<PAGE> 1
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) September 28, 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
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(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 4
Exhibit Index on Page 4
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ITEMS 1 THROUGH 4, 6, 8 AND 9 ARE NOT APPLICABLE.
ITEM 5. ACQUISITION OR DISPOSITION OF ASSETS
The license agreement between SONUS Pharmaceuticals, Inc. and
Nycomed Imaging AS dated August 31, 1999 became effective on September 28, 1999.
The text of which is attached hereto as Exhibit 10.36.
Reference is made to the press release issued to the public by the
registrant on September 29, 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>
10.36 License Agreement by and between Nycomed Amersham AS
and SONUS Pharmaceuticals, Inc. dated August 31, 1999.
99.1 Press Release dated September 29, 1999.
</TABLE>
2
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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: October 12, 1999 By: /s/ Gregory Sessler
-------------------------------------
Gregory Sessler
Chief Financial Officer
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
10.36 License Agreement by and between Nycomed Amersham AS and
SONUS Pharmaceuticals, Inc. dated August 31, 1999.
99.1 Press Release dated September 29, 1999.
</TABLE>
4
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Exhibit 10.36
LICENSE AGREEMENT
This License Agreement ("Agreement") dated as of August 31, 1999, is
entered into by and between Nycomed Imaging AS, a Norwegian corporation with
principal offices at Nycoveien 1-2, Oslo ("Nycomed") and Sonus Pharmaceuticals,
Inc., a Delaware corporation with principal offices at 22026 20th Avenue, S.E.,
Suite 102, Bothell, Washington 98021 ("Sonus").
RECITALS
WHEREAS, Nycomed has developed and holds patents and patent
applications on ultrasound contrast agents, and
WHEREAS, Sonus has developed and holds patents and patent applications
on ultrasound contrast agents,
WHEREAS, Nycomed desires to obtain the rights to manufacture, develop,
use, sell, offer to sell, and import Non-perfluoropentane Ultrasound Products
(such term subsequently defined) covered by any patents and applications held by
Sonus relating to ultrasound contrast agents, including the right to sublicense,
develop, have made, developed, used or sold such products, alone or in
combination with other products, with Third Parties (such term subsequently
defined), and
WHEREAS, Sonus desires to obtain certain license rights under Nycomed
patents and applications on Perfluoropentane Ultrasound Products (such term
subsequently defined),
NOW THEREFORE, in consideration of the premises and the faithful
performance of the mutual covenants hereinafter set forth, the parties hereto
hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following defined terms shall have the
respective meanings set forth below:
[*] Confidential portions omitted
and filed separately with Commission.
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1.1 "Perfluoropentane Ultrasound Products" shall mean (i) an ultrasound
contrast agent constituted as EchoGen(R) is presently constituted and
described in the pending application for U.S. Food and Drug Administration
approval of same, together with such modification thereto as may be made
in connection with such application so long as any such modified product
contains * (hereafter, "EchoGen"), (ii) an ultrasound contrast agent
constituted as SonoGen (a/k/a QW 7437) is presently constituted, together
with modifications thereto so long as any such modified product contains *
(hereafter, "SonoGen"), and (iii) any ultrasound contrast agent developed
by Sonus that contains *. Provided always that "Perfluoropentane
Ultrasound Products" excludes any ultrasound contrast agent that contains
any *. The current formulations of EchoGen and SonoGen shall be deemed
Perfluoropentane Ultrasound Products notwithstanding the immediately
preceding sentence.
1.2 "Non-perfluoropentane Ultrasound Products" shall mean all ultrasound
contrast agents not within the definition of Perfluoropentane Ultrasound
Products of paragraph 1.1 above. Provided always that
"Non-perfluoropentane Ultrasound Products" excludes any ultrasound
contrast agent that contains perfluoropentane.
1.3 "Sonus Patents" shall mean all patents owned or controlled by Sonus or its
Current Affiliates pertaining to Non-perfluoropentane Ultrasound Products
that (i) have issued on or before the day of the Closing, (ii) issue from
any application that was filed before the day of the Closing, (iii) issue
from any application that directly or through other applications claims
priority from any application that was filed prior to the day of the
Closing, and/or (iv) are listed in Appendix 1.3. "Sonus Patents" shall
also include any patent application owned or controlled by Sonus or its
Current Affiliates that (a) is published for opposition on or before the
day of the Closing or after the day of the Closing and during the Term of
this Agreement, and (b) would qualify as a Sonus Patent under clauses (i)
through (iii) of this paragraph 1.3 above if it issued as a patent on the
date it is published for opposition.
1.4 "Nycomed Patents" shall mean all patents owned or controlled by Nycomed or
its Current Affiliates pertaining to Perfluoropentane Ultrasound Products
that (i) have issued on or before the day of the Closing, (ii) issue from
an application that was filed prior to the day of the Closing, (iii) issue
from any application that directly or through other applications claims
priority from any application that was filed prior to
[*] Confidential portions omitted
and filed separately with Commission.
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the day of the Closing, and/or (iv) are listed in Appendix 1.4. "Nycomed
Patents" shall also include any patent application owned or controlled by
Nycomed or its Current Affiliates that (a) is published for opposition on
or before the day of the Closing or after the day of the Closing and
during the Term of this Agreement, and (b) would qualify as a Nycomed
Patent under clauses (i) through (iii) of this paragraph 1.4 above if it
issued as a patent on the date it is published for opposition.
1.5 "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 such company directly or
indirectly owns 50% or more in nominal value of the issued equity share
capital of such other company, or 50% or more of the shares entitled to
vote upon the election of:
(i) the directors,
(ii) persons performing functions similar to those performed by directors
or
(iii) persons otherwise having the right to elect or appoint (a) directors
having the majority vote of the Board of Directors, or (b) other
persons having the majority vote of the highest and most
authoritative directive body of such other company.
Provided that Nihon MediPhysics shall not qualify as an Affiliate of
Nycomed for purposes of this Agreement (but, if Nihon MediPhysics
manufactures, uses, sells, offers for sale, or imports ultrasound contrast
agents under license from Nycomed, it shall be treated as if it were an
Affiliate of Nycomed for purposes of calculating any royalties due under
this Agreement with respect to such ultrasound contrast agents). "Current
Affiliates" shall mean those entities that are Affiliates of a party as of
the day of the Closing for so long as such entities continue to satisfy
the definition of "Affiliates" in this paragraph 1.5 above.
1.6 "Pacific Rim Territory" shall mean Japan, Taiwan, China, South Korea,
Hong Kong, Thailand, Indonesia, Singapore, Malaysia, and the
Philippines.
1.7 "General Territory" shall mean all countries other than those in the
Pacific Rim Territory.
[*] Confidential portions omitted
and filed separately with Commission.
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1.8 "Net Sales" shall mean the gross revenues recognized by a party to this
Agreement or its Affiliates (including revenues recognized from
distributors, agents, or licensees), less sales, use, value-added or other
similar taxes, returns, and actual discounts granted, on account of the
sale or other disposition of any ultrasound contrast agents practicing any
claim of the other party's Patents (as defined in paragraphs 1.3 and 1.4
above), i.e., the Sonus Patents in the case of Nycomed and its Affiliates
and the Nycomed Patents in the case of Sonus and its Affiliates. For
purposes of calculating royalties payable to Sonus pursuant to paragraph
5.5 below, "Net Sales" shall also include gross revenues recognized by
Mallinckrodt or Molecular Biosystems and their Affiliates, less the
foregoing taxes, returns, and discounts, on account of such sale or other
disposition. For purposes of paragraph 26.3 below, "Net Sales" means gross
revenues recognized by the Third Party, less the foregoing taxes, returns,
and discounts, on account of such sale or other disposition. No unit of
any product shall be subject to more than one sale or disposition that
qualifies as a Net Sale, regardless of the number or form of sales or
dispositions of such unit; the first sale or other disposition by Nycomed,
Sonus, Mallinckrodt, Molecular Biosystems, or their respective Affiliates
to an entity other than an entity which is controlled by or controls the
entity making the sale or disposition shall be used to calculate Net
Sales. When reference is made to Net Sales in a country or territory, such
Net Sales shall be deemed to occur in the country or territory in which
the product is to be used.
1.9 "Quarter" shall mean each three-month calendar quarter during the term of
this Agreement, provided that the first Quarter shall include any
remaining portion of the calendar quarter following the day of the Closing
in addition to the calendar quarter following such portion.
"Quarterly" shall mean per Quarter.
1.10 "Third Party" shall mean all persons and entities other than Nycomed,
Sonus, and their respective Affiliates.
1.11 "Mallinckrodt Litigation" shall mean that certain action (and all
claims made therein) pending in the U.S. District Court for the Western
District of Washington captioned Sonus Pharmaceuticals, Inc. v.
Molecular Biosystems, Inc. and Mallinckrodt Medical, Inc., Civil Action
No. 97-1273R.
[*] Confidential portions omitted
and filed separately with Commission.
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1.12 "Sonus Patent Applications" shall mean all pending patent applications
owned or controlled by Sonus or its current Affiliates pertaining to
Non-perfluoropentane Ultrasound Products, including provisionals,
divisions, continuations, continuations-in-part, extensions, renewals,
reissues, or reexaminations of any such application, or supplemental
protection certificate, including but not limited to all applications
listed in Appendix 1.12.
1.13 "Abbott Agreements" shall mean the following agreements in the form
attached to Sonus's U.S. Securities and Exchange Commission filings (i)
that certain agreement dated May 14, 1996, between Sonus and Abbott
Laboratories, as amended (plus Appendices 1.6 and 1.13, which appendices
previously have been provided to Nycomed), and (ii) that certain
International License Agreement dated October 1, 1996, between Sonus and
Abbott International, Ltd., as amended (plus Appendices 1.7 and 1.16,
which appendices previously have been provided to Nycomed).
1.14 "Optison" shall mean (i) an ultrasound contrast agent constituted as
Optison(R) is presently constituted and described in the application for
U.S. Food and Drug Administration approval of same, together with such
modification thereto as may be made in connection with such application so
long as any such modified product does not contain perfluoropentane, (ii)
an ultrasound contrast agent constituted as Optison is presently
constituted and described in any pending application for regulatory
approval of same, together with such modification thereto as may be made
in connection with such application so long as any such modified product
does not contain perfluoropentane, and (iii) any ultrasound contrast agent
developed and/or sold by Mallinckrodt Inc., Molecular Biosystems Inc., or
their respective Affiliates to which Nycomed or its Affiliates acquires
license, co-marketing, co-promotion, or other rights incident to a
settlement of the Mallinckrodt Litigation under section 5 of this
Agreement or to any other business relationship between Nycomed and
Mallinckrodt, Molecular Biosystems, and their respective Affiliates, so
long as any such product does not contain perfluoropentane.
1.15 "Closing" shall mean the closing of the transactions contemplated by this
Agreement as provided in paragraph 31.3 of this Agreement.
[*] Confidential portions omitted
and filed separately with Commission.
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2. LICENSE GRANT
2.1 As of Closing, Sonus grants Nycomed and its Affiliates an exclusive
license together with the right to sublicense under the Sonus Patents to
develop, make, have made, use, sell, offer to sell, and import
Non-perfluoropentane Ultrasound Products in the General Territory. This
license shall be exclusive even as to Sonus.
2.2 As of Closing, Sonus grants Nycomed and its Affiliates a non-exclusive
license under the Sonus Patents to develop, make, have made, use, sell,
offer to sell, and import Non-perfluoropentane Ultrasound Products in the
Pacific Rim Territory. (Products that Nycomed or its Affiliates develop,
make, have made, use, sell, offer to sell, or import under the licenses of
paragraph 2.1 and/or this paragraph 2.2 are referred to in this Agreement
as "Nycomed Licensed Products.")
2.3 As of Closing, Nycomed grants Sonus and its Affiliates a non-exclusive
license under the Nycomed Patents to develop, make, have made, use, sell,
offer to sell, and import Perfluoropentane Ultrasound Products in the
General Territory and Pacific Rim Territory. (Products that Sonus or its
Affiliates develop, make, have made, use, sell, offer to sell, or import
under the license of this paragraph 2.3 are referred to as "Sonus Licensed
Products.") Sonus shall have the right to sublicense the Nycomed Patents
as provided in paragraphs 4.3 and 4.4 below, but shall not otherwise have
the right to sublicense the Nycomed Patents.
2.4 Sonus warrants that (i) it will not grant, and (ii) with the possible
exception of the Abbott Agreements it has not granted to any Third Party
any license under the Sonus Patents to develop, make, have made, use,
sell, import, or offer for sale Non-perfluoropentane Ultrasound Products
in the General Territory.
2.5 Each party retains all rights in its patents and patent applications not
granted to the other party in this Agreement. Notwithstanding anything to
the contrary herein, the licenses and other rights granted to Nycomed in
this Agreement under the Sonus Patents shall not detract from the scope of
the licenses and other rights previously granted to Abbott Laboratories
and Abbott International, Ltd. (collectively, "Abbott") under the Abbott
Agreements.
[*] Confidential portions omitted
and filed separately with Commission.
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2.6 In the event that Sonus or its Affiliates develop and desire to make, use,
sell, offer for sale, or import an ultrasound contrast agent that contains
perfluoropentane but does not meet the definition of Perfluoropentane
Ultrasound Products of paragraph 1.1 above (except any such agent that
contains *), the parties will negotiate in good faith with respect to a
possible license to Sonus or its Affiliates under the Sonus Patents and
Nycomed Patents, provided that neither party shall have any obligation to
enter into any such license if, in its sole and absolute discretion, entry
into such a license would not be in the party's own business interests.
3. UP-FRONT FEE AND ROYALTIES
3.1 On the business day following the execution of this Agreement, Nycomed
shall pay into escrow a license fee of U.S. $10,000,000 to be disbursed to
Sonus in accordance with the provisions of paragraph 31.2 below. Upon
satisfaction of the escrow conditions, this payment shall be nonrefundable
and shall not be creditable against any other amounts due Sonus under this
Agreement.
3.2 In addition to the payment required under paragraph 3.1 above, Nycomed
shall incur in favor of Sonus a royalty on Quarterly Net Sales, which
royalty shall be the larger of:
(i) * said Quarterly Net Sales in each such country, provided that in no
Quarter shall the amount incurred by Nycomed in favor of Sonus *
that would be incurred by Sonus in favor of Nycomed in accordance
with paragraph 3.3 below for that country in the Quarter if such
paragraph 3.3 did not include a cap referring to this paragraph
3.2(i), or
(ii) * of Quarterly Net Sales in the General Territory, * of Quarterly
Net Sales in the General Territory, and * all additional Quarterly
Net Sales in the General Territory (except in the Pacific Rim
Territory, where the rate shall be * on all Net Sales in that
territory).
Provided always that the provisions of this paragraph 3.2 shall not apply
to any sales of Optison in any territory, or any revenues received by
Nycomed on account of any sales of Optison. Any royalties to which Sonus
shall be entitled related to the sale of Optison shall be governed
exclusively by the provisions of section 5 below.
[*] Confidential portions omitted
and filed separately with Commission.
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3.3 Sonus shall incur in favor of Nycomed a royalty on Quarterly Net Sales,
which royalty for each country shall be * said Net Sales, provided that in
no Quarter shall the amount incurred by Sonus in favor of Nycomed *
incurred by Nycomed in favor of Sonus in accordance with paragraph 3.2
above for that country in the Quarter.
3.4 The incurred royalties shall be calculated Quarterly on a
country-by-country basis. No later than 30 days after the end of each
Quarter, each party shall provide the other with a statement of Net Sales
of its respective Licensed Products in each country, which statement shall
report on a product-by-product and country-by-country basis showing the
sales of each product in each country. The net royalty payment due Sonus
by Nycomed shall then be made within 30 days of the exchange of said
statements. Examples of the calculation of royalties are provided in
Appendix 3.4 hereto.
3.5 All royalties for each Quarter shall be independent of royalties for any
other Quarter and not subject to carry-over or set-off against royalties
for any other Quarter.
3.6 Nycomed ultrasound contrast agents constituted as those products now
designated (i) Sonazoid * are constituted shall be deemed Nycomed Licensed
Products, and sales of such products shall be deemed royalty-bearing Net
Sales for purposes of paragraph 3.2 under at least the patents listed in
Appendix 3.6 hereto.
3.7 Sonus ultrasound contrast agents constituted as those products now
designated (i) EchoGen and (ii) SonoGen are constituted shall be deemed
Sonus Licensed Products, and sales of such products shall be deemed
royalty-bearing Net Sales for purposes of paragraph 3.3 under at least the
patents listed in Appendix 3.7 hereto.
4. SUBLICENSES, RELEASES, AND PATENT ENFORCEMENT
4.1 For the General Territory, Nycomed shall have the right to sublicense one
or more Third Parties under the Sonus Patents to make, have made, use,
sell, import, or offer for sale Non-perfluoropentane Ultrasound Products.
4.2 For each country of the Pacific Rim Territory, Nycomed shall have the
right to sublicense one Third Party under the Sonus Patents to make, have
made, use, sell, import, or offer for sale each Non-perfluoropentane
[*] Confidential portions omitted
and filed separately with Commission.
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Ultrasound Product. Nycomed may sublicense a different Third Party for
each such product in each different country of the Pacific Rim Territory
and substitute its Third Party sublicensees under this paragraph.
4.3 For each country of the Pacific Rim Territory, Sonus shall have the right
to sublicense one Third Party under the Nycomed Patents to make, have
made, use, sell, import, or offer for sale each Perfluoropentane
Ultrasound Product. Sonus may sublicense a different Third Party for each
such product in each different country of the Pacific Rim Territory and
substitute its Third Party sublicensees under this paragraph.
4.4 In the General Territory, Sonus shall have the right to sublicense any
Third Party to, under the Nycomed Patents, make, have made, use, sell,
import, or offer for sale under license from Sonus of Perfluoropentane
Ultrasound Products developed by Sonus. Sonus shall be limited to one such
sublicense per commercial Perfluoropentane Ultrasound Product per country
in the General Territory. Thus, by way of example only, Sonus may license
one Third Party to manufacture EchoGen in the United States, another to
manufacture and distribute SonoGen in the United States, and another to
manufacture and distribute EchoGen in Brazil, but may not license one
Third Party to manufacture EchoGen and SonoGen in the United States and
another to manufacture and distribute SonoGen in the United States. Sonus
shall provide Nycomed with written notice of any such sublicenses granted.
4.5 No sublicense granted by Nycomed under paragraph 4.1 or 4.2 above shall
authorize the sublicensee to grant any sublicenses under the Sonus
Patents. No sublicense granted by Sonus under paragraph 4.3 or 4.4 above
shall authorize the sublicensee to grant any sublicenses under the Nycomed
Patents.
4.6 If (i) Nycomed is engaged in negotiations for a license in the General
Territory under patents or patent applications owned by a Third Party for
Non-perfluoropentane Ultrasound Products in exchange (in whole or in part)
for granting said Third Party a sublicense under the Sonus Patents (as
permitted by paragraph 4.1) for sales in the General Territory, (ii) said
Third Party *and (iii) said Third Party has the *, then Nycomed shall use
*, in connection *. Nycomed shall have *, and Nycomed may *. Nycomed shall
have *. Sonus shall *. Sonus, however, has *. Nycomed shall advise Sonus
of any such negotiations and consult with Sonus as to the Third Party's
patents and patent applications at issue. During the
[*] Confidential portions omitted
and filed separately with Commission.
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course of such negotiations between Nycomed and the Third Party, Sonus
shall not contact or negotiate with the Third Party concerning licensing
or sublicensing the Sonus Patents, Nycomed Patents, or the Third Party's
patents or patent applications without the written consent of Nycomed,
which Nycomed may grant, withhold, or condition in its sole and absolute
discretion. The prohibition of the preceding sentence shall not apply to
communications between Sonus and a Third Party related to litigation that
is initiated or threatened by the Third Party against Sonus or its
Affiliates.
4.7 Nycomed shall *, provided that, Nycomed *. If Nycomed receives payments
from a Third Party in exchange for a sublicense pursuant to paragraph 4.1
of any Sonus Patents or Nycomed Patents in the General Territory, Nycomed
shall first deduct from such payments its reasonable and direct out of
pocket expenses incurred after the day of the Closing to consummate its
agreement with the Third Party, including any associated attorneys fees,
and shall then pay Sonus * the balance. The only other benefit to which
Sonus may be entitled as a result of any such transaction between Nycomed
and such a Third Party is a license under that Third Party's patents as
set forth in paragraph 4.6 above, which provisions may or may not apply to
the transaction between Nycomed and the Third Party depending on the terms
of said transaction. Sonus shall not be entitled to share in any other
benefits or consideration realized by Nycomed, including but not limited
to the value of a license or sublicense that Nycomed obtains under the
Third Party's patents (including a royalty free cross-license in a
transaction including licenses under the Sonus Patents), the value of
marketing rights to the Third Party's products, or the value of any
settlement of a dispute between Nycomed and the Third Party or their
respective Affiliates. Sonus acknowledges that Nycomed may, in connection
with licensing or sublicensing activities under this paragraph 4.7, enter
into business arrangements with Third Parties in the field of ultrasound
contrast agents or in other fields, which arrangements may include, by way
of example and not limitation, co-marketing, co-promotion, joint ventures,
or other cooperative relationships, or the settlement of other disputes
between Nycomed and such Third Parties and their respective Affiliates.
The exclusive consideration due Sonus shall be * the payments received by
Nycomed (net Nycomed's reasonable and direct out of pocket expenses) as
set forth above in this paragraph 4.7; Sonus shall be entitled to no other
participation or consideration in, from, for, or on account of such a
business relationship between Nycomed and any Third Party and their
respective Affiliates. Sonus further acknowledges that
[*] Confidential portions omitted
and filed separately with Commission.
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Nycomed's freedom of action in this regard is paramount to this Agreement.
Any dispute between Sonus and Nycomed concerning the parties' performance
under this paragraph 4.7 shall be resolved as set forth in paragraph 26.3
below. Except as provided by paragraph 26.3 below, Sonus irrevocably binds
itself to never challenge the form or substance of any such transaction
entered into by Nycomed and agrees to be bound for the purposes of this
Agreement to any allocation and characterization of consideration flowing
to Nycomed thereunder made between Nycomed and any Third Party.
4.8 Nycomed shall have the exclusive right, exclusive even as to Sonus, to sue
any Third Party for direct infringement, contributory infringement, or
inducement of infringement of the Sonus Patents, when the Third Party's
direct infringement, contributory infringement, or inducement of
infringement relates to the manufacture, use, sale, importation, or offer
for sale in the General Territory of any ultrasound contrast agent that
does not contain perfluoropentane. Nycomed shall have sole and absolute
discretion over whether to bring any claims and complete control of any
suits or counterclaims it asserts. Nycomed will bear all costs and
expenses associated with the prosecution of such claims. Sonus agrees to
cooperate reasonably with Nycomed in connection with such suits or
counterclaims and will, if requested by Nycomed, join as a co-party to
Nycomed in any suit or counterclaims Nycomed asserts pursuant to this
paragraph provided that Nycomed promptly reimburses Sonus for its
reasonable and direct out of pocket expenses (including attorneys fees)
that Sonus incurs to undertake such aspects of cooperation as requested by
Nycomed. Immediately following the Closing, Sonus will provide Nycomed
with full access to all files, records, and other documents relating to
the Sonus Patents, giving due protection to privileged information. Any
proceeds that Nycomed receives from a suit or counterclaim brought under
this paragraph for infringement of a Sonus Patent shall be divided between
Nycomed and Sonus as follows: (x) first, Nycomed shall recover its full
out of pocket expenses incurred after the day of the Closing for that suit
or counterclaim (including attorneys fees and any reimbursements made to
Sonus), and (y) second, from any remaining proceeds, Nycomed shall provide
Sonus with * such excess.
4.9 If Sonus, its Affiliates or their licensees are sued for alleged direct
infringement, contributory infringement, or inducement of infringement of
a patent owned by a Third Party, and the alleged infringement involves
[*] Confidential portions omitted
and filed separately with Commission.
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the manufacture, use, sale, importation, or offering to sell by Sonus, its
Affiliates or their licensees of Perfluoropentane Ultrasound Products,
Sonus may request in writing that Nycomed file a claim for infringement of
the Sonus Patents against that Third Party pursuant to paragraph 4.8
above, which request shall include (i) identification of the infringing
products and/or conduct, (ii) identification of the infringed claims of
the Sonus Patents, and (iii) a full explanation of Sonus's bases for
concluding that the Third Party is infringing claims of the Sonus Patents.
Nycomed shall * to evaluate same, during which period Sonus *. If Nycomed
notifies Sonus in writing that *. Nycomed may *. If Nycomed *. If Nycomed
declines to pursue a claim for infringement of the Sonus Patents against
the Third Party *, Sonus shall have the right to sue said Third Party for
direct infringement, contributory infringement, or inducement of
infringement of the Sonus Patents, by way of counterclaim or independent
action. Nycomed agrees to provide Sonus with reasonable cooperation in
connection with any such infringement suit brought by Sonus, including
joining as co-plaintiff if requested, provided that Sonus promptly
reimburses Nycomed for its reasonable and direct out of pocket expenses
(including attorneys fees) that Nycomed incurs to undertake such aspects
of cooperation as requested by Sonus. In any suit brought by Sonus against
a Third Party under the provisions of this paragraph 4.9, Sonus shall
control the suit, shall bear all costs and expenses associated with the
prosecution of such suit, and any proceeds that Sonus receives for
infringement of the Sonus Patents shall be retained by Sonus.
4.10 If Sonus, its Affiliates or their licensees are sued or threatened with
suit by a Third Party in a lawsuit alleging that Sonus, its Affiliates or
their licensees are infringing a patent owned by that Third Party by
developing, making, using, selling, importing, or offering for sale
Perfluoropentane Ultrasound Products in the General Territory, Sonus may
*. If Sonus makes such a request to Nycomed, *. If the Third Party agrees
to *, provided that Nycomed may *. If Nycomed *.
4.11 Nycomed's authority under this Agreement to license or sublicense Third
Parties under the Sonus Patents (as permitted in paragraphs 4.1 and 4.2)
also includes the authority to release Third Parties from back damages
under the Sonus Patents for activities within the scope for which Nycomed
may grant licenses or sublicenses under the Sonus Patents, regardless of
whether such back damages accrued from activities before or after the day
of the Closing. If Nycomed receives any
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 13
payments or royalties from Third Parties for such a release, they shall,
except as otherwise provided herein, be divided * Nycomed and * Sonus.
4.12 Sonus shall have the exclusive right, exclusive even as to Nycomed, to sue
any Third Party for direct infringement, contributory infringement, or
inducement of infringement of the Sonus Patents, when the Third Party's
direct infringement, contributory infringement, or inducement of
infringement relates to the manufacture, use, sale, importation, or offer
for sale of Perfluoropentane Ultrasound Products. Sonus shall have sole
and absolute discretion over whether to bring any claims and complete
control of any suits or counterclaims it asserts. Sonus will bear all
costs and expenses associated with the prosecution of such claims, and
shall retain any proceeds it receives. Nycomed agrees to cooperate
reasonably with Sonus in connection with such suits or counterclaims and
will, if requested by Sonus, join as a co-party to Sonus in any suit or
counterclaims Sonus asserts pursuant to this paragraph provided that Sonus
promptly reimburses Nycomed for its reasonable and direct out of pocket
expenses (including attorneys fees) that Nycomed incurs to undertake such
aspects of cooperation as requested by Sonus.
4.13 Each party shall have the rights as set forth in this paragraph 4.13 to
sue any Third Party on account of the manufacture, use, sale, importation,
or offer for sale of an ultrasound contrast agent that contains
perfluoropentane but does not meet the definition of Perfluoropentane
Ultrasound Products in paragraph 1.1 above. Sonus shall have *, and
Nycomed shall have *.
(1) In a case brought by Nycomed under this paragraph 4.13, Nycomed
shall *. Nycomed *. Sonus agrees to *.
(2) In a case brought by Sonus under this paragraph 4.13, Sonus shall *.
Sonus *. Nycomed agrees to *.
4.14 The provisions of this section 4 (specifically including but not limited
to paragraph 4.7 above) shall not apply to matters concerning the
Mallinckrodt Litigation or settlement thereof (including any licenses,
sublicenses, releases, or transactions incident to or associated with such
settlement), which matters are and shall be governed exclusively by
section 5 below.
5. MALLINCKRODT LITIGATION
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 14
5.1 * the Closing and subject to the provisions of this section 5, Nycomed
shall have sole authority to settle (within the scope of the rights
granted to Nycomed elsewhere in this Agreement) the Mallinckrodt
Litigation on its own behalf and on behalf of Sonus at any time, including
after entry of judgment and on appeal. Sonus acknowledges that such a
settlement may include, by way of example and not limitation, *. Sonus
shall subscribe or cause its attorneys to subscribe all papers, pleadings,
and agreements necessary or desirable to effectuate any such settlement of
the Mallinckrodt Litigation, including but not limited to *. Subject to
the below provisions concerning the compensation due Sonus for settlement
of the Mallinckrodt Litigation and the release of the counterclaims
asserted against Sonus, Nycomed shall have sole and absolute discretion
to settle or refrain from settling the Mallinckrodt Litigation and over
the terms, conditions, and timing of any settlement.
5.2 Absent Sonus's written consent, Nycomed shall not settle the Mallinckrodt
Litigation without also settling the counterclaims asserted against Sonus
and obtaining a release of such claims, provided that, Nycomed may, *.
5.3 Absent Sonus's prior written consent, no settlement of the Mallinckrodt
Litigation shall bind Sonus to make a payment to any party.
5.4 Sonus acknowledges that Nycomed may, in connection with settlement of the
Mallinckrodt Litigation, enter into business arrangements with
Mallinckrodt and/or Molecular Biosystems and their respective Affiliates,
licensees, and sublicensees for Optison or otherwise, which arrangements
may include, by way of example and not limitation, co-marketing,
co-promotion, joint ventures, or other cooperative relationships, and
settlement of other disputes between Nycomed and Mallinckrodt and/or
Molecular Biosystems and their respective Affiliates, licensees, and
sublicensees (including but not limited to settlement and release of all
claims asserted against Nycomed in those certain actions styled
Mallinckrodt Medical, Inc. and Molecular Biosystems, Inc. v.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 15
Nycomed Imaging AS, Civil Action No. 97-1732 (PLF/DAR) pending in the U.S.
District Court for the District of Columbia and Nycomed Inc. v.
Mallinckrodt Medical, Inc., Civil Action No. 98-1833 (GEB) pending in the
U.S. District Court for the District of New Jersey). Sonus further
acknowledges that, incident to or as a result of a settlement of the
Mallinckrodt Litigation, Nycomed may use its rights under the Sonus
Patents to reach agreements with Third Parties for licenses or other
arrangements to secure for itself, Mallinckrodt, and/or Molecular
Biosystems the freedom to make, use, sell, offer to sell, and import
Optison in the General Territory, provided that no such settlements or
other agreements shall confer rights in the Pacific Rim Territory under
the Sonus Patents to Mallinckrodt, Molecular Biosystems or any Third Party
except as permitted in, and subject to the limitations of, paragraph 4.2
above.
5.5 Sonus's consideration for any settlement of the Mallinckrodt Litigation by
Nycomed (however accomplished, including by dismissal, covenant not to
sue, and/or license), which settlement may include but is not limited to a
complete release of all claims asserted by Sonus against Mallinckrodt and
Molecular Biosystems and the grant of a sublicense under the Sonus Patents
to Mallinckrodt and Molecular Biosystems for the manufacture, use, sale,
offer for sale, and importation of Optison in the General Territory, shall
* wherein Sonus Patents claiming direct or indirect priority from the
applications for U.S. Patents 5,558,094 or 5,573,751 have issued or been
published for opposition and are unexpired, (ii) dismissal with prejudice
of all counterclaims asserted by Molecular Biosystems or Mallinckrodt in
the Mallinckrodt Litigation, without payment by Sonus or admission of
liability, and (iii) a grant to Sonus of a royalty-free license or
covenant not to sue under the patents listed in Appendix 5.5 that are
owned or controlled by Molecular Biosystems, Mallinckrodt, or their
Current Affiliates sufficient to provide Sonus, its Affiliates and
licensees the freedom to make, use, sell, offer to sell, and import
EchoGen and SonoGen in the General Territory (clauses (i), (ii), and
(iii), collectively, the "Consideration"). No settlement of the
Mallinckrodt Litigation or grant of a sublicense under the Sonus Patents
to Mallinckrodt, Molecular Biosystems or their Affiliates shall be
concluded unless Sonus receives the Consideration. Other than the
Consideration, no other or further compensation shall be due Sonus on
account of the Mallinckrodt Litigation, Nycomed's settlement thereof, any
business relationship between Nycomed and Mallinckrodt and/or Molecular
Biosystems and their respective Affiliates, and the grant of
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 16
licenses under the Sonus Patents. Sonus shall be entitled to no other
participation or consideration in, from, for, or on account of any
business relationship between Nycomed and Mallinckrodt and/or Molecular
Biosystems and their respective Affiliates that is entered into as part
of, incident to, or following settlement of the Mallinckrodt Litigation.
Provided that it receives the Consideration, Sonus irrevocably binds
itself to never challenge the form or substance of any agreement of
settlement of the Mallinckrodt Litigation and agrees to be bound for the
purposes of this Agreement to any allocation and characterization of
consideration flowing to Nycomed thereunder.
5.6 Nycomed shall use *. For a period *, Nycomed and Sonus shall *, and
Nycomed shall *.
5.7 If Nycomed does not settle the Mallinckrodt Litigation * from the day of
the Closing, Nycomed shall assume sole control over the Mallinckrodt
Litigation including responsibility for the costs and expenses of the
litigation incurred thereafter, provided that Sonus shall retain sole
control (at its own expense) over the defense of the Tort Counterclaims
(as hereafter defined). "Tort Counterclaims" are all counterclaims
asserted by Mallinckrodt and Molecular Biosystems in the Mallinckrodt
Litigation other than the counterclaims seeking declaratory judgment of
non-infringement, invalidity, and/or unenforceability of the patents
asserted by Sonus in that litigation. Sonus shall cooperate with Nycomed
in transferring control of the Mallinckrodt Litigation (other than the
Tort Counterclaims) to Nycomed, and shall subscribe and execute all papers
and pleadings necessary or desirable to join or substitute Nycomed as
plaintiff therein. The provisions of paragraphs 5.1, 5.2, 5.3, 5.4, and
5.5 above shall continue to apply to any settlement of the Mallinckrodt
Litigation reached after the * period. The parties agree to cooperate and
consult with one another in connection with their respective roles in the
Mallinckrodt Litigation.
5.8 If Nycomed does not settle the Mallinckrodt Litigation (as provided
above), it may litigate the case (other than the Tort Counterclaims as
provided in paragraph 5.7 above) and any proceeds that Nycomed recovers
from the Mallinckrodt Litigation as plaintiff shall be divided between
Sonus and Nycomed as follows: (a) first, Nycomed shall recover its full
out of pocket expenses incurred after the day of the Closing for the
Mallinckrodt Litigation, including attorneys fees, and (b) second, any
remaining proceeds * between Sonus and Nycomed.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 17
5.9 The provisions of this section 5 shall apply to matters concerning the
Mallinckrodt Litigation and/or the settlement thereof notwithstanding any
different or conflicting provisions of this Agreement (specifically
including but not limited to section 4 above), and shall take precedence
over same. In all events any sublicense or other rights under the Sonus
Patents granted to Mallinckrodt or Molecular Biosystems pursuant to this
section 5 shall be limited to Non-perfluoropentane Ultrasound Products.
6. SONUS PATENTS AND SONUS PATENT APPLICATIONS
6.1 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 Sonus Patents and
Sonus Patent Applications, including the prosecution of any reissue
application, reexamination proceeding, and interference proceeding. Sonus
shall send Nycomed Quarterly reports on the status of all Sonus Patents
and Patent Applications.
6.2 Sonus shall be responsible for the selection and retention of counsel
subject to Nycomed's approval, such approval not to be unreasonably
withheld. It shall not be unreasonable for Nycomed to withhold or withdraw
consent as to any counsel that is, becomes, or threatens to become
directly adverse to Nycomed or an Affiliate in any inter partes judicial
or administrative proceeding.
6.3 Sonus shall promptly provide Nycomed with a copy of all correspondence,
filings and notices of action between Sonus and the pertinent official
patent office concerning the Sonus Patents and Sonus Patent Applications.
Sonus shall provide Nycomed with a reasonable opportunity to review and
advise Sonus on the written or oral response to any official patent office
action or correspondence or written submission by a Third Party to any
official patent office concerning the Sonus Patents or Sonus Patent
Applications. Sonus *. In the case *, Sonus shall *.
6.4 If Sonus and Abbott (to the extent Abbott is entitled to assume
prosecution as provided in the Abbott Agreements) decide to discontinue
the prosecution or maintenance of any Sonus Patent or Sonus Patent
Application (which Sonus may do in its sole and absolute discretion),
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 18
Sonus shall promptly notify Nycomed, supply Nycomed with copies of all
written communications with the pertinent official patent office, and
fully cooperate with Nycomed to transfer control of the patent or
application to Nycomed, including subscribing all papers necessary or
desirable to effectuate same. In such event, Nycomed may, but does not
have the obligation to, file or continue prosecution of such application
or maintain such patent without any liability to Sonus for any acts or
omissions related thereto. In the case of filing or continuing prosecution
of an application (including maintenance fees for any patents issuing
therefrom), such actions shall be at Nycomed's sole expense. Sonus shall
bear the cost of paying official maintenance fees for those Sonus Patents
that have issued or been published for opposition as of the day of the
Closing, and shall promptly reimburse Nycomed for all such costs upon
notice by Nycomed, and Nycomed shall have the right to set-off
reimbursements due it from Sonus against any amounts owed by Nycomed to
Sonus under sections 3, 4, and/or 5 of this Agreement.
6.5 Nycomed may request that Sonus act under paragraph 6.4 above with respect
to any Sonus Patent Application that Nycomed desires to prosecute itself
(which request Sonus may honor or reject in its sole discretion, except as
provided in the following sentence). If Nycomed makes such a request as to
a Sonus Patent Application that concerns only Non-perfluoropentane
Ultrasound Products, Sonus shall not unreasonably withhold approval of
Nycomed's request, and Nycomed shall upon approval of its request by Sonus
assume all further costs and expenses associated with the prosecution of
such application.
6.6 If any Sonus Patent Application *, Nycomed shall *. Any agreement between
Sonus and any entity (other than Abbott) *.
6.7 The handling of the enforcement of the Sonus Patents is governed by
sections 4 and 5 of this Agreement.
6.8 Sonus hereby agrees that prior to electing to discontinue prosecution of
any Sonus Patent Application or claims that concern only
Non-perfluoropentane Ultrasound Products, it shall first consult with
Nycomed. If Nycomed so requests, Sonus shall continue prosecution of such
application or claims at Nycomed's expense (including reimbursement of
Sonus's attorneys fees).
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 19
7. PATENT MARKING
7.1 If requested by any party, insofar as practical, the other party (and any
sublicensees) shall place, or shall cause the manufacturer to place,
appropriate patent and/or patent pending markings on an exposed surface of
each Licensed Product made or sold hereunder or on the packaging for such
Licensed Product. The content, form, size, location and language used in
such markings shall be in accordance with the laws and practices of the
country where such markings are required.
7.2 To the extent permitted by law, Nycomed shall include, in any submission
to the U.S. Food and Drug Administration for a Nycomed Product which
includes a listing of Nycomed Patents that cover such product, a listing
of the appropriate Sonus Patents that also cover such product.
7.3 To the extent permitted by law, Sonus shall include, in any submission to
the U.S. Food and Drug Administration for a Sonus Product which includes a
listing of Sonus Patents that cover such product, a listing of the
appropriate Nycomed Patents that also cover such product.
8. ASSIGNMENT
8.1 This Agreement may not be assigned or transferred by either party
without written consent of the other party, such consent not to be
unreasonably withheld, except that either party may assign this
Agreement to any successor by merger, consolidation, or sale of
substantially all of its business unit (or assets relating to that
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 shall be of no force or effect.
8.2 This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their successors and permitted assigns.
8.3 Notwithstanding the provisions of paragraph 8.1 above, either party may
upon written notice assign this Agreement to an Affiliate, provided that
no such assignment shall relieve the assigning party of its duties and
responsibilities under this Agreement.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 20
9. RIGHT OF FIRST REFUSAL AS TO *
In the event Sonus receives an offer to buy * Nycomed shall have a right
of first refusal with respect to *. If Sonus desires to solicit any such
offer from Third Parties or desires to file for bankruptcy protection,
Sonus shall promptly give written notice to Nycomed, which shall be at
least 30 days prior to any such solicitation and as soon as possible prior
to any such bankruptcy filing. Within 30 days of such notice, Nycomed
shall indicate whether or not it is interested in making the purchase. If
Nycomed is interested, Sonus and Nycomed shall negotiate in good faith for
a maximum of 60 days to mutually determine the material terms of a
definitive agreement. If Nycomed and Sonus do not reach such agreement,
but during the negotiation period, Nycomed 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 Nycomed, then Sonus shall promptly notify Nycomed in writing.
Nycomed then may offer to meet such terms within 45 days from such notice.
If Nycomed does not offer to meet such terms within such 45 day period,
then Nycomed shall have no further rights under this Section with respect
to such bona fide Third Party offer for *. The provisions of this
paragraph 9 shall not apply where, *.
10. CONFIDENTIALITY
Each party agrees that the terms of this Agreement and any information
provided by either party to the other hereunder (including information
provided under paragraphs 6.3-6.6 and section 20) shall remain
confidential throughout the term of this Agreement and shall not be
disclosed to any person or entity, except to a party's professional
advisor, Abbott, for purposes of obtaining its consent, and the escrow
agent pursuant to section 31, without advance written permission of the
other party, provided that, either party in negotiation or business with a
Third Party concerning the sublicensing of patent rights pursuant to this
Agreement may disclose to such Third Party, under a written
confidentiality agreement, such terms of this Agreement as are reasonably
necessary in order to engage in such negotiations or business, and further
provided that either party may make any filings of this Agreement, subject
to confidential treatment, required by law in any country. Each party
further agrees that it will not issue any press
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 21
release or publicity in regard to this Agreement without the advance
written permission of the other party. Advance written permission will not
be required when a party is ordered to disclose information concerning the
Agreement by a competent tribunal, such disclosures are required by law,
or disclosure is to be made to the tribunal in arbitration proceedings
under section 26 below. Each party agrees that to the extent that
information subject to claims of attorney-client privilege, work product,
or any similar privilege or immunity is disclosed to the other pursuant to
performance of this Agreement, such disclosure is intended to further the
parties' common legal interests and/or joint defense and shall remain
subject to such privilege or immunity to the maximum extent permitted by
law.
11. TERM
This Agreement is effective as of Closing. Unless earlier terminated as
provided in section 13 or paragraph 31.2 of this Agreement, it shall
continue in effect until the expiration of the last to expire patent among
the Nycomed Patents and the Sonus Patents. As used in this Agreement, the
"expiration" of a patent includes (i) irrevocable lapse for failure to pay
maintenance fees or the like, (ii) final revocation of the applicable
claims by a national patent office and the exhaustion or expiration of all
appeals of such revocation, and (iii) final adjudication by a court of
competent jurisdiction that the applicable claims of the patent are
invalid or unenforceable and the exhaustion or expiration of all appeals
from said adjudication.
12. STANDSTILL
Nycomed shall not directly or indirectly, for the Term of this Agreement,
absent prior written of consent of Sonus which may be withheld in its sole
discretion, purchase, acquire, or obtain the right to vote or control the
voting of any voting securities of Sonus, or seek or propose to influence
or control the management or policies of Sonus except in the exercise of
Nycomed's rights under this Agreement.
13. DEFAULT AND TERMINATION
13.1 If either party breaches any of the material terms or conditions of this
Agreement, the party claiming such breach may serve the alleged breaching
party with a notice of breach specifying the acts or omissions
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 22
creating such alleged breach. If the alleged breaching party fails to
remedy said breach within 60 days of receipt of said notice, the other
party may terminate this Agreement by serving a notice of termination.
13.2 Any notice of termination pursuant to paragraph 13.1 above shall be
effective 30 days after receipt of such notice by the non-terminating
party, unless before the expiration of said 30 day period, the
non-terminating party requests or shall have requested mediation pursuant
to paragraph 26.2 of this Agreement, in which event this Agreement shall
not terminate until after the conclusion of (i) such mediation, and (ii)
any arbitration under paragraph 26.1 commenced by either party within 30
days of service by either party of a request for mediation under paragraph
26.2, and then only if and to the extent not inconsistent with any award
rendered in such arbitration.
13.3 In the event that either party files a petition in bankruptcy, is
adjudicated a bankrupt or files a petition or otherwise seeks relief under
or pursuant to any bankruptcy, insolvency or reorganization statute or
proceeding, or if a petition in bankruptcy is filed against it or it
becomes insolvent or makes an assignment for the benefit of its creditors
or a custodian, receiver or trustee is appointed for it or a substantial
portion of its business or assets, the other party shall have the right to
terminate this Agreement forthwith upon written notice, which notice shall
be effective upon dispatch.
13.4 No debtor-in-possession, assignee for the benefit of creditors, custodian,
receiver, trustee in bankruptcy, sheriff or any other officer of the court
or official charged with taking over custody of a party's assets or
business shall have any right to continue this Agreement if this Agreement
terminates pursuant to paragraph 13.3 hereof.
13.5 In the event that, notwithstanding the provisions of paragraph 13.4
hereof, pursuant to the U.S. Bankruptcy Code or any amendment or successor
thereto (the "Code"), a trustee in bankruptcy of a party to this
Agreement, or a party to this Agreement as debtor-in-possession, is
permitted to assume this Agreement and does so and, thereafter, desires to
assign this Agreement to a third party, which assignment satisfies the
requirements of the Code, the trustee or debtor-in-possession, as the case
may be, shall notify the other party to this Agreement (the "Nonbankrupt
Party") of same in writing. Said notice shall set forth the name and
address of the proposed assignee, the proposed consideration
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 23
for the assignment and all other relevant details thereof. The giving of
such notice shall be deemed to constitute the grant to the Nonbankrupt
Party of an option to have this Agreement assigned to it or to its
designee for such consideration, or its equivalent in money, and upon such
terms as are specified in the notice. The aforesaid option may be
exercised only by written notice by the Nonbankrupt Party to the trustee
or debtor-inpossession, as the case may be, within 15 days of receipt of
the notice of the proposed transaction. If the Nonbankrupt Party fails to
accept the terms within the said exercise period, the party giving notice
may complete the assignment referred to in its notice, but only if such
assignment is to the entity named in said notice and for the consideration
and upon the terms specified therein.
13.6 Nothing contained herein shall be deemed to preclude or impair any rights
that the Nonbankrupt party may have as a creditor in any bankruptcy
proceeding.
14. CHOICE OF LAW; CHOICE OF FORUM
This Agreement shall be construed and interpreted in accordance with the
laws of the State of Delaware without reference to its choice of law
principles. As provided in section 26 of this Agreement, any dispute
between the parties related to or arising out of this Agreement, the
parties' relationship created hereby, and/or the negotiations for and
entry into this Agreement including any dispute concerning its conclusion,
binding effect, amendment, coverage, or termination, shall be submitted to
and resolved by arbitration. If, however, any such dispute is not subject
to arbitration under section 26 of this Agreement, the state and federal
courts located in New York County, New York shall have exclusive
jurisdiction of such dispute. Said courts shall also have exclusive
jurisdiction of any action to compel arbitration under this Agreement,
incident to arbitration under this Agreement, or to enter or set aside an
arbitration award. The parties expressly submit to the personal
jurisdiction of such courts for any action described in this paragraph 14,
agree that such courts provide a convenient forum for any such action, and
waive any objections or challenges to venue.
15. ENTIRE AGREEMENT; NO ORAL MODIFICATIONS; WAIVER
15.1 This Agreement contains the entire understanding and agreement between
Nycomed and Sonus with respect to the subject matter hereof,
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 24
and supersedes all prior oral or written understandings and agreements
relating thereto. Neither party shall be bound by any conditions,
definitions, warranties, understandings, or representations concerning the
subject matter hereof except as are (i) provided in this Agreement, (ii)
contained in any prior existing written agreement between the parties, or
(iii) duly set forth on or after the day of the Closing of this Agreement
in a written instrument subscribed by an authorized representative of the
party to be bound thereby.
15.2 Each party has relied solely on its own evaluation of the subject matter
in deciding to enter into this Agreement, and has not been induced to
enter into this Agreement by any statements, promises, or representations
of the other party, nor has it relied on any such statements, promises, or
representations.
15.3 No waiver by either party, whether express or implied, of any provision of
this Agreement, or of any breach or default thereof, shall constitute a
continuing waiver of such provision or of any other provision of this
Agreement. Either party's acceptance of payments by the other under this
Agreement shall not be deemed a waiver of any violation of or default
under any of the provisions of this Agreement.
16. RELATIONSHIP OF THE PARTIES
Nothing herein contained shall be construed to constitute the parties
hereto as partners or as joint venturers, or either as agent or employee
of the other. Neither party shall take any action that purports to bind
the other.
17. SEVERABILITY
If any provision or any portion of any provision of this Agreement shall
be held to be void or unenforceable (or a formal indication to that effect
is communicated by any competent authority), the parties shall in good
faith negotiate valid substitute provisions which reflect, as closely as
reasonably practicable, their commercial intentions as set out herein.
Subject thereto, the remaining provisions of this Agreement and the
remaining portion of any provision held void or unenforceable in part
shall continue in full force and effect.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 25
18. CONSTRUCTION
This Agreement shall be construed without regard to any presumption or
other rule requiring construction against the party causing this Agreement
to be drafted. If any words or phrases in this Agreement shall have been
stricken out or otherwise eliminated, whether or not any other words or
phrases have been added, this Agreement shall be construed as if those
words or phrases were never included in this Agreement, and no implication
or inference shall be drawn from the fact that the words or phrases were
so stricken out or otherwise eliminated.
19. HEADINGS
The captions and paragraph headings appearing in this Agreement are
inserted for convenience and reference only and in no way define, limit or
describe the scope or intent of this Agreement or any of the provisions
thereof.
20. BOOKS AND RECORDS; AUDITS
20.1 Each party shall prepare and maintain, in accordance with generally
accepted accounting principles, complete and accurate books of account and
records covering all sales, receipts, payments, and other transactions
relating to this Agreement. Each party may appoint an independant
certified public accountant, recognized nationally in the United States
and approved by the other party (such approval not to be unreasonably
withheld), to inspect and audit such books and records with respect to the
subject matter and terms of this Agreement. Such audits shall be conducted
during regular business hours (no more than once per year and no more than
three years after termination of this Agreement) at the expense of the
party requesting the audit (except as provided in paragraph 20.2 below).
The auditors may inspect and copy all such books of account and records in
the possession or under the control of the party being audited, but shall
maintain such information in confidence, provided that the auditor may
report its findings (but not the underlying data) to the party requesting
the audit. All such books of account, records, and documents shall be kept
available by each party for at least three years after the end of the
quarter to which they relate.
20.2 If as a result of any audit of books and records it is shown that payments
under this Agreement were less than the amount that should have been
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 26
paid, all payments required to be made to eliminate such underpayment
shall be made promptly upon the auditing party's demand therefor. If the
discrepancy is in an amount equal to five percent (5%) or more of the
amount actually paid, the audited party shall also reimburse the auditing
party for the reasonable costs of such audit. No claim of underpayment may
be made more than three years after the Quarter in which the payments in
question were initially due.
21. TAXES
Each party shall bear all taxes resulting from royalties under this
Agreement, that party's granting or receipt of licenses or sublicenses
under this Agreement, or that party's other activities under this
Agreement. The payments to be made to Sonus as provided in paragraphs
3.2-3.7 and sections 4 and 5 above shall be net of any withholding taxes
or duties (there shall be no withholding in connection the payment to be
made under paragraph 3.1).
22. IMMUNITY UNDER OTHER PATENTS
22.1 During the term of this Agreement, Nycomed hereby grants to Sonus, its
Affiliates and their licensees, with respect to and only with respect to
Sonus Licensed Products for which royalties are incurred under the Nycomed
Patents pursuant to paragraph 3.3 above, a royalty-free immunity from suit
under all other patents or patent applications presently owned or
controlled by Nycomed or its Current Affiliates.
22.2 During the term of this Agreement, Sonus hereby grants to Nycomed, its
Affiliates and their licensees, with respect to and only with respect to
(i) Nycomed Licensed Products for which royalties are incurred under the
Sonus Patents pursuant to paragraph 3.2 above and (ii) Optison if a
royalty is incurred under the Sonus Patent pursuant to paragraph 5.5
above, a royalty-free immunity from suit under all other patents or patent
applications presently owned or controlled by Sonus or its Current
Affiliates.
22.3 Each party shall promptly discontinue, and refrain from initiating or
pursuing, any patent office opposition proceedings (worldwide) against the
other's licensed patents and applications. Neither this paragraph 22.3 nor
any other provisions of this Agreement shall affect any interference
proceedings currently pending in the U.S. Patent and
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 27
Trademark Office between Sonus and Nycomed involving patents or
applications licensed under this Agreement.
23. REPRESENTATIONS AND WARRANTIES OF SONUS
Sonus hereby represents and warrants that:
23.1 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
herein.
23.2 Sonus is the owner of all right, title, and interest in and to the Sonus
Patents and Sonus Patent Applications (subject to the Abbott Agreements).
Sonus has no license agreements or other agreements or obligations with or
to third parties or any other binding commitments, obligations, liens,
mortgages, or encumbrances of any kind or nature that diminish, limit, or
impair (i) the rights granted by Sonus to Nycomed in this Agreement or
(ii) the ability of Sonus to perform its covenants and obligations under
this Agreement.
23.3 Sonus will not divest itself of any rights now or hereafter possessed when
the effect of doing so may diminish limit, or impair (i) the rights
granted by Sonus to Nycomed in this Agreement or (ii) the ability of Sonus
to perform its covenants and obligations under this Agreement. In no event
shall Sonus's exercise of rights that it is accorded under this Agreement
constitute a breach of Sonus's obligations under this paragraph 23.3.
23.4 The Abbott Agreements are the only agreements between Sonus and Abbott
Laboratories or Abbott International, Ltd. and their respective Affiliates
conferring license rights under the Sonus Patents.
23.5 Sonus has obtained the consent of Abbott Laboratories and Abbott
International, Ltd., to enter into this Agreement, and Abbott Laboratories
and Abbott International, Ltd., have each executed a form of Statement of
Consent as provided in Appendix 23.5 hereto.
23.6 Sonus is not party to any other agreement the terms of which (i) conflict
with the covenants and obligations of Sonus under this Agreement or the
rights granted by Sonus to Nycomed under this Agreement or (ii) diminish
limit, or impair the rights granted by Sonus to Nycomed in this
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 28
Agreement or the ability of Sonus to perform its covenants and obligations
under this Agreement.
23.7 Sonus is not in default in its payment of legal fees associated with the
Mallinckrodt Litigation. No attorney will assert a retaining lien on or
other interest in the pleadings and papers for the Mallinckrodt Litigation
that would interfere with their transfer to Nycomed or require payment of
a fee to cause their release. No attorney will assert a lien on or other
interest in any proceeds of the Mallinckrodt Litigation, nor is any
attorney entitled to compensation that is contingent on the outcome of the
Mallinckrodt Litigation.
23.8 With the exception of claims for infringement of the Sonus Patents or
Sonus PatentApplications and claims asserted in the Mallinckrodt
Litigation, Sonus has no claims against any Third Party in the business of
researching, developing, manufacturing, or marketing ultrasound contrast
agents.
23.9 Sonus is party to an enforceable agreement with * under which *.
24. REPRESENTATIONS AND WARRANTIES OF NYCOMED
Nycomed hereby represents and warrants that:
24.1 Nycomed has the full right, power, and corporate authority to enter into
this Agreement and to make the promises and grant the licenses set forth
herein.
24.2 Nycomed is the owner of all right, title, and interest in and to the
Nycomed Patents. Nycomed has no license agreements or other agreements or
obligations with or to third parties or any other binding commitments,
obligations, liens, mortgages, or encumbrances of any kind or nature that
diminish, limit, or impair (i) the rights granted by Nycomed to Sonus in
this Agreement or (ii) the ability of Nycomed to perform its covenants and
obligations under this Agreement.
24.3 Nycomed will not divest itself of any rights now or hereafter possessed
when the effect of doing so may diminish limit, or impair (i) the rights
granted by Nycomed to Sonus in this Agreement or (ii) the ability of
Nycomed to perform its covenants and obligations under this Agreement. In
no event shall Nycomed's exercise of rights that it is accorded under
[*] Confidential portions omitted
and filed separately with Commission.
-28-
<PAGE> 29
this Agreement constitute a breach of Nycomed's obligations under this
paragraph 24.3.
24.4 Nycomed is not party to any other agreement the terms of which (i)
conflict with the covenants and obligations of Nycomed under this
Agreement or the rights granted by Nycomed to Sonus under this Agreement
or (ii) diminish limit, or impair the rights granted by Nycomed to Sonus
in this Agreement or the ability of Nycomed to perform its covenants and
obligations under this Agreement.
24.5 Nycomed AS is a wholly owned subsidiary of Nycomed Amersham plc
25. RECORDING
Neither party shall record this Agreement or any abstract hereof in any
patent office or public recording office. Provided that each party shall
be permitted to record abstracts or short forms of its licenses under the
other's licensed patents in the European Patent Office, U.S. Patent and
Trademark Office, and any other national patent office. Each party shall
execute and deliver to the other any documents required for such
recording.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 30
26. ARBITRATION
26.1 Subject to the mediation requirements of paragraph 26.2 below and the
limitation on any award of paragraph 26.3 below, all disputes between the
parties related to or arising out of this Agreement, the parties'
relationship created hereby, and/or the negotiations for and entry into
this Agreement, including any dispute concerning its conclusion, binding
effect, amendment, coverage, or termination, shall be resolved, to the
exclusion of the ordinary courts, by a three-person arbitral tribunal
composed of one arbitrator appointed by each party and a third arbitrator,
who shall be a retired judge of a U.S. federal or state trial or appeal
court of record, selected by the arbitrators appointed by the parties.
Arbitration shall proceed in accordance with the CPR Rules for
Non-Administered Arbitration of Patent and Trade Secret Disputes in effect
on the day of the Closing of this Agreement. In no case shall the arbitral
tribunal make any award that is inconsistent with the limitations set
forth in paragraph 26.3 below, and the arbitral tribunal shall have no
jurisdiction to make any such inconsistent award. The decision of the
arbitral tribunal shall be final, and the parties waive all challenge of
the award. The venue of any such proceeding shall be New York County, New
York. All proceedings shall be conducted in the English language.
26.2 If either party desires to commence arbitration pursuant to paragraph 26.1
above, prior to doing so it shall so notify the other party in writing and
simultaneously request an internal mediation proceeding between the
parties ("Mediation Request"). The Mediation Request shall not constitute
a notice of arbitration, nor serve to commence arbitration proceedings
under paragraph 26.1 above. Within 7 business days of service of the
Mediation Request, each party shall (i) designate a senior member of its
management, at the level of at least executive vice president or division
chief executive, and with authority to settle the dispute (subject to
approval of a settlement by the party's board if necessary), to
participate in the mediation as its management representative, and (ii)
submit to the other party a confidential summary of its position, in
letter form not to exceed 5 pages in length, which shall be provided to
that other party's management representative. Within 14 business days
thereafter, the management representatives shall meet with each other in
person to attempt in good faith to resolve the dispute. If a party desires
to have counsel also attend such meeting, it shall notify the other party
at least 5 business days in advance. The meeting shall be held in London,
England, if the Mediation Request is served by Sonus, and in Seattle,
Washington, if the Mediation Request is served by
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 31
Nycomed. If the parties are unable to resolve the dispute within 7
business days following the meeting, either party may commence arbitration
under paragraph 26.1 above. A party that refuses or fails to participate
in the mediation process shall not initiate arbitration proceedings until
such time as it so participates, but the other party shall be free to
initiate arbitration proceedings (and the non-participating party shall
respond to the commencement of arbitration in accordance with the
arbitration rules specified in paragraph 26.1).
26.3 Any dispute arising under paragraph 4.7 concerning the compensation due
Sonus incident to any transaction between Nycomed and a Third Party
thereunder shall be subject to mediation and arbitration under paragraphs
26.2 and 26.1 above and the additional provisions of this paragraph 26.3.
If the only consideration that Nycomed receives from a transaction with a
Third Party under paragraph 4.7 consists of payments that are shared with
Sonus thereunder, Sonus shall not be permitted to challenge the
transaction. If Nycomed receives other consideration in any such
transaction that is not shared with Sonus, and if Sonus contends that
consideration for the grant of licenses or sublicenses has been
unreasonably allocated to such other forms of consideration, Sonus must so
notify Nycomed within 30 days after it is informed of the terms of such
transaction by Nycomed. If Sonus does not so notify Nycomed within such
30-day period, it shall not be permitted to challenge the transaction. In
any challenge of the allocation of consideration by Sonus, Sonus shall be
obligated to demonstrate by clear and convincing evidence that the
allocation was unreasonable or made in bad faith. In any such challenge by
Sonus, the maximum award to which Sonus would be entitled upon such
showing is *. At any time during such dispute, including during mediation
or arbitration, Nycomed may conclusively resolve all claims brought by
Sonus by agreeing to pay or have paid to Sonus *, and in no dispute
concerning Sonus's entitlement pursuant to paragraph 4.7 to share in
consideration received by Nycomed shall the arbitral tribunal be permitted
to make an award to Sonus that is *. The provisions of this paragraph 26.3
constitute Sonus's exclusive right and remedy to challenge the allocation
of consideration flowing to Nycomed in any such transaction. In no case
shall Sonus pursue or assert any claim against the Third Party to any such
transaction, or attempt to set-aside, modify, void, annul, or terminate
the transaction between Nycomed and the Third Party.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 32
27. NOTICES
All reports, approvals, requests, demands and notices required or
permitted by this Agreement to be given to a party (hereafter "Notices")
shall be in writing. Notices shall be hand delivered, sent by certified or
registered mail, return receipt requested, or sent via a reputable private
express service which requires the addressee to acknowledge receipt
thereof. Notices may also be transmitted by fax, provided that a
confirmation copy is also sent by one of the above methods. Except as
otherwise provided in this Agreement, notices shall be effective upon
dispatch unless sent by mail, in which case they shall be effective five
days after mailing. Notices shall be sent to the party concerned as
follows (or at such other address as a party may specify by notice to the
other):
As to Nycomed:
Nycomed Amersham Imaging
Amersham Place
Little Chalfont
Buckinghamshire HP7 9LL
ENGLAND
Telefax: +44 1494 542242
Attn: Group Legal Advisor and Corporate Secretary
-with a copy to-
Richard L. DeLucia, Esq.
Kenyon & Kenyon
1 Broadway
New York, NY 10004-1050
Telefax: (212) 425-5288
As to Sonus:
Sonus Pharmaceuticals, Inc.
22026 20th Avenue, S.E., Suite 102
Bothell, Washington 98021
Telefax: (206) 489-0626
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 33
Attention: President
-with a copy to-
Gary N. Frischling, Esq.
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067-4276
Telefax: (310) 203-7199
28. APPENDICES AND EXHIBITS
All Appendices and Exhibits referenced herein are hereby made a part of
this Agreement.
29. PAYMENTS; PARTIAL PAYMENTS; INTEREST; CURRENCY
29.1 Each party may accept partial payments from the other of any amount due
under this Agreement without prejudice to any claim for the balance owed.
The acceptance of any payments or checks marked "Payment in Full" or
otherwise shall be without prejudice and such notations shall be of no
effect.
29.2 Any payments not made when due shall bear interest from the due date until
the date of payment at the rate which is the lower of (i) two percentage
points above the one-month London Interbank Offering Rate in effect on the
due date or (ii) the highest rate permitted by applicable law.
29.3 All payments required by this Agreement shall be made by wire transfer to
the institution and account designated in writing for receipt of such
payments by each party.
29.4 All payments required by this Agreement shall be made in U.S. dollars.
When conversion of currency is required to render a statement under
paragraph 3.4 of this Agreement, the conversion shall be made at the rate
in effect on the last business day of the Quarter to which such statement
relates. The conversion rates shall be the New York foreign exchange
mid-range rates published in the Wall Street Journal.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 34
30. COEXISTENCE OF SONAZOID AND SONOGEN TRADEMARKS
The parties have determined and agree that there is no likelihood that
consumers will be confused by the use and registration of the trademark
"Sonazoid" adopted by Nycomed and the trademark "SonoGen" adopted by
Sonus.
31. CONDITIONS OF CLOSING; HART-SCOTT-RODINO FILING; ESCROW
31.1 As soon as practicable after the execution of this Agreement, but in no
event later than two business days thereafter, Sonus and Nycomed shall
cause to be filed any notices, reports and other documents required to be
filed under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"). Each party shall respond as promptly as
practicable, and in a manner deemed advisable by that party as most likely
to further the attainment of any necessary governmental approvals or the
avoidance of any order impeding the consummation of the transactions
contemplated by this Agreement, to (i) any inquiries or requests received
from the Federal Trade Commission or the Department of Justice for
additional information or documentation and (ii) any inquiries or requests
received from any state attorney general or other governmental body in
connection with antitrust or related matters. Each of the parties shall
(a) give the other party prompt notice of the commencement of any action,
suit, litigation, arbitration, preceding or investigation ("Legal
Proceeding") by or before any governmental body with respect to the
transactions contemplated by this Agreement, (b) keep the other party
informed as to the status of any such Legal Proceeding, and (c) promptly
inform the other party of any communication to or from the Federal Trade
Commission, the Department of Justice or any other governmental body
regarding the proposed licensing arrangements between Nycomed and Sonus
contemplated by this Agreement. Nycomed shall pay the fee associated with
any filing of the notification form under the HSR Act.
31.2 Concurrent with execution of this Agreement, the parties shall establish
an escrow in substantially the form provided in Appendix 31.2 hereto, with
a mutually agreeable financially responsible escrow agent. Nycomed shall
pay the license fee called for under paragraph 3.1 above into escrow
within one business day after execution of this Agreement. The escrow
terms shall provide that (x) $5,000,000 be disbursed by the escrow holder
to Sonus on the satisfaction of the conditions set forth in 31.3(i) and
31.3(ii) below, and (y) if the Closing has occurred, the balance be
disbursed to Sonus on October 1, 1999 (or on the day of Closing if the
Closing occurs after October 1, 1999). The escrow terms shall further
provide that, in the event that conditions (i) and (ii) set forth in
paragraph 31.3 below are not satisfied on or before October 31, 1999,
either party shall have the right to terminate this Agreement and all
obligations, rights, and licenses hereunder (except that the provisions of
sections 10, 14, and 26 shall survive such termination), in which event
all funds contained in the escrow account shall be released to Nycomed.
All interest on the funds in escrow shall follow the amount paid into
escrow
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 35
and shall be disbursed to the party to whom the payment is made, which
party shall also bear any fees and costs charged by the escrow agent.
31.3 The Closing shall take effect automatically upon the satisfaction (or
waiver by both Parties) of the following conditions: (i) the waiting
period applicable to this Agreement under the HSR Act shall have
expired or early termination of the HSR Act waiting period shall have
been granted by the applicable government agency; (ii) no court or
governmental entity of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
judgment, decree, injunction or other order which is in effect and
prohibits the consummation of the Closing or threatened any action that
if successful would have the effect of prohibiting the consummation of
the Closing, and (iii) Sonus shall have received payment from the
escrow agent of the amounts to which it is entitled under paragraph
31.2(x) above. Notwithstanding the foregoing, paragraphs and sections
3.1, 10, 13.1, 13.2, 14, 15.1, 15.3, 16, 17, 18, 19, 21, 26, 27, 29,
and 31 of this Agreement shall take effect upon execution of this
Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by its duly authorized representative as of the day and year first
above written.
NYCOMED IMAGING AS SONUS PHARMACEUTICALS, INC.
By: /s/Ase Aulie Michelet By: /s/ Michael A. Martino
---------------------------- -------------------------------------
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 36
APPENDIX 1.3
(SONUS PATENTS)
*
And foreign equivalents of the above, which foreign equivalents have issued or
are published for opposition.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 37
APPENDIX 1.4
(NYCOMED PATENTS)
*
*
And foreign equivalents of the above, which foreign equivalents have issued or
are published for opposition.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 38
APPENDIX 1.12
(SONUS PATENT APPLICATIONS)
*
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 39
APPENDIX 3.4 TO LICENSE AGREEMENT
(Exemplification of royalty calculations)
Example 1
Net Sales in Quarter are as follows:
*
[*] Confidential portions omitted
and filed separately with Commission.
-40-
<PAGE> 40
Example 2
*
[*] Confidential portions omitted
and filed separately with Commission.
-41-
<PAGE> 41
Example 3
Net Sales in Quarter are as follows:
*
[*] Confidential portions omitted
and filed separately with Commission.
-42-
<PAGE> 42
Example 4
Net Sales in Quarter are as follows:
*
[*] Confidential portions omitted
and filed separately with Commission.
-43-
<PAGE> 43
Example 5
Net Sales in Quarter are as follows:
*
[*] Confidential portions omitted
and filed separately with Commission.
-44-
<PAGE> 44
Example 6
Net Sales in Quarter are as follows:
*
[*] Confidential portions omitted
and filed separately with Commission.
-45-
<PAGE> 45
Example 7
Net Sales in Quarter are as follows:
*
[*] Confidential portions omitted
and filed separately with Commission.
-46-
<PAGE> 46
APPENDIX 3.6
(CERTAIN SONUS PATENTS)
*
And foreign equivalents of the above, which foreign equivalents have issued or
are published for opposition.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 47
APPENDIX 3.7
(CERTAIN NYCOMED PATENTS)
*
[*] Confidential portions omitted
and filed separately with Commission.
-48-
<PAGE> 48
*
And foreign equivalents, which foreign equivalents have issued or are published
for opposition.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 49
Appendix 5.5
(Certain Molecular Biosystems and Mallinckrodt Medical patents and applications)
*
and all patents or patent applications (worldwide) claiming priority, directly
or indirectly, from the above applications and/or the applications resulting in
the above patents.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 50
Appendix 23.5
Abbott Laboratories
Abbott International, Ltd.
August , 1999
Nycomed Imaging AS
Nycoveien 1-2
Oslo, Norway
Sonus Pharmaceuticals, Inc.
22026 20th Avenue, S.E., Suite 102
Bothell, Washington 98021
Re: License Agreement between Nycomed Imaging AS ("Nycomed") and
Sonus Pharmaceuticals, Inc.
("Sonus")
Gentlemen:
At the request of Sonus, we have reviewed the proposed License Agreement between
Sonus and Nycomed that is attached to this letter.
Abbott Laboratories and Abbott International, Ltd. (collectively, "Abbott")
hereby give their consent to Sonus's entry into the proposed License Agreement.
Such consent is given notwithstanding sections 9 and 10.1(D) of the Abbott
International, Ltd. agreement and sections 10 and 11.1(D) of the Abbott
Laboratories agreement to the extent of Sonus's grant of rights to Nycomed
relating to Non-perfluoropentane Ultrasound Products.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 51
Very truly yours,
ABBOTT LABORATORIES ABBOTT INTERNATIONAL, LTD.
By: /s/ Richard A. Gonzales By: /s/ William J. Dempsey
--------------------------- -----------------------------------
Its: President Its: President
------------------------- -----------------------------------
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 52
APPENDIX 31.2 TO LICENSE AGREEMENT
ESCROW AGREEMENT
This Escrow Agreement dated as of August 31, 1999, is entered into by and
between Nycomed Imaging AS, a Norwegian corporation with principal offices at
Nycoveien 1-2, Oslo ("Nycomed"), Sonus Pharmaceuticals, Inc., a Delaware
corporation with principal offices at 22026 20th Avenue, S.E., Suite 102,
Bothell, Washington 98021 ("Sonus"), and Summit Bank ("Escrow Agent"), a New
Jersey corporation having offices at 210 Main Street, Hackensack, NJ 07601.
WHEREAS Nycomed and Sonus desire to establish an escrow account ("Escrow
Account") in connection with an intended transaction between them, the terms of
which are set forth in that certain proposed License Agreement attached hereto
in draft form; and
WHEREAS Nycomed and Sonus desire to appoint the Escrow Agent to carry out
the escrow functions defined in the License Agreement, more particularly
paragraph 31.2 thereof; and
WHEREAS the Escrow Agent desires to accept such appointment in accordance
with the terms set forth in this Escrow Agreement,
NOW THEREFORE, the parties agree as follows:
1. Nycomed and Sonus hereby appoint the Escrow Agent to act as the escrow
agent and to carry out the functions of the escrow agent as set forth in
this Escrow Agreement, and the Escrow Agent accepts such appointment.
2. Following execution of the License Agreement, Nycomed will provide a
copy of the executed License Agreement to the Escrow Agent, which shall
attach such executed copy to this Escrow Agreement, and the executed
copy of the License Agreement shall then govern over the terms of the
draft License Agreement. The executed copy of the License Agreement
may be supplied to the Escrow Agent without the exhibits that are
referred to and made part of the License Agreement, such exhibits not
having any effect on the Escrow Agent's performance of its duties
hereunder.
3. Nycomed shall deposit with the Escrow Agent the amount of $10,000,000, as
provided in paragraph 3.1 of the License Agreement. Those funds, together
with interest thereon (the "Escrowed Funds") shall be held by the Escrow
Agent in the Escrow Account. The Escrow Agent shall disburse funds from
the Escrow Account as follows:
(a) $5,000,000 shall be disbursed by the Escrow Agent to Sonus on the
satisfaction of the following conditions: (i) the waiting period
applicable to the License Agreement under the Hart-Scott-Rodino Act
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 53
shall have expired or early termination of the Hart-Scott-Rodino Act
waiting period shall have been granted by the applicable government
agency; and (ii) no court or governmental entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction
or other order which is in effect and prohibits the consummation of
the Closing (as defined in the License Agreement) or threatened any
action that if successful would have the effect of prohibiting the
consummation of the Closing.
(b) If the Closing (as defined in the License Agreement) occurs on or
before October 1, 1999, the balance of the Escrowed Funds (including
interest) shall be disbursed to Sonus on October 1, 1999. If the
Closing occurs after October 1, 1999, the balance (including
interest) shall be disbursed to Sonus on the day of the Closing.
(c) As set forth in section 31.2 of the License Agreement, Sonus and
Nycomed shall each have the right to terminate the License
Agreement as set forth in that paragraph in the event that
conditions a(i) and a(ii) above are not satisfied on or before
October 31, 1999. Such termination must be by written notice
from the terminating party to the other party and the Escrow
Agent, and shall be effective upon receipt. In the event of
termination under this paragraph 3(c), the Escrowed Funds shall
be released to Nycomed.
(d) The parties shall provide the Escrow Agent with notice of the
occurrence of any of the events specified in (a)-(c) above, and the
Escrow Agent shall be authorized to act on such notice as provided
in this Escrow Agreement.
(e) All interest on the Escrowed Funds shall follow the amounts paid
into escrow and shall be disbursed to the party to whom the payment
is made, which party shall also bear the fees charged by the Escrow
Agent as provided in paragraph 16 below. Funds shall be disbursed by
wire transfer in accordance with written instructions to be provided
by the party receiving the funds. In the case of Sonus, wire
transfer instructions are as follows:
Wells Fargo Bank
ABA: 121000248
*
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 54
Name of: SONUS Pharmaceuticals, Inc.
Attn: Mora Andrews
Phone: 415-396-7188
4. The Escrow Agent is authorized to act on written instructions of Nycomed's
attorneys (such attorneys being Kenyon & Kenyon) as if such instructions
were received directly from Nycomed, and on written instructions of
Sonus's attorneys (such attorneys being Irell & Manella LLP) as if such
instructions were received directly from Sonus.
5. Notices to the parties shall be made as follows:
As to Nycomed:
Nycomed Amersham Imaging
Amersham Place
Little Chalfont
Buckinghamshire HP7 9LL
ENGLAND
Telefax: +44 1494 542242
Attn: Robert Allnutt,
Group Legal Advisor and Corporate Secretary
-with a copy to-
Richard L. DeLucia, Esq.
Kenyon & Kenyon
1 Broadway
New York, NY 10004-1050
Telefax: (212) 425-5288
As to Sonus:
Sonus Pharmaceuticals, Inc.
22026 20th Avenue, S.E., Suite 102
Bothell, Washington 98021
Telefax: (206) 489-0626
Attn: Michael Martino
President
-with a copy to-
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 55
Gary N. Frischling, Esq.
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067-4276
Telefax: (310) 203-7199
As to the Escrow Agent:
Corporate Trust Department
Summit Bank
210 Main Street, 6th floor
Hackensack, NJ 07601
Telefax: (201) 646-0087
6. Any dispute between Nycomed and Sonus concerning this Escrow Agreement
shall be subject to the arbitration provisions of paragraph 26 of the
License Agreement. The Escrow Agent shall not be made a party to any such
arbitration proceedings.
7. The Escrowed Funds shall be invested by the Escrow Agent in accordance
with the signed, written instructions of Nycomed and Sonus. In the
absence of written instructions from the above-named parties, the
Escrow Agent shall invest the Escrowed Funds in the money market mutual
funds customarily utilized by the Escrow Agent's corporate trust
department in the ordinary course of its corporate trust and escrow
agent duties. Such money market mutual fund is the U.S. Treasury
Securities portfolio of The Pillar Funds(R) managed by the Investment
Management Division of the Escrow Agent. The Investment Management
Division of the Escrow Agent derives a fee for managing the Funds and
acting as its Custodian.
In investing the Escrowed Funds, the Escrow Agent shall rely upon the
written instructions of Nycomed and Sonus and the Escrow Agent shall be
and hereby is relieved of all liability with respect to making, holding,
redeeming or selling such investments in accordance with such
instructions. In the absence of the written investment instructions
contemplated herein, for any reasons whatsoever, the Escrow Agent shall be
and hereby is relieved of all liability with respect to making, holding,
redeeming or selling investments made in accordance with the preceding
paragraph which prescribes the permissible investment vehicles for the
Escrowed Funds absent written instructions from Nycomed and Sonus.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 56
Escrow Agent is and shall be under not duty to enforce the obligation of
Nycomed and Sonus to furnish written investment instructions nor shall the
Escrow Agent be liable to any person, firm or corporation, including any
of the parties hereto, for the investments made, held, redeemed or sold as
directed herein in the event that written investment instructions from
Nycomed and Sonus are not furnished to the Escrow Agent.
8. The Escrow Agent shall not be responsible for or be required to enforce
any of the terms or conditions of the License Agreement or any other
agreement between Nycomed and Sonus.
The Escrow Agent shall not be responsible or liable in any manner
whatsoever for the performance of or by Nycomed and Sonus of their
respective obligations under this Escrow Agreement nor shall the Escrow
Agent be responsible or liable in any manner whatsoever for the failure of
the other parties to the Escrow Agreement or of any third party to honor
any of the provisions of this Escrow Agreement.
9. The parties hereto represent to the Escrow Agent that they are authorized
to enter into the Escrow Agreement by their duly authorized
representatives and that the Escrow Agent is entitled to rely on this
representation without the need to confirm the authority of the
representatives.
10. The duties and obligations of the Escrow Agent shall be limited to and
determined solely by the express provisions of the Escrow Agreement and
no implied duties or obligations shall be read into this Escrow
Agreement against the Escrow Agent. The Escrow Agent is not bound by
and is under no duty to inquire into the terms or validity of any other
agreements or documents, including any agreements or documents which
may be related to, referred to in or deposited with the Escrow Agent in
connection with this Escrow Agreement.
11. The Escrow Agent shall be entitled to rely upon and shall be protected in
acting in reliance upon any instruction, notice, information, certificate,
instrument or other document which is submitted to it in connection with
its duties under this Escrow Agreement and which the Escrow Agent in good
faith believes to have been signed or presented by the proper party or
parties. The Escrow Agent shall have no liability with respect to the
form, execution, validity or authenticity thereof.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 57
12. The Escrow Agent shall not be liable for any act which the Escrow Agent
may do or omit to do hereunder, or for any mistake of fact or law, or for
any error of judgment, or for the misconduct of any employee, agent or
attorney appointed by it, while acting in good faith, unless caused by or
arising from its own gross negligence or willful misconduct.
13. The Escrow Agent shall be entitled to consult with counsel of its own
selection and the opinion of such counsel shall be full and complete
authorization and protection to the Escrow Agent in respect of any action
taken or omitted by the Escrow Agent hereunder in good faith and in
accordance with the opinion of such counsel.
14. The Escrow Agent shall have the right at any time to resign for any
reason and be discharged of its duties as Escrow Agent hereunder by
giving written notice of its resignation to the parties hereto at least
thirty days prior to the date specified for such resignation to take
effect. All obligations of the Escrow Agent hereunder shall cease and
terminate on the effective date of its resignation and its sole
responsibility thereafter shall be to hold the Escrowed Funds for a
period of thirty days following the effective date of resignation, at
which time,
(a) if a successor escrow agent shall have been appointed and written
notice thereof shall have been given to the resigning Escrow Agent
by parties hereto and the successor escrow agent, then the resigning
Escrow Agent shall deliver the Escrowed Funds to the successor
escrow agent; or
(b) if a successor escrow agent shall not have been appointed, for any
reason whatsoever, the resigning Escrow Agent shall deliver the
Escrowed Funds to a court of competent jurisdiction and give written
notice of the same to the parties hereto.
The resigning Escrow Agent shall be entitled to be reimbursed from the
Escrowed Funds for any expenses incurred in connection with its
resignation and transfer of the Escrowed Funds pursuant to and in
accordance with the provisions of this section.
15. The Escrow Agent shall be entitled to receive its fee of $1,500.00 per
year for its services hereunder and a one time document review fee of
$500.00. The fees shall be deducted by the Escrow Agent from the Escrowed
Funds. Any fee that is not so paid shall become a charge upon the Escrowed
Funds.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 58
16. Nycomed and Sonus jointly and severally agree to indemnify and hold the
Escrow Agent harmless from and against any and all liabilities, causes of
action, claims, demands, judgments, damages, costs and expenses (including
reasonable attorneys fees and expenses) that may arise out of or in
connection with the Escrow Agent's good faith acceptance of or performance
of its duties and obligations under this Escrow Agreement.
The Escrow Agent shall be under no duty to institute any suit, or to take
any remedial procedures under this Escrow Agreement, or to enter any
appearance or in any way defend any suit in which it may be made a
defendant hereunder until it shall be indemnified as provided above.
17. In the event that the Escrow Agent shall be uncertain as to its duties
or rights hereunder or shall receive instructions with respect to the
Escrow Account which, in its sole discretion, are in conflict either
with other instructions received by it or with any provision of this
Agreement, the Escrow Agent shall have the absolute right to suspend
all further performance under this Escrow Agreement (except for the
safekeeping of the Escrowed Fund) until the resolution of such
uncertainty or conflicting instructions to the Escrow Agent's sole
satisfaction by final judgment of a court of competent jurisdiction,
joint written instructions from all of the other parties hereto, or
otherwise.
18. In the event that any controversy arises between one or more of the
parties hereto or any other party with respect to this Escrow Agreement
or the Escrow Account, the Escrow Agent shall not be required to
determine the proper disposition of such controversy or the proper
disposition of the Escrow Account and shall have the absolute right, in
its sole discretion, to deposit the Escrow Account with the Clerk of a
court of competent jurisdiction, file a suit in interpleader and obtain
an order from the court requiring all parties involved to litigate in
such court their respective claims arising out of or in connection with
the Escrow Account. Upon the deposit by the Escrow Agent of the Escrow
Account with the Clerk of a court of competent jurisdiction in
accordance with this provision, the Escrow Agent shall be relieved of
all further obligations and released from all liability hereunder.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 59
19. It is understood that all checks received by the Escrow Agent hereunder
are subject to clearance time and the funds represented thereby cannot
be drawn upon or disbursed until such time as the same constitute good
and collected funds. If any checks are returned to the Escrow Agent as
uncollectible, the Escrow Agent shall notify the other parties hereto
and redeposit such check for collection upon the verbal instructions of
the party tendering such check. Notwithstanding the foregoing, if for
any reason any check or instrument entered for collection by the Escrow
Agent hereunder is uncollectible after payment of the funds represented
thereby has been made pursuant to the terms hereof, the party tendering
such check shall immediately reimburse the Escrow Agent and the Escrow
Agent shall deliver the returned check or instrument to the party
tendering such check.
20. Nycomed and Sonus hereby indemnify and hold the Escrow Agent harmless
from any possible violations of any Environmental Laws including any
local, state or federal law, rule or regulation pertaining to
environmental matters, as now or hereafter enacted or amended,
including without limitation, the Federal Comprehensive Environmental
Response; Compensation and Liability Act of 1980; the Federal Resource
Conservation and Recovery Act; the Federal Superfund Amendments and
Reauthorization Act of 1986; the Federal Toxic Substance Control Act;
the Federal Hazardous Material Transportation Act; the Federal Clean
Air Act; the Federal Water Pollution Control Act; the Industrial Site
Recovery Act; the New Jersey Spill Act; the Underground Storage Tank
Act; together with any other federal, state or local superlien, or
other statutes, rules or regulations, as now or hereafter amended in
any way pertaining to clean-up, disclosure, water pollution control,
air pollution control, regulation of solid waste, hazardous waste
management, storage tanks, regulation of environmentally sensitive
areas, use of ground water, surface waters and wetlands, hazardous and
toxic substance reporting and any other laws including case law, which
might be deemed or referred to as environmental common law.
Neither this Escrow Agreement, the License Agreement or any other
agreement between Nycomed and Sonus and the Escrow Agent shall be deemed
to create a joint venture between the Escrow Agent and Nycomed or Sonus.
Nor shall the Escrow Agent be considered the alter ego of Nycomed or Sonus
by virtue of this Agreement, or any other agreement.
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 60
NYCOMED IMAGING AS SONUS PHARMACEUTICALS, INC.
By: /s/ Ase Aulie Michelet By: /s/ Michael A. Martino
-------------------------- -------------------------------------
SUMMIT BANK
By:________________________
[*] Confidential portions omitted
and filed separately with Commission.
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<PAGE> 1
Exhibit 99.1
NEWS RELEASE
SONUS PHARMACEUTICALS ANNOUNCES ULTRASOUND CONTRAST AGREEMENT
WITH NYCOMED AMERSHAM
REPRESENTS FIRST SUCH ARRANGEMENT IN ULTRASOUND CONTRAST INDUSTRY
BOTHELL, WASHINGTON, SEPTEMBER 29, 1999 - SONUS Pharmaceuticals, Inc.
(Nasdaq:SNUS) announced today that it has entered into an agreement with Nycomed
Amersham plc (NYSE:NYE; LSE:NAM) for the broad cross-licensing of patents in the
field of ultrasound contrast agents.
Under the terms of the agreement, Nycomed Amersham will pay SONUS an up-front
license fee of $10 million, of which SONUS will receive $5 million in the third
quarter of 1999 and $5 million in the fourth quarter of 1999. In addition, both
companies have agreed to pay each other royalties on future sales of their
ultrasound contrast agents.
The agreement provides Nycomed Amersham with an exclusive license to SONUS'
ultrasound contrast patents except as related to perfluoropentane, which is the
perfluorocarbon gas used by SONUS in its contrast products. Under its exclusive
license to the patents, Nycomed Amersham also has the right to freely sublicense
to other companies with a portion of any sublicense fees to be paid to SONUS.
Nycomed Amersham's exclusive license covers all territories of the world except
for ten Pacific Rim countries where its license is non-exclusive.
Also under the agreement, SONUS has a worldwide, non-exclusive license to
Nycomed Amersham's ultrasound contrast agent patents related to
perfluoropentane. SONUS also has the right to sublicense these patents to its
collaborative partners, such as Abbott Laboratories.
"We are pleased for the opportunity to partner the complementary patent
portfolios of SONUS and Nycomed Amersham, and we believe that the combination of
these two portfolios represents the strongest patent estate in the industry,"
said Michael A. Martino, President and Chief Executive Officer of SONUS. "By
leveraging the value of our patents, the arrangement provides necessary
operating capital to SONUS without any dilution to our shareholders and enables
us to avoid the cost and distraction of future intellectual property disputes."
SONUS Pharmaceuticals, Inc., with headquarters in Bothell, Washington, is
engaged in the research and development of proprietary ultrasound contrast
agents and drug delivery systems. The Company's products are being investigated
for use in the diagnosis and treatment of heart disease, cancer and other
debilitating conditions. News releases and other corporate information are
available on SONUS' web site at www.sonuspharma.com. News releases may also be
obtained via fax by calling 800-758-5804, Ext. 108377.
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<PAGE> 2
Based in Amersham, England, Nycomed Amersham plc is a world leader in in-vivo
diagnostic imaging and in life sciences. The company has annual sales of Pound
Sterling1.1 billion and approximately 8,500 employees worldwide.
Contacts: Gregory Sessler or Pamela Dull, SONUS Pharmaceuticals, (425) 487-9500
Tracy Cheung, Nycomed Amersham, (44) 1494 542051
Corinne Daniels, Brunswick Group Limited, (44) 171 404 5959
Certain of the statements made in this news release are forward-looking such as
those, among others, relating to the value and strength of SONUS' patents and
the receipt of royalties and sublicense fees. As discussed in the Company's
annual report on Form 10-K filed March 25, 1999, actual results could differ
materially from those projected in the forward-looking statements as a result of
the following factors, among others: there can be no assurance that any or all
of SONUS' patents will survive any legal challenges or will be ultimately
enforceable or that any royalties will be received on licenses to the Company's
patents. In addition, there can be no assurance that third parties will not be
able to develop competitive products or processes that do not infringe any valid
patents held by SONUS, or that any patents will issue from pending or future
patent applications of the Company; SONUS' ultrasound contrast products will
require regulatory approval by the FDA and other regulatory agencies, which
approvals may never occur or may be subject to certain regulatory requirements;
and market acceptance of the Company's products will depend upon a number of
factors, including safety, efficacy, ease of administration, the presence of
competitive imaging products or technologies and the availability of
reimbursement by third party payors.
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