exv10w9





EXHIBIT 10.9


 


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