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ELAN INTERNATIONAL SERVICES, LTD.
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▇▇▇▇▇▇▇ Corporation
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Attention: Chief Executive Officer
and
Targon Corporation
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Attention: Chief Executive Officer
Gentlemen:
This letter agreement sets forth the terms and conditions upon
which (a) Elan International Services, Ltd., a Bermuda corporation ("EIS"),
will lend US$10 million to Cytogen Corporation, a Delaware corporation
("Cytogen"), pursuant to a Promissory Note (the "Note") and Note Purchase
Agreement (the "Note Purchase Agreement") to be entered into by EIS and
Cytogen, and (b) Elan Corporation, plc, a public limited company existing
under the laws of Ireland ("Elan"), will license certain intellectual property
to Targon Corporation, a Delaware corporation and subsidiary of
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Cytogen ("Targon"), each as provided herein. The parties intend that
this letter agreement constitute a definitive agreement between them relating
to the subject matter hereof; nonetheless, it is their intention to execute
and deliver certain definitive and/or supplemental documents, as provided
below, in respect of the transactions contemplated herein (the "Definitive
Documents"); if executed and delivered, the Definitive Documents shall, to the
extent applicable, supersede this letter agreement.
The parties agree as follows:
1. Loans. On the Closing Date (as defined below), EIS shall lend
to Cytogen US$10 million pursuant to the Note and Note Purchase Agreement,
which shall be on customary terms and contain customary conditions for similar
transactions and otherwise be reasonably satisfactory to each of EIS and
Cytogen. The Note shall have a term of three years (at which time the entire
principal amount thereof shall be due and payable), and shall provide that
interest thereunder shall be payable in cash on a quarterly basis, in arrears,
at a floating rate of interest, adjusted semi-annually, equal to the six-month
Libor Rate (as set forth on the Reuters Service LIBO page), plus 1% per year.
The indebtedness evidenced by the Note shall constitute senior indebtedness of
Cytogen.
2. Licenses. (a) On the Closing Date, Elan shall license to
Targon, on an exclusive, worldwide basis, Elan's morphine product (as
described in Exhibit A). Such license shall be pursuant to a license agreement
(the "License Agreement") which shall contain provisions to the effect of the
provisions set forth on Exhibit A (including without limitation, payment to
Elan of up-front and milestone fees as set forth therein, including an
up-front fee of US$7.5 million) and contain commercially reasonable and
customary terms and otherwise be reasonably satisfactory to each of Elan and
Targon.
(b) The parties intend that Elan shall hereafter additionally
license to Targon, on an exclusive worldwide basis, Elan's medipad
hydromorphone product (as described in Exhibit A). Such license shall be
pursuant to a license agreement (the "Medipad License Agreement"; together
with the License Agreement, the "License Agreements"), substantially in the
form of the License Agreement, and containing appropriate conforming changes
to the effect that such medipad hydromorphone product, rather than Elan's
morphine product, shall be licensed to Targon, and other appropriate economic
and other changes, including to give effect to the fact that such medipad
hydromorphone product incorporates a medical device. In connection therewith,
Elan (and its affiliates, including EIS), Cytogen and Targon shall enter into
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appropriate and customary transaction agreements. In the event that the
Medipad License Agreement and related documents, are not executed and
delivered by the appropriate parties thereto on or prior to December 31, 1997,
the provisions of this Section 2(b) shall be of no further force and effect;
prior to such time, Elan shall not license or transfer any of its intellectual
property rights in its medipad hydromorphone product other than (x) to one or
more of its affiliates or (y) in any manner that would not materially limit
the rights potentially to be licensed to Targon under this Section 2(b),
without the consent of Targon.
3. Certain Conditions. (a) The following shall be conditions to
Elan's and EIS's obligation to execute and deliver the Definitive Documents
and consummate the transactions contemplated hereby, including the funding of
all or any portion of the indebtedness evidenced by the Note and the entering
into of the License Agreement (such transactions, the "Closing"; the date
thereof, the "Closing Date"): (1) the Note, Note Purchase Agreement, License
Agreement and other reasonable and customary documents and instruments (which
are in customary form otherwise reasonably satisfactory to Elan and EIS)
(collectively, the "Definitive Documents") shall have been executed and
delivered by each of Cytogen and Targon, as applicable, and such documents
shall be in full force and effect and there shall be no breach or default by
Cytogen or Targon thereunder, (2) Cytogen's legal counsel (who may be internal
counsel) shall have provided an opinion to Elan and EIS, in customary form and
containing customary exceptions, to the effect of the items referred to in
clauses (i), (ii) and (iv) of Section 4(a) below (as to Cytogen only), (3)
there shall not have occurred from the date hereof through and including the
Closing Date any material adverse change in either of Cytogen's or Targon's
business or condition (financial or otherwise), (4) neither Cytogen nor Targon
shall have breached or defaulted in any of its material obligations hereunder
and its representations herein shall be true and correct in all material
respects, as if made on each such date, (5) no consent, approval or filing
(with any governmental authority or otherwise) shall be required, and all such
third-party consents shall have been obtained and applicable waiting periods
shall have elapsed and (6) the Closing shall have occurred on or prior to July
17, 1997.
(b) The following shall be conditions to Cytogen's and Targon's
obligation to execute and deliver the Definitive Documents (which are
otherwise reasonably satisfactory to each) and consummate the transactions
contemplated hereby, including the payment of any amounts under the License
Agreement: (1) the Definitive Documents shall have been executed and delivered
by Elan and EIS, as applicable, and such documents shall be in full force and
effect and there shall be no breach or default
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by such parties thereunder, (2) Elan and EIS shall not have breached
or defaulted in any of their material obligations hereunder and their
representations herein shall be true and correct in all material respects, as
if made on each such date, and (3) no consent, approval or filing (with any
governmental authority or otherwise) shall be required, and all such
third-party consents shall have been obtained and applicable waiting periods
shall have elapsed and (4) the Closing shall have occurred on or prior to July
17, 1997.
(c) In the event that the Closing shall not have occurred on or
prior to July 17, 1997 (other than as a result of a party's material breach or
default hereunder, in which case, the other party, but not such breaching
party, shall have the right not to consummate such transactions; it being
understood that for purposes of this Section 3(c), Cytogen and Targon shall be
considered one party and Elan and EIS shall be considered the other party),
the transactions contemplated hereby shall be canceled and of no further force
and effect; provided, that each party shall remain liable to the other for or
in respect of any breach or default which shall have occurred prior to such
date.
(d) The conditions set forth in Sections 3(a) above (other than
clause (6) thereof) and 3(b) above (other than clause (4) thereof) shall
constitute conditions to the closing of the Medipad License Agreement and
related transactions.
4. Representations and Certain Covenants. (a) Each of Cytogen and
Targon represents to Elan and EIS the following: (i) each of Cytogen and
Targon is duly and validly existing in good standing in the jurisdiction of
its incorporation and each other jurisdiction in which the conduct of its
business requires such qualification, and each is in compliance in all
material respects with all applicable laws, rules, regulations or orders
relating to its business and assets; (ii) each of such entities has full
corporate authority to execute and deliver this letter agreement and the
Definitive Documents and to consummate the transactions contemplated hereby
and thereby; this letter agreement has been duly executed and delivered and
constitutes the legal and valid obligations of each of such entities and is
enforceable against each in accordance with its terms; and the execution,
delivery and performance of this letter agreement and the Definitive Documents
and the transactions contemplated hereby and thereby will not violate or
result in a default under or creation of a lien or encumbrance under Cytogen's
or Targon's certificate of incorporation, by-laws or other organic documents,
any material agreement or instrument binding upon or affecting them or their
respective properties or assets or any applicable laws, rules, regulations or
orders affecting them or their properties or assets; (iii) the financial
statements of Cytogen (the
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"Financial Statements"), as set forth in its most recent annual and
quarterly filings on Forms 10-K and 10-Q, as filed with the Securities and
Exchange Commission (the "SEC") have been prepared in accordance with United
States generally accepted accounting principles, consistently applied and
fairly present the financial condition of the Company; (iv) neither Cytogen
nor Targon is in default in any material respect of its charter or by-laws,
any applicable laws or regulations or any contract or agreement binding upon
or affecting it or its properties or assets and the execution, delivery and
performance of this letter agreement and the transactions contemplated hereby
will not result in any such violation; and (v) Cytogen and Targon each owns
all of its properties and assets, subject to no liens or encumbrances, other
than as reflected in the Financial Statements.
(b) Each of Elan and EIS represents to Cytogen and Targon the
following: (i) each of Elan and EIS is duly and validly existing and in good
standing (if applicable) in the jurisdiction of its incorporation and each
other jurisdiction in which the conduct of its business requires such
qualification, and each of such entities is in compliance with all applicable
laws, rules, regulations or orders relating to its business and assets; (ii)
each of such entities has full corporate authority to execute and deliver this
letter agreement (as applicable) and the Definitive Documents and to
consummate the transactions contemplated hereby and thereby; this letter
agreement has been duly executed and delivered by Elan and EIS and constitutes
the legal and valid obligations of such entities and is enforceable against
them in accordance with its terms and the execution, delivery and performance
of this letter agreement and the Definitive Documents and the transactions
contemplated hereby and thereby will not violate or result in a default under
or creation of lien or encumbrance under either of such entity's memorandum
and articles of association or other organic documents, any material agreement
or instrument binding upon or affecting them or their properties or assets or
any applicable laws, rules, regulations or orders affecting them or their
properties or assets, (iii) none of such entities is in default of its
memorandum and articles of association or similar organic documents, any
applicable material laws or regulations or any contract or agreement binding
upon or affecting it or its properties or assets and the execution, delivery
and performance of this letter agreement and the transactions contemplated
hereby will not result in any such violation; and (iv) Elan owns or has the
right to use and license all of the Intellectual Property to be licensed under
the License Agreements and has the right to use such property without
restriction from third parties and, to Elan's knowledge, there are no pending
or threatened challenges or litigations or re-examinations of, or relating to,
such Intellectual Property.
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(c) Neither Cytogen nor Targon shall, prior to the earlier of (x)
the Closing Date and (y) the abandonment or termination of the transactions
contemplated hereby, as provided in Section 3(c) above, without the prior
written consent of EIS, (i) dispose of any material asset or business
(including any intellectual property rights), other than in the ordinary
course of business, (ii) in the case of Targon only, create, agree to or
permit to exist any indebtedness or lien or encumbrance against Targon's
property or assets other than as consented to by Elan, (iii) make, pay or
declare any dividend or distribution to any equity holder (in such capacity)
or redeem any of its capital stock, (iv) in the case of Targon only,
consummate any material financing transaction, or (v) vary its business plan
or practices, in any material respect, from past practices of Cytogen or
Targon, as the case may be.
5. Confidentiality and Non-disclosure. From and after the date of
this letter agreement and until the earlier of (x) the Closing Date and (y)
the abandonment or termination of the transactions contemplated hereby, as
provided in Section 3(c) above, (I) none of the parties hereto shall disclose
to any person or entity (other than their respective directors, officers and
agents who need to know such information in connection with the transactions
contemplated hereby (each of whom to whom such disclosure is made shall be
informed of this provision and in respect of whose breaches Cytogen or Targon,
as applicable, shall be liable)) this letter agreement or the substance of the
transactions contemplated hereby or the involvement of the other parties in
the subject matter of the transactions contemplated hereby, without, in the
case of proposed disclosure by Cytogen or Targon, the prior written consent of
Elan or, in the case of proposed disclosure by EIS or Elan, the prior written
consent of Cytogen; provided, that the foregoing covenant shall not be
applicable to the extent required by applicable law or judicial or
administrative process; and (II) neither Cytogen nor Targon shall conduct or
continue any discussions with any person or entity relating to (x) in the case
of Targon, an investment in or loan to Targon of the magnitude and scope
contemplated by this letter agreement, and (y) in the case of Targon, the
acquisition of any pharmaceutical or biotechnology compound, product or
technology, know-how or intellectual property, except, in each case, as
consented to in writing by EIS. Each party acknowledges that the others may
issue a press release in respect of the transactions contemplated hereby,
which shall be provided to the non-issuing parties a reasonable period of time
in advance for their reasonable review.
6. Miscellaneous. This letter agreement (a) shall be governed by
and construed in accordance with the internal laws of the State of New York,
without regard to principles of conflicts of laws, and, in connection
therewith, each party
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consents to the exclusive jurisdiction of any federal or state court
sitting in the County, City and State of New York over any dispute arising
from this letter agreement; (b) shall not be assigned or delegated by either
party without the consent of the other party (except that Elan and EIS shall
have the right to assign or delegate such rights and/or obligations to their
respective affiliates); and subject to the foregoing, shall be binding upon
the parties' respective successors and assigns; (c) may be executed in
counterparts and delivered by facsimile transmission; and (d) together with
the Definitive Documents, constitutes the entire agreement among the parties
and supersedes all prior agreements or understandings among the parties. Each
party consents to the entry of an injunction or other appropriate equitable
relief (in addition to other remedies at law), without the requirement to post
a bond or other security, in the event of any breach or threatened breach of
the terms of this letter agreement. Notices hereunder shall be given to the
parties in writing to their respective addresses set forth above and shall be
deemed given when received.
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Please indicate your approval to the foregoing by signing a copy
of this letter agreement where indicated below.
Very truly yours,
Elan Corporation, plc
By:__________________________
Name:
Title:
Elan International Services, Ltd.
By:__________________________
Name:
Title:
Agreed to:
Cytogen Corporation
By:____________________________
Name:
Title:
Targon Corporation
By:_____________________________
Name:
Title:
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