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UNITED STATES
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) January 31, 1999
----------------
SONUS PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-26866 95-4343413
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No)
22026 20th Avenue, S.E., Bothell, Washington 98021
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (425) 487-9500
Not Applicable
(Former name or former address, if changed since last report)
Page 1 of 5
Exhibit Index on Page 5
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ITEMS 1 THROUGH 4, 6, 8 AND 9 ARE NOT APPLICABLE.
ITEM 5 OTHER EVENTS.
On January 31, 1999, SONUS Pharmaceuticals, Inc. (the "Company") and
Abbott Laboratories and its affiliate, Abbott International, Ltd. (collectively
"Abbott") entered into amendments to the marketing and distribution agreements
that were originally entered into on May 14, 1996 and October 1, 1996 (the
"Amendments").
Concurrently with the execution and delivery of the Amendments, the
Company and Abbott entered into a Securities Purchase Agreement, pursuant to
which the Company and Abbott have agreed, among other things, that the Company
will issue shares of its common stock to Abbott in the event the Company
requests early payment of certain milestone payments according to the
Amendments.
Reference is made to the press release issued to the public by the
registrant on February 1, 1999, the text of which is attached hereto as Exhibit
99.1, for a description of the events reported pursuant to this Form 8-K.
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Not Applicable
(b) Pro Forma Financial Information
Not Applicable
(c) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<S> <C>
10.33 First Amendment to Agreement by and Between Abbott
Laboratories and SONUS Pharmaceuticals, Inc. dated January
31, 1999.*
10.34 First Amendment to International License Agreement by and
Between Abbott International, Ltd. and SONUS
Pharmaceuticals, Inc. dated January 31, 1999.*
</TABLE>
Page 2 of 5
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<TABLE>
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10.35 Securities Purchase Agreement between Abbott Laboratories
and SONUS Pharmaceuticals, Inc. dated January 31, 1999.*
99.1 Press Release dated February 1, 1999.
</TABLE>
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*Confidential portions have been omitted and filed separately with the
Commission.
Page 3 of 5
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SONUS PHARMACEUTICALS, INC.
Date: February 3, 1999 By: /s/ Gregory Sessler
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Gregory Sessler
Chief Financial Officer
Page 4 of 5
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
10.33 First Amendment to Agreement by and Between Abbott
Laboratories and SONUS Pharmaceuticals, Inc. dated January 31,
1999.*
10.34 First Amendment to International License Agreement by and
Between Abbott International, Ltd. and SONUS Pharmaceuticals,
Inc. dated January 31, 1999.*
10.35 Securities Purchase Agreement between Abbott Laboratories and
SONUS Pharmaceuticals, Inc. dated January 31, 1999.*
99.1 Press Release dated February 1, 1999.
</TABLE>
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*Confidential portions have been omitted and filed separately with the
Commission.
Page 5 of 5
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EXHIBIT 10.33
CONFIDENTIAL
FIRST AMENDMENT TO AGREEMENT
BY AND BETWEEN
ABBOTT LABORATORIES AND SONUS PHARMACEUTICALS, INC.
THIS FIRST AMENDMENT TO AGREEMENT ("Amendment") is dated January 31,
1999 ("Amendment 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, ABBOTT and SONUS have previously entered into the Agreement
dated May 14, 1996 ("Agreement") whereby SONUS granted to ABBOTT and ABBOTT
obtained from SONUS certain exclusive marketing rights to certain ultrasound
contrast agents, including EchoGen(R), in the United States in accordance with
the terms and conditions thereof;
WHEREAS, Abbott International, Ltd. ("Abbott International") and SONUS
entered into an International License Agreement, dated October 1, 1996 whereby
SONUS granted to Abbott International and Abbott International obtained from
SONUS certain exclusive marketing rights to EchoGen(R) in certain areas outside
the United States in accordance with the terms and conditions thereof
("International Agreement"), which agreement shall be amended as of the
Amendment Effective Date as specifically set forth in the amendment to such
agreement;
WHEREAS, ABBOTT and SONUS entered into a Development and Supply
Agreement, dated May 6, 1993, whereby ABBOTT assisted in the manufacturing
scale-up for EchoGen(R) and agreed to manufacture EchoGen(R) for SONUS ("Supply
Agreement"); and
[*] CONFIDENTIAL PORTIONS OMITTED AND
FILED SEPARATELY WITH COMMISSION
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WHEREAS, ABBOTT and SONUS desire to amend the Agreement, as set forth in
this Amendment, simultaneously with amending the International Agreement and
executing a letter of understanding with respect to the amendment of the Supply
Agreement as soon a reasonably practicable;
NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants set forth below, ABBOTT and SONUS mutually agree as follows:
1. ARTICLE 1 - DEFINITIONS. Capitalized terms used in this Amendment and
not otherwise defined in this Amendment shall have the meanings set forth in the
Agreement. Article 1 shall be amended by adding the following definitions:
1.21 "Cardiology Indication" means an indication for EchoGen(R) Emulsion
which is substantially equivalent to the following: [*]
1.22 "Radiology Indication" means an indication for EchoGen(R) Emulsion
which is substantially equivalent to the following: [*]
1.23 "Supply Agreement" shall mean the EchoGen(R) Contrast Agent
Development and Supply Agreement between ABBOTT and SONUS as amended and
restated as of the Amendment Effective Date as such agreement may be further
amended from time to time.
1.24 "Cardiology/Radiology Approval Date" means the later to occur of
(i) the date of FDA approval for the Cardiology Indication, and (ii) the date of
FDA approval for the Radiology Indication.
2. APPENDIX 2.3 - RESEARCH AND DEVELOPMENT PAYMENT SCHEDULE shall be
deleted and replaced with the amended Appendix 2.3, attached to this Amendment.
SONUS acknowledges and agrees that the amounts referred to in items 1, 2, 3, 4,
and 5 of the Appendix 2.3, as amended by this Amendment, have been paid by
ABBOTT to SONUS in full prior to the Amendment Effective Date.
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3. SECTION 2.4 - ADDITIONAL CLINICAL RESEARCH shall be deleted in its
entirety and replaced with the following:
"2.4 Additional Clinical Research.
(A) 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 indications
other than the Cardiology Indication and the Radiology Indication. 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
financially in such additional clinical research, and communicates its
decision to participate in writing, ABBOTT shall reimburse SONUS for
SONUS' documented incremental costs and expenses incurred with respect
to the additional clinical research described in Sections 2.2 and 2.6
and which are mutually agreed upon by the parties in writing. SONUS will
document the costs incurred during the studies approved by ABBOTT and
submit detailed cost summaries to ABBOTT on a monthly basis. ABBOTT will
reimburse SONUS for such documented costs incurred within thirty (30)
days of receipt of the cost summaries, subject to the funding
limitations set forth herein. If SONUS determines that there will be any
material variance in the actual costs, as compared to the approved
funding, SONUS will promptly notify ABBOTT and obtain prior written
approval from ABBOTT in advance of incurring the additional costs. Any
funding by ABBOTT in addition to that indicated above may be approved by
ABBOTT at its sole discretion. Furthermore, ABBOTT may terminate its
participation in and reimbursement of the costs of the clinical
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research if ABBOTT has any concern over safety and/or efficacy issues at
any time. For any such cost and expenses ABBOTT funds, SONUS shall
reimburse ABBOTT for fifty percent (50%) of such costs and expenses
funded by ABBOTT, plus interest at the prime rate of interest (as
published in the Wall Street Journal, Midwest Edition on the date on
which ABBOTT provides such funding) ("Reimbursement Amount").
Reimbursement Amounts shall be aggregated on an annual basis and must be
repaid by SONUS within five (5) years from the end of the calendar year
in which the Reimbursement Amount was advanced by ABBOTT as provided in
Subsections (i), (ii), (iii) and (iv) below. Interest on outstanding
Reimbursement Amounts shall be accrued monthly. Reimbursement Amounts
shall be paid by SONUS to ABBOTT, by either, at the option of SONUS:
(i) reimbursing ABBOTT in cash for the Reimbursement Amount
within five (5) years from the end of the calendar year in which
such Reimbursement Amount is paid by ABBOTT; or
(ii) reducing the percentage amounts payable by ABBOTT to SONUS
as provided in Article 7 at such dates and in such amounts as
mutually agreed by the parties; or
(iii) in the event that the net tangible assets of SONUS shall
fall below an amount equal to the then current Nasdaq National
Market listing requirement for net tangible assets contained in
paragraph 4450(a)(3) of the NASD Manual (as such provision may be
amended from time to time), plus One Million Dollars
($1,000,000), reimbursing ABBOTT such Reimbursement Amount with
interest at the United States prime rate of interest (as
published in the Wall Street Journal Midwest Edition on the date
on which ABBOTT funds such reimbursement), by issuing and
delivering to ABBOTT shares of Common Stock of SONUS having a
fair market value equal to the Reimbursement Amount pursuant to
the terms, provisions and conditions of a Securities Purchase
Agreement in form attached hereto as Appendix 2.4, and which is
incorporated herein by this reference; or
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(iv) reimbursing ABBOTT partially in cash pursuant to Section
2.4(A)(i) and the remainder in SONUS Common Stock pursuant to
Section 2.4(A)(iii).
SONUS shall provide fifteen (15) days prior written notice to ABBOTT of
the payment option SONUS elects under this Section 2.4(A). In addition,
the definition of the "Field" set forth in Section 1.6 shall be expanded
to include the indication(s) funded by ABBOTT pursuant to this Section
2.4(A).
(B) If the parties are unable to agree on a reduction of the
percentage allocations of Revenue Payments payable by ABBOTT to SONUS in
Article 7 pursuant to Section 2.4(A)(ii) within thirty (30) days of the
date on which they began discussing such reduction, then the parties
shall utilize the ADR Procedure under Article 21 to determine the
reduction in percentage amounts payable by ABBOTT to SONUS in Article 7.
In such event, from the time the ADR process is initiated and until the
final decision of the neutral, Abbott, at its option, may withhold from
payment to SONUS ten percent (10%) of the Revenue Payments due to SONUS
under Article 7. The neutral shall also determine whether ABBOTT owes to
SONUS a portion of the Revenue Payment withheld during the ADR, or SONUS
owes to ABBOTT certain sums. Such amount due by one party to the other
(if any) shall be due and payable (with interest at the prime rate of
interest, as published in the Wall Street Journal, Midwest Edition on
the date on which the decision is delivered) within thirty (30) days of
the delivery of a decision.
(C) In the event ABBOTT should terminate its reimbursement of
costs and expenses incurred by SONUS in connection with any clinical
research pursuant to Section 2.4(A) prior to the conclusion of such
clinical research, the parties shall negotiate in good faith to modify
the percentage allocations of Revenue Payments allocable to such
additional indications under Section 7.1 to reflect the amount of the
additional expenditures made by SONUS for such additional clinical
research, together with such other factors as are appropriate.
Notwithstanding the foregoing, if within ninety (90) days of the receipt
of regulatory approval of the Product for such additional indication
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supported by such clinical research in the United States or the European
Union (whichever first occurs) ABBOTT pays to SONUS the amount ABBOTT
would have paid had ABBOTT not terminated such reimbursement with
interest at the prime rate of interest (as published in the Wall Street
Journal, Midwest Edition on the date on which the termination took place
from the date of such unreimbursed expenditures by SONUS to the date of
payment by ABBOTT), the obligation of SONUS to reimburse ABBOTT as set
forth above shall continue with respect to all such amounts paid by
ABBOTT.
(D) If ABBOTT determines not to provide additional financial
support for such additional clinical research as provided in Section
2.4(A) 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 are unable to agree upon a reasonable
modification of the percentage allocation of Revenue Payments within
thirty (30) days of the date on which they began discussing such
modification, then the parties shall use the ADR procedure pursuant to
Article 21 to determine the modification of the percentage allocations
of Revenue Payments (if any). 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 the
right of first refusal pursuant to Article 10."
4. SECTION 3.2 shall be amended as follows:
A. APPENDIX 3.2B - FORECASTED NET SALES ("NET SALES FORECAST"). The
Net Sales Forecast shall be updated and revised by ABBOTT and
mutually agreed upon by the parties in good faith.
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B. SECTION 3.2(A) second sentence shall be amended as follows:
"ABBOTT shall use its reasonable best efforts to optimize sales,
profitability and market share of the Product in the Territory in
a manner consistent with the efforts which it exerts to optimize
sales, profitability, and market share of its other products in
the Territory."
C. SECTION 3.2(B) shall be amended by restating the preamble
paragraph and clause (i) as follows:
"(B) SONUS shall not have the right to co-promote (as
defined herein) the Product unless and until such time as SONUS
has received FDA approval of the Product for both the Cardiology
Indication and the Radiology Indication. In the event that (and
after such time as) SONUS has received FDA approval for the
Product for both the Cardiology Indication and the Radiology
Indication, SONUS may co-Promote 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 upon Net Sales
Forecast for any two consecutive calendar 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. The Net
Sales Forecast shall include the material assumptions made in
preparing the Net Sales Forecast, including without limitation,
the anticipated Cardiology Indication Approval Date and Radiology
Indication Approval Date. 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 calendar
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quarters. In the event that the Cardiology/Radiology Approval
Date does not occur within the time frame contemplated by the
parties as set forth in Net Sales Forecast, the Net Sales
Forecast shall be adjusted as mutually agreed by the parties to
reflect the revised anticipated Cardiology/Radiology Approval
Date and the specific indications approved, and any material
changes to the assumptions for the Net Sales Forecast, including
without limitation, any additional indications which may be
approved as contemplated in Section 2.4. If the parties are
unable to agree on such adjustment within thirty (30) days of the
date on which they began discussing such adjustment, then the
parties shall utilize the Alternative Dispute Resolution
Procedure set forth in Section 21 to determine such adjustment."
D. SECTION 3.2(C) shall be amended by adding to the beginning
thereto the following:
"In the event that SONUS co-promotes the Product pursuant
to Section 3.2(B), such co-promotion shall be in a manner
designed to be 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."
5. SECTION 3.4(A) - PRODUCT MANUFACTURE shall be deleted in its entirety
and replaced with the following:
"(A) ABBOTT and SONUS have previously entered into a
Development and Supply Agreement dated as of May 6, 1993, as
amended ("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
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Product by ABBOTT for sale in the Territory by ABBOTT shall be
governed by the terms of the Supply Agreement, as amended from
time to time, and the specifications for the Product in effect
under the Supply Agreement."
6. SECTION 3.5 - PRODUCT FORECASTS, ORDERS AND REJECTED PRODUCT shall be
amended by adding at the end thereto Subsection (H) as follows:
"(H) ABBOTT and SONUS agree that during the term of the
Agreement a certain portion of the Product will be packaged [*].
In the early years following the First Shipment Date of the
Product [*], a larger percentage of total Unit Sales shall
consist of [*], whereas, in later years, ABBOTT shall move toward
marketing and selling a certain portion of the Product [*] in
accordance with the following guidelines:
[*]
After the expiration of the Launch Budget Reimbursement Payments
under Article 6.2 and in the event that actual Unit Sales of [*]
as a percentage of total Unit Sales exceed the percentage
thresholds set forth in this subsection (H), ABBOTT and SONUS
agree to meet to discuss an adjustment of the percentages or
modifications to [*] or modification to the percentage allocation
of Revenue Payments under Article 7.1, as appropriate. If the
parties are unable to agree upon an appropriate and reasonable
adjustment or modification within thirty (30) days of the date on
which they began discussing such modification, then the parties
shall use the ADR procedure pursuant to Article 21 to determine
an appropriate and reasonable adjustment or modification, if any.
7. SECTION 3.6 - CLINICAL RESEARCH, REGULATORY AFFAIRS, TECHNICAL
MARKETING/MEDICAL SUPPORT. The last two sentences of subsection (A) are deleted.
Subsections (C) and (D) are added as follows:
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"3.6. Clinical Research, Regulatory Affairs, Technical
Marketing/Medical Support.
(C) ABBOTT shall be responsible for required adverse drug
event reporting to the FDA and will consult with SONUS prior to
such required reports to allow SONUS to conduct an investigation
of the event and review all such reports prior to submission to
the FDA. Notwithstanding the foregoing provisions, however,
nothing in this Agreement shall require ABBOTT to delay
submitting any adverse event report beyond the time limit set by
the FDA. Each party shall promptly notify the other party of all
communications from and to the FDA regarding the Product.
(D) ABBOTT shall be responsible for obtaining
reimbursement code programs with respect to all federally-funded
and/or state-funded reimbursement programs. ABBOTT will pursue
such activities diligently and will use its reasonable best
efforts to obtain such reimbursement code programs."
8. ARTICLE 4 - CANADA AND LATIN AMERICA AND OTHER TERRITORIES shall be
deleted in its entirety.
9. SECTION 5 - LICENSES shall be amended by adding a new Subsection (D) as
follows:
"(D) As specified in amended Appendix 2.3 certain
milestone payments have been conditioned upon the achievement of
specific milestones relating to the Cardiology Indication and the
Radiology Indication. Payments due on or after the date of this
Amendment have been apportioned (i) fifty percent (50%) to
milestones related to the achievement of the FDA approval of the
Cardiology Indication for the Product ("Cardiology Milestone
Payments") and (ii) fifty percent (50%) have been apportioned to
the achievement of FDA approval of the Radiology Indication (or a
modification of the Radiology Indication, as may be
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mutually agreed upon by ABBOTT and SONUS through good faith
discussions and in writing, through a development plan agreed
upon and approved by both ABBOTT and SONUS within ninety (90)
days following the date hereof) for the Product and other
specific milestones relating to the Radiology Indication
("Radiology Milestone Payments").
(E) Within one (1) year following the Radiology Prepayment
Date (as such term is defined on Exhibit A to the Securities
Purchase Agreement), SONUS shall have the right to request that
ABBOTT prepay any or all of the Radiology Milestone Payments in
consideration for the issuance by SONUS to ABBOTT of shares of
SONUS Common Stock, pursuant to and subject to the terms and
conditions of a the Securities Purchase Agreement in the form
attached hereto as Appendix 2.4, the terms and conditions of
which Securities Purchase Agreement are incorporated herein by
reference. Anything herein or in the Securities Purchase
Agreement notwithstanding, SONUS shall not have the right to
request that Abbott make any prepayment of any Radiology
Milestone Payment (i) relating to the NDA approval milestone
unless and until SONUS has received the first FDA approval of the
Product in the Field, and (ii) relating to the first shipment of
the Product milestone unless and until the first shipment of the
Product has occurred. If SONUS does not request prepayment of the
Radiology Milestone Payments within such one (1) year period as
provided in the Securities Purchase Agreement, ABBOTT shall not
be obligated to pay the Radiology Milestone Payments until such
time as SONUS obtains FDA approval of the Radiology Indication.
In the event that ABBOTT has prepaid any or all of the Radiology
Milestone Payments, SONUS shall repay thirty percent (30%) of the
dollar value of such prepaid amount ("Repayment Amount") to
ABBOTT if SONUS fails to achieve the Radiology Milestone on or
before the date which is [*] following the Amendment Effective
Date. SONUS shall pay to ABBOTT the Repayment Amount by either,
at the option of SONUS:
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(i) repaying ABBOTT the Repayment Amount in the form of
cash within ten (10) days following the date which is
[*] following the Amendment Effective Date; or
(ii) issuing and delivering to ABBOTT a number of shares
of Common Stock of SONUS equal to the Repayment Amount
pursuant to the terms and conditions of the Securities
Purchase Agreement.
10. SECTION 6.2 - LAUNCH BUDGET REIMBURSEMENT PAYMENTS - shall each be
deleted in its entirety and replaced with the following:
"6.2 Launch Budget Reimbursement Payments. Each calendar quarter
following the First Shipment Date and until the earlier to occur of
either: (a) the last day of the calendar quarter in which achievement of
Net Sales equal to or greater than fifteen million dollars ($15,000,000)
in two (2) consecutive calendar quarters, or (b) [*], one party shall
pay to the other party an amount equal to fifty percent (50%) of the
excess of 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 of Product sales, the amount to be
paid by SONUS to ABBOTT is [*]. 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. As used
herein, "Budget Launch Expenses" shall mean the lesser of: (i) [*], or
(ii) [*]
11. SECTION 6.3 - LOSS CARRY FORWARD. Section 6.3 shall be deleted in its
entirety and replaced with the following:
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"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 earlier to occur of either: (a) achievement of Net Sales
equal to or greater than fifteen million dollars ($15,000,000) in two
(2) consecutive calendar quarters, or (b) [*], 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."
12. SECTION 7.1 - CALCULATION OF REVENUE PAYMENTS - shall be amended by
adding to the end thereof the following:
"Anything herein to the contrary notwithstanding, the amount of the
payments to be made by ABBOTT to SONUS as set forth in Article 7 shall
not be reduced by more than fifty percent (50%) in any calendar quarter
as a result of the offsets pursuant to Section 6.2. Any offsets which
otherwise would have been made except for the preceding sentence or for
any other reason shall be carried forward and applied as offsets against
future payments to be made by ABBOTT to SONUS as set forth under Article
7."
13. SECTION 8.3 - PROHIBITION shall be amended by deleting the initial
phrase "With the exception of purchase under Section 8.1," and replacing it with
the phrase "With the exception of purchase under the terms of this Agreement or
any other written agreement between SONUS and ABBOTT or ABBOTT's Affiliates".
14. SECTION 16 - NON-COMPETE shall be amended by deleting the first sentence
thereof and replacing it with the following sentence:
"For a period of [*] after the Amendment Effective Date, each
party and its Affiliates shall undertake not to market or sell a
competing product in the Territory to an end user."
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15. [*] RIGHTS AND NEGOTIATION.
As of the Amendment Effective Date, SONUS has under development an
ultrasound diagnostic imaging product within the Field which SONUS has
designated as [*]. SONUS and ABBOTT acknowledge and agree that: (i) [*] falls
within the definition of "Product" set forth in Section 1.16 (although all
specific terms and conditions with respect to[*] shall be set forth in a
separate agreement between ABBOTT and SONUS), and (ii) ABBOTT has exclusive
rights to market and sell [*]. SONUS and ABBOTT shall exert all reasonable
efforts to negotiate in good faith, execute and deliver a separate agreement
with respect to [*].
16. REGISTRATION RIGHTS. SONUS shall, prior to or on the Amendment Effective
Date, cause to be amended and restated the Sonus Pharmaceuticals, Inc. Third
Amended and Restated Registration Rights Agreement dated May 15, 1996, as
amended ("Registration Rights Agreement"), to include the shares of Common Stock
issued by SONUS to ABBOTT and Common Stock issuable upon exercise of the
Warrants pursuant to the Agreement, as amended, and the Securities Purchase
Agreement, as "Registrable Securities" as the term "Registrable Securities" is
defined in the Registration Rights Agreement. The effectiveness of this
Amendment shall be conditioned upon the approval, execution and delivery of the
Registration Rights Agreement, amended and restated as set forth in this Section
16 of the Amendment.
17. APPENDICES. Appendices of the Agreement are amended as set forth in the
corresponding Appendices attached to this Amendment.
18. CONFIDENTIALITY. In the event that this Amendment is to be filed with
the Securities and Exchange Commission, ABBOTT and SONUS shall discuss any
request for confidential treatment of certain financial and other terms of this
Amendment and cooperate in the preparation and filing of any confidential
treatment requests submitted to the Securities and Exchange Commission with
respect to this Amendment.
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19. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all together shall
constitute one and the same instrument.
20. AMENDED TERMS. Except as expressly modified and amended by this
Amendment, all terms and conditions of the Agreement shall remain in full force
and effect.
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: /s/ Richard A. Gonzalez By: /s/ Michael A. Martino
------------------------------------- -------------------------------
Name: Richard A. Gonzalez Name: Michael A. Martino
Title: President, Hospital Title: President
Products Division
15
<PAGE> 16
AMENDED
APPENDIX 1.7
INDICATIONS AND USAGE
AS OF JANUARY 25, 1998
RADIOLOGY INDICATION
[*]
CARDIOLOGY INDICATION
[*]
<PAGE> 17
AMENDED
APPENDIX 2.3
RESEARCH AND DEVELOPMENT
PAYMENT SCHEDULE
1. Execution of definitive Agreement (May 14, 1996) $4 Million
(Includes $1,000,000 payment for grant of licenses)
2. 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
3. Filing NDA** within 15 days $2 Million
within 105 days $1 Million
within 195 days $1 Million
4. NDA acceptance by FDA**
within 15 days $1 Million
within 105 days $1 Million
within 195 days $1 Million
within 285 days $1 Million
5. Advisory Panel Approval**
within 15 days $2 Million
within 105 days $2 Million
6. NDA Approval ** $4 Million
7. 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 one or more indications which are the Cardiology Indication and
Radiology Indication defined in Sections 1.21 and 1.22, respectively. Of
the amount specified in each of item 6 and 7, fifty percent (50%) shall
be earned based on the FDA approval of the NDA for the Cardiology
Indication and fifty percent (50%) shall be earned based on FDA approval
of the NDA for the Radiology Indication. The manner in which these
milestones are earned and paid is further set forth in the Securities
Purchase Agreement.
17
<PAGE> 18
APPENDIX 2.4
SECURITIES PURCHASE AGREEMENT
[ATTACHED]
18
<PAGE> 1
EXHIBIT 10.34
FIRST AMENDMENT TO
INTERNATIONAL LICENSE AGREEMENT
BETWEEN
ABBOTT INTERNATIONAL, LTD. AND SONUS PHARMACEUTICALS, INC.
THIS FIRST AMENDMENT ("Amendment") dated January 31, 1999 ("Amendment
Effective Date"), by and between Abbott International, Ltd., a Delaware
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, ABBOTT and SONUS have previously entered into an International
License Agreement dated October 1, 1996 ("International Agreement"), whereby
ABBOTT obtained certain exclusive marketing rights for certain territories
outside of the United States, subject to limited SONUS co-promotion rights, to
certain ultrasound contrast agents;
WHEREAS, ABBOTT and SONUS desire to amend the International Agreement as
set forth in this Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants set forth below, ABBOTT and SONUS mutually agree as follows:
1. Capitalized terms used in this Amendment and not otherwise defined in
this Amendment shall have the meanings set forth in the International
Agreement. Article 1 of the International Agreement is amended as
follows: (a) Article 1.10 is amended as follows:
"First Sale Date" means the earlier of: (i) the date of the
first sale of the Product in a given Major Country following the Approval
Date(as defined
[*] CONFIDENTIAL PORTIONS OMITTED AND
FILED SEPARATELY WITH COMMISSION
1
<PAGE> 2
below) in such Major Country by ABBOTT or an ABBOTT Affiliate or
sublicensee to a Third Party; or (ii) the date ninety (90) days
after the Approval Date in such Major Country."
(b) The following new definitions are added to Article 1:
"1.24" 'Approval Date' means the later to occur of the date of
Regulatory Approval by the European Medicines Evaluation Agency
("EMEA") of the Product for (i) the Cardiology Indication and
(ii) the Radiology Indication.
"1.25" 'Cardiology Indication' means the indication for the
Product [*]
"1.26" 'Radiology Indication' means the indication for the
Product [*]
2. The introduction of Article 2.1(A) of the International Agreement is
amended as follows:
"(A) SONUS shall be responsible for all activities required to
obtain Regulatory Approval, exclusive of price approval and
reimbursement approval, in Countries which as of the Effective
Date, are members of the European Community ('EC Countries).
These activities will include, but not be limited to, clinical
trials and the filing of an application for marketing approval
with the EMEA. SONUS will pursue these activities diligently and
will use its reasonable best efforts to obtain such Regulatory
Approval, exclusive of price approval and reimbursement approval,
as quickly as is feasible. ABBOTT shall be responsible for all
activities required to obtain price approval and reimbursement
approval in such EC Countries. ABBOTT will pursue such activities
diligently and will use its reasonable best efforts to obtain
such price approvals and reimbursement approvals as quickly as is
feasible."
3. Article 2.2(A) of the International Agreement is amended as follows:
"(A) If ABBOTT desires to participate financially in such
additional clinical research, and communicates its decision to
participate in accordance with Article 2.4 of the United States
Agreement, as amended, SONUS shall reimburse ABBOTT fifty percent
(50%) of such costs and expenses funded by ABBOTT ('Reimbursement
Amount') by either, at the option of SONUS:
(i) reimbursing ABBOTT in cash such Reimbursement Amount
with interest at the United States prime rate of interest
(as published in the Wall Street
2
<PAGE> 3
Journal Midwest Edition on the date on which ABBOTT funds
such reimbursement) within five (5) years of the date such
Reimbursement Amount is fully paid by ABBOTT; or
(ii) reducing the royalty rates payable by ABBOTT to SONUS
as provided in Article 6.1 at such dates and in such
amounts as is mutually agreed by the parties; or
(iii) in the event that the net tangible assets of SONUS
shall, at any time within five (5) years of the date such
Reimbursement Amount is fully paid by ABBOTT, fall below
an amount equal to the then current Nasdaq National Market
listing requirements for net tangible assets contained in
paragraph 4450(a)(3) of the NASD Manual, as such paragraph
may be amended from time to time, plus One Million Dollars
($1,000,000) reimbursing ABBOTT such Reimbursement Amount
with interest at the United States prime rate of interest
(as published in the Wall Street Journal Midwest Edition
on the date on which ABBOTT funds such reimbursement), by
issuing and delivering to ABBOTT within such five (5) year
period shares of Common Stock of SONUS having a fair
market value equal to such Reimbursement Amount plus such
interest pursuant to the terms and conditions of a
Securities Purchase Agreement substantially in the form
attached hereto as Exhibit 2.2(A), and which is
incorporated herein by reference; or
(iv) reimbursing ABBOTT partially in cash pursuant to
Article 2.2(A)(i) and the remainder in SONUS Common Stock
pursuant to Article 2.2(A)(iii). If the parties are unable
to agree on a reduction of the royalty rates pursuant to
Article 2.2(A)(ii) within thirty (30) days of the date on
which they began discussing such reduction, then the
parties shall utilize the ADR procedure pursuant to
Article 20 to determine the royalty rate reduction. Once
the ADR procedure has been initiated, and through the date
of the final ADR decision, ABBOTT may deduct 10% from its
royalty payments to SONUS. Promptly after the ADR
decision, ABBOTT shall pay SONUS the balance of royalty
payments due under the reduced royalty rate (if any), or
SONUS shall repay to ABBOTT the overpayment by ABBOTT (if
any). Any such amount due
20
<PAGE> 4
from one party to the other shall be due and payable (with
interest at the prime rate of interest as published in the
Wall Street Journal Midwest Edition on the date of the ADR
decision) within thirty (30) days of the owing party's
receipt of the ADR decision."
4. The second sentence of Article 3.2(A) of the International Agreement is
amended as follows:
"ABBOTT shall use its reasonable best efforts to optimize
sales, profitability, and market share of the Product in
the Territory in a manner consistent with the efforts
which it exerts to optimize sales, profitability, and
market share of its other products in the Territory."
5. Article 3.2(B)(i)(c)(1) of the International Agreement is amended as
follows:
"(1) ABBOTT's failure to make the minimum royalty payment
in a Major Country in the Territory was due to the fact
that the Approval Date did not occur within the time frame
contemplated by the parties as set forth in the Plan for
that Major Country. The Net Sales forecast shall be
adjusted as mutually agreed by the parties to reflect the
actual Approval Date and the actual indications approved,
and any material changes to the assumptions for the Net
Sales forecast, including without limitation any
additional indications which may be approved as
contemplated in Section 2.2. If the parties are unable to
agree on such adjustment within thirty (30) days of the
date on which they began discussing such adjustment, then
the parties will utilize the Dispute Resolution Procedure
under Article 20 to determine such adjustment."
6. Article 3.4(A) of the International Agreement is deleted and replaced
with the following:
(A) ABBOTT and SONUS have previously entered into a Development
and Supply Agreement dated May 6, 1993, as amended ("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 Article 3.5.
All manufacturing of the Product by ABBOTT for sale in the
4
<PAGE> 5
Territory by ABBOTT shall be in accordance with the terms of the
Supply Agreement, as amended from tie to time, and the
specifications for the Product under the Supply Agreement."
7. Article 3.4 of the International Agreement is amended by adding the
following:
"(E) ABBOTT and SONUS agree that during the term of this
Agreement a certain portion of the Product will be packaged [*].
In the early years following the First Sale Date of the Product
packaged [*] in the E.U., a larger percentage of total Unit Sales
shall consist of [*], whereas in later years, ABBOTT shall move
toward selling a larger percentage of the total Unit Sales of
[*], in accordance with the following guidelines:
[*]
In the event that actual Unit Sales of [*] as a percentage of total Unit
Sales exceed the percentage thresholds set forth in this Subsection (E),
ABBOTT and SONUS agree to discuss an adjustment of the percentages or
modifications to [*] or a modification to the royalty rates under
Article 6, as appropriate." If the parties are unable to agree upon a
reasonable adjustment or modification within thirty (30) days of the
date on which they began discussing such adjustment or modifications,
then the parties shall use the ADR procedure pursuant to Article 20 to
determine such adjustment or modifications (if any).
8. Article 4 of the International Agreement shall be amended by adding the
following last sentence:
"ABBOTT agrees that, as of the Amendment Effective Date, SONUS
has fulfilled its obligations to ABBOTT relating to the
SONUS/Daiichi Agreement under this Article 4."
9. SONUS acknowledges that ABBOTT has exercised the options granted under
Article 5.1(C)(i) and Article 5.1(C)(ii), and that the licenses relating
respectively to such options have been granted to ABBOTT and are part
of, and subject to the terms and conditions of, the International
Agreement as modified by this Amendment.
5
<PAGE> 6
10. SONUS acknowledges that the amounts referred to in items 1,2 and 3 of
Appendix 5.2 and in items 1,2 and 3 of Appendix 5.3 of the International
Agreement, as modified by this Amendment, have been paid by ABBOTT to
SONUS in full prior to the Amendment Effective Date.
11. New Articles 5.4 and 5.5 are added to the International Agreement as
follows:
"5.4 Acceleration of Radiology Milestone Payments. As indicated
in Appendices 5.2 and 5.3 of the International Agreement, as
modified by this Amendment, certain of the milestone payments
have been conditioned upon the achievement of specific
milestones relating to specified indications for the Product.
Fifty percent (50%) of each such payment is to be earned based
on approval of the Cardiology Indication ('Cardiology Milestone
Payment') and the remaining fifty percent (50%) is to be earned
based on approval of the Radiology Indication or of a radiology
indication mutually agreed by the parties in writing hereafter
('Radiology Milestone Payment').
5.5 Prepayment of Radiology Milestone. Within one (1) year
following the Radiology Prepayment Date (as such term is defined
in Exhibit A to the Securities Purchase Agreement), SONUS shall
have the right to request that ABBOTT prepay any or all of such
Radiology Milestone Payments in consideration for the issuance
by SONUS to ABBOTT of shares of SONUS Common Stock pursuant to
and subject to the terms and conditions of the Securities
Purchase Agreement in the form attached hereto as Exhibit
2.2(A), the terms and conditions of which Securities Purchase
Agreement are incorporated herein by reference. Anything herein
or in the Securities Purchase Agreement notwithstanding, SONUS
shall not have the right to request that ABBOTT make any
prepayment of any Radiology Milestone Payment, (i) relating to
the U.S. NDA approval milestone unless and until SONUS has
received the first U.S. FDA approval of the Product in the Field
(as defined in the United States Agreement), and (ii) relating
to the first shipment date of Product for sale in Germany,
France, Italy, Spain, Canada or
6
<PAGE> 7
the United Kingdom milestone, unless and until the first
shipment of Product has occurred in any such country. If SONUS
does not request prepayment of the Radiology Milestone Payments
within such one (1) year period as provided in the Securities
Purchase Agreement, ABBOTT shall not be obligated to pay the
Radiology Milestone Payments until such time as SONUS obtains
EMEA approval of the Radiology Indication. In the event that
ABBOTT has prepaid any or all of the Radiology Milestone
Payments, SONUS shall repay thirty percent (30%) of the dollar
value of such prepaid amount ("Repayment Amount") to ABBOTT if
SONUS fails to achieve the Radiology Milestone on or before the
date which is [*] following the Amendment Effective Date. SONUS
shall pay to ABBOTT the Repayment Amount by either, at the
option of SONUS: (i) repaying ABBOTT the Repayment Amount in the
form of cash within ten (10) days following the date which is
[*] following the Amendment Effective Date; or (ii) issuing and
delivering to ABBOTT a number of shares of Common Stock of SONUS
equal to the Repayment Amount pursuant to the terms and
conditions of the Securities Purchase Agreement.
12. Article 6.1 of the International Agreement is amended as follows:
"Royalty Rate. The Royalty Rate applicable to calculate ABBOTT's
Royalty payment, pursuant to Article 6.2 below, shall be based
upon the number of approved indications for the Product in
Germany, France, Italy, Spain and the United Kingdom, and upon
the level of ABBOTT's aggregate annual Net Sales in the
Territory, as set forth in Appendix 6.1 to this Amendment."
13. As of the Amendment Effective Date, SONUS has under development an
ultrasound diagnostic imaging product within the Field which SONUS has
designated as [*]. SONUS and ABBOTT acknowledge and agree that: (i) [*]
falls within the definition of "Product" (although all specific terms
and conditions with respect to [*] shall be set forth in a separate
7
<PAGE> 8
agreement between ABBOTT and SONUS), and (ii) ABBOTT has exclusive
rights to market and sell [*]. SONUS and ABBOTT shall exert all
reasonable efforts to negotiate in good faith, execute and deliver a
separate agreement with respect to [*].
14. Registration Rights. SONUS shall, prior to or on the Amendment Effective
Date, cause to be amended the Sonus Pharmaceuticals, Inc. Third Amended
and Restated Registration Rights Agreement dated May 15, 1996, as
amended ("Registration Rights Agreement"), to include the shares of
Common Stock issued by SONUS to ABBOTT and Common Stock issuable upon
exercise of the Warrants pursuant to the United States Agreement, as
amended, and the Securities Purchase Agreement, as "Registrable
Securities" as the term "Registrable Securities" is defined in the
Registration Rights Agreement.
15. Appendices. Appendices of the International Agreement are amended as set
forth in the corresponding Appendices attached to this Amendment.
16. Confidentiality. In the event that this Amendment is to be filed with
the Securities and Exchange Commission, ABBOTT and SONUS shall discuss
any request for confidential treatment of certain financial and other
terms of this Amendment and cooperate in the preparation and filing of
any confidential treatment requests submitted to the Securities and
Exchange Commission with respect to this Amendment.
17. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all
together shall constitute one and the same instrument.
18. Except as expressly modified by this Amendment, all terms and conditions
of the International Agreement shall remain in full force and effect.
8
<PAGE> 9
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to be executed by its duly authorized representative as of the day and year
first above written.
ABBOTT INTERNATIONAL, LTD. SONUS PHARMACEUTICALS, INC.
By: /s/ Richard A. Gonzalez By: /s/ Michael A. Martino
----------------------------- -----------------------------
Title: President, Hospital Products Title: President
Division
9
<PAGE> 10
APPENDIX 5.2
MILESTONE AND LICENSE FEES
PAYMENT SCHEDULE
<TABLE>
<S> <C> <C>
1. Execution of Definitive Agreement US$ 1 million
2. Filing of NDA with EMEA US$ 1 million
within 15 days
3. Commencement of Phase III Myocardial Perfusion Studies*
within 30 days US$ 1 million
within 120 days 1 million
within 150 days 1 million
4. United States NDA Approval
within 15 days US$ 3 million***
5. European Community Marketing Authorization Granted
within 15 days US$ 2 million
within 105 days 1 million***
within 195 days 1 million***
6. First Shipment Date of Product for Sale**
within 15 days US$ 3 million***
within 105 days 1 million***
</TABLE>
10
<PAGE> 11
<TABLE>
<S> <C> <C>
7. Annual**** (One-Time) U.S. $20 Million Net Sales in the
Territory US$ 4 million
8. Annual**** (One-Time) U.S. $40 Million Net Sales in the
Territory US$ 2 million
Total License and Milestone Payments US$ 22 million
</TABLE>
*"Commencement" means enrollment of first patient in a U.S. clinical study.
**To Germany, France, Italy, Spain, Canada or the United Kingdom.
***These milestone payments shall be earned based on approved indications. Of
the amount specified in item 4 above, fifty percent (50%) shall be earned based
on United States NDA approval by the FDA of the Cardiology Indication for the
Product, and fifty percent (50%) shall be earned based on United States NDA
approval by the FDA of the Radiology Indication or a radiology indication
mutually agreed by the parties hereafter for the Product. Of the amounts
specified in items 5 and 6 above, fifty percent (50%) shall be earned based on
approval by the EMEA of the Cardiology Indication for the Product, and fifty
percent (50%) shall be earned based on approval by the EMEA of the Radiology
Indication or of a radiology indication mutually agreed by the parties hereafter
for the Product.
****"Annual" means the then-applicable fiscal year of ABBOTT.
11
<PAGE> 12
APPENDIX 5.3
OFFSETTABLE MILESTONES, LICENSE AND OPTION FEES
PAYMENT SCHEDULE
<TABLE>
<S> <C> <C>
1. Execution of Definitive Agreement
within 300 days US$ 700,000
2. Commencement of Phase III Myocardial Perfusion Studies*
within 30 days US$ 700,000
within 120 days 700,000
3. After Exercise by ABBOTT of Article 5.1 (C) Option
On December 15, 1997 US$ 1,400,000
On January 15, 1998 700,000
On April 15, 1998 700,000
4. European Community Marketing Authorization Granted
within 15 days US$ 700,000
within 105 days 700,000**
within 195 days 700,000**
within 265 days 700,000**
</TABLE>
12
<PAGE> 13
<TABLE>
<S> <C> <C>
5. Annual*** (One-Time) U.S. $20 Million Net Sales in the
Territory US$ 2,800,000
6. Annual*** (One-Time) U.S. $40 Million Net Sales in the
Territory US$ 2,100,000
Total Offsettable License and Milestone Payments US$ 12,600,000
</TABLE>
* "Commencement" means enrollment of first patient in a U.S. clinical study.
** These milestone payments shall be earned based on approved indications. Fifty
percent (50%) shall be earned based on approval by the EMEA of the Cardiology
Indication for the Product, and fifty percent (50%) shall be earned based on
approval by the EMEA of the Radiology Indication or a radiology indication
mutually agreed by the parties hereafter for the Product.
*** "Annual" means the then-applicable fiscal year of ABBOTT.
13
<PAGE> 14
APPENDIX 6.1
ROYALTY RATES
<TABLE>
<CAPTION>
Indications Aggregate Annual** Sales Royalty Rate
- ------------------------------- -------------------------- ----------------
<S> <C> <C>
Sales during the period that Up to $42 million 24% of Net Sales
there is only Cardiology
Indication approved in the E.U.*
Sales during the period that Greater than $42 million 28% of Net Sales
there is only Cardiology
Indication approved in the E.U.*
Sales during the period that Up to $90 million 28% of Net Sales
there are Cardiology and
Radiology Indications approved
in the E.U.*
Sales during the period that From $90 million to $125 32% of Net Sales
there are Cardiology and million
Radiology Indications approved
in the E.U.*
Sales during the period that Over $125 million 36% of Net Sales
there are Cardiology and
Radiology Indications approved
in the E.U.*
Sales during the period that Up to $90 million 32% of Net Sales
there are Cardiology, Radiology
and perfusion Indications
approved in the E.U.*
Sales during the period that From $90 million to $125 36% of Net Sales
there are Cardiology, Radiology million
and perfusion Indications
approved in the E.U.*
Sales during the period that From $125 million to $225 40% of Net Sales
there are Cardiology, Radiology million
and perfusion Indications
approved in the E.U.*
Sales during the period that Over $225 million 42% of Net Sales
there are Cardiology, Radiology
and perfusion Indications
approved in the E.U.*
</TABLE>
14
<PAGE> 15
* "Approved in the E.U." means that EMEA marketing authorization has been
obtained for the specified indications in at least Germany, France, Italy, Spain
and the United Kingdom.
15
<PAGE> 1
EXHIBIT 10.35
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement is entered into as of this 31st day
of January 1999 by and between Abbott Laboratories, an Illinois corporation
("Abbott") and SONUS Pharmaceuticals, Inc. a Delaware corporation ("SONUS").
RECITALS
A. Concurrently herewith Abbott and SONUS are entering into a First
Amendment to that certain Agreement between Abbott and SONUS dated May 14, 1996
(as amended, the "U.S. Agreement") and a First Amendment to that certain
International License Agreement dated October 1, 1996 (as amended, the
"International Agreement") (the U.S. Agreement and the International Agreement
are collectively referred to herein as the "Agreements") whereby, among other
things, Abbott and SONUS have agreed that certain milestone payments shall be
made conditioned upon the achievement of specified milestones relating to a
Cardiology Indication (the "Cardiology Milestone Payments"), and that certain
milestone payments shall be conditioned upon the achievement of specified
milestones relating to a specified Radiology Indication (collectively, the
"Radiology Milestone Payments"), as more particularly specified on Appendix 2.3
of the U.S. Agreement and Appendix 5.2 and 5.3 of the International Agreement.
B. The Agreements provide that SONUS shall have the right to request
that Abbott prepay all or a portion of the Radiology Milestone Payments on or
after the Radiology Prepayment Date, as specified in Exhibit A attached hereto,
in consideration for the issuance by SONUS of shares of its Common Stock under
the terms and conditions provided herein.
C. Pursuant to Section 2.4 of the U. S. Agreement, and Article 2.2(A) of
the International Agreement, Abbott may at its option elect to fund certain
expenditures for clinical research conducted by SONUS to support research and
development for ultrasound diagnostic applications for certain specified
indications for the Product, in which event SONUS shall become obligated to
reimburse Abbott fifty percent (50%) of such costs and expenses funded by Abbott
plus accrued interest (the "Additional Clinical Reimbursement Amounts"). Such
sections of the Agreements further provide that in the event that the net
tangible assets of SONUS shall at any time fall below an amount equal to the
current Nasdaq National Market listing requirement for net tangible assets
contained in paragraph 4450(a)(3) of the NASD Manual, plus $1,000,000, SONUS at
its option may repay the Additional Clinical Reimbursement Amounts by delivering
shares of Common Stock of SONUS pursuant to the terms and provisions set forth
herein.
In consideration of the foregoing, and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereby agree as follows:
[*] CONFIDENTIAL PORTIONS OMITTED AND
FILED SEPARATELY WITH COMMISSION
<PAGE> 2
1. Definitions. Capitalized terms used but not otherwise defined
herein shall have the meanings set forth in the Agreements, or a
specific Agreement as may be indicated herein or as may be
applicable due to variations in certain definitions between the
Agreements.
2. Purchase and Sale of Common Stock Upon Prepayment of Radiology
Milestone Payments and Payment of Repayment Amount.
2.1 Purchase and Sale Upon Prepayment of Radiology Milestone
Payments. In the event that SONUS desires that Abbott
prepay all or any portion of the Radiology Milestone Payment, SONUS shall give
written notice to Abbott of such prepayment request within one (1) year
following the Radiology Prepayment Date, which notice shall specify the amount
of the prepayment (which may not exceed the amount of the Radiology Milestone
Payment). In such event, pursuant to the terms and conditions set forth herein,
SONUS shall issue to Abbott and Abbott shall accept and purchase from SONUS a
number of shares of Common Stock equal to the amount of the prepayment divided
by the "Fair Market Value" per share of Common Stock. The "Fair Market Value" of
the Common Stock shall be determined as follows:
(a) 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 or any
comparable system, the current Fair Market Value shall be the average of the
daily closing prices of the Common Stock on such exchange or Nasdaq for the
twenty (20) trading days prior to the notice by SONUS to Abbott of the requested
prepayment; the closing price for any day shall be the last reported sale price
regular way or, if no such reported sale takes place on such day, the average of
the closing bid and asked prices regular way for such day, in each case (1) on
the principal national securities exchange on which the shares of Common Stock
are listed or to which such shares are admitted to trading or (2) if the Common
Stock is not listed or admitted to trading on a national securities exchange, in
the over-the-counter market as reported by Nasdaq or any comparable system; or
(b) If the Common Stock is not so listed or
admitted to unlisted trading privileges or quoted on Nasdaq or any comparable
system, the current Fair Market Value shall be the average of the daily closing
prices for the twenty (20) trading days prior to the notice by SONUS to Abbott
of the requested repayment as furnished by two members of Nasdaq selected from
time to time in good faith by the Board of Directors of SONUS for that purpose;
or
(c) In the absence of the foregoing valuation
methods in Section 2.1(a) or (b), or if for any other reason the Fair Market
Value per share cannot be determined pursuant to Section 2.1(a) or (b), the
current Fair Market Value shall be determined in good faith as promptly as
reasonably practicable by the Board of Directors of SONUS.
(d) Anything herein to the contrary
notwithstanding, for the purpose of determining Fair Market Value under this
Section 2.1 (but not in Section 3.1), the Fair Market Value shall not exceed
$16.00 per share of Common Stock.
2.2 Purchase and Sale Upon Payment of Repayment Amount. In the
event SONUS has requested that Abbott prepay a Radiology Milestone Payment and
SONUS fails to
-2-
<PAGE> 3
achieve the milestone giving rise to the Radiology Milestone Payment within [*]
from the date of this Agreement, SONUS shall be obligated to pay Abbott an
amount equal to thirty percent (30%) of the amounts prepaid (the "Repayment
Amount") in cash, or by the issuance of shares of Common Stock. In the event
SONUS elects to pay the Repayment Amount in cash, such repayment shall be made
within ten (10) days following the expiration of the [*] period. In the event
SONUS elects to pay the Repayment Amount in the form of the issuance of shares
of Common Stock, SONUS shall issue to Abbott and Abbott shall accept and
purchase from SONUS that number of shares of Common Stock of SONUS equal to the
Repayment Amount divided by the Fair Market Value per share (determined in
accordance with Section 2.1 above for the seventeen (17) trading days preceding
the third trading day prior to the closing date). The issuance of such shares of
Common Stock shall constitute payment in full of the Repayment Amount. Anything
herein to the contrary notwithstanding, in the event that SONUS elected to pay
the Repayment Amount in the form of issuance of shares of SONUS Common Stock and
either (i) SONUS' ability to issue some or all of the shares of Common Stock for
such repayment to Abbott is suspended pursuant to the terms of Section 2.4, or
(ii) the conditions to closing set forth in Section 6 have not been fulfilled
within 180 days following the expiration of the [*] period following the date
hereof, then in either such event SONUS shall pay to Abbott the portion of the
Repayment Amount (not paid in the form of Common Stock) in the form of cash or
in another form mutually agreed to by the parties.
2.3 Closing. The closing for the purchase and sale of shares
of Common Stock shall occur at a mutually agreeable date and location, which
shall occur within the later of (i) (A) ten (10) days from the date of the
notice of exercise of prepayment by SONUS in the case of shares issued pursuant
to Section 2.1 above, or (B) within ten (10) days of expiration of the [*]
period following the date hereof in the case of shares issued pursuant to
Section 2.2 above, or (ii) five (5) days following the fulfillment of all of the
conditions set forth in Section 6 below. At the closing, SONUS shall deliver to
Abbott shares of Common Stock as provided in Section 2.1 or Section 2.2 above,
as applicable, against payment by Abbott to SONUS of the prepayment amount in
the case of Section 2.1 above. In addition, a duly authorized officer of each of
SONUS and Abbott shall deliver to the other a certificate confirming that their
respective representations and covenants set forth in Sections 4 and 5, as
applicable, are true and correct in all material respects as of the closing
date.
2.4 Suspension of Right to Request Prepayment. Anything herein
to the contrary notwithstanding, SONUS shall not have the right to request that
Abbott make any prepayment of any Radiology Milestone Payment or accept payment
of any Repayment Amount in return for the issuance of shares of Common Stock as
provided in this Section 2 if the number of shares of Common Stock to be issued
to Abbott would result in Abbott beneficially owning shares of Common Stock of
SONUS following the issuance in an amount equal to 19.9% or more of the
outstanding Common Stock of SONUS in which event SONUS shall be obligated to pay
the appropriate Repayment Amount in cash as set forth in Section 5(E) of the
U.S. Agreement or Section 5.5 of the International Agreement, as applicable. The
shares of Common Stock of SONUS subject to any warrants or other rights to
acquire shares of Common Stock shall be included for the purpose of determining
the number of shares beneficially owned by Abbott, but warrants and other rights
to acquire Common Stock held by persons other than Abbott shall not be included
for the purpose of determining the total amount of outstanding Common Stock.
Furthermore, anything herein to the contrary notwithstanding, SONUS shall not
have the right to
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<PAGE> 4
request that Abbott make any prepayment of any Radiology Milestone Payment (a)
with respect to the U.S. Agreement (i) relating to the U.S. NDA approval
milestone unless and until SONUS has received the first U.S. FDA approval of the
Product in the Field (as defined in the U.S. Agreement), and (ii) relating to
the U.S. first shipment of Product milestone unless and until the U.S. first
shipment of Product has occurred and (b) with respect to the International
Agreement (i) relating to the U.S. NDA approval milestone, unless and until
SONUS has received the first U.S. FDA approval of the Product in the Field (as
defined in the U.S. Agreement) and (ii) relating to the first shipment date of
the Product in Germany, France, Italy, Spain, Canada or the United Kingdom
milestone, unless and until the first shipment of Product has occurred in any
such country. SONUS shall not repurchase its shares of Common Stock if such
repurchases (including shares repurchased by SONUS from Abbott) would cause
Abbott to beneficially own 19.9% or more of the outstanding Common Stock of
SONUS, calculated as set forth above.
3. Purchase and Sale of Common Stock Upon Exercise of Additional
Clinical Research Reimbursement Option.
3.1 Purchase and Sale. SONUS shall have the right at any time
after the amount of its net tangible assets is below an amount equal to the then
current Nasdaq National Market listing requirement for net tangible assets
contained in paragraph 4450(a)(3) of the NASD Manual, as such paragraph may be
amended from time to time, plus $1,000,000, to elect to fulfill its obligations
to repay Abbott for any or all of the outstanding Additional Clinical
Reimbursement Amounts payable to Abbott by the delivery to Abbott of shares of
Common Stock of SONUS. The amount of net tangible assets of SONUS shall be
determined as of the end of any month according to the unaudited balance sheet
of SONUS prepared in accordance with generally accepted accounting principles.
In the event SONUS desires to make such election, it shall notify Abbott in
writing of the election, specifying the amount of the Additional Clinical
Reimbursement Amount to be paid by delivery to Abbott of shares of Common Stock
and including a copy of the most recent monthly unaudited balance sheet.
3.2 Closing. The closing of the purchase and sale of shares of
Common Stock in connection with any such election shall be a mutually agreeable
date and location, which shall be within the later of (i) ten (10) days from the
notice from SONUS, or (ii) five (5) days following the fulfillment of all of the
conditions set forth in Section 6 below. At the closing, SONUS shall deliver to
Abbott a number of shares of Common Stock of SONUS equal to the amount of the
Additional Clinical Reimbursement Amount to be so paid, divided by the Fair
Market Value per share of Common Stock of SONUS determined in accordance with
the provisions of Section 2.1 above (excluding paragraph 2.1(d), against a
receipt by Abbott acknowledging receipt of the shares of Common Stock and a
cancellation of the Additional Clinical Reimbursement Amount to be so paid. In
addition, a duly authorized officer of each of SONUS and Abbott shall deliver to
the other a certificate confirming that the respective representations,
warranties and covenants set forth in Section 4 and 5 as applicable, are true
and correct in all material respects as of the closing date.
3.3 Suspension of Right to Issue Shares. Anything herein to
the contrary notwithstanding, SONUS shall not have the right to pay the
Additional Clinical Reimbursement Amounts in shares of Common Stock as provided
in this Section 3 if the number of shares of Common Stock to be issued to ABBOTT
would result in ABBOTT beneficially owning shares of Common Stock of SONUS
following the issuance in an amount equal to 19.9% or more of the
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<PAGE> 5
outstanding Common Stock of SONUS, in which event SONUS shall be obligated to
pay the Additional Clinical Reimbursement Amounts in cash as set forth in
Section 2.4 of the U.S. Agreement or Section 2.2A of the International
Agreement, as applicable. The shares of Common Stock of SONUS subject to any
warrant or other right to acquire shares of Common Stock held by Abbott shall be
included for the purpose of determining the number of shares beneficially owned
by Abbott but warrants and other rights to acquire Common Stock held by persons
other than Abbott shall not be included for the purpose of determining the total
amount of outstanding Common Stock.
4. Representations, Warranties and Covenants of SONUS. SONUS hereby
represents and warrants to, and covenants with, Abbott as of the date hereof as
follows:
4.1 Authorization. SONUS has full power and authority to
execute, deliver and perform its obligations under this Agreement and to issue
and sell the Common Stock. All corporate action on the part of SONUS necessary
for the authorization, execution and delivery of this Agreement and the Common
Stock and the performance of all obligations of SONUS hereunder has been taken.
The execution and delivery of this Agreement and the Common Stock and the
performance of all obligations of SONUS hereunder have been duly authorized and
approved by the Board of Directors of SONUS and no further authorization is
necessary. This Agreement and the Common Stock are valid and legally binding
obligations of SONUS enforceable against it in accordance with their terms.
4.2 No Conflict. The execution, delivery and performance of
this Agreement and the issuance and sale of the Common Stock and the
consummation of each of the transactions contemplated hereby and thereby do not
and will not (a) conflict with or result in a breach of the terms, conditions or
provisions of, (b) with or without notice or lapse of time or both, constitute a
default under, (c) result in the creation of any lien, security interest, charge
or encumbrance upon the capital stock or assets of SONUS pursuant to, (d) with
or without notice or lapse of time or both, give any third party the right to
accelerate, cancel or terminate any obligation under, (e) result in a violation
of, or (f) require any order, qualification, waiver, permit, authorization,
consent, approval, exemption or other action by or from, or any registration,
notice, declaration, application or filing to or with, any court or
administrative or governmental body or any other person or entity pursuant to
(i) the Certificate of Incorporation or Bylaws of SONUS, (ii) any agreement to
which SONUS is a party or is bound or to which its assets are subject, which
conflict, breach or default would have a material adverse effect on SONUS or the
ability of SONUS to perform its duties or obligations hereunder or (iii) any
law, statute, rule or regulation to which SONUS is subject; provided, however,
that with respect to clause (f) of this Section 4.2, no representation or
warranty is made as to any such requirements applicable to SONUS as a result of
the specific legal or regulatory status of Abbott (including without limitation
any agreements between Abbott or its affiliates) or as a result of any other
facts that specifically relate to Abbott, any business in which Abbott has
engaged or proposes to engage or any financing arrangements or transactions
entered into or proposed to be entered into by or on behalf of Abbott and
provided, further, that no representation or warranty is made with respect to
the application of the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended (the "HSR Act"), to the issuance of the Common Stock. In the event that
the HSR Act should apply to the issuance of any shares of Common Stock, upon the
request of Abbott, SONUS agrees to prepare and file, and to assist Abbott and
cooperate with Abbott in its preparation and filing of all necessary
notifications and the
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<PAGE> 6
providing of all necessary information pursuant to the HSR Act. The fees for any
such HSR filing shall be paid fifty percent (50%) by SONUS and fifty percent
(50%) by Abbott.
4.3 Valid Issuance of Common Stock. The Common Stock, when
issued, sold and delivered in accordance with the terms of this Agreement to
Abbott, will be duly authorized and validly issued and will be issued in
compliance in all material respects with all federal and state securities laws.
The shares of Common Stock have been duly and validly reserved for issuance and,
upon issuance in accordance with the terms hereof, will be duly authorized,
validly issued, fully paid and nonassessable and, assuming no distribution of
the Common Stock by Abbott, will be issued in compliance with all applicable
federal and state securities laws.
4.4 Valid Existence and Capitalization. SONUS is duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and is qualified to do business as a foreign corporation in the
State of Washington. As of the date hereof, the description of the
capitalization of SONUS and its outstanding equity securities and rights to
acquire equity securities and the holders thereof is as set forth on Exhibit B.
4.5 SEC Documents. As of their respective dates, all
registration statements and reports filed by SONUS with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, since January 1, 1998 complied in
all material respects with the requirements of such Acts and the rules and
regulations promulgated thereunder and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
5. Warranties and Covenants of Abbott. Abbott hereby represents and
warrants to, and covenants with, SONUS as of the date hereof as follows:
5.1 Authorization. Abbott has full power and authority to
execute, deliver and perform its obligations under this Agreement. All corporate
action on the part of Abbott necessary for the authorization, execution and
delivery of this Agreement and the performance of all obligations of Abbott
hereunder has been taken. The execution and delivery of this Agreement and the
performance of all obligations of Abbott hereunder were duly authorized and
approved by Abbott, and no further authorization is necessary. This Agreement is
a valid and legally binding obligation of Abbott, enforceable against it in
accordance with its terms.
5.2 No Conflict. The execution, delivery and performance of
this Agreement and the consummation of each of the transactions contemplated
hereby do not and will not (a) conflict with or result in a breach of the terms,
conditions or provisions of, (b) with or without notice or lapse of time or
both, constitute a default under, (c) result in the creation of any lien,
security interest, charge or encumbrance upon Abbott's capital stock or assets
pursuant to, (d) with or without notice or lapse of time or both, give any third
party the right to accelerate, cancel or terminate any obligation under, (e)
result in a violation of, or (f) require any order, qualification, waiver,
permit, authorization, consent, approval, exemption or other action by or from,
or any registration, notice, declaration, application or filing to or with, any
court or administrative or governmental body or any other person or entity
pursuant to (i) the Certificate of Incorporation or Bylaws of Abbott, (ii) any
material agreement to which Abbott is a party or is bound or to which its
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<PAGE> 7
assets are subject or (iii) any law, statute, rule or regulation to which Abbott
is subject; provided, however, that with respect to clause (f) of this Section
5.2, no representation or warranty is made as to any such requirements
applicable to Abbott as a result of the specific legal or regulatory status of
SONUS (including without limitation any agreements between SONUS or its
affiliates) or as a result of any other facts that specifically relate to SONUS,
any business in which SONUS has engaged or proposes to engage or any financing
arrangements or transactions entered into or proposed to be entered into by or
on behalf of SONUS and provided, further, that no representation or warranty is
made with respect to the application of the HSR Act to the issuance of the
Common Stock. Upon the request of SONUS, Abbott agrees to prepare and file, and
to assist SONUS and cooperate with SONUS in its preparation and filing of all
necessary notifications and the providing of all necessary information pursuant
to the HSR Act. The fees for any such HSR filing shall be paid fifty percent
(50%) by Abbott and fifty percent (50%) by SONUS.
5.3 Accredited Investor Status. Abbott is an "accredited
investor" within the meaning of Regulation D promulgated under the Securities
Act of 1933, as amended (the "Securities Act").
5.4 Restricted Securities. Abbott understands that the shares
of Common Stock to be issued hereunder are restricted securities and may not be
sold, transferred or otherwise disposed of without registration under the
Securities Act or the availability of an exemption therefrom, and that in the
absence of an effective registration statement covering such securities or an
exemption from registration, the Common Stock must be held indefinitely. In the
absence of an effective registration statement under the Securities Act with
respect to the Common Stock, Abbott shall notify the Company of any proposed
disposition by Abbott of the Common Stock, shall furnish SONUS with a statement
of the circumstances surrounding the proposed disposition and, if reasonably
requested by SONUS, shall furnish SONUS with an opinion of counsel, reasonably
satisfactory to SONUS, that such disposition will not require the registration
of such Common Stock under the Securities Act; provided, however, that a notice
and an opinion of counsel will not be required for routine sales under Rule 144
under the Securities Act.
6. Conditions. The closing of the purchase by Abbott of Common Stock
of SONUS under Sections 2.3 and 3.2 shall be conditioned upon receipt of the
officer's certificates referenced in Sections 2.3 and 3.2, and upon the
following conditions any or all of which may be waived by Abbott in its sole
discretion:
6.1 Agreements in Effect. The amendments to the Agreements
referred to in Recital A above shall have been executed and delivered by the
parties thereto, and the Agreements shall be in full force and effect and SONUS
shall not be in breach, after all applicable cure periods, in any material
respect of its obligations thereunder.
6.2 No Material Adverse Change. Since the end of the last
fiscal quarter of SONUS, there shall have been no material adverse change in the
business, management, results of operations or financial condition of SONUS
which has not been publicly disclosed by SONUS.
6.3 Hart-Scott-Rodino. If the HSR Act shall apply, all waiting
periods under the HSR Act shall have expired or been earlier terminated without
action by the Justice Department or the Federal Trade Commission to prevent or
materially alter the consummation of the
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<PAGE> 8
transactions contemplated by this Agreement.
6.4 Actions or Proceedings. No action or proceeding by any
court or other governmental authority or other person or entity shall have been
instituted or threatened which could enjoin or prohibit any provision of this
Agreement or the consummation of the transactions contemplated hereby.
7. Miscellaneous.
7.1 Governing Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of Delaware, without regard
to the conflicts of law rules of such state.
7.2 Successors and Assigns. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by SONUS or
Abbott without the prior written consent of Abbott or SONUS, respectively;
provided, however, 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 assignment or delegation in contravention of this Agreement shall be
void and shall not relieve the assigning or delegating party of any obligation
hereunder. Except as set forth in the preceding sentences, this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.
7.3 No Third Party Beneficiaries. Nothing in this Agreement,
whether express or implied, shall be construed to give any person, other than
the parties hereto, any legal or equitable right, remedy or claim under or in
respect of this Agreement.
7.4 Counterparts. This Agreement may be executed in any number
of counterparts with the same effect as if all parties hereto had signed the
same document. Each counterpart shall be enforceable against the parties
actually executing such counterpart, and all counterparts shall be construed
together and shall constitute one instrument.
7.5 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
7.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given as follows:
To Abbott:
(1) Abbott Laboratories
100 Abbott Park Road
Abbott Park, Illinois 60064-3500
Attn: President - Hospital Products Division
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<PAGE> 9
With a copy to:
Abbott Laboratories
100 Abbott Park Road
Abbott Park, Illinois 60064-3500
Attn: Divisional Vice President
Domestic Legal Affairs
D-322/AP6D
and (2)Abbott International, Ltd.
200 Abbott Park Road
Abbott Park, Illinois 60064-3537
Attn: President - Abbott International
With a copy to:
Abbott International, Ltd.
100 Abbott Park Road
Abbott Park, Illinois 60064-3500
Attn: Divisional Vice President
International Legal Operations
D-323/AP6D
To SONUS:
SONUS Pharmaceuticals, Inc.
22026 20th Avenue, S.E., Suite 201
Bothell, Washington 98021
Attn: Chief Executive Officer
7.7 Public Announcements. Any press release or other public
statement issued by any party relating to this Agreement or the transactions
contemplated hereby shall be governed by Section 22 of the U.S. Agreement.
7.8 Entire Agreement. This Agreement constitutes the entire
agreement between the parties concerning the subject matter hereof. This
Agreement may be amended, modified or waived only by a written instrument
executed by duly authorized representatives or both parties.
7.9 Alternative Dispute Resolution. The Parties agree that any
dispute that arises in connection with this Agreement shall be determined
according to the Alternative Dispute Resolution provisions set forth in Section
21 of the U.S. Agreement.
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<PAGE> 10
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SONUS PHARMACEUTICALS, INC.
By: /s/ Michael A. Martino
---------------------------------------------
Name: Michael A. Martino
Title: President
ABBOTT LABORATORIES
By: /s/ Richard A. Gonzalez
---------------------------------------------
Name: Richard A. Gonzalez
Title: President - Hospital Products Division
Attachments:
Exhibit A - Radiology Milestone Dates
Exhibit B - Capitalization of SONUS
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<PAGE> 11
EXHIBIT A
U.S. AGREEMENT
<TABLE>
<CAPTION>
RADIOLOGY RADIOLOGY
MILESTONE PREPAYMENT DATE MILESTONE PAYMENT
--------- --------------- -----------------
<S> <C> <C>
U.S. NDA [*] $2.0 Million
Approval
U.S. First [*] $2.0 Million
Shipment of Product
Total:$4.0 Million
</TABLE>
INTERNATIONAL AGREEMENT
<TABLE>
<CAPTION>
RADIOLOGY RADIOLOGY
MILESTONE PREPAYMENT DATE MILESTONE PAYMENT
--------- --------------- -----------------
<S> <C> <C>
U.S. NDA
Approval Within 15 Days [*] $1,500,000
European Community
Authorization Granted
Within 105 days: [*] $850,000
Within 195 days: [*] $850,000
Within 265 days: [*] $350,000
First Shipment Date of
Product for Sale
(to Germany, France,
Italy, Spain, Canada, or
the United Kingdom)
Within 15 days: [*] $1,500,000
Within 105 days: [*] $500,000
Total: $5,550,000
</TABLE>
- ------------------
* Anything herein to the contrary notwithstanding, the Radiology Prepayment Date
shall be the later of (i) the date referenced, or (ii) the first U.S. FDA
approval for the Product in the Field (as defined in the U.S. Agreement).
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<PAGE> 12
** Anything herein to the contrary notwithstanding, the Radiology Prepayment
Date shall be the later of (i) the date referenced, or (ii) the U.S. first
shipment of Product.
*** Anything herein to the contrary notwithstanding, the Radiology Prepayment
Date shall be the later of (i) the date referenced, or (ii) the first shipment
date of Product in Germany, France, Italy, Spain, Canada or United Kingdom.
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<PAGE> 13
EXHIBIT B
CAPITALIZATION OF SONUS
Common Stock:
Authorized: 20,000,000 shares of Common Stock; 5,000,000
shares of Preferred Stock Outstanding as of
December 31, 1998: 8,632,225 shares of Common Stock
No shares of Preferred Stock
Options:
Authorized: 2,022,137
Outstanding as of
December 31, 1998: 1,311,091
Warrants:
Outstanding as of
December 31, 1998: 785,161
- ----------------
Note: SONUS also has in place a Stockholders Rights Plan which provides for the
issuance of Convertible Preferred Stock under certain circumstances.
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<PAGE> 1
EXHIBIT 99.1
SONUS AND ABBOTT AMEND ECHOGEN(R) AGREEMENTS
BOTHELL, Wash., February 1, 1999 - SONUS Pharmaceuticals, Inc. (Nasdaq:SNUS)
today announced that it has executed amendments to the marketing and
distribution agreements with Abbott Laboratories (Abbott) covering EchoGen(R)
(perflenapent injectable emulsion). Included in the amendments are reductions to
the royalty rates on international sales of EchoGen(R), and redefinition of U.S.
and international milestones which trigger milestone payments to SONUS. The U.S.
royalty rates and the aggregate amount of milestone payments were not changed.
In addition, provisions were added to the agreements which allow SONUS to
request Abbott to make milestone payments in advance of the achievement of
certain milestones, in exchange for SONUS common stock.
"Prior to beginning the commercialization of EchoGen(R), we believed it was
important to rework certain terms of the agreements to address the challenges of
launching a new technology that could change the practice of the diagnosis of
cardiovascular disease," said Michael A. Martino, president and COO of SONUS.
"We are pleased to see Abbott's continued commitment to EchoGen(R) and the
ultrasound contrast field."
EchoGen(R) is SONUS' proprietary fluorocarbon-based ultrasound contrast agent.
It has been approved for use in the 15 countries of the European Union as a
transpulmonary echocardiographic contrast agent for use in patients with
suspected or established cardiovascular disease who have had previous
inconclusive non-contrast studies. EchoGen(R) is not approved for use in the
United States. An application for approval has been submitted. Under agreements
signed in 1996, Abbott has the exclusive marketing and distribution rights to
EchoGen(R) in all countries of the world except for 10 countries in the Pacific
Rim, including Japan.
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<PAGE> 2
ABBOTT LABORATORIES AND SONUS PHARMACEUTICALS, INC. ANNOUNCE AMENDMENTS TO
ECHOGEN(R) AGREEMENTS
FEBRUARY 1, 1999
PAGE 2
SONUS Pharmaceuticals, Inc., based in Bothell, Wash., is engaged in the research
and development of ultrasound contrast agents and drug delivery systems based on
its proprietary PhaseShift(TM) fluorocarbon technology. The company's products
are being investigated for use in the diagnosis and treatment of heart disease,
cancer and other debilitating conditions.
Contact: Gregory Sessler
SONUS Pharmaceuticals, Inc.
(425) 487-9500
Certain of the statements made in this news release are forward looking such as
those relating to future milestone payments and the commercialization of
EchoGen(R). Among the factors that could result in a materially different
outcome are: Milestone payments from Abbott are dependent upon the achievement
of certain regulatory and commercialization milestones. EchoGen(R) will require
regulatory approval, which approval is subject to certain regulatory
requirements and can be lengthy and ultimately will depend on a number of
factors including safety and efficacy. Market acceptance of EchoGen(R) will
depend on a number of factors, including safety, efficacy, ease of
administration and the presence of competitive imaging products or technologies.
There can be no assurance that the FDA will approve EchoGen(R) or that the
regulatory and commercialization milestones necessary to trigger milestone
payments from Abbott will be achieved or that SONUS will, without such milestone
payments, have sufficient resources to achieve any regulatory or commercial
milestones.
NOTE: News releases and additional information about SONUS can be accessed at
the SONUS Homepage, http://www.sonuspharma.com.
###
