EXHIBIT 10.1


 


CONFIDENTIAL
TREATMENT


EPIX Medical, Inc. has requested that the
marked portions of this document be accorded confidential treatment pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934.


 


EXECUTION COPY


 


INTELLECTUAL PROPERTY AGREEMENT


 


This
“Agreement” made this 17th day of November, 2003 by and between Dr. Martin R.
Prince (hereinafter, “Prince”), an individual residing at *****, and EPIX
Medical, Inc., a corporation duly organized under the laws of the State of
Delaware and having a principal place of business at 71 Rogers Street,
Cambridge, Massachusetts USA (hereinafter “EPIX”).


 


RECITALS


 


Prince is
recognized for his expertise in clinical magnetic resonance imaging and
magnetic resonance angiography and as the inventor of contrast-enhanced
magnetic resonance angiography techniques


 


Prince and
Dr. James F.M. Meaney (hereinafter “Meaney”), an individual residing at *****,
are the inventors of certain inventions relating to bolus chase magnetic
resonance angiography.


 


Prince
represents that he is the owner of, and has the right to grant the discharges,
releases, promises and covenants not to sue under intellectual property
pertaining to magnetic resonance imaging and magnetic resonance angiography
that is the subject of this Agreement.


 


EPIX, by
itself and/or through its Affiliates, desires to obtain discharges, releases,
promises and covenants not to sue under the above-described intellectual
property rights to enable them to develop and commercialize contrast agents
used in magnetic resonance imaging and magnetic resonance angiography on the
terms set forth herein.


 


Prince
desires to grant such discharges, releases, promises and covenants not to sue
on the terms set forth herein.


 


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AGREEMENT


 


NOW,
THEREFORE, in consideration of the promises and mutual covenants set forth
herein, the parties agree as follows:


 


ARTICLE 1


DEFINITIONS


 


1.1                                 “Effective Date” means the date first set
forth above.


 


1.2                                 “Royalty Start Date” means the date of the
first Sale of an MR Contrast Agent Product.


 


1.3                                 “Affiliate(s)” means any entity which is or
becomes directly or indirectly controlled by EPIX, control being defined as (i)
the direct or indirect ownership of at least 50% of the stock entitled to vote
upon election of directors or persons performing similar functions, or (ii)
direct or indirect ownership of the maximum percentage of such stock permitted
by local laws or regulations in those countries where fifty percent (50%)
ownership by a foreign entity is not permitted.


 


1.4                                 “CE-MRA” means contrast-enhanced MR
angiography.


 


1.5                                 “MR” means magnetic resonance imaging and
magnetic resonance angiography.


 


1.6                                 “MR Contrast Agent(s)” means any contrast
agent used in, or capable of use in CE-MRA procedures.


 


1.7                                 “MR Imaging System(s)” means any magnetic
resonance transmission/receiving system, inclusive of all hardware (for
example, without limitation, imaging coils) and software components, that is
capable of performing CE-MRA procedures.


 


1.8                                 “MR Injection Product(s)” means any pump,
tubing set, or like apparatus that is designed for or advertised to be used in
CE-MRA procedures to administer, inject or infuse contrast agent(s) to a
patient.  Notwithstanding the foregoing,
a syringe that is pre-filled with the MR Contrast Agent Product is not an MR
Injection Product.


 


1.9                                 “MR Contrast Agent Product” means a product
containing the MR Contrast Agent currently designated by EPIX as MS-325.  Expressly excluded from this definition are
all other MR Contrast Agents, and MR Imaging Systems or any MR Injection
Products, no matter how Sold, provided, used or disposed of.


 


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1.10                           “Prince MR Intellectual Property” means any
invention, improvement, trade secret, patent, patent application, copyright and
other intellectual property rights to which Prince is able to grant the
discharge, release, promise and covenant not to sue herein as of the Effective
Date  or thereafter during the term
of this Agreement, which relate to the manufacture, use, importation,
advertisement, offer to Sell, or Sale of any MR Contrast Agent Product.


 


1.11                           “Prince Patents” means the patents and
patent applications included within the Prince MR Intellectual Property,
including, without limitation, the patents and patent applications listed in
Exhibit A and any and all applications, continuation applications,
continuation-in-part applications, divisional applications, reissue
applications, reexamination applications, foreign counterparts or other statutory
rights arising from or based on such applications, anywhere in the world.


 


1.12                           “Third Party(ies)” means any entity which is
neither a party to this Agreement nor an Affiliate of such a party.


 


1.13                           “EPIX Licensee(s)” means any entity that is authorized by EPIX to Sell
the MR Contrast Agent Product to a customer/user in any country of the
world.  Currently, the only EPIX
Licensees are Berlex Laboratories, Inc. (hereinafter “Berlex”), a company
having its principal place of business at 340 Changebridge Road, Montville, New
Jersey, and Schering AG (hereinafter “Schering”), a company having its
principal place of business at Müllerstrasse 178, D-13342 Berlin, Germany.


 


1.14                           “Sell” means to sell, lease, or otherwise transfer or convey an MR
Contrast Agent Product.  A commercially
reasonable number of units of MR Contrast Agent Product that are provided, free
of charge, to Third Parties as samples for promotional purposes shall be deemed
not to have been Sold for purposes of determining the royalty payable
hereunder.  “Sold”, “Sale”, and other
forms of “Sell” shall have the same meaning.


 


1.15                           “Net Sales” means the gross amount invoiced or otherwise charged a
customer by EPIX (or its Affiliates) or EPIX Licensees for a MR Contrast Agent
Product Sold by EPIX (or its Affiliates) or EPIX Licensees in any country of
the world, less the following amounts: (a) insurance, transportation, taxes,
customs brokers fees and customs duties provided such deductions are paid by
EPIX (or its Affiliates) or EPIX Licensees and listed on the invoice; (b)
allowances or credits to customers in the ordinary course of business in
connection with the sale of an MR Contrast Agent Product on account of
outdating, recall, market withdrawal, rejection, or return of such MR Contrast
Agent Product, (c) credited allowances to such independent


 


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customers
for such MR Contrast Agent Product which were spoiled, damaged, out-dated or
returned; (d) freight and insurance costs charged to such customers; (e)
quantity and promotional discounts actually allowed and taken; (f) sales, use,
value added, and other taxes or governmental charges (such as customs duties)
incurred in connection with the sale, exportation or importation of the MR
Contrast Agent Product in finished packaged form; (g) charge back payments
and/or rebates or other fees provided to distributors, wholesalers, or other
purchasers and managed health care organizations or federal, state and local
governments, their agencies, purchasers and reimbursers, including
reimbursements to social security organizations; and (h) volume-related
customer program costs which are required by the customer and which are
independent of marketing initiatives.


 


The parties
recognize that (a) customers may include persons in the chain of commerce, who
enter into agreements with a seller as to price even though title to the MR
Contrast Agent Product does not pass directly from the seller to such
customers, and even though payment for such MR Contrast Agent Product is not
made by such customers directly to the seller; and (b) in such cases
chargebacks paid by EPIX (or its Affiliates) or EPIX Licensees to or through a
Third Party (such as a wholesaler) can be deducted by EPIX (or its Affiliates)
or EPIX Licensees  from gross revenue in
order to calculate Net Sales.  Any
deductions listed above which involve a payment by EPIX (or its Affiliates) or
EPIX Licensees shall be taken as a deduction against aggregate sales for the
quarter in which the payment is made.


 


Net Sales
will be accounted for in accordance with international accounting standards
consistently applied. In any instance where the calculation of Net Sales
according to international accounting standards differs materially from GAAP
such that the result of such calculation under international accounting
standards would cause EPIX (or its Affiliates) or EPIX Licensees to improperly
account for such revenue under GAAP, EPIX will provide Prince with any and all
information requested by Prince regarding the calculation of Net Sales to
enable Prince to comply with GAAP in recognizing revenue from such Net Sales.


 


Where a MR
Contrast Agent Product is transferred by EPIX (or its Affiliates), through one
or more Affiliates or EPIX Licensees for Sale to a customer/user, only the Sale
to such customer/user shall be included in the Net Sales.  For example, where a MR Contrast Agent
Product is transferred by (i) EPIX to Berlex or Schering (whether through one
or more Affiliates of EPIX) for Sale to a customer/user, or (ii) Mallinckrodt
to EPIX or Berlex or Schering for Sale to a customer/user, only the Sale to
such customer/user shall be included in the Net Sales.


 


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Notwithstanding
the foregoing, the Net Sales for any calendar quarter shall be no less than the
net sales of MR Contrast Agent Product by EPIX Licensees for the corresponding
calendar quarter as reported (i) by EPIX Licensees to EPIX (or its Affiliates)
or (ii) by EPIX in publicly available documentation (such as, for example, the
Quarterly and/or Annual Reports).


 


Given the
worldwide scope of this Agreement, the impracticality of monitoring by EPIX of
the movement of the MR Contrast Agent Product through international markets and
the impracticality of establishing a value for pro-rata use in CE-MRA (if any),
it is agreed and recognized that paying royalties on all Sales of MR Contrast
Agent Product, as a whole, is fair and reasonable, representing a balance
between the concerns and interests of both parties and resulting in a
convenience for EPIX.


 


1.16                           “Third Party Price” means the average amount
paid by all Third Parties for the MR Contrast Agent Product in arms-length
transactions during the calendar quarter corresponding to the royalty period of
any royalty report, provided there are substantial Sales of such MR Contrast
Agent Product to Third Parties during the royalty period.  In the event of a dispute regarding whether
there have been such substantial Sales, the parties agree to first meet and
negotiate in good faith with the expectation of determining a Third Party
Price.


 


1.17                           “Confidential Information” means any
information disclosed by one party to the other, pursuant to this Agreement,
which is in written, graphic, machine readable or other tangible form and is
marked “Confidential”, “Proprietary” or in some other manner to indicate its
confidential nature.  Confidential
Information may also include oral information disclosed by one party to the
other provided that such information is designated as confidential at the time
of disclosure and reduced to a written summary by the disclosing party, within
thirty (30) days after its oral disclosure, which is marked in a manner to
indicate its confidential nature and delivered to the receiving party.  Notwithstanding the foregoing limitations,
all sales and similar reports and records provided by EPIX to Prince hereunder,
or to which Prince or its designee may gain access pursuant to Article 4,
are hereby deemed to be Confidential Information of EPIX.


 


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ARTICLE 2


DISCHARGE, RELEASE, AND COVENANT


 


2.1                                 Subject to the terms and conditions of this
Agreement, Prince hereby discharges, releases, promises and covenants not to
sue, threaten to sue or otherwise disturb EPIX, and its Affiliates, and any
EPIX Licensee, subcontractor, supplier, distributor, vendor, reseller,
purchaser, or user of the MR Contrast Agent Product, acquired directly or
indirectly from EPIX (or its Affiliates) or an EPIX Licensee in any country in
the world, for any claim or cause of action based upon (i) the Prince MR
Intellectual Property and (ii) the manufacture, use, Sale, advertisement, offer
for Sale, importation, lease, or otherwise transfer or disposition of the MR
Contrast Agent Product, whether such claim or cause of action is presently
known or unknown.  This covenant not to
sue is personal in nature and limited to EPIX, its Affiliates, any successor(s)
to EPIX, and any EPIX Licensee, subcontractor, supplier, distributor, vendor,
reseller, purchaser, or user of the MR Contrast Agent Product.


 


2.2                                 Prince hereby grants to EPIX, and its
Affiliates and any EPIX Licensee, a non-exclusive, license, without the right
to sublicense, under U.S. Patent ***** to make, have made, use, offer to Sell,
Sell, import, export and otherwise transfer the MR Contrast Agent Product
during the term of this Agreement. 
Nothing in  this Agreement
shall be construed as expressly, impliedly, or otherwise granting a license, of
any kind or type, under the Prince Patents other than U.S. Patent *****.


 


2.3                                 Nothing contained in this Agreement shall be
construed as:


 


(a)          a
warranty or representation by Prince as to the validity, enforceability, and/or
scope of any one of the Prince Patents; or


 


(b)         imposing
on Prince any obligation to institute legal action for infringement of any one
of the Prince Patents, or to defend a legal action brought by a Third Party in
relation to any one of the Prince Patents; or


 


(c)          imposing
on Prince any obligation to file application(s) or other intellectual property
registration(s) related to the Prince MR Intellectual Property, or to secure or
maintain in force any one of the Prince Patents; or


 


(d)         imposing
on Prince any obligation to furnish any technical information or know-how.


 


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ARTICLE 3


COMPENSATION AND RELATED OBLIGATIONS


 


3.1                                 In consideration of the license, discharges,
releases, promises and covenants not to sue granted herein, EPIX agrees to pay
Prince:


 


(a)          *****
($ *****), the payment being due and payable within two (2) weeks of the
Effective Date of the Agreement; and


 


(b)         commencing
with the Royalty Start Date, a royalty equal to ***** percent (*****%) of Net
Sales.


 


3.2                                 In the event that the MR Contrast Agent
Product is Sold during a calendar quarter under circumstances where the selling
price is not established on an arms-length basis, Net Sales shall be calculated
using the Third Party Price of such MR Contrast Agent Product.  If there is no Third Party Price for such MR
Contrast Agent Product, the parties shall immediately determine an appropriate
royalty base for such MR Contrast Agent Product.  In the event that a resolution is not reached, the dispute shall
be resolved according to the resolution procedure of paragraph 13.2.


 


3.3                                 In further consideration of the license,
discharges, releases, promises and covenants granted herein, EPIX agrees to
provide to Prince, or another designated in writing by Prince, ***** Dollars
($*****) worth of MR Contrast Agent Product per year calendar commencing on the
earlier of (i) the day that the FDA issues final approval of the use of MR
Contrast Agent Product for a CE-MRA procedure or indication, or (ii) the day
the MR Contrast Agent Product becomes commercially available, and continuing each
calendar year thereafter until expiration or termination of the Agreement.  The number of Doses to be provided for each  calendar year will be determined by
dividing ***** by the Third Party Price per Dose as of the first day of such
year.  EPIX will provide Prince with an
invoice promptly after the first day of the year setting forth the number of
Doses to be delivered to Prince during such year and the method by which the
number of doses was determined, including without limitation, the Third Party
Price per Dose.  Such Doses shall be
deemed not to have been Sold for purposes of determining the royalty payable
under this Agreement.  One (1) dose of
MR Contrast Agent Product is equal to the largest commercially available volume
of MR Contrast Agent Product, within a container, for administration to one (1)
patient.  For example, where the largest
commercially available volume of MR Contrast Agent within a container for
administration to one (1) patient is a vial or syringe containing one hundred
milliliters


 


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(100ml) of
MR Contrast Agent Product, one dose of MR Contrast Agent Product is one hundred
milliliters (100ml).


 


3.4                                 EPIX shall deliver the MR Contrast Agent
Product referenced in paragraph 3.3 of this Agreement to a place in North
America as designated by Prince within ninety (90) days of written notice.  Each dose shall be delivered to Prince in
accordance with industry “best practices” and shall be packaged in a separate
container in the same manner and material(s) (for example, without limitation,
vial or syringe) as commercially available to bona fide customers/users.  In the event that the MR Contrast Agent
Product is available in more than one type or form of container, Prince shall
have the option, at his sole discretion, to designate the type or form of
container.  To facilitate storage of
such MR Contrast Agent Product, Prince may, at his sole discretion, specify
delivery of the MR Contrast Agent Product of paragraph 3.3 in prorated amounts
at monthly or quarterly intervals.


 


3.5                                 Notwithstanding paragraph 3.3, in the event
that Prince, in any calendar year, requests delivery of fewer Doses than were
indicated on the invoice provided to Prince by EPIX for such calendar year,
then the difference between the number of Doses indicated on the invoice and
the number of Doses actually requested in that calendar year shall be added to
the number of Doses available to be requested by Prince in a subsequent year
under the conditions of paragraph 3.4. 
Further, in the event that the last year of the term of this Agreement
is not a full calendar year, EPIX shall deliver to Prince, under the same terms
and conditions as set forth in paragraphs 3.3 and 3.4, a pro-rated amount of MR
Contrast Agent Product plus any increase based on a carry over of a
non-requested amount from previous year(s).


 


3.6                                 Prince shall not Sell directly or indirectly
(for example, through another) the MR Contrast Agent Product provided by EPIX
to Prince pursuant to paragraphs 3.3 - 3.5 of this Agreement.  Notwithstanding the foregoing, MR Contrast
Agent Product of paragraphs 3.3 - 3.7 that is used in a CE-MRA procedure by
Prince, or his employers or employees, which is invoiced and/or charged to a Third
Party, shall not be considered as Sold to such Third Party for the purposes of
this paragraph 3.6 nor for the purposes of determining the royalty payable
under this Agreement.


 


3.7                                 Prince agrees to comply with all applicable
laws and regulations pertaining to the use, handling, storage, disposal,
administration, billing, recordkeeping and sale of the MR Contrast Agent
Product provided by EPIX hereunder. 
Without limiting the generality of the foregoing, Prince will properly
disclose accurate pricing information relating to the MR Contrast Agent Product
in any costs claimed or charges made to


 


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federal
health care programs in accordance with the provisions of 42 USC
Section 1320a-7b and 42 CFR Section 1001.952(h) if and as may be
appropriate thereunder.


 


3.8                                 Notwithstanding anything contained in this
Agreement to the contrary, it shall not be a breach of this Agreement in the
event that Prince, or his employers or employees, use the MR Contrast Agent
Product of paragraphs 3.3 - 3.7 for CE-MRA procedures and/or to practice the
techniques covered by the Prince Patents.


 


ARTICLE 4


PAYMENTS & ACCOUNTING


 


4.1                                 EPIX and its Affiliates shall keep complete
and accurate records relating to the Sale of the MR Contrast Agent Product
during the term (as determined by paragraph 6.1).  These records shall be retained for a period of at least three
(3) years from the date of payment, notwithstanding the expiration or other
termination of this Agreement.  Prince,
through his designated independent accounting firm, shall have the right to
examine and audit, not more than once a year unless the preceding audit
revealed a discrepancy exceeding ***** percent (*****%) of the total royalties
due for the period under audit, and during normal business hours, all such records
and such other records and accounts as may contain, under recognized accounting
practices, information bearing upon the amount of royalties payable to Prince
under this Agreement.  In no event will
Prince audit any given reporting period more than once.  Prompt adjustment shall be made by EPIX to
compensate for any underpayment of royalties hereunder, together with interest
thereon, calculated in accordance with Paragraph 4.4.  Should the amount of any such underpayment exceed ***** percent
(*****%) of the total royalties due for the period under audit, then upon
request by Prince, EPIX shall pay for the cost of the audit.  If any ***** (*****) consecutive audits
reveal underpayments of royalties in excess of ***** percent (*****%), Prince
shall be entitled to immediately terminate this Agreement on notice to EPIX at
any time within ninety (90) days after such ***** such audit.  Should such audit disclose an overpayment of
royalties hereunder, such overpayment shall be taken as a credit against future
royalties, and in the event that there are no future royalties, Prince shall
promptly issue a refund thereof.


 


4.2                                 Within forty-five (45) days after the end of
each calendar quarter, or, in the event there is/are EPIX Licensee(s), within
fifteen (15) days following the receipt of sales


 


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data from
the EPIX Licensee of the Sales of the MR Contrast Agent Product by such EPIX
Licensee for such quarter, EPIX shall pay to Prince, by electronic transfer,
the royalties payable hereunder for such quarter.  Concurrently therewith, EPIX shall furnish to Prince: (1) in the
event there is/are EPIX Licensee(s), a true and correct copy of each EPIX
Licensee royalty report to EPIX (or its Affiliates), including, without limitation,
all sales data of the MR Contrast Agent Product Sold by such EPIX Licensee, and
(2) a statement, in suitable form, showing (i) the volume of the MR Contrast
Agent Product Sold, (ii) the Sales in U.S. Dollars of the MR Contrast Agent
Product Sold during such quarter, (iii) the amount of royalty payable thereon,
and (iv) the number of units of MR Contrast Agent Product that are provided,
free of charge, to Third Parties as samples for promotional purposes, as
described in paragraph 1.13 of this Agreement. 
It is agreed that a suitable form of the statement is attached as
Exhibit B.  If no MR Contrast Agent
Product subject to royalty has been Sold, that fact shall be shown on such
statement.


 


4.3                                 All royalty and other payments to Prince
hereunder, including those of paragraphs 3.1(a) and 3.1(b), shall be made by
electronic transfer, in U.S. Dollars, directly to the following account or
another designated in writing by Prince:


 


Martin R. Prince


*****


 


4.4                                 All royalty and other payments to Prince
hereunder shall be in U.S. Dollars. The calculation of payments which refer to
Net Sales in countries other than United States shall be based upon EURO and
converted into U. S. Dollars. Therefore, where payments are based upon Net
Sales in countries other than the United States and the member states of the
European Currency Union, the amount of such Net Sales expressed in the currency
of such country shall be converted into EURO at the exchange rate of the last
business day of the applicable calendar quarter. The applicable exchange rate
shall be the EURO Foreign Exchange Reference Rate published by the European
Central Bank, Frankfurt / Main. If no EURO Foreign Exchange Reference Rate is
determined for the relevant currency, the Parties shall agree upon another
reference rate. Finally, the payable EURO amount shall be converted into US
Dollars at the EURO Foreign Exchange Reference Rate’ published by the European
Central Bank, Frankfurt / Main, on the last business day of the applicable
calendar quarter.  Late payment of
royalties hereunder shall be subject to interest, ***** (or the maximum allowed
by applicable law, if less).  The amount
of interest shall be calculated from the royalty due date to the date of
electronic transfer.  Failure to make
***** (*****) consecutive royalty payments in a


 


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timely
fashion shall be grounds for immediate termination.


 


4.5                                 All payments made by EPIX under this
Agreement shall be without deduction for taxes, assessments, currency exchange
fees or other charges of any kind or description.  Any payment made by EPIX to Prince under this Agreement shall not
be refunded or refundable to EPIX (or any other entity) for any reason
whatsoever, except in the case of administrative or accounting errors, such as
mistakes in typing, calculation or other clerical oversight.


 


4.6                                 Payment of royalties due under this
Agreement to any person, firm or entity, other than Prince, including without
limitation, any escrow fund or escrow agent, unless requested or permitted by
Prince, or ordered by any court, administrative agency or other government body
of competent jurisdiction, shall constitute a material breach of this
Agreement.  In the event that, pursuant
to an order by a court, administrative agency or other government body of
competent jurisdiction, EPIX pays such royalties due under this Agreement to a
person, firm or entity, other than Prince, EPIX shall (a) provide notice to
Prince no less than sixty (60) days before such payment, (b) provide Prince with
any and all materials from such court, administrative agency or other
government body ordering such payment, and (c) demonstrate such court,
administrative agency or other government body ordering such payment is or has
jurisdiction.  All royalties not subject
to such order, shall be paid to Prince and payment of such royalties to any
person, firm or entity, other than Prince, shall constitute a material breach
of this Agreement.


 


4.7                                 Prince agrees to provide to EPIX
documentation demonstrating that Prince pays taxes in the United States.  In the event that, after the Effective Date
of this Agreement, a country imposes any withholding tax on account of
applicable laws or regulations that require taxes to be withheld on royalty
payments made by EPIX under this Agreement, EPIX shall deduct such taxes from
the payment, provided EPIX notifies Prince, in writing, sixty (60) days before
any such deduction.  EPIX shall (a)
timely pay the deducted taxes to the competent tax authority and (b) notify
Prince within thirty (30) days of the payment made to the competent tax
authority.  EPIX agrees to assist Prince
in any intervention necessary to exempt such fee and royalty payments from tax,
and EPIX agrees to make all necessary filings, and take such other actions, as
are necessary to minimize the tax rate. 
EPIX shall promptly send to Prince the official certificate of such
payment to enable Prince to support a claim for a foreign tax credit with
respect to any such taxes so withheld and paid against income taxes which may
be levied by the United States government.


 


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ARTICLE 5


EQUITY COMPONENT


 


5.1                                 In further consideration of the license,
discharges, releases, promises and covenants not to sue granted herein, EPIX agrees
to issue and deliver to Prince, on January 2, 2004, One Hundred Thirty-Two
Thousand (132,000) shares of its common stock, $0.01 par value per share,
pursuant to a Stock Purchase Agreement executed concurrently herewith.


 


ARTICLE 6


TERM AND TERMINATION


 


6.1                                 This Agreement shall commence on the
Effective Date and shall continue until the expiration of the last-to-expire
patent within the Prince Patents, unless earlier terminated as provided
herein.  Upon a termination of this
Agreement, except as otherwise provided in Paragraph 6.3, all rights and
obligations of the parties shall immediately terminate.


 


6.2                                 Either party shall have the right to
terminate this Agreement following any material breach or default in
performance under this Agreement by the other Party upon sixty (60) days prior
written notice by certified mail to the breaching party specifying the nature
of the breach or default.  Unless the
breaching party has either cured or taken such steps as may be reasonably
expected to cure the breach or default prior to the expiration of such sixty
(60) day period, the non-breaching party, at its sole option, may terminate
this Agreement upon written notice to the breaching party.  Termination of this Agreement shall become
effective upon receipt of such notice by the breaching party.  Notwithstanding the foregoing, the
discharges, releases, promises and covenants not to sue granted herein are
contingent upon payment by EPIX of the royalties set forth in Articles 3 and 4,
and the satisfaction of the product delivery and equity obligations of EPIX set
forth in Articles 3 and 5.  In the event
that EPIX fails to satisfy its obligation(s), or become(s) unable to satisfy
its required obligation(s), for reasons attributable to EPIX (excluding events
such as, without limitation, force majeure), Prince may, upon written notice to
EPIX, and EPIX’s failure to remedy within sixty (60) days of receiving such
notice, terminate this Agreement and revoke all discharges, releases, promises
and covenants not to sue granted herein.


 


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6.3                                 The provisions of paragraphs 2.3, and the
provisions of Articles 2, 4, 6, 8, 10, 11 and 13, with respect to any MR
Contrast Agent Product Sold prior to the date of expiration or termination,
shall survive any expiration or termination of this Agreement for any reason;
and all provisions, other than those specified immediately above, shall
immediately terminate upon any termination or expiration of this Agreement.


 


ARTICLE 7


NOTICE


 


7.1                                 All notices and other communications
required or permitted hereunder shall be in writing and shall be mailed by
first class air mail (registered, if available), postage prepaid, or otherwise
delivered by hand, by messenger or by telecommunication, addressed to the
addresses set forth below or at such other address furnished with a notice in
the manner set forth herein.  Such
notices shall be deemed to have been effective when delivered or, if delivery
is not accomplished by reason of some fault of the addressee, when
tendered.  All notices shall be in
English.


 


In the case
of EPIX, notices and other communications shall be addressed to:


 


EPIX Medical, Inc.


71 Rogers Street


Cambridge, MA 02142-1118


ATTN: President


Telephone: 617-250-6000


Facsimile: 617-250-6031


 


In the case
of Prince, notices and other communications shall be addressed to:


 


Dr. Martin R. Prince


*****


 


In the case
of Meaney, notices and other communications shall be addressed to:


 


Dr. James F.M. Meaney


*****


 


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ARTICLE 8


WARRANTIES


 


8.1                                 Prince
warrants and represents that:


 


(a)          he has full authority to enter into this Agreement and to grant the
discharges, releases, promises and covenants not to sue;


 


(b)         he
owns all right title and interest in and to the Prince Patents except as
disclosed on Exhibit A; and


 


(c)          as of the effective date of the Agreement, Exhibit A contains a complete
list of all issued patents and pending patent applications relating to MR,
which Prince has authority to license and grant the discharges, releases,
promises and covenants as provided herein.


 


ARTICLE 9


TRANSFERABILITY


 


9.1                                 In the event of any change in ownership,
direction or control of EPIX, the terms of this Agreement shall be binding upon
and inure to the benefit of the respective successor(s) and assignee(s).


 


9.2                                 In
the event Prince sells, assigns, licenses or otherwise conveys the Prince MR
Intellectual Property to a Third Party, Prince agrees that, as a pre-condition
to the validity of such sale, assignment, license or conveyance, Prince will
require that: (a) such Third Party discharge, release, promise and covenant not
to sue, threaten to sue or otherwise disturb EPIX, and its Affiliates, and any
EPIX Licensee, subcontractor, supplier, distributor, vendor, reseller,
purchaser, or user of the MR Contrast Agent Product, acquired directly or
indirectly from EPIX (or its Affiliates) or an EPIX Licensee in any country in
the world, for any claim or cause of action based upon (i) the Prince MR
Intellectual Property and (ii) the manufacture, use, Sale, advertisement, offer
for Sale, importation, lease, or otherwise transfer or disposition of the MR
Contrast Agent Product, whether such claim or cause of action is presently
known or unknown, (b) EPIX will receive advance written notice of such sale,
assignment, license or conveyance, and (c) EPIX will be made an express third
party beneficiary of the Third Party’s discharge, release, promise and covenant


 


14

















 


not to sue described in this paragraph.  Prince agrees that any sale, assignment,
license or conveyance made in violation of this paragraph shall be void ab initio.


 


ARTICLE 10


INDEMNITY


 


10.1                           EPIX shall defend, indemnify and hold Prince harmless from and against all actions, claims,
proceedings and demands (including, without limitation, loss, death, injury,
illness or damage, whether personal or property, special, direct, indirect, or
consequential, including consequential financial loss) asserted by Third
Parties that may be brought against him and that arise out of the development,
manufacture, use, sale, importation or other commercialization efforts
(including, without limitation, advertisements and marketing) relating to the
MR Contrast Agent Product by EPIX, its Affiliates or EPIX Licensees.  If Prince, after learning of actions, such
claim, proceeding and demand from a Third Party, fails to provide prompt notice
to EPIX of any claims that are subject to this indemnity obligation after
Prince learns of such claims, then EPIX’s indemnity obligation shall be limited
to the extent such failure causes actual prejudice to the rights and defenses
which otherwise would have been available to EPIX.


 


10.2                           Prince shall defend, indemnify and hold EPIX harmless from and against all
successful actions, claims, proceedings and demands (including, without
limitation, loss, death, injury, illness or damage, whether personal or
property, special, direct, indirect, or consequential, including consequential
financial loss) asserted by a federal, state or local governmental authority of
competent jurisdiction that may be brought against EPIX and that arise out of
the breach by Prince of his obligations under paragraph 3.7 hereof.  If EPIX, after learning of actions, such
claim, proceeding and demand from a Third Party, fails to provide prompt notice
to Prince of any claims that are subject to this indemnity obligation after
EPIX learns of such claims, then Prince’s indemnity obligation shall be limited
to the extent such failure causes actual prejudice to the rights and defenses
which otherwise would have been available to Prince.


 


10.3                           If a Party (the “Indemnitee”) seeks indemnity from the other Party (the
“Indemnitor”) for a claim under paragraphs 10.1 or 10.2, the Indemnitee shall:
(i) fully and promptly notify the Indemnitor upon learning of such claim or
potential claim from a Third Party, (ii) permit the Indemnitor to assume
control of the defense of such


 


15

















 


claim,
(iii) cooperate with the Indemnitor in such defense, (iv) not compromise or
settle any such claim and (v) take all reasonable steps to mitigate any loss or
liability in respect of such claim after learning of such claim or potential
claim from a Third Party.


 


10.4                           The obligation to defend and indemnify set
forth above in paragraphs 10.1 and 10.2 shall be a continuing obligation
separate and independent of other obligations, and shall survive the expiration
or termination of this Agreement.


 


10.5                           Except as provided in paragraphs 10.1 and
10.2, neither party shall be liable to the other for any special, indirect, or
consequential damages, including consequential financial loss arising out of
this Agreement, or its performance.


 


10.6                           Prince disclaims and shall have no
obligation of defense, contribution, or indemnity with respect to any actual or
alleged infringement of any intellectual property right owned by a Third Party
with respect to the MR Contrast Agent Product. 
Prince shall have no liability arising out of any such actual or alleged
intellectual property infringement.


 


ARTICLE 11


CONFIDENTIALITY


 


11.1                           The parties agree that the terms of this
Agreement  are confidential and
shall not be disclosed, except as required by the rules of any stock exchange
or applicable laws and regulations, or by operation of law or a court,
administrative agency, or other governmental body, or by EPIX to its Affiliates
and EPIX Licensee(s), without prior written permission from the other
party.  The parties may disclose the
fact that they have entered into an agreement regarding the Prince MR
Intellectual Property, without more. 
However, neither party may represent that the Agreement is a license,
but may represent that it is a continuing discharge, release, promise and
covenant not to sue EPIX, its Affiliates, and any successor(s) to EPIX, and any
EPIX Licensee, distributor, vendor, reseller, purchaser or user of the MR
Contrast Agent Product.


 


11.2                           Notwithstanding paragraph 11.1, Prince may
provide a copy of the Agreement to: (a) Meaney, provided Meaney agrees to the
confidentiality terms set forth in the Agreement, and (b) the employer of
Prince and/or Meaney, if required to do so for purposes of determining
potential conflicts of interest.  Any
copy of this Agreement


 


16

















 


provided to
such employer shall have the financial terms of Articles 3 and 4 redacted
therefrom.


 


11.3                           Notwithstanding paragraph 11.1, EPIX may
provide a copy of the Agreement to potential successor(s) and/or assign(s) of
all or a major part of the assets of EPIX.


 


ARTICLE 12
MEET AND CONFER REGARDING

ISSUES OR DISPUTES PERTAINING TO THIS AGREEMENT


 


12.1                           The parties agree to meet at least every
eighteen (18) months to discuss any issues that may arise regarding the
Agreement.  Such meeting shall be at a
time mutually agreed upon by the parties, and may be via telephone or video
conference, or at a location to be mutually agreed upon by the parties.


 


12.2                           In the event a dispute arises between the
parties regarding rights or obligations under this Agreement, the parties agree
to first meet to discuss the matter and seek resolution before undertaking
litigation or legal action of any kind.


 


ARTICLE 13


MISCELLANEOUS


 


13.1                           This Agreement shall be construed, and the
legal relations between the parties shall be determined in accordance with the
law of the State of New York, without regard to any principles of conflict
laws.


 


13.2                           The parties agree to resolve any dispute or
claim that arises out of this Agreement in any competent federal or state
court: (i) located in the state where Prince then resides if initiated by EPIX
(unless Prince resides in Louisiana, in which event the case shall be brought
in Texas) and (ii) located in the Commonwealth of Massachusetts if initiated by
Prince.  The parties agree not to
challenge or otherwise oppose the jurisdiction of the applicable court over any
such dispute or claim.


 


13.3                           If any paragraph, provision, or clause
thereof in this Agreement shall be found or be held to be invalid or
unenforceable in any jurisdiction in which this Agreement is being performed,
the remainder of this Agreement shall be valid and enforceable


 


17

















 


and the
parties shall negotiate, in good faith, a substitute, valid and enforceable
provision which most nearly effects the parties’ intent in entering into this
Agreement.


 


13.4                           This Agreement contains the entire and only
agreements between the parties respecting the subject matter hereof and
supercedes and cancels all previous negotiations, agreements, commitments and
writings in respect thereto.  This
Agreement may not be amended, supplemented, released, discharged, abandoned,
changed or modified in any manner, orally or otherwise, except by an instrument
in writing of concurrent or subsequent date signed by a duly authorized officer
or representative of the parties.


 


13.5                           EPIX represents that all corporate action
necessary for the authorization, execution and delivery of this Agreement by
such party and the performance of its obligations hereunder has been
taken.  EPIX further represents that the
definition of “Net Sales” as set forth on Exhibit C attached hereto is a true
and complete copy of the definition of “Net Sales” taken from the Strategic
Collaboration Agreement between EPIX and Schering AG dated June 9, 2000.


 


13.6                           This Agreement may be executed in two (2) or
more counterparts, all of which, taken together, shall be regarded as one and
the same instrument.  Execution may be
completed through the exchange of executed facsimile copies hereof.


 


13.7                           The parties hereto are independent
contractors.  Nothing contained herein
or done in pursuance of this Agreement shall constitute either party the agent
of the other party for any purpose or in any sense whatsoever, or constitute
the parties as partners or joint ventures.


 


13.8                           The failure of either party to enforce at
any time the provisions of this Agreement, or the failure to require at any
time performance by the other party of any of the provisions of this Agreement,
shall in no way be construed to be a present or future waiver of such
provisions, nor in any way affect the right of either party to enforce each and
every such provision thereafter.  The
express waiver by either party of any provision, condition or requirement of
this Agreement shall not constitute a waiver of any future obligation to comply
with such provision, condition or requirement.


 


[Signature
page follows.]


 


18

















 


IN WITNESS WHEREOF, each of the
parties hereto has caused this Agreement to be executed in duplicate by its
duly authorized officer or representative.


 


 


	
  EPIX MEDICAL, INC.

  	
  MARTIN R. PRINCE

  
	
   

  	
   

  
	
  By:

  	
  /s/ Peyton J. Marshall

  	
   

  	
  By:

  	
  /s/ Martin R. Prince

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Peyton J. Marshall

  	
   

  	
  Date:

  	
  November 15, 2003

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  November 17, 2003

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Read and understood:

  	
   

  
	
   

  	
   

  
	
  James F. M. Meaney

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ James F. M. Meaney

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   November 15, 2003

  	
   

  	
   

  
																	



 


19

















 


EXHIBIT A


 


U.S. Patents:


 


*****


*****


*****


*****


*****


*****


*****


*****


*****


***** **


*****


*****


*****


*****


 


U.S. Applications:


 


*****


*****


*****


*****


*****


*****


*****


*****


 


European Patents:


 


*****


*****


*****


*****


 


European Applications:


 


*****


*****


 


Canadian Application:


 


*****


 












** Prince does not own all right, title and interest in this
patent


 


20

















 


EXHIBIT B


 


Product: MS-325


 


Period
                  


 


Exchange
Rate (end of calendar quarter) 
                             


 


	
  Country

  	
   

  	
  Sales

  	
   

  	
  Amount

  	
   

  	
  Royalty

  	
   

  	
  Royalty Due

  	
   

  
	
   

  	
   

  	
  Volume (L)

  	
   

  	
  Sold ($US)

  	
   

  	
  Rate

  	
   

  	
  ($US)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United States:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Europe:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Asia:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Australia:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other countries:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total royalty payable

  Amount to be remitted:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Royalty Due:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  ($US)

  	
   

  



 


21

















 


EXHIBIT
C


 


“Net Sales” means the invoiced sales price per unit for each of the
Licensed Products billed by a Party or its Affiliates or any distributor or
either who is not an Affiliate, or, to the extent permitted in
Section 3.1.2 hereof, by permitted sublicensees of Schering to independent
customers, less actual (a) credited allowances of such independent customers
for such Licensed Products which were spoiled, damaged, out-dated or returned;
(b) freight and insurances Costs charged to such customers, (b) freight and
insurance costs charged to such customers; (c) quantity and promotional
discounts actually allowed and taken; (d) sales, use, value added, and other
taxes or governmental charges (such as customs duties) incurred in connection
with the sale, exportation or importation of the Licensed Products in finished
packaged form; (e) charge back payments and/or rebates or other fees provided
to distributors, wholesalers, or other purchasers and managed health care
organizations or federal, state and local governments, their agencies,
purchasers and reimbursers, including reimbursements to social security
organizations; and (f) volume-related customer program costs which are required
by the customer and which are independent of marketing initiatives.  The transfer of any Licensed Product by a
Party or one of its Affiliates to another Affiliate of such Party shall not be
considered a sale; in such cases, Net Sales shall be determined based on the
invoiced sales price by the Affiliate to its customer, less the deductions
allowed under this Section.


 


The Parties recognize that (a) Scherings customers may include persons
in the chain of commerce, who enter into agreements with Schering as to price
even though title to the Licensed Product does not pass directly from Schering
to such customers, and even though payment for such Licensed Product is not
made by such customers directly to Schering; and (b) in such cases chargebacks
paid by Schering to or through a Third Party (such as a wholesaler) can be
deducted by Schering from gross revenue in order to calculate Net Sales. Any
deductions listed above which involve a payment by Schering shall be taken as a
deduction against aggregate sales for the quarter in which the payment is made.


 


Net Sales will be accounted for in accordance with international
accounting standards consistently applied. In any instance where the
calculation of Net Sales according to international accounting standards
differs materially from GAAP such that the result of such calculation under
international accounting standards would cause EPIX to improperly account for
such revenue under GAAP, Schering will provide EPIX with any and all


 


22

















 


information requested by EPIX regarding the calculation of Net Sales to
enable EPIX to comply with GAAP in recognizing revenue from such Net Sales.


 


Schering agrees that, without obtaining the prior approval of EPIX
(which approval shall not be unreasonably withheld), it will not sell a
combination of products and/or services which include one or more Licensed
Products, (i) for a single price, or (ii) on other terms of purchase not
separately identifying a price per product. 
Schering agrees that records of the deductions referred to above for
each Licensed Product shall be maintained in a manner that allows audit of such
deductions pursuant to Section 7.11.


 


Schering agrees that it will not offer customers discounted prices for
any Licensed Product (i) for the purpose of inducing the customer to purchase
other products or services of Schering without obtaining the prior approval of
EPIX (such approval not to be unreasonably withheld) as to the fair
apportionment of sales value to Licensed Product and any related Costs; or (ii)
for reasons other than the good faith sale of Licensed Product at a reasonable,
mutually beneficial profit margin in view of the circumstances applicable to
the relevant market.


 


23