Document:

Exhibit 4.1

 

REGISTRATION RIGHTS AGREEMENT

 

THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of the 3rd day of
November, 2003, by and among Evolving Systems, Inc., a Delaware corporation
(the “Parent”),
and the shareholders listed on Exhibit A hereto, referred to hereinafter
collectively as the “Company
Shareholders” and individually as a “Company Shareholder.”

 

RECITALS

 

WHEREAS,
pursuant to the Agreement and Plan of Merger, dated
November 3, 2003, by and among the Parent, ESI Acquisition One
Corporation, an Ohio corporation and wholly-owned subsidiary of the Parent (“Merger Sub”), CMS
Communications, Inc., an Ohio corporation (the “Company”), and the Company
Shareholders (the “Merger
Agreement”), Merger Sub is being merged with and into the
Company with the Company being the surviving corporation, and the common shares
of the Company held by the Company Shareholders are being converted into shares
of the Parent Common Stock (the “Transaction”);

 

WHEREAS,
the obligations of the parties in the Merger Agreement are conditioned upon the
execution and delivery of this Agreement; and

 

WHEREAS,
in connection with the consummation of the Transaction, the parties desire to
enter into this Agreement in order to grant registration and other rights to
the Company Shareholders with respect to their shares of the Parent’s common
stock as set forth below.

 

NOW, THEREFORE, in consideration of the
premises and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

SECTION 1.         GENERAL.

 

1.1                               Definitions. 
Unless otherwise defined herein, as used in this Agreement,
the following terms shall have the following respective meanings:

 

(a)                                  “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

 

(b)                                  “Form S-3” means
such form under the Securities Act as in effect on the date hereof or any
successor or similar registration form under the Securities Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Parent with the SEC.

 

(c)                                  “Holder” means
a person owning of record Registrable Securities that have not been sold to the
public or any assignee of record of such Registrable Securities in accordance
with Section 2.6(b) hereof and who does not notify the Parent in writing
upon or prior to the earlier of (i) the Filing Date or (ii) the 75th day
following the date hereof that he does not wish his Registrable Securities to
be included in the Registrable Securities covered by the Registration
Statement.

 

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(d)                                  “Prospectus”
means the prospectus included in the Registration Statement with respect to the
terms of the offering of the Registrable Securities covered by the Registration
Statement, and all amendments and supplements thereto, including any and all
exhibits and annexes thereto and any information incorporated by reference
therein.

 

(e)                                  “Registrable Securities” means
the number of shares of the Parent Common Stock received by the Company
Shareholders upon consummation of the Transaction and any shares of the Parent
Common Stock issued in respect thereof as the result of any adjustment,
recapitalization, reorganization, stock split, stock dividend or other change
in the Parent’s capital structure; provided, however, that Registrable
Securities shall cease to be Registrable Securities when (i) a Registration
Statement shall have become effective under the Securities Act and such Registrable
Securities shall have been disposed of in accordance with the Registration
Statement and the Securities Act, or (ii) with respect to a Holder, at such
time as all of the Registrable Securities held by such Holder can, in a three
month period, be distributed to the public in accordance with Rule 144 under
the Securities Act, as such rule may be amended from time to time, or any
successor rule or regulation (“Rule 144”); or (iii) at such time as all of the
Registrable Securities held by such Holder could be sold by such Holder in a
three-month period in accordance with Rule 144, assuming that, for purposes of
calculating the required holding periods set forth under Rule 144 for such
Holder, such Holder acquired such Registrable Securities on the earlier of the
Effective Date (as defined below) or the date such Holder received such
Registrable Securities.

 

(f)                                    “Rules”
shall mean the rules and regulations promulgated by the SEC under the
Securities Act or under the Exchange Act.

 

(g)                                 “SEC” means
the Securities and Exchange Commission.

 

(h)                                 “Securities Act” shall
mean the Securities Act of 1933, as amended.

 

(i)                                    “Special Registration
Statement” shall mean a registration statement (i) relating
to any employee benefit plan or (ii) related to equity securities issued upon
conversion of debt securities.

 

Capitalized terms used,
but not defined, herein shall have the meanings set forth in the Merger
Agreement.

 

SECTION 2.         REGISTRATION; RESTRICTIONS ON TRANSFER.

 

2.1                               Registration Procedures and Expenses.  The Parent shall:

 

(a)                                  subject
to receipt of information from the Holders that is both customary and
necessary, make commercially reasonable efforts to prepare and file with the
SEC, as soon as practicable following the Closing (the date of such filing with
the SEC, the “Filing Date”),
a registration statement on Form S-3 (the “Registration Statement”) to enable the resale of the
Registrable Securities by the Holders from time to time in accordance with the
methods of distribution elected by such Holders and set forth in the
Registration Statement; provided, however, that not less than five
(5) business days prior to the filing of the Registration Statement with the
SEC, the Parent shall furnish to the Holders, and counsel to the Holders; a
copy of the

 

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Registration Statement proposed to be filed and the
Parent agrees to consider appropriate comments provided by such Holders and
their counsel for inclusion in the Registration Statement; provided, further, that Parent
shall not be required to file a Registration Statement with the SEC until such
time as the audited financial statements for the Company, required by the Rules
to be included in the Registration Statement, are available in form and
substance satisfactory to Parent and its independent auditors (the “Company Financial Statements”);

 

(b)                                  use
its commercially reasonable efforts to cause the Company to complete the
preparation of, and facilitate the audit of, the Company Financial Statements;

 

(c)                                  not
less than five (5) business days prior to the filing thereof with the SEC,
furnish to the Holders and to counsel for the Holders, a copy of each amendment
to the Registration Statement, and each amendment or supplement, if any, to the
Prospectus (including all documents incorporated by reference therein after the
initial filing of the Registration Statement), and Parent agrees to consider
appropriate comments provided by such Holders and their counsel for inclusion
in the Registration Statement;

 

(d)                                  use
its commercially reasonable efforts, subject to receipt of necessary
information from the Holders, as reasonably determined upon consultation with
such Holder’s counsel to cause the Registration Statement to become effective
as soon as practicable after the Filing Date (the “Effective Date”);

 

(e)                                  use
its commercially reasonable efforts to prepare and file with the SEC such
amendments and supplements to the Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep the Registration
Statement current and continuously effective for a period not exceeding, with
respect to each Holder’s Registrable Securities, the earlier of (i) the
second anniversary of the Effective Time, (ii) the date on which such
Holder may sell all Registrable Securities then held by such Holder without
restriction by the volume limitations of Rule 144(e) of the Securities Act or
(iii) such time as all Registrable Securities covered by the Registration
Statement have been sold thereunder;

 

(f)                                    furnish
to any Holder with respect to the Registrable Securities registered under the
Registration Statement such number of copies of the Registration Statement, the
Prospectus (including any preliminary prospectuses) any amendments or
supplements thereto and such other documents as such Holder may reasonably
request, in order to facilitate the public sale or other disposition of all or
any of the Registrable Securities by such Holder, provided, however, that the
obligation of the Parent to deliver copies of the Prospectus and any amendments
or supplements thereto to such Holder shall be subject to the receipt by the
Parent of reasonable assurances from such Holder that the Holder will comply
with the applicable provisions of the Securities Act and of such other securities
or blue sky laws as may be applicable in connection with any use of such
Prospectus or any amendments or supplements thereto;

 

(g)                                 arrange,
if necessary for registration or qualification of the Registrable Securities
under the securities or blue sky laws of such states specified in writing by
any of the Holders, and maintain such registration or qualification in effect
so long as required; provided,

 

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however,
that the Parent shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented;

 

(h)                                 bear
all fees and expenses in connection with the procedures in paragraphs (a)
through (g) and (k) of this Section 2.1 and the registration of the
Registrable Securities pursuant to the Registration Statement;

 

(i)                                    advise
the Holders, promptly after it shall receive notice or obtain knowledge of the
issuance of any stop order by the SEC delaying or suspending the effectiveness
of the Registration Statement or of the initiation of any proceeding for that
purpose; and it will promptly use its commercially reasonable efforts to
prevent the issuance of any stop order or to obtain its withdrawal at the
earliest possible moment if such stop order should be issued;

 

(j)                                    ensure
that the Registration Statement and any amendment or supplement thereto and any
Prospectus forming part thereof and any amendment or supplement thereto (i)
complies with the applicable requirements of the Securities Act and (ii) does
not to contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading

 

(k)                                with
a view to making available to the Holders the benefits of Rule 144 (or its
successor rule) and any other rule or regulation of the SEC that may at any
time permit the Holders to sell Registrable Securities to the public without
registration, the Parent covenants and agrees to: (i) make and keep public
information available, as those terms are understood and defined in Rule 144,
until the earlier of (A) such date as all of the Registrable Securities
may be resold pursuant to Rule 144(k) or any other Rule of similar effect or
(B) such date as all of the Holders’ Registrable Securities shall have
been resold; (ii) file with the SEC in a timely manner all reports and
other documents required of the Parent under the Securities Act and under the
Exchange Act; (iii) furnish to any Holder upon request, as long as such Holder
owns any Registrable Securities, (A) a written statement by the Parent
that it has complied with the reporting requirements of the Securities Act and
the Exchange Act, (B) a copy of the Parent’s most recent Annual Report on
Form 10-K or Quarterly Report on Form 10-Q, and (C) such other information
as may be reasonably requested in order to avail such Holder of any rule or
regulation of the SEC that permits the selling of any such Registrable
Securities without registration; and (iv) subject to the conditions set forth
in this Agreement, and provided the conditions of Rule 144(k) are satisfied in
all respects, including without limitation, that such Holder is not an
Affiliate of the Parent, as such term is defined in Rule 144, use commercially
reasonable efforts to cause the removal of any restrictive legends on the
Registrable Securities necessary to enable such Holder to sell the Registrable
Securities under Rule 144(k).

 

(l)                                    It
shall be a condition precedent to the obligations of the Parent to take any
action pursuant to this Section 2.1 that any Holder shall furnish to the
Parent, pursuant to the written request by the Parent, such information
regarding itself, the Registrable Securities to be sold by such Holder, and the
intended method of disposition of such Registrable Securities as shall be
required to effect the registration of the Registrable Securities.

 

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2.2                               Suspension.

 

(a)                                  Each
Holder agrees that it will promptly notify the Parent of any changes in the
information set forth in the Registration Statement regarding the Holder or the
Holder’s plan of distribution.

 

(b)                                  Except
in the event that paragraph (c) below applies, the Parent shall: (i) if
deemed necessary by the Parent, prepare and file from time to time with the SEC
a post-effective amendment to the Registration Statement or a supplement to the
Prospectus forming a part thereof or a supplement or amendment to any document
incorporated therein by reference or file any other required document so that
such Registration Statement will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and so that, as
thereafter delivered to purchasers of the Registrable Securities being sold
thereunder, such Prospectus, Supplement or amendment will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and
(ii)  promptly inform each Holder that the Parent has complied with
its obligations in Section 2.2(b)(i) (or that, if the Parent has filed a
post-effective amendment to the Registration Statement which has not yet been
declared effective, the Parent will notify each Holder to that effect, will use
its commercially reasonable efforts to secure the effectiveness of such
post-effective amendment as promptly as possible and will promptly notify each
Holder pursuant to Section 2.2(b)(i) hereof when the amendment has become
effective).

 

(c)                                  Subject
to paragraph (d) below, in the event: (i) of any request by the SEC or any
other federal or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or supplements to
the Registration Statement or related Prospectus or for additional information;
(ii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose; (iii) of
the receipt by the Parent of any notification with respect to the suspension of
the registration or qualification or exemption from registration or
qualification of any of the Registrable Securities for sale in any jurisdiction
or the initiation of any proceeding for such purpose; or (iv) of any event
or circumstance which, in the reasonable judgment of Parent, necessitates the
making of any changes in the Registration Statement or Prospectus, or any
document incorporated or deemed to be incorporated therein by reference, so
that, in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or any omission to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; then
the Parent shall deliver a certificate in writing to each Holder (the “Suspension Notice”)
to the effect of the foregoing and, upon receipt of such Suspension Notice,
each Holder will refrain from selling any Registrable Securities pursuant to
the Registration Statement (a “Suspension”) until such Holder’s receipt of copies of a
supplemented or amended Prospectus prepared and filed by the Parent, or until
it is advised in writing by the Parent that any stop order suspending the
effectiveness of the Registration Statement has been withdrawn, that the
registration or qualification of the

 

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Registrable Securities has been reinstated  in such jurisdiction or that the  current Prospectus may be used, as
appropriate, and has received copies of any additional or supplemental filings
that are incorporated or deemed incorporated by reference in any such
Prospectus.  In the event of any
Suspension, the Parent will use its commercially reasonable efforts to cause
the use of the Prospectus so suspended to be resumed as soon as reasonably
practicable, and in no event later than 20 business days, after delivery of a
Suspension Notice to each Holder.

 

(d)                                  Notwithstanding
the foregoing paragraphs of this Section 2.2, the Holders shall not be
prohibited from selling Registrable Securities under the Registration Statement
as a result of Suspensions on more than two occasions of not more than sixty
(60) days each in any twelve (12) month period, unless, in the good faith
judgment of the Parent’s Board of Directors, upon advice of counsel, the sale
of Registrable Securities under the Registration Statement in reliance on this
paragraph 2.2(d) would be reasonably likely to cause a violation of the
Securities Act or the Exchange Act and result in potential liability to the
Parent.

 

(e)                                  Provided
that a Suspension is not then in effect, any Holder may sell Registrable
Securities under the Registration Statement, provided that it arranges for
delivery of a current Prospectus to the transferee of such Registrable Securities.

 

(f)                                    In
the event of a sale of Registrable Securities by any Holder, such Holder must
also deliver to the Parent’s transfer agent, with a copy to the Parent, a
Certificate of Subsequent Sale substantially in the form attached hereto as
Exhibit B, so that the shares may be properly transferred.

 

2.3                               Indemnification.  For the purpose of this Section 2.3:

 

(a)                                  the
term “Selling Company Shareholder”
shall include each Holder and any officer, director, agent, trustee or
affiliate of such Holder;

 

(b)                                  the
term “Registration Statement”
shall include any final prospectus, exhibit, supplement or amendment included
in or relating to the Registration Statement referred to in Section 2.1;
and

 

(c)                                  the
term “Untrue Statement”
shall include any untrue statement or alleged untrue statement, or any omission
or alleged omission to state in the Registration Statement a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

 

(i)                                    The
Parent agrees to indemnify and hold harmless each Selling Company Shareholder
from and against any losses, claims, damages or liabilities to which such
Selling Company Shareholder may become subject (under the Securities Act or
otherwise) but only insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of, or are based upon
(i) any Untrue Statement of a material fact contained in the Registration
Statement, or (ii) any failure by the Parent to fulfill any undertaking
included in the Registration Statement, and the Parent will reimburse such
Selling Company Shareholder for any reasonable legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim, provided, however, that the Parent shall not be
liable in any such case to the extent that such loss, claim, damage or
liability arises

 

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out of, or is based upon, an Untrue Statement made in
such Registration Statement in reliance upon and in conformity with written
information furnished to the Parent by or on behalf of any such Selling Company
Shareholder specifically for use in preparation of the Registration Statement
or the failure of any such Selling Company Shareholder to comply with its
covenants and agreements contained in Section 2.2 hereof or any statement
or omission in any prospectus that is corrected in any subsequent prospectus
that was delivered to a Holder prior to the pertinent sale or sales by such
Holder.

 

(ii)                                Each
Holder agrees to indemnify and hold harmless the other Selling Company
Shareholders and the Parent (and each person, if any, who controls the Parent
or the other Selling Company Shareholders within the meaning of Section 15
of the Securities Act, each officer of the Parent who signs the Registration
Statement and each director of the Parent) from and against any losses, claims,
damages or liabilities to which the other Selling Company Shareholders or the
Parent (or any such officer, director or controlling person) may become subject
(under the Securities Act or otherwise), but only insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of, or are based upon, (A) any failure by such Holder to comply
with the covenants and agreements contained in Section 2.2 hereof, or
(B) any Untrue Statement of a material fact contained in the Registration
Statement if such Untrue Statement was made in reliance upon and in conformity
with written information furnished by or on behalf of a Holder specifically for
use in preparation of the Registration Statement, and such Holder will
reimburse the other Selling Company Shareholders and the Parent (or such officer,
director or controlling person), as the case may be, for any reasonable legal
or other expenses reasonably incurred in investigating, defending or preparing
to defend any such action, proceeding or claim.

 

(iii)                            Promptly
after receipt by any indemnified person of a notice of a claim or the beginning
of any action in respect of which indemnity is to be sought against an
indemnifying person pursuant to this Section 2.3, such indemnified person
shall notify the indemnifying person in writing of such claim or of the
commencement of such action, but the omission to so notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party under this Section 2.3 (except to the extent that such
omission materially and adversely affects the indemnifying party’s ability to
defend such action) or from any liability otherwise than under this
Section 2.3.  Subject to the
provisions hereinafter stated, in case any such action shall be brought against
an indemnified person, the indemnifying person shall be entitled to participate
therein, and, to the extent that it shall elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, shall be entitled to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified person.  After notice from the indemnifying person to
such indemnified person of its election to assume the defense thereof, such indemnifying
person shall not be liable to such indemnified person for any legal expenses
subsequently incurred by such indemnified person in connection with the defense
thereof, provided, however, that if there exists or shall exist a conflict of
interest that would make it inappropriate, in the reasonable opinion of counsel
to the indemnified person, for the same counsel to represent both the
indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel at the
expense of such indemnifying person; provided, however, that no indemnifying
person shall be responsible for the fees and expenses of more than one separate
counsel (in addition to appropriate local counsel) for all indemnified parties.

 

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In no event shall any indemnifying person be liable in
respect of any amounts paid in settlement of any action unless the indemnifying
person shall have approved the terms of such settlement; provided that such
consent shall not be unreasonably withheld or delayed.  No indemnifying person shall, without the
prior written consent of the indemnified person, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified person is
or could have been a party and indemnification could have been sought hereunder
by such indemnified person, unless such settlement includes an unconditional
release of such indemnified person from all liability on claims that are the
subject matter of such proceeding.

 

(iv)                               If
the indemnification provided for in this Section 2.3 is unavailable to or
insufficient to hold harmless an indemnified party under subsection (i) or
(ii) above in respect of any losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of the Parent on the one hand and the Holders on the other in connection
with the statements or omissions or other matters which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations.  The relative fault shall be determined by reference to, among
other things, in the case of an Untrue Statement, whether the Untrue Statement
relates to information supplied by the Parent on the one hand or a Holder on
the other and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such Untrue Statement.  The Parent and the Holders agree that it
would not be just and equitable if contribution pursuant to this
subsection (iv) were determined by pro rata allocation (even if the
Holders were treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable considerations
referred to above in this subsection (iv).  The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (iv) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this
subsection (iv), no Holder shall be required to contribute any amount in
excess of the amount by which the gross amount received by such Holder from the
sale of the Registrable Securities to which such loss relates exceeds the
amount of any damages which such Holder has otherwise been required to pay by
reason of such Untrue Statement.  No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.  The Holders’ obligations in this
subsection to contribute are several in proportion to their sales of
Registrable Securities to which such loss relates and not joint.

 

(v)                                   The
parties to this Agreement hereby acknowledge that they are sophisticated
business persons who were represented by counsel during the negotiations
regarding the provisions hereof including, without limitation, the provisions
of this Section 2.3, and are fully informed regarding said
provisions.  They further acknowledge
that the provisions of this Section 2.3 fairly allocate the risks in light
of the ability of the parties to investigate the Parent and its business in
order to assure that adequate disclosure is made in the Registration Statement
as required by the Securities Act and the Exchange Act.  The parties are advised that federal or
state public policy as interpreted by the courts in certain jurisdictions may
be contrary

 

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to certain of the provisions of this Section 2.3,
and the parties hereto hereby expressly waive and relinquish any right or
ability to assert such public policy as a defense to a claim under this
Section 2.3 and further agree not to attempt to assert any such defense.

 

2.4                               Termination
of Conditions and Obligations.  The  restrictions
imposed by Section 2.6 upon the transferability of the Registrable
Securities shall cease and terminate as to any particular number of the
Registrable Securities when an opinion of counsel reasonably satisfactory to
the Parent shall have been rendered to the effect that such conditions are not
necessary in order to comply with the Securities Act.

 

2.5                               Information
Available.  So long as the
Registration Statement is effective covering the resale of Registrable
Securities owned by any Holder, the Parent:

 

(a)                                  will
furnish to each Holder, as soon as practicable after it is available, one copy
of (i) its annual report to shareholders (which annual report shall
contain financial statements audited in accordance with generally accepted
accounting principles by a national firm of certified public accountants
registered with the Public Company Accounting Oversight Board) and (ii) if
not included in substance in the annual report to shareholders, its Annual
Report on Form 10-K (the foregoing, in each case, excluding exhibits);

 

(b)                                  will
furnish to each Holder, upon the request of the Holder, all exhibits to the
documents referred to in Section 2.5(a) filed with the SEC and all other
information that is made available to shareholders; and

 

(c)                                  upon
the reasonable request of any Holder, will meet with such Holder or a
representative thereof at the Parent’s headquarters to discuss all information
relevant for disclosure in the Registration Statement and will otherwise
cooperate with any Holder conducting an investigation for the purpose of reducing
or eliminating such Holder’s exposure to liability under the Securities Act,
including the reasonable production of information at the Parent’s
headquarters; provided, that the Parent shall not be required to disclose any
confidential information to or meet at its headquarters with any Holder until
and unless such Holder shall have entered into a confidentiality agreement in
form and substance reasonably satisfactory to the Parent with the Parent with
respect thereto.

 

2.6                               Restrictions
on Transfer.

 

(a)                                  Each
Holder agrees not to make any disposition of all or any portion of the
Registrable Securities unless and until:

 

(i)                                    The
Registration Statement is declared effective under the Securities Act and such
disposition is made in accordance with the Registration Statement; or

 

(ii)                                (A) the
transferee has agreed in writing to be bound by the terms of this Agreement,
(B) such Holder shall have notified the Parent of the proposed disposition
and shall have furnished the Parent with a detailed statement of the circumstances
surrounding the proposed disposition, and (C) if reasonably requested by
the Parent, such Holder shall have furnished the Parent with an opinion of
counsel, reasonably satisfactory to the Parent, that such

 

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disposition will not require registration of such
Registrable Securities under the Securities Act.  It is agreed that the Parent will not require opinions of counsel
for transactions made pursuant to Rule 144, except in unusual circumstances.

 

(b)                                  Notwithstanding
the provisions of subsection (a) above, no such restriction shall apply to
a transfer by any Holder transferring his Registrable Securities to such
Holder’s family member or a trust, partnership or limited liability company for
the benefit of an individual Holder or such Holder’s immediate family member; provided that in each case the transferee
will agree in writing to be subject to the terms of this Agreement to the same
extent as if the transferee was an original Holder hereunder.

 

(c)                                  Each
certificate representing Registrable Securities shall be stamped or otherwise
imprinted with legends substantially similar to the following (in addition to
any legend required under applicable state securities laws):

 

THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR
UNLESS EVOLVING SYSTEMS, INC. (THE “COMPANY”) HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS
NOT REQUIRED.

 

THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND
CONDITIONS OF A CERTAIN REGISTRATION RIGHTS AGREEMENT TO WHICH THE STOCKHOLDER
AND THE COMPANY ARE PARTIES.  COPIES OF
SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF
THE COMPANY.

 

(d)                                  The
Parent shall be obligated to reissue promptly unlegended certificates at the
request of any Holder thereof and, if required, deliver such unlegended
certificates to the escrow agent under the Hold-Back Share Escrow Agreement, if
the Parent has completed the registration contemplated by this Agreement.

 

(e)                                  Any
legend endorsed on a certificate pursuant to applicable state securities laws
and the stop-transfer instructions with respect to such Registrable Securities
shall be removed upon receipt by the Parent of an order of the appropriate blue
sky authority evidencing that such legend is no longer required.

 

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2.7                               Delay
of Registration; Furnishing Information.

 

(a)                                  No
Holder shall have any right to obtain or seek an injunction restraining or
otherwise delaying any such registration as the result of any controversy that
might arise with respect to the interpretation or implementation of this
Section 2.

 

(b)                                  It
shall be a condition precedent to the obligations of the Parent to take any
action pursuant to Section 2.2 that all selling Holders shall furnish to
the Parent such information regarding themselves, the Registrable Securities
held by them and the intended method of disposition of such Registrable
Securities as shall be required to effect the registration of their Registrable
Securities.

 

2.8                               Assignment
of Registration Rights.  The rights
to cause the Parent to register Registrable Securities pursuant to this
Agreement may only be assigned by a Holder to a transferee (a) in connection
with a transfer of Registrable Securities permitted under Section 2.6(b)
or (b) that acquires at least 10,000 shares of Registrable Securities (as
adjusted for any adjustment, recapitalization, reorganization, stock split,
stock dividend or other change in the Parent’s capital structure); provided that in each case (y) the
transferor shall, within 5 days after such transfer furnish Parent written
notice of the name and address of the transferee or assignee and the
Registrable Securities as to which such registration rights are being assigned
and (z) the transferee will agree in writing to be subject to the terms of this
Agreement to the same extent as if the transferee was an original Holder
hereunder.

 

2.9                               Agreement
to Furnish Information.  If
requested by the Parent, each Holder shall provide, within ten (10) days of
such request, such information as may be required by the Parent in connection
with the completion of any public offering of the Parent’s securities pursuant
to a registration statement filed under the Securities Act.  The obligations described in this
Section 2.9 shall not apply to a Special Registration Statement.  Each Holder agrees that any transferee of
any Registrable Securities shall be bound by this Sections 2.9.

 

SECTION 3.         MISCELLANEOUS.

 

3.1                               Governing Law.  This Agreement shall be governed by and construed
under the laws of the State of Colorado  as
applied to agreements among Colorado residents entered into and to be performed
entirely within Colorado.

 

3.2                               Successors and Assigns.  Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors, and administrators of
the parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time.

 

3.3                               Entire Agreement.  This Agreement, the Exhibits hereto, the Merger
Agreement and the other documents delivered pursuant thereto constitute the
full and entire understanding and agreement among the parties with regard to
the subjects hereof and no party shall be liable or bound to any other in any
manner by any representations, warranties, covenants and agreements except as
specifically set forth herein and therein.

 

11

 

3.4                               Severability.  In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.

 

3.5                               Amendment
and Waiver.

 

(a)                                  Except
as otherwise expressly provided, this Agreement may be amended or modified only
upon the written consent of the Parent and the Holders of at least a majority
of the Registrable Securities.

 

(b)                                  Except
as otherwise expressly provided, the obligations of the Parent and the rights
of the Holders under this Agreement may be waived only with the written consent
of the Holders of at least a majority of the Registrable Securities.

 

(c)                                  For
the purposes of determining the number of Holders or Company Shareholders
entitled to vote or exercise any rights hereunder, the Parent shall be entitled
to rely solely on the list of record holders of its common stock as maintained
by or on behalf of the Parent.

 

(d)                                  Any
amendment or waiver effected in accordance with this Section 3.5 shall be
binding upon each Holder and Parent.  By
accepting the benefits conferred under this Agreement, the Holders hereby agree
to be bound by the provisions of this Section 3.5.

 

3.6                               Delays or Omissions.  It is agreed that no delay or
omission to exercise any right, power, or remedy accruing to any Holder, upon
any breach, default or noncompliance of the Parent under this Agreement shall
impair any such right, power, or remedy, nor shall it be construed to be a
waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of any similar breach, default or noncompliance thereafter
occurring.  It is further agreed that
any waiver, permit, consent, or approval of any kind or character on any
Holder’s part of any breach, default or noncompliance under this Agreement or
any waiver on such Holder’s part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. 
All remedies, either under this Agreement, by law, or otherwise afforded
to Holders, shall be cumulative and not alternative.

 

3.7                               Notices. 
All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery
to the party to be notified, (b) when sent by confirmed electronic mail or
facsimile if sent during normal business hours of the recipient; if not, then
on the next business day, (c) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or
(d) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of
receipt.  All communications shall be
sent to the party to be notified at the address as set forth on the signature
pages hereof or Exhibit A hereto or at such other address as such party may
designate by ten (10) days advance written notice to the other parties hereto.

 

3.8                               Attorneys’ Fees.  In the event that any suit or action is instituted to
enforce any provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from

 

12

 

the losing party all fees, costs and expenses of
enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.

 

3.9                               Titles and Subtitles.  The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.

 

3.10                        Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

 

3.11                        Aggregation of Stock.  All
Registrable Securities held or acquired by affiliated entities or persons or
persons or entities under common management or control shall be aggregated
together for the purpose of determining the availability of any rights under
this Agreement.

 

[THIS SPACE
INTENTIONALLY LEFT BLANK]

 

13

 

In Witness Whereof, the parties hereto have
executed this Registration Rights Agreement as
of the date set forth in the first paragraph hereof.

 

	
  PARENT:

  	
  COMPANY
  SHAREHOLDERS:

  
	
   

  	
   

  
	
  EVOLVING
  SYSTEMS, INC.

  	
   

  
	
   

  	
    /s/ John M. Cullen, Jr.

  	
   

  
	
  By:

  	
    /s/ Anita T. Moseley

  	
   

  	
  John M. Cullen, Jr.

  
	
  Name:

  	
  Anita T. Moseley

  	
   

  
	
  Title:

  	
  Senior Vice President

  	
  Address:

  
	
   

  	
  986 Ridge Crest Drive

  
	
  Address:

  	
  Gahanna, Ohio 43230

  
	
  9777 Mount Pyramid Ct.

  	
  Fax: 614-355-0049

  
	
  Englewood, CO  80112

  	
   

  
	
  Fax:  (303) 802-1399

  	
   

  
	
   

  	
    /s/ Jeffrey A. Curran

  	
   

  
	
   

  	
  Jeffrey A. Curran

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  6450 Scioto Ct.

  
	
   

  	
  Westerville, Ohio 43082

  
	
   

  	
  Fax: 614-355-0049

  
	
   

  	
   

  
	
   

  	
    /s/ Michael E. Brannan

  	
   

  
	
   

  	
  Michael E. Brannan

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  987 Grandview Avenue

  
	
   

  	
  Columbus, Ohio 43212

  
	
   

  	
  Fax: 614-355-0049

  
	
   

  	
   

  
	
   

  	
    /s/ Stephen J. Valachovic

  	
   

  
	
   

  	
  Stephen J. Valachovic

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  1087 Lincoln Road

  
	
   

  	
  Columbus, Ohio 43212

  
	
   

  	
  Fax: 614-355-0049

  
						

 

REGISTRATION
RIGHTS AGREEMENT

SIGNATURE
PAGE

 

 

EXHIBIT A

 

SCHEDULE OF COMPANY
SHAREHOLDERS

 

John M. Cullen, Jr.

 

Jeffrey A. Curran

 

Michael E. Brannan

 

Stephen J. Valachovic

 

A-1

 

EXHIBIT B

 

EVOLVING SYSTEMS, INC.

 

CERTIFICATE OF SUBSEQUENT SALE

 

[Name of Transfer Agent]

 

RE:          Sale of Shares of Common Stock of Evolving Systems, Inc. (the
“Company”) pursuant to the Company’s Prospectus dated
                      ,
2004 (the “Prospectus”)

 

Dear Sir/Madam:

 

The undersigned
hereby certifies, in connection with the sale of shares of Common Stock of the
Company included in the table of Selling Shareholders in the Prospectus, that
the undersigned has sold the shares pursuant to the Prospectus and in a manner
described under the caption “Plan of Distribution” in the Prospectus and that
such sale complies with all applicable securities laws, including, without
limitation, the Prospectus delivery requirements of the Securities Act of 1933,
as amended.

 

Selling Shareholder (the
beneficial
owner):                                                              

 

Record Holder (e.g., if
held in name of
nominee):                                                    

 

Restricted Stock
Certificate
No.(s):                                                                           

 

Number of Shares
Sold:                                                                                             

 

Date of
Sale:                                                                                                               

 

In the event that
you receive a stock certificate(s) representing more shares of Common Stock
than have been sold by the undersigned, then you should return to the
undersigned a newly issued certificate for such excess shares in the name of
the Record Holder and BEARING A RESTRICTIVE LEGEND.  Further, you should place a stop transfer on your records with
regard to such certificate.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  cc:

  	
  Investor Relations

  	
   

  
	
   

  	
  Evolving Systems, Inc.

  	
   

  
	
   

  	
  9777 Mt. Pyramid Ct. Suite 100

  	
   

  
	
   

  	
  Englewood, CO  80112

  	
   

  
									

 

B-1EXHIBIT 10.1

 

CONFIDENTIAL
TREATMENT

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

 

EXECUTION COPY

 

INTELLECTUAL PROPERTY AGREEMENT

 

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

 

RECITALS

 

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

 

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

 

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

 

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

 

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

 

1

 

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.

 

2

 

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

 

3

 

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.

 

4

 

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.

 

5

 

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.

 

6

 

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

 

7

 

(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

 

8

 

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

 

9

 

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

 

10

 

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.

 

11

 

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.

 

12

 

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

*****

 

13

 

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

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