regulatory approval is obtained. MBI was entirely within its rights under the Restated License
Agreement to enter into this sublicense with Chugai. Until such time that the sublicense with
Chugai expires or is cancelled, MBI will continue to conduct business operations related to the
Feinstein patents.

As noted in the original opinion of December 2, 2003, the parties executed an agreement
that contained an ambiguous term: “voluntary suspension of business operations.” The Court
construed this term to mean any and all business operations, active or passive, related to the
Feinstein patents. As of December 14, 2001, when the Plaintiff submitted its Notice of
Termination, Defendant MBI was still conducting passive business operations relating to the
Feinstein patents. It was not, as the Court originally found, receiving and cashing royalty checks
from its two sublicensees. Instead, as of December 14, 2001, MBI was waiting to learn whether
it would be entitled to royalties from either of its two sublicensees. Today, MBI has no current
or future claim to royalties from Mallinckrodt. It does, however, have a contingent claim to
royalties in the future from Chugai. This is sufficient to constitute business operations under the
Restated License Agreement. Therefore, the two factual errors that Plaintiff detected in the

Court’s opinion do not alter the Court’s original conclusion.



Although Plaintiff correctly highlights these two factual errors in the Court’s opinion,
neither of these errors undermines the Court’s conclusion that MBI was still engaging in business
operations related to the Feinstein patents at the time Plaintiff submitted its Notice of
Termination. With respect to the Mallinckrodt error (which was the larger of the two), at the
time of Plaintiffs Notice of Termination, MBI was entitled to receive royalties from
Mallinckrodt for nearly two more years. Plaintiff presents deposition testimony from Theodore
Roth, the President and Chief Operating Officer of Alliance, that MBI was not expecting to
receive any payments from the sale of Optison.' Whether it expected the sales milestones to be
reached is irrelevant to whether it was still conducting business related to the patents. It is true
that after September 30, 2003, MBI had no claim to royalties (expected or unexpected) under the
sublicense with Mallinckrodt, but that alone would not establish a voluntary suspension of
business operations under the Restated License Agreement because MBI has another sublicense
agreement in place.’

With respect to the Chugai sublicense, the corrected fact has no effect on the outcome.

Defendant MBI remains entitled to receive royalties under its sublicense with Chugai if and when

‘The deposition question and answer is as follows:

Q: Mr. Roth, does Alliance expect to receive any payments from the licensed products
under the restated license agreement?

A: No.

(PI. Mot. Alter or Amend, Ex. | at 53, lines 3-6) Although it is not clear that this evidence
establishes that MBI (as opposed to Alliance) was not expecting to receive any payments, the
Court will assume for the sake of this opinion that MBI did not expect to receive royalty
payments.

2MBI’s excision of itself from the relationship with Mallinckrodt would lend support to
an argument that the sublicense with Mallinckrodt violated the anti-assignment provision of the
Restated License Agreement, but the Plaintiff explicitly waived that argument.

3



CONCLUSION

For the reasons set forth above, the Court denies Plaintiff's Motion to Alter or Amend the

Duala.

David H. Coar
United States District Judge

Judgment.

Enter:

Dated: January 29, 2004



7
{_ Matute Ouder Fern (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge David H. Coar Sitting Judge if Other
‘or Magistrate Judge than Assigned Judge
CASE NUMBER 01 C 9576 DATE 01/29/2004
CASE SLF Limited Partnership vs. Molecular Biosystems, Inc.
TITLE

{In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) stale briefly the nature
of the motion being presented.]

MOTION:
Plaintiff's Motion to Alter or Amend Judgment
DOCKET ENTRY:
(ly a Filed motion of [ use listing in “Motion” box above.]
(2) Oo Brief in support of motion due.
(3) im) Answer brief to motion due___._ Reply to answer brief due_
(4) o Ruling/Hearing on ___setfor___—_at
(5) a Status hearing{held/continued to] [set for/re-set for]on____sset for at
(6) Oo Pretrial conference[held/continued to] [set for/re-set for]on___—sset for ats
(7) a ‘Trial[set for/re-set for]on ss at_
(8) Oo [Bench/Jury trial] [Hearing] held/continued toa
(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OFRCP4(m) CO Local Rule 41.1 COFRCP41(a)(1) OO FRCP41(a)(2).

(10) Ml (Other docket entry] For the reasons given in the attached memorandum opinion, Plaintiff's Motion

to Alter or Amend the Judgment [Doc. # 78] is denied. 1)

dl) (For further detail see order attached to the original minute order.]

Y | No notices required, advised in open court. Document

Number

es required js
No notices requires number of notices:

Notices mailed by judge’s stal", ‘JAN 30 2004

Notified counsel by telephone.

date docketed

Docketing to mail notices.

Mail AO 430 form. ocketing daputy Mitts

Copy to judge/magistrate judge.

a

date mailed
courtroom:

jar(le) doputy’s
initials

Date/time received in
contral Clerk's Office anaing deputy nivas



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
SLF LIMITED PARTNERSHIP, )
) No. 01 C 9576
Plaintiff, )
) HONORABLE DAVID H. COAR
v. )
)
MOLECULAR BIOSYSTEMS, INC. RR RE
Paturren
) JAN 3 4
Defendant. ) oe 2004

MEMORANDUM OPINION AND ORDER

On December 2, 2003, this Court issued its findings of fact and conclusions of law
following a bench trial in this case. Plaintiff SLF Limited Partnership (‘‘Plaintiff” or “SLF”)
timely filed a Motion to Alter or Amend the Judgment pursuant to Rule 52(b). Plaintiff's Motion
has now been fully briefed and is ripe for decision.

Plaintiff asserts in its motion that this Court made two manifest errors of fact in its
opinion. Both of these alleged errors relate to the characterization of Defendant Molecular
Biosystems, Incorporated’s (““Defendant” or “MBI”) relationship with its two sublicensees:
Mallinckrodt and Chugai. The first alleged error relates to the characterization of Defendant’s
sublicense agreement with Mallinckrodt. In the opinion of December 2, 2003, this Court found
that MBI was “receiving and cashing” a five percent royalty from Mallinckrodt. Plaintiff
correctly points out that MBI earned this five percent royalty under an earlier sublicensing
agreement than the one that was in effect at the time Plaintiff submitted its Notice of Termination

on December 14, 2001.

gO


When Plaintiff submitted its Notice of Termination, the Third Amendment to the
Mallinckrodt sublicense (known as the Optison Products Rights Agreement (OPRA)), was in
effect. The Third Amendment to OPRA set forth a different royalty schedule. Under the Third
Amendment to OPRA, Mallinckrodt was obligated to make a one-time payment of $5,000,000 to
adjust the royalty schedule. (PI. Tr. Ex. 83, at MBi000373) Beyond that, Mallinckrodt was
obligated to pay an 8 percent royalty for net sales in excess of $20 million from October 1, 2001
to September 30, 2002, and an 8 percent royalty for net sales in excess of $30 million from
October 1, 2002 to September 30, 2003. (PI. Tr. Ex. 83, at MBI000373) After September 30,
2003, the Third Amendment to OPRA establishes that the “licenses granted to Mallinckrodt . . .
shall be deemed exclusive, royalty-free, and perpetual ....” (Pl. Tr. Ex. 83 at MBI000373).
Consequently, the Court did err when it found that MBI was “receiving and cashing royalty
checks” from Mallinckrodt. (Slip op. of Dec. 2, 2003, at 26)

The second alleged error in the Court’s opinion relates to the Defendant’s sublicense
agreement with Chugai Pharmaceuticals. Plaintiff suggests that the Court implicitly found that
MBI was “receiving and cashing royalty checks” from Chugai. (Slip op. of Dec. 2, 2003, at 26)
Plaintiff is again correct that the Defendant presented no evidence that it had received royalty
checks from Chugai pharmaceuticals. Chugai has not yet received permission from the Japanese
regulatory authorities to market or sell Optison. If and when Chugai obtains the regulatory
approvals necessary, MBI would be entitled to receive royalties as described in the Cooperative
Development and Marketing Agreement (CDMA). (PI. Tr. Ex. 36, at MBI00855-—56) To the
extent that the Court’s December 2, 2003 opinion intimated that MBI had already received

royalties from Chugai, it was in error.