Document:

Settlement Agreement Dated March 5, 2007

 

EXHIBIT 10.4

CONFIDENTIAL TREATMENT REQUESTED BY QLT INC.

Settlement Agreement

          This Settlement Agreement (“Agreement”) is entered into this 2nd day of March, 2007, by and
between QLT INC. (“QLT”), a British Columbia corporation having a principal place of business at
887 Great Northern Way, Vancouver, British Columbia, Canada, MASSACHUSETTS EYE AND EAR INFIRMARY
(“MEEI”), a Massachusetts non-profit corporation having a principal place of business at 243
Charles Street, Boston, Massachusetts, DR. JOAN W. MILLER, an individual residing at 40 Westland
Avenue, Winchester, Massachusetts; and DR. EVANGELOS S. GRAGOUDAS, an individual residing at 15
Fairfield Drive, Lexington, Massachusetts.

Recitals

               WHEREAS:

A.     QLT is currently manufacturing benzoporphyrin derivative (“BPD”);

B.     QLT, MEEI and The General Hospital Corporation (“MGH”) are joint owners of United States Patent
No. 5,798,349 (the “‘349 Patent”) directed to methods of using BPD to treat
neovasculature in the eye with photodynamic therapy;

C.     On
April 24, 2000, MEEI filed a lawsuit against QLT captioned, Massachusetts Eye and Ear Infirmary v. QLT Phototherapeutics, Inc., Civil Action No. 00-10783, in the United States
District Court for the District of Massachusetts (the “District Court”) (the “First Lawsuit”);

D.     QLT asserted a counterclaim in the First Lawsuit seeking correction of inventorship of the ‘349
Patent under 35 U.S.C. § 256 to add as an inventor Dr. Reginald Birngruber;

1

 

E.     MEEI owns or controls certain patents and patent applications that claim certain methods of
using BPD for the photodynamic therapeutic treatment of neovasculature in the eye, including United
States Patent No. 6,225,303 (the “‘303 Patent”) which issued on May 1, 2001;

F.     On May 1, 2001, MEEI filed a lawsuit against QLT and Novartis Ophthalmics, Inc., captioned
Massachusetts Eye and Ear Infirmary v. Novartis Ophthalmics, Inc.
and QLT Inc., Civil
Action No. 01-10747, in the District Court (the “Second Lawsuit”);

G.     On January 3, 2003, MEEI filed a lawsuit against Novartis Pharma AG captioned Massachusetts
Eye and Ear Infirmary v. Novartis Pharma AG, Civil Action No. 03-10023, in the District Court
(the “Third Lawsuit”);

H.     QLT asserted certain counterclaims in the Second Lawsuit against MEEI, DR. MILLER and DR.
GRAGOUDAS, including counterclaims for declarations of non-infringement, invalidity and
unenforceability of the ‘303 Patent, and counterclaims for damages for breach of contract,
misrepresentation and unfair trade practices as well as a counterclaim seeking correction of
inventorship of the ‘303 Patent under 35 U.S.C. § 256 to add as inventors Dr. Tayyaba Hasan, Dr.
Ursula Schmidt-Erfurth, and Dr. Reginald Birngruber and Dr. Julia Levy;

I.     Dr. Levy has filly assigned to QLT any and all rights she has or may have in MEEI PATENTS, as
defined in Ex. E hereto;

J.     Novartis Ophthalmics, Inc. asserted certain counterclaims in the Second Lawsuit against MEEI
including counterclaims for declarations of non-infringement, invalidity and unenforceability of
the ‘303 Patent, and counterclaims for damages for breach of contract;

K.     MGH filed a complaint in intervention in the Second Lawsuit seeking correction of inventorship
of the ‘303 Patent under 35 U.S.C. § 256;

2

 

L.     Dr. Hasan and Dr. Schmidt-Erfurth have fully assigned to MGH, and Dr. Birngruber is
contractually obligated to fully assign to MGH, any and all rights she or he has or may have in
MEEI PATENTS, as defined in Ex. E hereto;

M.     During the course of trial in the First Lawsuit, MEEI made certain representations to the Court
regarding its patent rights; and

N.     QLT, MEEI, MILLER, and GRAGOUDAS now desire to resolve QLT’s correction of inventorship
counterclaim in the First Lawsuit and all other disputes described in the pleadings of the Second
Lawsuit;

          NOW, THEREFORE, in consideration of the premises herein, the parties hereto agree as follows:

     1.     Dismissal of the Second and Third Lawsuits. On or before March 2, 2007, all of the
parties to the Second Lawsuit and the Third Lawsuit shall, through their respective counsel,
execute and cause to be filed with the District Court in each of the Second Lawsuit and the Third
Lawsuit to which he, she or it is a party the Stipulations of Dismissal attached hereto as Exhibits
A and B, respectively.

     2.     Stipulation of Dismissal of QLT’s Inventorship Claim in the First Lawsuit. On or
before March 2, 2007, the parties shall, through their respective counsel, execute and cause to be
filed in the First Lawsuit the Stipulated Order of Partial Dismissal Without Prejudice attached
hereto as Exhibit C.

     3.     Resolution of Claims for Correction of Inventorship. QLT and MEEI hereby agree that, no
sooner than thirty (30) days after the exhaustion of any and all appeals in the First Lawsuit,
QLT’s claims for correction of inventorship under 35 U.S.C. § 256 in the First Lawsuit and QLT’s
and MGH’s claims for correction of inventorship in the Second Lawsuit shall be

3

 

submitted to final and binding arbitration under 35 U.S.C. § 294 in accordance with the
procedures set forth in the Arbitration Agreement among QLT, MEEI and MGH, a copy of which is
attached hereto as Exhibit D. The parties mutually covenant not to sue any other party to this
Agreement in any forum to challenge or relitigate inventorship of the MEEI PATENTS as defined in
Exhibit E attached hereto, provided, however, that the binding effect of such arbitration as
between the parties shall not prevent any party from invoking the remedy of correction of
inventorship under 35 U.S.C. § 256 in the event that an unaffiliated third party hereafter
successfully challenges inventorship of the patents-in-suit. A proceeding under the Federal
Arbitration Act, 9 U.S.C. §§ 1 et seq. in connection with the arbitrator’s decision shall not be
deemed relitigation of the inventorship claims for purposes of the preceding sentence.

     4.     [**].

     5.     [**]. MEEI shall, concurrently with the execution of this Settlement Agreement,
execute the agreement in the form attached hereto as Exhibit E.

     6.     Stipulation of the Parties in the First Lawsuit. The parties shall, through their
respective counsel, execute and cause to be filed in the First Lawsuit the Stipulation of the
Parties attached hereto as Exhibit F. The parties expressly incorporate herein by reference the
provisions of Exhibit F. Moreover, the parties agree and confirm that except as expressly provided
herein, all claims and defenses pending in the First Lawsuit as of the date of this Settlement
Agreement remain pending.

     7.     Representations and Warranties. The parties make the representations and
warranties set forth in this Section 7. In making these representations and warranties, each
party is making such representations and warranties as to itself, himself or herself
and is not making such representations and warranties jointly with any other party.

 

			
	**	 	Portions of this exhibit have been omitted and filed separately with the SEC. Confidential treatment has been requested with respect to the omitted portions.

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(a)     Authority. Each party represents and warrants that (i) he, she or it has the
full legal right and power to enter into and perform his, her or its obligations under this
Settlement Agreement; (ii) the execution, delivery and performance by such party has been
duly and validly authorized and approved by all necessary actions; and (iii) this Settlement
Agreement has been duly executed and delivered by such party.

(b)     No Assignment of Claims. Each party represents and warrants that he, she or it
has not sold, assigned, conveyed, pledged or encumbered or otherwise in any way transferred
to any person or entity any claim dismissed pursuant to this Settlement Agreement and has
not agreed to do any of the foregoing.

(c)     No Other Claims. Each party represents and warrants that as of the date hereof
he, she or it has not filed (or caused to be filed through a third party) any legal or
administrative proceedings of any kind or nature against the other parties to this
Settlement Agreement involving the facts and circumstances alleged in the First, Second, and
Third Lawsuits and other than the First, Second, and Third Lawsuits.

     8.     Release. Dr. Miller and Dr. Gragoudas waive any and all claims that could have
been brought against QLT on or before the date of this Agreement. QLT waives any and all claims
that could have been brought against Dr. Miller or Dr. Gragoudas on or before the date of this
Agreement, other than those claims that are the subject of QLT’s correction of inventorship-related
claims in the First and Second Lawsuits which are to be addressed pursuant to the parties’
Arbitration Agreement attached as Exhibit D. MEEI and QLT waive any and all claims arising from the
facts and circumstances described in the pleadings in the First and Second Lawsuits that could have
been brought against the other on or before the date of this Agreement, other than
those claims that are the subject of MEEI’s claims in the First Lawsuit and QLT’s
inventorship-related claims in the First and Second Lawsuits.

5

 

     9.     Benefits and Burdens. This Settlement Agreement shall be binding upon the parties
to this Settlement Agreement and their respective heirs, executors, administrators,
representatives, successors and assigns. Except as otherwise expressly set forth herein, this
Settlement Agreement shall be for the sole benefit of the parties hereto and their respective
successors and assigns and shall not be construed to provide any benefits to any third parties, nor
is anything in this Settlement Agreement intended to relieve or discharge the obligation or
liability of any third persons to any party to this Settlement Agreement, nor shall any provision
give any third persons any right of subrogation or action against any party to this
Settlement Agreement.

     10.     Entire Agreement. This Settlement Agreement (including Exhibits A-F) constitutes
the entire settlement agreement of the parties with respect to the subject matters contained herein
and may not be amended, altered or modified except in a subsequent writing signed by both of the
parties. The parties have fully informed themselves of the terms, contents, conditions, and effects
of this Settlement Agreement, and warrant that no promise or representation of any kind has been
made except as expressly stated in this Settlement Agreement. In making and signing this Settlement
Agreement, the parties represent and certify that they have read this Settlement Agreement and
discussed it with their attorneys and that they fully understand and voluntarily accept the terms
of this Settlement Agreement. The parties also represent and certify that they are entering into
this Settlement Agreement in good faith based solely and completely upon their own judgment and the
advice of their attorneys following their good-faith assessment of pending claims.

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     11.     Choice of Law. This Settlement Agreement is entered into in the Commonwealth of
Massachusetts and shall be construed and interpreted in accordance with its laws.

     12.     Limitation. Neither this Settlement Agreement (including Exhibits) nor any of the
statements or communications made by the parties, or any of their respective agents, during the
negotiations leading to this Settlement Agreement shall be considered admissions of liability by or
on behalf of any of them, or used in any way in connection with the First Lawsuit. The parties
agree, however, that Exhibits C and F shall be filed with the Court in the First Lawsuit.

     13.     Execution by Counterparts. This Settlement Agreement may be executed in one or
more counterparts, each of which will be deemed an original once all parties have signed one of the
counterparts. Facsimile execution and delivery of this Settlement Agreement by any of the parties
shall be legal, valid and binding execution and delivery of such document for such purposes.

     14.     Contingency. This Settlement Agreement is contingent on execution of the
agreements attached hereto as Exhibits A-F.

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          IN WITNESS WHEREOF, the Parties have caused their authorized representatives to sign this
Agreement.

	 	 	 	 	 	 	 	 
	QLT INC.

 	 	MASSACHUSETTS EYE AND EAR INFIRMARY

 	 
	BY:  	/s/ Robert L. Butchofsky
 	 	BY:  	/s/ John Fernandez
 	 
	 	TITLE:   President and Chief Executive Officer 	 	 	TITLE:   President and CEO 	 
	 	 	DATE:    3/2/07 	 	 	DATE:    3/2/07 	 

	 	 	 	 	 
	 	JOAN W. MILLER, M.D.

 	 
	 	BY:  	/s/ Joan W. Miller, M.D.
 	 
	 	 	TITLE: 	 
	 	 	DATE:    3/2/07 	 
	 
	 	EVANGELOS S. GRAGOUDAS, M.D.

 	 
	 	BY:  	/s/ Evangelos S. Gragoudas, M.D.
 	 
	 	 	TITLE: 	 
	 	 	DATE:    3/2/07 	 

8

 

	 	 	 	 	 

 

 

 

 

 

 

EXHIBIT A

 

 

 

 

 

 

 

 

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	)	 	 	 
	MASSACHUSETTS EYE AND EAR INFIRMARY,

	 	 	)	 	 	 
	                    Plaintiff,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	          v.

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	NOVARTIS OPHTHALMICS, INC. and QLT, INC.,

	 	 	)	 	 	 
	                    Defendants.

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 	 	 	)	 	 	 
	QLT, INC.,

	 	 	)	 	 	 
	                    Counterclaimant,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	          v.

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	MASSACHUSETTS EYE AND EAR INFIRMARY,

	 	 	)	 	 	          Civil Action No.
	EVANGELOS S. GRAGOUDAS, M.D., and

	 	 	)	 	 	          01-CV-10747-WGY
	JOAN W. MILLER, M.D.,

	 	 	)	 	 	 
	                    Counterdefendants.

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	)	 	 	 
	THE GENERAL HOSPITAL CORPORATION,

	 	 	)	 	 	 
	                    Intervenor,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	          v.

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	MASSACHUSETTS EYE AND EAR INFIRMARY,

	 	 	)	 	 	 
	EVANGELOS S. GRAGOUDAS, M.D., and

	 	 	)	 	 	 
	JOAN W. MILLER, M.D.,

	 	 	)	 	 	 
	                    Defendants to Intervenor’s Complaint.

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 	 	 	 	 	 	 

STIPULATED ORDER OF DISMISSAL

 

 

     Whereas, all parties of record have agreed to settle the claims and counterclaims asserted in
the above-captioned action on agreed-upon terms and conditions.

     NOW, THEREFORE, all parties of record hereby stipulate and agree, by and through their
respective counsel of record, that the Court enter the following Stipulated Order of Dismissal,
which shall be binding upon them:

     1.     The Court has specific personal jurisdiction over all parties of record for purposes of
this action only.

     2.     All claims of the Massachusetts Eye and Ear Infirmary in the above-captioned action are
hereby dismissed with prejudice.

     3.     All counterclaims of Novartis Ophthalmics, Inc. are hereby dismissed with prejudice.

     4.     All counterclaims of QLT Inc. are hereby dismissed with prejudice, with the exception of
Count IV, seeking correction of inventorship, which is dismissed without prejudice. Moreover,
dismissal with prejudice of Counts II and V shall in no way act as res judicata or have collateral
estoppel effect with respect to any allegations or claims made in Count IV.

     5.     All claims of intervenor The General Hospital Corporation are hereby dismissed without
prejudice.

     6.     The parties shall each bear their own costs in connection with the above-captioned action.
In addition, the parties waive all rights to appeal this Stipulated Order of Dismissal.

2

 

	 	 	 	 	 
	Dated: March 2, 2007 	MASSACHUSETTS EYE AND EAR INFIRMARY

EVANGELOS S. GRAGOUDAS, M.D.

JOAN W. MILLER, M.D.
 	 
	 	/s/  	Karen Mangasarian
 	 
	 	 	Kenneth B. Herman 	 
	 	 	James F. Haley, Jr.
Christopher
J. Harnett
Karen Mangasarian

ROPES & GRAY LLP

1211 Avenue of the Americas

New York, NY 10036 	 
	 
	Dated: March 2, 2007 	QLT Inc.

 	 
	 	/s/  	Donald R. Ware
 	 
	 	 	Donald R. Ware 	 
	 	 	Dean Richlin

Barbara A. Fiacco

FOLEY HOAG LLP

155 Seaport Boulevard

Boston, MA 02210

(617) 832-1000 	 
	 
	Dated: March 2, 2007 	NOVARTIS OPHTHALMICS, INC.

 	 
	 	/s/  	James S. Trainor
 	 
	 	 	Dimitrios T. Drivas 	 
	 	 	Jeffrey J. Oelke

Kevin X. McGann

James S. Trainor

WHITE & CASE LLP

1155 Avenue of the Americas

New York, New York 10036 	 
	 
	Dated: March 2, 2007 	THE GENERAL HOSPITAL CORPORATION

 	 
	 	/s/  	Scott McConchie
 	 
	 	 	Thomas F. Maffei 	 
	 	 	Scott McConchie

GRIESINGER, TIGHE, & MAFFEI, LLP.

176 Federal Street

Boston, MA 02110 	 

3

 

	 	 	 	 	 

Certificate of Service

I hereby certify that the above document filed through the ECF system will be sent electronically
on March 2, 2007 to the registered participants as identified on the Notice of Electronic Filing
(NEF).

	 	 	 	 	 
	 	 

 	 
	 	  	/s/ Karen Mangasarian
 	 
	 	 	 	 
	 	 	 	 

4

 

	 	 	 	 	 

ORDER

          Pursuant to the Stipulation among all parties of record, IT IS ORDERED, ADJUDGED AND
DECREED THAT:

     7.     The Court has specific personal jurisdiction over all parties of record for purposes of
this action only.

     8.     All claims of the Massachusetts Eye and Ear Infirmary in the above-captioned action are
hereby dismissed with prejudice.

     9.     All counterclaims of Novartis Ophthalmics, Inc. are hereby dismissed with prejudice.

     10.     All counterclaims of QLT Inc. are hereby dismissed with prejudice, with the exception of
Count IV, seeking correction of inventorship, which is dismissed without prejudice. Moreover,
dismissal with prejudice of Counts II and V shall in no way act as res judicata or have collateral
estoppel effect with respect to any allegations or claims made in Count IV.

     11.     All claims of intervenor The General Hospital Corporation are hereby dismissed without
prejudice.

     12.     The parties shall each bear their own costs in connection with the above-captioned action.
In addition, the parties waive all rights to appeal this Stipulated Order of Dismissal.

	 	 	 
	 
	 	 
	Dated:                                                   

	 	                                                                                
	 

	 	HON. WILLIAM G. YOUNG
	 

	 	UNITED STATES DISTRICT JUDGE

5

 

 

 

 

 

 

 

EXHIBIT B

 

 

 

 

 

 

 

 

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	)	 	 	 
	MASSACHUSETTS EYE AND EAR INFIRMARY,

	 	 	)	 	 	 
	                    Plaintiff,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	          v.

	 	 	)	 	 	          Civil Action No.
	 

	 	 	)	 	 	          03-10023-EFH
	NOVARTIS PHARMA AG,

	 	 	)	 	 	 
	                    Defendant.

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 	 	 	 	 	 	 

STIPULATED ORDER OF DISMISSAL

     Whereas, all parties of record have entered into an agreement to settle the claims and
counterclaims they have asserted in the above-captioned action on certain terms and conditions set
forth in their agreement,

     NOW, THEREFORE, all parties of record hereby stipulate and agree, by and through their
respective counsel of record, that the Court enter the following Stipulated Order of Dismissal,
which shall be binding upon them:

     1.     This action is hereby dismissed with prejudice.

     2.     The parties shall each bear their own costs in connection with the above-captioned action.
In addition, the parties waive all rights to appeal this Stipulated Order of Dismissal.

     3.     Entry into this Stipulated Order does not subject Novartis Pharma to the personal
jurisdiction of the United States District Court for the District of Massachusetts, or of any other
state or federal court in the United States, and the parties will not argue to the contrary.

1

 

	 	 	 	 	 
	Dated: March 2, 2007 	MASSACHUSETTS EYE AND EAR INFIRMARY

 	 
	 	/s/  	Karen Mangasarian
 	 
	 	 	Kenneth B. Herman 	 
	 	 	James F. Haley, Jr.
Christopher
J. Harnett
Karen Mangasarian

ROPES & GRAY LLP

1211 Avenue of the Americas

New York, NY 10036 	 
	 
	Dated: March 2, 2007 	NOVARTIS PHARMA AG

 	 
	 	/s/  	David A. Bunis
 	 
	 	 	David A. Bunis (BBO No. 550570) 	 
	 	 	Nicholas J. Walsh (BBO No. 647702)

DWYER & COLLORA, LLP

600 Atlantic Avenue

Boston, MA 02210

(617) 371-1000

(617) 371-1037 (fax) 	 
	 

Of Counsel:

Grant J. Esposito

Mitchell M. Wong

MORRISON & FOERSTER

1290 Avenue of the Americas

New York, NY 10104-0050

(212) 468-8000

(212) 468-7900

Certificate of Service

I hereby certify that the above document filed through the ECF system will be sent electronically
on March 2, 2007 to the registered participants as identified on the Notice of Electronic Filing
(NEF).

	 	 	 	 	 
	 	 

 	 
	 	  	/s/ Karen Mangasarian
 	 
	 	 	 	 
	 	 	 	 

2

 

	 	 	 	 	 

ORDER

     Pursuant to the Stipulation among all parties of record, IT IS ORDERED, ADJUDGED AND
DECREED THAT:

     1.     This action is hereby dismissed with prejudice.

     2.     The parties shall each bear their own costs in connection with the above-captioned action.
In addition, the parties waive all rights to appeal this Stipulated Order of Dismissal.

     3.     Entry into this Stipulated Order does not subject Novartis Pharma to the personal
jurisdiction of the United States District Court for the District of Massachusetts, or of any other
state or federal court in the United States, and the parties will not argue to the contrary.

	 	 	 
	 
	 	 
	Dated:                                                   

	 	                                                                                
	 

	 	HON. EDWARD F. HARRINGTON
	 

	 	UNITED STATES DISTRICT JUDGE

3

 

 

 

 

 

 

 

EXHIBIT C

 

 

 

 

 

 

 

 

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	)	 	 	 
	MASSACHUSETTS EYE AND EAR INFIRMARY,

	 	 	)	 	 	 
	                    Plaintiff,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	          v.

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	QLT PHOTOTHERAPEUTICS, INC.,

	 	 	)	 	 	 
	                    Defendant.

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	          Civil Action No.
	 	 	 	 	 	 	 
	 

	 	 	)	 	 	           00-CV-10783-WGY
	 

	 	 	)	 	 	 
	QLT, INC.,

	 	 	)	 	 	 
	                    Counterclaimant,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	          v.

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	MASSACHUSETTS EYE AND EAR INFIRMARY,

	 	 	)	 	 	 
	EVANGELOS S. GRAGOUDAS, M.D., and

	 	 	)	 	 	 
	JOAN W. MILLER, M.D.,

	 	 	)	 	 	 
	                    Counterdefendants.

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 	 	 	 	 	 	 

STIPULATED
ORDER OF PARTIAL DISMISSAL WITHOUT PREJUDICE

 

 

     Whereas, all parties of record have entered into a stipulation to resolve Count I of the
Amended Answer and Counterclaim of QLT Inc., Correction of Inventorship under 35 U.S.C. § 256, on
certain terms and conditions set forth in their agreement,

     NOW, THEREFORE, all parties of record hereby stipulate and agree, by and through their
respective counsel of record, that the Court enter the following Stipulated Order of Partial
Dismissal Without Prejudice, which shall be binding upon them:

     1.     The Court has specific personal jurisdiction over all parties of record for purposes of
this action only.

     2.     Count I of the Amended Answer and Counterclaim of QLT Inc. is hereby dismissed without
prejudice.

     3.     The parties shall each bear their own costs with respect to that Count. In addition, the
parties waive all rights to appeal this Stipulated Order of Partial Dismissal Without Prejudice.

2

 

	 	 	 	 	 
	Dated: March 2, 2007 	MASSACHUSETTS EYE AND EAR INFIRMARY

EVANGELOS S. GRAGOUDAS, M.D.

JOAN W. MILLER, M.D.

 	 
	 	/s/  	Karen Mangasarian
 	 
	 	 	Kenneth B. Herman 	 
	 	 	James F. Haley, Jr.
Christopher
J. Harnett
Karen Mangasarian

ROPES & GRAY LLP

1211 Avenue of the Americas

New York, NY 10036 	 
	 
	Dated: March 2, 2007 	QLT Inc.

 	 
	 	/s/  	Donald R. Ware
 	 
	 	 	Donald R. Ware 	 
	 	 	Dean Richlin

Barbara A. Fiacco

FOLEY HOAG LLP

155 Seaport Boulevard

Boston, MA 02210

(617) 832-1000 	 
	 

Certificate of Service

I hereby certify that the above document filed through the ECF system will be sent electronically
on March 2, 2007 to the registered participants as identified on the Notice of Electronic Filing
(NEF).

	 	 	 	 	 
	 	 

 	 
	 	  	/s/ Karen Mangasarian
 	 
	 	 	 	 
	 	 	 	 

3

 

	 	 	 	 	 

ORDER

          Pursuant to the Stipulation among all parties of record, IT IS ORDERED, ADJUDGED AND
DECREED THAT:

     1.     The Court has specific personal jurisdiction over all parties of record for purposes of
this action only.

     2.     Count I of the Amended Answer and Counterclaim of QLT Inc. is hereby dismissed without
prejudice.

     3.     The parties shall each bear their own costs with respect to that Count. In addition, the
parties waive all rights to appeal this Stipulated Order of Partial Dismissal Without Prejudice.

	 	 	 
	 
	 	 
	Dated:                                                   

	 	                                                                                
	 

	 	HON. WILLIAM G. YOUNG
	 

	 	UNITED STATES DISTRICT JUDGE

4

 

	 	 	 	 	 

 

 

 

 

 

 

EXHIBIT
D

 

 

 

 

 

 

 

 

ARBITRATION AGREEMENT

     This Arbitration Agreement (“Arbitration Agreement”) is entered into this 2nd day of March,
2007, by and between QLT INC. (“QLT”), a Canadian corporation having a principal place of business
at 887 Great Northern Way, Vancouver, British Columbia, Canada, THE GENERAL HOSPITAL CORPORATION, a
non-profit corporation doing business as Massachusetts General Hospital, having a place of business
at Fruit Street, Boston, Massachusetts (“MGH”),
MASSACHUSETTS EYE AND EAR INFIRMARY (“MEEI”), a
Massachusetts non-profit corporation having a principal place of business at 243 Charles Street,
Boston, Massachusetts, DR. JOAN W. MILLER, an individual residing at 40 Westland Avenue,
Winchester, Massachusetts; and DR. EVANGELOS S. GRAGOUDAS, an individual residing at 15 Fairfield
Drive, Lexington, Massachusetts.

Recitals

     WHEREAS, QLT currently manufactures benzoporphyrin derivative (“BPD”); and

     WHEREAS,
QLT, MGH, and MEEI are joint owners of United States Patent
No. 5,798,349 (the “‘349
Patent”) directed to methods of using BPD to treat neovasculature in the eye with photodynamic
therapy; and

     WHEREAS, on April 24, 2000, MEEI filed a lawsuit against QLT captioned, Massachusetts Eye
and Ear Infirmary v. QLT Phototherapeutics, Inc., Civil Action No. 00-10783, in the United
States District Court for the District of Massachusetts (the
“First Lawsuit”); and

     WHEREAS, QLT
asserted a counterclaim in the First Lawsuit seeking correction of inventorship of the ‘349 Patent
under 35 U.S.C. § 256 to add as an inventor Dr. Reginald Birngruber; and

     WHEREAS, the First Lawsuit was tried beginning in October 2006; and

 

 

     WHEREAS, MEEI owns or controls certain patents and patent applications that claim certain
methods of using BPD for the photodynamic therapeutic treatment of neovasculature in the eye,
including United States Patent No. 6,225,303 (the “‘303 Patent”) which issued on May 1, 2001; and

     WHEREAS,
on May 1, 2001, MEEI filed a lawsuit against QLT captioned
Massachusetts Eye and
Ear Infirmary v. Novartis Ophthalmics, Inc. and QLT Inc., Civil Action No. 01-10747, in United
States District Court for the District of Massachusetts (the “Second Lawsuit”); and

     WHEREAS, QLT asserted counterclaims in the Second Lawsuit against MEEI, Dr. Miller and Dr.
Gragoudas seeking correction of inventorship of the ‘303 Patent under 35 U.S.C. § 256 to add as
inventors Dr. Tayyaba Hasan, Dr. Ursula Schmidt-Erfurth, and Dr. Reginald Birngruber and Dr. Julia
Levy; and

     WHEREAS Dr. Levy has fully assigned to QLT any and all rights she has or may have in MEEI
PATENTS, as defined in Ex. E to the parties’ Settlement Agreement; and

     WHEREAS, MGH also asserted a claim in intervention in the Second Lawsuit seeking correction of
inventorship of the ‘303 Patent under 35 U.S.C. § 256; and

     WHEREAS, Dr. Hasan and Dr. Schmidt-Erfurth have fully assigned to MGH, and Dr. Birngruber is
contractually obligated to fully assign to MGH, any and all rights she or he has or may have in
MEEI PATENTS, as defined in Ex. E to the parties’ Settlement Agreement; and

     WHEREAS, QLT, MGH, MEEI, MILLER and GRAGOUDAS now desire to resolve their disputes regarding
the inventorship of the ‘349 Patent and the ‘303 Patent;

     NOW, THEREFORE, in consideration of good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, QLT, MGH, MEEI, MILLER, and GRAGOUDAS agree as
follows:

2

 

     1.     The parties shall submit to final and binding arbitration administered by a neutral
third-party (e.g., the American Arbitration Association (“AAA”) under its Supplementary Rules for
the Resolution of Patent Disputes, except as modified by the procedures set forth in this
Agreement) the following questions for resolution and determination under 35 U.S.C. § 256:

	 	(a)	 	Should Dr. Reginald Birngruber be named as an inventor under the ‘349 Patent?;
	 
	 	 	 	and
	 
	 	(b)	 	Should any or all of Dr. Tayyaba Hasan, Dr. Ursula Schmidt-Erfurth, Dr.
Reginald Birngruber and Dr. Julia Levy be named as an inventor under the ‘303 Patent?;

as more particularly described in the pleadings previously filed in each of the First and Second
Lawsuits. The arbitrator shall not consider, and the parties shall not challenge, whether any
current named inventor as of the date of this Agreement is properly named as an inventor under the
‘349 or ‘303 Patents. The arbitration shall be held in Boston, Massachusetts, before a single
arbitrator, who shall render a reasoned decision. The arbitrator shall be an attorney knowledgeable
and experienced in patent law and inventorship determinations. A judgment may be entered on the
arbitrator’s decision by the United States District Court for the District of Massachusetts in
accordance with 9 U.S.C. § 9. QLT and MGH covenant not to sue MEEI, Dr. Miller or Dr. Gragoudas, or
relitigate these claims in any forum, provided, however, that the binding effect of such
arbitration as between the parties shall not prevent any party from invoking the remedy of
correction of inventorship under 35 U.S.C. Section 256 in the event that an unaffiliated third
party hereafter successfully challenges inventorship of the patents-in-suit. A proceeding under the
Federal Arbitration Act, 9 U.S.C. Sections 1 et seq. in connection with the
arbitrator’s decision shall not be deemed relitigation of the inventorship claims for purposes of
the preceding sentence.

3

 

     2.     Any party may initiate arbitration proceedings by written notice to the other parties to
this Arbitration Agreement, no sooner than thirty (30) days after the exhaustion of any and all
appeals in the First Lawsuit.

     3.     There shall be no additional fact or expert discovery or submission of additional expert
reports in the arbitration proceeding.

     4.     The record on which the arbitrator shall base his decision shall include the summary
judgment papers filed in the Second Lawsuit, the record of the trial in the First Lawsuit, and
expert reports exchanged by the parties in the First and Second Lawsuits. The parties may
supplement the evidentiary record, as each deems necessary, with materials previously provided in
the course of the First or Second Lawsuits, including deposition testimony. Unless the parties
agree otherwise, no live testimony shall be presented in the arbitration.

     5.     In the event that the arbitrator rules that any of the persons named in paragraphs 1 (a)
and (b) above should be named as inventors under the respective patents, the parties shall promptly
and fully cooperate in executing and filing all required documents with the United States Patent
and Trademark Office for certificate(s) correcting inventorship under 35 U.S.C. § 256 in
accordance with the arbitrator’s decision. Except as may be necessary to effectuate the
requirements described by the preceding sentence, any decision by the arbitrator shall not form the
basis of any claim, action or proceeding against any party to this Agreement.

4

 

     6.     Any notice required or desired to be given hereunder shall be in writing and shall be
served upon and received by both the party and the persons designated to receive a copy thereof at
the addresses set forth below:

	 	 	 
	If to QLT:

	 	QLT Inc., 887 Great Northern Way, Vancouver, British Columbia, V5T 4T5
Canada, Attn: President, with a copy to Foley Hoag LLP, 155 Seaport Boulevard, Boston,
MA 02210, Attn: Donald R. Ware.
	 
	 	 
	If to MGH:

	 	Paul G. Cushing, Esquire, Office of the General Counsel, Partners
HealthCare Systems, Inc., 50 Staniford Street, Suite 1000, Boston, MA 02114-2521, with
a copy to Thomas F. Maffei, Esquire, 176 Federal Street, Boston, MA, 02110.
	 
	 	 
	If to
MEEI, Dr. Miller and Dr. Gragoudas:

	 	Lisa Putukian, Vice President Business
Development, Massachusetts Eye and Ear Infirmary, 243 Charles Street, Boston, MA 02114,
with a copy to Barbara F. Katz, General Counsel.

     7.     The parties will jointly bear the fees of the arbitrator as well as all filing and other
administrative fees associated with the arbitration. Each party will bear their own legal costs,
including their respective attorneys’ fees.

5

 

     IN WITNESS WHEREOF, the Parties have caused their authorized representatives to sign this
Agreement.

	 	 	 	 	 	 	 	 
	QLT INC.

 	 	MASSACHUSETTS EYE AND EAR

INFIRMARY

 	 
	BY:  	
/s/ Robert L. Butchofsky
 	 	BY:  	/s/ John Fernandez
 	 
	 	TITLE:   President and CEO 	 	 	TITLE:   President and CEO 	 
	 	DATE:    3/2/07 	 	 	DATE:    3/2/07 	 
	 
	 
	 	JOAN W. MILLER, M.D.

 	 
	 	BY:  	/s/ Joan W. Miller, M.D.
 	 
	 	 	TITLE: 	 
	 	 	DATE:    3/2/07 	 
	 
	THE GENERAL HOSPITAL CORPORATION

 	 	EVANGELOS S. GRAGOUDAS, M.D.

 	 
	BY:  	
/s/ Frances Toneguzzo, Ph.D.
 	 	BY:  	/s/ Evangelos S. Gragoudas, M.D.
 	 
	 	TITLE:   Director, Corporate
Sponsored

               Research and Licensing 	 	 	TITLE:   	 
	 	DATE:    3/2/07 	 	 	DATE:    3/2/07 	 

6

 

	 	 	 	 	 

 

 

 

 

 

 

EXHIBIT E

 

 

 

 

 

 

 

 

[**]

 

 

 

 

 

 

 

			
	**	 	Portions of this exhibit have been omitted and filed separately with the SEC. Confidential treatment has been requested with respect to the omitted portions.

 

 

 

 

 

 

 

 

EXHIBIT F

 

 

 

 

 

 

 

 

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	)	 	 	 
	MASSACHUSETTS EYE AND EAR INFIRMARY,

	 	 	)	 	 	 
	                    Plaintiff,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	          v.

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	QLT PHOTOTHERAPEUTICS, INC.,

	 	 	)	 	 	 
	                    Defendant.

	 	 	)	 	 	 
	 

	 	 	)	 	 	Civil Action No.
	 	 	 	 	 	 	 
	 

	 	 	)	 	 	00-CV-10783-WGY
	QLT, INC.,

	 	 	)	 	 	 
	                    Counterclaimant,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	          v.

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	MASSACHUSETTS EYE AND EAR INFIRMARY,

	 	 	)	 	 	 
	EVANGELOS S. GRAGOUDAS, M.D., and

	 	 	)	 	 	 
	JOAN W. MILLER, M.D.,

	 	 	)	 	 	 
	                    Counterdefendants.

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 	 	 	 	 	 	 

STIPULATION OF THE PARTIES

     The parties to the above-captioned matter hereby stipulate and agree:

     1.     The parties hereto have resolved by voluntary settlement (the “Settlement”) all claims and
counterclaims in the related matter, Civil Action No. 01-CV-10747-WGY (the “Second Lawsuit”).

     2.     The resolution of the Second Lawsuit will have no effect on the above-captioned matter.
Except as expressly agreed to by both parties in writing, no party shall reference or disclose in
the above-captioned matter any term or provision of the Settlement. The Settlement shall not
effect, limit or prejudice either party’s claims or defenses in this action.

 

 

     Each party may assert the same claims, defenses and arguments in this action as though there
had been no Settlement.

	 	 	 
	 

	 	Respectfully submitted,
	 
	 	 
	MASSACHUSETTS EYE AND EAR INFIRMARY,

	 	QLT INC.
	EVANGELOS S. GRAGOUDAS, M.D.,
	 	 
	AND
	 	 
	JOAN W. MILLER, M.D.
	 	 
	 
	 	 
	By their attorneys,

	 	By its attorneys,
	 
	 	 
	/s/ Karen Mangasarian

	 	/s/ Donald R. Ware
	 

	 	 
	Kenneth B. Herman

	 	Donald R. Ware (BBO No. 516260)
	James F. Haley, Jr. (BBO No. 217220)

	 	Dean Richlin (BBO No. 419200)
	Christopher J. Harnett

	 	Barbara A. Fiacco
	Karen Mangasarian

	 	FOLEY HOAG LLP
	ROPES & GRAY LLP

	 	155 Seaport Boulevard
	1211 Avenue of the Americas

	 	Boston, MA 02210
	New York, NY 10036

	 	(617) 832-1000
	(212) 596-9000
	 	 

Dated: March 2, 2007

Certificate of Service

I hereby certify that the above document filed through the ECF system will be sent electronically
on March 2, 2007 to the registered participants as identified on the Notice of Electronic Filing
(NEF).

	 	 	 	 	 
	 	 

 	 
	 	  	/s/ Karen MangasarianEXHIBIT 10.22

[NAME]

INDIVIDUAL PERFORMANCE-BASED INCENTIVE GRANT

20xx-20xx

PURPOSE

Incentives under this award are designed to provide a meaningful motivation and reward for [performance objective] in [Line of Business (“LOB”) General Metric] over the next [x] years through the delivery of an equity-based award using Restricted Stock Units (“RSUs”) under The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit, and Long-Term Incentive Plan (the “Plan”), provided certain performance objectives are met.  

Long-term incentive (LTI) compensation provides a method for linking the compensation of key executives to the long-term results of The Phoenix Companies, Inc. (the “Company”) and to the drivers of shareholder value, thereby aligning your interests with the interests of shareholders.

BASIC GRANT CONCEPTS

This grant is a Long-Term Performance Unit grant. It provides a grant of RSUs at the beginning of the [x]-year period ending [month day, 20xx] (the “Performance Cycle”) that represents the Target RSUs to be earned at the end of the Performance Cycle, provided certain performance objectives are met. An RSU represents the right to receive one share of The Phoenix Companies, Inc. common stock (“PNX Stock”). The Target RSUs are based on a $[x] target award divided by the Company's closing stock price as of [date of grant] ($xx.xx). The number of RSUs actually earned, if any, at the end of the Performance Cycle may be higher or lower than the Target RSUs, depending on the extent to which the performance objectives are achieved. The maximum RSUs are set at [xxx%] of Target RSUs. The ultimate value of the award depends on both the number of RSUs earned and the Company's closing stock price at the end of the Performance Cycle.

						
	Award Summary

	Type of 

Award 

	Performance Cycle

	Performance Criteria

	Target

Award
Value

	Target RSUs Awarded

	Maximum RSUs

	Performance-Based RSUs

	20xx-20xx

	General Metric (see
details below)

	[$]

	[#] (1)

	

      [#]

(xxx% of Target)

	   (1) Determined by dividing the Target Award Value by the closing stock price on [date of grant].

Performance Criteria

The number of RSUs actually earned at the end of the Performance Cycle will be based on the achievement of the following performance criteria:

			

	Performance Criteria and Award Calculation

	Performance Period 20xx-20xx

	Line of Business Goal(s)

	Performance Metric

	

Award Payment

	   Goal 1

	 
	x% of Target Units

	   Goal 2

	 
	xx% of Target Units

	   Goal 3

	 
	xxx% of Target Units

	   ...... (as needed)

	 
	 

	

   Details of the Line of Business Metric

Determination of Final Award 

The final RSU award determination will
be made in the first quarter following the end of the Performance Cycle based
on actual performance results.  Award results must be approved by the CEO,
the Board of Directors, or the Committee, as required, including any reduction
to awards if circumstances warrant (e.g. initial targets are deemed too low or
events not core to the business create a favorable result).  

Payment of Awards and Retention Requirements

The number of RSUs earned, if any,
will convert into shares of PNX Stock in the first quarter of 20xx, immediately
following final award determination.  Receipt of PNX Stock is taxable as
ordinary income in the year received. Also, you will be required to hold
a fixed percentage of the shares of PNX Stock received based upon your share
ownership and retention guidelines, and you will be able to sell the remaining shares upon receipt.  

Deferring Awards

The Company may provide you an
opportunity to defer some or all of your award.  You will be notified of
any such opportunity before the date required to effect a proper deferral
election with respect to your award.

Termination During the Performance Cycle

If you terminate employment with the
Company during this Performance Cycle due to death, Disability or Approved
Retirement (as these terms are defined under the Plan), your final award will
be determined by prorating the percentage of the target earned, if any,
according to the number of months that you were actively at work during the
Performance Cycle.  You will receive full credit for your last month even
if you only worked part of that month.  Any such RSUs will be delivered to
you as soon as practicable following the determination of performance results
(or later if subject to a deferral election), and will not be subject to the
retention requirements. In the event of your death, any shares of PNX Stock
that would have been issuable shall be delivered to your beneficiary pursuant
to the terms of the Plan as soon as practical following the determination of results.

If your employment with the Company is
terminated during the Performance Cycle for any other reason, you will not
receive any RSUs in connection with this incentive.

Change of Control

Notwithstanding the above, in the
event of a Change of Control (as defined under the Plan), the Plan will govern
the treatment of this award, unless you have a Change of Control Agreement.  

Impact on Benefits

Long-term incentive payments made under
the Plan will not be used for determining pay-related benefits under either
qualified or nonqualified benefit plans maintained by the Company.

Administration

The Committee is responsible for the
administration of the Plan.  Subject to the terms of the Plan, the
Committee is authorized to interpret, prescribe, amend and rescind rules
relating to the Plan, and to make all other determinations necessary to carry
out the terms of the Plan, including, but not limited to (1) determination of
any eligibility rules or conditions that may be required to be satisfied
(consistent with the terms and purposes of the Plan) following the Performance
Cycle but prior to the award payment date (such as, for example, a requirement

that Participants are
actively at work and in good standing with the Company on the award payment
date), and (2) any determinations, amendments, or rules the Committee deems necessary or
desirable to comply with the requirements of Section 409A of the Internal Revenue
Code and the regulations and pronouncements thereunder, regardless of whether
any such amendment would cause a reduction, delay, or cessation of
an award accrued prior to the adoption of such amendment.

Governing Plan Document

The grant of RSUs to be earned under
this Performance Cycle, and any corresponding RSUs or PNX Stock actually issued
in connection with this incentive cycle, are governed by the terms of the Plan.
Any inconsistency between this document and that of the Plan will be governed by the Plan.

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