EXHIBIT 10.3
AGREEMENT
Agreement dated as of August 12, 1998 among Targon
Corporation, a Delaware corporation ("Targon"), Cytogen
Corporation, a Delaware corporation ("Cytogen"), Elan
Corporation, plc, an Irish public limited company ("Elan"), and
Elan International Services, Ltd., a Bermuda corporation and
wholly-owned subsidiary of Elan ("EIS").
RECITALS:
A. Some or all of the parties hereto are parties to
(1) a Securities Purchase Agreement dated as of September 26,
1996 (the "Securities Purchase Agreement") between Cytogen and
EIS and a Joint Development and Operating Agreement dated as of
September 26, 1996 (the "Development Agreement"; together with
the Securities Purchase Agreement and the other documents and
instruments executed on or about September 26, 1996 in connection
therewith, the "Targon Agreements") among Elan, EIS, Cytogen and
Targon, relating to, among other things, the establishment,
capitalization and operation of Targon, and (2) a Note Purchase
Agreement dated as of July 17, 1997 (the "Note Purchase
Agreement") between Cytogen and EIS and a Securities Purchase
Agreement (the "Cytogen/Targon Morphelan Agreement"; together
with the Note Purchase Agreement and the other documents and
instruments executed on or about July 17, 1997 in connection
therewith, the "Morphelan Agreements") between Targon and
Cytogen. Capitalized terms not defined herein have the meanings
ascribed to them in the applicable Targon Agreements or Morphelan
Agreements. Attached hereto as Exhibits A-1 and A-2 are
complete lists of the Targon Agreements and the Morphelan
Agreements.
B. In connection with the establishment of Targon,
Targon acquired certain intellectual property, including without
limitation, the rights to the Cytogen Compounds and the ATS
Compounds, from each of Cytogen and Elan (or their respective
affiliates), and in connection with the business of Targon,
Targon undertook certain contractual and other relationships with
various third parties.
C. On or about March 31, 1998, EIS exercised the
Exchange Right, thereby becoming an equal stockholder with
Cytogen in Targon.
D. The parties desire to set forth herein their
agreements relating to the reorganization of the business of
Targon and in connection therewith, the transfer of certain
assets to Cytogen; the remaining business of Targon to be
retained by Elan, subject to the other interests referred to
below. This Agreement is intended to be a binding agreement
between the parties hereto. In connection with the transactions
contemplated hereby, however, the parties may subsequently
execute and deliver certain supplementary or definitive documents
(the "Supplemental Agreements"); the Supplemental Agreements, if
executed and delivered, shall supplement and/or supersede, as
appropriate, the provisions hereof.
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AGREEMENT:
The parties agree as follows:
1. Transfer of Certain Targon Products. Targon hereby
transfers, assigns and sets over to Cytogen all of Targon's
right, title and interest in and to each of the Cytogen
Compounds, together with any and all improvements, trade secrets
and intellectual property developed or acquired by Targon since
its date of inception and related thereto. In connection
therewith, each of the parties agrees to the termination of
Documents 1, 3, 4, 6 (as it relates to Cytogen's rights only), 7
and 12 set forth on Exhibit A-1 hereto and that neither party
shall have any further liability or obligation thereunder; it
being understood that the other documents and instruments set
forth on Exhibit A-1 shall remain in full force and effect as
originally stated. The parties agree that the consideration for
the Cytogen Compounds and such related intellectual property and
rights is $3 million.
2. Repayment of Certain Targon Obligations. Within
five business days of the date hereof, Targon shall pay to
Cytogen by wire transfer $7,241,693; such amount, together with
the consideration referred to in Section 1 above (i.e., an
aggregate of $10,241,693, which includes accrued interest of
$241,963) shall constitute payment and satisfaction in full of
Targon's outstanding obligations under the Cytogen/Targon
Morphelan Agreement and the accompanying promissory note and,
accordingly, each of the parties agrees to the termination of
Documents 3 and 4 set forth on Exhibit A-2 hereto and that
subject to the payment of interest by Cytogen to EIS of $241,693
within five business days of the date hereof neither party shall
have any further liability or obligation thereunder; it being
understood that Document 5 on Exhibit A-2 shall remain in full
force and effect as originally stated. The original promissory
note shall, within five business days of the date hereof, be
marked "paid in full" by Cytogen and returned to Targon.
3. Targon Share Purchase; Etc. (a) Cytogen hereby
transfers, assigns and sets over to EIS all of Cytogen's right,
title and interest in and to the 500,000 shares of Common Stock,
par value $.01 per share, of Targon issued to Cytogen on
September 26, 1996 (the "Targon Common Stock"). Cytogen
represents that (i) it owns the Targon Common Stock free and
clear, and not subject to any right, encumbrance, lien or
restriction of any third party (collectively, "Encumbrances"),
(ii) the transactions contemplated by this Agreement will vest in
EIS legal and valid title to such Targon Common Stock, not
subject to any Encumbrance and (iii) to its best knowledge, there
are no other equity owners of Targon (or persons entitled to any
rights, options or warrants therein, other than as previously
disclosed to EIS). The parties agree that the consideration for
such transfer of Targon Common Stock is $10 million, which shall
be paid by the parties hereby agreeing to terminate the Note
Purchase Agreement and accompanying promissory note and,
accordingly, each of the parties agrees to the termination of
Documents 1 and 2 set forth on Exhibit A-2 hereto and that
neither party shall have any further liability or obligation
thereunder. The original promissory note shall, within five
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business days of the date hereof, be marked "paid in full" by EIS
and returned to Cytogen .
(b) Cytogen agrees that from and after the date
hereof, it fully releases and it shall have no interest or right
in and to Targon, its name or goodwill or any of Targon's
intellectual property, all of which shall be owned by EIS and
certain unaffiliated stockholders and/or option holders.
4. Payment of Certain Fees. In connection with the
reorganization of Targon and the termination of certain of the
agreements referred to herein, Cytogen shall pay to EIS, within
five business days of the date hereof, by wire transfer, a fee of
$5 million.
5. Certain Investment in Cytogen. EIS shall, subject
to the remaining provisions of this Section 5, purchase from
Cytogen, and Cytogen shall issue to EIS, a convertible,
subordinated note in the original principal amount of $2 million
(the "Convertible Note"). The Convertible Note shall be
purchased at 100% of its original principal amount. The terms of
the Convertible Note shall be negotiated in good faith by each of
Cytogen and EIS, who shall use their commercially reasonable
efforts to conclude such negotiation and execution and fund the
Convertible Note as soon as practicable, but in any event within
15 days of the date hereof. The Convertible Note shall (a) bear
interest at 7% per year and be compounded semi-annually, however,
such interest shall not be payable in cash but shall be added to
principal for the first 24 months; thereafter, interest shall be
payable in cash, (b) be subordinated to senior indebtedness of
Cytogen and its subsidiaries on customary market terms, (c) be
convertible into shares of Cytogen common stock, par value $.01
per share (the "Cytogen Common Stock"), at a conversion price of
$2.80 per share, which shall be subject to customary
anti-dilution provisions, (d) have a term of seven years and (e)
contain customary financial and operating covenants for similar
instruments issued by similarly-situated issuers.
6. Certain Representations. (a) Cytogen represents to
Elan the following: (i) Cytogen is duly and validly existing in
good standing in the state of Delaware and each other
jurisdiction in which the conduct of its business requires such
qualification; (ii) Cytogen has full corporate authority to
execute and deliver this Agreement and the Supplemental
Agreements and to consummate the transactions contemplated hereby
and thereby, and this Agreement has been duly executed and
delivered and constitutes the legal and valid obligation of
Cytogen and is enforceable against Cytogen in accordance with its
terms; (iii) the Convertible Note and the shares of Cytogen
Common Stock issuable upon conversion thereof, have been or will
be duly and validly authorized and when issued will be fully paid
and non assessable and free from any and all options, warrants
and preemptive and other rights; (iv) Cytogen is not 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 Agreement and the transactions
contemplated hereby will not result in any such violation; (v)
after due inquiry, Cytogen is not aware of any liability or
obligation of Targon, for indebtedness, in respect of employee or
development or other matters or otherwise, other than as
previously disclosed in writing to EIS; and (vi) Cytogen has not
retained any broker or finder in connection with the transactions
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contemplated hereby and no person or entity is entitled to any
fee, commission or other compensation in respect thereof.
(b) Elan and EIS, jointly and severally, represent to
Cytogen the following: (i) each of Elan and EIS 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; (ii) each of Elan and
EIS has full corporate authority to execute and deliver this
Agreement and the Supplemental Agreements and to consummate the
transactions contemplated hereby and thereby; this Agreement has
been duly executed and delivered and constitutes the legal and
valid obligations of each of Elan and EIS and is enforceable
against them in accordance with its terms; (iii) neither Elan nor
EIS is in default in any material respect of its memorandum and
articles of association, 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 Agreement and the transactions contemplated hereby will
not result in any such violation and (iv) neither Elan nor EIS
has retained any broker or finder in connection with the
transactions contemplated hereby and no person or entity is
entitled to any fee, commission or other compensation in respect
thereof.
(c) Neither Elan nor EIS has entered into on behalf of
Targon, as of the date hereof, any commercial transactions
relating to the licensing of the intellectual property relating
to Morphelan (as defined in the Morphelan Agreements) or
marketing of Morphelan. In addition, neither Elan nor EIS is, as
of the date hereof, in substantive discussion with any third
party relating to the licensing of the intellectual property
relating to Morphelan or marketing of Morphelan. For greater
clarity EIS, Elan and/or Targon may continue and consummate any
discussions or negotiations currently underway in connection with
such intellectual property or products without breaching this
representation.
7. Certain Indemnifications. (a) Each of Cytogen and
EIS (in such capacity, an "Indemnitor") hereby indemnifies and
holds the other and the other's affiliates and their respective
directors, officers and employees (collectively, the
"Indemnitees") harmless from and against any and all loss, cost
or expense, including without limitation, reasonable attorneys'
fees and disbursements (collectively, "Losses"), incurred by an
Indemnitee as a result of any breach or default of any of the
representations or covenants contained in this Agreement by such
Indemnitor or its affiliates.
(b) In addition to the indemnification provided for in
Section 7(a) above, EIS hereby indemnifies and holds harmless
Cytogen and Cytogen's other Indemnitees from and against any
Losses resulting from the business or operations of Targon from
and after the date hereof, except to the extent that any such
Loss was caused or resulted from any wrongful or improper action
taken by or on behalf of Cytogen or its affiliates.
(c) An Indemnitor (including EIS under Section 7(b)
above) shall have the right to direct any proceeding relating to
third-party claim resulting in any indemnity claim hereunder and
no Indemnitee shall settle any matter that could result in
indemnification hereunder without the consent of the Indemnitor,
which consent shall not be unreasonably withheld. Each of the
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parties shall reasonably cooperate with the other in connection
with any third-party claim that could potentially result in
indemnification hereunder.
8. Confidentiality, Non disclosure, Etc. (a) Each of
the parties shall keep and maintain this Agreement and the
Supplemental Agreements and the transactions contemplated hereby
and thereby confidential and not disclose such matters or the
participation of the parties in such transactions to any person
or entity, except (a) to the extent required by applicable law or
administrative or judicial process or (b) for a press release as
may be required by applicable laws, so long as the text thereof
shall have been provided to the other party at least one business
day prior to issuance thereof and such other party shall have
been given the opportunity to approved the text thereof, which
approval shall not be unreasonably withheld.
(b) In addition to the obligations set forth in
Section 8(a) above, Cytogen agrees that it shall, and it shall
cause its officers, directors, employees and agents, to keep and
maintain in confidence and not disclose to any other person or
entity any and all confidential or proprietary information
relating to Targon or the business and affairs of Targon
disclosed to or in the possession of such persons; provided, that
the foregoing shall not apply to the extent required by
applicable law or administrative or judicial process.
Confidential or proprietary information relating to Targon shall
include all information relating to the business or affairs of
Targon derived or relating to any periods ending on or prior to
the date hereof.
9. Further Assurances. Each of the parties hereto
acknowledges that the transactions contemplated by this Agreement
may require additional actions to be taken or additional
documents or instruments to be executed, delivered or filed.
Each of such parties agrees, at its own expense and without
charge to the others, promptly to take such actions and to
execute such documents and instruments that may be reasonably
requested by the other or appropriate in the context of such
transactions.
10. Notices. Notices shall be in writing, given by
facsimile transmission (along with confirming originals),
reputable overnight courier (such as Federal Express) or by hand
and shall be given to the parties at their respective addresses
as set forth in the Securities Purchase Agreement.
11. Miscellaneous. This 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 consents to the
non 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 (other
than to their respective affiliates) and, subject to the
foregoing provisions of this clause (b), 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 Supplemental Agreements, constitutes
the entire agreement among the parties and supersedes all prior
agreements or understandings among the parties.
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IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first set forth above.
Targon Corporation
By: /s/ Michael Sember
------------------------
Name: Michael Sember
Title: Chairman and CEO
Cytogen Corporation
By: /s/ John E. Bagalay, Jr.
-------------------------
Name: John E. Bagalay, Jr.
Title: President and
Chief Executive Officer
Elan Corporation, plc
By: /s/ Thomas G. Lynch
---------------------------
Name: Thomas G. Lynch
Title: Director
Elan International Services, Ltd.
By: /s/ Kevin Insley
----------------------------
Name: Kevin Insley
Title: President
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Exhibit A-1
[All documents are dated September 26, 1996 unless otherwise indicated]
1. Securities Purchase Agreement between Cytogen and EIS
2. Cytogen Certificate of Designations, Powers, Preferences and
Rights of Series A Preferred Stock
3. Stock Subscription Agreement between Cytogen and Targon
4. Warrant for 1,000,000 shares of Cytogen Common Stock issued
by Cytogen to EIS
5. Registration Rights Agreement between Cytogen and EIS
6. Registration Rights Agreement between Targon, on the one
hand, and EIS and Cytogen, on the other hand
7. Joint Development and Operating Agreement among Elan, Cytogen
and Targon
8. Technology Transfer Agreement between ATS and Targon
9. Letter from Elan to Targon relating to Elan's necessary steps
in connection with the transfer of the ATS Compounds
10. Technology Assignment Agreement between Elan Pharmaceutical
Research Corp. ("EPRC") and Targon
11. Letter from EPRC to Elan relating to the ATS Compounds
12. Technology Transfer Agreement between Cytogen and Targon
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Exhibit A-2
[All documents are dated July 17, 1997 unless otherwise indicated]
1. Note Purchase Agreement between Cytogen and EIS
2. Promissory note from Cytogen to EIS
3. Securities Purchase Agreement between Targon and Cytogen
4. Promissory Note from Targon to Cytogen
5. License Agreement from Elan to Targon
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