**EXHIBIT 10.9**

 

**CONFIDENTIAL TREATMENT**

**EPIXMedical, Inc. has requested that the marked portions of this document beaccorded confidential treatment pursuant to Rule 24b-2 under the SecuritiesExchange 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 individualresiding at *****, and EPIX Medical, Inc., a corporation duly organized underthe laws of the State of Delaware and having a principal place of business at 71Rogers Street, Cambridge, Massachusetts USA (hereinafter “EPIX”).

 

**RECITALS**

 

Prince is recognized for his expertise in clinicalmagnetic resonance imaging and magnetic resonance angiography and as theinventor of contrast-enhanced magnetic resonance angiographytechniques.

 

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

 

Prince represents that he is the owner of, and hasthe right to grant the discharges, releases, promises and covenants not to sueunder intellectual property pertaining to magnetic resonance imaging andmagnetic 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 underthe above-described intellectual property rights to enable them to develop andcommercialize contrast agents used in magnetic resonance imaging and magneticresonance 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 promisesand 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 ContrastAgent Product.

 

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

 

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

 

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

 

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

 

1.7                                “MR Imaging System(s)” means any magnetic resonancetransmission/receiving system, inclusive of all hardware (for example, withoutlimitation, imaging coils) and software components, that is capable ofperforming CE-MRA procedures.

 

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

 

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

 

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1.10                          “Prince MR Intellectual Property” means any invention, improvement, tradesecret, patent, patent application, copyright and other intellectual propertyrights to which Prince is able to grant the discharge, release, promise andcovenant not to sue herein as of the Effective Date****or thereafter during the term of thisAgreement, 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 includedwithin the Prince MR Intellectual Property, including, without limitation, thepatents and patent applications listed in Exhibit A and any and allapplications, continuation applications, continuation-in-part applications,divisional applications, reissue applications, reexamination applications,foreign counterparts or other statutory rights arising from or based on suchapplications, anywhere in the world.

 

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

 

1.13                          “EPIX Licensee(s)” means any entity that is authorized by EPIX to Sellthe MR Contrast Agent Product to a customer/user in any country of theworld.  Currently, the only EPIX Licensees are Berlex Laboratories, Inc.(hereinafter “Berlex”), a company having its principal place of business at 340Changebridge Road, Montville, New Jersey, and Schering AG (hereinafter“Schering”), a company having its principal place ofbusiness at Müllerstrasse178, D-13342 Berlin, Germany.

 

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

 

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

 

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customers for such MR Contrast Agent Product whichwere spoiled, damaged, out-dated or returned; (d) freight and insurance costscharged to such customers; (e) quantity and promotional discounts actuallyallowed and taken; (f) sales, use, value added, and other taxes or governmentalcharges (such as customs duties) incurred in connection with the sale,exportation or importation of the MR Contrast Agent Product in finished packagedform; (g) charge back payments and/or rebates or other fees provided todistributors, wholesalers, or other purchasers and managed health careorganizations or federal, state and local governments, their agencies,purchasers and reimbursers, including reimbursements to social securityorganizations; and (h) volume-related customer program costs which are requiredby the customer and which are independent of marketing initiatives.

 

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

 

Net Sales will be accounted for in accordance withinternational accounting standards consistently applied. In any instance wherethe calculation of Net Sales according to international accounting standardsdiffers materially from GAAP such that the result of such calculation underinternational accounting standards would cause EPIX (or its Affiliates) or EPIXLicensees to improperly account for such revenue under GAAP, EPIX will providePrince with any and all information requested by Prince regarding thecalculation of Net Sales to enable Prince to comply with GAAP in recognizingrevenue from such Net Sales.

 

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

 

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Notwithstanding the foregoing, the Net Sales forany calendar quarter shall be no less than the net sales of MR Contrast AgentProduct by EPIX Licensees for the corresponding calendar quarter as reported (i)by EPIX Licensees to EPIX (or its Affiliates) or (ii) by EPIX in publiclyavailable documentation (such as, for example, the Quarterly and/or AnnualReports).

 

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

 

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

 

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

 

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**ARTICLE 2**
**DISCHARGE, RELEASE, AND COVENANT** 
2.1                                Subject to the terms and conditions of this Agreement, Prince herebydischarges, releases, promises and covenants not to sue, threaten to sue orotherwise disturb EPIX, and its Affiliates, and any EPIX Licensee,subcontractor, supplier, distributor, vendor, reseller, purchaser, or user ofthe MR Contrast Agent Product, acquired directly or indirectly from EPIX (or itsAffiliates) or an EPIX Licensee in any country in the world, for any claim orcause of action based upon (i) the Prince MR Intellectual Property and (ii) themanufacture, use, Sale, advertisement, offer for Sale, importation, lease, orotherwise transfer or disposition of the MR Contrast Agent Product, whether suchclaim or cause of action is presently known or unknown.  This covenant notto sue is personal in nature and limited to EPIX, its Affiliates, anysuccessor(s) to EPIX, and any EPIX Licensee, subcontractor, supplier,distributor, vendor, reseller, purchaser, or user of the MR Contrast AgentProduct.

 

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

 

2.3                                Nothing contained in this Agreement shall be construed as:

 

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

 

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

 

(c)          imposing onPrince any obligation to file application(s) or other intellectual propertyregistration(s) related to the Prince MR Intellectual Property, or to secure ormaintain in force any one of the Prince Patents; or

 

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

 

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**ARTICLE 3**
**COMPENSATION AND RELATEDOBLIGATIONS** 
3.1                                In consideration of the license, discharges, releases, promises andcovenants not to sue granted herein, EPIX agrees to pay Prince:

 

(a)          ***** ($*****), the payment being due and payable within two (2) weeks of the EffectiveDate 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 calendarquarter under circumstances where the selling price is not established on anarms-length basis, Net Sales shall be calculated using the Third Party Price ofsuch MR Contrast Agent Product.  If there is no Third Party Price for suchMR Contrast Agent Product, the parties shall immediately determine anappropriate royalty base for such MR Contrast Agent Product.  In the eventthat a resolution is not reached, the dispute shall be resolved according to theresolution procedure of paragraph 13.2.

 

3.3                                In further consideration of the license, discharges, releases, promisesand covenants granted herein, EPIX agrees to provide to Prince, or anotherdesignated in writing by Prince, ***** Dollars ($*****) worth of MR ContrastAgent Product per year calendar commencing on the earlier of (i) the day thatthe FDA issues final approval of the use of MR Contrast Agent Product for aCE-MRA procedure or indication, or (ii) the day the MR Contrast Agent Productbecomes commercially available, and continuing each calendar year thereafteruntil expiration or termination of the Agreement.  The number of Doses tobe provided for each****calendar yearwill be determined by dividing ***** by the Third Party Price per Dose as of thefirst day of such year.  EPIX will provide Prince with an invoice promptlyafter the first day of the year setting forth the number of Doses to bedelivered to Prince during such year and the method by which the number of doseswas determined, including without limitation, the Third Party Price perDose.  Such Doses shall be deemed not to have been Sold for purposes ofdetermining the royalty payable under this Agreement.  One (1) dose of MRContrast Agent Product is equal to the largest commercially available volume ofMR Contrast Agent Product, within a container, for administration to one (1)patient.  For example, where the largest commercially available volume ofMR Contrast Agent within a container for administration to one (1) patient is avial or syringe containing one hundred milliliters

 

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

 

3.4                                EPIX shall deliver the MR Contrast Agent Product referenced in paragraph3.3 of this Agreement to a place in North America as designated by Prince withinninety (90) days of written notice.  Each dose shall be delivered to Princein accordance with industry “best practices” and shall be packaged in a separatecontainer 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 onetype 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 suchMR Contrast Agent Product, Prince may, at his sole discretion, specify deliveryof the MR Contrast Agent Product of paragraph 3.3 in prorated amounts at monthlyor quarterly intervals.

 

3.5                                Notwithstanding paragraph 3.3, in the event that Prince, in any calendaryear, requests delivery of fewer Doses than were indicated on the invoiceprovided to Prince by EPIX for such calendar year, then the difference betweenthe number of Doses indicated on the invoice and the number of Doses actuallyrequested in that calendar year shall be added to the number of Doses availableto be requested by Prince in a subsequent year under the conditions of paragraph3.4.  Further, in the event that the last year of the term of thisAgreement is not a full calendar year, EPIX shall deliver to Prince, under thesame terms and conditions as set forth in paragraphs 3.3 and 3.4, a pro-ratedamount of MR Contrast Agent Product plus any increase based on a carry over of anon-requested amount from previous year(s).

 

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

 

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

 

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

 

3.8                                Notwithstanding anything contained in this Agreement to the contrary, itshall not be a breach of this Agreement in the event that Prince, or hisemployers 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 thePrince Patents.

 

**ARTICLE 4**
**PAYMENTS & ACCOUNTING** 
4.1                                EPIX and its Affiliates shall keep complete and accurate records relatingto the Sale of the MR Contrast Agent Product during the term (as determined byparagraph 6.1).  These records shall be retained for a period of at leastthree (3) years from the date of payment, notwithstanding the expiration orother termination of this Agreement.  Prince, through his designatedindependent accounting firm, shall have the right to examine and audit, not morethan 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 andaccounts as may contain, under recognized accounting practices, informationbearing upon the amount of royalties payable to Prince under thisAgreement.  In no event will Prince audit any given reporting period morethan once.  Prompt adjustment shall be made by EPIX to compensate for anyunderpayment of royalties hereunder, together with interest thereon, calculatedin accordance with Paragraph 4.4.  Should the amount of any suchunderpayment exceed ***** percent (*****%) of the total royalties due for theperiod under audit, then upon request by Prince, EPIX shall pay for the cost ofthe audit.  If any ***** (*****) consecutive audits reveal underpayments ofroyalties in excess of ***** percent (*****%), Prince shall be entitled toimmediately terminate this Agreement on notice to EPIX at any time within ninety(90) days after such ***** such audit.  Should such audit disclose anoverpayment of royalties hereunder, such overpayment shall be taken as a creditagainst 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 followingthe receipt of sales

 

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data from the EPIX Licensee of the Sales of the MRContrast Agent Product by such EPIX Licensee for such quarter, EPIX shall pay toPrince, by electronic transfer, the royalties payable hereunder for suchquarter.  Concurrently therewith, EPIX shall furnish to Prince: (1) in theevent there is/are EPIX Licensee(s), a true and correct copy of each EPIXLicensee royalty report to EPIX (or its Affiliates), including, withoutlimitation, all sales data of the MR Contrast Agent Product Sold by such EPIXLicensee, and (2) a statement, in suitable form, showing (i) the volume of theMR Contrast Agent Product Sold, (ii) the Sales in U.S. Dollars of the MRContrast Agent Product Sold during such quarter, (iii) the amount of royaltypayable thereon, and (iv) the number of units of MR Contrast Agent Product thatare provided, free of charge, to Third Parties as samples for promotionalpurposes, as described in paragraph 1.13 of this Agreement.  It is agreedthat a suitable form of the statement is attached as Exhibit B.  If no MRContrast Agent Product subject to royalty has been Sold, that fact shall beshown on such statement.

 

4.3                                All royalty and other payments to Prince hereunder, including those ofparagraphs 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 byPrince:

 

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 otherthan 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 theUnited States and the member states of the European Currency Union, the amountof such Net Sales expressed in the currency of such country shall be convertedinto EURO at the exchange rate of the last business day of the applicablecalendar quarter. The applicable exchange rate shall be the EURO ForeignExchange Reference Rate published by the European Central Bank, Frankfurt /Main. If no EURO Foreign Exchange Reference Rate is determined for the relevantcurrency, the Parties shall agree upon another reference rate. Finally, thepayable EURO amount shall be converted into US Dollars at the EURO ForeignExchange Reference Rate’ published by the European Central Bank, Frankfurt /Main, on the last business day of the applicable calendar quarter.  Latepayment of royalties hereunder shall be subject to interest, ***** (or themaximum allowed by applicable law, if less).  The amount of interest shallbe calculated from the royalty due date to the date of electronictransfer.  Failure to make ***** (*****) consecutive royalty payments ina

 

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timely fashion shall be grounds for immediatetermination.

 

4.5                                All payments made by EPIX under this Agreement shall be without deductionfor taxes, assessments, currency exchange fees or other charges of any kind ordescription.  Any payment made by EPIX to Prince under this Agreement shallnot be refunded or refundable to EPIX (or any other entity) for any reasonwhatsoever, except in the case of administrative or accounting errors, such asmistakes in typing, calculation or other clerical oversight.

 

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

 

4.7                                Prince agrees to provide to EPIX documentation demonstrating that Princepays taxes in the United States.  In the event that, after the EffectiveDate of this Agreement, a country imposes any withholding tax on account ofapplicable laws or regulations that require taxes to be withheld on royaltypayments made by EPIX under this Agreement, EPIX shall deduct such taxes fromthe payment, provided EPIX notifies Prince, in writing, sixty (60) days beforeany such deduction.  EPIX shall (a) timely pay the deducted taxes to thecompetent tax authority and (b) notify Prince within thirty (30) days of thepayment made to the competent tax authority.  EPIX agrees to assist Princein 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, asare necessary to minimize the tax rate.  EPIX shall promptly send to Princethe official certificate of such payment to enable Prince to support a claim fora foreign tax credit with respect to any such taxes so withheld and paid againstincome 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, promisesand covenants not to sue granted herein, EPIX agrees to issue and deliver toPrince, 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 StockPurchase Agreement executed concurrently herewith.

 
**ARTICLE 6****TERM AND TERMINATION** 
6.1                                This Agreement shall commence on the Effective Date and shall continueuntil the expiration of the last-to-expire patent within the Prince Patents,unless earlier terminated as provided herein.  Upon a termination of thisAgreement, except as otherwise provided in Paragraph 6.3, all rights andobligations of the parties shall immediately terminate.

 

6.2                                Either party shall have the right to terminate this Agreement followingany material breach or default in performance under this Agreement by the otherParty upon sixty (60) days prior written notice by certified mail to thebreaching party specifying the nature of the breach or default.  Unless thebreaching party has either cured or taken such steps as may be reasonablyexpected 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 thisAgreement upon written notice to the breaching party.  Termination of thisAgreement shall become effective upon receipt of such notice by the breachingparty.  Notwithstanding the foregoing, the discharges, releases, promisesand covenants not to sue granted herein are contingent upon payment by EPIX ofthe royalties set forth in Articles 3 and 4, and the satisfaction of the productdelivery and equity obligations of EPIX set forth in Articles 3 and 5.  Inthe event that EPIX fails to satisfy its obligation(s), or become(s) unable tosatisfy its required obligation(s), for reasons attributable to EPIX (excludingevents such as, without limitation, force majeure), Prince may, upon writtennotice to EPIX, and EPIX’s failure to remedy within sixty (60) days of receivingsuch 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 tothe date of expiration or termination, shall survive any expiration ortermination of this Agreement for any reason; and all provisions, other thanthose specified immediately above, shall immediately terminate upon anytermination or expiration of this Agreement.

 
**ARTICLE 7****NOTICE** 
7.1                                All notices and other communications required or permitted hereundershall be in writing and shall be mailed by first class air mail (registered, ifavailable), postage prepaid, or otherwise delivered by hand, by messenger or bytelecommunication, addressed to the addresses set forth below or at such otheraddress furnished with a notice in the manner set forth herein.  Suchnotices shall be deemed to have been effective when delivered or, if delivery isnot accomplished by reason of some fault of the addressee, when tendered. All notices shall be in English.

 

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

 

EPIX Medical,Inc.

71 RogersStreet

Cambridge, MA02142-1118

ATTN: President

Telephone:617-250-6000

Facsimile:617-250-6031

 

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

 

Dr. Martin R.Prince

*****

 

In the case of Meaney, notices and othercommunications 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 fullauthority 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 exceptas disclosed on Exhibit A; and

 

(c)          as of theeffective date of the Agreement, Exhibit A contains a complete list of allissued patents and pending patent applications relating to MR, which Prince hasauthority to license and grant the discharges, releases, promises and covenantsas 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 ofthe respective successor(s) and assignee(s).

 

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

 

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not to sue described in this paragraph. Prince agrees that any sale, assignment, license or conveyance made in violationof this paragraph shall be *void abinitio*.

 

**ARTICLE 10**

**INDEMNITY**

 

10.1                          EPIX shall defend, indemnify and hold Prince harmless from and againstall 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 ofthe development, manufacture, use, sale, importation or other commercializationefforts (including, without limitation, advertisements and marketing) relatingto the MR Contrast Agent Product by EPIX, its Affiliates or EPIXLicensees.  If Prince, after learning of actions, such claim, proceedingand demand from a Third Party, fails to provide prompt notice to EPIX of anyclaims that are subject to this indemnity obligation after Prince learns of suchclaims, then EPIX’s indemnity obligation shall be limited to the extent suchfailure causes actual prejudice to the rights and defenses which otherwise wouldhave been available to EPIX.

 

10.2                          Prince shall defend, indemnify and hold EPIX harmless from and againstall successful actions, claims, proceedings and demands (including, withoutlimitation, loss, death, injury, illness or damage, whether personal orproperty, special, direct, indirect, or consequential, including consequentialfinancial loss) asserted by a federal, state or local governmental authority ofcompetent jurisdiction that may be brought against EPIX and that arise out ofthe breach by Prince of his obligations under paragraph 3.7 hereof.  IfEPIX, after learning of actions, such claim, proceeding and demand from a ThirdParty, fails to provide prompt notice to Prince of any claims that are subjectto this indemnity obligation after EPIX learns of such claims, thenPrince’sindemnity obligation shall be limited to the extent such failure causes actualprejudice to the rights and defenses which otherwise would have been availableto 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 orpotential claim from a Third Party, (ii) permit the Indemnitor to assume controlof the defense of such

 

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

 

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

 

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

 

10.6                          Prince disclaims and shall have no obligation of defense, contribution,or indemnity with respect to any actual or alleged infringement of anyintellectual property right owned by a Third Party with respect to the MRContrast Agent Product.  Prince shall have no liability arising out of anysuch 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 bedisclosed, except as required by the rules of any stock exchange or applicablelaws 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 maydisclose the fact that they have entered into an agreement regarding the PrinceMR Intellectual Property, without more.  However, neither party mayrepresent that the Agreement is a license, but may represent that it is acontinuing discharge, release, promise and covenant not to sue EPIX, itsAffiliates, 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 theAgreement to: (a) Meaney, provided Meaney agrees to the confidentiality termsset forth in the Agreement, and (b) the employer of Prince and/or Meaney, ifrequired to do so for purposes of determining potential conflicts ofinterest.  Any copy of this Agreement

 

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

 

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

 

**ARTICLE 12**