the decreased payment warrants
to purchase 125,000 shares of common stock of SONUS, subject to adjustment as
set forth in the Warrant evidenced by a warrant certificate substantially in the
form of Exhibit A ("Warrant") for shares of SONUS common stock, such Warrant
based on the warrant exercise price equal to the volume weighted average price
for the ten (10) trading days prior to the date SONUS executes a definitive
agreement with a Third Party for marketing rights as set forth in this provision
or December 31, 1996, whichever is earlier. SONUS shall notify ABBOTT of which
option it chooses no later than December 31, 1996. The warrant shall be issued
as of the date of the determination of the warrant price as set forth above.
Anything in the foregoing to the contrary notwithstanding, in the event that
prior to December 31, 1996, SONUS should receive a bona fide offer from a Third
Party for marketing rights in Canada and/or Latin America and ABBOTT shall have
failed to meet or offer more favorable terms as provided above, then SONUS shall
not be subject to a reduced fee upon First Shipment or have an
*Confidential Portions omitted and filed separately with the Commission.
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obligation to issue any warrants as provided herein. For purposes of this
Agreement, Latin America shall include South America, Central America, Mexico,
and the Caribbean (including possessions or territories of the United States,
France, the United Kingdom and the Netherlands).
4.2 Other Territories. If SONUS receives a bona fide offer from a Third
Party for the right to market and sell the Product in areas or countries other
than the Territory, Canada, Latin America or areas or countries which are
covered by the Agreement dated March 31, 1995 between SONUS and Daiichi
Pharmaceuticals, Ltd. or the Agreement dated October 27, 1994 between SONUS and
Guerbet S.A. (collectively, the "Prior Agreements"), then within a reasonable
time, not to exceed sixty (60) days, SONUS shall give written notice to ABBOTT
of the details of the offer and ABBOTT shall have the opportunity to meet, or
offer terms more favorable than, such Third Party offer within sixty (60) days
of such notice. If ABBOTT meets or offers terms more favorable to SONUS, ABBOTT
and SONUS shall negotiate and enter into an agreement on such terms together
with such other terms as are substantially the same terms of this Agreement for
such areas or countries. Furthermore, in the event that any areas or countries
covered under a Prior Agreement are no longer covered under a Prior Agreement,
SONUS shall within sixty (60) days notify ABBOTT and facilitate discussions with
ABBOTT regarding ABBOTT acquiring marketing rights for the Products in such
areas or countries.
4.3 Co-Promotion. ABBOTT and SONUS agree to consider and discuss, and
if requested by ABBOTT, SONUS shall introduce the concept with the parties
contracting with SONUS under the Prior Agreements to consider and discuss,
opportunities for ABBOTT to co- promote the Product in areas or counties covered
by the Prior Agreements.
5. LICENSES
(A) SONUS hereby grants to ABBOTT a royalty-free exclusive
license, exclusive even as to SONUS. with the right to sublicense, under the
Licensed Patents and Know-
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How to use, offer to sell and sell the Product in the Field in the Territory
subject to SONUS' co- promotion rights pursuant to Section 3.2(B). The right to
sublicense to a Third Party shall be subject to the approval of SONUS, such
approval not to be unreasonably withheld.
(B) SONUS hereby grants to ABBOTT a royalty-free nonexclusive
license, with the right to sublicense, under the Licensed Patents and Know-How
to make, have made, and import the Product for the Field in the Territory,
subject to the limitations set forth in Section 3.5(B). The right to sublicense
to a Third Party shall be subject to the approval of SONUS, such approval not to
be unreasonably withheld.
(C) ABBOTT's licenses hereunder shall become paid-up upon
ABBOTT tendering to SONUS all payments due pursuant to Appendix 2.3.
6. LAUNCH BUDGETS; REIMBURSEMENT PAYMENTS
6.1 Launch Budgets. ABBOTT and SONUS shall each prepare separate pro
forma launch budgets to cover their respective expenses associated with and
incurred after the launch of the Product which shall be mutually approved by the
parties. Within thirty (30) days of FDA Advisory Panel approval, ABBOTT and
SONUS will meet to review and, if appropriate and mutually agreeable, update
such launch budgets for the period for which Launch Budget Reimbursement
Payments may be required as set forth in Section 6.2. The parties will
thereafter meet quarterly during this period to review and, if appropriate and
mutually agreeable, update such budgets. Each party's launch budget shall
include the expense line items and allocation of the expense items between
ABBOTT and SONUS.
6.2 Launch Budget Reimbursement Payments. Each quarter following the
First Shipment Date and until either the second anniversary of the First
Shipment Date or the achievement of Net Sales of Product in the Territory of at
least twenty-five million dollars ($25,000,000) in each of two consecutive
quarters, whichever comes first, one party shall pay to
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<PAGE> 29
the other party an amount equal to fifty percent (50%) of the excess budget
launch expenses of one party over the budget launch expenses of the other party
for the same period (e.g. if ABBOTT has budget launch expenses of [ * ]
and SONUS has budget launch expenses of [ * ] in the first twelve (12)
months Product sales, the amount to be paid by SONUS is [ * ] x 50% or [ * ]).
The payment will be made within sixty (60) days of the end of each calendar
quarter for the period the launch expenses are incurred. In the case of
payment to be made by SONUS, the amounts payable shall be offset against
payments to be made by ABBOTT to SONUS as set forth in Article 7. In the case of
payments to be made by ABBOTT, the payments will be made by wire transfer. Each
party shall supply to the other party all wire transfer account information.
6.3 Loss Carry Forward. If a Launch Budget Reimbursement Payment as
calculated in Section 6.2 is to be made by SONUS to ABBOTT and such Launch
Budget Reimbursement Payment has not been fully paid by SONUS to ABBOTT by the
expiration of twenty-four (24) months following the First Shipment Date, or the
achievement of Net Sales of Product in the Territory of at least twenty-five
million dollars ($25,000,000) in each of two (2) consecutive quarters, whichever
should first occur, then the unpaid amount shall be carried forward and offset
against Revenue Payments for subsequent quarters until such time as the entire
Launch Budget Reimbursement Payment has been paid or credited to ABBOTT.
7. REVENUE PAYMENTS
7.1 Calculation of Revenue Payments. Following the First Shipment Date,
ABBOTT shall pay SONUS an amount as calculated in the following formula
("Revenue Payment").
Revenue = 47% x Units of Finished Product x Average Unit Selling Price
Payment accepted by ABBOTT into from prior Quarter
Finished Goods Inventory
Less: returned goods,
Inventory outdates, recalls
and/or withdrawals
* Confidential Portions omitted and filed separately with the Commission.
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For the first quarter following the First Shipment date, the estimated
Average Unit Selling Price shall be communicated to SONUS on or before ninety
(90) days prior to the First Shipment Date. The Revenue Payment for any quarter
shall be paid within thirty (30) days after the end of each such calendar
quarter or ninety (90) days after the Finished Product is placed in Finished
Goods Inventory, whichever is earlier. The payment will be made by wire
transfer. SONUS shall supply to ABBOTT all wire transfer account information. At
the time of the wire transfer, ABBOTT shall send to SONUS by electronic-mail,
facsimile or overnight courier, a report to SONUS setting forth the calculation
used to determine the Revenue Payment, including launch budget reimbursement
payments.
7.2 SONUS Co-promotion. If SONUS is co-promoting the Product in the
Territory pursuant to Section 3.2(B), all sales of Product by SONUS shall be
credited to ABBOTT and included in gross sales for purposes of the Revenue
Payment calculation. In the event that SONUS is co-promoting the Product under
3.2(B)(iii), the Revenue Payments due by ABBOTT to SONUS under Article 7 shall
be adjusted to reflect SONUS' additional contribution at such time and in such
amount as the parties mutually agree.
7.3 Records and Audit. ABBOTT and SONUS shall keep and maintain records
of sales made and expenses incurred pursuant to this Agreement. On a monthly
basis, ABBOTT shall provide SONUS with records of sales of Units by list numbers
consistent with ABBOTT's other products of a similar nature in the normal course
of business. On a quarterly basis, ABBOTT shall provide SONUS with reports
reconciling sales of Products with discounts and other deductions to support Net
Sales figures. Such records shall be kept for a period of four (4) years after
the sales period to which such records relate. During this period, such records
shall be open to inspection upon reasonable written notice by one party to the
other. Such inspection shall be performed by a nationally recognized independent
certified public accountant selected by
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the requesting party and approved by the other party, which approval shall not
be unreasonably withheld. All expenses of such inspection shall be borne by the
requesting party. However, (i) if an inspection initiated by SONUS reveals that
payments to SONUS have been understated by five percent (5%) or more, and if
such understatement is greater than $25,000, ABBOTT shall pay the cost of
inspection, the understated amount and interest at the prime rate of interest on
the understated amount, and (ii) if an inspection initiated by ABBOTT reveals
that figures reported by SONUS to ABBOTT have been understated by five percent
(5%) or more and if such understatement is greater than $25,000, SONUS shall pay
the cost of inspection, the understated amount and interest at the prime rate of
interest on the understated amount. Any independent certified public accountant
engaged by either party shall sign a confidentiality agreement prior to any
audit and shall then have the right to examine the records kept pursuant to this
Agreement and report findings (but not the underlying data) of the examination
to the requesting party as is necessary to evidence that records were or were
not maintained and used in accordance with this Agreement. A copy of any report
provided to the requesting party by the independent certified public accountant
shall be given concurrently to the other party.
8. WARRANT
8.1 Purchase. ABBOTT shall concurrently herewith purchase, and SONUS
agrees to sell and issue, at ABBOTT's request, warrants evidenced by a warrant
certificate substantially in the form of Exhibit A ("Warrant"), for five hundred
thousand (500,000) shares of SONUS' common stock at an exercise price equal to
sixteen dollars ($16.00) per share subject to adjustments as set forth in the
Warrant. The Warrant shall be priced at eight dollars ($8.00) per share, which
price per share will be paid concurrently with the issuance of the Warrant. The
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Warrant shall be exercisable at any time after receipt by ABBOTT for a period
of five (5) years from the date of ABBOTT's receipt of the Warrant.
8.2 Registration Rights. SONUS shall, prior to or on the Effective
Date, cause be amended the Sonus Pharmaceuticals, Inc. Amended and Restated
Registration Rights Agreement dated November 23, 1994, as amended ("Registration
Rights Agreement"), to include ABBOTT as a "Holder" thereunder and include the
shares of common stock issuable upon exercise of the Warrant as "Registrable
Securities," as the terms "Holder" and "Registrable Securities" are defined in
the Registration Rights Agreement. In the event that SONUS is unable to cause
such amendment prior to the Effective Date, Sonus shall cause such amendment
within thirty (30) days of the Effective Date.
8.3 Prohibition. With the exception of the purchase under Section 8.1,
ABBOTT, and its Affiliates for the term of this Agreement, shall not, without
the prior written consent of SONUS, acquire or agree to acquire, by purchase or
otherwise, any voting securities of SONUS or any subsidiary of SONUS.
9. BUYOUT OPTION
It is the intent of the parties to provide for a buyout of this
Agreement by one party from the other subject to the mutual agreement of the
parties. On the sixth (6th), ninth (9th), and twelfth (12th) anniversary of the
Effective Date, either party may give written notice to the other party of its
interest in buying out the other party's rights and obligations under this
Agreement. If both parties agree, a process will be established whereby either
party may buy out the rights and obligations of the other party in the Territory
at a price equal to or greater than the net present value of the projected net
profit before tax, discounted at fifteen percent (15%) for the remaining term of
the Agreement ("Option Price"). If both parties desire to exercise the buyout
and ABBOTT and SONUS do agree on the Option Price, then the representatives of
ABBOTT
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and SONUS shall meet and simultaneously exchange closed bids, which bids shall
be opened in the presence of both representatives. If both parties agree, the
higher bid shall prevail. If the parties mutually agree that the buyout is to
take place, the parties shall enter into an agreement that sets forth the
timetable and process for the orderly transfer of such rights. If both parties
do not agree on the calculation of the buyout price or do not agree on the
transfer of rights and terms of the buyout, then the buyout shall not take place
and notwithstanding anything else in this Article, the buyout option will not be
effective again during the remaining term of this Agreement.
10. RIGHT OF FIRST REFUSAL FOR ADDITIONAL PRODUCTS
In the event SONUS desires to grant any license to market or distribute
to a Third Party, any ultrasound diagnostic imaging products for the Field and
in the Territory which are not covered by the license set forth in Section 5 or
the terms of Section 2.4 and which are the proprietary technology of SONUS
including, but not limited to those technologies commonly referred to as
PhaseShift(TM) and High-Q Factor(TM), then ABBOTT shall have a right of first
refusal with respect to the license or sale of such product in the Field and in
the Territory. If SONUS desires to solicit offers from Third Parties to market
and sell such product for the Field in the Territory, then SONUS shall promptly
give written notice to ABBOTT. Within thirty (30) days of such notice, ABBOTT
shall indicate whether or not it is interested in such product. If ABBOTT is
interested, SONUS and ABBOTT shall negotiate in good faith for a maximum of
sixty (60) days to mutually determine the material terms of a definitive
agreement regarding such product. If ABBOTT and SONUS do not reach such
agreement, but during the negotiation period, ABBOTT offered in writing economic
terms which were rejected by SONUS, and during the term of this Agreement SONUS
subsequently solicits and receives a bona fide Third Party offer on the same or
less favorable economic terms considered as a whole than those offered by
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ABBOTT, then SONUS shall promptly notify ABBOTT in writing. ABBOTT then may
offer to meet such terms within forty-five (45) days from such notice. The
parties will then negotiate in good faith towards a definitive agreement for the
product. If ABBOTT does not offer to meet such terms within such forty-five (45)
day period, then ABBOTT shall have no further rights under this Section 9 with
respect to such product. Nothing herein shall restrict SONUS from itself
marketing, selling or distributing any such product.
11. REPRESENTATIONS AND WARRANTIES
11.1 SONUS hereby represents and warrants that:
(A) SONUS has the full right, power and corporate authority to
enter into this Agreement, and to make the promises and grant the licenses set
forth in this Agreement and that there are no outstanding agreements,
assignments or encumbrances in existence inconsistent with the provisions of
this Agreement.
(B) To the best knowledge of SONUS, the Licensed Patents have
not or will not be obtained through any activity, omission or representation
that would limit or destroy the validity of the Licensed Patents and SONUS has
no knowledge or information that would materially adversely impact on or affect
the validity and/or enforceability of the Licensed Patents.
(C) There are no actions threatened or pending before any
court or governmental agency or other tribunal other than the PTO relating to
the Licensed Patents or Know-How.
(D) SONUS has not authorized and will not during the term of
this Agreement authorize Third Parties to practice the Licensed Patents or the
Know-How in the Field in the Territory or otherwise grant rights or licenses to
market and sell the Product in the Field in the Territory, other than as may be
granted in any patent infringement settlement as permitted pursuant to the terms
of Section 3.8(C).
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<PAGE> 35
(E) No Third Party has acquired, owns or possesses any right,
title or interest in or to the Licensed Patents or Know-How in the Field in the
Territory.
11.2 ABBOTT hereby represents and warrants that:
(A) ABBOTT has the full right, power and corporate authority
to enter into is Agreement and to make the promises set forth in this Agreement
and that there are no outstanding agreements, assignments or encumbrances in
existence inconsistent with the provisions of this Agreement.
(B) ABBOTT is an "accredited investor" within the meaning of
Rule 501 under the Securities Act of 1933, as amended (the "Act") and hereby
certifies that all shares of common stock in SONUS purchased or to be purchased
by it pursuant to the exercise of the Warrants set forth in Articles 4 and 8 are
being, or are to be, acquired by it for investment, and not with a view to the
distribution thereof. Further, ABBOTT understands that the common stock to be
purchased pursuant to the exercise of such Warrants will be "restricted
securities" and may not be sold, transferred or otherwise disposed of without
registration under the Act, or an exemption therefrom, and that in the absence
of an effective registration statement, or an available exemption from
registration under the Act, the common stock must be held indefinitely.
12. TERM AND TERMINATION
12.1 Term. The term of this Agreement shall commence on the Effective
Date, and unless sooner terminated pursuant to Section 12.2 or Article 9, and
shall continue in effect until the last to expire of the patents under the
Licensed Patents or end of the life of the branded Product, whichever is longer.
The "life of the branded Product" shall be defined as the time period ending
three (3) months after FDA approval of the first generic form of the Product to
be marketed by a Third Party in the Territory. Upon expiration of the term of
this Agreement
31
<PAGE> 36
pursuant to this Section 12.1 ABBOTT shall have a fully paid up, irrevocable and
non-exclusive license under the Know-How.
12.2 Early Termination. This Agreement may be terminated in accordance
with the following provisions:
(A) Surrender. In whole or in part by ABBOTT's surrender and
termination of the licenses and rights granted hereunder at any time upon one
(1) year prior written notice to SONUS.
(B) Insolvency. By notice by either party to the other party
upon (i) the insolvency of the other party, or the appointment of a receiver by
the other party for all or any substantial part of its properties, provided that
such receiver is not discharged within sixty (60) days of his appointment; (ii)
the adjudication of the other party as a bankrupt; (iii) the admission by the
other party in writing of its inability to generally pay its debts as they
become due; (iv) the execution by the other party of an assignment for the
benefit of its creditors; or (v) the filing by the other party of a petition to
be adjudged a bankrupt, or a petition or answer admitting the material
allegations of a petition filed against the other party in any bankruptcy
proceeding, or the act of the other party in instituting or voluntarily being or
becoming a party to any other
judicial proceeding intended to effect a discharge of the debts of the other
party, in whole or in substantial part.
(C) Product Failure. If the Product is found to be not safe or
efficacious by ABBOTT, then ABBOTT may terminate this Agreement upon thirty (30)
days written notice to SONUS, subject to applicable indemnification as set forth
in Section 13.1.
(D) Supply Failure. In the event of failure to supply Product,
the provisions of Section 3.5 shall apply. Any termination under Section 3.5
shall be subject to the provisions of Section 12.3(E).
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<PAGE> 37
(E) Default. Except as provided in Section 12.2 and Section
17.1, the rights set forth in this Article 12 to terminate this Agreement and to
terminate the licenses granted hereunder are the only such rights of the parties
to take such actions under this Agreement. If either party believes that the
other party has committed a breach of any material provision of this Agreement,
the following shall apply:
(i) If the other party has failed to remedy such
breach within ninety (90) days after the receipt of notice in writing of such
breach from the nonbreaching party, then the nonbreaching party may submit the
issue of whether the other party has committed a breach of any material
provision hereunder for resolution in accordance with the procedure set forth in
Article 21 (Alternative Dispute Resolution); and
(ii) If the neutral person (as set forth in Article
21) in accordance with the procedures set forth in Article 21 renders a ruling
that the breaching party has materially breached the Agreement; and
(iii) If the breaching party has materially failed to
comply with the terms of such ruling within the time period specified therein
for compliance or, if no time period is stated, then the nonbreaching party has
served notice upon the breaching party to undertake the actions specified to
comply with the terms of the ruling and the breaching party has materially
failed, within thirty (30) days of such notice with regard to payment
obligations and within ninety (90) days of such notice with regard to other
obligations, to undertake such action; then the nonbreaching party shall have
the right to terminate this Agreement by delivering written notice to the
breaching party within thirty (30) days after expiration of the applicable
period under Section 12.2(E)(iii).
(iv) In the event that ABBOTT is the non-breaching
party, in lieu of terminating the Agreement, ABBOTT may proceed under Section
12.4.
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12.3 Consequences of Expiration or Early Termination: Survival.
(A) Upon expiration or early termination, including that set
forth in Section 12.2(A), SONUS shall retain ownership of all regulatory filings
or approvals, clinical data and all other data developed by SONUS in the
Territory; ABBOTT shall retain ownership of all data developed solely by ABBOTT
in the Territory. In the event of surrender or early termination, ABBOTT shall
make no further use of the Licensed Patents or Know-How within the Territory.
Upon expiration or termination, any sublicenses granted under such licenses
shall be terminated. Expiration or early termination of the Agreement shall not
effect the Supply Agreement, which shall main effective as to its terms.
(B) If this Agreement is terminated in part or in whole by
ABBOTT under Section 12.2, then SONUS, at ABBOTT's option, shall repurchase all
remaining Product which is reasonably resalable from ABBOTT at ABBOTT's cost,
unless otherwise mutually agreed by the parties, within thirty (30) days of
termination.
(C) If the Agreement is terminated under Section 12.2(B), then
the parties shall have the rights as set forth in those bankruptcy statutes, as
may be amended at the time of such termination, governing intellectual property
rights of licensors and licensees, as appropriate, in a bankruptcy proceeding.
(D) If this Agreement is terminated by either party for any
reason, then ABBOTT's exclusive license hereunder shall terminate, SONUS shall
repurchase the remaining Product which is reasonably resalable from ABBOTT at
ABBOTT's cost, unless otherwise mutually agreed by the parties within thirty
(30) days of termination and neither party will have any further liability to
the other except as set forth in Section 12.3(E). If this Agreement is
terminated by either party under Section 12.2(D) or 12.2(E) due to breach of the
provisions of this Agreement, then the non-breaching party may seek damages for
breach from the breaching
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<PAGE> 39
party. If the breach is a breach a representation or warranty set forth in
Article 11, then the non- breaching party shall also have the remedy set forth
in Article 13. Neither party shall have any further liability to the other
except as set forth in Section 12.3(E) and this Section.
(E) Expiration or early termination of this Agreement shall
not relieve either party of its obligations incurred prior to expiration or
early termination. The obligations under Article 22 (Publicity); Article 21
(Alternative Dispute Resolution); Article 19 (Assignment); Article 15
(Confidential Information); Article 14 (Limitation of Liability); Article 13
(Indemnification); and Article 11 (Representations and Warranties) shall survive
expiration or early termination of this Agreement or of any extensions thereof.
12.4 ABBOTT Right to Continue. Notwithstanding the foregoing, in the
event of default by SONUS under Section 12.2(E), then ABBOTT may, at ABBOTT's
option (i) seek damages for breach by SONUS and continue to operate under the
Agreement and keep the Agreement in effect, in which case ABBOTT shall have the
right, but not the obligation, to assume any and all responsibilities of SONUS
as set forth under Article 3 and be entitled to adjustment in the division of
revenue reflecting ABBOTT's assumption of such responsibilities as
reasonably determined by ABBOTT, or (ii) seek damages for breach by SONUS and
terminate the Agreement.
13. INDEMNIFICATION
13.1 By SONUS. SONUS shall indemnify, defend and hold ABBOTT, its
directors, employees, agents and representatives harmless from and against all
claims, causes of action, settlement costs (including reasonable attorney fees
and expenses), losses or liabilities of any kind (A) which are asserted by a
Third Party and which (i) arise out of or are attributable to any negligent act
or omission or willful misconduct on the part of SONUS, its directors,
employees, agents or representatives, or (ii) involve the use of the Product as
a pharmaceutical product or the
35
<PAGE> 40
safety or efficacy of the Product, including any theory of strict liability in
tort or any other theory of product liability, and which are not otherwise
attributable to any negligent act or omission or willful misconduct on the part
of ABBOTT, its directors, employees, agents or representatives; or (iii) arise
from claims that the product or its manufacture, use or sale infringes a patent,
trademark or other proprietary right of a Third Party provided that the
infringement does not relate solely to the manufacturing procedure of ABBOTT; or
(B) arise from a breach of a representation or warranty in Section 11.1; (C)
arise out the negligent act or omission or willful misconduct by SONUS in the
manufacture of the Product by SONUS; or (D) arising, from the supply by SONUS
and use by ABBOTT of bulk raw materials which fail to comply with Bulk Raw
Materials Specifications, as defined in the Supply Agreement, where ABBOTT
manufactures the Product.
13.2 By ABBOTT. ABBOTT shall indemnify, defend and hold SONUS, its
directors, employees, agents and representatives harmless from and against all
claims, causes of action, settlement costs (including reasonable attorney fees
and expenses), losses or liabilities of any kind (A) which are asserted by a
Third Party and which arise out of or are attributable to any negligent act or
omission or willful misconduct on the part of ABBOTT, its employees, agents, or
representative, or (B) which arise from a breach of a representation or warranty
in Section 11.2.
13.3 Condition of Indemnification. If either party expects to seek
indemnification under this Article, it shall promptly give notice to the
indemnifying party of the basis for such claim of indemnification. If
indemnification is sought as a result of any Third Party claim or suit, such
notice to the indemnifying party shall be within fifteen (15) days after receipt
by the other party of such claim or suit (if to ABBOTT, notice to Abbott
Laboratories, Risk Management, D-317, 100 Abbott Park Road, Abbott Park, IL
60064-3500; if to SONUS, notice
36
<PAGE> 41
as set forth in Article 18); provided, however, that the failure to give notice
within such time period shall not relieve the indemnifying party of its
obligation to indemnify unless it shall be materially prejudiced by the failure.
Each such party shall cooperate fully with the other party in the defense of all
such claims or suits. No offer of settlement, settlement or compromise shall be
binding on a party hereto without its prior written consent (which consent will
not be unreasonably withheld) unless such settlement fully releases the other
party without any liability, loss, cost or obligation to such party.
14. LIMITATION OF LIABILITY
Except for Third Party liability arising under Article 13, in no event
shall either party be liable for loss of profits or other economic loss, or for
indirect, incidental, penal or consequential damages, or other similar damages
arising out of this agreement.
15. CONFIDENTIAL INFORMATION
15.1 Due Care. It is recognized by the parties that during the term of
this Agreement, the parties will exchange Confidential Information pertaining to
their performance hereunder. Each party will exercise due care to prevent the
disclosure of Confidential Information of the other party.
15.2 Permitted Disclosures.
(A) Notwithstanding the above, nothing contained in this
Agreement shall preclude SONUS or ABBOTT from utilizing or disclosing to others
its Confidential Information or utilizing Confidential Information received from
the other party as may required (i) for regulatory purposes, including obtaining
FDA approvals; (ii) for audit, tax or customs purposes; or (iii) by law
(including disclosure obligations under applicable securities laws), court or
other government order, provided that the party subject to such order notifies
the other party and uses reasonable efforts to obtain a protective order
covering such Confidential Information.
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<PAGE> 42
(B) In addition to the foregoing, ABBOTT and SONUS may
disclose the Confidential Information of the other party, only to such employees
or Third Parties who have a reasonable need for the Confidential Information in
the performance of their services in connection with the matters set forth in
this Agreement or otherwise within the scope of the licenses set forth in
Article 5 and Section 3.9; who are informed of the confidential nature of the
Confidential Information; and who are bound not to disclose such Confidential
Information.
15.3 Other Agreements. The parties have entered into a Confidential
Disclosure Agreement dated October 7, 1992 ("CDA"). The CDA shall remain in full
force and effect as to its confidentiality requirements for the terms specified
therein. However, on and after the Effective Date of this Agreement, all subject
matter conveyed or covered under this Agreement shall be governed in all
respects by the confidentiality provisions contained in this Article 15. The
obligations of the parties set forth in this Article 15 shall apply during the
term hereof and for a period of five (5) years after the date of early
termination or expiration of this Agreement or any extension thereof.
16. NON-COMPETE
For a period of five (5) years after the Effective Date each party and
its Affiliates shall undertake not to market or sell a competing product in the
Territory to an end user. However, nothing contained in this Article 16 shall be
construed as preventing (i) either party from conducting research and
development, manufacturing, formulation, development, and/or distribution
activities relating to a competing product during such period or thereafter, or
(ii) the grant of any rights in any patent infringement settlement as permitted
pursuant to the terms of Section 3.8(C).
For purposes of this Article 16, a competing product shall mean a
product in the Field whose mode of action and/or mechanism is materially similar
to the Product.
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17. FORCE MAJEURE
17.1 Events of Force Majeure. Delay or failure on the part of either
party in performing its obligations under this Agreement shall not subject such
party to any liability to the other if such delay or failure is caused by or
results from acts such as but not limited to acts of God, fire, explosion,
flood, drought, war, riot, sabotage, embargo, strikes or other labor trouble, or
compliance with any law, order or regulation of any government entity acting
with color of right.
17.2 Consequences of Force Majeure. Upon occurrence of an event of
force majeure, the party affected shall promptly notify the other in writing,
setting forth the details of the occurrence, and making every attempt to resume
the performance of its obligations as soon as practicable after the force
majeure event ceases. If such event prevents performance by one party for more
than six (6) months, then the other party may terminate this Agreement subject
to Section 12.3.
18. NOTICES
Any notices permitted or required by this Agreement shall be sent by
(A) facsimile, (B) registered mail or (C) a recognized private mail carrier
service, and such notice shall be effective on the date received as indicated by
the facsimile imprint date in the case of (A) and the carrier receipt in the
case of (B) and (C). If sent and addressed as follows or to such other address
as may be designated by a party in writing:
If to SONUS: SONUS PHARMACEUTICALS, INC.
22026 20th Avenue, S.E.
Suite 102
Bothell, Washington 98021
Telefax: (206) 489-0626
Attention: Steven Quay, M.D., Ph.D
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<PAGE> 44
With a copy to: Stradling, Yocca, Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660-6441
Telefax: (714) 725-4100
Attention: K. C. Schaaf
If to ABBOTT: ABBOTT LABORATORIES
Hospital Products Division
200 Abbott Park Road
Abbott Park, IL 60064-3537
Telefax: (847) 937-0805
Attention: President, Hospital Products Division
With copy to: Division Vice President
Domestic Legal Operations
D-322, AP6D
Abbott Laboratories
100 Abbott Park Road
Abbott Park, IL 60064-3500
Telefax: (847) 938-1206
19. ASSIGNMENT
19.1 Limitation on Assignment. This Agreement may not be assigned or
transferred by either party, whether by operation of law or otherwise, except
that either party may assign this Agreement to any of its Affiliates, or to any
successor by merger or sale of substantially all of its business unit to which
this Agreement relates without the consent of the other party. Any attempted
delegation or assignment not in accordance with this Article 19 shall be of no
force or effect.
19.2 Assumption by ABBOTT. In the event that SONUS sells, transfers or
otherwise assigns this Agreement to a third party ("Assignee") as permitted in
this Article 19, and ABBOTT, in ABBOTT's reasonable discretion, determines that
the Assignee is not at least as capable as SONUS of performing its (SONUS')
responsibilities under this Agreement, ABBOTT may, upon thirty (30) days prior
written notice to Assignee, assume any or all of Assignee's responsibilities
under this Agreement, including, but not limited to, responsibilities set forth
in
40
<PAGE> 45
Section 3 and other responsibilities agreed to by the parties in accordance with
Section 6.1, and adjust, in ABBOTT's reasonable discretion, the Revenue Payment
set forth in Article 7 proportionately in accordance with the reduction in the
responsibilities of Assignee.
20. SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their successors and permitted assigns.
21. ALTERNATIVE DISPUTE RESOLUTION
The parties agree that any dispute that arises in connection with this
Agreement shall first be presented to the respective presidents of the ABBOTT
Hospital Products Division, and of SONUS, or their designees, for resolution. If
no resolution is reached, then such dispute shall be resolved by binding
Alternative Dispute Resolution ("ADR") in the manner described in the Appendix
21. Anything herein to the contrary notwithstanding the neutral shall not have
the ability to change or alter any decision of ABBOTT to exercise its rights
under Section 12.4.
22. PUBLICITY
The parties agree that upon the execution of this Agreement, a press
release approved by both parties will be issued. Except for such press release
and periodic disclosures by SONUS required by law or regulation or in the
ordinary course of its SEC filings, neither party shall (A) originate any
publicity, news release or other public announcement, written or oral, whether
to the public press, stockholders or otherwise, relating to this Agreement, any
amendment hereto or performance hereunder, or (B) use the name of the other in
any publicity, news release or other public announcement, except (i) with the
prior written consent of the other party, or (ii) as required by law, in which
case the originating party will give to the other party at least ten (10) days
prior notice of such proposed disclosure to complete a review in order to offer
comments
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<PAGE> 46
and modifications. Consistent with applicable law, the other party will have the
right to request reasonable changes to the disclosure to protect its interests.
In all other cases, the originating party shall give the consenting party at
least twenty-one (21) days to complete a review in order to offer comments,
modifications or to give such consent. The party required to give consent shall
endeavor to respond in less an twenty-one (21) days if practicable.
23. RELATIONSHIP OF PARTIES
The relationship of the parties under this Agreement is that of
independent contractors. Nothing contained in this Agreement is intended or is
to be construed so as to constitute the parties as partners, joint venturers, or
either party as an agent or employee of the other. Neither party has any express
or implied right under this Agreement to assume or create any obligation on
behalf of or in the name of the other, or to bind the other party to any
contract, agreement or undertaking with any Third Party, and no conduct of the
parties shall be deemed to infer such right.
24. APPENDICES AND EXHIBITS
All Appendices and Exhibits referenced herein are hereby made a part of
this Agreement.
25. HEADINGS
The headings used in this Agreement are for convenience only and are
not a part of this Agreement.
26. WAIVER
No waiver by either party of any default, right or remedy shall be
effective unless in writing, nor shall any such waiver operate as a waiver of
any other or of the same default, right or remedy respectively, on a future
occasion.
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27. SEVERABILITY
If any term or provision of this Agreement shall for any reason be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other term or provision hereof, and this
Agreement shall be interpreted and construed as if such term or provision, to
the extent the same shall ave been held to be invalid, illegal or unenforceable,
had never been contained herein.
28. ENTIRE AGREEMENT; AMENDMENT
Except as specifically contemplated in this Agreement and except for
the CDA and the Supply Agreement, this Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements, written and oral, between the parties. No
modification of any of the terms of this Agreement shall be deemed to be valid
unless it is in writing and signed by both parties. No course of dealing or
usage of trade shall be used to modify the terms and conditions herein.
29. APPLICABLE LAW
This Agreement shall be governed by and construed in accordance with
the laws of Washington, excluding its conflict of laws principles.
30. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which all be deemed an original, but all of which together shall constitute one
and the same instrument.
[Signature Page Follows]
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<PAGE> 48
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized representative as of the day and
year first above written.
ABBOTT LABORATORIES SONUS PHARMACEUTICALS, INC.
By: By:
------------------------------- -------------------------------------
John G. Kringel Steven C. Quay, M.D., Ph.D
President President and Chief Executive Officer
Hospital Products Division
44
<PAGE> 49
APPENDIX 1.6
INDICATIONS AND USAGE
AS OF 4/3/96
[ * ]
*Confidential Portions omitted and filed separately with the Commission.
45
<PAGE> 50
APPENDIX 1.13
[ * ]
*Confidential Portions omitted and filed separately with the Commission.
46
<PAGE> 51
[ * ]
*Confidential Portions omitted and filed separately with the Commission.
47
<PAGE> 52
APPENDIX 2.2
RESEARCH AND DEVELOPMENT PLAN
[Attached]
48
<PAGE> 53
APPENDIX 2.2
RESEARCH AND DEVELOPMENT PLAN
[ * ]
*Confidential Portions omitted and filed separately with the Commission.
49
<PAGE> 54
Appendix 2.2 (cont'd)
[ * ]
*Confidential Portions omitted and filed separately with the Commission.
50
<PAGE> 55
APPENDIX 2.3
RESEARCH AND DEVELOPMENT
PAYMENT SCHEDULE
Execution of definitive agreement $4 Million
(Includes $1,000,000 payment for grant of licenses)
Quarterly Milestone Payments*
Payment 1 $1 Million
Payment 2 $1 Million
Payment 3 $1 Million
Payment 4 $1 Million
Payment 5 $1 Million
Payment 6 $1 Million
Payment 7 $1 Million
Filing NDA** within 15 days $2 Million
within 105 days $1 Million
within 195 days $1 Million
NDA acceptance by FDA**
within 15 days $1 Million
within 105 days $1 Million
within 195 days $1 Million
within 285 days $1 Million
Advisory Panel Approval**
within 15 days $2 Million
within 105 days $2 Million
within 195 days $2 Million
NDA approval $2 Million
First Shipment of Product $4 Million
* Payments made on January 1, April 1, July 1, and October 1. Payments
will begin on the first quarter after the Effective Date.
** For indications substantially as listed in Appendix 1.6.
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APPENDIX 3.2B
NET SALES FORECAST
[Attached]
52
<PAGE> 57
FORECASTED NET SALES
APPENDIX 3.2B
TOTAL $ SALES (U.S.)
($000)
[ * ]
*Confidential Portions omitted and filed separately with the Commission.
53
<PAGE> 58
APPENDIX 3.4
SPECIFICATIONS
[Attached]
54
<PAGE> 59
[ * ]
*Confidential Portions omitted and filed separately with the Commission.
55
<PAGE> 60
[ * ]
*Confidential Portions omitted and filed separately with the Commission.
56
<PAGE> 61
[ * ]
*Confidential Portions omitted and filed separately with the Commission.
57
<PAGE> 62
[ * ]
*Confidential Portions omitted and filed separately with the Commission.
58
<PAGE> 63
APPENDIX 3.9
TRADEMARKS OF SONUS PHARMACEUTICALS, INC.
<TABLE>
<CAPTION>
MARK REG/APPLN NO. REG/APPLN DATE
<S> <C> <C>
ECHOGEN U.S. Reg. February 14, 1995
1,879,096
SONUS U.S. Appln. November 19, 1994
PHARMACEUTICALS 74/599,476
and Design
</TABLE>
COMMON LAW TRADEMARKS
SONUS
SONUS PHARMACEUTICALS
PhaseShift
HIGH-Q Factor
59
<PAGE> 64
APPENDIX 21
ALTERNATIVE DISPUTE RESOLUTION
The parties recognize that bona fide disputes as to certain matters may arise
from time to time during the term of this Agreement which relate to either
party's rights and/or obligations. To have such a dispute resolved by this
Alternative Dispute Resolution ("ADR") provision, a party first must send
written notice of the dispute to the other party for attempted resolution by
good faith negotiations between their respective presidents (or their
equivalents or designees) of the affected subsidiaries, divisions, or business
units within twenty-eight (28) days after such notice is received (all
references to "days" in this ADR provision are to calendar days).
If the matter has not been resolved within twenty-eight (28) days of the notice
of dispute, or if the parties fail to meet within such twenty-eight (28) days,
either party may initiate an ADR proceeding as provided herein. The parties
shall have the right to be represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to the
other party of the issues to be resolved by ADR. Within fourteen (14)
days after its receipt of such notice, the other party may, by written
notice to the party initiating the ADR, add additional issues to be
resolved within the same ADR.
2. Within twenty-one (21) days following receipt of the original ADR
notice, the parties shall select a mutually acceptable neutral to
preside in the resolution of any disputes in this ADR proceeding. If
the parties are unable to agree on a mutually acceptable neutral within
such period, either party may request the President of the CPR
institute for Dispute Resolution ("CPR"), 366 Madison Avenue, 14th
Floor, New York, New York 10017, to select a neutral pursuant to the
following procedures:
(a) The CPR shall submit to the parties a list of not less than
five (5) candidates within fourteen (14) days after receipt of
the request, along with a Curriculum Vitae for each candidate.
No candidate shall be an employee, director, or shareholder of
either party or any of their subsidiaries or affiliates.
(b) Such list shall include a statement of disclosure by each
candidate of any circumstances likely to affect his or her
impartiality.
(c) Each party shall number the candidates in order of preference
(with the number one (1) signifying the greatest preference)
and shall deliver the list to the CPR within seven (7) days
following receipt of the list of candidates. If a party
believes a conflict of interest exists regarding any of the
candidates, that party shall provide a written explanation of
the conflict to the CPR along with its list showing its order
of preference for the candidates. Any party failing to return
a list of preferences on time shall be deemed to have no order
of preference.
(d) If the parties collectively have identified fewer than three
(3) candidates deemed to have conflicts, the CPR immediately
shall designate as the neutral the candidate
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for whom the parties collectively have indicated the greatest
preference. If a tie should result between two candidates, the
CPR may designate either candidate. If the parties
collectively have identified three (3) or more candidates
deemed to have conflicts, the CPR shall review the
explanations regarding conflicts and, in its sole discretion,
may either (i) immediately designate as the neutral the
candidate for whom the parties collectively have indicated the
greatest preference, or (ii) issue a new list of not less than
five (5) candidates, in which case the procedures set forth in
subparagraphs 2(a) - 2(d) shall be repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six (56)
days after selection, the neutral shall hold a hearing to resolve each
of the issues identified by the parties. The ADR proceeding shall take
place at a location agreed upon by the parties. If the parties cannot
agree, the neutral shall designate a location other than the principal
place of business of either party or any of their subsidiaries or
affiliates.
4. At least seven (7) days prior to the hearing, each party shall submit
the following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to rely in
any oral or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the
hearing, and a short summary of the anticipated testimony of
each witness;
(c) a proposed ruling on each issue to be resolved, together with
a request for a specific damage award or other remedy for each
issue. The proposed rulings and remedies shall not contain any
recitation of the facts or any legal arguments and shall not
exceed five (5) pages per issue.
(d) a brief in support of such party's proposed rulings and
remedies, provided that the brief shall not exceed fifty (50)
pages. This page limitation shall apply regardless of the
number of issues raised in the ADR proceeding.
Except as expressly set forth in subparagraph 4(a) - 4(d), no discovery
shall be required or permitted by any means, including depositions,
interrogatories, requests for admissions, or production of documents.
5. The hearing shall be conducted on up to fifteen (15) consecutive
business days and shall be governed by the following rules:
(a) Each party shall be entitled to five (5) business days of
hearing time to present its case. The neutral shall determine
whether each party has had the five (5) business days to which
it is entitled.
(b) Each party shall be entitled, but not required, to make an
opening statement, to present regular and rebuttal testimony,
documents or other evidence, to cross- examine witnesses, and
to make a closing argument. Cross-examination of witnesses
shall occur immediately after their direct testimony, and
cross-
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examination time shall be charged against the party conducting
the cross-examination.
(c) The party initiating the ADR shall begin the hearing and, if
it chooses to make an opening statement, shall address not
only issues it raised but also any issues raised by the
responding party. The responding party, if it chooses to make
an opening statement, also shall address all issues raised in
the ADR. Thereafter, the presentation of regular and rebuttal
testimony and documents, other evidence, and closing arguments
shall proceed in the same sequence.
(d) Except when testifying, witnesses shall be excluded from the
hearing until closing arguments.
(e) Settlement negotiations, including any statements made
therein, shall not be admissible under any circumstances.
Affidavits prepared for purposes of the ADR hearing also shall
not be admissible. As to all other matters, the neutral shall
have sole discretion regarding the admissibility of any
evidence.
6. Within seven (7) days following completion of the hearing, each party
may submit to the other party and the neutral a post-hearing brief in
support of its proposed rulings and remedies, provided that such brief
shall not contain or discuss any new evidence and shall not exceed
thirty (30) pages. This page limitation shall apply regardless of the
number if issues raised in the ADR proceeding.
7. The neutral shall rule on each disputed issue within fourteen (14) days
following completion of the hearing. Such ruling shall adopt in its
entirety the proposed ruling and remedy of one of the parties on each
disputed issue but may adopt one party's proposed rulings and remedies
on some issues and the other party's proposed rulings and remedies on
other issues. The neutral shall not issue any written opinion or
otherwise explain the basis of the ruling.
8. The neutral shall be paid a reasonable fee plus expenses. These fees
and expenses, along with the reasonable legal fees and expenses of the
prevailing party (including all expert witness fees and expenses), the
fees and expenses of a court reporter, and any expenses for a hearing
room, shall be paid as follows:
(a) If the neutral rules in favor of one party on all disputed
issues in the ADR, the losing party shall pay 100% of such
fees and expenses.
(b) If the neutral rules in favor of one party on some issues and
the other party on other issues, the neutral shall issue with
the rulings a written determination as to how such fees and
expenses shall be allocated between the parties. The neutral
shall allocate fees and expenses in a way that bears a
reasonable relationship to the outcome of the ADR, with the
party prevailing on more issues, or on issues of greater value
or gravity, recovering a relatively larger share of its legal
fees and expenses.
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9. The rulings of the neutral and the allocation of fees and expenses
shall be binding, non- reviewable, and non-appealable, and may be
entered as a final judgment in any court having jurisdiction.
10. Except as provided in paragraph 9 or as required by law, the existence
of the dispute, any settlement negotiations, the ADR hearing, any
submissions (including exhibits, testimony, proposed rulings, and
briefs), and the rulings shall be deemed Confidential Information. The
neutral shall have the authority to impose sanctions for unauthorized
disclosure of Confidential Information.
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EXHIBIT A
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933; THEY HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT
AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933 AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER.
Warrant Certificate No. ____
__________________, 1996 _______________Warrants
SONUS PHARMACEUTICALS, INC.
WARRANT CERTIFICATE
THIS WARRANT CERTIFICATE (the "Warrant Certificate"), certifies that
______________ or registered assigns (the "Holder"), is the owner of
_________________ warrants ("Warrants"), each of which entitles the Holder
hereof to purchase, as and when described herein one fully paid and
non-assessable share of common stock, as such shares may be adjusted pursuant to
Paragraph 5, ("Common Stock") of SONUS PHARMACEUTICALS, INC., a Delaware
corporation (the "Company"), at a purchase price of $_______ per share during
the term of this Warrant Certificate.
1. WARRANT. Each Warrant entitles the Holder to purchase one fully paid
and nonassessable share of Common Stock of the Company (such number being
subject to adjustment as provided in Paragraph 5 hereof) on the terms and
conditions herein set forth.
2. PURCHASE PRICE. The purchase price of the shares of Common Stock
covered by the Warrants shall be $_____ per share, subject to adjustment as
provided in Paragraph 5 hereof. The purchase price of the shares of Common Stock
as to which the Warrants shall be exercised shall be paid in full at the time of
exercise and such consideration may consist of cash, check or bank draft.
3. TERM OF WARRANT. The term of the Warrants shall commence on the date
hereof and all rights to purchase shares of Common Stock hereunder shall cease
at 11:59 P.M. on ___________________, _______________________, subject to
earlier termination as provided herein. Warrants granted hereunder may be
exercised at any time from the date hereof until expiration hereof. The Holder
of the Warrants shall not have any of the rights of a stockholder with respect
to the shares covered by the Warrants as to any shares of Common Stock not
actually issued and delivered to it.
4. TRANSFERABILITY. The Warrants shall not be transferable or
assignable except to an Affiliate of the Holder without the prior written
consent of the Company, which consent shall not be unreasonably withheld. The
Holder may transfer or assign the shares of Common Stock issuable upon exercise
of the Warrants; provided, however, that (i) a registration statement with
respect thereto has become effective under the Securities Act; or (ii) in the
opinion of counsel to the Holder such registration is not necessary; or (iii)
such transfer complies with the provisions of Rule 144 under the Securities Act
of 1933, as amended (the "Securities Act"). The legend imprinted on the
certificates pursuant to Section 10 shall be removed, and the Company shall
issue a new certificate
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without such legend to the Holder of such security if such security is
registered under the Securities Act or, in the opinion of counsel to the Holder
such legend is no longer required under the Securities Act or the conditions for
a permissible sale or transfer under Rule 144(k) have been complied with. For
purposes of this Warrant Certificate, "Affiliate" shall mean any wholly-owned
subsidiary or parent of, or any corporation, entity or other person which is,
within the meaning of the 1933 Act, controlling, controlled by or under common
control with, the Holder or the Company, as the case may be.
5. ADJUSTMENTS FOR STOCK SPLITS, CONSOLIDATIONS, ETC. The purchase
price and number and class of shares subject to this Warrant Certificate shall
all be proportionately adjusted in the event of any change or increase or
decrease in the number of issued shares of Common Stock in the Company, without
receipt of consideration by the Company, which result from a split-up or
consolidation of shares, payment of a share dividend, a recapitalization,
combination of shares or other like capital adjustment, so that, upon exercise
of this Warrant Certificate, the Holder shall receive the number and class of
shares it would have received had it been the holder of the number of shares of
Common Stock in the Company, for which this Warrant Certificate is being
exercised, on the date of such change or increase or decrease in the number of
issued shares of Common Stock in the Company. If the Company shall reorganize,
consolidate or merge with or into any other corporation where the Company is not
the surviving entity, then each share of Common Stock shall be convertible into
the consideration to which the shares of Common Stock subject to this Warrant
Certificate would have been entitled to receive upon the effectiveness of such
reorganization, merger or consolidation. "Affiliate" shall have the meaning set
forth in Paragraph 4. Adjustments under this paragraph shall be made by the
Board of Directors in its reasonable, good faith judgment, whose determination
with respect thereto shall be final and conclusive. No fractional shares shall
be issued under this Warrant Certificate or upon any such adjustment.
6. METHOD OF EXERCISING WARRANTS.
(a) Subject to the terms and conditions of this Warrant
Certificate, the Warrants may be exercised by surrender of the Warrant
Certificate together with delivery to the Company at its principal office of a
signed Subscription Agreement in the form attached hereto as Annex 1 (the
"Subscription Agreement") specifying the number of shares to be purchased. Such
Subscription Agreement shall be accompanied by payment in cash, check or bank
draft, payable to the Company, equal to, in the aggregate, the full purchase
price of such shares. The Company shall deliver a certificate or certificates
representing the shares subject to such exercise as soon as practicable after
the Subscription Agreement and consideration for the shares shall have been
received by the Company, and the Holder shall be deemed a record holder of
Common Stock upon such receipt by the Company. All shares that shall be
purchased upon the exercise of the Warrants as provided herein shall be fully
paid and nonassessable.
(b) In addition, the Holder shall have the right, upon its
written request delivered or transmitted to the Company together with this
Warrant Certificate, to exchange this Warrant Certificate, in whole or in part
at any time or from time to time on or prior to ,__________ _______, for the
number of shares of Common Stock having an aggregate Fair Market Value
(determined as set forth in Paragraph 6(c) below) on the date of such exchange
equal to the difference between (1) the aggregate Fair Market Value on the date
of such exchange of a number of shares designated by the Holder and (2) the
aggregate exercise price the Holder would have paid to the Company to purchase
such designated number of shares upon exercise of this Warrant Certificate. Upon
any such
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exchange, the number of shares purchasable upon exercise of this Warrant
Certificate shall be reduced by such designated number of shares, and, if a
balance of purchasable shares remains after such exchange, the Company shall
execute and deliver to the Holder a new Warrant Certificate evidencing the right
of the Holder to purchase such balance of shares. No payment of any cash or
other consideration shall be required. Such exchange shall be effective upon the
date of receipt by the Company of the original Warrant Certificate surrendered
for cancellation and a written request from the Holder that the exchange
pursuant to this Section be made, or at such later date as may be specified in
such request.
(c) Fair market value of the Common Stock ("Fair Market
Value") shall be determined as follows:
(i) If the Common Stock is listed on a national
securities exchange or admitted to unlisted trading privileges on such an
exchange, or is listed on the Nasdaq National Market or Small Cap Market, the
current Fair Market Value shall be the volume-weighted average price of the
Common Stock on such exchange or Nasdaq for the ten (10) business days prior to
the date of exchange of this Warrant; or
(ii) If the Common Stock is not so listed or admitted
to unlisted trading privileges or quoted on Nasdaq, the current Fair Market
Value shall be the volume-weighted average of the mean of the last bid and asked
prices reported for the ten (10) business days prior to the date of the exchange
of this Warrant (1) by Nasdaq, or (2) if reports are unavailable under clause
(i) above, by the National Quotation Bureau Incorporated; or
(iii) If the Common Stock is not so listed or
admitted to unlisted trading privileges and bid and asked prices are not so
reported, the current Fair Market Value shall be determined in good faith as
promptly as reasonably practicable by the Board of Directors.
7. REGISTRATION RIGHTS. The Holder hereunder has been made a party to
the SONUS Pharmaceuticals, Inc. Amended and Restated Registration Rights
Agreement dated November 23, 1994, as amended ("Registration Rights Agreement").
The shares of Common Stock issuable upon exercise of this Warrant Certificate
are included as "Registrable Securities" under the Registration Rights Agreement
(as that term is defined in the Registration Rights Agreement) with all
registration rights pertaining to such Registrable Securities.
8. GENERAL. The Company shall at all times during the term of the
Warrants reserve and keep available such number of shares of Common Stock as
will be sufficient to satisfy the requirements of this Warrant Certificate,
shall pay all original issue and transfer taxes with respect to the issue and
transfer of shares pursuant hereto and all other fees and expenses necessarily
incurred by the Company in connection therewith, and will from time to time use
its best efforts to comply with all laws and regulations, which, in the opinion
of counsel for the Company, shall be applicable thereto.
9. LEGENDS. It is understood that the certificates evidencing the
Common Stock purchased upon exercise of this Warrant Certificate may bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN
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ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT AS MAY
BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER."
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed by its officers thereunto duly authorized, all as of the day
and year first above written.
SONUS PHARMACEUTICALS, INC.
By: _______________________________
Its: _______________________________
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<PAGE> 72
ANNEX I TO WARRANT CERTIFICATE
SUBSCRIPTION AGREEMENT
The undersigned holder of the Warrant Certificate to which this
Subscription Agreement is attached as Annex I hereby subscribes for _________
shares of Common Stock which the undersigned is entitled to purchase pursuant to
the terms of such Warrant Certificate. Payment of the purchase price for the
Warrants is being made concurrently herewith.
I hereby certify that all of the shares of Common Stock, $0.001 par
value, of SONUS PHARMACEUTICALS, INC., purchased by the undersigned pursuant to
the exercise on this date of the Warrants granted to the undersigned by the
Warrant Certificate are being acquired by the undersigned for investment and not
with a view to the distribution thereof.
Date:
---------------------
---------------------------------------------
Signature
---------------------------------------------
Type or Print Name
---------------------------------------------
Street Address
---------------------------------------------
City State Zip Code
68
<PAGE> 1
Exhibit 99.1
NEWS RELEASE
For Immediate Release
Steven C. Quay, M.D., Ph.D. Greg Sessler, C.F.O.
SONUS Pharmaceuticals, Inc. SONUS Pharmaceuticals, Inc.
487-9500 (206) 487-9500
Traci Lance-Lumberg Peter A. Zambelli
Abbott Laboratories Hill and Knowlton, Inc.
(847) 938-3895 (212) 885-0303
SONUS PHARMACEUTICALS AND ABBOTT LABORATORIES
SIGN AGREEMENT FOR ECHOGEN(R) EMULSION IN THE U.S.
STRATEGIC ALLIANCE FORMED TO LAUNCH SONUS' INNOVATIVE
ULTRASOUND CONTRAST AGENT FOR CARDIOLOGY AND RADIOLOGY
NEW YORK, N.Y., MAY 15, 1996 -- SONUS Pharmaceuticals, Inc. (NASDAQ NNM:SNUS)
and Abbott Laboratories, Inc. (NYSE:ABT) announced today the signing of a
strategic alliance agreement focusing on the clinical development, marketing and
sale of EchoGen(R) Emulsion, a proprietary ultrasound contrast agent developed
by SONUS, for cardiology and radiology uses. Under the agreement, SONUS has
primary responsibility for clinical development, regulatory affairs, and medical
and technical support of EchoGen(R) and Abbott has primary responsibility for
U.S. marketing and sales. SONUS has retained certain co-promotion rights to
EchoGen(R) in the U.S.
Abbott will pay SONUS $31 million in up-front, clinical support and milestone
payments. SONUS will receive 47 percent of net EchoGen(R) revenues in the U.S. -
a portion of which SONUS must use to fund its obligations under the agreement.
The agreement spans the life of the patents relating to EchoGen(R). In addition,
Abbott has purchased, for $4 million, warrants to acquire 500,000 shares of
SONUS common stock, equal to about six percent (6%) of the company's outstanding
common stock. The warrants are exercisable over five years at $16 per share.
Abbott can acquire the rights to additional indications for EchoGen(R) by making
additional clinical support payments.
"Having Abbott's marketing strength combined with SONUS' alliances in Europe and
the Pacific Rim provides marketing coverage of about 85% of the worldwide market
for EchoGen," said Steven C. Quay, M.D., Ph.D., founder, president and CEO of
SONUS Pharmaceuticals, Inc. "SONUS will continue
[SONUS PHARMACEUTICALS LOGO]
<PAGE> 2
SONUS/Abbott Labs Alliance
May 15, 1996
Page 2
to focus its resources on regulatory approvals in the U.S. and Europe, and
investigation of expanded uses of EchoGen."
-more-
Pivotal Phase 3 radiology and cardiology trials of EchoGen(R), intended to
satisfy the U.S. Food and Drug Administration (FDA) requirements for a New Drug
Application (NDA), have been completed. These Phase 3 trials will be the basis
for SONUS' NDA, which the company expects to file with the FDA this year,
followed shortly thereafter with a filing to the European Medicines Evaluation
Agency.
SONUS is investigating expanded uses for EchoGen(R) in breast and prostate
cancer, and CNS applications in European trials. In January, SONUS completed a
U.S. Phase 2 myocardial perfusion trial. Pre-clinical studies are also underway
or planned for other advanced imaging and therapeutic uses of SONUS' proprietary
PhaseShift(TM) and High-Q Factor(TM) technologies.
The statements made in this news release are forward looking. As discussed in
SONUS' annual report on Form 10-K dated March 29, 1996, EchoGen(R) will require
regulatory approval, which approval is subject to certain regulatory
requirements and can be lengthy, and market acceptance of EchoGen(R) will depend
on a number of factors, including safety, efficacy and ease of administration.
SONUS Pharmaceuticals, based in Bothell, Wash., is engaged in the research and
development of proprietary contrast agents for use in ultrasound imaging. The
company's products are being investigated to improve the management of heart
disease, cancer, infectious disease and other debilitating conditions.
NOTE: SONUS Pharmaceuticals' press releases are now available via PR Newswire's
Company News on Call service. To receive previous SONUS press releases via fax,
dial 1- 800-758-5804, ext. 108377. SONUS releases also can be accessed on the
Internet at PR Newswire's home page. The address is: http://www.prnewswire.com/
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