As filed with the Securities and Exchange Commission on December 10, 1996
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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EPIX Medical, Inc.
(Exact Name Of Registrant As Specified In Its Charter)
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<S> <C> <C>
Delaware 2835 04-3030815
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
71 Rogers Street, Cambridge, Massachusetts 02142 (617) 499-1400
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
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MICHAEL D. WEBB
President and Chief Executive Officer
EPIX MEDICAL, INC.
71 Rogers Street
Cambridge, Massachusetts 02142
(617) 499-1400
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
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Copies to:
WILLIAM T. WHELAN, ESQ. STEVEN D. SINGER, ESQ.
Palmer & Dodge LLP Hale and Dorr
One Beacon Street 60 State Street
Boston, Massachusetts 02108 Boston, Massachusetts 02109
(617) 573-0100 (617) 526-6000
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Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Proposed
Proposed Maximum
Title of Each Class Amount Maximum Aggregate Amount of
Of Securities To Be to be Offering Price Offering Registration
Registered Registered (1) Per Share (2) Price (1) (2) Fee
- -------------------------------------------------------------------------------------------------------
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Common Stock, $.01 par value per share 2,300,000 $11.00 $25,300,000 $7,667.00
</TABLE>
(1) Includes 300,000 shares which the Underwriters may purchase to cover
over-allotments, if any. See "Underwriting."
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to Section 8(a), may determine.
================================================================================
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This Prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
SUBJECT TO COMPLETION, DATED DECEMBER 10, 1996
PROSPECTUS
2,000,000 Shares
[EPIX MEDICAL LOGO]
Common Stock
All of the 2,000,000 shares of Common Stock offered hereby are being sold
by EPIX Medical, Inc. ("EPIX" or the "Company"). Prior to this offering,
there has been no public market for the Common Stock of the Company. It is
currently estimated that the initial public offering price will be between
$9.00 and $11.00 per share. See "Underwriting" for a discussion of the
factors to be considered in determining the initial public offering price.
The Company has applied for quotation of the Common Stock on the Nasdaq
National Market under the symbol EPIX.
-------------
The shares offered hereby involve a high degree of risk.
See "Risk Factors" commencing on page 5.
-------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
================================================================================
Price to Underwriting Proceeds to
Public Discount (1) Company (2)
- --------------------------------------------------------------------------------
Per Share $ $ $
- --------------------------------------------------------------------------------
Total (3) $ $ $
================================================================================
(1) See "Underwriting" for indemnification arrangements with the several
Underwriters.
(2) Before deducting expenses payable by the Company estimated at $700,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase
up to 300,000 additional shares of Common Stock solely to cover
over-allotments, if any. If all such shares are purchased, the total
Price to Public, Underwriting Discount and Proceeds to Company will be $,
$ and $, respectively. See "Underwriting."
-------------
The shares of Common Stock are offered by the several Underwriters subject
to prior sale, receipt and acceptance by them and subject to the right of the
Underwriters to reject any order in whole or in part and certain other
conditions. It is expected that certificates for such shares will be
available for delivery on or about , 1997, at the office of the
agent of Hambrecht & Quist LLC in New York, New York.
HAMBRECHT & QUIST WESSELS, ARNOLD & HENDERSON
, 1997
<PAGE>
MS-325: NONINVASIVE CARDIOVASCULAR IMAGING
- --------------------------------------------------------------------------------
[EPIX LOGO]
EPIX Medical, Inc. is developing targeted contrast agents to improve the
capability of magnetic resonance imaging ("MRI") to diagnose a variety of
diseases. The Company's principal product under development, MS-325, is an
injectable vascular contrast agent. The Company believes that MS-325 will
simplify the diagnostic pathway for a number of diseases and in many cases
replace highly invasive and expensive X-ray angiography.
- --------------------------------------------------------------------------------
X-RAY ANGIOGRAPHY
X-ray angiography is generally considered to be the definitive
diagnostic exam for assessing cardiovascular disease.
[bullet] Approximately 3.3 million diagnostic X-ray
angiograms are performed annually
in the U.S.
[bullet] X-ray angiography is highly invasive,
painful and expensive.
[bullet] A catheter is fed into the patient
through an arterial puncture in the
groin area to introduce contrast media
and enable an X-ray to be taken.
[bullet] Complications from X-ray angiography
include renal failure, limb loss
and death.
[Photograph of x-ray angiography]
[Photograph of x-ray angiography]
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THE EPIX
SOLUTION
[bullet] EPIX is developing MS-325 to provide
physicians with a clinically superior,
noninvasive and cost-effective
diagnostic procedure.
[bullet] The patient receives a single injection
of MS-325 in an arm vein and then
enters an MRI scanner.
[bullet] MS-325 binds to the blood protein
albumin and is designed to be excreted
safely through the kidneys over time.
[bullet] A Phase I clinical trial of MS-325
commenced in September 1996.
[Photograph of MRI exam]
- --------------------------------------------------------------------------------
MS-325 IS CURRENTLY BEING EVALUATED IN A PHASE I CLINICAL TRIAL AND NEITHER
MS-325 NOR OTHER CONTRAST AGENTS UNDER DEVELOPMENT HAVE RECEIVED MARKETING
APPROVAL FROM THE FDA OR ANY FOREIGN REGULATORY BODY.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
<PAGE>
HUMAN STUDIES WITH MS-325
- --------------------------------------------------------------------------------
[EPIX LOGO]
EPIX Medical is currently evaluating the safety of MS-325 in a Phase I clinical
trial. The MRI images below were obtained from subjects enrolled in this trial.
- --------------------------------------------------------------------------------
Carotid Arteries
Enhanced right carotid artery showing
the profile of the human subject.
[Photo: MRI of corotid artery]
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Coronary Arteries
Left:
Cross section of the heart, showing the
enhanced right coronary artery (arrow).
Top Right:
Three-dimensional computer-rendered
view of portions of the ascending aorta
and right coronary artery (arrow).
Bottom Right:
Major coronary arteries in a different
subject; RCA=right coronary artery,
LAD= left anterior descending artery,
LCx= left circumflex artery.
[Photo: MRI of coronary arteries (3 views)]
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Pulmonary Vessels
Enhanced pulmonary arteries and veins
of the lungs.
[Photo: MRI of pulmonary vessels]
THE IMAGES ABOVE ARE FROM A PHASE I CLINICAL TRIAL OF THE EPIX VASCULAR IMAGING
AGENT, MS-325, AN INJECTABLE CONTRAST AGENT FOR USE IN MAGNETIC RESONANCE
IMAGING. MS-325 IS CURRENTLY BEING EVALUATED IN CLINICAL TRIALS AND HAS NOT
RECEIVED MARKETING APPROVAL FROM THE FDA OR ANY FOREIGN REGULATORY BODY.
<PAGE>
- --------------------------------------------------------------------------------
HUMAN STUDIES WITH MS-325
[Diagram of aorta and renal arteries]
Aorta and Renal Arteries
The renal arteries extend
from the aorta to the kidneys
(shown on either side of
the image). The aorta then
bifurcates into the iliac
arteries.
[Photo: MRI of aorta and renal arteries]
- --------------------------------------------------------------------------------
[Diagram of thigh vessels]
Thigh Vessels
Left:
The left femoral artery (arrow)
can be viewed at any angle
from the 3D dataset.
Right:
The femoral artery can be
isolated and displayed using
computer techniques.
[Photo: MRI of thigh vessels]
[Photo: MRI of isolated femoral artery]
- --------------------------------------------------------------------------------
[Diagram of calf vessels]
Calf Vessels
Left:
Arteries can be seen with
attendant pairs of veins on
either side.
Center:
Isolated left tibial arterial
tree.
Right:
Isolated left saphenous vein.
[Photo: MRI of calf vessels]
[Photo: MRI of isolated tibial artery]
[Photo: MRI of isolated saphenous vein]
- --------------------------------------------------------------------------------
THE IMAGES ABOVE ARE FROM A PHASE I CLINICAL TRIAL OF THE EPIX VASCULAR IMAGING
AGENT, MS-325, AN INJECTABLE CONTRAST AGENT FOR USE IN MAGNETIC RESONANCE
IMAGING. MS-325 IS CURRENTLY BEING EVALUATED IN CLINICAL TRIALS AND HAS NOT
RECEIVED MARKETING APPROVAL FROM THE FDA OR ANY FOREIGN REGULATORY BODY.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and Financial Statements and Notes thereto appearing elsewhere in
this Prospectus. The Common Stock offered hereby involves a high degree of
risk. See "Risk Factors."
The Company
EPIX Medical, Inc. ("EPIX" or the "Company") is developing targeted
contrast agents both to improve the capability and expand the use of magnetic
resonance imaging ("MRI") as a diagnostic tool for a variety of diseases. The
Company's principal product under development, MS-325, is an injectable
vascular contrast agent designed for multiple vascular imaging indications,
including coronary artery disease ("CAD") and peripheral vascular disease
("PVD"). The Company believes that MS-325 will significantly enhance the
quality of images and provide physicians with a clinically superior,
noninvasive and cost-effective method for diagnosing cardiovascular disease.
The Company further believes that MS-325 will simplify the diagnostic pathway
for a number of diseases and in many cases replace highly invasive and
expensive X-ray angiography, which is currently considered the definitive
diagnostic exam for assessing cardiovascular disease. The Company is
presently conducting Phase I clinical trials of MS-325, and 35 subjects have
received MS-325 to date with no clinically significant adverse effects
reported.
The Company's objective is to become a worldwide leader in MRI contrast
agents by pursuing a strategy based on commercializing MS-325 and developing
new applications for its proprietary technology platform. EPIX has entered
into strategic alliances with Mallinckrodt Group Inc. ("Mallinckrodt"), the
fourth largest seller of contrast agents in the world, and Daiichi
Radioisotope Laboratories, Ltd. ("Daiichi"), an affiliate of the leading
contrast agent company in Japan, for the development and commercialization of
MS-325 and other vascular contrast agents.
The use of MRI has grown steadily over the past 10 years due to reduced
cost and improved imaging capabilities and now provides an effective
diagnostic modality for a broad range of applications. MRI manufacturers have
improved the hardware and software of their systems, reducing the time per
procedure drastically while significantly enhancing resolution. While MRI is
currently used extensively to image many organs and tissues in the body, its
use in imaging the arteries and veins has been limited. Prior attempts to
develop contrast agents to facilitate the clinical usefulness of MRI for the
cardiovascular system have had limited success. EPIX believes that MS-325
will lead to significantly expanded use of MRI to diagnose cardiovascular and
other diseases.
Cardiovascular disease is a growing worldwide problem. It is estimated
that approximately 500,000 people in the United States die of CAD each year,
making it the leading cause of death. PVD affects arteries throughout the
body, resulting in approximately 600,000 vascular operations, 400,000 strokes
and 100,000 amputations (primarily related to PVD) each year in the United
States. Diagnosis of CAD and PVD is currently very complex and expensive,
requires multiple tests and ultimately relies upon a painful and costly X-ray
angiogram for a definitive diagnosis. Approximately 3.3 million diagnostic
X-ray angiograms were performed in the United States in 1995 at an estimated
cost of $5.9 billion. The Company believes that MS-325, together with
anticipated hardware and software solutions to problems associated with
cardiac motion, will enable widespread clinical use of MRI to diagnose CAD.
The Company also believes that MS-325 will significantly expand the use of
currently available MRI equipment in diagnosing PVD. If such a product were
available today, the Company believes that it could eliminate many X-ray
angiograms and ancillary tests, dramatically improving the current approach
to the diagnosis of cardiovascular disease. The Company believes, based on
1995 estimated procedure costs, that savings to the United States healthcare
system for CAD alone could exceed $2.0 billion.
MS-325 is a magnetically active, injectable small molecule. It binds to
the blood protein albumin, remains at high concentrations in the bloodstream
throughout the MRI exam, and is designed to be excreted safely through the
kidneys over time. Because of its affinity for albumin, MS-325 provides the
image acquisition time and signal strength needed to obtain a high contrast,
high resolution image of the cardiovascular system. The Company is also
investigating additional imaging applications for MS-325, including tumor
imaging. The Company believes that its proprietary technology platform will
enable it to create additional contrast agents that target particular tissue
and fluid types. Research efforts are ongoing in the areas of thrombosis and
functional brain imaging.
The Company was incorporated in Delaware in 1988 and commenced operations
in 1992. The Company's principal executive offices are located at 71 Rogers
Street, Cambridge, Massachusetts, 02142-1118, and its telephone number is
(617) 499-1400. The Company recently changed its name from Metasyn, Inc.
3
<PAGE>
The Offering
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Common Stock offered by the Company 2,000,000 shares
Common Stock to be outstanding after the
offering 8,314,747 shares (1)
Use of proceeds To fund research and development,
clinical trials, working capital
requirements and other general
corporate purposes.
Proposed Nasdaq National Market Symbol EPIX
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Summary Financial Information
(in thousands, except per share data)
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Nine Months
Period from inception Year Ended Nine Months Ended
(November 29, 1988) March 31, Ended September 30,
through March 31, ------------------ December 31, -----------------
1993 1994 1995 1995 (2) 1995 1996
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Statement of Operations Data:
Revenues $1,000 $1,700 $ 412 $ 900 $ 900 $9,635
Operating income (loss) (311) (579) (2,820) (4,770) (3,438) 2,471
Net income (loss) (270) (616) (2,778) (4,893) (3,475) 2,338
Pro forma:
Net income (loss) per share (3) $ (0.70) $ 0.30
Shares used in per share
calculations 6,973 7,711
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September 30, 1996
------------------------------------------
Actual Pro Forma (4) As Adjusted (5)
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Balance Sheet Data:
Cash and cash equivalents $11,735 $11,735 $29,635
Working capital 10,882 10,882 28,782
Total assets 13,815 13,815 31,715
Capital lease obligations, less current portion 198 198 198
Redeemable convertible preferred stock 20,491 -- --
Total stockholders' equity (deficit) (8,476) 12,015 29,915
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(1) Based on the number of shares outstanding at November 30, 1996. Excludes
1,277,803 shares of Common Stock reserved for issuance upon the exercise
of outstanding options at a weighted average exercise price of $2.32 per
share, of which options to purchase 337,925 shares were exercisable, and
79,696 shares of Common Stock issuable upon exercise of outstanding
warrants at a weighted average exercise price of $3.98 per share. See
"Capitalization," "Dilution" and "Description of Capital Stock."
(2) The Company changed its fiscal year end from March 31 to December 31
commencing with the fiscal year ended December 31, 1995.
(3) See Note 2 to Notes to Financial Statements for a description of the
calculation of pro forma net income (loss) per share.
(4) Reflects the automatic conversion of all outstanding shares of preferred
stock into shares of Common Stock contemporaneously with the closing of
this offering.
(5) As adjusted to give effect to sale of the 2,000,000 shares of Common
Stock offered hereby at an assumed initial public offering price of
$10.00 per share and the application of the net proceeds therefrom. See
"Use of Proceeds" and "Capitalization."
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Except as otherwise noted, all information in this Prospectus (i) reflects
a 1-for-1.5 reverse stock split effected on December 6, 1996, (ii) assumes no
exercise of the Underwriters' over-allotment option, (iii) reflects the
conversion of all outstanding shares of preferred stock into an aggregate of
4,750,296 shares of Common Stock effective upon the closing of this offering
and (iv) reflects an amendment to the Company's Restated Certificate of
Incorporation to be effective upon the closing of this offering to create a
class of authorized but undesignated preferred stock. See "Description of
Capital Stock," "Underwriting" and Notes to Financial Statements.
4
<PAGE>
RISK FACTORS
This Prospectus contains forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those discussed in
the forward-looking statements as a result of certain factors, including
those set forth below and elsewhere in this Prospectus. The following risk
factors should be considered carefully in addition to the other information
presented in this Prospectus before purchasing the shares of Common Stock
offered hereby.
Early Stage of Development; No Product Sales to Date. The Company
commenced operations in 1992 and is a development stage company. The Company
currently has no products for sale nor is there any guarantee that it will
ever have marketable products. All of the Company's product candidates are in
research or development, and no revenues have been generated from product
sales. To date, the Company has financed its operations through private sales
of equity securities, equipment lease financings and license payments from
its strategic partners. To achieve profitable operations, the Company, alone
or with others, must successfully develop, obtain regulatory approval for,
introduce, market and sell products. The Company does not expect to receive
revenue from the sale of any of its product candidates for the next several
years. There can be no assurance that the Company's product development
efforts will be successfully completed, that required regulatory approvals
will be obtained in a timely manner, if at all, that its product candidates
can be manufactured at an acceptable cost and with acceptable quality or that
any approved products can be successfully marketed. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business."
Dependence on MS-325. MS-325 is currently the Company's only product
candidate in human clinical trials, and there is no guarantee that any of its
other development projects will yield a product candidate suitable for entry
into clinical trials. The failure of MS-325 to achieve regulatory approval
and market acceptance would have a material adverse effect on the Company's
business, financial condition and results of operations. See "Business--EPIX
Products and Development Programs."
Dependence on MRI Advancements for Cardiac Applications. Existing MRI
scanners do not have the capability to perform coronary angiography without
improvements in current MRI hardware and software. The success of cardiac
applications of MS-325 is therefore dependent on advancements in MRI hardware
and software. Although several leading MRI manufacturers, academic centers
and others are developing advanced hardware and software, there can be no
assurance when, or if, these techniques will enable MS-325 to provide
clinically relevant images in cardiac indications currently being pursued.
See "Business--Magnetic Resonance Imaging Background" and "--The EPIX
Solution--The EPIX Approach to CAD Diagnosis."
Uncertainty of Market Acceptance of Technology and Products. The
commercial success of MS-325 and the Company's other product candidates, when
and if approved for marketing by the United States Food and Drug
Administration (the "FDA") and corresponding foreign agencies, will depend on
their acceptance by the medical community and third-party payors as
clinically useful, cost-effective and safe. While contrast agents are
currently used in an estimated 25% of all MRI exams, there are no targeted
vascular agents approved by the FDA in use. Furthermore, clinical use of MRI
for vascular imaging has been limited, and use of MRI for cardiac imaging has
occurred mainly in research. Market acceptance, and thus sales of the
Company's product candidates, will depend on several factors, including
safety, price, ease of administration, effectiveness and the rate of adoption
of up-to-date MRI technology. Market acceptance will also depend on the
ability of the Company and its strategic partners to educate the medical
community and third-party payors about the benefits of diagnostic imaging
with MRI enhanced with the Company's product candidates compared to imaging
with other modalities. The Company's MRI contrast agents represent a new
approach to imaging the cardiovascular system ("CVS"), and market acceptance
both of MRI as an appropriate imaging technique for the CVS and of the
Company's product candidates is critical to the Company's success. There can
be no assurance that the Company's product candidates will gain market
acceptance. Failure to achieve market acceptance would have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business--Business Strategy" and "--Competition."
Intense Competition and Risk of Technological Obsolescence. Medical
technology is subject to intense competition and rapid technological change.
The Company has many competitors, including pharmaceutical, biotechnology and
chemical companies, a number of which, including both of the Company's
strategic partners, are actively developing and marketing products that could
compete with the Company's product candidates.
5
<PAGE>
Many of these competitors have substantially greater capital and other
resources than the Company and may represent significant competition for the
Company. Such companies may succeed in developing technologies and products
that are more effective or less costly than any of those that may be
developed by the Company, and such companies may be more successful than the
Company in developing, manufacturing and marketing products. Furthermore,
there are several well-established medical imaging modalities that currently
compete, and will continue to compete, with MRI including X-ray angiography,
computer assisted tomography ("CT"), nuclear medicine and ultrasound. Other
companies are actively developing the capabilities of the competing
modalities to enhance their effectiveness in CVS imaging. There can be no
assurance that the Company will be able to compete successfully in the future
or that developments by others will not render MS-325 or the Company's future
product candidates obsolete or non-competitive or that the Company's
strategic partners or customers will not choose to use competing technologies
or products. See "Business--Competition."
Dependence on Licensed Technology. The Company and Massachusetts General
Hospital ("MGH") have entered into a license agreement (the "MGH License")
pursuant to which the Company is the exclusive licensee to certain
technology, including certain patents and patent applications, which relates
to the Company's product candidates, including MS-325. The MGH License
imposes various commercialization, sub-licensing, royalty and other
obligations on the Company. Failure of the Company to comply with these and
other requirements could result in the conversion of the license from being
exclusive to non-exclusive in nature or termination of the license agreement
itself. Any such event would have a material adverse effect on the Company's
business, financial condition and results of operations. See
"Business--Patents and Proprietary Rights."
Dependence on Strategic Partners. The Company is dependent on strategic
partners for support in product development and the regulatory approval
process as well as a variety of activities including manufacturing, marketing
and distribution of its products in the United States and abroad, when and if
its product candidates are approved for marketing by the FDA and
corresponding foreign agencies. To date, the Company has entered into two
strategic alliances: a collaboration agreement with Mallinckrodt to develop
and commercialize MS-325 and other MRI vascular agents worldwide, excluding
Japan, and a development and license agreement with Daiichi for the
development and commercialization of MS-325 in Japan. The Company may not
receive milestone payments from these alliances should MS-325 fail to meet
certain performance targets in clinical trials. Further, the Company's
receipt of revenues from strategic alliances is affected by the level of
efforts of its partners. There can be no assurance that the Company's
partners will devote the resources necessary to complete development, and
commence marketing, of MS-325 in their respective territories, or that they
will successfully market MS-325. Both Mallinckrodt and Daiichi currently
manufacture imaging agents for other modalities that will compete against
MS-325. Mallinckrodt and the Company will share responsibility for setting
the price of the product worldwide, except Japan, and Daiichi will be
responsible for setting the product price in Japan. There can be no assurance
that either Mallinckrodt or Daiichi will do so in a manner that maximizes
revenues for the Company. In addition, Daiichi has the right to terminate its
agreement on short notice under certain circumstances, and there is no
guarantee that it will not exercise this right. The failure of the Company to
receive milestone payments, a reduction or discontinuance of efforts by the
Company's partners or the termination of these alliances would have a
material adverse effect on the Company's business, financial condition and
results of operations.
There can be no assurance that the Company will be successful in entering
into additional strategic alliances for the development and commercialization
of future product candidates, nor that these alliances, if entered into, will
be on terms favorable to the Company or will be successful. If the Company
were unable to enter into future strategic alliances with capable partners on
commercially reasonable terms, the development and commercialization of
future product candidates would be delayed and possibly postponed
indefinitely. See "Business--Strategic Alliances" and "--Manufacturing."
Unproven Safety and Effectiveness of Product Candidates; Uncertainties
Related to Clinical Trials. The Company's product candidates are in research
and development and will require additional research and development,
extensive clinical testing and regulatory approval prior to any commercial
sales. The Company cannot predict if or when any of its products under
development will be commercialized. The Company currently has only one
product candidate, MS-325, in clinical trials. The Company will be required
to complete successfully clinical trials in the United States to demonstrate
the safety and efficacy of MS-325, currently in Phase I clinical trials,
prior to obtaining FDA approval. There can be no assurance that clinical
trials will be successful, or that they will be completed in a timely manner.
Although no clinically significant adverse effects from MS-325 in
6
<PAGE>
Phase I clinical trials have been reported to date, results are based on
preliminary data only, and there can be no assurance that serious side
effects will not be reported as the clinical trial proceeds. The results from
early clinical trials may not be predictive of results that will be obtained
in large scale clinical trials, as a number of companies have suffered
significant setbacks in advanced clinical trials, even after promising
results in earlier trials. There can be no assurance that Phase II or Phase
III clinical trials for MS-325 will be conducted or that such trials, if
begun, will demonstrate any efficacy or will be completed successfully in a
timely manner, if at all. The rate of completion of the Company's clinical
trials is dependent upon, among other things, the rate of patient enrollment.
Patient enrollment is a function of many factors, including the size of the
patient population, the nature of the clinical protocol under which MS-325
will be studied, the proximity of the patient to a clinical site and the
eligibility criteria for the study. Delays in planned patient enrollment may
result in increased costs, regulatory filing delays, or both. Furthermore,
the Company, the FDA or other regulatory authorities may suspend or terminate
clinical trials at any time. Failure to complete successfully any of its
clinical trials on a timely basis or at all would have a material adverse
effect on the Company's business, financial condition and results of
operations. See "Business--Government Regulation."
Uncertainty Regarding Patents and Proprietary Rights. The Company
considers the protection of its proprietary technologies to be material to
its business prospects. The Company pursues a comprehensive patent program
for its product candidates in the United States and in other countries where
it believes that significant market opportunities exist. The Company owns or
has an exclusive license to patents and patent applications on the critical
aspects of its core technology as well as many specific applications of this
technology. However, the patent positions of pharmaceutical and
biopharmaceutical firms including the Company generally include complex legal
and factual questions. There can be no assurance that the issued patents
owned or licensed to the Company, or any patents that may be issued in the
future, will effectively protect the Company's technology or provide a
competitive advantage. There can be no assurance that any of the patents or
patent applications owned or licensed by the Company will not be challenged,
invalidated or circumvented in the future.
The Company's commercial success will also depend on its ability to
operate without infringing upon the patents of others in the United States and
abroad. If any third-party patents are upheld as valid and enforceable in any
judicial or administrative proceeding, the Company could be prevented from
practicing the subject matter claimed in such patents, or would be required to
obtain licenses from the owners of each such patent, or to redesign its products
or processes to avoid infringement. There are pending or issued patents, held by
parties not affiliated with the Company, relating to technologies used by the
Company in the development or use of certain of the Company's contrast agents.
In particular, the Company is aware of certain patents in the United States,
Japan and elsewhere owned by or licensed to one party that relate to MRI
contrast agents and which may cover certain of the Company's MRI contrast
agents, including MS-325. Mallinckrodt, one of the Company's strategic partners,
has rights from this third party under those patents which the Company and
Mallinckrodt believe will permit Mallinckrodt to manufacture, market and sell
MS-325 and other products developed pursuant to the collaboration agreement
between the Company and Mallinckrodt were MS-325 and those other products to be
held to fall within the claims of those third-party patents. If the agreement
with Mallinckrodt is terminated by either party, the Company would likely be
required to enter into a strategic alliance with another party having a license
from this third party or obtain a license from this third party directly or from
others licensed by this third party in order to manufacture, market and sell
MS-325 and other chelate-based MRI contrast agents. However, there can be no
assurance that the Company would be able to consummate a strategic alliance with
a party having this third-party license or obtain licenses from third parties on
commercially reasonable terms, if at all. The patent rights of this third party
in Japan will expire in 2002, before such time as the Company presently
anticipates that Daiichi will have material sales of MS-325 in Japan and,
therefore, the Company believes that the existence of such patents in Japan is
unlikely to have a material adverse effect on the Company. However, in the event
that Daiichi commercializes MS-325 in Japan before 2002, it may be required to
obtain an appropriate license from this third party or from others licensed by
this third party, or take other measures to avoid infringement of third-party
patents, including delaying the commencement of product sales. There can be no
assurance that the Company's current or future activities will not be challenged
in the future, that additional patents will not be issued containing claims
materially constraining the proposed activities of the Company, that the Company
will not be required to obtain licenses from third parties, or that the Company
will not become involved in costly, time-consuming litigation regarding patents
in the field of contrast agents, including actions brought to challenge or
invalidate the Company's own patent rights. See "Business--Patents and
Proprietary Rights."
7
<PAGE>
Many of the Company's competitors are continuing to actively pursue patent
protection for activities and discoveries similar to the Company's. There can
be no assurance that these competitors, many of which have substantially
greater resources than the Company and have made substantial investments in
competing technologies, will not seek to assert that the Company's products
or chemical processes infringe their existing patents and/or will not seek
new patents that claim to cover aspects of the Company's technology.
Furthermore, patent applications in the United States are maintained in
secrecy until patents issue, and patent applications in foreign countries are
maintained in secrecy for a specified period after filing. Publication of
discoveries in the scientific or patent literature tends to lag behind actual
discoveries and the filing of related patent applications. In addition,
patents issued and patent applications filed relating to pharmaceuticals are
numerous. Therefore, there can be no assurance that the Company is aware of
all competitive patents, either pending or issued, that relate to products or
processes used or proposed to be used by the Company.
The pharmaceutical and biotechnology industries have been characterized by
extensive litigation regarding patents and other intellectual property
rights. Litigation may be necessary to enforce any patents issued to the
Company and/or determine the scope and validity of others' proprietary
rights. The Company may have to participate in interference proceedings
declared by the United States Patent and Trademark Office or by foreign
agencies to determine the priority of inventions. Any involvement in
litigation surrounding these issues could result in extensive costs to the
Company as well as be a significant distraction for management. Such costs
could have a material adverse effect on the Company's business, financial
condition and results of operations.
The Company also relies upon trade secrets, technical know-how and
continuing technological innovation to develop and maintain its competitive
position. The Company typically requires its employees, consultants and
advisors to execute confidentiality and assignment of inventions agreements
in connection with their employment, consulting or advisory relationships
with the Company. There can be no assurance, however, that these agreements
will not be breached or that the Company will have adequate remedies for any
breach. Furthermore, there can be no assurance that competitors will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to the Company's proprietary technology,
or that the Company can meaningfully protect its rights in unpatented
proprietary technology. Several of the Company's management and scientific
personnel were formerly associated with other pharmaceutical and
biotechnology companies and academic institutions. In some cases, these
individuals are conducting research in similar areas with which they were
involved prior to joining the Company. As a result, the Company, as well as
these individuals, could be subject to claims of violation of trade secrets
and similar claims.
The Company intends to vigorously protect and defend its intellectual
property. Costly and time-consuming litigation brought by the Company may be
necessary to enforce patents issued to the Company, to protect trade secrets
or know-how owned by the Company, or to determine the enforceability, scope
and validity of the proprietary rights of others. See "Business--Patents and
Proprietary Rights."
Extensive Government Regulation; No Assurance of Regulatory Approval. The
Company is subject to extensive governmental regulatory requirements and a
lengthy approval process for its product candidates. The development and
commercial use of the Company's product candidates will be regulated by
numerous federal, state and local governmental authorities in the United
States, including the FDA and comparable foreign regulatory agencies abroad.
The nature of the Company's research and development and manufacturing
processes requires the use of hazardous substances and testing on certain
laboratory animals. Accordingly, the Company is subject to extensive federal,
state and local laws, rules, regulations and policies governing the use,
generation, manufacture, storage, air emission, effluent discharge, handling
and disposal of certain materials and wastes, as well as the use of and care
for laboratory animals. Although the Company believes it is in compliance
with all such laws and maintains policies and procedures to ensure that it
remains in compliance, there can be no assurance that accidents will not
happen that would expose the Company to legal risk and/or financial loss.
Furthermore, there can be no assurance that current laws will not be changed
or that new laws will not be passed that force the Company to change its
policies and procedures, an event which could impose significant costs on the
Company.
The regulatory approval process for new MRI contrast agents, including
required preclinical studies and clinical trials, is lengthy and expensive.
Although certain employees of the Company have experience in obtaining
regulatory approvals, the Company itself has only limited experience in
filing or pursuing applications necessary to gain regulatory approvals.
Preclinical testing of the Company's product development candidates is
subject
8
<PAGE>
to Good Laboratory Practices ("GLP") as prescribed by the FDA and the
manufacture of any products developed by the Company will be subject to Good
Manufacturing Practices ("GMP") as prescribed by the FDA. There can be no
assurance that the necessary FDA clearances and subsequent approvals will be
obtained in a timely manner, if at all. There can be no assurance as to the
length of the clinical trial period or the number of patients that will be
required to be tested in the clinical trials in order to establish the safety
and efficacy of MS-325 or any future product candidates of the Company. The
Company may encounter unanticipated delays or significant costs in its
efforts to secure necessary approvals. There can be no assurance, even after
the performance of clinical trials and the passage of time and the
expenditure of such resources, that regulatory approval will be obtained for
MS-325 or any other product candidates that may be developed by the Company.
The Company's analysis of data obtained from preclinical and clinical
activities is subject to confirmation and interpretation by regulatory
authorities which could delay, limit or prevent FDA regulatory approval.
Future United States legislative or administrative actions also could prevent
or delay regulatory approval of the Company's product candidates. Even if
regulatory approvals are obtained, they may include significant limitations
on the indicated uses for which a product may be marketed. A marketed product
also is subject to continual FDA and other regulatory agency review and
regulation. Later discovery of previously unknown problems or failure to
comply with the applicable regulatory requirements may result in restrictions
on the marketing of a product or withdrawal of the product from the market,
as well as possible civil or criminal sanctions. Further, many academic
institutions and companies conducting research and clinical trials in the MRI
contrast agent field are using a variety of approaches and technologies. Any
adverse results obtained by such researchers in preclinical studies or
clinical trials could adversely affect the regulatory environment for MRI
contrast agents generally. In addition, if marketing approval is obtained,
the FDA may require post-marketing testing and surveillance programs to
monitor the product's efficacy and side effects. Results of these
post-marketing programs may prevent or limit the further marketing of the
monitored product.
The Company and its strategic partners are also subject to numerous and
varying foreign regulatory requirements governing the design and conduct of
clinical trials and the manufacturing and marketing of its products. The
foreign regulatory approval process may include all of the risks associated
with obtaining FDA approval set forth above, and there can be no assurance
that foreign regulatory approvals will be obtained on a timely basis, if at
all. See "Business--Government Regulation."
History of Operating Losses and Accumulated Deficit; Uncertainty of Future
Profitability. The Company's future financial results are uncertain. The
Company has experienced significant losses since it commenced operations in
1992. As of September 30, 1996, the Company had accumulated net losses of
approximately $6.2 million. These losses have resulted primarily from
expenses associated with the Company's research and development activities,
including preclinical and clinical trials, and general and administrative
expenses. The Company anticipates that its research and development expenses
will increase significantly in the future and it expects to incur substantial
losses over at least the next several years. There can be no assurance that
the Company will ever be able to generate revenues from the sale of products.
Moreover, even if the Company generates product revenues, there can be no
assurance that the Company will be able to achieve or sustain profitability.
The Company's results of operations have varied and will continue to vary
significantly from quarter to quarter and depend on, among other factors: the
timing of fees and milestone payments received from strategic partners; the
formation of new strategic alliances by the Company; the timing of
expenditures in connection with research and development activities,
including clinical trials; the timing of product introductions and associated
launch, marketing and sales activities; and the timing and extent of product
acceptance for different indications and geographical areas of the world. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Future Capital Needs; Uncertainty of Additional Funding. Since inception,
the Company has funded its operations primarily through private sales of
equity securities, equipment lease financings and license payments from its
strategic partners. The Company believes that the proceeds of this offering,
together with existing cash and cash equivalents, will be sufficient to fund
its operations through June 1998. The Company believes that it will need to
raise substantial additional funds for research, development and other
expenses, through equity or debt financings, strategic alliances or
otherwise, prior to commercialization of any of its product candidates. The
Company's future liquidity and capital requirements will depend upon numerous
factors, including the following: the progress and scope of clinical trials;
the timing and costs of filing future regulatory submissions; the timing and
costs required to receive both United States and foreign governmental
approvals; the cost of filing,
9
<PAGE>
prosecuting, defending and enforcing patent claims and other intellectual
property rights; the extent to which the Company's products gain market
acceptance; the timing and costs of product introductions; the extent of the
Company's ongoing research and development programs; the costs of training
physicians to become proficient with the use of the Company's products; and,
if necessary once regulatory approvals are received, the costs of developing
marketing and distribution capabilities. There can be no assurance that
additional financing will be available on terms acceptable to the Company, or
at all. The Company's inability to fund its capital requirements would have a
material adverse effect on the Company's business, financial condition and
results of operations. If adequate funds are not available, the Company may
be required to curtail operations significantly or to obtain funds by
entering into arrangements with strategic partners or others that may require
the Company to relinquish rights to certain of its technologies, product
candidates, products or potential markets. To the extent that additional
capital is raised through the sale of equity or securities convertible into
equity, the issuance of such securities could result in dilution to the
Company's existing stockholders. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Limited Manufacturing Capability. The Company does not have, nor does it
currently have plans to develop, full-scale manufacturing capability for
MS-325. While it does manufacture small amounts of MS-325 for research and
development efforts, the Company intends to rely on Mallinckrodt as the
primary manufacturer of MS-325 for Phase III clinical trials as well as for
any future human clinical trials and commercial use. If Mallinckrodt is
unable to produce MS-325 in adequate amounts and at a reasonable cost or to
comply with any applicable regulations, including GMP, it could have a
material adverse effect on the Company's business, financial condition and
results of operations. Furthermore, should Mallinckrodt fail to fulfill its
manufacturing responsibilities satisfactorily, the Company could be forced to
find an alternative manufacturer. There can be no assurance that the Company
would be able to find such an alternative manufacturer. In the event the
Company were forced to develop its own FDA-approved full-scale manufacturing
capability, it would require significant expenditures of capital and
management attention and resources and could require the Company to obtain a
license from a third party, and would result in a delay in the approval or
commercialization of MS-325. There can be no assurance that the Company would
be able to obtain such a license on commercially reasonable terms, if at all.
See "Risk Factors--Uncertainty Regarding Patents and Proprietary Rights" and
"Business--Strategic Alliances" and "--Manufacturing."
Dependence on Suppliers. The Company currently procures the raw materials
for the various components of MS-325 from a broad variety of vendors and,
wherever possible, maintains relationships with multiple vendors for each
component. There are a number of components of MS-325 for which the largest
suppliers may have significant control over the market price due to
controlling market shares. If any one of the Company's suppliers decided to
increase prices significantly or reduce quantities of components of MS-325
available for sale to the Company, it could have a material adverse effect on
the Company's ability to commercialize MS-325 and on the Company's business,
financial condition and results of operations. See "Business--Manufacturing."
Potential Product Liability Exposure and Insurance. The clinical testing,
manufacturing and marketing of the Company's product candidates may expose
the Company to product liability claims, and there can be no assurance that
the Company will not experience material product liability losses in the
future. The Company currently has limited product liability insurance for the
use of its product candidates in clinical research, but there can be no
assurance that such coverage will continue to be available on terms
acceptable to the Company or that such coverage will be adequate for
liabilities actually incurred. The Company does not have product liability
insurance coverage for the commercial sale of its products but intends to
obtain such coverage if and when its product candidates are commercialized.
However, there can be no assurance that the Company will be able to obtain
adequate additional product liability insurance coverage on acceptable terms,
if at all. A successful claim brought against the Company in excess of
available insurance coverage, or any claim or product recall that results in
significant adverse publicity against the Company, may have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business--Product Liability Insurance."
Uncertainty of Adequate Reimbursement. The Company could be adversely
affected by changes in reimbursement policies of governmental or private
healthcare payors, particularly to the extent any such changes affect
reimbursement for procedures in which the Company's product candidates would
be used. Failure by physicians, hospitals and other users of the Company's
products to obtain sufficient reimbursement from third- party payors for the
procedures in which the Company's product candidates would be used or adverse
changes
10
<PAGE>
in governmental and private third-party payors' policies toward reimbursement
for such procedures would have a material adverse effect on the Company's
business, financial condition and results of operations. If the Company
obtains the necessary foreign regulatory approvals, market acceptance of the
Company's product candidates in international markets would be dependent, in
part, upon the availability of reimbursement within prevailing healthcare
payment systems. Reimbursement and healthcare payment systems in
international markets vary significantly by country, and include both
government sponsored health care and private insurance. The Company intends
to seek international reimbursement approvals, although there can be no
assurance that any such approvals will be obtained in a timely manner, if at
all, and failure to receive international reimbursement approvals could have
an adverse effect on market acceptance of the Company's products in the
international markets in which such approvals are sought. See
"Business--Reimbursement."
Dependence Upon Key Personnel. The Company's future business and operating
results depend in significant part upon the continued contributions of its
key technical and senior management personnel, many of whom would be
difficult to replace and certain of whom perform important functions for the
Company beyond those functions suggested by their respective job title or
description. The Company's future business and operating results also depend
in significant part upon its ability to attract and retain qualified
management, operational and technical personnel. Competition for such
personnel is intense, and there can be no assurance that the Company will be
successful in attracting or retaining such personnel. Although the Company
maintains key life insurance on the lives of certain officers, the loss of
any key employee, the failure of any key employee to perform in his or her
current position, or the Company's inability to attract and retain skilled
employees, as needed, could have a material adverse effect on the Company's
business, financial condition and results of operations. See
"Management--Executive Officers and Directors."
No Public Market; Possible Volatility of Share Price. Prior to this
offering, there has been no public market for the Common Stock, and there can
be no assurance that an active trading market will develop or be sustained
after this offering. The initial public offering price will be determined
through negotiations among the Company and the representatives of the
Underwriters based on several factors and may not be indicative of the market
price of the Common Stock after this offering. The market prices of the
capital stock of medical technology companies have historically been very
volatile, and the market price of the shares of Common Stock may be highly
volatile. The market price of the shares of the Common Stock may be
significantly affected by factors such as actual or anticipated fluctuations
in the Company's operating results, announcements of technological
innovations, new products or new contracts by the Company or its competitors,
developments with respect to patents or proprietary rights, conditions and
trends in the pharmaceutical and other technology industries, adoption of new
accounting standards affecting such industries, changes in financial
estimates by securities analysts, general market conditions and other
factors. In addition, the stock market has from time to time experienced
significant price and volume fluctuations that have particularly affected the
market prices for the common stock of development stage companies. These
broad market fluctuations may adversely affect the market price of the Common
Stock. In the past, following periods of volatility in the market price of a
particular company's securities, class action securities litigation has often
been brought against that company. Such litigation, if brought against the
Company, could result in substantial costs and a diversion of management's
attention and resources. See "Underwriting."
Anti-Takeover Effect of Certain Charter and By-Law Provisions and Delaware
Law. The Company's Restated Certificate of Incorporation as it is proposed to
be amended and restated concurrently with the closing of this offering (the
"Restated Certificate") authorizes the Board of Directors to issue, without
stockholder approval, up to 1,000,000 shares of preferred stock ("Preferred
Stock") with voting, conversion and other rights and preferences that could
adversely affect the voting power or other rights of the holders of Common
Stock. The issuance of Preferred Stock or of rights to purchase Preferred
Stock could be used to discourage an unsolicited acquisition proposal. In
addition, the possible issuance of Preferred Stock could discourage a proxy
contest, make more difficult the acquisition of a substantial block of the
Company's Common Stock or limit the price that investors might be willing to
pay for shares of the Company's Common Stock. The Restated Certificate
provides for staggered terms for the members of the Board of Directors. A
staggered Board of Directors and certain provisions of the Company's By-laws
(the "By-laws") and of Delaware law applicable to the Company could delay or
make more difficult a merger, tender offer or proxy contest involving the
Company. The Company, for example, will be subject to Section 203 of the
General Corporate Law of Delaware which, subject to certain exceptions,
restricts certain transactions and business combinations between a
corporation and a stockholder
11
<PAGE>
owning 15% or more of the corporation's outstanding voting stock (an
"interested stockholder") for a period of three years from the date the
stockholder becomes an interested stockholder. These provisions may have the
effect of delaying or preventing a change of control of the Company without
action by the stockholders and, therefore, could adversely affect the price
of the Company's Stock. See "Management," "Description of Capital
Stock--Preferred Stock" and "--Anti-Takeover Measures."
Control by Directors and Officers. Upon completion of this offering, the
present directors, executive officers and principal stockholders of the
Company and their affiliates will beneficially own approximately 66.3% of the
outstanding Common Stock of the Company. As a result, these stockholders will
be able to significantly influence corporate actions requiring stockholder
approval, including the election of directors and approval of significant
corporate transactions. Such concentration of ownership may have the effect
of delaying or preventing a change in control of the Company. See "Principal
Stockholders."
Broad Discretion of Management to Allocate Offering Proceeds. The Company
expects to use the net proceeds of this offering for research and development
and funding of clinical trials in support of regulatory and reimbursement
approvals and for working capital and general corporate purposes. The Company
is not yet able to estimate precisely the allocation of the proceeds among
such uses, and the timing and amount of expenditures will vary depending upon
numerous factors. The Company's management will have broad discretion to
allocate the proceeds of this offering and the timing of expenditures. See
"Use of Proceeds."
Shares Eligible for Future Sale; Registration Rights. Future sales of
Common Stock in the public market following this offering could adversely
affect the market price of the Common Stock. Upon completion of this
offering, the Company will have 8,314,747 shares of Common Stock outstanding,
assuming no exercise of options and warrants outstanding on November 30,
1996. Of these shares, the 2,000,000 shares sold in this offering (plus any
additional shares sold upon exercise of the Underwriters' over-allotment
option) will be freely transferable without restriction under the Securities
Act of 1933, as amended (the "Securities Act"), unless they are held by
"affiliates" of the Company as that term is used under the Securities Act and
the regulations promulgated thereunder. Of the 6,314,747 remaining shares,
approximately 112,357 shares of Common Stock will be eligible for sale under
Rules 144 and 701 under the Securities Act on the ninety-first day after the
effectiveness of this offering. Stockholders of the Company, holding in the
aggregate 6,202,390 shares of Common Stock, have agreed, subject to certain
limited exceptions, not to sell or otherwise dispose of any of the shares
held by them as of the date of this Prospectus for a period of 180 days after
the date of this Prospectus (the "lock-up period") without the prior written
consent of Hambrecht & Quist LLC. However, Hambrecht & Quist LLC may in its
sole discretion and at any time without notice, release all or any portion of
the securities subject to lock-up agreements. At the end of the
aforementioned lock-up period, an additional 3,950,728 shares of Common Stock
(plus approximately 371,669 shares issuable upon exercise of vested options
and outstanding warrants) will be eligible for immediate resale, subject to
compliance with Rules 144 and Rule 701 under the Securities Act. An
additional 2,177,587 shares of Common Stock held by existing stockholders
will become eligible for sale at various times over a period of less than two
years and could be sold earlier if the holders exercise any available
registration rights. The holders of 4,750,296 shares of Common Stock have the
right in certain circumstances to require the Company to register their
shares under the Securities Act for resale to the public beginning at the end
of the lock-up period. If such holders, by exercising their demand
registration rights, cause a large number of shares to be registered and sold
in the public market, such sales could have an adverse effect on the market
price for the Company's Common Stock. If the Company were required to include
in a Company-initiated registration shares held by such holders pursuant to
the exercise of their piggyback registration rights, such sales may have an
adverse effect on the Company's ability to raise needed capital and could
also have an adverse effect on the market price for the Company's Common
Stock. In addition, approximately 90 days after the date of this Prospectus,
the Company expects to file a registration statement on Form S-8 registering
a total of approximately 1,560,654 shares of Common Stock subject to
outstanding stock options or reserved for issuance under the Company's stock
option and stock purchase plans. See "Management--Director Compensation,"
"--Stock Plans," "Description of Capital Stock," "Shares Eligible for Future
Sale--Registration Rights" and "Underwriting."
Immediate and Substantial Dilution. Purchasers of the shares of Common
Stock offered hereby will experience immediate and substantial dilution in
the net tangible book value of their investment from the initial
12
<PAGE>
public offering price. Additional dilution will occur upon exercise of
outstanding options and warrants. See "Dilution," "Description of Capital
Stock--Stock Purchase Warrants" and "Shares Eligible for Future Sale."
Absence of Dividends. To date, the Company has neither declared nor paid
any cash dividends on shares of its Common Stock and does not anticipate
paying any cash dividends in the foreseeable future. See "Dividend Policy."
Forward-looking Statements. This Prospectus contains forward-looking
statements, which may be deemed to include the Company's plans to continue
the development and achieve commercial introduction of its product
candidates. Actual results could differ from those projected in any
forward-looking statement for the reasons detailed in the other sections of
this "Risk Factors" section or elsewhere in this Prospectus.
13
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock offered by the Company hereby, at an assumed initial public
offering price of $10.00 per share, are estimated to be $17,900,000
($20,690,000 if the Underwriters' over-allotment option is exercised in
full). The Company expects to use the net proceeds for research and
development and funding of clinical trials in support of regulatory and
reimbursement approvals and for working capital and general corporate
purposes. The Company is not yet able to estimate precisely the allocation of
the proceeds among such uses, and the timing and amount of expenditures will
vary depending upon numerous factors. The Company's Board of Directors and
management retain complete discretion with respect to the allocation of such
proceeds and the timing of expenditures. Although the Company may use a
portion of the net proceeds for possible licensing or acquisition of products
and technologies that are complementary to those of the Company, or
acquisitions of businesses that are complementary to those of the Company,
there are no current plans or commitments in this regard. Pending such uses,
the Company plans to invest the net proceeds in investment grade,
interest-bearing securities. The Company intends to invest and use the
proceeds so as not to be considered an "investment company" under the
Investment Company Act of 1940, as amended.
The Company believes that the net proceeds from the offering and its
existing cash and cash equivalents will be sufficient to fund its operations
through June 1998. Thereafter, the Company may require additional funds to
support its operating requirements or for other purposes and may seek to
raise such additional funds through public or private equity financing or
from other sources. There can be no assurance that additional financing will
be available at all or that, if available, such financing would be obtainable
on terms favorable to the Company and would not be dilutive. See "Risk
Factors--Future Capital Needs; Uncertainty of Additional Funding," "-- Broad
Discretion of Management to Allocate Proceeds" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."
DIVIDEND POLICY
To date, the Company has neither declared nor paid any cash dividends on
shares of its Common Stock and does not anticipate paying any cash dividends
in the foreseeable future.
14
<PAGE>
CAPITALIZATION
The following table sets forth, at September 30, 1996, (i) the actual
capitalization of the Company, (ii) the pro forma capitalization of the
Company, giving effect to the conversion upon the closing of the offering of
6,738,076 shares of Preferred Stock into 4,750,296 shares of Common Stock and
(iii) the capitalization of the Company on an as adjusted basis to give
effect to the issuance and sale by the Company of 2,000,000 shares of Common
Stock (at an assumed initial public offering price of $10.00 per share and
after deducting underwriting discounts and commissions and offering
expenses). This table should be read in conjunction with the Financial
Statements of the Company and the Notes thereto included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
September 30, 1996
-------------------------------------
Actual Pro forma As Adjusted
---------- --------- -----------
(in thousands)
<S> <C> <C> <C>
Capital lease obligations, less current portion $ 198 $ 198 $ 198
Series B Redeemable Convertible Preferred Stock, $.01 par value;
2,655,138 shares authorized; 2,643,736 shares issued and
outstanding actual; none issued and outstanding pro forma and as
adjusted 6,171 -- --
Series C Redeemable Convertible Preferred Stock, $.01 par value;
1,445,536 shares authorized; 1,432,318 shares issued and
outstanding actual; none issued and outstanding pro forma and as
adjusted 3,485 -- --
Series D Redeemable Convertible Preferred Stock, $.01 par value;
1,740,002 shares authorized; 1,700,002 shares issued and
outstanding actual; none issued and outstanding pro forma and as
adjusted 5,515 -- --
Series E Redeemable Convertible Preferred Stock, $.01 par value;
868,329 shares authorized; 868,329 shares issued and outstanding
actual; none issued and outstanding pro forma and as adjusted 5,320 -- --
Stockholders' equity deficit (1):
Series A Convertible Preferred Stock, $.01 par value; 104,388
shares authorized; 93,691 shares issued and outstanding actual;
none issued and outstanding pro forma and as adjusted 1,038 -- --
Common Stock, $.01 par value; 15,000,000 shares authorized;
1,539,673 shares issued and outstanding actual; 6,289,969 shares
issued and outstanding pro forma; 8,289,969 shares issued and
outstanding as adjusted (2) 15 63 83
Additional paid-in capital 94 18,187 36,067
Accretion of dividends on redeemable convertible preferred stock (3,388) -- --
Accumulated deficit (6,235) (6,235) (6,235)
Total stockholders' equity (deficit) (8,476) 12,015 29,915
------- ------- -------
Total capitalization $12,213 $12,213 $30,113
======= ======= =======
</TABLE>
- -------------
(1) Effective upon the closing of this offering, the Company's Restated
Certificate of Incorporation will be further amended and restated to,
among other matters, reduce the number of authorized shares of Preferred
Stock from 6,813,393 to 1,000,000. See "Description of Capital
Stock--Preferred Stock."
(2) Excludes (i) 1,292,517 shares of Common Stock issuable upon exercise of
options outstanding at September 30, 1996 at a weighted average exercise
price of $2.20 per share, of which options to purchase 329,330 shares of
Common Stock were exercisable, and (ii) 79,696 shares of Common Stock
issuable of upon exercise of warrants outstanding at September 30, 1996
at a weighted average exercise price of $3.98 per share. See
"Management--Stock Plans," "Description of Capital Stock" and Notes 8 and
9 to Notes to Financial Statements.
15
<PAGE>
DILUTION
As of September 30, 1996, the Company had a pro forma net tangible book
value of approximately $12.0 million, or $1.91 per share of Common Stock. Pro
forma net tangible book value per share represents the amount of total
tangible assets, less total liabilities, divided by the number of shares of
Common Stock then outstanding after giving effect to the conversion of all
outstanding shares of Preferred Stock into shares of Common Stock upon the
completion of this offering. After giving effect to the sale of 2,000,000
shares of Common Stock offered hereby at an assumed initial public offering
price of $10.00 per share and after deduction of the estimated underwriting
discounts and commissions and offering expenses payable by the Company, the
adjusted pro forma net tangible book value of the Company as of September 30,
1996 would have been $29.9 million, or $3.61 per share of Common Stock. This
represents an immediate increase in pro forma net tangible book value of
$1.70 per share to existing investors and an immediate dilution of $6.39 per
share of to new investors. The following table illustrates this per share
dilution:
<TABLE>
<S> <C> <C>
Assumed initial offering price per share $10.00
Pro forma net tangible book value per share before the offering $1.91
Increase attributable to new investors 1.70
-----
Adjusted pro forma net tangible book value per share after the offering 3.61
------
Dilution per share to new investors $ 6.39
======
</TABLE>
The following table summarizes on a pro forma basis as of September 30,
1996 the difference between the number of shares of Common Stock purchased
from the Company, the total consideration paid and the average price per
share paid:
<TABLE>
<CAPTION>
Shares Purchased Total Consideration
---------------------- ------------------------- Average Price
Number Percent Amount Percent Per Share
------------ --------- -------------- --------- ---------------
<S> <C> <C> <C> <C> <C>
Existing stockholders 6,289,969 75.9% $18,494,711 48.0% $ 2.94
New investors 2,000,000 24.1 20,000,000 52.0 10.00
--------- ---- ----------- ---- ------
Total 8,289,969 100.0% $38,494,711 100.0%
========= ===== =========== =====
</TABLE>
The foregoing computations assume no exercise of warrants or stock options
outstanding at September 30, 1996, at which date there were 1,292,517 shares
of Common Stock issuable upon exercise of outstanding options at a weighted
average exercise price of $2.20 per share, of which options to purchase
329,330 shares of Common Stock were exercisable, and 79,696 shares of Common
Stock issuable of upon exercise of outstanding warrants at a weighted average
exercise price of $3.98 per share. See "Management--Stock Plans" and
"Description of Capital Stock."
16
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data for the period from inception
(November 29, 1988) through March 31, 1993, the nine months ended December
31, 1995, and for each of the two years in the period ended March 31, 1995 are
derived from Financial Statements of the Company which have been audited by
Ernst & Young LLP, independent auditors. The financial statements as of
December 31, 1995 and March 31, 1995 and the nine months ended December 31,
1995 and for each of the two years in the period ended March 31, 1995 and the
report of Ernst & Young LLP relating thereto are included elsewhere herein.
The financial data for the nine months ended September 30, 1996 and 1995 are
derived from unaudited financial statements included elsewhere herein. The
unaudited financial statements include all adjustments, consisting of normal
recurring accruals, which the Company considers necessary for a fair
presentation of the financial position and the results of operations for
these periods. Operating results for the nine months ended September 30, 1996
are not indicative of the results that may be expected for the entire year
ending December 31, 1996. The following data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations," the Financial Statements, related Notes and other financial
information included herein.
<TABLE>
<CAPTION>
Nine Months
Period from inception Year Ended Nine Months Ended
(November 29, 1988) March 31, Ended September 30,
through March 31, --------------------- December 31, ----------------------
1993 1994 1995 1995 (1) 1995 1996
--------------------- --------- ----------- -------------- ----------- ----------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues $ 1,000 $1,700 $ 412 $ 900 $ 900 $ 9,635
Operating expenses:
Research and development 470 1,382 2,407 4,165 2,989 4,952
General and administrative 841 897 825 1,505 1,349 2,212
------- ------ ------- ------- ------- -------
Total operating expenses 1,311 2,279 3,232 5,670 4,338 7,164
------- ------ ------- ------- ------- -------
Operating income (loss) (311) (579) (2,820) (4,770) (3,438) 2,471
Interest income (expense), net 41 (38) 42 (123) (37) (133)
------- ------ ------- ------- ------- -------
Net income (loss) $ (270) $ (617) $(2,778) $(4,893) $(3,475) $2,338
======= ====== ======= ======= ======= =======
Pro forma:
Net income (loss) per share (2) $ (0.70) $ 0.30
Shares used in per share calculations (2) 6,973 7,711
</TABLE>
<TABLE>
<CAPTION>
March 31,
------------------------------ December 31, September 30,
1993 1994 1995 1995 (1) 1996
-------- --------- --------- -------------- ---------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents $ 114 $ 4,154 $ 1,079 $ 150 $11,735
Working capital (deficit) (142) 3,574 516 (1,327) 10,882
Total assets 1,118 5,050 2,141 1,211 13,815
Capital lease obligations, less current portion 13 292 107 342 198
Redeemable convertible preferred stock -- 4,060 4,791 5,438 20,491
Total stockholders' equity (deficit) 773 81 (3,393) (8,818) (8,476)
</TABLE>
- -------------
(1) The Company changed its fiscal year end from March 31 to December 31
commencing with the fiscal year ended December 31, 1995.
(2) See Note 2 to Notes to Financial Statements for a description of the
calculation of pro forma net income (loss) per share.
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
"Selected Financial Data" and the Company's Financial Statements and Notes
thereto included elsewhere in this Prospectus. Except for the historical
information contained herein, the discussion in this Prospectus contains
certain forward-looking statements that involve risks and uncertainties, such
as statements of the Company's plans, objectives, expectations and
intentions. The cautionary statements made in this Prospectus should be read
as being applicable to all related forward-looking statements wherever they
appear in this Prospectus. The Company's actual results could differ
materially from those discussed here. Factors that could cause or contribute
to such differences include those discussed in "Risk Factors," as well as
those discussed elsewhere herein.
Overview
The Company was incorporated in 1988. Since commencing operations in 1992,
the Company has been engaged principally in the research and development of
its product candidates as well as seeking various regulatory clearances and
patent protection. The Company has had no revenues from product sales and has
incurred losses since inception through September 30, 1996 aggregating
approximately $6.2 million. The Company has received revenues in connection
with various licensing and collaboration agreements. In August 1996, the
Company entered into a strategic alliance with Mallinckrodt pursuant to which
it received $6.0 million in up-front license fees. The agreement provides for
an additional $2.0 million payment upon the earlier of a specified date or
the achievement of an MS-325 development milestone. In March 1996, the
Company entered into a strategic alliance with Daiichi. Under this agreement,
the Company received $3.0 million in license fees and $5.0 million from the
sale of Preferred Stock, and is entitled to receive up to $3.3 million in
future payments based upon the Company's achievement of certain product
development milestones.
The Company reported profitable operating results for the nine-month
period ended September 30, 1996 due to significant license fees and milestone
payments received from Mallinckrodt and Daiichi. However, the Company expects
continued operating losses for the next several years as it incurs expenses
to support research, development and efforts to obtain regulatory approvals.
The Company's initial product candidate, MS-325, is currently the
Company's only product candidate undergoing human clinical trials. The
Company filed an Investigational New Drug ("IND") application for MS- 325 in
July 1996 and initiated Phase I clinical trials in September 1996.
In 1995, the Company changed its fiscal year end from March 31 to
December 31. The Company anticipates fluctuation in its quarterly results of
operations due to several factors, including: the timing of fees and milestone
payments received from strategic partners; the formation of new strategic
alliances by the Company; the timing of expenditures in connection with research
and development activities; the timing of product introductions and associated
launch, marketing and sales activities; and the timing and extent of product
acceptance for different indications and geographical areas of the world.
Results of Operations
Comparison of Nine Months Ended September 30, 1996 and 1995
Revenues. Revenues for the nine-month period ended September 30, 1996 were
$9.6 million as compared to $900,000 for the corresponding period of 1995.
Revenues for the nine-month period ended September 30, 1996 included $6.0
million in license fees and approximately $665,000 of development contract
revenue from Mallinckrodt. Revenues for the period also included $3.0 million
in license fees (net of 10% foreign withholding tax) received from Daiichi
for the rights to commercialize MS-325 in Japan. Revenues for the nine-month
period ended September 30, 1995 consisted entirely of payments received from
a pharmaceutical company as consideration for an option for certain rights to
the Company's future contrast agents in Japan. The option expired and the
rights to the agent were subsequently licensed to a third party.
Research and development expenses. Research and development expenses for
the nine-month period ended September 30, 1996 were $5.0 million as compared
to $3.0 million for the corresponding period of 1995. This increase was due
primarily to increased MS-325 development costs associated with the
commencement of Phase I clinical trials in September 1996.
18
<PAGE>
General and administrative expenses. General and administrative expenses
for the nine-month period ended September 30, 1996 were $2.2 million as
compared to $1.3 million for the corresponding period of 1995. This increase
was due primarily to increased patent costs, higher expenses related to
forming strategic collaborations and compensation associated with additions
to the senior management team. In addition, general and administrative
expenses for the 1996 period included $250,000 of expense incurred in
connection with the restructuring of a liver agent development program which
was terminated by the Company in 1995. The Company expects general and
administrative expenses to increase as the Company's product candidates
advance through clinical trials and to eventual commercialization.
Interest income and expense. Interest income for the nine-month period
ended September 30, 1996 was $140,000 as compared to $63,000 for the
corresponding period of 1995. This increase was due to higher average cash
available for investment. Interest expense for the nine-month period ended
September 30, 1996 was $274,000 as compared to $100,000 for the corresponding
period of 1995. This increase was due to higher borrowings under promissory
notes and bridge loans.
Comparison of Nine Months Ended December 31, 1995 and Years Ended March 31,
1995 and 1994
Revenues. Revenues for the nine-month period ended December 31, 1995
consisted of the aforementioned $900,000 received as consideration for an
option for certain rights to contrast agents which has since expired. Revenue
for the years ended March 31, 1995 and 1994 of $411,000 and $1.7 million,
respectively, consisted principally of research and license fees received
from a Japanese company in connection with a liver agent development program
which was terminated by the Company in 1995.
Research and development expenses. Research and development expenses were
$4.2 million for the nine- month period ended December 31, 1995 as compared
to $2.4 million for the year ended March 31, 1995 and $1.4 million for the
year ended March 31, 1994. The respective year-to-year increases were
attributable to increased payments to third parties for research studies,
hiring of additional staff and building the infrastructure required to
perform research, development and regulatory activities with respect to the
Company's product candidates, principally MS-325.
General and administrative expenses. General and administrative expenses
were $1.5 million for the nine- month period ended December 31, 1995 as
compared to $825,000 for the year ended March 31, 1995 and $897,000 for the
year ended March 31, 1994, reflecting the investment in personnel and
facilities to support the Company's expanded operations. General and
administrative expenses for the year ended March 31, 1994 exceeded those for
the year ended March 31, 1995 due primarily to a finder's fee paid in 1994 to
a third party in connection with identifying possible collaborative partners
for the Company's liver agent development program.
Interest income and expense. Interest income for the nine-month period
ended December 31, 1995 was $28,000 as compared to $121,000 and $29,000 for
the years ended March 31, 1995 and 1994, respectively. The decrease in
interest income for the nine-month period ended December 31, 1995 as compared
to the prior fiscal period was due to lower average cash available for
investment. Interest income for the year ended March 31, 1995 increased over
the prior fiscal year primarily due to higher average invested cash balances
resulting from the Series B Convertible Preferred Stock financing completed
in March 1994. Interest expense for the nine- month period ended December 31,
1995 was $151,000 as compared to $79,000 and $67,000 for the years ended
March 31, 1995 and 1994, respectively. The increased interest expense for the
nine-month period ended December 31, 1995 was due primarily to additional
interest expense related to the convertible promissory notes issued in May
and November 1995.
Liquidity and Capital Resources
The Company has financed its operations since inception principally
through the sale of its Preferred Stock, with proceeds therefrom totaling
$18.4 million (including $3.8 million from convertible debt securities that
were converted to Preferred Stock) and payments aggregating $13.6 million
received from third parties, including Mallinckrodt and Daiichi, in
connection with collaboration and license arrangements. In addition, the
Company arranged capital lease lines under which it has borrowed $1.4 million
to date. From inception through September 30, 1996, the Company has incurred
$19.7 million of costs attributable to operating activities, including $13.4
million related to the research and development of technology and new product
candidates, including MS-325.
19
<PAGE>
The Company has reported only tax losses to date and therefore has not
paid federal or state income taxes since inception. The Company accounts for
income taxes under Statement of Financial Accounting Standards No. 109
(FAS 109). Realization of deferred taxes is dependent on future events and
earnings, if any, the timing and extent of which are uncertain. Accordingly,
the benefit of deferred tax assets has been fully reserved as of September
30, 1996 and 1995. At September 30, 1996, the Company had net operating loss
carryforwards of approximately $7.8 million available to offset future
taxable income. These amounts expire at various times through 2010. As a
result of ownership changes resulting from recent sales of equity securities,
the Company's ability to use the loss carryforwards is subject to limitations
as defined in Sections 382 and 383 of the Internal Revenue Code of 1986, as
amended (the "Code"). The Company currently estimates that the annual
limitation on its use of net operating losses through May 31, 1996 will be
approximately $900,000. Pursuant to Section 382 of the Code, the change in
ownership resulting from this offering and any other future sale of stock may
limit utilization of future losses in any one year. The Company is also
eligible for research and development tax credits, which can be carried
forward to offset federal taxable income. The annual limitation and the
timing of attaining profitability may result in the expiration of net
operating loss and tax credit carryforwards before utilization.
The Company's principal source of liquidity consists of cash and cash
equivalents totaling $11.7 million at September 30, 1996. The Company is
eligible to receive an additional $2.0 million of revenues from Mallinckrodt
and $3.3 million from Daiichi upon the attainment of certain product
development milestones. The Company's agreement with Mallinckrodt requires
Mallinckrodt to fund a portion of the future development costs of MS-325 up
to a specified maximum amount. The Company expects that its cash needs will
increase significantly in future periods due to pending and planned clinical
trials and other increased operating expenses. The Company estimates that the
net proceeds of this offering and existing cash and cash equivalents will be
sufficient to meet the Company's capital requirements through June 1998. The
Company's future capital requirements will, however, depend on many factors,
including the progress of the Company's research and development programs and
clinical trials, the time and costs required to gain regulatory approvals,
the ability of the Company to obtain and retain continued funding from third
parties under collaborative agreements, the costs of filing, prosecuting and
enforcing patents, patent applications, patent claims and trademarks, the
status of competing products and the market acceptance of the Company's
products, if and when approved. The Company may be required to raise
substantial additional funds to complete development of any product candidate
or to commercialize any products if and when approved by the FDA. There can
be no assurance that additional financing will be available on acceptable
terms, if at all.
20
<PAGE>
BUSINESS
Overview
The Company is developing targeted contrast agents both to improve the
capability and expand the use of MRI as a diagnostic tool for a variety of
diseases. The Company's principal product under development, MS-325, is an
injectable vascular contrast agent designed for multiple vascular imaging
indications, including CAD and PVD. The Company believes that MS-325 will
significantly enhance the quality of images and provide physicians with a
clinically superior, noninvasive and cost-effective method for diagnosing
cardiovascular disease. The Company further believes that MS-325 will
simplify the diagnostic pathway for a number of cardiovascular diseases and
in many cases replace highly invasive and expensive X-ray angiography, which
is currently considered the definitive diagnostic exam for assessing
cardiovascular disease. The Company is presently conducting Phase I clinical
trials of MS-325, and 35 subjects have received MS-325 to date with no
clinically significant adverse effects reported. The Company has entered into
strategic alliances with Mallinckrodt and Daiichi for the development and
commercialization worldwide of MS-325 and other vascular contrast agents.
MS-325 is a magnetically active, injectable small molecule. It binds to
the blood protein albumin, remains at high concentrations in the bloodstream
throughout the MRI exam, and is designed to be excreted safely through the
kidneys over time. Because of its affinity for albumin, MS-325 provides the
image acquisition time and signal strength needed to obtain a high contrast,
high resolution image of the cardiovascular system. The Company is also
investigating additional imaging applications for MS-325, including tumor
imaging. The Company believes that its proprietary technology platform will
enable it to create additional contrast agents that target particular tissue
and fluid types. Research efforts are ongoing in the areas of thrombosis and
functional brain imaging.
Magnetic Resonance Imaging Background
In MRI, images are obtained by placing a portion of the patient's body in
a magnetic field and applying safe, low-energy radio waves. The different
organs and tissues in the body respond uniquely to the MRI's electromagnetic
field and these responses are then scanned and converted into a
three-dimensional image. MRI can easily provide high contrast, high
resolution images of anatomy deep inside the body.
The use of MRI, which was developed in the 1970s, has grown steadily over
the past decade due to declining costs, increased clinical effectiveness,
reduced exam times and more comprehensive coverage by third-party payors. As
an example, a standard MRI brain exam, which in 1985 required 60 minutes and
cost approximately $1,500, now takes only 30 minutes, costs approximately
half as much and can identify tumors that are over 50% smaller than those
detectable in 1985. The installed base of MRI scanners in the United States
grew from fewer than 400 scanners in 1985 to an estimated 3,900 in 1995,
during which year there were an estimated 8.5 million MRI exams performed.
Underlying MRI's economic and clinical advancement is the consistent and
rapid technological progress achieved by MRI equipment manufacturers such as
General Electric, Siemens and Philips. Over the past 10 years, MRI equipment
manufacturers have achieved significant improvements in both MRI hardware and
software while reducing the price of a new machine by more than 35%. The
primary hardware components in an MRI scanner are the magnet, gradients,
radio frequency coils and computer processors and memory. Since 1985,
gradients have quadrupled in speed and power, and enhancements in radio
frequency coils have improved the signal-to-noise ratio by over 100%.
Improvements in computer processors, memory and software, including new
techniques to improve scanning, image processing and motion compensation,
have been even more dramatic.
Images obtained in certain applications of MRI can be enhanced through the
use of contrast agents. Contrast agents are injected into a vein in the
patient's arm prior to a scan and are designed to amplify the contrast
between various tissues, organs and anatomic structures. Currently available
MRI contrast agents are primarily non- specific gadolinium compounds which
diffuse throughout the body following injection. They are effective at
enhancing images of certain tissue types, primarily in the brain and spine,
but lack the efficacy to be clinically useful for many vascular applications.
Non-specific contrast agents are used in an estimated 25% of MRI exams and
their usage has grown approximately 40% over the last four years.
MRI has been established as the modality of choice for a broad range of
indications, including brain tumors, many spinal disorders and knee injuries.
Nevertheless, MRI has been used sparingly as an imaging modality for the
vascular system due to its limited ability to image arteries and veins in
patients. In particular, cardiac motion currently
21
<PAGE>
precludes MRI of the coronary arteries. Several leading MRI manufactures,
academic centers and others are developing hardware and software solutions to
the problem of cardiac motion. In both CAD and PVD, clinically significant
magnetic resonance images of the arterial anatomy are also limited by MRI's
inability to provide sufficient contrast between the arteries and the
surrounding tissues. Further, MRI studies using the existing non-specific
contrast agents are limited by their rapid diffusion out of the vascular
system. Consequently, many experts believe MRI contrast agents which remain
in the vascular system for extended periods of time will be necessary to
obtain sufficient contrast for clinically relevant vascular images.
The EPIX Solution
The Company believes that MS-325, together with the anticipated hardware
and software solutions to the cardiac motion problem, will enable widespread
clinical use of MRI to diagnose CAD. The Company also believes that MS-325
will significantly expand the use of currently available MRI equipment in
diagnosing PVD. MS-325 has been designed to be used with MRI to provide
physicians with a clinically superior, noninvasive and cost-effective
diagnostic pathway by eliminating many X-ray angiograms and ancillary tests.
MS-325: Cardiology Indications
Background. It is estimated that approximately 500,000 people in the
United States die of CAD each year, making it the leading cause of death. CAD
is characterized by the accumulation of plaque on the arterial walls, leading
to a disruption in blood flow to the heart muscle. This interruption of blood
to the heart can cause ischemia (lack of oxygen) or infarction (death of
heart tissue) and result in significant morbidity or death. In order to
diagnose a patient who exhibits apparent symptoms of CAD, prescribe an
effective treatment and monitor the results of intervention, a physician
often requires information on the anatomy and function of the heart and,
specifically, the coronary arteries. Due, in part, to the lack of
cost-effective, noninvasive, comprehensive diagnostic imaging procedures,
diagnosis of CAD is currently a complex and expensive process. Based on
independent sources, the Company believes that in 1995 over six million
patients in the United States underwent over 11 million various diagnostic
tests for the diagnosis of CAD at an estimated cost of approximately $7.0
billion. The Company believes that MRI-based cardiac evaluations using MS-325
would simplify the process of diagnosing CAD, significantly improving patient
outcomes and lowering total medical costs.
Traditional Approach to CAD Diagnosis. The current diagnostic process for
CAD is complex, expensive and can involve multiple, often inconclusive,
tests. While the specific diagnostic pathway may vary for any given patient,
several appointments for multiple diagnostic exams may be necessary prior to
formulation of a treatment plan. Figure 1 below outlines the traditional
approach to CAD diagnosis.
Figure 1--Coronary Artery Disease: Traditional diagnostic pathway
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
7% Acute/Critical 60% Drug Therapy
---- Ischemia ---- or Rule Out
| | CAD
| Traditional |
Initial | Non-Invasive |
Chest Pain | Imaging | 50% Drug
Workup | o Stress echo- | ---- Therapy or
| cardiogram | | No Therapy
o EKG | Indeterminate | |
o Exercise |51% Non-acute o Nuclear stress | |27%
stress test ---- Myocardial ---- perfusion study | Coronary ---- PTCA
| Infarction |40% X-ray |
6.75 Million |42% 3.44 Million ---- Angiography |
Patients ---- Rule Out CAD Patients |23%
1.38 Million ---- CABG
Patients
</TABLE>
- --------------------------------------------------------------------------------
22
<PAGE>
An estimated 6.75 million patients enter the CAD diagnostic pathway in the
United States after experiencing chest pain or shortness of breath. An
electrocardiogram ("EKG") is often performed at this stage. Approximately 7%
of these patients present with severe pain and acute or critical ischemia and
are immediately triaged for treatment. For the remaining 93%, the physician
completes a work-up, history and physical exam to determine whether the
patient exhibits symptoms consistent with CAD and has any of the risk factors
for CAD, such as smoking, high cholesterol, family history, excess weight,
diabetes or high blood pressure. A patient with an abnormal EKG or
significant risk factors will likely be referred to a cardiologist for
further testing. The cardiologist will typically continue the work-up with an
exercise stress test. Based on EKG and exercise stress test results, CAD is
ruled out for approximately 42% of all patients entering the diagnostic
pathway. For the remaining 51% of all patients, results of the exercise
stress test are indeterminate and the cardiologist generally will perform a
stress echocardiogram and/or a nuclear stress perfusion study. Approximately
60% of patients undergoing these tests receive either drug therapy or no
further treatment. For the remaining 40% of patients, for whom the stress
echocardiogram or a nuclear stress perfusion study is positive or
indeterminate, a coronary X-ray angiogram is often prescribed. Approximately
50% of the patients who receive coronary X-ray angiograms are either treated
with drugs or require no therapy. If the coronary X-ray angiogram indicates
surgically correctable disease, the patient will be scheduled for a
percutaneous transluminal coronary angioplasty ("PTCA") or referred to a
cardiac surgeon for a coronary artery bypass graft ("CABG").
As indicated above, the following tests are generally part of the
traditional diagnostic pathway for CAD:
(bullet) EKGs measure the electrical potential of the heart using several
surface electrodes. Varying patterns of monitored electrical
activity may indicate heart abnormalities, including ischemic
heart disease or a previous heart attack.
(bullet) Exercise stress tests measure a patient's ability to exercise
without chest pain. For certain patients with extreme results,
the test can be used to confirm or exclude the presence of
blockages which significantly decrease blood flow and sometimes
to prescribe drug therapy. However, for most patients the test is
inconclusive. The test provides no information on the anatomy of
the coronary arteries.
(bullet) Stress echocardiograms use transthoracic ultrasound to measure
motion of the walls of the heart under physical or
pharmacological stress. In most cases, a lack of blood flow to a
particular area of the heart will be reflected in atypical motion
of the heart wall. The test is noninvasive and costs between $300
and $900. While a normal stress echocardiogram usually eliminates
the possibility of blockages which significantly decrease blood
flow, the test is often inconclusive and provides no information
on the anatomy of the coronary arteries. Over 800,000 stress
echocardiograms were performed in the United States in 1995 at an
estimated cost of over $250 million.
(bullet) Nuclear stress perfusion studies, which measure the flow of blood
to cardiac tissue, can be used either as the critical diagnostic
test prior to X-ray angiography or to confirm the impact on blood
flow of an intermediate blockage identified through X-ray
angiography. These tests are noninvasive, use small quantities of
ionizing radiation and cost between $600 and $1,400. A patient is
injected with a radiopharmaceutical and then a gamma camera is
used to detect uptake of the agent in the heart muscle. A
deficiency in blood flow to particular regions of the heart is
shown on the resultant images. While the test can identify the
effects of CAD, it provides no information on the anatomy of the
coronary arteries and it cannot determine the location of
blockages. Approximately 2.7 million nuclear stress perfusion
studies were conducted in the United States in 1995 at an
estimated cost of $1.9 billion.
(bullet) Coronary X-ray angiography is currently considered by many to be
the definitive diagnostic exam for imaging the coronary artery
anatomy. It uses conventional X-ray technology enhanced with
iodinated contrast media. Coronary X-ray angiography is highly
invasive and costs between $2,000 and $6,000 per procedure. The
procedure requires an interventional cardiologist to puncture the
femoral artery in the patient's groin area and feed a catheter up
into the patient's heart. During X-ray imaging, up to 100
milliliters of contrast media are injected into the catheter,
effectively replacing blood flow in the heart and associated
arteries for approximately two seconds. This cardiac
catheterization must be performed in a surgical setting and
requires patient monitoring for at least six hours after the
procedure. Approximately 5% of patients undergoing a coronary
X-ray angiogram experience serious side effects, including renal
failure, limb loss and death, which may be caused by both the
insertion of the catheter and the high dosage of iodinated
radio-opaque dye. In
23
<PAGE>
addition, coronary X-ray angiography does not always provide
sufficient information for clinical decision- making. While the
procedure identifies the location of arterial blockages, in many
cases it cannot conclusively determine their impact on blood
flow. Therefore, for many blockages, a nuclear stress perfusion
study must be performed to enable the physician to make a
definitive diagnosis. Due to the expensive nature of coronary
X-ray angiography, its high risk of complications, and the fact
that approximately 50% of the patients undergoing coronary X-ray
angiograms ultimately are diagnosed as having conditions that do
not warrant invasive therapy, physicians employ a battery of
tests to triage patients in an effort to avoid this procedure.
However, because a diagnostic coronary X-ray angiogram is
currently the only test that can image the coronary artery
anatomy, approximately 1.4 million such procedures were performed
in the United States in 1995 at an approximate cost of $3.8
billion.
The EPIX Approach to CAD Diagnosis. The Company believes that MS-325,
coupled with anticipated advances in software and hardware for MRI equipment,
will enable physicians to use cardiac MRI to perform a noninvasive,
integrated cardiac exam for the diagnosis of CAD. Such a procedure is
designed to provide information on coronary artery anatomy, including
location of arterial blockages, perfusion and cardiac function, in one
sitting early in the diagnostic pathway, thereby achieving better patient
outcomes at a lower cost. Figure 2 below outlines the EPIX approach to the
diagnosis of CAD.
Figure 2--Coronary Artery Disease: EPIX diagnostic pathway
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
7% Acute/Critical 80% Drug Therapy
---- Ischemia ---- or Rule Out CAD
| |
| EPIX Solution |
Initial | MS-325/MRI |
Chest Pain | Imaging | 9% Coronary
Workup | o Anatomy ---- X-ray ---- CABG
| | Angiography
o EKG | Indeterminate o Perfusion |
o Exercise |51% Non-acute | 0.31 Million
stress test ---- Myocardial ---- o Function | Patients
| Infarction |11%
6.75 Million |42% 3.44 Million ---- PTCA
Patients ---- Rule Out CAD Patients
</TABLE>
- --------------------------------------------------------------------------------
The Company believes that the use of MS-325 with MRI to perform integrated
cardiac exams will simplify and improve the diagnostic work-up for CAD by
enabling noninvasive cardiologists (approximately 80% of all cardiologists)
to visualize the coronary arteries noninvasively early in the work-up. Under
the EPIX approach for CAD assessment, a patient who has an indeterminate EKG
and exercise stress test would be referred for a noninvasive, integrated
cardiac exam. Unlike the invasive nature of coronary X-ray angiography, the
patient would receive a single injection of MS-325 in a vein in the arm prior
to the exam and then enter the MRI scanner. The exam is expected to provide
the physician with three-dimensional anatomic detail of the coronary arteries
as well as the perfusion and functional information currently provided by
stress echocardiograms and nuclear stress perfusion studies. Based on the
results of the MS-325-based integrated cardiac exam, the cardiologist would
either prescribe no treatment, prescribe drug therapy or refer the patient to
an interventional cardiologist for a PTCA or surgical planning for a CABG.
Only in the limited number of cases where CABG is deemed necessary would the
patient be subjected to invasive coronary X-ray angiography for surgical
planning.
The Company believes that the EPIX simplified diagnostic pathway could
result in significant cost savings to the United States healthcare system for
the diagnosis of CAD. These savings are predicated on providing
24
<PAGE>
noninvasive coronary artery anatomic information earlier in the CAD work-up.
In 1995, for the approximately 3.44 million patients in the United States
completing the traditional diagnostic pathway, the total cost of the
diagnostic work-up for CAD was approximately $5.4 billion. Under the EPIX
approach to diagnosis of CAD, both stress echocardiograms and nuclear stress
perfusion studies could be eliminated. In addition, because an MRI exam with
MS-325 is expected to provide physicians with anatomic information early in
the CAD work-up, the Company believes that half of the patients who undergo
coronary X-ray angiography but do not ultimately require invasive therapy
will be able to avoid a coronary X-ray angiogram. The estimated total cost
for the 3.44 million patients completing the EPIX diagnostic pathway for CAD
would be $3.2 billion, yielding approximately $2.2 billion in savings to the
United States healthcare system based on estimated 1995 procedure costs.
Figure 3--Estimated Savings: Traditional CAD diagnostic
pathway versus EPIX diagnosit pathway
- --------------------------------------------------------------------------------
Traditional
60% Drug Therapy
$500 ---- or Rule Out
| CAD
Traditional |
Non-Invasive |
Imaging | 50% Drug
o Stress echo- | ---- Therapy or
cardiogram | | Rule Out CAD
| |
o Nuclear stress | $2,700 |27%
perfusion study | Coronary ---- PTCA
|40% X-ray |
---- Angiography |
|23%
3.44 Million ---- CABG
Patients
1.38 Million
Patients
Estimated Total U.S. Cost = $5.4 billion
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EPIX
80% Drug Therapy
---- or Rule Out CAD
$700 |
EPIX Solution |
MS-325/MRI |
Imaging | 9% Coronary
o Anatomy ---- X-Ray ---- CABG
| Angiography
o Perfusion |
| 0.31 Million
o Function | Patients
|11%
3.44 Million ---- PTCA
Patients
Estimated Total U.S. Cost = $3.2 billion
- --------------------------------------------------------------------------------
Post-Intervention Monitoring and "Relooks." The Company believes that,
after either a PTCA or a CABG, optimal patient management would include
follow-up exams to determine re-forming of blockages ("restenosis") as well
as proper functioning of grafts. However, while it is estimated that
approximately 400,000 PTCAs and 500,000 CABGs were performed in the United
States in 1995, only a small proportion of the patients undergoing these
procedures received follow-up coronary X-ray angiography ("relooks"). Due to
the risk, discomfort and expense associated with coronary X-ray angiography,
follow-up imaging currently is limited, which can lead to increased patient
management costs and poorer outcomes due to undiagnosed restenosis and other
complications. The Company believes that the availability of MS-325 may lead
to an increase in follow-up exams using MRI. Furthermore, the Company
believes that MS-325 would enable noninvasive cardiologists to visualize the
coronary arteries of the increasing number of patients who have been treated
with thrombolytic therapy (streptokinase and TPA).
25
<PAGE>
MS-325: Radiology Indications
Background. PVD affects arteries throughout the body and results in
significant morbidity and mortality. There are approximately 600,000 vascular
operations, 400,000 strokes and 100,000 amputations (primarily related to PVD)
each year in the United States. Similar to CAD, blockage of arteries outside the
heart can lead to ischemia (lack of oxygen) or infarction (death of tissue).
Complications from PVD include pain, limitations in mobility, amputation of the
extremities, hypertension, kidney failure in the case of renal arteries, or
stroke in the case of carotid or cerebral arteries. The need for imaging the
vascular system outside the heart extends to many areas of the body, including
the carotid arteries, vessels of the leg, the aorta and pulmonary arteries.
Traditional Approach to PVD Diagnosis. A patient with PVD may present
with a wide range of symptoms, such as leg pain, gangrene, hypertension, renal
failure, stroke or transient ischemic attack ("TIA"). The appropriate initial
diagnostic tests vary according to the particular PVD indication. Traditional
imaging modalities for diagnosing PVD, such as ultrasound, nuclear medicine and
CT, frequently do not provide definitive diagnostic information. For example,
ultrasound and renal nuclear scans have poor image quality, leading to exams
which are frequently indeterminate. CT can be used for certain radiological
applications, but can only image a limited area during each scan due to the
large amounts of potentially toxic X-ray contrast media required.
With the exception of imaging carotid arteries, MRI has not made a
significant impact on the diagnosis of PVD to date. Non-contrast MRI studies
of the vascular system, which measure blood flow and not anatomy, are often
ineffective when used in patients with disease because of their limitations
in imaging the blood flow associated with PVD, which may be either minimal or
turbulent. Even for the imaging of carotid arteries, where flow-based MRI has
had a substantial clinical impact, the lack of direct anatomic data limits
its ability to provide a quantitative measurement of stenosis required for
accurate diagnosis. MRI studies using existing non-specific contrast agents
are limited by the rapid diffusion of the agents out of the vascular system.
As with the diagnostic work-up of CAD, a peripheral X-ray angiogram is
generally considered to be the definitive diagnostic exam for radiological
indications. In the work-up of PVD of the lower extremities, for example, the
patient typically presents with leg pain, gangrene or limited mobility. The
surgeon checks the patient's pulse in the ankles and performs two noninvasive
exams, impedance plethysmography and ankle brachial index measurements, which
confirm that the patient has PVD and often localizes the disease within the
limb. An ultrasound exam is sometimes performed at this stage. Peripheral
X-ray angiography is then performed to visualize the extent of the disease
and to plan for surgery. Like coronary X-ray angiograms, peripheral X-ray
angiograms are performed in a surgical setting and involve the puncture of
the femoral artery in the groin area, the placement of a catheter in the
artery and the replacement of blood by X-ray contrast media. While peripheral
X-ray angiograms have slightly lower morbidity rates compared to coronary
X-ray angiograms, the risks are significant with complications, including
limb loss and renal failure, occurring at a rate of 1.7%. The cost of
peripheral X-ray angiography is estimated to range from less than $1,000 to
almost $3,000 per procedure. Despite the drawbacks of peripheral X-ray
angiography, approximately 1.9 million of these procedures were performed in
the United States in 1995. Figure 4 below outlines the traditional diagnostic
pathway for various forms of PVD.
26
<PAGE>
Figure 4--Peripheral Vascular Disease: Traditional diagnostic pathway
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Anatomic Area Current Diagnostic Exams
- ----------------------
Carotid Ultrasound
Artery ---- MRI ----| |
- ---------------------- | |
| |
- ---------------------- | |
Aorta ---- CT | ---- Surgery
- ---------------------- Ultrasound ----| |
| Peripheral |
- ---------------------- | X-ray |
Renal Renal nuclear scan | Angiography |
Arteries ---- Ultrasound ----| | Percutaneous
- ---------------------- | ---- Transluminal
| | Angioplasty
- ---------------------- Impedance | | (PTA)
Extremities ---- plethysmography (IPG) | |
- ---------------------- Ankle Brachial Index (ABI) ----| |
| Ultrasound
|
|
|
[GRAPHIC OF HUMAN BODY]
</TABLE>
- --------------------------------------------------------------------------------
The EPIX Approach to PVD Diagnosis. The Company believes that the use of
MS-325 with MRI will simplify and improve the PVD diagnostic pathway by
enabling radiologists to visualize peripheral arteries noninvasively with
high resolution early in the work-up. MS-325 is designed to remain in the
blood vessels for over an hour providing sufficient time for detailed images
of the vascular system. By significantly increasing the contrast of the
vascular system and using the MRI equipment currently in widespread use, the
Company believes that MS-325 will enable MRI to overcome the principal
problem that has limited its clinical effectiveness in diagnosing PVD.
An MRI exam utilizing MS-325 is intended to provide sufficient anatomic
detail for a definitive diagnosis and the anatomic data necessary for
surgical planning. Unlike peripheral X-ray angiography which, due to its
invasive and painful nature, high cost and risk of complications, is often
deferred in favor of noninvasive, often inconclusive exams, an MRI exam
utilizing MS-325 is intended for use early in the PVD work-up. Phase I
clinical trials, although not completed, have yielded measurements of signal
intensity over time consistent with the Company's belief that MRI with MS-325
will provide physicians with diagnostic information clinically equivalent to
peripheral X-ray angiography earlier in the diagnostic pathway. Consequently,
the Company believes that MS- 325-based MRI exams would not only replace a
large portion of the approximately 1.9 million peripheral X-ray angiograms
performed in the United States each year, but would also be used in a
significant number of instances where ultrasound, nuclear medicine or other
noninvasive modalities are currently employed but lack definitive diagnostic
capability as described above. Based upon estimated 1995 procedure costs, the
Company believes that the use of MS-325 with MRI to diagnose PVD could yield
savings to the United States healthcare system of nearly $1.0 billion.
Thrombosis is another vascular disease outside the heart that is diagnosed
with a variety of radiological imaging techniques. Commonly referred to as
"blood clots," thrombosis can occur in the legs, arms, pelvis, lungs and
neck, and is the cause of over 400,000 deaths per year in the United States.
Blood clots can cause death from a pulmonary embolus, stroke or heart attack.
Ultrasound and nuclear stress perfusion studies are used early
27
<PAGE>
in the work-up in an attempt to defer peripheral X-ray angiography because of
cost, mortality and complications. These noninvasive modalities are often
indeterminate. Although limited in use because of the mortality and
complication rate, peripheral X-ray angiography, as in PVD, continues to be
considered by many to be the definitive diagnostic tool. The Company believes
that an MRI exam using MS-325 will be able to noninvasively provide
diagnostic information which is clinically equivalent to peripheral X-ray
angiography for the diagnosis of blood clots in selected cases.
Business Strategy
The Company's objective is to become a leader in MRI contrast agents. It
will seek to do so by pursuing a strategy based on commercializing MS-325 and
developing new applications for its proprietary technology platform. The
Company's key business objectives are to:
Establish the safety and clinical utility of MS-325 for multiple vascular
imaging indications. The Company is conducting Phase I clinical trials to
establish the safety of MS-325 for human use, after which it intends to
conduct Phase II and Phase III clinical trials for multiple cardiology and
radiology indications. The Company intends to conduct the clinical trial
programs for cardiology and radiology indications concurrently to the extent
possible.
Achieve market acceptance of MS-325. The Company intends to collect
pharmacoeconomic and clinical data that demonstrates that MRI enhanced with
MS-325 is superior to the traditional diagnostic pathway. Through its
strategic partners' extensive worldwide marketing and sales networks, the
Company intends to present this data to both physicians and third-party
payors. The Company believes that third-party payors will promote the use of
MS-325 because of its potential for substantial cost savings and clinical
benefits.
Broaden the use of MS-325 to additional clinical indications. The Company
intends to evaluate MS-325 for use in the diagnosis of various tumors. For
example, the Company is currently planning a Phase II clinical trial for the
use of MS-325 in the diagnosis of breast cancer. Based on the physical
properties of MS-325 and preclinical studies, the Company believes that
MS-325 has potential application as part of a noninvasive imaging procedure
that would enable physicians to discriminate between malignant and benign
breast masses in patients with indeterminate mammograms or palpable lumps.
Develop new targeted MRI contrast agents. In addition to evaluating the
use of MS-325 in diagnosing thrombosis, the Company is developing
thrombosis-specific MRI contrast agents based on its proprietary technology
platform. The Company is also pursuing a discovery program for functional
brain imaging.
Maximize the value of strategic alliances. The Company currently has
strategic alliances with Mallinckrodt and Daiichi. The Company entered into
these alliances, and will seek to enter into future strategic alliances with
pharmaceutical and imaging agent industry leaders, in order to obtain access
to resources and infrastructure to leverage the Company's strengths.
Technology
Background
The products under development by the Company are based upon its
proprietary biophysics technology platform. The Company's product candidates
are small molecule chelates containing a magnetically active metal element
which elicit a strong MRI signal and are designed to be safely excreted
through the kidneys over time. The Company has developed significant
expertise in the design, synthesis and characterization of metal- containing
complexes for in vivo use. While the contrast agents primarily used in MRI
today are non-targeted in that they diffuse indiscriminately throughout the
tissues of the body, the Company believes that its proprietary technology
platform will enable it to design contrast agents which are capable of
targeting specific tissues or organs by binding to particular proteins. The
Company's proprietary biophysics technology platform consists of two key
elements:
Receptor-Induced Magnetic Enhancement
Receptor-induced magnetic enhancement ("RIME") technology, which was
developed by Dr. Randall Lauffer, the Company's founder, while at
Massachusetts General Hospital ("MGH"), allows targeting of a contrast agent
to particular tissue and fluid types in the body while simultaneously
multiplying the signal enhancing effect of the agent and is now exclusively
licensed by the Company under patents held by MGH. RIME technology involves
the design of metal complexes that bind to particular proteins and receptor
molecules
28
<PAGE>
in the body. This binding causes increased concentration and retention of the
contrast agent in the specific tissues and fluids that contain targeted
receptor molecules. The binding also causes a special magnetic effect based
on the complex biophysics of MRI contrast agents. One of the factors that
determines an MRI contrast agent's signal enhancing effect is its rotation,
or tumbling rate, in solution. When an agent binds to a large molecule
through the RIME process, the agent's tumbling rate decreases substantially,
resulting in a corresponding increase in the strength of the agent's magnetic
signal, which is detectable by MRI.
Enzyme Sensing Technology
Developed by EPIX scientists, enzyme sensing technology is an extension of
the RIME technology that allows MRI to probe biological events on the
molecular level for the first time, thereby increasing the sensitivity of
MRI. The Company is developing small molecule contrast agents that become
active in the presence of certain enzymes which allows them to bind to their
target receptor molecules and express their full RIME signal enhancement.
Because the presence of elevated levels of particular enzymes occur only in
certain biological situations, enzyme sensing technology would allow MRI to
scan for specific biological events currently undetectable with MRI.
EPIX Products and Development Programs
MS-325
The Company's lead product candidate, MS-325, is a targeted vascular
contrast agent intended for use with MRI. MS-325 is a gadolinium-based small
molecule chelate, engineered with the Company's proprietary RIME technology.
Animal studies have demonstrated that, when injected into the bloodstream,
MS-325 binds reversibly to the blood protein albumin and is designed to be
excreted safely through the kidneys over time. This allows the agent to
remain at high concentrations in the bloodstream during the imaging procedure
and then be gradually excreted from the body. The Company has designed the
half-life of the agent to allow for the optimal imaging window of at least
one hour. In animal studies, MS-325 has exhibited signal enhancement that is
significantly stronger than currently available agents. In an image enhanced
by MS-325 using standard MRI techniques, the blood, which is infused with
gadolinium, gives off a strong magnetic signal and appears bright while the
surrounding tissue gives off a very low magnetic signal and appears dark.
While MS-325 is based on the Company's proprietary technology platform,
its chemical composition is similar to currently available MRI contrast
agents which have a strong safety record and are known to cause few, if any,
side effects. Furthermore, due to the increased magnetic signal elicited by
MS-325, the Company expects it to be used at a similar or lower dose than
currently available MRI contrast agents. As a result of these factors, the
Company believes that MS-325 will have a safety profile comparable to
currently available MRI contrast agents.
The Company submitted an IND application for MS-325 to the FDA on July 22,
1996 and commenced a Phase I clinical trial on September 6, 1996. Thirty-five
subjects participated in the clinical safety monitoring portion of the trial,
which ended on November 22, 1996. Eighteen of these subjects, who were
divided into three different dosing groups, participated in a typical Phase I
safety study in which the dose of MS-325 was gradually increased from one
group to the next. The remaining 17 subjects, who received the highest dose
tested, were also imaged in order to confirm the appropriateness of the dose
and to evaluate the imaging characteristics of MS-325. Vital signs, blood
chemistries and other biological and physical markers were monitored in all
subjects. Based on preliminary results, no clinically significant adverse
effects have been reported. The Company anticipates that the final audit of
the Phase I data will be completed by February 1997. Assuming successful
completion of the Phase I clinical trial, the Company intends to conduct
concurrent but separate Phase II and Phase III clinical trials for different
cardiology and radiology indications.
In addition to the diagnosis of CAD and PVD, the Company intends to pursue
the use of MS-325 for additional clinical indications, including thrombosis,
commonly referred to as "blood clots." The Company believes that MRI with
MS-325 could eliminate the need for selected ultrasound and nuclear medicine
studies of thrombosis while providing, noninvasively, diagnostic information
which is clinically equivalent to that provided by peripheral X-ray
angiography.
The Company further believes that, based on the physical properties of
MS-325 and preclinical studies, MS- 325 has potential application as part of
a noninvasive imaging procedure that would enable physicians to
29
<PAGE>
discriminate between malignant and benign breast masses in patients with
indeterminate mammograms or palpable lumps. Another potential application for
MS-325 in the diagnosis of breast cancer is in defining the size of malignant
lesions. The Company believes that an MRI breast exam using MS-325 could
allow better determination of eligibility for breast-conserving therapy.
Other Research and Development Programs
Thrombosis Imaging. The Company is developing new agents designed
specifically for imaging blood clots. The Company is seeking to develop a
targeted contrast agent and protocol that would enable MRI to illuminate blood
clots against a dark background. The Company believes that its proprietary
technology platform could also enable MRI to differentiate old and new clot
formations and that such a product would change the diagnostic pathway for many
of the conditions associated with thrombotic disease, including pulmonary
embolism and deep vein thrombosis. The Company believes that use of the new
approach would lead to better medical outcomes due to earlier definitive
diagnosis. Early diagnosis is especially important for clots in the pelvis and
vena cana because of their increased likelihood of migrating to the lungs where
the clots can be fatal. The Company believes that a thrombosis-specific contrast
agent could largely replace the noninvasive modalities currently in use,
including nuclear medicine ventilation/perfusion scans.
Functional Brain Imaging. Functional brain imaging involves measuring
small changes in the brain to, in effect, "watch" the brain function in real
time. In the past, these cognitive function mapping studies were done using
modalities such as electro-encephalograms and nuclear medicine, both of which
are generally recognized to have low resolution and provide limited clinical
information. Recently however, investigators at a number of institutions,
including MGH, have developed a new brain imaging technique using MRI. Even
in its present experimental form, the technique is rapidly being adopted by
many leading neuroscience centers throughout the world. The technique detects
small increases in blood volume or flow that accompany the greater metabolic
activity in stimulated brain regions, thus allowing one to watch, in real
time, different regions of the brain "light up" as a person thinks, moves or
views objects. At present, studies are being conducted using a specialized
MRI technique which does not employ a contrast agent. However, these studies
are currently difficult to interpret since blood flow changes induced by
cognitive activity are subtle and associated signals are weak. Clinical
applications of functional brain imaging are potentially broad, including
pre-surgical planning, neurodegenerative disease diagnosis and psychiatry.
EPIX is currently conducting preclinical testing of prototype brain
imaging agents with researchers at MGH based on the Company's proprietary
technology platform. The Company is seeking to establish the feasibility of
developing an agent that would be able to magnify the signal from small
volume changes in blood flow to particular areas of the brain. The Company
believes that such a contrast agent could enable highly illuminated
three-dimensional MRI scans of brain function.
Strategic Alliances
The Company's strategy includes entering into alliances with leaders in
the pharmaceutical and diagnostic imaging industries to facilitate the
development, manufacture, marketing, sale and distribution of its products.
To date, the Company has formed strategic alliances with Mallinckrodt and
Daiichi for the development and commercialization of MS-325. See "Risk
Factors--Dependence on Strategic Partners."
Mallinckrodt Group Inc.
Pursuant to a collaboration agreement between the Company and
Mallinckrodt, which was executed in August 1996, the Company granted
Mallinckrodt an exclusive license to develop and commercialize MS-325
worldwide, excluding Japan. The agreement also provides for potential
collaboration and cost sharing arrangements in connection with future MRI
vascular agent programs, whether developed by the Company or Mallinckrodt or
in-licensed by either party. The operations of the collaboration are
supervised by a joint steering committee comprised of an equal number of
representatives of both parties. Mallinckrodt and the Company will
collaborate on the clinical development of MS-325, beginning with Phase I
clinical trials. The Company has primary responsibility for conducting Phase
I and Phase II clinical trials and for manufacturing MS-325 for such trials.
Mallinckrodt will assume primary responsibility for development and
manufacturing starting with Phase III clinical trials. Mallinckrodt will also
be responsible for the marketing and distribution of MS-325 worldwide,
excluding Japan. The agreement imposes certain development due diligence
obligations on both of the parties and certain marketing due diligence
obligations on Mallinckrodt.
30
<PAGE>
The Company received a $6.0 million license fee upon execution of the
agreement with Mallinckrodt. The agreement provides for an additional $2.0
million payment upon the earlier of a specified date or the achievement of an
MS-325 milestone. Mallinckrodt and the Company will share in the worldwide,
excluding Japan, development and manufacturing scale-up and product launch
costs of MS-325 and all future MRI vascular agents which may be covered by
the agreement. The parties' current obligations with respect to MS-325
development costs are limited to a specified amount. Under the arrangement,
the Company will share in future operating profits, if any.
The agreement provides that Mallinckrodt may not develop, market or sell
any MRI vascular agent worldwide except Japan other than those that are part
of the collaboration without the approval of the joint steering committee (in
which case they, if approved, would become part of the collaboration).
Daiichi Radioisotope Laboratories, Ltd.
Pursuant to a development and license agreement, which was entered into in
March 1996, the Company granted Daiichi an exclusive license to develop and
commercialize MS-325 in Japan. Under this arrangement, Daiichi will assume
primary responsibility for clinical development, regulatory approval,
marketing and distribution of MS-325 in Japan. The Company retained the right
and obligation to manufacture MS-325 for development activities and
commercial sale under the agreement. However, Daiichi may, under certain
circumstances, elect to formulate MS-325 purchased from the Company into a
final product. The agreement imposes certain development due diligence
obligations on both parties and marketing due diligence obligations on
Daiichi. The agreement may be terminated by Daiichi upon 30 days prior
written notice if Daiichi determines in its reasonable opinion that MS- 325
lacks clinical efficacy, presents serious side effects or otherwise exhibits
unacceptable properties. In connection with this strategic alliance, the
Company received an up-front fee from Daiichi in the amount of $3.0 million
and Daiichi is required to make future payments to EPIX up to an aggregate
amount of $3.3 million, upon the achievement of certain MS-325 development
milestones. Daiichi also made a $5.0 million equity investment in the
Company. Daiichi will make royalty payments to the Company on net sales of
MS-325 in Japan.
In 1992, the Company entered into an agency agreement with Sumitomo
Corporation ("Sumitomo") whereby the Company engaged Sumitomo as its
exclusive agent to assist the Company in entering into arrangements with
third parties for the development and commercialization of vascular, liver
and tumor MRI agents in Japan. Sumitomo assigned this agreement to Summit
Pharmaceuticals International Corporation ("Summit") in 1995. In accordance
with the agreement, the Company paid Summit a specified percentage on all
amounts received by the Company from Daiichi to date and will make payments
to Summit on future milestone payments it receives from Daiichi, if any. The
Company will be obliged to make such payments with respect to future
arrangements with partners headquartered in Japan if entered into prior to
the first anniversary of the termination of the agency agreement.
Competition
The healthcare industry is characterized by extensive research efforts and
rapid technological change, and there are many companies that are working to
develop products similar to the Company's. There are currently no
FDA-approved targeted vascular contrast agents for use with MRI. However,
there are a number of non- specific MRI agents approved for marketing in the
United States and certain foreign markets that are likely to compete with the
Company's products for certain applications. Magnevist(R) by Schering-AG,
Dotarem(R) by Guerbet, S.A., Omniscan(R) by Nycomed Imaging ASA, and
ProHance(R) by Bracco S.p.A. are all such products. The Company is aware of
other agents under development that may have application in vascular imaging.
There can be no assurance that the Company's competitors will not succeed in
the future in developing products that are more effective than any that are
being developed by the Company. The Company believes that its ability to
compete within the MRI contrast agent market is dependent on a number of
factors, including the success and timeliness with which it completes FDA
trials, the breadth of applications, if any, for which it receives approval,
and the effectiveness, cost, safety and ease of use of the Company's products
in comparison to the products of the Company's competitors. The success of
the Company will also be based on physician acceptance of MRI as a primary
imaging modality for certain cardiovascular and other applications. See "Risk
Factors-- Uncertainty of Market Acceptance of Technology and Products."
The Company has many competitors including pharmaceutical, biotechnology
and chemical companies, a number of which, including both of the Company's
strategic partners, are actively developing and marketing
31
<PAGE>
products that, if commercialized, would compete with the Company's product
candidates. Many of these competitors have substantially greater capital and
other resources than the Company and may represent significant competition
for the Company. Such companies may succeed in developing technologies and
products that are more effective or less costly than any of those that may be
developed by the Company, and such companies may be more successful than the
Company in developing, manufacturing and marketing products. Furthermore,
there are several well-established medical imaging modalities that currently
compete, and will continue to compete, with MRI, including X-ray angiography,
CT, nuclear medicine and ultrasound. Other companies are actively developing
the capabilities of the competing modalities to enhance their effectiveness
in CVS imaging. There can be no assurance that the Company will be able to
compete successfully in the future or that developments by others will not
render MS-325 or the Company's future product candidates obsolete or
non-competitive or that the Company's collaborators or customers will not
choose to use competing technologies or products.
Patents and Proprietary Rights
EPIX considers the protection of its proprietary technologies to be
material to its business prospects. The Company pursues a comprehensive
patent program in the United States and in other countries where it believes
that significant market opportunities exist.
The Company owns or has exclusively licensed patents and patent
applications on the critical aspects of its core technology as well as many
specific applications of this technology. EPIX has exclusively licensed two
patents in the United States broadly covering RIME technology, albumin
binding with metal chelates, and liver targeting metal chelates, and has
received notice of allowance for similar patent applications in Japan and
Europe. The Company has exclusively licensed four additional patents in the
United States and received notice of allowance of an additional U.S. patent
covering novel metal chelates, with similar patent applications in Japan and
Europe. Finally, the Company has patent applications pending in the United
States, Japan and Europe covering various aspects of its RIME technology. The
Company's patent protection for MS-325 currently extends to 2007 in the
United States, Japan and Europe. If the currently pending patent applications
issue, this protection will be extended until 17 years after the date of
issue in the United States, and until 2016 in Europe and Japan.
An issued patent grants to the owner the right to exclude others from
practicing inventions claimed therein. In the United States, a patent filed
before June 8, 1995 is enforceable for 17 years from the date of issuance or
20 years from the deemed date of filing the underlying patent applications,
whichever is longer. Patents based on applications filed from June 8, 1995
expire 20 years from the deemed date. The General Agreement on Tariffs and
Trade provides that patents whose applications were filed on or after June 8,
1995 are effective for 20 years from filing. This new rule is generally
regarded as unfavorable to pharmaceutical companies, where the time period
between patent filing and commercialization of the patented product may be
extended many years because of the lengthy development cycle and regulatory
process.
The patent positions of pharmaceutical and biopharmaceutical firms involve
complex legal and factual questions. There can be no assurance that the
Company's issued patents, or any patents that may be issued in the future,
will effectively protect the Company's technology or provide a competitive
advantage. There can be no assurance that any of the Company's patents or
patent applications will not be challenged, invalidated or circumvented in
the future.
The Company's commercial success will also depend on its ability to
operate without infringing upon the patents of others in the United States
and abroad. If any third-party patents are upheld as valid and enforceable in
any judicial or administrative proceeding, the Company could be prevented
from practicing the subject matter claimed in such patents, or would be
required to obtain licenses from the patent owners of each such patent, or to
redesign its products or processes, to avoid infringement. There can be no
assurance that such licenses would be available or, if available, would be
available on terms acceptable to the Company or that the Company would be
successful in any attempt to redesign its products or processes to avoid
infringement. Accordingly, an adverse determination in a judicial or
administrative proceeding or failure to obtain necessary licenses could
prevent the Company from manufacturing and selling its products, which would
have a material adverse effect on the Company's business, financial condition
and results of operations.
There are pending or issued patents, held by parties not affiliated with
the Company, relating to technologies used by the Company in the development
or use of certain of the Company's product candidates. In particular,
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the Company is aware of certain patents in the United States, Japan and
elsewhere owned by or licensed to one party that relate to MRI contrast agents
and which may cover certain of the Company's MRI product candidates, including
MS-325. Mallinckrodt, one of the Company's partners, has rights from this third
party under those patents which the Company and Mallinckrodt believe will permit
Mallinckrodt to manufacture, market and sell MS-325 and other products developed
pursuant to the collaboration agreement between the Company and Mallinckrodt
were MS-325 and those other products to be held to fall within the claims of
those third-party patents. If the agreement with Mallinckrodt is terminated by
either party, the Company would be required to enter into a strategic alliance
with another party having a license from this third party or obtain a license
from this third party directly or from others licensed by this third party in
order to manufacture, market and sell MS-325 and other chelate-based MRI
contrast agents. However, there can be no assurance that the Company would be
able to consummate a strategic alliance with a party having this third-party
license or obtain a license on commercially reasonable terms, if at all. The
patent rights of this third party in Japan will expire in 2002, before such time
as the Company presently anticipates that Daiichi will have material sales of
MS-325 in Japan and, therefore, the Company believes that the existence of such
patents in Japan is unlikely to have a material adverse effect on the Company.
However, in the event that Daiichi commercializes MS-325 in Japan before 2002,
it may be required to obtain an appropriate license or take other measures to
avoid infringement of the third party patents, including delaying the
commencement of product sales. There can be no assurance that the Company's
current or future activities will not be challenged, that additional patents
will not be issued containing claims materially constraining the proposed
activities of the Company, that the Company will not be required to obtain
licenses from third parties, or that the Company will not become involved in
costly, time-consuming litigation regarding patents in the field of contrast
agents, including actions brought to challenge or invalidate the Company's own
patent rights. At the same time, the Company is aware of certain products under
development by the third party referred to above and others which it believes
may infringe certain of the Company's exclusively licensed patents. The Company
intends to pursue license or cross-license arrangements with or, if necessary
and appropriate, infringement proceedings against, these parties upon their
seeking final regulatory approval for the marketing and sale of any such
products. See "Risk Factors--Uncertainty Regarding Patents and Proprietary
Rights. "
Many of the Company's competitors are continuing to actively pursue patent
protection for activities and discoveries similar to the Company's. There can be
no assurance that these competitors, many of which have substantially greater
resources than the Company and have made substantial investments in competing
technologies, will not in the future seek to assert that the Company's products
or chemical processes infringe their existing patents and/or will not seek new
patents that claim to cover aspects of the Company's technology. Furthermore,
patent applications in the United States are maintained in secrecy until patents
issue, and patent applications in foreign countries are maintained in secrecy
for a specified period after filing. Publication of discoveries in the
scientific or patent literature tends to lag behind actual discoveries and the
filing of related patent applications. In addition, patents issued and patent
applications filed relating to biopharmaceuticals are numerous. Therefore, there
can be no assurance that the Company is aware of all competitive patents, either
pending or issued, that relate to products or processes used or proposed to be
used by the Company.
The Company and MGH have entered into a license agreement pursuant to
which MGH has granted the Company an exclusive worldwide license to the
patents and patent applications which relate to the Company's only product
candidate, MS-325. The MGH License imposed certain due diligence obligations
with respect to the development of products covered by the license, all of
which have been fulfilled to date. The MGH License requires the Company to
pay royalties on net sales of MS-325 by the Company. The Company must also
pay MGH a percentage of all royalties received by the Company from its
sublicensees. Accordingly, the Company will be required to make payments to
MGH on profits generated under the Mallinckrodt collaboration, if any, and on
royalties received from Daiichi under its license agreement, if any. Failure
of the Company to comply with these requirements could result in the
conversion of the license from being exclusive to non-exclusive in nature or
termination of the license agreement itself. Any such event would have a
material adverse effect on the Company's business, financial condition and
results of operations.
The pharmaceutical and biotechnology industries have been characterized by
extensive litigation regarding patents and other intellectual property
rights. Litigation may be necessary to enforce any patents issued to the
Company and or determine the scope and validity of others' proprietary
rights. The Company may have to participate in interference proceedings
declared by the United States Patent and Trademark Office or by foreign
agencies to determine the priority of inventions. Any involvement in
litigation surrounding these issues could
33
<PAGE>
require extensive costs to the Company as well as be a significant
distraction for management. Such costs could have a material adverse effect
on the Company's business, financial condition and results of operations.
The Company also relies upon trade secrets, technical know-how, and
continuing technological innovation to develop and maintain its competitive
position. The Company typically requires its employees, consultants, and
advisors to execute confidentiality and assignment of inventions agreements
in connection with their employment, consulting or advisory relationships
with the Company. These agreements require disclosure and assignment to the
Company of ideas, developments, discoveries and inventions made by employees,
consultants and advisors. There can be no assurance, however, that these
agreements will not be breached or that the Company will have adequate
remedies for any breach. Furthermore, no assurance can be given that
competitors will not independently develop substantially equivalent
proprietary information and techniques or otherwise gain access to the
Company's proprietary technology, or that the Company can meaningfully
protect its rights in unpatented proprietary technology.
The Company intends to vigorously protect and defend its intellectual
property. Costly and time-consuming litigation brought by the Company may be
necessary to enforce patents issued to the Company, to protect trade secrets
or know-how owned by the Company, or to determine the enforceability, scope,
and validity of the proprietary rights of others. See "Risk
Factors--Uncertainty Regarding Patents and Proprietary Rights."
Manufacturing
The Company currently manufactures, as part of its ongoing development
efforts, small non-GMP batches of MS-325 in its laboratories located in
Cambridge, Massachusetts. The Company has contracted for the manufacture in
accordance with GMP of MS-325 from outside contractors for use in preclinical
and Phase I and II clinical trials. As part of its strategic alliance with
the Company, Mallinckrodt will serve as primary manufacturer for MS-325
thereafter. If Mallinckrodt is unable to produce MS-325 in adequate amounts
and at a reasonable cost or to comply with any applicable regulations,
including GMP, it could have a material adverse effect on the Company's
business, financial condition and results of operations. Furthermore, should
Mallinckrodt fail to fulfill its manufacturing responsibilities
satisfactorily, the Company could be forced to find an alternative
manufacturer. There can be no assurance that the Company would be able to
find such an alternative manufacturer. In the event the Company was forced to
develop its own FDA-approved full-scale manufacturing capability, it would
require significant expenditures of capital and management attention and
resources and could require the Company to obtain a license from a third
party, and would result in a delay in the approval or commercialization of
MS-325. There can be no assurance that the Company would be able to obtain
such a license on commercially reasonable terms, if at all. The Company
currently procures the raw materials for the various components of MS-325
from a broad variety of vendors and, wherever possible, maintains
relationships with multiple vendors for each component. There are a number of
components of MS- 325 for which the largest suppliers may have significant
control over the market price due to controlling market shares. If any one of
the Company's suppliers decided to increase prices significantly or reduce
quantities of any component of MS-325 available for sale to the Company, it
could have a material adverse effect on the Company's ability to
commercialize MS-325 and on the Company's business, financial condition and
results of operations. See "Business--Strategic Alliances," "Risk
Factors--Uncertainty Regarding Products and Proprietary Rights," "--Limited
Manufacturing Capability" and "--Dependence on Suppliers."
Government Regulation
The manufacture and commercial distribution of the Company's product
candidates are subject to extensive governmental regulation in the United
States and other countries. Pharmaceuticals, including contrast imaging
agents for use with MRI, are regulated in the United States by the FDA under
the Food, Drug and Cosmetic Act ("FD&C Act") and require FDA approval prior
to commercial distribution. Pursuant to the FD&C Act, pharmaceutical
manufacturers and distributors must be registered with the FDA and are
subject to ongoing FDA regulation, including periodic FDA inspection of their
facilities and review of their operating procedures. Noncompliance with
applicable requirements can result in failure to receive approval, withdrawal
of approval, total or partial suspension of production, fines, injunctions,
civil penalties, recalls or seizure of products and criminal prosecution,
each of which would have a material adverse effect on the Company's business,
financial conditions and results of operations.
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In order to undertake clinical trials and market pharmaceutical products
for diagnostic or therapeutic use in humans, the procedures and safety
standards established by the FDA and comparable agencies in foreign countries
must be followed. In the United States, a company seeking approval to market
a new pharmaceutical must obtain FDA approval of a new drug application
("NDA"). Before an NDA may be filed, however, a certain procedure is
typically followed. This includes: (i) performance of preclinical laboratory
and animal studies; (ii) submission to the FDA of an application for an IND,
which must become effective before human clinical trials may commence; (iii)
completion of adequate and well-controlled human clinical trials to establish
the safety and efficacy of the pharmaceutical for its intended application;
(iv) submission to the FDA of an NDA; and (v) approval of the NDA by the FDA
prior to any commercial sale or shipment of the agent.
Preclinical studies include laboratory evaluation of product chemistry and
animal studies to assess the potential safety and efficacy of the product and
its formulation. The results of the preclinical studies are submitted to the
FDA as part of an IND, and unless the FDA objects, the IND will become
effective 30 days following its receipt by the FDA. Clinical trials are
conducted in accordance with protocols that detail the objectives of the
study, the parameters to be used to monitor safety and the efficacy criteria
to be evaluated. Each protocol together with information about the clinical
investigators who will perform the studies and the institutions at which the
trials will be performed are submitted to the FDA as part of the IND. An
independent institutional review board ("IRB") at each institution at which
the trial will be conducted will also be asked by the principal investigator
at that institution to approve, according to FDA regulations governing IRBs,
the trials that will be performed at that institution. The IRB will consider,
among other things, ethical factors, the protection of human subjects and the
possible liability of the institution.
Clinical trials under the IND are typically conducted in three sequential
phases, but the phases may overlap. In Phase I, the initial introduction of
the pharmaceutical into humans, the pharmaceutical is tested for safety,
dosage tolerance, metabolism, distribution, excretion and clinical
pharmacology in healthy adult subjects. Imaging agents may also be subject to
a Phase IB trial under which an agent's imaging characteristics in humans are
first evaluated. Phase II involves a detailed evaluation of the safety and
efficacy of the agent in a range of doses in patients with the disease or
condition being studied. Phase III clinical trials typically consist of
evaluation of safety and efficacy in a larger patient population and at more
institutions.
The Company submitted an IND for MS-325 to the FDA on July 22, 1996 and
commenced Phase I clinical trials on September 6, 1996. The clinical safety
monitoring portion of the trial ended on November 22, 1996. Upon the
successful completion of the Phase I clinical trials, the Company intends to
conduct concurrent but separate Phase II and Phase III clinical trials for
different cardiology and radiology indications. The process of completing
clinical testing and obtaining FDA approval for a new product is likely to
take a number of years. When the study as described in the IND is complete,
and assuming that the results support the safety and efficacy of the product
for that indication, the Company intends to submit an NDA to the FDA. The NDA
approval process can be expensive, uncertain and lengthy. Although the FDA is
supposed to complete its review of an NDA within 180 days of the date that it
is filed, the review time is often significantly extended by the FDA which
may require more information or clarification of information already provided
in the NDA. During the review period, an FDA advisory committee likely will
be asked to review and evaluate the application and provide recommendations
to the FDA about approval of the pharmaceutical. In addition, the FDA will
inspect the facility at which the pharmaceutical is manufactured to ensure
compliance with GMP and other applicable regulations. Failure of the
third-party manufacturers to comply or come into compliance with GMP
requirements could significantly delay FDA approval of the NDA. The FDA may
grant an unconditional approval of an agent for a particular indication or
may grant approval conditioned on further post-marketing testing and/or
surveillance programs to monitor the agent's efficacy and side effects.
Results of these post-marketing programs may prevent or limit the further
marketing of the agent. In addition, additional studies and a supplement to
the initially approved NDA will be required to gain approval for the use of
an approved product in indications other than those for which the NDA was
approved initially.
While the Company, because of its agreement with Mallinckrodt, does not
currently intend to manufacture any of its products itself once they are
approved, it may choose to do so in the future. Should the Company decide to
manufacture its products, the Company would be required to obtain a license
from a third party having rights to patents which may cover certain of the
Company's contrast agents. There can be no assurance that the Company would
be able to obtain such a license from the third party. Furthermore, the
Company's
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<PAGE>
manufacturing facilities would be subject to inspection and approval by the
FDA before the Company could begin commercial distribution of product from
its own manufacturing facilities. See "Business--Patents and Proprietary
Rights" and "Risk Factors--Uncertainty Regarding Patents and Proprietary
Rights."
After an NDA is approved, the Company would continue to be subject to
pervasive and continuing regulation by the FDA, including record keeping
requirements, reporting of adverse experience from the use of the agent and
other requirements imposed by the FDA. FDA regulations also require FDA
approval of an NDA supplement for certain changes if they affect the safety
and efficacy of the pharmaceutical, including, but not limited to, new
indications for use, labeling changes, the use of a different facility to
manufacture, process or package the product, changes in manufacturing methods
or quality control systems and changes in specifications for the product.
Failure by the Company to receive approval of an NDA supplement could have a
material adverse effect on the Company's business, financial condition and
results of operations.
The advertising of most FDA-regulated products is subject to FDA and
Federal Trade Commission jurisdiction, but the FDA has sole jurisdiction over
advertisements for prescription drugs. The Company is and may be subject to
regulation under state and Federal law regarding occupational safety,
laboratory practices, handling of chemicals, environmental protection and
hazardous substance control. The Company also will be subject to other
present and possible future local, state, federal and foreign regulation.
Failure to comply with regulatory requirements could have a material adverse
effect on the Company's business, financial conditions and results of
operations.
Approval and marketing of pharmaceutical products outside of the United
States are subject to regulatory requirements that vary widely from country
to country. In the European Union ("EU"), the general trend has been towards
coordination of common standards for clinical testing of new agents, leading
to changes in various requirements imposed by each EU country. The level of
regulation in the EU and other foreign jurisdictions varies widely. The time
required to obtain regulatory approval from comparable regulatory agencies in
each foreign country may be longer or shorter than that required for FDA
approval. In addition, in certain foreign markets the Company may be subject
to governmentally mandated prices for its products.
Regulations regarding the approval, manufacture and sale of the Company's
product candidates are subject to change. The Company cannot predict what
impact, if any, such changes might have on its business, financial condition
or results of operations.
The Company's research, development and manufacturing processes require
the use of hazardous substances and testing on certain laboratory animals. As
a result, the Company is also subject to federal, state, and local laws,
regulations and policies governing the use, generation, manufacture, storage,
air emission, effluent discharge, handling and disposal of certain materials
and waste as well as the use of and care of laboratory animals. These laws
and regulations are all subject to change. The Company cannot predict what
impact, if any, such changes might have on its business, financial condition
or results of operations.
Reimbursement
The Company expects that sales volumes and prices of its products will be
dependent in large measure on the availability of reimbursement from
third-party payors and that individuals seldom would be willing or able to
pay directly for all the costs associated with procedures which in the future
may incorporate the use of the Company's products. The Company expects that
its products will be purchased by hospitals, clinics, doctors and other users
that bill various third-party payors, such as Medicare, Medicaid and other
government insurance programs, and private payors including indemnity
insurers, Blue Cross Blue Shield plans and managed care organizations
("MCOs") such as health maintenance organizations. Most of these third-party
payors provide coverage for MRI for some indications when it is medically
necessary, but the amount that a third-party payor will pay for MRI may not
include a separate payment for a contrast imaging agent that is used with
MRI. Reimbursement rates vary depending on the procedure performed, the
third-party payor, the type of insurance plan and other factors. For example,
Medicare pays hospitals a prospectively determined amount for an in-patient
stay based on a Medicare beneficiary's discharge diagnosis related group
("DRG"). This payment includes payment for any procedure, including MRI, that
is performed while a beneficiary is in the hospital. No additional payment is
made for contrast agents used during the procedure. Other third-party payors
may pay a hospital an additional amount for an MRI procedure performed on an
in-patient according to another methodology such
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<PAGE>
as a fee schedule or a percentage of charge. Such payment may or may not
include a payment for a contrast imaging agent. In the outpatient setting,
Medicare and other third-party payors may pay for all, some portion of, or
none of the cost of contrast agents used with MRI.
Third-party payors carefully review and increasingly challenge the prices
charged for procedures and medical products. In the past few years, the
amounts paid for radiology procedures in particular have come under careful
scrutiny and have been subject to decreasing reimbursement rates. In
addition, an increasing percentage of insured individuals are receiving their
medical care through MCOs which monitor and often require preapproval of the
services that a member will receive. Many MCOs are paying their providers on
a capitated basis which puts the providers at financial risk for the services
provided to their patients by paying them a predetermined payment per member
per month. The percentage of individuals covered by MCOs is expected to grow
in the United States over the next decade. Even Medicare is shifting many of
its beneficiaries into managed care plans. The Company believes that the
managed care approach to healthcare and the growth in capitated arrangements
and other arrangements under which the providers are at financial risk for
the services that are provided to their patients will facilitate the market
acceptance of its products, as it believes that the use of its products will
significantly lower the overall costs and improve the effectiveness of
managing patient populations. There can be no assurance, however, that the
Company's products will be available, will lower costs of care for any
patients or that providers will choose to utilize them even if they do, or if
reimbursement will be available.
In foreign markets, reimbursement is obtained from a variety of sources,
including governmental authorities, private health insurance plans and labor
unions. In most foreign countries, there are also private insurance systems
that may offer payments for alternative therapies. Although not as prevalent
as in the United States, health maintenance organizations are emerging in
certain European countries. The Company may need to seek international
reimbursement approvals, although there can be no assurance that any such
approvals will be obtained in a timely manner or at all. Failure to receive
international reimbursement approvals could have a material adverse effect on
market acceptance of the Company's product candidates in the international
markets in which such approvals are sought.
The Company believes that reimbursement in the future will be subject to
increased restrictions such as those described above, both in the United
States and in foreign markets. The Company believes that the overall
escalating cost of medical products and services has led to, and will
continue to lead to, increased pressures on the health care industry, both
foreign and domestic, to reduce the cost of products and services, including
products offered by the Company. There can be no assurance, in either the
United States or foreign markets, that third party reimbursement and coverage
will be available or adequate, that current reimbursement amounts will not be
decreased in the future or that future legislation, regulation, or
reimbursement policies of third-party payors will not otherwise adversely
affect the demand for the Company's product candidates or its ability to sell
its product candidates on a profitable basis, particularly if MRI exams
enhanced with the Company's contrast agents are more expensive than competing
vascular imaging techniques that are equally effective. The unavailability or
inadequacy of third-party payor coverage or reimbursement could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Product Liability Insurance
The clinical and commercial development of pharmaceuticals, including
contrast imaging agents such as those being developed by the Company, may
entail exposure to product liability claims. While the Company has never been
subject to any liability claims stemming from the manufacture of or
preclinical or clinical trials of its products, there can be no assurance
that it will not face such claims in the future. While the Company currently
has product liability insurance coverage for the clinical research use of its
product candidates, there can be no assurance that such coverage limits will
be adequate nor that a successful product liability lawsuit would not have a
material adverse effect on the Company. The Company does not have product
liability insurance coverage for the commercial sale of its products but
intends to obtain such coverage if and when its products are commercialized.
If and when MS-325 or other EPIX product candidates are approved for
marketing by the FDA, or similar foreign regulatory bodies, there can be no
assurance that sufficient product liability insurance will be available on
terms acceptable to the Company or at all.
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Facilities
The Company leases a total of 17,050 square feet of space at 71 Rogers
Street and adjacent locations, all in Cambridge, Massachusetts. The lease
runs until December 31, 1997. The Company believes that its current
facilities are adequate to meet its requirements for the foreseeable future.
Employees
As of November 30, 1996 the Company employed 36 persons on a full-time
basis, of which 26 were involved in research and development and 10 in
administration and general management. Fifteen of the Company's employees
hold Ph.D. or M.D. degrees. The Company believes that its relations are good
with all of its employees. None of the Company's employees is a party to a
collective bargaining agreement. See "Management-- Executive Officers and
Directors."
Legal Proceedings
The Company is not a party to any material legal proceedings.
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MANAGEMENT
Executive Officers and Directors
The following table sets forth certain information regarding the executive
officers, directors and key employees of the Company as of November 30, 1996:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Michael D. Webb 38 President, Chief Executive Officer, Secretary and
Director
James E. Smith, Ph.D. 53 Executive Vice President, Research and Development
Randall B. Lauffer, Ph.D. 39 Chief Scientific Officer and Director
E. Kent Yucel, M.D. 40 Senior Vice President and Chief Medical Officer
Susan M. Flint 45 Vice President, Regulatory Affairs
Stephen C. Knight, M.D. 36 Vice President, Strategic Planning and Corporate
Development
Jeffrey R. Lentz 43 Vice President, Finance and Administration, Chief
Financial Officer, Treasurer and Assistant
Secretary
Christopher F. O. Gabrieli (1)(2) 36 Chairman of the Board
Luke B. Evnin, Ph.D. (1)(2) 33 Director
Stanley T. Crooke, M.D., Ph.D. (1) 51 Director and Chairman of the Scientific Advisory
Board
</TABLE>
- -------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
Michael D. Webb joined EPIX in December 1994 from Ciba-Corning
Diagnostics, Inc., where he was most recently Senior Vice President,
Worldwide Marketing and Strategic Planning. During his tenure at Ciba from
April 1989 to December 1994, Mr. Webb's achievements included the development
and commercialization of the ACS:180(r) immunodiagnostics system. From 1984
to 1989, Mr. Webb was a senior consultant at Booz, Allen & Hamilton, Inc.,
specializing in healthcare and life sciences. Mr. Webb holds an MM degree in
marketing and finance from the J.L. Kellogg Graduate School of Management at
Northwestern University.
Dr. James E. Smith has over 20 years experience in the in vivo diagnostics
industry. Prior to joining EPIX in February 1996, Dr. Smith worked for 16
years at Du Pont Merck Pharmaceutical Company, where his experience included
research and development, regulatory, QA/QC and manufacturing for the radio-
pharmaceutical division, most recently as Senior Director of
Radiopharmaceutical Research and Development. Dr. Smith has published and
lectured on radiopharmaceutical research and development. Dr. Smith received
his Ph.D. degree in inorganic chemistry from the University of Washington.
Dr. Randall B. Lauffer, Chief Scientific Officer, founded the Company in
November 1988 and served as Chief Executive Officer until December 1994 and
as Chairman until October 1996. From November 1983 to March 1992, Dr. Lauffer
was a member of the faculty of Harvard Medical School, serving most recently
as Assistant Professor of Radiology from 1987 to 1992. During this time he
was also Director of the NMR Contrast Media Laboratory at MGH as well as an
NIH Postdoctoral Fellow and an NIH New Investigator. Dr. Lauffer is the
primary inventor of the Company's core technology and is the originator of
several types of MRI technology, including hepatobiliary (liver-enhancing)
agents, vascular agents, tissue blood flow agents, and strategies to increase
the magnetic efficiency of MRI agents in the body. He has written over 50
scientific publications and two books, and has been named on several U.S.
patents. Dr. Lauffer holds a Ph.D. degree in inorganic chemistry from Cornell
University.
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<PAGE>
Dr. E. Kent Yucel joined the Company in June 1996. From March 1993 to July
1996, he was Chief of Vascular and Interventional Radiology and Director of
MRI at Boston Medical Center and Professor of Radiology at Boston University
Medical School. From July 1988 to February 1993 he served as Assistant
Professor of Radiology at MGH and Harvard Medical School. Dr. Yucel was
Principal Investigator for a Phase III vascular imaging trial of Prohance(R),
the nonspecific MRI agent now sold by Bracco. Dr. Yucel is the editor and
co-author of Magnetic Resonance Angiography (McGraw-Hill, 1995). Dr. Yucel
received his M.D. degree from Harvard Medical School.
Ms. Susan M. Flint joined the Company in April 1995. She is a Regulatory
Affairs specialist with over twenty years of experience in regulatory
submissions and clinical trials. She was a regulatory affairs/clinical
research consultant to various companies, including EPIX, from April 1993 to
April 1995. Ms. Flint previously held the position of Director of Clinical
Trials at Advanced Magnetics, Inc. from February 1989 to March 1993 and
Director of Regulatory Affairs at Du Pont Pharmaceutical Company from June
1975 to January 1989. She has filed a number of applications for INDs and ten
NDAs, along with several medical device applications. Ms. Flint is certified
by the Regulatory Affairs Professional Society. She received her M.S. degree
in pharmacology from Northeastern University.
Dr. Stephen C. Knight joined the Company in July 1996. From April 1991 to
June 1996, Dr. Knight was a senior consultant with Arthur D. Little
specializing in biotechnology, pharmaceuticals and valuation. Dr. Knight was
also a consultant at APM, Inc., a consulting company. Prior to 1990, Dr.
Knight performed research at AT&T Bell Laboratories, the National Institute
of Neurological and Communicative Diseases and Stroke, and Yale University.
He serves on the board of directors of Pharmos, Inc. Dr. Knight holds an M.D.
from the Yale University School of Medicine and an MPPM degree from the Yale
School of Organization and Management.
Jeffrey R. Lentz joined the Company in May 1996 as Vice President, Finance
and Administration. He is also the Company's Chief Financial Officer and
Treasurer. Prior to joining the Company, Mr. Lentz worked from August 1994 to
May 1996 in private practice as a consultant and in venture capital. Mr.
Lentz served as Director of Finance with Nova Biomedical Corporation from
March 1993 to August 1994 and as a senior manager with Ernst & Young LLP from
November 1986 to November 1992. Mr. Lentz is a certified public accountant
and holds an M.S. degree from Northeastern University.
Christopher F. O. Gabrieli has served as a director of the Company since
February 1994. He has been a General Partner at Bessemer Venture Partners in
Wellesley Hills, Massachusetts since September 1986, where he is responsible
for the firm's venture capital investment activities in healthcare and the
life sciences. He currently serves on the boards of directors of Isis
Pharmaceuticals, where he was a co-founder, Opta Food Ingredients and several
privately held biomedical companies. Prior to joining Bessemer, Mr. Gabrieli
was a founder, President and director of GMIS, Inc., a supplier of clinical
information systems. Mr. Gabrieli is a graduate of Harvard College.
Dr. Luke B. Evnin has served as a director of the Company since February
1994. He is a General Partner at Accel Partners, where he has been involved
in the firm's biomedical investing activities since September 1990. He
currently serves on the boards of directors of several private companies
including Iotek, Sonix Technologies, and Signal Pharmaceuticals. Dr. Evnin
received his Ph.D. degree from the Department of Biochemistry at the
University of California at San Francisco.
Dr. Stanley T. Crooke has served as a director of the Company since
January 1996. Since 1987, he has been Chairman and Chief Executive Officer of
Isis Pharmaceuticals in Carlsbad, California. Dr. Crooke serves on the boards
of directors of GeneMedicine, SIBIA and the Biotechnology Industry
Organization. Dr. Crooke holds an M.D. degree and a Ph.D. degree in
pharmacology, both from Baylor College of Medicine, where Dr. Crooke has
served as an adjunct professor of pharmacology.
The Company, the holders of the Company's Series A and Series B
Convertible Preferred Stock and certain of the holders of the Company's
Common Stock (the "Common Holders"), including Dr. Lauffer, are parties to an
Amended and Restated Stockholders' Voting Agreement pursuant to which each
such stockholder has agreed to elect (i) two directors designated by the
Common Holders and the Series A stockholders, voting together as a class,
(ii) two directors designated by the Series B stockholders, one to be
designated by Accel IV L.P. and certain related persons and one to be
designated by Bessemer Venture Partners III L.P. and (iii) two directors
mutually agreeable to Dr. Lauffer and the holders of a majority of then
outstanding shares of Series
40
<PAGE>
B Convertible Preferred Stock. Drs. Lauffer and Evnin and Mr. Gabrieli were
elected pursuant to this agreement. This agreement will automatically
terminate upon the consummation of this offering.
The Company's Restated Certificate, to be filed concurrently with the
closing of this offering, provides for a classified board of directors
consisting of three classes, with each class being as nearly equal in number
as possible. The term of one class expires and their successors are elected
for a term of three years at each annual meeting of the Company's
stockholders. The Company has designated two class I directors (Drs. Evnin
and Lauffer), one class II director (Dr. Crooke) and two class III directors
(Messrs. Gabrieli and Webb). These class I, class II and class III directors
will serve until the annual meeting of stockholders to be held in 1997, 1998
and 1999, respectively, and until their respective successors are duly
elected and qualified, or until their earlier resignation or removal. The
Restated Certificate provides that directors may be removed only for cause by
a majority of stockholders. See "Description of Capital Stock--Anti-Takeover
Measures." There are no family relationships among any of the directors or
executive officers.
Board Committees
The Company has standing Audit and Compensation Committees of the Board of
Directors. The Audit Committee consists of Dr. Evnin and Mr. Gabrieli. The
primary function of the Audit Committee is to assist the Board of Directors
in the discharge of its duties and responsibilities by providing the Board
with an independent review of the financial health of the Company and of the
reliability of the Company's financial controls and financial reporting
systems. The Audit Committee reviews the general scope of the Company's
annual audit, the fee charged by the Company's independent accountants and
other matters relating to internal control systems.
The Compensation Committee of the Board of Directors determines the
compensation to be paid to all executive officers of the Company, including
the Chief Executive Officer. The Compensation Committee's duties include the
administration of the Company's Amended and Restated 1992 Equity Incentive
Plan (the "Equity Plan") and the 1996 Employee Stock Purchase Plan. The
Compensation Committee is currently composed of Drs. Crooke and Evnin and Mr.
Gabrieli.
Scientific Advisory Board
The Company's Scientific Advisory Board consists of individuals with
demonstrated expertise in various fields who advise the Company concerning
long-term scientific planning, research and development. Members also
evaluate the Company's research program, recommend personnel to the Company
and advise the Company on technology matters. While the Scientific Advisory
Board has not met collectively, its members have been available individually
to advise the Company on specific scientific and technical issues. Scientific
Advisory Board members are compensated on a time and expenses basis and some
members have received nonstatutory stock options under the Equity Plan. The
Company has entered into consulting agreements with a number of the
Scientific Advisory Board members.
No member of the Scientific Advisory Board is employed by the Company, and
members may have other commitments to or consulting or advisory contracts
with their employers or other entities that may conflict or compete with
their obligations to the Company. Accordingly, such persons are expected to
devote only a small portion of their time to the Company. The current members
of the Company's Scientific Advisory Board are:
Stanley T. Crooke, M.D., Ph.D., Chairman of the Scientific Advisory Board.
See "Management--Executive Officers and Directors."
Lawrence H. Cohn, M.D., is Professor of Surgery at Harvard Medical School
and Chief of Cardiac Surgery at the Brigham and Women's Hospital in Boston.
He is a member of the Council on Cardiovascular Surgery at the American Heart
Association and serves on the editorial boards of the Journal of the American
College of Cardiology, American Heart Journal, the Journal of Cardiovascular
Surgery, and the Harvard Heart Letter. Dr. Cohn is an author of over 300
scientific papers in the area of cardiovascular surgery.
Richard S. J. Frackowiak, M.D., is Professor and Head of the Wellcome
Department of Cognitive Neurology and Director of the Leopold Muller
Functional Imaging Laboratory at the Institute of Neurology in London. He is
also Consultant Neurologist at the National Hospital for Neurology and
Neurosurgery. Dr. Frackowiak is Editor-in-Chief of NeuroImage: a Journal of
Brain Function and Deputy Chief Editor of the Journal of
41
<PAGE>
Cerebral Blood Flow and Metabolism. He has published over 200 scientific
papers in the area of function brain imaging.
Jean-Marie Lehn, Ph.D., is Professor of Chemistry at the Universite Louis
Pasteur, Strasbourg, France. He has authored over 400 scientific papers in
the areas of organic, bio-organic and inorganic chemistry. Dr. Lehn shared
the 1987 Nobel Prize in Chemistry for the design of the first cryptand, a
cage-like complexing agent for metal ions.
Kenneth N. Raymond, Ph.D., is Professor of Chemistry at the University of
California, Berkeley. He is Chair of the Inorganic Division of the American
Chemical Society and serves on the editorial boards of Advances in Inorganic
Chemistry, the Journal of Biological Inorganic Chemistry, the Journal of
Coordination Chemistry, and BioMetals. Dr. Raymond has published over 260
scientific papers on the structural, biological and medical aspects of metals
such as iron and gadolinium.
Bruce R. Rosen, M.D., Ph.D., is an Associate Professor of Radiology at
Harvard Medical School and Co- Director of the Massachusetts General Hospital
NMR Center. He is also Director of the Radiological Sciences Joint Program at
the Harvard/Massachusetts Institute of Technology Division of Health Sciences
and Technology. Dr. Rosen serves on the Board of Trustees of the
International Society of Magnetic Resonance in Medicine and is on the
editorial boards of Magnetic Resonance Imaging and the Journal of Computer
Assisted Tomography. He is also Associate Editor of Human Brain Mapping. Dr.
Rosen has published over 100 scientific papers in MRI, including the first
studies of real-time cognitive activity in the human brain.
Burton E. Sobel, M.D., is the E. L. Amidon Professor and Chairman of the
Department of Medicine and Professor of Biochemistry at the University of
Vermont. He is also Physician-in-Chief at Fletcher Allen Health Care in
Burlington, VT. Dr. Sobel is a Fellow of the American College of Cardiology
and the Royal Society of Medicine and has various editorial positions with
Circulation, American Journal of Cardiology, Coronary Artery Disease, and
Fibrinolysis. He has published extensively in the area of coronary artery
disease.
Christopher T. Walsh, Ph.D., is the Hamilton Kuhn Professor and Chairman
of the Department of Biological Chemistry and Molecular Pharmacology at
Harvard Medical School. He is a member of the National Academy of Sciences,
the Institute of Medicine, and the National Institutes of Health General
Medical Sciences Council. Dr. Walsh serves on the Scientific Advisory Boards
of KOSAN Biosciences and IDUN Pharmaceuticals, and he is a director of
LeukoSite. He has over 400 publications in the areas of enzymatic reactions
and the mechanisms of drug action.
Director Compensation
Directors currently receive no compensation for their service on the
Company's Board of Directors except pursuant to the 1996 Director Stock
Option Plan (the "Director Plan") described below.
1996 Director Stock Option Plan. In December 1996, the Board of Directors
and stockholders of the Company adopted the Director Plan. All of the
directors who are not employees of the Company (the "Eligible Directors") are
currently eligible to participate in the Director Plan. There are 66,666
shares of Common Stock reserved for issuance under the Director Plan. Upon
the election or reelection of an Eligible Director, such director is
automatically granted an option to purchase 6,666 shares of Common Stock (the
"Option"). Each Option becomes exercisable with respect to 1,333 shares on
each anniversary date of grant for a period of five years, provided that the
optionee is still a director of the Company at the opening of business on
such date. The Options have a term of ten years. The exercise price for the
Options is equal to the last sale price for the Common Stock on the business
day immediately preceding the date of grant, as reported on the Nasdaq
National Market. The exercise price may be paid in cash or shares of Common
Stock, or a combination of both.
Executive Compensation
The following table sets forth certain compensation information for the
Chief Executive Officer of the Company and the one other executive officer of
the Company whose salary and bonus for the year ended December 31, 1995
exceeded $100,000 (together, the "Named Executive Officers"):
42
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Annual
Compensation
---------------- All Other
Name and Principal Position Year (1) Salary Bonus Compensation
- --------------------------- -------- ------ ----- ------------
<S> <C> <C> <C> <C>
Michael D. Webb, 1995 $175,000 -- $30,000 (2)
President and Chief Executive Officer
Randall B. Lauffer, Ph.D., 1995 158,367 -- 1,100 (3)
Chief Scientific Officer
</TABLE>
- -------------
(1) The Company changed its fiscal year end from March 31 to December 31
beginning with the fiscal year ended December 31, 1995. Amounts shown are
for the calendar year ended December 31, 1995.
(2) Consists of payment made upon commencement of employment with the
Company.
(3) Consists of life insurance premiums paid by the Company on behalf of Dr.
Lauffer on a policy for the benefit of Dr. Lauffer.
The following table sets forth certain information concerning exercisable and
unexercisable stock options held by the Named Executive Officers as of
December 31, 1995:
Aggregated Option Exercises In Last Fiscal Year And
Fiscal Year-End Option Values (1)
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised Options at In-The-Money Options at
Shares Fiscal Year-End Fiscal Year-End (2)
Acquired in Value --------------------------- ----------------------------
Name Exercise Realized (2) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael D. Webb 33,333 $12,370 85,635 211,498 $31,779 $78,487
Randall B. Lauffer,
Ph.D. (3) -- -- -- -- -- --
</TABLE>
- -------------
(1) The Company changed its fiscal year end from March 31 to December 31
commencing with the fiscal year ended December 31, 1995. Amounts shown
are for the calendar year ended December 31, 1995.
(2) Based on the difference between the fair market value of the underlying
shares of Common Stock on December 31, 1995 as determined by the Board of
Directors and the option exercise price.
(3) Dr. Lauffer does not hold any stock options.
Stock Plans
Amended and Restated 1992 Equity Incentive Plan. The Company's 1992 Equity
Incentive Plan was adopted in July 1992 and amended and restated in December
1996 (as amended and restated, the "Equity Plan"). The Equity Plan is
designed to provide the Company flexibility in awarding equity incentives by
providing for multiple types of incentives that may be awarded. The purpose
of the Equity Plan is to attract and retain key employees of and consultants
of the Company and to enable them to participate in the long-term growth of
the Company. The Equity Plan provides for the grant of stock options
(incentive and nonstatutory), stock appreciation rights, performance shares,
restricted stock or stock units for the purchase of an aggregate of 1,599,901
shares of Common Stock, subject to adjustment for stock-splits and similar
capital changes. Awards under the Equity Plan can be granted to officers,
employees and other individuals as determined by the committee of the Board
of Directors which administers the Equity Plan, each of whose members is a
"non- employee director" within the meaning of Rule 16b-3 under the
Securities Act. The Compensation Committee of the Board of Directors
administers the Equity Plan. The Compensation Committee selects the
participants and establishes the terms and conditions of each option or other
equity right granted under the Equity Plan, including the exercise price, the
number of shares subject to options or other equity rights and the time at
which such options become exercisable. The exercise price of all "incentive
stock options" within the meaning of Section
43
<PAGE>
422 of the Code, granted under the Equity Plan must be at least equal to 100%
of the fair market value of the option shares on the date of grant. The term
of any incentive stock option granted under the Equity Plan may not exceed
ten years.
As of November 30, 1996, options to purchase an aggregate of 1,497,644
shares of Common Stock had been granted under the Equity Plan. Options to
purchase 172,574 shares were exercised as of such date and options to
purchase 47,267 shares were cancelled. Of the options to purchase an
aggregate of 1,277,803 shares of Common Stock that were outstanding as of
such date, options to purchase 337,925 shares were exercisable. No stock
appreciation rights or award other than option grants have been granted under
the Equity Plan.
1996 Employee Stock Purchase Plan. In December 1996, the Company adopted
the Company's 1996 Employee Stock Purchase Plan (the "Purchase Plan") under
which employees may purchase shares of Common Stock at a discount from fair
market value. There are 66,666 shares of Common Stock reserved for issuance
under the Purchase Plan. To date, no shares of Common Stock have been issued
under the Purchase Plan. The Purchase Plan is intended to qualify as an
employee stock purchase plan within the meaning of Section 423 of the Code.
Rights to purchase Common Stock under the Purchase Plan are granted at the
discretion of the Compensation Committee, which determines the frequency and
duration of individual offerings under the Purchase Plan and the dates when
stock may be purchased. Eligible employees participate voluntarily and may
withdraw from any offering at any time before stock is purchased.
Participation terminates automatically upon termina- tion of employment. The
purchase price per share of Common Stock in an offering is 85% of the lesser
of its fair market value at the beginning of the offering period or on the
applicable exercise date and may be paid through payroll deductions, periodic
lump sum payments or a combination of both. The Purchase Plan terminates in
December 2006.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is responsible for determining salaries,
incentives and other forms of compensation for directors, officers and other
employees of the Company. The Compensation Committee also administers various
incentive compensation and benefit plans. See "Management--Stock Plans." The
Compensation Committee currently consists of Drs. Crooke and Evnin and Mr.
Gabrieli. Dr. Evnin is a General Partner of Accel Partners, a venture capital
firm and a principal stockholder of the Company. Mr. Gabrieli is a General
Partner of Bessemer Venture Partners, a venture capital firm and a principal
stockholder of the Company. See "Certain Transactions" and "Principal
Stockholders."
CERTAIN TRANSACTIONS
In May 1995, the Company issued convertible promissory notes to Accel IV
L.P., Bessemer Venture Partners III L.P. and certain related persons in the
aggregate principal amount of $1,500,000 bearing interest at a rate of 10%
per annum and convertible into shares of Series C Convertible Preferred Stock
at a conversion price of $4.54 per share (the "1995 Convertible Notes"). Dr.
Luke B. Evnin, a director of the Company, is a General Partner of Accel IV
Associates L.P., the General Partner of Accel IV L.P. See footnotes (2) and
(10) to the table set forth under "Principal Stockholders." Christopher F.O.
Gabrieli, Chairman of the Company, is a General Partner of Deer III & Co.,
the General Partner of Bessemer Venture Partners III L.P. See footnotes (3)
and (9) to the table set forth under "Principal Stockholders."
In November and December 1995, Accel IV L.P., Bessemer Venture Partners
III L.P. and certain related persons made bridge loans to the Company in an
aggregate principal amount of $1,200,000 in exchange for promissory notes
bearing interest at a rate of 10% per annum and convertible into shares of
the Company's securities in the Company's next permanent equity financing
(the "1995 Bridge Notes").
In January 1996, the 1995 Convertible Notes were amended and restated (the
"Amended 1995 Convertible Notes") to, among other things, change the
conversion price to between $1.51 and $2.25 per share, depending on certain
events of conversion. At such time, the Company also issued additional
convertible promissory notes to the holders of the Amended 1995 Convertible
Notes in an aggregate principal amount of $1,515,862 (the "1996 Convertible
Notes") with the same terms as the Amended 1995 Convertible Notes in exchange
for cash and the surrender of the 1995 Bridge Notes (including accrued
interest thereon).
In February 1996, Accel IV L.P., Bessemer Venture Partners III L.P. and
certain related persons made bridge loans to the Company in the aggregate
principal amount of $600,000 in exchange for promissory notes bearing
interest at a rate of 10% per annum (the "1996 Bridge Notes").
44
<PAGE>
In March 1996, the Company entered into a Development and License
Agreement with Daiichi. Pursuant to such agreement, the Company granted
Daiichi an exclusive license to develop and market MS-325 in Japan in
exchange for an up-front fee of $3.0 million and future milestone payments
for up to an aggregate of $3.3 million and royalty payments on net sales of
MS-325 in Japan. In addition, pursuant to the agreement with Daiichi, in May
and August 1996, the Company sold an aggregate of 868,329 shares of Series E
Convertible Preferred Stock to Daiichi (which will convert into an aggregate
amount of 578,886 shares of Common Stock upon the closing of this offering)
at a price of $5.76 per share.
In May 1996, the Company sold 1,700,002 shares of Series D Convertible
Preferred Stock (which will convert into 1,133,325 shares of Common Stock
upon the closing of this offering) at a price of $3.00 per share (the "Series
D Financing"). In connection with the Series D Financing, Accel IV L.P.,
Bessemer Venture Partners III L.P. and certain related persons surrendered
their respective 1996 Bridge Notes as partial payment for their respective
shares of Series D Preferred Stock and each received cash payments from the
Company in the aggregate amount of $9,698 for accrued interest on their
respective 1996 Bridge Notes. Through the Series D Financing, Accel IV L.P.
and certain related persons purchased 266,668 shares (244,267 shares held by
Accel IV L.P., 9,867 shares held by Accel Investors '93 L.P., 5,067 shares
held by Accel Keiretsu L.P., 5,867 shares held by Ellmore C. Patterson
Partners and 1,600 shares held by Prosper Partners), Bessemer Venture
Partners III L.P. and certain related persons purchased 266,667 shares
(213,696 shares held by Bessemer Venture Partners III L.P. and 40,983 shares
held by certain related persons, including 9,990 shares held directly by Mr.
Gabrieli and 1,998 shares held by the Gabrieli Family Foundation, of which
Mr. Gabrieli is President), affiliates of Advent International Corporation
purchased 666,667 shares (365,000 shares held by Rovent II Limited
Partnership, 200,000 shares held by Advent Performance Materials Limited
Partnership, 66,667 shares held by Adwest Limited Partnership and 35,000
shares held by Advent Partners Limited Partnership) and Fidelity Ventures
Ltd. purchased 500,000 shares.
Concurrently with the Series D Financing, Accel IV L.P., Bessemer Ventures
Partners III L.P. and certain related persons converted the entire principal
amount of their respective Amended 1995 Convertible Notes and 1996
Convertible Notes, plus accrued interest, into 1,432,318 shares of Series C
Convertible Preferred Stock (which will convert into 954,872 shares of Common
Stock upon the closing of this offering) as follows: 656,006 shares held by
Accel IV L.P.; 26,498 shares held by Accel Investors '93 L.P.; 13,607 shares
held by Accel Keiretsu L.P.; 15,755 shares held by Ellmore C. Patterson
Partners; 4,296 shares held by Prosper Partners); 642,837 shares held by
Bessemer Venture Partners III L.P.; and 43,386 shares held by certain persons
related to Bessemer Venture Partners III L.P., including 25,328 shares held
directly by Mr. Gabrieli and 4,605 shares held by the Gabrieli Family
Foundation.
In May 1996, the Company repurchased from Randall B. Lauffer, Ph.D., a
director and executive officer of the Company, 66,666 shares of Common Stock
at a price per share of $4.05.
In June 1995 and April 1996, the Company made two loans to Dr. Lauffer,
each in the principal amount of $50,000 and bearing interest at the rate of
7.31% and 6.51% per annum, respectively (the Applicable Federal Rates for
long term loans announced for such months), and each secured by a pledge of
14,814 shares of the Company's Common Stock held by Dr. Lauffer. As of
November 30, 1996, the outstanding amounts on these loans were $55,352.82 and
$52,140.27, respectively. In May 1996, the Company made a loan to Dr. Lauffer
in the principal amount of $180,000 bearing interest at the rate of 6.83% per
annum (the Applicable Federal Rate for long term loans announced for May
1996) and secured by a pledge of 44,444 shares of the Company's Common Stock
held by Dr. Lauffer. As of November 30, 1996, the outstanding amount on this
loan was $186,197.52. Each of these loans is subject to acceleration upon the
voluntary termination of Dr. Lauffer's employment, among other events.
45
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table and footnotes set forth certain information regarding
the beneficial ownership of the Company's Common Stock as of November 30,
1996 by (i) persons known by the Company to beneficially own 5% or more of
the Company's Common Stock, (ii) the Named Executive Officers, (iii) each
director of the Company and (iv) all current executive officers and directors
as a group:
<TABLE>
<CAPTION>
Percentage of Shares
Beneficially Owned (1)
-----------------------
Number of Shares Before After
Beneficial Owners Beneficially Owned (1) Offering Offering
- ----------------- ---------------------- -------- --------
<S> <C> <C> <C>
Accel IV L.P. and certain related persons (2) 1,549,792 24.5% 18.6%
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Bessemer Venture Partners III
L.P. and certain related persons (3) 1,538,823 24.3 18.5
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Daiichi Radioisotope Laboratories, Ltd. (4) 578,885 9.2 7.0
17-10, Kyobashi 1-chome Chuo-ku
Tokyo, 104 Japan
Affiliates of Advent International Corporation (5) 444,443 7.0 5.4
101 Federal Street
Boston, MA 02110
Fidelity Ventures Ltd. (6) 349,708 5.5 4.2
82 Devonshire Street, R25C
Boston, MA 02109
Michael D. Webb (7) 171,842 2.7 2.0
Randall B. Lauffer, Ph.D. (8) 1,266,664 20.1 15.2
Christopher F.O. Gabrieli (9) 1,538,823 24.3 18.5
Luke B. Evnin, Ph.D. (10) 1,549,792 24.5 18.6
Stanley T. Crooke, M.D., Ph.D. (11) 11,041 * *
All current executive officers and directors as a group
(10 persons) (12) 4,662,626 71.0% 54.4%
</TABLE>
- -------------
* Indicates less than 1%.
(1) Reflects the conversion, contemporaneously with the closing of this
offering, of all outstanding shares of preferred stock of the Company
into an aggregate of 4,750,296 shares of Common Stock. The number of
shares of Common Stock deemed outstanding after this offering includes
the 2,000,000 shares of Common Stock of the Company being offered for
sale in this offering. The persons and entities named in the table have
sole voting and investment power with respect to the shares beneficially
owned by them, except as noted below. Share numbers include shares of
Common Stock issuable pursuant to the outstanding options and warrants
that may be exercised within the 60-day period following November 30,
1996.
(2) Consists of the following shares and warrants exercisable within the
60-day period following November 30, 1996: 1,407,405 shares and a warrant
to purchase 12,213 shares held by Accel IV L.P.; 56,848 shares and a
warrant to purchase 493 shares held by Accel Investors '93 L.P.; 33,800
shares and a warrant to purchase 293 shares held by Ellmore C. Patterson
Partners; 29,191 shares and a warrant to purchase 253 shares held by
Accel
46
<PAGE>
Keiretsu L.P.; and 9,216 shares and a warrant to purchase 80 shares held
by Prosper Partners. Accel IV Associates L.P. is the General Partner of
Accel IV L.P. and has voting and investment control over the shares held
by Accel IV L.P. Arthur C. Patterson, James R. Swartz, James W. Bryer,
Paul H. Klingenstein, Luke B. Evnin, Eugene D. Hill, III, G. Carter
Sednaoui and the Swartz Family Partnership L.P. are the General Partners
of Accel IV Associates L.P. Messrs. Patterson, Swartz, Klingenstein,
Bryer, Evnin and Sednaoui are the General Partners of Accel Investors '93
L.P. and have voting and investment control over shares held by Accel
Investors '93 L.P. Mr. Patterson is the sole General Partner of Ellmore
C. Patterson Partners and has voting and investment control over shares
held by Ellmore C. Patterson Partners. Accel Partners & Co. L.P. is the
General Partner of Accel Keiretsu L.P. and has voting and investment
control over shares held by Accel Keiretsu L.P. Messrs. Patterson and
Swartz are the co-owners and partners of Accel Partners & Co. L.P.
Messrs. Klingenstein and Sednaoui are the attorneys-in-fact for Prosper
Partners and disclaim beneficial ownership of shares held by Prosper
Partners.
(3) Includes the following shares held by the following persons and entities
related to Bessemer Venture Partners III L.P. as to which Bessemer
Venture Partners III L.P. has voting and investment control: William T.
Burgin (1,969); Robert H. Buescher (3,366); G. Felda Hardymon (18,366);
Christopher F.O. Gabrieli (32,357); David J. Cowan (5,125); Brimstone
Island Co. L.P. (1,969); Gabrieli Family Foundation (6,604); Diane N.
McPartlin (528); Ravi B. Mhatre (666); Gautam A. Prakash (3,713); Robi
L. Soni (1,705); Rodney A. Cohen (1,222); Richard R. Davis (4,045); Adam
P. Godfrey (1,662); Barbara M. Henagan (2,997); Belisarius Corp.
(7,667); Robert J.S. Roriston (947); Russell D. Sternlicht (639);
Quentin Corp. (11,152); and BVP III Special Situations L.P. (26,465).
Also includes a warrant to purchase 13,333 shares exercisable within the
60-day period following November 30, 1996 held by Bessemer Venture
Partners III L.P. Does not include shares held by the following persons
related to Bessemer Venture Partners III L.P. as to which shares
Bessemer Venture Partners III L.P. does not possess voting or investment
control: Michael Barash (1,666); Neill H. Brownstein (6,184); C.
Samantha Chen (1,124); Rachel J. Erickson (660); and John K. Rodakis
(1,321). Messrs. Burgin, Buescher, Gabrieli, Hardymon and Cowen are the
voting General Partners of Deer III & Co., the General Partner of
Bessemer Venture Partners III L.P. and BVP III Special Situations L.P.
and disclaim beneficial ownership of shares and the warrant held by
Bessemer Venture Partners III L.P. and shares held by BVP III Special
Situations L.P. except to the extent of their partnership interest.
(4) Osamu Ikeda, M.D., President and Chief Executive Officer of Daiichi
Radioisotope Laboratories, Ltd., has voting and investment control over
these shares.
(5) Includes the ownership by the following venture capital funds managed by
Advent International Corporation: 243,333 shares held by Rovent II
Limited Partnership, 133,333 shares held by Advent Performance Materials
Limited Partnership, 44,444 shares held by Adwest Limited Partnership,
23,333 shares held by Advent Partners Limited Partnership. In its
capacity as manager of these funds, Advent International Corporation
exercises sole voting and investment power with respect to all shares
held by these funds. Advent International Corporation exercises its
voting and investment power through a group of three persons, none of
whom may act independently and a majority of whom must act in concert to
exercise voting or investment power over the beneficial holdings of such
entity. Therefore, no individual in this group is deemed to share voting
or investment power.
(6) Includes 16,375 shared subject to options exercisable within the 60-day
period following November 30, 1996 held by FMR Corp. FMR Corp. is the
parent and sole owner of Fidelity Capital Associates, Inc., the General
Partner of Fidelity Ventures Ltd.
(7) Includes 105,176 shares subject to options exercisable within the 60-day
period following November 30, 1996.
(8) Includes 26,666 shares held by Dr. Lauffer's wife and 16,000 shares held
in a trust for the benefit of Dr. Lauffer's children as to which Dr.
Lauffer disclaims beneficial ownership. Also includes 1,000,000 shares
held by a trust for the benefit of Dr. Lauffer as to which shares Dr.
Lauffer has voting and investment control.
(9) See footnote (3) above. Mr. Gabrieli disclaims beneficial ownership of
these shares except to the extent of his proportionate pecuniary
interest therein or with respect to shares held in his name.
(10) See footnote (2) above. Dr. Evnin disclaims beneficial ownership of
these shares except to the extent of his proportionate pecuniary
interest in shares held by Accel IV L.P. and Accel Investors '93 L.P.
(11) Consists of options exercisable within the 60-day period following
November 30, 1996.
(12) See footnotes (2), (3) and (7)--(11) above. Includes an additional
124,464 shares subject to options exercisable within the 60-day period
following November 30, 1996.
47
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company currently consists of
15,000,000 shares of Common Stock, $0.01 par value per share, and 6,813,393
shares of Preferred Stock, $0.01 par value per share. Upon the closing of
this offering, the authorized capital stock of the Company will consist of
15,000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock
after giving effect to the amendment and restatement of the Company's
Restated Certificate of Incorporation to delete references to the Series A,
Series B, Series C, Series D and Series E Convertible Preferred Stock. Prior
to this offering, there were outstanding an aggregate of (i) 1,564,451 shares
of Common Stock and (ii) 6,738,076 shares of Preferred Stock, consisting of
93,691 shares of Series A Convertible Preferred Stock, 2,643,736 shares of
Series B Convertible Preferred Stock, 1,432,318 shares of Series C
Convertible Preferred Stock, 1,700,002 shares of Series D Convertible
Preferred Stock and 868,329 shares of Series E Convertible Preferred Stock,
which shares will automatically convert into an aggregate of 4,750,296 shares
of Common Stock upon the closing of this offering. As of the date of this
Prospectus, the Company had 59 shareholders. Upon the closing of this
offering, the Company will have 8,314,747 shares of Common Stock outstanding.
The following summary of certain provisions of the Common Stock and
Preferred Stock does not purport to be complete and is subject to, and
qualified in its entirety by (i) the provisions of the Company's Restated
Certificate and By-laws (each as filed and effected, respectively, on or
before the closing of this offering and included as exhibits to the
Registration Statement) and (ii) the provisions of applicable law.
Common Stock
Holders of Common Stock are entitled to one vote per share on matters to
be voted upon by the stockholders. There are no cumulative voting rights.
Holders of Common Stock are entitled to receive dividends if, as and when
declared by the Board of Directors out of funds legally available therefor.
See "Dividend Policy." Upon the liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to share ratably in the assets
of the Company available for distribution to its stockholders, subject to the
preferential rights of any then outstanding shares of Preferred Stock. No
shares of Preferred Stock will be outstanding immediately following the
closing of this offering. The Common Stock outstanding upon the effective
date of the Registration Statement, and the shares offered by the Company
hereby, upon issuance and sale, will be fully paid and nonassessable.
Preferred Stock
The Company is currently authorized to issue 6,813,393 shares of Preferred
Stock. Upon the consummation of the offering, all of the issued and
outstanding shares of Preferred Stock will be converted into an aggregate of
4,750,296 shares of Common Stock. Immediately following such conversion, all
currently outstanding shares of Preferred Stock will be cancelled, retired
and eliminated from the Company's authorized shares of capital stock and the
number of authorized shares of Preferred Stock will be decreased to 1,000,000
shares.
Upon consummation of the offering, the Company's Board of Directors will
have the authority to issue up to 1,000,000 shares of Preferred Stock in one
or more series and to fix the relative rights, preferences, privileges,
qualifications, limitations and restrictions thereof, including dividend
rights, dividend rates, conversion rights, voting rights, terms of
redemption, redemption prices, liquidation preferences, sinking fund terms
and the number of shares constituting any series or the designation of such
series, without further vote or action by the stockholders. The Company
believes that the power to issue Preferred Stock will provide flexibility in
connection with possible corporate transactions. The issuance of Preferred
Stock could adversely affect the voting power of the holders of Common Stock
and restrict their rights to receive payment upon liquidation and could have
the effect of delaying, deferring or preventing a change-in-control of the
Company. See "Description of Capital Stock--Anti-Takeover Measures." The
Company has no present plans to issue any shares of Preferred Stock.
Stock Purchase Warrants
During the period from December 1992 to May 1996, the Company issued
warrants to purchase an aggregate of 75,317 shares of Preferred Stock in
connection with equipment leasing transactions and equity financings,
including (i) two warrants exercisable for an aggregate amount of 10,697
shares of Company's Series A Convertible Preferred Stock at an exercise price
of $11.21. per share (which will be exercisable for an aggregate of 36,618
shares of Common Stock at an exercise price of $3.27 per share upon
consummation of this offering), (ii) a warrant exercisable for 11,402 shares
of Company's Series B Convertible Preferred Stock at an exercise price of
$1.51 per share (which will be exercisable for 7,601 shares of Common Stock
at an exercise price of $2.27 upon consummation of this offering), (iii) a
warrant exercisable for 13,218 shares of Company's Series C
48
<PAGE>
Convertible Preferred Stock at an exercise price of $4.54 per share (which
will be exercisable for 8,812 shares of Common Stock at an exercise price of
$6.81 upon consummation of this offering) and (iv) six warrants exercisable
for an aggregate of 40,000 shares of Company's Series D Convertible Preferred
Stock at an exercise price of $3.00 per share (which will be exercisable for
an aggregate of 26,665 shares of Common Stock at an exercise price of $4.50
upon consummation of this offering) (collectively, the "Preferred Stock
Warrants"). The Preferred Stock Warrants will expire five years after the
date of the closing of the offering. The exercise price of each Preferred
Stock Warrant is subject to adjustment in the event of a stock split,
combination or dividend by the Company. The number and kind of securities for
which each Preferred Stock Warrant is exercisable is subject to adjustment in
the event of a merger or reclassification by the Company.
Anti-Takeover Measures
In addition to the Board of Directors' ability to issue shares of
Preferred Stock, the Restated Certificate and the By-laws contain several
other provisions that are commonly considered to discourage unsolicited
takeover bids. The Restated Certificate includes a provision classifying the
Board of Directors into three classes with staggered three- year terms, and
the By-laws include a provision prohibiting stockholder action by written
consent except as otherwise provided by law. Under the Restated Certificate
and By-laws, the Board of Directors may enlarge the size of the Board and
fill any vacancies on the Board. The Restated Certificate requires the
approval of the holders of at least 66-2/3% of the outstanding capital stock
of the Company prior to (i) the merger of the Company into another entity,
(ii) the sale or disposition of all or substantially all of the Company's
assets, (iii) the issuance or transfer by the Company of its securities
having a market value in excess of $500,000 and (iv) engaging in any other
business combination transaction, unless such transaction has been approved
by a majority of the Board of Directors. Further, provisions of the By-laws
and the Restated Certificate provide that the stockholders may amend the
By-laws or certain provisions of the Restated Certificate only with the
affirmative vote of 66-2/3% of the Company's capital stock. The By-laws
provide that nominations for directors may not be made by stockholders at any
annual or special meeting unless the stockholder intending to make a
nomination notifies the Company of its intention a specified period in
advance and furnishes certain information. The By-laws also provide that
special meetings of the Company's stockholders may be called only by the
President or the Board of Directors and require advance notice of business to
be brought by a stockholder before the annual meeting.
Upon the consummation of the offering made hereby, the Company will be
subject to the provisions of Section 203 of the Delaware General Corporation
Law, a law regulating corporate takeovers (the "Anti-Takeover Law"). In
certain circumstances, the Anti-Takeover Law prevents certain Delaware
corporations, including those whose securities are listed on the Nasdaq
National Market, from engaging in a "business combination" (which includes a
merger or sale of more than ten percent of the corporation's assets) with an
"interested stockholder" (a stockholder who owns 15% or more of the
corporation's outstanding voting stock) for three years following the date on
which such stockholder became an "interested stockholder" subject to certain
exceptions, unless the transaction is approved by the board of directors and
the holders of at least 66-2/3% of the outstanding voting stock of the
corporation (excluding shares held by the interested stockholder). The
statutory ban does not apply if, upon consummation of the transaction in
which any person becomes an interested stockholder, the interested
stockholder owns at least 85% of the outstanding voting stock of the
corporation (excluding shares held by persons who are both directors and
officers or by certain employee stock plans). A Delaware corporation subject
to the Anti-Takeover Law may "opt out" of the Anti-Takeover Law with an
express provision either in its certificate of incorporation or by-laws
resulting from a stockholders' amendment approved by at least a majority of
the outstanding voting shares; such an amendment is effective following
expiration of twelve months from adoption. The Company has not "opted out" of
the Anti-Takeover Law.
The foregoing provisions of the Restated Certificate and By-laws and
Delaware law could have the effect of discouraging others from attempting
hostile takeovers of the Company and, as a consequence, they may also inhibit
temporary fluctuations in the market price of the Common Stock that might
result from actual or rumored hostile takeover attempts. Such provisions may
also have the effect of preventing changes in the management of the Company.
It is possible that such provisions could make it more difficult to
accomplish transactions which stockholders may otherwise deem to be in their
best interests.
Transfer Agent
The transfer agent and registrar for the Common Stock is Boston EquiServe.
49
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have 8,314,747 shares
of Common Stock outstanding, assuming no exercise of the Underwriters'
over-allotment option or of any other outstanding options. Of these shares,
the 2,000,000 shares sold in this offering will be freely tradable, without
restriction or further registration under the Securities Act, except for
shares purchased by "affiliates" of the Company as that term is defined in
Rule 144 under the Securities Act.
The remaining 6,314,747 outstanding shares of Common Stock are owned by
existing stockholders and are deemed "Restricted Shares" under Rule 144.
These may not be resold, except pursuant to an effective registration
statement or an applicable exemption from registration. Of these remaining
shares, approximately 112,357 shares of Common Stock will be eligible for
sale under Rules 144 and 701 on the ninety-first day after the effectiveness
of this offering. Stockholders of the Company, holding in the aggregate
6,202,390 shares of Common Stock, have agreed to enter into the 180-day
lock-up agreements described below. At the end of such 180-day period, an
additional 3,950,728 shares of Common Stock will be eligible for sale under
Rules 144 and 701. The remaining Restricted Shares will become eligible from
time to time thereafter upon the expiration of the minimum two-year holding
period prescribed by Rule 144.
In general, under Rule 144, as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate, who has beneficially
owned Restricted Shares for at least two years from the later of the date
such Restricted Shares were acquired from the Company and (if applicable) the
date they were acquired from an affiliate, is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of 1%
of the then outstanding shares of Common Stock or the average weekly trading
volume in the public market during the four calendar weeks preceding such
sale. Sales under Rule 144 are also subject to certain requirements as to the
manner and notice of sale and the availability of public information
concerning the Company. All sales of shares of the Company's Common Stock,
including Restricted Shares, held by affiliates of the Company must be sold
under Rule 144, subject to the foregoing volume limitations and other
restrictions.
The Commission has proposed an amendment to Rule 144 which would reduce
the holding period required for shares subject to Rule 144 from two years to
one year. If this proposal is adopted as of the expected closing of this
offering, an additional 1,946,033 shares of Common Stock would become
eligible for sale by existing stockholders to the public after the expiration
of the 180-day lock-up period.
The Company's directors and executive officers and certain of its
stockholders have agreed that they will not, without the prior written
consent of the representatives of the Underwriters, offer to sell, sell,
contract to sell, grant any option to sell or otherwise dispose of or require
the Company to file with the Commission a registration statement under the
Securities Act to register any shares of Common Stock or securities
convertible or exchangeable for shares of Common Stock or warrants or other
rights to acquire shares of Common Stock during the 180-day period following
the effective date of the Registration Statement.
The Company plans to file registration statements under the Securities Act
to register approximately 1,427,322, 66,666 and 66,666 shares of Common Stock
issuable under the Equity Plan, the Director Plan and the Stock Purchase
Plan, respectively, 90 days after the date of this Prospectus. Upon
registration, such shares will be eligible for immediate resale upon
exercise, subject, in the case of affiliates, to the volume, manner of sale
and notice requirements of Rule 144.
No prediction can be made as to the effect, if any, that market sales of
additional shares or the availability of such additional shares for sale will
have on the market price of the Common Stock. Nevertheless, sales of
substantial amounts of Common Stock in the public market may have an adverse
impact on the market price for the Common Stock. See "Risk Factors--Shares
Eligible for Future Sale; Registration Rights" and "-- Dilution."
Registration Rights
The holders of the 4,750,296 shares of Common Stock to be issued on
conversion of the Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock (the
"Registrable Shares") are entitled to certain rights with respect to
registration of the Registrable Shares under the Securities Act beginning at
the end of the lock-up period. If the Company proposes to register any of its
securities under the Securities Act, either for its own account or for the
account of other security holders,
50
<PAGE>
such holders are entitled to notice of such registration and are entitled to
include such Registrable Shares in the registration. The rights are subject
to certain conditions and limitations, among them, the right of the
underwriters of a registered offering to limit the number of shares included
in such registration. Holders of Registrable Shares benefiting from these
rights may also require the Company to file at its expense a registration
statement under the Securities Act with respect to their shares of Common
Stock and, subject to certain conditions and limitations, the Company is
required to use its best efforts to effect such registration. Furthermore,
such holders may, subject to certain conditions and limitations, require the
Company to file additional registration statements on Form S-3 with respect
to such Registrable Shares. Such holders did not have the right to have
shares of Common Stock registered under the Securities Act as part of this
offering.
51
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, through their Representatives, Hambrecht & Quist
LLC and Wessels, Arnold & Henderson, L.L.C., have severally agreed to
purchase from the Company the following respective numbers of shares of
Common Stock:
Number of
Name Shares
---- ---------
Hambrecht & Quist LLC
Wessels, Arnold & Henderson, L.L.C.
---------
Total 2,000,000
=========
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent, including the
absence of any material adverse change in the Company's business and the
receipt of certain certificates, opinions and letters from the Company, its
counsel and independent auditors. The nature of the Underwriters' obligation
is such that they are committed to purchase all shares of Common Stock
offered hereby if any of such shares are purchased.
The Underwriters propose to offer the shares of Common Stock directly to
the public at the initial public offering price set forth on the cover page
of this Prospectus and to certain dealers at such price less a concession not
in excess of $ per share. The Underwriters may allow, and such dealers
may reallow, a concession not in excess of $ per share to certain other
dealers. After the initial public offering of the shares, the offering price
and other selling terms may be changed by the Representatives of the
Underwriters. The Representatives have informed the Company that the
Underwriters do not intend to confirm sales to accounts over which they
exercise discretionary authority.
The Company has granted to the Underwriters an option, exercisable no
later than 30 days after the date of this Prospectus, to purchase up to
300,000 additional shares of Common Stock at the initial public offering
price, less the underwriting discount, set forth on the cover page of this
Prospectus. To the extent that the Underwriters exercise this option, each of
the Underwriters will have a firm commitment to purchase approximately the
same percentage thereof which the number of shares of Common Stock to be
purchased by it shown in the above table bears to the total number of shares
of Common Stock offered hereby. The Company will be obligated, pursuant to
the option, to sell shares to the Underwriters to the extent the option is
exercised. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of shares of Common Stock
offered hereby.
The offering of the shares is made for delivery when, as and if accepted
by the Underwriters and subject to prior sale and to withdrawal, cancellation
or modification of the offering without notice. The Underwriters reserve the
right to reject an order for the purchase of shares in whole or in part.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, and to
contribute to payments the Underwriters may be required to make in respect
thereof.
Certain existing stockholders of the Company, including the executive
officers and directors, who will own in the aggregate 6,202,390 shares of
Common Stock after the offering, have agreed that they will not, without the
prior written consent of Hambrecht & Quist LLC, offer, sell or otherwise
dispose of any shares of Common Stock, options or warrants to acquire shares
of Common Stock or securities exchangeable for or convertible into shares of
Common Stock owned by them during the 180-day period following the date of
this Prospectus. The Company has agreed that, it will not, without the prior
written consent of Hambrecht & Quist LLC, offer, sell or otherwise dispose of
any shares of Common Stock, options or warrants to acquire shares of Common
Stock or securities exchangeable for or convertible into shares of Common
Stock, other than pursuant to its equity benefit plans, during the 180-day
period following the date of this Prospectus.
Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock will be
determined by negotiation among the Company and the Representatives.
52
<PAGE>
Among the factors to be considered in determining the initial public offering
price are prevailing market and economic conditions, revenues and earnings of
the Company, market valuations of other companies engaged in activities
similar to those of the Company, estimates of the business potential and
prospects of the Company, the present state of the Company's business
operations, the Company's management and other factors deemed relevant. The
estimated initial public offering price range set forth on the cover of this
preliminary prospectus is subject to change as a result of market conditions
and other factors.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Palmer & Dodge LLP, Boston, Massachusetts. William T.
Whelan, a partner of Palmer & Dodge LLP, is an Assistant Secretary of the
Company. Certain legal matters are being passed upon for the Underwriters by
Hale and Dorr, Boston, Massachusetts.
EXPERTS
The financial statements of the Company at December 31, 1995 and March 31,
1995 and for the nine months ended December 31, 1995, and for each of the two
years in the period ended March 31, 1995 appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein,
and are included in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act, with respect to the shares of Common
Stock offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement and the exhibits and schedules
thereto. For further information with respect to the Company and the Common
Stock offered hereby, reference is made to the Registration Statement and the
exhibits and schedules thereto. All statements made in this Prospectus
regarding the contents of any contract, agreement or other document filed as
an exhibit to the Registration Statement are qualified by reference to the
copy of such document filed as an exhibit to the Registration Statement. A
copy of the Registration Statement may be inspected without charge at the
offices of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549,
and copies of all or any part thereof may be obtained from the Commission
upon the payment of certain fees prescribed by the Commission. Such reports
and other information can also be reviewed through the Commission's Web site
(http://www.sec.gov).
Statements made in this Prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily complete. With
respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement
shall be deemed qualified in its entirety by such reference.
The Company intends to distribute to its stockholders annual reports
containing financial statements audited by its independent auditors and will
make available copies of quarterly reports for the first three quarters of
each fiscal year containing unaudited financial information.
53
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Auditors F-3
Financial Statements
Balance Sheets F-4
Statements of Operations F-5
Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) F-6
Statements of Cash Flows F-8
Notes to Financial Statements F-10
</TABLE>
F-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
F-2
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
EPIX Medical, Inc.
We have audited the accompanying balance sheets of EPIX Medical, Inc. (a
company in the development stage) as of December 31, 1995 and March 31, 1995,
and the related statements of operations, redeemable convertible preferred
stock and stockholders' equity (deficit), and cash flows for the nine months
ended December 31, 1995, and each of the two years in the period ended March
31, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
Since the date of completion of the audit of the accompanying financial
statements and initial issuance of our report thereon dated April 12, 1996,
except for Note 14, as to which the date is May 14, 1996, which report
contained an explanatory paragraph regarding the Company's ability to
continue as a going concern, the Company, as discussed in Note 14, has
received significant proceeds from the sale of Preferred Stock and from
strategic collaboration agreements. Therefore the conditions that raised
substantial doubt about whether the Company will continue as a going concern
no longer exist.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of EPIX Medical, Inc. at
December 31, 1995 and March 31, 1995, and the results of its operations and
its cash flows for the nine months ended December 31, 1995, and each of the
two years in the period ended March 31, 1995, in conformity with generally
accepted accounting principles.
Ernst & Young LLP
Boston, Massachusetts
April 12, 1996, except for Note 14, as
to which the date is August 30, 1996
F-3
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 December 31 September 30
1995 1995 1996
-------- ----------- ------------
Assets (Unaudited)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 1,079,355 $ 149,686 $11,734,558
Accounts receivable 665,088
Prepaid expenses 49,496 58,940 74,695
Other current assets 23,000 13,178 10,267
----------- ----------- -----------
Total current assets 1,151,851 221,804 12,484,608
Property and equipment, net 890,814 856,912 981,498
Notes receivable from officer 51,878 290,437
Other assets 98,082 80,171 58,735
----------- ----------- -----------
Total assets $ 2,140,747 $ 1,210,765 $13,815,278
=========== =========== ===========
Liabilities and Stockholders' Deficit (Unaudited)
Current liabilities:
Current portion of capital lease obligations $ 263,657 $ 304,416 $ 239,679
Accounts payable and accrued expenses 372,183 1,244,201 1,362,574
----------- ----------- -----------
Total current liabilities 635,840 1,548,617 1,602,253
Capital lease obligations, less current portion 107,120 342,256 198,459
Promissory notes 2,700,000
Redeemable convertible preferred stock:
Series B, $.01 par value, 2,655,138 shares authorized; 2,643,736
shares issued and outstanding at March 31, 1995, December
31, 1995 and September 30, 1996, at liquidation value 4,790,800 5,437,600 6,170,731
Series C, $.01 par value, 1,445,536 shares authorized; 1,432,318
shares issued and outstanding at September 30, 1996, at
liquidation value 3,485,238
Series D, $.01 par value, 1,740,002 shares authorized; 1,700,002
shares issued and outstanding at September 30, 1996, at
liquidation value 5,515,452
Series E, $.01 par value, 868,329 shares authorized; 868,329
shares issued and outstanding at September 30, 1996, at
liquidation value 5,319,631
Stockholders' deficit:
Series A convertible preferred stock, $.01 par value, 104,388
shares authorized; 93,691 shares issued and outstanding at
March 31, 1995, December 31, 1995 and September 30, 1996 1,037,664 1,037,664 1,037,664
Common stock, $.01 par value, 15,000,000 shares authorized;
1,441,686, 1,563,808 and 1,539,673 shares issued and
outstanding at March 31, 1995, December 31, 1995 and September
30, 1996, respectively 14,417 15,638 15,396
Additional paid-in capital 84,606 198,418 93,990
Accretion of dividends on redeemable convertible preferred stock (849,564) (1,496,364) (3,388,304)
Deficit accumulated during the development stage (3,680,136) (8,573,064) (6,235,232)
----------- ----------- -----------
Total stockholders' deficit (3,393,013) (8,817,708) (8,476,486)
----------- ----------- -----------
Total liabilities and stockholders' deficit $ 2,140,747 $ 1,210,765 $13,815,278
=========== =========== ===========
</TABLE>
See accompanying notes.
F-4
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
STATEMENTS OF OPERATIONS
Nine months
Year ended Year ended ended
March 31 March 31 December 31
1994 1995 1995
---------- ----------- -----------
Revenues $1,700,000 $ 411,509 $ 900,000
Operating expenses:
Research and development 1,381,528 2,407,113 4,164,940
General and administrative 897,117 824,769 1,504,811
---------- ----------- -----------
Total operating expenses 2,278,645 3,231,882 5,669,751
---------- ----------- -----------
Operating income (loss) (578,645) (2,820,373) (4,769,751)
Interest expense (66,976) (78,672) (151,057)
Interest income 29,141 120,845 27,880
---------- ----------- -----------
Net income (loss) $ (616,480) $(2,778,200) $(4,892,928)
========== =========== ===========
Pro forma (unaudited):
Net income (loss) per share $ (0.70)
===========
Weighted-average common
stock and equivalents 6,973,000
===========
Period from
Inception
(November 29,
Nine months ended 1988) to
September 30 September 30
1995 1996 1996
----------- ---------- -----------
(Unaudited) (Unaudited)
Revenues $ 900,000 $9,635,088 $13,646,597
Operating expenses:
Research and development 2,989,257 4,951,652 13,374,909
General and administrative 1,348,358 2,212,086 6,280,189
----------- ---------- -----------
Total operating expenses 4,337,615 7,163,738 19,655,098
----------- ---------- -----------
Operating income (loss) (3,437,615) 2,471,350 (6,008,501)
Interest expense (100,077) (273,640) (570,345)
Interest income 62,943 140,122 359,081
----------- ---------- -----------
Net income (loss) $(3,474,749) $2,337,832 $(6,219,765)
=========== ========== ===========
Pro forma (unaudited):
Net income (loss) per share $ 0.30
==========
Weighted-average common
stock and equivalents 7,711,000
==========
See accompanying notes.
F-5
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
(DEFICIT)
<TABLE>
<CAPTION>
Redeemable Series A
Convertible Convertible
Preferred Stock Preferred Stock Common Stock
--------------------- ------------------ ------------------
Shares Amount Shares Amount Shares Amount
--------- --------- ------ --------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
Issuance of common stock in May 1989 333,330 $ 3,333
Issuance of Series A preferred stock in
March 1992 (net of legal costs of
$12,336) 93,691 $1,037,664
Cumulative net loss for the period
November 29, 1988 (date of inception)
through March 31, 1992
--------- --------- ------ --------- --------- ------
Balance at March 31, 1992 93,691 1,037,664 333,330 3,333
Issuance of common stock in April 1992 as
payment for consulting services received 5,186 52
Net loss
--------- --------- ------ --------- --------- ------
Balance at March 31, 1993 93,691 1,037,664 338,516 3,385
Issuance of common stock in February 1994
as payment for consulting services
received 5,186 52
Three-for-one stock dividend declared and
paid in March 1994 1,031,118 10,311
Issuance of Series B preferred stock in
March 1994, net of issuance costs of
$58,764 2,643,736 $3,941,236
Issuance of warrants in conjunction with
financing
Accretion of dividends of redeemable
convertible preferred stock 118,764
Net loss
--------- --------- ------ --------- --------- ------
Balance at March 31, 1994 2,643,736 4,060,000 93,691 1,037,664 1,374,820 13,748
Issuance of common stock upon exercise of
options 66,866 669
Issuance of warrants in conjunction with
financing
Accretion of dividends of redeemable
convertible preferred stock 730,800
Net loss
--------- --------- ------ --------- --------- ------
Balance at March 31, 1995 2,643,736 4,790,800 93,691 1,037,664 1,441,686 14,417
</TABLE>
<TABLE>
<CAPTION>
Cumulative
Accretion of
Dividends on Deficit
Redeemable Accumulated Total
Additional Convertible During Stockholders'
Paid-in Preferred Development Equity
Capital Stock Stage (Deficit)
---------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Issuance of common stock in May 1989 $ 1,667 $ 5,000
Issuance of Series A preferred stock in
March 1992 (net of legal costs of
$12,336) 1,037,664
Cumulative net loss for the period
November 29, 1988 (date of inception)
through March 31, 1992 $ (27,911) (27,911)
------ -------- ---------- ----------
Balance at March 31, 1992 1,667 (27,911) 1,014,753
Issuance of common stock in April 1992 as
payment for consulting services received 26 78
Net loss (242,078) (242,078)
------ -------- ---------- ----------
Balance at March 31, 1993 1,693 (269,989) 772,753
Issuance of common stock in February 1994
as payment for consulting services
received 26 78
Three-for-one stock dividend declared and
paid in March 1994 5,156 (15,467)
Issuance of Series B preferred stock in
March 1994, net of issuance costs of
$58,764
Issuance of warrants in conjunction with
financing 43,391 43,391
Accretion of dividends of redeemable
convertible preferred stock $(118,764) (118,764)
Net loss (616,480) (616,480)
------ -------- ---------- ----------
Balance at March 31, 1994 50,266 (118,764) (901,936) 80,978
Issuance of common stock upon exercise of
options 27,415 28,084
Issuance of warrants in conjunction with
financing 6,925 6,925
Accretion of dividends of redeemable
convertible preferred stock (730,800) (730,800)
Net loss (2,778,200) (2,778,200)
------ -------- ---------- ----------
Balance at March 31, 1995 84,606 (849,564) (3,680,136) (3,393,013)
</TABLE>
F-6
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Issuance of common stock upon exercise of
options 38,399 384
Issuance of common stock in July 1995
under license agreement 83,723 837
Accretion of dividends of redeemable
convertible preferred stock 646,800
Issuance of warrants in conjunction with
financing
Net loss
--------- ----------- ------ ---------- --------- -------
Balance at December 31, 1995 2,643,736 5,437,600 93,691 1,037,664 1,563,808 15,638
Issuance of common stock upon exercise of
options (unaudited) 42,531 425
Issuance of Series C preferred stock in
May 1996, net of issuance costs of
$12,560 (unaudited) 1,432,318 3,210,177
Issuance of warrants in conjunction with
financing (unaudited)
Issuance of Series D preferred stock in
May 1996, net of issuance costs of
$31,043 (unaudited) 1,700,002 5,068,963
Issuance of Series E preferred stock in
May 1996, net of issuance costs of
$117,628 (unaudited) 868,329 4,882,372
Issuance of compensatory stock option
grants (unaudited)
Repurchase of common stock from officer in
May 1996 (unaudited) (66,666) (667)
Accretion of dividends of redeemable
convertible preferred stock (unaudited) 1,891,940
Net income (unaudited)
--------- ----------- ------ ---------- --------- -------
Balance at September 30, 1996 (unaudited) 6,644,385 $20,491,052 93,691 $1,037,664 1,539,673 $15,396
========= =========== ====== ========== ========= =======
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Issuance of common stock upon exercise of
options 16,874 17,258
Issuance of common stock in July 1995
under license agreement 68,235 69,072
Accretion of dividends of redeemable
convertible preferred stock (646,800) (646,800)
Issuance of warrants in conjunction with
financing 28,703 28,703
Net loss (4,892,928) (4,892,928)
--------- ----------- ----------- -----------
Balance at December 31, 1995 198,418 (1,496,364) (8,573,064) (8,817,708)
Issuance of common stock upon exercise of
options (unaudited) 19,343 19,768
Issuance of Series C preferred stock in
May 1996, net of issuance costs of
$12,560 (unaudited)
Issuance of warrants in conjunction with
financing (unaudited) 78,236 78,236
Issuance of Series D preferred stock in
May 1996, net of issuance costs of
$31,043 (unaudited)
Issuance of Series E preferred stock in
May 1996, net of issuance costs of
$117,628 (unaudited)
Issuance of compensatory stock option
grants (unaudited) 67,326 67,326
Repurchase of common stock from officer in
May 1996 (unaudited) (269,333) (270,000)
Accretion of dividends of redeemable
convertible preferred stock (unaudited) (1,891,940) (1,891,940)
Net income (unaudited) 2,337,832 2,337,832
--------- ----------- ----------- -----------
Balance at September 30, 1996 (unaudited) $ 93,990 $(3,388,304) $(6,235,232) $(8,476,486)
========= =========== =========== ===========
</TABLE>
See accompanying notes.
F-7
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
STATEMENTS OF CASH FLOWS
Nine months
Year ended Year ended ended
March 31 March 31 December 31
1994 1995 1995
---------- ---------- -----------
Operating activities
Net income (loss) $ (616,480) $(2,778,200) $(4,892,928)
Adjustments to reconcile net
income (loss) to cash provided
(used) by operating activities:
Depreciation and amortization 295,370 285,515 396,673
Expenses paid with equity
instruments 67,816
Change in operating assets and
liabilities:
Accounts receivable
Prepaid expenses and other
current assets 50,928 (2,769) 16,411
Accounts payable and accrued
expenses 80,922 (36,009) 872,018
---------- --------- -------
Net cash provided (used)
by operating activities (189,260) (2,531,463) (3,540,010)
Investing activities
Purchase of fixed assets (106,299) (367,830) (324,429)
Proceeds from sale leaseback of
fixed assets 553,067 41,468 511,145
Purchase of marketable securities (2,356,510)
Proceeds from sale of marketable
securities 2,356,510
Issuance of note receivable from
officer (50,000)
---------- --------- -------
Net cash provided (used) by
investing activities (1,909,742) 2,030,148 136,716
---------- --------- -------
Period from
inception
Nine months ended (November 29,
September 30 1988) to
----------------------------- September 30
1995 1996 1996
--------------- ------------- -------------
(Unaudited) (Unaudited)
Operating activities
Net income (loss) $(3,474,749) $2,337,832 $(6,219,765)
Adjustments to reconcile net
income (loss) to cash provided
(used) by operating activities:
Depreciation and amortization 279,432 406,169 1,509,572
Expenses paid with equity
instruments 67,816 136,526 204,342
Change in operating assets and
liabilities:
Accounts receivable (665,088) (665,088)
Prepaid expenses and other
current assets 16,357 32 (154,134)
Accounts payable and accrued
expenses 185,999 341,110 1,585,311
----------- ---------- -----------
Net cash provided (used)
by operating activities (2,925,145) 2,556,581 (3,739,762)
Investing activities
Purchase of fixed assets (402,969) (542,812) (2,230,971)
Proceeds from sale leaseback of
fixed assets 274,114 17,173 1,122,853
Purchase of marketable securities (2,356,510)
Proceeds from sale of marketable
securities 1,945,621 2,356,510
Issuance of note receivable from
officer (50,000) (230,000) (280,000)
----------- ---------- -----------
Net cash provided (used) by
investing activities 1,766,766 (755,639) (1,388,118)
----------- ---------- -----------
F-8
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
STATEMENTS OF CASH FLOWS--(Continued)
<TABLE>
<CAPTION>
Nine months
Year ended Year ended ended
March 31 March 31 December 31
1994 1995 1995
------------- ------------- -------------
<S> <C> <C> <C>
Financing activities
Repayment of capital lease obligations $ (157,975) $ (245,399) $ (245,489)
Proceeds from issuance of promissory notes 2,700,000
Proceeds from issuance of bridge notes
Proceeds from sale of Series B redeemable
convertible preferred stock 3,941,236
Proceeds from sale of Series D redeemable
convertible preferred stock
Proceeds from sale of Series E redeemable
convertible preferred stock
Proceeds from sale of Series A convertible
preferred stock
Repurchase of stock from officer
Sale of common stock 28,084 18,514
Proceeds from issuance of warrants 600
---------- ---------- ----------
Net cash provided (used) by financing
activities 3,783,261 (217,315) 2,473,625
---------- ---------- ----------
Increase (decrease) in cash and cash
equivalents 1,684,259 (718,630) (929,669)
Cash and cash equivalents at beginning of
period 113,726 1,797,985 1,079,355
---------- ---------- ----------
Cash and cash equivalents at end of period $1,797,985 $1,079,355 $ 149,686
========== ========== ==========
Supplemental cash flow information
Cash paid for interest $ 66,976 $ 78,672 $ 51,441
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Period from
inception
Nine months ended (November 29,
September 30 1988) to
------------------------- September 30
1995 1996 1996
---------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Financing activities
Repayment of capital lease obligations $ (200,315) $ (217,173) $ (869,763)
Proceeds from issuance of promissory notes 1,500,000 300,000 3,000,000
Proceeds from issuance of bridge notes 600,000 600,000
Proceeds from sale of Series B redeemable
convertible preferred stock 3,941,236
Proceeds from sale of Series D redeemable
convertible preferred stock 4,468,963 4,468,963
Proceeds from sale of Series E redeemable
convertible preferred stock 4,882,372 4,882,372
Proceeds from sale of Series A convertible
preferred stock 1,037,664
Repurchase of stock from officer (270,000) (270,000)
Sale of common stock 31,636 19,768 71,366
Proceeds from issuance of warrants 600
---------- ----------- -----------
Net cash provided (used) by financing
activities 1,331,321 9,783,930 16,862,438
---------- ----------- -----------
Increase (decrease) in cash and cash
equivalents 172,942 11,584,872 11,734,558
Cash and cash equivalents at beginning of
period 154,009 149,686 --
---------- ----------- -----------
Cash and cash equivalents at end of period $ 326,951 $11,734,558 $11,734,558
========== =========== ===========
Supplemental cash flow information
Cash paid for interest $ 47,885 $ 81,319 $ 278,408
</TABLE>
See accompanying notes.
F-9
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
EPIX Medical, Inc. ("EPIX" or the "Company") was formed on November 29,
1988 as a Delaware corporation and commenced operations in 1992. The Company is
developing targeted contrast agents both to improve the capability and expand
the use of magnetic resonance imaging ("MRI") as a diagnostic tool for a variety
of diseases. The Company's principal product under development, MS-325, is an
injectable contrast agent designed for multiple vascular imaging indications.
The Company is a development-stage enterprise, as defined in Statement of
Financial Accounting Standards No. 7, and has, since inception, been engaged
in the research and development of its product candidates as well as seeking
regulatory clearances and patent protection and raising capital to fund
operations.
Change of Year End
Subsequent to March 31, 1995, the Company elected to change its fiscal
year end from March 31 to December 31.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Significant Revenues
All of the revenues received during the year ended March 31, 1994 were
derived from a single source. For the year ended March 31, 1995 one source
represented 61% and another source represented 39% of the total revenues. All
of the revenues received during the nine months ended December 31, 1995 were
derived from a single source.
2. SIGNIFICANT ACCOUNTING POLICIES
Unaudited Interim Financial Statements
The balance sheet as of September 30, 1996 and the related statements of
operations, redeemable convertible preferred stock and stockholders' equity
(deficit) and cash flows for the nine months ended September 30, 1995 and
1996 and the period from inception (November 29, 1988) to September 30, 1996,
are unaudited and, in the opinion of management, include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation. The results of operations for the nine months ended September
30, 1996 are not necessarily indicative of the results to be expected for the
entire year.
Cash and Cash Equivalents
The Company considers all investments with original maturities of three
months or less to be cash equivalents. Cash equivalents consist of money
market accounts and short-term investments.
Property and Equipment
Property and Equipment are recorded at historical cost. Depreciation on
laboratory equipment and furniture, fixtures and other equipment is
determined using the straight-line method over the estimated useful lives of
the related assets, ranging from 3 to 5 years. Leasehold improvements are
amortized using the straight- line method over the shorter of the asset life
or the remaining life of the lease. Expenditures for maintenance and repairs
are charged to expense; betterments are capitalized.
Capital Lease Obligations
Assets and liabilities relating to capital leases are recorded at the
present value of the future minimum rental payments using interest rates
appropriate at the inception of the lease.
F-10
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS--(Continued)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
The Company provides for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." Under this
method, deferred taxes are recognized using the liability method, whereby tax
rates are applied to cumulative temporary differences between carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes based on when and how they are expected
to affect the tax return. A valuation allowance is provided to the extent
that there is uncertainty as to the Company's ability to generate taxable
income in the future to realize the benefit from its net deferred tax asset.
Revenue Recognition
Revenues from nonrefundable license fees are recognized upon execution of
the underlying license agreement. Option, license and milestone payments
under collaborative agreements are recorded as earned based upon the
provisions of each agreement. Payments received for which revenue has not
been earned are recorded as deferred revenue.
Technology, Licenses and Patents
Costs associated with technology, licenses and patents are expensed as
incurred.
Stock-Based Compensation
The Company has elected to follow Accounting Principles Board Opinion No.
25 "Accounting for Stock Issued to Employees" (APB 25) in accounting for its
stock-based compensation plans, rather than the alternative fair value
accounting method provided for under Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation." Under APB 25,
when the exercise price of options granted under these plans equals the
market price of the underlying stock on the date of grant, no compensation
expense is required.
Pro Forma Net Income (Loss) Per Share (Unaudited)
Pro forma net income (loss) per share is computed using the
weighted-average number of outstanding shares of Common Stock and Common
Stock equivalents, assuming conversion of Series A Convertible Preferred
Stock ("Series A Preferred Stock"), Series B Redeemable Convertible Preferred
Stock ("Series B Preferred Stock"), Series C Redeemable Convertible Preferred
Stock ("Series C Preferred Stock"), Series D Redeemable Convertible Preferred
Stock ("Series D Preferred Stock") and Series E Redeemable Convertible
Preferred Stock ("Series E Preferred Stock") into Common Stock (as of their
original date of issuance), which will occur upon completion of the Company's
proposed initial public offering. Common Stock equivalents are excluded from the
pro forma net income (loss) per share computation when their effect is
anti-dilutive; however, pursuant to the requirements of the Securities and
Exchange Commission, Common Stock equivalent shares relating to stock options
and warrants (using the treasury stock method and an assumed initial public
offering price) and Convertible Preferred Stock issued during the twelve-month
period prior to the initial public offering are included for all periods
presented whether or not they are anti-dilutive. Historical earnings per share
have not been presented because such amounts are not considered meaningful due
to the significant change in the Company's capital structure that will occur in
connection with the Company's proposed initial public offering.
Accounting Pronouncement
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121, "Accounting for Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which
establishes criteria for the recognition and measurement of impairment loss
associated with long-lived assets. The Company has adopted this standard in
1996, and its adoption did not have a material impact on the Company's
financial position or results of operations.
F-11
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS--(Continued)
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
March 31 December 31
1995 1995
---------- ----------
Laboratory equipment $ 918,466 $1,163,370
Leasehold improvements 417,955 462,099
Furniture, fixtures and other equipment 157,068 215,869
---------- ----------
1,493,489 1,841,338
Less accumulated depreciation and amortization 602,675 984,426
---------- ----------
$ 890,814 $ 856,912
========== ==========
4. LEASES
Under a $1.4 million lease line, the Company has entered into a number of
capital leases for equipment, including sale and leaseback transactions
involving certain equipment. Assets under capital leases, the majority of
which are laboratory equipment, totaled $800,737 and $1,320,994 at March 31,
1995 and December 31, 1995, respectively. Accumulated amortization relating
to assets under capital leases was $383,809 and $661,257 at March 31, 1995
and December 31, 1995 respectively.
Additionally, the Company leases office space under operating lease
arrangements. The initial term of the lease expires in December 1997 and is
renewable with 12 months notice for an additional five year term.
Future minimum commitments under leases with non-cancelable terms of one
or more years are as follows at December 31, 1995:
Capital Operating
Leases Leases
-------- ---------
1996 $381,280 $110,000
1997 228,096 120,000
1998 160,591
-------- ---------
Total minimum lease payments 769,967 $230,000
======== =========
Less amounts representing interest 123,295
--------
Present value minimum lease payments 646,672
Less amounts due within one year 304,416
--------
$342,256
========
Rent expense amounted to approximately $79,819, $94,600 and $86,100 for
the twelve months ended March 31, 1994, March 31, 1995, and for the nine
months ended December 31, 1995 respectively, and approximately $312,500 for
the period from inception (November 29, 1988) to December 31, 1995.
F-12
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS--(Continued)
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Included in accounts payable and accrued expenses were the following items
at March 31, 1995 and December 31, 1995:
March 31, December 31,
1995 1995
-------- ----------
Accounts payable $147,623 $ 615,174
Accrued development costs 435,562
Accrued interest 99,616
Accrued licensing expense 72,707 27,972
Accrued payroll 86,601 15,990
Accrued professional fees 32,173
Other accrued expenses 33,079 49,887
-------- ----------
Total accounts payable and accrued expenses $372,183 $1,244,201
======== ==========
6. PROMISSORY NOTES
In May 1995, the Company issued Promissory Notes ("Promissory Notes") in
an aggregate amount of $1,500,000, which approximates fair value. The
Promissory Notes bear interest at the rate of 10% per year and become due
upon demand on or after February 15, 1996. The Promissory Notes and accrued
interest thereon are convertible, at any time after the date of issuance,
into shares of the Series C Preferred Stock, at an initial conversion price
of $4.54 per share. The initial conversion price per share shall be subject
to adjustment from time to time as provided in the agreement. In November and
December 1995, the Company issued a series of additional Promissory Notes
aggregating $1,200,000 with the same terms of interest and repayment. It is
contemplated that the Convertible Notes (see Note 14) for which the
Promissory Notes may subsequently be exchanged will be converted concurrent
with a Series D Preferred Stock equity financing during 1996. Accordingly,
all the Promissory Notes have been classified as long-term at December 31,
1995.
7. CAPITAL STOCK
Shares of Series A Preferred Stock and Series B Preferred Stock are
convertible into shares of Common Stock by dividing $11.21 by the Series A
Preferred Stock conversion price in effect at the time of conversion and, in
the case of the Series B Preferred Stock, by dividing $1.51 by the Series B
Preferred Stock conversion price in effect at the time of conversion. The
conversion price for Series A and Series B Preferred Stock is subject to
adjustment from time to time based upon terms identified in the respective
agreements. The Company has reserved 320,730 and 1,762,484 shares of Common
Stock for issuance upon conversion of the Series A and Series B Preferred
Stock, respectively, at December 31, 1995.
The stockholders of Series A and Series B Preferred Stock are entitled to
have voting rights equal to the number of Common Stocks into which the
Preferred Stocks may be converted at such time and shall be entitled to elect
two directors of the Company. The holders of Series B Preferred Stock are
also entitled to a cumulative cash dividend of 18% per annum, compounded
annually from the date of issuance, plus any other declared but unpaid
dividends thereon. In the event of liquidation, the holders of Series A and
Series B Preferred Stock are entitled to be paid an amount equal to $11.21
per share plus all declared and unpaid dividends in the case of Series A
Preferred Stock and $1.51 per share plus unpaid cumulative dividends and any
other declared but unpaid dividends thereon in the case of Series B Preferred
Stock, subject to adjustment, in the event of any stock dividends, stock
split, combination or other similar recapitalization affecting such shares.
As of December 31, 1995, aggregate cumulative unpaid dividends on Series B
Preferred Stock is $1,496,364 ($0.85 per share). At any time on or after
February 1, 2000, the holders of 67% or more of the then outstanding shares
of Series B Preferred Stock are entitled to require the Company to redeem
shares of Series B Preferred Stock then held by such stockholders. Upon
exercise of the redemption right by the Series B stockholders, the Company is
required to pay such Series B stockholders an amount equal to $1.51 per
share, subject to adjustments from time to time as identified in the
agreement, plus all accrued but unpaid dividends.
F-13
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS--(Continued)
8. WARRANTS
In connection with a master line of leasing (see Note 5) the Company has
issued two warrants to purchase shares of the Company's Series A Preferred
Stock at an exercise price of $11.21 per share, subject to adjustment. The
Company has reserved 10,697 shares of Series A Preferred Stock and 36,618
shares of Common Stock for issuance upon exercise of the warrants and
subsequent conversion by the Warrant Holders of Series A Preferred Stock into
Common Stock. Warrants for the purchase of 9,365 and 1,332 shares of the
Company's Series A Preferred Stock remain outstanding as of December 31, 1995
and expire the earlier of five years from the date of an initial public
offering or on December 21, 2002 and August 5, 2002, respectively.
During the year ended March 31, 1995, and in connection with the master
lease line, the Company issued a warrant to purchase shares of the Company's
Series B Preferred Stock ("Series B Warrants") at an exercise price of $1.51
per share, subject to adjustment. The Company has reserved 11,402 shares of
the Company's Series B Preferred Stock and 7,601 shares of Common Stock for
issuance upon exercise of the warrants and subsequent conversion by the
Warrant Holders of Series B Preferred Stock into Common Stock. Warrants to
purchase 11,402 shares of the Company's Series B Preferred Stock remain
outstanding as of December 31, 1995 and expire on the earlier of five years
from the date of an initial public offering or June 6, 2004.
During the nine months ended December 31, 1995, in connection with the
master lease line, the Company issued a warrant to purchase shares of the
Company's Series C Preferred Stock at an exercise price of $4.54 per share,
subject to adjustment. The Company has reserved 13,218 shares of the
Company's Series C Stock and 8,812 shares of Common Stock for issuance upon
exercise of the warrants and subsequent conversion by the Warrant Holders of
Series C Preferred Stock into Common Stock. Warrants to purchase 13,218
shares of the Company's Series C Preferred Stock remain outstanding as of
December 31, 1995 and expire on the earlier of five years from the date of an
initial public offering or August 2, 2005.
The value ascribed to the warrants aggregating $79,019 has been accounted
for as additional paid in capital.
9. 1992 EQUITY INCENTIVE PLAN
On July 1, 1992, the Company adopted the 1992 Equity Incentive Plan (the
"Equity Plan"), which provides stock awards to purchase shares of Common
Stock to be granted to employees and consultants under incentive and
nonstatutory stock option agreements. Under the Plan, the exercise price for
stock options shall not be less than fair market value of the optioned stock
at the date of grant. The options are exercisable over a period determined by
the Board of Directors, but not longer than ten years after the date they are
granted. Stock option information is as follows:
<TABLE>
<CAPTION>
Options Option price Available for
Outstanding range per share Grant Exercisable
-------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
March 31, 1993 107,976 $0.42 725,259 6,975
Granted 142,648 $0.42 ------- --------------
---------
March 31, 1994 250,624 $0.42 582,611 34,592
Granted 359,131 $0.45 ------- --------------
Exercised (66,866) $0.42
Canceled (1,400) $0.42
---------
March 31, 1995 541,489 $0.42 - $0.45 224,880 143,207
Granted 133,993 $0.45 - $0.83 ------- --------------
Exercised (38,399) $0.42 - $0.45
Canceled (40,933) $0.42 - $0.45
---------
December 31, 1995 596,150 $0.42 - $0.83 131,820 200,631
Granted (unaudited) 738,898 $0.83 - $6.75 ------- -------
Exercised (unaudited) (42,531) $0.42 - $0.83
---------
September 30, 1996 (unaudited) 1,292,517 $0.42 - $6.75 159,563 329,330
========= ======= =======
</TABLE>
F-14
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS--(Continued)
10. INCOME TAXES
The Company has incurred losses since inception and, due to the degree of
uncertainty related to the ultimate use of the loss carryforwards, fully
reserved this tax benefit. The Company has the following total deferred tax
assets as of March 31, 1995 and December 31, 1995:
March 31, December 31,
1995 1995
----------- -----------
Deferred tax assets:
Net operating loss carryforwards $ 1,273,000 $ 3,137,000
Book over tax depreciation and amortization 79,800 113,400
Other 18,800 9,900
----------- -----------
Total deferred tax assets 1,371,600 3,260,300
Valuation allowances (1,371,600) (3,260,300)
----------- -----------
Deferred income taxes, net $ -0- $ -0-
=========== ===========
As of December 31, 1995, the Company has net operating loss carryforwards
for income tax purposes of approximately $7.8 million, which expire through
the year 2010. The valuation allowance increased by $200,483, $ 1,112,900 and
$1,888,700 in the twelve months ended March 31, 1994 and March 31, 1995 and
the nine months ended December 31, 1995 respectively, due primarily to the
additional allowance for the net operating losses incurred in the respective
periods. The tax net operating loss carryforwards differ from the accumulated
deficit principally due to temporary differences in the recognition of
certain revenue and expense items for financial and tax reporting purposes.
11. DEFINED CONTRIBUTION PLAN
During the year ended March 31, 1995, the Company began a defined
contribution 401(k) plan which covers substantially all employees. The plan
permits participants to make contributions from 1% to 15% of their
compensation (as defined).
12. RELATED PARTY TRANSACTION
In June 1995, the Company received a promissory note from a director and
executive officer of the Company in exchange for the principal amount of
$50,000. The note is due in June 2005 and bears interest at an annual rate of
7.31% (the applicable Federal Rate at issuance). The note is subject to
certain acceleration clauses and is secured by a pledge of 14,814 shares of
the Company's Common Stock held by the borrower.
13. SIGNIFICANT AGREEMENTS
The Company has a license agreement with Massachusetts General Hospital
("MGH") for the exclusive license of a number of patents and patent applications
on which the Company's research and development efforts are significantly based.
In exchange, the Company will remit royalties based on a specified percentage of
revenues. Under this agreement, the Company is required to pay for all patent
application costs related to the licensed technology. On July 10, 1995, the
Company issued and sold to the MGH 83,723 shares of the Company's Common Stock
for $1,256 as consideration for certain modifications to the license. The
Company expensed the difference between proceeds received and fair value at the
time of issuance, approximately $68,000.
In March 1992, the Company entered into an Agency Agreement with Sumitomo
Corp. ("Sumitomo") to assist the Company in entering into collaboration and
licensing arrangements with other companies in Japan for the development,
manufacture, distribution and sale of the Company's future products. At that
time, the Japanese Company purchased 66,923 shares of the Company's Series A
Preferred Stock, $.01 par value, for $11.21 per share. In October 1995,
Sumitomo assigned the Agency Agreement and its shares to Summit
F-15
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS--(Continued)
13. SIGNIFICANT AGREEMENTS (Continued)
Pharmaceutical International Corporation ("Agent"). Under the terms of the
amended Agency Agreement, which expired and was extended for one year in
March 1996, the Company is required to pay the Agent certain commissions and
fees, based on a stipulated percentage of amounts received by the Company as
license fees milestone payments or capital investments.
Also, in March 1992, the Company entered into a $3.5 million development
and license agreement with, a Japanese manufacturer and distributor
("Japanese Manufacturer and Distributor") of medical products. Under the
terms of the agreement, the Company received funding for research and
development through the sale of Preferred Stock and license rights to the
Company's liver MRI contrast agent product candidate. The Company will also
receive royalties on future sales of the liver contrast agent. In exchange,
the Japanese Manufacturer and Distributor received exclusive rights to
develop and commercialize the product in Japan and certain rights in other
countries in the Far East (see Note 14). In March of 1992, the Japanese
Manufacturer and Distributor purchased an equity interest in the Company in
accordance with the agreement by acquiring 26,768 shares of Series A
Preferred Stock for $11.21 per share. As of December 31, 1995, the Company
had received an aggregate of $2.7 million in revenues (net of withholding
tax) under this agreement.
14. SUBSEQUENT EVENTS
In January 1996, the Company issued convertible promissory notes for an
aggregate amount of $3,015,862 ("Convertible Notes") (see Note 6) in exchange
for $300,000 of cash and cancellation of $2.7 million of previously issued
promissory notes and accrued interest thereon. The Convertible Notes bear
interest at the rate of 10% per year and become due upon demand on or after
February 15, 1996. The Convertible Notes and accrued interest thereon are
convertible, at any time after the date of issuance, into shares of the
Company's Series C Preferred Stock at an initial conversion price that will
be between $1.51 and $2.25 depending upon certain events of conversion. The
initial conversion price per share shall be subject to further adjustment.
The stockholders of Series C Preferred Stock will be entitled to have
voting rights equal to the number of shares of Common Stock into which such
shares of Preferred Stock may be converted at such time. In the event of
liquidation, the holders of Series C Preferred Stock will be entitled to be
paid an amount equal to the price per share at which shares of Series C
Preferred Stock are initially issued plus unpaid cumulative dividends plus
any other declared but unpaid dividends thereon, subject to adjustment in the
event of any stock dividends, stock split, combination or other similar
recapitalization affecting such shares.
Shares of Series C Preferred Stock, upon issuance, will be convertible
into Common Stock by dividing the initial price per share at which such
shares are issued by the Series C Preferred Stock conversion price in effect
at the time of conversion. The initial conversion price for Series C
Preferred Stock, $2.25 per share, is subject to adjustment. The Company has
reserved 954,872 shares of Common Stock for issuance upon conversion of the
Series C Preferred Stock.
In February 1996, the Company also issued convertible promissory notes for
an aggregate amount of $600,000 ("Bridge Notes") which bear interest at a
rate of 10% per year and are due upon demand. The Bridge Notes and accrued
interest thereon are convertible, at any time after the date of issuance, on
an equivalent basis into securities of the next equity financing which is
expected to be Series D Preferred Stock, with an initial conversion price of
$3.00 per share which is subject to adjustment. The Company has reserved
1,133,325 shares of Common Stock for issuance upon conversion of the Series D
Preferred Stock.
In March 1996, the Company entered into marketing, development and license
agreements with Daiichi Radioisotope Laboratories Ltd., a Japanese
pharmaceutical company ("Daiichi"). The agreements cover the Company's
vascular MRI contrast agent and provide for the Company to receive a license
fee of $3.0 million (net of withholding tax), milestone payments of up to
$3.3 million (net of withholding tax) and proceeds from
F-16
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS--(Continued)
14. SUBSEQUENT EVENTS (Continued)
the issuance of 868,329 shares of Series E Preferred Stock at price of $5.76
per share. The agreements also provides for the Company to supply product to
Daiichi and to receive royalties for sales made by Daiichi in Japan.
In April 1996, the Company received a promissory note from a director and
executive officer of the Company in exchange for the principal amount of
$50,000. The note is due in April 2006 and bears interest at an annual rate
of 6.51% (the applicable Federal Rate at issuance). The note is subject to
certain acceleration clauses and is secured by a pledge of 14,814 shares of
the Company's Common Stock held by the borrower.
In May 1996, the Convertible Notes and accrued interest thereon were
converted into 1,432,318 shares of the Series C Preferred Stock.
In May 1996, the Company issued 1,700,002 shares of Series D Preferred
Stock, priced at $3.00 per share, in exchange for cash and the Bridge Notes
and accrued interest thereon.
In May 1996, the Company issued warrants to purchase 40,000 shares of the
Company's Series D Preferred Stock at an exercise price of $3.00 per share,
subject to adjustment. The Company has reserved 26,665 shares of Common Stock
for issuance upon exercise of the warrants and subsequent conversion of
Series D Preferred Stock.
The sale of the Series E Preferred Stock, was completed in two separate
closings, one in May 1996 and the other in August 1996, for a total of
868,329 shares. The Company has reserved 578,885 shares of Common Stock for
issuance upon conversion of the Series E Preferred Stock.
In May 1996, the Company received a promissory note from an officer of the
Company in exchange for the amount of $180,000. The note is due in May 2006
and bears interest at an annual rate of 6.83% (the applicable Federal Rate at
issuance). The note is subject to certain acceleration clauses and is secured
by a pledge of 44,444 shares of the Company's Common Stock held by the
borrower. The Company also repurchased from the same officer of the Company,
66,666 shares of Common Stock at a price per share of $4.05.
As a result of the above noted ownership change, the Company's ability to
utilize its tax loss carryforwards is subject to limitations as defined in
Internal Revenue Code Sections 382 and 383. The Company currently estimates
that their annual limitation on the use of tax loss carryforwards through May
31, 1996 will be approximately $900,000. The amount of the potential
limitation on the utilization of research and development tax credits due to
the change in ownership have not been calculated at this time.
In August 1996, the Company entered into a strategic collaboration
agreement with Mallinckrodt Group Inc. ("Mallinckrodt "), a U.S. pharmaceutical
company, involving research, development and marketing of MS- 325 and future MRI
vascular contrast agents developed or in-licensed by either party. Under the
terms of the agreement each party is obligated to fund a portion of the
development cost of MS-325 up to a specified maximum amount. Mallinckrodt will
have the right to manufacture MS-325 and to market the product worldwide except
Japan. The Company received a $6.0 million license fee payment upon execution of
the agreement and is eligible to receive an additional $2.0 million upon the
earlier of the completion of a specified milestone or a designated date. Under
the agreement, the Company will share in future operating profits from the sale
of products covered under the agreement.
In November 1996, the Board of Directors of the Company authorized
management to file a registration statement with the Securities and Exchange
Commission in order to permit the Company to sell shares of its Common Stock
to the public. If the offering is consummated under terms presently
anticipated, all of the Preferred Stock issued and outstanding will
automatically convert into 4,750,296 shares of Common Stock. Immediately
following such conversion, all currently outstanding shares of Preferred
Stock will be canceled, retired and eliminated from the Company's authorized
shares of capital stock and the number of authorized shares of Preferred
Stock will be decreased to 1,000,000 shares.
F-17
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS--(Continued)
14. SUBSEQUENT EVENTS (Continued)
In December 1996, the Company adopted the Company's 1996 Employee Stock
Purchase Plan (the "Purchase Plan") under which employees may purchase shares
of Common Stock at a discount from fair market value. There are 66,666 shares
of Common Stock reserved for issuance under the Purchase Plan. To date, no
shares of Common Stock have been issued under the Purchase Plan. The Purchase
Plan is intended to qualify as an employee stock purchase plan within the
meaning of Section 423 of the code. Rights to purchase Common Stock under the
Purchase Plan are granted at the discretion of the Compensation Committee,
which determines the frequency and duration of individual offerings under the
Purchase Plan and the dates when stock may be purchased. Eligible employees
participate voluntarily and may withdraw from any offering at any time before
stock is purchased. Participation terminates automatically upon termination
of employment. The purchase price per share of Common Stock in an offering is
85% of the lesser of its fair market value at the beginning of the offering
period or on the applicable exercise date and may be paid through payroll
deductions, periodic lump sum payments or a combination of both. The Purchase
Plan terminates in December 2006.
In December 1996, the Board of Directors and stockholders of the Company
adopted the Company's 1996 Director Stock Option Plan (the "Director Plan").
All of the directors who are not employees of the Company (the "Eligible
Directors") are currently eligible to participate in the Director Plan. There
are 66,666 shares of Common Stock reserved for issuance under the Director
Plan. Upon the election or reelection of an Eligible Director, such director
is automatically granted an option to purchase 6,666 shares of Common Stock
(the Option). Each Option becomes exercisable with respect to 1,333 shares on
each anniversary date of grant for a period of five years, provided that the
optionee is still a director of the Company at the opening of business such
date. The Options have a term of ten years. The exercise price for the
Options is equal to the last sale price for the Common Stock on the business
day immediately preceding the date of grant, as reported on The Nasdaq
National Market. The exercise price may be paid in cash or shares of Common
Stock, or a combination of both.
In December 1996, the Company amended the 1992 Equity Plan. The Equity
Plan is designed to provide the Company flexibility in awarding equity
incentives by providing for multiple types of incentives that may be awarded.
The purpose of the Equity Plan is to attract and retain key employees of and
consultants of the Company and to enable them to participate in the long-term
growth of the Company. The Equity Plan provides for the grant of stock
options (incentive and nonstatutory), stock appreciation rights, performance
shares, restricted stock or stock units for the purchase of an aggregate of
1,599,901 shares of Common Stock, subject to adjustment for stock-splits and
similar capital changes. Awards under the Equity Plan can be granted to
officers, employees and other individuals as determined by the committee of
the Board of Directors which administers the Equity Plan. The Compensation
Committee selects the participants and establishes the terms and conditions
of each option or other equity right granted under the Equity Plan, including
the exercise price, the number of shares subject to options or other equity
rights and the time at which such options become exercisable. The exercise
price of all "incentive stock options" within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), granted under the
Equity Plan must be at least equal to 100% of the fair market value of the
option shares on the date of grant. The term of any incentive stock option
granted under the Equity Plan may not exceed ten years.
A reverse stock split was approved by the Board of Directors in December
1996, whereby one share of Common Stock is outstanding after the split for each
1.5 shares of Common Stock outstanding prior to the split. All share and per
share amounts related to Common Stock presented in the accompanying financial
statements have been restated to reflect the reverse stock split.
In December 1996, the Company and the Japanese Manufacturer and
Distributor agreed to restructure an existing agreement to collaborate on the
development and commercialization of a liver MRI contrast agent. In
connection with the restructuring, the parties terminated further
collaboration efforts and the Japanese Manufacturer and Distributor
relinquished its exclusive rights in Japan to the liver MRI agent in exchange
for
F-18
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS--(Continued)
14. SUBSEQUENT EVENTS (Continued)
a non-exclusive technology license and a $250,000 payment from the Company.
The Company is entitled to receive royalties based upon specified percentage
of future revenues, if any, from the sale of liver MRI contrast agents by the
Japanese Manufacturer and Distributor.
F-19
<PAGE>
TECHNOLOGY AND RESEARCH PIPELINE
- --------------------------------------------------------------------------------
[EPIX LOGO]
MS-325 and the Next
Generation of Targeted
MRI Agents
[bullet] MS-325 was designed by EPIX
scientists to bind to the blood
protein albumin and provide an
enhanced magnetic signal.
[bullet] EPIX scientists are developing
additional targeting and signal
enhancement technologies to
expand the number of diseases
which can be detected with MRI.
[Diagram of MS-325 molecular structure]
[Diagram caption: Chemical structure of MS-325]
[Diagram of MS-325 attached to albumin]
[Diagram caption: MS-325 fitting into albumin binding site]
[Diagram of MS-325 mechanism of action]
[Diagram caption: MS-325 mechanism of action: signal enhancement upon binding
to albumin]
- --------------------------------------------------------------------------------
EPIX Products and Research Areas
In addition to developing MS-325 for vascular applications, EPIX is conducting
research in the following areas:
[bullet] MS-325 for MRI exams to diagnose tumors, including breast cancer;
[bullet] Thrombus-seeking agents for the detection of blood clots throughout
the body; and
[bullet] Functional brain-imaging agents to enhance the use of MRI in
differentiating among the many neurodegenerative and psychiatric
diseases.
[Diagram demonstrating current areas of research]
[Diagram captions: Brain Activation
Thrombus
Vascular MS-325]
- --------------------------------------------------------------------------------
MS-325 IS CURRENTLY BEING EVALUATED IN CLINICAL TRIALS AND NEITHER MS-325 NOR
OTHER CONTRAST AGENTS UNDER DEVELOPMENT HAVE RECEIVED MARKETING APPROVAL FROM
THE FDA OR ANY FOREIGN REGULATORY BODY.
<PAGE>
================================================================================
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company or the
Underwriters. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy to any person in any jurisdiction in which
such offer or solicitation would be unlawful, or to any person to whom it is
unlawful. Neither the delivery of this Prospectus nor any offer or sale made
hereunder shall, under any circumstances, create any implication that there
has been no change in the affairs of the Company or that the information
contained herein is correct as of any time subsequent to the date hereof.
-------------
TABLE OF CONTENTS
Page
---------
Prospectus Summary 3
Risk Factors 5
Use of Proceeds 14
Dividend Policy 14
Capitalization 15
Dilution 16
Selected Financial Data 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations 18
Business 21
Management 39
Certain Transactions 44
Principal Stockholders 46
Description of Capital Stock 48
Shares Eligible for Future Sale 50
Underwriting 52
Legal Matters 53
Experts 53
Additional Information 53
Index to Financial Statements F-1
-------------
Until , 1997 (25 days after the date of this Prospectus), all dealers
effecting transactions in the Common Stock, whether or not participating in
this distribution, may be required to deliver a Prospectus. This is in
addition to the obligations of dealers to deliver a Prospectus when acting as
Underwriters and with respect to their unsold allotments or subscriptions.
2,000,000 Shares
[EPIX MEDICAL LOGO]
Common Stock
-------------
PROSPECTUS
-------------
HAMBRECHT & QUIST
WESSELS, ARNOLD &
HENDERSON
, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following are the expenses of issuance and distribution of the Common
Stock registered hereunder on Form S-1 other than underwriting discounts and
commissions:
SEC registration fee $ 7,667
Nasdaq listing fee $ 40,037
NASD filing fee $ 3,030
Blue Sky fees and expenses $ 10,000
Printing, engraving and mailing expenses $120,000
Accounting fees and expenses $150,000
Legal fees and expenses $275,000
Transfer Agent and Registrar fees $ 5,500
Miscellaneous expenses $ 88,766
Total $700,000
Item 14. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law grants the Registrant
the power to indemnify each person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative by
reason of the fact that he is or was a director, officer, employee or agent
of the Registrant, or is or was serving at the request of the Registrant as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with any such action, suit or
proceeding if (i) he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Registrant and
(ii) with respect to any criminal action or proceeding, he had no reasonable
cause to believe his conduct was unlawful, provided, however, no
indemnification shall be made in connection with any proceeding brought by or
in the right of the Registrant where the person involved is adjudged to be
liable to the Registrant except to the extent approved by a court.
Article NINTH of the Registrant's Restated Certificate of Incorporation
provides that a director shall not be personally liable to the Registrant's
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent that the eliminations or limitation of liability is not
permitted under the Delaware General Corporation Law as in effect when such
liability is determined.
Article TENTH of the Registrant's Restated Certificate of Incorporation
provides that the Registrant shall, to the fullest extent permitted by the
Delaware General Corporation Law, as amended from time to time, indemnify
each person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by reason of the
fact that he is or was, or has agreed to become a director or officer of the
Registrant. The indemnification provided for in Article TENTH is expressly
not exclusive of any other rights to which those seeking indemnification may
be entitled under any law, agreement or vote of stockholders or disinterested
directors or otherwise, and shall inure to the benefit of the heirs,
executors and administrators of such persons. Article TENTH further permits
the Board of Directors to authorize the grant of indemnification rights to
other employees and agents of the Registrant and such rights may be
equivalent to, or greater or less than, those set forth in Article TENTH.
Article V, Section 1 of the Registrant's By-laws provides that the
Registrant shall, to the full extent permitted by the Delaware General
Corporation Law, as amended from time to time, and the Certificate of
Incorporation, indemnify each person whom it may indemnify thereto.
Article V, Section 2 of the Registrant's By-Laws provides that the
Registrant shall have the power to purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
II-1
<PAGE>
Registrant, or is or was serving at the request of the Registrant as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against such person and incurred by such person in any such capacity or
arising out of such person's status as such.
The Registrant's Restated Certificate of Incorporation and applicable
provisions of Delaware law provide that directors of the Registrant will not
be personally liable to the Registrant or its stockholders for monetary
damages for breach of fiduciary duty as a director, whether or not an
individual continues to be a director at the time such liability is asserted,
except for liability (i) for any breach of the director's duty of loyalty to
the Registrant or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) pursuant to Section 174 of the Delaware General Corporation Law or (iv)
for any transaction from which the director derives an improper personal
benefit.
The Registrant expects to enter into agreements with certain officers and
directors affirming the Registrant's obligation to indemnify them to the
fullest extent permitted by law and providing various other protections.
Item 15. Recent Sales of Unregistered Securities
Since 1993, the Registrant has sold and issued the following unregistered
securities:
In March 1994, the Registrant sold 2,643,736 shares of Series B
Convertible Preferred Stock at a purchase price of $1.513 per share to
Bessemer Venture Partners III L.P., Accel IV L.P. and certain related
persons. Such shares will convert into shares of Common Stock on a 1-for-1.5
basis upon the consummation of the Registrant's initial public offering as a
result of a 1-for-1.5 reverse stock split effected in December 1996.
In June 1994, the Registrant issued to Dominion Ventures, Inc., a warrant
to purchase 11,402 shares of the Registrant's Convertible Series B Preferred
Stock having an exercise price per share of $1.513. This warrant will be
exercisable for 7,601 shares of Common Stock with an exercise price of $2.27
per share upon consummation of the Registrant's initial public offering as a
result of a 1-for-1.5 reverse stock split effected in December 1996.
In May 1995, the Registrant sold to Bessemer Venture Partners III L.P.,
Accel IV L.P. and certain related persons Convertible Promissory Notes (the
"1995 Convertible Notes") having an aggregate principal amount of $1,500,000
and convertible, as a whole, at the holders' option, into 355,256 shares of
the Registrant's Series C Convertible Preferred Stock at a conversion price
of $4.54 per share.
In August 1995, the Registrant issued to Dominion Fund II a warrant to
purchase 13,218 shares of the Registrant's Series C Convertible Preferred
Stock having an exercise price per share of $4.54. This warrant will be
exercisable for 8,812 shares of Common Stock with an exercise price of $6.81
per share upon consummation of the Registrant's initial public offering as a
result of a 1-for-1.5 reverse stock split effected in December 1996.
In November and December 1995, Accel IV L.P., Bessemer Venture Partners
III L.P. and certain related persons made bridge loans to the Company in an
aggregate principal amount of $1,200,000 in exchange for promissory notes
bearing interest at a rate of 10% per annum and convertible on a
dollar-for-dollar basis for shares of the Company's securities in the
Company's next permanent equity financing (the "1995 Bridge Notes").
In January 1996, all of the 1995 Convertible Notes were amended and
restated to, among other things, change the conversion price to between 1.51
and $2.25 per share, depending on certain events of conversion, and the
Registrant issued to Bessemer Venture Partners III L.P., Accel IV L.P. and
certain related persons Convertible Promissory Notes (the "1996 Convertible
Notes") having an aggregate principal amount of $1,515,862 and convertible,
as a whole, at the holder's option, into shares of the Registrants' Series C
Convertible Preferred Stock at a conversion price between $1.51 and $2.25 per
share, depending on certain events of conversion, in exchange for cash and
the surrender of the 1995 Bridge Notes and accrued interest thereon.
In May 1996, the Registrant sold 1,700,002 shares of Series D Convertible
Preferred Stock at a purchase price of $3.00 per share to a group of
sophisticated investors. Such shares will convert into shares of Common Stock
on a 1-for-1.5 basis upon the consummation of the Company's initial public
offering as a result of a 1-for-1.5 reverse stock split effected in December
1996.
In May 1996, in connection with the Registrant's sale of Series D
Convertible Preferred Stock, the Registrant issued warrants to purchase an
aggregate of 40,000 shares of the Registrant's Series D Preferred Stock
II-2
<PAGE>
having an exercise price of $3.00 per share. The warrants were issued to
Bessemer Venture Partners III L.P., Accel IV L.P., Accel Investors '93 L.P.,
Ellmore C. Patterson Partners, Accel Keiretsu L.P. and Prosper Partners.
These warrants will be exercisable for an aggregate of 26,665 shares of
Common Stock with an exercise price of $4.50 per share upon consummation of
the Registrant's initial public offering as a result of a 1-for-1.5 reverse
stock split effected in December 1996.
Concurrently with the sale of Series D Convertible Preferred Stock, the
1995 Convertible Notes and the 1996 Convertible Notes were surrendered and
converted into an aggregate of 1,432,318 shares of Series C Convertible
Preferred Stock at a conversion price of $2.25 per share. Such shares will
convert into shares of Common Stock on a 1-for-1.5 basis upon the
consummation of the Registrant's initial public offering as a result of a
1-for-1.5 reverse stock split effected in December 1996.
In May 1996, the Registrant sold to Daiichi Radioisotope Laboratories,
Ltd. 520,997 shares of the Registrant's Series E Convertible Preferred Stock
at a purchase price of approximately $5.76 per share. Such shares will
convert into shares of Common Stock on a 1-for-1.5 basis upon the
consummation of the Registrant's initial public offering as a result of a
1-for-1.5 reverse stock split effected in December 1996.
In August 1996, the Registrant issued to Daiichi Radioisotope
Laboratories, Ltd. 347,332 shares of the Registrant's Series E Convertible
Preferred Stock at a purchase price of approximately $5.76 per share. Such
shares will convert into shares of Common Stock on a 1-for-1.5 basis upon the
consummation of the Registrant's initial public offering as a result of a
1-for-1.5 reverse stock split effected in December 1996.
Between June 30, 1992 and November 30, 1996, the Registrant granted
options to purchase 1,497,644 shares of Common Stock to its employees and
consultants under its 1992 Equity Incentive Plan having exercise prices
ranging from $0.42 to $10.50 per share. As of November 30, 1996, options to
purchase 172,574 shares had been exercised, options to purchase 47,267 shares
had been cancelled and options to purchase 1,277,803 shares remained
outstanding.
No underwriter was engaged in connection with the foregoing issuance of
securities. The above described issuances of the Registrant's Preferred Stock
were made in reliance upon Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act"), as transactions not involving any public
offering. The Company has reason to believe that all of the foregoing
purchasers were familiar with or had access to information concerning the
operations and financial conditions of the Company, and all of those
individuals were acquiring the shares for investment and not with a view to
the distribution thereof. At the time of issuance, all of the foregoing
shares of Preferred Stock were deemed to be restricted securities for
purposes of the Act and the certificates representing such securities bore
legends to that effect.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
1.1 Form of Underwriting Agreement. Filed herewith.
3.1 Restated Certificate of Incorporation of the Registrant. Filed
herewith.
3.2 Certificate of Amendment of Restated Certificate of Incorporation of
Registrant. Filed herewith.
3.3 Form of Restated Certificate of Incorporation of Registrant. Filed
herewith.
3.4 By-Laws of the Registrant, as amended. Filed herewith.
3.5 Form of Amended and Restated By-Laws of Registrant. Filed herewith.
4.1 Specimen certificate for shares of Common Stock of the Registrant.
Filed herewith.
5.1 Opinion of Palmer & Dodge LLP. Filed herewith.
10.1+ Agency Agreement between the Registrant and Sumitomo Corporation
dated March 13, 1992. Filed herewith.
10.2+ Amendment Agreement to the Agency Agreement between the Registrant
and Sumitomo Corporation dated June 26, 1992. Filed herewith.
10.3 Short Form Lease from Trustees of the Cambridge East Trust to the
Registrant dated July 1, 1992. Filed herewith.*
10.4 Form of Warrant to Purchase Shares of Series A Convertible Preferred
Stock dated December 21, 1992. Filed herewith.
II-3
<PAGE>
10.5 Dominion Ventures Master Lease Agreement No. 8050 dated December 21,
1992. Filed herewith.
10.6 First Amendment to Master Lease Agreement No. 8050 dated May 14,
1993. Filed herewith.
10.7 Second Amendment to Master Lease Agreement No. 8050 dated August 5,
1993. Filed herewith.
10.8 First Amendment Lease From Trustees of the Cambridge Trust to the
Registrant dated October 20, 1993. Filed herewith.
10.9 Warrant to Purchase Shares of Series B Convertible Preferred Stock
dated June 6, 1994. Filed herewith.
10.10 Second Amendment to Master Lease Agreement No. 8050 dated June 6,
1994. Filed herewith.
10.11+ Amendment Agreement to the Agency Agreement between the Registrant
and Sumitomo Corporation dated September 15, 1994. Filed herewith.
10.12 Second Amendment Lease From Trustees of the Cambridge East Trust to
the Registrant dated September 17, 1994. Filed herewith.
10.13 Convertible Promissory Note Purchase Agreement by and among the
Registrant and certain purchasers named therein dated May 26, 1995.
Filed herewith.
10.14+ Amended and Restated License Agreement between the Registrant and
The General Hospital Corporation dated July 10, 1995. Filed
herewith.
10.15 Warrant to Purchase Shares of Series C Convertible Preferred Stock
dated August 2, 1995. Filed herewith.
10.16 Third Amendment to the Master Lease Agreement No. 8050 dated August
2, 1995. Filed herewith.
10.17 Amendment No. 1 to Convertible Promissory Note Purchase Agreement by
and among the Registrant and certain purchasers named therein dated
January 19, 1996. Filed herewith.
10.18+ Extension Agreement to Agency Agreement between the Registrant and
Sumitomo Corporation dated March 5, 1996. Filed herewith.
10.19+ Development and License Agreement dated March 29, 1996 by and among
the Registrant and Daiichi Radioisotope Laboratories, Ltd. Filed
herewith.
10.20 Third Amendment Lease From Trustees of the Cambridge East Trust to
the Registrant dated May 1, 1996. Filed herewith.
10.21 Series D Convertible Preferred Stock Purchase Agreement by and among
the Registrant and certain purchasers named therein dated May 29,
1996. Filed herewith.
10.22 Third Amended and Restated Stockholders' Rights Agreement by and
among the Registrant and certain of its stockholders named therein
dated May 29, 1996. Filed herewith.
10.23 Form of Warrant to Purchase Shares of Series D Preferred Stock dated
May 29, 1996. Filed herewith.
10.24 Amendment No. 1 to Third Amended and Restated Stockholders' Rights
Agreement dated May 31, 1996. Filed herewith.
10.25 Series E Convertible Preferred Stock Purchase Agreement dated May
31, 1996 between the Registrant and Daiichi Radioisotope
Laboratories, Ltd. Filed herewith.
10.26+ Strategic Collaboration Agreement between the Registrant and
Mallinckrodt Medical, Inc. and Mallinckrodt Group Inc. dated August
30, 1996. Filed herewith.
10.27 Amendment No. 2 to Third Amended and Restated Stockholders' Rights
Agreement dated December 6, 1996. Filed herewith.
10.28 Amended and Restated 1992 Equity Incentive Plan. Filed herewith.
10.29 Form of Incentive Stock Option Certificate. Filed herewith.
10.30 Form of Nonstatutory Stock Option Certificate. Filed herewith.
10.31 1996 Director Stock Option Plan. Filed herewith.
10.32 1996 Employee Stock Purchase Plan. Filed herewith.
10.33 Form of Consulting and Confidentiality Agreement between the
Registrant and certain consultants of the Registrant. Filed
herewith.
10.34 Form of Invention and Non-disclosure Agreement between
the Registrant and certain employees of the Registrant. Filed
herewith.
II-4
<PAGE>
10.35 Form of Non-Competition and Non-Solicitation Agreement between the
Registrant and certain employees of the Registrant. Filed herewith.
10.36 Form of Common Stock Purchase Agreement. Filed herewith.
10.37 Form of Stock Purchase and Right of First Refusal Agreement. Filed
herewith.
23.1 Consent of Palmer & Dodge LLP (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP. Filed herewith.
24.1 Power of Attorney (included in signature page hereto).
24.2 Certified resolutions of the Registrant authorizing power of
attorney. Filed herewith.
27.1 Financial Data Schedule. Filed herewith.
- -------------
+ Certain confidential material contained in the document has been omitted
and filed separately with the Securities and Exchange Commission pursuant
to Rule 406 of the Securities Act.
* Schedules to be filed by amendment.
(b) Financial Statement Schedules
All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
Item 17. Undertakings
(a) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under "Item
14- Indemnification of Directors and Officers" above, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
(b) The undersigned Registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreement
certificates in such denominations and registered in such names as required
by the underwriters to permit prompt delivery to each purchaser.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be a part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cambridge, State of
Massachusetts, on December 10, 1996.
EPIX MEDICAL, INC.
By: /s/ Michael D. Webb
------------------------------------
Michael D. Webb
President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of EPIX Medical, Inc., hereby
severally constitute and appoint Michael D. Webb and William T. Whelan, and each
of them singly, our true and lawful attorneys, with full power to them in any
and all capacitates, to sign any amendments to this Registration Statement on
Form S-1 (including Pre-and Post-Effective Amendments), and any related Rule
462(b) registration statement or amendment thereto, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
President, Chief Executive Officer
/s/ Michael D. Webb and Director (Principal Executive
- --------------------------------------- Officer) December 10, 1996
Michael D. Webb
/s/ Jeffrey R. Lentz Chief Financial Officer, and Vice
- --------------------------------------- President, Finance and
Jeffrey R. Lentz Administration (Principal Financial
Officer and Principal Accounting
Officer) December 10, 1996
/s/ Christopher F. O. Gabrieli Director and Chairman of the Board December 10, 1996
- ---------------------------------------
Christopher F. O. Gabrieli
/s/ Stanley T. Crooke, M.D., Ph.D. Director December 10, 1996
- ---------------------------------------
Stanley T. Crooke, M.D., Ph.D.
/s/ Luke B. Evnin, Ph.D. Director December 10, 1996
- ---------------------------------------
Luke B. Evnin, Ph.D.
/s/ Randall B. Lauffer, Ph.D. Director December 10, 1996
- ---------------------------------------
Randall B. Lauffer, Ph.D.
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description Page
- ------ ----------- ----
1.1 Form of Underwriting Agreement. Filed herewith.
3.1 Restated Certificate of Incorporation of the Registrant.
Filed herewith.
3.2 Certificate of Amendment of Restated Certificate of
Incorporation of Registrant. Filed herewith.
3.3 Form of Restated Certificate of Incorporation of
Registrant. Filed herewith.
3.4 By-Laws of the Registrant, as amended. Filed herewith.
3.5 Form of Amended and Restated By-Laws of Registrant. Filed
herewith.
4.1 Specimen certificate for shares of Common Stock of the
Registrant. Filed herewith.
5.1 Opinion of Palmer & Dodge LLP. Filed herewith.
10.1+ Agency Agreement between the Registrant and Sumitomo
Corporation dated March 13, 1992. Filed herewith.
10.2 Amendment to the Agency Agreement between the Registrant
and Sumitomo Corporation dated June 26, 1992. Filed
herewith.
10.3 Short Form Lease from Trustees of the Cambridge East Trust
to the Registrant dated July 1, 1992. Filed herewith.*
10.4 Form of Warrant to Purchase Shares of Series A Convertible
Preferred Stock dated December 21, 1992. Filed herewith.
10.5 Dominion Ventures Master Lease Agreement No. 8050 dated
December 21, 1992. Filed herewith.
10.6 First Amendment to Master Lease Agreement No. 8050 dated
May 14, 1993. Filed herewith.
10.7 Second Amendment to Master Lease Agreement No. 8050 dated
August 5, 1993. Filed herewith.
10.8 First Amendment Lease From Trustees of the Cambridge Trust
to the Registrant dated October 20, 1993. Filed herewith.
10.9 Warrant to Purchase Shares of Series B Convertible
Preferred Stock dated June 6, 1994. Filed herewith.
10.10 Second Amendment to Master Lease Agreement No. 8050 dated
June 6, 1994. Filed herewith.
10.11+ Amendment Agreement to the Agency Agreement between the
Registrant and Sumitomo Corporation dated September 15,
1994. Filed herewith.
10.12 Second Amendment Lease From Trustees of the Cambridge East
Trust to the Registrant dated September 17, 1994. Filed
herewith.
10.13 Convertible Promissory Note Purchase Agreement by and among
the Registrant and certain purchasers named therein dated
May 26, 1995. Filed herewith.
10.14+ Amended and Restated License Agreement between the
Registrant and The General Hospital Corporation dated
July 10, 1995. Filed herewith.
10.15 Warrant to Purchase Shares of Series C Convertible
Preferred Stock dated August 2, 1995. Filed herewith.
10.16 Third Amendment to the Master Lease Agreement No. 8050
dated August 2, 1995. Filed herewith.
10.17 Amendment No. 1 to Convertible Promissory Note Purchase
Agreement by and among the Registrant and certain
purchasers named therein dated January 19, 1996. Filed
herewith.
10.18+ Extension Agreement to Agency Agreement between the
Registrant and Sumitomo Corporation dated March 5, 1996.
Filed herewith.
10.19+ Development and License Agreement dated March 29, 1996 by
and among the Registrant and Daiichi Radioisotope
Laboratories, Ltd. Filed herewith.
10.20 Third Amendment Lease From Trustees of the Cambridge East
Trust to the Registrant dated May 1, 1996. Filed
herewith.
<PAGE>
Exhibit
Number Description Page
- ------ ----------- ----
10.21 Series D Convertible Preferred Stock Purchase Agreement by
and among the Registrant and certain purchasers named
therein dated May 29, 1996. Filed herewith.
10.22 Third Amended and Restated Stockholders' Rights Agreement
by and among the Registrant and certain of its
stockholders named therein dated May 29, 1996. Filed
herewith.
10.23 Form of Warrant to Purchase Shares of Series D Preferred
Stock dated May 29, 1996. Filed herewith.
10.24 Amendment No. 1 to Third Amended and Restated Stockholders'
Rights Agreement dated May 31, 1996. Filed herewith.
10.25 Series E Convertible Preferred Stock Purchase Agreement
dated May 31, 1996 between the Registrant and Daiichi
Radioisotope Laboratories, Ltd. Filed herewith.
10.26+ Strategic Collaboration Agreement between the Registrant
and Mallinckrodt Medical, Inc. and Mallinckrodt Group
Inc. dated August 30, 1996. Filed herewith.
10.27 Amendment No. 2 to Third Amended and Restated Stockholders'
Rights Agreement dated December 6, 1996. Filed herewith.
10.28 Amended and Restated 1992 Equity Incentive Plan. Filed
herewith.
10.29 Form of Incentive Stock Option Certificate. Filed herewith.
10.30 Form of Nonstatutory Stock Option Certificate. Filed
herewith.
10.31 1996 Director Stock Option Plan. Filed herewith.
10.32 1996 Employee Stock Purchase Plan. Filed herewith.
10.33 Form of Consulting and Confidentiality Agreement between
the Registrant and certain consultants of the Registrant.
Filed herewith.
10.34 Form of Invention and Non-disclosure Agreement between the
Registrant and certain employees of the Registrant. Filed herewith.
10.35 Form of Non-Competition and Non-Solicitation Agreement
between the Registrant and certain employees of the
Registrant. Filed herewith.
10.36 Form of Common Stock Purchase Agreement. Filed herewith.
10.37 Form of Stock Purchase and Right of First Refusal
Agreement. Filed herewith.
23.1 Consent of Palmer & Dodge LLP (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP. Filed herewith.
24.1 Power of Attorney (included in signature page hereto).
24.2 Certified resolutions of the Registrant authorizing power
of attorney. Filed herewith.
27.1 Financial Data Schedule. Filed herewith.
- -------------
+ Certain confidential material contained in the document has been omitted
and filed separately with the Securities and Exchange Commission pursuant
to Rule 406 of the Securities Act.
* Schedules to be filed by amendment.
Exhibit 1.1
EPIX MEDICAL, INC.
2,000,000 Shares 1
Common Stock
UNDERWRITING AGREEMENT
----------------------
January ___, 1997
HAMBRECHT & QUIST LLC
WESSELS, ARNOLD & HENDERSON, L.L.C.
c/o Hambrecht & Quist LLC
One Bush Street
San Francisco, CA 94104
Ladies and Gentlemen:
EPIX Medical, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell 2,000,000 shares of its authorized but unissued Common Stock,
$.01 par value per share (the "Common Stock") (such shares of Common Stock being
herein called the "Underwritten Stock"). The Company also proposes to grant to
the Underwriters (as hereinafter defined) an option to purchase up to 300,000
additional shares of Common Stock (the "Option Stock", and together with the
Underwritten Stock, the "Stock"). The Common Stock is more fully described in
the Registration Statement and the Prospectus hereinafter mentioned.
The Company hereby confirms its agreements made with respect to the
purchase of the Stock by the several underwriters, for whom you are acting,
named in Schedule I hereto (the "Underwriters," which term shall also include
any underwriter purchasing Stock pursuant to Section 3(b) hereof). You represent
and warrant that you have been authorized by each of the other Underwriters to
enter into this Agreement on its behalf and to act for it in the manner herein
provided.
1. Registration Statement. The Company has filed with the Securities
and Exchange Commission (the "Commission") a registration statement on Form S- 1
(No. 333- ), including the related preliminary prospectus, for the registration
under the
- -------------
1 Plus an option to purchase from the Company up to 300,000 additional
shares to cover over-allotments.
<PAGE>
-2-
Securities Act of 1933, as amended (the "Securities Act") of the Stock.
Copies of such registration statement and of each amendment thereto, if any,
including the related preliminary prospectus (meeting the requirements of Rule
430A of the rules and regulations of the Commission) heretofore filed by the
Company with the Commission have been delivered to you and are identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
the Commission's Electronic Data Gathering, Analysis and Retrieval System
("EDGAR"), except to the extent permitted by Regulation S-T.
The term Registration Statement as used in this Agreement shall mean
such registration statement, including all exhibits and financial statements,
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, in the form in which it became effective, and
any registration statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission with respect to the Stock ("Rule 462(b)
registration statement"), and, in the event of any amendment thereto after the
effective date of such registration statement (the "Effective Date"), shall also
mean (from and after the effectiveness of such amendment) such registration
statement as so amended (including any Rule 462(b) registration statement). The
term Prospectus as used in this Agreement shall mean the prospectus relating to
the Stock first filed with the Commission pursuant to Rule 424(b) and Rule 430A
(or if no such filing is required, as included in the Registration Statement)
and, in the event of any supplement or amendment to such prospectus after the
Effective Date, shall also mean (from and after the filing with the Commission
of such supplement or the effectiveness of such amendment) such prospectus as so
supplemented or amended. The term Preliminary Prospectus as used in this
Agreement shall mean each preliminary prospectus included in such registration
statement prior to the time it becomes effective. For the purposes of this
Agreement, all references to the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission pursuant
to EDGAR.
The Registration Statement has been declared effective under the
Securities Act, and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. The Company has caused to be
delivered to you copies of each Preliminary Prospectus and has consented to the
use of such copies for the purposes permitted by the Securities Act.
2. Representations and Warranties of the Company. The Company
hereby represents and warrants as follows:
(a) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has
<PAGE>
-3-
full corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement and the
Prospectus and as currently being conducted, and is duly qualified as a foreign
corporation and in good standing in all jurisdictions in which the character of
the property owned or leased or the nature of the business transacted by it
makes qualification necessary (except where the failure to be so qualified would
not have a material adverse effect on the business, properties, operations,
condition (financial or otherwise), results of operations, income or business
prospects of the Company (a "Material Adverse Effect").
(b) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any material
adverse change, or any development for which the Company has a reasonable basis
to believe may result in a prospective material adverse change in the business,
properties, operations, condition (financial or otherwise), results of
operations, income or business prospects of the Company, whether or not arising
from transactions in the ordinary course of business, other than as set forth in
the Registration Statement and the Prospectus, and since such dates, except in
the ordinary course of business, the Company has not entered into, or agreed to
enter into, any material transaction not referred to in the Registration
Statement and the Prospectus.
(c) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus or the Prospectus, nor instituted
proceedings for that purpose. The Registration Statement and the Prospectus
comply, and on the Closing Date (as hereinafter defined) and any later date on
which Option Stock is to be purchased, the Prospectus will comply as to form, in
all material respects, with the provisions of the Securities Act and the rules
and regulations of the Commission thereunder. On the Effective Date, the
Registration Statement did not contain any untrue statement of a material fact
and did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; on the
Effective Date, the Prospectus did not and, on the Closing Date and any later
date on which Option Stock is to be purchased, will not, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and each of the Prospectus and any
amendments or supplements thereto delivered to you for use in connection with
the offering of the Stock is identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T; provided, however, that none of the representations
and warranties in this subparagraph (c) shall apply to statements in, or
omissions from, the Registration Statement or the Prospectus made in reliance
upon and in conformity with information herein or otherwise furnished in writing
to the Company by or on behalf of the Underwriters expressly for use in the
Registration Statement or the Prospectus.
<PAGE>
-4-
(d) The Stock is duly and validly authorized, will be, when issued and
sold to the Underwriters as provided herein, duly and validly issued, fully paid
and nonassessable and conforms to the description thereof in the Prospectus. No
further approval or authority of the stockholders or the Board of Directors of
the Company will be required for the issuance and sale of the Stock as
contemplated herein.
(e) Except as set forth in the Prospectus, to the best of the Company's
knowledge, the Company now holds, and on the Closing Date and any later date on
which Option Stock is to be purchased will hold, all material licenses,
certificates and permits from state, federal and other regulatory authorities
which are necessary for the conduct of the business of the Company; the Company
is not in violation of its corporate charter or by-laws, or in default in the
performance or observance of any provision of any obligation, agreement,
covenant or condition contained in any bond, debenture or in any contract,
indenture, mortgage, loan agreement, joint venture or other agreement or
instrument which is an exhibit to the Registration Statement and to which it is
a party or by which it or any of its properties is bound or, to the best of the
Company's knowledge, in violation of any law, order, rule, regulation, writ,
injunction or decree of any government, governmental instrumentality or court,
domestic or foreign statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or over the
properties of the Company.
(f) This Agreement has been duly authorized, executed and delivered by
the Company; the performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, (i) any
indenture, mortgage, deed of trust, loan agreement or other material agreement
or instrument which is an exhibit to the Registration Statement and to which
the Company is a party or by which the property of the Company is bound or
(ii) the corporate charter or by-laws of the Company.
(g) The Company owns, or is licensed or possesses adequate rights to
use and sublicense, all patents, patent rights, inventions, trade secrets,
licenses, know-how, proprietary techniques, including processes, trademarks,
service marks, trade names, copyrights and other intellectual property described
or referred to in the Registration Statement and the Prospectus as owned,
licensed or used by it or, except as set forth in the Prospectus, which are
necessary for the conduct of its business as now conducted and as described in
the Registration Statement and the Prospectus. Except as set forth in the
Prospectus to the best of the Company's knowledge all such patents, patent
rights, licenses, trademarks, service marks and copyrights are not being
infringed by any third parties which infringement could, whether singly or in
the aggregate, materially and adversely affect the business,
<PAGE>
-5-
properties, operations, condition (financial or otherwise), results of
operations, income or business prospects of the Company, as presently being
conducted or as proposed to be conducted in the Prospectus. Except as set forth
in the Prospectus, the Company has no knowledge of; nor has it received any
notice of, infringement of or conflict with asserted rights of others with
respect to any patents, patent rights, inventions, trade secrets, licenses,
know-how, proprietary techniques including processes and substances, trademarks,
service marks, trade names, copyrights or other intellectual property which,
singly or in the aggregate, is, or is reasonably likely to be, the subject of an
unfavorable decision, ruling or finding that could have a Material Adverse
Effect.
(h) Upon filing of the Amended and Restated Certificate of
Incorporation of the Company (a true and correct copy of which has previously
been shown to your counsel) with the Secretary of State of the State of Delaware
and upon consummation of the transactions contemplated hereby, the authorized
and outstanding shares of capital stock of the Company will be as set forth in
the Prospectus under the caption "Description of Capital Stock" provided that
the outstanding shares shall have increased by the number of shares as have been
issued after November 30, 1996 and prior to the Closing Date pursuant to the
exercise of options granted under the Company's 1996 Director Stock Option Plan,
Amended and Restated 1992 Equity Incentive Plan and 1996 Employee Stock Purchase
Plan (collectively, the "Plans"). On the Closing Date the capital stock of the
Company will conform to the description thereof in the Registration Statement
under the caption "Description of Capital Stock." There are no outstanding
options, warrants or other rights granted to or by the Company to purchase
shares of Common Stock or other securities of the Company, other than as
described in the Prospectus. To the best knowledge of the Company, no such
option, warrant or other right has been granted to any person, the exercise of
which would cause such person to own more than five percent (5%) of the Common
Stock outstanding immediately after the offering other than as described in the
Prospectus. No person or entity holds a right to require or participate in a
registration under the Securities Act of shares of Common Stock of the Company
which right has not been irrevocably waived by the holder thereof as of the date
hereof with respect to the registration of shares pursuant to the Registration
Statement. Except as set forth in the Prospectus, no person or entity holds a
right to require registration under the Securities Act of shares of Common Stock
of the Company at any other time. Except for rights terminating upon the
consummation of the offering of the Stock, no person or entity has a right of
first refusal or participation with respect to the sale of shares of the Stock
by the Company. The Company has no subsidiaries.
(i) The financial statements of the Company, together with related
notes and schedules as set forth in the Registration Statement, present fairly
the financial position, results of operations and cash flows of the Company at
the indicated dates and for the indicated periods. The information set forth in
such financial statements is true,
<PAGE>
-6-
complete and correct in all material respects and has been derived from the
books and records of the Company, and such financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, and all adjustments
necessary for a fair presentation of results for such periods have been made.
The summary financial and other data included in the Registration Statement
present fairly the information shown therein and have been compiled on a basis
consistent with the financial statements presented therein.
(j) Ernst & Young LLP, who have certified certain of the financial
statements filed with the Commission as part of the Registration Statement,
are independent public accountants as required by the Securities Act and the
rules and regulations thereunder.
(k) The Company has filed a registration statement pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
to register the Common Stock under the Exchange Act, has filed an application to
list the Stock on the Nasdaq National Market, and has received notification that
the listing has been approved, subject to notice of issuance of the Stock.
(l) The Company is familiar with the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and has in the past conducted its
affairs in such a manner to ensure that the Company was not and is not an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act, and the rules and regulations
thereunder.
<PAGE>
-7-
(m) There are no legal or governmental proceedings pending to which the
Company is a party or to which any property or assets of the Company is the
subject which, if determined adversely to the Company, might result in a
Material Adverse Effect; and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
3. Purchase of the Stock by the Underwriters.
(a) On the basis of the representations and warranties and subject to
the terms and conditions herein set forth, the Company agrees to issue and sell
shares of the Underwritten Stock to the several Underwriters and each of the
Underwriters agrees to purchase from the Company the respective aggregate number
of shares of Underwritten Stock set forth opposite its name in Schedule I. The
price at which such shares of Underwritten Stock shall be sold by the Company
and purchased by the several Underwriters shall be $ per share. In making this
Agreement, each Underwriter is contracting severally and not jointly; except as
provided in paragraphs (b) and (c) of this Section 3, the agreement of each
Underwriter is to purchase only the respective number of shares of the
Underwritten Stock specified in Schedule I.
(b) If for any reason one or more of the Underwriters shall fail or
refuse (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 8 or 9 hereof) to purchase and
pay for the number of shares of the Stock agreed to be purchased by such
Underwriter or Underwriters, the Company shall immediately give notice thereof
to you, and the non-defaulting Underwriters shall have the right within 24 hours
after the receipt by you of such notice to purchase, or procure one or more
other Underwriters to purchase, in such proportions as may be agreed upon
between you and such purchasing Underwriter or Underwriters and upon the terms
herein set forth, all or any part of the shares of the Stock which such
defaulting Underwriter or Underwriters agreed to purchase. If the non-defaulting
Underwriters fail so to make such arrangements with respect to all such shares
and portion, the number of shares of the Stock which each non-defaulting
Underwriter is otherwise obligated to purchase under this Agreement shall be
automatically increased on a pro rata basis to absorb the remaining shares and
portion which the defaulting Underwriter or Underwriters agreed to purchase;
provided, however, that the non-defaulting Underwriters shall not be obligated
to purchase the shares and portion which the defaulting Underwriter or
Underwriters agreed to purchase if the aggregate number of such shares of the
Stock exceeds 10% of the total number of shares of the Stock which all
Underwriters agreed to purchase hereunder. If the total number of shares of the
Stock which the defaulting Underwriter or Underwriters agreed to purchase shall
not be purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within 24 hours next succeeding the 24-hour period
above referred to, to make arrangements with other
<PAGE>
-8-
underwriters or purchasers satisfactory to you for purchase of such shares
and portion on the terms herein set forth. In any such case, either you
or the Company shall have the right to postpone the Closing Date determined as
provided in Section 5 hereof for not more than seven business days after the
date originally fixed as the Closing Date pursuant to said Section 5 in order
that any necessary changes in the Registration Statement, the Prospectus or any
other documents or arrangements may be made. If neither the non-defaulting
Underwriters nor the Company shall make arrangements within the 24-hour periods
stated above for the purchase of all the shares of the Stock which the
defaulting Underwriter or Underwriters agreed to purchase hereunder, this
Agreement shall be terminated without further act or deed and without any
liability on the part of the Company to any non-defaulting Underwriter and
without any liability on the part of any non-defaulting Underwriter to the
Company. Nothing in this paragraph (b), and no action taken hereunder, shall
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
(c) On the basis of the representations, warranties and covenants
herein contained and subject to the terms and conditions herein set forth, the
Company hereby grants an option to the several Underwriters to purchase the
Option Stock at the same price per share as the Underwriters shall pay for the
Underwritten Stock. The maximum aggregate number of shares of Option Stock to be
sold by the Company is 300,000. Said option may be exercised only to cover
over-allotments in the sale of the Underwritten Stock by the Underwriters and
may be exercised in whole or in part at any time (but not more than once) on or
before the thirtieth day after the date of this Agreement upon written or
telegraphic notice by you to the Company setting forth the aggregate number of
shares of the Option Stock as to which the several Underwriters are exercising
the option. Delivery of certificates for the shares of Option Stock, and payment
therefor, shall be made as provided in Section 5 hereof. The number of shares of
the Option Stock to be purchased by each Underwriter shall be the same
percentage of the total number of shares of the Option Stock to be purchased by
the several Underwriters as such Underwriter is purchasing of the Underwritten
Stock, as adjusted by you in such manner as you deem advisable to avoid
fractional shares.
4. Offering by Underwriters.
(a) The terms of the initial public offering by the Underwriters of the
Stock to be purchased by them shall be as set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.
(b) The information set forth in the last paragraph on the front cover
page, the first paragraph on the inside front cover and under "Underwriting" in
the
<PAGE>
-9-
Registration Statement, any Preliminary Prospectus and the Prospectus
relating to the Stock filed by the Company (insofar as such information relates
to the Underwriters) constitutes the only information furnished by the
Underwriters to the Company for inclusion in the Registration Statement, any
Preliminary Prospectus and the Prospectus, and you on behalf of the respective
Underwriters represent and warrant to the Company that the statements made
therein are correct.
5. Delivery of and Payment for the Stock.
(a) Delivery of certificates for the shares of the Underwritten Stock
and the Option Stock (if the option granted by Section 3(c) hereof shall have
been exercised not later than 7:00 A.M., San Francisco time, on the date two
business days preceding the Closing Date), and payment therefor, shall be made
at the office of Palmer & Dodge LLP, One Beacon Street, Boston, MA 02108, at
7:00 a.m., San Francisco time, on the third business day after the date of this
Agreement, or at such time on such other day, not later than seven full business
days after such third business day, as shall be agreed upon in writing by the
Company and you. The date and hour of such delivery and payment (which may be
postponed as provided in Section 3(b) hereof) are herein called the Closing
Date.
(b) If the option granted by Section 3(c) hereof shall be exercised
after 7:00 a.m., San Francisco time, on the date two business days preceding the
Closing Date, delivery of certificates for the shares of Option Stock, and
payment therefor, shall be made at the office of Palmer & Dodge LLP, One Beacon
Street, Boston, MA 02108, at 7:00 a.m., San Francisco time, on the third
business day after the exercise of such option.
(c) Payment for the Stock purchased from the Company shall be made to
the Company or its order by wire transfer or certified or official bank check or
checks in same day funds. Such payment shall be made upon delivery of
certificates for the Stock to you for the respective accounts of the several
Underwriters against receipt therefor signed by you. Certificates for the Stock
to be delivered to you shall be registered in such name or names and shall be in
such denominations as you may request at least one business day before the
Closing Date in the case of Underwritten Stock, and at least one business day
prior to the purchase thereof in the case of the Option Stock. Such certificates
will be made available to the Underwriters for inspection, checking and
packaging at the offices of Lewco Securities Corporation, 2 Broadway, New York,
New York 10004 on the business day prior to the Closing Date or, in the case of
the Option Stock, by 3:00 p.m., New York time, on the business day preceding the
date of purchase.
<PAGE>
-10-
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
for shares to be purchased by any Underwriter whose check shall not have been
received by you on the Closing Date or any later date on which Option Stock is
purchased for the account of such Underwriter. Any such payment by you shall not
relieve such Underwriter from any of its obligations hereunder.
6. Further Agreements of the Company. The Company covenants and
agrees as follows:
(a) The Company will (i) to the extent necessary, prepare and timely
file with the Commission under Rule 424(b) a Prospectus containing information
previously omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A and (ii) not file any amendment to the Registration
Statement or supplement to the Prospectus of which you shall not previously have
been advised and furnished with a copy or to which you shall have reasonably
objected in writing or which is not in compliance with the Securities Act or the
rules and regulations of the Commission.
(b) The Company will promptly notify each Underwriter in the event of
(i) the request by the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information, (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, (iii) the institution or notice of intended institution
of any action or proceeding for that purpose, (iv) the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Stock for sale in any jurisdiction, or (v) the receipt by it of notice of the
initiation or threatening of any proceeding for such purpose. The Company will
make every reasonable effort to prevent the issuance of such a stop order and,
if such an order shall at any time be issued, to obtain the withdrawal thereof
at the earliest possible moment.
(c) The Company will (i) on or before the Closing Date, deliver to you
a signed copy of the Registration Statement as originally filed and of each
amendment thereto filed prior to the time the Registration Statement becomes
effective and, promptly upon the filing thereof; a signed copy of each
post-effective amendment, if any, to the Registration Statement (together with,
in each case, all exhibits thereto unless previously furnished to you) and will
also deliver to you, for distribution to the Underwriters, a sufficient number
of additional conformed copies of each of the foregoing (but without exhibits)
so that one copy of each may be distributed to each Underwriter, (ii) as
promptly as possible deliver to you and send to the several Underwriters, at
such office or offices as you may designate, as many copies of the Prospectus as
you may reasonably request, and (iii) thereafter from time to time during the
period in which a prospectus is required by law to be delivered by an
Underwriter
-11-
<PAGE>
or dealer, likewise send to the Underwriters as many additional copies of
the Prospectus and as many copies of any supplement to the Prospectus and of any
amended prospectus, filed by the Company with the Commission, as you may
reasonably request for the purposes contemplated by the Securities Act. The
Registration Statement, the Prospectus and any amendments or supplements thereto
furnished to you will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(d) If at any time during the period in which a prospectus is required
by law to be delivered by an Underwriter or dealer any event relating to or
affecting the Company, or of which the Company shall be advised in writing by
you, shall occur as a result of which it is necessary, in the opinion of counsel
for the Company or of counsel for the Underwriters, to supplement or amend the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser of the Stock,
the Company will forthwith prepare and file with the Commission a supplement to
the Prospectus or an amended prospectus so that the Prospectus as so
supplemented or amended will not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time such Prospectus
is delivered to such purchaser, not misleading. If, after the initial public
offering of the Stock by the Underwriters and during such period, the
Underwriters shall propose to vary the terms of offering thereof by reason of
changes in general market conditions or otherwise, you will advise the Company
in writing of the proposed variation, and, if in the opinion either of counsel
for the Company or of counsel for the Underwriters such proposed variation
requires that the Prospectus be supplemented or amended, the Company will
forthwith prepare and file with the Commission a supplement to the Prospectus or
an amended prospectus setting forth such variation. The Company authorizes the
Underwriters and all dealers to whom any of the Stock may be sold by the several
Underwriters to use the Prospectus, as from time to time amended or
supplemented, in connection with the sale of the Stock in accordance with the
applicable provisions of the Securities Act and the applicable rules and
regulations thereunder for such period.
(e) Prior to the filing thereof with the Commission, the Company will
submit to you, for your information, a copy of any post-effective amendment to
the Registration Statement and any supplement to the Prospectus or any amended
prospectus proposed to be filed.
(f) The Company will cooperate, when and as requested by you, in the
qualification of the Stock for offer and sale under the securities or blue sky
laws of such jurisdictions as you may designate and, during the period in which
a prospectus is
<PAGE>
-12-
required by law to be delivered by an Underwriter or dealer, in keeping
such qualifications in good standing under said securities or blue sky laws;
provided, however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified. The Company will, from time to
time, prepare and file such statements, reports, and other documents as are or
may be required to continue such qualifications in effect for so long a period
as you may reasonably request for distribution of the Stock.
(g) During a period of five years commencing with the date hereof; the
Company will furnish to you, and to each Underwriter who may so request in
writing, copies of all periodic and special reports, documents or statements
furnished to stockholders of the Company or filed with the Commission (including
the Report on Form SR required by Rule 463 of the Commission under the
Securities Act). If applicable, any such document furnished to you will be
identical to the electronically transmitted copy thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(h) Not later than the 45th day following the end of the fiscal quarter
first occurring after the first anniversary of the Effective Date, the Company
will make generally available to its stockholders an earnings statement in
accordance with Section 11(a) of the Securities Act and Rule 158 thereunder.
(i) The Company agrees to pay all costs and expenses incident to the
performance of the obligations of the Company under this Agreement, including
all costs and expenses incident to (i) the preparation, printing and filing with
the Commission and the NASD of the Registration Statement, any Preliminary
Prospectus and the Prospectus, (ii) the furnishing to the Underwriters of copies
of any Preliminary Prospectus and of the several documents required by paragraph
(c) of this Section 6 to be so furnished, (iii) the photocopying of this
Agreement and related documents delivered to the Underwriters, (iv) the
preparation, printing and filing of all supplements and amendments to the
Prospectus referred to in paragraph (d) of this Section 6, (v) the furnishing to
you and the Underwriters of the reports and information referred to in paragraph
(g) of this Section 6 and (vi) the printing and issuance of stock certificates,
including the transfer agent's fees.
(j) The Company agrees to reimburse you, for the account of the several
Underwriters, for fees and related disbursements (including, without limitation,
counsel fees and disbursements and the cost of printing memoranda for the
Underwriters) paid by or for the account of the Underwriters or their counsel in
qualifying the Stock under state securities or blue sky laws and in the review
of the offering by the NASD.
<PAGE>
-13-
(k) The Company hereby agrees that, without the prior written consent
of Hambrecht & Quist LLC on behalf of the Underwriters, the Company will not,
for a period of 180 days following the date of the Prospectus, (i) sell, offer,
contract to sell, make any short sale, pledge, transfer or otherwise dispose of,
directly or indirectly, any shares of Common Stock (including any stock
appreciation right or similar right with an exercise or conversion privilege at
a price related to, or derived from, the market price of the Common Stock) or
any securities convertible into or exchangeable or exercisable for shares of
Common Stock, (ii) engage in any hedging transaction with respect to any shares
of Common Stock that may have an impact on the market price of the Common Stock,
whether any such transaction is to be settled by delivery of Common Stock or
such other securities, in cash or otherwise, or (iii) file a Registration
Statement on Form S-8 with respect to shares issued pursuant to stock options.
The prohibition in clause (i) of the foregoing sentence shall not apply to (A)
the sale of Stock to be sold to the Underwriters pursuant to this Agreement, (B)
the issuance of shares of Common Stock by the Company pursuant to the Plans and
(C) the grant of options to purchase Common Stock under the Plans.
(l) If at any time during the 25-day period after the Registration
Statement becomes effective any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your reasonable
opinion the market price for the Stock has been or is likely to be materially
affected (regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising the Company to the effect set forth above, forthwith
prepare, consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you, responding to
or commenting on such rumor, publication or event.
(m) The Company will in the future conduct its affairs in such a manner
to ensure that the Company will not be an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act, and the rules and regulations thereunder.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person (including each partner or officer thereof) who controls any
Underwriter within the meaning of Section 15 of the Securities Act from and
against any and all losses, claims, damages or liabilities, joint or several, to
which such indemnified parties or any of them may become subject under the
Securities Act, the Exchange Act, or the common law or otherwise, and the
Company agrees to reimburse each such Underwriter and controlling person for any
legal or other expenses (including, except as otherwise hereinafter provided,
reasonable fees and
<PAGE>
-14-
disbursements of a single counsel for all indemnified parties) incurred by
the respective indemnified parties in connection with defending against any
such losses, claims, damages or liabilities or in connection with any
investigation or inquiry of, or other proceeding which may be brought against,
the respective indemnified parties, in each case arising out of or based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any Rule 462(b) registration statement) or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus or the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto) or the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that (1) the indemnity agreements of the Company contained in
this paragraph (a) shall not apply to any such losses, claims, damages,
liabilities or expenses if such statement or omission was made in reliance upon
and in conformity with information furnished as herein stated or otherwise
furnished in writing to the Company by or on behalf of any Underwriter for use
in any Preliminary Prospectus or the Registration Statement or the Prospectus or
any such amendment thereof or supplement thereto and (2) the indemnity agreement
contained in this paragraph (a) with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages, liabilities or expenses purchased the Stock which
is the subject thereof (or to the benefit of any person controlling such
Underwriter) if at or prior to the written confirmation of the sale of such
Stock a copy of the Prospectus (or the Prospectus as amended or supplemented)
was not sent or delivered to such person and the untrue statement or omission of
a material fact contained in such Preliminary Prospectus was corrected in the
Prospectus (or the Prospectus as amended or supplemented) unless the failure is
the result of noncompliance by the Company with paragraph (c) of Section 6
hereof. The indemnity agreements of the Company contained in this paragraph (a)
and the representations and warranties of the Company contained in Section 2
hereof shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the delivery of and payment for the Stock.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its officers who signs the Registration Statement on his or
her own behalf or pursuant to a power of attorney, each of its directors, each
other Underwriter and each person (including each partner or officer thereof)
who controls the Company or any such other Underwriter within the meaning of
Section 15 of the Securities Act
<PAGE>
-15-
from and against any and all losses, claims, damages or liabilities, joint
or several, to which such indemnified parties or any of them may become
subject under the Securities Act, the Exchange Act, or the common law or
otherwise and to reimburse each of them for any legal or other expenses
(including, except as otherwise hereinafter provided, reasonable fees and
disbursements of a single counsel for all indemnified parties) incurred by the
respective indemnified parties in connection with defending against any such
losses, claims, damages or liabilities or in connection with any investigation
or inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (including the Prospectus as part thereof and any Rule
462(b) registration statement) or any post-effective amendment thereto
(including any Rule 462(b) registration statement) or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or (ii) any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment thereof or supplement thereto) or the omission or
alleged omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, if such statement or mission was made in reliance upon and
in conformity with information furnished as herein stated or otherwise furnished
in writing to the Company by or on behalf of such indemnifying Underwriter for
use in the Registration Statement or the Prospectus or any such amendment
thereof or supplement thereto. The indemnity agreement of each Underwriter
contained in this paragraph (b) shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any indemnified
party and shall survive the delivery of and payment for the Stock.
(c) Each party indemnified under the provision of paragraphs (a) and
(b) of this Section 7 agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against, it in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, it will promptly give written notice (the "Notice") of such service
or notification to the party or parties from whom indemnification may be sought
hereunder. No indemnification provided for in such paragraphs shall be available
to any party who shall fail so to give the Notice if the party to whom such
Notice was not given was unaware of the action, suit, investigation, inquiry or
proceeding to which the Notice would have related and was
prejudiced by the failure to give the Notice, but the omission so to notify such
indemnifying party or parties of any such service or notification shall not
relieve such indemnifying party or parties from any liability which it or they
may have to the
<PAGE>
-16-
indemnified party for contribution or otherwise than on account of such
indemnity agreement. Any indemnifying party shall be entitled at its own expense
to participate in the defense of any action, suit or proceeding against, or
investigation or inquiry of, an indemnified party. Any indemnifying party shall
be entitled, if it so elects within a reasonable time after receipt of the
Notice by giving written notice (the "Notice of Defense") to the indemnified
party, to assume (alone or in conjunction with any other indemnifying party or
parties) the entire defense of such action, suit, investigation, inquiry or
proceeding, in which event such defense shall be conducted, at the expense of
the indemnifying party or parties, by counsel chosen by such indemnifying party
or parties and reasonably satisfactory to the indemnified party or parties;
provided, however, that (i) if the indemnified party or parties reasonably
determine that there may be a conflict between the positions of the indemnifying
party or parties and of the indemnified party or parties in conducting the
defense of such action, suit, investigation, inquiry or proceeding or that there
may be legal defenses available to such indemnified party or parties different
from or in addition to those available to the indemnifying party or parties,
then counsel for the indemnified party or parties shall be entitled to conduct
the defense to the extent reasonably determined by such counsel to be necessary
to protect the interests of the indemnified party or parties and (ii) in any
event the indemnified party or parties shall be entitled to have counsel chosen
by such indemnified party or parties participate in, but not conduct, the
defense. If, within a reasonable time after receipt of the Notice, an
indemnifying party gives a Notice of Defense and the counsel chosen by the
indemnifying party or parties is reasonably satisfactory to the indemnified
party or parties (it being agreed that Palmer & Dodge LLP is satisfactory), the
indemnifying party or parties will not be liable under paragraphs (a) through
(c) of this Section 7 for any legal or other expenses subsequently incurred by
the indemnified party or parties in connection with the defense of the action,
suit, investigation, inquiry or proceeding, except that (A) the indemnifying
party or parties shall bear the, legal and other expenses incurred in connection
with the conduct of the defense as referred to in clause (i) of the proviso to
the preceding sentence and (B) the indemnifying party or parties shall bear such
other expenses as it or they have authorized to be incurred by the indemnified
party or parties. If, within ten (10) business days after receipt of the Notice,
no Notice of Defense has been given, the indemnifying party or parties shall be
responsible for any legal or other expenses incurred by the indemnified party or
parties in connection with the defense of the action, suit, investigation,
inquiry or proceeding.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 7, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 7 (i) in such
proportion as is appropriate to reflect the relative benefits
<PAGE>
-17-
received by each indemnifying party from the offering of the Stock or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
each indemnifying party in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, or actions in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of the Stock received by the Company and the total
underwriting discount received by the Underwriters, as set forth in the table on
the cover page of the Prospectus, bear to the aggregate initial public offering
price of the Stock. Relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by each indemnifying party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation (even if the Underwriters 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 in the first sentence of this paragraph
(d). The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities, or actions in respect thereof referred to in the first
sentence of this paragraph (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating, preparing to defend or defending against any action or claim
which is the subject of this paragraph (d). Notwithstanding the provisions of
this paragraph (d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discount applicable to the Stock purchased by such
Underwriter. 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 Underwriters' obligations in this paragraph (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the failure to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise (except as specifically provided
in paragraph (c) of this Section 7).
<PAGE>
-18-
(e) The Company will not, without the prior written consent of each
Underwriter, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Underwriter or any
person who controls such Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act is a party to such claim,
action, suit or proceeding) unless such settlement compromise or consent
includes an unconditional release of such Underwriter and each such controlling
person from all liability arising out of such claim, action, suit or proceeding.
8. Termination. This Agreement may be terminated by you at any time
prior to the Closing Date by giving written notice to the Company if after the
date of this Agreement trading in the Common Stock shall have been suspended, or
if there shall have occurred (i) the engagement in hostilities or an escalation
of major hostilities by the United States or the declaration of war or a
national emergency by the United States on or after the date hereof, (ii) any
outbreak of hostilities or other national or international calamity or crisis or
change in economic or political conditions if the effect of such outbreak,
calamity, crisis or change in economic or political conditions in the financial
markets of the United States would, in the Underwriters' reasonable judgment,
make the offering or delivery of the Stock impracticable, (iii) suspension of
trading in securities generally or a material adverse decline in value of
securities generally on the New York Stock Exchange, the American Stock
Exchange, or the Nasdaq National Market or limitations on prices (other than
limitations on hours or numbers of days of trading) for securities on either
such exchange or system, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of, or
commencement of any proceeding or investigation by, any court, legislative body,
agency or other governmental authority which in the Underwriters' reasonable
opinion materially and adversely affects or will materially or adversely affect
the business, properties, operations, condition (financial or otherwise),
results of operations, income or business prospects of the Company, (v)
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in the
Underwriters reasonable opinion has a material adverse effect on the securities
markets in the United States. If this Agreement shall be terminated pursuant to
this Section 8, there shall be no liability of the Company to the Underwriters
and no liability of the Underwriters to the Company; provided, however, that in
the event of any such termination the Company agrees to indemnify and hold
harmless the Underwriters from all actual, accountable, out-of-pocket costs and
expenses incident to the performance of the obligations of the Company under
this Agreement, including all actual, accountable, out-of-pocket costs and
expenses referred to in paragraphs (i) and (j) of Section 6 hereof.
<PAGE>
-19-
9. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Stock shall be subject to the
performance by the Company of all its obligations to be performed hereunder at
or prior to the Closing Date or any later date on which Option Stock is to be
purchased, as the case may be, and to the following further conditions:
(a) The Registration Statement shall have become effective, and no stop
order suspending the effectiveness thereof shall have been issued and no
proceedings therefor shall be pending or threatened by the Commission.
(b) The legality and sufficiency of the sale of the Stock hereunder and
the validity and form of the certificates representing the Stock, all corporate
proceedings and other legal matters incident to the foregoing, and the form of
the Registration Statement and of the Prospectus (except as to the financial
statements contained therein), shall have been approved at or prior to the
Closing Date by Hale and Dorr, counsel for the Underwriters.
(c) You shall have received from Palmer & Dodge LLP, counsel for the
Company, an opinion, addressed to the Underwriters and dated the Closing Date,
covering the matters set forth in Annex A hereto, and if Option Stock is
purchased at any date after the Closing Date, additional opinions from such
counsel, addressed to the Underwriters and dated such later date, confirming
that the statements expressed as of the Closing Date in such opinion remain
valid as of such later date.
(d) You shall have received from Fish & Neave, patent counsel for the
Company, an opinion, addressed to the Underwriters and dated the Closing Date,
to the effect that they serve a patent counsel to the Company with respect to
the issued patents, pending and contemplated patent applications, trade secrets
and the proprietary technology that the Company owns or has rights to, and
covering the matters set forth in Annex B hereto, and if Option Stock is
purchased at any date after the Closing Date, additional opinions from such
counsel, addressed to the Underwriters and dated such later date, confirming
that the statements expressed as of the Closing Date, in such opinion remain
valid as of such later date.
(e) You shall be satisfied that (i) as of the Effective Date, the
statements made in the Registration Statement and the Prospectus were true and
correct in all material respects and neither the Registration Statement nor the
Prospectus omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, respectively, not misleading,
(ii) since the Effective Date, no event has occurred which should have been set
forth in a supplement or amendment to the Prospectus which has not been set
forth in such a supplement or amendment, (iii) since the respective dates as of
which information is given in the
<PAGE>
-20-
Registration Statement in the form in which it originally became
effective and the Prospectus contained therein, there has not been any material
adverse change or any development involving a prospective material adverse
change in or affecting the business, properties, operations, condition
(financial or otherwise), results of operations, income or business prospects of
the Company, whether or not arising from transactions in the ordinary course of
business, and, since such dates, except in the ordinary course of business, the
Company has not entered into, or agreed to enter into, any material transaction
not referred to in the Registration Statement in the form in which it originally
became effective and the Prospectus contained therein, (iv) the Company has no
material contingent obligations which are not disclosed in the Registration
Statement and the Prospectus, (v) there are no pending or threatened legal
proceedings to which the Company is a party or of which property of the Company
is the subject which are material and which are not disclosed in the
Registration Statement and the Prospectus, (vi) there are no franchises,
contracts, leases or other documents which are required to be filed as exhibits
to the Registration Statement which have not been filed as required, (vii) the
representations and warranties of the Company herein are true and correct in all
material respects as of the Closing Date or any later date on which Option Stock
is to be purchased, as the case may be, and (viii) there has not been any
material change in the market for securities in general or in political,
financial or economic conditions from those reasonably foreseeable that would
render it impracticable in your reasonable judgment to make a public offering of
the Stock, or a material adverse change in market levels for securities in
general (or those of companies such as the Company in particular) or financial
or economic conditions which render it inadvisable to proceed.
(f) You shall have received on the Closing Date and on any later date
on which Option Stock is purchased a certificate, dated the Closing Date or such
later date, as the case may be, and signed by the Chief Executive Officer and
the Chief Financial Officer of the Company, stating that the respective signers
of said certificate have carefully examined the Registration Statement in the
form in which it originally became effective and the Prospectus contained
therein and any supplements or amendments thereto, and that the statements
included in clauses (i) through (vii) of paragraph (e) of this Section 9 are
true and correct.
(g) You shall have received from Ernst & Young LLP a letter or letters,
addressed to the Underwriters and dated the Closing Date and any later date on
which Option Stock is purchased, confirming that they are independent public
accountants with respect to the Company within the meaning of the Securities Act
and the applicable published rules and regulations thereunder and based upon the
procedures described in their letter delivered to you concurrently with the
execution of this Agreement (the "Original Letter"), but carried out to a date
not more than five business days prior to the Closing Date or such later date on
which Option Stock is purchased (i) confirming, to the extent true, that the
statements and conclusions set forth in the
<PAGE>
-21-
Original Letter are accurate as of the Closing Date or such later date, as the
case may be, and (ii) setting forth any revisions and additions to the
statements and conclusions set forth in the Original Letter which are necessary
to reflect any changes in the facts described in the Original Letter since the
date of the Original Letter or to reflect the availability of more recent
financial statements, data or information. The letters shall not disclose any
change, or any development involving a prospective change, in or affecting the
business or properties of the Company which, in your sole judgment makes it
impractical or inadvisable to proceed with the public offering of the Stock or
the purchase of the Option Stock as contemplated by the Prospectus.
(h) You shall have received from Ernst & Young LLP a letter stating
that their review of the Company's system of internal accounting controls, to
the extent they deemed necessary in establishing the scope of their examination
of the Company's financial statements as of December 31, 1995, did not disclose
any weakness in internal controls that they considered to be material
weaknesses.
(i) You shall have been furnished evidence in usual written or
telegraphic form from the appropriate authorities of the several jurisdictions,
or other evidence satisfactory to you, of the qualification referred to in
paragraph (f) of Section 6 hereof.
(j) Prior to the Closing Date, the Stock to be issued and sold by the
Company shall have been accepted for listing by the Nasdaq National Market upon
notice of issuance.
(k) On or prior to the Closing Date, you shall have received from all
directors, officers, and beneficial holders of the outstanding capital stock of
the Company, agreements, in form reasonably satisfactory to Hambrecht & Quist
LLC, stating that without the prior written consent of Hambrecht & Quist LLC on
behalf of the Underwriters, such person or entity will not, for a period of 180
days after the date of the Prospectus, (i) sell, offer, contract to sell, make
any short sale, pledge, transfer or otherwise dispose of, directly or
indirectly, any shares of Common Stock (including any stock appreciation right
or similar right with an exercise or conversion privilege at a price related to,
or derived from, the market price of the Common Stock) or any securities
convertible into or exchangeable or exercisable for shares of Common Stock owned
directly by the undersigned or with respect to which the undersigned has the
power of disposition (including, without limitation, shares of Common Stock
which the undersigned may be deemed to beneficially own in accordance with the
rules and regulations promulgated under the Securities and Exchange Act of 1934,
as amended), or (ii) engage in any hedging transaction with respect to any
shares of Common Stock that may have an impact on the market price of the Common
Stock, whether any such transaction is to be settled by delivery of Common Stock
or such other securities, in cash or otherwise.
<PAGE>
-22-
All the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if Hale and Dorr, counsel for the Underwriters, shall be
reasonably satisfied that they comply in form and scope.
In case any of the conditions specified in this Section 9 shall not be
fulfilled, this Agreement may be terminated by you by giving notice to the
Company. Any such termination shall be without liability of the Company to the
Underwriters and without liability of the Underwriters to the Company; provided,
however, that (i) in the event of such termination, the Company agrees to
indemnify and hold harmless the Underwriters from all actual, accountable,
out-of-pocket costs and expenses incident to the performance of the obligations
of the Company under this Agreement, including all actual, accountable,
out-of-pocket costs and expenses referred to in paragraphs (i) and (j) of
Section 6 hereof, and (ii) if this Agreement is terminated by you because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein, to fulfill any of the conditions herein, or to comply with any
provision hereof other than by reason of a default by any of the Underwriters,
the Company will reimburse the Underwriters severally upon demand for all
actual, accountable, out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the transactions contemplated hereby.
10. Conditions of the Obligation of the Company. The obligation of the
Company to deliver the Stock shall be subject to the conditions that (a) the
Registration Statement shall have become effective and (b) no stop order
suspending the effectiveness thereof shall be in effect and no proceedings
therefor shall be pending or threatened by the Commission.
In case either of the conditions specified in this Section 10 shall not
be fulfilled, this Agreement may be terminated by the Company by giving notice
to you. Any such termination shall be without liability of the Company to the
Underwriters and without liability of the Underwriters to the Company; provided,
however, that in the event of any such termination the Company agrees to
indemnify and hold harmless the Underwriters from all actual, accountable,
out-of-pocket costs and expenses incident to the performance of the obligations
of the Company under this Agreement including all actual, accountable,
out-of-pocket costs and expenses referred to in paragraphs (i) and (j) of
Section 6 hereof.
11. Reimbursement of Certain Expenses. In addition to their other
obligations under Section 7 of this Agreement, the Company hereby agrees to
reimburse on a quarterly basis the Underwriters for all reasonable legal and
other expenses incurred in connection with investigating or defending any claim,
action,
<PAGE>
-23-
investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 7 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 11 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent any such payment is
ultimately held to be improper, the persons receiving such payments shall
promptly refund them and (ii) such persons shall provide to the Company, upon
request, reasonable assurances of their ability to effect any refund, when and
if due.
12. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of the Company and the several Underwriters and, with
respect to the provisions of Section 7 hereof, the several parties (in addition
to the Company and the several Underwriters) indemnified under the provisions of
said Section 7, and their respective personal representatives, successors and
assigns. Nothing in this Agreement is intended or shall be construed to give to
any other person, firm or corporation any legal or equitable remedy or claim
under or in respect of this Agreement or any provision herein contained. The
term "successors and assigns" as herein used shall not include any purchaser, as
such, of any of the Stock from any of the several Underwriters.
13. Notices. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telecopied or delivered to Hambrecht & Quist LLC, One Bush Street,
San Francisco, California 94104; telecopy (415)399-4325; and if to the Company,
shall be mailed, telecopied or delivered to it at its office, 71 Rogers Street,
Cambridge, MA 02142, Attention: Chief Executive Officer; telecopy (617)499-1414.
All notices given by telecopy shall be promptly confirmed by letter.
14. Miscellaneous. The reimbursement indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or their respective directors or officers, and (c) delivery and
payment for the Stock under this Agreement; provided, however, that if this
Agreement is terminated prior to the Closing Date, the provisions of paragraphs
(k) and (1) of Section 6 hereof shall be of no further force or effect.
This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
<PAGE>
-24-
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of California.
<PAGE>
-25-
Please sign and return to the Company the enclosed duplicates of this
letter, whereupon this letter will become a binding agreement among the Company
and the several Underwriters in accordance with its terms.
Very Truly Yours,
EPIX MEDICAL, INC.
By: ______________________________________
Michael D. Webb,
President and Chief Executive Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
HAMBRECHT & QUIST LLC
WESSELS, ARNOLD & HENDERSON, L.L.C.
By: HAMBRECHT & QUIST LLC
By:_____________________
Managing Director
Acting on behalf of the several
Underwriters, including themselves,
named in Schedule I hereto.
<PAGE>
SCHEDULE I
UNDERWRITERS
<TABLE>
<CAPTION>
<S> <C>
Number of
Shares of
Underwritten Stock
Underwriters to be Purchased
Hambrecht & Quist LLC.......................................................
Wessels, Arnold & Henderson L.L.C...........................................
Total..................................................................
</TABLE>
<PAGE>
ANNEX A
Matters to be Covered in the Opinion of
Counsel for the Company
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and is duly
qualified to do business and is in good standing as a foreign corporation in the
Commonwealth of Massachusetts. The Company has all corporate power and authority
necessary to own or hold its properties and conduct the business in which it is
presently engaged.
2. The Company's authorized capitalization consists of 15,000,000
shares of Common Stock, $.01 par value per share, and 1,000,000 shares of
Preferred Stock, $0.01 par value per share. All of the issued and outstanding
shares of capital stock of the Company have been, and the shares of the Stock
being delivered on the date hereof, upon issuance and delivery and payment
therefor in the manner described in the Underwriting Agreement, will be, duly
and validly authorized and issued, fully paid and non-assessable with no
personal liability attaching to the ownership thereof. The statements made in
the Prospectus under the caption "Description of Capital Stock," insofar as they
purport to constitute summaries of the terms of the Company's capital stock
(including the Stock), constitute accurate summaries of the terms of such
capital stock in all material respects and fairly present in all material
respects the information called for with respect thereto by Item 202 of
Regulation S-K promulgated by the Commission.
3. Upon the consummation of the initial public offering, there will be
no preemptive or other rights to subscribe for or to purchase or rights of first
refusal or participation with respect to any shares of Common Stock pursuant to
the Company's charter or by-laws or any agreement or other instrument known to
us. Except as described in the Prospectus and as provided in the Company charter
and by-laws, there are no restrictions upon the voting or transfer of any shares
of Common Stock pursuant to any agreement or other instrument known to us.
4. To our knowledge, but without inquiry into the dockets of any court,
commission, regulatory body, administrative agency or other government body,
there are no legal or governmental proceedings pending to which the Company is
a party or to which any property or assets of the Company is subject which, if
determined adversely to the Company, are reasonably likely to have a material
adverse effect on the business, properties, operations, condition (financial or
otherwise), results of operations, income
<PAGE>
or business prospects of the Company and, to our knowledge, no such proceedings
are threatened by governmental authorities or by others.
5. The Registration Statement has been declared effective under the
Securities Act and, to our knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceeding for that purpose
is pending or threatened by the Commission.
6. The Registration Statement and the Prospectus and any further
amendments or supplements thereto made by the Company prior to the date hereof
(other than the financial statements, financial and statistical information, pro
forma financial information and related schedules and notes thereto, as to which
we express no opinion) comply as to form in all material respects with the
requirements of the Securities Act and the rules and regulations promulgated by
the Commission. In passing upon the form of such documents, we have not
independently verified and are not passing upon, and have assumed the
correctness and completeness of, the statements made therein.
7. To our knowledge, there are no contracts or other documents that are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the rules and regulations
promulgated by the Commission that have not been described or filed as exhibits
to the Registration Statement.
8. The Company has full right, power, and authority to execute and
deliver the Underwriting Agreement and to perform its obligations thereunder,
and all corporate action required to be taken for the due and proper
authorization, issuance, sale and delivery of the Common Stock to be issued and
sold by the Company under the Underwriting Agreement and the consummation of the
transactions contemplated thereby to be effected by the Company have been duly
and validly taken by the Company.
9. The Underwriting Agreement has been duly authorized, executed, and
delivered by the Company.
10. The issuance and sale of the shares of Stock being delivered on the
date hereof by the Company, the compliance by the Company with all of the
provisions of the Underwriting Agreement and the consummation of the
transactions contemplated thereby will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default, an
event of default, or an event which, with notice or lapse of time or both, would
constitute a default or event of default under, any indenture, mortgage, deed of
trust, loan agreement, or other agreement or instrument
<PAGE>
filed as an exhibit to the Registration Statement, nor will such actions result
in any violation of the provisions of the charter or by-laws of the Company or
any material statute, order, rule or regulation applicable to the Company or, to
our knowledge, any judgment, order or decree of any court or governmental agency
or body having jurisdiction over the Company or any of its properties or assets,
except for such conflicts, breaches, violations and defaults as are not
reasonably likely, individually or in the aggregate, to have (a) a material
adverse effect on the business, properties, operations, condition (financial or
otherwise), results of operations, income or business prospects of the Company,
or (b) any adverse effect on the consummation of the transactions contemplated
by the Underwriting Agreement. Except for the registration of the Stock under
the Securities Act, and such consents, approvals, authorizations, registrations,
or qualifications as may be required under the Exchange Act and applicable state
or foreign securities laws in connection with the purchase and distribution of
the Stock by the Underwriters thereof, no consent, approval, authorization or
order of, or filing or registration with, any such court or governmental agency
or body is required for the issuance and sale of the shares of Stock being
delivered on the date hereof by the Company, the compliance by the Company with
all of the provisions of the Underwriting Agreement or the consummation of the
transactions contemplated thereby.
11. To our knowledge, except as described under the caption "Shares
Eligible for Future Sale - Registration Rights" in the Preliminary Prospectus
there are no contracts, agreements or understandings in effect on the date
hereof between the Company and any person granting such person the right to
require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the Registration
Statement or in any other registration statement filed by the Company under the
Securities Act.
12. The Stock issued and sold by the Company will be accepted for
listing by the Nasdaq National Market upon notice of issuance of the shares by
the Company to the Nasdaq National Market.
In connection with the preparation of the Registration Statement and
the Prospectus, we have participated in conferences with officers and
representatives of the Company and the independent accountants of the Company,
at which conferences we have made inquiries of such persons and others and
discussed the contents of the Registration Statement and the Prospectus. While
the limitations inherent in the independent verification of factual matters and
the character of determinations involved in the registration process are such
that we are not passing upon and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus (except as specifically stated
elsewhere in this opinion), nothing has come to our attention that has caused us
to
<PAGE>
-28-
believe that the Registration Statement, as of its effective date, contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading (except that we express no view or opinion with respect
to the financial statements and schedules or other financial and statistical
data included in the Registration Statement), and nothing has come to our
attention that has caused us to believe that the Prospectus, as of its date and
as of the Closing Date, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (except that we express no view or opinion with respect to the
financial statements and schedules or other financial and statistical data
included in the Prospectus).
-----------------------------------------------------
In rendering the foregoing opinion we may rely as to questions of law
not involving the laws of the United States, the Commonwealth of Massachusetts
and the State of Delaware upon opinions of local counsel satisfactory in form
and scope to counsel for the Underwriters. We are not, however, rendering any
opinion with respect to patents, trademarks or federal or state regulation of
healthcare products. Copies of any opinions so relied upon shall be delivered to
the Representatives and to counsel for the Underwriters and the foregoing
opinion shall also state that counsel knows of no reason the Underwriters are
not entitled to rely upon the opinions of such local counsel. In addition, we
may state that as to various questions of fact material to our opinion, we have
relied upon the representations made in or pursuant to the Underwriting
Agreement and upon certificates of officers of the Company.
<PAGE>
ANNEX B
Matters to be Covered in the Opinion of
Patent Counsel for the Company
1. With respect to the U.S. patent and each of the U.S. patent
applications referred to in the Registration Statement which are listed in
Schedules ____, nothing has come to our attention which would cause us to
believe that the sections of the Registration Statement entitled "Risk Factors -
Dependence on [ ]"; and "Business - Patents and Proprietary Rights", at the time
the Registration Statement became effective, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, not misleading.
2. With respect to the US. patent and each of the U.S. patent
applications referred to in the Prospectus which are listed in Schedules ____,
nothing has come to our attention which would cause us to believe that the
sections of the Prospectus entitled "Risk Factors - Dependence on Patents and
Proprietary Rights"; and "Business - Patents and Proprietary Rights", as of its
date and as of the Closing Date, contain any untrue statement of material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.
3. To the best of our actual knowledge, except as described in the
Prospectus, and with the exception of ex parte proceedings before the U.S.
Patent and Trademark Office, there are no pending, or threatened, legal or
governmental proceedings relating to the U.S. patent or any of the U.S. patent
applications listed in Schedules ----
4. To the best of our actual knowledge, except as described in the
Prospectus, the Company owns each of the U.S. patent applications referred to in
the Prospectus that are listed in Schedules ____.
5. To the best of our actual knowledge, the Company has not received
any notice challenging the validity or enforceability of the U.S. patents listed
in Schedule ____.
6. While there can be no guarantee that any particular patent
application will issue as a patent, each of the U.S. patent applications
referred to in the Prospectus which is listed in Schedules ____ was properly
filed, and is being properly and diligently prosecuted, in the U.S. Patent and
Trademark Office.
<PAGE>
-29-
7. To the best of our actual knowledge, for each U.S. patent
application listed in Schedules ____,all information known to Fish & Neave, to
date, to be "material to patentability", as defined in 37 C.F.R. ss. 1.56(b),
has been disclosed, or will be disclosed pursuant to 37 C.F.R. ss. 1.97, to the
U.S. Patent and Trademark Office.
8. To the best of our knowledge, no claim, action, suit or proceeding
is presently pending or threatened against the Company relating to the potential
infringement of, or conflict with, any patents of others.
Exhibit 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
METASYN, INC.
The undersigned, Michael D. Webb and Randall B. Lauffer, do hereby
certify:
A. They are the duly elected and acting President and Secretary,
respectively, of Metasyn, Inc., a Delaware corporation (the "Corporation").
B. The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State on November 28, 1988, and the name under which
the Corporation was originally incorporated is Metacorp, Inc.
C. The Certificate of Incorporation, as previously amended, is further
amended and restated to read in full as follows:
FIRST. The name of the Corporation is Metasyn, Inc.
SECOND. The address of the registered office of the Corporation in the
state of Delaware is at 1013 Centre Road, Wilmington, County of New Castle,
Delaware 19805-1297. The name of its registered agent at such address is The
Prentice-Hall Corporation System, Inc.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is (i) 11,500,000 shares of Common
Stock, $.01 par value per share ("Common Stock"), and (ii) 6,813,393 shares of
Preferred Stock, $.01 par value per share ("Preferred Stock").
The following is a statement of the designations and the powers,
privileges and rights, and the qualifications, limitations or restrictions
thereof in respect of each class of capital stock of the Corporation.
A. COMMON STOCK.
1. General. The voting, dividend and liquidation rights of the holders
of the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock of any series as may be designated by the Board of Directors
upon any issuance of the Preferred Stock of any series.
2. Voting. The holders of the Common Stock are entitled to one vote for
each share held at all meetings of stockholders (and written actions in lieu of
meetings). There shall be no cumulative voting. The holders of record of shares
of Common Stock and the holders of record of shares of Series A Convertible
Preferred Stock, voting together as a
<PAGE>
single class, shall be entitled to elect two (2) directors of the Corporation.
At any meeting held for the purpose of electing directors, the presence in
person or by proxy of the holders of a majority of the shares of Common Stock
and Series A Convertible Preferred Stock then outstanding shall constitute a
quorum of the Common Stock and Series A Convertible Preferred Stock for the
purpose of electing directors by holders of the Common Stock and Series A
Convertible Preferred Stock. A vacancy in any directorship elected by the
holders of Common Stock and Series A Convertible Preferred Stock shall be filled
only by vote or written consent in lieu of a meeting of the holders of the
Common Stock and Series A Convertible Preferred Stock.
3. Dividends. Dividends may be declared and paid on the Common Stock
from funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.
4. Liquidation. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders, subject to any preferential rights of any then outstanding
Preferred Stock.
B. PREFERRED STOCK.
Preferred Stock may be issued from time to time in one or more series,
each of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. Any shares of
Preferred Stock which may be redeemed, purchased, acquired or converted into
shares of Common Stock by the Corporation may be reissued except as otherwise
provided herein or by law. Different series of Preferred Stock shall not be
construed to constitute different classes of shares for the purposes of voting
by classes unless expressly provided.
Authority is hereby granted to the Board of Directors from time to time
to issue the Preferred Stock in one or more series, and in connection with the
creation of any such series, by resolution or resolutions providing for the
issue of the shares thereof, to determine and fix such voting powers, full or
limited, or no voting powers, and such designations, preferences and relative
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including without limitation thereof, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall
be stated and expressed in such resolutions, all to the full extent now or
hereafter permitted by the General Corporation Law of Delaware. Without limiting
the generality of the foregoing, except as otherwise provided herein or in the
resolutions providing for the issuance of any other series of Preferred Stock,
the resolutions providing for issuance of any series of Preferred Stock may
provide that such series shall be superior or rank equally or be junior to the
Preferred Stock of any other series to the extent permitted by law. Except as
otherwise provided herein or in the resolutions provided for the issuance of any
series of Preferred Stock, no vote of the holders of the Preferred Stock or
Common Stock shall be a prerequisite to the issuance of any shares of any series
of the Preferred Stock authorized by and complying with the conditions of the
Certificate of Incorporation, the right to have such vote being expressly waived
by all present and future holders of the capital stock of the Corporation.
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C. SERIES A, SERIES B, SERIES C, SERIES D AND SERIES E
CONVERTIBLE PREFERRED STOCK.
1. Designation.
(a) Series A Convertible Preferred Stock. One Hundred Four
Thousand Three Hundred and Eighty-Eight (104,388) shares of the authorized
Preferred Stock of the Corporation are hereby designated "Series A Convertible
Preferred Stock" (the "Series A Preferred Stock") with the rights, preferences,
powers, privileges and restrictions, qualifications and limitations set forth
below.
(b) Series B Convertible Preferred Stock. Two Million Six
Hundred Fifty- Five Thousand One Hundred and Thirty-Eight (2,655,138) shares of
the authorized Preferred Stock of the Corporation are hereby designated "Series
B Convertible Preferred Stock" (the "Series B Preferred Stock") with the rights,
preferences, powers, privileges and restrictions, qualifications and limitations
set forth below.
(c) Series C Convertible Preferred Stock. One Million Four
Hundred Forty- Five Thousand Five Hundred and Thirty-Six (1,445,536) shares of
the authorized Preferred Stock of the Corporation are hereby designated "Series
C Convertible Preferred Stock" (the "Series C Preferred Stock") with the rights,
preferences, powers, privileges and restrictions, qualifications and limitations
set forth below.
(d) Series D Convertible Preferred Stock. One Million Seven
Hundred Forty Thousand and Two (1,740,002) shares of the authorized Preferred
Stock of the Corporation are hereby designated "Series D Convertible Preferred
Stock" (the "Series D Preferred Stock") with the rights, preferences, powers,
privileges and restrictions, qualifications and limitations set forth below.
(e) Series E Convertible Preferred Stock. Eight Hundred and
Sixty-Eight Thousand Three Hundred Twenty-Nine (868,329) shares of the
authorized Preferred Stock of the Corporation are hereby designated "Series E
Convertible Preferred Stock" (the "Series E Preferred Stock") with the rights,
preferences, powers, privileges and restrictions, qualifications and limitations
set forth below.
(f) Series Preferred Stock. The Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock are sometimes collectively referred to herein as the
"Series Preferred Stock".
2. Dividends. In each fiscal year of the Corporation, the holders of
shares of Series Preferred Stock shall be entitled to receive, before any cash
dividends shall be paid upon or set aside for the Common Stock in such fiscal
year, if, when and as declared by the Board of Directors of the Corporation out
of the funds legally available for that purpose, dividends payable in cash in an
amount per share for such fiscal year at least equal to the product of (i) the
per share amount, if any, of the cash dividend declared, paid or set aside for
the Common Stock during such fiscal year, multiplied by (ii) the number of whole
shares of Common Stock into which each such share of Series Preferred Stock is
then convertible. In addition, in each fiscal year of the Corporation, the
holders of shares of Series C
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Preferred Stock and Series E Preferred Stock shall be entitled to receive if,
when and as declared by the Board of Directors of the Corporation, out of funds
legally available therefor, a dividend of $.05 per share. Further, no dividend
shall be declared or paid on the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock or any other series of Preferred Stock unless an equivalent dividend is
declared or paid on the Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock (based on the number of shares of Common Stock into
which the Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock are then convertible).
3. Liquidation, Dissolution or Winding Up.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series D
Preferred Stock then outstanding shall be entitled to be paid, out of the assets
of the Corporation available for distribution to its stockholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any other class or series of stock of the Corporation ranking on
liquidation prior and in preference to the Series D Preferred Stock
(collectively referred to as "Senior Preferred Stock"), but before any payment
shall be made to the holders of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series E Preferred Stock, Common Stock or any
other class or series of stock ranking on liquidation junior to the Series D
Preferred Stock, by reason of their ownership thereof, an amount (being the
liquidation preference for the Series D Preferred Stock) equal to the amount of
$3.00 per share, a cumulative cash dividend of 18% per annum, compounded
annually from the date of issuance, plus any other declared but unpaid dividends
thereon (subject to appropriate adjustment in the event of any stock dividend,
stock split, combination or other similar recapitalization affecting the Series
D Preferred Stock).
(b) If upon any such liquidation, dissolution or winding up of
the Corporation the remaining assets of the Corporation available for
distribution to its stockholders shall be insufficient to pay all holders of
shares of Series D Preferred Stock the full amount to which they shall be
entitled, the holders of shares of Series D Preferred Stock and any class or
series of stock ranking on liquidation on a parity with the Series D Preferred
Stock shall share ratably in any distribution of the remaining assets and funds
of the Corporation to such series or class in proportion to the respective
amounts which would otherwise be payable in respect of the shares held by them
upon such distribution if all amounts payable on or with respect to shares of
such series were paid in full.
(c) After the payment of all preferential amounts required to
be paid to the holders of Series D Preferred Stock and Senior Preferred Stock,
upon the liquidation, dissolution or winding up of the Corporation, the holders
of shares of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series E Preferred Stock then outstanding shall be entitled
to be paid, pari passu on the basis of the relative liquidation preference
amounts of the Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock and the Series E Preferred Stock, out of such assets of
the Corporation available for distribution after the payment in full of all
amounts required to be paid to the holders of Senior Preferred Stock and Series
D Preferred Stock pursuant to Subsections (a) and (b) above, but before any
payment shall be made to the holders of Common Stock or any
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other class or series of stock ranking on liquidation junior to the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series E
Preferred Stock (such Common Stock and other stock being collectively referred
to as "Junior Stock") by reason of their ownership thereof, an amount (being the
liquidation preference for the applicable series) equal to, (i) in the case of
Series A Preferred Stock, the amount of $11.207 per share, plus any declared but
unpaid dividends thereon, (ii) in the case of Series B Preferred Stock, the
amount of $1.513 per share, a cumulative cash dividend of 18% per annum,
compounded annually from the date of issuance, plus any other declared but
unpaid dividends thereon, (iii) in the case of Series C Preferred Stock, the
amount of $2.25 per share, a cumulative cash dividend of 18% per annum,
compounded annually from the date of issuance, plus any other declared but
unpaid dividends thereon, and (iv) in the case of Series E Preferred Stock, the
amount of $5.76 per share, a cumulative cash dividend of 18% per annum,
compounded annually from the date of issuance, plus any other declared but
unpaid dividends thereon (in each case, subject to appropriate adjustment in the
event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares).
(d) If following the distributions contemplated pursuant to
Subsections (a) and (b) above the remaining assets of the Corporation available
for distribution to its stockholders shall be insufficient to pay all holders of
shares of each series of Series Preferred Stock entitled to a distribution of
such amounts pursuant to Subsection (c) above the full amount to which they
shall be entitled, the holders of shares of each such series of Series Preferred
Stock and any class or series of stock ranking on liquidation on a parity with
such series of Series Preferred Stock shall share ratably in any distribution of
the remaining assets and funds of the Corporation to such series or class in
proportion to the respective amounts which would otherwise be payable in respect
of the shares held by them upon such distribution if all amounts payable on or
with respect to shares of such series were paid in full.
(e) After the payment of all preferential amounts required to
be paid to the holders of Senior Preferred Stock, Series Preferred Stock and any
other class or series of stock of the Corporation ranking on liquidation on a
parity with the Series Preferred Stock, upon the dissolution, liquidation or
winding up of the Corporation, the holders of shares of Junior Stock then
outstanding shall be entitled to receive the remaining assets and funds of the
Corporation available for distribution to its stockholders.
(f) The merger or consolidation of the Corporation into or
with another corporation or the sale of all or substantially all the assets of
the Corporation, shall be deemed to be a liquidation, dissolution or winding up
of the Corporation for purposes of this Section 3 unless the holders of at least
66 2/3% of the then outstanding shares of Series Preferred Stock, voting
separately as a class, elect to have such events not deemed to be a liquidation,
dissolution or winding up of the Corporation by giving written notice thereof to
the Corporation at least ten (10) days before the effective date of such event.
If such notice is given, the provisions of Subsection 5(i) shall apply. The
amount deemed distributed to the holders of Series Preferred Stock upon any such
merger, consolidation or sale shall include any cash or the value of any
property, rights or securities distributed to such holders by the acquiring
person, firm or other entity. The value of such property, rights or other
securities shall be determined in good faith by the Board of Directors of the
Corporation.
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<PAGE>
4. Voting.
(a) Each holder of the outstanding shares of Series Preferred
Stock shall be entitled to the number of votes equal to the number of whole
shares of Common Stock into which the shares of Series Preferred Stock held by
such holder are then convertible (as adjusted from time to time pursuant to
Section 5 below), at each meeting of stockholders of the Corporation (and
written actions of stockholders in lieu of meetings) with respect to any and all
matters, other than as provided in Subsection 4(b) below, presented to the
stockholders of the Corporation for their action or consideration. Except as
provided by law or by the provisions of Subsections 4(b) and (c) below, holders
of Series Preferred Stock shall vote together with the holders of Common Stock
as a single class.
(b) The holders of record of the shares of Series A Preferred
Stock and the holders of record of shares of Common Stock, voting together as a
single class, shall be entitled to elect two (2) directors of the Corporation in
accordance with Section 2 of Part A hereof. The holders of record of the shares
of Series B Preferred Stock and Series C Preferred Stock, voting together as a
single class, shall be entitled to elect two (2) directors of the Corporation.
All remaining directors of the Corporation shall be elected by the holders of
record of the shares of Series Preferred Stock and the holders of record of
shares of Common Stock, voting together as a single class. At any meeting held
for the purpose of electing directors, the presence in person or by proxy of the
holders of a majority of the shares of stock then outstanding and entitled to
vote for a director shall constitute a quorum for the purpose of electing such
director. A vacancy in any directorship elected by the holders of any class or
series of stock shall be filled only by vote or written consent in lieu of a
meeting of the holders of such class or series of stock.
(c) The consent of the holders of record of a majority of the
outstanding shares of Series C Preferred Stock, voting as a single class, shall
be required for the Corporation to (i) adopt any amendment to this Restated
Certificate of Incorporation that would alter or change the powers, preferences
or rights of the holders of the outstanding shares of Series C Preferred Stock
so as to affect them adversely, (ii) increase the size of the Board of Directors
of the Corporation or (iii) declare any dividends on the capital stock of the
Corporation.
(d) The consent of the holders of record of a majority of the
outstanding shares of Series D Preferred Stock, voting as a single class, shall
be required for the Corporation to: (i) adopt any amendment to this Restated
Certificate of Incorporation to alter, change or amend the preferences, rights
or privileges of the holders of the outstanding shares of Series D Preferred
Stock, (ii) adopt any amendment to this Restated Certificate of Incorporation to
create any class or series of stock on parity with or having preference over the
Series D Preferred Stock, (iii) effect a sale of all or substantially all of the
assets of the Corporation, or a merger or reorganization of the Corporation for
aggregate consideration in an amount equal to less than $4.50 per share of the
capital stock of the Corporation outstanding at the time of such sale or merger
(on a fully diluted basis and subject to appropriate adjustment in the event of
any stock dividend, stock split, combination or other similar recapitalization)
or (iv) effect a repurchase or redemption of any securities prior to the
repurchase or redemption of the Series D Preferred Stock (excluding for this
purpose (A) up to 100,000 shares of the Common Stock to be reacquired by the
Corporation from
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<PAGE>
Randall B. Lauffer and (B) shares reacquired by the Corporation pursuant to
restricted stock arrangements from key employees, consultants and others who
have terminated their relationship with the Corporation).
(e) The consent of the holders of record of a majority of the
outstanding shares of Series E Preferred Stock, voting as a single class, shall
be required for the Corporation to adopt any amendment to this Restated
Certificate of Incorporation that would alter or change the powers, preferences
or rights of the holders of the outstanding shares of Series E Preferred Stock
so as to affect them adversely.
5. Optional Conversion. The holders of the Series Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series Preferred Stock
shall be convertible, at the option of the holder thereof, at any time and from
time to time, and in the case of the Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock, prior to
the close of business on any Redemption Date (as defined in Section 6 below) for
such share, into such number of fully paid and nonassessable shares of Common
Stock as is determined, (i) in the case of the Series A Preferred Stock, by
dividing $11.207 by the Series A Conversion Price (as defined below) in effect
at the time of conversion, (ii) in the case of the Series B Preferred Stock, by
dividing $1.513 by the Series B Conversion Price (as defined below) in effect at
the time of conversion, (iii) in the case of the Series C Preferred Stock, by
dividing $2.25 by the Series C Conversion Price (as defined below) in effect at
the time of conversion, (iv) in the case of the Series D Preferred Stock, by
dividing $3.00 by the Series D Conversion Price (as defined below) in effect at
the time of conversion, and (v) in the case of the Series E Preferred Stock, by
dividing $5.76 by the Series E Conversion Price (as defined below) in effect at
the time of conversion. The conversion price at which shares of Common Stock
shall be deliverable upon conversion of Series A Preferred Stock without the
payment of additional consideration by the holder thereof (the "Series A
Conversion Price") shall be $2.1825 on the effective date of the filing of this
Restated Certificate of Incorporation. The conversion price at which shares of
Common Stock shall be deliverable upon conversion of Series B Preferred Stock
without the payment of additional consideration by the holder thereof (the
"Series B Conversion Price") shall initially be $1.513. The conversion price at
which shares of Common Stock shall be deliverable upon conversion of Series C
Preferred Stock without the payment of additional consideration by the holder
thereof (the "Series C Conversion Price") shall initially be $2.25. The
conversion price at which shares of Common Stock shall be deliverable on
conversion of Series D Preferred Stock without the payment of additional
consideration by the holder (the "Series D Conversion Price") shall be $3.00 on
the effective date of filing of this Restated Certificate of Incorporation. The
conversion price at which shares of Common Stock shall be deliverable upon
conversion of Series E Preferred Stock without the payment of additional
consideration by the holder thereof (the "Series E Conversion Price") shall
initially be $5.76. The Series A Conversion Price, Series B Conversion Price,
the Series C Conversion Price, Series D Conversion Price and Series E Conversion
Price are sometimes hereinafter collectively referred to as the "Conversion
Prices" or the "Conversion Price," as the case may be. Such initial Conversion
Prices, and the rate at which shares of Series Preferred Stock may be converted
into shares of Common Stock, shall be subject to adjustment as provided below.
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In the event of a notice of redemption of any shares of Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series E
Preferred Stock pursuant to Section 6 hereof, the Conversion Rights of the
shares designated for redemption shall terminate at the close of business on any
Redemption Date (as defined in Section 6), unless the applicable Redemption
Price (as defined in Section 6) is not paid when due, in which case the
Conversion Rights for such shares shall continue until such price is paid in
full. In the event of a liquidation, dissolution or winding up of the
Corporation, the Conversion Rights shall terminate at the close of business on
the first full day preceding the date fixed for the payment of any amounts
distributable on such liquidation, dissolution or winding up to the holders of
Series Preferred Stock.
(b) Conversion in the Event of a Public Offering In the event
of the sale by the Corporation to the public of shares of Common Stock in an
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, in which (i) the price per share sold to the public
exceeds $6.00 (subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization) and the
gross proceeds received by the Corporation equal at least $15,000,000 or (ii)
the price per share sold to the public is less than or equal to $6.00 (subject
to appropriate adjustment in the event of any stock dividend, stock split,
combination or other similar recapitalization) and the gross proceeds to the
Corporation are less than $15,000,000 and the Corporation has received the
request of the holders of at least a majority of the then outstanding shares of
Series Preferred Stock, voting together as a class, (an offering described in
clauses (i) and/or (ii) hereinafter referred to as a "Public Offering"), all
duly issued and outstanding shares of Series Preferred Stock shall, as of the
closing date of such sale, be converted at the applicable Conversion Price
therefor in effect at such time, into fully paid and nonassessable shares of
Common Stock, provided that such conversion shall not affect the right of the
holders of such Series Preferred Stock to receive, out of the proceeds of such
Public Offering or otherwise, an amount equal to all declared but unpaid
dividends on the shares of Series Preferred Stock so converted to and including
such closing date. The Corporation shall give the holders of the Series
Preferred Stock notice of the filing with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, of any registration statement
relating to any such Public Offering, not less than 30 days prior to such
filing. The holders of shares of Series Preferred Stock shall present such
shares for surrender to the Corporation in accordance with the provisions of
Subsection 5(d)(i) hereof no later than the closing date of such Public Offering
and the Corporation shall issue to such holders shares of Common Stock in
accordance with the provisions of Subsection 5(d)(i) hereof on such closing
date.
(c) Fractional Shares. The Corporation shall not issue
fractions of shares of Common Stock upon conversion of Series Preferred Stock.
If any fraction of a share of Common Stock would, except for the provisions of
this Subsection (c), be issuable upon conversion of any Series Preferred Stock,
the Corporation shall in lieu thereof pay to the person entitled thereto an
amount of cash equal to the current value of such fraction, calculated to the
nearest one-thousandth (1/1000) of a share, as determined in good faith by the
Board of Directors of the Corporation.
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(d) Mechanics of Conversion.
(i) In order for a holder of Series Preferred Stock
to convert shares of Series Preferred Stock into shares of Common Stock, such
holder shall surrender the certificate or certificates for such shares of Series
Preferred Stock, at the office of the transfer agent for the Series Preferred
Stock (or at the principal office of the Corporation if the Corporation serves
as its own transfer agent), together with written notice that such holder elects
to convert all or any number of the shares of the Series Preferred Stock
represented by such certificate or certificates. Such notice shall state such
holder's name or the names of the nominees in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. If required
by the Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Corporation, duly executed by the registered holder or his,
her or its attorney duly authorized in writing. The date of receipt of such
certificates and notice by the transfer agent (or by the Corporation if the
Corporation serves as its own transfer agent) shall be the conversion date
("Conversion Date"). The Corporation shall, as soon as practicable after the
Conversion Date, issue and deliver at such office to such holder of Series
Preferred Stock, or to his, her or its nominees, a certificate or certificates
for the number of shares of Common Stock to which such holder shall be entitled,
together with cash in lieu of any fraction of a share.
(ii) The Corporation shall, at all times when shares
of Series Preferred Stock shall be outstanding, reserve and keep available out
of its authorized but unissued stock, for the purpose of effecting the
conversion of the Series Preferred Stock, such number of its duly authorized
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding Series Preferred Stock. Before taking any action
which would cause an adjustment reducing the Series A Conversion Price, the
Series B Conversion Price, Series C Conversion Price, Series D Conversion Price
or Series E Conversion Price below the then par value of the shares of Common
Stock issuable upon conversion of such series of Series Preferred Stock, the
Corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Common Stock at such adjusted
Series A Conversion Price, Series B Conversion Price, Series C Conversion Price,
Series D Conversion Price or Series E Conversion Price, as the case may be.
(iii) Upon any such conversion, no adjustment to the
applicable Conversion Price shall be made for any declared but unpaid dividends
on the Series Preferred Stock surrendered for conversion or on the Common Stock
delivered upon conversion, which dividends shall be paid in accordance with
clause (iv) below.
(iv) All shares of Series Preferred Stock which shall
have been surrendered or are required to have been surrendered for conversion as
herein provided shall no longer be deemed to be outstanding and all rights with
respect to such shares, including the rights, if any, to receive notices and to
vote, shall immediately cease and terminate on the Conversion Date, except only
the right of the holders thereof to receive shares of Common Stock in exchange
therefor and payment of any declared but unpaid dividends thereon. Any shares of
Series Preferred Stock so converted shall be retired and cancelled
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and shall not be reissued, and the Corporation may from time to time take such
appropriate action as may be necessary to reduce the authorized Series Preferred
Stock accordingly.
(e) Adjustment for Stock Splits and Combinations. If the
Corporation shall at any time or from time to time after the effective date of
the filing of this Restated Certificate of Incorporation effect a stock split or
subdivision of the outstanding Common Stock, the Conversion Price for each
series of Series Preferred Stock then in effect immediately before such split or
subdivision shall be proportionately decreased. If the Corporation shall at any
time or from time to time after the effective date of the filing of this
Restated Certificate of Incorporation combine the outstanding shares of Common
Stock, the Conversion Price for each series of Series Preferred Stock then in
effect immediately before the combination shall be proportionately increased.
Any adjustment under this paragraph shall become effective at the close of
business on the date the stock split, subdivision or combination becomes
effective.
(f) Adjustment for Certain Dividends and Distributions. In the
event the Corporation at any time, or from time to time after the effective date
of the filing of this Restated Certificate of Incorporation, shall make or
issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in additional
shares of Common Stock, then and in each such event the Conversion Prices shall
be decreased as of the time of such issuance or, in the event such a record date
shall have been fixed, as of the close of business on such record date, by
multiplying the Conversion Price for each series of Series Preferred Stock then
in effect by a fraction:
(1) the numerator of which shall be the total number
of shares of Common Stock issued and outstanding immediately
prior to the time of such issuance or the close of business on
such record date, and
(2) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of
Common Stock issuable in payment of such dividend or
distribution;
provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Conversion Price for each series of Series Preferred Stock shall
be recomputed accordingly as of the close of business on such record date and
thereafter the Conversion Price for each series of Series Preferred Stock shall
be adjusted pursuant to this paragraph as of the time of actual payment of such
dividends or distributions.
(g) Adjustments for Other Dividends and Distributions. In the
event the Corporation at any time or from time to time after the effective date
of the filing of this Restated Certificate of Incorporation shall make or issue,
or fix a record date for the determination of holders of Common Stock entitled
to receive, a dividend or other distribution payable in securities of the
Corporation other than shares of Common Stock, then and in each such event
provision shall be made so that the holders of Series Preferred Stock shall
receive upon conversion thereof in addition to the number of shares of Common
Stock
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receivable thereupon, the amount of securities of the Corporation that they
would have received had the Series Preferred Stock been converted into Common
Stock on the date of such event and had thereafter, during the period from the
date of such event to and including the conversion date, retained such
securities receivable by them as aforesaid during such period giving application
to all adjustments called for during such period, under this paragraph with
respect to the rights of the holders of the Series Preferred Stock.
(h) Adjustment for Reclassification, Exchange, or
Substitution. If the Common Stock issuable upon the conversion of the Series
Preferred Stock shall be changed into the same or a different number of shares
of any class or classes of stock, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or combination of
shares or stock dividend provided for above, or a reorganization, merger,
consolidation, or sale of assets provided for below), then and in each such
event the holder of each such share of Series Preferred Stock shall have the
right thereafter to convert such share into the kind and amount of shares of
stock and other securities and property receivable upon such reorganization,
reclassification, or other change, by holders of the number of shares of Common
Stock into which such shares of Series Preferred Stock might have been converted
immediately prior to such reorganization, reclassification, or change, all
subject to further adjustment as provided herein.
(i) Adjustment for Merger or Reorganization, etc. Subject to
Section 3 of this Part C, in case of any consolidation or merger of the
Corporation with or into another corporation or the sale of all or substantially
all of the assets of the Corporation to another corporation, each share of
Series Preferred Stock shall thereafter be convertible into the kind and amount
of shares of stock or other securities or property to which a holder of the
number of shares of Common Stock of the Corporation deliverable upon conversion
of such Series Preferred Stock would have been entitled upon such consolidation,
merger or sale; and, in such case, appropriate adjustment (as determined in good
faith by the Board of Directors) shall be made in the application of the
provisions set forth in this Section 5 with respect to the rights and interests
thereafter of the holders of the Series Preferred Stock, to the end that the
provisions set forth in this Section 5 (including provisions with respect to
changes in and other adjustments of the applicable Conversion Price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the conversion of
the Series Preferred Stock.
(j) No Impairment. The Corporation will not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series Preferred Stock against impairment.
(k) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of any Conversion Price pursuant to this Section 5,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
shares of the affected series of Series Preferred
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<PAGE>
Stock a certificate setting forth such adjustment or readjustment and showing in
detail facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of Series
Preferred Stock, furnish or cause to be furnished to such holder a similar
certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Prices then in effect, and (iii) the number of shares of Common Stock
and the amount, if any, of other property which then would be received upon the
conversion of Series Preferred Stock.
(l) Notice of Record Date. In the event:
(i) that the Corporation declares a dividend (or
any other distribution) on its Common Stock
payable in Common Stock or other securities
of the Corporation;
(ii) that the Corporation splits, subdivides or
combines its outstanding shares of Common
Stock;
(iii) of any reclassification of the Common Stock
of the Corporation (other than a stock
split, subdivision or combination of its
outstanding shares of Common Stock or a
stock dividend or stock distribution
thereon), or of any consolidation or merger
of the Corporation into or with another
corporation, or of the sale of all or
substantially all of the assets of the
Corporation; or
(iv) of the involuntary or voluntary dissolution,
liquidation or winding up of the
Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of each transfer agent of the Series Preferred Stock, and shall cause to
be mailed to the holders of Series Preferred Stock at their last addresses as
shown on the records of the Corporation or such transfer agent, at least 10 days
prior to the record date specified in (A) below or 20 days before the date
specified in (B) below, a notice stating
(A) the record date of such dividend,
distribution, stock split, subdivision or
combination, or, if a record is not to be
taken, the date as of which the holders of
Common Stock of record to be entitled to
such dividend, distribution, subdivision or
combination are to be determined, or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution,
liquidation or winding up is expected to
become effective, and the date as of which
it is expected that holders of Common Stock
of record shall be entitled to exchange
their shares of Common Stock for securities
or other property deliverable upon such
reclassification, consolidation, merger,
sale, dissolution or winding up.
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<PAGE>
6. Redemption at Option of Holder.
(a) At any time on or after May 29, 2001, the holders of 66
2/3% or more of the then outstanding shares of each of the Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock and Series E Preferred
Stock (collectively, the "Redeemable Stock") may require the Corporation to
redeem shares of such Series B Preferred Stock, Series C Preferred Stock, Series
D Preferred Stock or Series E Preferred Stock, as the case may be, then held by
such holders, subject to Section 4(d) hereof. Holders desiring to exercise the
redemption right granted herein (a "Requesting Holder") shall provide written
notice to the Corporation (a "Redemption Notice") setting forth the number of
shares to be redeemed and designating the date, which shall not be less than 60
days following the date of such notice, on which the initial redemption is to
occur (the initial redemption date and each subsequent redemption date,
hereinafter a "Redemption Date"). The Corporation shall notify all holders of
shares of Redeemable Stock (other than the Requesting Holders and holders to
whom notice will be sent pursuant to Section 6(b) below) of the Corporation's
receipt of a Redemption Notice within three business days following receipt of
such notice and any additional Redemption Notices received by the Corporation
within 10 business days of the Corporation's receipt of the initial Redemption
Notice shall be deemed to have been received on the same date as the initial
Redemption Notice and the Redemption Date shall be the same for all redemptions
to be effected pursuant to all such Redemption Notices. With respect to
Redemption Notices received by the Corporation from holders of the requisite
number of shares of Redeemable Stock other than Series D Preferred Stock, the
Corporation shall promptly notify the holders of then-outstanding shares of
Series D Preferred Stock of its receipt of such Redemption Notices and request
their consent to such redemption in accordance with Section 4(d) hereof. If the
Corporation does not receive the requisite consent from the holders of Series D
Preferred Stock at least 20 days prior to the initial Redemption Date, it shall
so notify the Requesting Holders and the Corporation shall not be permitted or
obliged to redeem any shares of Redeemable Stock pursuant to such Redemption
Notices. If the Corporation receives the requisite consent from the holders of
the Series D Preferred Stock pursuant to Section 4(d) hereof, the Corporation
shall be required to redeem the shares of the appropriate series of such
Redeemable Stock held by the Requesting Holders plus any additional shares
specified by holders pursuant to Subsection (b) hereof in three installments,
redeeming up to 33 1/3%, 50% and 100%, respectively, of all shares of the
appropriate series of Redeemable Stock to be redeemed that remain outstanding on
each such installment date, with the first installment redeemable on the initial
Redemption Date specified in the Redemption Notice and the second and third
installments redeemable on the first and second anniversaries of the initial
Redemption Date.
On each Redemption Date and upon a holder's surrender, in accordance
with this Section 6, of his, her or its certificates representing shares to be
redeemed, the redemption price shall be paid by the Corporation in cash in an
amount equal to (i) $1.513 per share in the case of Series B Preferred Stock,
(ii) $2.25 per share in the case of Series C Preferred Stock, (iii) $3.00 per
share in the case of the Series D Preferred Stock, and (iv) $5.76 per share in
the case of the Series E Preferred Stock (subject to appropriate adjustment for
stock splits, stock dividends, combination and other similar recapitalizations
affecting such shares), plus an amount equal to all declared but unpaid
dividends payable in accordance with Section 2 hereof on each share of
Redeemable Stock to be redeemed (the "Redemption Price").
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<PAGE>
(b) Within five days following its receipt from a Requesting
Holder of a notice of intent to exercise redemption rights pursuant to
Subsection (a) hereof, the Corporation shall provide each holder of shares of
the same series of Redeemable Stock, other than the Requesting Holder, with a
written notice (addressed to the holder at its address as it appears on the
stock transfer books of the Corporation) containing an offer to redeem shares of
such Redeemable Stock as provided above, which notice shall specify the
applicable Redemption Price. Each such holder, other than the Requesting Holder,
will have until 10 days prior to each Redemption Date to provide the Corporation
with written notice of such holder's acceptance of the redemption offer, which
notice shall specify the number of shares to be redeemed. All notices or offers
hereunder shall be sent by first class or registered mail, postage prepaid, and
shall be deemed to have been provided when mailed.
(c) In the event that any holder of such Redeemable Stock,
other than the Requesting Holder, does not provide the Corporation with written
notice of the holder's acceptance of the redemption offer on or before the date
10 days prior to the applicable Redemption Date, the Corporation shall have no
obligation to redeem any shares of Redeemable Stock of such holder on the
Redemption Date specified in its notice to such holder or at any time
thereafter.
(d) Notwithstanding the foregoing, the Corporation's
obligation to redeem shares of a series of Redeemable Stock on any Redemption
Date shall be waived if the holders of at least 66 2/3% of the then outstanding
shares of such series of Redeemable Stock shall request such waiver by written
notice given to the Corporation at least ten days prior to such Redemption Date.
The Corporation shall immediately notify all other holders of such series of
Redeemable Stock of any such waiver and shall not be required to redeem the
shares of such Redeemable Stock on such Redemption Date. No waiver of the
Corporation's redemption obligation in any one instance shall be deemed to be,
or construed as, a further or continuing waiver of the Corporation's redemption
obligation under this Section 6.
(e) On or prior to the Redemption Date, unless waived pursuant
to Subsection (d) above, the Requesting Holder and each other holder of
Redeemable Stock accepting the Corporation's redemption offer shall surrender
his, her or its certificate or certificates representing the shares to be
redeemed, in the manner and at the place designated in the Corporation's
redemption offer. If less than all shares represented by such certificate or
certificates are redeemed, the Corporation shall issue a new certificate for the
unredeemed shares. From and after each Redemption Date, all rights of each
holder with respect to shares of Redeemable Stock redeemed on such Redemption
Date shall cease (except the right to receive the Redemption Price without
interest upon surrender of the certificate or certificates therefor), and such
shares shall not be deemed to be outstanding for any purpose whatsoever. Such
shares of Redeemable Stock shall not be reissued, and the Corporation may from
time to time take such appropriate action as may be necessary to reduce the
authorized number of shares of Redeemable Stock accordingly.
(f) For the purpose of determining whether funds are legally
available for redemption of shares of Redeemable Stock as provided herein, the
Corporation shall value its assets at the highest amount permissible under
applicable law. If on any Redemption Date funds of the Corporation legally
available therefor shall be insufficient to redeem all the shares of such stock
required to be redeemed as provided herein, funds to the extent legally
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<PAGE>
available shall be used for such purpose and the Corporation shall effect such
redemption ratably on the basis of the number of shares of Redeemable Stock
which would be redeemed on such date if the funds of the Corporation legally
available therefor had been sufficient to redeem all shares of Redeemable Stock
required to be redeemed on such date. The redemption requirements provided
hereby shall be continuous, so that if on any Redemption Date such requirements
shall not be fully discharged, without further action by any holder of such
stock, funds legally available shall be applied therefor until such requirements
are fully discharged.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The Board of Directors is expressly authorized to exercise all
powers granted to the directors by law except insofar as such powers are limited
or denied herein or in the by-laws of the Corporation. In furtherance of such
powers, the Board of Directors shall have the right to make, alter or repeal the
by-laws of the Corporation.
SEVENTH: Elections of directors need not be by written ballot unless
the by-laws of the Corporation shall so provide.
EIGHTH: No director shall be personally liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law is hereafter
amended to authorize a further limitation or elimination of the liability of
directors, then the liability of a director of the Corporation shall, in
addition to the limitation on personal liability provided herein, be limited or
eliminated to the fullest extent permitted by the Delaware General Corporation
Law, as from time to time amended. No amendment to or repeal of this Article
Eighth shall apply to or have any effect on the liability or alleged liability
of any director of the Corporation for or with respect to any acts or omissions
of such director occurring prior to such amendment or repeal.
NINTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as that
section may be amended and supplemented from time to time, indemnify any and all
persons whom it shall have power under that section to indemnify against any
expenses, liabilities or other matters referred to in or covered by that
section. The indemnification provided for herein shall not be deemed exclusive
of any other rights to which those seeking indemnification may be entitled under
any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as
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<PAGE>
to action in their official capacities and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
TENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate of Incorporation, in
the manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
D. The foregoing Restated Certificate of Incorporation has been
approved by the Board of Directors of the Corporation.
E. The foregoing Restated Certificate of Incorporation was approved by
the written consent of the holders of a majority of the outstanding shares of
Common Stock and Preferred Stock, voting as a single class, all in accordance
with Sections 228, 242, and 245 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, Metasyn, Inc. has caused this Restated Certificate
of Incorporation to be signed by Michael D. Webb, its President, and attested by
Randall B. Lauffer, its Secretary, this ___ day of May 1996.
METASYN, INC.
By: /s/ Michael D. Webb
---------------------------
Michael D. Webb
President
ATTEST:
By: /s/ Randall B. Lauffer
----------------------------
Randall B. Lauffer
Secretary
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Exhibit 3.2
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
EPIX MEDICAL, INC.
EPIX Medical, Inc., a corporation organized and existing under the laws
of the State of Delaware (the "Corporation"), hereby certifies as follows,
pursuant to Section 242 of the Delaware General Corporation Law:
FIRST: That the Board of Directors of the Corporation by unanimous
written consent of its members, filed with the minutes of the Board of
Directors, in accordance with the provisions of Section 141(f) and 242,
respectively, of the General Corporation Law of the State of Delaware, duly
adopted the following amendment to the Restated Certificate of Incorporation:
That Article FOURTH of the the Corporation's Restated
Certificate of Incorporation be amended by deleting it in its entirety
and replacing it with the following:
FOURTH: The total number of shares of all
classes of stock which the
Corporation shall have authority to
issue is (i) 15,000,000 shares of
Common Stock, $.01 par value per
share ("Common Stock"), and (ii)
6,813,393 shares of Preferred Stock,
$.01 par value per share ("Preferred
Stock").
SECOND: That the holders of a majority of the outstanding shares of the
Corporations's Common Stock and Preferred Stock, voting together as a single
class, voted in favor of said amendment by written consent.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Sections 228 and 242 of the General Corporation Law of the State
of Delaware and written notice of this Certificate of Amendment has been given
as provided by Section 228 of the General Corporation Law of the State of
Delaware to every stockholder entitle to such notice.
<PAGE>
IN WITNESS WHEREOF, EPIX Medical, Inc. has caused this Certificate of
Amendment of its Restated Certificate of Incorporation to be signed by Michael
D. Webb, President, and William T. Whelan, its Assistant Secretary, on this
_____ day of __________________, 1996.
EPIX MEDICAL, INC.
By:
-------------------------------
Michael D. Webb, President
ATTEST:
By:
----------------------------
William T. Whelan
Assistant Secretary
Exhibit 3.3
RESTATED CERTIFICATE OF INCORPORATION
OF
EPIX MEDICAL, INC.
The undersigned, Michael D. Webb and William T. Whelan, do hereby
certify:
A. They are the duly elected and acting President and Assistant
Secretary, respectively, of EPIX Medical, Inc., a Delaware corporation (the
"Corporation").
B. The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State on November 28, 1988, and the name under which
the Corporation was originally incorporated is Metacorp, Inc.
C. The Certificate of Incorporation, as previously amended and
restated, is further amended and restated to read in full as follows:
FIRST. The name of the Corporation is EPIX Medical, Inc.
SECOND. The address of the registered office of the Corporation in the
state of Delaware is at 1013 Centre Road, Wilmington, County of New Castle,
Delaware 19805-1297. The name of its registered agent at such address is The
Prentice-Hall Corporation System, Inc.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 16,000,000, consisting of: (i)
15,000,000 shares of Common Stock, $.01 par value per share ("Common Stock"),
and (ii) 1,000,000 shares of Preferred Stock, $.01 par value per share
("Preferred Stock").
The following is a statement of the designations and the powers,
privileges and rights, and the qualifications, limitations or restrictions
thereof in respect of each class of capital stock of the Corporation.
A. PREFERRED STOCK
The Board of Directors is authorized, subject to limitations prescribed
by law and the provisions of this Article FOURTH, to provide by resolution for
the issuance of the shares of Preferred Stock in one or more series, and by
filing a certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designations, powers, preferences and rights of the
shares of each such series and any qualifications, limitations or restrictions
thereof.
<PAGE>
The authority of the Board with respect to each series shall include,
but shall not be limited to, determination of the following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The dividend rate, if any, on the shares of that series, whether
dividends shall be cumulative, and if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of the
series;
(c) Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
(d) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for adjustment
of the conversion rate in such events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable, and
if so, the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and at
different redemption dates;
(f) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and if so, the terms and amount of such
sinking fund;
(g) The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the Corporation, and
the relative rights of priority, if any, of payment of shares of that series;
and
(h) Any other relative rights, preferences and limitations of that
series.
B. COMMON STOCK
The Common Stock is subject to the rights and preferences of the
Preferred Stock as hereinbefore set forth or authorized.
Subject to the provisions of any applicable law or of the By-laws of
the Corporation, as from time to time amended, with respect to the fixing of a
record date for the determination of stockholders entitled to vote, and except
as otherwise provided herein or by law or by the resolution or resolutions
providing for the issue of any series of Preferred Stock, the holders of
outstanding shares of Common Stock shall have exclusive voting rights for the
election of directors and for all other purposes, each holder of record of
shares of Common Stock being entitled to one vote for each share of Common Stock
standing in his name on the books of the Corporation.
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<PAGE>
Subject to the rights of any one or more series of Preferred Stock, the
holders of Common Stock shall be entitled to receive such dividends from time to
time as may be declared by the Board of Directors out of any funds of the
Corporation legally available for the payment of such dividends.
In the event of the liquidation, dissolution, or winding up of the
Corporation, whether voluntary or involuntary, after payment shall have been
made to the holders of the Preferred Stock the full amount to which they are
entitled, the holders of Common Stock shall be entitled to share ratably
according to the number of shares of Common Stock held by them, in all remaining
assets of the Corporation available for distribution to its stockholders.
C. ISSUANCE
Subject to the provisions of this Restated Certificate of Incorporation
and except as otherwise provided by law, the shares of stock of the Corporation,
regardless of class, may be issued for such consideration and for such corporate
purposes as the Board of Directors may from time to time determine.
FIFTH: The Corporation is to have perpetual existence.
SIXTH. The Board of Directors shall consist of not less than three
directors, the exact number to be determined from time to time by resolution
adopted by the affirmative vote of a majority of the directors then in office.
The directors shall be divided into three classes, as nearly equal in number as
the then total number of directors constituting the entire Board of Directors
permits, with the term of office of one class expiring each year. The initial
directors of the first class shall be elected to hold office for a term expiring
at the next succeeding annual meeting, the initial directors of the second class
shall be elected to hold office for a term expiring at the second succeeding
annual meeting and the initial directors of the third class shall be elected to
hold office for a term expiring at the third succeeding annual meeting. At each
succeeding annual meeting of stockholders beginning in the first year following
the election of such staggered Board of Directors, successors to the class of
directors whose term expires at that meeting shall be elected for a three-year
term. If the number of directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of directors in each
class as nearly equal as possible, and any additional directors of any class
elected to fill a vacancy resulting from an increase in the size of such class
shall hold office for a term that shall coincide with the remaining term of that
class, but in no event will a decrease in the number of directors shorten the
term of any incumbent director. Any vacancies in the Board of Directors for any
reason, and any directorships resulting from any increase in the number of
directors, may be filled by the Board of Directors, acting by a majority of the
directors then in office, although less than a quorum, and any directors so
chosen shall hold office until the next election of the class for which such
directors shall have been chosen. Notwithstanding the foregoing, and except as
otherwise required by law, whenever the holders of any one or more series of
Preferred Stock shall have the right, voting separately as a class, to elect one
or more directors of the
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<PAGE>
Corporation, the election, term of office and other features of such
directorships shall be governed by the terms of this Restated Certificate of
Incorporation and certificates of designation applicable thereto, and such
directors so elected shall not be divided into classes pursuant to this Article
SIXTH unless expressly provided by such terms. Subject to the foregoing, at each
annual meeting of stockholders the successors to the class of directors whose
terms shall then expire shall be elected to hold office for a term expiring at
the annual meeting for the year in which their term expires and until their
successors shall be elected and qualified, subject to prior death, resignation,
retirement or removal.
Except as otherwise determined by the Board of Directors in
establishing a series of Preferred Stock as to directors elected by holders of
such series, at any special meeting of the stockholders called at least in part
for the purpose, any director or directors may, by the affirmative vote of the
holders of at least a majority of the stock entitled to vote for the election of
directors, be removed from office for cause. The provisions of this subsection
shall be the exclusive method for the removal of directors. This Article SIXTH
may not be amended, revised or revoked, in whole or in part, except by the
affirmative vote of the holders of 66 2/3% of the voting power of the shares of
all classes of stock of the Corporation entitled to vote for the election of
directors, considered for the purposes of this Article SIXTH as one class of
stock.
SEVENTH: The Board of Directors shall have the right to make, alter or
repeal the By-laws of the Corporation.
EIGHTH: Elections of directors need not be by written ballot unless the
By-laws of the Corporation shall so provide.
NINTH. A director shall not be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent that the elimination or limitation of liability
is not permitted under the General Corporation Law of the State of Delaware as
in effect when such liability is determined. No amendment or repeal of this
provision shall deprive a director of the benefits hereof with respect to any
act or omission occurring prior to such amendment or repeal.
TENTH. The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as amended
from time to time, indemnify each person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was, or has agreed to become, a director or officer of
the Corporation, or is or was serving, or has agreed to serve, at the request of
the Corporation, as a director, officer or trustee of, or in a similar capacity
with, another corporation, partnership, joint venture, trust or other enterprise
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or on his behalf in connection with such
action, suit or proceeding and any appeal therefrom.
- 4 -
<PAGE>
Indemnification may include payment by the Corporation of expenses in
defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of any undertaking by the person indemnified
to repay such payment if it is ultimately determined that such person is not
entitled to indemnification under this Article TENTH, which undertaking may be
accepted without reference to the financial ability of such person to make such
repayments.
The Corporation shall not indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person unless the initiation thereof was approved by the Board of Directors
of the Corporation.
The indemnification rights provided in this Article TENTH (i) shall not
be deemed exclusive of any other rights to which those indemnified may be
entitled under any law, agreement or vote of stockholders or disinterested
directors or otherwise, and (ii) shall inure to the benefit of the heirs,
executors and administrators of such persons. The Corporation may, to the extent
authorized from time to time by its Board of Directors, grant indemnification
rights to other employees or agents of the Corporation or other persons serving
the Corporation and such rights may be equivalent to, or greater or less than,
those set forth in this Article TENTH.
ELEVENTH: (a) Except as set forth in part (b) of this Article ELEVENTH,
the affirmative vote of the holders of 66 2/3% of the shares of all classes of
stock of the Corporation entitled to vote for the election of directors,
considered for the purposes of this Article ELEVENTH as one class, shall be
required (i) for the adoption of any agreement for the merger or consolidation
of the Corporation or any Subsidiary (as hereinafter defined) with or into any
Other Corporation (as hereinafter defined), (ii) to authorize any sale, lease,
exchange, mortgage, pledge or other disposition of all or substantially all of
the assets of the Corporation or any Subsidiary to any Other Corporation, (iii)
to authorize the issuance or transfer by the Corporation of any Substantial
Amount (as hereinafter defined) of securities of the Corporation in exchange for
the securities or assets of any Other Corporation, or (iv) to engage in any
other transaction the effect of which is to combine the assets and business of
the Corporation or any Subsidiary with any Other Corporation. Such affirmative
vote shall be in addition to the vote of the holders of the stock of the
Corporation otherwise required by law, the Restated Certificate of Incorporation
of the Corporation or any agreement or contract to which the Corporation is a
party.
(b) The provisions of part (a) of this Article
ELEVENTH shall not be applicable to any transaction described therein if such
transaction is approved by a resolution of the Board of Directors of the
Corporation, provided that the directors voting in favor of such resolution
include a majority of the persons who were duly elected and acting members of
the Board of Directors prior to the time any such Other Corporation became a
Beneficial Owner (as hereinafter defined) of 5% or more of the shares of stock
of the Corporation entitled to vote for the election of directors. In
considering such transaction, the Board of Directors shall give due
consideration to such factors as it deems relevant, which may
- 5 -
<PAGE>
include without limitation the social and economic effects on the employees,
customers, suppliers and other constituents of the Corporation and its
Subsidiaries and on the communities in which the Corporation and its
Subsidiaries operate or are located.
(c) The Board of Directors shall have the power and
duty to determine for the purposes of this Article ELEVENTH, on the basis of
information known to such Board, if and when any Other Corporation is the
Beneficial Owner of 5% or more of the outstanding shares of stock of the
Corporation entitled to vote for the election of directors. Any such
determination, if made in good faith, shall be conclusive and binding for all
purposes of this Article ELEVENTH.
(d) As used in this Article ELEVENTH, the following
terms shall have the meanings indicated:
"Other Corporation" means any person, firm,
corporation or other entity, other than a Subsidiary of the Corporation, which
is the Beneficial Owner of 5% or more of the shares of stock of the Corporation
entitled to vote in the election of directors.
"Subsidiary" means any corporation in which the
Corporation owns, directly or indirectly, more than 50% of the voting
securities.
"Substantial Amount" means any securities of the
Corporation having a then fair market value of more than $500,000.
An Other Corporation (as defined above) shall be
deemed to be the "Beneficial Owner" of stock if such Other Corporation or any
"affiliate" or "associate" of such Other Corporation (as those terms are defined
in Rule 12b-2 promulgated under the Securities and Exchange Act of 1934 (15
U.S.C. 78 aaa et seq.), as amended from time to time), directly or indirectly,
controls the voting of such stock or has any options, warrants, conversion or
other rights to acquire such stock.
(e) This Article ELEVENTH may not be amended, revised
or revoked, in whole or in part, except by the affirmative vote of the holders
of 66 2/3% of the shares of all classes of stock of the Corporation entitled to
vote for the election of directors, considered for the purposes of this Article
ELEVENTH as one class of stock.
TWELFTH: No action required to be taken or that may be taken at any
annual or special meeting of stockholders of the Corporation may be taken by
written consent without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is specifically denied.
This Article TWELFTH may not be amended, revised or revoked, in whole
or in part, except by the affirmative vote of the holders of 66 2/3% of the
voting power of the
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<PAGE>
shares of all classes of stock of the Corporation entitled to vote for the
election of directors, considered for the purposes of this Article TWELFTH as
one class of stock.
THIRTEENTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
D. The foregoing Restated Certificate of Incorporation has been duly
adopted by the Board of Directors of the Corporation.
E. The foregoing Restated Certificate of Incorporation was approved by
the written consent of the holders of (i) a majority of the outstanding shares
of Common Stock and Preferred Stock, voting as a single class and (ii) a
majority of the holders of the outstanding shares of each of the Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C
Convertible Preferred Stock, Series D Convertible Preferred Stock and Series E
Convertible Preferred Stock, each voting separately as a class, all in
accordance with Sections 228, 242, and 245 of the Delaware General Corporation
Law.
IN WITNESS WHEREOF, EPIX Medical, Inc. has caused this Restated
Certificate of Incorporation to be signed by Michael D. Webb, its President, and
attested by William T. Whelan, its Assistant Secretary, this ___ day of
_____________ 1997.
EPIX MEDICAL, INC.
By:
--------------------------------
Michael D. Webb
President
ATTEST:
By:
-------------------------------
William T. Whelan
Assistant Secretary
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Exhibit 3.4
BY-LAWS
OF
METACORP, INC.
ARTICLE I
STOCKHOLDERS
SECTION 1. Place of Meetings. All meetings of stockholders shall be
held at such place within or without the State of Delaware as may be designated
from time to time by the Board of Directors or, if not so designated, at the
principal office of the corporation.
SECTION 2. Annual Meeting. The annual meeting of stockholders for the
election of directors and the transaction of such other business as may properly
come before the meeting shall be held at 10 a.m. on the first Friday in May of
each year or on such other date or at such hour as may be specified by
resolution of the Board of Directors. If the date of the annual meeting shall
fall upon a legal holiday at the place of the meeting, the meeting shall be held
at the same hour on the next succeeding business day. If the annual meeting is
not held on the date designated therefor, the directors shall cause the meeting
to be held as soon thereafter as convenient.
SECTION 3. Special Meetings. Special meetings of the stockholders may
be called at any time by the President, the Chairman, or the Board of Directors,
or by the Secretary or any other officer upon the written request of one or more
stockholders holding of record at least a majority of the outstanding shares of
stock of the corporation entitled to vote at such meeting. Such written request
shall state the purpose or purposes of the proposed meeting. Business transacted
at any special meeting of stockholders shall be limited to matters relating to
the purpose or purposes stated in the notice of meeting.
SECTION 4. Notice of Meetings. Except where some other notice is
required by law, written notice of each meeting of stockholders, stating the
place, date and hour thereof and the purposes for which the meeting is called,
shall be given by or under the direction of the Secretary, not less than ten nor
more than sixty days before the date fixed for such meeting, to each stockholder
entitled to vote at such meeting of record at the close of business on the day
fixed by the Board of Directors as a record date for the determination of the
stockholders entitled to vote at such meeting or, if no such date has been
fixed, of record at the close of business on the day before the day on which
notice is given. Notice shall be given personally to each stockholder or left at
his or her residence or usual place of business or mailed postage prepaid and
addressed to the stockholder at his or her address as it appears upon the
records of the corporation. In case of the death, absence, incapacity or refusal
of the Secretary, such notice may be given by a person designated either by the
Secretary or by the person or persons calling the meeting or by the Board of
Directors. A waiver of such
<PAGE>
notice in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent to
such notice. Attendance of a person at a meeting of stockholders shall
constitute a waiver of notice of such meeting, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders need be specified in any
written waiver of notice. Notice of any meeting of the stockholders shall be
deemed to have been given to any person who may become a stockholder of record
after the mailing of such notice and prior to such meeting. Except as required
by statute, notice of any adjourned meeting of the stockholders shall not be
required.
SECTION 5. Voting List. The officer who has charge of the stock ledger
of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city or other municipality or community
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
SECTION 6. Quorum of Stockholders. At any meeting of the stockholders,
the holders of a majority in interest of all stock issued and outstanding and
entitled to vote upon a question to be considered at the meeting, present in
person or represented by proxy, shall constitute a quorum for the consideration
of such question, but a smaller group may adjourn any meeting from time to time.
When a quorum is present at any meeting, a majority of the stock represented
thereat and entitled to vote shall, except where a larger vote is required by
law, by the certificate of incorporation, or by these by-laws, decide any
question brought before such meeting. Any election by stockholders shall be
determined by a plurality of the vote cast by the stockholders entitled to vote
at the election.
SECTION 7. Proxies and Voting. Each stockholder shall at every meeting
of the stockholders be entitled to one vote in person or by proxy for each share
of the capital stock held of record by such stockholder, but no proxy shall be
voted on after three years from its date, unless said proxy provides for a
longer period. Persons holding stock in a fiduciary capacity shall be entitled
to vote the shares so held, and persons whose stock is pledged shall be entitled
to vote, unless in the transfer by the pledger on the books of the corporation
the pledgee shall have been expressly empowered to vote thereon, in which case
only the pledgee or the pledgee's proxy may represent said stock and vote
thereon. Shares of the capital stock of the corporation belonging to the
corporation or to another corporation, a majority of whose shares entitled to
vote in the election of directors is owned by the corporation, shall not be
entitled to vote nor counted for quorum purposes.
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<PAGE>
SECTION 8. Conduct of Meeting. Meetings of the stockholders shall be
presided over by one of the following officers in the order of seniority and if
present and acting: the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, the President, a Vice-President, or, if none of the foregoing is
in office and present and acting, a chairman to be chosen by the stockholders.
The Secretary of the corporation, if present, or an Assistant Secretary, shall
act as secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the chairman of the meeting shall appoint a secretary of
the meeting.
SECTION 9. Action Without Meeting. Any action required or permitted to
be taken at any annual or special meeting of stockholders of the corporation may
be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, is signed by the holders
or by proxy for the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote on such action were present
and voted. Prompt notice of the taking of corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE II
DIRECTORS
SECTION 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of a Board of Directors, who may
exercise all of the powers of the corporation which are not by law required to
be exercised by the stockholders. In the event of a vacancy in the Board of
Directors, the remaining directors, except as otherwise provided by law, may
exercise the powers of the full Board until the vacancy is filled.
SECTION 2. Number; Election; Tenure and Qualification. The initial
Board of Directors shall consist of one person and shall be elected by the
incorporator. Thereafter, the number of directors which shall constitute the
whole Board shall be fixed by resolution of the Board of Directors, but in no
event shall be less than one. Each director shall be elected by the stockholders
at the annual meeting and all directors shall hold office until the next annual
meeting and until their successors are elected and qualified, or until their
earlier death, resignation or removal. The number of directors may be increased
or decreased by action of the Board of Directors. Directors need not be
stockholders of the corporation.
SECTION 3. Enlargement of the Board. The number of the Board of
Directors may be increased at any time, such increase to be effective
immediately, by vote of a majority of the directors then in office.
SECTION 4. Vacancies. Unless and until filled by the stockholders, any
vacancy in the Board of Directors, however occurring, including a vacancy
resulting from an enlargement of the Board and an unfilled vacancy resulting
from the removal of any director for cause or without cause, may be filled by
vote of a majority of the directors then in office although less than a quorum,
or by the sole remaining director. A director elected to fill a
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<PAGE>
vacancy shall hold office until the next annual meeting of stockholders and
until his or her successor is elected and qualified or until his or her earlier
death, resignation, or removal. When one or more directors shall resign from the
Board, effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have the power to fill such vacancy
of vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective. If at any time there are no directors in
office, then an election of directors may be held in accordance with the General
Corporation Law of the State of Delaware.
SECTION 5. Resignation. Any director may resign at any time upon
written notice to the corporation. Such resignation shall take effect at the
time specified therein, or if no time is specified, at the time of its receipt
by the President or Secretary.
SECTION 6. Removal. Except as may otherwise be provided by the General
Corporation Law, any director or the entire Board of Directors may be removed,
with or without cause, at an annual meeting or at a special meeting called for
that purpose, by the holders of a majority of the shares then entitled to vote
at an election of directors. The vacancy or vacancies thus created may be filled
by the stockholders at the meeting held for the purpose of removal or, if not so
filled, by the directors in the manner provided in Section 4 of this Article II.
SECTION 7. Committees. The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of one or more directors of the
corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of
any member of such committee or committees, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of such absent or
disqualified member.
A majority of all the members of any such committee may fix its rules
of procedure, determine its action and fix the time and place, whether within or
without the State of Delaware, of its meetings and specify what notice thereof,
if any, shall be given, unless the Board of Directors shall otherwise by
resolution provide. The Board of Directors shall have the power to change the
members of any such committee at any time, to fill vacancies therein and to
discharge any such committee, either with or without cause, at any time.
Any such committee, unless otherwise provided in the resolution of the
Board of Directors, or in these by-laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; but no such committee shall have
such power or authority in reference to amending the certificate of
incorporation, adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending a dissolution of the corporation
or a
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<PAGE>
revocation of a dissolution, or amending the by-laws of the corporation, and,
unless the resolution or these by-laws expressly so provide, no such committee
shall have the power or the authority to declare a dividend or to authorize the
issuance of stock.
Each committee shall keep regular minutes of its meetings and make such
reports as the Board of Directors may from time to time request.
SECTION 8. Meetings of the Board of Directors. Regular meetings of the
Board of Directors may be held without call or formal notice at such places
either within or without the State of Delaware and at such times as the Board
may by vote from time to time determine. A regular meeting of the Board of
Directors may be held without call or formal notice immediately after and at the
same place as the annual meeting of the stockholders, or any special meeting of
the stockholders at which a Board of Directors is elected.
Special meetings of the Board of Directors may be held at any place
either within or without the State of Delaware at any time when called by the
Chairman of the Board of Directors, the President, Treasurer, Secretary, or two
or more directors. Reasonable notice of the time and place of a special meeting
shall be given to each director unless such notice is waived by attendance or by
written waiver in the manner provided in these by-laws for waiver of notice by
stockholders. No notice of any adjourned meeting of the Board of Directors shall
be required. In any case it shall be deemed sufficient notice to a director to
send notice by mail at least seventy-two hours, or by telegram at least
forty-eight hours, before the meeting, addressed to such director at his or her
usual or last known business or home address.
Directors or members of any committee designated by the directors may
participate in a meeting of the Board of Directors or such committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation by
such means shall constitute presence in person at such meeting.
SECTION 9. Quorum and Voting. A majority of the total number of
directors shall constitute a quorum, except that when a vacancy or vacancies
exist in the Board, a majority of the directors then in office (but not less
than one-third of the total number of the directors) shall constitute a quorum.
A majority of the directors present, whether or not a quorum is present, may
adjourn any meeting from time to time. The vote of a majority of the directors
present at any meeting at which a quorum is-present shall be the act of the
Board of Directors, except where a different vote is required or permitted by
law, by the certificate of incorporation, or by these by-laws.
SECTION 10. Compensation. The Board of Directors may fix fees for their
services and for their membership on committees, and expenses of attendance may
be allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity as an officer, agent or otherwise, and receiving compensation therefor.
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<PAGE>
SECTION 11. Action Without Meeting. Any action required or permitted to
be taken at any meeting of the Board of Directors, or of any committee thereof,
may be taken without a meeting, and without notice, if a written consent thereto
is signed by all members of the Board of Directors, or of such committee, as the
case may be, and such written consent is filed with the minutes of proceedings
of the Board of Directors or such committee.
ARTICLE III
OFFICERS
SECTION 1. Titles. The officers of the corporation shall consist of a
President, a Secretary, a Treasurer, and such other officers with such other
titles as the Board of Directors shall determine, including without limitation a
Chairman of the Board, a Vice-Chairman of the Board, and one or more Vice
Presidents, Assistant Treasurers, or Assistant Secretaries.
SECTION 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the Board of Directors at its first meeting
following the annual meeting of the stockholders. Each officer shall hold office
until his or her successor is elected and qualified, unless a different term is
specified in the vote electing such officer, or until his or her earlier death,
resignation or removal.
SECTION 3. Qualification. Unless otherwise provided by resolution of
the Board of Directors, no officer, other than the Chairman or Vice-Chairman of
the Board, need be a director. No officer need be a stockholder. Any number of
offices may be held by the same person, as the directors shall determine.
SECTION 4. Removal. Any officer may be removed, with or without cause,
at any time, by resolution adopted by the Board of Directors.
SECTION 5. Resignation. Any officer may resign by delivering a written
resignation to the corporation at its principal office or to the President or
Secretary. Such resignation shall be effective upon receipt or at such later
time as shall be specified therein.
SECTION 6. Vacancies. The Board of Directors may at any time fill any
vacancy occurring in any office for the unexpired portion of the term and may
leave unfilled for such period as it may determine any office other than those
of President, Treasurer and Secretary.
SECTION 7. Powers and Duties. The officers of the corporation shall
have such powers and perform such duties as are specified herein and as may be
conferred upon or assigned to them by the Board of Directors, and shall have
such additional powers and duties as are incident to their office except to the
extent that resolutions of the Board of Directors are inconsistent therewith.
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<PAGE>
SECTION 8. President and Vice-Presidents. The President shall be the
chief executive officer of the corporation, shall preside at all meetings of the
stockholders and the Board of Directors unless a Chairman or Vice-Chairman of
the Board is elected by the Board, empowered to preside, and present at such
meeting, shall have general and active management of the business of the
corporation and general supervision of its officers, agents and employees, and
shall see that all orders and resolutions of the Board of Directors are carried
into effect.
In the absence of the President or in the event of his or her inability
or refusal to act, the Vice-President if any (or in the event there be more than
one Vice-President, the Vice-Presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. The Board of Directors may assign to any Vice-President the title of
Executive Vice-President, Senior Vice-President or any other title selected by
the Board of Directors.
SECTION 9. Secretary and Assistant Secretaries. The Secretary shall
attend all meetings of the Board of Directors and of the stockholders and record
all the proceedings of such meetings in a book to be kept for that purpose,
shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, shall maintain a stock ledger and
prepare lists of stockholders and their addresses as required and shall have
custody of the corporate seal which the Secretary or any Assistant Secretary
shall have authority to affix to any instrument requiring it and attest by any
of their signatures. The Board of Directors may give general authority to any
other officer to affix and attest the seal of the corporation.
The Assistant Secretary if any (or if there be more than one, the
Assistant Secretaries in the order determined by the Board of Directors of if
there be no such determination, then in the order of their election) shall in
the absence of the Secretary or in the event of the Secretary's inability or
refusal to act, perform the duties and exercise the powers of the Secretary.
SECTION 10. Treasurer and Assistant Treasurers. The Treasurer shall
have the custody of the corporate funds and securities, shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the Board of Directors. The Treasurer shall disburse the funds of the
corporation as may be ordered by the Board of Directors or the President, taking
proper vouchers for such disbursements, and shall render to the President and
the Board of Directors, at its regular meetings, or whenever they may require
it, an account of all transactions and of the financial condition of the
corporation.
The Assistant Treasurer if any (or if there be more than one, the
Assistant Treasurers in the order determined by the Board of Directors or if
there be no such determination, then in the order of their election) shall, in
the absence of the Treasurer or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the Treasurer.
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<PAGE>
SECTION 11. Bonded Officers. The Board of Directors may require any
officer to give the corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors upon such terms and
conditions as the Board of Directors may specify, including without limitation a
bond for the faithful performance of the duties of such officer and for the
restoration to the corporation of all property in his or her possession or
control belonging to the corporation.
SECTION 12. Salaries. Officers of the corporation shall be entitled to
such salaries, compensation or reimbursement as shall be fixed or allowed from
time to time by the Board of Directors.
ARTICLE IV
STOCK
SECTION 1. Certificates of Stock. One or more certificates of stock,
signed by the Chairman or Vice-Chairman of the Board of Directors or by the
President or Vice-President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary, shall be issued to each stockholder
certifying, in the aggregate, the number of shares owned by the stockholder in
the corporation. Any or all signatures on any such certificate may be
facsimiles. In case any officer who shall have signed or whose facsimile
signature shall have been placed upon a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the Incorporation
with the same effect as if he were such officer at the date of issue.
Each certificate for shares of stock which are subject to any
restriction on transfer pursuant to the certificate of incorporation, the
by-laws, applicable securities laws, or any agreement among any number of
shareholders or among such holders and the corporation shall have conspicuously
noted on the face or back of the certificate either the full text of the
restriction or a statement of the existence of such restriction.
SECTION 2. Transfers of Shares of Stock. Subject to the restrictions,
if any, stated or noted on the stock certificates, shares of stock may be
transferred on the books of the corporation by the surrender to the corporation
or its transfer agent of the certificate representing such shares properly
endorsed or accompanied by a written assignment or power of attorney properly
executed, and with such proof of authority or the authenticity of signature as
the corporation or its transfer agent may reasonably require. The corporation
shall be entitled to treat the record holder of stock as shown on its books as
the owner of such stock for all purposes, including the payment of dividends and
the right to vote with respect to that stock, regardless of any transfer, pledge
or other disposition of that stock, until the shares have been transferred on
the books of the corporation in accordance with the requirements of these
by-laws.
SECTION 3. Lost Certificates. A new certificate of stock may be issued
in the place of any certificate theretofore issued by the corporation and
alleged to have been lost, stolen, destroyed, or mutilated, upon such terms in
conformity with law as the Board of Directors shall prescribe. The directors
may, in their discretion, require the owner of the lost, stolen,
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<PAGE>
destroyed or mutilated certificate, or the owner's legal representatives, to
give the corporation a bond, in such sum as they may direct, to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, destruction or mutilation of any such certificate, or the
issuance of any such new certificate.
SECTION 4. Record Date. The Board of Directors may fix in advance a
record date for the determination of the stockholders entitled to notice of or
to vote at any meeting of stockholders or to express consent to corporate action
in writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action.
Such record date shall not be more than 60 nor less than 10 days before the date
of such meeting, nor more than 60 days prior to any other action to which such
record date relates.
If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day before the day on which notice is given,
or, if notice is waived, at the close of business on the day before the day on
which the meeting is held. The record date for determining stockholders entitled
to express consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is necessary, shall be the day on which
the first written consent is expressed. The record date for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating to such purpose.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
SECTION 5. Fractional Share Interests. The corporation may, but shall
not be required to, issue fractions of a share. If the corporation does not
issue fractions of a share, it shall (1) arrange for the disposition of
fractional interests by those entitled thereto, (2) pay in cash the fair value
of fractions of a share as of the time when those entitled to receive such
fractions are determined, or (3) issue scrip or warrants in registered or bearer
form which shall entitle the holder to receive a certificate for a full share
upon the surrender of such scrip or warrants aggregating a full share. A
certificate for a fractional share shall, but scrip or warrants shall not unless
otherwise provided therein, entitle the holder to exercise voting rights, to
receive dividends thereon, and to participate in any of the assets of the
corporation in the event of liquidation. The Board of Directors may cause scrip
or warrants to be issued subject to the conditions that they shall become void
if not exchanged for certificates representing full shares before a specified
date, or subject to the conditions that the shares for which scrip or warrants
are exchangeable may be sold by the corporation and the proceeds thereof
distributed to the holders of scrip or warrants, or subject to any other
conditions which the Board of Directors may impose.
SECTION 6. Dividends. Subject to the provisions of the certificate of
incorporation, the Board of Directors may, out of funds legally available
therefor, at any regular or special meeting, declare dividends upon the common
stock of the corporation as and when they deem expedient.
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<PAGE>
ARTICLE V
INDEMNIFICATION AND INSURANCE
SECTION 1. Indemnification. The corporation shall, to the full extent
permitted by the General Corporation Law of the State of Delaware, as amended
from time to time, and the certificate of incorporation, indemnify each person
whom it may indemnify pursuant thereto.
SECTION 2. Insurance. The corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred by such person in any such capacity or
arising out of such person's status as such, whether or not the corporation
would have the power to indemnify such person against such liability under the
provisions of the General Corporation Law of the State of Delaware.
ARTICLE VI
GENERAL PROVISIONS
SECTION 1. Fiscal Year. Except as otherwise designated from time to
time by the Board of Directors, the fiscal year of the corporation shall begin
on the first day of April and end on the last day of March.
SECTION 2. Corporate Seal. The corporate seal shall be in such form as
shall be approved by the Board of Directors. The Secretary shall be the
custodian of the seal. The Board of Directors may authorize a duplicate seal to
be kept and used by any other officer.
SECTION 3. Certificate of Incorporation. All references in these
by-laws to the certificate of incorporation shall be deemed to refer to the
certificate of incorporation of the corporation, as in effect from time to time.
SECTION 4. Execution of Instruments. The Chairman and Vice-Chairman of
the Board of Directors, if any, the President, any Vice-President, and the
Treasurer shall have power to execute and deliver on behalf and in the name of
the corporation any instrument requiring the signature of an officer of the
corporation, including deeds, contracts, mortgages, bonds, notes, debentures,
checks, drafts, and other orders for the payment of money. In addition, the
Board of Directors may expressly delegate such powers to any other officer or
agent of the corporation.
SECTION 5. Voting of Securities. Except as the directors may otherwise
designate, the President or Treasurer may waive notice of, and act as, or
appoint any person or persons to act as, proxy or attorney-in-fact for this
corporation (with or without power of
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substitution) at any meeting of stockholders or shareholders of any other
corporation or organization the securities of which may be held by this
corporation.
SECTION 6. Evidence of Authority. A certificate by the Secretary, or an
Assistant Secretary, or a temporary secretary, as to any action taken by the
stockholders, directors, a committee or any officer or representative of the
corporation shall, as to all persons who rely on the certificate in good faith,
be conclusive evidence of that action.
SECTION 7. Transactions with Interested Parties. No contract or
transaction between the corporation and one or more of the directors or
officers, or between the corporation and any other corporation, partnership,
association, or other organization in which one or more of the directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for that reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or a
committee of the Board of Directors which authorizes the contract or transaction
or solely because the vote of any such director is counted for such purpose, if:
(1) The material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board or; committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; or
(2) The material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee of the Board of Directors, or the stockholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
SECTION 8. Books and Records. The books and records of the corporation
shall be kept at such places within or without the State of Delaware as the
Board of Directors may from time to time determine.
ARTICLE VII
AMENDMENTS
SECTION 1. By the Board of Directors. These bylaws may be altered,
amended or repealed or new by-laws may be adopted by the affirmative vote of a
majority of the directors present at any regular or special meeting of the Board
of Directors at which a quorum is present.
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SECTION 2. By the Stockholders. These by-laws may be altered, amended
or repealed or new by-laws may be adopted by the affirmative vote of the holders
of a majority of the shares of the capital stock of the corporation issued and
outstanding and entitled to vote at any regular meeting of stockholders, or at
any special meeting of stockholders provided notice of such alteration,
amendment, repeal or adoption of new by-laws shall have been stated in the
notice of such special meeting.
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Exhibit 3.5
AMENDED AND RESTATED BY-LAWS
OF
EPIX MEDICAL, INC.
ARTICLE I
STOCKHOLDERS
SECTION 1. Place of Meetings. All meetings of stockholders
shall be held at such place within or without the State of Delaware as may be
designated from time to time by the Board of Directors or, if not so designated,
at the principal office of the corporation.
SECTION 2. Annual Meeting. The annual meeting of stockholders
for the election of directors and the transaction of such other business as may
properly come before the meeting shall be held on such date and at such hour and
place as the directors or an officer designated by the directors may determine.
If the annual meeting is not held on the date designated therefor, the directors
shall cause the meeting to be held as soon thereafter as convenient.
SECTION 3. Special Meetings. Special meetings of the
stockholders may be called at any time by the President or the Board of
Directors.
SECTION 4. Notice of Meetings. Except where some other notice
is required by law, written notice of each meeting of stockholders, stating the
place, date and hour thereof and the purposes for which the meeting is called,
shall be given by or under the direction of the Secretary, not less than ten nor
more than sixty days before the date fixed for such meeting, to each stockholder
entitled to vote at such meeting of record at the close of business on the day
fixed by the Board of Directors as a record date for the determination of the
stockholders entitled to vote at such meeting or, if no such date has been
fixed, of record at the close of business on the day before the day on which
notice is given. Notice shall be given personally to each stockholder or left at
his or her residence or usual place of business or mailed postage prepaid and
addressed to the stockholder at his or her address as it appears upon the
records of the corporation. In case of the death, absence, incapacity or refusal
of the Secretary, such notice may be given by a person designated either by the
Secretary or by the person or persons calling the meeting or by the Board of
Directors. A waiver of such notice in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent to such notice. Attendance of a person at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders need be
<PAGE>
specified in any written waiver of notice. Notice of any meeting of the
stockholders shall be deemed to have been given to any person who may become a
stockholder of record after the mailing of such notice and prior to such
meeting. Except as required by statute, notice of any adjourned meeting of the
stockholders shall not be required.
SECTION 5. Stockholder Nominations of Directors. Only persons who are
nominated in accordance with the following procedures shall be eligible for
election as directors at any annual or special meeting. Nominations of persons
for election as directors may be made by or at the direction of the Board of
Directors, or by any stockholder entitled to vote for the election of directors
at the meeting who complies with the notice procedures set forth in this Section
5. Such nominations, other than those made by or at the direction of the Board,
shall be made pursuant to timely notice in writing to the Chairman, if any, the
President, the Secretary or the Treasurer. To be timely, a stockholder's notice
shall be delivered to or mailed and received at the principal executive offices
of the corporation not less than 50 days nor more than 75 days prior to the
meeting; provided, however, that if less than 65 days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be so received not later than the close of
business on the 15th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Such stockholder's
notice shall set forth: (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a director, (i) the name, age, business
address and residence address of the person, (ii) the principal occupation or
employment of the person, (iii) the class and number of shares of capital stock
of the corporation which are beneficially owned by the person and (iv) any other
information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended; and (b) as to the
stockholder giving the notice (i) the name and record address of such
stockholder and (ii) the class and number of shares of capital stock of the
corporation which are beneficially owned by such stockholder. No person shall be
eligible for election as a director at any annual or special meeting of
stockholders unless nominated in accordance with the procedures set forth
herein. Nothing in this Section 5 shall be deemed to grant stockholders the
right have such nominations included on the agenda or in the notice or proxy
materials for such meeting except as otherwise required by law.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
SECTION 6. Record Date. The Board of Directors may fix in
advance a record date for the determination of the stockholders entitled to
notice of or to vote at any meeting of stockholders, or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purpose of any other lawful action. Such record date shall
not be more than 60 nor less than 10 days before the date of such meeting, nor
more than 60 days prior to any other action to which such record date relates.
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If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day before the day on which notice is given,
or, if notice is waived, at the close of business on the day before the day on
which the meeting is held. The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating to such purpose. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 7. Advance Notice of Stockholder-Proposed Business at Annual
Meetings. At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be brought
properly before an annual meeting, business must be either (a) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the President or the Board of Directors, (b) otherwise properly brought before
the meeting by or at the direction of the Board or (c) otherwise properly
brought before the meeting by a stockholder. In addition to any other applicable
requirements, for business to be brought properly before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Chairman, if any, the President, the Secretary or the Treasurer. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the corporation not less than 50 days nor
more than 75 days prior to the meeting; provided, however, that if less than 65
days' notice or prior public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must be so received
not later than the close of business on the 15th day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made. A stockholder's notice shall set forth as to each matter
the stockholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and record address of the stockholder proposing such business, (iii) the class
and number of shares of the corporation which are beneficially owned by the
stockholder and (iv) any material interest of the stockholder in such business.
Notwithstanding anything in these by-laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 6, provided, however, that nothing in this
Section 6 shall be deemed to preclude discussion by any stockholder of any
business properly brought before the annual meeting in accordance with said
procedure; provided, further, that nothing in this Section 6 shall be deemed to
grant stockholders the right have such business included on the agenda or in the
notice or proxy materials for such meeting except as otherwise required by law.
The chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 6, and if
he should so determine, he shall so declare to the meeting and any such business
not properly brought before the meeting shall not be transacted.
SECTION 8. Voting List. The officer who has charge of the
stock ledger of the corporation shall make or have made, at least ten days
before every meeting of stockholders,
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a complete list of the stockholders, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the name
of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city or other municipality or community where the meeting is to be
held, which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list required by this section or the books of the
corporation, or to vote at any meeting of stockholders.
SECTION 9. Quorum of Stockholders. At any meeting of the
stockholders, the holders of a majority in interest of all stock issued and
outstanding and entitled to vote upon a question to be considered at the
meeting, present in person or represented by proxy, shall constitute a quorum
for the consideration of such question, but a smaller group may adjourn any
meeting from time to time. When a quorum is present at any meeting, a majority
of the stock represented thereat and entitled to vote shall, except where a
larger vote is required by law, by the Certificate of Incorporation, or by these
by-laws, decide any question brought before such meeting. Any election by
stockholders shall be determined by a plurality of the vote cast by the
stockholders entitled to vote at the election.
SECTION 10. Proxies and Voting. Unless otherwise provided in
the Certificate of Incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock held of record by such stockholder, but no proxy shall be voted or
acted upon after three years from its date, unless said proxy provides for a
longer period. Persons holding stock in a fiduciary capacity shall be entitled
to vote the shares so held, and persons whose stock is pledged shall be entitled
to vote, unless in the transfer by the pledger on the books of the corporation
the pledgee shall have been expressly empowered to vote thereon, in which case
only the pledgee or the pledgee's proxy may represent said stock and vote
thereon. Shares of the capital stock of the corporation belonging to the
corporation or to another corporation, a majority of whose shares entitled to
vote in the election of directors is owned by the corporation, shall neither be
entitled to vote nor be counted for quorum purposes.
SECTION 11. Conduct of Meeting. Meetings of the stockholders
shall be presided over by one of the following officers in the order of
seniority and if present and acting: the President, a Vice President, the
Chairman of the Board, if any, the Vice Chairman of the Board, if any, or, if
none of the foregoing is in office and present and acting, a chairman to be
chosen by the stockholders. The Secretary of the corporation, if present, or an
Assistant Secretary, shall act as secretary of every meeting, but if neither the
Secretary nor an Assistant Secretary is present the chairman of the meeting
shall appoint a secretary of the meeting.
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ARTICLE II
DIRECTORS
SECTION 1. General Powers. The business and affairs of the
corporation shall be managed by or under the direction of a Board of Directors,
who may exercise all of the powers of the corporation which are not by law or
the Certificate of Incorporation required to be exercised by the stockholders.
In the event of a vacancy in the Board of Directors, the remaining directors,
except as otherwise provided by law, may exercise the powers of the full Board
until the vacancy is filled.
SECTION 2. Number, Election, Tenure and Qualification. Subject
to any restrictions contained in the Certificate of Incorporation, the number of
directors that shall constitute the Board of Directors shall be fixed by
resolution of the Board of Directors but in no event shall be less than three.
Directors shall be elected in the manner provided in the Certificate of
Incorporation by such stockholders as have the right to vote thereon. The number
of directors may be increased or decreased by action of the Board of Directors.
Directors need not be stockholders of the corporation.
SECTION 3. Enlargement of the Board. Subject to the
restrictions contained in the Certificate of Incorporation, the number of the
Board of Directors may be increased at any time, such increase to be effective
immediately, by vote of a majority of the directors then in office.
SECTION 4. Vacancies. Unless and until filled by the
stockholders, any vacancy in the Board of Directors, however occurring,
including a vacancy resulting from an enlargement of the Board and an unfilled
vacancy resulting from the removal of any director for cause, may be filled in
the manner provided in the Certificate of Incorporation. When one or more
directors shall resign from the Board, effective at a future date, a majority of
the directors then in office, including those who have so resigned, shall have
the power to fill such vacancy or vacancies, the vote thereon to take effect
when such resignation or resignations shall become effective. If at any time
there are no directors in office, then an election of directors may be held in
accordance with the General Corporation Law of the State of Delaware.
SECTION 5. Resignation. Any director may resign at any time
upon written notice to the corporation. Such resignation shall take effect at
the time specified therein, or if no time is specified, at the time of its
receipt by the President or Secretary.
SECTION 6. Removal. Directors may be removed from office only
as provided in the Certificate of Incorporation. The vacancy or vacancies thus
created may be filled by the stockholders at the meeting held for the purpose of
removal or, if not so filled, by the directors in the manner provided in Section
4 of this Article II.
SECTION 7. Committees. The Board of Directors may, by
resolution or resolutions passed by a majority of the whole Board of Directors,
designate one or more committees, each committee to consist of one or more
directors of the corporation. The Board
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of Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of any member of such
committee or committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not such member or members
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of such absent or disqualified
member.
A majority of all the members of any such committee may fix its rules
of procedure, determine its action and fix the time and place, whether within or
without the State of Delaware, of its meetings and specify what notice thereof,
if any, shall be given, unless the Board of Directors shall otherwise by
resolution provide. The Board of Directors shall have the power to change the
members of any such committee at any time, to fill vacancies therein and to
discharge any such committee, either with or without cause, at any time.
Any such committee, unless otherwise provided in the resolution of the
Board of Directors, or in these by-laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; but no such committee shall have
such power or authority in reference to amending the Certificate of
Incorporation, adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending a dissolution of the corporation
or a revocation of a dissolution, or amending the By-laws of the corporation,
and, unless the resolution or these By-laws expressly so provide, no such
committee shall have the power or the authority to declare a dividend or to
authorize the issuance of stock.
Each committee shall keep regular minutes of its meetings and make such
reports as the Board of Directors may from time to time request.
SECTION 8. Meetings of the Board of Directors. Regular
meetings of the Board of Directors may be held without call or formal notice at
such places either within or without the State of Delaware and at such times as
the Board may by vote from time to time determine. A regular meeting of the
Board of Directors may be held without call or formal notice immediately after
and at the same place as the annual meeting of the stockholders, or any special
meeting of the stockholders at which a Board of Directors is elected.
Special meetings of the Board of Directors may be held at any place
either within or without the State of Delaware at any time when called by the
Chairman of the Board of Directors, the President, Treasurer, Secretary, or two
or more directors. Reasonable notice of the time and place of a special meeting
shall be given to each director unless such notice is waived by attendance or by
written waiver in the manner provided in these by-laws for waiver of notice by
stockholders. Notice may be given by, or by a person designated by, the
Secretary, the person or persons calling the meeting, or the Board of Directors.
No notice of any adjourned meeting of the Board of Directors shall be required.
In any case it shall be deemed sufficient notice to a director to send notice by
mail at least seventy-two hours, or by telegram at least forty-eight hours,
before the meeting, addressed to such director at his or her usual or last known
business or home address.
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Directors or members of any committee designated by the directors may
participate in a meeting of the Board of Directors or such committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation by
such means shall constitute presence in person at such meeting
SECTION 9. Quorum and Voting. A majority of the total number
of directors shall constitute a quorum, except that when a vacancy or vacancies
exist in the Board, a majority of the directors then in office (but not less
than one-third of the total number of the directors) shall constitute a quorum.
A majority of the directors present, whether or not a quorum is present, may
adjourn any meeting from time to time. The vote of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors, except where a different vote is required or permitted by
law, by the Certificate of Incorporation, or by these by-laws.
SECTION 10. Compensation. The Board of Directors may fix fees
for their services and for their membership on committees, and expenses of
attendance may be allowed for attendance at each meeting. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity as an officer, agent or otherwise, and
receiving compensation therefor.
SECTION 11. Action Without Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting, and without notice, if a
written consent thereto is signed by all members of the Board of Directors, or
of such committee, as the case may be, and such written consent is filed with
the minutes of proceedings of the Board of Directors or such committee.
ARTICLE III
OFFICERS
SECTION 1. Titles. The officers of the corporation shall
consist of a President, a Secretary, a Treasurer, and such other officers with
such other titles as the Board of Directors shall determine, including without
limitation a Chairman of the Board, a Vice Chairman of the Board, and one or
more Vice Presidents, Assistant Treasurers, or Assistant Secretaries.
SECTION 2. Election and Term of Office. The officers of the
corporation shall be elected annually by the Board of Directors at its first
meeting following the annual meeting of the stockholders. Each officer shall
hold office until his or her successor is elected and qualified, unless a
different term is specified in the vote electing such officer, or until his or
her earlier death, resignation or removal.
SECTION 3. Qualification. Unless otherwise provided by
resolution of the Board of Directors, no officer, other than the Chairman or
Vice Chairman of the Board, need be a director. No officer need be a
stockholder. Any number of offices may be held by the same person, as the
directors shall determine.
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SECTION 4. Removal. Any officer may be removed, with or
without cause, at any time, by resolution adopted by the Board of Directors.
SECTION 5. Resignation. Any officer may resign by delivering a
written resignation to the corporation at its principal office or to the
President or Secretary. Such resignation shall be effective upon receipt or at
such later time as may be specified therein.
SECTION 6. Vacancies. The Board of Directors may at any time
fill any vacancy occurring in any office for the unexpired portion of the term
and may leave unfilled for such period as it may determine any office other than
those of President, Treasurer and Secretary.
SECTION 7. Powers and Duties. The officers of the corporation
shall have such powers and perform such duties as are specified herein and as
may be conferred upon or assigned to them by the Board of Directors, and shall
have such additional powers and duties as are incident to their office except to
the extent that resolutions of the Board of Directors are inconsistent
therewith.
SECTION 8. President and Vice Presidents. The President shall
be the chief executive officer of the corporation, shall preside at all meetings
of the stockholders and the Board of Directors unless a Chairman or Vice
Chairman of the Board is elected by the Board, empowered to preside, and present
at such meeting, shall have general and active management of the business of the
corporation and general supervision of its officers, agents and employees, and
shall see that all orders and resolutions of the Board of Directors are carried
into effect.
In the absence of the President or in the event of his or her inability
or refusal to act, the Vice President if any (or in the event there be more than
one Vice President, the Vice Presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. The Board of Directors may assign to any Vice President the title of
Executive Vice President, Senior Vice President or any other title selected by
the Board of Directors.
SECTION 9. Secretary and Assistant Secretaries. The Secretary
shall attend all meetings of the Board of Directors and of the stockholders and
record all the proceedings of such meetings in a book to be kept for that
purpose, shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board of Directors, shall maintain a
stock ledger and prepare lists of stockholders and their addresses as required
and shall have custody of the corporate seal which the Secretary or any
Assistant Secretary shall have authority to affix to any instrument requiring it
and attest by any of their signatures. The Board of Directors may give general
authority to any other officer to affix and attest the seal of the corporation.
The Assistant Secretary if any (or if there be more than one, the
Assistant Secretaries in the order determined by the Board of Directors of if
there be no such determination, then in the order of their election) shall, in
the absence of the Secretary or in the event of the
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Secretary's inability or refusal to act, perform the duties and exercise the
powers of the Secretary.
SECTION 10. Treasurer and Assistant Treasurers. The Treasurer
shall have the custody of the corporate funds and securities, shall keep full
and accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the Board of Directors. The Treasurer shall disburse the funds of the
corporation as may be ordered by the Board of Directors or the President, taking
proper vouchers for such disbursements, and shall render to the President and
the Board of Directors, at its regular meetings, or whenever they may require
it, an account of all transactions and of the financial condition of the
corporation.
The Assistant Treasurer if any (or if there be more than one, the
Assistant Treasurers in the order determined by the Board of Directors or if
there be no such determination, then in the order of their election) shall, in
the absence of the Treasurer or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the Treasurer.
SECTION 11. Bonded Officers. The Board of Directors may
require any officer to give the corporation a bond in such sum and with such
surety or sureties as shall be satisfactory to the Board of Directors upon such
terms and conditions as the Board of Directors may specify, including without
limitation a bond for the faithful performance of the duties of such officer and
for the restoration to the corporation of all property in his or her possession
or control belonging to the corporation.
SECTION 12. Salaries. Officers of the corporation shall be
entitled to such salaries, compensation or reimbursement as shall be fixed or
allowed from time to time by the Board of Directors.
ARTICLE IV
STOCK
SECTION 1. Certificates of Stock. One or more certificates of
stock, signed by the Chairman or Vice Chairman of the Board of Directors or by
the President or Vice President and by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary, shall be issued to each stockholder
certifying, in the aggregate, the number of shares owned by the stockholder in
the corporation. Any or all signatures on any such certificate may be
facsimiles. In case any officer, transfer agent or registrar who shall have
signed or whose facsimile signature shall have been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he or she were such officer, transfer agent or registrar at the date of
issue.
Each certificate for shares of stock which are subject to any
restriction on transfer pursuant to the Certificate of Incorporation, the
by-laws, applicable securities laws, or any
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agreement among any number of stockholders or among such holders and the
corporation shall have conspicuously noted on the face or back of the
certificate either the full text of the restriction or a statement of the
existence of such restriction.
SECTION 2. Transfers of Shares of Stock. Subject to the
restrictions, if any, stated or noted on the stock certificates, shares of stock
may be transferred on the books of the corporation by the surrender to the
corporation or its transfer agent of the certificate representing such shares
properly endorsed or accompanied by a written assignment or power of attorney
properly executed, and with such proof of authority or the authenticity of
signature as the corporation or its transfer agent may reasonably require. The
corporation shall be entitled to treat the record holder of stock as shown on
its books as the owner of such stock for all purposes, including the payment of
dividends and the right to vote with respect to that stock, regardless of any
transfer, pledge or other disposition of that stock, until the shares have been
transferred on the books of the corporation in accordance with the requirements
of these by-laws.
SECTION 3. Lost Certificates. A new certificate of stock may
be issued in the place of any certificate theretofore issued by the corporation
and alleged to have been lost, stolen, destroyed, or mutilated, upon such terms
in conformity with law as the Board of Directors shall prescribe. The directors
may, in their discretion, require the owner of the lost, stolen, destroyed or
mutilated certificate, or the owner's legal representatives, to give the
corporation a bond, in such sum as they may direct, to indemnify the corporation
against any claim that may be made against it on account of the alleged loss,
theft, destruction or mutilation of any such certificate, or the issuance of any
such new certificate.
SECTION 4. Fractional Share Interests. The corporation may,
but shall not be required to, issue fractions of a share. If the corporation
does not issue fractions of a share, it shall (1) arrange for the disposition of
fractional interests by those entitled thereto, (2) pay in cash the fair value
of fractions of a share as of the time when those entitled to receive such
fractions are determined or (3) issue scrip or warrants in registered or bearer
form which shall entitle the holder to receive a certificate for a full share
upon the surrender of such scrip or warrants aggregating a full share. A
certificate for a fractional share shall, but scrip or warrants shall not unless
otherwise provided therein, entitle the holder to exercise voting rights, to
receive dividends thereon, and to participate in any of the assets of the
corporation in the event of liquidation. The Board of Directors may cause scrip
or warrants to be issued subject to the conditions that they shall become void
if not exchanged for certificates representing full shares before a specified
date, or subject to the conditions that the shares for which scrip or warrants
are exchangeable may be sold by the corporation and the proceeds thereof
distributed to the holders of scrip or warrants, or subject to any other
conditions which the Board of Directors may impose.
SECTION 5. Dividends. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of funds legally
available therefor, at any regular or special meeting, declare dividends upon
the common stock of the corporation as and when they deem expedient.
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ARTICLE V
INSURANCE
SECTION 1. Indemnification. The corporation shall, to the full
extent permitted by the General Corporation Law of the State of Delaware, as
amended from time to time, the Certificate of Incorporation, and any agreement
of the Corporation, indemnify each person whom it may indemnify pursuant
thereto.
SECTION 2. Insurance. The corporation shall have power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against such person and incurred by such person
in any such capacity or arising out of such person's status as such, whether or
not the corporation would have the power to indemnify such person against such
liability under the provisions of the General Corporation Law of the State of
Delaware.
ARTICLE VI
GENERAL PROVISIONS
SECTION 1. Fiscal Year. Except as otherwise designated from
time to time by the Board of Directors, the fiscal year of the corporation shall
begin on the first day of January and end on the last day of December.
SECTION 2. Corporate Seal. The corporate seal shall be in such
form as shall be approved by the Board of Directors. The Secretary shall be the
custodian of the seal. The Board of Directors may authorize a duplicate seal to
be kept and used by any other officer.
SECTION 3. Certificate of Incorporation. All references in
these by-laws to the Certificate of Incorporation shall be deemed to refer to
the Certificate of Incorporation of the corporation, as in effect from time to
time.
SECTION 4. Execution of Instruments. The Chairman and Vice
Chairman of the Board of Directors, if any, the President, any Vice President,
and the Treasurer shall have power to execute and deliver on behalf and in the
name of the corporation any instrument requiring the signature of an officer of
the corporation, including deeds, contracts, mortgages, bonds, notes,
debentures, checks, drafts, and other orders for the payment of money. In
addition, the Board of Directors may expressly delegate such powers to any other
officer or agent of the corporation.
SECTION 5. Voting of Securities. Except as the directors may
otherwise designate, the President or Treasurer may waive notice of, and act as,
or appoint any person or persons to act as, proxy or attorney-in-fact for this
corporation (with or without power of
- 11 -
<PAGE>
substitution) at any meeting of stockholders or shareholders of any other
corporation or organization the securities of which may be held by this
corporation.
SECTION 6. Evidence of Authority. A certificate by the
Secretary, or an Assistant Secretary, or a temporary secretary, as to any action
taken by the stockholders, directors, a committee or any officer or
representative of the corporation shall, as to all persons who rely on the
certificate in good faith, be conclusive evidence of that action.
SECTION 7. Transactions with Interested Parties. No contract
or transaction between the corporation and one or more of the directors or
officers, or between the corporation and any other corporation, partnership,
association, or other organization in which one or more of the directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for that reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or a
committee of the Board of Directors which authorizes the contract or transaction
or solely because the vote of any such director is counted for such purpose, if:
(1) The material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; or
(2) The material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee of the Board of Directors, or the stockholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
SECTION 8. Books and Records. The books and records of the
corporation shall be kept at such places within or without the State of Delaware
as the Board of Directors may from time to time determine.
ARTICLE VII
AMENDMENTS
SECTION 1. By the Board of Directors. These by-laws may be
altered, amended or repealed or new by-laws may be adopted by the affirmative
vote of a majority of
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<PAGE>
the directors present at any regular or special meeting of the Board of
Directors at which a quorum is present.
SECTION 2. By the Stockholders. These by-laws may be altered,
amended or repealed or new by-laws may be adopted by the affirmative vote of the
holders of a majority of the shares of the capital stock of the corporation
issued and outstanding and entitled to vote at any regular meeting of
stockholders, or at any special meeting of stockholders provided notice of such
alteration, amendment, repeal or adoption of new by-laws shall have been stated
in the notice of such special meeting.
- 13 -
[Front] Exhibit 4.1
INCORPORATED UNDER THE LAWS OF THE
STATE OF DELAWARE
NUMBER SHARES
EPIX MEDICAL INC.
COMMON STOCK COMMON STOCK
THIS CERTIFICATE IS TRANSFERABLE IN BOSTON, MA AND NEW YORK, NY
CUSIP
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK OF EPIX Medical, Inc.
(herein called the "Corporation") transferable upon the books of the
Corporation in person or by attorney upon surrender of this certificate duly
endorsed or assigned. This certificate and the shares represented hereby are
subject to the laws of The Commonwealth of Massachusetts and to the Certificate
of Incorporation of the Corporation as now or hereafter amended, as to all of
which the holder of this certificate assents by acceptance hereof.
This certificate is not valid unless countersigned by the Transfer Agent
and registered by the Registrar.
IN WITNESS WHEREOF OF, __________________ has caused its facsimile
corporate seal and the facsimile signatures of its duly authorized officers
to be hereunto affixed.
Dated:
[Seal] ___________________ ___________________
TREASURER PRESIDENT
COUNTERSIGNED AND REGISTERED: FIRST NATIONAL BANK OF BOSTON (BOSTON)
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
AMERICAN BANK NOTE COMPANY
<PAGE>
[Reverse Side]
EPIX MEDICAL, INC.
THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OR SERIES OF
STOCK. A COPY OF THE PREFERENCES, POWERS, QUALIFICATIONS AND RIGHTS OF EACH
CLASS AND SERIES WILL BE FURNISHED BY THE CORPORATION UPON WRITTEN REQUEST
AND WITHOUT CHARGE.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-_______Custodian______
TENANT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right under Uniform Gifts to Minors
of survivorship and not as Act_________________
tenants in common (State)
Additional abbreviations may also be used through not in the above list.
For value received, _______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
--------------------
| |
| |
--------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE
OF ASSIGNEE
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
____________________________________________________________________Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _______________________________________
__________________________________________________________________________
Attorney to transfer the said stock on the books of the within-named
corporation with full power of substitution in the premises.
Dated, __________________
___________________________
SIGNATURE(S) GUARANTEED:__________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
NOTICE: The signature to this agreement must correspond with the name as
written upon the face of the Certificate, in every particular, without
alternation or enlargement, or any change whatever.
Exhibit 5.1
PALMER & DODGE LLP
One Beacon Street
Boston, MA 02108
Telephone: (617) 573-0100 Facsimile: (617) 227-4420
December 10, 1996
EPIX Medical, Inc.
71 Rogers Street
Cambridge, Massachusetts 02142
We are rendering this opinion in connection with the Registration
Statement on Form S- 1 (the "Registration Statement") filed by EPIX Medical,
Inc. (the "Company") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, on or about the date hereof. The
Registration Statement relates to up to 2,300,000 shares of the Company's Common
Stock, $0.01 par value (the "Shares"). We understand that the Shares are to be
offered and sold in the manner described in the Registration Statement.
We have acted as your counsel in connection with the preparation of the
Registration Statement. We are executed familiar with the unanimous written
consents of the Board of Directors dated November 29, 1996 and December 10, 1996
in connection with the authorization, issuance and sale of the Shares (the
"Resolutions"). We have examined such other documents as we consider necessary
to render this opinion.
Based upon the foregoing, we are of the opinion that the Shares have
been duly authorized and, when issued and delivered by the Company against
payment therefor at the price to be determined pursuant to the Resolutions, will
be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as a part of the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus filed as part thereof.
Very truly yours,
/s/ Palmer & Dodge LLP
Palmer & Dodge LLP
Exhibit 10.1
AGENCY AGREEMENT
This Agreement, entered into this 13th day of March, 1992 by the between :
METASYN INC. a corporation duly organized and existing under the laws of
Delaware and having its principal office of business at 272, Marlborough
St.-Suite 2F, Boston, Massachusetts 02116 (hereinafter referred to as
"Company"),
and :
SUMITOMO CORPORATION
corporation duly organized and existing under the laws of Japan and having its
principal office of business at 3-11-1 Kandanishiki-cho, Chiyoda-ku, Tokyo,
Japan (hereinafter referred to as "Agent"),
WITNESSETH THAT :
Whereas, Company is the owner of certain technology as hereinafter defined, in
connection with the manufacture and sale of Products as hereinafter defined, and
Whereas, Company is interested in entering into Arrangements as hereinafter
defined, with companies for the manufacture, distribution and sale in Territory
as hereinafter defined of Products, and
Whereas, Agent is in a position to assist Company in entering into such
Arrangements and thereafter assisting Company in the administration of such
Arrangements as well as providing other related services, and
<PAGE>
Whereas, Agent is desirous of obtaining the rights to do the said business on
the terms and conditions set forth below, Now Therefore, it is hereby agreed as
follows :
Article 1 : Definitions
The following terms as used in this Agreement shall, unless the context clearly
indicates to the contrary, have the meanings set forth in this Article and the
singular shall include the plural and vice versa :
1.1. "Product" means the products, listed on Appendix 1, which Company has the
right to develop manufacture and commercialize.
1.2. "Technology" means
a) all scientific, technical, medical, commercial and other confidential
information and know-how
b) all patents, and applications for patents owned and/or controlled by
Company including, without limitation, patents listed on Appendix 2
and licensed by Massachusetts General Hospital ("MGH") that Company
considers necessary for developing, manufacturing and commercializing
the Products and for obtaining Government approvals for proper
manufacture and promotion of the Product.
1.3. "Arrangements" means option agreement, license agreement, research and
development agreement in connection therewith or joint venture with or
equity participation or investment in Company relating to the manufacture,
distribution, and sale of Products in Territory or any other arrangement or
transaction relating to the Products of similar nature thereto.
-2-
<PAGE>
1.4. "Raw Materials" means the raw materials or active ingradients of the
Product insofar that they are used in the manufacture of the Product.
1.5. "Territory" means Japan.
1.6. "Partner" means any third party headquartered in the Territory and its
subsidiaries or affiliates wherever located.
Article 2 : Appointment
Company hereby appoints Agent, and Agent agrees to act, as an exclusive agent
for the Products with Partner upon the terms and conditions set forth
hereinafter.
Article 3 : Privity
Agent shall not be authorized to conclude any contract on Company's behalf, and
shall not make any representation, warranty, promise or any other act binding
Company. It is confirmed and agreed that in any event Company shall at its sole
discretion determine whether or not to enter into any Arrangement with Partners
and that Agent shall not be responsible for any liabilities, damage or other
claims whatsoever arising in connection with any Arrangement or contents or
performance thereof to which Agent is not a party, including without limitation,
infringement of patent or other intellectual property right, product liability,
warranty, and performance of the Arrangements by Partners. Company shall
indemnity and hold Agent harmless from and against all suits, claims, demands,
damages, costs and expenses which are made against or incurred by Agent with
respect to the Arrangement or contents or performance thereof, to which Agent is
not a party, including, without limitation, infringement of patent or other
intellectual property right, product liability, warranty, and performance of the
Arrangement.
-3-
<PAGE>
Article 4 : Scope of Services
During the life of this Agreement, Agent shall :
a) use its best efforts to find appropriate Partners with which Company
will enter into Arrangements,
b) assist Company in negotiation on any Arrangements which will be made
between Company and Partners,
c) coordinate closely with Partners to obtain and maintain any necessary
registrations and approvals of Products required from Health or other
authorities in Territory,
d) assist Company in obtaining information, if deemed necessary and
specifically requested by Company, as to laws, regulations and
policies having the force of law in Territory applicable to the
conduct of business pursuant to this Agreement, as well as to
Arrangements which Company have concluded with Partners to the extent
available and practicable to Agent, and
e) provide Company with reports concerning the above matters as may from
time to time be reasonably required by Company.
Article 5 : Expenses
Unless otherwise expressly provided herein, all costs and expenses of Agent and
any third parties utilized by Agent in performing its service hereunder shall be
borne solely by Agent, and Company shall be required to make no payments to
Agent other than those expressly agreed by Company.
-4-
<PAGE>
Article 6 : Exclusivity
Company shall refer to Agent any inquiry or offer concerning Product which
Company may receive from a person or firm in Territory, and Company shall not
enter into Arrangements through other channel than Agent.
Article 7 : Compensation on hepatobiliary MRI agent
7.1 In consideration for the services to be rendered by Agent hereunder,
Company shall pay a commission of [ ]* on [ ]*, and [ ]* on [ ]*. Company
shall pay the commission to Agent within thirty (30) days after the date
on which Company receives the [ ]*.
7.2 Notwithstanding the provisions of the preceeding article 7.1, in case by
April 15, 1992 Company enters into any Arrangements for hepatobiliary MRI
agent with any Partner pursuant to which Company would be entitled to
receive more than [ ]* within one (1) year from the date of conclusion of
an agreement for such Arrangements, Company shall pay a commission of [ ]*
of [ ]* under such Arrangements.
7.3 For all sales of Product of hepatobiliary MRI agent or Raw Materials
therefor by Company to Partners, Company shall pay Agent a [ ]*
commission (calculated on [ ]* value).
*Confidential information omitted and filed with the Commission.
-5-
<PAGE>
Article 8 : Compensation on blood pool MRI agent
8.1 In consideration for the services to be rendered by Agent hereunder,
Company shall pay a commission of [ ]* on [ ]*. Company shall pay the
commission to Agent within thirty (30) days after the date on which
Company receives the [ ]*.
8.2 Notwithstanding the provisions of the preceeding article 8.1, in case by
the end of September, 1993 Company enters into any Arrangements for blood
pool MRI agent with any Partner pursuant to which Company would be entitled
to receive more than [ ]* within one (1) year from the date of conclusion
of an agreement for such Arrangements, Company shall pay a commission of
[ ]* of [ ]* and [ ]* of [ ]* under such Arrangements.
8.3 For all sales of Products of blood pool MRI agent or Raw Materials therefor
by Company to Partners, Company shall pay Agent a [ ]* commission
(calculated on [ ]* value).
Article 9 : Intellectual Property
Company hereby represents and warrants that Company has the right to use the
Technology including, without limitation, patents or patent applications with
respect to the products listed on Appendix 2.
*Confidential information omitted and filed with the Commission.
-6-
<PAGE>
Article 10 : Confidentiality
During the term of this Agreement and for a period of seven (7) years
thereafter, Agent shall take the maximum precautions to (i) keep strictly
confidential all and any part of Technology furnished to it hereunder by
Company, and (ii) prevent its employees to whom it is necessary to disclose all
and any part of Technology for the performance of this Agreement from disclosing
or devulging said Technology, except when, after and to the extent such
Technology;
(i) is or hereafter becomes available to the public through no fault
of Agent and licensees,
(ii) was known to Agent prior to date of such disclosure
(iii) is subsequently disclosed to Agent on a non-confidential basis
by a third party not having a confidential relationship to
Company,
(iv) is forced to be disclosed by laws, regulations or orders of the
public authorities. 10.2 Each of the parties shall keep in strict
confidence from any third party any and all matters concerning
the business affairs and transactions covered by this Agreement,
except such matters as are forced to be disclosed by laws,
regulations or orders of government authorities. The obligation
hereunder shall survive the termination or expiration of this
Agreement.
Article 11 : Term
11.1 The initial contracted period of this Agreement shall be three (3) years
from the date of signature on this Agreement, provided that the parties
hereto may discuss on a two (2) years extention of this Agreement prior to
the termination of this Agreement.
-7-
<PAGE>
11.2 Notwithstanding any provision herein contrary to this paragraph of this
Article, Agent's right to receive compensation pursuant to Article 7 and 8
hereof shall survive effectively the termination of this Agreement so long
as Arrangements contemplated herein and concluded during the term of this
Agreement and one (1) year thereafter remain in force and running royalties
and other sums are paid by Partners. Company further agrees to pay
commission to Agent in accordance with Article 7 and 8 hereof if Company
enters into Arrangements with Partners with regard to the Products within
one (1) year after the termination of this Agreement if such Partner was
introduced by Agent to Company with regard to the Products during the life
of this Agreement.
11.3 Notwithstanding any provision herein contrary to this Agreement, Agent
shall have the right to receive the compensation with respect to sale of
Products and Raw Materials pursuant to Article 7.3 and 8.3 after the
termination of this Agreement if the sale of the Products or Raw Materials
is made based on or related to the Arrangement concluded during the term of
this Agreement and one (1) year thereafter.
Article 12 : Termination
12.1 This Agreement may be terminated by either party at any time upon the
occurrence of a material breach by the other party of any of the terms and
conditions hereof which breach remains uncured for a period of thirty (30)
days after the date of receipt of written notice from the non-breaching
party advising of the nature of such breach.
12.2 Either party hereto shall further have the right to terminate this
Agreement forthwith by written notice to the other party in the event that
such other party shall be adjudicated bankrupt, become insolvent, make any
assignment for the benefit of its creditors, have its assets placed in the
hands of receiver, file or have filed against it a petition in bankruptcy,
or be dissolved or liquidated.
-8-
<PAGE>
12.3 This Agreement may be terminated with immediate effect if the parties
hereto unanimously so resolve.
Article 13 : Step after Termination
Immediately upon termination of this Agreement Agent shall return to Company
original copies and all reproductions of Technology furnished by Company under
this Agreement.
Article 14 : Severability
This Agreement shall be severable, and in the event any portion hereof is
declared or deemed to be illegal or invalid by any court, regulatory agency or
any body having jurisdiction or competence, the remainder hereof shall remain
valid and enforceable according to its terms unless written notice to the
contrary is given by one party hereto to the other within thirty (30) days after
the receipt by such party giving the notice of such declaration or
determination.
Article 15 : Arbitration
All disputes, controversies or differences which may arise between the parties
hereto, out of or in relation to or in connection with this Agreement, or the
breach thereof which cannot be settled amicably shall be finally settled by
arbitration in Boston pursuant to the most recent Japan-American Trade
Arbitration Agreement.
Article 16 : Governing Law
This Agreement shall be construed in accordance with and governed by the laws of
Massachusetts, USA.
-9-
<PAGE>
Article 17 : Waiver
The failure of either Agent or Company to require performance of any provision
of this Agreement or the waiver by either party of any breach of such a
provision shall not prevent a subsequent enforcement of nor be deemed a waiver
of any subsequent breach of such provision.
Article 18 : Assignment
This Agreement shall be binding upon and shall inure to the benefit of each
party's successors, heirs and assigns, provided that neither this Agreement nor
any rights or obligations hereunder may be assigned, pledged or otherwise
transferred, in whole or in part, by either party without the prior written
consent of the other party.
Article 19 : Force Majeure
Neither party shall be liable to the other for failure or delay in the
performance of any of its obligations under this Agreement for the time and to
the extent such failure or delay is caused by riots, civil commotions, wars
(declared or undeclared), hostilities between nations, governmental laws, orders
or regulations, embargoes, actions by the government or any agency thereof, Act
of God, storms, fires, accidents, strikes, sabotages, explosions, or other
similar or different contingencies beyond the reasonable control of the
respective parties. If, as a result of legislation or governmental action, any
party or parties are precluded from receiving any benefit to which they are
entitled hereunder, the parties hereto shall review the terms of this Agreement
so as to use their best efforts to restore the party or parties to the same
relative position as previously obtained hereunder.
-10-
<PAGE>
Article 20 : Notices
20.1 All notices herein provided for may be given by personal delivery or by
registered airmail return receipt requested, addressed to the parties at
their above principal office of business.
20.2 The parties may change said addresses for notice by delivering notice of
change of address in the manner provided in this Article.
Article 21 : Sole Understanding
This Agreement supersedes and cancels any and all previous agreements,
understandings or negotiations, whether oral or written, between the parties
relating to the subject matter of this Agreement and expresses the complete and
final agreement of the parties in respect hereof. The Agreement may only be
amended by a written agreement executed by both the parties hereto.
Article 22 : Headings
The headings of articles used in this Agreement are inserted for convenience of
reference only and shall not affect the interpretation of the respective
articles of this Agreement.
Article 23 : Language
This Agreement has been executed in two (2) copies with equal force and effect
in English language. No translation into other language shall be taken into
consideration in the interpretation of this Agreement.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed and
sealed by their duly authorized officer or representative as of the date first
above written.
METASYN INC. SUMITOMO CORPORATION
By /s/ Randall B. Lauffer By /s/ T. Yoshikawa
Name: Randall B. Lauffer Name: Takahiro Yoshikawa
Title: Chairman and Title: Assistant to General Manager
Chief Scientific Officer
New Drug & Biochemicals
Development Dept.
Date: March 13, 1992 Date: March 13, 1992
-12-
<PAGE>
Appendix 1
o Hepatobiliary Magnetic Resonance Imaging (MRI) Agent
o Blood Pool Magnetic Resonance Imaging (MRI) Agent
-13-
<PAGE>
Appendix 2
1) U.S. Ser. No. 731,841 filed May 8, 1985 (now U.S. Patent No. 4,899,755) for
"Hepatobiliary NMR Contrast Agents" Randall B. Lauffer and Thomas J. Brady,
Inventors
2) U.S. Ser. No. 860,540 filed May 7, 1986 (now U.S. Patent 4,880,000) for "In
Vivo Enhancement of NMR Relaxivity," Randall B. Lauffer, Inventor
3) [ ]*
*Confidential information omitted and filed with the Commission.
-14-
Exhibit 10.2
AMENDMENT
METASYN INC.("METASYN") and SUMITOMO CORPORATION ("SUMITOMO") hereby agree that
the parties shall amend the Article 8.2 of the AGENCY AGREEMENT dated on 13th of
March, 1992 (the "Original Agreement") as follows:
l. Amendment
Article 8 of the Original Agreement is amended by modifying paragraph 2
to read as follows :
Notwithstanding the provisions of the preceeding article 8.1, in
case by the end of March, 1994 Company enters into Arrangements
for blood pool MRI agent with any Partner pursuant to which
Companv would be entitled to receive more than [ ]* within one
(l) year from the date of conclusion of an agreement for such
Arrangements, Company shall pay a commission of [ ]* of [ ]* and
[ ]* and [ ]* of [ ]* received by Company under such
Arrangements.
2. Effect of Amendment
The amendments to the Orinial Agreement hereby made shall become
effective from June 26, 1992 ,and be applied to all transactions made
or to be made on or after such date. Except as specificaily provided
herein, the Original Agreement, as amended hereby, remains in full
force and effect, and each refernce to "hereby","hereof" and words of
similar import shall refer to the Original Agreement as amended hereby.
3. Definitions
All terms used herein, except as defined herein, shall have the
meanings ascribed in the Original Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
by their duly authorized representatives as of the day and year first above
written.
METASYN INC. SUMITOMO CORPORATION
BY:/s/ Randall B. Lauffer By/s/ T. Yoshikawa
------------------------- ------------------------------
Name: Randall B. Lauffer Name: T.Yoshikawa
Title: Chairman and CEO Title: Assistant to
General Manager
New Drug & Biochem.
Development Dept.
Date: June 26, 1992 Date: June 23
*Confidential information omitted and filed with the Commission
Exhibit 10.3
SHORT FORM
LEASE
TRUSTEES OF THE CAMBRIDGE EAST TRUST
TO
METASYN, INC.
AT
71 AND 75 ROGERS STREET, CAMBRIDGE, MASSACHUSETTS
<PAGE>
Table of Contents
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<TABLE>
<CAPTION>
Section Page
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<S> <C> <C>
1. REFERENCE DATA 1
SIGNATURES 3
SECRETARY'S CERTIFICATE 4
LIST OF EXHIBITS 5
2. PREMISES 6
2.1 Premises 6
2.2 Deleted 6
2.3 Appurtenant Rights 6
2.4 Landlord's Reservations 6
3. COMMENCEMENT AND TERM OF LEASE 7
3.1 Condition and Delivery of Premises 7
3.2 Habendum 7
3.3.1.d Tenant's Right to Cancel 8
3.3 Entry Prior to Commencment Date 7
3.4 Tenant's Option to Extend Term 9
3.5 Tenant's Right of Refusal as to
79 Rogers Street 11
3.6 Tenant's Option to Add Premises at
69 Rogers Street 11
3.7 Time Limits on Exercise of Rights under
Section 3.5 and 3.6 11
4. PREPARATION OF PREMISES 12
4.1 Tenant's Work 12
5. USE OF PREMISES 14
5.1 Permitted Uses 15
5.2 Prohibited Uses 15
5.3 Licenses and Permits 15
5.4 Signs 15
6. RENT 15
6.1 Annual Fixed Rent 16
6.2 Additional Rent; Taxes and Operating Expenses 18
6.2.1 Billing of Taxes and Operating Expenses 19
ii
<PAGE>
Section Page
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6.2.2 Definition of Operating Expenses 21
6.2.3 Certain Excluded Charges 23
6.3 Late Charges 24
6.4 Security Deposit 24
7. ALLOCATION OF BUILDING SERVICES 24
7.1 Landlord's Duties 24
7.2 Tenant's Duties 24
7.3 Tenant to Pay for All Utilities 25
7.4 Deleted 25
7.4.1 Repairs for Account of Tenant 25
7.5 Curtailed Services 25
7.6 Payment for Tenant's Work 25
8. TENANT'S ADDITIONAL COVENANTS 26
8.1 Compliance with Law, Including Hazardous
Substances 26
8.2 Indemnity 28
8.3 Tenant's Property is Tenant's Risk 29
8.4 Estoppel Certificate 29
8.5 Overloading, Nuisance, Restrictions on
Research Activities; Volatile or Dangerous
Substances 29
8.6 Yield Up 30
8.6.1 What are Intended to be Fixtures 30
8.7 Alterations and Improvements by Tenant
After Term Commencement 31
8.8 Flood Load; Heavy Machinery 31
8.9 Assignment and Subletting 31
8.10 Landlord's Access to Premises 33
8.11 Construction Activity 34
8.12 Tenant's Financial Statements 34
9. INSURANCE 34
9.1 Public Liability Insurance 34
9.2 Casualty Insurance 35
9.3 Certificates of Insurance 35
9.4 Landlord's Insurance 35
iii
<PAGE>
Section Page
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9.5 Waiver of Subrogation 36
9.6 Increase in Insurance Risk 36
10. DAMAGE TO PREMISES AND CONSEQUENCES OF
EMINENT DOMAIN 36
10.1 Repair and Restoration of Casualty Loss 36
10.2 Abatement of Rent 37
10.3 Termination for Major Damage or If Damaged
at End of Term 37
10.4 Eminent Domain 39
11. DEFAULT AND REMEDIES 40
11.1 Events of Default 40
11.2 Deleted 42
11.3 Damages - Termination 42
11.4 Effect of Tax and Operating Payments
on Damages 43
11.5 Landlord's Expense in Performing
Obligations of Tenant 44
11.6 Landlord's Remedies Not Exclusive 44
11.7 Landlord's Default 45
11.8 Effect of Waivers of Default 45
11.9 Deleted 45
11.10 No Accord and Satisfaction 45
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Section Page
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12. SUBORDINATION 45
12.1 Subordination 45
13. HOLDING OVER 46
13.1 Holding Over 46
14. MISCELLANEOUS PROVISIONS 48
14.1 Notices 48
14.2 Quiet Enjoyment 48
14.3 Limitation of Landlord's Liability 48
14.4 Acts of God 49
14.5 Applicable Law and Construction 49
14.6 Arbitration 49
14.7 Timely Performance 50
14.8 No Broker 50
14.9 Financing Requirements 50
14.10 Agreement Made Only When Lease Signed 50
14.11 Demolition 50
14.12 Deleted 51
14.13 No Parking 51
EXHIBITS 52-61
</TABLE>
v
<PAGE>
LEASE
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1. REFERENCE DATA
Each reference in this Lease to the following subjects shall be construed
to incorporate the data for that subject stated in Section 1.
DATE: As of July 1, 1992
PREMISES: The premises shown on Exhibit 1 containing
approximately 2,500 square feet located in the 2,500
square foot building known as and numbered 71 Rogers
Street, Cambridge, Massachusetts and the premises
shown on Exhibit 2 containing approximately 5,000
square feet located in the 5,000 square foot building
known as and numbered 75 Rogers Street, Cambridge,
Massachusetts (collectively, the Building)
LANDLORD: Bruce A. Beal and Robert L. Beal, Trustees of The
Cambridge East Trust, under declaration of trust
dated June 1, 1983 recorded with the South Middlesex
Registry of Deeds, Book 15067, Page 392 and
registered with the South Middlesex Registry District
of the Land Court as Document 641740 noted on
Certificate of Title 168090, Book 970, Page 140, as
Trustees and not individually.
ORIGINAL ADDRESS OF LANDLORD:
c/o Beal and Company, Inc.
177 Milk Street
Boston, Massachusetts 02109
TENANT: Metasyn, Inc., a Delaware corporation
ORIGINAL ADDRESS OF TENANT:
71 Rogers Street
Cambridge, MA
TERM: 5 years, 2 months
EXTENSION OPTION: See section 3.6
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REFUSAL RIGHTS: See section 3.5
COMMENCEMENT DATE: November 1, 1992
TERMINATION DATE: December 31, 1997
ANNUAL FIXED RENT: None - 11/01/92 through 12/31/92
$ 60,000 - 01/01/93 through 12/31/93
$ 67,500 - 01/01/94 through 12/31/94
$ 75,000 - 01/01/95 through 12/31/95
$ 82,500 - 01/01/96 through 12/31/96
$ 90,000 - 01/01/97 through 12/31/97
MONTHLY PAYMENT: $ 5,000 - 01/01/93 through 12/31/93
$ 5,625 - 01/01/94 through 12/31/94
$ 6,250- 01/01/95 through 12/31/95
$ 6,875 01/01/96 through 12/31/96
$ 7,500 01/01/97 through 12/31/97
TENANT'S PERCENTAGE OF
OPERATING EXPENSES: 100 %
TAX BASE: None
PERMITTED USES: Office, laboratory use and ancillary animal
space to the extent permitted by applicable
law, and no other use.
SECURITY DEPOSIT:
Except as provided in the following paragraph, the security deposit
shall be $100,000, which at Tenant's election may be paid (a) in cash
or (b) in an unconditional, irrevocable letter of credit drawn to
Landlord's order on a financial institution satisfactory to Landlord
which expires not earlier than December 31, 1993 and which shall be
renewed (or replaced with an equivalent letter of credit) on or before
November 1 of each year through and including November 1, 1996 (and
annually thereafter until November 1, 2001 in the event the Term is
extended under Section 3.4).
On the condition that Tenant has incurred no defaults (whether or not
subsequently cured or waived) in the payment of Annual Fixed Rent and
all items of additional rent continuing
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beyond any applicable cure or grace periods, and (b) on the further
condition that Tenant is not then in default beyond applicable cure or
grace periods of any other obligation under the Lease, the security
deposit will be reduced to $75,000 on November 1, 1993, to $50,000 on
November 1, 1994, and to $25,000 on November 1, 1995. In the event the
security deposit is in cash, the reduction will be implemented by the
Landlord's refund of the appropriate amount on demand of the Tenant. In
the event the security deposit is being funded by letter of credit, the
reduction may be implemented by Tenant's tendering a replacement letter
of credit on terms identical to the original letter of credit, in each
case ending not sooner than December 31 of the following year, for the
reduced amount, which shall be exchanged for the letter of credit then
held by Landlord. Tenant's right to receive the reductions of the
security deposit specified above is a privilege conditioned upon
Tenant's satisfying the conditions stated above.
BROKER: Lynch, Murphy, Walsh & Partners
SIGNATURES
LANDLORD: TENANT:
Bruce A. Beal and Robert L. Beal,
Trustees as aforesaid
and not individually
By: Beal and Company, Inc. Metasyn, Inc.
Managing Agent
By: /s/ By: /s/ Randall B. Lauffer
------------------------------- ------------------------------
Randall B. Lauffer
its its president
hereunto duly authorized hereunto duly authorized
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SECRETARY'S CERTIFICATE
I, Peter K. Wirth, Assistant Secretary of Metasyn, Inc., hereby certify
that the following is a true copy of a resolution of the Board of Directors
of this corporation adopted by unanimous written consent, dated June 29,
1992, and that such resolution has not been revoked, amended or modified
and is in full force and effect:
Voted: That the President be and hereby is authorized singly, to execute
and deliver on behalf of this corporation a lease between the Trustees of
The Cambridge East Trust, as landlord, and this corporation, as tenant, for
approximately 7,500 rentable square feet of space in the landlord's
buildings located at 71 and 75 Rogers Street, Cambridge, Massachusetts,
with certain rights to lease additional space in the landlord's buildings
at 69 and 79 Rogers Street , Cambridge, for such rent and upon such terms
as the signing officer shall determine to be necessary, desirable or
appropriate, the signature of the President on such lease and any notice of
such lease to be conclusive evidence of the approval thereof by this vote.
This is to certify further that as of the date hereof, Randall Lauffer is
the President of this corporation.
This is to certify further that the execution and performance by this
corporation of the lease described in the forgoing vote will not contravene
or violate the Charter and Bylaws of this corporation.
/s/ Peter Wirth
-----------------------------
Assistant Secretary
Dated: July 6, 1992
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LIST OF EXHIBITS
Exhibit 1 - Floor Plan of Premises at 71 Rogers Street
Exhibit 2 - Floor Plan of Premises at 75 Rogers Street
Exhibit 3 - Tenant's Work
Exhibit 4 - Floor Plan of Premises at 79 Rogers Street
Exhibit 5 - Reference Data for 79 Rogers Street
Exhibit 6 - Floor Plan of Premises at 69 Rogers Street
Exhibit 7 - Reference Data for 69 Rogers Street
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2. PREMISES
2.1 Premises. The Premises are shown on the Floor Plan (Exhibit 1)
attached hereto and comprise the entire Building in which each
is located. Such Building, together all the Buildings now
or hereafter containing Premises are referred to collectively
as the "Building".)
2.2 Deleted.
2.3 Appurtenant Rights. Subject to Landlord's rules, Tenant shall
have, as appurtenant to any Premises which are less than all
the Building in which Premises are located, rights to use in
common with others entitled thereto: (a) the common lobbies and
hallways, if any, of the Building; and (b) any common toilets
and other common facilities, if any.
Tenant has exclusive rights to use the entire Building at 71
Rogers Street and 75 Rogers Street, except that Landlord reserves
the right to use the restrooms at 71 Rogers as common facilities
for 69 Rogers Street. If and when the premises at 69 Rogers Street
are occupied by a person other than Tenant, Landlord shall
erect doors (or construct walls and separate bathrooms) so that
Tenant's Premises are not accessible to such other person.
2.4 Landlord's Reservations. Landlord reserves (a) access to the
Premises for inspection and repair on prior notice and during
Tenant's business hours; and (b) any space in the Premises used
for shafts, stacks, pipes, conducts, wires and appurtenant
fixtures, ducts, electrical wiring, sinks or other facilities
which serve the Building. Access and repair shall be done in a
manner designed to reasonably minimize interference with Tenant's
use of the Premises. Landlord reserves the right to alter existing
patterns of vehicular traffic flow in the vicinity of the Building
including, without limitation, reduction or elimination of
vehicular flow (other than delivery and other service vehicles) on
Rogers Street.
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3. COMMENCEMENT AND TERM OF LEASE
3.1 Condition and Delivery of Premises. The Premises are leased to
Tenant in their existing condition without warranty or
representations except as stated in this Lease. Landlord shall
deliver possession on the Commencement Date. If Landlord is unable
to do so because a prior tenant or occupant retains possession,
Landlord shall incur no liability thereto nor shall such failure
affect the validity of this Lease except that Annual Fixed Rent
and all other amounts due from Tenant shall be abated pro rata as
to the area not delivered until possession of the occupied space
is delivered to Tenant.
Landlord represents that the HVAC system(s) in the Premises will
be in good working order at the commencement of the TERM. (This is
not an implied warranty in any respect.)
Tenant acknowledges that at the time of execution of this Lease,
Tenant is in full possession of the portion of the Premises
located at 71 Rogers Street. Upon the occurrence of the
Commencement Date hereunder, Tenant's status as a tenant-at-will
automatically terminated.
3.2 Habendum. To have and to hold the Premises for the Term
commencing on the Commencement Date and ending on the Termination
Date or such earlier date upon which said term may expire
or be terminated pursuant to this Lease or pursuant to law
(collectively the "Termination Date").
3.3 Entry Prior to Commencement Date.: Landlord agrees to notify
Tenant if Landlord becomes aware that the present occupant of the
Premises, Organogenesis, Inc. has vacated or will vacate
materially before October 31, 1992. With Landlord's prior written
consent, Tenant may, at its sole risk, enter the Premises prior to
the Commencement Date without payment of rent but otherwise under
the terms of this Lease; but notwithstanding any provision in the
Lease to the contrary, for the first sixty (60) days after
Tenant's entry. Tenant shall be entitled to occupy the Premises
"rent free" commencing
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<PAGE>
sixty-one (61) days after Tenant's entry. Tenant shall pay use and
occupancy until December 31, 1992 at the rate set forth for annual
Fixed Rent for 1993 plus all taxes, operating expenses and other
additional rent for the use and occupancy period.
3.3.1 Tenant's Right to Cancel. If Landlord has not delivered
possession of substantially all the Premises to Tenant by February
28, 1993, Tenant may at any time thereafter until such possession
is delivered send Landlord notice of Tenant's intent to cancel
this Lease (the "Termination Intent Notice"). If Landlord has not
delivered possession as aforesaid within ten (10) days after
receiving the Termination Intent Notice, Tenant may at any time
thereafter until such possession is delivered elect to terminate
this Lease by notice to Landlord so stating (the "Termination
Notice"). Such termination shall be effective on the later of 1)
the date stated in the Termination Notice or 2) the date Tenant
vacates all the portions of the Premises accepted by Tenant, but
such termination shall not be effective unless Tenant so vacates
within ten (10) days of the Termination Notice.
3.4 Tenant's Option to Extend Term. In the event this Lease is in full
force and effect without notice of default to Tenant or, if such
notice of default has been given, Tenant is acting promptly and
diligently to cure the same and applicable grace periods, if any,
have not expired, and the original Tenant or any successor Tenant
to whom the original Tenant can transfer its interest under this
Lease by right and without Landlord's consent pursuant to Section
8.9 (the "Successor Tenant") holds the entire tenant's interest
hereunder and is in occupancy of the Premises and engaged in the
active conduct of its business, the original Tenant or such
Successor Tenant, as the case may be, may extend the initial Term
for one period of five (5) years from the Termination Date on the
terms and conditions of this lease (except for Annual Fixed Rent,
which shall be determined as follows), by giving at least twelve
(12) months prior written notice thereof to Landlord, and
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<PAGE>
thereafter all references in this Lease to the Term shall also
include the Term as extended.
At Tenant's written request made at least thirty (30) days prior
to the last day for Tenant to exercise the extension option under
section 3.4 (but not more than sixty (60) days prior thereto),
Landlord agrees to state in writing the fair market rent to which
Landlord would agree for the extended Term ("Landlord's Rent
Statement"). If Tenant makes such request, then the last day on
which Tenant may exercise its option to extent the term shall be
the later of (i) the date set forth above or (ii) ten (10)
business days after receiving Landlord's Rent Statement.
Notwithstanding the foregoing, Annual Fixed Rent for the extended
Term shall be established as set forth in section 6.1.
3.5 Tenant's Right of Refusal as to 79 Rogers Street. In the event
this Lease is in full force and effect without notice of default
to Tenant or, if such notice of default has been given, Tenant is
acting promptly and diligently to cure the same and applicable
grace periods, if any, have not expired, and the original Tenant
or the Successor Tenant holds the entire Tenant's interest
hereunder and is in occupancy of all Premises then included in the
Lease and engaged in the active conduct of its business, the
original Tenant or the Successor Tenant, as the case may be, shall
have a right of refusal to lease 5,000 square feet of space at 79
Rogers Street, Cambridge, Massachusetts shown on Exhibit 4
attached to this Lease (the "Refusal Premises") in their then
existing condition with no obligation in Landlord with regard to
altering or improving the condition thereof (except as stated in
Section 4.1, which shall apply to the Refusal Premises) for a term
beginning not more than four (4) months after the date of
Landlord's Refusal Premises Notice (or on March 1, 1993 if later)
and ending on the Termination Date (as it may be extended) on the
terms and conditions
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<PAGE>
stated on Exhibit 5 and otherwise on all the terms and conditions
of this Lease (including, but not limited, to Tenant's obligation
to pay all Taxes and Operating Expenses with respect thereto);
except that the amount Landlord shall pay for Tenant's
Improvements to the Refusal Premises shall be $85,000 multiplied
by a fraction, the numerator of which is the number of days from
the Commencement Date on the Refusal Premises to the original
Termination Date and the denominator of which is One Thousand
Eight Hundred Twenty Six (1,826).
The right of refusal shall be exercised as follows (but in no
other way).
If, during the initial Term, the Refusal Premises are proposed to
be leased, Landlord shall so notify Tenant in writing ("Landlord's
Refusal Premises Notice"). Landlord's Refusal Premises Notice
shall state the date on which the Refusal Premises would be added
to the Premises under this Lease (or, if that date is uncertain,
may state the earliest date the Refusal Premises could be added to
the Premises under this Lease) and shall be given not sooner than
forty-five (45) days before such date. Tenant shall have the right
to lease the Refusal Premises on the terms and conditions stated
above if (but only if) (1) Tenant gives Landlord written notice of
its intention to do so within fifteen (15) calendar days of
receipt of Landlord's Refusal Premises Notice and (2) executes and
delivers to Landlord, within ten (10) business days of receipt
thereof, the amendment adding the Refusal Premises to this Lease
on the terms and conditions stated above, and Tenant's failure to
do either of these acts within the time stated (time being of the
essence as stated in Section 14.7) shall terminate Tenant's right
to lease the Refusal Premises under this Section 3.5 if Landlord
leases the Refusal Premises to any person within twelve (12)
months following the last day Tenant could have exercised the
refusal rights; and otherwise, subject to Section 3.7, Tenant's
right to lease the Refusal Premises shall apply to the next
proposed lease and shall be exercised as stated in this Section
3.5.
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<PAGE>
3.6 Tenant's Option to Add Premises at 69 Rogers Street. In the event
this Lease is in full force and effect without notice of default
to Tenant or, if such notice of default has been given, Tenant is
acting promptly and diligently to cure the same and applicable
grace periods, if any, have not expired, and the original Tenant
or the Successor Tenant holds the entire Tenant's interest
hereunder and is in occupancy of all Premises then included in the
Lease and engaged in the active conduct of its business, the
original Tenant or the Successor Tenant, as the case may be, shall
have the option to add the Premises comprising 2,500 square feet
located at and known as 69 Rogers Street as shown on Exhibit 6
(the "Expansion Premises") for a term ending on the Termination
Date, as it may be extended, in their then existing condition with
no obligation to the Landlord with regard to altering or improving
the condition thereof (except as stated in Section 4.1 which shall
apply to the Expansion Premises) on the terms and conditions
stated in Exhibit 7 hereto and on all the other terms and
conditions of this Lease; except that the amount Landlord shall
pay for the Tenant's Improvements to the Expansion Premises shall
be Forty Two Thousand Five Hundred Dollars ($42,500) multiplied
by a fraction, the numerator of which is the number of days from
the Commencement Date for the Expansion Premises to the original
Termination Date and the denominator of which is One Thousand
Eight Hundred Twenty Six (1,826). Tenant shall exercise its
right to add the Expansion Premises to the Premises by giving
at least six (6) months' written notice to Landlord, and
thereafter all references in this Lease to the Premises shall
also include the Expansion Premises. The Commencement Date as
to the Expansion Premises shall be the date stated in the
Tenant's notice of exercise, and if none is stated, shall be
six (6) months from the date of Tenant's notice of exercise
(or such earlier date on which Tenant first occupies the
Expansion Premises for any use (including construction).
3.7 Time Limits on Exercise of Rights under Sections 3.5 and 3.6. No
exercise of Tenant's right of refusal under Section 3.5 as to 79
Rogers Street or Tenant's expansion
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right under Section 3.6 as to 69 Rogers Street shall be valid
unless exercised such that the term as to those Premises commences
on or before July 1, 1996; provided, however, that if Tenant has
validly exercised its right to extend the Term as to the original
Premises, then the notices required to exercise the aforesaid
refusal and expansion rights will be effective if received by
Landlord on or before December 31, 1996 (but not if received
later).
4. PREPARATION OF PREMISES
4.1 Tenant's Work; Landlord's Reimbursement.
---------------------------------------
Tenant agrees to perform at its sole expense, and Landlord hereby
consents to, the work described in Exhibit 3 ("Tenant's
Improvements") on the following terms and conditions:
(a) Prior to undertaking any work on the Premises, Tenant shall
obtain Landlord's approval of all plans for Tenant's
Improvements ("Tenant's Plans"). Landlord shall review
Tenant's Plans with Landlord's staff or, as to matters
which are in Landlord's sole judgment beyond the competence
of Landlord's staff to review unassisted, Landlord shall
engage an outside consultant to review Tenant's Plans at
Tenants sole cost and expense. Landlord agrees to approve
Tenant's Plans ( or specify in reasonable detail the
matters of which the Landlord does not approve) within
thirty (30) days of receiving a complete set of Tenant's
Plans. If Landlord fails to do so, and Tenant gives
Landlord written notice to that effect (the "Reminder
Notice"), then unless Landlord approves/ responds, as the
case may be, within two (2) business days of receiving
Tenant's Reminder Notice, Landlord shall be deemed to have
approved Tenant's Plans.
Landlord agrees to review and approve Tenant's Plans for 71
Rogers Street and 75 Rogers Street separately if so
requested by Tenant.
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(b) Upon receipt of Landlord's written approval of Tenant's
Plans, which approval may include such reasonable conditions
as Landlord deems necessary or appropriate (or Landlord's
deemed approval, as the case may be), Tenant may proceed, at
Tenant's sole cost and expense, with the Tenant's
Improvements as contemplated by Tenant's Plans approved in
writing by Landlord.
(c) Upon completion of Tenant's Improvements and all work
related thereto, and upon Landlord's receipt from Tenant of
satisfactory proof of payment for all Direct Construction
Costs of Tenant's Improvements, all related work and any
other costs which, in Landlord's judgment could result in a
statutory lien for labor and materials on the Building or
the Premises under applicable law, Landlord shall reimburse
Tenant for the Reimbursable Direct Construction Costs of
Tenant's Improvements, but in no event exceeding $127,500.
"Direct Construction Costs" shall be all actual direct
construction costs (i.e. so-called "hard costs") of all
Tenant's Improvements and all work related thereto.
"Reimbursable Direct Construction Costs" shall be limited to
the Direct Construction Costs of those Tenant's Improvements
which under the Lease become Landlord's property, and shall
specifically exclude, by way of example, all costs of
personal property and fixtures which Tenant is entitled to
remove from the Premises.
At Tenant's written request, Landlord will pay ninety
percent (90%) of the Reimbursable Direct Construction Costs
requisitioned as progress payments by Tenant's contractor on
the conditions that (1) Tenant is simultaneously paying all
other amounts due the contractor on such requisition and (2)
Landlord has had reasonable opportunity (if Landlord so
elects, but with no obligation to do so) to inspect the
contractor's work. In such case, Landlord shall pay the
balance of the Reimbursable Direct Construction Costs at
Tenant's written request, but not sooner than Tenant's
payment of all retainage to the contractor. Tenant's request
for any such payment shall constitute Tenant's
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<PAGE>
acknowledgment to Landlord that Tenant is not relying on
Landlord for any inspection or approval of work.
(d) Tenant shall perform no work in the Premises not shown on
Tenant's Plans as approved in writing by Landlord. Tenant
shall secure Landlord's prior written approval (not to be
unreasonably withheld or delayed) of the contractor(s) to do
Tenant's Improvements. All persons working in the Premises
in connection with Tenant's Improvements shall be covered by
workman's compensation satisfactory to Landlord.
Tenant shall indemnify and save harmless Landlord from all
costs, expenses, damages or losses sustained or claimed
against Landlord arising out of work done by Tenant or by
Landlord on Tenant's account in the Premises except to the
extent caused by Landlord's negligence or willful act,
including without implied limitation attorneys' fees, and on
Landlord's written request Tenant shall provide a copy of
Tenant's contractor's payment bond, or, at Tenant's option,
other evidence of the contractor's financial integrity
satisfactory to Landlord in Landlord's sole judgment. Tenant
shall promptly cause to be removed, by a lien bond if
necessary, any liens or notices or other claims of lien
against the Premises arising out of Tenant's Improvements or
other work performed by or on behalf of Tenant on the
Premises.
(f) Any special approvals for occupancy of the Premises,
municipal or otherwise, necessitated by the nature of the
Tenant's business or the like shall be the Tenant's sole
responsibility.
(g) This Section shall also apply to the Refusal Premises (79
Rogers Street) and the Expansion Premises (69 Rogers Street)
if added to this Lease, subject to the separate limits on
Landlord's reimbursement of Reimbursable Direct Construction
Costs of Tenant's Improvements set forth in Sections 3.5 and
3.6.
5. USE OF PREMISES
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5.1 Permitted Use. Tenant shall use the Premises only for the
purposes set forth in Section 1 and for no other purposes.
Tenant agrees always to use the Premises in accordance with the
requirements of the Cambridge Zoning Code and other applicable
law, and that Landlord has made no warranties on representations
with regard thereto.
5.2 Prohibited Uses. Without limiting the generality of Section 5.1,
Tenant shall not use any part of the Premises (a) in any manner
which would violate this Lease, (b) for any unlawful purpose, (c)
in any manner which in Landlord's judgment impairs the exterior
appearance or reputation of the Building or (d) in any manner
which impairs or interferes with Building services or the economic
heating of the Building, or which interferes with other tenants or
occupants of the Building. Tenant may not install coffee makers,
refrigerators, cooking equipment or other food-related equipment
in the Premises without Landlord's prior written consent, which
consent shall not be unreasonably withheld as to equipment
designed for Tenant's employees which requires no permits and no
construction or special venting.
All volatile, dangerous or harmful substances shall at all times
be stored in a secure area in a safe manner and always in
compliance with applicable law and government and insurance
requirements and guidelines.
5.3 Licenses and Permits. Tenant shall obtain at its expense all
licenses or permits required for the lawful conduct of Tenant's
business.
5.4 Signs. Tenant shall not place signs on the exterior of the
Building, in any window or in any common or public area without
the Landlord's prior written consent. Tenant's signs shall comply
with applicable law.
6. RENT
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6.1 Annual Fixed Rent. Tenant covenants and agrees to pay to Landlord
at the Original Address of Landlord, or such other place
as Landlord may by written notice to Tenant direct, Annual Fixed
Rent stated in section 1 in equal monthly installments on the
first day of each month during the Term and pro rata for any
partial month. The first payment shall be made on execution of
this Lease and shall be for the first full month for which full
rent is due plus any preceding partial month.
Annual Fixed Rent for the extended Term shall be established by
agreement between Landlord and Tenant and shall be ninety percent
(90%) of the fair market rent for the Premises (exclusive of Real
Estate Taxes and Operating Expenses) on or about the date the
extended Term begins (but in no event shall Annual Fixed Rent for
the extended Term be less than Annual Fixed Rent for the final
twelve months of the original Term). Fair market rent shall be the
highest Annual Fixed Rent (or schedule or formula of varying rents
and, including without limitation the net present value of
concessions, such as free rent periods, then typical in that
market) which willing tenants would pay to lease such area for the
term in question in a competitive and open market under terms and
conditions substantially the same as those of this Lease with such
area considered free and clear of this Lease and as though then
available for occupancy for any legal use in their then condition.
Rent historically paid under this Lease shall be disregarded in
determining fair market rent.
If, at Tenant's request, Landlord states in writing the fair
market rent Landlord would accept for the extended Term as set
forth in Section 3.4, and Tenant specifically accepts that rent in
its notice extending the Term, then that shall be the Annual Fixed
Rent for the extended Term. In all other cases, Annual Fixed Rent
shall be determined by subsequent agreement (or failing agreement,
by appraisers) as stated below.
If Landlord and Tenant have not agreed on such fair market rent in
writing by September 1, 1997, the fair market rate shall be
determined by appraisers, one to be
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chosen by Landlord, one to be chosen by Tenant and a third to be
selected by the first chosen if the first two cannot agree; or, at
Landlord's option, by a member of the American Society of Real
Estate Counselors experienced in first class urban office
buildings.
Landlord and Tenant shall each notify the other of its chosen
appraiser within thirty (30) days after the commencement of the
Term as to the Additional Premises and, unless those two
appraisers shall have reach a unanimous decision within
seventy-five (75) days from the end of that thirty (30) day
period, they shall within the following fifteen (15) days select a
third appraiser, notify Landlord and Tenant thereof and proceed
forthwith to decision. If Landlord elects to have the
determination made by a member of the American Society of Real
Estate Counselors, Landlord shall notify Tenant within thirty (30)
days after the commencement of such year of the name of the
Counselor chosen, and neither party shall have any further
obligation to select appraisers. If Tenant notifies Landlord with
in thirty (30) days of the date of Landlord's notice the Tenant
wants two (2) or if necessary three (3), such Counselors to act,
and includes in that notice the name of a second Counselor, then
Landlord shall so inform the original Counselor, and those two
Counselors shall proceed in the manner and on the schedule
specified herein for appraisers, including selecting a third
Counselor failing agreement of the two. Landlord and Tenant shall
each bear the expense of the appraiser/ Counselor chosen by it and
shall bear equally the expense of the third appraiser/Counselor
(if any) or of the sole Counselor if he or she acts alone. The
written decision of the sole Counselor, the unanimous written
decision of the two first appraiser/Counselors chosen, without
selection and participation of a third, or, if they do not agree,
the written decision of a majority of the three
appraisers/Counselors, as the case may be, shall be conclusive and
binding upon Landlord and Tenant.
Until Annual Fixed Rent for the extended Term is determined,
Tenant shall make payments of Annual Fixed
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Rent in the amount of Landlord's last offer subject to retroactive
adjustment, without interest, in conformity with and within thirty
(30) days of the determination of Annual Fixed Rent as set forth
in this Section.
6.2 Additional Rent; Taxes and Operating Expenses. Tenant agrees to
pay as additional rent for any period or portion thereof included
within the Term and in the manner stated in Section 6.2.1 (a)
Tenant's Share (defined below) of Real Estate Taxes (defined
below) and (b) Tenant's Percentage (defined in Section 1) of
Operating Expenses as defined in Section 6.2.2. Tenant shall pay
all increased taxes attributable to any improvement or alteration
in the Premises for the exclusive benefit of Tenant.
"Tenant's Share" shall mean (i) that percentage of Real Estate
Taxes allocated to land value by the City of Cambridge assessors
which the square footage of the Premises bears to the total square
footage of all buildings included within the same tax bill as the
Premises on January 1st of each year and (ii) the applicable tax
rate (a) applied to the assessment of the Premises most recently
determined by the City of Cambridge Assessors, and (b) if the
Assessor's valuations are not available, then applied to the
Premises' share of the value attributed to all buildings within
such tax bill allocated by Landlord among the Premises and such
other building(s) in Landlord's sole judgment. The term "Real
Estate Taxes" and "taxes" shall mean all taxes, assessments,
betterments, use fees and charges, sewer entrance fees and all
other public charges, (including so called "linkage payments"
required to be paid by Landlord) levied, assessed or imposed at
any time by any governmental authority or agreed or governmentally
imposed "in lieu of" or similar charges, upon or against the land
and Building(s) described in Section 1 and all other properties of
Landlord included in the same tax bill, and the land used for
parking by Landlord's tenants of Landlord's several properties in
the proximity of the Building (but Tenant's share shall not
include Real Estate Taxes to the extent Real Estate Taxes for such
land used for parking are included within the parking
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fees charged by Landlord for such parking), or in case of
assessment, betterment or other charges to improve services,
facilities, or other amenities in the vicinity of Landlord's said
properties, voluntarily accepted by Landlord.
Landlord represents that the present tax bill for the Premises
includes the buildings at 69 Rogers Street, 71 Rogers Street,
75 Rogers Street and 79 Rogers Street.
"Real estate taxes" shall not include taxes, assessments, etc.
on additional rental space constructed by Landlord unless there
is a corresponding reduction in "Tenant's Share".
6.2.1 Billing of Taxes and Operating expenses.
---------------------------------------
(a) Landlord will send Tenant a copy of the tax bill(s) and a
statement for Tenant's portion thereof, and Tenant will pay
Tenant's Share to Landlord within 10 days. Landlord reserves
the sole right to bring proceedings for abatement of taxes
and Tenant assigns Landlord all rights Tenant may now or
hereafter have with respect thereto, whether arising under
statute or by any other means.
Tenant shall pay 1/12th of Tenant's obligations for real
estate taxes on the first day of each month based on taxes
for the prior tax year so that Landlord shall have received
sufficient monthly payments at least 15 days before each
payment is due the taxing authority to make full payment of
such taxes when they are due, which funds Landlord may hold
in co-mingled accounts and without interest to Tenant. If
Tenant is late in any tax payment, Tenant shall pay Landlord
any interest required of Landlord by the taxing authority,
or if Landlord advances the Taxes, Tenant shall pay Landlord
interest as in Section 6.3.
If during the Term, under the laws of the United States,
Massachusetts, Middlesex County or Cambridge, or any other
governmental entity having
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jurisdiction, there shall be adopted some other method of
taxation upon or relating to the economic productivity of
real estate in addition, substitution or modification in
whole or in part for taxes on real estate as now levied in
Massachusetts including, by way of illustration and not
limitation, taxes on rent and increased or new fees for
municipal services, Tenant will pay such substitute or
modified taxes and fees as soon as the same shall become
due and payable. If the parties cannot agree whether such
taxes or fees are in fact in addition, substitution or
modification in whole or in part for taxes and fees on real
estate, as now levied, or on the extent to which Tenant
should bear the cost of such taxes and fees, the matter
shall be submitted to arbitration by the parties in
accordance with the provisions of Section 14.6.
Notwithstanding such submission, Tenant agrees to pay
Landlord such taxes and fees when and in the amount
demanded by Landlord, with refund to the Tenant, without
interest, of any amount determined by said arbitrators to
be in excess of Tenant's obligations under this Section
6.2.3. It is the parties' intent that Landlord's net
return of Annual Fixed Rent shall not be reduced by
changes in the methods or structure of taxing the economic
productivity of real estate and this clause shall be
interpreted to effect that result.
(b) Tenant shall incur in its own name and pay for all Operating
Expenses within the scope of its duties stated in Section 7.
To the extent that Landlord incurs any Operating Expenses
pursuant to its duties under Section 7, Tenant shall pay
such Operating Expenses on the first day of each month in a
monthly payment representing 1/12th of the annualized
Operating Expenses based on the Landlord's most recent
fiscal period.
Landlord from time to time shall furnish to Tenant, at such
interval as Landlord shall from time to time determine a
statement in reasonable detail of Operating Expenses
Sustained by Landlord during
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such fiscal period together with a computation of Tenant's
Percentage thereof and Tenant will pay Tenant's Percentage
within fourteen (14) days. Operating Expenses of the
Building are defined in Section 6.2.2.
Together with the last such payment of Operating Expenses
for any period, and on the first of each month until the
next statement, Tenant shall remit to Landlord one month's
portion of the Tenant's Percentage of Operating Expenses
incurred during the period just completed. If such monthly
remittances exceed Operating Expenses for the period, Tenant
may credit the difference against the next installment of
Operating Expenses due to Landlord. If such remittances are
less than the Operating Expenses for such period, Tenant
shall pay the difference to Landlord when Operating Expenses
are payable as provided in the preceding paragraph. Landlord
may change the fiscal period as Landlord desires.
6.2.2 Definition of Operating Expenses. "Operating Expenses" shall
mean (i) all amounts of whatever nature incurred by Landlord or
Tenant in connection with the operation, management, repair and
replacement not involving casualty loss (to which Article 10
applies), and maintenance of the Building and (ii) the Building's
pro rata share (apportioned by building area as determined by
Landlord among the building and the properties referenced below)
of all amounts of whatever nature incurred by Landlord in
connection with the operation, management, repair and replacement
of the grounds surrounding the Building and Landlord's other
properties in the proximity of the Building as determined by
Landlord in its sole discretion and of the parking facilities
serving Landlord's several properties in the proximity of the
Building. For example, Operating Expenses include charges for
water and other public facilities, insurance (including, without
limitation, casualty, liability and other insurance against such
risks and in such amounts as Landlord, in its sole discretion,
shall determine or as may be required by any mortgagee), exterior
maintenance of the
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Building; snow removal, sidewalk maintenance and repair and
maintenance of the grounds, shrubs, trees and other landscaping of
Landlord's other properties near the Building; security service,
if any; compensation of personnel providing service to the
Building; the costs of maintaining assessed value referenced in
Section 6.2.1 and a management fee at competitive rates. Operating
Expenses pursuant to subsection (ii) above are in the nature of
common expenses and shall be allocated among Landlord's several
properties in the proximity of the Building according to leasable
building area or such other equitable basis as Landlord shall
determine. Operating Expenses do not include mortgage charges,
brokerage commissions, executive (owner) salaries, Landlord's cost
of work done for a particular tenant for which Landlord is
reimbursed by such tenant and such portion of expenditures as are
not properly chargeable against income. If, during the Term,
Landlord in replacement of items makes capital expenditures in
replacement of items not fully incredible in Operating Expense for
the year in which made, there shall be included in Operating
Expenses for each year the amount, if any, by which the annual
charge-off (determined as hereinafter provided) of such
expenditure (less insurance proceeds, if any, collected by
Landlord by reason of damage to, or destruction of, the capital
item being replaced) exceeds the annual charge-off of the original
cost of such item; and (ii) if a capital expenditure is made for a
new capital item not in replacement of another capital item,
provided such capital expenditure is appropriate to prudent
management of real property or is of direct benefit to Tenant,
then Operating Expenses shall include in each fiscal year
thereafter the annual charge-off of such capital expenditure.
Annual charge-off shall be determined by dividing the original
cost of a capital item or expenditure by the useful life (in
years) of the capital item acquired. Landlord will determine
useful life in accordance with generally accepted accounting
principles.
In no event shall Operating Expenses include:
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(1) repairs or other work occasioned by fire or other casualty
or by the exercise of eminent domain.
(2) leasing commissions, attorney's fees, costs and
disbursements and other expenses incurred in connection
with negotiations or disputes with tenants, other
occupants, or prospective tenants or occupants.
(3) costs for which Landlord can be reimbursed by insurance,
warranties, or similar sources;
(4) renovating or otherwise improving, decorating, painting
or redecorating space for tenants or other occupants of
the properties.
(5) Landlord's cost of electricity and other services that are
sold to specific tenants (as distinguished from most or
all tenants in Landlord's properties in the environs of
the Premises) and for which Landlord is entitled to be
reimbursed by such tenants as an additional charge.
(6) any fines or penalties incurred due to violations by
Landlord of any governmental rule or authority.
If Landlord sustains any expense hereunder by reason of misuse or
neglect of the Premises, the Building, the grounds near Landlord's
other properties in the vicinity of the Building or driveways and
parking areas by Tenants of the Building or driveways and parking
areas by Tenant, or its agents, employees and invitees, such cost
shall not be Operating Expenses and Tenant shall reimburse
Landlord fully on demand for all such expenses as additional rent.
6.2.3 Certain Excluded Charges. Tenant shall not be required to pay any
franchise, corporate, estate, inheritance, succession, capital
levy, or transfer tax of Landlord, or any income tax imposed in
respect of Landlord's income from the Premises (as distinguished
from an excise tax upon rentals, which shall be Tenant's
obligation).
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6.3 Late Charges. Rent and additional rent not paid within thirty
(30) days of the due date shall bear interest at the annual rate
of 2% over the Base Rate of the First National Bank of Boston (or
any lower maximum rate permitted by law) from the date first due
until paid.
6.4 Security Deposit. During such time as the Security Deposit is a
cash deposit, Tenant shall deposit and maintain with Landlord the
Security Deposit which Landlord may commingle with Landlord's
other funds without interest to Tenant. The Security Deposit shall
be returned to Tenant at the expiration of this Lease upon
Tenant's written request, provided Tenant has not breached this
Lease. Landlord in its discretion may apply the Security Deposit
in total or partial satisfaction of any default by Tenant existing
beyond any applicable notice, grace or cure period, without
affecting or waiving any other rights or remedies.
7. ALLOCATION OF BUILDING SERVICES
7.1 Landlord's Duties. Within a reasonable period after Landlord has
received notice of the need thereof, Landlord shall repair the
exterior walls (but not interior surfaces thereof or window
glass), structural interior walls (but not the surfaces thereof or
glass therein), any other structural elements of the Building and
the roof of the Premises, and shall repair, or replace if
necessary, utilities exterior to the Building. Landlord's duty of
repair shall not extend to reasonable wear and tear. (Article 10
governs casualty or taking).
7.2 Tenant's Duties. Except as specifically herein otherwise provided,
Tenant shall keep the Premises, including all non-structural
elements, and as to Tenant's obligations under Section 8.1, the
Premises and areas in the vicinity thereof, in the same good
order, repair and condition as they are in on the Commencement
Date, or by improvements may be put in during the Term, reasonable
use and wear and damage by fire or other casualty damage by taking
and damage resulting from any failure of Landlord to perform its
obligations only excepted, including, for example, floors, doors,
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windows, glass, interior wall surfaces, fixtures and equipment in
the Premises, heating, air conditioning, plumbing, sprinkler
system, electrical and mechanical fixtures and equipment, and the
air, water and soil in, under and in the vicinity of the Premises.
Tenant shall keep the Premises safe, orderly and clean, including
rug shampoos and waxing of tile floors.
7.3 Tenant to Pay for All Utilities. Tenant will contract, in its own
name, and pay for all utility services, including without
limitation, water, electricity and heating, ventilation and air
conditioning. Landlord shall not be liable to Tenant for
interruption in or curtailment of any utility service. If any
utilities are not separately metered, Tenant shall pay a pro rata
share, based on use as determined by Landlord or at Landlord's
option according to Tenant's Percentage of Operating Expenses.
7.4 Deleted.
7. 4.1 Repairs for Account of Tenant. If, after written notice, or
after oral notice which is reasonable under the circumstances,
Tenant fails to do needed repairs promptly, Landlord may, at
Tenant's expense, make any such repairs without waiving any right
or remedy for Tenant's failure to make such repairs.
7.5 Curtailed Services. If any of Landlord's services are curtailed by
any reason or cause beyond Landlord's reasonable control, there
shall be no abatement of rent or other compensation due to
Landlord, nor shall Tenant's obligations hereunder be reduced.
7.6 Payment for Tenant's Work. The Premises shall at all times be free
of liens for labor and materials. To that end, Tenant shall pay
promptly for all work or services with respect to the Premises
undertaken or on behalf of Tenant. Tenant shall have the right to
contest/dispute claims brought by contractors, subcontractors and
suppliers so long as Tenant keeps the Premises free of all liens
and claims in the nature of liens, whether by surety bonds or
otherwise, and Landlord has not been
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named in ( or, if named, has been dismissed from) any litigation
related thereto. Landlord shall receive a reasonable service fee,
determined by Landlord, for work performed by or under the
supervision of Landlord.
8. TENANT'S ADDITIONAL COVENANTS
8.1 Compliance with Law, Including Hazardous Substances. Tenant, at
its sole expense, shall comply in all material respects with all
applicable law, and all applicable insurance requirements, with
respect to Tenant's use and occupancy of the Premises and will not
do or permit to be done anything upon the Premises which will
violate applicable law or invalidate or be in conflict with fire
and casualty insurance policies. Except for necessary quantities
of customary and usual cleaning supplies used in cleaning and
maintenance of the Premises, which shall be properly stored, and
except as otherwise provided in this Section 8.1, there shall not
be brought on or kept within the Premises any inflammable,
combustible or explosive fluid, material, chemical or other
Hazardous Substance.
Tenant agrees not to cause, permit or suffer any release or
discharge onto or in the vicinity of the Premises of any
hazardous, toxic or radioactive material or substance, including
without limitation oil (collectively, "Hazardous Substances")
regulated by any local, state or Federal law (for example, the
Federal Comprehensive Environmental Response Compensation
Liability Act of 1980, the Massachusetts Oil and Hazardous
Material Release Prevention Act) now in existence or hereinafter
enacted (collectively "Hazardous Substance Laws"). Tenant agrees
at Tenant's sole cost and expense to remove from the Premises and
the air and buildings adjacent to, and land and water under and
adjacent to, the Premises any Hazardous Substance which may be
released thereon by Tenant's act or neglect without regard to
fault.
Tenant further agrees not to store or use any Hazardous Substance
in, or about the Premises, or dispose of
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Hazardous Substances from the Premises to any other location,
without Landlord's prior written consent, which consent shall not
be unreasonably withheld provided Tenant has established to
Landlord's satisfaction that (i) such Hazardous Substance is
related to the Permitted Uses of the Premises and (ii) Tenant has
obtained all permits and approvals therefor and the same are
validly issued and outstanding and may be relied on by Tenant or
commit or suffer to be committed in or on the Premises any act
which would require the filing of a notice pursuant to any
Hazardous Substance Law, including without limitation
Massachusetts General Laws Chapter 21E. Notwithstanding Landlord's
consent, Tenant covenants and agrees that it shall advise Landlord
in writing on a continuing basis (i) of any Hazardous Substances
Tenant deals with in any way on the Premises that may be regulated
under any Hazardous Substance Law prior to such substances or
materials being brought upon the Premises, and (ii) of Tenant's
application for, receipt of, rejection regarding, and withdrawal
or lapse of, any license or permit required with respect to
Hazardous Substances relating to Tenant's activities at the
Premises. In the event that Tenant receives from any Federal,
state or local government agency any notice of violation or
alleged violation of any Hazardous Substance Law, Tenant agrees to
forward to Landlord a copy of any such notice within three (3)
days of Tenant's receipt thereof, and Tenant agrees to take all
steps necessary to bring Tenant's use of the Premises into
compliance with such Hazardous Substance Law and any other
applicable law.
Tenant agrees to be solely responsible for and to indemnify
Landlord, as additional rent, against any and all liability
arising from the breach of any of Tenant's covenants and
agreements under this Section 8.1, including without implied
limitation attorneys' fees and costs incurred by Landlord in
connection therewith, whenever such liability shall arise and for
as long as Landlord remains so liable. Tenant shall be liable
hereunder without regard to fault. At Landlord's request from time
to time during or Landlord's lender's
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request, and upon the expiration of, the Term of this Lease,
Tenant shall cause the Premises and the Building and land, air,
water related thereto to be inspected by a qualified professional
satisfactory to Landlord for the presence of any material or
substance prohibited or regulated under any Hazardous Substance
Law and to obtain and forward to Landlord the professional's
written report setting forth the scope and results of such
inspection; provided, however, that during the Term Landlord may
require only one "without cause" inspection, and Landlord can only
require other inspections during the Term only if Landlord has
reasons to deliver or suspect that there has nor is likely to be a
violation of the Hazardous Substance Law. (Landlord lender's is
not bound by this restriction.)
Landlord agrees at Landlord's cost and expense to relocate Tenant
to other premises (i) of Landlord or (ii) of any person related to
or affiliated with The Beal Companies if (a) Hazardous Substances
are released into the Premises by act or neglect of a person other
than Tenant or Tenant's agents, employees, suppliers, contractors
or other person related to or affiliated with or dealing with
Tenant (a "Third Party") and (b) as a consequence thereof Tenant
is ordered by public authority having jurisdiction to vacate the
Premises for health or safety reasons; but if no such alternative
premises are available, Landlord may terminate this Lease upon
payment of Tenant's unamortized cost of improvements to the
Premises. Tenant's occupancy of alternate premises shall be for
the remainder of the original Term, at the Annual Fixed Rent and
additional rent, and otherwise on the terms and conditions of this
lease. If Tenant is relocated to such alternative premises,
Tenant's right to extend the Term, and Tenant's right to add
either the Refusal Premises or the Expansion Premises shall be of
no force or effect.
8.2 Indemnity. Tenant agrees to defend and hold Landlord harmless from
all injury, loss claim or damage to or of any person or property
while on the Premises or in or about the Building and on account
of, any work or thing whatsoever done (other than by or on behalf
of Landlord)
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on the Premises, including without implied limitation reasonable
attorneys' fees; except that to the extent required by
Massachusetts law the foregoing shall not exculpate Landlord from
liability for its own negligence or willful act.
8.3 Tenant's Property is Tenant's Risk. All property of Tenant and
persons claiming by, through, or under Tenant at any time on the
Premises, shall be at the sole risk of Tenant or such person and
if the whole or any part thereof shall be destroyed or damaged by
any cause whatever, no part of said loss or damage shall be borne
by Landlord; except that to the extent required by Massachusetts
law the foregoing shall not exculpate the Landlord from liability
for its own negligence or willful act.
8.4 Estoppel Certification. Upon not less than fifteen (15) days prior
written request, Landlord and Tenant agree to execute, acknowledge
and deliver to the other a statement certifying this Lease is
unmodified and in full force and effect (or stating any
modifications), and the dates to which the Annual Fixed Rent and
all additional rent and other charges have been paid and any other
information reasonably requested. Such statement may be relied
upon by any prospective purchaser, mortgagee or lending source.
8.5 Overloading, Nuisance; Restrictions on Research Activity, Volatile
or Dangerous Substances. Tenant shall not injure, overload,
deface, or otherwise harm the Premises, nor commit any nuisance,
nor permit the emission of any objectionable noise, noxious or
objectionable odor or of any particulate residue; nor make, allow
or suffer any waste; nor make any use of the Premises which is
improper, offensive or contrary to any law, ordinance, order or
regulation of any public authority or which will invalidate or
increase the premium of any insurance.
All chemical, biological and similar work shall be conducted in a
safe manner and always in strict compliance
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with applicable law and guidelines of governmental authority.
All dangerous substances shall be stored safely and securely in
compliance with law and applicable governmental and insurance
requirements and guidelines.
8.6 Yield Up. At the expiration or earlier termination of this Lease,
Tenant shall surrender all keys to the Premises, remove all
personal property, remove such installations made by it as
Landlord may request and all Tenant's signs, and yield up the
Premises (including all Tenant's installations and improvements
made except for those which Landlord requested Tenant to remove)
broom clean and in the same good order, repair and condition in
which Tenant is obliged to maintain the same under this Lease.
Tenant's property not removed within thirty (30) days may be
disposed of by Landlord as Landlord shall determine. Tenant
indemnifies Landlord against all loss, cost and damage, including
without limitation reasonable attorneys' fees and costs resulting
from Tenant's failure and delay in surrendering the Premises. If
Tenant's failure to surrender the Premises as required hereunder
renders the Premises unavailable for use by another tenant (for
example, where Tenant or another person claiming under Tenant
remains in occupancy or Tenant or other such person has caused,
permitted or suffered the contamination of, the Premises or areas
adjacent thereto with a Hazardous Substance), Tenant shall be
deemed in holdover status while such state of facts continues to
exist and shall be liable under Section 13 in addition to all
other liability under the Lease, including this Section.
8.6.1 What are intended to be Fixtures. Equipment, improvements and
appurtenances attached to or built into the Premises prior to or
during the Term shall be and remain part of the Premises and are
intended as real estate fixtures and shall not be removed by
Tenant unless otherwise expressly provided in this Lease or except
as otherwise expressly provided in a separate written agreement
signed by both Landlord and Tenant. All electrical, plumbing,
heating and sprinkling systems,
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fixtures and outlets, vaults, paneling, molding, shelving,
radiator enclosures, flooring, HVAC equipment and HVAC ducts shall
be deemed to be real estate fixtures, whether or not attached to
or built into the Premises.
8.7 Alterations and Improvements by Tenant after Term Commencement.
Tenant shall make no alterations, installations, removals,
additions or improvements in or to the Premises without Landlord's
prior written consent, which shall not unreasonably be withheld.
Any approvals for occupancy of the Premises, municipal or
otherwise, necessitated by the nature of Tenant's business shall
be Tenant's sole responsibility.
8.8 Floor Load; Heavy Machinery. Tenant shall place no load upon
any floor of the Premises exceeding the floor load per square foot
of area which such floor was designed to carry or which in its
present condition it is capable of carrying without damage and
which is allowed by law.
8.9 Assignment and Subletting. Tenant shall not assign this Lease, or
sublet or license the Premises or any portion thereof, or
advertise the Premises for assignment or subletting or permit the
occupancy of all or any portion of the Premises by anybody other
than tenant (all of the foregoing actions are sometimes
collectively referred to as an "assignment") without obtaining, on
each occasion, the prior written consent of Landlord. Except as
provided in the following sentence, assignment shall include,
without limitation, any transfer of Tenant's interest in this
Lease by operation of law, merger or consolidation of Tenant into
any other firm or corporation and the transfer or sale of a
controlling interest in Tenant, whiter by sale of its capital
stock or otherwise. Assignment shall not include (1) assignment or
sublease to any parent or subsidiary corporation or corporation
under identical ownership, (2) sale of the original Tenant by
stock transfer or sale of substantial all of its assets (3)
admission of additional stockholders or other investors or (4)
merger, consolidation or other reorganization involving the
original Tenant, provided in each instance that
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Landlord receives prior written notice thereof and receives,
promptly on request, all information with respect to the
transaction or new entity, as the case may be, as Landlord had
previously received (or was requested) as to the original Tenant.
Tenant shall not offer to make or enter into negotiations with
respect to an assignment with (i) any tenant of Landlord in any
property in the East Cambridge environs of the Building, or any
affiliate of, or any entity owned directly or indirectly by, such
a tenant; and (ii) any party with whom Landlord is then
negotiating with respect to other space in any property in the
East Cambridge environs of the Building. Tenant's request for
consent to an assignment shall include a copy of the proposed
instrument of assignment, if available, or else a statement of the
proposed assignment in detail satisfactory to Landlord. Landlord
shall have the option (but not the obligation) to terminate the
Lease, or that portion proposed to be assigned by giving Tenant
notice of such termination within 60 days of Landlord's receipt of
Tenant's request. If Tenant does make an assignment hereunder, and
if the aggregate rent and all other amounts and charges payable to
Tenant under such assignment less out-of-pocket costs to Tenant of
such transaction exceed the rent and other charges payable
hereunder, Tenant shall pay to Landlord, as additional rent, the
amount of such excess when the same is payable to Tenant.
Tenant shall pay to Landlord, as additional rent, Landlord's
reasonable legal fees and other expenses incurred in connection
with any proposed assignment, including without limitation fees
for review of documents. Notwithstanding any such assignment, the
original Tenant named herein shall remain directly and primarily
obligated under this Lease.
It shall be a condition to the effectiveness of any such
assignment that such assignee, subtenant, licensee or occupant
(collectively, an "assignee") agree directly with Landlord to be
liable, jointly and severally with Tenant, for the performance of
all of Tenant's agreements
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under this Lease (including without limitation payment of rent).
Landlord may collect rent and other charges from the assignee and
apply the net amount collected to the rent and other charges
herein reserved, but no such assignment or collection shall be
deemed a waiver of the provisions of Section 8.9, or the
acceptance of the assignee as a Tenant, or a release of Tenant
from direct and primary liability for the further performance of
covenants on the part of Tenant herein contained. The consent by
Landlord to an assignment shall not relieve Tenant from obtaining
the express consent of Landlord to any further assignment.
In event of any assignment requiring Landlord's consent, (1)
Tenant's right to extend the Term shall be void and of no further
force or effect unless previously exercised by Tenant, (2)
Tenant's right to expand the Premises pursuant to either Section
3.5 or 3.6 shall be void and of no further force or effect except
as to premises as to which (i) Tenant has exercised its right of
refusal or expansion and (ii) either (a) has taken possession
thereof for active conduct of its business or (ii) has commenced
construction of improvements therein. In any event, Landlord's
obligation to reimburse Tenant's costs of improvements shall
terminate with respect to any portion of the Premises subject to
any such assignment.
8.10 Landlord's Access to Premises. (a) Landlord may erect, use and
maintain pipes, ducts and conduits in and through the Premises
provided the same do not materially interfere with Tenant's use
and enjoyment of the Premises; (b) Landlord and any mortgagee and
their representatives may enter the Premises at reasonable times
to inspect, repair, replace or improve the Premises or the
Building or equipment or to comply with any law, order or
requirement of governmental or other authority or of exercise any
right reserved to Landlord by this Lease; (c) Landlord may at
reasonable times, show the Premises to other persons. If during
the last month of the Term, Tenant shall have removed all or
substantially all of Tenant's property therefrom, Landlord may
immediately enter and alter, renovate and
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redecorate the Premises without abatement of rent and without
liability to Tenant for compensation, and such acts shall have no
effect upon this Lease.
Landlord shall exercise its right of access with due regard for
Tenant's security requirements and in a manner which is intended
to minimize disruption to Tenant.
8.11 Construction Activity. Construction activity in or near the
Premises or the Building shall neither entitle Tenant to any
reduction in rent nor cause Landlord to have any liability to
Tenant.
8.12 Tenant's Financial Statements. Within 90 days after the end of
Tenant's fiscal years, Tenant shall furnish Landlord with a true
copy of Tenant's annual financial statements, prepared by a
certified public accountant, for Tenant's fiscal year just ended.
Tenant shall also furnish Landlord with true copies of Tenant's
quarterly financial statements to the extent the same are prepared
for Tenant. Tenant agrees to meet with Landlord at Landlord's
request to review and discuss Tenant's financial statements.
Landlord agrees not to disclose any information received pursuant
to this Section to any person other than Landlord's employees or
any mortgagee or prospective mortgagee, or prospective purchaser,
of the property of which the Building is a part.
9.0 INSURANCE
9.1 Public Liability Insurance. Tenant shall take out and maintain in
force throughout the Term comprehensive public liability insurance
naming Landlord, Tenant and all persons claiming under them as
insureds against all claims and demands for any injury to person
or property which may be claimed to have occurred on the Premises,
the Building, the grounds and ways adjoining the Building, in an
amount which at the beginning of the Term shall not be less than
$1,000,000 for injury or
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death of one person, $3,000,000 for injury or death of more than
one person in a single accident and $500,000 for property damage
or such higher amounts as Landlord shall determine are required by
reason of Tenant's use of the Premises and which thereafter, if
Landlord requires, shall be in such higher amounts as are then
consistent with sound commercial practice in Cambridge,
Massachusetts.
9.2 Casualty Insurance. Tenant shall take out and maintain throughout
the Term a policy of fire, vandalism, malicious mischief, extended
coverage and so-called all risk coverage insurance insuring
Tenant's improvements to the Premises and Tenant's fixtures,
furnishings and equipment to their full insurable value, except
that any such insurance may be written with an 80% co-insurance
clause. Such insurance shall include waiver of subrogation
protection in conformance with section 9.5 if available on
commercially reasonable terms.
With Landlord's prior written consent, which shall not be
unreasonably withheld, Tenant may self-insure property which will
belong to Tenant at the termination of the Lease.
9.3 Certificate of Insurance. Such insurance shall be placed with
insurers satisfactory to Landlord and authorized to do business in
Massachusetts. Such insurance shall provide that it shall not be
canceled without at least ten (10) days prior written notice to
each insured named therein. Upon Landlord's request, Tenant shall
furnish Landlord Certificates of Insurance for all such insurance
and, at Landlord's request, shall furnish any mortgage
Certificates together with evidence satisfactory to Landlord of
the payment of all premiums.
9.4 Landlord's Insurance. Landlord shall maintain during the Term
such commercially reasonable policies of casualty insurance and
other coverages in such amounts and insuring against such risks as
Landlord shall from time to time determine. Such insurance shall
include waiver of subrogation protection in conformance with
Section 9.5 if available on commercially reasonable terms.
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Tenant agrees to cooperate with Landlord in obtaining and
maintaining such insurance.
9.5 Waiver of Subrogation. Landlord and Tenant hereby release each
other, to the extent of their respective insurance coverages, from
any and all liability for any loss or damage caused by fire or any
of the extended coverage casualties, even if such fire or other
casualty shall be brought about by the fault or negligence of the
party benefited by the release or its agents, provided, however,
this release shall be in force and effect only with respect to
loss or damage occurring during such time as the policies of fire
and extended coverage insurance required hereunder to be
maintained by the releasing party shall contain a clause to the
effect that such release shall not affect said policies or the
right of the releasing party to recover thereunder. Landlord and
Tenant each agree to make best efforts to have their respective
fire and extended coverage insurance policies include such a
clause so long as the same is obtainable without extra cost, or if
extra cost is chargeable therefor, so long as the party benefited
by such clause in its discretion chooses to pay such extra cost.
9.6 Increase in Insurance Risk. If Tenant's use of or failure to use,
the Premises results in any increase in Landlord's insurance rates
on the Building or Landlord's other property near the Building,
Tenant shall reimburse Landlord for such increase in insurance
charges, provided that Tenant was the cause of the increase.
Without limiting the generality of the foregoing, the insurer's
statement to that effect shall be sufficient.
10. DAMAGE TO PREMISES AND CONSEQUENCES OF EMINENT DOMAIN
10.1 Repair and Restoration of Casualty Loss. If the Premises or any
part thereof shall be damaged by an insured casualty, Landlord
shall proceed with diligence, and at its expense, to repair or
cause to be repaired such damage to the Premises (excluding all
Tenant's property and all Tenant's improvements to the Building
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and the Premises which are Tenant's sole responsibility), subject
to the then applicable statues, building codes, zoning ordinances
and regulations of governmental authority, but only to the extent
of insurance proceeds available to Landlord. Tenant shall repair
or cause to be repaired damage to Tenant improvements, whether or
not covered by insurance and whether or not the proceeds of such
insurance are adequate to defray the cost of repair. All repairs
to and replacements of property which Tenant is entitled to remove
under Section 8.6.1 shall be made by and at the expense of Tenant.
Landlord shall not be liable for delays in the making of any such
repairs which are beyond Landlord's reasonable control, nor for
any inconvenience or annoyance to Tenant or injury to Tenant's
business resulting from such delays, but Landlord shall use
reasonable efforts to minimize any disruption.
10.2 Abatement of Rent. If the Premises or a part of them shall have
been rendered unfit for use and occupation by reason of such
damage, rent shall be abated in proportion to the space not
available to Tenant until the Premises are repaired (except as to
property to be repaired by or at the expense of Tenant) as nearly
as practicable to the condition the Premises were in immediately
prior to their damage. If Landlord, or any mortgagee of the
Building shall be unable to collect insurance proceeds (including
rent insurance proceeds) applicable to the damage because of some
action inaction on the part of Tenant, or the employee, licensees
or invitees of Tenant, the cost of repairing such damage shall be
paid by Tenant and there shall be no abatement of rent.
10.3 Termination for Major Damage or If Damaged at End of Term. If (i)
the Premises are damaged by fire or other casualty (whether or not
insured) at any time during the last eighteen (18) months of the
term hereof such that the cost to repair the damage is reasonably
estimated to exceed one-third (1/3) of the total Annual Fixed Rent
plus additional rent (projected on the basis of the preceding
lease year) payable for the period from the estimated date of
restoration until the Termination Date
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(provided, however, that Landlord shall have no duty of repair for
damage occurring during the final six (6) months of the Term),
(ii) the Building is so damaged by fire or other casualty (whether
or not insured) that substantial alteration or reconstruction or
demolition of the Building shall in Landlord's judgment be
required, (iii) the Building is damaged or destroyed to the extent
of five (5%) percent or more of the then insurable replacement
value from any cause not covered by the insurance carried by
Landlord under Section 9.4, or (iv) the available insurance
proceeds, in Landlord's reasonable judgment, would be insufficient
to cover the cost of repair, or (v) in Landlord's judgment the
Premises cannot be restored as required by this Lease within 90
working days after work commences, then and in any such events
this Lease and the term hereof may be terminated at the election
of Landlord by a notice in writing of its election so to terminate
which shall be given by Landlord to Tenant within sixty (60) days
following such fire or other casualty. The effective termination
date shall be not less than thirty (30) days after the day on
which such termination notice is received by Tenant. In the event
of any termination, this Lease and the term hereof shall expire as
of such effective termination date as though that were the
Termination Date as stated in Section 1 and the Annual Fixed Rent,
additional rent and all other charges shall be apportioned as of
such date.
Tenant shall have the right to terminate this lease following any
such damage occurring during the last eighteen (18) months of the
Term (as if may have been extended) if Landlord refuses to
provide, within a reasonable time after Tenant's written request,
written assurance that the damaged portion of the Premises will be
restored for Tenant's use within nine (9) months from the date of
casualty or, at any time during the Term if Landlord has assured
Tenant that the Premises will be restored within nine (9) months
but Landlord, having so assured Tenant, fails to deliver the
restored Premises for Tenant's use on substantially that schedule.
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10.4 Eminent Domain. In the event that the Premises or any part thereof
shall be taken by eminent domain for any public or quasi-public
use, or, by virtue of any such taking, shall suffer any damage
(direct, indirect or consequential) for which Landlord or Tenant
shall be entitled to compensation, then this Lease may be
terminated at the election of Landlord by a notice in writing of
its election so to terminate which shall be given by Landlord to
Tenant within sixty (60) days following the date on which Landlord
shall have received notice of such taking, appropriation or
condemnation. In the event that a substantial part of the Premises
(or, if the Premises include all or part of more than one
building, of any building included in the Premises) shall be
taken, appropriated or condemned or that all access to the
Premises shall be permanently taken, then (and in any such event)
this Lease and the Term hereof may be terminated as to the
building(s) taken at the election of Tenant by a notice in writing
of its election so to terminate which shall be given by Tenant to
Landlord within sixty (60) days following the date on which Tenant
shall have received notice of such taking, appropriation or
condemnation. No action of public authorities with respect to the
public streets in the vicinity of the Building, including without
limitation elimination of vehicular access thereon, shall affect
this Lease in any way except as stated in this section 10.4.
Upon the giving of any such notice of termination (either by
Landlord or Tenant) this Lease and the Term hereof shall terminate
on or retroactively as of the date on which Tenant shall be
required to vacate any part of the Premises or shall be deprived
of a substantial part of the means of access thereto, provided,
however, that Landlord may in Landlord's notice elect to terminate
this Lease and the Term hereof retroactively as of the date on
which such taking became legally effective. Rent and other charges
shall be apportioned as of such termination date. If neither party
(having the right so to do) elects to terminate, Landlord will,
with reasonable diligence and at Landlord's expense, restore the
remainder of the Premises, or the remainder of the means of
access, as nearly as practicable to the
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same condition as existed prior to such taking. A just proportion
of the rent, according to the nature and extent of the injury to
the Premises, shall be abated until what may remain of the
Premises shall be restored as aforesaid, and thereafter a just
proportion of the rent according to the nature and extent of the
part of the Premises so taken shall be abated for the balance of
the term of this Lease.
Except for any award expressly and specifically reimbursing Tenant
for moving or relocation expenses, Landlord reserves all rights to
compensation and damages created, accrued or accruing by reason of
any such taking, in implementation and in confirmation of which
Tenant hereby acknowledges that Landlord shall be entitled to
receive all such compensation and damages, grants to Landlord all
and whatever rights (if any) Tenant may have to such compensation
and damages, and agrees to execute and deliver all and whatever
further instruments of assignment as Landlord may from time to
time request. In the event of any taking of the Premises or any
part thereof for temporary use, (i) this Lease shall be and remain
unaffected thereby, (ii) rent shall not abate, and (iii) Tenant
shall be entitled to receive for itself any aware made for such
use, provided, that if any taking is for a period extending beyond
the Term of this Lease, such award shall be apportioned between
Landlord and Tenant as of the Termination Date or earlier
termination of this Lease.
11. DEFAULT AND REMEDIES
11.1 Events of Default. (a) If Tenant shall default in the
performance of any of its obligations to pay the Annual Rixed Tent
or additional rent hereundet within ten (10) business days after
LAndlord gives written notice of nonpayment, or if, within thirty
(30) days after written notice from Landlord to Tenant specifying
any ither default or defaults, Tenant has not commenced diligently
to correct the devault or defaults so specified or has not
thereafter diligently pursued such correction to completion, or
(b) if any assignment shall be made by Tenant for the benefit of
creditors, or (c) if Tenant's
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leasehold interest shall be taken on execution, or (d) if a
petition is filed by Tenant or any guarantor of Tenant's
obligaions under this Lease for adjudication as a bankrupt or for
reorganization or any arrangement under any provisions of the
Bankruptcy Code as then in force and effect, or (e) if an
involuntary petition under any of the provisions of said
Bankruptcy Code is filed against Tenant or any such guarantor and
is not dismissed eithin sixty (60) days thereafter, or (f) if a
receiver, or insolvent according to law, or (g) if a receiver,
trustee or assignee shall be appointed for the whole or any part
of Tenant's property or the property of any such guarantor and
shall not be removed within sixty (60) days thereafter, then, and
in any of such cases, Landlord and its agents lawfully may, in
addition to and not in derogation of any remidies for any
preceding breach of covenant, immediately or at any time
thereafter**and without demand or notice and with or without
process of law enter into and upon the Premises or any part therof
in the name of the whole or mail a notice of termination addressed
to Tenant at the Premises, and respossess the same as of
Landlord's former estate and expel Tenant and those claiming
through or under Tenant and remove its and their effects without
being deemed guilty of any manner of trespass and wihtout
prijudice or priorbreach of covenant, and upon such entry or
mailing as aforesaid this Lease sall terminate, Tenant hereby
waiving all statutory rights (including wihtout limitation rights
of redemption, if any) to the extent such rights may be lawfully
waived, and Landlord, with notice to Tenant, may stored Tenant's
effects, and those of any person claiming through or under Tenant
at the expense and risk of Tenant, and , if Landlord so elects,
may sell such effects at public auction and apply the net proceeds
to the payment of all sums due to Landlord from Tenant, if any,
and pay over the paclance, if any, top Tenant. For purposes of
this Section 11.1 and all sections under Article 11, "Tenant"
shall include any guarantor of any of Tenant's obligations under
this Lease and any corporation of which Tenant is a controlled
subsidary.
**so long as Landlord has not accepted a cure of such default
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11.2 Deleted.
11.3 Damages - Termination. Upon the termination of this Lease
under the provisions of this Article 11, then except as otherwise
provided in Section 11.2, Tenant shall pay to Landlord the rent
and other charges payable by Tenant to Landlord up to the time of
such termination, shall continue to be liable for any preceding
breach of covenant, and in addition, shall pay to Landlord as
damages, at the election of Landlord e either:
(x) the amount by which, at the time of the termination of this
Lease (or at any time there after if Landlord shall have
initially elected damages under subparagraph (y), below), (i)
the aggregate of the rent, taxes, Operating Expenses and other
charges projected over the period commencing with such
termination and ending on the Termination Date as stated in
Section 1 (or such later date to which the Lease has been
extended) exceeds (ii) the aggregate projected value of the
premises for such period, each discounted to present value at
the then prevailing rate for Treasury bills having a maturity
which most closely corresponds to the remaining Term of the
Lease , or:
(y) amounts equal to the rent, taxes and Operating Expenses and
other charges which would have been payable by Tenant had
this Lease not been so terminated, payable upon the due dates
therefor specified herein following such termination and until
the Termination Date as specified in Section 1, (or such later
date to which the Lease has been extended) provided, however,
if Landlord shall re-let the Premises during such period, that
Landlord shall credit Tenant with the net rents received by
Landlord from such re-letting, such net rents to be determined
by first deducting from the gross rents as and when received
by Landlord from such reletting the expenses incurred or paid
by Landlord in terminating this Lease, as well as the expenses
of re-letting, including altering and preparing the Premises
for new tenants, brokers' commissions,
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reasonable attorneys' fees and all other similar and
dissimilar expenses properly chargeable against the Premises
and the rental therefrom, it being understood that any such
re-letting may be for a period equal to or shorter or longer
than the remaining term of this Lease as extended; and
provided, further, that (i) in no event shall Tenant be
entitled to receive any excess of such net rents over the sums
payable by Tenant to Landlord hereunder and (ii) in no event
shall Tenant be entitled in any suit for the collection of
damages pursuant to this Subparagraph (y) to a credit in
respect of any net rents from a reletting except to the extent
that such net rents are actually received by Landlord prior to
the commencement of such suit. If the Premises or any part
thereof should be re-let in combination with other space, then
proper apportionment on a square foot area basis shall be made
of the rent received from such re-letting and of the expenses
of reletting.
Suit or suits for the recovery of such damages, or any
installments thereof, may be brought by Landlord from time to time
at its election, and nothing contained herein shall be deemed to
require Landlord to postpone suit until the date when the term of
this Lease would have expired if it had not been terminated
hereunder.
Nothing herein contained shall be construed as limiting or
precluding the recovery by Landlord against Tenant of any sums or
damages to which, in addition to the damages particularly provided
above, Landlord may lawfully be entitled by reason of any default
hereunder on the part of Tenant.
11.4 Effect of Taxes and Operating Expenses. In the event of any
termination of this Lease or re-entry by Landlord under the
provisions of this Article 11 or other proceeding or action or any
provision of law by reason of default under this Lease on the part
of Tenant, then for the purpose of computing damages as shall be
payable pursuant to this Article 11, it is agreed that:
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(a) If (i) Landlord shall be entitled to liquidated damages under
Section 11.2, or if (ii) Landlord shall elect that damages be
payable pursuant to Subparagraph (x) of Section 11.3, the
computation of such damage shall be made, insofar as the same
relates to Taxes and Operating Expense by taking the product
of (i) the sum of Taxes and Operating Expense for the
immediately preceding fiscal year of Landlord, respectively,
times (ii) the number of years remaining of the full term
hereby granted, on the assumption that the amount of such
Taxes and Operating Expense so payable for the immediately
preceding fiscal year of Landlord would have remained constant
for each subsequent fiscal year of the full term hereby
granted.
(b) If Landlord shall elect that such damages be payable pursuant
to Subparagraph (y) of Section 11.3, the sums referred to in
said Subparagraph (y) shall include, without limitation, the
amount of the Taxes and Operating Expense which under the
provisions of Section 6.2 would be payable by Tenant for the
period referred to in said Subparagraph (y).
11.5 Landlord's Expenses in Performing Obligations of Tenant. If
Tenant shall default in the performance of any covenant of this
Lease, and such default continues beyond any applicable grace
periods, Landlord may without waiving or releasing any right or
remedy immediately, or at any time thereafter, without notice,
perform the same for Tenant's account and Tenant shall pay on
demand as reimbursement the sum so paid by Landlord with all
interests, costs and damages.
11.6 Landlord's Remedies Not Exclusive. Landlord's remedies stated
in this Lease are cumulative and not exclusive of any other
remedies or means of redress available to Landlord by law.
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11.7 Landlord's Default. Landlord shall not be in default of any
of its obligations hereunder unless it shall fail to perform such
obligations within thirty (30) days (or such further time as is
reasonably necessary) after receipt of written notice thereof from
Tenant.
11.8 Effect of Waivers of Default. No consent or waiver, express
or implied, by either party to any act or omission which otherwise
would be a breach of the other party's obligations shall in any
way be construed to impair such other party's continuing
obligations hereunder or operate to permit similar acts or
omission.
11.9 Repeated Defaults. No notice of default need be given under
Section 11.1, and no default in the payment of Annual Fixed Rent
or Additional Rent shall be curable if on two prior occasions in
any one lease year Tenant has failed to make such payment or
received a notice of default from Landlord and, in such event,
Landlord shall have the right to terminate this Lease as in
Section 11.1 provided and the right to damages as in Section 11.3
provided.
11.10 No Accord and Satisfaction. No acceptance by Landlord of a
lesser sum than the Annual Fixed Rent, Additional Rent or any
other charge then due shall be deemed to be other than on account
of the earliest installment of such rent or charge due, nor shall
any endorsement or statement on any check or any letter
accompanying any check for payment as rent or other charge be
deemed an accord and satisfaction, and Landlord may accept such
check or payment without prejudice to Landlord's right to recover
the balance of such installment or pursue any other remedy in this
Lease provided.
12. SUBORDINATION
12.1 Subordination. This Lease is subject and subordinate to all
matters of record including without limitation, ground leases and
mortgages, any of which may now or hereafter be placed on or
affect the Premises, or any part thereof and to each advance made
or to be made
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under any such mortgages, and to all renewals, modifications,
consolidations, replacements and extensions thereof and all
substitutions therefor. This Section 12 Shall be self-operative
and no further instrument of subordination shall be required. In
confirmation of such subordination, Tenant shall execute and
deliver such subordination, Tenant shall execute an deliver
promptly (and in any event within ten (10) business days of
Landlord's written request therefor) any certificate that Landlord
and/or any mortgagee and /or lessor under any ground or underlying
lease and/or their respective successors in interest may request.
Landlord agrees to use reasonable efforts to obtain a
nondisturbance agreement form the present an any future mortgagee.
"Reasonable efforts" shall consist of (1) submitting to the
mortgagee a written request and (2) providing the mortgagee with
information it requests.
Without limitation of any of the provisions of this Lease, if any
ground lessor or mortgagee shall succeed to the interest of
Landlord under this Lease; and in such event, the Tenant (which in
the case of a ground lease shall be within thirty (30) days after
such expiration or sooner termination) that it is succeeding to
the interest of Landlord under this Lease; and in such event, the
Tenant shall attorn to such successor and shall ipso facto be and
become bound directly to such successor in interest to Landlord to
perform and observe all the Tenant's obligations under this Lease
without the necessity of the execution of any further instrument.
Nevertheless, Tenant agrees at any time and from time to time
during the term hereof to execute a suitable instrument in
confirmation of Tenant's agreement to attorn, as aforesaid.
13. HOLDING OVER
13.1 Holding Over.If Tenant or anyone claiming under Tenant shall
remain in occupancy of all or any portion of the Premises, or
shall fail to yield-up the Premises free of
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Hazardous Substances, in each case delaying rental or delivery of
possession of the Premises to another tenant, Tenant or such other
person shall be deemed to be holding over after the termination of
this Lease.
If Tenant or anyone claiming under Tenant shall remain in
occupancy of the Premises or any part thereof after the expiration
of the Term of this Lease without any agreement in writing between
Landlord and Tenant with respect thereto, prior to acceptance of
rent by Landlord Tenant (or such person claiming under Tenant)
shall be deemed a tenant at sufferance, and after acceptance of
rent by Landlord a tenant from month-to-month, in either case at a
use and occupancy charge equal to twice the rate of Annual Fixed
Rent plus all other charges payable under this Lease, and subject
to the provisions of this Lease (excluding all provisions for
rent) insofar as the same may be applicable. Notwithstanding the
foregoing, prior to acceptance of rent for any period after the
Term, Landlord, at its option, may re-enter and take possession of
the Premises or any part thereof forthwith without process or by
any manner provided by law, in every case without prejudice to
claim for the use and occupancy charge as stated above.
If the Premises of areas adjacent thereto have been contaminated
with Hazardous Substances by Tenant's act or neglect (but without
regard to fault), thereby delaying rental of the Premises to
another tenant by reason of order of public health or safety
official or the like, or by reason of the prospective tenant'(s)
refusal to occupy the contaminated portion of the Premises, Tenant
shall be deemed to continue in possession of the affected Premises
as a tenant at sufferance as aforesaid for the duration of such
delay at the use and occupancy charge set forth above and subject
to the provisions of this Lease as aforesaid, and Tenant agrees
that unless Tenant (and such person claiming under Tenant) is in
bankruptcy or insolvency proceedings or similarly disabled from
performing Tenant's obligations hereunder, Landlord has the right
at Landlord's election, but no duty or obligation, to restore the
Premises to the condition required at the
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termination of this lease hereunder, and tenant is solely
responsible to do so. Landlord's election to make the Premises
conform with the requirements of this Lease, such as by removing
any Hazardous Substances, shall not diminish in any way Landlord's
claim for the use and occupancy charge as aforesaid for the
duration of any delay in re-leasing the Premises resulting
therefrom.
14. MISCELLANEOUS PROVISIONS
14.1 Notices. All notices hereunder shall be in writing and deemed duly
served if delivered in hand or to a recognized national overnight
courier service such as Federal Express, or if mailed, certified
mail, to Tenant, at the Original Address of Tenant or such other
address as Tenant shall have last designated by notice in writing
to Landlord and, Landlord, at Original Address of Landlord or such
other address as Landlord shall have last designated by notice in
writing to Tenant. At Tenant's written request, a courtesy notice
will also be given to Tenant's counsel named in such request but
such notice shall not be necessary to Landlord's rights.
14.2 Quite Enjoyment. Upon Tenant's paying the rent and performing all
provisions of this Lease, Tenant may peaceably and quietly have,
hold and enjoy the Premises during the Term without any manner of
hindrance or molestation from Landlord or anyone claiming under
Landlord.
14.3 Limitation of Landlord's Liability. Tenant shall neither assert
nor seek to enforce any claim for breach of this Lease against any
of Landlord's assets other than Landlord's interest in the
Premises and in the rents, issues and profits thereof, and Tenant
agrees to look solely to such interest for the satisfaction of any
liability of Landlord under this Lease. In no event shall Landlord
(which term shall include, without limitation any of the officers,
trustees, directors, partners, beneficiaries, joint ventures,
members, stockholders or other principals or representatives,
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disclosed or undisclosed, thereof) ever be personally liable for
any such liability or ever be liable for consequential damages.
14.4 Acts of God. In any case where either party hereto is required to
do any act, other than the payment of Annual Fixed Rent or
additional rent, delays caused by or resulting from acts of God,
war, civil commotion, fire, flood or other casualty, labor
difficulties, shortages of labor, materials or equipment, unusual
government regulations, moratorium or similar acts of government,
unusually severe weather, or other causes beyond such party's
reasonable control shall not be counted in determining the time
during which such act shall be completed, whether such time be
designated by a fixed date, a fixed time or "a reasonable time,"
and such time shall be deemed to be extended by the period of such
delay.
14.5 Applicable Law and Construction. This Lease is made under
Massachusetts law and shall bind Landlord and Tenant and their
respective heirs, successors and assigns. If any provisions of
this Lease shall to any extent be invalid, the remainder of this
Lease shall to any valid portion of such provisions, shall not be
affected thereby. There are no oral or written agreements between
Landlord and Tenant affecting this Lease. This Lease may be
amended only by instruments in writing executed by Landlord and
Tenant. The titles of the several Articles and Sections contained
herein are for convenience only and shall not be considered in
construing this Lease.
14.6 Arbitration. Wherever this Lease provides that any question
shall be determined by arbitration, such question shall be
determined by arbitration in accordance with the rules of the
American Arbitration Association and judgment upon the award
rendered shall be binding upon the parties hereto and may be
entered in any court having jurisdiction. Arbitration shall be
held in Boston, Massachusetts and the cost thereof shall be borne
equally between the parties.
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<PAGE>
14.7 Timely Performance. Time is of the essence in all matters
relating to this Lease.
14.8 No Broker. Tenant represents and warrants that it has not directly
or indirectly dealt, with respect to the leasing of the Building
nor had its attention called to the Premises by anyone other than
the broker, person or firm, if any, designated in Section 1.
Tenant agrees to exonerate and save harmless and indemnify
Landlord against any claims for a commission arising out of the
execution and delivery of this Lease or out of negotiations
between Landlord and Tenant with respect to the leasing of other
space in the Building, provided that Landlord shall be solely
responsible for the payment of brokerage commissions to the
broker, person or firm, if any, designated in Section 1.
14.9 Financing Requirements. If in connection with obtaining financing
for the Building, a bank, insurance company, pension trust or
other institutional lender shall request reasonable modifications
in this Lease as a condition to such financing, Tenant will not
unreasonably withhold, delay or condition its consent thereto
provided that such modifications do not increase the obligations
of Tenant hereunder or materially adversely affect the leasehold
interest hereby created.
14.10 Agreement Made Only When Lease Signed. This Lease shall bind
Landlord and Tenant only when executed and delivered by both. This
Lease when signed by one party and delivered to the other shall
constitute an offer to enter into a lease on the terms set forth
herein. No submission of this lease, unsigned by either party to
the other shall constitute an offer to lease.
14.11 Demolition. In the event Landlord decides to demolish the
Building, Landlord may terminate this Lease by not less that
eighteen (18) months notice to Tenant, and upon the giving of such
notice this Lease shall, without the necessity of further writing,
terminate on the Termination Date stated in such notice with the
same effect as if such date had been the Termination Date stated
in Section 1.1, provided Landlord reimburses Tenant's
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unamortized cost of those improvements to the Premises which are
to become Landlord's property at the end of the Term. At
Landlord's request, Tenant agrees to provide Landlord with a
written statement of such costs in reasonable detail.
14.2 Deleted.
14.13 No Parking. This Lease does not create any parking privileges
on any of Landlord's property.
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<PAGE>
EXHIBIT 1
FLOOR PLAN OF PREMISES AT 71 ROGERS STREET
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<PAGE>
EXHIBIT 2
FLOOR PLAN OF PREMISES AT 75 ROGERS STREET
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<PAGE>
EXHIBIT 3
TENANT'S WORK
As to 71 Rogers Street - To be attached prior to execution.
As to 75 Rogers Street - To be submitted by Tenant and approved by Landlord
after execution of Lease.
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<PAGE>
EXHIBIT 4
FLOOR PLAN OF PREMISES AT 79 ROGERS STREET
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<PAGE>
EXHIBIT 5
1. Reference Data as to the Premises at 79 Rogers Street. Each reference
is this Lease to the following subjects shall be construed to incorporate
the data for that subject stated herein.
PREMISES: The premises shown on Exhibit 4 containing approximately 5,000 square
feet located in the building known as and numbered 79 Rogers Street
in Cambridge, Massachusetts.
LANDLORD: Trustees of The Cambridge East Trust, as Trustees and not
individually
ORIGINAL ADDRESS OF LANDLORD: c/o Beal and Company, Inc.
177 Milk Street
Boston, Massachusetts 02109
TENANT: Metasyn, Inc., a Delaware corporation
ORIGINAL ADDRESS OF TENANT: 71 Rogers Street
Cambridge, MA
TERM: The period from the Commencement Date until the Termination Date
COMMENCEMENT DATE: As stated in section 3.5
TERMINATION DATE: December 31, 1997 (subject to extension as set
forth in the Lease)
ANNUAL FIXED RENT: 01/1/93-12/31/93 - $40,000
(as applicable) 01/1/94-12/31/94 - $45,000
01/1/95-12/31/95 - $50,000
01/1/96-12/31/96 - $55,000
01/1/97-12/31/97 - $60,000
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MONTHLY PAYMENT: 01/1/93-12/31/93 - $3,333.33
(as applicable) 01/1/94-12/31/94 - $3,750.00
01/1/95-12/31/95 - $4,166.67
01/1/96-12/31/96 - $4,503.30
01/1/96-12/31/97 - $5,000.00
LANDLORD'S RENOVATIONS, ALTERATIONS, IMPROVEMENTS: None other than as
stated in Sections 3.5 and 4.1
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<PAGE>
TENANT'S PERCENTAGE OF OPERATING EXPENSES REAL ESTATE TAXES: 100%
TAX BASE YEAR: None
PERMITTED USES: Office use, laboratory use and ancillary animal space
to the extent permitted by applicable law, and no
other use
SECURITY DEPOSIT: As stated in Section 1
BROKER: Murphy, Lynch, Walsh & Partners
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EXHIBIT 6
FLOOR PLAN OF PREMISES AT 69 ROGERS STREET
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<PAGE>
EXHIBIT 7
1. Reference Data as to 69 Rogers Street. Each reference is this Lease to the
following subjects shall be construed to incorporate the data for that
subject stated in this Section 1.
PREMISES: The premises shown on Exhibit 6 containing approximately 2,500 square
feet located in the building known as and numbered 69 Rogers Street
in Cambridge, Massachusetts.
LANDLORD: Trustees of The Cambridge East Trust, as Trustees and not
individually
ORIGINAL ADDRESS OF LANDLORD: c/o Beal and Company, Inc.
177 Milk Street
Boston, Massachusetts 02109
TENANT: Metasyn, Inc., a Delaware corporation
ORIGINAL ADDRESS OF TENANT: 71 Rogers Street
Cambridge, MA
TERM: From the Commencement Date to the Termination Date
COMMENCEMENT DATE: As stated in section 3.6
TERMINATION DATE: December 31, 1997
ANNUAL FIXED RENT: 01/1/93-12/31/93 - $20,000
(as applicable) 01/1/94-12/31/94 - $22,500
01/1/95-12/31/95 - $25,000
01/1/96-12/31/96 - $27,500
01/1/97-12/31/97 - $30,000
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MONTHLY PAYMENT: 01/1/93-12/31/93 - $1,667.67
(as applicable) 01/1/94-12/31/94 - $1,875.00
01/1/95-12/31/95 - $2,083.33
01/1/96-12/31/96 - $2,291.67
01/1/97-12/31/97 - $2,500.00
LANDLORD'S RENOVATIONS, ALTERATIONS, IMPROVEMENTS: None other than as
set forth in Sections 3.6 and 4.1
TENANT'S PERCENTAGE OF OPERATING EXPENSES
& REAL ESTATE TAXES: 100%
TAX BASE YEAR: None
PERMITTED USES: Office use, laboratory use and ancillary animal space
to the extent permitted under applicable law,
and no other use
SECURITY DEPOSIT: As stated in Section 1
BROKER: Murphy, Lynch, Walsh & Partners
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Exhibit 10.4
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE; TRANSFER
OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (i)
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL
FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION
IS NOT REQUIRED OR (iii) RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT
REQUIRED.
Shares Issuable Upon Exercise:_______
WARRANT TO PURCHASE
SHARES OF SERIES A PREFERRED STOCK
Expires December 21, 2002
THIS CERTIFIES THAT, for value received, __________________________, is
entitled to subscribe for and purchase _____ shares (as adjusted pursuant to
provisions hereof, the "Shares") of the fully paid and nonassessable Series A
Preferred Stock of Metasyn, Inc., a Delaware corporation (the "Company"), at a
price per share of $11.21 (such price and such other price as shall result, from
time to time, from adjustments specified herein is herein referred to as the
"Warrant Price"), subject to the provisions and upon the terms and conditions
hereafter set forth. As used herein, the term "Preferred Stock" shall mean the
Company's presently authorized Series A Preferred Stock, and any stock into or
for which such Series A Preferred Stock may hereafter be converted or exchanged
pursuant to the Certificate of Incorporation of the Company as from time to time
amended as provided by law and in such Certificate, and the term "Grant Date"
shall mean December 21, l992.
1. Term. The purchase right represented by this Warrant is exercisable, in
whole or in part, at any time and from time to time from and after the Grant
Date and prior to the earlier of the tenth annual anniversary date of the Grant
Date or the fifth annual anniversary of the consummation of the Company's
initial public offering of its Common Stock, the aggregate gross proceeds from
which exceed $5,000,000.
2. Method of Exercise; Net Issue Exercise.
2.1. Method of Exercise; Payment; Issuance of New Warrant. The
purchase right represented by this Warrant may be exercised by the holder
hereof, in whole or in part and from time to time, by either, at the election of
the holder hereof, (a) the surrender of this Warrant with the notice of exercise
form attached hereto as Exhibit A duly executed) at the
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<PAGE>
principal office of the Company and by the payment to the Company, by check, of
an amount equal to the then applicable Warrant Price per share multiplied by the
number of Shares then being purchased or (b) if in connection with a registered
public offering of the Company's securities, the surrender of this Warrant (with
the notice of exercise form attached hereto as Exhibit A-1 duly executed) at the
principal office of the Company together with notice of arrangements reasonably
satisfactory to the Company for payment to the Company either by check or from
the proceeds of the sale of shares to be sold by the holder in such public
offering of an amount equal to the then applicable Warrant Price per share
multiplied by the number of Shares then being purchased. The person or persons
in whose name(s) any certificate(s) representing shares of Preferred Stock shall
be issuable upon exercise of this Warrant shall be deemed to have become the
holder(s) of record of, and shall be treated for all purposes as the record
holder(s) of, the shares represented thereby (and such shares shall be deemed to
have been issued) immediately prior to the close of business on the date or
dates upon which this Warrant is exercised. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of stock so
purchased shall be delivered to the holder hereof as soon as possible and in any
event within thirty days of receipt of such notice and, unless this Warrant has
been fully exercised or expired, a new Warrant representing the portion of the
Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the holder hereof as soon as possible and in
any event within such thirty-day period.
2.2. Net Issue Exercise.
(a) In lieu of exercising this Warrant, holder may elect to
receive shares equal to the value of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with notice of such election in which event the Company shall issue to
Holder a number of shares of the Company's Preferred Stock computed using the
following formula:
X=Y(A-B)
A
Where X - The number of shares of Preferred Stock to be issued to Holder.
Y - the number of shares of Preferred Stock purchasable under
this Warrant.
A - the fair market value of one share of the Company's
Preferred Stock.
B - Warrant price (as adjusted to the date of such
calculations).
(b) For purposes of this Section, fair market value of the
Company's Preferred Stock shall mean the average of the closing bid and asked
prices of the Company's Preferred Stock quoted in the Over-The-Counter Market
Summary or the closing price quoted on any exchange on which the Preferred Stock
is listed, whichever is applicable, as published in the Western Edition of The
Wall Street Journal for the ten trading days prior to the date of
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<PAGE>
determination of fair market value. If the Preferred Stock is not traded
Over-The-Counter or on an exchange, the fair market value shall be the price per
share which the Company could obtain from a willing buyer for shares sold by the
Company from authorized but unissued shares, as such price shall be agreed by
the Company and the Holder.
3. Stock Fully Paid: Reservation of Shares. All Shares that may be issued
upon the exercise of the rights represented by this Warrant and Common Stock
issuable upon conversion of the Preferred Stock will, upon issuance, be fully
paid and nonassessable, and free from all taxes, liens and charges with respect
to the issue thereof. During the period within which the rights represented by
the Warrant may be exercised, the Company will at all times have authorized and
reserved for the purpose of issuance upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Preferred Stock
(and Common Stock issuable upon conversion thereof) to provide for the exercise
of the right represented by this Warrant.
4. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of the Warrant and the Warrant Price
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows:
(a) Reclassification or Merger. In case of any reclassification,
change or conversion of securities of the class issuable upon exercise of this
Warrant (other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision or combination),
or in case of any merger of the Company with or into another corporation (other
than a merger with another corporation in which the Company is a continuing
corporation and which does not result in any reclassification or change of
outstanding securities issuable upon exercise of this Warrant), or in case of
any sale of all or substantially all of the assets of the Company, the Company,
or such successor or purchasing corporation, as the case may be, shall execute a
new Warrant (in form and substance satisfactory to the holder of this Warrant)
providing that the holder of this Warrant shall have the right to exercise such
new Warrant and upon such exercise to receive, in lieu of each share of
Preferred Stock theretofore issuable upon exercise of this Warrant, the kind and
amount of shares of stock, other securities, money and property receivable upon
such reclassification, change or merger by a holder of one share of Preferred
Stock. Such new Warrant shall provide for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Paragraph 4. The provisions of this subparagraph (a) shall similarly apply to
successive reclassifications, changes, mergers and transfers.
(b) Subdivisions or Combination of Shares. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Preferred Stock, the Warrant Price and the number of Shares issuable
upon exercise hereof shall be proportionately adjusted.
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<PAGE>
(c) Stock Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend payable in shares of
Preferred Stock (except any distribution specifically provided for in the
foregoing subparagraphs (a) and (b)), then the Warrant Price shall be adjusted,
from and after the date of determination of shareholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Warrant Price in effect immediately prior to such date of determination by a
fraction (a) the numerator of which shall be the total number of shares of
Preferred Stock outstanding immediately prior to such dividend or distribution,
and (b) the denominator of which shall be the total number of shares of
Preferred Stock outstanding immediately after such dividend or distribution and
the number of Shares subject to this Warrant shall be proportionately adjusted.
(d) No Impairment. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Paragraph 4 and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the holder of this
Warrant against impairment.
(e) Notices of Record Date. In the event of any taking by the
Company of a record of its shareholders for the purpose of determining
shareholders who are entitled to receive payment of any dividend (other than a
cash dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any share of any class or any other securities or property, or
to receive any other right, or for the purpose of determining shareholders who
are entitled to vote in connection with any proposed merger or consolidation of
the Company with or into any other corporation, or any proposed sale, lease or
conveyance of all or substantially all of the assets of the Company, or any
proposed liquidation, dissolution or winding up of the Company, the Company
shall mail to the holder of the Warrant, at least twenty (20) days prior to the
date specified therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right.
5. Notice of Adjustments. Whenever the Warrant Price shall be adjusted
pursuant to the provisions hereof, the Company shall within thirty (30) days of
such adjustment deliver a certificate signed by its chief financial officer to
the registered holder(s) hereof setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the Warrant Price after giving effect to such
adjustment.
6. Fractional Shares. No fractional shares of Preferred Stock will be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall make a cash payment therefor upon the basis of the
Warrant Price then in effect.
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<PAGE>
7. Compliance with Securities Act; Disposition of Warrant or Shares of
Preferred Stock.
(a) Compliance with Securities Act. The holder of this Warrant,
by acceptance hereof, agrees that this Warrant, the shares of Preferred Stock to
be issued upon exercise hereof and the Common Stock to be issued upon conversion
of such Preferred Stock are being acquired for investment and that such holder
will not offer, sell or otherwise dispose of this Warrant or any shares of
Preferred Stock to be issued upon exercise hereof (or Common Stock issued upon
conversion of the Preferred Stock) except under circumstances which will not
result in a violation of the Securities Act of 1933, as amended (the "Act").
This Warrant and all shares of Preferred Stock issued upon exercise of this
Warrant (unless registered under the Act) shall be stamped or imprinted with a
legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i)
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION
OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED OR (iii) RECEIPT OF A NO-ACTION
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT
REGISTRATION UNDER THE ACT IS NOT REQUIRED.
(b) Disposition of Warrant and Shares. With respect to any offer,
sale or other disposition of this Warrant or any shares of Preferred Stock
acquired pursuant to the exercise of this Warrant (or Common Stock issued upon
conversion of such Preferred Stock) prior to registration of such shares, the
holder hereof and each subsequent holder of the Warrant agrees to give written
notice to the Company prior thereto, describing briefly the manner thereof,
together with a written opinion of such holder's counsel, if reasonably
requested by the Company, to the effect that such offer, sale or other
disposition may be effected without registration or qualification (under the Act
as then in effect or any federal or state law then in effect) of this Warrant or
such shares of Preferred Stock or Common Stock and indicating whether or not
under the Act certificates for this Warrant or such shares of Preferred Stock or
Common Stock to be sold or otherwise disposed of require any restrictive legend
as to applicable restrictions on transferability in order to insure compliance
with the Act. Each certificate representing this Warrant or the shares of
Preferred Stock or Common Stock thus transferred (except a transfer pursuant to
Rule 144) shall bear a legend as to the applicable restrictions on
transferability in order to insure compliance with the Act, unless in the
aforesaid opinion of counsel for the holder, such legend is not required in
order to insure compliance with the Act. Nothing herein shall restrict the
transfer of this Warrant or any portion hereof by the initial holder hereof to
any partnership affiliated with the initial holder, or to any partner of any
such partnership provided such transfer may be made in compliance with
applicable federal and state securities laws. The Company may issue stop
transfer instructions to its transfer agent in
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connection with the foregoing restrictions.
8. Rights as Shareholders; Information.
8.1. Shareholder Rights. No holder of the Warrant, as such, shall be
entitled to vote or receive dividends or be deemed the holder of Preferred Stock
or any other securities of the Company which may at any time be issuable on the
exercise thereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to receive notice of meetings, or to receive dividends or subscription rights
or otherwise until this Warrant shall have been exercised and the Shares
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.
8.2. Financial Statements and Information. The Company shall deliver
to the registered holder hereof (i) within 120 days after the end of the fiscal
year of the Company, a consolidated balance sheet of the Company as of the end
of such year and a consolidated statement of income, retained earnings and cash
flows for such year, which year-end financial reports shall be in reasonable
detail and certified by independent public accountants of nationally recognized
standing selected by the Company, and (ii) within 45 days after the end of each
fiscal quarter other than the last fiscal quarter, unaudited consolidated
statements of income, retained earnings and cash flows for such quarter and a
consolidated balance sheet as of the end of such quarter. In addition, the
Company shall deliver to the registered holder hereof any other information or
data provided to the shareholders of the Company.
9. Registration Rights. The Company covenants and agrees as follows:
9.1. Grant of Rights. The Company hereby agrees to amend that certain
Series A Convertible Preferred Stock Purchase Agreement, dated as of March 25,
1992, between the Company and certain holders of its securities, a copy of which
is attached hereto as Exhibit B (the "Stock Purchase Agreement") to provide that
the holder of this Warrant shall be entitled to the benefit of the Provisions of
Section 8 and 10 thereof and to seek the consent of the other parties to such
Stock Purchase Agreement. Such amendment shall be in the form attached hereto as
shall Exhibit C, and shall provide that the holder of this Warrant be deemed a
"Stockholder" as defined in Section 8 of the Stock Purchase Agreement, and that
the Common Stock of the Company issued upon conversion of the Shares shall be
deemed to be "Registrable Shares" as defined in Section 8 of the Stock Purchase
Agreement. Furthermore, the amendment shall allow for the transfer of the rights
granted to the holder hereof to affiliated limited partnerships of the holder
hereof.
10. Additional Rights.
10.1. Secondary Sales. The Company agrees to assist the holder of this
Warrant in obtaining liquidity if opportunities to make secondary sales of the
Company's securities
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become available. To this end, the Company will promptly provide the holder of
this Warrant with notice of any offer to acquire from the Company's security
holders more than five percent (5%) of the total voting power of the Company and
will cooperate with the holder in arranging the sale of this Warrant to the
person or persons making such offer.
10.2. Mergers. Unless the Company provides the holder of this Warrant
with at least 30 days' notice of the terms and conditions of the proposed
transaction, the Company will not (i) sell, lease, exchange, convey or otherwise
dispose of all or substantially all of its property or business, or (ii) merge
into or consolidate with any other corporation (other than a wholly-owned
subsidiary of the Company), or effect any transaction (including a merger or
other reorganization) or series of related transactions, in which more than 50%
of the voting power of the Company is disposed of. The Company will cooperate
with the holder in arranging the sale of this Warrant in connection with any
such transaction.
11. Representations and Warranties. This Warrant is issued and delivered on
the basis of the following:
(a) This Warrant has been duly authorized and executed by the
Company and when delivered will be the valid and binding obligation of the
Company enforceable in accordance with its terms;
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable;
(c) The rights, preferences, privileges and restrictions granted
to or imposed upon the shares of Preferred Stock and the holders thereof are as
set forth in the Company's Certificate of Incorporation, as amended, a true and
complete copy of which has been delivered to the original Warrantholder;
(d) The shares of Common Stock issuable upon conversion of the
Shares have been duly authorized and reserved and, when issued in accordance
with the terms of the Company's Certificate of Incorporation, as amended, will
be validly issued, fully paid and nonassessable; and
(e) The execution and delivery of this Warrant are not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Certificate of
Incorporation or by-laws, do not and will not contravene any law, governmental
rule or regulation, judgment or order applicable to the Company, and do not and
will not contravene any provision of, or constitute a default under, any
indenture, mortgage, contract or other instrument of which the Company is a
party or by which it is bound or require the consent or approval of, the giving
of notice to, the registration with or the taking of any action in respect of or
by, any Federal, state or local government authority or agency or other person.
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12. Amendment of Conversion Rights. During the term of this Warrant, the
Company agrees that it shall not amend its Certificate of Incorporation without
the prior written consent of the holder or holders entitled to purchase a
majority of the Shares upon exercise of this Warrant if as a result of such
amendment any of the conversion rights, including without limitation the
conversion price or antidilution protection privileges, of the Preferred Stock
would be adversely affected.
13. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
14. Notices. Any notice, request or other document required or permitted to
be given or delivered to the holder hereof or the Company shall be delivered, or
shall be sent by certified or registered mail, postage prepaid, to each such
holder at its address as shown on the books of the Company or to the Company at
the address indicated therefore on the signature page of this Warrant.
15. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets, and all of the obligations of
the Company relating to the Preferred Stock issuable upon the exercise of this
Warrant shall survive the exercise and termination of this Warrant and all of
the covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the holder hereof. The Company will, at the time of
the exercise of this Warrant, in whole or in part, upon request of the holder
hereof but at the Company's expense, acknowledge in writing its continuing
obligation to the holder hereof in respect of any rights (including, without
limitation, any right to registration of the shares of Registrable Securities)
to which the holder hereof shall continue to be entitled after such exercise in
accordance with this Warrant; provided, that the failure of the holder hereof to
make any such request shall not affect the continuing obligation of the Company
to the holder hereof in respect of such rights.
16. Lost Warrants or Stock Certificates. The Company covenants to the
holder hereof that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, or like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
17. Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
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18. Governing Law. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF
THE COMMONWEALTH OF MASSACHUSETTS.
METASYN, INC.
By: /s/ Randall B. Lauffer
------------------------------
Title: CEO
----------------------------
Address: Metasyn, Inc.
--------------------------
71 Rogers Street
--------------------------
Cambridge, MA 02142
--------------------------
Date: Dec. 21, 1992
-9-
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EXHIBIT A
Notice of Exercise
To:
1. The undersigned hereby elects to purchase shares of Series Preferred
Stock of Corporation pursuant to the terms of the attached Warrant, and tenders
herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are specified
below:
(Name)
(Address)
3. The undersigned represents that the aforesaid shares being acquired for
the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares.
________________________________
(Signature)
______________________________
(Date)
-10-
<PAGE>
EXHIBIT A-1
Notice of Exercise
To:
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement of Form S-__________, filed ____________, 19__, the undersigned hereby
elects to purchase shares of Series ___ Preferred Stock of the Company (or such
lesser nether of shares as may be sold on behalf of the undersigned at the
Closing) pursuant to the terms of the attached Warrant.
2. Please deliver to the custodian for the selling shareholders a stock
certificate representing such _________ shares.
3. The undersigned has instructed the custodian for the selling
shareholders to deliver to the Company $____________ or, if less, the net
proceeds due the undersigned from the sale of shares in the aforesaid public
offering. If such net proceeds are less than the purchase price for such shares,
the undersigned agrees to deliver the difference to the Company prior to the
Closing.
____________________________
(Signature)
______________________________
Date
-11-
Exhibit 10.5
Lease Number 8050
DOMINION VENTURES MASTER LEASE AGREEMENT
LESSOR/AGENT: LESSEE:
Dominion Ventures, Inc. Metasyn, Inc.
44 Montgomery Street, Suite 4200 71 Rogers Street
San Francisco, CA 94104 Cambridge, MA 02142
Master Lease Line: Initial Term: Rent Factor:
$700,000.00 36 Months 3.32%
- -----------------------------------------------------------------
Advance Rental Security Deposit
(Rent Factor x Master Lease) (Rent Factor x Master Lease)
$23,240.00 $0.00
- ----------------------------------------------------------------.
Effective Date: Funding Expiration Date:
December 21, 1992 May 31, 1993
- -----------------------------------------------------------------
The Master Lease Line, specified above, shall remain open until fully funded or
until the Funding Expiration Date noted above whichever occurs first. The Term
"Equipment" means the items of personal property that are listed on the
Equipment Schedule Agreements (the "Schedules") attached or from time to time
added to this Lease, together with all replacement parts, additions and
accessories incorporated thereto. Schedules, each of which shall have a total
cost of not less than ten thousand dollars ($10,000.00), may be added to this
Lease not more frequently than once per month and in any event only with the
prior approval of Lessor. Equipment is to be limited to the types of equipment
described in Exhibit A attached hereto, the original use of which commences with
Lessee not more than sixty (60) days prior to the date of this Lease. No item of
Equipment shall have a unit cost of less than one thousand dollars ($1,000.00)
or be subject to an invoice of less than five thousand dollars ($5,000.00).
Lessee acknowledges that Lessor must specifically segregate funds for this
Master Lease Line. Advance Rental paid under this Lease is nonrefundable for any
reason; but, for each item of Equipment shall be credited to the last complete
calendar month's rent for such item, subject to the conditions of Paragraph 6.
See attached Schedules for detailed Equipment descriptions and effective
dates.
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This Lease and the Schedules attached hereto are subject to the terms and
conditions set forth above and on subsequent pages which are made part hereof.
1. TRUE LEASE. Lessor leases to Lessee, and Lessee hires and takes from
Lessor, the Equipment. It is the intent of both Lessor and Lessee that this
agreement be a true lease and not a lease intended as security or a conditional
sales agreement. Lessor and Lessee also agree to treat this Lease as a true
lease for income tax purposes.
2. EQUIPMENT AND LIABILITY. Lessee shall select the type and quantity of
each item of Equipment designated in the appropriate Schedule. Lessee shall
defer to Lessor's ability to obtain discount pricing from suppliers of
equipment, and any discounts and rebates resulting from the purchase of
Equipment shall be remitted to Lessor. Lessee shall order each item from the
respective supplier and, in reliance thereon and subject to its prior approval,
Lessor shall be deemed to have ordered and acquired such Equipment from such
supplier. At Lessor's request, and subject to the last sentence in Paragraph 3
hereof, Lessee shall formally assign the purchase order for such Equipment to
Lessor. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT THE MANUFACTURER, RETAILER OR
DISTRIBUTOR OF THE EQUIPMENT, THAT SAID ENTITIES ARE NOT AGENTS OF LESSOR, THAT
LESSEE RENTS THE EQUIPMENT "AS IS", AND THAT LESSOR HAS ACCEPTED NO
RESPONSIBILITY FOR THE TRANSPORTATION, INSTALLATION OR REQUIRED LICENSING
NECESSARY FOR THE TRANSFER, INSTALLATION OR USE OF THE EQUIPMENT. Lessor shall
not be liable for specific performance of this Lease nor for damages if for any
reason a supplier declines, delays or fails to fill any order. Lessee authorizes
Lessor to add the serial number of the Equipment to this Lease. Lessor shall not
be liable to Lessee for any loss, damage or expense of any kind or nature caused
directly or indirectly by the Equipment, its use or maintenance; nor for any
delay or failure to provide any of the Equipment; nor for any interruption of
service or loss of use of the Equipment; nor for any loss of business or damages
caused thereby.
3. WARRANTIES. LESSOR WARRANTS THAT, SO LONG AS LESSEE SHALL NOT BE IN
DEFAULT OF ANY OF THE PROVISIONS OF THIS AGREEMENT OR OF THE APPLICABLE
SCHEDULE, NEITHER LESSOR OR ANY ASSIGNEE OF LESSOR WILL DISTURB LESSEE'S QUIET
AND PEACEFUL POSSESSION OF THE EQUIPMENT AND LESSEE'S USE THEREOF FOR ITS
INTENDED PURPOSES (SUBJECT TO THE TERMS OF PARAGRAPH 15 HEREOF). LESSEE HAS NOT
RELIED UPON AND ACKNOWLEDGES THAT LESSOR HAS MADE NO OTHER REPRESENTATION OR
WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE EQUIPMENT,
INCLUDING WITHOUT
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LIMITATION ITS CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.
NO DEFECT OR UNFITNESS OF THE EQUIPMENT NOR OTHER CLAIM REGARDING CONDITION OR
USE OF THE EQUIPMENT SHALL RELIEVE LESSEE OF THE OBLIGATION TO PAY RENT OR ANY
OTHER OBLIGATION UNDER THIS LEASE. Lessor authorizes Lessee to enforce in its
own name all warranties, agreements or representations, if any, which may be
made by any manufacturer, retailer, distributor or supplier to Lessee or Lessor.
4. TERM. All obligations under this Lease, except regular rental payments,
shall commence immediately upon the Effective Date specified on the first page
of this Agreement (the "Effective Date") and shall continue until full
performance of every provision of this Lease, and each Schedule and Addendum
(the "Lease Term"). All obligations under each Schedule shall commence upon
Lessee's execution of Lessor's Certificate of Inspection and Acceptance (the
"Acceptance Certificate") for the Equipment specified on such Schedule and shall
terminate at the end of the Initial Term (The "Noncancellable Term"). The
"Initial Term", as set forth on page 1 of this Lease, shall begin on the first
day of the calendar quarter following the date of the Acceptance Certificate.
This Lease is irrevocable for its full term and until Lessee has performed all
of its obligations hereunder.
5. RENTAL PAYMENTS. Lessee shall pay to Lessor, as rental for Equipment
during each month of the Noncancellable Term of any Schedule, an amount equal to
the Rent Factor set forth on page one of this Lease multiplied by the total Cost
(as defined below in paragraph 7) of the Equipment to Lessor, which amount shall
be due and payable in advance on the first day of each calendar month during the
Noncancellable Term. If the date of the Acceptance Certificate of any Schedule
shall be other than the first day of the calendar quarter, Lessee shall make
rental payments ("Interim Rent") equal to one-thirtieth of the monthly rental
set forth on the Schedule for each day from and including the date of the
Acceptance Certificate for such Schedule, through and including the last day of
the calendar quarter prior to the beginning of the Initial Term. Such Interim
Rent shall be due and payable on the first day of the calendar month following
the month for which such payment is assessed. In addition to any other remedies
that Lessor may have under this Lease, if Lessee fails to pay any rent or other
amount herein provided within five (5) business days after the same is due,
Lessee shall pay to Lessor a late charge of three percent (3%) of such amount
plus interest from the due date until the date of payment, calculated at the
rate of one and five tenths percent (1.5%) per month, or at the highest rate
permitted by applicable law, whichever is
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<PAGE>
less, to compensate Lessor for additional bookkeeping and collection expense.
All rents, late charges and other amounts for which Lessee is liable shall be
paid to Lessor at its address as set forth above or as otherwise directed by
Lessor. Lessor's right to receive rental payments, as well as all other rights
of Lessor to payment hereunder, shall not be subject to any defense, set off,
counterclaim or recoupment which may arise out of any breach on the part of
Lessor, or by reason of any other liability Lessor may owe Lessee.
6. ADVANCE RENTAL. Upon execution of this Lease, Lessee shall pay to Lessor
an Advance Rental in an amount equal to the Rent Factor multiplied by the Master
Lease Line (plus applicable taxes). A pro-rata portion of the Advance Rental
shall be credited to the last complete calendar month's rent for each item of
Equipment. Lessee grants Lessor a security interest in the Advance Rental to
secure all of Lessee's obligations hereunder. If the Master Lease Line has not
been fully expended by the Funding Expiration Date, Lessor shall retain the
uncredited balance of the Advance Rental as compensation for expenses. Lessor
shall have the right, but not the obligation, to apply the Advance Rental to
cure any default (as described in Section 24 hereof) Lessee, in which event
Lessee shall promptly restore the Advance Rental account to its proper balance.
7. ADJUSTMENTS FOR ACTUAL COST. As used herein, "Cost" means the cost to
Lessor of purchasing the Equipment including any sales taxes and other charges
paid by Lessor and net of any discounts and rebates remitted to Lessor. The
Advance Rental is based upon the Master Lease Line, which is an estimate. If at
any time the actual aggregate Cost of all Equipment exceeds the Master Lease
Line, the Advance Rental shall be increased proportionately. Lessee shall pay
any additional sums for Advance Rental due under this Lease within five (5)
business days after receiving notice from Lessor. If any Schedule of Equipment
causes the actual aggregate Cost of all Equipment to exceed the Master Lease
Line by more than ten percent (10%), Lessor may terminate said Schedule within
fifteen (15) days after receiving invoices for such excess cost and upon request
shall promptly be reimbursed by Lessee for such excess cost. If the actual
aggregate Cost of all Equipment, together with any additional equipment proposed
to be added to the Lease, would exceed the Master Lease Line by more than ten
percent (10%), Lessor may refuse to add such equipment to this Lease, and shall
so notify Lessee.
8. TITLE. All Equipment shall remain personal property, and the title
thereto shall remain exclusively in Lessor. Lessee
4
<PAGE>
will not, without the prior written consent of Lessor, affix the Equipment to
any real property if, as a result thereof, such Equipment would become a fixture
under applicable law. . Lessee agrees, upon the request of Lessor at any time
during the Lease Term, to affix or permit Lessor to affix, in a permanent place
on the Equipment, labels supplied by Lessor identifying the Equipment as
property of Lessor, and shall not alter or remove any such label from any item
of Equipment. Lessee shall keep the Equipment free from any and all liens and
encumbrances except those created by Lessor. Lessee shall give Lessor immediate
notice of any judicial process or encumbrance affecting the Equipment and shall
indemnify and save Lessor harmless from any loss or damage caused thereby,
including court costs, reasonable attorney fees and expenses.
9. FILING. Lessee shall execute or cause to be executed, at Lessee's sole
expense, such supplemental instruments, financing statements and landlord's
waivers as Lessor deems necessary or advisable and shall cooperate to defend the
title of Lessor by filing or otherwise. Lessee authorizes Lessor to record in
any state, this Lease and any financing statements, security agreements and
landlord's waivers with respect to the Equipment or any collateral provided by
Lessee to Lessor. Lessee agrees to give Lessor thirty (30) days written notice
of any change in Lessee's name or place of business. Lessee agrees to give
written notice to Lessor as soon as Lessee has knowledge of any change of
ownership of the real property upon which or within which the Equipment is
located.
10. TAXES. Lessee shall pay in a timely fashion, and shall indemnify and
hold Lessor harmless against all federal, state and local taxes, assessments,
license and registration fees, and other governmental charges of any kind,
including those levied on motor vehicles or trailers, and any interest or
penalties thereon, which may be levied, directly or indirectly, against the
Equipment or with respect to its ordering, purchasing, delivery, ownership,
possession, use, leasing, documentation, and return or other disposition
thereof, regardless of whether such taxes and fees are levied against Lessor or
Lessee. Such taxes and fees to be paid by Lessee shall include, without
limitation, property, sales, rent, franchise, gross receipts, lease, and use
taxes, and any other tax measured by gross rental payments, but shall not
include net income or franchise taxes payable by Lessor on its receipt of rental
payments hereunder. Personal Property Taxes shall be reasonably estimated by
Lessor and billed to Lessee as of the date of assessment each year. Upon receipt
by Lessor of the final personal property tax assessment and invoice, Lessor
shall
5
<PAGE>
invoice or credit Lessee, as applicable, for any differences of such final
assessment and Lessor's original estimate. Lessor shall have the right, but not
the obligation, to pay any such taxes or fees regardless of whether levied
against Lessor or Lessee. Any and all sales taxes levied against Lessor's
purchase of Equipment shall be added to the total Cost of such Equipment as
specified on the Schedule under which such equipment is added to this Lease.
With the exception of taxes and fees which are added to the total Cost of
Equipment hereunder, Lessee shall reimburse Lessor within five (5) days after
receipt of invoice from Lessor specifying the amount of, and reason for, any
payment by Lessor of amounts for which Lessee is liable under this Paragraph 10.
Lessee shall timely prepare and file all reports and returns which are required
to be made with respect to such taxes and/or fees, and all such reports shall
show Lessor as owner of the Equipment.
11. ASSIGNMENTS AND SUBLEASES. Lessee shall not assign this Lease or
Lessee's rights hereunder, or sublease any Equipment, without the prior written
consent of Lessor, which consent shall not be unreasonably withheld, but shall
be subject, nonetheless, to such due diligence and credit review as Lessor deems
necessary. Lessor and Lessee agree that any purchase of all or substantially all
of Lessee's assets, any merger or consolidation into or with Lessee regardless
of whether Lessee is the surviving entity or any entity acquiring more than
fifty percent (50%) of Lessee shall be deemed to be an assignment. Lessor shall
have the right, in its sole discretion, to assign this Lease or any part hereof
subject to the terms hereof. In particular, Lessee acknowledges that it is
Lessor's intention to assign this Lease to one or more limited partnerships with
which Lessor is affiliated, that upon any such assignment the sole liability for
performance of Lessor's obligations hereunder shall fall upon such assignee, and
that the limited partners of such assignee shall have no personal liability for
the performance or observance of this Lease, provided that they act in
accordance with applicable law governing the limited liability of Limited
Partnerships. Following any assignment by Lessor, the term "Lessor", as used
herein, shall include and/or refer to Lessor's assignee, and the Equipment
covered by such assignment shall be deemed to be used by Lessee under a lease
agreement between Lessee and such assignee, the terms and conditions of which
shall be the terms and conditions of this Lease; provided, however, that any
such lease agreement shall cover only the Equipment so assigned. Subject to the
foregoing, this Lease inures to the benefit of, and is binding upon, the heirs,
legatees, representatives, successors and assigns of Lessee and Lessor.
6
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12. POSSESSION. Lessor covenants that, to the best of its knowledge, it is
the lawful owner of the Equipment.
13. USE AND INDEMNITY. Lessee shall use the Equipment in Lessee's business.
Lessee agrees not to allow the Equipment to be used by other than its employees,
consultants and agents. Lessee acknowledges that the Equipment is leased for
commercial purposes and not for personal use. Lessee agrees to indemnify and
hold Lessor, and Lessor's agents, servants, successors and assigns, harmless
against any and all claims, actions, liabilities and expenses of any nature,
including court costs and attorney fees, arising in connection with the
operation, use, maintenance, storage, relocation, and return of the Equipment,
except to the extent any such claims, actions, liabilities and expenses result
from the willful misconduct of Lessor. The foregoing indemnity shall continue in
full force and effect notwithstanding the termination of this Lease, whether by
expiration of time, operation of law or otherwise. Notwithstanding anything to
the contrary contained herein or in any Schedule, Exhibit or Addendum, in no
event shall Lessee be liable to Lessor for special or consequential damages
arising from or as a result of a default or failure to perform any term,
covenant or agreement contained in this Lease.
14. LOCATION. Lessee shall keep the Equipment within the continental United
States and at its place of business as specified above or on the Schedules.
Lessee shall not permit any Equipment to be moved to a new location without the
prior written consent of Lessor.
15. RIGHT OF INSPECTION. Lessor and its agents shall have the right, at any
time during normal business hours, to inspect and photograph the Equipment, to
review all maintenance records related to the Equipment and, during the last
ninety (90) days of the rental term of each respective Schedule, to demonstrate
the Equipment specified thereon to prospective purchasers; provided, however,
Lessor shall give five days notice to Lessee of any such demonstration.
16. MAINTENANCE. Lessee shall exercise due and proper care in the use,
repair and servicing of the Equipment. Lessee shall, at its own expense, make
all repairs and replacements required to maintain the Equipment in good working
condition in accordance with manufacturers' specifications and Lessor's
requirements, and shall pay all other operating expenses relating to the
Equipment. Lessee shall have the right, upon ten (10) days prior written notice
to Lessor, to make any alterations, additions or improvements which do not
render the Equipment in
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such a condition that it cannot, prior to the expiration or other termination of
this Lease, be restored to its original condition, reasonable wear and tear
alone excepted; provided that no such alteration, addition or improvement shall
be made by Lessee if as a result thereof any warranties made by the supplier of
the Equipment would be canceled or terminated. If Lessee does not exercise its
option to purchase the Equipment, as specified in Paragraph 17, or if Lessee
should become in default of any of its obligations hereunder, Lessee shall
restore the Equipment to its original condition, reasonable wear and tear alone
excepted, prior to the expiration or other termination of each respective
Schedule. All replacement parts and additions incorporated to the Equipment
shall become the property of Lessor; provided, however, that Lessor shall
transfer to Lessee title to any alterations, additions and improvements which
were made by Lessee at its own expense to (i) each item of Equipment which
Lessee has restored to its original condition as specified in this Paragraph 16,
and (ii) each item of Equipment purchased by Lessee pursuant to the provisions
of Paragraph 17. Lessee agrees to maintain and provide upon request of Lessor
all internal maintenance reports relating to the Equipment.
17. PURCHASE OPTION. Upon written notice to Lessor not less than 90 days
prior to the expiration of this Lease, so long no default as described in
Section 24 hereof has occurred and is continuing, Lessee shall have the right to
purchase all, but not less than all, of the Equipment, for Fair Market Value (as
defined below) as such term is adopted and recognized by the American Society of
Appraisers (plus applicable taxes), pursuant to mutually agreeable terms and
conditions. Should Lessor and Lessee fail to agree upon the fair market value
purchase price of the Equipment, said price shall be determined by an
independent appraiser, and the cost shall be borne equally by both Lessor and
Lessee. Notwithstanding the date on which Lessee exercises this option, Lessee
shall acquire no rights of title to any Equipment, nor shall any Equipment be
transferred to Lessee, until the expiration of the rental term for the Schedule
on which such Equipment is specified. Lessee shall remain liable for all rental
payments and other obligations until the expiration of the Lease Term. Any
Equipment sold by Lessor shall be sold "as is", "where is", and with no
warranties, express or implied, including without limitation implied warranties
of merchantability and fitness for any particular purpose. "Fair Market Value"
is defined as the estimated amount at which the property might be expected to
exchange between a willing buyer and a willing seller, neither being under
compulsion, each having reasonable knowledge of all relevant facts, and with
equity to both.
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18. RETURN OF EQUIPMENT. Upon 90 days written notice to Lessor, in the
event Lessee has not exercised its Purchase Option as specified in Paragraph 17,
after such notification and upon the expiration or termination of this Lease,
Lessee shall, at Lessee's sole expense, properly pack and return the Equipment,
insured, unencumbered and in the same condition as when received by Lessee,
reasonable wear and tear alone excepted, by such carriers as Lessor shall
approve and to such place as designated by Lessor. Should Lessee fail to return
the Equipment as directed above, all obligations of Lessee under this Lease,
including rental payments, shall remain in full force and effect during the
holdover period.
19. FINANCIAL STATEMENTS.
a. Lessee shall provide to Lessor the financial statements specified
in this subparagraph 19 (a), prepared in accordance with generally accepted
accounting principles, consistently applied (the "Financial Statements");
provided, however, that after the effective date of the initial registration
statement covering a public offering of Lessee's securities, the term "Financial
Statements" shall be deemed to refer only to those statements required by the
Securities and Exchange Commission, to be provided no less frequently than
quarterly.
(i) As soon as practicable (and in any event within thirty (30)
days after the end of each month), a reasonably detailed balance sheet as of the
end of such month and the related statements of income or loss, cash flow and
capital structure of the Lessee during such month (including the commencement of
any material litigation by or against Lessee), certified by Lessee's Chief
Executive Officer or Chief Financial Officer fairly to present the data
reflected therein.
(ii) As soon as practicable (and in any event within ninety (90)
days after the end of each fiscal year, audited balance sheets as of the end of
such year (consolidated if applicable), and related statements of income or
loss, retained earnings or deficit, cash flows and capital structure of Lessee
for such year, setting forth in comparative form the corresponding figures for
the preceding fiscal year, and accompanied by an audit report and opinion of the
independent certified public accountants of recognized national standing
selected by Lessee.
b. Lessee shall promptly furnish to Lessor any additional information
(including but not limited to tax returns,
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income statements, balance sheets, and names of principal creditors) as Lessor
reasonably believes necessary to evaluate Lessee's continuing financial
obligations (the "Additional Information").
c. Lessor agrees to preserve the confidentiality of all information
provided to it hereunder by Lessee regarding the Lessee and its business which
Lessee designates in writing as confidential and which is otherwise not
generally known.
20. TAX INDEMNIFICATION. Lessee acknowledges that this Lease has been
entered into on the basis that Lessor or Lessor's designee intends to claim such
depreciation, interest deductions and other tax benefits as are provided to an
owner of Equipment under the Internal Revenue Code of 1986, as amended (the
"Code") (the "Tax Benefits"). If Lessor or Lessor's designee shall not have the
right to claim or there shall be disallowed or recaptured with respect to Lessor
or Lessor's designee, all or any portion of the Tax Benefits as a result of an
act or failure to act by Lessee in contravention with any of the terms and
conditions of the Lease, Lessee shall promptly pay to Lessor or Lessor's
designee, an amount which, on an after-tax basis, will compensate Lessor or
Lessor's designee for the value of the lost Tax Benefits. The Tax Benefits shall
be deemed to have been disallowed or recaptured upon the earliest of (i) the
adjustment by a taxing authority of the tax return of Lessor to reflect such
loss; or (ii) the payment by Lessor to the Internal Revenue Service or state
taxing authority of the tax increase resulting from such lost Tax Benefits.
Lessor or Lessor's designee shall be deemed not to have the right to claim the
Tax Benefits if, in the opinion of Lessor's independent tax counsel, reasonably
acceptable to Lessee, there is no reasonable basis for claiming the Tax
Benefits.
21. NO REPRESENTATION. Lessor assumes no liability as to the treatment by
Lessee of this Lease, the Equipment or the rental payments for financial
statement or tax purposes.
22. RISK OF LOSS. Lessee assumes the entire risk of loss, theft and damage
of the Equipment from any cause whatsoever, and no such event shall relieve
Lessee of any obligation under this Lease. Lessee shall notify Lessor in writing
within ten (10) days after any such event. Lessee agrees that Lessor shall have
the following remedies upon each occurrence of the following events:
a. In the case of damage of any kind whatsoever to any item of
Equipment (unless such item is damaged beyond
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repair), Lessee shall, at Lessee's sole expense and with Lessor's reasonable
consent, (i) restore such Equipment to its original condition, reasonable wear
and tear alone excepted, or (ii) replace it with like equipment of the same or
later model in good condition. Upon Lessee's replacement of any Equipment as
specified in this subparagraph 22 (a) (ii), Lessor shall transfer title to such
replaced Equipment to Lessee.
b. If any item of Equipment is determined by Lessor to be damaged
beyond repair, or if Lessor has reasonable cause to believe that any item of
Equipment is stolen or lost and such item is not returned to its proper location
within thirty (30) days after notice thereof to Lessee, Lessee shall, with
Lessor's reasonable consent, immediately pay to Lessor: (i) the amount required
to replace such item with like equipment of the same or later model in good
condition, in which case Lessor shall replace such item, and rental payments
shall continue throughout the Lease Term without any interruption, or (ii) the
aggregate unpaid rent due for the balance of the rental term for the items of
Equipment involved, discounted to present value at the then current Treasury
Bill rate, not to exceed eight percent (8%) per annum; the then estimated fair
market value of the items of Equipment involved, calculated as of the expiration
of the Lease Term (the "Residual Value"), discounted to present value at the
then current Treasury Bill rate, not to exceed eight percent (8%) per annum; any
tax payments or indemnification for which Lessee is liable under Paragraphs 10
and 20; and any other amounts for which Lessee is liable under this Lease;
provided, however, the option specified in subparagraph 22 (b) (i) shall not be
available in the event of Lessee's default. Upon payment under subparagraph 22
(b) (ii), this Lease shall terminate with respect to the items paid for, and
Lessee shall become entitled to such items "as is" and "where is" without any
warranty, express or implied.
c. Any proceeds paid to Lessor from the Personal Property Insurance
specified in subparagraph 23 (a) (i) shall be applied to Lessee's obligations
under this Paragraph 22.
23. INSURANCE.
a. Lessee shall, at its own expense, maintain the following types of
insurance, with companies acceptable to Lessor ( being deemed acceptable to
Lessor), until such time as Lessee has returned the Equipment as specified in
Paragraph 18:
(i) Personal Property Insurance on all property owned by Lessee
(including but not limited to all of the
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Equipment), in an agreed amount based upon the following:
(A) Standard All Risk Property Insurance, including boiler
and machinery insurance, and flood insurance if any Equipment is located in an
identified "flood hazard area," in which flood insurance has been made available
pursuant to the National Flood Insurance Act of 1968;
(B) The amount of such insurance shall be not less than the
greater of the fair market value or the full undepreciated replacement value of
the Equipment. The Amount of such insurance allocable to loss or damage or
personal property shall not have a deductible in excess of one thousand dollars
($1,000.00) per occurrence.
(C) Such insurance shall contain an endorsement in which
Lessor is named as Loss Payee with respect to the Equipment, and shall set aside
the amount stated in subparagraph 23 (a) (i) (B) for the sole benefit of, and
payable directly to, Lessor.
(ii) Business interruption insurance in an amount at all times
equal to the total rental payments to become due during the six months following
the date of calculation. In the event of any interruption of Lessee's business,
the amount payable to Lessor shall be equal to the actual loss of rental
payments suffered by Lessor as the result of such interruption, and shall be
payable to Lessor within thirty (30) days from the date of loss, and on a
month-to-month basis thereafter, until Lessee's business is returned to a fully
operational state, plus ninety (90) days.
(iii) Commercial General Liability Insurance covering bodily
injury (including death) and property damage, naming Lessor, its directors,
officers, agents and employees as an Additional Insureds on all policies, and
providing total limits in amounts as are at the time carried by entities engaged
in the same or similar business and which are similarly situated, but in no
event less than two million dollars ($2,000,000.00) for combined single limit
occurrence. All such policies shall cover any injury (including injuries to
Lessee's employees, agents and contractors) or damage occasioned by, or
occurring upon, Lessee's premises, products, operations and, at Lessor's option,
explosion, collapse and underground hazards. All such policies shall contain
contractual liability coverage including all liability assumed under this
agreement, and a cross liability clause providing that such insurance shall,
except with respect to the limits of liability, apply separately to each
insured.
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(iv) Key Person Life Insurance on Randall B. Lauffer in an amount
at all times at least equal to the total rental payments due and to become due
under this Lease, naming Lessor or its Assignee as Collateral Assignee. Lessee
shall obtain said insurance prior to any funding by Lessor and shall maintain
said insurance for the entire Lease Term. If, at any time during the Lease Term,
such named individual's employment with Lessee should terminate in such a manner
that Lessor is unable to collect the proceeds of said Key Person Life Insurance,
Lessee shall cancel such policy and substitute therefore a Key Person Life
Insurance Policy on an employee reasonably selected by Lessor. If Lessee is not
in default of this Lease and Lessor is in receipt of any proceeds from said Key
Person Life Insurance, said proceeds shall be applied, in the following order,
to (A) Lessee's rental and other obligations due the last month of the Lease
Term and then to each successively preceding month, discounted to present value
at the then current Treasury Bill rate, not to exceed eight percent (8%) per
annum, (B) any amounts for which Lessee is liable under Paragraphs 10 and 20 of
this Lease, and (C) any other amounts for which Lessee is liable. Any excess,
after all such obligations have been discharged, shall be paid to Lessee without
interest.
b. All insurance specified in this Paragraph 23 shall be primary over,
and in no event shall, any insurance carried by Lessor be called upon to
contribute to any loss relating to or arising out of this Lease. All insurance
shall be in effect, and shall be evidenced by policies and/or endorsements
delivered to Lessor no later than twenty (20) days after the date upon which
Lessee executes this Lease. Notwithstanding anything to the contrary contained
in this Lease, Lessor shall have no obligation to purchase any Equipment until
all policies are in place. All such policies shall provide for at least thirty
(30) days' prior written notice to Lessor in the event of any cancellation,
non-renewal or material change in coverage, and Lessor shall receive a copy of
any and all endorsements or other documentation relating to such policies.
c. Should Lessee, at any time during the Lease Term, be without
sufficient insurance, as determined by Lessor in accordance with the provisions
of this Paragraph 23, Lessee appoints Lessor as its agent to obtain such
coverage, and promises to pay to Lessor the entire cost of such coverage.
24. DEFAULT. Time is of the essence of this Lease and each of its
provisions. Lessee shall be in default immediately upon the occurrence of any of
the following events:
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a. Nonpayment, by the due date specified herein, of any rental or
other payment required of Lessee under the terms of this Lease, and such
nonpayment shall continue for a period of five (5) business days;
b. Material noncompliance with any or all of the provisions of
Paragraph 23, and such noncompliance shall continue for a period of five (5)
days after notice thereof is given to Lessee;
c. If Lessee has made a misstatement or false statement of, or omitted
to state, a material fact in connection with the execution, performance or
nonperformance of this Lease or any Schedule, or if any representation or
warranty of Lessee in this Lease or the Acceptance Certificate for any item of
Equipment is materially inaccurate or false;
d. If Lessee, without Lessor's prior written consent shall have
attempted to remove, part possession with, sell transfer, encumber, assign or
sublet the Equipment or Lessee's interest under this Lease; or if Lessee shall
have attempted to convert any interest of Lessor arising under this Lease or any
purchase order, or resulting from the purchase of Equipment;
e. If Lessee shall encumber, without Lessor's prior written consent,
other than for valid business purposes during the normal course of business with
respect to license agreements or similar agreements, sell, transfer or assign
Lessee's rights, title and interest in all patents, patent applications,
invention disclosures, copyrights, copyright applications, trademarks (including
service marks), trademark registrations, trade names, computer software and
hardware, microcode and source code, trade secrets, know-how and processes owned
by Lessee (hereinafter referred to as "Intellectual Property");
f. If any of Lessee's credit or financial information submitted to
Lessor prior or subsequent to execution of this Lease (including but not limited
to due diligence materials, Financial Statements and Additional Information)
contains any misstatement or false statement of a material fact, or fails to
state therein any material fact necessary to make the statements made, in light
of the circumstances under which they were made, not misleading;
g. The inability of Lessee to pay debts when due or
14
<PAGE>
within any applicable grace period, or the insolvency of Lessee or the
commission by Lessee of any act of bankruptcy as defined in the Federal
Bankruptcy Act, as amended;
h. If any single judgement for payment of money damages in excess of
fifty thousand dollars ($50,000.00), or aggregate judgments for payment of money
damages in excess of one-hundred thousand dollars ($100,000.00), shall be
rendered against Lessee and shall remain undischarged for a period of sixty (60)
days, during which period execution shall not effectively be stayed;
i. If any substantial part of Lessee's property shall remain subjected
to any levy, seizure, involuntary assignment, attachment, application or sale
for or by any creditor or governmental agency;
j. If any single indebtedness of Lessee exceeding the sum of fifty
thousand dollars ($50,000.00), or aggregate indebtedness exceeding the sum of
one-hundred thousand dollars ($100,000.00), under any other lease or contract
for the borrowing of money or on account of the deferred purchase price of
property shall be accelerated, or subject to acceleration upon the giving of
notice, passage of time or both as a result of a default by Lessee, or the
obligee with respect to such indebtedness shall exercise any other remedy it may
have as a result of such default;
k. If an order, judgement or decree shall be entered by any court
having jurisdiction for (i) relief in respect of Lessee in an involuntary case
under any applicable bankruptcy, insolvency or other similar law (as now or
hereafter in effect), (ii) appointing of receiver, liquidator, assignee,
trustee, custodian, sequestrator (or similar official) for Lessee or for any
substantial part of its property, or sequestering any substantial part of the
property of Lessee, or (iii) liquidating of Lessee's affairs, and any such
order, judgement or decree shall remain in force undismissed, unstayed or
unvacated for a period of sixty (60) days after the date of entry thereof; or if
Lessee shall seek relief of any kind under any such law or consent to any of the
foregoing; or
l. Nonperformance of any of Lessee's obligations other than those
described in this Paragraph 24, and such material nonperformance shall continue
for a period of ten (10) days after notice thereof is given to Lessee.
15
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25. REMEDIES. In the event of any default by Lessee, or upon termination
prior to the expiration of this Lease, Lessor or its agent shall have the right,
without demand or prior notice, in Lessor's sole discretion, to exercise any one
or more of the following remedies in addition to any other remedies available to
Lessor under applicable law:
a. To declare the entire amount of rent hereunder during the remainder
of the Lease Term immediately due and payable;
b. To enforce Lessee's performance or recover damages for Lessee's
default as specified in Paragraph 26;
c. To take possession of any or all items of Equipment and, in
Lessor's sole discretion, with or without any court order or other process of
law. This Lease shall terminate if all defaults on the part of Lessee are not
cured within five (5) days after such taking of possession; however, such taking
of possession and termination of this Lease shall not relieve Lessee of its
obligations to pay rent and other amounts due hereunder. Lessee waives any and
all damages occasioned by such taking of possession.
d. To pursue any and all remedies available at law by reason of
Lessee's default.
26. DAMAGES. Lessor's damages, in the event of default by Lessee (as
described in Paragraph 24), shall include without limitation: (i) the unpaid
balance of rent and all other amounts due and to become due hereunder,
discounted to present value at then current Treasury Bill rate, not to exceed
eight percent (8%) per annum, (ii) the Residual Value (as defined in Paragraph
22), discounted to present value at the then current Treasury Bill rate, not to
exceed eight percent (8%) per annum, (iii) indemnification for any Loss of Tax
Benefits under Paragraph 20, (iv) costs of repossession and repairs and lease or
sale to a third party, plus (v) all other expenses including court costs and
reasonable attorney fees. Lessor's obligation to mitigate said damages shall be
limited as follows:
a. Lessor shall make best efforts to mitigate its damages by
re-leasing the Equipment to a third party, and any rentals received in
consideration for such third party's use of said Equipment during any period of
the Lease Term shall be applied only to that portion of Lessor's damages
resulting from loss of rentals that Lessor would have received from Lessee
during the same period had Lessee not become in default. Amounts
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<PAGE>
received from such third party shall be applied in mitigation of Lessor's
damages only to the extent such amounts are payable in connection with such
third party's periodic rental obligations as specified in the preceding
sentence; in no event shall any other amount received from such third party,
including without limitation as a security deposit or as an advance on periodic
rental obligations, be applied in mitigation of Lessor's damages hereunder.
b. Lessor shall have no obligation to sell any of the Equipment;
however, any amounts received from a sale to a third party shall be applied to
Lessor's damages as specified in this paragraph 26.
27. CHOICE OF LAW. THIS LEASE SHALL BE DEEMED TO HAVE BEEN MADE AND
ACCEPTED AND PERFORMED IN THE COUNTY OF SAN FRANCISCO, IN THE STATE OF
CALIFORNIA, WHERE THE LESSOR'S PRINCIPAL PLACE OF BUSINESS IS LOCATED. THIS
LEASE AND ALL TRANSACTIONS HEREUNDER, AND ALL RIGHTS AND LIABILITIES OF THE
PARTIES HERETO, SHALL BE DETERMINED AND GOVERNED AS TO THE VALIDITY,
INTERPRETATION, ENFORCEMENT AND EFFECT BY THE LAWS OF THE STATE OF CALIFORNIA.
THE LESSEE HEREBY CONSENTS, IN ALL ACTIONS AND PROCEEDINGS ARISING DIRECTLY OR
INDIRECTLY FROM THIS LEASE, TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL
DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA OR ANY STATE COURT
LOCATED WITHIN SAN FRANCISCO COUNTY IN THE STATE OF CALIFORNIA.
28. MISCELLANEOUS.
a. If more than one Lessee is named in or added to this Lease, the
liability of each shall be joint and several.
b. The rent shall not abate by reason of termination of Lessee's right
of possession and/or the taking of possession by Lessor, or for any other
reason.
c. All notices related hereto shall be mailed to Lessor or Lessee
at its respective address as specified on page one of this Lease, or at such
other address as either party may designate upon ten days written notice to the
other party.
d. Paragraph titles are solely for convenience and are not an aid in
the interpretation of this Lease.
e. A representative of Lessor shall have the right to meet with
Lessee's Chief Executive Officer and Chief Financial
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Officer once per quarter throughout the lease term, to discuss the operating
performance and financial condition of the Company. Lessee shall provide to
Lessor complete minutes of each meeting of the Board of Directors of Lessee,
which minutes shall be delivered to Lessor no later than fifteen (15) days after
such meeting.
29. RIGHT OF FIRST OFFER. During the lease term, Lessee shall provide
Lessor with all requests for additional leasing services of equipment of the
type covered by this Leaseprior to the time that such requests are provided to
other equipment leasing sources. Should Lessor and Lessee fail to agree
reasonably promptly on the terms and conditions of such leasing services, then
Lessee may accept a provider other than Lessor.
30. LESSOR'S PERFORMANCE OF LESSEE'S OBLIGATIONS. If Lessee shall fail duly
and promptly to perform any of its obligations under this Lease, Lessor may, at
its option and at any time and upon prior notice to Lessee, perform the same
without waiving any default on the part of Lessee, or any of Lessor's rights.
Lessee shall reimburse Lessor, within five (5) days after notice thereof is
given to Lessee, for all reasonable expenses and liabilities incurred by Lessor
in the performance of Lessee's obligations.
31. NONWAIVER. Lessor's failure at any time to require strict performance
by Lessee shall not constitute waiver of, or diminish, Lessor's right to demand
strict compliance with any provision of this Lease. Waiver by Lessor of any
default shall not constitute waiver of any other default.
32. SURVIVAL OF OBLIGATIONS. All agreements, covenants, representations and
warranties of Lessee and Lessor contained in this Lease or in the Schedules or
other documents delivered pursuant hereto or in connection herewith shall
survive the execution and delivery, and the expiration or other termination of
this Lease.
33. SEVERABILITY. If any provision or remedy herein provided is determined
invalid under applicable law, such provision shall be inapplicable and deemed
omitted; but the remaining provisions, including remaining default remedies,
shall be given effect in accordance with their manifest intent.
34. WARRANTS. As an inducement to Lessor to enter into the Lease, Lessee
grants to Lessor the right to purchase, at a price per share of $11.21, 9,365
shares of Lessee's Series A Preferred Stock, pursuant to a definitive Warrant
dated as of
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21, 1992. If, for any reason, the total cost to Lessor under the Lease should
exceed the Master Lease Line, as specified on page 1 of the Lease, Lessor shall
have the right to purchase from Lessee, at the price per share specified in the
preceding sentence, an additional number of shares obtained by dividing (i) the
product of (A) the amount by which the total Cost to Lessor exceeds the Master
Lease Line multiplied by (B) the number of shares specified in the preceding
sentence, by (ii) the Master Lease Line.
35. UPGRADES, ADDITIONS AND ATTACHMENTS. Any added memory, upgrades,
additions and attachments to Equipment previously placed under this Lease shall,
upon approval by Lessor, be included on a Schedule, with a Noncancellable Term
that is co-terminus with the Equipment to which such added memory, upgrade,
addition or attachment is being attached.
36. ENTIRE AGREEMENT. This instrument constitutes the entire agreement
between the parties and may not be modified except in writing executed by Lessor
and Lessee. No supplier or agent of Lessor is authorized to bind Lessor or to
waive or modify any term of this Lease.
The undersigned representative of Lessee affirms that he or she has read
and understood this Lease and is duly authorized to execute this Lease on behalf
of Lessee and that, if Lessee is a corporation, this Lease is entered into with
consent of Lessee's Board of Directors and stockholders if so required.
In witness whereof, the parties hereto execute this noncancellable Lease as
of the effective date.
LESSEE: LESSOR:
METASYN, INC. DOMINION VENTURES, INC.
By: /s/ Randall B. Lauffer By: /s/ Randolph D. Werner
-------------------------- ------------------------
19
Exhibit 10.6
FIRST AMENDMENT TO MASTER LEASE AGREEMENT NO. 8050
This Amendment dated May 14, 1993, to Master Lease Agreement No. 8050 dated
December 21, 1992 (the "Lease"), is entered into by and between Metasyn, Inc.
(the "Lessee") and Dominion Ventures, Inc. (the "Lessor").
WHEREAS, the Funding Expiration Date as set forth in the First Amendment to the
Lease has expired.
NOW THEREFORE, the parties hereto agree to amend the Lease as follows:
1. The Funding Expiration Date of May 31, 1993 as set forth in the Master
Lease Agreement No. 8050, shall be amended to June 30, 1993.
Except as specifically provided herein, all terms and conditions
of the Lease shall remain in full force and effect, without
waiver or modification.
IN WITNESS WHEREOF, the parties hereto have caused this amendment
to be executed as of the date first written above.
LESSEE: METASYN, INC.
By: /s/ Randall B. Lauffer
------------------------
Its: CEO
-------------------------
LESSOR: DOMINION VENTURES, INC.
By: /s/ Randolph D. Werner
-------------------------
Its: CFO
-------------------------
Exhibit 10.7
SECOND AMENDMENT TO MASTER LEASE AGREEMENT NO. 8050
This Second Amendment dated August 5, 1993, to Master Lease Agreement No.
8050 dated December 21, 1992, (the "Lease"), is entered into by and between
Metasyn, Inc. (the "Lessee") and Dominion Ventures, Inc., (the "Lessor").
WHEREAS, Lessee has requested that additional items be purchased under the
Lease.
NOW THEREFORE, the parties hereto agree to amend the lease as follows:
1. The Funding Expiration Date of June 30, 1993 as set forth in the First
Amendment to the Lease, shall be amended to be September 30, 1993.
2. As an inducement to Lessor to extend the Funding Expiration Date, Lessee
shall grant to lessor, in addition to that certain Warrant to purchase
9,365 shares of Lessee's Series A Preferred Stock dated 12/21/92, a
Warrant to purchase 1,332 shares of Lessee's Series A Preferred Stock
at a price per share of $11.21, substantially in the form attached
hereto as exhibit A.
3. Upon signing of this Amendment, Lessee shall pay to Lessor a commitment
fee of $1,000.
4. Paragraph 34, line 5 of the Lease, beginning "If, for any reason,..."
shall be amended to read as follows;
If for any reason, the total cost to Lessor under the Lease should
exceed the Master Leaseline, as specified in the Lease, Lessor
shall have the right to purchase from Lessee at a price per share
specified in the preceding sentence, an additional number of shares
obtained by dividing (i) the product of (a) the amount by which the
total cost to Lessor exceeds the Master Leaseline multiplied by
(b) the total number of shares granted to Lessor by (ii) the Master
Leaseline.
Except as specifically provided herein, all terms and conditions of the Lease
shall remain in full force and effect, without waiver or modification.
IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
executed as of the date first written above.
LESSEE: METASYN, INC.
By: /s/ Randall B. Lauffer 8/10/93
Its: CEO
LESSOR: DOMINION VENTURES, INC. 8/10/93
By: /s/ Randolph Werner
Its: CFO
Exhibit 10.8
FIRST AMENDMENT LEASE FROM
TRUSTEES OF THE CAMBRIDGE EAST TRUST
TO METASYN, INC.
This is the First Amendment made as of October 20, 1993 to the Lease
dated July 7, 1992 between the Trustees of The Cambridge East Trust, as
Landlord, and Metasybn, Inc., as Tenant, for premises at 71 Rogers Street and 75
Rogers Street, Cambridge, Massachusetts (the "Lease").
Whereas, the Landlord is willing and the Tenant wishes to amend the
requirements of the Lease pertaining to Tenant's liability insurance
obligations.
Therefore, for valuable consideration the receipt and sufficiency of
which is mutually acknowledged:
This Lease is amended by deleting Section 9.l related to public
liability insurance and adding the following in lieu thereof:
9.1 Public Liability Insurance. Tenant shall take out and maintain in
force throughout the Term commercial general liability insurance naming
Landlord, Tenant and all persons claiming under them as insureds
against all claims and demands for any injury to person or property
which may be claimed to have occurred on the Premises, the Building,
the grounds and ways adjoining the Building, in an amount which at the
beginning of the Term shall not be less than $3,000,000 or such higher
amounts as Landlord shall determine are required by reason of Tenants'
use of the Premises and which thereafter, if Landlord requires, shall
be in such higher amounts as are then consistent with sound commercial
practice in Cambridge, Massachusetts. This coverage may be provided
through a primary policy or a primary policy with excess umbrella, at
Tenant's election.
Agreement Made Only When Amendment Signed. This Amendment
shall bind Landlord and Tenant only when executed and delivered by
both. This Amendment when signed by one party and delivered to the
other, shall constitute an offer to enter into the Amendment on the
terms set forth herein. No submission of this Amendment, unsigned by
either party to the other, shall constitute an offer.
Except as amended herein, the Lease is ratified, confirmed and
approved.
Executed as a sealed instrument under Massachusetts law.
<PAGE>
Signatures
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LANDLORD: TENANT:
Trustees of The Cambridge East
Trust, as Trustees and not
individually
By: Beal and Company, Inc. Metasyn, Inc.
Managing Agent
By: /s/ Robert L. Beal By: /s/ Randall B. Lauffer
___________________________ ____________________________
hereunto duly authorized hereunder duly authorized
Secretary's Certificate
The undersigned hereby certifies (1) that he is the duly elected Secretary
of the corporation executing this Lease as amended by this First Amendment as
Tenant, (2) that the Tenant's Board of Directors has duly decided as required by
law and the Tenant's governing documents that the Tenant shall enter into this
Lease as amended by this First Amendment and has duly empowered the person who
executed this First Amendment to do so in the name of and on behalf of the
Tenant, and (3) that the Tenant's execution and performance of this Lease as
amended by this First Amendment is consistent with and does not contravene or
violate the law and governing documents under which Tenant is organized and
operated.
/s/ Peter Wirth
--------------------------
, Secretary
Exhibit 10.9
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE, TRANSFER
OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (i)
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL
FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION
IS NOT REQUIRED OR (iii) RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT
REQUIRED.
Shares Issuable Upon Exercise: 11,402
WARRANT TO PURCHASE
SHARES OF SERIES B PREFERRED STOCK
Expires June 6, 2004
THIS CERTIFIES THAT, for value received, Dominion Ventures, Inc., is
entitled to subscribe for and purchase 11,402 shares (as adjusted pursuant to
provisions hereof, the "Shares") of the fully paid and nonassessable Series B
Preferred Stock of Metasyn, Inc., a Delaware corporation (the "Company"), at a
price per share of $1.513 (such price and such other price as shall result, from
time to time, from adjustments specified herein is herein referred to as the
"Warrant Price"), subject to the provisions and upon the terms and conditions
hereinafter set forth. As used herein, the term "Preferred Stock" shall mean the
Company's presently authorized Series B Preferred Stock, and any stock into or
for which such Series B Preferred Stock may hereafter be converted or exchanged
pursuant to the Certificate of Incorporation of the Company as from time to time
amended as provided by law and in such Certificate, and the term "Grant Date"
shall mean June 6, 1994.
1. Term. The purchase right represented by this Warrant is exercisable, in
whole or in part, at any time and from time to time from and after the Grant
Date and prior to the earlier of the tenth annual anniversary date of the Grant
Date or the fifth annual anniversary of the consummation of the Company's
initial public offering of its Common Stock, the aggregate gross proceeds from
which exceed $5,000,000.
2. Method of Exercise; Net Issue Exercise.
2.1. Method of Exercise; Payment; Issuance of New Warrant. The
purchase right represented by this Warrant may be exercised by the holder
hereof, in whole or in part and from time to time, by either, at the election of
the holder hereof, (a) the surrender of this Warrant (with the notice of
exercise form attached hereto as Exhibit A duly executed) at the principal
office of the Company and by the payment to the Company, by check, of an amount
equal to the then applicable Warrant Price per share multiplied by the number of
Shares then
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being purchased or (b) if in connection with a registered public offering of the
Company's securities, the surrender of this Warrant (with the notice of exercise
form attached hereto as Exhibit A-1 duly executed) at the principal office of
the Company together with notice of arrangements reasonably satisfactory to the
Company for payment to the Company either by check or from the proceeds of the
sale of shares to be sold by the holder in such public offering of an amount
equal to the then applicable Warrant Price per share multiplied by the number of
Shares then being purchased. The person or persons in whose name(s) any
certificate(s) representing shares of Preferred Stock shall be issuable upon
exercise of this Warrant shall be deemed to have become the holder(s) of record
of, and shall be treated for all purposes as the record holder(s) of, the shares
represented thereby (and such shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised. In the event of any exercise of the rights represented by
this Warrant, certificates for the shares of stock so purchased shall be
delivered to the holder hereof as soon as possible and in any event within
thirty days of receipt of such notice and, unless this Warrant has been fully
exercised or expired, a new Warrant representing the portion of the Shares, if
any, with respect to which this Warrant shall not then have been exercised shall
also be issued to the holder hereof as soon as possible and in any event within
such thirty-day period.
2.2. Net Issue Exercise.
(a) In lieu of exercising this Warrant, holder may elect to
receive shares equal to the value of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with notice of such election in which event the Company shall issue to
Holder a number of shares of the Company's Preferred Stock computed using the
following formula:
X= Y(A-B)
A
Where X - The number of shares of Preferred Stock to be issued to Holder.
Y - the number of shares of Preferred Stock purchasable under
this Warrant.
A - the fair market value of one share of the Company's
Preferred Stock.
B - Warrant price (as adjusted to the date of such calculations).
(b) For purposes of this Section, fair market value of the
Company's Preferred Stock shall mean the average of the closing bid and asked
prices of the Company's Preferred Stock quoted in the Over-The-Counter Market
Summary or the closing price quoted on any exchange on which the Preferred Stock
is listed, whichever is applicable, as published in the Western Edition of The
Wall Street Journal for the ten trading days prior to the date of determination
of fair market value. If the Preferred Stock is not traded Over-The-Counter or
on an exchange, the fair market value shall be the price per share which the
Company could obtain
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<PAGE>
from a willing buyer for shares sold by the Company from authorized but unissued
shares, as such price shall be agreed by the Company and the Holder.
3. Stock Fully Paid; Reservation of Shares. All Shares that may be issued
upon the exercise of the rights represented by this Warrant and Common Stock
issuable upon conversion of the Preferred Stock will, upon issuance, be fully
paid and nonassessable, and free from all taxes, liens and charges with respect
to the issue thereof. During the period within which the rights represented by
the Warrant may be exercised, the Company will at all times have authorized and
reserved for the purpose of issuance upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Preferred Stock
(and Common Stock issuable upon conversion thereof) to provide for the exercise
of the right represented by this Warrant.
4. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of the Warrant and the Warrant Price
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows:
(a) Reclassification or Merger. In case of any reclassification,
change or conversion of securities of the class issuable upon exercise of this
Warrant (other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision or combination),
or in case of any merger of the Company with or into another corporation (other
than a merger with another corporation in which the Company is a continuing
corporation and which does not result in any reclassification or change of
outstanding securities issuable upon exercise of this Warrant), or in case of
any sale of all or substantially all of the assets of the Company, the Company,
or such successor or purchasing corporation, as the case may be, shall execute a
new Warrant (in form and substance satisfactory to the holder of this Warrant)
providing that the holder of this Warrant shall have the right to exercise such
new Warrant and upon such exercise to receive, in lieu of each share of
Preferred Stock theretofore issuable upon exercise of this Warrant, the kind and
amount of shares of stock, other securities, money and property receivable upon
such reclassification, change or merger by a holder of one share of Preferred
Stock. Such new Warrant shall provide for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Paragraph 4. The provisions of this subparagraph (a) shall similarly apply to
successive reclassifications, changes, mergers and transfers.
(b) Subdivisions or Combination of Shares. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Preferred Stock, the Warrant Price and the number of Shares issuable
upon exercise hereof shall be proportionately adjusted.
(c) Stock Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend payable in shares of
Preferred Stock (except any distribution specifically provided for in the
foregoing subparagraphs (a) and (b)), then the
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<PAGE>
Warrant Price shall be adjusted, from and after the date of determination of
shareholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Warrant Price in effect immediately prior to such
date of determination by a fraction (a) the numerator of which shall be the
total number of shares of Preferred Stock outstanding immediately prior to such
dividend or distribution, and (b) the denominator of which shall be the total
number of shares of Preferred Stock outstanding immediately after such dividend
or distribution and the number of Shares subject to this Warrant shall be
proportionately adjusted.
(d) No Impairment. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Paragraph 4 and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the holder of this
Warrant against impairment.
(e) Notices of Record Date. In the event of any taking by the
Company of a record of its shareholders for the purpose of determining
shareholders who are entitled to receive payment of any dividend (other than a
cash dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any share of any class or any other securities or property, or
to receive any other right, or for the purpose of determining shareholders who
are entitled to vote in connection with any proposed merger or consolidation of
the Company with or into any other corporation, or any proposed sale, lease or
conveyance of all or substantially all of the assets of the Company, or any
proposed liquidation, dissolution or winding up of the Company, the Company
shall mail to the holder of the Warrant, at least twenty (20) days prior to the
date specified therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right.
5. Notice of Adjustments. Whenever the Warrant Price shall be adjusted
pursuant to the provisions hereof, the Company shall within thirty (30) days of
such adjustment deliver a certificate signed by its chief financial officer to
the registered holder(s) hereof setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the Warrant Price after giving effect to such
adjustment.
6. Fractional Shares. No fractional shares of Preferred Stock will be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall make a cash payment therefor upon the basis of the
Warrant Price then in effect.
7. Compliance with Securities Act: Disposition of Warrant or Shares of
Preferred Stock.
-4-
<PAGE>
(a) Compliance with Securities Act. The holder of this Warrant,
by acceptance hereof, agrees that this Warrant, the shares of Preferred Stock to
be issued upon exercise hereof and the Common Stock to be issued upon conversion
of such Preferred Stock are being acquired for investment and that such holder
will not offer, sell or otherwise dispose of this Warrant or any shares of
Preferred Stock to be issued upon exercise hereof (or Common Stock issued upon
conversion of the Preferred Stock) except under circumstances which will not
result in a violation of the Securities Act of 1933, as amended (the "Act").
This Warrant and all shares of Preferred Stock issued upon exercise of this
Warrant (unless registered under the Act) shall be stamped or imprinted with a
legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i)
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION
OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED OR (iii) RECEIPT OF A NO-ACTION
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT
REGISTRATION UNDER THE ACT IS NOT REQUIRED.
(b) Disposition of Warrant and Shares. With respect to any offer,
sale or other disposition of this Warrant or any shares of Preferred Stock
acquired pursuant to the exercise of this Warrant (or Common Stock issued upon
conversion of such Preferred Stock) prior to registration of such shares, the
holder hereof and each subsequent holder of the Warrant agrees to give written
notice to the Company prior thereto, describing briefly the manner thereof,
together with a written opinion of such holder's counsel, if reasonably
requested by the Company, to the effect that such offer, sale or other
disposition may be effected without registration or qualification (under the Act
as then in effect or any federal or state law then in effect) of this Warrant or
such shares of Preferred Stock or Common Stock and indicating whether or not
under the Act certificates for this Warrant or such shares of Preferred Stock or
Common Stock to be sold or otherwise disposed of require any restrictive legend
as to applicable restrictions on transferability in order to insure compliance
with the Act. Each certificate representing this Warrant or the shares of
Preferred Stock or Common Stock thus transferred (except a transfer pursuant to
Rule 144) shall bear a legend as to the applicable restrictions on
transferability in order to insure compliance with the Act, unless in the
aforesaid opinion of counsel for the holder, such legend is not required in
order to insure compliance with the Act. Nothing herein shall restrict the
transfer of this Warrant or any portion hereof by the initial holder hereof to
any partnership affiliated with the initial holder, or to any partner of any
such partnership provided such transfer may be made in compliance with
applicable federal and state securities laws. The Company may issue stop
transfer instructions to its transfer agent in connection with the foregoing
restrictions.
-5-
<PAGE>
8. Rights as Shareholders; Information.
8.1. Shareholder Rights. No holder of the Warrant, as such, shall be
entitled to vote or receive dividends or be deemed the holder of Preferred Stock
or any other securities of the Company which may at any time be issuable on the
exercise thereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to receive notice of meetings, or to receive dividends or subscription rights
or otherwise until this Warrant shall have been exercised and the Shares
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.
8.2. Financial Statements and Information. The Company shall deliver
to the registered holder hereof (i) within 120 days after the end of the fiscal
year of the Company, a consolidated balance sheet of the Company as of the end
of such year and a consolidated statement of income, retained earnings and cash
flows for such year, which year-end financial reports shall be in reasonable
detail and certified by independent public accountants of nationally recognized
standing selected by the Company, and (ii) within 45 days after the end of each
fiscal quarter other than the last fiscal quarter, unaudited consolidated
statements of income, retained earnings and cash flows for such quarter and a
consolidated balance sheet as of the end of such quarter. In addition, the
Company shall deliver to the registered holder hereof any other information or
data provided to the shareholders of the Company.
9. Registration Rights. The Company covenants and agrees as follows:
9.1. Grant of Rights. The Company hereby agrees to amend that certain
Stockholders' Rights Agreement dated as of March 4, 1994, between the Company
and certain holders of its securities, a copy of which is attached hereto as
Exhibit B (the "Registration Rights Agreement") to provide that the holder of
this Warrant shall be entitled to the benefit of the provisions thereof and to
seek the consent or the other parties to such Registration Rights Agreement.
Such amendment shall be in the form attached hereto as Exhibit C, and shall
provide that the holder of this Warrant be deemed a "Stockholder" as defined in
the Registration Rights Agreement, and that the Common Stock of the Company
issued upon conversion of the Shares shall be deemed to be "Registrable Shares"
as defined in the Registration Rights Agreement. Furthermore, the amendment
shall allow for the transfer of the rights granted to the holder hereof to
affiliated limited partnerships of the holder hereof.
10. Additional Rights.
10.1. Secondary Sales. The Company agrees to assist the holder of this
Warrant in obtaining liquidity if opportunities to make secondary sales of the
Company's securities become available. To this end, the Company will promptly
provide the holder of this Warrant with notice of any offer to acquire from the
Company's security holders more than five percent (5%) of the total voting power
of the Company and will cooperate with the holder in arranging
-6-
<PAGE>
the sale of this Warrant to the person or persons making such offer.
10.2. Mergers. Unless the Company provides the holder of this Warrant
with at least 30 days' notice of the terms and conditions of the proposed
transaction, the Company will not (i) sell, lease, exchange, convey or otherwise
dispose of all or substantially all of its property or business, or (ii) merge
into or consolidate with any other corporation (other than a wholly-owned
subsidiary of the Company), or effect any transaction (including a merger or
other reorganization) or series of related transactions, in which more than 50%
of the voting power of the Company is disposed of. The Company will cooperate
with the holder in arranging the sale of this Warrant in connection with any
such transaction.
11. Representations and Warranties. This Warrant is issued and delivered on
the basis of the following:
(a) This Warrant has been duly authorized and executed by the
Company and when delivered will be the valid and binding obligation of the
Company enforceable in accordance with its terms;
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable;
(c) The rights, preferences, privileges and restrictions granted
to or imposed upon the shares of Preferred Stock and the holders thereof are as
set forth in the Company's Certificate of Incorporation, as amended, a true and
complete copy of which has been delivered to the original Warrantholder;
(d) The shares of Common Stock issuable upon conversion of the
Shares have been duly authorized and reserved and, when issued in accordance
with the terms of the Company's Certificate of Incorporation, as amended, will
be validly issued, fully paid and nonassessable; and
(e) The execution and delivery of this Warrant are not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Certificate of
Incorporation or by-laws, do not and will not contravene any law, governmental
rule or regulation, judgment or order applicable to the Company, and do not and
will not contravene any provision of, or constitute a default under, any
indenture, mortgage, contract or other instrument of which the Company is a
party or by which it is bound or require the consent or approval of, the giving
of notice to, the registration with or the taking of any action in respect of or
by, any Federal, state or local government authority or agency or other person.
12. Amendment of Conversion Rights. During the term of this Warrant, the
Company agrees that it shall not amend its Certificate of Incorporation without
the prior written
-7-
<PAGE>
consent of holders of not less than 66 2/3% of the Preferred Stock (including,
for this purpose, Shares subject to this Warrant) if as a result of such
amendment any of the conversion rights, including without limitation the
conversion price or antidilution protection privileges, of the Preferred Stock
would be adversely affected.
13. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
14. Notices. Any notice, request or other document required or permitted to
be given or delivered to the holder hereof or the Company shall be delivered, or
shall be sent by certified or registered mail, postage prepaid, to each such
holder at its address as shown on the books of the Company or to the Company at
the address indicated therefore on the signature page of this warrant.
15. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets, and all of the obligations of
the Company relating to the Preferred Stock issuable upon the exercise of this
Warrant shall survive the exercise and termination of this Warrant and all of
the covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the holder hereof. The Company will, at the time of
the exercise of this Warrant, in whole or in part, upon request of the holder
hereof but at the Company's expense, acknowledge in writing its continuing
obligation to the holder hereof in respect of any rights (including, without
limitation, any right to registration of the shares of Registrable Securities)
to which the holder hereof shall continue to be entitled after such exercise in
accordance with this Warrant; provided, that the failure of the holder hereof to
make nay such request shall not affect the continuing obligation of the Company
to the holder hereof in respect of such rights.
16. Lost Warrants or Stock Certificates. The Company covenants to the
holder hereof that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, or like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
17. Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
-8-
<PAGE>
18. Governing Law. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF
THE COMMONWEALTH OF MASSACHUSETTS.
METASYN, INC.
By: /s/ Randall B. Lauffer
------------------------
Title: CEO
Address:
-------------------------
---------------------------------
Date: June 21, 1994
-9-
<PAGE>
EXHIBIT A
Notice of Exercise
To:
1. The undersigned hereby elects to purchase shares of Series Preferred
Stock of Corporation pursuant to the terms of the attached Warrant, and tenders
herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are specified
below:
(Name)
(Address)
3. The undersigned represents that the aforesaid shares being acquired for
the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares.
----------------------------------------
(Signature)
- ---------------------------------
(Date)
-10-
<PAGE>
EXHIBIT A-1
Notice of Exercise
To:
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the ___________ Company's public offering contemplated by the
Registration Statement of Form S-________, filed __________, 19__, the
undersigned hereby elects to purchase shares of Series Preferred Stock of the
Company (or such lesser number of shares as may be sold on behalf of the
undersigned at the Closing) pursuant to the terms of the attached Warrant.
2. Please deliver to the custodian for the selling shareholders a stock
certificate representing such ______ shares.
3. The undersigned has instructed the custodian for the selling
shareholders to deliver to the Company $__________ or, if less, the net proceeds
due the undersigned from the sale of shares in the aforesaid public offering. If
such net proceeds are less than the purchase price for such shares, the
undersigned agrees to deliver the difference to the Company prior to the
Closing.
-----------------------------------
(Signature)
- ----------------------------
(Date)
-11-
Exhibit 10.10
SECOND AMENDMENT TO MASTER LEASE AGREEMENT NO. 8050
This Second Amendment dated June 6, 1994, to Master Lease Agreement No. 8050
dated December 21, 1992 (the "Lease"), is entered into by and between Metasyn,
Inc. (the "Lessee") and Dominion Ventures, Inc. (the "Lessor").
WHEREAS, the Funding Expiration Date as set forth in the First Amendment to the
Lease has expired.
NOW THEREFORE, the parties hereto agree to amend the Lease as follows:
1. The Master Lease Line shall be increased by $115,000 for a total of
$787,199.78.
2. The Funding Expiration Date of June 30, 1993 as set forth in the First
Amendment to the Lease shall be amended to June 30, 1994.
3. The Advance Rental Amount specified on page 1 of the Lease, shall be
increased by $3,730.60 (plus applicable taxes) for a total of
$26,047.63, which shall be paid to Lessor upon execution of the Second
Amendment and shall be credited to the last complete calendar month's
rent for each item of Equipment, subject to the conditions set forth
in paragraph 6 of the Lease.
4. The Rent Factor set forth on Page 1 of the Lease shall hereinafter be
amended to 3.244%.
Except as specifically provided herein, all terms and conditions
of the Lease shall remain in full force and effect, without
waiver or modification.
IN WITNESS WHEREOF, the parties hereto have caused this amendment
to be executed as of the date first written above.
LESSEE: METASYN, INC.
By: /s/ Randall B. Lauffer
--------------------------
Its: CEO
--------------------------
LESSOR: DOMINION VENTURES, INC.
By: /s/ Randolph D. Werner
--------------------------
Its: CFO
--------------------------
Exhibit 10.11
AMENDMENT AGREEMENT
This Amendment Agreement made this 15th day of Sept., 1994 by and between the
following parties:
SUMITOMO CORPORATION, a Japanese corporation with its principal place of
business located at 2-2, Hitosubashi 1-chome, Chiyoda-ku, Tokyo, Japan
(hereinafter "Agent"); and
METASYN, INC., an United States corporation, with its principal place of
business located at 71 Rogers Street, Cambridge, MA 02142-lll8, USA (hereinafter
"Company")
WITNESSETH:
WHEREAS, the parties hereto have entered into Agency Agreement dated 13th day of
March, l992, as amended by Amendment dated 26th day of June, 1992 (hereinafter
collectively the "Original Agreement"); and
WHEREAS, the parties hereto desire to amend certain provisions of
the Original Agreement as hereinafter set forth;
NOW, THEREFORE, Agent and Company hereby agree to amend the Original Agreement
as follows:
Clause 1.
Article 6 of the Original Agreement is amended by changing the title of
article to "Exclusivity and Exclusion Criteria" and adding at the end
thereof the following:
"provided that Company reserves the right to exclude Agent from
contacting [ ]* and its parent company but always subject to
Article 8.2".
Clause 2.
Article 8 of the Original Agreement shall be amended by changing the
title of article to "Compensation on blood pool MRI agent and tumor
differentiation MRI agent" and amended to read in its entirety as
follows:
"8.1 In consideration for the services to be rendered by Agent
hereunder, Company shall pay the following
commission to Agent:
A. in respect of the total amount of [ ]*
*Confidential information omitted and filed with the Commission.
<PAGE>
which may be received by Company under any arrangement:
[ ]* on amount
up to and including [ ]*
[ ]* on amount
exceeding [ ]* and up to and including [ ]*
[ ]* on amount
exceeding [ ]*
If both agents are licensed to the same company and it is difficult to
discern exact quantities of [ ]*, then the above model will be applied
to the total of these payments.
B. in respect for the total amounts of milestone payments
which depend on an identifiable event, not time, for both
agents which may be received by Company under any
Arrangement:
[ ]* on amount payable to Company
8.2 If Company enters into any Arrangement for blood pool agent
and tumor differentiation MRI agent with [ ]* or its parent
company Company shall pay Agent the commission of [ ]* as
provided for in Article 8.1.
Clause 3.
Article 11.1 of the Original Agreement shall be amended to read in its
entirety as follows:
"11.1 The initial contracted period of this Agreement
shall be four (4) years from 13th day of March,
1992, provided that the parties hereto may discuss,
in any time, on a one ( 1 ) year extension of this
Agreement and/or the amendment of Appendix 1 prior
to the expiration of the initial term or any
extension thereof."
Clause 4.
Appendix 1 of the Original Agreement shall be replaced with the new
Appendix 1 as attached hereto.
Clause 5.
*Confidential information omitted and filed with the Commission.
<PAGE>
This Agreement shall be effective as from 1st day of September, 1994.
Clause 6.
Except as expressly amended hereinabove, all other terms and conditions
of the Original Agreement shall continue to be effective and remain
unchanged.
Clause 7.
All terms used herein, except as defined herein, shall have the
meanings ascrived in the Original Agreement.
IN WITNESS THEREOF, the parties hereto have caused this Amendment
Agreement to be executed by their duly authorized representatives as of
the day and year first above written.
METASYN, INC.
By: /s/ Randall B. Lauffer
-------------------------
Name: Randall B. Lauffer
Title: CEO
SUMITOMO CORPORATION
By: /s/ A. Tamai
-------------------------
Name: A. Tamai
Title: General Manager
New Drug & Biotech Dept.
<PAGE>
Appendix 1
[bullet] Hepatobiliary Magnetic Resonance Imaging (MRI) Agent
[bullet] Blood Pool Magnetic Resonance Imaging (MRI) Agent
[bullet] Tumor Differentiation Magnetic Resonance Imaging (MRI)
Agent
Exhibit 10.12
SECOND AMENDMENT LEASE FROM
TRUSTEES OF THE CAMBRIDGE EAST TRUST
TO METASYN, INC.
This is the Second Amendment made as of as of September 17, 1994 to the
Lease dated July 7, 1992 between the Trustees of The Cambridge East Trust, as
Landlord, and Metasyn, Inc., as Tenant, for premises at 71 Rogers Street and 75
Rogers Street, Cambridge, Massachusetts (the "Lease").
Whereas, the Landlord is willing and the Tenant wishes (i) to lease as
additional premises a portion of the premises at 69 Rogers Street, Cambridge and
(ii) to make certain other amendments, all on the terms and conditions stated in
the Lease as modified in this Second Amendment.
Therefore, for valuable consideration the receipt and sufficiency of
which is mutually acknowledged:
1. Section l Reference Data The Landlord and the Tenant amend the Lease
by substituting Section 1 Reference Data appearing at the end of this Second
Amendment for the original Section 1 Reference Data and the Lease is hereby so
amended.
The Premises added to the Lease by this Second Amendment are delivered
by Landlord and accepted by Tenant "as is".
2. Sections 3.5, 3.6 and 3.7, pertaining Tenant's expansion to premises
at 69 Rogers Street and 79 Rogers Street, shall be of no further force or effect
(but this shall not be construed to affect Tenant's rights to receive payment
for Tenant's Improvements as stated in Section 3.6 as to the Premises added by
this Second Amendment, which remain as stated in Section 3.6).
3. Section 8.1 Compliance with Law, including Hazardous Materials is
amended by adding the following at the end of the second paragraph "Exhibit 4
hereto states the standard to which Tenant shall restore the Premises at the end
of the Term as required in Section 8.1 of the Lease".
4. Except as amended herein, the Lease is ratified and confirmed.
5. Agreement Made Only When Amendment Signed. This Amendment shall bind Landlord
and Tenant only when executed and delivered by both. This Amendment when signed
by one party and delivered to the other, shall constitute an offer to enter into
the Amendment on the terms set forth herein. No submission of this Amendment,
unsigned by either party to the other, shall constitute an offer.
1
<PAGE>
LEASE
-----
WITH SECOND AMENDMENT
---------------------
As of September 17, 1994
1. Reference Data. Each reference in this Lease to the following
subjects shall be construed to incorporate the data for that subject stated in
this Section 1.
DATE: July 7, 1992, as previously amended by the First Amendment dated
October 25, 1993 and as further amended by this Second Amendment.
PREMISES: (i) The premises shown on Exhibit 1 to the Lease containing
approximately 2,500 square feet located in the 2,500 square foot building known
as and numbered 71 Rogers Street, (ii) the premises shown on Exhibit 2 to the
Lease containing approximately 5,000 square feet in the 5,000 square foot
building known as and numbered 75 Rogers Street, and (iii) the Premises shown on
Exhibit 6 to the Lease, containing approximately 2,500 square feet in the 2,500
building known as and numbered 69 Rogers Street, all in Cambridge, Massachusetts
(collectively, the Building.)
LANDLORD: Trustees of The Cambridge East Trust, as Trustees and not individually
ORIGINAL ADDRESS OF LANDLORD:
c/o Beal and Company, Inc.
177 Milk Street
Boston, Massachusetts 02109-3410
TENANT: Metasyn, Inc., a Delaware corporation
ORIGINAL ADDRESS OF TENANT:
71 Rogers Street
Cambridge, Massachusetts 02141
TERM: Five years two months
EXTENSION OPTION: See Section 3.4 of Lease
COMMENCEMENT DATE: November 1, 1992
TERMINATION DATE: December 31, 1997
2
<PAGE>
ANNUAL FIXED RENT: Through September 17, 1994 - As stated in the Lease
September 18, 1994 - December 31, 1994 - $ 26,000.00
January 1, 1995 - December 31, 1995 - $ 100,000.00
January 1, 1996 - December 31, 1996 - $ 110,000.00
January 1, 1997 - December 31, 1997 - $ 120,000.00
MONTHLY PAYMENT: Through September 17, 1994 - As stated in the Lease
September 18, 1994 - September 30, 1994 - $ 3,500.00
October 1, 1994 - December 31, 1994 - $ 7,500.00
January 1, 1995 - December 31, 1995 - $ 8,333.33
January 1, 1996 - December 31, 1996 - $ 9,166.67
January 1, 1997 - December 31, 1997 - $ 10,000.00
LANDLORD'S RENOVATIONS, ALTERATIONS, IMPROVEMENTS: As stated in Section
3.6 of the Lease
TENANT'S PERCENTAGE OF OPERATING EXPENSES
& REAL ESTATE TAXES: 100% as to all Premises
TAX BASE YEAR: None
PERMITTED USES: Office and laboratory use and ancillary animal space to the
extent permitted by applicable law, and no other use
SECURITY DEPOSIT: As stated in the Lease
BROKER: Lynch, Murphy, Walsh & Partners - as to the Lease
None as to this Second Amendment
Signatures
- ----------
LANDLORD: TENANT:
Trustees of The Cambridge East
Trust, as Trustees and not individually
By: Beal and Company, Inc. Metasyn, Inc.
Managing Agent
By: /s/ Bruce A. Beal By: /s/ Randall B. Lauffer
________________________ __________________________
Randall B. Lauffer,
President and Treasurer
hereunto duly authorized hereunder duly authorized
3
<PAGE>
Assistant Secretary's Certificate
The undersigned hereby certifies (1) that he is the duly elected
Assistant Secretary of the corporation executing this Lease as amended by this
Second Amendment as Tenant, (2) that the Tenant's Board of Directors has duly
decided as required by law and the Tenant's governing documents that the Tenant
shall enter into this Lease as amended by this Second Amendment and has duly
empowered the person who executed this Second Amendment to do so in the name of
and on behalf of the Tenant, and (3) that the Tenant's execution and performance
of this Lease as amended by this Second Amendment is consistent with and does
not contravene or violate the law and governing documents under which Tenant is
organized and operated.
/s/ Peter K. Wirth
-----------------------------------
Peter K. Wirth, Assistant Secretary
EXHIBIT 4
Clean-up Requirements,
Including Standards for Biological, Chemical and Radioactive Agents
General
- -------
Except as more specifically addressed below, Sublessee shall remove any
Hazardous Substances released by Sublessee on, under or adjacent to the Premises
to levels below the "reportable" or "releasable" concentration and/or quantities
of such Hazardous Substances set forth in applicable Hazardous Substance Laws.
The following shall also apply to biological, chemical and radioactive agents.
Biological
- ----------
Applicable regulatory requirements shall be adhered to (for example, if
the bloodbourne pathogen standard is applicable, the requirements for clean up
and decontamination included in 29 CFR 1910.1030 shall be adhered to).
Where no applicable regulatory requirements exist, National Institutes
of Health (NIH) guidelines for general cleaning and disinfecting areas where
biological agents were used, such as presently set forth in the NIH's
"Laboratory Safety Monograph - A supplement to the NIH Guidelines for
Recombinant DNA Research", shall be adhered to.
Chemical
- --------
Applicable regulatory requirements shall be adhered to.
4
<PAGE>
Where no applicable regulatory requirements exist, general cleaning of
all working and walking surfaces of the laboratories shall be performed using an
appropriate industrial strength cleaner.
Without limiting the foregoing, any disposal of washing solutions from
the Premises after cleanup shall conform with Massachusetts Water Resources
Authority and other applicable regulatory requirements.
Radioactive
- -----------
Applicable regulatory requirements shall be adhered to, including
without limitation Nuclear Regulatory Commission (NRC) licensing, documentation
and decommissioning requirements and procedures.
All radioactivity, including materials regulated under the Atomic
Energy Act of 1954 and unregulated radioactive materials, shall be removed from
the Premises using NRC decontamination procedures so that all radioactive
materials remaining on the Premises are below the guidelines of NRC Regulatory
Guide 1.86.
Without limiting the foregoing, all regulated radioactive materials
shall be removed in compliance with NRC licensing and decommissioning
requirements, and Tenant shall provide Landlord with a copy of the acceptance
letter from the NRC stating that the Premises have been decontaminated and
decommissioned properly.
5
Exhibit 10.13
METASYN, INC.
CONVERTIBLE PROMISSORY NOTE
PURCHASE AGREEMENT
Dated as of May 26, 1995
<PAGE>
Table of Contents
1. Authorization and Sale of Notes........................................ 1
1.1 Authorization of Notes........................................... 1
1.2 Authorization of Shares.......................................... 1
1.3 Sale of Notes.................................................... 1
1.4 Use of Proceeds.................................................. 1
2. The Closing....................................................... 1
3. Representations of the Company.................................... 2
3.1 Organization and Standing........................................ 2
3.2 Capitalization................................................... 2
3.3 Issuance of Notes................................................ 3
3.4 Issuance of Shares............................................... 3
3.5 Reservation of Series C Preferred Stock and Common Stock......... 3
3.6 Subsidiaries..................................................... 3
3.7 Stockholder List and Agreements.................................. 3
3.8 Tax Returns and Payments......................................... 3
3.9 ERISA............................................................ 4
3.10 Title to Assets................................................. 4
3.11 No Material Adverse Change...................................... 4
3.12 Real Property Leases............................................ 5
3.13 Insurance....................................................... 5
3.14 Transactions with Affiliates.................................... 5
3.15 Assumptions or Guaranties of Indebtedness of Other Persons...... 5
3.16 Investments in Other Persons.................................... 5
3.17 Authority for Agreements........................................ 5
3.18 Conflicting Agreements and Violations of Charter Provisions..... 5
3.19 Consents and Approvals.......................................... 6
3.20 Compliance with Laws............................................ 6
3.21 Litigation...................................................... 6
3.22 Financial Statements............................................ 6
3.23 Absence of Liabilities.......................................... 7
3.24 Patents and Trademarks.......................................... 7
3.25 Material Contracts and Obligations.............................. 7
3.26 Employees and Consultants....................................... 7
3.27 Books and Records............................................... 7
3.28 Disclosures..................................................... 7
4. Representations of the Purchasers...................................... 8
4.1 Investment....................................................... 8
4.2 Authority........................................................ 8
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4.3 Experience.......................................................... 8
4.4 Accredited Investor................................................. 8
5. Conditions to the Obligations of the Purchasers........................... 8
5.1 Accuracy of Representations and Warranties.......................... 9
5.2 Performance......................................................... 9
5.3 Financing Agreements................................................ 9
5.4 Certificates and Documents.......................................... 9
5.5 Compliance Certificate.............................................. 9
5.6 Other Matters....................................................... 9
5.7 Opinion of Counsel................................................. 10
6. Conditions to the Obligations of the Company............................. 10
6.1 Accuracy of Representations and Warranties......................... 10
6.2 Performance........................................................ 10
7. Annual Financial Reports................................................. 10
8. Successors and Assigns................................................... 10
9. Transfers of Certain Rights.............................................. 10
9.1 Permitted Transfers................................................ 10
9.2 Subsequent Transferees............................................. 11
10. Confidentiality......................................................... 11
11. Survival of Representations and Warranties.............................. 11
12. Notices................................................................. 11
13. Brokers................................................................. 11
14. Legal Expenses.......................................................... 11
15. Entire Agreement........................................................ 12
16. Amendments and Waivers.................................................. 12
17. Counterparts............................................................ 12
18. Headings................................................................ 12
19. Severability............................................................ 12
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20. Governing Law........................................................... 12
Exhibits
A - List of Purchasers
B - Form of Convertible Promissory Note
C - Restated Certificate of Incorporation
D - Exceptions to Representations and Warranties
E - List of Stockholders
F - Amended and Restated Stockholders' Rights Agreement
G - Financial Information
H - Employee Nondisclosure and Assignment of Inventions
I - Consultant Nondisclosure and Assignment of Inventions Agreement
J - Form of Opinion of Palmer & Dodge
Schedules
1 - Foreign Qualifications
2 - Real Property Leases
3 - Agreements with Affiliates
4 - Non-accredited Investors
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CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT
This Agreement, dated as of May 26, 1995, is entered into by and among
Metasyn, Inc., a Delaware corporation (the "Company"), and the purchasers listed
on Exhibit A hereto (the "Purchasers").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. Authorization and Sale of Notes.
1.1 Authorization of Notes. The Company has, or before the Closing (as
defined in Section 2) will have, duly authorized the sale and issuance to the
Purchasers of the Company's convertible promissory notes (each note,
individually, a "Note" and collectively, the "Notes," which terms shall also
include any notes delivered in exchange for or replacement of the Notes
originally delivered pursuant to this Agreement) substantially in the form
attached hereto as Exhibit B and convertible into shares of the Company's Series
C Preferred Stock (as defined below).
1.2 Authorization of Shares. The Company has, or before the Closing will
have, duly authorized the issuance upon conversion of the Notes of up to 355,256
shares of its Series C Convertible Preferred Stock, $.01 par value per share
(the "Series C Preferred Stock"), having the rights, restrictions, privileges
and preferences set forth in the Restated Certificate of Incorporation attached
hereto as Exhibit C (the "Restated Certificate"). The Company has, or on or
before the Closing will have, adopted and filed the Restated Certificate with
the Secretary of State of the State of Delaware. The shares of Series C
Preferred Stock issuable upon conversion of the Notes shall collectively
constitute and are hereinafter referred to as the "Shares."
1.3 Sale of Notes. Subject to the terms and conditions of this Agreement,
at the Closing the Company will sell and issue to each of the Purchasers, and
each of the Purchasers will purchase, the Notes for an aggregate purchase price
of up to $1,500,005.00, payable as set forth in Section 2 of this Agreement, in
denominations set forth opposite such Purchaser's name on Exhibit A hereto.
1.4 Use of Proceeds. The Company will use the proceeds from the sale of
the Notes for product development and other working capital purposes.
2. The Closing. The closing ("Closing") of the sale and purchase of the
Notes under this Agreement shall take place at the offices of Palmer & Dodge,
One Beacon Street, Boston, Massachusetts at 10:00 a.m. on May 26, 1995. At or
promptly following the Closing, the Company will deliver to each of the
Purchasers a Note in the original principal
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amount to be purchased by the Purchasers, payable to the order of the
Purchasers, against payment to the Company of the purchase price therefor, by
wire transfer, check, or other method acceptable to the Company. The date of the
Closing is hereinafter referred to as the "Closing Date." If at the Closing any
of the conditions specified in Section 5 shall not have been fulfilled, each of
the Purchasers shall, at its election, be relieved of all of its obligations
under this Agreement without thereby waiving any other rights it may have by
reason of such failure or such non-fulfillment.
3. Representations of the Company. Subject to and except as disclosed by
the Company in Exhibit D hereto, the Company hereby represents and warrants to
each of the Purchasers as follows:
3.1 Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to own and hold its
properties and conduct its business as presently conducted and as proposed to be
conducted by it and to enter into and perform this Agreement, the Notes, the
Amended and Restated Stockholders' Rights Agreement (Exhibit F), and the
agreements, documents and instruments contemplated hereby and thereby
(collectively, the "Financing Agreements"), and to carry out the transactions
contemplated by the Financing Agreements. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
listed on Schedule 1, such jurisdictions being the only jurisdictions in which
the failure to so qualify would have a material adverse effect on the operations
or financial condition of the Company. The Company has furnished to the
Purchasers true and complete copies of its Restated Certificate and By-Laws,
each as amended to date and presently in effect.
3.2 Capitalization. The authorized capital stock of the Company (after
the filing of the Restated Certificate and immediately prior to the Closing)
will consist of 8,000,000 shares of common stock, $.01 par value per share (the
"Common Stock"), of which 2,163,736 shares are issued and outstanding, and
3,114,782 shares of Preferred Stock, $.01 par value per share, of which 104,388
have been designated Series A Preferred Stock and 93,691 of which are issued and
outstanding, 2,655,138 of which have been designated Series B Preferred Stock
and 2,643,736 of which are issued and outstanding, and 355,256 of which have
been designated Series C Preferred Stock, none of which are issued and
outstanding. All of the issued and outstanding shares of the Company's capital
stock have been duly authorized and validly issued and are fully paid and
non-assessable, and have been issued in transactions which have been exempt from
the registration requirements of applicable federal and state securities laws.
Except as set forth in Exhibit D hereto or contemplated by this Agreement, (i)
no subscription, warrant, option, convertible security or other right
(contingent or otherwise) to purchase or acquire any shares of capital stock of
the Company is authorized or outstanding, (ii) there is not any commitment or
offer of the Company to issue any subscription, warrant, option, convertible
security or other such right or to issue or distribute to holders of any shares
of its capital stock any evidences of indebtedness or assets of the Company, and
(iii) the Company has no obligation (contingent
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or otherwise) to purchase, redeem or otherwise acquire any shares of its capital
stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof. Except as set forth in Exhibit D hereto or
contemplated by this Agreement, no person or entity is entitled to (i) any
preemptive or similar right with respect to the issuance of any capital stock of
the Company, or (ii) any rights with respect to the registration of any capital
stock of the Company under the Securities Act of 1933, as amended. Except as set
forth in Exhibit D hereto or contemplated by this Agreement, the designations,
powers, preferences, rights, qualifications, limitations and restrictions in
respect of each class and series of authorized capital stock of the Company are
as set forth in the Restated Certificate and By-Laws, each as amended, and all
such designations, powers, preferences, rights, qualifications, limitations and
restrictions are valid, binding and enforceable and in accordance with all
applicable laws.
3.3 Issuance of Notes. The issuance, sale and delivery of the Notes
have been, or will be on or prior to the Closing, duly authorized by all
necessary corporate action on the part of the Company.
3.4 Issuance of Shares. The issuance and delivery of the Shares
issuable upon conversion of the Notes, and the issuance and delivery of the
shares of Common Stock issuable upon conversion of the Shares (the "Conversion
Stock"), have been, or will be on or prior to the Closing, duly authorized and
reserved for issuance by all necessary corporate action on the part of the
Company, and the Shares and the shares of Conversion Stock, when issued upon
such conversion, will be duly and validly issued, fully paid and non-assessable.
3.5 Reservation of Series C Preferred Stock and Common Stock. The
Company has authorized and reserved, and will continue to reserve, free of
preemptive and other preferential rights, a sufficient number of its authorized
but unissued shares of Series C Preferred Stock and Common Stock to satisfy the
rights of conversion of any holders of Notes and Series C Preferred Stock,
respectively.
3.6 Subsidiaries. The Company has no subsidiaries and does not own or
control, directly or indirectly, any other corporation, association or business
entity.
3.7 Stockholder List and Agreements. Attached hereto as Exhibit E is a
true and complete list of the stockholders of the Company, showing the number of
shares of Common Stock or other securities of the Company held by each
stockholder immediately prior to the Closing. Except as contemplated by this
Agreement or in Exhibit E, there are no agreements, written or oral, between the
Company and any holder of its capital stock, or, to the best knowledge of the
Company, among any holders of its capital stock, relating to the acquisition,
disposition or voting of the capital stock of the Company.
3.8 Tax Returns and Payments. The Company has timely filed all required
tax returns and reports (other than those not required to be filed by applicable
law or regulation) and has paid, or adequately provided for the payment of, all
taxes, assessments
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and other governmental charges imposed upon it or upon any of its assets, income
or franchises, other than any such charges which are currently payable without
penalty or interest and taxes, assessments and charges which are being contested
in good faith by the Company. The charges, accruals and reserves on the books of
the Company with respect to taxes for all fiscal periods are adequate in the
opinion of the Company. Except to the extent adequate reserves have been set up,
the Company does not know of any actual or proposed tax assessment for any
fiscal period. The federal income tax returns of the Company have never been
audited by the Internal Revenue Service. The Company has not received notice of
any tax lien imposed by any taxing authority which is outstanding against the
assets, properties or business of the Company.
3.9 ERISA. Each employee benefit plan sponsored by the Company is in
material compliance with applicable provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA") and the Internal Revenue Code of 1986, as amended
(the "Code"). The Company has not incurred any material liability to the Pension
Benefit Guaranty Corporation ("PBGC") or any employee benefit plan on account of
any failure to meet the contribution requirements of any such plan, minimum
funding requirements or prohibited transactions under ERISA or the Code,
termination of a single employer plan, partial or complete withdrawal from a
multi-employer plan, or the insolvency, reorganization or termination of any
multi-employer plan, and no event has occurred or conditions exist which present
a material risk that the Company will incur any material liability on account of
any of the foregoing circumstances. The consummation of the transactions
contemplated by this Agreement will not result in any prohibited transaction
under ERISA or the Code for which an exemption is not available.
3.10 Title to Assets. The Company has good and merchantable title to
all of its owned assets free of any mortgages, pledges, charges, liens, security
interests or other encumbrances except (i) those reflected on its audited
financial statements or the notes thereto, or (ii) tax and mechanics liens not
material to the Company or any property to which such liens relate. The Company
enjoys peaceful and undisturbed possession under all leases (both capital and
operating leases) under which it is operating, and all said leases are valid and
subsisting and in full force and effect on and against the Company and, to the
knowledge of the Company, the other parties thereto.
3.11 No Material Adverse Change. Since March 31, 1994, except as
indicated in the Financial Statements (as defined below) or in any Exhibit or
Schedule hereto, or for changes in general economic conditions, (i) there has
been no material adverse change in the business, properties, operations or
condition, financial or otherwise, of the Company, whether or not covered by
insurance and whether or not arising from transactions in the ordinary course of
business; (ii) the business, assets, financial condition, or operations of the
Company or any of its properties or assets, including without limitation its
patents, patent rights, copyrights, trademarks, trade secrets and other
intellectual property rights, have not been adversely affected as the result of
any legislative or regulatory change or any revocation or change in any material
franchise, permit, license or right to do business, whether or not
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<PAGE>
insured against; and (iii) the Company has not entered into any material
transaction other than in the ordinary course of business, made any distribution
on its capital stock, or redeemed or repurchased any of its capital stock.
3.12 Real Property Leases. The Company's real property identified on
Schedule 2 is leased as described in such Schedule, having been leased on what
the Company believes to be customary terms and conditions in view of the nature
and location of the properties.
3.13 Insurance. The Company carries insurance with financially sound
and reputable insurance companies or associations and in such amounts and
covering such risks as are adequate and customary for the type and scope of its
properties and business.
3.14 Transactions with Affiliates. Except as set forth in Schedule 3,
the Company is not a party to or bound by any agreement with any officer,
director, or holder of more than 5% of the Company's outstanding capital stock
on a fully diluted basis ("Affiliate"). All of the agreements identified on
Schedule 3 hereto were entered into by the Company in good faith and are on
terms no less favorable to the Company than those which the Company could have
obtained from non-Affiliates.
3.15 Assumptions or Guaranties of Indebtedness of Other Persons. The
Company has not assumed, guaranteed, endorsed or otherwise become directly or
contingently liable on (including, without limitation, liability by way of
agreement, contingent or otherwise, to purchase, to provide funds for payments,
to supply funds to or otherwise invest in the debtor or otherwise to assure the
creditor against loss) any indebtedness of any other person.
3.16 Investments in Other Persons. The Company has not made any loan or
advance to any person which is outstanding on the date of this Agreement, nor is
the Company obligated or committed to make any such loan or advance, nor does
the Company own any capital stock or assets comprising the business of,
obligations of, or any interest in, any person. The Company has no subsidiaries.
3.17 Authority for Agreements. The execution, delivery and performance
by the Company of the Financing Agreements have been duly authorized by all
necessary corporate action, and the Financing Agreements have been duly executed
and delivered by the Company. The Financing Agreements constitute the valid and
binding obligations of the Company enforceable against the Company in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
moratorium and similar laws affecting the rights and remedies of creditors
generally and also by general principles of equity.
3.18 Conflicting Agreements and Violations of Charter Provisions. The
Company is not in violation of its charter, by-laws or of any agreement or
instrument by which it is bound, except for violations which, individually or
in the aggregate, would not
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materially and adversely affect the business, properties, operations or
condition, financial or otherwise, of the Company. Neither the authorization,
execution and delivery of the Financing Agreements, the consummation of the
transactions therein contemplated, nor the fulfillment of or compliance with the
terms thereof, will conflict with or result in a material breach of any of the
terms of the charter or by-laws, or of any statute, law, rule or regulation, or
of any judgment, decree, writ, injunction, order or award of any arbitrator,
court or governmental authority specifically naming the Company, or of any
agreement or instrument which is applicable to the Company or by which the
Company is bound, or constitute a default thereunder.
3.19 Consents and Approvals. The Company has obtained or made all
necessary (i) governmental consents, approvals and authorizations, and
registrations and filings with governmental authorities, and (ii) consents,
approvals, waivers and notifications of stockholders, creditors, lessors and
other non-governmental persons, in each case, which are required to be obtained
or made by the Company in connection with the execution and delivery of the
Financing Agreements, and the consummation of the transactions herein and
therein contemplated.
3.20 Compliance with Laws. The Company is not in violation of any
statute, law, rule or regulation, or in default with respect to any judgment,
writ, injunction, decree, rule or regulation of any court or governmental agency
or instrumentality specifically naming the Company, including, without
limitation, laws relating to environmental protection, except for such
violations or defaults which do not, individually or in the aggregate,
materially and adversely affect the business, assets, operations or condition,
financial or otherwise, of the Company.
3.21 Litigation. There is no action, suit, proceeding or investigation
pending, or, to the best of the Company's knowledge, any basis therefor or
threat thereof, against the Company, which questions the validity of the
Financing Agreements or the right of the Company to enter into them, or which
might result, either individually or in the aggregate, in any material adverse
change in the assets, condition (financial or otherwise), business or prospects
of the Company.
3.22 Financial Statements. Set forth on Exhibit G is a complete and
correct copy of (i) the unaudited balance sheet of the Company (the "Unaudited
Balance Sheet") as of February 28, 1995 (the "Unaudited Balance Sheet Date") and
the related statements of operations and of changes in financial position for
the eleven-month period then ended, and (ii) the audited balance sheet of the
Company as of March 31, 1994 and the related statements of operations and
changes in financial position for the 12-month period then ended, each together
with the notes thereto (collectively, the "Financial Statements"). The Financial
Statements have been prepared in accordance with generally accepted accounting
principles consistently applied (except as noted) and fairly present the
financial condition of the Company at the date thereof and for the periods
covered thereby.
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3.23 Absence of Liabilities. Except for liabilities incurred from
operations conducted in the ordinary course of business since February 28, 1995,
or as reflected or provided for in the Unaudited Balance Sheet set forth in
Exhibit G, the Company does not have any liabilities or obligations of any type,
whether absolute or contingent, other than as disclosed herein or in the
Schedules or Exhibits hereto.
3.24 Patents and Trademarks. Set forth on Exhibit D is a true and
complete list of all patents, patent applications, trademarks, service marks,
trademark and service mark applications, trade names, registered copyrights and
licenses presently owned or licensed by the Company. The licenses set forth on
Exhibit D are the valid, binding and enforceable obligations of the Company and,
to the best of the Company's knowledge, of the other parties thereto, subject to
applicable bankruptcy, insolvency, moratorium and similar laws affecting the
rights and remedies of creditors generally and also by general principles of
equity. The Company is not aware of and has not received any notice of
infringement of any patents, trademarks, service marks, trade names, copyrights,
licenses, trade secrets or other proprietary rights of any other person or
entity. The Company is not aware that any employee is obligated under any
contract (including any license, covenant or commitment of any nature), or under
common law, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of such employee's best
efforts to promote the interests of the Company or would conflict with the
Company's business as proposed to be conducted. To the best of the Company's
knowledge, no prior employer of any employee of the Company has any right to or
interest in any inventions, improvements, discoveries or other information
assigned to the Company by such employee pursuant to the nondisclosure and
assignment of invention agreement (in the form attached hereto as Exhibit H)
executed by such employee, or otherwise so assigned.
3.25 Material Contracts and Obligations. Exhibit D sets forth a list of
all material agreements of any nature to which the Company is a party or by
which it is bound.
3.26 Employees and Consultants. All employees and consultants of the
Company whose employment responsibility requires access to confidential or
proprietary information of the Company have executed and delivered nondisclosure
and assignment of invention agreements in the forms of Exhibits H and I,
respectively, and all of such agreements are in full force and effect. None of
the employees of the Company is represented by any labor union.
3.27 Books and Records. The minute books of the Company contain
complete and accurate records of all meetings and other corporate actions of its
stockholders and its Board of Directors and committees thereof. The stock ledger
of the Company is complete and reflects all issuances, transfers, repurchases
and cancellations of shares of capital stock of the Company.
3.28 Disclosures. Neither this Agreement nor any Exhibit or Schedule
hereto contains or will contain any material misstatement of fact or omits or
will omit to
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state a material fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they were made, not misleading.
The Company knows of no information or fact which has or would have a material
adverse effect on the financial condition, business or prospects of the Company
which has not been disclosed to the Purchasers.
4. Representations of the Purchasers. Each of the Purchasers severally
represents and warrants to the Company as follows:
4.1 Investment. Such Purchaser is acquiring the Notes, the Shares into
which the Notes may be converted, and the shares of Conversion Stock into which
the Shares may be converted, for its own account for investment and not with a
view to, or for sale in connection with, any distribution thereof, nor with any
present intention of distributing or selling the same; and, except as
contemplated by this Agreement and the Exhibits hereto, such Purchaser has no
present or contemplated agreement, undertaking, arrangement, obligation,
indebtedness or commitment providing for the disposition thereof.
4.2 Authority. Such Purchaser has full power and authority to enter
into and to perform the Financing Agreements in accordance with their respective
terms. Any Purchaser which is a corporation, partnership or trust represents
that it has not been organized, reorganized or recapitalized specifically for
the purpose of investing in the Company.
4.3 Experience. Such Purchaser has carefully reviewed the
representations concerning the Company contained in this Agreement, and has had
the opportunity to make detailed inquiry concerning the Company, its business
and its personnel; the officers of the Company have made available to such
Purchaser any and all written information which he or it has requested and have
answered to such Purchaser's satisfaction all inquiries made by such Purchaser;
and such Purchaser has adequate net worth and means of providing for its current
needs and personal contingencies to sustain a complete loss of its investment in
the Company; such Purchaser's overall commitment to investments which are not
readily marketable is not disproportionate to its net worth and such Purchaser's
investment in the Notes will not cause such overall commitment to become
excessive; and such Purchaser has sufficient knowledge and experience to
evaluate the risk of its investment in the Company.
4.4 Accredited Investor. Except as set forth on Schedule 4 hereto, each
Purchaser is an "accredited investor" within the meaning of Rule 501(a) of
Regulation D under the Securities Act of 1933, as amended.
5. Conditions to the Obligations of the Purchasers. The obligation of
each of the Purchasers to purchase Notes at the Closing is subject to the
fulfillment, or the waiver by such Purchaser, of the following conditions on or
before the Closing Date:
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5.1 Accuracy of Representations and Warranties. Each representation and
warranty contained in Section 3 shall be true on and as of the Closing Date with
the same effect as though such representation and warranty had been made on and
as of that date.
5.2 Performance. The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by the Company prior to or at the Closing.
5.3 Financing Agreements. The Financing Agreements contemplated hereby
shall have been executed and delivered by the Company, by each of the Purchasers
and by each of the other parties thereto.
5.4 Certificates and Documents. The Company shall have delivered to the
Purchasers:
(i) The Restated Certificate of the Company, as in effect prior to
the Closing Date, certified by the Secretary of State of the State of Delaware;
(ii) Certificates, as of the most recent practicable dates, as to
the corporate good standing of the Company issued by the Secretary of State of
the State of Delaware and the Secretary of the Commonwealth of Massachusetts,
confirming such good standing on or immediately prior to the Closing Date;
(iii) By-laws of the Company, certified by its Secretary or
Assistant Secretary as of the Closing Date; and
(iv) Resolutions of the Board of Directors and stockholders of the
Company, authorizing and approving all matters in connection with this Agreement
and the transactions contemplated hereby, certified by the Secretary or
Assistant Secretary of the Company as of the Closing Date.
5.5 Compliance Certificate. The Company shall have delivered to the
Purchasers a certificate, executed by the President of the Company, dated the
Closing Date, certifying to the fulfillment of the conditions specified in
subsections 5.1 through 5.4 of this Agreement.
5.6 Other Matters. All corporate and other proceedings in connection with
the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to the Purchasers, and the Purchasers shall have received all
such counterpart originals or certified or other copies of such documents as
they may reasonably request.
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5.7 Opinion of Counsel. Each Purchaser shall have received an opinion from
Palmer & Dodge, counsel for the Company, dated the Closing Date, addressed to
the Purchasers, substantially in the form attached hereto as Exhibit J.
6. Conditions to the Obligations of the Company. The obligations of the
Company under subsection 1.3 of this Agreement are subject to fulfillment, on or
before the Closing Date, of each of the following conditions:
6.1 Accuracy of Representations and Warranties. The representations and
warranties of the Purchasers contained in Section 4 shall be true on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of that date.
6.2 Performance. The Purchasers shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by them prior to or at the Closing.
7. Annual Financial Reports. The Company will furnish to each Purchaser,
within 120 days after the end of each fiscal year of the Company, an audited
balance sheet of the Company as at the end of such year and audited statements
of income and of changes of cash flows of the Company for such year, certified
by certified public accountants of established national reputation selected by
the Company, and prepared in accordance with generally accepted accounting
principles.
8. Successors and Assigns. Except as provided in Section 9, the provisions of
this Agreement shall be binding upon, and inure to the benefit of, the
respective successors, assigns, heirs, executors and administrators of the
parties hereto
9. Transfers of Certain Rights.
9.1 Permitted Transfers. The rights granted to a Purchaser under this
Agreement may be transferred by such Purchaser to another Purchaser, to any
officer, director or partner of such Purchaser or to any person or entity
acquiring Notes convertible into at least fifty thousand (50,000) Shares or
Registrable Shares (as such terms are defined in the Amended and Restated
Stockholders' Rights Agreement (Exhibit F)); provided, however, that (i) the
Company is given written notice by the transferee at the time of such transfer
stating the name and address of the transferee and identifying the securities
with respect to which such rights are being assigned, and (ii) any transferee
(other than a Purchaser) to whom rights under this Agreement are transferred
shall, as a condition to such transfer, deliver to the Company a written
instrument by which such transferee agrees to be bound by the obligations
imposed upon Purchasers under Section 10 to the same extent as if such
transferee were a Purchaser hereunder.
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9.2 Subsequent Transferees. A transferee to whom rights are transferred
pursuant to this Section 9 may not again transfer such rights to any other
person or entity, other than as provided in 9.1 above.
10. Confidentiality. Each Purchaser agrees that it will keep confidential and
will not disclose or divulge any confidential, proprietary or secret information
which such Purchaser may obtain from the Company pursuant to financial
statements, reports and other materials submitted by the Company to such
Purchaser pursuant to this Agreement or pursuant to visitation or inspection
rights granted hereunder, unless such information is known, or until such
information becomes known, to the public.
11. Survival of Representations and Warranties. All agreements,
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the closing of the transactions contemplated
hereby.
12. Notices. All notices, requests, consents, and other communications under
this Agreement shall be in writing and shall be delivered by hand or mailed by
first class certified or registered mail, return receipt requested, postage
prepaid:
If to the Company, at Metasyn, Inc., c/o Michael D. Webb, President, 71
Rogers Street, Cambridge, Massachusetts 02142-1118, or at such other address or
addresses as may have been furnished in writing by the Company to the
Purchasers, with a copy to Peter Wirth, Esq., Palmer & Dodge, One Beacon Street,
Boston, Massachusetts 02108;
If to a Purchaser, at its address set forth on Exhibit A, or at such other
address or addresses as may have been furnished to the Company in writing by
such Purchaser, with a copy to Bruce E. Rogoff, Esq., Mintz, Levin, Cohn,
Ferris, Glovsky & Popeo, One Financial Center, Boston, MA 02111.
Notices provided in accordance with this Section 12 shall be deemed delivered
upon personal delivery or 48 hours after deposit in the mail.
13. Brokers. The Company and each Purchaser (i) represents and warrants to
the other parties hereto that it has retained no finder or broker in connection
with the transactions contemplated by this Agreement, and (ii) will indemnify
and save the other parties harmless from and against any and all claims,
liabilities or obligations with respect to brokerage or finders' fees or
commissions, or consulting fees in connection with the transactions contemplated
by this Agreement asserted by any person on the basis of any statement or
representation alleged to have been made by such indemnifying party.
14. Legal Expenses. The Company will reimburse the Purchasers for the
reasonable fees, expenses and disbursements of legal counsel in connection with
the transactions contemplated hereby, up to an aggregate maximum amount of
$20,000.
11
<PAGE>
15. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter.
16. Amendments and Waivers. Except as otherwise expressly set forth in this
Agreement, any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Company and the holders of Securities (as such term is defined in the
Amended and Restated Stockholders' Rights Agreement) converted or convertible
into not less than 66 2/3% of the Registrable Shares. Any amendment or waiver
effected in accordance with this Section 16 shall be binding upon each holder of
any Notes or Shares (including Conversion Stock) and each future holder of all
such securities and the Company. No waivers of or exceptions to any term,
condition or provision of this Agreement, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any such term,
condition or provision.
17. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
18. Headings. The headings of the sections, subsections, and paragraphs of
this Agreement have been added for convenience only and shall not be deemed to
be a part of this Agreement.
19. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision.
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
12
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the
day and year first above written.
METASYN, INC.
By: /s/ Michael D. Webb
-------------------------
Name: Michael D. Webb
Title: President
13
<PAGE>
SIGNATURE PAGE TO
CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT
ACCEL IV L.P.
By: Accel IV Associates L.P.,
its General Partner
By: /s/ G. Carter Sednaoui
---------------------------------
Name:
Title: General Partner
ACCEL INVESTORS '93 L.P.
By: /s/ G. Carter Sednaoui
--------------------------------
Name:
Title: General Partner
ACCEL KEIRETSU L.P.
By: Accel Partners & Co., Inc.,
its General Partner
By: /s/ G. Carter Sednaoui
------------------------------
Name:
Title: General Partner
ELLMORE C. PATTERSON PARTNERS
By: /s/ Arthur C. Patterson
--------------------------------
Name:
Title: General Partner
14
<PAGE>
SIGNATURE PAGE TO
CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT
PROSPER PARTNERS
By: /s/ G. Carter Sednaoui
--------------------------------
Name:
Title: Attorney-in-Fact
BESSEMER VENTURE PARTNERS III L.P.
By: Deer III & Co.,
General Partner
By: /s/ Robert H. Buescher
--------------------------------
Name: Robert H. Buescher
Title: General Partner
BVP III SPECIAL SITUATIONS L.P.
By: Deer III & Co.,
General Partner
By: /s/ Robert H. Buescher
--------------------------------
Name: Robert H. Buescher
Title: General Partner
*
--------------------------------
David J. Cowan
*
--------------------------------
C. Samantha Chen
15
<PAGE>
SIGNATURE PAGE TO
CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT
*
--------------------------------
Rodney A. Cohen
*
--------------------------------
Richard R. Davis
*
--------------------------------
Adam P. Godfrey
*
--------------------------------
Robert D. Lindsay
*
--------------------------------
Ward W. Woods, Jr.
/s/ Robert H. Buescher
--------------------------------
Robert H. Buescher
* By: /s/ Robert H. Buescher
--------------------------------
Name: Robert H. Buescher
Title: Attorney-in-Fact
16
Exhibit 10.14
AMENDED AND RESTATED LICENSE AGREEMENT
THIS AMENDED AND RESTATED LICENSE AGREEMENT, dated as of July 10, 1995,
is between The General Hospital Corporation, a not-for-profit Massachusetts
corporation doing business as Massachusetts General Hospital, having a place of
business at Fruit Street, Boston, Massachusetts 02114 ("GENERAL") and Metasyn,
Inc., a corporation of Delaware having offices at 71 Rogers Street, Cambridge,
MA 02142 ("METASYN"), and amends and restates, from and after the date hereof, a
License Agreement effective as of March 24, 1992 (the "LICENSE EFFECTIVE DATE")
between GENERAL and METASYN.
WITNESSETH
WHEREAS, under research programs funded by the GENERAL, the GENERAL
Department of Radiology through research conducted by Randall B. Lauffer and
Thomas J. Brady has developed certain inventions pertaining to Hepatobiliary NMR
Contrast Agents;
WHEREAS, GENERAL has filed U.S. Patent Applications as identified in
Appendix A and all rights, title and interest in said applications have been
assigned to GENERAL by the inventors;
WHEREAS, GENERAL represents to the best of its knowledge and belief
that it is the owner of all rights, title and interest in said patent
applications and has the right and ability to grant the licenses hereinafter
described;
WHEREAS, as a center for research and education, GENERAL is interested
in licensing PATENT RIGHTS and thus benefiting the public and GENERAL by
facilitating the dissemination of the results of their research in the form of
useful products, but is without the capacity to commercially develop,
manufacture, and distribute any such products; and
WHEREAS, METASYN having such capacity, desires to commercially develop,
manufacture, use and distribute such products throughout the world;
NOW THEREFORE, in consideration of the premises and of the faithful
performance of the covenants herein contained, the parties hereto agree as
follows:
1. DEFINITIONS
1.1. The term "ACCOUNTING PERIOD" shall mean any January through June
or July through December in which PRODUCT is manufactured or sold.
1.2. The term "AFFILIATE" as applied to METASYN shall mean METASYN and
any company or other legal entity other than METASYN in whatever country
organized, controlling, controlled by or under common control with METASYN. The
term "control" means possession, direct or indirect, of the powers to direct or
cause the direction of
<PAGE>
the management and policies of a person or entity, whether through the ownership
of voting securities, by contract or otherwise.
1.3. The term "FIELD" shall mean the use of paramagnetic contrast
agents in the magnetic resonance imaging of normal and pathological conditions
in man and animals.
1.4. The term "FIRST COMMERCIAL SALE" shall mean in each country the
first sale of any PRODUCT by METASYN, its AFFILIATES or SUBLICENSEES, following
approval, where required, of its marketing by the appropriate governmental
agency for the country in which the sale is to be made.
1.5. The term "NET SALES PRICE" shall mean the gross billing price of
any PRODUCT as invoiced to the customer by METASYN or its AFFILIATES, less (1) a
bad debt allowance of [ ]* of the gross billing price and (2) the following
amounts actually paid out by METASYN or its AFFILIATES, or credited by them
against the gross billing price of any PRODUCT:
(a) discounts allowed;
(b) refunds or allowances for damaged or outdated goods;
(c) transportation charges or allowances;
(d) customs, duties or charges; and
(e) sales or other excise taxes or other governmental
charges levied on or measured by sales but not
franchise or income taxes of any kind whatsoever.
Transfer of a PRODUCT to an AFFILIATE for sale by the AFFILIATE shall
not be considered a sale; in the case of such a transfer the NET SALES PRICE
shall be based on the gross billing price of the PRODUCT by the AFFILIATE as
invoiced to its customer.
Every commercial use or disposition by METASYN or any of its AFFILIATES
or SUBLICENSEES of any PRODUCT (excluding any use for (i) assuring product
testing or control, (ii) promotional distribution to physicians by or on behalf
of METASYN or any of its AFFILIATES or SUBLICENSEES or (iii) distribution to
researchers by or on behalf of METASYN or any of its AFFILIATES or SUBLICENSEES
or (iv) obtaining regulatory approvals), in addition to a bonafide sale to a
bonafide customer (not to be construed as including METASYN or any such
AFFILIATE or SUBLICENSEE), shall be considered a sale of such PRODUCT at the NET
SALES PRICE then payable in an arm's length transaction.
In the event any PRODUCT is sold as a component of a combination of
functional elements, NET SALES PRICE for purposes of determining royalty
payments on such combination shall be calculated by the fraction A over A+B, in
which "A" is the gross selling price of the PRODUCT portion of the combination
when sold separately during the
*Confidential information omitted and filed with the Commission.
- 2 -
<PAGE>
ACCOUNTING PERIOD in which the sale was made, and "B" is the gross selling price
of the other active elements of the combination sold separately during the
ACCOUNTING PERIOD in question. In the event that no separate sale of either such
above designated PRODUCT or such above designated elements of the combination is
made during the ACCOUNTING PERIOD in which the sale was made, NET SALES PRICE
shall be calculated by multiplying NET SALES PRICE of such combination by the
fraction C over C+D, in which "C" is the standard fully-absorbed cost of the
PRODUCT portion of such combination, and "D" is the standard fully absorbed cost
of the other component(s), with such costs being determined in accordance with
generally accepted accounting practices.
1.6. The term "PATENT RIGHTS" shall mean the U.S. patents and patent
applications and the international patent applications identified in Appendix A
and any division, continuation, continuation-in-part thereof, any foreign patent
applications corresponding to any such applications or any United States or
foreign patents or the equivalent thereof issuing thereon or any reissue or
extension thereof.
1.7. The term "PRODUCT" shall mean any article of manufacture or any
other article of commerce for use in the FIELD whose manufacture, use or sale is
covered by a VALID CLAIM of any PATENT RIGHTS.
1.8. The term "SUBLICENSEE" shall mean any non-AFFILIATE third party
licensed by METASYN to manufacture, use or sell any PRODUCT.
1.9. The term "VALID CLAIM" shall mean any claim of any PATENT RIGHT
that has not (i) expired or been abandoned, or (ii) been finally rejected or
declared invalid or unenforceable by a patent office or court of competent
jurisdiction in an unappealed and unappealable decision.
2. LICENSE
2.1. GENERAL hereby grants to METASYN and its AFFILIATES:
(a) an exclusive worldwide royalty-bearing license in the
FIELD under PATENT RIGHTS to make, have made, use and
sell PRODUCT; and
(b) to the extent that GENERAL is precluded by the laws
of a particular country from granting to METASYN and
its AFFILIATES an exclusive license with respect to
such country, a license with as great a degree of
exclusivity as is permitted under the applicable laws
of such country, but in no event less than a
nonexclusive, royalty-bearing license in the FIELD
under PATENT RIGHTS to make, have made, use and sell
PRODUCTS; and
(c) the right to sublicense PATENT RIGHTS exclusively
licensed to METASYN provided that the existence of
any such sublicense shall not relieve METASYN of any
of its obligations hereunder.
- 3 -
<PAGE>
2.2. All licenses to PATENT RIGHTS granted hereunder are subject to (i)
GENERAL's right to make and to use the subject matter described and claimed in
PATENT RIGHTS for research and clinical purposes but for no other purpose and
(ii) for any invention conceived or first reduced to practice in the course of
research supported in part by funds from any U.S. federal agency, the
obligations established by U.S. law including 35 USC 200-212 and 35 CFR Part 401
and such laws and regulations as may be applicable.
2.3. It is understood and agreed that nothing herein shall be construed
to grant METASYN any license, express or implied, under any patent application
or patent in which GENERAL has ownership rights except for the licenses to
PATENT RIGHTS expressly granted in this Section 2.
2.4. The above licenses to sell PRODUCT include the right to grant to
the purchaser of PRODUCT from METASYN, its AFFILIATES or SUBLICENSEES the right
to use such purchased PRODUCT in a method coming within the scope of PATENT
RIGHTS.
3. DUE DILIGENCE OBLIGATIONS
3.1. METASYN, its AFFILIATES and SUBLICENSEES shall use due diligence
to develop PRODUCTS for commercial sales and distribution throughout the world
and to such end, shall seek to achieve the following objectives in accordance
with the following schedule:
(a) initiate Good Manufacturing Practices production of
clinical trial quantities of a PRODUCT within [ ]*
of the LICENSE EFFECTIVE DATE;
(b) initiate animal toxicity studies of a PRODUCT within
[ ]* of LICENSE EFFECTIVE DATE; and
(c) initiate a human clinical study of a PRODUCT within
[ ]* of LICENSE EFFECTIVE DATE.
In the event any objective identified herein or subsequently designated
as provided herein cannot be met for technical or regulatory reasons that the
parties could not have reasonably foreseen or that are beyond the reasonable
control of METASYN, its AFFILIATES or SUBLICENSEES, GENERAL shall not
unreasonably withhold its assent to any revision in the schedule whenever
requested in writing by METASYN, its AFFILIATES or SUBLICENSEES and supported by
evidence of such technical difficulties or delays in the regulatory process.
3.2. At intervals no longer than every six (6) months, METASYN shall
report in writing to GENERAL on progress made toward the objectives designated
in accordance with Paragraph 3.1.
*Confidential information omitted and filed with the Commission.
- 4 -
<PAGE>
4. FILING. PROSECUTION AND MAINTENANCE OF PATENT RIGHTS
4.1. GENERAL shall be responsible for the preparation, filing,
prosecution and maintenance of all patent applications and patents included in
PATENT RIGHTS. GENERAL shall use reasonable efforts to obtain the issuance of
the broadest valid claims in such applications in such countries as METASYN may,
from time to time specify. METASYN shall reimburse GENERAL for all reasonable
costs incurred by GENERAL both prior to and subsequent to the LICENSE EFFECTIVE
DATE for the preparation, filing, prosecution and maintenance of all PATENT
RIGHTS ("COSTS") except as hereinafter provided, provided that patent counsel
selected by GENERAL is acceptable to METASYN. With respect to COSTS incurred by
GENERAL prior to the LICENSE EFFECTIVE DATE, GENERAL shall provide METASYN with
a detailed accounting of such COSTS within thirty (30) days of the LICENSE
EFFECTIVE DATE and METASYN shall reimburse GENERAL for such costs in twenty four
(24) equal monthly installments commencing on the first day of the month
following the month in which METASYN receives such accounting. With respect to
COSTS incurred subsequent to the LICENSE EFFECTIVE DATE, GENERAL shall be
reimbursed by METASYN within thirty (30) days of receipt of GENERAL's notice of
payment of such COSTS and any COSTS not reimbursed within said thirty (30) days
shall be charged interest at the rate of 1.5 percent per month compounded each
thirty (30) days they remain unpaid. Subsequent to the LICENSE EFFECTIVE DATE,
GENERAL (and by instruction, its patent counsel) shall consult with METASYN and
its patent counsel as to the preparation, filing, prosecution and maintenance of
such PATENT RIGHTS and shall furnish to METASYN copies of documents relevant to
such preparation, filing, prosecution or maintenance sufficiently prior to
filing such documents or making any payment due thereunder to allow for review
and comment by METASYN. If, as a result of any such review, METASYN shall elect
not to pay the expenses of any patent application or patent included in PATENT
RIGHTS, METASYN shall so notify GENERAL within thirty (30) days of the receipt
of such documents and shall thereby surrender its rights under such patent
application or patent, provided, however, that METASYN shall remain obligated to
reimburse GENERAL for any costs incurred with respect to such patent application
or patent prior to said election.
4.2. METASYN may offset royalty payments payable by METASYN to GENERAL
pursuant to Section 5 hereof during any ACCOUNTING PERIOD against up to [ ]* of
all reimbursable expenses described in Paragraph 4.1 and incurred during the
same or any prior ACCOUNTING PERIOD; provided, however, that the aggregate
amount of expenses offset shall not reduce royalties payable by METASYN during
such ACCOUNTING PERIOD by more than [ ]*.
4.3. GENERAL agrees that it shall not abandon the prosecution of any
patent applications under PATENT RIGHTS nor shall it fail to make to any payment
or fail to take any other action necessary to obtain or maintain a patent under
PATENT RIGHTS unless it has notified METASYN in sufficient time for METASYN to
assume such prosecution, make such payment or take such action, and METASYN
shall thereafter have the right to prosecute and/or maintain such PATENT RIGHTS
at its expense in GENERAL's name, and GENERAL shall thereafter render to METASYN
all necessary assistance in order to facilitate such prosecution and/or
maintenance.
*Confidential information omitted and filed with the Commission.
- 5 -
<PAGE>
5. CONSIDERATION AND ROYALTIES
5.1. As additional consideration for the license granted hereunder,
METASYN shall issue and sell to GENERAL [ ]* shares of the common stock,
$0.01 par value per share, of METASYN (the "SHARES") at par value.
5.2. On all sales of PRODUCTS anywhere in the world by METASYN and its
AFFILIATES, METASYN shall pay GENERAL royalties in accordance with the following
schedule, such undertaking and schedule having been agreed to for the purpose of
reflecting and advancing the mutual convenience of the parties. For each PRODUCT
sold by METASYN or its AFFILIATES;
(a) [ ]* of the NET SALES PRICE on each PRODUCT
manufactured, used or sold in any country wherein
such manufacture, use or sale would, except for the
license granted by this Agreement, infringe a VALID
CLAIM of any PATENT RIGHTS licensed exclusively to
METASYN; and
(b) [ ]* of the NET SALES PRICE on each PRODUCT
manufactured, used or sold in any country wherein
such manufacture, use or sale would, except for the
license granted by this Agreement, infringe a VALID
CLAIM of any PATENT RIGHTS licensed non-exclusively
to METASYN.
5.3. On all sales of PRODUCT anywhere in the world by SUBLICENSEES, so
long as the PRODUCT manufactured, used or sold in any country is covered by a
VALID CLAIM of any PATENT RIGHTS in such country, METASYN shall pay GENERAL a
royalty of [ ]* of all royalties on sales of PRODUCTS received by METASYN from
SUBLICENSEES under the terms of the sublicenses between METASYN and said
SUBLICENSEES (but not including any amounts received by METASYN which are not
based on sales of PRODUCTS by such SUBLICENSEE, including without limitation any
expense reimbursements, license fees, technology transfer fees, up-front
payments, milestone payments, funding for collaborative research and development
pertaining to any PRODUCT or the proceeds from the sale of equity in METASYN);
provided, however, that the royalty payable to GENERAL by METASYN with respect
to sales of PRODUCTS by any SUBLICENSEE for any ACCOUNTING PERIOD shall not be
less than [ ]* of the NET SALES PRICE of the PRODUCTS sold by such SUBLICENSEE
during the same ACCOUNTING PERIOD.
5.4. In the event METASYN requires rights under patents owned by a
third party to practice PATENT RIGHTS licensed hereunder, METASYN may reduce the
amount paid GENERAL hereunder by [ ]* the amount paid to such third party
or parties, provided, however, that the aggregate of any reduction in royalties
under this Paragraph 5.4 shall not exceed [ ]* of any royalty payment otherwise
due GENERAL under Paragraph 5.2 of this Agreement.
*Confidential information omitted and filed with the Commission.
- 6 -
<PAGE>
5.5. If any license granted pursuant to Section 2 shall be or become
non-exclusive and GENERAL shall license any PATENT RIGHT to another licensee for
the purpose of making using or selling PRODUCTS in the FIELD and accept a
royalty or royalties more favorable to such licensee than herein provided for
METASYN, GENERAL shall give written notice thereof to METASYN and as of the
LICENSE EFFECTIVE DATE of such more favorable royalty or royalties, METASYN's
obligation hereunder to pay royalty or royalties to GENERAL shall be revised to
the more favorable rate.
5.6. In the event that the royalty paid to GENERAL is a significant
factor in the return realized by METASYN so as to diminish METASYN's capability
to respond to competitive pressures in the market, GENERAL agrees to consider a
reasonable reduction in the royalty paid to GENERAL as to each such PRODUCT for
the period during which such market condition exists. Factors determining the
size of the reduction will include profit margin on PRODUCT and on analogous
products, prices of competitive products, total prior sales by METASYN, and
METASYN' s expenditures in PRODUCT development.
5.7. METASYN, its AFFILIATES or SUBLICENSEES shall not owe GENERAL the
royalties set forth in Paragraph 5.2 above on sales of PRODUCT to the United
States Government, its agencies or instrumentalities when the government reduces
NET SALES PRICE by the amount of the royalty due GENERAL hereunder on the basis
of its royalty-free license for government use of the PATENT RIGHTS for which
the royalty, in the absence of such license, would be due hereunder.
5.8. Any tax required to be withheld by METASYN, its AFFILIATES or
SUBLICENSEES under the laws of any foreign country for the account of GENERAL
shall be promptly paid by METASYN, its AFFILIATES or SUBLICENSEES, as the case
may be, for and on behalf of GENERAL to the appropriate governmental authority,
and METASYN, its AFFILIATES or SUBLICENSEES, as the case may be, shall use best
efforts to furnish GENERAL with proof of payment of such tax. Any such tax
actually paid on GENERAL'S behalf shall be deducted from royalty payments due
GENERAL.
6. REPORTS AND PAYMENTS
6.1. METASYN shall keep, and shall cause each of its AFFILIATES and
SUBLICENSEES, if any, to keep full and accurate books of account containing all
particulars that may be necessary for the purpose of calculating all royalties
payable to GENERAL. Such books of account shall be kept at their principal place
of business and, with all necessary supporting data shall, during all reasonable
times for the three (3) years next following the end of the calendar year to
which each shall pertain and which shall be open for inspection at reasonable
times by an independent certified public accountant to whom METASYN, its
AFFILIATES or SUBLICENSEES have no reasonable objection at GENERAL's expense for
the purpose of verifying royalty statements or compliance with this Agreement.
6.2. In each year the amount of royalty due shall be calculated
semiannually as of the end of each ACCOUNTING PERIOD and shall be paid
semiannually within the sixty (60) days next following such date, every such
payment to be supported by the accounting prescribed in Paragraph 6.3 and to be
made in United States currency, except as provided in Paragraph 6.5 hereto.
- 7 -
<PAGE>
6.3. With each semiannual payment, METASYN shall deliver to GENERAL a
full and accurate accounting to include at least the following information:
(a) Quantity of each PRODUCT sold or leased (by country)
by METASYN, and its AFFILIATES or SUBLICENSEES;
(b) Total billings for each PRODUCT (by country);
(c) Quantities of each PRODUCT used by METASYN and its
AFFILIATES OR SUBLICENSEES;
(d) Names and addresses of all SUBLICENSEES of METASYN;
and
(e) Total royalties payable to GENERAL.
6.4. The royalty payments due under the Agreement shall, if overdue,
bear interest until payment at a per annum rate equal to one percent (1%) above
the prime rate in effect at the First National Bank of Boston on the due date,
not to exceed the maximum permitted by law. The payments of such interest shall
not preclude GENERAL from exercising any other rights it may have as a
consequence of the lateness of any royalty payment.
6.5. Except as set forth below, revenues from sales of PRODUCTS or
sublicenses received by METASYN in the form of foreign currency which is
convertible into U.S. dollars shall be converted, for purposes of computation of
royalties due GENERAL, at the conversion rate published in the Wall Street
Journal on the day on which such foreign currency is received by METASYN. If by
law, regulations, or fiscal policy of a particular country, conversion into
United States dollars or transfer of funds of a convertible currency to the
United States is restricted or forbidden, METASYN shall give GENERAL prompt
notice in writing and shall pay the royalty and other amounts due through such
means or methods as are lawful in such country as GENERAL may reasonably
designate. Failing the designation by GENERAL of such lawful means or methods
within thirty (30) days after such notice is given to GENERAL, METASYN shall
deposit the royalty payment due in local currency to the credit of GENERAL in a
recognized banking institution designated by GENERAL or, if none is designated
by GENERAL within the period of thirty (30) days as described above, in a
recognized banking institution selected by METASYN and identified in a notice in
writing given to GENERAL by METASYN, and such deposit shall fulfill all
obligations of METASYN with respect to such royalties and other amounts due.
- 8 -
<PAGE>
7. REPRESENTATION AND WARRANTIES
7.1. Nothing in this Agreement shall be construed as a warranty or
representation by either party as to the validity of any PATENT RIGHTS. Nothing
in this Agreement shall be construed as a warranty or representation by either
party that anything made, used, sold, sublicensed, or otherwise disposed of
under any license granted under this Agreement is or will be free from
infringement of domestic or foreign patent rights or other rights of other
parties.
7.2. GENERAL represents that to the best of its knowledge it is the
sole owner of all right title and interest in any inventions to be claimed in
any PATENT RIGHTS and represents that it has not made nor will during the term
of this Agreement make without the written consent of METASYN, any agreement
with others dealing with the PATENT RIGHTS in conflict with the rights granted
herein, subject to any rights of the Federal government pursuant to Paragraph
2.2. hereof.
7.3. GENERAL hereby represents to the best of its knowledge that
whatever rights, title and interest its employees or members of its medical
staff have in the PATENT RIGHTS by virtue of their employment or medical staff
membership as of the LICENSE EFFECTIVE DATE have been assigned to GENERAL.
7.4. GENERAL represents that to the best of its knowledge it does not
have any patents or patent applications, other than those included in the PATENT
RIGHTS, which (i) would prevent METASYN from making, using or selling PRODUCTS
or practicing or otherwise using the PATENT RIGHTS or (ii) dominate the
inventions claimed in the PATENT RIGHTS.
7.5. GENERAL represents that it is acquiring the SHARES for its own
account, for investment and not for, with a view to, or in connection with, any
transfer, assignment, resale or distribution thereof, in whole or in part.
GENERAL understands that the SHARES have not been registered under the
Securities Act of 1933, as amended, nor have they been registered or qualified
pursuant to the provisions of the securities laws of any other applicable
jurisdictions, by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act and such laws, and that they
must be held indefinitely unless they are subsequently registered under the
Securities Act and such laws or a subsequent disposition thereof is exempt from
registration. GENERAL acknowledges that the certificates for the SHARES shall
bear a legend substantially in the following form restricting their transfer,
and that a notation restricting such transfer will be made on the stock transfer
books of METASYN:
The securities represented hereby have not been registered
under the Securities Act of 1933, as amended, and may not be
sold, assigned or otherwise transferred in the absence of an
effective registration statement under said Act covering the
transfer or an opinion of counsel satisfactory to the issuer
that registration under said Act is not required.
- 9 -
<PAGE>
GENERAL has sufficient knowledge and experience in business and
financial matters and with respect to investment in securities of privately held
companies so as to enable it to analyze and evaluate the merits and risks of
acquisition of the SHARES contemplated hereby and is capable of protecting its
interest in connection with this transaction. GENERAL is able to bear the
economic risk of owning the SHARES, including a complete loss of their value.
GENERAL acknowledges that its representatives have had the opportunity to ask
questions and receive answers from officers and representatives of METASYN in
connection with its acquisition of the SHARES.
7.6. METASYN represents that its authorized capital stock consists of
8,000,000 shares of common stock, $.01 par value per share (the "Common Stock"),
of which 2,062,236 shares were issued and outstanding as of February 23, 1995,
and 3,237,922 shares of Preferred Stock, $.01 par value per share, of which
417,552 have been designated Series A Preferred Stock and 481,097 of which were
issued and outstanding as of February 23, 1995, and 2,820,370 of which have been
designated Series B Preferred Stock and 2,643,736 of which were issued and
outstanding as of February 23, 1995. A copy of the Certificate of Incorporation,
as amended, and the Bylaws of METASYN, each as in effect on and as of the date
hereof, is being delivered concurrently with the delivery of this Agreement.
8. INFRINGEMENT
8.1. METASYN shall inform GENERAL promptly in writing of any alleged
infringement of PATENT RIGHTS by a third party of which it shall have knowledge
and provide any available evidence of infringement.
8.2. GENERAL shall have the right, but shall not be obligated, to
prosecute at its own expense any such infringements of PATENT RIGHTS and, in
furtherance of such rights, METASYN hereby agrees that GENERAL may join METASYN
as a party plaintiff in any such suit, without expense to METASYN. The total
cost of any such infringement action commenced or defended solely by GENERAL
shall be borne by GENERAL. No settlement, consent judgment or other voluntary
final disposition of the suit may be entered into without the consent of METASYN
which consent shall not unreasonably be withheld. Any recovery or damages for
past infringement derived from such action shall first be used to reimburse
GENERAL for all expenses and legal fees connected with such action. GENERAL
shall then keep any recovery or damages equal to the amount of royalties not
received by GENERAL. Any recovery or damages then remaining shall be used to
compensate METASYN for its lost profits or a reasonable royalty on the sales of
the infringer, whichever measure of damages the court shall have applied. In the
event the damages remaining after the deductions of expenses and legal fees are
not sufficient to cover the allocations to both GENERAL and METASYN set forth in
the preceding two sentences, the remaining damages will be allocated between
GENERAL and METASYN on a pro rata basis. In the event recovery or damages still
remain after the above-mentioned allocations the remainder shall be divided as
follows: [ ]* to GENERAL and the remaining [ ]* to METASYN.
8.3. If within six months after having been notified of any alleged
infringement GENERAL shall have been unsuccessful in causing the alleged
infringer to desist and shall
*Confidential information omitted and filed with the Commission.
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not have brought or shall not be diligently prosecuting an infringement action,
or if GENERAL shall notify METASYN at any time prior thereto of its intention
not to bring suit against any alleged infringer, then, in those events only,
METASYN may, for such purposes, use the name of GENERAL as party plaintiff, and
GENERAL shall cooperate with METASYN in such action at METASYN's expense. No
settlement, consent judgment or other voluntary final disposition of the suit
which invalidates or restricts the claims of such PATENT RIGHTS may be entered
into without the consent of GENERAL, which consent shall not be unreasonably
withheld. METASYN shall indemnify GENERAL against any order for payment that may
be made against GENERAL in such proceedings.
8.4. In the event that any action is brought against METASYN for
infringement of any patent or for wrongful use of any proprietary information of
any third party arising out of METASYN's exercise of any PATENT RIGHTS licensed
under this Agreement, GENERAL agrees to cooperate with METASYN, at METASYN's
expense, in connection with METASYN's defense of such action.
8.5. In the event that METASYN shall undertake the enforcement and/or
defense of the PATENT RIGHTS by litigation, METASYN may withhold up to [ ]*
of the royalties and sublicense revenues otherwise due GENERAL hereunder
(after any reduction pursuant to Paragraph 5.4) after notification of
infringement and apply the same toward reimbursement of its expenses, including
reasonable attorneys' fees, in connection therewith. In order for such royalties
to be continued to be withheld, METASYN must continuously and diligently pursue
such enforcement and/or defense. GENERAL may retain counsel at its expense to
represent it in such suit. Any recovery of damages by METASYN for any such suit
shall be applied first in satisfaction of any unreimbursed expenses and legal
fees of METASYN and then the expenses and legal fees of GENERAL, if any,
relating to the suit. Next the remaining damages shall be applied toward
compensation for METASYN's lost profits or a reasonable royalty on the sales of
the infringer, whichever measure of damages the court shall have applied, and
the reimbursement to GENERAL of royalties withheld by METASYN pursuant to this
Paragraph 7.5 and royalties not received by GENERAL from sales by the infringer.
In the event damages remaining after the deduction of any unreimbursed expenses
and legal fees of METASYN or GENERAL relating to the suit are not sufficient to
cover the allocations to METASYN and GENERAL set forth in the preceding
sentence, the damages remaining after reimbursement of expenses and legal fees
shall be allocated to METASYN and GENERAL on a pro rata basis. Any damages or
recovery remaining after the allocations to METASYN and GENERAL of lost profits
or unrecovered royalties as previously set forth shall be divided as follows:
[ ]* to METASYN and [ ]* to GENERAL.
8.6. In the event that a declaratory judgment action alleging
invalidity or non-infringement of any of the PATENT RIGHTS shall be brought
against METASYN, GENERAL as its option, shall have the right, within thirty (30)
days after commencement of such action to intervene and take over the sole
defense of the action at its own expense.
8.7. In the event one party undertakes the enforcement and/or defense
of any PATENT RIGHTS hereunder, the other party shall use reasonable efforts to
fully cooperate with and shall supply all assistance reasonably requested by the
party initiating or carrying
*Confidential information omitted and filed with the Commission.
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<PAGE>
out such proceedings. The party that institutes any proceeding to enforce or
defend PATENT RIGHTS shall have sole control of that proceeding and shall bear
the reasonable expenses incurred by said other party in providing such
assistance and cooperation as is requested pursuant to this Section.
9. INDEMNIFICATION AND INSURANCE
9.1. METASYN shall indemnify, defend and hold harmless GENERAL and its
trustees, officers, medical and professional staff, employees, and agents and
their respective successors, heirs and assigns (the "Indemnitees"), against any
liability, damage, loss, or expense (including reasonable attorney's fees and
expenses of litigation) incurred by or imposed upon the Indemnitees or any one
of them in connection with any claims, suits, actions, demands or judgments (i)
arising out of the design, production, manufacture, sale, use in commerce,
lease, or promotion by METASYN or by a SUBLICENSEE, AFFILIATE or agent of
METASYN of any product, process or service relating to, or developed pursuant
to, this Agreement or (ii) arising out of any other activities to be carried out
pursuant to this Agreement.
9.2. METASYN's indemnification under Paragraph 9.1(i) shall apply to
any liability, damage, loss or expense whether or not it is attributable to the
negligent activities of the Indemnitees. METASYN's indemnification under
Paragraph 9.1(ii) shall not apply to any liability, damage, loss or expense to
the extent that it is attributable to the negligent activities or willful
misconduct of the Indemnitees.
9.3. GENERAL shall promptly notify METASYN of any claim of which it has
knowledge which could give rise to an obligation of METASYN to indemnify it
hereunder, shall cooperate with METASYN in any proceeding arising under
Paragraph 9.1 and agrees that METASYN shall have full control over the conduct
of the defense and settlement thereof. METASYN agrees, at its own expense, to
provide attorneys reasonably acceptable to the GENERAL to defend against any
actions brought or filed against any party indemnified hereunder with respect to
the subject of indemnity contained herein, whether or not such actions are
rightfully brought.
9.4. At such time as any product, process or service relating to, or
developed pursuant to, this Agreement is being commercially distributed or sold
(other than for the purpose of obtaining regulatory approvals) by METASYN or by
a SUBLICENSEE, AFFILIATE or agent of METASYN (hereinafter "OTHER SELLER"),
METASYN shall itself or in the alternative shall ensure that OTHER SELLER either
(i) at its sole cost and expense, procure(s) and maintain(s) comprehensive
general liability insurance in amounts not less than $2,000,000 per incident and
$2,000,000 annual aggregate and naming the Indemnitees as additional insureds or
(ii) pay(s) for the procurement and maintenance by GENERAL of insurance in the
amounts and in the form set forth in this Paragraph. Such comprehensive general
liability insurance shall provide (i) product liability coverage and (ii) broad
form contractual liability coverage, both of which shall apply to METASYN' s
indemnification under Paragraph 9.1 of this Agreement. METASYN shall ensure that
if METASYN or OTHER SELLER elects to self-insure all or part of the limits
described above (including deductibles or retentions which are in excess of
$250,000 annual aggregate) such
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<PAGE>
self-insurance program must be reasonably acceptable to the GENERAL and the Risk
Management Foundation of the Harvard Medical Institutions Inc. The minimum
amounts of insurance coverage required under this Paragraph 9.4 shall not be
construed to create a limit of METASYN's liability with respect to its
indemnification under Paragraph 9.1 of this Agreement.
9.5. METASYN shall provide GENERAL with written evidence of such
insurance upon request of GENERAL. METASYN shall provide GENERAL with written
notice at least fifteen (15) days prior to the cancellation, non-renewal or
material change in such insurance; if METASYN or OTHER SELLER does not obtain
replacement insurance providing comparable coverage prior to the expiration of
such fifteen (15) day period, GENERAL shall have the right to terminate this
Agreement effective at the end of such fifteen (15) day period without notice or
additional waiting periods.
9.6. METASYN shall itself maintain, or shall ensure that OTHER SELLER
maintains or that payments are made for the maintenance by GENERAL of, as the
case may be, such comprehensive general liability insurance beyond the
expiration or termination of this Agreement during (i) the period that any
product, process, or service, relating to, or developed pursuant to, this
Agreement is being commercially distributed or sold (other than for the purpose
of obtaining regulatory approvals) by METASYN or by OTHER SELLER and (ii) a
reasonable period after the period referred to in (c) (i) above which in no
event shall be less than ten (10) years.
9.7. This Section 9 shall survive expiration or termination of this
Agreement.
10. TERMINATION
10.1. METASYN shall have the right to terminate any license granted
hereunder or to convert any such license from an exclusive license to a
nonexclusive license, upon sixty (60) days prior written notice to GENERAL.
METASYN may exercise its right to terminate or convert to a nonexclusive license
any license granted hereunder on a patent-by-patent and/or a country-by-country
basis.
10.2. If either party shall fail to faithfully perform any of its
obligations under this Agreement, the nondefaulting party may give written
notice of the default to the defaulting party. Unless such default is corrected
within sixty (60) days after such notice, the notifying party may terminate this
Agreement upon thirty (30) days prior written notice; provided, however, that
all royalties accrued prior to such termination shall be paid. Termination of a
patent license under one patent shall not affect a patent license under another
patent.
10.3. Notwithstanding any early termination pursuant to Paragraph 10.2
("Early Termination"), METASYN shall have the right for one year after the
effective date of an Early Termination to dispose of all completed or
substantially completed PRODUCTS then in hand and to complete all orders for
PRODUCTS then in hand which METASYN is unable to cancel without penalty.
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<PAGE>
10.4. Upon termination of any license granted hereunder METASYN shall
pay GENERAL all royalties due or accrued on (i) the sale of PRODUCT up to and
including the date of termination and (ii) the sale of PRODUCT pursuant to
Paragraph 10.3 hereof.
10.5. Unless otherwise terminated as provided for in this Agreement,
GENERAL shall have the right to terminate the licenses and rights granted to
METASYN in any country under this Agreement in the event that after the FIRST
COMMERCIAL SALE of PRODUCT in such country there is a continuous [ ]* period in
which no PRODUCT is sold in such country, provided that such sale is not
prevented by force majeure, government regulation or intervention, or
institution of a law suit by a third party.
10.6. Unless otherwise terminated as provided for in this Agreement,
the licenses to PATENT RIGHTS granted hereunder will continue on a country by
country basis until the last to expire of any PATENT RIGHTS, the claims of which
but for this Agreement would be infringed by the manufacture, use or sale of any
PRODUCT in the applicable country, at which time METASYN shall have a fully paid
up license.
10.7. In the event that any license granted to METASYN under this
Agreement is terminated, any sublicense under such license granted prior to
termination of said license shall remain in full force and effect, provided
that:
(a) the SUBLICENSEE is not then in breach of its
sublicense agreement;
(b) the SUBLICENSEE agrees to be bound to GENERAL as the
licensor under the terms and conditions of the
sublicense agreement, as modified by the provisions
of this Paragraph 10.7;
(c) the SUBLICENSEE, at GENERAL'S written request,
assumes in a signed writing the same obligations to
GENERAL as those assumed by METASYN under Sections 9
and 11 hereof;
(d) GENERAL shall have the right to receive the greater
of (i) any payments payable to METASYN under such
sublicense agreement to the extent they are
reasonably and equitably attributable to such
SUBLICENSEE'S right under such sublicense to use and
exploit PATENT RIGHTS, or (b) the royalty payments
set forth in Paragraph 5.2 hereof;
(e) the SUBLICENSEE agrees to be bound by the due
diligence obligations of METASYN pursuant to Section
3 hereof, in the field and territory of sublicense;
(f) GENERAL has the right to terminate such sublicense
upon the terms and conditions set forth in Section
10.2; and
(g) GENERAL shall not assume, and shall not be
responsible to such SUBLICENSEE for, any
representations, warranties or obligations of
*Confidential information omitted and filed with the Commission.
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<PAGE>
METASYN to such SUBLICENSEE, other than to permit
such SUBLICENSEE to exercise any right to PATENT
RIGHTS that are granted under such sublicense
agreement consistent with the terms of this
Agreement.
11. MISCELLANEOUS
11.1. This Agreement constitutes the entire understanding between the
parties with respect to the subject matter hereof.
11.2. In order to facilitate implementation of this Agreement, GENERAL
and METASYN are designating the following individuals to act on their behalf
with respect to this Agreement for the matter indicated below:
(a) with respect to all royalty payments, any
correspondence pertaining to any PATENT RIGHTS, or
any notice of the use of GENERAL's name: for GENERAL,
the Director, Office of Technology Affairs, and for
METASYN Dr. Randall Lauffer, President.
(b) any amendment of or waiver under this Agreement, any
written notice or other communication pertaining to
the Agreement: for GENERAL, the Director, Office of
Technology Affairs, and for METASYN, Dr. Randall
Lauffer, President.
(c) the above designations may be superseded from time to
time by alternative designations made by: for
GENERAL, the Director, Office of Technology Affairs,
and for METASYN, Dr. Randall Lauffer, President.
11.3. This Agreement may be amended and any of its terms or conditions
may be waived only by a written instrument executed by the parties or, in the
case of a waiver, by the party waiving compliance. The failure of either party
at any time or times to require performance of any provision hereof shall in no
manner affect its rights at a later time to enforce the same. No waiver by
either party of any condition or term in any one or more instances shall be
construed as a further or continuing waiver of such condition or term or of any
other condition or term.
11.4. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
permitted assigns. METASYN may at any time request that GENERAL ascertain
whether Risk Management Foundation has in effect Uniform Indemnification and
Insurance Provisions more favorable to METASYN than those of this Agreement, in
which event METASYN and GENERAL shall amend this Agreement to include such more
favorable provisions.
11.5. Any delays in or failures of performance by either party under
this Agreement shall not be considered a breach of this Agreement if and to the
extent caused by occurrences beyond the reasonable control of the party
affected, including but not limited to: Acts of
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<PAGE>
God; acts, regulations or laws of any government; strikes or their concerted
acts of worker; fires; floods; explosions; riots; wars; rebellion; and sabotage.
Any time for performance hereunder shall be extended by the actual time of delay
caused by such occurrence.
11.6. Neither party shall use the name of the other party or of any
staff member, officer, employee or student of the other party or any adaptation
thereof in any advertising, promotional or sales literature, publicity or in any
document employed to obtain funds or financing without the prior written
approval of the party or individual whose name is to be used. For GENERAL, such
approval shall be obtained from the Director of Public Affairs.
11.7. This Agreement shall be governed by and construed and interpreted
in accordance with the laws of the Commonwealth of Massachusetts.
11.8. This Agreement shall not be assignable by GENERAL without
METASYN's written consent except for the right to receive royalties payable
herein. METASYN may at its own discretion and without approval by GENERAL
transfer its interest or any part thereof under this Agreement to a wholly-owned
subsidiary or any assignee or purchaser of the portion of its business
associated with the manufacture and sale of PRODUCT. In the event of any such
transfer, the transferee shall assume and be bound by the provisions of this
Agreement. Otherwise this Agreement shall be assignable by METASYN only with the
consent in writing of GENERAL.
11.9. Except as to issues relating to the validity, construction or
effect of any PATENT RIGHTS, any dispute arising under this Agreement which the
parties are unable to resolve shall be submitted to arbitration pursuant to this
Paragraph 11.9. Any arbitration shall be conducted in accordance with the then
prevailing commercial arbitration rules of the American Arbitration Association
(the "AAA"), except where modified by this Paragraph 11.9, before a panel of
three (3) arbitrators. Each party shall select one (1) arbitrator no later than
twenty (20) days after the serving of a demand for arbitration by either party
and the third arbitrator, who shall be the chairman of the arbitration panel,
shall be appointed by the first two (2) arbitrators no later than twenty (20)
days after the first two (2) arbitrators are selected. In the event any party
fails to select its arbitrator within the required time period or the third
arbitrator is not selected within the required time period, such arbitrator(s)
shall be appointed within ten (10) days by the AAA in accordance with its normal
selection procedures. Each party shall pay fifty percent (50%) of the AAA
arbitration expenses.
11.10. If any provision(s) of this Agreement are or become invalid, are
ruled illegal by any court of competent jurisdiction or are deemed unenforceable
under then current applicable law from time to time in effect during the term
hereof, it is the intention of the parties that the remainder of this agreement
shall not be effected thereby. It is further the intention of the parties that
in lieu of each such provision which is invalid, illegal or unenforceable, there
be substituted or added as part of this Agreement a provision which shall be as
similar as possible in economic and business objectives as intended by the
parties to such invalid, illegal or enforceable provision, but shall be valid,
legal and enforceable.
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<PAGE>
THE PARTIES have duly executed this Agreement as of the date first
shown above written.
METASYN, INC. THE GENERAL HOSPITAL CORPORATION
BY /s/ Randall B. Lauffer BY /s/ Marvin C. Guthrie
----------------------- ---------------------------
TITLE Chairman TITLE V.P. Patents Licensing and
Industry Sponsored Research
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<PAGE>
Appendix A
I) U.S. Ser. No. 731,841 filed May 8, 1985 (now U.S. Patent
No. 4,899,755) for "Hepatobiliary NMR Contrast Agents"
Randall B. Lauffer and Thomas J. Brady, Inventors
2) U.S. Ser. No. 860,540 filed May 7, 1986 (now U.S. Patent
No. 4,880,008) for "In Vivo Enhancement of NMR Relaxivity,"
Randall B. Lauffer, Inventor
3) [ ]*
4) [ ]*
5) [ ]*
*Confidential information omitted and filed with the Commission.
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Exhibit 10.15
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE, TRANSFER
OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (i)
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL
FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION
IS NOT REQUIRED OR (iii) RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT
REQUIRED.
Shares Issuable Upon Exercise:
WARRANT TO PURCHASE
SHARES OF SERIES C PREFERRED STOCK
Expires August 2, 2005
THIS CERTIFIES THAT, for value received, Dominion Fund II, is entitled to
subscribe for and purchase that number of shares (as adjusted pursuant to
provisions hereof, the "Shares") of the fully paid and nonassessable Series C
Preferred Stock of Metasyn, Inc., a Delaware corporation (the "Company"), that
have an aggregate purchase price of based upon the Warrant Price specified in
Section 1.2 below $59,996.50. The purchase price of each share shall be in the
amount set forth in Section 1.2 herein as such amount shall result, from time to
time, from adjustments specified herein is herein referred to as the "Warrant
Price", subject to the provisions and upon the terms and conditions hereinafter
set forth. As used herein, the term "Preferred Stock" shall mean the Company's
presently authorized Series C Preferred Stock, and any stock into or for which
such Series C Preferred Stock may hereafter be converted or exchanged pursuant
to the Certificate of Incorporation of the Company as from time to time amended
as provided by law and in such Certificate, and the term "Grant Date" shall mean
August 2, 1995.
1. Term and Initial Warrant Price
1.1. Term. The purchase right represented by this Warrant is
exercisable, in whole or in part, at any time and from time to time from and
after the Grant Date and prior to the earlier of the tenth annual anniversary
date of the Grant Date or the fifth annual anniversary of the consummation of
the Company's initial public offering of its Common Stock, the aggregate gross
proceeds from which exceed $5,000,000.
1.2. Initial Warrant Price. The initial Warrant Price shall be equal
to the lesser of (i) the price per share of the Company's Securities in the
Company's next Equity Financing
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<PAGE>
to occur after the date hereof (as such term is defined in Section 1.2(a) below)
and (ii) $4.539.
(a) The term "Equity Financing" shall be defined as the first
sale of equity securities of the Company after the date hereof prior to December
31, 1995.
2. Method of Exercise; Net Issue Exercise.
2.1. Method of Exercise; Payment; Issuance of New Warrant. The
purchase right represented by this Warrant may be exercised by the holder
hereof, in whole or in part and from time to time, by either, at the election of
the holder hereof, (a) the surrender of this Warrant (with the notice of
exercise form attached hereto as Exhibit A duly executed) at the principal
office of the Company and by the payment to the Company, by check, of an amount
equal to the then applicable Warrant Price per share multiplied by the number of
Shares then being purchased or (b) if in connection with a registered public
offering of the Company's securities, the surrender of this Warrant (with the
notice of exercise form attached hereto as Exhibit A-1 duly executed) at the
principal office of the Company together with notice of arrangements reasonably
satisfactory to the Company for payment to the Company either by check or from
the proceeds of the sale of shares to be sold by the holder in such public
offering of an amount equal to the then applicable Warrant Price per share
multiplied by the number of Shares then being purchased. The person or persons
in whose name(s) any certificate(s) representing shares of Preferred Stock shall
be issuable upon exercise of this Warrant shall be deemed to have become the
holder(s) of record of, and shall be treated for all purposes as the record
holder(s) of, the shares represented thereby (and such shares shall be deemed to
have been issued) immediately prior to the close of business on the date or
dates upon which this Warrant is exercised. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of stock so
purchased shall be delivered to the holder hereof as soon as possible and in any
event within thirty days of receipt of such notice and, unless this Warrant has
been fully exercised or expired, a new Warrant representing the portion of the
Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the holder hereof as soon as possible and in
any event within such thirty-day period.
2.2. Net Issue Exercise.
(a) In lieu of exercising this Warrant, holder may elect to
receive shares equal to the value of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with notice of such election in which event the Company shall issue to
Holder a number of shares of the Company's Preferred Stock computed using the
following formula:
X= Y(A-B)
A
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<PAGE>
Where X - The number of shares of Preferred Stock to be issued to Holder.
Y - the number of shares of Preferred Stock purchasable under this
Warrant.
A - the fair market value of one share of the Company's Preferred
Stock.
B - Warrant price (as adjusted to the date of such calculations).
(b) For purposes of this Section, fair market value of the
Company's Preferred Stock shall mean the average of the closing bid and asked
prices of the Company's Preferred Stock quoted in the Over-The-Counter Market
Summary or the closing price quoted on any exchange on which the Preferred Stock
is listed, whichever is applicable, as published in the Western Edition of The
Wall Street Journal for the ten trading days prior to the date of determination
of fair market value. If the Preferred Stock is not traded Over-The-Counter or
on an exchange, the fair market value shall be the price per share which the
Company could obtain from a willing buyer for shares sold by the Company from
authorized but unissued shares, as such price shall be agreed by the Company and
the Holder.
3. Stock Fully Paid; Reservation of Shares. All Shares that may be issued
upon the exercise of the rights represented by this Warrant and Common Stock
issuable upon conversion of the Preferred Stock will, upon issuance, be fully
paid and nonassessable, and free from all taxes, liens and charges with respect
to the issue thereof. During the period within which the rights represented by
the Warrant may be exercised, the Company will at all times have authorized and
reserved for the purpose of issuance upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Preferred Stock
(and Common Stock issuable upon conversion thereof) to provide for the exercise
of the right represented by this Warrant.
4. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of the Warrant and the Warrant Price
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows:
(a) Reclassification or Merger. In case of any reclassification,
change or conversion of securities of the class issuable upon exercise of this
Warrant (other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision or combination),
or in case of any merger of the Company with or into another corporation (other
than a merger with another corporation in which the Company is a continuing
corporation and which does not result in any reclassification or change of
outstanding securities issuable upon exercise of this Warrant), or in case of
any sale of all or substantially all of the assets of the Company, the Company,
or such successor or purchasing corporation, as the case may be, shall execute a
new Warrant (in form and substance satisfactory to the holder of this Warrant)
providing that the holder of this Warrant shall have the right to exercise such
new Warrant and upon such exercise to receive, in lieu of each share of
Preferred Stock theretofore issuable upon exercise of this Warrant, the kind and
amount of shares of stock, other securities,
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<PAGE>
money and property receivable upon such reclassification, change or merger by a
holder of one share of Preferred Stock. Such new Warrant shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Paragraph 4. The provisions of this
subparagraph (a) shall similarly apply to successive reclassifications, changes,
mergers and transfers.
(b) Subdivisions or Combination of Shares. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Preferred Stock, the Warrant Price and the number of Shares issuable
upon exercise hereof shall be proportionately adjusted.
(c) Stock Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend payable in shares of
Preferred Stock (except any distribution specifically provided for in the
foregoing subparagraphs (a) and (b)), then the Warrant Price shall be adjusted,
from and after the date of determination of shareholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Warrant Price in effect immediately prior to such date of determination by a
fraction (a) the numerator of which shall be the total number of shares of
Preferred Stock outstanding immediately prior to such dividend or distribution,
and (b) the denominator of which shall be the total number of shares of
Preferred Stock outstanding immediately after such dividend or distribution and
the number of Shares subject to this Warrant shall be proportionately adjusted.
(d) No Impairment. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Paragraph 4 and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the holder of this
Warrant against impairment.
(e) Notices of Record Date. In the event of any taking by the
Company of a record of its shareholders for the purpose of determining
shareholders who are entitled to receive payment of any dividend (other than a
cash dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any share of any class or any other securities or property, or
to receive any other right, or for the purpose of determining shareholders who
are entitled to vote in connection with any proposed merger or consolidation of
the Company with or into any other corporation, or any proposed sale, lease or
conveyance of all or substantially all of the assets of the Company, or any
proposed liquidation, dissolution or winding up of the Company, the Company
shall mail to the holder of the Warrant, at least twenty (20) days prior to the
date specified therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right.
-4-
<PAGE>
5. Notice of Adjustments. Whenever the Warrant Price shall be adjusted
pursuant to the provisions hereof, the Company shall within thirty (30) days of
such adjustment deliver a certificate signed by its chief financial officer to
the registered holder(s) hereof setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the Warrant Price after giving effect to such
adjustment.
6. Fractional Shares. No fractional shares of Preferred Stock will be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall make a cash payment therefor upon the basis of the
Warrant Price then in effect.
7. Compliance with Securities Act; Disposition of Warrant or Shares of
Preferred Stock.
(a) Compliance with Securities Act. The holder of this Warrant,
by acceptance hereof, agrees that this Warrant, the shares of Preferred Stock to
be issued upon exercise hereof and the Common Stock to be issued upon conversion
of such Preferred Stock are being acquired for investment and that such holder
will not offer, sell or otherwise dispose of this Warrant or any shares of
Preferred Stock to be issued upon exercise hereof (or Common Stock issued upon
conversion of the Preferred Stock) except under circumstances which will not
result in a violation of the Securities Act of 1933, as amended (the "Acts).
This Warrant and all shares of Preferred Stock issued upon exercise of this
Warrant (unless registered under the Act) shall be stamped or imprinted with a
legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i)
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION
OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED OR (iii) RECEIPT OF A NO-ACTION
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT
REGISTRATION UNDER THE ACT IS NOT REQUIRED.
(b) Disposition of Warrant and Shares. With respect to any offer,
sale or other disposition of this Warrant or any shares of Preferred Stock
acquired pursuant to the exercise of this Warrant (or Common Stock issued upon
conversion of such Preferred Stock) prior to registration of such shares, the
holder hereof and each subsequent holder of the Warrant agrees to give written
notice to the Company prior thereto describing briefly the manner thereof,
together with a written opinion of such holder's counsel, if reasonably
requested by the Company, to the effect that such offer, sale or other
disposition may be effected without registration or qualification (under the Act
as then in effect or any federal or state law then in effect) of this Warrant or
such shares of Preferred Stock or Common Stock and indicating whether or not
under the Act certificates for this Warrant or such shares of Preferred Stock or
-5-
<PAGE>
Common Stock to be sold or otherwise disposed of require any restrictive legend
as to applicable restrictions on transferability in order to insure compliance
with the Act. Each certificate representing this Warrant or the shares of
Preferred Stock or Common Stock thus transferred (except a transfer pursuant to
Rule 144) shall bear a legend as to the applicable restrictions on
transferability in order to insure compliance with the Act, unless in the
aforesaid opinion of counsel for the holder, such legend is not required in
order to insure compliance with the Act. Nothing herein shall restrict the
transfer of this Warrant or any portion hereof by the initial holder hereof to
any partnership affiliated with the initial holder, or to any partner of any
such partnership provided such transfer may be made in compliance with
applicable federal and state securities laws. The Company may issue stop
transfer instructions to its transfer agent in connection with the foregoing
restrictions.
8. Rights as Shareholders: Information.
8.1. Shareholder Rights. No holder of the Warrant, as such, shall be
entitled to vote or receive dividends or be deemed the holder of Preferred Stock
or any other securities of the Company which may at any time be issuable on the
exercise thereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to receive notice of meetings, or to receive dividends or subscription rights
or otherwise until this Warrant shall have been exercised and the Shares
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.
8.2. Financial Statements and Information. The Company shall deliver
to the registered holder hereof (i) within 120 days after the end of the fiscal
year of the Company, a consolidated balance sheet of the Company as of the end
of such year and a consolidated statement of income, retained earnings and cash
flows for such year, which year-end financial reports shall be in reasonable
detail and certified by independent public accountants of nationally recognized
standing selected by the Company, and (ii) within 45 days after the end of each
fiscal quarter other than the last fiscal quarter, unaudited consolidated
statements of income, retained earnings and cash flows for such quarter and a
consolidated balance sheet as of the end of such quarter. In addition, the
Company shall deliver to the registered holder hereof any other information or
data provided to the shareholders of the Company.
9. Registration Rights. The Company covenants and agrees as follows:
9.1. Grant of Rights. The Company hereby agrees to amend that certain
Amended and Restated Stockholders' Rights Agreement dated as of May 26, 1995,
between the Company and certain holders of its securities, a copy of which is
attached hereto as Exhibit B (the "Registration Rights Agreement") to provide
that the holder of this Warrant shall be entitled to the benefit of the
provisions thereof and to seek the consent of the other parties to such
Registration Rights Agreement. Such amendment shall be in the form attached
hereto as Exhibit
-6-
<PAGE>
C, and shall provide that the holder of this Warrant be deemed a "Stockholder"
as defined in the Registration Rights Agreement, and that the Common Stock of
the Company issued upon conversion of the Shares shall be deemed to be
"Registrable Shares" as defined in the Registration Rights Agreement.
Furthermore, the amendment shall allow for the transfer of the rights granted to
the holder hereof to affiliated limited partnerships of the holder hereof.
10. Additional Rights.
10.1. Secondary Sales. The Company agrees to assist the holder of this
Warrant in obtaining liquidity if opportunities to make secondary sales of the
Company's securities become available. To this end, the Company will promptly
provide the holder of this Warrant with notice of any offer to acquire from the
Company's security holders more than five percent (5%) of the total voting power
of the Company and will cooperate with the holder in arranging the sale of this
Warrant to the person or persons making such offer.
10.2. Mergers. Unless the Company provides the holder of this Warrant
with at least 30 days' notice of the terms and conditions of the proposed
transaction, the Company will not (i) sell, lease, exchange, convey or otherwise
dispose of all or substantially all of its property or business, or (ii) merge
into or consolidate with any other corporation (other than a wholly-owned
subsidiary of the Company), or effect any transaction (including a merger or
other reorganization) or series of related transactions, in which more than 50%
of the voting power of the Company is disposed of. The Company will cooperate
with the holder in arranging the sale of this Warrant in connection with any
such transaction.
11. Representations and Warranties. This Warrant is issued and delivered on
the basis of the following:
(a) This Warrant has been duly authorized and executed by the
Company and when delivered will be the valid and binding obligation of the
Company enforceable in accordance with its terms;
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable;
(c) The rights, preferences, privileges and restrictions granted
to or imposed upon the shares of Preferred Stock and the holders thereof are as
set forth in the Company's Certificate of Incorporation, as amended, a true and
complete copy of which has been delivered to the original Warrantholder;
(d) The shares of Common Stock issuable upon conversion of the
Shares have been duly authorized and reserved and, when issued in accordance
with the terms of the Company's Certificate of Incorporation, as amended, will
be validly issued, fully paid and nonassessable; and
-7-
<PAGE>
(e) The execution and delivery of this Warrant are not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Certificate of
Incorporation or by-laws, do not and will not contravene any law, governmental
rule or regulation, judgment or order applicable to the Company, and do not and
will not contravene any provision of, or constitute a default under, any
indenture, mortgage, contract or other instrument of which the Company is a
party or by which it is bound or require the consent or approval of, the giving
of notice to, the registration with or the taking of any action in respect of or
by, any Federal, state or local government authority or agency or other person.
12. Amendment of Conversion Rights. During the term of this Warrant, the
Company agrees that it shall not amend its Certificate of Incorporation without
the prior written consent of holders of not less than 66 2/3% of the Preferred
Stock (including, for this purpose, Shares subject to this Warrant) if as a
result of such amendment any of the conversion rights, including without
limitation the conversion price or antidilution protection privileges, of the
Preferred Stock would be adversely affected.
13. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
14. Notices. Any notice, request or other document required or permitted to
be given or delivered to the holder hereof or the Company shall be delivered, or
shall be sent by certified or registered mail, postage prepaid, to each such
holder at its address as shown on the books of the Company or to the Company at
the address indicated therefore on the signature page of this Warrant.
15. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets, and all of the obligations of
the Company relating to the Preferred Stock issuable upon the exercise of this
Warrant shall survive the exercise and termination of this Warrant and all of
the covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the holder hereof. The Company will, at the time of
the exercise of this Warrant, in whole or in part, upon request of the holder
hereof but at the Company's expense, acknowledge in writing its continuing
obligation to the holder hereof in respect of any rights (including, without
limitation, any right to registration of the shares of Registrable Securities)
to which the holder hereof shall continue to be entitled after such exercise in
accordance with this Warrant; provided, that the failure of the holder hereof to
make any such request shall not affect the continuing obligation of the Company
to the holder hereof in respect of such rights.
-8-
<PAGE>
16. Lost Warrants or Stock Certificates. The Company covenants to the
holder hereof that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, or like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
17. Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
18. Governing Law. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF
THE COMMONWEALTH OF MASSACHUSETTS.
METASYN, INC.
By: /s/ Michael D. Webb
------------------------
Title: President & CEO
------------------------
Address:
----------------------
----------------------
Date:
--------------------
-9-
<PAGE>
EXHIBIT A
Notice of Exercise
To:
1. The undersigned hereby elects to purchase shares of Series Preferred
Stock of Corporation pursuant to the terms of the attached Warrant, and tenders
herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are specified
below:
(Name)
(Address)
3. The undersigned represents that the aforesaid shares being acquired for
the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares.
(Signature)
- --------------------------
(Date)
-10-
<PAGE>
EXHIBIT A-1
Notice of Exercise
To:
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement of Form S-_______, filed _____________, 19__, the undersigned hereby
elects to purchase _______ shares of Series ___ Preferred Stock of the Company
(or such lesser number of shares as may be sold on behalf of the undersigned at
the Closing) pursuant to the terms of the attached Warrant.
2. Please deliver to the custodian for the selling shareholders a stock
certificate representing such _______ shares.
3. The undersigned has instructed the custodian for the selling
shareholders to deliver to the Company $____________ or, if less, the net
proceeds due the undersigned from the sale of shares in the aforesaid public
offering. If such net proceeds are less than the purchase price for such shares,
the undersigned agrees to deliver the difference to the Company prior to the
Closing.
------------------------------
(Signature)
- ---------------------------
Date
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first set forth above.
METASYN, INC. DOMINION FUND III,
a Delaware corporation a California limited partnership
By: /s/ Michael D. Webb By: /s/ Randolph D. Werner
------------------------ --------------------------
Title: President & CEO Title: General Partner
-12-
Exhibit 10.16
THIRD AMENDMENT TO MASTER LEASE AGREEMENT NO. 8050
This Third Amendment dated August 2, 1995, to Master Lease
Agreement No. 8050 dated December 21, 1992 (the "Lease"), is
entered into by and between Metasyn, Inc. (the "Lessee") and
Dominion Ventures, Inc. (the "Lessor").
WHEREAS, the Funding Expiration Date as set forth in the Second Amendment to the
Lease has expired.
NOW THEREFORE, the parties hereto agree to amend the Lease as follows:
1. The Master Lease Line shall be increased by $600,000 for a total of
$1,378,702.94.
2. The Funding Expiration Date of June 30, 1994 as set forth in the Second
Amendment to the Lease shall be amended to May 31, 1996.
3. The Advance Rental Amount specified on page 1 of the Lease, shall be
increased by $19,260.00 (plus applicable taxes) for a total of $44,230.60, which
shall be paid to Lessor upon execution of the Third Amendment and shall be
credited to the last complete calendar month's rent for each item of Equipment,
subject to the conditions set forth in paragraph 6 of the Lease.
4. The Rent Factor set forth in the Second Amendment to the Lease shall
hereinafter be amended to 3.21%.
Except as specifically provided herein, all terms and conditions of the
Lease shall remain in full force and effect, without waiver or
modification.
IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
executed as of the date first written above.
LESSEE: METASYN, INC.
By: /s/ Michael D. Webb
--------------------------------
President & CEO
Its:
--------------------------------
LESSOR: DOMINION VENTURES, INC.
By: Randolph D. Werner
--------------------------------
Its: CFO
---------------------------------
Exhibit 10.17
AMENDMENT NO. 1 TO CONVERTIBLE
PROMISSORY NOTE PURCHASE AGREEMENT
This Amendment No. 1, dated as of January 19, 1996, is entered into by and
among Metasyn, Inc., a Delaware corporation (the "Company"), and the purchasers
listed on Exhibit A hereto (the "Purchasers"). Reference is hereby made to the
Convertible Promissory Note Purchase Agreement (the "Agreement") dated as of May
26, 1995 by and among the Company and the Purchasers. Capitalized terms used in
this Amendment that are not defined herein shall have the same meanings in the
Agreement.
WHEREAS, the Purchasers desire to surrender the Company's convertible
promissory notes issued in May 1995 having an aggregate value of $1,500,000.00
(the "May Notes") and promissory notes issued in November and December 1995
having an aggregate value of $1,200,000.00 (the "Bridge Notes") and pay an
additional $300,000.00 in exchange for new promissory notes (the "Notes")
convertible into shares of the Company's Series C Convertible Preferred Stock,
$0.01 par value per share ("Series C Preferred Stock"); and
WHEREAS, the Company is willing to issue the Notes to the Purchasers in
exchange for the surrender of the May Notes and the Bridge Notes and the payment
of an additional aggregate amount of $300,000; and
WHEREAS, the Company and the Purchaser wish to effect such transaction by
amending the Agreement pursuant to this Amendment No. 1.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in the Agreement, as amended hereby, the parties agree as follows:
A. Amendment to Agreement. The Sections of and Exhibits and Schedules to
the Agreement listed below are hereby amended as follows:
1.2 Authorization of Shares. The number "355,256" on the second line
of Section 1.2 is hereby deleted and replaced with "2,071,164."
1.3 Sale of Notes. The words "of up to $1,500,005.00" on the third
line of Section 1.3 is hereby deleted and replaced with "of $3,000,000.00".
2. The Closing. The date "May 26, 1995" on the third line of Section 2 is
hereby deleted and replaced with "January 19, 1996."
3.2 Capitalization. The number "8,000,000" on the third line of Section 3.2
is hereby deleted and replaced with "8,700,000", the number "2,163,736" on the
fourth line thereof is hereby deleted and replaced with "2,345,721", the number
"3,114,782" on the fourth line thereof is hereby deleted and replaced with
- 1 -
<PAGE>
"4,830,690" and the number "355,256" on the seventh line thereof is hereby
deleted and replaced with "2,071,164".
3.11 No Material Adverse Change. The date "March 31, 1994" on the first
line of Section 3.11 is hereby deleted and replaced with "September 30, 1995".
3.16 Investments in Other Persons. The words "Except as set forth in
Schedule 4," are hereby inserted on the first line of Section 3.16 in front of
"The Company" and the "t" in the word "The" on the first line of Section 3.16 is
hereby made lower case.
3.22 Financial Statements. The date "February 28, 1995" on the third line
of Section 3.22 is hereby deleted and replaced with "September 30, 1995", the
words "eleven-month period" on the fourth line thereof if hereby deleted and
replaced with "six-month period" and the date "March 31, 1994" on the fifth line
thereof is hereby deleted and replaced with "March 31, 1995."
3.23 Absence of Liabilities. The date "February 28, 1995" on the second
line of Section 3.23 is hereby deleted and replaced with "September 30, 1995."
4.4 Accredited Investor. The words "Schedule 4" on the first line of
Section 4.4 are hereby deleted and replaced with the words "Schedule 5."
5.8 Payment of Legal Fees. The following new Section 5.8 shall be inserted
after Section 5.7:
5.8 Payment of Legal Fees. The Company shall have delivered to the
Purchasers at Closing a check in an aggregate amount sufficient to reimburse the
Purchasers for the legal fees, expenses and disbursements of counsel to the
Purchasers pursuant to Section 14 hereof.
9.1 Permitted Transfers. The words "or a Subchapter S corporation that is
wholly-owned by such Purchaser" are hereby inserted after the words "(Exhibit
F))" on the fifth line of Section 9.1.
12. Notices. The name "Peter Wirth, Esq." on the third and fourth lines of
the second paragraph of Section 12 is hereby deleted and replaced with the name
"William T. Whelan, Esq.", the name "Bruce E. Rogoff, Esq." on the third line of
the third paragraph of Section 12 is hereby deleted and replaced with the name
"Judith I. Jacobs, Esq." and the words "Glovsky & Popeo" on the third line
thereof are hereby deleted and replaced with "Glovsky and Popeo, P.C.".
14. Legal Expenses. The words "the reasonable" on the first and second
lines of Section 14 are hereby deleted and replaced with "all reasonable" and
the words", up to an aggregate maximum amount of $20,000" are hereby deleted in
their entirety.
- 2 -
<PAGE>
Exhibits. Exhibits A (List of Purchasers), B (Form of Convertible
Promissory Note), C (Restated Certificate of Incorporation), D (Exceptions
to Representations and Warranties), E (List of Stockholders), F (Amended
and Restated Stockholders' Rights Agreement), G (Financial Information) and
J (Form of Opinion of Palmer & Dodge) are hereby deleted in their entirety
and replaced with Exhibits A, B, C, D, E, F, G and J hereto, respectively.
Schedules. Schedule 4 (Non-accredited Investors) is hereby replaced
with Schedule 4 (Investments in other Persons) hereto and old Schedule 4,
hereby renumbered Schedule 5.
B. Representations and Warranties of the Company. The Company hereby represents
and warrants to each of the Purchasers that each of the representations and
warranties set forth in Section 3 of the Agreement, as amended hereby, are true
on and as of the date hereof with the same effect as though such representations
and warranties had been made on and as of the date hereof.
C. Representations and Warranties to the Purchasers. Each of the Purchasers
hereby severally represents and warrants to the Company that each of the
representations and warranties set forth in Section 4 of the Agreement, as
amended hereby, are true on and as of the date hereof with the same force and
effect as though such representations and warranties had been made on and as of
the date hereof.
D. No Other Amendments. There have been no other changes, modifications or
alterations to the Agreement except as amended hereby.
E. Entire Agreement. The Agreement, as amended hereby, embodies the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
F. Counterparts. This Amendment may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
G. Headings. The headings of the sections, subsections, and paragraphs of this
Amendment have been added for convenience only and shall not be deemed to be a
part of this Agreement.
- 3 -
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the
day and year first above written.
METASYN, INC.
By: /s/ Michael D. Webb
--------------------------
Name: Michael D. Webb
Title: President
- 4 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT
ACCEL IV L.P.
By: Accel IV Associates L.P.,
its General Partner
By: /s/ Luke Evnin
------------------------------
Name:
Title: General Partner
ACCEL INVESTORS '93 L.P.
By: /s/ G. Carter Sednaoui
------------------------------
Name:
Title: General Partner
ACCEL KEIRETSU L.P.
By: Accel Partners & Co., Inc.,
its General Partner
By: /s/ G. Carter Sednaoui
------------------------------
Name:
Title: General Partner
ELLMORE C. PATTERSON PARTNERS
By: /s/ Arthur C. Patterson
------------------------------
Name:
Title: General Partner
- 5 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT
PROSPER PARTNERS
By: /s/ G. Carter Sednaoui
------------------------------
Name:
Title: Attorney-in-Fact
BESSEMER VENTURE PARTNERS III L.P.
By: Deer III & Co.,
General Partner
By: /s/ Robert H. Buescher
------------------------------
Name: Robert H. Buescher
Title: General Partner
BVP III SPECIAL SITUATIONS L.P.
By: Deer III & Co.,
General Partner
By: /s/ Robert H. Buescher
------------------------------
Name: Robert H. Buescher
Title: General Partner
*
------------------------------
David J. Cowan
*
------------------------------
C. Samantha Chen
- 6 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT
*
------------------------------
Rodney A. Cohen
*
------------------------------
Richard R. Davis
*
------------------------------
Adam P. Godfrey
*
------------------------------
Robert D. Lindsay
*
------------------------------
Belisarius Corporation
*
------------------------------
Ward W. Woods, Jr.
*
------------------------------
G. Felda Hardymon
*
------------------------------
Christopher Gabrieli
*
------------------------------
Gabrieli Family Foundation
*
------------------------------
Diane N. McPartlin
*
------------------------------
Gautum A. Prakash
*
- 7 -
<PAGE>
*
------------------------------
Robi L. Soni
*
------------------------------
Robert J. S. Roriston
*
------------------------------
Russell D. Sternlicht
/s/ Robert H. Buescher
------------------------------
Robert H. Buescher
* By: /s/ Robert H. Buescher
-----------------------------
Name: Robert H. Buescher
Title: Attorney-in-Fact
- 8 -
Exhibit 10.18
EXTENSION AGREEMENT
This Extension Agreement is entered into as of the 5th day of March, 1996
by Metasyn, Inc., a Delaware corporation with its principal place of business
located at 71 Rogers Street, Cambridge, Massachusetts 02142, USA ("Metasyn")
and Summit Pharmaceuticals International Corporation, a Japanese corporation
with its principal place of business located at Hirose 2nd Building, 3-19
Kandanishikicho, Chiyoda-ku, Tokyo 101 Japan ("Summit").
WHEREAS, Metasyn and Sumitomo Corporation ("Sumitomo") entered into an
Agency Agreement dated March 13, 1992, as amended by an Amendment dated
June 26, 1992 and further amended by an Amendment Agreement dated September 15,
1994 (collectively, the "Agreement");
WHEREAS, Sumitomo assigned all of its rights and obligations under the
Agreement to Summit as of October 1, 1995; and
WHEREAS, Metasyn and Summit agree to extend the term of the Agreement for
one year as set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
as set forth in the Agreement, the parties agree as follows.
1. Pursuant to Section 11.1 of the Agreement, the term of the Agreement
is hereby extended to [ ]*.
2. Except as expressly provided herein, all other terms and conditions
of the Agreement shall continue to be effective and remain unchanged.
IN WITNESS WHEREOF, the parties hereto have caused this Extension
Agreement to be executed by their respective duly authorized representatives
as of the date first written above.
METASYN, INC.
By: /s/ Michael D. Webb
-----------------------
Name: Michael D. Webb
-----------------------
Title: President and CEO
-----------------------
SUMMIT PHARMACEUTICALS
INTERNATIONAL CORPORATION
By: /s/ Akikazu Tamai
------------------------
Name: Akikazu Tamai
------------------------
Title: President and CEO
------------------------
*Confidential information omitted and filed with the Commission
Exhibit 10.19
DEVELOPMENT AND LICENSE AGREEMENT
between
METASYN, INC.
and
DAIICHI RADIOISOTOPE LABORATORIES, LTD.
dated as of March 29, 1996
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C> <C>
ARTICLE 1. DEFINITIONS................................................................................... 1
1.1. "Affiliate"................................................................................... 1
1.2. "Development Phase"........................................................................... 2
1.3. "Effective Date".............................................................................. 2
1.4. "FDA"......................................................................................... 2
1.5. "Field"....................................................................................... 2
1.6. "First Commercial Sale"....................................................................... 2
1.7. "IND"......................................................................................... 2
1.8. "Licensed Compound"........................................................................... 2
1.9. "Licensed Products"........................................................................... 2
1.10. "Master Agreement"............................................................................ 2
1.11. "MGH Patent Rights"........................................................................... 2
1.12. "Metasyn Patent Rights"....................................................................... 2
1.13. "Metasyn Technology".......................................................................... 3
1.14. "NDA"......................................................................................... 3
1.15. "Net Sales"................................................................................... 3
1.16. "Patent Rights"............................................................................... 3
1.17. "Program"..................................................................................... 4
1.18. "Stock Purchase Agreement".................................................................... 4
1.19. "Territory"................................................................................... 4
1.20. "Third Party"................................................................................. 4
1.21. "Valid Claim"................................................................................. 4
ARTICLE 2. LICENSE GRANTS; MANUFACTURING AND MARKETING RIGHTS................................................. 4
2.1. Grant of License Rights by Metasyn to DRL..................................................... 4
2.1.1. Grant for Licensed Compound............................................................ 4
2.1.2. Sublicenses............................................................................ 4
2.2. Manufacturing and Supply of Licensed Compounds and Licensed Products.......................... 5
2.2.1. Manufacture and Supply by Metasyn during the Development
Phase.................................................................................. 5
2.2.2. Manufacture and Supply by Metasyn After DRL's Launch of the
Licensed Products...................................................................... 5
2.2.3. Manufacture by DRL..................................................................... 6
2.2.4. Assistance by Metasyn to DRL for Manufacturing License................................. 7
2.3. Marketing and Distribution Rights and Obligations............................................. 7
2.4. No Other Technology Rights.................................................................... 7
ARTICLE 3. EFFORTS DURING DEVELOPMENT PHASE; MANAGEMENT....................................................... 7
3.1. Obligations of the Parties.................................................................... 7
3.1.1. Diligent Efforts of Metasyn............................................................ 7
3.1.2. Diligent Efforts of DRL................................................................ 8
3.1.3. Development Schedule................................................................... 8
3.1.4. Extensions............................................................................. 8
(i)
<PAGE>
3.2. Attendance at Regulatory Meetings.............................................................. 8
3.3. Information Exchange, Reports.................................................................. 8
3.4. Representatives................................................................................ 9
3.5. Availability of Employees...................................................................... 9
3.6. Visit of Facilities............................................................................ 9
3.7. Training of DRL Scientists..................................................................... 9
ARTICLE 4. PAYMENTS............................................................................................ 9
4.1. Initial Payment................................................................................ 9
4.2. Milestone Payments............................................................................. 10
4.3. Royalties...................................................................................... 10
4.3.1. Royalties on Net Sales of the Licensed Products......................................... 10
4.3.2. Adjustments for Third Party Royalties................................................... 10
4.3.3. [ ]*.................................................................................... 11
4.3.4. Royalty Reports, Exchange Rates......................................................... 11
4.3.5. Audits.................................................................................. 11
4.3.6. Royalty Payment Terms................................................................... 12
4.4. [ ]*........................................................................................... 12
4.5. Interest on Late Payments...................................................................... 12
ARTICLE 5. INTELLECTUAL PROPERTY............................................................................... 12
5.1. Filing, Prosecution and Maintenance of MGH Patent Rights....................................... 12
5.1.1. Responsibility and Costs................................................................ 12
5.1.2. Abandonment............................................................................. 12
5.1.3. Notice of Infringement.................................................................. 13
5.1.4. Prosecution by MGH or Metasyn of MGH Patent Rights...................................... 13
5.1.5. Prosecution by DRL...................................................................... 13
5.1.6. [ ]*.................................................................................... 13
5.1.7. Declaratory Actions..................................................................... 14
5.2. Filing, Prosecution and Maintenance of Metasyn Patent Rights................................... 14
5.2.1. Prosecution and Maintenance............................................................. 14
5.2.2. Abandonment; Failure to Pay............................................................. 14
5.2.3. Cooperation............................................................................. 15
5.2.4. Infringement by Others; Prosecution by Metasyn.......................................... 15
5.2.5. Infringement by Others; Prosecution by DRL.............................................. 15
5.2.6. Cooperation in Infringement Actions..................................................... 16
5.2.7. Declaratory Actions..................................................................... 16
5.3. Infringement Action Against DRL................................................................ 16
5.4. Cooperation in Infringement Actions............................................................ 17
ARTICLE 6. CONFIDENTIALITY..................................................................................... 17
6.1. Nondisclosure Obligations...................................................................... 17
6.1.1. General................................................................................. 17
6.1.2. Limitations............................................................................. 17
6.2. Samples........................................................................................ 18
6.3. Terms of this Agreement........................................................................ 18
6.4. Publications................................................................................... 18
*Confidential information omitted and filed with the Commission
(ii)
<PAGE>
6.4.1. Procedure............................................................................... 18
6.4.2. Delay................................................................................... 19
6.4.3. Resolution.............................................................................. 19
6.5. Injunctive Relief.............................................................................. 19
ARTICLE 7. REPRESENTATIONS AND WARRANTIES...................................................................... 19
7.1. Patent Validity................................................................................ 19
7.2. Accuracy of Exhibits A and B................................................................... 19
ARTICLE 8. INDEMNITY........................................................................................... 19
8.1. DRL Indemnity Obligations...................................................................... 19
8.2. Metasyn Indemnity Obligations.................................................................. 20
8.3. Procedure...................................................................................... 20
8.4. Insurance...................................................................................... 20
ARTICLE 9. EXPIRATION AND TERMINATION.......................................................................... 21
9.1. Expiration..................................................................................... 21
9.2. Termination.................................................................................... 21
9.2.1. Termination by Either Party............................................................ 21
9.2.2. Termination by Metasyn................................................................. 21
9.2.3. Termination by DRL..................................................................... 21
9.2.4. Automatic Termination.................................................................. 21
9.3. Effect of Expiration or Termination............................................................ 22
9.3.1. Manufacturing Approval and Technology.................................................. 22
9.3.2. Termination due to Termination of MGH License.......................................... 22
9.3.3. Termination Due to Section 9.2.4....................................................... 22
9.3.4. Survival............................................................................... 23
9.4. Remedy Other Than Termination.................................................................. 23
ARTICLE 10. MISCELLANEOUS...................................................................................... 23
10.1. Force Majeure.................................................................................. 23
10.2. Assignment..................................................................................... 24
10.3. Severability................................................................................... 24
10.4. Notices........................................................................................ 24
10.5. Applicable Law................................................................................. 25
10.6. Dispute Resolution............................................................................. 25
10.7. Public Announcements........................................................................... 26
10.8. Entire Agreement............................................................................... 26
10.9. Headings....................................................................................... 26
10.10. Independent Contractors........................................................................ 26
10.11. Agreement Not to Solicit Employees............................................................. 26
10.12. Exports........................................................................................ 27
10.13. Waiver......................................................................................... 27
10.14. Counterparts................................................................................... 27
</TABLE>
(iii)
<PAGE>
Exhibit A List of MGH Patent Rights (ss.1.12)
Exhibit B List of Metasyn Patent Rights (ss.1.13)
Exhibit C Development Schedule (ss.3.1.3)
Appendix I MGH License
(iv)
<PAGE>
DEVELOPMENT AND LICENSE AGREEMENT
THIS DEVELOPMENT AND LICENSE AGREEMENT dated as of March 29, 1996 (the
"Agreement") is made between METASYN, INC., a Delaware corporation having its
principal place of business at 71 Rogers Street, Cambridge, Massachusetts
02142-1118 U.S.A. ("Metasyn"), and DAIICHI RADIOISOTOPE LABORATORIES, LTD., a
Japanese corporation having its principal place of business at 17-10, Kyobashi
1-chome Chuo-ku, Tokyo, 104 Japan ("DRL").
R E C I T A L S
WHEREAS, Metasyn has obtained certain rights under certain patents and
patent applications owned by The General Hospital Corporation, doing business as
Massachusetts General Hospital, ("MGH") pursuant to an Amended and Restated
License Agreement dated July 10, 1995 between Metasyn and MGH (the "MGH
License") a copy of which is attached as Appendix I;
WHEREAS, Metasyn is developing a proprietary compound coded as MS-325
("Compound MS-325") which is intended for use as an enhancer for magnetic
resonance imaging, which compound is covered by said MGH patents and patent
applications as well as by Metasyn patent applications;
WHEREAS, DRL is interested in obtaining an exclusive license to develop
and sell Compound MS-325 in Japan; and
WHEREAS, Metasyn is willing to grant DRL such a license upon the terms
and conditions set forth below.
NOW THEREFORE, in consideration of the premises and of the covenants
herein contained, the parties hereto mutually agree as follows:
ARTICLE 1. DEFINITIONS
For purposes of this Agreement, the terms defined in this Article shall
have the meanings specified below:
1.1. "Affiliate" shall mean any corporation or other entity which
directly or indirectly controls, is controlled by or is under common control
with a party to this Agreement. A corporation or other entity shall be regarded
as in control of another corporation or entity if it owns or directly or
indirectly controls more than fifty percent (50%) of the voting stock or other
ownership interest of the other corporation or entity, or if it possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the corporation or other entity or the power to elect
or appoint
<PAGE>
fifty percent (50%) or more of the members of the governing body of the
corporation or other entity.
1.2. "Development Phase" shall mean the period commencing on the
Effective Date of the Agreement and continuing until final marketing approval
for the Licensed Products has been obtained in the Territory.
1.3. "Effective Date" shall mean the date first written above.
1.4. "FDA" shall mean the United States Food and Drug Administration.
1.5. "Field" shall mean the medical application of contrasting and/or
enhancement agents for magnetic resonance imaging in humans.
1.6. "First Commercial Sale" of the Licensed Products in Japan shall
mean the first sale for use or consumption by the general public of the Licensed
Products in such country based on the required marketing and pricing approval
granted by the governing health authority of Japan.
1.7. "IND" shall mean an investigational new drug application or its
equivalent filed with the FDA and necessary for beginning clinical trials in
humans, or any comparable application filed with the regulatory authorities of
Japan prior to beginning clinical trials in humans in Japan, with respect to the
Licensed Products.
1.8. "Licensed Compound" shall mean Compound MS-325 in bulk form.
1.9. "Licensed Products" shall mean pharmaceutically allowed products
comprising the Licensed Compound as a formulated final product which fulfill all
the governmentally approved specifications and quality control criteria for use
in the Field.
1.10. "Master Agreement" shall mean the Master Agreement between
Metasyn and DRL of even date herewith.
1.11. "MGH Patent Rights" shall mean the U.S. patents and patent
applications and the international patent applications identified in Exhibit A
and any division, continuation or continuation-in-part thereof, any foreign
patent applications corresponding to any such patent applications and any U.S.
or foreign patents or the equivalent thereof issuing thereon or any reissue or
extension thereof.
1.12. "Metasyn Patent Rights" shall mean the United States and foreign
patent applications set forth in Exhibit B hereto and any division, continuation
or continuation-in-part thereof, any foreign patent applications corresponding
to any such patent applications and any U.S. or foreign patents or the
equivalent thereof issuing thereon or any reissue or extension thereof.
-2-
<PAGE>
1.13. "Metasyn Technology" shall mean and include all present and
future inventions, trade secrets, copyrights, know-how, data, regulatory
submissions and other intellectual property of any kind owned or controlled by,
or licensed (with the right to sublicense) to, Metasyn necessary or useful for
the manufacture, use or sale of the Licensed Compound and the Licensed Products
in the Territory.
1.14. "NDA" shall mean a new drug application filed with the governing
health authority of Japan after completion of human clinical trials to obtain
marketing approval for a Licensed Product in Japan.
1.15. "Net Sales" shall mean DRL's gross invoice sales price for the
Licensed Products sold by DRL and/or its permitted sublicensees, less discounts,
reasonable and customary quantities of samples, returns, customs charges, sales,
taxes, transportation costs and packaging expenses. The transfer of the Licensed
Products by DRL or one of its permitted sublicensees to (i) an Affiliate of DRL
or (ii) another permitted sublicensee of DRL shall not be considered a sale; in
such cases, Net Sales shall be determined based on the invoiced sales price by
the Affiliate or permitted sublicensee to its customer, less the deductions
allowed under this Section 1.14. Every other commercial use or disposition of
Licensed Products by DRL or, to the extent permitted under Article 2, by
permitted sublicensees of DRL, other than reasonable quantities of promotional
samples or bona fide sale to a bona fide customer shall be considered a sale of
the Licensed Products at the weighted average Net Sales price then being
invoiced by the seller in arm's length transactions.
DRL or its permitted sublicensees shall be deemed to have sold a
"Bundled Product" if the Licensed Products are sold by DRL or its permitted
sublicensees pursuant to an agreement with an independent customer specifying,
for a combination of products or services, (i) a single price, (ii) other terms
of purchase not separately identifying either a price per product or the
effective deductions referred to above per product or (iii) a price for units of
the Licensed Products which is discounted below DRL's or its permitted
sublicensees' standard invoice price per unit of the Licensed Products by at
least five (5) percentage points more than the amount that any other product or
service in the Bundled Product is discounted below such other product's or
service's standard invoice price. In order to calculate the Net Sales of the
Licensed Products included in a Bundled Product (a) in the case of the foregoing
clauses (i) and (ii), the total Net Sales of the Bundled Product shall be
multiplied by a fraction, the numerator of which shall be the product of the
number of units of the Licensed Products sold multiplied by the standard invoice
price per unit of the Licensed Products, and the denominator of which shall be
the sum, for all products or services included in the Bundled Product, of the
products of the number of units sold for each product or service in the Bundled
Product multiplied by the standard invoice price per unit for each such product
or service and (b) in the case of the foregoing clause (iii), the parties will
determine whether an adjustment to Net Sales is appropriate and, if so, a
mutually agreeable method of calculation.
1.16. "Patent Rights" shall mean MGH Patent Rights and Metasyn Patent
Rights, collectively.
-3-
<PAGE>
1.17. "Program" shall mean the collaboration between Metasyn and DRL
during the Development Phase.
1.18. "Stock Purchase Agreement" shall mean the Stock Purchase
agreement to be entered into between Metasyn and DRL on or before May 31, 1996
pursuant to the terms of the Master Agreement.
1.19. "Territory" shall mean Japan.
1.20. "Third Party" shall mean any entity other than Metasyn or DRL
and their respective Affiliates.
1.21. "Valid Claim" shall mean either (a) a claim of an issued and
unexpired patent which has not been held permanently revoked, unenforceable or
invalid by a decision of a court or other governmental agency of competent
jurisdiction, unappealable or unappealed within the time allowed for appeal, and
which has not been admitted to be invalid or unenforceable through reissue or
disclaimer or otherwise or (b) a claim of a pending patent application which
claim was filed in good faith and has not been abandoned or finally disallowed
without the possibility of appeal or refiling of said application.
ARTICLE 2. LICENSE GRANTS; MANUFACTURING AND MARKETING RIGHTS
2.1. Grant of License Rights by Metasyn to DRL.
2.1.1. Grant for Licensed Compound. Metasyn hereby grants to
DRL the exclusive right and license under the Patent Rights and Metasyn
Technology to (a) use the Licensed Compound in the Territory for use in the
Field, (b) use, manufacture, have manufactured, distribute for sale and sell the
Licensed Products in the Territory for use in the Field and (c) provide the
Licensed Compound to permitted sublicensees for the purpose of permitting such
sublicensees to manufacture or have manufactured Licensed Products in the
Territory for use in the Field. The foregoing notwithstanding, Metasyn reserves
the exclusive right to manufacture the Licensed Compound and its corresponding
Licensed Products subject to Section 2.2 below.
2.1.2. Sublicenses. DRL shall have the right to grant
sublicenses under the Patent Rights and the Metasyn Technology to Affiliates of
DRL and, with the prior written consent of Metasyn which shall not be
unreasonably withheld, to Third Parties.
-4-
<PAGE>
2.1.3. Reserved Rights of MGH and the U.S. Government. DRL
acknowledges that the license granted herein to the Patent Rights is dependent
upon the rights and licenses obtained by Metasyn under the MGH License and are
subject to certain rights reserved to MGH and the United States Government in
the MGH License. In the event that the MGH License is terminated due to
Metasyn's failure to comply with the due diligence obligations imposed on
Metasyn pursuant to Paragraph 3.1(b) of the MGH License, such failure shall
constitute a material breach by Metasyn and DRL may terminate this Agreement in
accordance with Section 9.2.1 hereof.
2.2. Manufacturing and Supply of Licensed Compounds and Licensed
Products.
2.2.1. Manufacture and Supply by Metasyn during the
Development Phase. Unless otherwise agreed between the parties pursuant to
Section 2.2.3, Metasyn shall manufacture and supply the Licensed Compound and
its corresponding Licensed Products to DRL in quantities sufficient to conduct
any preclinical and clinical development of the Licensed Compound and its
corresponding Licensed Products during the Development Phase. Metasyn shall be
responsible for (i) manufacturing the Licensed Compound and its corresponding
Licensed Product at the required quality and in quantities sufficient for
preclinical and clinical development of the Licensed Compound and its
corresponding Licensed Products during the Development Phase, (ii) providing
documentation to DRL regarding the manufacture of the Licensed Compound and its
corresponding Licensed Products which is needed to register the Licensed
Products in the Territory and (iii) arranging for pre-approval inspections which
may be required by the Japanese regulatory authorities. DRL shall pay Metasyn an
amount equal to Metasyn's Direct Cost (hereinafter defined) for any Licensed
Compound or Licensed Product supplied by Metasyn to DRL. For purposes of this
Section 2.2.1, "Direct Cost" shall mean (i) Metasyn's cost of materials,
including costs payable by Metasyn to third parties relating to production of
the Licensed Compound and/or Licensed Product, and (ii) Metasyn's direct labor
costs incurred in the manufacture of the Licensed Compound and/or Licensed
Product supplied by Metasyn. DRL shall periodically submit to Metasyn orders for
the quantities of the Licensed Compound and its corresponding Licensed Product
needed by DRL during the Development Phase. Each purchase order shall specify
the quantities of Licensed Compound and/or Licensed Product ordered and the date
by which delivery is reasonably requested. DRL shall pay fifty percent (50%) of
the estimated Direct Cost for the order upon submission of each purchase order
and shall pay the balance upon receipt of the vials of Licensed Compound and/or
Licensed Product. Upon DRL's request from time to time, Metasyn shall furnish to
DRL reasonable supporting data for Metasyn's calculation of the Direct Cost for
any Licensed Compound or Licensed Product.
2.2.2. Manufacture and Supply by Metasyn After DRL's Launch of
the Licensed Products. Unless otherwise agreed between the parties pursuant to
Section 2.2.3, Metasyn shall manufacture and supply the Licensed Compound and
its corresponding Licensed Products to DRL in quantities sufficient to meet the
demand for the Licensed Products in the Territory after the launch of the
commercial sale of the Licensed Products in the Territory. Metasyn shall be
responsible for (i) manufacturing the Licensed Compound and its corresponding
Licensed Product at the required quality and in quantities sufficient for
commercial sale in the Territory, (ii) providing documentation to DRL regarding
the
-5-
<PAGE>
manufacture of the Licensed Compound and its corresponding Licensed Products
which is needed for DRL to sell the Licensed Products under the relevant
governmental approval in the Territory and (iii) arranging for routine
establishment inspections. Metasyn shall supply the Licensed Compound and its
corresponding Licensed Products to DRL pursuant to the terms and conditions of a
supply agreement to be negotiated by the parties in good faith not later than
[ ]* from the date of DRL's filing of an IND with the government in the
Territory or such longer period as may be mutually agreed upon by the parties.
2.2.3. Manufacture by DRL. During the Development Phase and
thereafter, DRL may elect, as stated below, to manufacture Licensed Products in
the Territory by itself or by a designated third party manufacturer under the
Patent Rights and Metasyn Technology by formulating Licensed Compound purchased
from Metasyn into a final product. In the event that DRL designates any such
third party manufacturer, it shall enter into a reasonable confidentiality
agreement with such manufacturer approved by Metasyn in writing, such approval
not to be unreasonably withheld. If DRL determines that it or its designated
third party manufacturer wishes to elect to manufacture the Licensed Products in
the Territory, DRL shall deliver prior written notice to Metasyn at least one
hundred and eighty (180) days before DRL or such third party commences
manufacturing the Licensed Products or such shorter period as may be mutually
agreed by Metasyn and DRL. Such notice shall specify the date upon which DRL or
its third party manufacturer will commence manufacture of the Licensed Products
(the "DRL Commencement Date"). Prior to the DRL Commencement Date, the parties
shall discuss and agree upon in good faith appropriate amendments to the supply
agreement set forth in Section 2.2.1 and/or the supply agreement entered into
pursuant to Section 2.2.2 hereof or the negotiation of a new supply agreement to
replace the said existing agreements. If by the DRL Commencement Date the
parties are unable to reach agreement on such amendments or said new supply
agreement, the DRL Commencement Date shall be postponed and the matter will be
submitted to arbitration pursuant to Section 10.6 hereof. DRL may, in its
discretion, designate Metasyn as an alternative and/or parallel supplier of the
Licensed Products after the DRL Commencement Date, subject to Metasyn's consent.
In the event that Metasyn consents to serve as an alternate and/or parallel
supplier, the parties will negotiate in good faith a supply agreement for such
services.
Metasyn shall continue to be responsible for the manufacture of the
Licensed Compound and its Licensed Products pursuant to Sections 2.2.1 and 2.2.2
until the DRL Commencement Date and will continue to be responsible for the
manufacture of the Licensed Compound pursuant to said Sections thereafter. Upon
the DRL Commencement Date, DRL shall become responsible for (i) manufacturing
the Licensed Products at the required quality and in quantities, other than that
supplied by Metasyn, if any, sufficient for development and commercial sale of
the Licensed Products in the Territory, (ii) providing documentation, other than
that provided by Metasyn, regarding the manufacture of the Licensed Products
needed to register the Licensed Products in the Territory and to sell the
Licensed Products under the relevant governmental approval in the Territory and
(iii) arranging for pre-approval and/or routine establishment inspections with
respect to the Licensed Products made by DRL. After the DRL Commencement date,
the royalty rate set forth in Section 4.3.1 shall be increased pursuant to
Section 4.3.1 on Net Sales of the Licensed Compound and its corresponding
Licensed Products manufactured by DRL or its third party manufacturer.
*Confidential information omitted and filed with the Commission
-6-
<PAGE>
Notwithstanding the provisions of this Section 2.2.3, both parties shall
negotiate in good faith in case either party desires to have the other party
manufacture a part of its requirement of the corresponding Licensed Products.
2.2.4. Assistance by Metasyn to DRL for Manufacturing License.
After DRL delivers notice to Metasyn as provided in Section 2.2.3, upon request
by DRL, Metasyn shall disclose to DRL, free of charge, all information related
to the manufacture of the Licensed Products, and Metasyn will cooperate with DRL
to provide such technical assistance and characterization work as may be
necessary in connection with the manufacture and production of the Licensed
Products in the Territory. Such assistance shall be without charge, except that
DRL will reimburse any Metasyn personnel for their out-of-pocket costs if
required to travel away from Metasyn's premises. Metasyn will provide such
assistance to DRL as is consistent with the capacity and capabilities of
Metasyn.
2.3. Marketing and Distribution Rights and Obligations. DRL shall have
the exclusive right to market and distribute the Licensed Products in the
Territory. Upon receipt of approval for commercial sale of the Licensed Products
in the Territory, DRL agrees, at its own expense, to use diligent efforts to
market the Licensed Products in the Territory consistent with those used for
other DRL products with similar commercial potential.
2.4. No Other Technology Rights. Except as otherwise expressly provided
in this Agreement, under no circumstances shall a party hereto, as a result of
this Agreement, obtain any ownership interest in or other right to any
technology, know-how, patents, pending patent applications, products or
biological materials of the other party, including items owned, controlled or
developed by the other party, or transferred by the other party to said party,
at any time pursuant to this Agreement.
ARTICLE 3. EFFORTS DURING DEVELOPMENT PHASE; MANAGEMENT
3.1. Obligations of the Parties.
3.1.1. Diligent Efforts of Metasyn. During the Development
Phase and thereafter, Metasyn agrees, at its own expense, to use diligent
efforts to perform research, preclinical development and clinical development
with the Licensed Compound and its corresponding Licensed Products outside the
Territory and provide DRL with the plan and results of such activity in a timely
manner. Metasyn further agrees that, during the Development Phase, it will, at
its own expense, furnish current available information and make available
Metasyn's scientists and other employees and members of its scientific advisory
board, all in order to provide reasonable assistance to DRL with respect to such
modification of instruments for magnetic resonance imaging for cardiac
applications (arteriography and perfusion) as may be necessary or appropriate
for the completion of clinical trials of the Licensed Product in the Territory;
provided, however, that if Metasyn's employees or advisors are required to
travel to Japan, DRL shall be responsible for any and all travel and lodging
costs incurred by Metasyn and its employees or advisors in the course of
performing Metasyn's obligations hereunder; provided further that all out of
pocket costs for equipment, devices and materials shall be borne directly by
DRL.
-7-
<PAGE>
3.1.2. Diligent Efforts of DRL. During the Development Phase
and thereafter, DRL agrees, at its own expense, to use diligent efforts (with
the assistance of Metasyn as provided in Section 3.1.1 above) to perform
research, preclinical development and clinical development with the Licensed
Compound and its corresponding Licensed Products in the Territory. DRL shall
have sole responsibility for filing and obtaining health registrations for the
Licensed Products in the Territory.
3.1.3. Development Schedule. Each of the parties agree to use
its reasonable efforts to achieve its respective obligations as set forth in the
schedule for the development of the Licensed Compound and its Licensed Products
for the United States and Japan attached hereto as Exhibit C (the "Development
Schedule").
3.1.4. Extensions. If either party is unable to achieve an
objective set forth in this Section 3.1 or in the Development Schedule on time
due to circumstances beyond its control, the other party will not unreasonably
withhold consent to an extension of the time for achievement of the objective.
If either party's failure to achieve an objective on time is due to the other
party's failure to perform its obligations under this Article 3 or the
Development Schedule, the time for performance will be appropriately extended.
3.2. Attendance at Regulatory Meetings. DRL or Metasyn, as the case may
be, will provide the other party with reasonable prior notice of all meetings
between its representatives and regulatory authorities regarding marketing
approval of the Licensed Products. The recipient of such notice shall have the
right to have a representative present at all important meetings; provided,
however, that the party holding such meeting with a regulatory authority other
than the FDA may revoke this right with respect to any particular meeting if, in
its good faith reasonable judgment, the presence of any other party will be a
detriment to the success of the meeting. Each of DRL and Metasyn will furnish,
at the other's request, a representative to attend regulatory meetings of the
other regarding marketing approval of the Licensed Products.
3.3. Information Exchange, Reports. During the Development Phase and
thereafter, each party shall keep the other informed as to its progress related
to the Licensed Compound and its corresponding Licensed Products developed or
acquired by either party or its Affiliates, licensees or sublicensees, including
but not limited to any information on adverse reactions and copies of all
preclinical or clinical studies or tests performed by such party. In a timely
manner during the Development Phase and thereafter, each party shall provide the
other party with a reasonably detailed report which shall describe the reporting
party's progress with respect to its efforts under this Agreement. Each party
shall also provide the other party with reports on any competitiveness studies
that the reporting party may conduct concerning the Licensed Compound or its
corresponding Licensed Products and the results of such studies. In the event
that Metasyn grants to one or more third parties a license to develop and market
MS-325 outside the Territory, it agrees to retain the right to obtain from any
such licensees, and to provide to DRL, subject to appropriate confidentiality
undertakings from DRL, all information which Metasyn is obligated to provide DRL
under this Section 3.3. Similarly, DRL agrees to obtain from any sublicensees in
the Territory and permit Metasyn to share with any Metasyn licensees outside the
Territory all information
-8-
<PAGE>
which DRL is obligated to provide Metasyn under this Section 3.3 subject to
appropriate confidentiality undertakings from such licensees.
3.4. Representatives. Each party shall designate no more than three (3)
representatives to discuss and coordinate the conduct of the Program and to
facilitate the exchange of information between the parties pursuant to Section
3.3 above. A party may change one or more of its representatives at any time.
The representatives of the parties shall meet at times and places or in such
form (e.g. telephone or video conference) as the representatives shall agree.
Accurate minutes of the meetings of the representatives shall be kept which
record all proposed decisions and all actions recommended or taken, and such
minutes shall be available to both parties.
3.5. Availability of Employees. Each party agrees to make its employees
and non-employee consultants reasonably available at their respective places of
employment to consult with the other party on issues arising during the
Development Phase and in connection with any request from any regulatory agency,
including regulatory, scientific, technical and clinical testing issues.
3.6. Visit of Facilities. Representatives of Metasyn and DRL may, with
the other party's prior approval, which approval shall not be unreasonably
withheld, visit the sites of any clinical trials or other experiments being
conducted by such other party in connection with the Development Phase and,
subject to any necessary approvals of the relevant Third Party, manufacturing
sites used for the Licensed Compound and the Licensed Product. If requested by
the other party, Metasyn and DRL shall cause appropriate individuals working
thereon to be available for meetings at the location of the facilities where
such individuals are employed at times reasonably convenient to the party
responding to such request.
3.7. Training of DRL Scientists. During the Development Phase, Metasyn
will provide training of DRL scientific employees ("DRL Scientists") at
Metasyn's facility and at Metasyn's MRI or drug production sites. At appointed
times to be agreed upon by both parties, Metasyn will host the DRL Scientists
for seminars at Metasyn's facility. Upon Metasyn's request, the DRL Scientists
shall enter into appropriate confidentiality agreements with Metasyn having the
same or similar provisions as contained in such agreements between Metasyn and
its own scientific employees. At appointed times to be agreed upon by both
parties, Metasyn will request admission of DRL Scientists into hospitals,
universities or drug production sites to further train DRL Scientists. If
requested by the organization responsible for any such site, DRL Scientists
shall enter into confidentiality agreements with the organization responsible
for any such site prior to such admission in a form satisfactory to said
organization. All costs and expenses of the DRL Scientist shall be borne by DRL.
ARTICLE 4. PAYMENTS
4.1. Initial Payment. Metasyn acknowledges receipt from DRL of an
initial payment in United States dollars in the amount of $3.3 million (the
"Initial Payment") prior to the date hereof.
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4.2. Milestone Payments. Upon the achievement of each of the milestones
set forth below, DRL shall make the corresponding payment stated below:
Milestone Payment
=============================================== ===============================
[ ]* [ ]* milestone payment
[ ]* [ ]* milestone payment
[ ]* [ ]* milestone payment
- ----------------------------------------------- -------------------------------
For purposes of this Section 4.2 and Exhibit C hereto, a clinical trial shall be
deemed to have commenced upon the enrollment of the first patient in such trial.
Within ten (10) days following the occurrence of each of the milestones
set forth above, DRL shall pay to Metasyn in United States dollars by certified
or bank check or wire transfer the corresponding milestone payment set forth
above, subject to Section 4.4. Payments made by DRL to Metasyn pursuant to this
Section 4.2 are not refundable under any circumstances and will not be credited
against royalty payments due to Metasyn pursuant to Section 4.3.
4.3. Royalties. Following the First Commercial Sale of the Licensed
Products in the Territory, DRL will pay, on a quarterly basis, a royalty in the
amounts set forth below on Net Sales of the Licensed Products during the
previous quarter.
4.3.1. Royalties on Net Sales of the Licensed Products. In
consideration of the licenses granted to DRL, DRL shall pay to Metasyn a royalty
in the amount of [ ]* of the Net Sales of the Licensed Products
sold by DRL, its Affiliates and/or sublicensees in the Territory. In the event
that DRL, its third party manufacturer or any permitted sublicensee of DRL
manufactures the Licensed Products pursuant to Section 2.2.3 hereof, the
[ ]* royalty rate shall be increased by a percentage to be agreed upon
by the parties in good faith during negotiations of the amendments to or
termination and replacement of the supply agreement pursuant to Section 2.2.3
above.
4.3.2. Adjustments for Third Party Royalties. If DRL is
required to pay royalties to Third Parties for rights under patents necessary to
sell the Licensed Products, it may deduct an amount equal to up to [ ]* of
such royalties from the royalties
* Confidential information omitted and filed with the Commission.
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due Metasyn; provided that royalties due to Metasyn may not be reduced by more
than [ ]* in any given quarter.
4.3.3. [ ]* In the event that during any calendar year, [ ]*
for such year, then [ ]* provided that [ ]* in any given calendar quarter.
4.3.4. Royalty Reports, Exchange Rates. During the term of
this Agreement following the First Commercial Sale of the Licensed Products in
the Territory, DRL shall within thirty (30) days after each calendar quarter
furnish to Metasyn a written quarterly report showing: (i) the gross sales of
the Licensed Products sold by DRL, its Affiliates, and its sublicensees during
the reporting period and the calculation of Net Sales from such gross sales;
(ii) the royalty due thereon; (iii) withholding taxes, if any, required by law
to be deducted in respect of such royalties; and (iv) the exchange rates used in
determining the amount of United States dollars. All sales in currencies other
than United States dollars shall first be converted into United States dollars
calculated under the TT Spot Selling Rate employed by the head office of The
Sumitomo Bank Ltd. on the payment date. If no royalty is due for any royalty
period hereunder, DRL shall so report. DRL shall keep complete and accurate
records in sufficient detail to properly reflect all gross sales and Net Sales
and to enable the royalties payable hereunder to be determined.
4.3.5. Audits. Upon the written request of Metasyn, DRL shall
permit an internal auditor or independent public accountant selected by Metasyn
and acceptable to DRL, which acceptance shall not be unreasonably withheld or
delayed, to have access during normal business hours to such records of DRL as
may be reasonably necessary to verify the accuracy of the royalty reports
described herein, in respect of any fiscal year ending not more than [ ]* prior
to the date of such request. All such verifications shall be conducted at
Metasyn's expense and not more than once in each calendar year. In the event
such Metasyn representative concludes that additional royalties were owed to
Metasyn during such period, the additional royalty shall be paid by DRL within
thirty (30) days of the date Metasyn delivers to DRL such representative's
written report so concluding. The fees charged by such representative shall be
paid by Metasyn unless the audit discloses that the royalties payable by DRL for
the audited period are incorrect by more than [ ]*, in which case DRL shall pay
the reasonable fees and expenses charged by such representative. DRL shall
include in each Third Party sublicense granted by it pursuant to this Agreement
a provision requiring the sublicensee to make reports to DRL, to keep and
maintain records of sales made pursuant to such sublicense and to grant access
to such records by Metasyn's representatives to the same extent required of DRL
under this Agreement. Metasyn agrees that all information subject to review
under this Section 4.3.5
*Confidential information omitted and filed with the Commission.
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or under any sublicense agreement is confidential and that Metasyn shall cause
its representatives to retain all such information in confidence.
4.3.6. Royalty Payment Terms. Royalties shown to have accrued
by each royalty report provided for under this Agreement shall be due thirty
(30) days after the end of each calendar quarter. Payment of royalties in whole
or in part may be made in advance of such due date. Royalties determined to be
owing with respect to any prior quarter shall be added, together with interest
thereon accruing under this Agreement from the date of the report for the
quarter for which such amounts are owing, to the next quarterly payment
hereunder.
4.4. [ ]*. A [ ]*. DRL shall [ ]*. DRL shall not [ ]* except as noted
above. DRL shall [ ]* to Metasyn. The parties will [ ]*
4.5. Interest on Late Payments. Any payments by DRL to Metasyn that are
not paid on or before the fifth day after date such payments are due under this
Agreement shall bear interest, to the extent permitted by applicable law, at two
(2) percentage points above the Prime Rate of interest declared from time to
time by The First National Bank of Boston in Boston, Massachusetts, calculated
on the number of days payment is delinquent.
ARTICLE 5. INTELLECTUAL PROPERTY
5.1. Filing, Prosecution and Maintenance of MGH Patent Rights.
5.1.1. Responsibility and Costs. Metasyn shall, in
coordination with MGH, be responsible for the preparation, filing, prosecution
and maintenance of all patent applications and patents included in MGH Patent
Rights in the Territory. All costs ("Costs") incurred by Metasyn for the
preparation, filing, prosecution and maintenance of all patents and patent
applications included in MGH Patent Rights in the Territory shall be the
responsibility of Metasyn.
5.1.2. Abandonment. If MGH notifies Metasyn of its intention
to abandon the prosecution of any patent applications under the MGH Patent
Rights or of its intention to refrain from making any payment or taking any
other action necessary to obtain or maintain a patent under the MGH Patent
Rights, Metasyn will thereafter at its expense take all action
*Confidential information omitted and filed with the Commission.
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necessary or appropriate to prosecute and/or maintain such MGH Patent Rights in
the Territory.
5.1.3. Notice of Infringement. DRL shall inform Metasyn
promptly in writing of any alleged infringement of MGH Patent Rights licensed
hereunder to DRL in the Territory by a third party of which it shall have
knowledge and provide any available evidence of such infringement to Metasyn and
Metasyn, in turn shall promptly inform MGH of such alleged infringement of the
MGH Patent Rights.
5.1.4. Prosecution by MGH or Metasyn of MGH Patent Rights.
Under the MGH License, MGH has the first right to prosecute at its own expense
any infringements in the Territory of MGH Patent Rights. In the event that MGH
chooses not to prosecute such infringement of the MGH Patent Rights in the
Territory or, within six (6) months of receiving notice of such infringement, is
unsuccessful in causing the alleged infringer to desist and shall not have
brought or is not diligently enforcing an infringement action, Metasyn has the
right to bring such suit at Metasyn's expense.
5.1.5. Prosecution by DRL. In the event that Metasyn declines
to exercise its right to prosecute any infringement of the MGH Patent Rights in
the Territory pursuant to Section 5.1.4, DRL shall have the right to enforce
such MGH Patent Rights at its own cost and expense. In the case of enforcement
of the MGH Patent Rights, DRL shall have the rights granted to Metasyn under
Paragraphs 8.3 and 8.5 of the MGH License, except that DRL shall retain
Metasyn's share of any recoveries under the MGH License, subject to Section
5.1.6 below. In such event, DRL shall have the right, if Metasyn is a legally
indispensable party, to bring such suit or action in the name of Metasyn (in
addition to the right to bring the action in MGH's name). Metasyn shall have the
right to join any such suit or action brought by DRL and, in such event, shall
pay one-half of the cost of such suit or action.
5.1.6. [ ]*. In the event that DRL shall undertake the
enforcement of the MGH Patent Rights in the Territory by litigation, DRL
may [ ]*, provided that it applies the same toward reimbursement of any expenses
it has incurred in connection with such suit or action, including reasonable
attorneys fees, in accordance with the following procedures: (i) DRL may not
prospectively [ ]*, but must actually incur an expense before [ ]*; and (ii) any
expenses incurred by DRL may [ ]* in which the expenses were incurred.
Provided that Metasyn has joined in the action and shared the costs
thereof as stated in Section 5.1.5 above, no settlement, consent judgment or
other voluntary final disposition of the suit may be entered into without the
consent of Metasyn, which consent shall not unreasonably be withheld. Any
recovery or damages derived from such action shall first be used to reimburse
DRL for all legal expenses relating to the suit in excess of the amount of
withheld royalties and thereafter to be used to reimburse Metasyn for all of its
legal expenses relating to the suit if it has joined the suit or action. Any
recovery or damages still remaining shall thereafter be distributed (a) to pay
DRL its lost profits attributable to the
*Confidential information omitted and filed with the Commission.
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<PAGE>
infringement, or a reasonable royalty on the sales of the infringer, whichever
standard the court may have applied, and (b) to reimburse Metasyn for the amount
of royalties not received by Metasyn as a result of such infringement. Any
remaining recovery or damages shall be divided among the parties in proportion
to their contributions to the action.
5.1.7. Declaratory Actions. In the event that a declaratory
judgment action alleging invalidity or non-infringement of any of the MGH Patent
Rights in the Territory shall be brought against DRL, DRL shall notify Metasyn
and MGH in writing, and the parties shall consult concerning the action to be
taken. MGH, at its option, shall have the right within thirty (30) days after
commencement of such action to intervene and take over the sole defense of the
action at its expense. If MGH does not exercise the said option, Metasyn, at its
sole option, shall have the right, within sixty (60) days after commencement of
such action, to intervene, take over and duly prosecute the sole defense of the
action at its own expense. DRL shall have no obligation to defend any such
action, but DRL shall have the right to join in the defense of any such suit or
action by Metasyn, and in such event, shall pay [ ]* of the cost of such suit or
action. In such event, Metasyn will confer with DRL prior to making any decision
regarding settlement or other significant decisions regarding the suit or action
and no such decision will be made without DRL's consent, which consent will not
be unreasonably withheld or delayed.
If DRL has joined in the defense of such action, then DRL may [ ]*
provided that it applies the same toward reimbursement of any expenses it
has incurred in connection with such action, including reasonable attorneys
fees, in accordance with the following procedures: (i) DRL may not prospectively
[ ]*, but must actually incur an expense [ ]* and (ii) any expenses incurred by
DRL may [ ]* in which the expenses were incurred.
5.2. Filing, Prosecution and Maintenance of Metasyn Patent Rights.
5.2.1. Prosecution and Maintenance. Metasyn shall be
responsible for maintenance of the Metasyn Patent Rights in the Territory at its
expense in its own name, keeping DRL informed. If Metasyn elects not to continue
to seek or maintain patent protection on any patent or patent application
included in the Metasyn Patent Rights in the Territory, DRL shall have the
right, at its option and expense, but in the name of Metasyn to prepare, file,
prosecute (including oppositions) and maintain such patent applications and
patents; provided, however, that the rights of the parties with respect to any
such Metasyn Patent Rights in all other respects shall be as described in this
Agreement. Metasyn will advise DRL of all decisions taken with respect to any
such election in a timely manner in order to allow DRL to protect its rights
under this Section 5.2.1. DRL may offset all expenses incurred by DRL under this
Section 5.2.1 against royalty payments in accordance with the procedure set
forth in the second paragraph of Section 5.2.5 below.
5.2.2. Abandonment; Failure to Pay. Metasyn agrees that it
will not abandon the prosecution of any patent applications included within the
Metasyn Patent Rights nor shall it fail to make any payment or fail to take any
other action necessary to maintain a patent
*Confidential information omitted and filed with the Commission.
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<PAGE>
under the Metasyn Patent Rights unless it has notified DRL in sufficient time
for DRL to assume such prosecution or make such payment.
5.2.3. Cooperation. Each party shall make available to the
other party (or to the other party's authorized attorneys, agents or
representatives), its employees, agents or consultants to the extent reasonably
necessary or appropriate to enable the appropriate party to file, prosecute and
maintain patent applications and resulting patents as set forth in this Section
5.2 for periods of time reasonably sufficient for such party to obtain the
assistance it needs from such personnel. Where appropriate, each party shall
sign or cause to have signed all documents relating to said patent applications
or patents at no charge to the other party.
5.2.4. Infringement by Others; Prosecution by Metasyn. Metasyn
and DRL shall each promptly notify the other in writing of any alleged or
threatened infringement of patents or patent applications included in the
Metasyn Patent Rights licensed hereunder to DRL of which they become aware, and
the parties shall consult concerning the action to be taken. Metasyn shall have
the right, but not the obligation, to prosecute at its own expense any such
infringement. Any recovery or damages derived from such action shall be retained
by Metasyn.
5.2.5. Infringement by Others; Prosecution by DRL. If, within
six (6) months after Metasyn first becomes aware of any infringement of the
Metasyn Patent Rights, Metasyn declines to prosecute such infringement or fails
to cause such infringement to terminate or to bring diligently prosecute or a
suit or action to compel termination, DRL shall have the right, but not the
obligation, to bring such suit or action to compel termination at the sole
expense of DRL. In such event, DRL shall have the right, if Metasyn is a legally
indispensable party, to bring such suit or action in the name of Metasyn.
Metasyn shall have the right to join any such suit or action brought by DRL and,
in such event, shall pay [ ]* of the cost of such suit or action.
In the event DRL brings any such suit or action, DRL may [ ]* provided
that it applies the same toward reimbursement of any expenses it has incurred in
connection with such suit or action, including reasonable attorneys fees, in
accordance with the following procedures: (i) DRL may not prospectively [ ]* but
must actually incur an expense [ ]* and (ii) any expenses incurred by DRL may
[ ]* in which the expenses were incurred.
Provided that Metasyn has joined in the action and shared the costs
thereof as stated above, no settlement, consent judgment or other voluntary
final disposition of the suit may be entered into without the consent of
Metasyn, which consent shall not unreasonably be withheld. Any recovery or
damages derived from such action shall first be used to reimburse DRL for all
legal expenses relating to the suit in excess of the amount of withheld
royalties and thereafter to be used to reimburse Metasyn for all of its legal
expenses relating to the suit if it has joined the suit or action. Any recovery
or damages still remaining shall thereafter be distributed (a) to pay DRL its
lost profits attributable to the infringement, or a reasonable royalty on the
sales of the infringer, whichever standard the court may have
*Confidential information omitted and filed with the Commission.
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applied, and (b) to reimburse Metasyn for the amount of royalties not received
by Metasyn as a result of such infringement. Any remaining recovery or damages
shall be divided among the parties in proportion to their contributions to the
action.
5.2.6. Cooperation in Infringement Actions. In any
infringement suit as either party may institute to enforce the Metasyn Patent
Rights pursuant to this Agreement, the other party hereto shall, at the request
of the party initiating such suit, cooperate in all respects and, to the extent
possible, have its employees testify when requested and make available relevant
records, papers, information, samples and the like. DRL's cooperation in any
suit initiated by Metasyn shall be at Metasyn's expense. Metasyn's cooperation
in any suit initiated by DRL shall be at DRL's expense.
5.2.7. Declaratory Actions. In the event that a declaratory
judgment action alleging invalidity or non-infringement of any of the Metasyn
Patent Rights in the Territory shall be brought against DRL, DRL shall notify
Metasyn in writing, and the parties shall consult concerning the action to be
taken. Metasyn, at its sole option, shall have the right, within thirty (30)
days after commencement of such action, to intervene, take over and duly
prosecute the sole defense of the action at its own expense. DRL shall have no
obligation to defend any such action, but DRL shall have the right to join in
the defense of any such suit or action, and in such event, shall pay [ ]* of
the cost of such suit or action. In such event, Metasyn will confer with DRL
prior to making any decision regarding settlement or other significant decisions
regarding the suit or action and no such decision will be made without DRL's
consent, which consent will not be unreasonably withheld or delayed.
If DRL has joined in the defense of such action, then DRL may
[ ]* provided that it applies the same toward reimbursement of any expenses it
has incurred in connection with such action, including reasonable attorneys
fees, in accordance with the following procedures: (i) DRL may not prospectively
[ ]*, but must actually incur an expense [ ]* and (ii) any expenses incurred by
DRL may [ ]* in which the expenses were incurred.
5.3. Infringement Action Against DRL. In the event that a suit or
action is brought against DRL alleging infringement of any third-party patent
right as a result of the exercise of DRL's rights under Section 2.1, DRL shall
have the exclusive right to defend such suit or action at its sole expense.
Metasyn will confer with and assist DRL, at Metasyn's expense, in the conduct or
settlement of such defense. Metasyn shall have the right to be represented in
such suit or action by advisory counsel at its expense. DRL shall not have the
right to settle any such suit or action without the prior written consent of
Metasyn if as a result of such settlement Metasyn would be obligated to make any
payment, assume any obligation, part with any property or interest therein, be
subject to any injunction or order, grant any license or other right under the
Patent Rights, or acknowledge the invalidity of any of the Patent Rights.
If DRL undertakes the defense of or incurs expenses as a defendant in
such action, then DRL may [ ]*,
*Confidential information omitted and filed with the Commission.
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provided that it applies the same toward reimbursement of any expenses it has
incurred in connection with such action, including the amount of any judgment or
settlement and reasonable attorneys fees, in accordance with the following
procedures: (i) DRL may not prospectively [ ]*, but must actually incur an
expense [ ]*; (ii) any expenses incurred by DRL, other than a judgment or
settlement, may [ ]* in which the expenses were incurred; and (iii) in the event
that DRL must pay any judgment or settlement, the amount of such judgment or
settlement [ ]* until DRL is fully reimbursed.
Any recovery or damages obtained by DRL in relation to any counterclaim
or the like filed by DRL in such suit shall be applied first in satisfaction of
any expenses and legal fees of DRL relating to the suit in excess of the amount
of any withheld royalties. Any recovery or damages remaining shall be applied
toward reimbursement of Metasyn for the amount of any royalties withheld. Any
recovery or damages still remaining shall be retained by DRL.
5.4. Cooperation in Infringement Actions. In any infringement suit
either party may institute to enforce or defend the Patent Rights or in which
either party defend claims of infringement of third-party patents pursuant to
this Agreement, the other party hereto shall, at the request of the party
initiating or defending such suit, cooperate at its expense in all respects and,
to the extent possible, have its employees testify when requested and make
available relevant records, papers, information, samples and the like.
ARTICLE 6. CONFIDENTIALITY
6.1. Nondisclosure Obligations.
6.1.1. General. Except as otherwise provided in this Article
6, during the term of this Agreement and for a period of ten (10) years
thereafter, both parties shall maintain in confidence and use only for purposes
specifically authorized under this Agreement (i) information and data received
from the other party resulting from or related to the development of the
Licensed Compound and the Licensed Products and (ii) all information and data
not described in clause (i) but supplied by the other party under this Agreement
marked "Confidential." For purposes of this Article 6, information and data
described in clause (i) or (ii) shall be referred to as "Information."
6.1.2. Limitations. To the extent it is reasonably necessary
or appropriate to fulfil its obligations or exercise its rights under this
Agreement, a party may disclose Information it is otherwise obligated under this
Section 6.1 not to disclose to its Affiliates, sublicensees, consultants,
outside contractors and clinical investigators, on a need-to-know basis on
condition that such entities or persons agree to keep the Information
confidential for the same time periods and to the same extent as such party is
required to keep the Information confidential; and a party or its sublicensees
may disclose such Information to government or other regulatory authorities to
the extent that such disclosure is reasonably necessary to obtain patents or
authorizations to conduct clinical trials of, and to commercially
*Confidential information omitted and filed with the Commission.
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market, the Licensed Compound and its corresponding Licensed Products. The
obligation not to disclose Information shall not apply to any part of such
Information that: (i) is or becomes part of the public domain other than by
unauthorized acts of the party obligated not to disclose such Information or its
Affiliates or sublicensees; (ii) can be shown by written documents to have been
disclosed to the receiving party or its Affiliates or sublicensees by a Third
Party, provided such Information was not obtained by such Third Party directly
or indirectly from the other party under this Agreement pursuant to a
confidentiality agreement; (iii) prior to disclosure under this Agreement, was
already in the possession of the receiving party or its Affiliates or
sublicensees, provided such Information was not obtained directly or indirectly
from the other party under this Agreement pursuant to a confidentiality
agreement; (iv) can be shown by written documents to have been independently
developed by the receiving party or its Affiliates without breach of any of the
provisions of this Agreement; or (v) is disclosed by the receiving party
pursuant to interrogatories, requests for information or documents, subpoena,
civil investigative demand issued by a court or governmental agency or as
otherwise required by law, provided that the receiving party notifies the other
party immediately upon receipt thereof and provided further that the disclosing
party furnishes only that portion of the Information which it is advised by
counsel is legally required.
6.2. Samples. Samples of the Licensed Compound and/or the Licensed
Compound provided by Metasyn to DRL in the course of the Program shall not be
supplied or sent by DRL to any Third Party, other than to regulatory agencies,
except pursuant to a written materials transfer and/or confidentiality agreement
approved by Metasyn.
6.3. Terms of this Agreement. Except as provided in Section 10.7
hereof, Metasyn and DRL each agree not to disclose any terms or conditions of
this Agreement to any Third Party without the prior consent of the other party,
except as required by applicable law. If Metasyn determines that it is required
to file with the Securities and Exchange Commission or other governmental agency
this Agreement for any reason, Metasyn shall request confidential treatment of
such portions of this Agreement as it and DRL shall together determine.
Notwithstanding the foregoing, prior to execution of this Agreement, Metasyn and
DRL shall agree upon the substance of information that can be used as a routine
reference in the usual course of business to describe the terms of this
transaction, and Metasyn and DRL may disclose such information, as modified by
mutual agreement from time to time, without the other party's consent.
6.4. Publications.
6.4.1. Procedure. Each party recognizes the mutual interest in
obtaining patent protection for inventions which arise under this Agreement. In
the event that, either party, its employees or consultants or any other Third
Party under contract to such party wishes to make a publication (including any
oral disclosure made without obligation of confidentiality) relating to work
performed under this Agreement (the "Publishing Party"), such party shall
transmit to the other party (the "Reviewing Party") a copy of the proposed
written publication at least forty-five (45) days prior to submission for
publication, or an abstract of such oral disclosure at least thirty (30) days
prior to submission of the abstract or the oral disclosure, whichever is
earlier. The Reviewing Party shall have the right (a) to propose modifications
to the publication for patent reasons, (b) to request a delay in
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publication or presentation in order to protect patentable information, or (c)
to request that the information be maintained as a trade secret and, in such
case, the Publishing Party shall not make such publication; provided, however,
that the Publishing Party need only provide the other party with a copy of a
proposed press release within ten (10) days prior to submission for publication
or such other period as the parties may mutually agree.
6.4.2. Delay. If the Reviewing Party requests a delay as
described in Section 6.4.1(b), the Publishing Party shall delay submission or
presentation of the publication for a period of ninety (90) days to enable
patent applications protecting each party's rights in such information to be
filed.
6.4.3. Resolution. Upon the receipt of written approval of the
Reviewing Party, the Publishing Party may proceed with the written publication
or the oral presentation.
6.5. Injunctive Relief. The parties hereto understand and agree that
remedies at law may be inadequate to protect against any breach of any of the
provisions of this Article 6 by either party or their employees, agents,
officers or directors or any other person acting in concert with it or on its
behalf. Accordingly, each party shall be entitled to the granting of injunctive
relief by a court of competent jurisdiction against any action that constitutes
any such breach of this Article 6.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES
7.1. Patent Validity. Nothing in this Agreement shall be construed as a
warranty or representation by Metasyn as to the validity or scope of any Metasyn
Technology or Patent Rights or that the exercise of the Patent Rights will not
infringe upon the rights of any Third Party.
7.2. Accuracy of Exhibits A and B. Metasyn represents and warrants that
Exhibits A and B list all Patent Rights which are relevant to the manufacture,
use and sale of the Licensed Compound and its corresponding Licensed Products in
the Territory as of the Effective Date.
ARTICLE 8. INDEMNITY
8.1. DRL Indemnity Obligations. Subject to the provisions of Section
8.2, DRL agrees to defend, indemnify and hold Metasyn, its Affiliates and their
respective directors, officers, employees and agents harmless from all costs,
judgments, liabilities and damages assessed by a court of competent jurisdiction
arising from claims asserted by a third party against Metasyn, its Affiliates or
their respective directors, employees or agents as a result of: (a) actual or
asserted violations of any applicable law or regulation by DRL, its Affiliates
or sublicensees by virtue of which the Licensed Products manufactured,
distributed or sold shall be alleged or determined to be adulterated,
misbranded, mislabeled or otherwise not in compliance with such applicable law
or regulation; (b) claims for bodily injury, death or property damage
attributable to the manufacture, distribution, sale or use of the Licensed
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Products by DRL, its Affiliates or sublicensees; or (c) a recall ordered by a
governmental agency, or required by a confirmed failure, of Licensed Products
manufactured, distributed, or sold by DRL, its affiliates or sublicensees as
reasonably determined by the parties hereto.
8.2. Metasyn Indemnity Obligations. Metasyn, its Affiliates and their
respective directors, officers, employees and agents shall not be entitled to
the indemnities set forth in Section 8.1 where the claim, loss, damage or
expense for which indemnification is sought was either caused by (a) a defect in
manufacturing of Licensed Products manufactured by Metasyn or its Affiliates or
(b) a negligent or willful act or omission by Metasyn, its Affiliates, and their
respective directors, officers, employees or authorized agents and, in either
such case, Metasyn shall indemnify DRL, its Affiliates and their respective
directors, officers, employees and agents harmless from all costs, judgments,
liabilities and damages assessed by a court of competent jurisdiction arising
from claims asserted by a third party.
8.3. Procedure. A party or any of its Affiliates or their respective
employees or agents (the "Indemnitee") that intends to claim indemnification
under this Article 8 shall promptly notify the other party (the "Indemnitor") of
any loss, claim, damage, liability or action in respect of which the Indemnitee
intends to claim such indemnification, and the Indemnitor shall assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an Indemnitee shall have the right to retain its own counsel, with
the fees and expenses to be paid by the Indemnitor, if representation of such
Indemnitee by the counsel retained by the Indemnitor would be inappropriate due
to actual or potential differing interests between such Indemnitee and any other
party represented by such counsel in such proceedings. The indemnity agreement
in this Article 8 shall not apply to amounts paid in settlement of any loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Indemnitor, which consent shall not be withheld unreasonably. The
failure to deliver notice to the Indemnitor within a reasonable time after the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such Indemnitor of any liability to the Indemnitee under
this Article 8, but the omission so to deliver notice to the Indemnitor will not
relieve it of any liability that it may have to any Indemnitee otherwise than
under this Article 8. The Indemnitee under this Article 8, its employees and
agents, shall cooperate fully with the Indemnitor and its legal representatives
in the investigation of any action, claim or liability covered by this
indemnification. In the event that each party claims indemnity from the other
and one party is finally held liable to indemnify the other, the Indemnitor
shall additionally be liable to pay the reasonable legal costs and attorneys'
fees incurred by the Indemnitee in establishing its claim for indemnity.
8.4. Insurance. DRL and Metasyn shall each maintain appropriate product
liability insurance with respect to development, manufacture and sales of the
Licensed Products by DRL or Metasyn, respectively, in such amount as DRL or
Metasyn, respectively, customarily maintains with respect to sales of its other
products. DRL and Metasyn, as applicable, shall each maintain such insurance for
so long as it continues to manufacture or sell the Licensed Products, and
thereafter for so long as DRL or Metasyn, as applicable, maintains insurance for
itself covering such manufacture or sales.
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ARTICLE 9. EXPIRATION AND TERMINATION
9.1. Expiration. Unless this Agreement is sooner terminated in
accordance with the provisions of this Article 9 hereof, the term of DRL's
obligation of royalty payments pursuant to Section 4.3 hereof shall cease upon
earlier of (i) fifteen (15) years after the First Commercial Sale of the
Licensed Products in the Territory or (ii) abandonment, invalidity or rejection
with no possibility of appeal or expiration of all claims of the Patent Rights
listed in Exhibits A and B.
DRL shall have an irrevocable paid-up license thereafter.
9.2. Termination.
9.2.1. Termination by Either Party. This Agreement may be
terminated by either party (i) by reason of a material breach (other than as
provided in clause (ii) hereof and Section 9.2.2 below) if the breaching party
fails to remedy such breach within ninety (90) days after written notice thereof
by the non-breaching party, (ii) if the other party fails to meet one of its
assigned product objectives listed in Exhibit C hereto within the specified
period of time for such objective (including any extensions granted pursuant to
Section 3.1.4 hereof) or (iii) upon bankruptcy, insolvency, dissolution or
winding up of the other party.
9.2.2. Termination by Metasyn. This Agreement may be
terminated by Metasyn if (i) DRL fails to make any expense or royalty payment
within ten (10) business days after such payment becomes payable and such
failure is not remedied within thirty (30) days after notice thereof from
Metasyn or (ii) if DRL fails to obtain final marketing approval for the Licensed
Products in the Territory by [ ]* (provided that Metasyn will not unreasonably
withhold its consent to a reasonable extension of such date if DRL can
demonstrate that failure to meet such objective is the result of circumstances
beyond DRL's control or is the result of Metasyn's failure to perform its
obligations hereunder). The ability of DRL to cure a breach pursuant to clause
(i) hereof will apply only if the number of breaches properly noticed under the
terms of this Agreement does not exceed three (3) breaches by DRL within any
three (3) calendar year period. Any subsequent breach within that three (3)
calendar year period which commenced with the first of the three (3) prior
breaches by DRL will entitle Metasyn to terminate this Agreement upon proper
notice.
9.2.3. Termination by DRL. This Agreement may be terminated by
DRL upon thirty (30) days prior written notice to Metasyn if DRL determines in
its reasonable opinion that the Licensed Products lack clinical efficacy,
present injurious side effects or otherwise exhibit unacceptable properties.
9.2.4. Automatic Termination. In the event that the parties do
not enter into the Stock Purchase Agreement by May 31, 1996 or such later date
as the parties may mutually agree in writing (the "Expiration Date"), then this
Agreement shall automatically be terminated as of the end of the day on the
Expiration Date, unless:
(a) the reasons for not entering into the Stock Purchase Agreement are
due to Metasyn's failure to negotiate in good faith, in which case, in lieu of
termination of this Agreement and the remedies set forth in Section 9.3.3(b)
below, DRL may remit to Metasyn on or before the Expiration Date as an
additional license fee the amount of [ ]* in
*Confidential information omitted and filed with the Commission.
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United States dollars by certified check or wire transfer (which fee will not be
refundable under any circumstances), which fee will be creditable against
royalty payments due to Metasyn pursuant to Section 4.3 hereof; provided that
royalties due to Metasyn may not be reduced by more than [ ]* in any given
quarter; or
(b) (i) the reasons for not entering into the Stock Purchase Agreement
are other than those described in clauses (a) or (b) of Section 9.3.3; and (ii)
on or before the Expiration Date, DRL remits to Metasyn as an additional license
fee the amount of [ ]* in United States dollars by certified check or wire
transfer (which fee will not be refundable under any circumstances and will not
be credited against any royalty payments due to Metasyn pursuant to Section 4.3
hereof), the net amount of which fee shall be creditable against the amounts due
under the Stock Purchase Agreement if, and only if, Metasyn and DRL enter into
the Stock Purchase Agreement on or before July 31, 1996; provided, however, that
if the sole reason for not entering into the Stock Purchase Agreement is due to
Metasyn's inability to issue shares to DRL pursuant to the Stock Purchase
Agreement as a result of either (x) a court of competent jurisdiction having
enjoined Metasyn from issuing such shares or (y) such issuance being prohibited
by any statute, rule or regulation applicable to the parties and the proposed
transaction or any order of any governmental agency or body having jurisdiction
over the parties, then the net amount of such additional license fee may be
creditable against amounts due under the Stock Purchase Agreement if, and only
if, Metasyn and DRL enter into the Stock Purchase Agreement on or before May 31,
1997.
9.3. Effect of Expiration or Termination.
9.3.1. Manufacturing Approval and Technology. In the event
this Agreement is terminated, except by DRL pursuant to Section 9.2.1 above, a)
if DRL has obtained manufacturing approval in the Territory, then DRL shall
promptly assign and transfer such manufacturing approval to Metasyn so as to
enable Metasyn to manufacture and sell the Licensed Products in the Territory,
and b) DRL will grant Metasyn licenses on reasonable and customary terms to be
negotiated in good faith by the parties for any technology or know-how developed
by DRL or its third party manufacturer relating to the manufacture of the
Licensed Products.
9.3.2. Termination due to Termination of MGH License. In the
event this Agreement is terminated by DRL in accordance with Section 9.2.1
hereof as a result of the termination of the MGH License, Metasyn shall grant a
royalty-free license to the rights stipulated in Section 2.1, excluding rights
involving MGH Patent Rights and DRL shall have the rights provided under
Paragraph 10.7 of the MGH License to cause the licenses to the MGH Patent Rights
granted to it hereunder to remain in full force and effect.
9.3.3. Termination Due to Section 9.2.4. In the event that
this Agreement is terminated pursuant to Section 9.2.4 above, then:
(a) In the event that the Stock Purchase Agreement is
not executed by the parties by the Expiration Date due to DRL's failure to
negotiate in good faith, then the entire Initial Payment shall be
non-refundable.
*Confidential information omitted and filed with the Commission.
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(b) In the event that the Stock Purchase Agreement is
not executed by the parties by the Expiration Date due to Metasyn's failure to
negotiate in good faith, then Metasyn shall deliver to DRL a promissory note on
the Expiration Date for the principal amount of [ ]* (the "Refund Note"). The
Refund Note shall bear interest at a rate of [ ]*. The principal amount of the
Refund Note shall be repaid in two (2) payments of [ ]* each, payable on the
first and second anniversaries of the Expiration Date. All unpaid principal
together with all accrued interest due under the Refund Note shall be due and
payable in full on the second anniversary of the Expiration Date. The Refund
Note shall include customary event of default provisions. In the event that
Metasyn fails to pay the Refund Note on any installment date or on maturity, DRL
shall have available to it all remedies at law or in equity.
(c) In the event that the Stock Purchase Agreement is
not executed by the parties by the Expiration Date for reasons other than those
described in clauses (a) and (b) above, then on the day after the Expiration
Date, Metasyn shall deliver to DRL a promissory note for the principal amount of
[ ]* (the "Partial Refund Note"). The Partial Refund Note shall bear interest at
a rate of [ ]* per annum. The principal amount of the Partial Refund Note shall
be repaid in two (2) payments of [ ]* each, payable on the first and second
anniversaries of the Expiration Date. All unpaid principal together with all
accrued interest due under the Partial Refund Note shall be due and payable in
full on the second anniversary of the Expiration Date. The Partial Refund Note
shall include customary event of default provisions. In the event that Metasyn
fails to pay the Partial Refund Note on any installment date or on maturity, DRL
shall have available to it all remedies at law or in equity.
9.3.4. Survival. The provisions of Articles 4 (with respect
only to expense payments and royalties accrued at the time of expiration or
termination but not yet paid) 5, 6, 7 and 8, Section 10.11 and this Section 9.3
shall survive the expiration or termination of this Agreement.
9.4. Remedy Other Than Termination. In the event of breach by Metasyn
of any of its obligations hereunder that would entitle DRL to terminate this
Agreement pursuant to Section 9.2.1(i) hereof that Metasyn fails to remedy or
take reasonable action to initiate a remedy for within ninety (90) days after
notice thereof by DRL, in lieu of termination, DRL shall have the right and
option, upon obtaining final judgment or judicial or arbitral award of monetary
damages and/or costs against Metasyn, to offset the amount of such damages
and/or costs against any amounts otherwise due to Metasyn under Article 4
hereof.
ARTICLE 10. MISCELLANEOUS
10.1. Force Majeure. Neither party shall be held liable or responsible
to the other party nor be deemed to have defaulted under or breached this
Agreement for failure or delay in fulfilling or performing any term of this
Agreement when such failure or delay is caused by or results from causes beyond
the reasonable control of the affected party, including but not limited to fire,
floods, embargoes, war, acts of war (whether war is declared or not),
*Confidential information omitted and filed with the Commission.
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insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or the other party; provided, however, that the party so
affected shall use reasonable commercial efforts to avoid or remove such causes
of nonperformance, and shall continue performance hereunder with reasonable
dispatch whenever such causes are removed. Either party shall provide the other
party with prompt written notice of any delay or failure to perform that occurs
by reason of force majeure. The parties shall mutually seek a resolution of the
delay or the failure to perform as noted above.
10.2. Assignment. This Agreement may not be assigned or otherwise
transferred by either party without the prior written consent of the other
party; provided, however, that either Metasyn or DRL may, without such consent,
assign its rights and obligations under this Agreement (i) in connection with a
corporate reorganization, to any Affiliate, all or substantially all of the
equity interest of which is owned and controlled by such party or its direct or
indirect parent corporation, or (ii) in connection with a merger, consolidation
or sale of substantially all of such party's assets to an unrelated Third Party;
provided, however, that such party's rights and obligations under this Agreement
shall be assumed in writing by its successor in interest in any such transaction
and shall not be transferred separate from all or substantially all of its other
business assets, including those business assets that are the subject of this
Agreement. Any purported assignment in violation of the preceding sentence shall
be void. Any permitted assignee shall assume all obligations of its assignor
under this Agreement.
10.3. Severability. Each party hereby agrees that it does not intend to
violate any public policy, statutory or common laws, rules, regulations, treaty
or decision of any government agency or executive body thereof of any country or
community or association of countries. Should one or more provisions of this
Agreement be or become invalid, the parties hereto shall substitute, by mutual
consent, valid provisions for such invalid provisions which valid provisions in
their economic effect are sufficiently similar to the invalid provisions that it
can be reasonably assumed that the parties would have entered into this
Agreement with such valid provisions. In case such valid provisions cannot be
agreed upon, the invalidity of one or several provisions of this Agreement shall
not affect the validity of this Agreement as a whole, unless the invalid
provisions are of such essential importance to this Agreement that it is to be
reasonably assumed that the parties would not have entered into this Agreement
without the invalid provisions.
10.4. Notices. Any consent, notice or report required or permitted to
be given or made under this Agreement by one of the parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by telephone, personal delivery or courier) or courier, postage
prepaid (where applicable), addressed to such other party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor and shall be effective upon receipt by the
addressee.
If to Metasyn: Metasyn, Inc.
71 Rogers Street
Cambridge, Massachusetts 02142-1118
Attention: President
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<PAGE>
Telephone: 1-617-499-1400
Telecopy: 1-617-499-1414
with a copy to: Palmer & Dodge
One Beacon Street
Boston, Massachusetts 02108
Attention: Peter Wirth, Esq.
Telephone: 1-617-573-0100
Telecopy: 1-617-227-4420
If to DRL: Daiichi Radioisotope Laboratories, Ltd.
17-10, Kyobashi 1-chome Chuo-ku
Tokyo, 104 Japan
Attention: President
Telephone: 011 81 3 5250 2607
Telecopy: 011 81 3 5250 2609
with a copy to: Nutter, McClennen & Fish, LLP
One International Place
Boston, Massachusetts 02110
Attention: Charles B. Abbott, Esq.
Telephone: (617) 439-2000
Telecopy: (617) 973-9748
10.5. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of laws provisions thereof.
10.6. Dispute Resolution.
10.6.1. The parties hereby agree that they will attempt in
good faith to resolve any controversy or claim arising out of or relating to
this Agreement promptly by negotiations. If a controversy or claim should arise
hereunder, the representatives of the parties will confer at least once and will
attempt to resolve the matter. If the matter has not been resolved within
fourteen (14) days of their first meeting, the representatives shall refer the
matter to the Chief Executive Officers of the parties. If the matter has not
been resolved within thirty (30) days of the first meeting of the Chief
Executive Officers of the parties (which period may be extended by mutual
agreement), subject to rights to injunctive relief and specific performance, and
unless otherwise specifically provided for herein, any controversy or claim
arising out of or relating to this Agreement, or the breach thereof, will be
settled as set forth in Section 10.6.2.
10.6.2. All disputes, controversies or differences which may
arise between the parties out of or in relation to this Agreement or any default
or breach thereof may be resolved by arbitration in accordance with the Rules of
Conciliation and Arbitration of the International Chamber of Commerce by one or
more arbitrators appointed in accordance with the sail Rules. If DRL is the
moving party, the arbitration shall take place in Boston,
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Massachusetts, and if Metasyn is the moving party, the arbitration shall take
place in Tokyo, Japan. Any decision or award resulting from the arbitration
provided for herein shall be final and binding on the parties hereto.
Notwithstanding the above, either party has the right to bring suit in a court
of competent jurisdiction against the other party for (i) any breach of such
other party's duties of confidentiality pursuant to Article 6 of this Agreement
and (ii) any infringement of its own proprietary rights by the other party.
Judgment upon the arbitrator's award may be entered in any court of competent
jurisdiction. The award of the arbitrator may include compensatory damages
against either party, but under no circumstances will the arbitrator be
authorized to, nor shall he, award punitive damages or multiple damages against
either party. The parties agree not to institute any litigation or proceedings
against each other in connection with this Agreement except as provided in this
Section 10.6.2.
10.7. Public Announcements. The parties agree that press releases and
other announcements to be made by either of them in relation to this Agreement
shall be subject to the written consent of the other party, which consent shall
not be unreasonably withheld or delayed. The parties will agree to issue a joint
press release immediately following the execution of this Agreement, the form
and content of which shall be reasonably satisfactory to both parties.
Notwithstanding the foregoing, after the Effective Date, Metasyn shall be free
to issue any press releases regarding the preclinical, clinical and regulatory
development of the Licensed Compound or Licensed Product taking place in any
country other than Japan, and DRL shall be free to issue any press releases
regarding the preclinical, clinical and regulatory development of the Licensed
Compound or Licensed Product taking place in Japan.
10.8. Entire Agreement. This Agreement, together with the exhibits
hereto, the Development Schedule, any supply agreement that the parties may
execute pursuant to Section 2.2 hereof, the Master Agreement and the Stock
Purchase Agreement, contains the entire understanding of the parties with
respect to the subject matter hereof and supersedes the Letter of Intent dated
March 1, 1996 between Metasyn and DRL. All express or implied agreements and
understandings, either oral or written, heretofore made are expressly merged in
and made a part of this Agreement. This Agreement may be amended, or any term
hereof modified, only by a written instrument duly executed by both parties
hereto.
10.9. Headings. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are merely guides or labels to
assist in locating and reading the several Articles and Sections hereof.
10.10. Independent Contractors. It is expressly agreed that Metasyn and
DRL shall be independent contractors and that the relationship between the two
parties shall not constitute a partnership, joint venture or agency. Neither
Metasyn nor DRL shall have the authority to make any statements, representations
or commitments of any kind, or to take any action, which shall be binding on the
other, without the prior consent of the other party to do so.
10.11. Agreement Not to Solicit Employees. During the term of this
Agreement and for a period of [ ]* following the expiration pursuant to
Section 9.1 or termination
*Confidential information omitted and filed with the Commission.
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<PAGE>
pursuant to Section 9.2 of this Agreement, Metasyn and DRL agree not to seek to
persuade or induce any employee of the other company to discontinue his or her
employment with that company in order to become employed by or associated with
any business, enterprise or effort that is associated with its own business.
10.12. Exports. The parties acknowledge that the export of technical
data, materials or products is subject to the exporting party receiving any
necessary export licenses and that the parties cannot be responsible for any
delays attributable to export controls which are beyond the reasonable control
of either party. Metasyn and DRL agree not to export or re-export, directly or
indirectly, any information, technical data, the direct product of such data,
samples or equipment received or generated under this Agreement in violation of
any applicable export control laws or governmental regulations. Metasyn and DRL
agree to obtain similar covenants from their licensees, sublicensees and
contractors with respect to the subject matter of this Section 10.12.
10.13. Waiver. The waiver by either party hereto of any right hereunder
or the failure to perform or of a breach by the other party shall not be deemed
a waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.
10.14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
METASYN, INC.
By: /s/ Michael D. Webb
-------------------------
Michael D. Webb
Title: President and Chief Executive Officer
DAIICHI RADIOISOTOPE LABORATORIES, LTD.
By: /s/ Osamu Ikeda
- ----------------------------
Title: Osamu Ikeda
-------------------------------------
President and Chief Executive Officer
-------------------------------------
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EXHIBIT A
MGH Patent Rights
1) U.S. Patent No. 4,899,755, "Hepatobiliary NMR Contrast Agents," Randall
B. Lauffer and Thomas J. Brady, Ser. No. 731,841, filed May 8, 1985,
issued February 13, 1990.
2) U.S. Patent No. 4,880,008, "In Vivo Enhancement of NMR Relaxivity,"
Randall B. Lauffer, Ser. No. 860,540, filed May 7, 1986, issued
November 14, 1989.
3) Canadian Patent No. 1,264,663, "Hepatobiliary NMR Contrast Agents,"
Randall B. Lauffer and Thomas J. Brady, Ser. No. 508,749, filed May 8,
1986, issued January 23, 1990.
4) [ ]*
5) [ ]*
6) [ ]*
*Confidential information omitted and filed with the Commission.
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EXHIBIT B
Metasyn Patent Rights
1) [ ]*
2) [ ]*
*Confidential information omitted and filed with the Commission.
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EXHIBIT C
Development Schedule
================================================================================
[ ]* [ ]*
[ ]* [ ]*
[ ]* [ ]*
[ ]* [ ]*
[ ]* [ ]*
[ ]* [ ]*
================================================================================
*Confidential information omitted and filed with the Commission.
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APPENDIX I
MGH License
Filed herewith as Exhibit 10.14.
Exhibit 10.20
THIRD AMENDMENT LEASE FROM
TRUSTEES OF THE CAMBRIDGE EAST TRUST
TO METASYN, INC.
This is the Third Amendment made as of as of May 1, 1996 to the Lease
dated July 7, 1992 between the Trustees of The Cambridge East Trust, as
Landlord, and Metasyn, Inc., as Tenant, for premises at 71 Rogers Street and 75
Rogers Street, Cambridge, Massachusetts, amended by First Amendment dated
October 25, 2993 and by Second Amendment dated as of September 17, 1994 (the
"Lease").
Whereas, the Landlord is willing and the Tenant wishes to lease as
additional premises the premises at the rear of 63 Rogers Street and at the rear
of 65 Rogers Street, Cambridge on the terms and conditions stated in the Lease
as amended.
Therefore, for valuable consideration the receipt and sufficiency of
which is mutually acknowledged:
1. The premises at the rear of 63 Rogers Street and at the rear of 65
Rogers Street, Cambridge, consisting of approximately 7,050 square feet and more
completely described on Exhibit 7 to this Third Amendment are added to the Lease
as of May 1, 1996 in their present condition, for rent and other terms and
conditions reflected on Section 1 Reference Data attached to this Third
Amendment otherwise on all the terms and conditions of the Lease as previously
amended.
2. Section l Reference Data The Landlord and the Tenant further amend
the Lease by substituting Section 1 Reference Data appearing at the end of this
Third Amendment for the Section 1 Reference Data attached to the Second
Amendment and the Lease is hereby so amended.
The Premises added to the Lease by this Third Amendment are delivered
by Landlord and accepted by Tenant "as is".
3. The Lease is amended by deleting Section 8.1 in its entirety and
substituting the following new Section 8.1 therefor:
8.1 Compliance with Law, Including Hazardous Substances. Tenant, at its
sole expense, shall comply with all applicable law, and all applicable insurance
requirements, with respect to Tenant's use and occupancy of the Premises and
will not do or permit to be done anything upon the Premises which will violate
applicable law or invalidate or be in conflict with fire and casualty insurance
policies. Except for necessary quantities of customary and usual cleaning
supplies used in cleaning and maintenance of the Premises, which shall be
properly stored, and except as otherwise provided in this Section 8.l, there
shall not be brought on or kept within the Premises any inflammable, combustible
or explosive fluid, material or chemical, or any hazardous, toxic or radioactive
material or substance, including without limitation oil
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(collectively, "Hazardous Substances") regulated by any local, state or Federal
law (for example, the Federal Comprehensive Environmental Response Compensation
Liability Act of l980, the Massachusetts Hazardous Waste Management Act and the
Massachusetts Oil and Hazardous Material Release Prevention Act) as now in
existence or as hereafter enacted or amended (collectively "Hazardous Substance
Law").
Tenant agrees not to store or use any Hazardous Substance in, on or
about the Premises, or dispose of Hazardous Substances from the Premises to any
other location, without Landlord's prior written consent, which consent may be
withheld unless Tenant has established to Landlord's satisfaction that (i) such
Hazardous Substance is related to the Permitted Uses of the Premises and (ii)
Tenant has obtained all permits and approvals therefor and the same are validly
issued and outstanding and may be relied on by Tenant, or commit or suffer to be
committed in or on the Premises any act which would require the filing of a
notice pursuant to any Hazardous Substance Law, including without limitation
Massachusetts General Laws Chapter 2lE. Notwithstanding Landlord's consent,
Tenant covenants and agrees that it shall advise Landlord in writing on a
continuing basis (i) of any Hazardous Substances Tenant deals with in any way on
the Premises that may be regulated under any Hazardous Substance Law prior to
such substances or materials being brought upon the Premises, and (ii) of
Tenant's application for, receipt of, rejection regarding, and withdrawal or
lapse of, any license or permit required with respect to Hazardous Substances
relating to Tenant's activities at the Premises.] In the event that Tenant
receives from any federal, state or local governmental agency any notice of
violation or alleged violation of any Hazardous Substance Law, Tenant agrees to
forward to Landlord a copy of any such notice within three (3) days of Tenant's
receipt thereof, and Tenant agrees to take all steps necessary to bring Tenant's
use of the Premises into compliance with such Hazardous Substance Law and any
other applicable law.
At Landlord's or Landlord's lender's request from time to time during,
and upon the expiration of, the Term of this Lease, Tenant shall cause the
Premises and the Building and land, air and water related thereto to be
inspected by a qualified professional satisfactory to Landlord for the presence
of any material or substance prohibited or regulated under any Hazardous
Substance Law and to obtain and forward to Landlord the professional's written
report setting forth the scope and results of such inspection.
Tenant agrees not to cause, permit or tolerate, by act or omission of
Tenant, Tenant's employees, agents or contractors or any other person who is on
or in the vicinity of the Premises by reason of Tenant's occupancy of the
Premises, any release or discharge any Hazardous Substance within, onto or in
the vicinity of the Premises. Tenant's responsibility shall include all releases
or discharges of Hazardous Substances (a) occurring during the Term, without
regard to actual occupancy by Tenant, and during any other period Tenant is in
occupancy of all or any part of the Premises (the "Possession Period") and also
(b) occurring or continuing to occur after the Possession Period by virtue of
events first occurring during the Possession Period for which Tenant is
responsible under this Section.
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Tenant agrees at Tenant's sole cost and expense to remove from the
Premises, and the buildings adjacent to and the air, land and water above,
around and under, the Premises and buildings adjacent thereto, as more
completely set forth on Exhibit 4 to the Second Amendment, any Hazardous
Substance which may be released thereon for which Tenant is responsible under
this Lease.
Tenant shall be liable for and shall indemnify Landlord, as additional
rent, against any and all liability arising from the breach of any of Tenant's
covenants and agreements under this Section 8.l, including without implied
limitation (i) all costs and expenses of or related to response and remediation,
whether performed under judicial order, governmental requirement or in voluntary
compliance with Hazardous Substance Laws, (ii) all liability for injury to
persons and damage to property, (iii) all fines and penalties and (iv) all costs
and expenses of dispute, such as attorneys' fees and costs and the fees and
costs of Licensed Site Professionals and other persons whose services are
reasonably related to such liability, incurred by Landlord in connection
therewith, whenever such liability shall arise and for as long as Landlord
remains so liable. Tenant shall be liable to and indemnify Landlord to the same
extent as Landlord is or may be liable to any governmental agency or to any
other person (such as corporations, other legally existing entities and
individuals), including, by way of example, other tenants of Landlord's adjacent
properties and abutting landowners. Tenant's liability to Landlord is intended
to include the same standard of liability imposed on Landlord by Hazardous
Substance Law, including strict liability as well as liability for negligence
and for willfully wrong conduct.
Tenant shall not be responsible to Landlord under this Section, either
as to removal or indemnification, for releases first occurring off the Premises
due to the conduct of persons other than persons for whom Tenant is responsible
which migrate onto the Premises, nor shall Tenant be responsible to Landlord
under this Section, either as to removal or indemnification, for any releases
occurring by act or omission of Landlord, Landlord's employees, agents,
contractors or any other person on or in the vicinity of the Premises at
Landlord's direction or request, provided as to releases occurring on the
Premises involving Hazardous Substances maintained by Tenant that Tenant has
exercised due care supervising the person who caused the release during the time
that person was on the Premises.
Tenant releases Landlord from any and all liability with respect to
damage, however and whenever arising, actual or contingent, liquidated or
unliquidated, which is due to Hazardous Substances, excepting only liability
arising from the direct acts of Landlord, its employee and agents.
Nothing in this Section shall be construed to limit the scope of any
other indemnification in this Lease to the extent the same applies to other than
Hazardous Substances.
4. Except as amended herein, the Lease is ratified and confirmed.
3
<PAGE>
5. Agreement Made Only When Amendment Signed. This Amendment shall bind
Landlord and Tenant only when executed and delivered by both. This Amendment
when signed by one party and delivered to the other, shall constitute an offer
to enter into the Amendment on the terms set forth herein. No submission of this
Amendment, unsigned by either party to the other, shall constitute an offer.
LEASE
-----
WITH THIRD AMENDMENT
--------------------
As of May 1, 1996
1. Reference Data. Each reference in this Lease to the following
subjects shall be construed to incorporate the data for that subject stated in
this Section 1.
DATE: July 7, 1992, as previously amended by the First Amendment dated October
25, 1993, the Second Amendment dated as of September 17, 1994 and as further
amended by this Third Amendment.
PREMISES: (i) The premises shown on Exhibit 1 to the Lease containing
approximately 2,500 square feet located in the 2,500 square foot building known
as and numbered 71 Rogers Street, (ii) the premises shown on Exhibit 2 to the
Lease containing approximately 5,000 square feet in the 5,000 square foot
building known as and numbered 75 Rogers Street, (iii) the Premises shown on
Exhibit 6 to the Lease, containing approximately 2,500 square feet in the 2,500
building known as and numbered 69 Rogers Street and (iv) the premises shown on
Exhibit 7 attached to this Third Amendment containing approximately 7,050 square
feet and located at the rear of 63 Rogers Street and at the rear of 65 Rogers
Street, all in Cambridge, Massachusetts (collectively, the Building.)
LANDLORD: Trustees of The Cambridge East Trust, as Trustees and not individually
ORIGINAL ADDRESS OF LANDLORD:
c/o Beal and Company, Inc.
177 Milk Street
Boston, Massachusetts 02109-3410
TENANT: Metasyn, Inc., a Delaware corporation
ORIGINAL ADDRESS OF TENANT:
71 Rogers Street
Cambridge, Massachusetts 02142
4
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TERM:
Five years two months (or such shorter time as applicable to the
Premises added by Second Amendment) as to the Premises previously included in
this Lease
One year eight months as to the Premises being added to the Lease by this Third
Amendment
EXTENSION OPTION: See Section 3.4 of Lease
COMMENCEMENT DATE:
November 1, 1992 (or the date established in the Second Amendment as
to the Premises to the Lease thereby) as to the Premises previously included in
this Lease
May 1, 1996 as to the Premises being added to the Lease by this Third
Amendment
TERMINATION DATE: December 31, 1997 (as to all Premises)
ANNUAL FIXED RENT:
Through April 30, 1996 - As stated in the Lease as previously amended
May 1, 1996 - December 31, 1996 $ 115,633.33
January 1, 1997 - December 31, 1997 $ 197,550.00
MONTHLY PAYMENT:
Through April 30, 1996 - As stated in the Lease as previously amended
May 1, 1996 - December 31, 1996 $ 14,454.17
January 1, 1997 - December 31, 1997 $ 16,462.50
LANDLORD'S RENOVATIONS, ALTERATIONS, IMPROVEMENTS:
As stated in Section 3.6 of the Lease as to Premises previously part
of the Lease
None as the the Premises being added to the Lease in this Third
Amendment
TENANT'S PERCENTAGE OF OPERATING EXPENSES
& REAL ESTATE TAXES:
100% as to all Premises except as stated below
40.08% as to the Premises at the rear of 63 Rogers Street
81.88% as to the Premises at the rear of 65 Rogers Street
TAX BASE YEAR: None
PERMITTED USES: Office and laboratory use and ancillary animal space to the
extent permitted by applicable law, and no other use
5
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SECURITY DEPOSIT: $30,287.50
BROKER: Lynch, Murphy, Walsh & Partners - as to the Lease
None as to this Third Amendment
Signatures
- ----------
LANDLORD: TENANT:
Trustees of The Cambridge East
Trust, as Trustees and not
individually
By: Beal and Company, Inc. Metasyn, Inc.
Managing Agent
By: /s/ Bruce A. Beal By: /s/ Michael D. Webb
_________________________ ____________________________
hereunto duly authorized Michael D. Webb, President and
Chief Executive Officer
hereunder duly authorized
Secretary's Certificate
The undersigned hereby certifies (1) that he is the duly elected
Assistant Secretary of the corporation executing this Lease as amended by this
Third Amendment as Tenant, (2) that the Tenant's Board of Directors has duly
decided as required by law and the Tenant's governing documents that the Tenant
shall enter into this Lease as amended by this Third Amendment and has duly
empowered the person who executed this Third Amendment to do so in the name of
and on behalf of the Tenant, and (3) that the Tenant's execution and performance
of this Lease as amended by this Third Amendment is consistent with and does not
contravene or violate the law and governing documents under which Tenant is
organized and operated.
/s/ Randall B. Lauffer
-----------------------------------
Randall B. Lauffer, Secretary
6
Exhibit 10.21
METASYN, INC.
SERIES D CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
Dated as of May 29, 1996
<PAGE>
Table of Contents
1. Authorization and Sale of Shares................................... 1
1.1 Authorization................................................. 1
1.2 Sale of Shares................................................ 1
1.3 Use of Proceeds............................................... 1
2. The Closing....................................................... 1
3. Representations of the Company.................................... 2
3.1 Organization and Standing................................... 2
3.2 Capitalization.............................................. 2
3.3 Issuance of Shares.......................................... 3
3.4 Reservation of Common Stock................................. 3
3.5 Subsidiaries................................................ 3
3.6 Stockholder List and Agreements............................. 3
3.7 Tax Returns and Payments.................................... 4
3.8 ERISA....................................................... 4
3.9 Title to Assets............................................. 4
3.10 No Material Adverse Change.................................. 4
3.11 Real Property Leases........................................ 5
3.12 Insurance................................................... 5
3.13 Transactions with Affiliates................................ 5
3.14 Assumptions or Guaranties of Indebtedness of Other Persons.. 5
3.15 Investments in Other Persons................................ 5
3.16 Authority for Agreements.................................... 5
3.17 Conflicting Agreements and Violations of Charter Provisions. 6
3.18 Consents and Approvals...................................... 6
3.19 Compliance with Laws........................................ 6
3.20 Litigation.................................................. 6
3.21 Financial Statements........................................ 6
3.22 Absence of Liabilities...................................... 7
3.23 Patents and Trademarks...................................... 7
3.24 Material Contracts and Obligations.......................... 7
3.25 Employees and Consultants................................... 7
3.26 Books and Records........................................... 7
3.27 Disclosures................................................. 8
4. Representations of the Purchasers................................. 8
4.1 Investment.................................................. 8
4.2 Authority................................................... 8
4.3 Experience.................................................. 8
4.4 Accredited Investor......................................... 8
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5. Conditions to the Obligations of the Purchasers...................... 9
5.1 Accuracy of Representations and Warranties.................. 9
5.2 Performance................................................. 9
5.3 Financing Agreements........................................ 9
5.4 Certificates and Documents.................................. 9
5.5 Compliance Certificate...................................... 9
5.6 Other Matters............................................... 9
5.7 Opinion of Counsel......................................... 10
5.8 Issuance of Warrants....................................... 10
5.9 Series C Preferred Stock Certificates...................... 10
6. Conditions to the Obligations of the Company........................ 10
6.1 Accuracy of Representations and Warranties................. 10
6.2 Performance................................................ 10
6.3 Surrender of Bridge Notes.................................. 10
7. Covenants of the Company........................................ 11
7.1 Material Changes and Litigation........................... 11
7.2 Non-Compete and Non-Solicitation Agreement................ 11
7.3 Payment of Taxes and Trade Debt........................... 11
7.4 Maintenance of Insurance.................................. 11
7.5 Key Man Life Insurance.................................... 11
7.6 Preservation of Corporate Existence....................... 11
7.7 Maintenance of Properties, etc............................ 12
7.8 Compliance with ERISA..................................... 12
7.9 Negative Covenants........................................ 12
7.10 Common Stock Purchase Agreement........................... 13
7.11 Financial Statements and Other Information................ 13
7.12 Inspection Rights......................................... 13
7.13 Observation Rights; Information Rights.................... 14
7.14 Termination of Covenants.................................. 14
8. Waiver by Purchasers of Certain Rights.......................... 14
8.1 Waiver of Certain Rights of First Refusal................. 14
8.2 Waiver of Certain Rights of Co-Sale....................... 15
9. Successors and Assigns.......................................... 15
10. Transfers of Certain Rights..................................... 15
10.1 Transfers Permitted....................................... 15
10.2 Transferees............................................... 15
10.3 Subsequent Transferees.................................... 15
10.4 Partners, Stockholders, Affiliates and
Wholly-Owned S Corporations.............................. 15
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11. Confidentiality................................................ 16
12. Survival of Representations and Warranties..................... 16
13. Notices........................................................ 16
14. Brokers........................................................ 16
15. Legal Expenses................................................. 16
16. Entire Agreement............................................... 17
17. Amendments and Waivers......................................... 17
18. Counterparts................................................... 17
19. Headings....................................................... 17
20. Severability................................................... 17
21. Governing Law.................................................. 17
Exhibits
A - List of Purchasers
B - Restated Certificate of Incorporation
C - Exceptions to Representations and Warranties
D - Third Amended and Restated Stockholders' Rights Agreement
E - List of Stockholders
F - Financial Information
G - Employee Nondisclosure and Assignment of Inventions Agreement
H- Consultant Nondisclosure and Assignment of Inventions Agreement
I - Form of Opinion of Palmer & Dodge LLP
J - Non-compete and Non-solicitation Agreement
K - Common Stock Purchase Agreement
L - Stock Purchase and Right of First Refusal Agreement
Schedules
1 - Real Property Leases
2 - Agreements with Affiliates
3 - Investment in Other Persons
4 - Non-accredited Investors
iii
<PAGE>
SERIES D CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
This Agreement dated as of May 29, 1996 is entered into by and among
Metasyn, Inc., a Delaware corporation (the "Company"), and the purchasers listed
on Exhibit A hereto (the "Purchasers").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. Authorization and Sale of Shares.
1.1 Authorization. The Company has, or before the Closing (as defined in
Section 2) will have, duly authorized the sale and issuance of up to 1,740,002
shares of its Series D Convertible Preferred Stock, $.01 par value per share
(the "Series D Preferred Stock"), having the rights, restrictions, privileges
and preferences set forth in the Restated Certificate of Incorporation attached
hereto as Exhibit B (the "Restated Certificate"). The Company has, or on or
before the Closing will have, adopted and filed the Restated Certificate with
the Secretary of State of the State of Delaware.
1.2 Sale of Shares. Subject to the terms and conditions of this Agreement,
at the Closing the Company will sell and issue to each of the Purchasers, and
each of the Purchasers will purchase, the number of shares of Series D Preferred
Stock set forth opposite such Purchaser's name on Exhibit A hereto, for the
purchase price of $3.00 per share (the "Purchase Price"). The aggregate amount
of 1,700,002 shares of Series D Preferred Stock being sold under this Agreement
shall collectively constitute and are hereinafter referred to as the "Shares."
1.3 Use of Proceeds. The Company will use the proceeds from the sale of the
Shares for product development and other working capital purposes.
2. The Closing. The closing ("Closing") of the sale and purchase of the
Shares under this Agreement shall take place at the offices of Palmer & Dodge
LLP, One Beacon Street, Boston, Massachusetts at 11:00 a.m. on May 29, 1996. At
or promptly following the Closing, the Company will deliver to each of the
Purchasers a certificate for the number of Shares being purchased by such
Purchaser, registered in the name of such Purchaser, against payment to the
Company of the purchase price therefor, by wire transfer, check, or other method
acceptable to the Company. At the Closing, (i) Accel Investors '93 L.P., Accel
IV L.P., Accel Keiretsu L.P., Bessemer Venture Partners III L.P., Prosper
Partners and Ellmore C. Patterson Partners shall each surrender to the Company
for cancellation certain promissory notes executed by the Company, each dated as
of February 2, 1996, for the aggregate principal amount of $600,000
(collectively, the "Bridge Notes"), (ii) the principal amount of each such
Bridge Note shall be credited by the Company against the purchase
1
<PAGE>
price of the Shares being purchased by such Purchasers and (iii) the Company
shall pay such purchasers the accrued and unpaid interest on the Bridge Notes.
The date of the Closing is hereinafter referred to as the "Closing Date." On the
Closing Date, the principal amount of Company's Amended and Restated Convertible
Promissory Notes dated as of May 26, 1995 and Convertible Promissory Notes dated
as of January 19, 1996 (together, the "Convertible Notes") plus accrued and
unpaid interest thereon shall automatically convert into shares of the Company's
Series C Convertible Preferred Stock, $.01 par value per share ("Series C
Preferred Stock"). If at the Closing any of the conditions specified in Section
5 shall not have been fulfilled, each of the Purchasers shall, at its election,
be relieved of all of its obligations under this Agreement without thereby
waiving any other rights it may have by reason of such failure or such
non-fulfillment.
3. Representations of the Company. Subject to and except as disclosed by
the Company in Exhibit C hereto, the Company hereby represents and warrants to
each of the Purchasers as follows:
3.1 Organization and Standing. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to own and hold its properties and
conduct its business as presently conducted and as proposed to be conducted by
it and to enter into and perform this Agreement, the Third Amended and Restated
Stockholders' Rights Agreement between the Company and certain investors listed
therein (the "Rights Agreement") attached hereto as Exhibit D, and the
agreements, documents and instruments contemplated hereby and thereby
(collectively, the "Financing Agreements"), and to carry out the transactions
contemplated by the Financing Agreements. The Company is duly qualified to do
business as a foreign corporation and is in good standing in the Commonwealth of
Massachusetts, such jurisdiction being the only jurisdiction in which the
failure to so qualify would have a material adverse effect on the operations or
financial condition of the Company. The Company has furnished to the Purchasers
true and complete copies of its Restated Certificate and By-Laws, each as
amended to date and presently in effect.
3.2 Capitalization. The authorized capital stock of the Company (after the
filing of the Restated Certificate and immediately prior to the Closing) will
consist of: 11,500,000 shares of common stock, $.01 par value per share (the
"Common Stock"), of which 2,404,721 shares are issued and outstanding; and
6,813,393 shares of Preferred Stock, $.01 par value per share, of which (i)
104,388 have been designated Series A Convertible Preferred Stock, 93,691 of
which are issued and outstanding, (ii) 2,655,138 of which have been designated
Series B Convertible Preferred Stock, 2,643,736 of which are issued and
outstanding, (iii) 1,445,536 of which have been designated Series C Convertible
Preferred Stock, none of which are issued and outstanding, (iv) 1,740,002 shares
of Series D Convertible Preferred Stock, none of which are issued and
outstanding and (v) 868,329 shares of Series E Convertible Preferred Stock, none
of which are issued and outstanding. All of the issued and outstanding shares of
the Company's capital stock have been duly authorized and validly issued and are
fully paid and non-assessable, and have been issued in
2
<PAGE>
transactions which have been exempt from the registration requirements of
applicable federal and state securities laws. Except as set forth in Exhibit C
hereto or contemplated by this Agreement, (i) no subscription, warrant, option,
convertible security or other right (contingent or otherwise) to purchase or
acquire any shares of capital stock of the Company is authorized or outstanding,
(ii) there is not any commitment or offer of the Company to issue any
subscription, warrant, option, convertible security or other such right or to
issue or distribute to holders of any shares of its capital stock any evidences
of indebtedness or assets of the Company, and (iii) the Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any shares of its capital stock or any interest therein or to pay any dividend
or make any other distribution in respect thereof. Except as set forth in
Exhibit C hereto or contemplated by this Agreement, no person or entity is
entitled to (i) any preemptive or similar right with respect to the issuance of
any capital stock of the Company, or (ii) any rights with respect to the
registration of any capital stock of the Company under the Securities Act of
1933, as amended. Except as set forth in Exhibit C hereto or contemplated by
this Agreement, the designations, powers, preferences, rights, qualifications,
limitations and restrictions in respect of each class and series of authorized
capital stock of the Company are as set forth in the Restated Certificate and
By-Laws, each as amended, and all such designations, powers, preferences,
rights, qualifications, limitations and restrictions are valid, binding and
enforceable and in accordance with all applicable laws.
3.3 Issuance of Shares. The issuance and delivery of the Shares and the
issuance and delivery of the shares of Common Stock issuable upon conversion of
the Shares (the "Conversion Stock"), have been, or will be on or prior to the
Closing, duly authorized and reserved for issuance by all necessary corporate
action on the part of the Company, and the Shares and the shares of Conversion
Stock, when issued upon such conversion, will be duly and validly issued, fully
paid and non-assessable. Based on the representations made by the Purchasers set
forth in Section 4 hereof, the offer, issuance and sale of the Shares pursuant
to the Agreement are exempt from registration under the Securities Act of 1933,
as amended, and applicable state securities laws. The Company has complied and
will comply with all applicable federal and state securities laws in connection
with the offer, issuance and sale of the Shares and the shares of Conversion
Stock.
3.4 Reservation of Common Stock. The Company has authorized and reserved,
and will continue to reserve, free of preemptive and other preferential rights,
a sufficient number of its authorized but unissued shares of Common Stock to
satisfy the rights of conversion of any holders of Series D Preferred Stock.
3.5 Subsidiaries. The Company has no subsidiaries and does not own or
control, directly or indirectly, any other corporation, association or business
entity.
3.6 Stockholder List and Agreements. Attached hereto as Exhibit E is a true
and complete list of the stockholders of the Company, showing the number of
shares of Common Stock or other securities of the Company held by each
stockholder immediately prior to the Closing. Except as contemplated by this
Agreement or in Exhibit E, there are
3
<PAGE>
no agreements, written or oral, between the Company and any holder of its
capital stock, or, to the best knowledge of the Company, among any holders of
its capital stock, relating to the acquisition, disposition or voting of the
capital stock of the Company.
3.7 Tax Returns and Payments. The Company has timely filed all required tax
returns and reports (other than those not required to be filed by applicable law
or regulation) and has paid, or adequately provided for the payment of, all
taxes, assessments and other governmental charges imposed upon it or upon any of
its assets, income or franchises, other than any such charges which are
currently payable without penalty or interest and taxes, assessments and charges
which are being contested in good faith by the Company. The charges, accruals
and reserves on the books of the Company with respect to taxes for all fiscal
periods are adequate in the opinion of the Company. Except to the extent
adequate reserves have been set up, the Company does not know of any actual or
proposed tax assessment for any fiscal period. The federal income tax returns of
the Company have never been audited by the Internal Revenue Service. The Company
has not received notice of any tax lien imposed by any taxing authority which is
outstanding against the assets, properties or business of the Company.
3.8 ERISA. Each employee benefit plan sponsored by the Company is in
material compliance with all applicable provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA") and the Internal Revenue Code of 1986, as
amended (the "Code"). The Company has not incurred any material liability to the
Pension Benefit Guaranty Corporation ("PBGC") or any employee benefit plan on
account of any failure to meet the contribution requirements of any such plan,
minimum funding requirements or prohibited transactions under ERISA or the Code,
termination of a single employer plan, partial or complete withdrawal from a
multi-employer plan, or the insolvency, reorganization or termination of any
multi-employer plan, and no event has occurred or conditions exist which present
a material risk that the Company will incur any material liability on account of
any of the foregoing circumstances. The consummation of the transactions
contemplated by this Agreement will not result in any prohibited transaction
under ERISA or the Code for which an exemption is not available.
3.9 Title to Assets. The Company has good and merchantable title to all of
its owned assets free of any mortgages, pledges, charges, liens, security
interests or other encumbrances except (i) those reflected on its audited
financial statements or the notes thereto, or (ii) tax and mechanics liens not
material to the Company or any property to which such liens relate. The Company
enjoys peaceful and undisturbed possession under all leases (both capital and
operating leases) under which it is operating, and all said leases are valid and
subsisting and in full force and effect on and against the Company and, to the
knowledge of the Company, the other parties thereto.
3.10 No Material Adverse Change. Since December 31, 1995, except as
indicated in the Financial Statements (as defined below) or in any Exhibit or
Schedule hereto, or for changes in general economic conditions, (i) there has
been no material adverse change
4
<PAGE>
in the business, properties, operations or condition, financial or otherwise, of
the Company, whether or not covered by insurance and whether or not arising from
transactions in the ordinary course of business; (ii) the business, assets,
financial condition, or operations of the Company or any of its properties or
assets, including without limitation its patents, patent rights, copyrights,
trademarks, trade secrets and other intellectual property rights, have not been
adversely affected as the result of any legislative or regulatory change or any
revocation or change in any material franchise, permit, license or right to do
business, whether or not insured against; and (iii) the Company has not entered
into any material transaction other than in the ordinary course of business,
made any distribution on its capital stock, or redeemed or repurchased any of
its capital stock.
3.11 Real Property Leases. The Company's real property identified on
Schedule 1 is leased as described in such Schedule, having been leased on what
the Company believes to be customary terms and conditions in view of the nature
and location of the properties.
3.12 Insurance. The Company carries insurance with financially sound and
reputable insurance companies or associations and in such amounts and covering
such risks as are adequate and customary for the type and scope of its
properties and business.
3.13 Transactions with Affiliates. Except as set forth in Schedule 2, the
Company is not a party to or bound by any agreement with any officer, director,
or holder of more than 5% of the Company's outstanding capital stock on a fully
diluted basis ("Affiliate"). All of the agreements identified on Schedule 2
hereto were entered into by the Company in good faith and are on terms no less
favorable to the Company than those which the Company could have obtained from
non-Affiliates.
3.14 Assumptions or Guaranties of Indebtedness of Other Persons. The
Company has not assumed, guaranteed, endorsed or otherwise become directly or
contingently liable on (including, without limitation, liability by way of
agreement, contingent or otherwise, to purchase, to provide funds for payments,
to supply funds to or otherwise invest in the debtor or otherwise to assure the
creditor against loss) any indebtedness of any other person.
3.15 Investments in Other Persons. Except as set forth in Schedule 3, the
Company has not made any loan or advance to any person which is outstanding on
the date of this Agreement, nor is the Company obligated or committed to make
any such loan or advance, nor does the Company own any capital stock or assets
comprising the business of, obligations of, or any interest in, any person. The
Company has no subsidiaries.
3.16 Authority for Agreements. The execution, delivery and performance by
the Company of the Financing Agreements have been duly authorized by all
necessary corporate action, and the Financing Agreements have been duly executed
and delivered by the Company. The Financing Agreements constitute the valid and
binding obligations of the
5
<PAGE>
Company enforceable against the Company in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium and similar laws
affecting the rights and remedies of creditors generally and also by general
principles of equity.
3.17 Conflicting Agreements and Violations of Charter Provisions. The
Company is not in violation of its Restated Certificate, By-laws or of any
agreement or instrument by which it is bound, except for violations which,
individually or in the aggregate, would not materially and adversely affect the
business, properties, operations or condition, financial or otherwise, of the
Company. Neither the authorization, execution and delivery of the Financing
Agreements, the consummation of the transactions therein contemplated, nor the
fulfillment of or compliance with the terms thereof, will conflict with or
result in a material breach of any of the terms of the Restated Certificate or
By-laws, or of any statute, law, rule or regulation, or of any judgment, decree,
writ, injunction, order or award of any arbitrator, court or governmental
authority specifically naming the Company, or of any agreement or instrument
which is applicable to the Company or by which the Company is bound, or
constitute a default thereunder.
3.18 Consents and Approvals. The Company has obtained or made all necessary
(i) governmental consents, approvals and authorizations, and registrations and
filings with governmental authorities, and (ii) consents, approvals, waivers and
notifications of stockholders, creditors, lessors and other non-governmental
persons, in each case, which are required to be obtained or made by the Company
in connection with the execution and delivery of the Financing Agreements, and
the consummation of the transactions herein and therein contemplated.
3.19 Compliance with Laws. The Company is not in violation of any statute,
law, rule or regulation, or in default with respect to any judgment, writ,
injunction, decree, rule or regulation of any court or governmental agency or
instrumentality specifically naming the Company, including, without limitation,
laws relating to environmental protection, except for such violations or
defaults which do not, individually or in the aggregate, materially and
adversely affect the business, assets, operations or condition, financial or
otherwise, of the Company.
3.20 Litigation. There is no action, suit, proceeding or investigation
pending, or, to the best of the Company's knowledge, any basis therefor or
threat thereof, against the Company, which questions the validity of the
Financing Agreements or the right of the Company to enter into them, or which
might result, either individually or in the aggregate, in any material adverse
change in the assets, condition (financial or otherwise), business or prospects
of the Company.
3.21 Financial Statements. Set forth on Exhibit F is a complete and correct
copy of the audited balance sheet of the Company as of December 31, 1995 and the
related statements of operations and changes in financial position for the
nine-month period then ended, each together with the notes thereto
(collectively, the "Financial Statements"). The
6
<PAGE>
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied (except as noted) and fairly present
the financial condition of the Company at the date thereof and for the periods
covered thereby.
3.22 Absence of Liabilities. Except for liabilities incurred from
operations conducted in the ordinary course of business since December 31, 1995,
the Company does not have any liabilities or obligations of any type, whether
absolute or contingent, other than as disclosed herein or in the Schedules or
Exhibits hereto.
3.23 Patents and Trademarks. Set forth on Exhibit C is a true and complete
list of all patents, patent applications, trademarks, service marks, trademark
and service mark applications, trade names, registered copyrights and licenses
presently owned or licensed by the Company. The licenses set forth on Exhibit C
are the valid, binding and enforceable obligations of the Company and, to the
best of the Company's knowledge, of the other parties thereto, subject to
applicable bankruptcy, insolvency, moratorium and similar laws affecting the
rights and remedies of creditors generally and also by general principles of
equity. The Company is not aware of and has not received any notice of
infringement of any patents, trademarks, service marks, trade names, copyrights,
licenses, trade secrets or other proprietary rights of any other person or
entity. The Company is not aware that any employee is obligated under any
contract (including any license, covenant or commitment of any nature), or under
common law, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of such employee's best
efforts to promote the interests of the Company or would conflict with the
Company's business as proposed to be conducted. To the best of the Company's
knowledge, no prior employer of any employee of the Company has any right to or
interest in any inventions, improvements, discoveries or other information
assigned to the Company by such employee pursuant to a nondisclosure and
assignment of invention agreement (in the form attached hereto as Exhibit G)
executed by such employee, or otherwise so assigned.
3.24 Material Contracts and Obligations. Exhibit C sets forth a list of all
material agreements of any nature to which the Company is a party or by which it
is bound.
3.25 Employees and Consultants. All employees and consultants of the
Company whose employment responsibility requires access to confidential or
proprietary information of the Company have executed and delivered nondisclosure
and assignment of invention agreements in the forms of Exhibits G and H,
respectively, and all of such agreements are in full force and effect. None of
the employees of the Company is represented by any labor union.
3.26 Books and Records. The minute books of the Company contain complete
and accurate records of all meetings and other corporate actions of its
stockholders and its Board of Directors and committees thereof. The stock ledger
of the Company is complete and reflects all issuances, transfers, repurchases
and cancellations of shares of capital stock of the Company.
7
<PAGE>
3.27 Disclosures. Neither this Agreement nor any Exhibit or Schedule hereto
contains or will contain any material misstatement of fact or omits or will omit
to state a material fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they were made, not misleading.
The Company knows of no information or fact which has or would have a material
adverse effect on the financial condition, business or prospects of the Company
which has not been disclosed to the Purchasers.
4. Representations of the Purchasers. Each of the Purchasers severally
represents and warrants to the Company as follows:
4.1 Investment. Such Purchaser is acquiring the Shares and the shares
of Common Stock into which the Shares may be converted for its own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same; and, except as contemplated by this Agreement and the Exhibits hereto,
such Purchaser has no present or contemplated agreement, undertaking,
arrangement, obligation, indebtedness or commitment providing for the
disposition thereof.
4.2 Authority. Such Purchaser has full power and authority to enter
into and to perform the Financing Agreements in accordance with their respective
terms. Any Purchaser which is a corporation, partnership or trust represents
that it has not been organized, reorganized or recapitalized specifically for
the purpose of investing in the Company.
4.3 Experience. Such Purchaser has carefully reviewed the
representations concerning the Company contained in this Agreement, and has had
the opportunity to make detailed inquiry concerning the Company, its business
and its personnel; the officers of the Company have made available to such
Purchaser any and all written information which he or it has requested and have
answered to such Purchaser's satisfaction all inquiries made by such Purchaser;
and such Purchaser has adequate net worth and means of providing for its current
needs and personal contingencies to sustain a complete loss of its investment in
the Company; such Purchaser's overall commitment to investments which are not
readily marketable is not disproportionate to its net worth and such Purchaser's
investment in the Shares will not cause such overall commitment to become
excessive; and such Purchaser has sufficient knowledge and experience to
evaluate the risk of its investment in the Company.
4.4 Accredited Investor. Except as set forth on Schedule 4 hereto,
each Purchaser is an "accredited investor" within the meaning of Rule 501(a) of
Regulation D under the Securities Act of 1933, as amended.
5. Conditions to the Obligations of the Purchasers. The obligation of each
of the Purchasers to purchase Shares at the Closing is subject to the
fulfillment, or the waiver by such Purchaser, of the following conditions on or
before the Closing Date:
8
<PAGE>
5.1 Accuracy of Representations and Warranties. Each representation
and warranty contained in Section 3 shall be true on and as of the Closing Date
with the same effect as though such representation and warranty had been made on
and as of that date.
5.2 Performance. The Company shall have performed and complied with
all agreements and conditions contained in this Agreement required to be
performed or complied with by the Company prior to or at the Closing.
5.3 Financing Agreements. The Financing Agreements contemplated hereby
shall have been executed and delivered by the Company, by each of the Purchasers
and by each of the other parties thereto.
5.4 Certificates and Documents. The Company shall have delivered to
the Purchasers:
(i) The Restated Restated Certificate of the Company, as amended and
in effect prior to the Closing Date, certified by the Secretary of State of
the State of Delaware;
(ii) Certificates, as of the most recent practicable dates, as to the
corporate good standing of the Company issued by the Secretary of State of
the State of Delaware and the Secretary of the Commonwealth of
Massachusetts, confirming such good standing on or immediately prior to the
Closing Date;
(iii) By-laws of the Company, certified by its Secretary or Assistant
Secretary as of the Closing Date; and
(iv) Resolutions of the Board of Directors and the stockholders of the
Company, authorizing and approving all matters in connection with this
Agreement and the transactions contemplated hereby, certified by the
Secretary or Assistant Secretary of the Company as of the Closing Date.
5.5 Compliance Certificate. The Company shall have delivered to the
Purchasers a certificate, executed by the President of the Company, dated the
Closing Date, certifying to the fulfillment of the conditions specified in
Sections 5.1 through 5.4 of this Agreement.
5.6 Other Matters. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to the Purchasers, and the Purchasers shall have received all
such counterpart originals or certified or other copies of such documents as
they may reasonably request.
9
<PAGE>
5.7 Opinion of Counsel. Each Purchaser shall have received an opinion
from Palmer & Dodge LLP, counsel for the Company, dated the Closing Date,
addressed to the Purchasers, substantially in the form attached hereto as
Exhibit I.
5.8 Issuance of Warrants. The Company shall issue at the Closing the
warrants to the following Purchasers exercisable for the number of shares of
Series D Preferred Stock set forth opposite their respective names:
Purchaser No. of shares
Accel IV L.P. 18,320
Accel Investors '93 L.P. 740
Accel Keiretsu L.P. 380
Ellmore C. Patterson Partners 440
Prosper Partners 120
Bessemer Venture Partners III L.P. 20,000
5.9 Series C Preferred Stock Certificates. At the Closing, the Company
shall deliver to counsel to the Purchasers stock certificates representing
shares of Series C Preferred Stock into which the Convertible Notes
automatically convert as of the Closing Date.
6. Conditions to the Obligations of the Company. The obligations of the
Company under Section 1.2 of this Agreement are subject to fulfillment, on or
before the Closing Date, of each of the following conditions:
6.1 Accuracy of Representations and Warranties. The representations
and warranties of the Purchasers contained in Section 4 shall be true on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of that date.
6.2 Performance. The Purchasers shall have performed and complied with
all agreements and conditions contained in this Agreement required to be
performed or complied with by them prior to or at the Closing.
6.3 Surrender of Bridge Notes. At the Closing, the holders of the
Bridge Notes shall have surrendered all of such notes to the Company.
6.4 Surrender of Convertible Notes. At the Closing, the holders of the
Convertible Notes shall have surrendered all of such notes to the Company.
10
<PAGE>
7. Covenants of the Company.
7.1 Material Changes and Litigation. The Company will promptly notify
the Purchasers of any material adverse change in the business, properties,
assets or condition, financial or otherwise, of the Company and of any
litigation or governmental proceeding or investigation pending or, to the best
knowledge of the Company, threatened against the Company, or against any
officer, director, key employee, consultant, or principal stockholder of the
Company materially affecting or which, if adversely determined, would materially
adversely affect its present or proposed business, properties, assets or
condition taken as a whole.
7.2 Non-Compete and Non-Solicitation Agreement. The Company and its
key employees and consultants will enter into non-compete and non-solicitation
agreements substantially in the form attached hereto as Exhibit J.
7.3 Payment of Taxes and Trade Debt. The Company will pay and
discharge all taxes, assessments and governmental charges or levies imposed upon
it or upon its income or profits or business, or upon any properties belonging
to it, prior to the date on which penalties attach thereto, and all lawful
claims which, if unpaid, might become a lien or charge upon any properties of
the Company, provided that the Company shall not be required to pay any such
tax, assessment, charge, levy or claim which is being contested in good faith
and by appropriate proceedings if the Company shall have set aside on its books
adequate reserves with respect thereto, or where the failure to so pay would not
have a material adverse effect on the business, assets, operations or financial
condition of the Company. The Company will pay, when due, or in conformity with
customary trade terms but not later than 90 days from the due date, all lease
obligations, all trade debt, and all other indebtedness incident to the
operations of the Company, except such as are being contested in good faith and
by proper proceedings if the Company shall have set aside on its books
sufficient reserves with respect thereto, or where the failure to so pay would
have a material adverse effect on the business, assets, operations or financial
condition of the Company.
7.4 Maintenance of Insurance. The Company will maintain insurance with
financially sound and reputable insurance companies or associations in such
amounts and covering such risks as is usually carried by companies engaged in
similar businesses and owning similar properties in the same general areas in
which the Company operates.
7.5 Key Man Life Insurance. The Company shall obtain and/or maintain
insurance policies in the amount of $2,000,000 on the life of Dr. Randall B.
Lauffer and in the amount of $2,000,000 on the life of Michael D. Webb, the
proceeds of which are payable to the Company.
7.6 Preservation of Corporate Existence. The Company will preserve and
maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified, as a
foreign corporation in each jurisdiction
11
<PAGE>
in which such qualification is necessary or desirable in view of its business
and operations or the ownership of its properties. The Company shall preserve
and maintain all licenses and other rights to use patents, processes, licenses,
trademarks, trade names, inventions, intellectual property rights or copyrights
owned or possessed by it and necessary to the conduct of its business, except
where the failure to preserve and maintain such intellectual property rights
would not have a material adverse effect on the business operations, assets or
financial condition of the Company.
7.7 Maintenance of Properties, etc. The Company will maintain and
preserve all of its properties, necessary or useful in the proper conduct of its
business, in good repair, working order and condition, ordinary wear and tear
excepted, except where the failure to so preserve and maintain would not have a
material adverse effect on the business, assets, operations or financial
condition of the Company.
7.8 Compliance with ERISA. The Company will comply with all minimum
funding requirements applicable to any pension or other employee benefit or
employee contribution plans which are subject to ERISA or to the Code, and
comply in all other material respects with the provisions of ERISA and the Code,
and the rules and regulations thereunder, which are applicable to any such plan.
The Company shall not permit any event or condition to exist which could permit
any such plan to be terminated under circumstances which would cause the lien
provided for in Section 4068 of ERISA to attach to the assets of the Company.
7.9 Negative Covenants. The Company hereby further covenants and
agrees that it shall not, without the prior written consent of the holders of at
least a majority of the outstanding Shares:
(a) adopt any amendment to the Restated Certificate to create any
other class or series of capital stock on parity with or having preference over
the Series D Preferred Stock;
(b) redeem or repurchase any capital stock of the Company
(excluding for this purpose (i) up to 100,000 shares of the Common Stock to be
reacquired by the Company from Randall B. Lauffer and (ii) shares reacquired by
the Company pursuant to restricted stock arrangements from key employees,
consultants and others who have terminated their relationship with the Company)
unless all of the then outstanding shares of Series D Preferred Stock are first
redeemed or repurchased;
(c) enter into any transaction of merger, consolidation,
reorganization or sale of all or substantially all of the assets of the Company
if the value of the consideration to be received by the Company in such
transaction is less than $4.50 per share of the Company's then outstanding
capital stock on a fully diluted basis (subject to appropriate adjustment in the
event of any stock dividend, stock split, combination or other similar
recapitalization); and
12
<PAGE>
(d) amend the Restated Certificate of the Company in such a way
as to alter, change or amend the rights, preferences or privileges of the Series
D Preferred Stock.
7.10 Common Stock Purchase Agreement. The Company will cause all
employees who acquire Common Stock from the Company to execute a Common Stock
Purchase Agreement substantially in the form of Exhibit K hereto (for issuances
of restricted stock), or a Stock Purchase and Right of First Refusal Agreement
substantially in the form of Exhibit L hereto (for issuances of stock upon
exercise of stock options).
7.11 Financial Statements and Other Information. The Company will:
(i) furnish to each Purchaser, within 90 days after the end of
each fiscal year of the Company, an audited balance sheet of the Company as at
the end of such year and audited statements of income and of changes of cash
flows of the Company for such year, certified by certified public accountants of
established national reputation selected by the Company, and prepared in
accordance with generally accepted accounting principles;
(ii) furnish to each Purchaser, within 20 days after the end of
each month, an unaudited balance sheet of the Company as at the end of such
month and unaudited statements of income for such month and of changes of cash
flows of the Company for such month and for the current fiscal year to the end
of such month, setting forth in comparative form the Company's projected
financial statements for the corresponding periods for the current fiscal year,
and summaries of bookings and backlogs for such month; and
(iii) furnish to each Purchaser, as soon as available, but in any
event within 45 days after commencement of each new fiscal year, a projected
annual budget and business plan for such fiscal year prepared on a monthly
basis, and, as soon as available, any revisions to such forecast with reasonable
promptness, and such other notices, information and data with respect to the
Company as may be prepared from time to time, including without limitation,
reports of adverse developments, communications with stockholders or directors,
press releases and all registration statements, and amendments thereto.
The foregoing financial statements shall be prepared on a consolidated
basis if the Company then has any subsidiaries. The financial statements
delivered pursuant to clause (ii) above shall be accompanied by a certificate of
the Chief Financial Officer or Treasurer of the Company stating that such
statements have been prepared in accordance with generally accepted accounting
principles consistently applied (except as noted) and fairly present the
financial condition of the Company at the date thereof and for the periods
covered thereby.
7.12 Inspection Rights. The Company will permit each Purchaser, or its
authorized representative, access to the Company's facilities during normal
business hours, upon reasonable request and prior notice, for the purpose of
inspecting the property, affairs and finances of the Company and for discussing
the same with any of the Company's
13
<PAGE>
officers, directors and employees; provided, however, that each Purchaser will
maintain the confidentiality of any information obtained by it during the course
of any such inspection.
7.13 Observation Rights; Information Rights. The Company will permit
Advent International Corporation ("Advent") to designate a representative (the
"Advent Representative") who shall be allowed to attend meetings of the Board of
Directors of the Company as a non-voting observer; provided, however, that the
Company may exclude the Advent Representative from meetings, or portions
thereof, of the Board of Directors when such exclusion is deemed necessary by
the Board of Directors or the presiding officer. The Company will provide the
Advent Representative with reasonable prior written notice of all scheduled
meetings of the Board of Directors. Paal C. Gisholt shall serve as the initial
Advent Representative and Advent shall notify the Company in writing prior to
any change in the Advent Representative. In addition, the Company agrees to
furnish Advent and Fidelity Ventures ("Fidelity") with copies of (i) materials
prepared by or on behalf of the Company and circulated to the Board of
Directors, and (ii) any correspondence between the Company and members of the
Board of Directors. The Advent Representative, prior to attending any meeting or
receiving any of the aforementioned materials, shall be required to execute and
deliver a nondisclosure and confidentiality agreement to the Company in
substantially the form used by the Company for its employees. Advent and
Fidelity each agree to maintain the confidentiality of any information obtained
pursuant to this Section 7.13.
7.14 Termination of Covenants. The covenants of the Company contained
in this Section 7 shall terminate, and be of no further force or effect, upon
the effective date of a Registration Statement (as defined in the Rights
Agreement) covering the Company's first public offering of Common Stock in which
the price per share to the public exceeds $6.00 (subject to appropriate
adjustment in the event of any stock dividend, stock split, combination or other
similar recapitalization) and the gross proceeds to the Company equal at least
$15,000,000.
8. Waiver by Purchasers of Certain Rights.
8.1 Waiver of Certain Rights of First Refusal. Each Purchaser
hereby irrevocably and unconditionally waives all of its rights of first refusal
under Section 3 of the Rights Agreement with respect to the issuance by the
Company of up to 900,000 shares of the Series E Convertible Preferred Stock of
the Company, $.01 par value per share ("Series E Preferred"), to Daiichi
Radioisotope Laboratories Ltd. ("DRL"), as well as issuance by the Company of
Common Stock issuable upon conversion of such shares, at the price and
substantially upon the general terms and conditions set forth in the proposed
Series E Convertible Preferred Stock Purchase Agreement between the Company and
DRL, substantially in the form submitted to the Board of Directors of the
Company for approval with such changes as may be approved by the Chief Executive
Officer of the Company, and hereby also waives any notice period connected with
such rights required by the Rights Agreement.
14
<PAGE>
8.2 Waiver of Certain Rights of Co-Sale. Each Purchaser hereby
irrevocably and unconditionally waives all of its rights of co-sale under
Section 4.2 of the Rights Agreement with respect to the sale by Randall B.
Lauffer (the "Founder") to the Company of up to 100,000 shares of Common Stock
owned by the Founder, at the price and substantially upon the general terms and
conditions approved by the Board of Directors of the Company with such changes
as may be approved by the Chief Executive Officer of the Company, and hereby
also waives any notice period connected with such rights required by the Rights
Agreement.
9. Successors and Assigns. Except as provided in Section 10, the provisions
of this Agreement shall be binding upon, and inure to the benefit of, the
respective successors, assigns, heirs, executors and administrators of the
parties hereto.
10. Transfers of Certain Rights.
10.1 Transfers Permitted. The rights granted to a Purchaser under this
Agreement may be transferred by such Purchaser only to another Purchaser, to any
Affiliate of the Company or to any person or entity that is acquiring securities
converted or convertible into at least Two Hundred Thousand (200,000) Shares or
Registrable Shares (as such term is defined in the Rights Agreement); provided,
however, that the Company is given written notice by the transferee at the time
of such transfer stating the name and address of the transferee and identifying
the securities with respect to which such rights are being assigned.
10.2 Transferees. Any transferee (other than a Purchaser) to whom
rights under this Agreement are transferred shall, as a condition to such
transfer, deliver to the Company a written instrument by which such transferee
agrees to be bound by the obligations imposed upon Purchasers under Section 11
of this Agreement to the same extent as if such transferee were a Purchaser
hereunder.
10.3 Subsequent Transferees. A transferee to whom rights are
transferred pursuant to this Section 10 may not again transfer such rights to
any other person or entity, other than as provided in Sections 10.1 and 10.2
above.
10.4 Partners, Stockholders, Affiliates and Wholly-Owned S
Corporations. Notwithstanding anything to the contrary contained in this
Agreement, any Purchaser (i) which is a partnership or corporation may transfer
rights granted to such Purchaser under this Agreement to any partner,
stockholder or Affiliate thereof or (ii) who is the sole owner of a Subchapter S
corporation may transfer rights granted to such Purchaser under this Agreement
to such Subchapter S corporation, in either case to whom Shares are transferred
and who delivers to the Company a written instrument in accordance with Section
10.2 above and containing the representation that the transfer is exempt from
registration under the Securities Act of 1933, as amended. In the event of such
transfer, such partner, stockholder, Affiliate or corporation shall be deemed a
Purchaser for purposes of this Section 10 and may
15
<PAGE>
again transfer such rights to any other person or entity which acquires Shares
from such partner, stockholder, Affiliate or corporation, in accordance with,
and subject to, the provisions of Sections 10.1, 10.2 and 10.3 above and this
Section 10.4.
11. Confidentiality. Each Purchaser agrees that it will keep confidential
and will not disclose or divulge any confidential, proprietary or secret
information which such Purchaser may obtain from the Company pursuant to
financial statements, reports and other materials submitted by the Company to
such Purchaser pursuant to this Agreement or pursuant to visitation or
inspection rights granted hereunder, unless such information is known, or until
such information becomes known, to the public.
12. Survival of Representations and Warranties. All agreements,
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the closing of the transactions contemplated
hereby.
13. Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be delivered by hand or
mailed by first class certified or registered mail, return receipt requested,
postage prepaid:
If to the Company, at Metasyn, Inc., c/o Michael D. Webb, President, 71
Rogers Street, Cambridge, Massachusetts 02142-1118, or at such other address or
addresses as may have been furnished in writing by the Company to the
Purchasers, with a copy to William T. Whelan, Esq., Palmer & Dodge LLP, One
Beacon Street, Boston, Massachusetts 02108;
If to a Purchaser, at its address set forth on Exhibit A, or at such other
address or addresses as may have been furnished to the Company in writing by
such Purchaser, with a copy to Judith I. Jacobs, Esq., Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, Massachusetts
02111.
Notices provided in accordance with this Section 13 shall be deemed
delivered upon personal delivery or 48 hours after deposit in the mail.
14. Brokers. The Company and each Purchaser (i) represents and warrants to
the other parties hereto that it has retained no finder or broker in connection
with the transactions contemplated by this Agreement, and (ii) will indemnify
and save the other parties harmless from and against any and all claims,
liabilities or obligations with respect to brokerage or finders' fees or
commissions, or consulting fees in connection with the transactions contemplated
by this Agreement asserted by any person on the basis of any statement or
representation alleged to have been made by such indemnifying party.
15. Legal Expenses. The Company will pay for the reasonable fees, expenses
and disbursements of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., legal
counsel to the Purchasers in connection with the transactions contemplated
hereby.
16
<PAGE>
16. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter.
17. Amendments and Waivers. Except as otherwise expressly set forth in this
Agreement, any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Company and the holders of not less than 66 2/3% of the Registrable Shares.
Any amendment or waiver effected in accordance with this Section 17 shall be
binding upon each holder of any Shares (including shares of Common Stock into
which such Shares have been converted) and each future holder of all such
securities and the Company. No waivers of or exceptions to any term, condition
or provision of this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.
18. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
19. Headings. The headings of the sections, subsections, and paragraphs of
this Agreement have been added for convenience only and shall not be deemed to
be a part of this Agreement.
20. Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision.
21. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
17
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the
day and year first above written.
METASYN, INC.
By: /s/ Michael D. Webb
-----------------------
Name: Michael D. Webb
Title: President
18
<PAGE>
SIGNATURE PAGE TO SERIES D
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
PURCHASERS:
ROVENT II LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation, General
Partner
By: /s/ Paal Gisholt
--------------------------------
Name: Paal Gisholt
Title: Investment Manager
ADVENT PERFORMANCE MATERIALS
LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation, General
Partner
By: /s/ Paal Gisholt
--------------------------------
Name: Paal Gisholt
Title: Investment Manager
ADWEST LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation, General
Partner
By: /s/ Paal Gisholt
--------------------------------
Name: Paal Gisholt
Title: Investment Manager
19
<PAGE>
SIGNATURE PAGE TO SERIES D
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
ADVENT PARTNERS LIMITED PARTNERSHIP
By: Advent International Corporation, General
Partner
By: /s/ Paal Gisholt
--------------------------------
Name: Paal Gisholt
Title: Investment Manager
FIDELITY VENTURES, LTD. by: Fidelity
Capital Associates, Inc.(its General Partner)
By: /s/ Neal Yanofsky
--------------------------------
Name: Neal Yanofsky
Title: Vice President
20
<PAGE>
SIGNATURE PAGE TO SERIES D
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
ACCEL IV L.P.
By: Accel IV Associates L.P.,
its General Partner)
By: /s/ Luke Evnin
--------------------------------
Name:
Title: General Partner
ACCEL INVESTORS '93 L.P.
By: /s/ G. Carter Sednaoui
--------------------------------
Name:
Title: General Partner
ACCEL KEIRETSU L.P.
By: Accel Partners & Co., Inc.,
its General Partner
By: /s/ G. Carter Sednaoui
--------------------------------
Name:
Title: General Partner
ELLMORE C. PATTERSON PARTNERS
By: /s/ Arthur C. Patterson
Name:
Title: General Partner
PROSPER PARTNERS
By: /s/ G. Carter Sednaoui
--------------------------------
Name:
Title: Attorney-in-Fact
21
<PAGE>
SIGNATURE PAGE TO SERIES D
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
BESSEMER VENTURE PARTNERS III L.P.
By: Deer III & Co.,
General Partner
By: /s/ Robert H. Buescher
--------------------------------
Name: Robert H. Buescher
Title: General Partner
BVP III SPECIAL SITUATIONS L.P.
By: Deer III & Co.,
General Partner
By: /s/ Robert H. Buescher
Name: Robert H. Buescher
--------------------------------
Title: General Partner
BRIMSTONE ISLAND CO. L.P.
By: *
--------------------------------
Name:
Title:
*
--------------------------------
David J. Cowan
*
--------------------------------
Rodney A. Cohen
*
--------------------------------
Richard R. Davis
22
<PAGE>
SIGNATURE PAGE TO SERIES D
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
*
--------------------------------
Adam P. Godfrey
*
--------------------------------
Belisarius Corporation
*
--------------------------------
Quentin Corporation
*
--------------------------------
G. Felda Hardymon
*
--------------------------------
Christopher Gabrieli
*
--------------------------------
Gabrieli Family Foundation
*
--------------------------------
Diane N. McPartlin
*
--------------------------------
Gautum A. Prakash
*
--------------------------------
Robi L. Soni
*
--------------------------------
Robert J. S. Roriston
23
<PAGE>
SIGNATURE PAGE TO SERIES D
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
*
--------------------------------
Russell D. Sternlicht
*
--------------------------------
William T. Burgin
*
--------------------------------
Neill H. Brownstein
*
--------------------------------
Michael I. Barach
*
--------------------------------
Ravi Mhatre
*
--------------------------------
Barbara M. Henagan
/s/ Robert H. Buescher
--------------------------------
Robert H. Buescher
* By: /s/ Robert H. Buescher
--------------------------------
Name: Robert H. Buescher
Title: Attorney-in-Fact
24
Exhibit 10.22
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
This Third Amended and Restated Stockholders' Rights Agreement (the
"Agreement") dated as of May 29, 1996 is entered into by and among Metasyn,
Inc., a Delaware corporation (the "Company"), Randall B. Lauffer (the
"Founder"), the holders of shares of the Company's Series A Convertible
Preferred Stock, $.01 par value per share (the "Series A Preferred"), and
warrants convertible into Series A Preferred, the holders of the Company's
Series B Convertible Preferred Stock, $.01 par value per share (the "Series B
Preferred"), and warrants convertible into Series B Preferred, the holders of
Convertible Promissory Notes issued by the Company and convertible into shares
of the Company's Series C Convertible Preferred Stock, $.01 par value per share
(the "Series C Preferred"), and warrants convertible into Series C Preferred,
and the purchasers of the Company's Series D Convertible Preferred Stock, $.01
par value per share (the "Series D Preferred"), and warrants convertible into
Series D Preferred listed on Schedule A hereto.
WITNESSETH:
WHEREAS, the Company, the purchasers of the Company's Series A Preferred
(the "Series A Purchasers") and the purchasers of the Company's Series B
Preferred (the "Series B Purchasers"), Dominion Ventures, Inc., a California
corporation, and Dominion Fund II, a California limited partnership (together,
"Dominion"), and the purchasers (the "Note Purchasers") of promissory notes
dated May 26, 1995 and January 19, 1996 issued by the Company and convertible
into shares of the Series C Preferred having an aggregate original principal
amount of $3,015,862.02 (the "Notes") were parties to a certain Second Amended
and Restated Stockholders' Rights Agreement dated as of January 19, 1996,
pursuant to which the Series A Purchasers, Series B Purchasers, Dominion and the
Note Purchasers were granted registration rights, rights of first refusal with
respect to new equity offerings by the Company, and other rights with respect to
certain actions proposed to be undertaken by the Company; and
WHEREAS, this Agreement is entered into as a condition to the purchase by
certain purchasers (the "Series D Purchasers") of the Company's Series D
Preferred pursuant to a Series D Convertible Preferred Stock Purchase Agreement
dated of even date herewith by and among the Series D Purchasers and the Company
(the "Series D Purchase Agreement"); and
WHEREAS, each of the parties hereto desires to set forth in a single
agreement the registration rights, first refusal rights, and certain other
rights of the Series A Purchasers, the Series B Purchasers, the Note Purchasers
and the Series D Purchasers with respect to all of the shares of Preferred Stock
(as defined herein) acquired or obtainable by the Purchasers (as defined herein)
pursuant to the Purchase Agreements (as defined herein), by Dominion upon
exercise of the Dominion Warrants (as defined herein), and upon the exercise of
the Accel Warrants and the Bessemer Warrant (each as defined herein).
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NOW THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth and other good and valuable consideration, the
parties hereto agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the following
respective meanings:
"Accel Warrants" means collectively the warrants exercisable for shares of
Series D Preferred held by Accel Investors '93 L.P., Accel IV L.P., Accel
Keiretsu L.P., Prosper Partners and Ellmore C. Patterson Partners.
"Affiliate" means any individual, partnership, joint venture, corporation,
trust, unincorporated organization or government or any department or agency
thereof (a "Person") which directly or indirectly controls, is controlled by, or
is under common control with, the indicated Person.
"Bessemer Warrant" means the warrant exercisable for Series D Preferred
held by Bessemer Venture Partners III, L.P.
"Commission" means the Securities and Exchange Commission, or any other
Federal agency at the time administering the Securities Act.
"Dominion Warrants" means the warrants exercisable for shares of Series A
Preferred, Series B Preferred and Series C Preferred held by Dominion.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
"Founder's Shares" means the shares of the Company's Common Stock now owned
and hereafter acquired by Randall B. Lauffer.
"Preferred Stock" means collectively, the Series A Preferred, the Series B
Preferred, the Series C Preferred and the Series D Preferred.
"Purchase Agreements" means collectively the Series A Convertible Preferred
Stock Purchase Agreement dated as of March 25, 1992, as amended, by and among
the Company and the Series A Purchasers (the "Series A Purchase Agreement"), the
Series B Convertible Preferred Stock Purchase Agreement dated as of March 4,
1994, as amended, by and among the Company and the Series B Purchasers (the
"Series B Purchase Agreement"), the Convertible Promissory Note Purchase
Agreement dated as of May 26, 1995, as amended
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<PAGE>
by Amendment No. 1 to the Convertible Promissory Note Purchase Agreement
dated as of January 19, 1996, and the Series D Purchase Agreement.
"Purchasers" means collectively the Series A Purchasers, the Series B
Purchasers, the Note Purchasers and the Series D Purchasers.
"Registration Statement" means a registration statement filed by the
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
"Registration Expenses" means the expenses described in Subsection 2.5.
"Registrable Shares" means (i) the shares of Common Stock of the Company
issued or issuable upon conversion of the Shares (as defined below), (ii) any
shares of Common Stock of the Company acquired (directly or upon the conversion
of securities convertible into shares of Common Stock or pursuant to the
exercise of options, warrants or other rights) by the Securityholders (as
defined below) pursuant to any preemptive rights or rights of first refusal
contained in this Agreement or in any agreement contemplated by this Agreement,
and (iii) any other shares of Common Stock of the Company issued in respect of
the shares described in clauses (i) and (ii) hereof (because of stock splits,
stock dividends, reclassifications, recapitalizations or similar events);
provided, however, that shares of Common Stock which are Registrable Shares
shall cease to be Registrable Shares upon any sale pursuant to a Registration
Statement or Rule 144 under the Securities Act, or any sale in any manner to a
person or entity which, by virtue of Subsection 2.12 of this Agreement, is not
entitled to the rights provided by Section 2. Wherever reference is made in this
Agreement to a request or consent of holders of a certain percentage of
Registrable Shares, the determination of such percentage shall include shares of
Common Stock issuable upon conversion of the Shares, even if such conversion has
not yet been effected.
"Securities" means the Shares (as defined below), the Accel Warrants, the
Bessemer Warrant, the Dominion Warrants and the Notes.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission issued
under such Act, as they each may, from time to time, be in effect.
"Securityholders" means the Purchasers, Dominion, and any persons or
entities to whom the rights granted under this Agreement are transferred by any
Securityholders, their successors or assigns pursuant to Subsection 2.12 hereof.
"Shares" shall mean (i) all shares of Preferred Stock acquired pursuant to
the Purchase Agreements and upon the exercise of the Accel Warrants, the
Bessemer Warrant
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and the Dominion Warrants and (ii) the shares of Series C Preferred issued
or issuable upon conversion of the Notes.
2. Registration Rights.
2.1 Sale or Transfer of Securities; Legend.
(a) The Securities and the Registrable Shares and shares issued in
respect of the Securities or the Registrable Shares shall not be sold or
transferred unless either (i) they first shall have been registered under the
Securities Act, or (ii) the Company first shall have been furnished with an
opinion of legal counsel (which may be counsel to the Company), reasonably
satisfactory to the Company, to the effect that such sale or transfer is exempt
from the registration requirements of the Securities Act.
(b) Notwithstanding the foregoing, no registration or opinion of
counsel shall be required for (i) a transfer by a Securityholder which is a
partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner or (ii) a transfer by a Securityholder to a
Subchapter S corporation that is wholly-owned by such Securityholder, if, in
either case, the transferee agrees in writing to be subject to the terms of this
Section 2 to the same extent as if he or it were an original Securityholder
hereunder, and if the transfer complies with all federal and state securities
laws and regulations promulgated thereunder.
(c) Each certificate or other instrument representing the
Securities and the Registrable Shares and shares issued in respect of the
Securities or the Registrable Shares shall bear a legend substantially in the
following form:
"This security has not been registered under the Securities Act of
1933, as amended, and may not be offered, sold or otherwise
transferred, pledged or hypothecated unless and until it has been
registered under such Act or an opinion of counsel satisfactory to the
Company is obtained to the effect that such registration is not
required."
The foregoing legend shall be removed from the certificates representing
any Registrable Shares, at the request of the holder thereof, at such time as
they become eligible for resale pursuant to Rule 144(k) under the Securities
Act.
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<PAGE>
2.2 Required Registrations.
(a) A Securityholder or Securityholders holding in the aggregate at
least 40% of the Registrable Shares then held by all Securityholders may
request, in writing, that the Company effect the registration on Form S-1 or
Form S-2 (or any successor form) of Registrable Shares owned by such
Securityholder or Securityholders having an aggregate offering price of at least
$7,500,000 (based on the then current market price or fair market value). If the
holders initiating the registration intend to distribute the Registrable Shares
by means of an underwriting, they shall so advise the Company in their request.
In the event such registration is underwritten, the right of other
Securityholders to participate shall be conditioned on such Securityholders'
participation in such underwriting. Upon receipt of any request for registration
pursuant to this paragraph (a), the Company shall promptly give written notice
of such proposed registration to all other Securityholders. Such other
Securityholders shall have the right, by giving written notice to the Company
within 30 days after the Company provides its notice, to elect to have included
in such registration such of their Registrable Shares as such Securityholders
may request in such notice of election, subject to the approval of the
underwriter managing the offering. If in the written opinion of the managing
underwriter the registration of all, or part of, the Registrable Shares which
the holders have requested to be included would materially and adversely affect
such public offering, then the Company shall be required to include in the
underwriting only that number of Registrable Shares owned by such holders which
the managing underwriter believes may be sold without causing such adverse
effect. If the number of Registrable Shares to be included in the underwriting
in accordance with the foregoing is less than the total number of shares which
the holders of Registrable Shares have requested to be included, then the
holders of Registrable Shares who have requested registration shall participate
in the underwriting pro rata based upon their total ownership of Registrable
Shares. Following a request for registration hereunder, the Company shall, as
expeditiously as practicable, use its best efforts to effect the registration,
on Form S-1 or Form S-2 (or any successor form), of all Registrable Shares which
the Company has been requested to so register.
(b) At any time after the Company becomes eligible to file a
Registration Statement on Form S-3 (or any successor form relating to secondary
offerings), a Securityholder or Securityholders may request the Company, in
writing, to effect the registration on Form S-3 (or such successor form), of
Registrable Shares owned by such Securityholder or Securityholders having an
aggregate offering price of at least $1,000,000 (based on the then current
market price or fair value). Upon receipt of any such request, the Company shall
promptly give written notice of such proposed registration to all other
Securityholders. Such other Securityholders shall have the right, by giving
written notice to the Company within 10 days after the Company provides its
notice, to elect to have included in such registration such of their Registrable
Shares as such Securityholders may request in such notice of election.
Thereupon, the Company shall, as expeditiously as practicable, use its best
efforts to effect the registration on Form S-3, or such successor form, of all
Registrable Shares which the Company has been requested to register.
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<PAGE>
(c) The Company shall not be required to effect (x) more than one
registration pursuant to paragraph (a) above or (y) during any 15-month period,
more than two registrations pursuant to paragraph (b) above; provided that any
registration effected under paragraph (a) above shall not be counted for the
purpose of the foregoing limitation if the Company elects to sell stock pursuant
to a registration at the same time as a registration is requested by
Securityholders pursuant to paragraph (a), unless all Registrable Shares
requested to be registered have been included therein and the inclusion of the
Company shares, in the written opinion of the managing underwriter, does not
reduce the offering price of the shares to be offered by the selling
Securityholders. In addition, the Company shall not be required to effect any
registration (other than on Form S- 3 or any successor form relating to
secondary offerings) within 180 days after the effective date of any other
Registration Statement of the Company.
(d) If at the time of any request to register Registrable Shares
pursuant to this Subsection 2.2, the Company is engaged or has fixed plans to
engage within 30 days of the time of the request in a registered public offering
as to which the Securityholders may include Registrable Shares pursuant to
Subsection 2.3 or is engaged in any other activity which, in the good faith
determination of the Company's Board of Directors, would be adversely affected
by the requested registration to the material detriment of the Company, then the
Company may direct, by a vote of a majority of the Company's Board of Directors
which, for this purpose, shall include at least one of the directors designated
by the Series B Purchasers, that such request be delayed for a period not in
excess of 90 days from the effective date of such offering or the date of
commencement of such other material activity, as the case may be, such right to
delay a request to be exercised by the Company not more than once.
2.3 Incidental Registration.
(a) Whenever the Company proposes to file a Registration Statement
(other than pursuant to Subsection 2.2) at any time and from time to time, it
will, prior to such filing, give written notice to all Securityholders of its
intention to do so and, upon the written request of a Securityholder or
Securityholders given within 30 days after the Company provides such notice
(which request shall state the intended method of disposition of such
Registrable Shares), the Company shall use its best efforts to cause all
Registrable Shares which the Company has been requested by such Securityholder
or Securityholders to register to be registered under the Securities Act to the
extent necessary to permit their sale or other disposition in accordance with
the intended methods of distribution specified in the request of such
Securityholder or Securityholders; provided that the Company shall have the
right to postpone or withdraw any registration effected pursuant to this
Subsection 2.3 without obligation to any Securityholder.
(b) In connection with any offering under this Subsection 2.3
involving an underwriting, the Company shall not be required to include any
Registrable Shares in such underwriting unless the holders thereof accept the
terms of the underwriting
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<PAGE>
as agreed upon between the Company and the underwriters selected by it, and then
only in such quantity as will not, in the written opinion of the underwriters,
jeopardize the success of the offering by the Company. If in the written opinion
of the managing underwriter the registration of all, or part of, the Registrable
Shares which the holders have requested to be included would materially and
adversely affect such public offering, then the Company shall be required to
include in the underwriting only that number of Registrable Shares which the
managing underwriter believes may be sold without causing such adverse effect.
If the number of Registrable Shares to be included in the underwriting in
accordance with the foregoing is less than the total number of shares which the
holders of Registrable Shares have requested to be included, then the holders of
Registrable Shares who have requested registration shall participate in the
underwriting pro rata based upon their total ownership of Registrable Shares;
provided, however, that such requesting holders shall not have the participation
rights conferred by this Subsection 2.3 if the underwriting relates to the
initial public offering of the Company's securities. If any holder would thus be
entitled to include more shares than such holder requested to be registered, the
excess shall be allocated among other requesting holders pro rata based upon
their total ownership of Registrable Shares.
2.4 Registration Procedures. If and whenever the Company is required by the
provisions of this Agreement to use its best efforts to effect the registration
of any of the Registrable Shares under the Securities Act, the Company shall:
(a) file with the Commission a Registration Statement with respect to
such Registrable Shares and use its best efforts to cause that Registration
Statement to become and remain effective;
(b) as expeditiously as practicable prepare and file with the
Commission any amendments and supplements to the Registration Statement and the
prospectus included in the Registration Statement as may be necessary to keep
the Registration Statement effective for a period of not less than 120 days from
the effective date;
(c) as expeditiously as practicable furnish to each selling
Securityholder such reasonable numbers of copies of the prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and copies of such other documents as the selling Securityholder may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Shares owned by the selling Securityholder; and
(d) as expeditiously as practicable, use its best efforts to register
or qualify the Registrable Shares covered by the Registration Statement under
the securities or Blue Sky laws of such states as the selling Securityholders
shall reasonably request, and do any and all other acts and things that may be
necessary or desirable to enable the selling Securityholders to consummate the
public sale or other disposition in such states of the Registrable Shares owned
by the selling Securityholder; provided, however, that the
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<PAGE>
Company shall not be required in connection with this paragraph (d) to qualify
as a foreign corporation or execute a general consent to service of process in
any jurisdiction.
If the Company has delivered preliminary or final prospectuses to the
selling Securityholders and after having done so the prospectus is amended to
comply with the requirements of the Securities Act, the Company shall promptly
notify the selling Securityholders and, if requested, the selling
Securityholders shall immediately cease making offers of Registrable Shares and
return all prospectuses to the Company. The Company shall promptly provide the
selling Securityholders with revised prospectuses and, following receipt of the
revised prospectuses, the selling Securityholders shall be free to resume making
offers of the Registrable Shares.
2.5 Allocation of Expenses. The Company will pay all Registration Expenses
of all registrations under Subsections 2.2 and 2.3; provided, however, that if a
registration is withdrawn at the request of the Securityholders requesting such
registration (other than as a result of information concerning the business or
financial condition of the Company which is made known to the Securityholders
after the date on which such registration was requested) and if the requesting
Securityholders elect not to have such registration counted as a registration
requested under Subsection 2.2, the requesting Securityholders shall pay the
Registration Expenses of such registration pro rata in accordance with the
number of their Registrable Shares included in such registration. For purposes
of this Section 2, the term "Registration Expenses" shall mean all expenses
incurred by the Company in complying with this Section 2, including, without
limitation, all registration and filing fees, exchange listing fees, printing
expenses, fees and disbursements of counsel for the Company and the fees and
expenses of one counsel selected by the selling Securityholders to represent the
selling Securityholders, state Blue Sky fees and expenses, and the expense of
any special audits incident to or required by any such registration, but
excluding underwriting discounts, selling commissions and the fees and expenses
of selling Securityholders' own counsel (other than the counsel selected to
represent all selling Securityholders).
2.6 Indemnification. (a) In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this Agreement, the
Company will, to the extent permitted by the Commission and the respective
Securities Commissions of each State in which the Registrable Shares are to be
sold, indemnify and hold harmless the seller of such Registrable Shares (which,
for purposes of this paragraph (a), shall include each of its officers,
directors, general partners and affiliated Securityholders), each underwriter of
such Registrable Shares, and each other person, if any, who controls such seller
or underwriter within the meaning of the Securities Act or the Exchange Act
against any losses, claims, damages or liabilities, joint or several, to which
such seller, underwriter or controlling person may become subject under the
Securities Act, the Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
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<PAGE>
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to such Registration Statement, or
arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company will reimburse such seller, underwriter
and each such controlling person for any legal or any other expenses reasonably
incurred by such seller, underwriter or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or omission (i) made in such Registration Statement,
preliminary prospectus or prospectus, or any such amendment or supplement, in
reliance upon and in conformity with information furnished to the Company, in
writing, by or on behalf of such seller, underwriter or controlling person
specifically for use in the preparation thereof; or (ii) contained in a
preliminary prospectus and corrected in a final or amended prospectus if such
seller, underwriter or controlling person received such final or amended
prospectus but failed to deliver a copy of the final or amended prospectus at or
prior to the confirmation of the sale of the Registrable Shares to the person
asserting any such loss, claim, damage or liability, in any case where such
delivery is required by the Securities Act.
(b) In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, each seller of Registrable
Shares, severally and not jointly, will indemnify and hold harmless the Company,
each of its directors and officers and each underwriter (if any) and each
person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company, such directors
and officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information furnished in writing to the Company by or on
behalf of such seller, specifically for use in connection with the preparation
of such Registration Statement, prospectus, amendment or supplement; and each
seller of Registrable Shares, severally and not jointly, will reimburse the
Company, each of its directors and officers and each underwriter (if any) and
each person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, for any legal or any other
expenses reasonably incurred by any such person or entity in connection with
investigating or defending such loss, claim, damage, liability or action;
provided, however, that (i) no seller of Registrable Shares will be liable in
any such
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case to the extent that any such loss, claim, damage or liability arises out of
or is based upon any untrue statement or omission contained in a preliminary
prospectus and corrected in a final or amended prospectus if the Company
received such final or amended prospectus and failed to deliver a copy of the
final or amended prospectus at or prior to the confirmation of the sale of the
Registrable Shares to the person asserting any such loss, claim, damage or
liability, in any case where such delivery is required by the Securities Act,
and (ii) in any event, the obligations of each Securityholder hereunder shall be
limited to an amount equal to the proceeds to such Securityholder of Registrable
Shares sold as contemplated herein.
(c) Each party entitled to indemnification under this Subsection 2.6
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 2. The Indemnified
Party may participate in such defense at such party's expense; provided,
however, that the Indemnifying Party shall pay such expense if representation of
such Indemnified Party by the counsel retained by the Indemnifying Party would
be inappropriate due to actual or potential differing interests between the
Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party, in the defense of any such claim or
litigation shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation, and no Indemnified Party shall consent to entry of any judgment or
settle such claim or litigation without the prior written consent of the
Indemnifying Party.
2.7 Indemnification with Respect to Underwritten Offering. In the event
that Registrable Shares are sold pursuant to a Registration Statement in an
underwritten offering pursuant to Subsection 2.2(a), the Company agrees to enter
into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of an issuer of the
securities being registered and customary covenants and agreements to be
performed by such issuer, including without limitation customary provisions with
respect to indemnification by the Company of the underwriters of such offering.
2.8 Information by Holder. Each holder of Registrable Shares included in
any registration shall promptly furnish to the Company such information
regarding such holder and the distribution proposed by such holder as the
Company may request in writing and as shall be required from time to time in
connection with any registration, qualification or compliance referred to in
this Section 2.
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2.9 "Stand-Off" Agreement. Each Securityholder, if requested by the Company
and an underwriter of Common Stock or other securities of the Company, shall
agree not to sell or otherwise transfer or dispose of any Registrable Shares or
other securities of the Company held by such Securityholder for a specified
period of time (not to exceed 120 days) following the effective date of a
Registration Statement relating to the initial public offering of the Company's
Common Stock; provided, that (i) all officers and directors of the Company and
all holders of more than five percent (5%) of the outstanding shares of Common
Stock of the Company enter into similar agreements, and (ii) the Company shall
use its best efforts to cause all holders of more than two percent (2%) of the
outstanding shares of Common Stock of the Company to enter into similar
agreements.
Such agreement shall be in writing in a form satisfactory to the Company
and such underwriter. The Company may impose stop transfer instructions with
respect to the Registrable Shares or other securities subject to the foregoing
restriction until the end of the stand-off period.
2.10 Limitations on Subsequent Registration Rights. The Company shall not,
without the prior written consent of holders of Securities converted or
convertible into at least 51% of the Registrable Shares, enter into any
agreement (other than this Agreement) with any holder or prospective holder of
any securities of the Company which would give any such holder or prospective
holder the right to register or cause the registration of, any securities of the
Company except for incidental registration rights which are subordinate to, or
pari passu with, those provided to the Securityholders under Subsection 2.3
hereof.
2.11 Rule 144 Requirements. After the earliest of (i) the closing of the
sale of securities of the Company pursuant to a Registration Statement, or (ii)
the registration by the Company of a class of securities under Section 12 of the
Exchange Act, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and
(c) furnish to any holder of Registrable Shares upon request a written
statement by the Company as to its compliance with the reporting requirements of
said Rule 144 (at any time after 90 days following the closing of the first sale
of securities by the Company pursuant to a Registration Statement), and of the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements), a copy of the most recent annual or quarterly
report of the Company and such other reports and documents of the Company as
such holder may reasonably request to avail itself of any
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<PAGE>
similar rule or regulation of the Commission allowing it to sell any such
securities without registration.
2.12 Transfers of Certain Rights.
(a) The rights granted to a Securityholder under this Section 2 may be
transferred by such Securityholder only to another Securityholder, to any
Affiliate of the Company or to any person or entity that is acquiring Securities
converted or convertible into at least Two Hundred Thousand (200,000) Shares or
Registrable Shares; provided, however, that the Company is given written notice
by the transferee at the time of such transfer stating the name and address of
the transferee and identifying the securities with respect to which such rights
are being assigned.
(b) Transferees. Any transferee (other than a Securityholder) to whom
rights under Section 2 are transferred pursuant to this Section 2.12 shall, as a
condition to such transfer, deliver to the Company a written instrument by which
such transferee agrees to be bound by the obligations imposed upon
Securityholders under Section 2 of this Agreement to the same extent as if such
transferee were a Securityholder hereunder.
(c) Subsequent Transferees. A transferee to whom rights under Section
2 are transferred pursuant to this Subsection 2.12 may not again transfer such
rights to any other person or entity, other than as provided in paragraphs (a)
or (b) above.
(d) Partners, Stockholders, Affiliates and Wholly-Owned S
Corporations. Notwithstanding anything to the contrary contained in this
Agreement, any Securityholder (i) which is a partnership or corporation may
transfer rights granted to such Securityholder under this Section 2 to any
partner, stockholder or Affiliate thereof or (ii) who is the sole owner of a
Subchapter S corporation may transfer rights granted to such Securityholder
under this Section 2 to such Subchapter S corporation, in either case to whom
Securities are transferred pursuant to Subsection 2.1 and who delivers to the
Company a written instrument in accordance with subparagraph (b) above and
containing the representation that the transfer is exempt from registration
under the Securities Act. In the event of such transfer, such partner,
stockholder, Affiliate or corporation shall be deemed a Securityholder for
purposes of this Subsection 2.12 and may again transfer such rights to any other
person or entity which acquires Securities from such partner, stockholder,
Affiliate or corporation, in accordance with, and subject to, the provisions of
subparagraphs (a), (b) and (c) above.
2.13 Termination of Registration Rights. The rights granted to the
Securityholders under this Section 2 shall terminate and be of no further force
and effect upon the earlier of (i) five years following the date on which shares
of Common Stock of the Company are first offered to the public pursuant to a
Registration Statement, or (ii) the date on which all Registrable Shares have
become eligible for resale pursuant to Rule 144(k) under the Securities Act.
- 12 -
<PAGE>
3. Right of First Refusal.
(a) The Company hereby grants to each Securityholder a right of first
refusal to purchase, on a pro rata basis, all or any part of New Securities (as
defined below) which the Company may, from time to time, propose to sell and
issue, subject to the terms and conditions set forth below. Any Securityholder's
pro rata share, for purposes of this Section 3, shall equal a fraction, the
numerator of which is the number of shares of Common Stock then held by such
Securityholder or issuable upon conversion or exercise of any Securities,
convertible securities, options, rights or warrants then held by such
Securityholder, and the denominator of which is the total number of shares of
Common Stock then outstanding plus the number of shares of Common Stock issuable
upon conversion or exercise of then outstanding Securities, convertible
securities, options, rights or warrants.
(b) "New Securities" shall mean any capital stock of the Company
whether now authorized or not, and rights, options or warrants to purchase
capital stock, and securities of any type whatsoever which are, or may become,
convertible into capital stock; provided, however, that the term "New
Securities" does not include Preferred Stock or shares of Common Stock issuable
upon conversion of the Securities issued and outstanding as of the date hereof;
(ii) securities offered to the public pursuant to a Registration Statement (as
defined in Section 1); (iii) securities issued for the acquisition of another
corporation by the Company by merger, purchase of substantially all the assets
of such corporation or other reorganization resulting in the ownership by the
Company of not less than a majority of the voting power of such corporation;
(iv) securities issued as a result of a stock split, stock dividend or
reclassification of Common Stock, distributable on a pro rata basis to all
holders of Common Stock; (v) securities issued in connection with equipment
lease transactions between the Company and unaffiliated third parties; or (vi)
"Employee Shares" which, for purposes of this Agreement, shall consist of not
more than 1,749,852 shares of Common Stock issued or issuable to employees,
officers and directors of, or consultants to, the Company pursuant to
agreements, plans or programs, or pursuant to rights, options or warrants
granted under stock option plans, employee stock purchase plans, restricted
stock plans or other employee stock plans or agreements, in each case approved
by the Board of Directors of the Company.
(c) In the event the Company intends to issue New Securities, it shall
give each Securityholder written notice of such intention, describing the type
of New Securities to be issued, the price thereof and the general terms upon
which the Company proposes to effect such issuance. Each Securityholder shall
have 10 days from the date of any such notice to agree to purchase all or part
of its or his pro rata share of such New Securities for the price and upon the
general terms and conditions specified in the Company's notice by giving written
notice to the Company stating the quantity of New Securities to be so purchased.
Each Securityholder shall have a right of overallotment such that if any
purchaser fails to exercise his or its right hereunder to purchase his or its
total pro rata portion of New Securities, the other Securityholders may purchase
such portion on a pro rata basis, by giving written notice to the Company within
5 days from the date that the Company
- 13 -
<PAGE>
provides written notice to the other Securityholders of the amount of New
Securities with respect to which such nonpurchasing purchaser has failed to
exercise its or his right hereunder.
(d) In the event any Securityholder fails to exercise the foregoing
right of first refusal with respect to any New Securities within such 10-day
period (or the additional 5-day period provided for overallotments), the Company
may within 120 days thereafter sell any or all of such New Securities not agreed
to be purchased by the Securityholders, at a price and upon general terms no
more favorable to the purchasers thereof than those specified in the notice
given to each Purchaser pursuant to paragraph (c) above. In the event the
Company has not sold such New Securities within such 120-day period, the Company
shall not thereafter issue or sell any New Securities without first offering
such New Securities to the Securityholders in the manner provided above.
(e) For purposes of this Section 3 (other than the notice provisions
of paragraph (c)), "Securityholder" shall mean and include the partners,
stockholders, officers or other Affiliates of a Securityholder, and, subject to
compliance with applicable Federal and state securities laws, a Securityholder
may apportion its pro rata share among itself and such partners, stockholders,
officers and other Affiliates in such proportions as it deems appropriate.
(f) The covenants of the Company contained in Section 3 of
this Agreement shall terminate, and be of no further force and effect, upon the
closing of the Company's first public offering of Common Stock, pursuant to a
Registration Statement (as defined in Section 1), in which the price per share
to the public exceeds $6.00 (subject to appropriate adjustment in the event of
any stock dividend, stock split, combination or other similar recapitalization)
and the gross proceeds to the Company equal at least $15,000,000.
4. Co-Sale Rights.
4.1 Series B, C and D Preferred Stock. (a) Except for transfers permitted
pursuant to Section 4.1(b) hereof, each of the Purchasers of the Company's
Series B Preferred Stock, Series D Preferred Stock and Notes agrees that it will
not transfer any Shares, whether now owned or hereafter acquired by such
Purchaser, in any one or more transactions, until such Purchaser (the "Selling
Purchaser") notifies the Purchasers of the Company's Series B Preferred Stock,
Series D Preferred Stock and Notes (together, the "Offerees") of the proposed
transaction and gives the Offerees the opportunity to include in the sale to the
proposed transferee, upon the same terms and conditions offered to the Selling
Purchaser by such transferee, its Shares. The number of Shares that the Selling
Purchaser and the Offerees, respectively, shall be entitled to have included in
such sale will be a number determined by multiplying the number of Shares
proposed to be sold by the Selling Purchaser multiplied by a fraction, the
numerator of which is the total number of Shares owned by the Selling Purchaser
or Shares owned by the Offerees, as the case may be, and the denominator of
which is the sum of the aggregate number of Shares then owned by the
- 14 -
<PAGE>
Selling Purchasers and the number of Shares owned by the Offerees. For purposes
of the foregoing formula, all options, warrants and convertible securities shall
be deemed to have been exercised and/or converted into Common Stock at the
applicable exercise price or conversion price. Each of the Offerees shall have a
period of 15 days (the "Offer Period") from the date notice of such opportunity
is received to give the Selling Purchaser written notice of its desire to
participate in such sale, stating in such notice the number of Shares desired to
be sold; and if no such notice is given within the Offer Period, such Offeree
shall be deemed to have chosen not to participate. If one or more Offerees
choose (or are deemed to have chosen) not to participate in such a sale, in
whole or in part, the Selling Purchaser shall promptly notify all other
participating Offerees, and such Offerees shall have the right, for a 5-day
period beginning on the date of such notice, to increase the number of Shares
they may sell pursuant to this Section 4.1, pro rata on the basis of the number
of Shares held by all Offerees participating in such sale, in an aggregate
amount equal to the number of Shares that such non-participating Offerees would
have been entitled to sell had they participated.
(b) Notwithstanding the foregoing, the provisions of this Section 4.1
shall be inapplicable to the following transactions:
(i) A transfer of Shares held by a Purchaser, either during the
Purchaser's lifetime or in death by will or intestacy, to a member of such
Purchaser's immediate family or to a trust the beneficiaries of which are
exclusively one or more of the group of persons consisting of such Purchaser and
members of such Purchaser's immediate family. "Immediate family" as used herein
shall mean the spouse, lineal descendant, father, mother, brother or sister of
such Purchaser;
(ii) The sale, assignment or transfer by way of bequest or
inheritance upon the death of the Purchaser;
(iii) The sale of Shares by a Purchaser's estate solely for
purposes of paying estate taxes; or
(iv) The assignment or transfer of Shares by a Purchaser to (A)
any officer, director or partner of such Purchaser, (B) a subchapter S
corporation wholly-owned by such Purchaser, (C) an entity that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such Purchaser, or (D) a person or entity
acquiring at least Two Hundred Thousand (200,000) Shares or Registrable Shares;
provided, that in any event, any transferee of such Purchaser shall agree to be
bound by this Agreement and shall so signify in writing.
4.2 Founder's Shares. (a) Except for transfers permitted pursuant to
Section 4.2(b) hereof, the Founder agrees that he shall not transfer any shares
of capital
- 15 -
<PAGE>
stock of the Company, whether now owned or hereafter acquired by him (the
"Founder's Shares"), in any one or more transactions, until he notifies the
Purchasers of the proposed transaction and gives the Purchasers the opportunity
to include in the sale to the proposed transferee, upon the same terms and
conditions offered to the Founder by such transferee, its Shares. The number of
Founder's Shares and Shares that the Founder and the Purchasers, respectively,
shall be entitled to have included in such sale will be a number determined by
multiplying the number of Founder's Shares proposed to be sold by the Founder
multiplied by a fraction, the numerator of which is the total number of
Founder's Shares owned by the Founder or Shares owned by the Purchasers, as the
case may be, and the denominator of which is the sum of the aggregate number of
Founder's Shares then owned by the Founder and the number of Shares owned by the
Purchasers. For purposes of the foregoing formula, all options, warrants and
convertible securities shall be deemed to have been exercised and/or converted
into Common Stock at the applicable exercise price or conversion price. Each of
the Purchasers shall have a period of 15 days (the "Offer Period") from the date
notice of such opportunity is received to give the Founder written notice of its
desire to participate in such sale, stating in such notice the number of Shares
desired to be sold; and if no such notice is given within the Offer Period, such
Purchaser shall be deemed to have chosen not to participate. If one or more
Purchasers choose (or is deemed to have chosen) not to participate in such a
sale, in whole or in part, the Founder shall promptly notify all other
participating Purchasers, and such Purchasers shall have the right, for a 5-day
period beginning on the date of such notice, to increase the number of Shares
they may sell pursuant to this Section 4.2, pro rata on the basis of the number
of Shares held by all Purchasers participating in such sale, in an aggregate
amount equal to the number of Shares that such non-participating Purchasers
would have been entitled to sell had they participated.
(b) Notwithstanding the foregoing, the provisions of this Section 4.2
shall be inapplicable to the following transactions:
(i) A transfer of any or all of the Founder's Shares, either
during the Founder's lifetime or in death by will or intestacy, to a member of
the Founder's immediate family or to a trust the beneficiaries of which are
exclusively one or more of the group of persons consisting of the Founder and
members of the Founder's immediate family. "Immediate family" as used herein
shall mean the spouse, lineal descendant, father, mother, brother or sister of
the Founder;
(ii) The sale, assignment or transfer by way of bequest or
inheritance upon the death of the Founder; or
(iii) The sale of the Founder's Shares by the Founder's estate
solely for purposes of paying estate taxes;
provided, that in any event, any transferee of the Founder shall agree to be
bound by this Agreement and shall so signify in writing.
- 16 -
<PAGE>
4.3 The covenants contained in this Section 4 shall terminate, and be
of no further force and effect, with respect to each Purchaser upon the
closing of a public offering of the Company's Common Stock, pursuant to a
Registration Statement, in which the price per share sold to the public
exceeds $6.00 (subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization) and
the gross proceeds to the Company equal at least $15,000,000.
5. Successors and Assigns. Except as otherwise provided herein, the
provisions of this Agreement shall be binding upon, and inure to the benefit of,
the respective successors and assigns of the parties hereto.
6. Amendments. Except as otherwise expressly set forth in this Agreement,
any term of this Agreement may be amended or modified with the written consent
of the Company and the holders of Securities converted or convertible into at
least 66 2/3% of the Registrable Shares; provided that this Agreement may be
amended or modified with the consent of the holders of less than all Registrable
Shares only in a manner which affects all Registrable Shares in the same
fashion. No waivers of or exceptions to any term, condition or provision of this
Agreement in any one or more instances shall be deemed to be, or construed as, a
further or continuing waiver of any such term, condition or provision.
7. Remedies. In case any one or more of the covenants or agreements set
forth in this Agreement shall have been breached by any party hereto, the other
parties may proceed to protect and enforce their rights either by suit in equity
or by action at law, including an action for damages as a result of any such
breach or an action for specific performance of any such covenant or agreement
contained in this Agreement.
8. Notices. All notices, requests, consents, and other communications under
this Agreement shall be in writing and shall be delivered by hand or mailed by
first class certified or registered mail, return receipt requested, postage
prepaid:
If to the Company, at 71 Rogers Street, Cambridge, MA 02142-1118,
Attention: Michael D. Webb, or at such other address or addresses as may have
been furnished in writing by the Company to the Purchasers, with a copy to
William T. Whelan, Esq., Palmer & Dodge LLP, One Beacon Street, Boston, MA
02108.
If to a Purchaser, at its address set forth on Schedule A hereto, or at
such other address or address as may have been furnished to the Company in
writing by such Purchaser, with a copy to Judith I. Jacobs, Esq., Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, MA 02111.
9. Entire Agreement. With respect to the subject matter hereof, this
Agreement embodies the entire agreement and understanding between the
Securityholders and the Company, and supersedes in their entirety all prior
agreements and understandings relating to
- 17 -
<PAGE>
such subject matter, including but not limited to Section 9 of the Series A
Purchase Agreement and Section 8 of the Series B Purchase Agreement.
10. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11. Headings. The headings of the Sections, Subsections, and Paragraphs of
this Agreement have been added for convenience only and shall not be deemed to
be a part of this Agreement.
12. Governing Law. The validity, performance and enforcement of this
Agreement with respect to each of the parties shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts without giving
effect to any choice or conflict of laws rule or provision that would cause the
application of the laws of any other jurisdiction.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the
day and year first above written.
METASYN, INC.
By: /s/ Michael D. Webb
--------------------------
Name: Michael D. Webb
Title: President
/s/ Randall B. Lauffer
--------------------------
Randall B. Lauffer
- 18 -
<PAGE>
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
SUMMIT PHARMACEUTICALS
INTERNATIONAL CORPORATION
By: /s/ A. Tamai
--------------------
Name: A. Tamai
Title: President and CEO
NIPPON SHOJI KAISHA, LTD.
By: /s/ Kazuhiro Shibata
--------------------
Name: Kazuhiro Shibata
Title: Managing Director
- 19 -
<PAGE>
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
ACCEL IV L.P.
By: Accel IV Associates L.P.,
its General Partner
By: /s/ Luke Evnin
--------------------------
Name:
Title: General Partner
ACCEL INVESTORS '93 L.P.
By: /s/ G. Carter Sednaoui
--------------------------
Name:
Title: General Partner
ACCEL KEIRETSU L.P.
By: Accel Partners & Co., Inc.,
its General Partner
By: /s/ G. Carter Sednaoui
--------------------------
Name:
Title: General Partner
ELLMORE C. PATTERSON PARTNERS
By: /s/ Arthur C. Patterson
--------------------------
Name:
Title: General Partner
PROSPER PARTNERS
By: /s/ G. Carter Sednaoui
--------------------------
Name:
Title: Attorney-in-Fact
- 20 -
<PAGE>
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
BESSEMER VENTURE PARTNERS III L.P.
By: Deer III & Co.,
General Partner
By: /s/ Robert H. Buescher
--------------------------
Name: Robert H. Buescher
Title: General Partner
*
--------------------------
Neill H. Brownstein
*
--------------------------
G. Felda Hardymon
*
--------------------------
Christopher Gabrieli
*
--------------------------
Gabrieli Family Foundation
*
--------------------------
David J. Cowan
*
--------------------------
C. Samantha Chen
*
--------------------------
Rachel J. Erickson
*
--------------------------
Gautam A. Prakash
- 21 -
<PAGE>
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
*
--------------------------
John K. Rodakis
*
--------------------------
Rodney A. Cohen
*
--------------------------
Richard R. Davis
*
--------------------------
Adam P. Godfrey
*
--------------------------
Barbara M. Henagan
*
--------------------------
Belisarius Corporation
*
--------------------------
Quentin Corporation
*
--------------------------
Diane N. McPartlin
*
--------------------------
Robi L. Soni
*
--------------------------
Robert J. S. Roriston
*
--------------------------
Russell D. Sternlicht
- 22 -
<PAGE>
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
*
--------------------------
William T. Burgin
*
--------------------------
Michael I. Barach
*
--------------------------
Ravi Mhatre
/s/ Robert H. Buescher
--------------------------
Robert H. Buescher
* By: /s/ Robert H. Buescher
--------------------------
Name: Robert H. Buescher
Title: Attorney-in-Fact
BVP III SPECIAL SITUATIONS L.P.
By: Deer III & Co.,
General Partner
By: /s/ Robert H. Buescher
--------------------------
Name: Robert H. Buescher
Title: General Partner
BRIMSTONE ISLAND CO. L.P.
By: *
--------------------------
Name:
Title:
- 23 -
<PAGE>
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
DOMINION VENTURES, INC.
By: /s/ Randolph D. Werner
--------------------------
Name:
Title:
DOMINION FUND II
By: /s/ Randolph D. Werner
--------------------------
Name:
Title:
- 24 -
<PAGE>
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
ROVENT II LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation,
General Partner
By: /s/ Paal Gisholt
--------------------------
Name: Paal Gisholt
Title: Investment Manager
ADVENT PERFORMANCE MATERIALS LIMITED
PARTNERSHIP
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation,
General Partner
By: /s/ Paal Gisholt
--------------------------
Name: Paal Gisholt
Title: Investment Manager
ADWEST LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation,
General Partner
By: /s/ Paal Gisholt
--------------------------
Name: Paal Gisholt
Title: Investment Manager
- 25 -
<PAGE>
SIGNATURE PAGE TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
ADVENT PARTNERS LIMITED
PARTNERSHIP
By: Advent International Corporation,
General Partner
By: /s/ Paal Gisholt
--------------------------
Name: Paal Gisholt
Title: Investment Manager
FIDELITY VENTURES, LTD.
by: Fidelity Capital Associates, Inc.
(its General Partner)
By: /s/ Neal Yanofsky
--------------------------
Name: Neal Yanofsky
Title: Vice President
- 26 -
<PAGE>
Schedule A
Name and Address of Purchasers
Series A Purchasers
Summit Pharmaceuticals International
Corporation
Hirose 2nd Bldg.
3-19 Kandanishikicho, Chiyoda-ku
Tokyo 101 Japan
Attn: A. Tamai
President and CEO
Nippon Shoji Kaisha, Ltd.
2-9, Kokumachi, 2-chome
Chuo-ku, Osaka, Japan
Attn: Kazuhiro Shibata
Managing Director
Series B Purchasers
Accel IV L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Accel Investors '93 L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Accel Keiretsu L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Ellmore C. Patterson Partners
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Series B Purchasers (cont.)
Prosper Partners
c/o Accel Partners
One Palmer Square
Princeton, NJ 08542
Bessemer Venture Partners III, L.P.
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
BVP III Special Situations L.P.
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Neill H. Brownstein
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Robert H. Buescher
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
G. Felda Hardymon
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Christopher Gabrieli
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Gabrieli Family Foundation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
- 27 -
<PAGE>
Series B Purchasers (cont.)
David J. Cowan
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
C. Samantha Chen
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Rachel J. Erickson
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Gautam A. Prakash
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
John K. Roadakis
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Rodney A. Cohen
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Richard R. Davis
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Adam P. Godfrey
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Barbara M. Henagan
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Belisarius Corporation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Quentin Corporation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Dominion
Dominion Ventures, Inc.
60 State Street
Boston, MA 02109
Dominion Fund II
60 State Street
Boston, MA 02109
- 28 -
<PAGE>
Note Purchasers
Accel IV L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Accel Investors '93 L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Accel Keiretsu L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Ellmore C. Patterson Partners
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Prosper Partners
c/o Accel Partners
One Palmer Square
Princeton, NJ 08542
Bessemer Venture Partners III L.P.
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
BVP III Special Situations L.P.
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Robert H. Buescher
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
David J. Cowan
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
C. Samantha Chen
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Rodney A. Cohen
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Richard R. Davis
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Adam P. Godfrey
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Belisarius Corporation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Quentin Corporation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
- 29 -
<PAGE>
Note Purchasers (cont.)
G. Felda Hardymon
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Christopher Gabrieli
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Gabrieli Family Foundation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Diane N. McPartlin
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Gautam A. Prakash
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Robi L. Soni
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Robert J. S. Roriston
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Russell D. Sternlicht
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Series D Purchasers
Rovent II Limited Partnership
c/o Advent International
101 Federal Street
Boston, MA 02110
Advent Performance Materials Limited
Partnership
c/o Advent International
101 Federal Street
Boston, MA 02110
Adwest Limited Partnership
c/o Advent International
101 Federal Street
Boston, MA 02110
Advent Partners Limited Partners
c/o Advent International
101 Federal Street
Boston, MA 02110
Fidelity Ventures Ltd.
c/o Fidelity CAPITAL
82 Devonshire Street, R25C
Boston, MA 02109
Accel IV L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Accel Investors '93 L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
- 30 -
<PAGE>
Series D Purchasers (cont.)
Accel Keiretsu L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Ellmore C. Patterson Partners
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Prosper Partners
c/o Accel Partners
One Palmer Square
Princeton, NJ 08542
Bessemer Venture Partners III L.P.
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
BVP III Special Situations L.P.
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Robert H. Buescher
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
David J. Cowan
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Rodney A. Cohen
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Richard R. Davis
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Adam P. Godfrey
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Belisarius Corporation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Quentin Corporation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
G. Felda Hardymon
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Christopher Gabrieli
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Gabrieli Family Foundation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Diane N. McPartlin
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
- 31 -
<PAGE>
Series D Purchasers (cont.)
Gautam A. Prakash
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Robi L. Soni
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Robert J. S. Roriston
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Russell D. Sternlicht
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
William T. Burgin
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Brimstone Island Co. L.P.
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Michael Barach
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Ravi Mhatre
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Neill H. Brownstein
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Barbara M. Henagan
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
- 32 -
Exhibit 10.23
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. NO SALE, TRANSFER OR OTHER DISPOSITION OF THIS WARRANT OR SAID
SHARES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED OR
(iii) RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS -NOT
REQUIRED.
WARRANT TO PURCHASE
SHARES OF SERIES D CONVERTIBLE PREFERRED STOCK
Expires May 29, 2006
THIS CERTIFIES THAT, for value received, ___________, is entitled to
subscribe for and purchase ____________ shares (as adjusted pursuant to
provisions hereof, the "Shares") of the fully paid and nonassessable Series D
Convertible Preferred Stock of Metasyn, Inc., a Delaware corporation (the
"Company"), at an initial purchase price per share of $3.00. The purchase price
of each share, as it may be adjusted from time to time as specified herein, is
herein referred to as the "Warrant Price.". As used herein, the term "Preferred
Stock" shall mean the Company's presently authorized Series D Convertible
Preferred Stock, and any stock into or for which such Series D Convertible
Preferred Stock may hereafter be converted or exchanged pursuant to the Restated
Certificate of Incorporation of the Company as from time to time amended as
provided by law and in such Certificate, and the term "Grant Date" shall mean
May 29, 1996.
1. Term. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time and from time to time from and after the Grant
Date and prior to the earlier of the tenth anniversary date of the Grant Date or
the fifth anniversary of the consummation of the Company's first public offering
of its Common Stock in which the price per share sold to the public exceeds
$6.00 (subject to appropriate adjustment in the event of any stock dividend,
stock split, combination or other similar recapitalization) and the gross
proceeds received by the Company equal at least $15,000,000.
2. Method of Exercise; Net Issue Exercise.
2.1. Method of Exercise; Payment; Issuance of New Warrant. The
purchase right represented by this Warrant may be exercised by the holder
hereof, in whole or in part and from time to time, by either, at the election of
the holder hereof, (a) the surrender of this Warrant (with the notice of
exercise form attached hereto as Exhibit A duly executed) at the principal
office of the Company and by the payment to the Company, by check, of an amount
<PAGE>
equal to the then applicable Warrant Price per share multiplied by the number of
Shares then being purchased or (b) if in connection with a registered public
offering of the Company's securities, the surrender of this Warrant (with the
notice of exercise form attached hereto as Exhibit A-1 duly executed) at the
principal office of the Company together with notice of arrangements reasonably
satisfactory to the Company for payment to the Company either by check or from
the proceeds of the sale of shares to be sold by the holder in such public
offering of an amount equal to the then applicable Warrant Price per share
multiplied by the number of Shares then being purchased. The person or persons
in whose name(s) any certificate(s) representing shares of Preferred Stock shall
be issuable upon exercise of this Warrant shall be deemed to have become the
holder(s) of record of, and shall be treated for all purposes as the record
holder(s) of, the shares represented thereby (and such shares shall be deemed to
have been issued) immediately prior to the close of business on the date or
dates upon which this Warrant is exercised. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of stock so
purchased shall be delivered to the holder hereof as soon as possible and in any
event within thirty days of receipt of such notice and, unless this Warrant has
been fully exercised or expired, a new Warrant representing the portion of the
Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the holder hereof as soon as possible and in
any event within such thirty-day period.
2.2. Net Issue Exercise.
(a) In lieu of exercising this Warrant for cash
pursuant to Section 2.1, holder may elect to receive shares equal to the value
of this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder a number of
shares of the Company's Preferred Stock computed using the following formula:
X= Y(A - B)
-----------
A
Where X = the number of shares of Preferred Stock to be issued to
the holder
Y = the number of shares of Preferred Stock purchasable
under this Warrant
A = the fair market value of one share of the Company's
Preferred Stock
B = Warrant Price (as adjusted to the date of such
calculations)
(b) For purposes of this Section 2.2, fair market
value of the Company's Preferred Stock shall mean the average of the closing bid
and asked prices of the Company's Preferred Stock quoted in the Over-The-Counter
Market Summary or the closing price quoted on any exchange on which the
Preferred Stock is listed, whichever is applicable, as published in the Western
Edition of The Wall Street Journal for the ten trading days prior to the date of
determination of fair market value. If the Preferred Stock is not traded
Over-The-Counter or on an exchange, the fair market value shall be the price per
share which the Company could obtain from a willing buyer for shares sold by the
Company from authorized but unissued shares, as such price shall be agreed by
the Company and the holder.
- 2 -
<PAGE>
3. Stock Fully Paid; Reservation of Shares. All Shares that may be
issued upon the exercise of the rights represented by this Warrant and Common
Stock issuable upon conversion of the Preferred Stock will, upon issuance, be
fully paid and nonassessable, and free from all taxes, liens and charges with
respect to the issue thereof. During the period within which the rights
represented by the Warrant may be exercised, the Company will at all times have
authorized and reserved for the purpose of issuance upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of its
Preferred Stock (and Common Stock issuable upon conversion thereof) to provide
for the exercise of the right represented by this Warrant.
4. Adjustment of Warrant Price and Number of Shares. The number and
kind of securities purchasable upon the exercise of the Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) Reclassification or Merger. In case of any
reclassification, change or conversion of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), or in case of any merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company
is a continuing corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company, the
Company, or such successor or purchasing corporation, as the case may be, shall
execute a new Warrant (in form and substance satisfactory to the holder of this
Warrant) providing that the holder of this Warrant shall have the right to
exercise such new Warrant and upon such exercise to receive, in lieu of each
share of Preferred Stock theretofore issuable upon exercise of this Warrant, the
kind and amount of shares of stock, other securities, money and property
receivable upon such reclassification, change or merger by a holder of one share
of Preferred Stock. Such new Warrant shall provide for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 4. The provisions of this subparagraph (a) shall similarly apply to
successive reclassifications, changes, mergers and transfers.
(b) Subdivisions or Combination of Shares. If the Company at
any time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Preferred Stock, the Warrant Price and the number of Shares issuable
upon exercise hereof shall be proportionately adjusted.
(c) Stock Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend payable in shares of
Preferred Stock (except any distribution specifically provided for in the
foregoing subparagraphs (a) and (b)), then the Warrant Price shall be adjusted,
from and after the date of determination of shareholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Warrant Price in effect immediately prior to such date of determination by a
fraction (a) the numerator of which shall be the total number of shares of
Preferred Stock outstanding immediately prior to such dividend or distribution,
and (b) the denominator of which shall be the total number of shares of
Preferred Stock outstanding immediately after such dividend or distribution and
the number of Shares subject to this Warrant shall be proportionately adjusted.
- 3 -
<PAGE>
(d) No Impairment. The Company will not, by amendment of its
Restated Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the holder of this Warrant against impairment.
(e) Notices of Record Date. In the event of any taking by the
Company of a record of its shareholders for the purpose of determining
shareholders who are entitled to receive payment of any dividend (other than a
cash dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any share of any class or any other securities or property, or
to receive any other right, or for the purpose of determining shareholders who
are entitled to vote in connection with any proposed merger or consolidation of
the Company with or into any other corporation, or any proposed sale, lease or
conveyance of all or substantially all of the assets of the Company, or any
proposed liquidation, dissolution or winding up of the Company, the Company
shall mail to the holder of the Warrant, at least twenty (20) days prior to the
date specified therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right.
5. Notice of Adjustments. Whenever the number and kind of securities
purchasable upon exercise of the Warrant and/or the Warrant Price shall be
adjusted pursuant to the provisions hereof, the Company shall within thirty (30)
days of such adjustment deliver a certificate signed by its chief financial
officer to the registered holder(s) hereof setting forth, in reasonable detail,
the event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated, and the Warrant Price after giving effect
to such adjustment.
6. Fractional Shares. No fractional shares of Preferred Stock will be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall make a cash payment therefor upon the basis of the
Warrant Price then in effect.
7. Compliance with Securities Act; Disposition of Warrant or Shares of
Preferred Stock.
(a) Compliance with Securities Act. The holder of this
Warrant, by acceptance hereof, agrees that this Warrant, the shares of Preferred
Stock to be issued upon exercise hereof and the Common Stock to be issued upon
conversion of such Preferred Stock are being acquired for investment and that
such holder will not offer, sell or otherwise dispose of this Warrant or any
shares of Preferred Stock to be issued upon exercise hereof (or Common Stock
issued upon conversion of the Preferred Stock) except under circumstances which
will not result in a violation of the Securities Act of 1933, as amended (the
"Act"). This Warrant and all shares of Preferred Stock issued upon exercise of
this Warrant (unless registered under the Act) shall be stamped or imprinted
with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
- 4 -
<PAGE>
ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
(i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN
OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED OR (iii) RECEIPT OF A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION TO THE
EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.
(b) Disposition of Warrant and Shares. With respect to any
offer, sale or other disposition of this Warrant or any shares of Preferred
Stock acquired pursuant to the exercise of this Warrant (or Common Stock issued
upon conversion of such Preferred Stock) prior to registration of such shares,
the holder hereof and each subsequent holder of the Warrant agrees to give
written notice to the Company prior thereto, describing briefly the manner
thereof, together with a written opinion of such holder's counsel, if reasonably
requested by the Company, to the effect that such offer, sale or other
disposition may be effected without registration or qualification (under the Act
as then in effect or any federal or state law then in effect) of this Warrant or
such shares of Preferred Stock or Common Stock and indicating whether or not
under the Act certificates for this Warrant or such shares of Preferred Stock or
Common Stock to be sold or otherwise disposed of require any restrictive legend
as to applicable restrictions on transferability in order to insure compliance
with the Act. Each certificate representing this Warrant or the shares of
Preferred Stock or Common Stock thus transferred (except a transfer pursuant to
Rule 144) shall bear a legend as to the applicable restrictions on
transferability in order to insure compliance with the Act, unless in the
aforesaid opinion of counsel for the holder, such legend is not required in
order to insure compliance with the Act. Nothing herein shall restrict the
transfer of this Warrant or any portion hereof by the initial holder hereof to
any partnership affiliated with the initial holder, or to any partner of any
such partnership provided such transfer may be made in compliance with
applicable federal and state securities laws. The Company may issue stop
transfer instructions to its transfer agent in connection with the foregoing
restrictions.
8. Rights as Shareholders: Information.
8.1. Shareholder Rights. No holder of the Warrant, as such,
shall be entitled to vote or receive dividends or be deemed the holder of
Preferred Stock or any other securities of the Company which may at any time be
issuable on the exercise thereof for any purpose, nor shall anything contained
herein be construed to confer upon the holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until this Warrant shall have been exercised
and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein.
8.2. Financial Statements and Information. The Company shall
deliver to the registered holder hereof (i) within 90 days after the end of the
fiscal year of the Company, a consolidated balance sheet of the Company as of
the end of such year and a consolidated statement of income, retained earnings
and cash flows for such year, which year-end financial
- 5 -
<PAGE>
reports shall be in reasonable detail and certified by independent public
accountants of nationally recognized standing selected by the Company, and (ii)
within 20 days after the end of each fiscal quarter other than the last fiscal
quarter, unaudited consolidated statements of income, retained earnings and cash
flows for such quarter and a consolidated balance sheet as of the end of such
quarter. In addition, the Company shall deliver to the registered holder hereof
any other information or data provided to the shareholders of the Company. The
holders' rights under this Section 8.2 shall terminate and be of no further
force or effect upon the consummation of the Company's first public offering of
its Common Stock in which the price per share sold to the public exceeds $6.00
(subject to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization) and the gross proceeds
received by the Company equal at least $15,000,000.
9. Additional Rights.
9.1. Secondary Sales. The Company agrees to assist the holder
of this Warrant in obtaining liquidity if opportunities to make secondary sales
of the Company's securities become available. To this end, the Company will
promptly provide the holder of this Warrant with notice of any offer to acquire
from the Company's security holders more than five percent (5%) of the total
voting power of the Company and will cooperate with the holder in arranging the
sale of this Warrant to the person or persons making such offer.
9.2. Mergers. Unless the Company provides the holder of this
Warrant with at least 30 days' notice of the terms and conditions of the
proposed transaction, the Company will not (i) sell, lease, exchange, convey or
otherwise dispose of all or substantially all of its property or business, or
(ii) merge into or consolidate with any other corporation (other than a
wholly-owned subsidiary of the Company), or effect any transaction (including a
merger or other reorganization) or series of related transactions, in which more
than 50% of the voting power of the Company is disposed of. The Company will
cooperate with the holder in arranging the sale of this Warrant in connection
with any such transaction.
10. Representations and Warranties. This Warrant is issued and
delivered on the basis of the following:
(a) This Warrant has been duly authorized and executed by the
Company and when delivered will be the valid and binding obligation of the
Company enforceable in accordance with its terms;
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable;
(c) The rights, preferences, privileges and restrictions
granted to or imposed upon the shares of Preferred Stock and the holders thereof
are as set forth in the Company's Restated Certificate of Incorporation, as
amended, a true and complete copy of which has been delivered to the original
Warrantholder;
(d) The shares of Common Stock issuable upon conversion of the
Shares have
- 6 -
<PAGE>
been duly authorized and reserved and, when issued in accordance with the terms
of the Company's Restated Certificate of Incorporation, as amended, will be
validly issued, fully paid and nonassessable; and
(e) The execution and delivery of this Warrant are not, and
the issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof (and the shares of Common Stock issuable upon conversion of the
Shares) will not be, inconsistent with the Company's Restated Certificate of
Incorporation or by-laws, do not and will not contravene any law, governmental
rule or regulation, judgment or order applicable to the Company, and do not and
will not contravene any provision of, or constitute a default under, any
indenture, mortgage, contract or other instrument of which the Company is a
party or by which it is bound or require the consent or approval of, the giving
of notice to, the registration with or the taking of any action in respect of or
by, any Federal, state or local government authority or agency or other person.
11. Amendment of Conversion Rights. During the term of this Warrant,
the Company agrees that it shall not amend its Restated Certificate of
Incorporation without the prior written consent of holders of not less than 66
2/3% of the Preferred Stock (including, for this purpose, Shares subject to this
Warrant) if as a result of such amendment any of the conversion rights,
including without limitation the conversion price or antidilution protection
privileges, of the Preferred Stock would be adversely affected.
12. Modification and Waiver. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
13. Notices. Any notice, request or other document required or
permitted to be given or delivered to the holder hereof or the Company shall be
delivered, or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the
Company at 71 Rogers Street, Cambridge, Massachusetts 02142.
14. Binding Effect on Successors. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets, and all of the obligations
of the Company relating to the Preferred Stock issuable upon the exercise of
this Warrant shall survive the exercise and termination of this Warrant and all
of the covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the holder hereof. The Company will, at the time of
the exercise of this Warrant, in whole or in part, upon request of the holder
hereof but at the Company's expense, acknowledge in writing its continuing
obligation to the holder hereof in respect of any rights (including, without
limitation, any right to registration of the shares of Registrable Securities)
to which the holder hereof shall continue to be entitled after such exercise in
accordance with this Warrant; provided, that the failure of the holder hereof to
make any such request shall not affect the continuing obligation of the Company
to the holder hereof in respect of such rights.
15. Lost Warrants or Stock Certificates. The Company covenants to the
holder hereof that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft,
- 7 -
<PAGE>
destruction, or mutilation of this Warrant or any stock certificate and, in the
case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation
upon surrender and cancellation of such Warrant or stock certificate, the
Company will make and deliver a new Warrant or stock certificate, or like tenor,
in lieu of the lost, stolen, destroyed or mutilated Warrant or stock
certificate.
16. Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
17. Governing Law. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF
THE COMMONWEALTH OF MASSACHUSETTS.
METASYN, INC.
By: /s/ Michael D. Webb
-------------------------------------
Michael D. Webb
President and Chief Executive Officer
Date: May 29, 1996
- 8 -
<PAGE>
EXHIBIT A
Notice of Exercise
To:
1. The undersigned hereby elects to purchase ____ shares of Series ___
Preferred Stock of ____________ pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:
(Name)
(Address)
3. The undersigned represents that the aforesaid shares being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares.
------------------------------
(Signature)
- ----------------------
(Date)
- 9 -
<PAGE>
EXHIBIT A-1
Notice of Exercise
To:
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement on Form S-______, filed __________________, 19__, the undersigned
hereby elects to purchase ________ shares of Series D Convertible Preferred
Stock of the Company (or such lesser number of shares as may be sold on behalf
of the undersigned at the Closing) pursuant to the terms of the attached
Warrant.
2. Please deliver to the custodian for the selling shareholders a stock
certificate representing such _________ shares.
3. The undersigned has instructed the custodian for the selling
shareholders to deliver to the Company $_______________ or, if less, the net
proceeds due the undersigned from the sale of shares in the aforesaid public
offering. If such net proceeds are less than the purchase price for such shares,
the undersigned agrees to deliver the difference to the Company prior to the
Closing.
--------------------------
(Signature)
- ---------------------
Date
- 10 -
Exhibit 10.24
AMENDMENT NO. 1 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
This Amendment (the "Amendment") dated as of May 31, 1996 is entered into
by and among Metasyn, Inc., a Delaware corporation (the "Company"), the holders
of shares of the Company's Series A Convertible Preferred Stock, $.01 par value
per share (the "Series A Preferred"), and warrants convertible into Series A
Preferred, the holders of the Company's Series B Convertible Preferred Stock,
$.01 par value per share (the "Series B Preferred"), and warrants convertible
into Series B Preferred, the holders of Convertible Promissory Notes issued by
the Company and convertible into shares of the Company's Series C Convertible
Preferred Stock, $.01 par value per share (the "Series C Preferred"), and
warrants convertible into Series C Preferred, the purchasers of the Company's
Series D Convertible Preferred Stock, $.01 par value per share (the "Series D
Preferred"), and warrants convertible into Series D Preferred, and the purchaser
of the Company's Series E Convertible Preferred Stock, $.01 par value per share
("Series E Preferred") listed on Schedule A hereto. All capitalized words and
terms used in this Amendment and not defined herein shall have the respective
meanings ascribed to them in the Rights Agreement.
WITNESSETH:
WHEREAS, the Company, the purchasers of the Company's Series A Preferred,
the purchasers of the Company's Series B Preferred, Dominion Ventures, Inc., a
California corporation, and Dominion Fund II, a California limited partnership,
the purchasers of promissory notes dated May 26, 1995 and January 19, 1996
issued by the Company and convertible into shares of the Series C Preferred
having an aggregate original principal amount of $3,015,862.02 and the
purchasers of the Company's Series D Preferred are parties to a certain Third
Amended and Restated Stockholders' Rights Agreement dated as of May 29, 1996
(the "Rights Agreement") pursuant to which the Series A Purchasers, Series B
Purchasers, Series D Purchasers, Dominion and the Note Purchasers were granted
registration rights, rights of first refusal with respect to new equity
offerings by the Company, and certain other rights; and
WHEREAS, this Amendment is entered into as a condition to the purchase by
Daiichi Radioisotope Laboratories, Inc. ("DRL") of the Company's Series E
Preferred pursuant to a Series E Convertible Preferred Stock Purchase Agreement
dated of even date herewith by and among the Company and DRL (the "Series E
Purchase Agreement"); and
NOW THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth and other good and valuable consideration, the
parties hereto agree as follows:
1. Amendments to Rights Agreement. The Rights Agreement are hereby amended
as follows:
- 1 -
<PAGE>
Section 1. Certain Definitions. The definitions of "Preferred Stock", "Purchase
Agreements" and "Purchasers" set forth in Section 1 are hereby deleted in their
entirety and replaced with the following:
"Preferred Stock" means collectively, the Series A Preferred, the
Series B Preferred, the Series C Preferred, the Series D Preferred and the
Series E Preferred.
"Purchase Agreements" means collectively the Series A Convertible
Preferred Stock Purchase Agreement dated as of March 25, 1992, as amended,
by and among the Company and the Series A Purchasers, the Series B
Convertible Preferred Stock Purchase Agreement dated as of March 4, 1994,
as amended, by and among the Company and the Series B Purchasers, the
Convertible Promissory Note Purchase Agreement dated as of May 26, 1995, as
amended by Amendment No. 1 to the Convertible Promissory Note Purchase
Agreement dated as of January 19, 1996, the Series D Convertible Preferred
Stock Purchase Agreement dated as of May 29, 1996 by and among the Company
and the Series D Purchasers, and the Series E Purchase Agreement.
"Purchasers" means collectively the Series A Purchasers, the Series B
Purchasers, the Note Purchasers, the Series D Purchasers and the Series E
Purchasers.
Section 4.1. Series B, C, D and E Preferred Stock. Section 4.1 of the Rights
Agreement is hereby deleted in its entirety and replaced with the following:
4.1. Series B, C, D and E Preferred Stock. (a) Except for transfers
permitted pursuant to Section 4.1(b) hereof, each of the Purchasers of the
Company's Series B Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock and Notes agrees that it will not transfer any Shares,
whether now owned or hereafter acquired by such Purchaser, in any one or
more transactions, until such Purchaser (the "Selling Purchaser") notifies
the Purchasers of the Company's Series B Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock and Notes (together, the
"Offerees") of the proposed transaction and gives the Offerees the
opportunity to include in the sale to the proposed transferee, upon the
same terms and conditions offered to the Selling Purchaser by such
transferee, its Shares. The number of Shares that the Selling Purchaser and
the Offerees, respectively, shall be entitled to have included in such sale
will be a number determined by multiplying the number of Shares proposed to
be sold by the Selling Purchaser multiplied by a fraction, the numerator of
which is the total number of Shares owned by the Selling Purchaser or
Shares owned by the Offerees, as the case may be, and the denominator of
which is the sum of the aggregate number of Shares then
- 2 -
<PAGE>
owned by the Selling Purchasers and the number of Shares owned by the
Offerees. For purposes of the foregoing formula, all options, warrants and
convertible securities shall be deemed to have been exercised and/or
converted into Common Stock at the applicable exercise price or conversion
price. Each of the Offerees shall have a period of 15 days (the "Offer
Period") from the date notice of such opportunity is received to give the
Selling Purchaser written notice of its desire to participate in such sale,
stating in such notice the number of Shares desired to be sold; and if no
such notice is given within the Offer Period, such Offeree shall be deemed
to have chosen not to participate. If one or more Offerees choose (or are
deemed to have chosen) not to participate in such a sale, in whole or in
part, the Selling Purchaser shall promptly notify all other participating
Offerees, and such Offerees shall have the right, for a 5-day period
beginning on the date of such notice, to increase the number of Shares they
may sell pursuant to this Section 4.1, pro rata on the basis of the number
of Shares held by all Offerees participating in such sale, in an aggregate
amount equal to the number of Shares that such non-participating Offerees
would have been entitled to sell had they participated.
Schedule A. Schedule A to the Rights Agreement is hereby deleted in its
entirety and replaced with Schedule A hereto.
2. No Other Amendments. There have been no other changes, modifications or
alterations to the Rights Agreement except as amended hereby.
3. Entire Agreement. The Rights Agreement, as amended hereby, embodies the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
4. Counterparts. This Amendment may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
5. Headings. The headings of the sections, subsections, and paragraphs of
this Amendment have been added for convenience only and shall not be deemed to
be a part of this Amendment.
- 3 -
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the
day and year first above written.
METASYN, INC.
/s/ Michael D. Webb
--------------------------
Michael D. Webb
President
/s/ Randall B. Lauffer
--------------------------
Randall B. Lauffer
- 4 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
SUMMIT PHARMACEUTICALS
INTERNATIONAL CORPORATION
By: /s/ A. Tamai
--------------------------
Name: A. Tamai
Title: President and CEO
NIPPON SHOJI KAISHA, LTD.
By: /s/ K. Shibata
--------------------------
Name: Kazuhiro Shibata
Title: Managing Director
- 5 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
ACCEL IV L.P.
By: Accel IV Associates L.P.,
its General Partner
By: /s/ Luke Evnin
--------------------------
Name:
Title: General Partner
ACCEL INVESTORS '93 L.P.
By: /s/ G. Carter Sednaoui
--------------------------
Name:
Title: General Partner
ACCEL KEIRETSU L.P.
By: Accel Partners & Co., Inc.,
its General Partner
By: /s/G. Carter Sednaoui
--------------------------
Name:
Title: General Partner
ELLMORE C. PATTERSON PARTNERS
By:/s/ Arthur C. Patterson
--------------------------
Name:
Title: General Partner
PROSPER PARTNERS
By: /s/G. Carter Sednaoui
--------------------------
Name:
Title: Attorney-in-Fact
- 6 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
BESSEMER VENTURE PARTNERS III L.P.
By: Deer III & Co.,
General Partner
By: /s/ Robert H. Buescher
--------------------------
Name: Robert H. Buescher
Title: General Partner
*
--------------------------
Neill H. Brownstein
*
--------------------------
G. Felda Hardymon
*
--------------------------
Christopher Gabrieli
*
--------------------------
Gabrieli Family Foundation
*
--------------------------
David J. Cowan
*
--------------------------
C. Samantha Chen
*
--------------------------
Rachel J. Erickson
*
--------------------------
Gautam A. Prakash
- 7 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
*
--------------------------
John K. Rodakis
*
--------------------------
Rodney A. Cohen
*
--------------------------
Richard R. Davis
*
--------------------------
Adam P. Godfrey
*
--------------------------
Barbara M. Henagan
*
--------------------------
Belisarius Corporation
*
--------------------------
Quentin Corporation
*
--------------------------
Diane N. McPartlin
*
--------------------------
Robi L. Soni
*
--------------------------
Robert J. S. Roriston
*
--------------------------
Russell D. Sternlicht
- 8 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
/s/ Robert H. Buescher
--------------------------
Robert H. Buescher
* By: /s/ Robert H. Buescher
--------------------------
Name: Robert H. Buescher
Title: Attorney-in-Fact
BVP III SPECIAL SITUATIONS L.P.
By: Deer III & Co.,
General Partner
By: /s/ Robert H. Buescher
--------------------------
Name: Robert H. Buescher
Title: General Partner
- 9 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
DOMINION VENTURES, INC.
By: /s/ Randolph D. Werner
--------------------------
Name:
Title:
DOMINION FUND II
By: /s/ Randolph D. Werner
--------------------------
Name:
Title:
- 10 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
ROVENT II LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation, General
Partner
By: /s/ Paal Gisholt
--------------------------
Name: Paal Gisholt
Title: Investment Manager
ADVENT PERFORMANCE MATERIALS
LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation, General
Partner
By: /s/ Paal Gisholt
--------------------------
Name: Paal Gisholt
Title: Investment Manager
ADWEST LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation, General
Partner
By: /s/ Paal Gisholt
--------------------------
Name: Paal Gisholt
Title: Investment Manager
- 11 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 1 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
ADVENT PARTNERS LIMITED
PARTNERSHIP
By: Advent International Corporation, General
Partner
By: /s/ Paal Gisholt
--------------------------
Name: Paal Gisholt
Title: Investment Manager
FIDELITY VENTURES, LTD.
By: /s/ Neal Yanofsky
--------------------------
Name: Neal Yanofsky
Title: Vice President
DAICHII RADIOISOTOPE LABORATORIES, LTD.
By: /s/ Osamu Ikeda
--------------------------
Name: Osamu Ikeda, M.D.
Title: President and Chief Executive Officer
- 12 -
<PAGE>
Schedule A
Name and Address of Purchasers
Series A Purchasers
Summit Pharmaceuticals International
Corporation
Hirose 2nd Bldg.
3-19 Kandanishikicho, Chiyoda-ku
Tokyo 101 Japan
Attn: A. Tamai
President and CEO
Nippon Shoji Kaisha, Ltd.
2-9, Kokumachi, 2-chome
Chuo-ku, Osaka, Japan
Attn: Kazuhiro Shibata
Managing Director
Series B Purchasers
Accel IV L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Accel Investors '93 L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Accel Keiretsu L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Ellmore C. Patterson Partners
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Series B Purchasers (cont.)
Prosper Partners
c/o Accel Partners
One Palmer Square
Princeton, NJ 08542
Bessemer Venture Partners III, L.P.
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
BVP III Special Situations L.P.
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Neill H. Brownstein
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Robert H. Buescher
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
G. Felda Hardymon
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Christopher Gabrieli
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Gabrieli Family Foundation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
- 13 -
<PAGE>
Series B Purchasers (cont.)
David J. Cowan
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
C. Samantha Chen
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Rachel J. Erickson
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Gautam A. Prakash
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
John K. Roadakis
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Rodney A. Cohen
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Richard R. Davis
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Adam P. Godfrey
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Barbara M. Henagan
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Belisarius Corporation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Quentin Corporation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Dominion
Dominion Ventures, Inc.
60 State Street
Boston, MA 02109
Dominion Fund II
60 State Street
Boston, MA 02109
- 14 -
<PAGE>
Note Purchasers
Accel IV L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Accel Investors '93 L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Accel Keiretsu L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Ellmore C. Patterson Partners
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Prosper Partners
c/o Accel Partners
One Palmer Square
Princeton, NJ 08542
Bessemer Venture Partners III L.P.
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
BVP III Special Situations L.P.
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Robert H. Buescher
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
David J. Cowan
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
C. Samantha Chen
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Rodney A. Cohen
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Richard R. Davis
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Adam P. Godfrey
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Belisarius Corporation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Quentin Corporation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
- 15 -
<PAGE>
Note Purchasers (cont.)
G. Felda Hardymon
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Christopher Gabrieli
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Gabrieli Family Foundation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Diane N. McPartlin
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Gautam A. Prakash
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Robi L. Soni
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Robert J. S. Roriston
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Russell D. Sternlicht
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Series D Purchasers
Rovent II Limited Partnership
c/o Advent International
101 Federal Street
Boston, MA 02110
Advent Performance Materials Limited
Partnership
c/o Advent International
101 Federal Street
Boston, MA 02110
Adwest Limited Partnership
c/o Advent International
101 Federal Street
Boston, MA 02110
Advent Partners Limited Partners
c/o Advent International
101 Federal Street
Boston, MA 02110
Fidelity Ventures Ltd.
c/o Fidelity CAPITAL
82 Devonshire Street, R25C
Boston, MA 02109
Accel IV L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Accel Investors '93 L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
- 16 -
<PAGE>
Series D Purchasers (cont.)
Accel Keiretsu L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Ellmore C. Patterson Partners
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Prosper Partners
c/o Accel Partners
One Palmer Square
Princeton, NJ 08542
Bessemer Venture Partners III L.P.
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
BVP III Special Situations L.P.
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Robert H. Buescher
c/o Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
David J. Cowan
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Rodney A. Cohen
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Richard R. Davis
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Adam P. Godfrey
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Belisarius Corporation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Quentin Corporation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
G. Felda Hardymon
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Christopher Gabrieli
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Gabrieli Family Foundation
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Diane N. McPartlin
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
- 17 -
<PAGE>
Series D Purchasers (cont.)
Gautam A. Prakash
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Robi L. Soni
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Robert J. S. Roriston
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Russell D. Sternlicht
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
William T. Burgin
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Brimstone Island Co. L.P.
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Michael Barach
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Ravi Mhatre
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Neill H. Brownstein
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Barbara M. Henagan
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, NY 11590
Series E Purchaser
Daiichi Radioisotope Laboratories, Ltd.
17-10, Kyobashi 1-chome Chuo-ku
Tokyo, 104 Japan
Attention: Osamu Ikeda, M.D.
President and Chief
Executive Officer
- 18 -
Exhibit 10.25
METASYN, INC.
SERIES E CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
Dated as of May 31, 1996
<PAGE>
Table of Contents
<TABLE>
<S> <C> <C>
1. Authorization of Shares; Use of Proceeds............................................................... 1
1.1 Authorization................................................................................. 1
1.2 Adjustment in Number of Shares................................................................ 1
1.3 Use of Proceeds............................................................................... 2
SECTION 2. Agreement to Sell and Purchase the Shares............................................ 2
2.1 First Closing................................................................................. 2
2.2 Second Closing................................................................................ 2
2.3 Delivery of the Shares at the Closings........................................................ 2
3. Representations of the Company......................................................................... 3
3.1 Organization and Standing..................................................................... 3
3.2 Capitalization................................................................................ 3
3.3 Issuance of Shares............................................................................ 4
3.4 Reservation of Common Stock................................................................... 4
3.5 Subsidiaries.................................................................................. 4
3.6 Stockholder List and Agreements............................................................... 4
3.7 Tax Returns and Payments...................................................................... 4
3.8 ERISA......................................................................................... 5
3.9 Title to Assets............................................................................... 5
3.10 No Material Adverse Change.................................................................... 5
3.11 Real Property Leases.......................................................................... 5
3.12 Insurance..................................................................................... 6
3.13 Transactions with Affiliates.................................................................. 6
3.14 Assumptions or Guaranties of Indebtedness of Other Persons.................................... 6
3.15 Investments in Other Persons.................................................................. 6
3.16 Authority for Agreements...................................................................... 6
3.17 Conflicting Agreements and Violations of Charter Provisions................................... 6
3.18 Consents and Approvals........................................................................ 6
3.19 Compliance with Laws.......................................................................... 7
3.20 Litigation.................................................................................... 7
3.21 Financial Statements.......................................................................... 7
3.22 Absence of Liabilities........................................................................ 7
3.23 Patents and Trademarks........................................................................ 7
3.24 Material Contracts and Obligations............................................................ 8
3.25 Employees and Consultants..................................................................... 8
3.26 Books and Records............................................................................. 8
3.27 Permits....................................................................................... 8
3.28 Not a Real Property Holding Company........................................................... 8
3.29 Disclosures................................................................................... 8
i
<PAGE>
4. Representations of DRL................................................................................. 8
4.1 Organization and Standing..................................................................... 9
4.2 Authority..................................................................................... 9
4.3 Investment.................................................................................... 9
4.4 Experience.................................................................................... 9
4.5 Accredited Investor........................................................................... 9
4.6 Consents and Approvals........................................................................ 9
4.7 Compliance with Other Instruments............................................................. 9
4.8 Litigation................................................................................... 10
4.9 Disclosure................................................................................... 10
5. Conditions to the Obligations of DRL.................................................................. 10
5.1 Accuracy of Representations and Warranties................................................... 10
5.2 Performance.................................................................................. 10
5.3 Financing Agreements......................................................................... 11
5.4 Certificates and Documents................................................................... 11
5.5 Compliance Certificate....................................................................... 11
5.6 Other Matters................................................................................ 11
5.7 Opinion of Counsel........................................................................... 11
5.8 License Agreement............................................................................ 11
5.9 Amendment to Rights Agreement................................................................ 12
6. Conditions to the Obligations of the Company.......................................................... 12
6.1 Accuracy of Representations and Warranties................................................... 12
6.2 Performance.................................................................................. 12
6.3 License Agreement............................................................................ 12
6.4 Waivers...................................................................................... 12
7. Covenants of the Company.............................................................................. 12
7.1 Material Changes and Litigation.............................................................. 12
7.2 Non-Compete and Non-Solicitation Agreement................................................... 12
7.3 Payment of Taxes and Trade Debt.............................................................. 12
7.4 Maintenance of Insurance..................................................................... 13
7.5 Key Man Life Insurance....................................................................... 13
7.6 Preservation of Corporate Existence.......................................................... 13
7.7 Maintenance of Properties, etc............................................................... 13
7.8 Compliance with ERISA........................................................................ 13
7.9 Common Stock Purchase Agreement.............................................................. 14
7.10 Financial Statements......................................................................... 14
7.11 Inspection Rights............................................................................ 14
7.12 Observation Rights........................................................................... 14
7.13 Termination of Covenants..................................................................... 15
8. Successors and Assigns................................................................................ 15
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9. Transfers............................................................................................. 15
9.1 Permitted Transfers.......................................................................... 15
9.2 Subsequent Transferees....................................................................... 16
10. Confidentiality....................................................................................... 16
11. Survival of Representations and Warranties............................................................ 16
12. Notices............................................................................................... 16
13. Brokers............................................................................................... 16
14. Entire Agreement...................................................................................... 17
15. Amendments and Waivers................................................................................ 17
16. Counterparts.......................................................................................... 17
17. Headings.............................................................................................. 17
18. Severability.......................................................................................... 17
19. Governing Law......................................................................................... 17
Exhibits
A - Restated Certificate of Incorporation
B - Exceptions to Representations and Warranties
C - List of Stockholders
D - Financial Information
E - Form of Opinion of Palmer & Dodge LLP
F - Form of Amendment to Third Amended and Restated Stockholders' Rights Agreement
G - Form of Employee Nondisclosure and Assignment of Inventions Agreement
H- Form of Consultant Nondisclosure and Assignment of Inventions Agreement
I - Non-compete and Non-solicitation Agreement
J - Common Stock Purchase Agreement
K - Stock Purchase and Right of First Refusal Agreement
Schedules
1 - Real Property Leases
2 - Agreements with Affiliates
3 - Investments in Other Persons
</TABLE>
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SERIES E CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
This Agreement, dated as of May 31, 1996, is entered into by and among
Metasyn, Inc., a Delaware corporation (the "Company"), and Daiichi Radioisotope
Laboratories, Ltd., a Japanese corporation ("DRL").
WHEREAS, Metasyn is a development stage pharmaceutical company focused
on the discovery and development of injectable contrast-enhancing agents for
magnetic resonance imaging ("MRI") and ultrasound imaging; and
WHEREAS, Metasyn and DRL have entered into a Development and License
Agreement dated as of March 29, 1996 (the "License Agreement") for the further
development and sale in Japan of a vascular agent intended for use as an
enhancer for MRI known as "Compound MS- 325"; and
WHEREAS, DRL desires to purchase from Metasyn, and Metasyn desires to
issue and sell to DRL, shares of Metasyn's Series E Convertible Preferred Stock;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
1. Authorization of Shares; Use of Proceeds.
1.1 Authorization. The Company has, or before the Closing (as
defined in Section 2) will have, duly authorized the sale and issuance to DRL of
up to 868,329 shares of Company's Series E Convertible Preferred Stock, $.01 par
value per share (the "Series E Preferred Stock") having the rights,
restrictions, privileges and preferences set forth in the Restated Certificate
of Incorporation attached hereto as Exhibit A (the "Restated Certificate"). The
Company has, or on or before the Closing will have, adopted and filed the
Restated Certificate with the Secretary of State of the State of Delaware. The
shares of Series E Preferred Stock being sold under this Agreement shall
collectively constitute and are hereinafter referred to as the "Shares."
1.2 Adjustment in Number of Shares. For purposes of Section 1.1 above,
the number of Shares was determined as follows:
N = .08 (X + N)
where N is the number of shares of Series E Preferred Stock, and X is Metasyn's
"Common Stock Deemed Outstanding" at the close of business on May 1, 1996. For
purposes hereof, "Metasyn's Common Stock Deemed Outstanding" shall mean (i) the
number of shares of Metasyn's Common Stock, $.01 par value per share ("Common
Stock"), outstanding plus (ii) all shares issuable, or which may become issuable
under any outstanding agreements
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(excluding this Agreement), warrants, convertible debt, convertible preferred
stock and other convertible securities, option rights or otherwise. If, on or
before July 31, 1996, Metasyn issues shares of its Common Stock (or any
securities convertible into, exchangeable for or exercisable with respect to,
shares of Metasyn's Common Stock) to financial institutions or other
professional investors at a purchase price per share of Common Stock which is
less than the conversion price provided for Series E Preferred Stock, then, in
such event, all of such shares and securities (the "New Stock") shall be deemed
to have been issued and outstanding on May 1, 1996; and the number of shares of
Series E Preferred Stock issued and to be issued to DRL pursuant to this
Agreement shall thereupon be recalculated in accordance with the formula set
forth above. The additional Shares of resulting from such recalculation will be
issuable to DRL without consideration additional to that provided in Section 2
below, and Metasyn will issue such additional Shares to DRL as follows: sixty
percent (60%) of the additional Shares to be issued on the date of issuance of
the New Stock, and the balance to be issued at the Second Closing. If the number
of Shares is increased pursuant to the foregoing provisions, DRL agrees to
consent to and approve all amendments to the Restated Certificate which may be
appropriate to reflect such increase.
1.3 Use of Proceeds. The Company will use the proceeds from
the sale of the Shares for the development of Compound MS-325 and other working
capital purposes.
SECTION 2. Agreement to Sell and Purchase the Shares.
2.1 First Closing. Concurrently with the execution and
delivery of this Agreement (the "First Closing"), the Company shall sell to DRL,
and DRL shall purchase from the Company, upon the terms and conditions
hereinafter set forth, 520,997 of the Shares, at a price per share of
approximately $5.76, for an aggregate purchase price of Three Million Dollars
($3,000,000.00) in United States dollars.
2.2 Second Closing. At such time as the Company provides
written notice to DRL of the filing of an investigational new drug application
package for the Licensed Products (as defined in the License Agreement) by the
Company with the United States Food and Drug Administration (which filing shall
hereinafter be referred to as the "Milestone Event"), DRL shall purchase from
the Company, and the Company shall sell to DRL, 347,332 Shares at a price per
share of approximately $5.76, for an aggregate purchase price of Two Million
Dollars ($2,000,000.00) in United States dollars. The closing of the purchase
and sale described herein shall occur not later than ten (10) business days
following DRL's receipt of the Company's written notice of the Milestone Event
(the "Second Closing"; the First Closing and the Second Closing are sometimes
referred to herein individually as a "Closing" and collectively as the
"Closings").
2.3 Delivery of the Shares at the Closings. Each Closing shall
occur at a place and time (a "Closing Date") to be agreed upon by the Company
and DRL. At each Closing, DRL shall pay to the Company the purchase price for
the Shares being purchased at such closing by certified or bank check or wire
transfer and the Company shall deliver to
2
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DRL one or more stock certificates registered in the name of DRL, or in such
nominee name(s) as designated in writing by DRL, representing the number of
Shares being purchased at such Closing in accordance with this Section 2 and
Section 1.2, if applicable. If, at the Second Closing, any of the conditions
specified in Section 5 shall have not been fulfilled, DRL shall, unless it
waives such conditions, be relieved of its obligation to make the second
investment at the Second Closing without thereby waiving any other rights it may
have by reason of such failure or such nonfulfillment or relieving DRL from any
other obligations hereunder.
3. Representations of the Company. Subject to and except as disclosed by
the Company in Exhibit B hereto, the Company hereby represents and warrants to
DRL as follows:
3.1 Organization and Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to own and hold its
properties and conduct its business as presently conducted and as proposed to be
conducted by it and to enter into and perform this Agreement, and the amendment
to the Third Amended and Restated Stockholders' Rights Agreement between the
Company and certain investors listed therein (the "Rights Agreement"), and the
agreements, documents and instruments contemplated hereby and thereby
(collectively, the "Financing Agreements"), and to carry out the transactions
contemplated by the Financing Agreements. The Company is duly qualified to do
business as a foreign corporation and is in good standing in the Commonwealth of
Massachusetts, such jurisdiction being the only jurisdiction in which the
failure to so qualify would have a material adverse effect on the operations or
financial condition of the Company. The Company has furnished to DRL true and
complete copies of its Restated Certificate and By-Laws, each as amended to date
and presently in effect.
3.2 Capitalization. The authorized capital stock of the
Company (after the filing of the Restated Certificate and immediately prior to
the Closing) will consist of: 11,500,000 shares of common stock, $.01 par value
per share (the "Common Stock"), of which 2,304,721 shares are issued and
outstanding; and 6,813,393 shares of Preferred Stock, $.01 par value per share,
of which (i) 104,388 have been designated Series A Convertible Preferred Stock,
93,691 of which are issued and outstanding, (ii) 2,655,138 of which have been
designated Series B Convertible Preferred Stock, 2,643,736 of which are issued
and outstanding, (iii) 1,445,536 of which have been designated Series C
Convertible Preferred Stock, 1,432,318 of which are issued and outstanding, (iv)
1,740,002 shares of Series D Convertible Preferred Stock, 1,700,002 of which are
issued and outstanding and (v) 868,329 shares of Series E Preferred Stock, none
of which are issued and outstanding. All of the issued and outstanding shares of
the Company's capital stock have been duly authorized and validly issued and are
fully paid and non-assessable, and have been issued in transactions which have
been exempt from the registration requirements of applicable federal and state
securities laws. Except as set forth in Exhibit B hereto or contemplated by this
Agreement, (i) no subscription, warrant, option, convertible security or other
right (contingent or otherwise) to purchase or acquire any shares of capital
stock of the Company is authorized or outstanding, (ii) there is not any
commitment or offer of the Company to issue any subscription, warrant, option,
convertible security or other such right or to issue or distribute
3
<PAGE>
to holders of any shares of its capital stock any evidences of indebtedness or
assets of the Company, and (iii) the Company has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any shares of its capital
stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof. Except as set forth in Exhibit B hereto or
contemplated by this Agreement, no person or entity is entitled to (i) any
preemptive or similar right with respect to the issuance of any capital stock of
the Company, or (ii) any rights with respect to the registration of any capital
stock of the Company under the Securities Act of 1933, as amended. Except as set
forth in Exhibit B hereto or contemplated by this Agreement, the designations,
powers, preferences, rights, qualifications, limitations and restrictions in
respect of each class and series of authorized capital stock of the Company are
as set forth in the Restated Certificate and By-Laws, each as amended, and all
such designations, powers, preferences, rights, qualifications, limitations and
restrictions are valid, binding and enforceable and in accordance with all
applicable laws.
3.3 Issuance of Shares. The issuance and delivery of the
Shares and the issuance and delivery of the shares of Common Stock issuable upon
conversion of the Shares (the "Conversion Stock"), have been, or will be on or
prior to the Closing, duly authorized and reserved for issuance by all necessary
corporate action on the part of the Company, and the Shares and the shares of
Conversion Stock, when issued upon such conversion, will be duly and validly
issued, fully paid and non-assessable.
3.4 Reservation of Common Stock. The Company has authorized
and reserved, and will continue to reserve, free of preemptive and other
preferential rights, a sufficient number of its authorized but unissued shares
of Common Stock to satisfy the rights of conversion of any holders of Series E
Preferred Stock.
3.5 Subsidiaries. The Company has no subsidiaries and does not
own or control, directly or indirectly, any other corporation, association or
business entity.
3.6 Stockholder List and Agreements. Attached hereto as
Exhibit C is a true and complete list of the stockholders of the Company,
showing the number of shares of Common Stock or other securities of the Company
held by each stockholder immediately prior to the Closing. Except as
contemplated by this Agreement or in Exhibit C, there are no agreements, written
or oral, between the Company and any holder of its capital stock, or, to the
best knowledge of the Company, among any holders of its capital stock, relating
to the acquisition, disposition or voting of the capital stock of the Company.
3.7 Tax Returns and Payments. The Company has timely filed all
required tax returns and reports (other than those not required to be filed by
applicable law or regulation) and has paid, or adequately provided for the
payment of, all taxes, assessments and other governmental charges imposed upon
it or upon any of its assets, income or franchises, other than any such charges
which are currently payable without penalty or interest and taxes, assessments
and charges which are being contested in good faith by the Company. The charges,
accruals and reserves on the books of the Company with respect to taxes for all
fiscal periods are adequate in the opinion of the Company. Except to the extent
adequate reserves have been set up, the Company does not know of any actual or
proposed tax assessment for any fiscal period. The federal income tax returns of
the Company have
4
<PAGE>
never been audited by the Internal Revenue Service. The Company has not received
notice of any tax lien imposed by any taxing authority which is outstanding
against the assets, properties or business of the Company.
3.8 ERISA. Each employee benefit plan sponsored by the Company
is in material compliance with applicable provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA") and the Internal Revenue Code of 1986, as
amended (the "Code"). The Company has not incurred any material liability to the
Pension Benefit Guaranty Corporation ("PBGC") or any employee benefit plan on
account of any failure to meet the contribution requirements of any such plan,
minimum funding requirements or prohibited transactions under ERISA or the Code,
termination of a single employer plan, partial or complete withdrawal from a
multi-employer plan, or the insolvency, reorganization or termination of any
multi-employer plan, and no event has occurred or conditions exist which present
a material risk that the Company will incur any material liability on account of
any of the foregoing circumstances. The consummation of the transactions
contemplated by this Agreement will not result in any prohibited transaction
under ERISA or the Code for which an exemption is not available.
3.9 Title to Assets. The Company has good and merchantable
title to all of its owned assets free of any mortgages, pledges, charges, liens,
security interests or other encumbrances except (i) those reflected on its
audited financial statements or the notes thereto, or (ii) tax and mechanics
liens not material to the Company or any property to which such liens relate.
The Company enjoys peaceful and undisturbed possession under all leases (both
capital and operating leases) under which it is operating, and all said leases
are valid and subsisting and in full force and effect on and against the Company
and, to the knowledge of the Company, the other parties thereto.
3.10 No Material Adverse Change. Since December 31, 1995,
except as indicated in the Financial Statements (as defined below) or in any
Exhibit or Schedule hereto, or for changes in general economic conditions, (i)
there has been no material adverse change in the business, properties,
operations or condition, financial or otherwise, of the Company, whether or not
covered by insurance and whether or not arising from transactions in the
ordinary course of business; (ii) the business, assets, financial condition, or
operations of the Company or any of its properties or assets, including without
limitation its patents, patent rights, copyrights, trademarks, trade secrets and
other intellectual property rights, have not been adversely affected as the
result of any legislative or regulatory change or any revocation or change in
any material franchise, permit, license or right to do business, whether or not
insured against; and (iii) the Company has not entered into any material
transaction other than in the ordinary course of business, made any distribution
on its capital stock, or redeemed or repurchased any of its capital stock.
3.11 Real Property Leases. The Company's real property
identified on Schedule 1 is leased as described in such Schedule, having been
leased on what the Company believes to be customary terms and conditions in view
of the nature and location of the properties.
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<PAGE>
3.12 Insurance. The Company carries insurance with financially
sound and reputable insurance companies or associations and in such amounts and
covering such risks as are adequate and customary for the type and scope of its
properties and business.
3.13 Transactions with Affiliates. Except as set forth in
Schedule 2, the Company is not a party to or bound by any agreement with any
officer, director, or holder of more than 5% of the Company's outstanding
capital stock on a fully diluted basis ("Affiliate"). All of the agreements
identified on Schedule 2 hereto were entered into by the Company in good faith
and are on terms no less favorable to the Company than those which the Company
could have obtained from non-Affiliates.
3.14 Assumptions or Guaranties of Indebtedness of Other
Persons. The Company has not assumed, guaranteed, endorsed or otherwise become
directly or contingently liable on (including, without limitation, liability by
way of agreement, contingent or otherwise, to purchase, to provide funds for
payments, to supply funds to or otherwise invest in the debtor or otherwise to
assure the creditor against loss) any indebtedness of any other person.
3.15 Investments in Other Persons. Except as set forth in
Schedule 3, the Company has not made any loan or advance to any person which is
outstanding on the date of this Agreement, nor is the Company obligated or
committed to make any such loan or advance, nor does the Company own any capital
stock or assets comprising the business of, obligations of, or any interest in,
any person. The Company has no subsidiaries.
3.16 Authority for Agreements. The execution, delivery and
performance by the Company of the Financing Agreements have been duly authorized
by all necessary corporate action, and the Financing Agreements have been duly
executed and delivered by the Company. The Financing Agreements constitute the
valid and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, moratorium and similar laws affecting the rights and remedies of
creditors generally and also by general principles of equity.
3.17 Conflicting Agreements and Violations of Charter
Provisions. The Company is not in violation of its Restated Certificate, By-laws
or of any agreement or instrument by which it is bound, except for violations
which, individually or in the aggregate, would not materially and adversely
affect the business, properties, operations or condition, financial or
otherwise, of the Company. Neither the authorization, execution and delivery of
the Financing Agreements, the consummation of the transactions therein
contemplated, nor the fulfillment of or compliance with the terms thereof, will
conflict with or result in a material breach of any of the terms of the Restated
Certificate or By-laws, or of any statute, law, rule or regulation, or of any
judgment, decree, writ, injunction, order or award of any arbitrator, court or
governmental authority specifically naming the Company, or of any lease,
indenture, agreement or instrument which is applicable to the Company or by
which the Company is bound, or constitute a default thereunder.
3.18 Consents and Approvals. The Company has obtained or made
all necessary (i) governmental consents, approvals and authorizations, and
registrations and
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<PAGE>
filings with governmental authorities (other than such as may be required in
Japan), and (ii) consents, approvals, waivers and notifications of stockholders,
creditors, lessors and other non-governmental persons, in each case, which are
required to be obtained or made by the Company in connection with the execution
and delivery of the Financing Agreements, and the consummation of the
transactions herein and therein contemplated.
3.19 Compliance with Laws. The Company is not in violation of
any statute, law, rule or regulation, or in default with respect to any
judgment, writ, injunction, decree, rule or regulation of any court or
governmental agency or instrumentality specifically naming the Company,
including, without limitation, laws relating to environmental protection, except
for such violations or defaults which do not, individually or in the aggregate,
materially and adversely affect the business, assets, operations or condition,
financial or otherwise, of the Company.
3.20 Litigation. There is no action, suit, proceeding or
investigation pending, or, to the best of the Company's knowledge, currently
threatened against the Company, which questions the validity of the Financing
Agreements or the right of the Company to enter into them, or to consummate the
transactions contemplated thereby, or that might result, either individually or
in the aggregate, in any material adverse change in the assets, properties,
financial condition, business or prospects of the Company. Metasyn is not a
party to, or to the best of its knowledge, named in any order, writ, injunction,
judgment or decree of any court, government, agency or instrumentality. There is
no action, suit or proceeding by Metasyn currently pending or that Metasyn
presently intends to initiate.
3.21 Financial Statements. Set forth on Exhibit D is a
complete and correct copy of the audited balance sheet of the Company as of
December 31, 1995 and the related statements of operations and changes in
financial position for the nine-month period then ended, each together with the
notes thereto (collectively, the "Financial Statements"). The Financial
Statements have been prepared in accordance with generally accepted accounting
principles consistently applied (except as noted) and fairly present the
financial condition of the Company at the date thereof and for the periods
covered thereby.
3.22 Absence of Liabilities. Except for liabilities incurred
from operations conducted in the ordinary course of business since December 31,
1995, the Company does not have any liabilities or obligations of any type,
whether absolute or contingent, other than as disclosed herein or in the
Schedules or Exhibits hereto.
3.23 Patents and Trademarks. Set forth on Exhibit B is a true
and complete list of all patents, patent applications, trademarks, service
marks, trademark and service mark applications, trade names, registered
copyrights and licenses presently owned or licensed by the Company. The licenses
set forth on Exhibit B are the valid, binding and enforceable obligations of the
Company and, to the best of the Company's knowledge, of the other parties
thereto, subject to applicable bankruptcy, insolvency, moratorium and similar
laws affecting the rights and remedies of creditors generally and also by
general principles of equity. The Company is not aware of and has not received
any notice of infringement of any patents, trademarks, service marks, trade
names, copyrights, licenses, trade secrets or other proprietary rights of any
other person or entity. The Company is not aware that any
7
<PAGE>
employee is obligated under any contract (including any license, covenant or
commitment of any nature), or under common law, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
the use of such employee's best efforts to promote the interests of the Company
or would conflict with the Company's business as proposed to be conducted. To
the best of the Company's knowledge, no prior employer of any employee of the
Company has any right to or interest in any inventions, improvements,
discoveries or other information assigned to the Company by such employee
pursuant to a nondisclosure and assignment of invention agreement (in the form
attached hereto as Exhibit G) executed by such employee, or otherwise so
assigned.
3.24 Material Contracts and Obligations. Exhibit B sets forth
a list of all material agreements of any nature to which the Company is a party
or by which it is bound.
3.25 Employees and Consultants. All employees and consultants
of the Company whose employment responsibility requires access to confidential
or proprietary information of the Company have executed and delivered
nondisclosure and assignment of invention agreements in the forms of Exhibits G
and H, respectively, and all of such agreements are in full force and effect.
None of the employees of the Company is represented by any labor union.
3.26 Books and Records. The minute books of the Company
contain complete and accurate records of all meetings and other corporate
actions of its stockholders and its Board of Directors and committees thereof.
The stock ledger of the Company is complete and reflects all issuances,
transfers, repurchases and cancellations of shares of capital stock of the
Company.
3.27 Permits. The Company has all franchises, permits,
licenses and any similar authority necessary for the conduct of its business as
now being conducted by it, the lack of which would materially and adversely
affect the Company's business, properties, prospects or financial condition. The
Company is not in default in any material respect under any of such franchises,
permits, licenses or other similar authority.
3.28 Not a Real Property Holding Company. The Company is not a
real property holding corporation within the meaning of Internal Revenue Code
Section 897(c)(2) and any regulations promulgated thereunder.
3.29 Disclosures. Neither this Agreement nor any Exhibit or
Schedule hereto contains or will contain any material misstatement of fact or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein, in light of the circumstances in which they were
made, not misleading. The Company knows of no information or fact which has or
would have a material adverse effect on the financial condition, business or
prospects of the Company which has not been disclosed to DRL.
4. Representations of DRL. DRL represents and warrants to the Company
as follows:
8
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4.1 Organization and Standing. DRL is a corporation duly
organized, validly existing and in good standing under the laws of Japan and has
full corporate power and authority to own and hold its properties and conduct
its business as presently conducted and as proposed to be conducted by it and to
enter into and perform the Financing Agreements and to carry out the
transactions contemplated thereby. DRL has not been organized, reorganized or
recapitalized specifically for the purpose of investing in the Company.
4.2 Authority. The execution, delivery and performance by the
Company of the Financing Agreements have been duly authorized by all necessary
corporate action, and the Financing Agreements have been duly executed and
delivered by DRL. The Financing Agreements constitute the valid and binding
obligations of DRL enforceable against DRL in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium and similar laws
affecting the rights and remedies of creditors generally and also by general
principles of equity.
4.3 Investment. DRL is acquiring the Shares and the shares of
Common Stock into which the Shares may be converted, for its own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same; and, except as contemplated by this Agreement and the Exhibits hereto,
DRL has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for the disposition thereof.
4.4 Experience. DRL has carefully reviewed the representations
concerning the Company contained in this Agreement, and has had the opportunity
to make detailed inquiry concerning the Company, its business and its personnel;
the officers of the Company have made available to DRL any and all written
information which it has requested and have answered to DRL's satisfaction all
inquiries made by DRL; and DRL has adequate net worth and means of providing for
its current needs and personal contingencies to sustain a complete loss of its
investment in the Company; DRL's overall commitment to investments which are not
readily marketable is not disproportionate to its net worth and DRL's investment
in the Shares will not cause such overall commitment to become excessive; and
DRL has sufficient knowledge and experience to evaluate the risk of its
investment in the Company.
4.5 Accredited Investor. DRL is an "accredited investor"
within the meaning of Rule 501(a) of Regulation D under the Securities Act of
1933, as amended.
4.6 Consents and Approvals. No consents, approvals,
qualifications, orders or authorizations of, or registrations and filings with,
any governmental authority is required on the part of DRL in connection with
DRL's valid execution, delivery or performance of the Financing Agreements and
the consummation of the transactions therein contemplated.
4.7 Compliance with Other Instruments. DRL is not in violation
of any provision of its charter or internal regulations or of any provision of
any mortgage, indenture, agreement, instrument or contract by which it is bound,
or, to the best of its
9
<PAGE>
knowledge, or any judgment, decree, writ, injunction, order, statute, rule or
regulation applicable to DRL. The execution, delivery and performance by DRL of
the Financing Agreements, and the consummation of the transactions contemplated
thereby, will not result in any violation or be in conflict with or constitute,
with or without the passage of time or giving of notice, either a default under
any such provision or and event that results in the creation of any lien, charge
or encumbrance upon any of DRL's assets or the suspension, revocation,
impairment, forfeiture or nonrenewal of any permit, license, authorization or
approval applicable to DRL, its business or operations, or any of its assets or
properties.
4.8 Litigation. There is no action, suit, proceeding or
investigation pending, or, to the best of DRL's knowledge, any basis therefor or
threat thereof, against the Company, which questions the validity of the
Financing Agreements or the right of DRL to enter into them, or to consummate
the transactions contemplated thereby, or that might result, either individually
or in the aggregate, in any material adverse change in the assets, condition
(financial or otherwise), business or prospects of the DRL.
4.9 Disclosure. DRL has provided Metasyn with all the
information available to it that Metasyn has requested for deciding whether to
enter into the Financing Agreements and whether to consummate the transactions
contemplated thereby. Neither this Agreement nor any other document, certificate
or instrument furnished Metasyn by or on behalf of DRL pursuant to this
Agreement, taken as a whole, contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein not misleading in light of the circumstances in which they were
made.
5. Conditions to the Obligations of DRL. The obligation of each of DRL
to purchase Shares at each Closing is subject to the fulfillment, or the waiver
by DRL, of the following conditions on or before such Closing:
5.1 Accuracy of Representations and Warranties. Each
representation and warranty contained in Section 3 shall be true on and as of
the date of the Closing with the same effect as though such representation and
warranty had been made on and as of that date; provided, however, that in
connection with the Second Closing, the Company may make any amendments to the
representations and warranties contained in subsections 3.2, 3.5, 3.6, 3.7,
3.10(iii), 3.11, 3.13, 3.14, 3.15, 3.23 (except the second and third sentences
thereof), 3.24, 3.25 and 3.29 (only to the extent necessary to reflect
amendments to the preceding subsections), as well as to the exhibits and
schedules hereto in connection therewith, it may deem necessary or desirable to
update the information contained therein to reflect the conduct of the Company's
business in the ordinary course (other than with respect to material adverse
information) without such amendments constituting a failure on the part of the
Company to fulfill this condition.
5.2 Performance. The Company shall have performed and complied
with all agreements and conditions contained in this Agreement required to be
performed or complied with by the Company prior to or at the Closing.
10
<PAGE>
5.3 Financing Agreements. The Financing Agreements
contemplated hereby shall have been executed and delivered by the Company, by
DRL and by each of the other parties thereto by the First Closing.
5.4 Certificates and Documents. The Company shall have
delivered to DRL:
(i) The Restated Certificate of the Company, as in
effect prior to the date of the Closing, certified by the Secretary of State of
the State of Delaware;
(ii) Certificates, as of the most recent practicable
dates, as to the corporate good standing of the Company issued by the Secretary
of State of the State of Delaware and the Secretary of the Commonwealth of
Massachusetts, confirming such good standing on or immediately prior to the date
of the Closing;
(iii) By-laws of the Company, certified by its
Secretary or Assistant Secretary as of the date of the Closing; and
(iv) Resolutions of the Board of Directors and
stockholders of the Company, authorizing and approving all matters in connection
with this Agreement and the transactions contemplated hereby, certified by the
Secretary or Assistant Secretary of the Company as of the date of the Closing.
5.5 Compliance Certificate. The Company shall have delivered
to DRL a certificate, executed by the President of the Company, dated the date
of the Closing, certifying to the fulfillment of the conditions specified in
Sections 5.1 through 5.4 of this Agreement.
5.6 Other Matters. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to DRL, and DRL shall have received all such
counterpart originals or certified or other copies of such documents as it may
reasonably request.
5.7 Opinion of Counsel. DRL shall have received an opinion
from Palmer & Dodge LLP, counsel for the Company, dated the date of the Closing,
addressed to DRL, substantially in the form attached hereto as Exhibit E.
5.8 License Agreement. The License Agreement shall be in full
force and effect and a valid and legally binding obligation of Metasyn. Metasyn
shall have performed all of its obligations under the License Agreement fully
and on a timely basis and as of the date of the Closing no condition or event
shall have occurred which there constitutes, or which, after notice or lapse of
time or both, would constitute a breach or default by Metasyn under the License
Agreement.
11
<PAGE>
5.9 Amendment to Rights Agreement. Contemporaneously with the
execution of this Agreement, Metasyn shall deliver an amendment to the Rights
Agreement substantially in the form attached hereto as Exhibit F.
6. Conditions to the Obligations of the Company. The obligations of the
Company under Section 2 of this Agreement are subject to fulfillment, on or
before each Closing, of each of the following conditions:
6.1 Accuracy of Representations and Warranties. The
representations and warranties of DRL contained in Section 4 shall be true on
and as of the date of the Closing with the same effect as though such
representations and warranties had been made on and as of that date.
6.2 Performance. DRL shall have performed and complied with
all agreements and conditions contained in this Agreement required to be
performed or complied with by it prior to or at the Closing.
6.3 License Agreement. The License Agreement shall be in full
force and effect and a valid and legally binding obligation of DRL. DRL shall
have performed all of its obligations under the License Agreement fully and on a
timely basis and as of the date of the Closing no condition or event shall have
occurred which there constitutes, or which, after notice or lapse of time or
both, would constitute a breach or default by DRL under the License Agreement.
6.4 Waivers. The Company shall have received waivers from its
investors who are parties to the Right Agreement of their right of first refusal
under Section 3 thereof with respect to the issuance of the Shares.
7. Covenants of the Company.
7.1 Material Changes and Litigation. The Company will promptly
notify DRL of any material adverse change in the business, properties, assets or
condition, financial or otherwise, of the Company and of any litigation or
governmental proceeding or investigation pending or, to the best knowledge of
the Company, threatened against the Company, or against any officer, director,
key employee, consultant, or principal stockholder of the Company materially
affecting or which, if adversely determined, would materially adversely affect
its present or proposed business, properties, assets or condition taken as a
whole.
7.2 Non-Compete and Non-Solicitation Agreement. The Company
and its key employees and consultants will enter into non-compete and non-
solicitation agreements substantially in the form attached hereto as Exhibit I.
7.3 Payment of Taxes and Trade Debt. The Company will pay and
discharge all taxes, assessments and governmental charges or levies imposed upon
it or upon its income or profits or business, or upon any properties belonging
to it, prior to the date on which penalties attach thereto, and all lawful
claims which, if unpaid, might become a lien or
12
<PAGE>
charge upon any properties of the Company, provided that the Company shall not
be required to pay any such tax, assessment, charge, levy or claim which is
being contested in good faith and by appropriate proceedings if the Company
shall have set aside on its books adequate reserves with respect thereto, or
where the failure to so pay would not have a material adverse effect on the
business, assets, operations or financial condition of the Company. The Company
will pay, when due, or in conformity with customary trade terms but not later
than 90 days from the due date, all lease obligations, all trade debt, and all
other indebtedness incident to the operations of the Company, except such as are
being contested in good faith and by proper proceedings if the Company shall
have set aside on its books sufficient reserves with respect thereto, or where
the failure to so pay would have a material adverse effect on the business,
assets, operations or financial condition of the Company.
7.4 Maintenance of Insurance. The Company will maintain
insurance with financially sound and reputable insurance companies or
associations in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which the Company operates.
7.5 Key Man Life Insurance. The Company shall obtain and/or
maintain insurance policies in the amount of $2,000,000 on the life of Dr.
Randall B. Lauffer and in the amount of $2,000,000 on the life of Michael D.
Webb, the proceeds of which are payable to the Company.
7.6 Preservation of Corporate Existence. The Company will
preserve and maintain its corporate existence, rights, franchises and privileges
in the jurisdiction of its incorporation, and qualify and remain qualified, as a
foreign corporation in each jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or the ownership
of its properties. The Company shall preserve and maintain all licenses and
other rights to use patents, processes, licenses, trademarks, trade names,
inventions, intellectual property rights or copyrights owned or possessed by it
and necessary to the conduct of its business, except where the failure to
preserve and maintain such intellectual property rights would not have a
material adverse effect on the business operations, assets or financial
condition of the Company.
7.7 Maintenance of Properties, etc. The Company will maintain
and preserve all of its properties, necessary or useful in the proper conduct of
its business, in good repair, working order and condition, ordinary wear and
tear excepted, except where the failure to so preserve and maintain would not
have a material adverse effect on the business, assets, operations or financial
condition of the Company.
7.8 Compliance with ERISA. The Company will comply with all
minimum funding requirements applicable to any pension or other employee benefit
or employee contribution plans which are subject to ERISA or to the Code, and
comply in all other material respects with the provisions of ERISA and the Code,
and the rules and regulations thereunder, which are applicable to any such plan.
The Company shall not permit any event or condition to exist which could permit
any such plan to be terminated under circumstances which would cause the lien
provided for in Section 4068 of ERISA to attach to the assets of the Company.
13
<PAGE>
7.9 Common Stock Purchase Agreement. The Company will cause
all employees who acquire Common Stock from the Company to execute a Common
Stock Purchase Agreement substantially in the form of Exhibit J hereto (for
issuances of restricted stock), or a Stock Purchase and Right of First Refusal
Agreement substantially in the form of Exhibit K hereto (for issuances of stock
upon exercise of stock options).
7.10 Financial Statements. The Company will:
(i) furnish to DRL, within 90 days after the end of
each fiscal year of the Company, an audited balance sheet of the Company as at
the end of such year and audited statements of income and of changes of cash
flows of the Company for such year, certified by certified public accountants of
established national reputation selected by the Company, and prepared in
accordance with generally accepted accounting principles; and
(ii) furnish to DRL, within 20 days after the end of
each quarter, an unaudited balance sheet of the Company as at the end of such
quarter and unaudited statements of income for such quarter and of changes of
cash flows of the Company for such quarter and for the current fiscal year to
the end of such quarter, setting forth in comparative form the Company's
projected financial statements for the corresponding periods for the current
fiscal year, and summaries of bookings and backlogs for such quarter.
The foregoing financial statements shall be prepared on a consolidated
basis if the Company then has any subsidiaries. The financial statements
delivered pursuant to clause (ii) above shall be accompanied by a certificate of
the Chief Financial Officer or Treasurer of the Company stating that such
statements have been prepared in accordance with generally accepted accounting
principles consistently applied (except as noted) and fairly present the
financial condition of the Company at the date thereof and for the periods
covered thereby.
7.11 Inspection Rights. The Company will permit DRL, or its
authorized representative, access to the Company's facilities during normal
business hours, upon reasonable request and prior notice, for the purpose of
inspecting the property, affairs and finances of the Company and for discussing
the same with any of the Company's officers, directors and employees; provided,
however, that DRL will maintain the confidentiality of any information obtained
by it during the course of any such inspection.
7.12 Observation Rights. The Company will permit DRL to
designate a representative to attend all meetings of the Company's Board of
Directors (whether in person or by telephone or video conference) as a
non-voting observer; provided, however, that the Company reserves the right to
exclude DRL's representative from any meeting or portion thereof at the sole
discretion of the Company's Board of Directors and/or its presiding officer. As
soon as possible after the execution of this Agreement, DRL will notify the
Company in writing of the name of the individual designated by DRL as its
initial representative for purposes of this Section 7.12 and agrees to notify
the Company in writing prior to any change in its representative. In addition,
the Company agrees to furnish DRL with copies of (i) materials prepared by or on
behalf of the Company and circulated to the Board of Directors, and (ii) any
correspondence between the Company and members of the Board of Directors;
provided, however, that the Company may, in its sole discretion,
14
<PAGE>
withhold from DRL any and all materials and correspondence pertaining to matters
(i) discussed or to be discussed in a meeting or portion of a meeting from which
the DRL Representative was excluded or will be excluded pursuant to the
provisions of this Section 7.12 or (ii) that the Company deems to be highly
confidential or with respect to which the Company believes in good faith DRL has
or may have a conflict of interest. DRL will maintain the confidentiality of any
information obtained by it in any manner pursuant to this Section 7.12. Prior to
attending any meeting of the Board of Directors, DRL agrees to require its
representative to execute and deliver to the Company a confidentiality agreement
in a form reasonably satisfactory to counsel to the Company. The Company shall
provide DRL with reasonable prior written notice of all scheduled meetings of
the Company's Board of Directors.
7.13 Termination of Covenants. The covenants of the Company
contained in this Section 7 shall terminate, and be of no further force or
effect, upon the effective date of a Registration Statement (as defined in the
Rights Agreement) covering the Company's first public offering of Common Stock
in which the price per share to the public exceeds $6.00 (subject to appropriate
adjustment in the event of any stock dividend, stock split, combination or other
similar recapitalization) and the gross proceeds to the Company equal at least
$15,000,000.
8. Successors and Assigns. Except as provided in Section 9, the
provisions of this Agreement shall be binding upon, and inure to .the benefit
of, the respective successors, assigns, heirs, executors and administrators of
the parties hereto.
9. Transfers.
9.1 Permitted Transfers. The Shares, Registrable Shares and
rights granted to DRL under this Agreement may be transferred by DRL to (a) any
entity that controls, is controlled by, or is under common control with, DRL, or
(b) any person or entity other than an entity described in clause (a) hereof
acquiring all, but not less than all, of the Shares or Registrable Shares (as
such terms are defined in the Rights Agreement) held by DRL; provided, however,
that, in either case, (i) the Company is given written notice by the transferee
at the time of such transfer stating the name and address of the transferee and
identifying the securities with respect to which such rights are being assigned,
and (ii) any transferee to whom rights under this Agreement are transferred
shall, as a condition to such transfer, deliver to the Company a written
instrument by which such transferee agrees to be bound by the obligations
imposed upon DRL under Section 10 to the same extent as if such transferee were
a party hereto; provided, further, that in the case of a proposed transfer to an
entity which neither controls, is controlled by, nor is under common control
with, DRL, the Shares or Registrable Shares issued to DRL or the rights granted
to DRL hereunder or under any other Financing Agreement, may not be transferred
to any entity which is, in the reasonable judgment of the Board of Directors of
the Company, a competitor of the Company. Registrable Shares (other than the
Shares) shall not be subject to the foregoing transfer restrictions provided
that the Company is given prior written notice of any transfer. In addition, DRL
may transfer Shares or Registrable Shares as part of any merger of the Company
or sale of all or substantially all of the outstanding capital stock of the
Company. Except as provided herein, no transfer of Shares, Registrable Shares or
rights under this
15
<PAGE>
Agreement shall be permitted. The foregoing transfer restrictions shall
terminate and be of no further force or effect upon the occurrence of a "Public
Offering" (as defined in the Restated Certificate) or the acquisition of the
Company, whether effected by means of merger, sale of assets or capital stock or
otherwise.
9.2 Subsequent Transferees. A transferee to whom Shares,
Registrable Shares or rights are transferred pursuant to this Section 9 (other
than (i) Registrable Shares (other than the Shares) with respect to which the
Company has received prior written notice of such transfer or (ii) as part of
any merger of the Company or sale of all or substantially all of the outstanding
capital stock of the Company) may not again transfer such Shares, Registrable
Shares or rights to any other person or entity, other than as provided in
Section 9.1 above, mutatis mutandis.
10. Confidentiality. DRL agrees that it will keep confidential and will
not disclose or divulge any confidential, proprietary or secret information
which DRL may obtain from the Company pursuant to financial statements, reports
and other materials submitted by the Company to DRL pursuant to this Agreement
or pursuant to visitation or inspection rights granted hereunder, unless such
information is known, or until such information becomes known, to the public.
11. Survival of Representations and Warranties. All agreements,
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the closing of the transactions contemplated
hereby.
12. Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be delivered by hand or
mailed by first class certified or registered mail, return receipt requested,
postage prepaid:
If to the Company, at Metasyn, Inc., c/o Michael D. Webb, President, 71
Rogers Street, Cambridge, Massachusetts 02142-1118, or at such other address or
addresses as may have been furnished in writing by the Company to DRL, with a
copy to William T. Whelan, Esq., Palmer & Dodge LLP, One Beacon Street, Boston,
Massachusetts 02108;
If to DRL, at Daiichi Radioisotope Laboratories, Ltd., 17-10 Kyobashi
1-Chome Chuo- Ku, Tokyo 104 Japan or at such other address or addresses as may
have been furnished to the Company in writing by DRL, with a copy to Charles B.
Abbott, Esq., Nutter, McClennen & Fish, LLP, One International Place, Boston,
Massachusetts 02110.
Notices provided in accordance with this Section 12 shall be deemed
delivered upon personal delivery or 48 hours after deposit in the mail.
13. Brokers. The Company and DRL (i) represents and warrants to the
other that it has retained no finder or broker in connection with the
transactions contemplated by this Agreement, and (ii) will indemnify and save
the other harmless from and against any and all claims, liabilities or
obligations with respect to brokerage or finders' fees or commissions, or
consulting fees in connection with the transactions contemplated by this
Agreement asserted
16
<PAGE>
by any person on the basis of any statement or representation alleged to have
been made by such indemnifying party.
14. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter including, but not limited to, the Master Agreement dated as of
March 29, 1996 between Metasyn and DRL.
15. Amendments and Waivers. Except as otherwise expressly set forth in
this Agreement, any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Company and the holders of Securities (as such term is defined in the Rights
Agreement) converted or convertible into not less than 66 2/3% of the
Registrable Shares. Any amendment or waiver effected in accordance with this
Section 15 shall be binding upon each holder of any Shares or Registrable Shares
(including Conversion Stock) and each future holder of all such securities and
the Company. No waivers of or exceptions to any term, condition or provision of
this Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition or
provision.
16. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17. Headings. The headings of the sections, subsections, and paragraphs
of this Agreement have been added for convenience only and shall not be deemed
to be a part of this Agreement.
18. Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
17
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
the day and year first above written.
METASYN, INC.
By: /s/ Michael D. Webb
-----------------------------------
Name: Michael D. Webb
Title: President and Chief Executive Officer
DAIICHI RADIOISOTOPE
LABORATORIES, LTD.
By: /s/ Osamu Ikeda
-----------------------------------
Name: Osamu Ikeda, M.D.
Title: President and Chief Executive Officer
18
Exhibit 10.26
STRATEGIC COLLABORATION AGREEMENT
between
METASYN, INC.,
MALLINCKRODT MEDICAL, INC.
and
MALLINCKRODT GROUP INC.
dated as of August 30, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
ARTICLE 1. DEFINITIONS................................................................................... 1
1.1. "Additional Compounds"........................................................................ 1
1.2. "Affiliate"................................................................................... 2
1.3. [ ]*.......................................................................................... 2
1.4. "Base Case Scenario Model".................................................................... 2
1.5. "Blood Pool Magnetic Resonance Contrast Agents"............................................... 2
1.6. "Costs of Goods Sold"......................................................................... 2
1.7. "Development Costs"........................................................................... 2
1.8. "Development Phase"........................................................................... 3
1.9. "Development Program"......................................................................... 3
1.10. "Effective Date".............................................................................. 3
1.11. "FDA"......................................................................................... 3
1.12. "Field"....................................................................................... 3
1.13. "First Commercial Sale"....................................................................... 3
1.14. "IND"......................................................................................... 3
1.15. "Launch Costs"................................................................................ 3
1.16. "Licensed Compound"........................................................................... 3
1.17. "Licensed Product"............................................................................ 3
1.18. "Major Market Countries"...................................................................... 4
1.19. "MGH Patent Rights"........................................................................... 4
1.20. "MKG Patent Rights"........................................................................... 4
1.21. "Metasyn Patent Rights"....................................................................... 4
1.22. "Metasyn Technology".......................................................................... 4
1.23. "NDA"......................................................................................... 4
1.24. "Net Sales"................................................................................... 4
1.25. "Operating Margin"............................................................................ 5
1.26. "Outside Compounds"........................................................................... 5
1.27. "Party"....................................................................................... 5
1.28. "Patent Rights"............................................................................... 5
1.29. "Program"..................................................................................... 6
1.30. "Replacement Compound"........................................................................ 6
1.31. "Research Costs".............................................................................. 6
1.32. "Research Phase".............................................................................. 6
1.33. "Research Program"............................................................................ 6
1.34. "Sales and Marketing Costs"................................................................... 6
1.35. [ ]*.......................................................................................... 6
1.36. "Second Generation Compounds"................................................................. 6
1.37. "Territory"................................................................................... 7
1.38. "Third Party"................................................................................. 7
ARTICLE 2. SCOPE AND STRUCTURE OF THE COLLABORATION...................................................... 7
2.1. General....................................................................................... 7
2.2. [ ]*.......................................................................................... 7
2.3. Non-Competition; Third Party Products Obtained by MKG......................................... 7
2.4. Japan......................................................................................... 8
*Confidential information omitted and filed with the Commission.
(i)
<PAGE>
2.4.1. Acknowledgement of DRL Arrangement.................................................... 8
2.4.2. Costs................................................................................. 8
ARTICLE 3. LICENSE GRANTS; MANUFACTURING AND MARKETING RIGHTS............................................ 9
3.1. Grant of License Rights by Metasyn to MKG..................................................... 9
3.1.1. License Grant......................................................................... 9
3.1.2. Sublicenses........................................................................... 9
3.1.3. Reserved Rights of MGH and the U.S. Government........................................ 9
3.1.4. Reserved Rights of Metasyn............................................................ 9
3.1.5. Third Party Patent Rights............................................................. 9
3.2. Manufacturing and Supply of Licensed Compounds and Licensed Products.......................... 10
3.2.1. Manufacture and Supply by Metasyn During the Development
Phase................................................................................. 10
3.2.2. Manufacture and Supply by MKG......................................................... 10
3.2.3. Assistance by Metasyn to MKG for Manufacturing License................................ 10
3.2.4. Right to Manufacture for the Japanese Market.......................................... 10
3.3. No Other Technology Rights.................................................................... 11
ARTICLE 4. THE DEVELOPMENT PROGRAM....................................................................... 11
4.1. Conduct of the Development Program............................................................ 11
4.1.1. General................................................................................ 11
4.1.2. Annual Development Plan............................................................... 11
4.1.3. Selection of Replacement Compound..................................................... 12
4.1.4. Selection of Second Generation Compounds or Outside
Compounds for Development............................................................. 12
4.2. Product Objectives............................................................................ 12
4.2.1. Metasyn Product Objectives............................................................ 12
4.2.2. MKG Product Objectives................................................................ 12
4.2.3. Extensions............................................................................ 13
4.3. Attendance at Regulatory Meetings............................................................. 13
4.4. Development Information; Reports.............................................................. 13
4.5. Availability of Employees..................................................................... 13
4.6. Visit of Facilities........................................................................... 14
4.7. Core Laboratory............................................................................... 14
ARTICLE 5. RESEARCH PROGRAM.............................................................................. 14
5.1. Additional Research Programs.................................................................. 14
5.2. Conduct of Research Program................................................................... 14
5.2.1. General............................................................................... 14
5.2.2. Annual Research Plan.................................................................. 14
5.2.3. Data.................................................................................. 15
5.2.4. Sources of Compounds.................................................................. 15
5.2.5. Semi-Annual Reports................................................................... 15
(ii)
<PAGE>
ARTICLE 6. MARKETING..................................................................................... 15
6.1. Sales and Marketing Plan...................................................................... 15
6.2. Exclusive Right............................................................................... 16
6.3. Diligence..................................................................................... 16
6.4. Labeling and Packaging........................................................................ 16
6.5. Participation by Metasyn Employees in Field Sales Activities.................................. 16
6.6. Co-Promotion Option........................................................................... 16
ARTICLE 7. MANAGEMENT OF THE COLLABORATION............................................................... 17
7.1. Joint Steering Committee...................................................................... 17
7.1.1. General............................................................................... 17
7.1.2. Chair................................................................................. 18
7.1.3. Minutes............................................................................... 18
7.2. Disagreements................................................................................. 18
ARTICLE 8. PAYMENTS...................................................................................... 18
8.1. Fee........................................................................................... 18
8.2. Milestone Payment............................................................................. 18
8.3. Funding of the Development Program............................................................ 19
8.3.1. Sharing of Development Costs.......................................................... 19
8.3.2. Previously Incurred Production Costs.................................................. 19
8.3.3. Advances.............................................................................. 19
8.3.4. Annual Reconciliation................................................................. 19
8.4. Funding of the Research Program............................................................... 20
8.4.1. Sharing of Research Costs............................................................. 20
8.4.2. Advances.............................................................................. 20
8.4.3. Annual Reconciliation................................................................. 20
8.5. Cash Flow Provisions.................................................................. 20
8.6. Share of Operating Margins.................................................................... 21
8.7. Operating Margin Reports...................................................................... 21
8.8. Audits by Metasyn............................................................................. 21
8.9. Audits by MKG................................................................................. 22
ARTICLE 9. INTELLECTUAL PROPERTY......................................................................... 22
9.1. Filing, Prosecution and Maintenance of MGH Patent Rights...................................... 22
9.1.1. Responsibility and Costs.............................................................. 22
9.1.2. Abandonment........................................................................... 23
9.1.3. Notice of Infringement................................................................ 23
9.1.4. Prosecution by MGH or Metasyn of MGH Patent Rights.................................... 23
9.1.5. Prosecution Under the Direction of the Joint Steering Committee....................... 23
9.1.6. Declaratory Actions................................................................... 23
9.2. Filing, Prosecution and Maintenance of Metasyn Patent Rights.................................. 24
9.2.1. Prosecution and Maintenance........................................................... 24
9.2.2. Abandonment; Failure to Pay........................................................... 24
9.2.3. Infringement by Others; Prosecution Under the Direction of the
Joint Steering Committee.............................................................. 24
9.2.4. Cooperation in Infringement Actions................................................... 24
(iii)
<PAGE>
9.2.5. Declaratory Actions.................................................................. 24
9.3. Infringement Action Against Either Party...................................................... 25
9.4. MKG Patent Rights............................................................................. 25
9.4.1. Maintenance of MKG Patent Rights..................................................... 25
9.4.2. Abandonment; Failure to Pay.......................................................... 25
9.4.3. Infringement by Others; Prosecution Under the Direction of the
Joint Steering Committee............................................................. 25
9.4.4. Cooperation in Infringement Actions.................................................. 25
9.4.5. Declaratory Actions.................................................................. 25
9.5. Cooperation in Infringement Actions........................................................... 26
9.6. Cooperation................................................................................... 26
ARTICLE 10. CONFIDENTIALITY............................................................................... 26
10.1. Nondisclosure Obligations..................................................................... 26
10.1.1. General.............................................................................. 26
10.1.2. Limitations.......................................................................... 26
10.2. Samples....................................................................................... 27
10.3. Terms of this Agreement....................................................................... 27
10.4. Publications.................................................................................. 27
10.4.1. Procedure............................................................................ 27
10.4.2. Delay................................................................................ 28
10.4.3. Resolution........................................................................... 28
10.5. Injunctive Relief............................................................................. 28
ARTICLE 11. REPRESENTATIONS AND WARRANTIES................................................................ 28
11.1. Patent Validity............................................................................... 28
11.2. Accuracy of Exhibits C and E.................................................................. 28
11.3. Authorization................................................................................. 28
11.4. [ ]*.......................................................................................... 29
ARTICLE 12. INDEMNITY..................................................................................... 29
12.1. MKG Indemnity Obligations..................................................................... 29
12.2. Metasyn Indemnity Obligations................................................................. 29
12.3. Product Liability............................................................................. 29
12.4. Contribution.................................................................................. 30
12.5. Procedure..................................................................................... 30
ARTICLE 13. EXPIRATION AND TERMINATION.................................................................... 31
13.1. The Development Phase......................................................................... 31
13.1.1. Expiration of the Development Phase.................................................. 31
13.1.2. Termination of Development Phase..................................................... 31
13.1.3. Existing Obligations................................................................. 31
13.1.4. Effect of Termination of the Development Program..................................... 31
13.2. The Research Program.......................................................................... 31
13.2.1. Expiration of Research Phase......................................................... 31
13.2.2. Termination of the Research Program.................................................. 32
13.2.3. Existing Obligations................................................................. 32
*Confidential information omitted and filed with the Commission.
(iv)
<PAGE>
13.2.4. Effect of Termination of the Research Program........................................ 32
13.3. Expiration of this Agreement.................................................................. 32
13.4. Termination of this Agreement................................................................. 32
13.4.1. Termination by Either Party.......................................................... 32
13.4.2. Termination by Metasyn............................................................... 33
13.5. Effect of Expiration or Termination of This Agreement......................................... 33
13.5.1. Existing Obligations................................................................. 33
13.5.2. Effect of Termination by Metasyn..................................................... 33
13.5.3. Effect of Termination by MKG......................................................... 34
13.5.4. Termination due to Termination of MGH License........................................ 35
13.5.5. Survival............................................................................. 35
ARTICLE 14. MISCELLANEOUS................................................................................. 35
14.1. Force Majeure................................................................................. 35
14.2. Assignment.................................................................................... 35
14.3. Severability.................................................................................. 36
14.4. Notices....................................................................................... 36
14.5. Applicable Law................................................................................ 37
14.6. Dispute Resolution............................................................................ 37
14.7. Public Announcements.......................................................................... 37
14.8. Entire Agreement.............................................................................. 38
14.9. Headings...................................................................................... 38
14.10. Agreement Not to Solicit Employees............................................................ 38
14.11. Exports....................................................................................... 38
14.12. Waiver........................................................................................ 38
14.13. Counterparts.................................................................................. 38
</TABLE>
Exhibit A Base Case Scenario Model (ss.1.4) Exhibit B Chemical Structure of
Compound MS-325 (ss.1.16) Exhibit C List of MGH Patent Rights (ss.1.19) Exhibit
D List of MKG Patent Rights (ss.1.20) Exhibit E List of Metasyn Patent Rights
(ss.1.21) Exhibit F First Annual Development Plan (ss.4.1.2)
Appendix I MGH License (Recitals)
Appendix II Costs of Goods Sold (ss.1.6)
Appendix III Development Costs (ss.1.7)
Appendix IV Research Costs (ss.1.31)
Appendix V Sales and Marketing Costs (ss.1.34)
(v)
<PAGE>
STRATEGIC COLLABORATION AGREEMENT
THIS STRATEGIC COLLABORATION AGREEMENT dated as of August 30, 1996 (the
"Agreement") is made by and among METASYN, INC., a Delaware corporation having
its principal place of business at 71 Rogers Street, Cambridge, Massachusetts
02142-1118 U.S.A. ("Metasyn"), MALLINCKRODT MEDICAL, INC., a Delaware
corporation having its principal place of business at 675 McDonnell Boulevard,
St. Louis, Missouri 63134 and MALLINCKRODT GROUP INC., a New York corporation
having its principal place of business at 7733 Forsyth Boulevard, St. Louis,
Missouri 63105, by and through its unincorporated Medical Imaging division
(together with Mallinckrodt Medical, Inc., "MKG").
RECITALS
WHEREAS, Metasyn has obtained certain rights under certain patents and
patent applications owned by The General Hospital Corporation, doing business as
Massachusetts General Hospital ("MGH"), pursuant to an Amended and Restated
License Agreement dated July 10, 1995 between Metasyn and MGH (the "MGH
License"), a copy of which is attached as Appendix I;
WHEREAS, Metasyn is developing a proprietary compound coded as MS-325
("Compound MS-325") which is intended for use as an enhancer for magnetic
resonance imaging, which compound is covered by said MGH patents and patent
applications as well as by Metasyn patent applications;
WHEREAS, MKG is interested in entering into a collaboration with
Metasyn for the development of blood pool magnetic resonance imaging agents and
desires to obtain an exclusive license to develop and sell Compound MS-325 and
all other blood pool magnetic resonance imaging agents worldwide excluding Japan
with respect to compounds licensed by Metasyn from time to time to Daiichi
Radioisotope Laboratories Ltd. ("DRL"), Metasyn's collaborator in Japan, in
accordance with the principles set forth herein; and
WHEREAS, Metasyn is willing to enter into such a collaboration and to
grant MKG such a license upon the terms and conditions set forth below.
NOW THEREFORE, in consideration of the premises and of the covenants
herein contained, the Parties hereto mutually agree as follows:
ARTICLE 1. DEFINITIONS
For purposes of this Agreement, the terms defined in this Article shall
have the meanings specified below:
1.1. "Additional Compounds" shall mean magnetic resonance imaging
agents other than Blood Pool Magnetic Resonance Contrast Agents.
<PAGE>
1.2. "Affiliate" shall mean any corporation or other entity which
directly or indirectly controls, is controlled by or is under common control
with a Party to this Agreement. A corporation or other entity shall be regarded
as in control of another corporation or entity if it owns or directly or
indirectly controls more than fifty percent (50%) of the voting stock or other
ownership interest of the other corporation or entity, or if it possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the corporation or other entity or the power to elect
or appoint fifty percent (50%) or more of the members of the governing body of
the corporation or other entity.
1.3. [ ]* shall mean the [ ]* as published by the Wall Street
Journal on the last day of the month [ ]*.
1.4. "Base Case Scenario Model" shall mean the Base Case Scenario Model
dated May 17, 1996 previously reviewed by the Parties and described in the
documents attached hereto as Exhibit A, as it may be amended by the Joint
Steering Committee from time to time pursuant to Section 6.1.
1.5. "Blood Pool Magnetic Resonance Contrast Agents" shall mean blood
pool persistent compounds with, as its primary application, clinical utility in
improving magnetic resonance imaging of arteries and veins, assessing organ
perfusion and organ blood volume with magnetic resonance imaging and identifying
tissue pathologies where increased vascular permeability is found (i.e., tumors,
inflammatory lesions).
1.6. "Costs of Goods Sold" shall mean all direct and indirect
manufacturing costs incurred by MKG and Metasyn specifically allowable to the
production of the Licensed Products, together with royalties payable to MGH and
other Third Parties and including Launch Costs and excluding the costs of the
syringe or other delivery system utilized with respect to and invoiced as part
of the price for any Licensed Product, as more fully described in Appendix II
hereto.
1.7. "Development Costs" shall mean all external costs and direct
internal costs incurred by Metasyn and MKG in connection with the Development
Program plus indirect costs allocated to the Development Program pursuant to the
terms agreed to by the Parties, as more fully described in Appendix III hereto.
Development Costs will include, but not be limited to, process development,
clinical work (Phase I - Phase III trials), overhead charges within agreed upon
standards, preclinical work, validation batches, stability batches and testing,
regulatory filings, production of compound for clinical work (Phase I - Phase
III trials), and all production of Licensed Compound related to regulatory
filings in the Territory. Development Costs shall specifically not include any
such costs to the extent attributable to development of any compounds and their
corresponding Licensed Products for use, sale or distribution exclusively in
Japan, it being understood that such costs shall be entirely the responsibility
and liability of Metasyn and/or DRL; provided, however, that if DRL is not
granted a license in accordance with Section 2.4.1 hereof with respect to any
compound for Japan prior to the IND filing with the FDA for such compound by the
Parties, the Development Costs shall include all such costs relative to any such
compound for all
*Confidential treatment omitted and filed with the Commission.
2
<PAGE>
purposes hereof. Costs for Licensed Products or Compounds that are to be sold or
distributed on a worldwide basis (including any case where such Licensed
Products or Compounds are licensed to DRL in accordance with Section 2.4.1
hereof prior to the filing of an IND with the FDA) will be apportioned to the
Parties to reflect the fact that Japan represents [ ]* the worldwide
market for such Licensed Products or Compounds.
1.8. "Development Phase" shall mean, with respect to the Licensed
Compound, any Second Generation Compound, Outside Compound or Replacement
Compound, the period commencing on the Effective Date of the Agreement and
continuing until final marketing approval for the Licensed Products has been
obtained in all Major Market Countries.
1.9. "Development Program" shall mean the development program described
generally in the Annual Development Plan attached as Exhibit F, as such plan may
be amended from time to time as provided in this Agreement.
1.10. "Effective Date" shall mean the date first written above.
1.11. "FDA" shall mean the United States Food and Drug Administration.
1.12. "Field" shall mean all indications comprehended by the definition
of the term "Blood Pool Magnetic Resonance Contrast Agents" above.
1.13. "First Commercial Sale" of any Licensed Product shall mean the
first sale for use or consumption by the general public of such Licensed Product
in a country when such sale has been made with the required marketing and
pricing approval granted by the governing health authority of such country.
1.14. "IND" shall mean an investigational new drug application or its
equivalent filed with the FDA and necessary for beginning clinical trials in
humans, or any comparable application filed with the regulatory authorities of a
country other than the United States prior to beginning clinical trials in
humans in such country, with respect to the Licensed Products.
1.15. "Launch Costs" shall mean non-recurring direct and indirect costs
incurred in connection with (i) the design, engineering, test and scale up of
the manufacturing process used to produce any Licensed Product for commercial
sale, (ii) introductory promotion and marketing of any Licensed Product and
(iii) registration or other similar costs to be incurred in other countries
where any Licensed Product is to be sold.
1.16. "Licensed Compound" shall mean Compound MS-325, a copy of the
chemical structure of which compound is attached hereto as Exhibit B.
1.17. "Licensed Product" shall mean any product comprising the Licensed
Compound, any Second Generation Compounds or the Replacement Compound, and shall
also include any Outside Compounds.
*Confidential information omitted and filed with the Commission.
3
<PAGE>
1.18. "Major Market Countries" shall mean the United States, the United
Kingdom, Germany, France, Spain, Italy and, with respect to compounds and their
corresponding Licensed Products for which the Territory has been expanded as
provided in Section 1.37 hereof to include Japan, if any, Japan.
1.19. "MGH Patent Rights" shall mean the United States patents and
patent applications and the international patent applications identified in
Exhibit C and any division, continuation or continuation-in-part thereof, any
foreign patent applications corresponding to any such patent applications and
any United States or foreign patents or the equivalent thereof issuing thereon
or any reissue, reexamination or extension thereof.
1.20. "MKG Patent Rights" shall mean any patent rights of MKG
identified in Exhibit D and such other patent rights of MKG that the Parties may
mutually agree from time to time are necessary for or useful in the making,
using or selling of Licensed Products in the Territory. MKG Patent Rights shall
not include the [ ]*.
1.21. "Metasyn Patent Rights" shall mean the United States and foreign
patent applications set forth in Exhibit E hereto and any division, continuation
or continuation-in-part thereof, any foreign patent applications corresponding
to any such patent applications and any United States or foreign patents or the
equivalent thereof issuing thereon or any reissue, reexamination or extension
thereof.
1.22. "Metasyn Technology" shall mean and include all present and
future inventions, trade secrets, copyrights, know-how, data, regulatory
submissions and other intellectual property of any kind (but not including
Metasyn Patent Rights) owned or controlled by, or licensed (with the right to
sublicense) to, Metasyn necessary or useful for the manufacture, use or sale of
the Licensed Compound and the Licensed Products in the Territory.
1.23. "NDA" shall mean a new drug application filed with the FDA or,
with respect to countries other than the United States, the Governing health
authority of such country, after completion of human clinical trials to obtain
marketing approval for a Licensed Product in such country.
1.24. "Net Sales" shall mean the invoiced sales price per unit for each
of the Licensed Products billed by a Party or its Affiliates or any distributor
of either who is not an Affiliate, or, to the extent permitted in Section 3.1.2
hereof, by permitted sublicensees of MKG to independent customers, less, to the
extent such amounts are included in the invoiced sales price, actual (a)
credited allowances to such independent customers for such Licensed Products
which were spoiled, damaged, out-dated or returned; (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 incurred in connection with the sale, exportation or importation of the
Licensed Products in finished packaged form; (e) charge back payments and/or
rebates 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) that amount of the invoiced sales price per unit
*Confidential information omitted and filed with the Commission.
4
<PAGE>
attributable to the syringe or other delivery system utilized with respect to
and invoiced as part of the price for any Licensed Product. 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. Every other commercial use or
disposition of a Licensed Product by a Party or its Affiliates or any
distributor of such Party who are not Affiliates, or, to the extent permitted in
Section 3.1.2 hereof, by permitted sublicensees of MKG, other than a bona fide
sale to a bona fide customer, shall be considered a sale of such Product at the
weighted average Net Sales price then being invoiced by the seller in arm's
length transactions.
A Party or its sublicensees shall be deemed to have sold a "Bundled
Product" if the Licensed Products are sold by a Party or its permitted
sublicensees pursuant to an agreement with an independent customer specifying,
for a combination of products and/or services, (i) a single price, (ii) other
terms of purchase not separately identifying either a price per product or the
effective deductions referred to above per product or (iii) a price for units of
the Licensed Products which is discounted below such Party's or its permitted
sublicensees' standard invoice price per unit of the Licensed Products by at
least five (5) percentage points more than the amount that any other product or
service in the Bundled Product is discounted below such other product's or
service's standard invoice price (i.e., average selling price for all Licensed
Products that are not bundled). In order to calculate the Net Sales of the
Licensed Products included in a Bundled Product (a) in the case of the foregoing
clauses (i) and (ii), the total Net Sales of the Bundled Product shall be
multiplied by a fraction, the numerator of which shall be the product of the
number of units of the Licensed Products sold multiplied by the standard invoice
price per unit of the Licensed Products, and the denominator of which shall be
the sum, for all products or services included in the Bundled Product, of the
products of the number of units sold for each product or service in the Bundled
Product multiplied by the standard invoice price per unit for each such product
or service and (b) in the case of the foregoing clause (iii), the Parties will
determine whether an adjustment to Net Sales is appropriate and, if so, a
mutually agreeable method of calculation.
1.25. "Operating Margin" shall mean for a particular quarter, the
aggregate Net Sales of and any other revenues relating to Licensed Products for
such quarter including, without limitation, royalties and any other payments
from sublicensees, less (i) Cost of Goods Sold and (ii) Sales and Marketing
Costs.
1.26. "Outside Compounds" shall mean any Blood Pool Magnetic Resonance
Contrast Agents or products comprising Blood Pool Magnetic Resonance Agents that
may be acquired or licensed by either or both of the Parties from any Third
Party with the approval and at the direction of the Joint Steering Committee.
1.27. "Party" shall mean Metasyn or MKG.
1.28. "Patent Rights" shall mean MGH Patent Rights and Metasyn Patent
Rights, collectively.
5
<PAGE>
1.29. "Program" shall mean the collaboration between Metasyn and MKG
contemplated by this Agreement.
1.30. "Replacement Compound" shall mean a Blood Pool Magnetic Resonance
Contrast Agent other than Compound MS-325 discovered by Metasyn or MKG that is
selected by the Joint Steering Committee as a replacement for the Licensed
Compound pursuant to Section 4.1.3 hereof. In appropriate cases, Replacement
Compounds may be any one or more Outside Compounds.
1.31. "Research Costs" shall mean all external costs and direct
internal costs incurred by Metasyn or MKG in connection with the Research
Program plus indirect costs allocated to the Research Program pursuant to the
terms agreed to by the Parties, as more fully described in Appendix IV hereto.
Research Costs shall specifically not include any such costs to the extent
attributable to research in connection with any compounds and their
corresponding Licensed Products to be utilized, sold or distributed exclusively
in Japan, it being understood that such costs shall be entirely the
responsibility and liability of Metasyn and/or DRL; provided, however, that if
DRL is not granted a license in accordance with Section 2.4.1 hereof with
respect to any compound for Japan prior to the IND filing with the FDA for such
compound by the Parties, the Research Costs shall include all such costs
relative to any such compound for all purposes hereof. Costs for Licensed
Products or Compounds that are to be sold or distributed on a worldwide basis
(including any case where such Licensed Products or Compounds are licensed to
DRL in accordance with Section 2.4.1 hereof prior to the filing of an IND with
the FDA) will be apportioned to the Parties to reflect the fact that Japan
represents [ ]* the worldwide market for such Licensed Products or Compounds.
1.32. "Research Phase" shall mean the period commencing on the date the
first Research Program is approved by the Joint Steering Committee pursuant to
Section 5.1 hereof and ending upon the termination or expiration of the final
research program approved by the Joint Steering Committee, during which period
the Parties will attempt to identify candidates for Second Generation Compounds,
as more fully described in Article 5 hereof.
1.33. "Research Program" shall mean the research program(s) described
generally in the Annual Research Plan, if any, to be developed by the Joint
Steering Committee as provided in Section 5.2.2 hereof.
1.34. "Sales and Marketing Costs" shall mean all direct and indirect
costs of MKG and Metasyn (including without limitation, cost associated with
receivables and inventory) specifically allocable to the sale and marketing of
the Licensed Products and Launch Costs, as more fully described in Appendix V
hereto.
1.35. [ ]* shall mean the [ ]* dated as of [ ]* between MKG and [ ]*.
1.36. "Second Generation Compounds" shall mean Blood Pool Magnetic
Resonance Contrast Agents selected by the Joint Steering Committee pursuant to
Section 4.1.4 hereof, including those discovered by either of the Parties
hereto.
*Confidential information omitted and filed with the Commission.
6
<PAGE>
1.37. "Territory" shall mean the world excluding Japan with respect to
and only to the extent of compounds licensed by Metasyn to DRL from time to time
pursuant to the terms of any existing written or oral agreement as provided in
Section 2.4.1 hereof. It is understood that the "Territory" will include Japan
with respect to any compound and its corresponding Licensed Products for which
DRL is not granted a license pursuant to Section 2.4.1 hereof prior to the IND
filing with the FDA for such compound.
1.38. "Third Party" shall mean any entity other than Metasyn or MKG and
their respective Affiliates.
ARTICLE 2. SCOPE AND STRUCTURE OF THE COLLABORATION
2.1. General. Metasyn and MKG wish to establish a collaborative
alliance to develop and discover Blood Pool Magnetic Resonance Imaging Agents,
including Compound MS-325. The collaboration will include a Development Program
for Compound MS-325, any Replacement Compound, any Second Generation Compounds
(as well as, if and when deemed necessary by the Parties, the acquisition of
rights to Outside Compounds and the conduct of a Research Program) and the
commercialization of the corresponding Licensed Products in the Territory.
During the course of this collaboration, Metasyn and MKG shall communicate
regularly and shall assume different rights and responsibilities for the
development and commercialization of the Licensed Products, based on the phase
of development and commercialization and the territory involved, all as more
specifically described below.
2.2. [ ]*. In the event that during the term of this Agreement Metasyn
[ ]*. In such event, Metasyn shall [ ]*. Metasyn shall [ ]* Metasyn and MKG
shall [ ]*. If, [ ]*, Metasyn and MKG are [ ]* then, unless the Parties [ ]*,
Metasyn shall [ ]*.
2.3. Non-Competition; Third Party Products Obtained by MKG. During the
term of this Agreement, MKG agrees that it will not develop market or sell any
Blood Pool Magnetic Resonance Contrast Agents other than the Licensed Products
without the approval of the Joint Steering Committee; provided, however, that
MKG may continue to develop market and sell magnetic resonance imaging agents
which have primary applications outside the Field;
*Confidential information omitted and filed with the Commission.
7
<PAGE>
provided further, that MKG may continue to develop, market and sell magnetic
resonance imaging agents of any kind (including, without limitation, Blood Pool
Magnetic Resonance Contrast Agents) outside the Territory, including any
compounds or products of its own or that it may acquire. If the Joint Steering
Committee approves the development, marketing or sale of an Outside Compound,
the acquisition or licensing costs associated with such compound and the
Development Costs and Operating Margin for any Licensed Product deriving
therefrom will be shared equally by Metasyn and MKG in accordance with the
terms set forth herein. In any such event, a development plan and budget will be
approved by the Joint Steering Committee, and the appropriate amendments to this
Agreement will be executed by the Parties.
2.4. Japan.
2.4.1. Acknowledgement of DRL Arrangement. MKG acknowledges
that Metasyn has granted a license to DRL to use the Licensed Compound and to
use, manufacture, have manufactured, distribute for sale and sell the Licensed
Products in Japan for medical application of contrasting and/or enhancement
agents for magnetic resonance imaging in humans. MKG acknowledges that, pursuant
to existing written and/or oral agreements between Metasyn and DRL, Metasyn may
also offer DRL rights with respect to Replacement Compounds and Second
Generation Compounds and their respective corresponding Licensed Products for
Japan at any time prior to the respective IND filings with the FDA for such
compounds. For this reason, MKG's territory consists of the world excluding
Japan with respect to any compounds and their corresponding Licensed Products as
to which Metasyn has granted or may grant DRL a license in accordance with this
Section 2.4.1. Thus, it is understood that, if any such license with respect to
any compound and its corresponding Licensed Products has not been granted by
Metasyn to DRL prior to the IND filing with the FDA with respect to any such
compound, then DRL shall have no right to any license with respect to such
compound thereafter.
2.4.2. Costs. The Parties agree that MKG shall not bear any
portion of the Research and Development Costs attributable to development of
compounds for Japan or attributable to development of compounds or products not
falling within the scope of this Agreement, which costs shall be Metasyn's or
DRL's responsibility and liability; provided, however, that if DRL is not
granted a license with respect to any compound for Japan prior to the IND filing
with the FDA for such compound, the total Research and Development Costs for
such compound shall be borne equally by the Parties, in accordance with the
applicable provisions of Article 8 hereof and the Territory for such compound
will include Japan. The Parties have agreed that, with respect to compounds
licensed to DRL for Japan, only [ ]* for such compound shall be borne by
the Parties pursuant to this Agreement.
*Confidential information omitted and filed with the Commission.
8
<PAGE>
ARTICLE 3. LICENSE GRANTS; MANUFACTURING AND MARKETING RIGHTS
3.1. Grant of License Rights by Metasyn to MKG.
3.1.1. License Grant. Metasyn hereby grants MKG the exclusive
right and license under the Patent Rights and Metasyn Technology to (a) use,
make and have made the Licensed Compound, any Second Generation Compounds and
any Replacement Compound in the Territory for use in the Field, (b) use, make
and have made, distribute for sale and sell the Licensed Products in the
Territory for use in the Field and (c) provide the Licensed Compound, any Second
Generation Compounds and any Replacement Compound to permitted sublicensees for
the purpose of permitting such sublicensees to manufacture or have manufactured
Licensed Products in the Territory for use in the Field, all subject to Sections
3.1.3 and 3.1.4 below.
3.1.2. Sublicenses. MKG shall have the right to grant
sublicenses under the licenses set forth in Section 3.1.1 hereof to Affiliates
of MKG and, subject to the prior approval of the Joint Steering Committee, to
Third Parties.
3.1.3. Reserved Rights of MGH and the U.S. Government. MKG
acknowledges that the license granted herein to the Patent Rights is dependent
upon the rights and licenses obtained by Metasyn under the MGH License and are
subject to certain rights reserved to MGH and the United States Government in
the MGH License, as set forth in the MGH License attached hereto as Appendix I.
In the event that the MGH License is terminated due to Metasyn's failure to
comply with the due diligence obligations imposed on Metasyn pursuant to
Paragraph 3.1 (b) of the MGH License or any other obligation therein, such
failure shall constitute a material breach by Metasyn and MKG may terminate this
Agreement in accordance with Section 13.4.1 hereof.
3.1.4. Reserved Rights of Metasyn. Notwithstanding the rights
granted or to be granted to MKG pursuant to this Article 3, Metasyn at all times
reserves the right under the Patent Rights and the Metasyn Technology to (a) use
the Licensed Compound, any Second Generation Compounds and any Replacement
Compound for research and development purposes only in the Territory subject to
the requirements of Article 5 hereof, (b) distribute for sale and sell the
Licensed Products in the Territory pursuant to any rights it may have under
Sections 6.2 and 6.6 hereof and (c) make and have made the Licensed Compound,
any Second Generation Compounds, any Replacement Compound and any Outside
Compound and their respective Licensed Products co-exclusively with MKG in the
Territory only as provided in Section 3.2.
3.1.5. Third Party Patent Rights. In the event that the Joint
Steering Committee determines that a license under a Third Party patent or other
intellectual property right is necessary for the use, development, manufacture,
distribution for sale or sale of the Licensed Compound, any Second Generation
Compounds, any Replacement Compound, any Outside Compound or a Licensed Product,
the costs of obtaining such license will be treated as Development Costs if such
costs are incurred during the Development Phase and shall be treated as Costs of
Goods Sold if incurred thereafter.
9
<PAGE>
3.2. Manufacturing and Supply of Licensed Compounds and Licensed
Products.
3.2.1. Manufacture and Supply by Metasyn During the
Development Phase. Metasyn shall be responsible for (i) manufacturing the
Licensed Compound and the corresponding Licensed Product at the required quality
and in quantities sufficient for preclinical and clinical development of the
Licensed Compound and the corresponding Licensed Product during the Development
Phase through completion of Phase II trials and (ii) providing documentation to
MKG regarding the manufacture of the Licensed Compound and the corresponding
Licensed Product which is needed to register the Licensed Product in the
Territory. The Joint Steering Committee shall determine which of the Parties
shall be responsible for performing the obligations described in clauses (i) and
(ii) of the immediately preceding sentence with respect to any Second Generation
Compound, the Replacement Compound(s) and any Outside Compounds and the
corresponding Licensed Products.
3.2.2. Manufacture and Supply by MKG. Promptly after execution
of this Agreement, MKG shall begin making preparations necessary to ensure that
sufficient quantities of the Licensed Compound are available to conduct Phase
III trials and complete validation of the manufacturing process of the Licensed
Products on schedule. Upon completion of Phase II trials of the Licensed
Compound and any Second Generation Compounds, any Replacement Compounds or any
Outside Compounds, as applicable, MKG shall become responsible for (i)
manufacturing the respective Licensed Products at the required quality and in
quantities sufficient for development of the Licensed Compound and any Second
Generation Compounds, Replacement Compounds or Outside Compounds, as applicable,
after completion of Phase II trials thereof, including validation batches, and
for commercial sale of the respective Licensed Products in the Territory, (ii)
providing documentation, other than that provided by Metasyn, regarding the
manufacture of the respective Licensed Products needed to register such Licensed
Products in the Territory and to sell the respective Licensed Products under the
relevant governmental approval in the Territory and (iii) arranging for
pre-approval and/or routine establishment inspections with respect to the
respective Licensed Products made by MKG. In the event that MKG designates a
Third Party manufacturer, it shall enter into a reasonable confidentiality
agreement with such manufacturer, such agreement to be subject to the approval
of the Joint Steering Committee.
3.2.3. Assistance by Metasyn to MKG for Manufacturing License.
Metasyn shall disclose to MKG, free of charge, all information related to the
manufacture of any Licensed Products, and Metasyn will cooperate with MKG to
provide such technical assistance and characterization work as may be necessary
in connection with the manufacture and production of any Licensed Products in
the Territory. Such assistance and any out-of-pocket costs incurred by Metasyn
personnel if required to travel away from Metasyn's premises shall be treated as
Development Costs. Metasyn will provide such assistance to MKG as is consistent
with the capacity and capabilities of Metasyn.
3.2.4. Right to Manufacture for the Japanese. Subject to any
applicable requirements of the [ ]* possibly covering the Licensed Compound,
Metasyn agrees that MKG will have the right to manufacture, at a price equal to
[ ]*, the Licensed Compound and/or corresponding
*Confidential information omitted and filed with the Commission.
10
<PAGE>
Licensed Products for Metasyn for use by Metasyn's Japanese licensee. In the
event that MKG is not permitted to do so under the [ ]*, MKG shall promptly
notify Metasyn and the Parties shall make every good faith effort necessary to
make any changes in the rights or structure of the transaction outlined herein
as they shall mutually deem appropriate to allow MKG to exercise the right to
manufacture the Licensed Compound and corresponding Licensed Products for
Metasyn for use by Metasyn's Japanese licensee. If Metasyn and MKG are unable or
willing to cure such disqualification or such disqualification is not, in the
first instance, curable, then Metasyn shall be free to make other arrangements
for supplying such licensee.
3.3. No Other Technology Rights. Except as otherwise expressly provided
in this Agreement, under no circumstances shall a Party hereto, as a result of
this Agreement, obtain any ownership interest in or other right to any
technology, know-how, patents, pending patent applications, products or
biological materials of the other Party, including items owned. controlled or
developed by the other Party, or transferred by the other Party to said Party,
at any time pursuant to this Agreement.
ARTICLE 4. THE DEVELOPMENT PROGRAM
4.1. Conduct of the Development Program.
4.1.1. General. During the Development Phase with respect to
any compound, Metasyn and MKG will use their respective best efforts to develop
the Licensed Compound, Replacement Compounds, Second Generation Compounds,
Outside Compounds (as appropriate) and the corresponding Licensed Products. The
Development Program shall be supervised by the Joint Steering Committee to be
formed pursuant to Article 7 hereof. The Joint Steering Committee will work with
designated individuals at Metasyn and MKG to coordinate the conduct of the
Development Program. The Development Program shall consist of the preparation
and filing of regulatory submissions and the clinical development of the
Licensed Compound and the Licensed Products until final marketing approval for a
compound and the corresponding Licensed Products is obtained in all of the Major
Market Countries for use in the Field. The Joint Steering Committee will
coordinate non-clinical and clinical testing of a compound and the corresponding
Licensed Products and prepare regulatory filings for a compound and the
corresponding Licensed Products.
4.1.2. Annual Development Plan. The Development Program shall
be conducted under an annual research and development plan (the "Annual
Development Plan") which shall reasonably describe the work to be pursued by the
Joint Steering Committee and to be conducted by Metasyn and MKG with respect to
the development of the Licensed Compound, any Second Generation Compounds, the
Replacement Compounds and any Outside Compounds and the corresponding Licensed
Products. The Annual Development Plan shall contain a budget including estimates
of the aggregate Development Costs of both Parties to be incurred during the
applicable year. The Annual Development Plan will incorporate the Base Case
Scenario Model (as the model may have been amended by the Joint Steering
Committee in accordance with Section 6.1 hereof and as it may be applicable).
The first Annual Development Plan describing the expenses and activities
anticipated for the period between the Effective Date and December
*Confidential information omitted and filed with the Commission.
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31, 1996 is attached hereto as Exhibit F. Thereafter, the Annual Development
Plan will be prepared by the Joint Steering Committee no later than sixty (60)
days prior to the beginning of each calendar year. Any changes to any Annual
Development Plan shall be subject to approval by the Joint Steering Committee.
4.1.3. Selection of Replacement Compound. If the Joint
Steering Committee decides to halt development of the Licensed Compound for
safety or any other reasons, it shall have the right to evaluate and select for
development any one or more other Metasyn Blood Pool Magnetic Resonance Agents
as the Replacement Compound(s). The Replacement Compound(s) will be a substitute
for the Licensed Compound for use in the Field. In such event, all provisions of
this Agreement applicable to the Licensed Compound shall be deemed to refer to
the selected Replacement Compound(s).
4.1.4. Selection of Second Generation Compounds or Outside
Compounds for Development. If the Joint Steering Committee determines that any
Metasyn or MKG Blood Pool Magnetic Resonance Agent has been shown to have
significant performance advantages (with respect to marketing, technical or
other requirements) over any compound then in development (including, without
limitation, the Licensed Compound) then the Joint Steering Committee may
designate such compound a Second Generation Compound. At such time, such
compound will become part of the Development Program and the Joint Steering
Committee will amend the Annual Development Plan then in effect as appropriate
to cover such Second Generation Compound including new product objectives for
each of the Parties. If the Parties have acquired rights to any Outside Compound
and the Joint Steering Committee determines that such compound has been shown to
have significant performance advantages (with respect to marketing, technical or
other requirements) over any compound then in development (including, without
limitation, the Licensed Compound) then the Joint Steering Committee will amend
the Annual Development Plan then in effect as appropriate to cover such Outside
Compound including new product objectives for each of the Parties.
4.2. Product Objectives.
4.2.1. Metasyn Product Objectives. With respect to the
Licensed Compound, Metasyn agrees to diligently attempt to achieve the following
objectives:
(a) Phase I. Commence Phase I trials of the Licensed
Products by September 3, 1996 but in no event later
than March 1, 1997.
(b) Phase II. Commence Phase II trials of the Licensed
Products by [ ]* but in no event later
than [ ]*.
4.2.2. MKG Product Objectives. Subject to Metasyn's meeting
all of its product objectives set forth in Section 4.2.1 above, with respect to
the Licensed Compound MKG agrees to diligently attempt to achieve the following
requirements:
(a) Phase III. Commence Phase III trials of the Licensed
Products by [ ]* but in no event later
than [ ]*.
*Confidential information omitted and filed with the Commission.
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(b) NDA. File an NDA package for the Licensed Products
with the FDA, acceptable for review by the FDA, by
[ ]* but in no event later than [ ]*.
4.2.3. Extensions. If either Party is unable to achieve an
objective set forth in this Section 4.2 or in the Annual Development Plan on
time due to circumstances beyond its control, the other Party will not
unreasonably withhold consent to an extension of the time for achievement of the
objective. If either Party's failure to achieve an objective on time is due to
the other Party's failure to perform its obligations under this Article 4 or the
Annual Development Plan, the time for performance will be appropriately
extended.
4.3. Attendance at Regulatory Meetings. MKG or Metasyn, as the case may
be, will provide the other Party with reasonable prior notice of all meetings
between its representatives and regulatory authorities regarding marketing
approval of the Licensed Products. The recipient of such notice shall have the
right to have a representative present at all meetings. Each of MKG and Metasyn
will furnish, at the other's request, a representative to attend regulatory
meetings of the other regarding marketing approval of the Licensed Products.
4.4. Development Information; Reports. During the Development Phase and
thereafter, each Party shall keep the other informed as to its progress related
to the Licensed Compound, Second Generation Compounds, Replacement Compounds and
any Outside Compounds and their respective corresponding Licensed Products
developed or acquired by either Party or its Affiliates, licensees or
sublicensees, including but not limited to any information on adverse reactions
and copies of all preclinical or clinical studies or tests performed by such
Party. In a timely manner during the Development Phase and thereafter, each
Party shall provide the other Party with a reasonably detailed report which
shall describe the reporting Party's progress with respect to its efforts under
this Agreement. Each Party will provide the other with a copy of a master
dossier as the basis for all submissions to be made by such Party to regulatory
authorities on or prior to the date of such submissions as well as promptly
provide the results of all studies and trials conducted by or under the
supervision of such Party with respect to the Licensed Compound, Second
Generation Compounds, Replacement Compounds and any Outside Compounds and/or the
corresponding Licensed Products. Each Party will have the right to use all such
information received from the other Party, subject to applicable confidentiality
restrictions. Within thirty (30) days after the end of each calendar quarter
during the Development Phase with respect to the Licensed Compound, each Party
shall provide the other Party with a reasonably detailed report which shall
describe the reporting Party's progress with respect to its product objectives
set forth under Section 4.2 and the expenses incurred by such Party during the
preceding calendar quarter.
4.5. Availability of Employees. Each Party agrees to make its employees
and non-employee consultants reasonably available at their respective places of
employment to consult with the other Party on issues arising during the
Development Phase and in connection with any request from any regulatory agency,
including regulatory, scientific, technical and clinical testing issues.
*Confidential information omitted and filed with the Commission.
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4.6. Visit of Facilities. Representatives of Metasyn and MKG may, with
the other Party's prior approval, which approval shall not be unreasonably
withheld or delayed, visit the sites of any clinical trials or other experiments
being conducted by such other Party in connection with the Development Program
and, subject to any necessary approvals of the relevant Third Party,
manufacturing sites used for the Licensed Compound, any Second Generation
Compound, Replacement Compound or Outside Compound and the corresponding
Licensed Products. If requested by the other Party, Metasyn and MKG shall cause
appropriate individuals working thereon to be available for meetings at the
location of the facilities where such individuals are employed at times
reasonably convenient to the Party responding to such request.
4.7. Core Laboratory. During Phase I and Phase II trials of the
Licensed Products, Metasyn shall serve as the core laboratory for quantitative
as well as blind-read analysis. The Parties shall thereafter reach agreement on
which of the Parties will serve as the core laboratory during Phase III trials
of the Licensed Products derived from the Licensed Compound.
ARTICLE 5. RESEARCH PROGRAM
5.1. Additional Research Programs. In the event that either Party,
during the term of this Agreement, has what it believes is a valid concept for
discovering potential Second Generation Compounds that are reasonably likely to
have successful commercial application, such Party shall promptly report such
concept to the Joint Steering Committee together with a recommended specific
research program pursuant to which any such concept could be added to the
Program. Such recommendation shall include a proposed research plan and budget.
The Joint Steering Committee shall make a determination with respect to each
such recommendation as soon as practicable after such recommendation is made but
in no event later than ninety (90) days. In the event that the Joint Steering
Party fails or declines to approve any recommended research program as an
addition to the Program within the aforementioned ninety (90)-day period (or
such longer period as the Parties may mutually agree), then the Party which
recommended such research program shall be free to develop, market and sell any
compounds developed in such research program itself or with a Third Party, free
of any restrictions under this Agreement, including but not limited to those set
forth in Article 2 hereof.
5.2. Conduct of Research Program.
5.2.1. General. The Joint Steering Committee will determine
the allocation of responsibility between the Parties for the conduct of each
approved Research Program. Each of the Parties will attempt to achieve
efficiently and expeditiously the objectives assigned to it by the Joint
Steering Committee as described in the Annual Research Plan (defined below) and
will proceed diligently with the work described therein by using its good faith
efforts.
5.2.2. Annual Research Plan. Each approved Research Program
shall be conducted under an Annual Research Plan that describes the work to be
pursued by the Parties during each calendar year. The first Annual Research Plan
describing the expenses and activities anticipated for the then-current calendar
year shall be developed by the Joint Steering Committee no later than sixty (60)
days after the first Research Program has been approved. Thereafter, the
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<PAGE>
Annual Research Plan (if there is any active and approved Research Program) will
be prepared by the Joint Steering Committee no later than sixty (60) days prior
to the start of each calendar year. The Annual Research Plan shall be amended to
include any additional Research Programs approved by the Joint Steering
Committee within sixty (60) days of such approval. Any amendments to the Annual
Research Plan shall be subject to approval by the Joint Steering Committee.
5.2.3. Data. Each of the Parties shall maintain records in
sufficient detail and in good scientific manner appropriate for patent purposes
and as will properly reflect all work done and results achieved in the
performance of the Research Program (including all data in the form required to
be maintained under any applicable governmental regulations). Such records shall
include books, records, reports, research notes, charts, graphs, comments,
computations, analyses, recordings, photographs, computer programs and
documentation thereof, computer information storage means, samples of materials
and other graphic or written data generated in connection with the Research
Program. Each Party shall provide the other Party the right to inspect such
records, and shall provide copies of all requested records, to the extent
reasonably required for the performance of the other Party's obligations under
this Agreement; provided, however, that each Party shall maintain such records
and the information of the other Party contained therein in confidence in
accordance with Article 10 below and shall not use such records or information
except to the extent otherwise permitted by this Agreement.
5.2.4. Sources of Compounds. Either Party may, subject to the
prior approval of the Joint Steering Committee, screen compounds obtained from
any Third Party with a view to identifying and developing Second Generation
Compounds, so long as such Third Party would not thereby obtain rights to
commercialize any products in the Field.
5.2.5. Semi-Annual Reports. Within thirty (30) days following
the end of each six (6)-month period of each calendar year, each Party shall
provide to the members of the Joint Steering Committee a written report which
shall summarize in reasonable detail the work it has performed under the Annual
Research Plan during the preceding six (6)-month period.
ARTICLE 6. MARKETING
6.1. Sales and Marketing Plan. The Joint Steering Committee shall
develop an annual sales and marketing plan (an "Annual Marketing Plan") which
shall reasonably describe the sales and marketing activities to be conducted by
MKG with regard to the Licensed Products and which shall include an annual
budget. The Annual Marketing Plan will incorporate the Base Case Scenario Model
(as the Model may have been amended by the Joint Steering Committee in
accordance with this Section and as it may be applicable). The Joint Steering
Committee shall develop the first Annual Marketing Plan at least thirty (30)
days prior to the date upon which approval of the first NDA in the Territory is
expected by the Joint Steering Committee to occur, which plan will cover the
remainder of the calendar year in which such NDA approval occurs. Thereafter,
the Annual Marketing Plan shall be prepared no later than thirty (30) days prior
to the beginning of each calendar year in which sales and marketing activities
will occur or are expected to occur. Any changes to the Annual Marketing Plan
shall be subject to the reasonable
15
<PAGE>
approval of the Joint Steering Committee and, in particular, the Joint Steering
Committee may amend the Base Case Scenario Model from time to time as necessary
to reflect market conditions; provided that neither Party's representatives
shall be required to approve any amendment to the Annual Marketing Plan or the
Base Case Scenario Model not based on actual or anticipated circumstances in the
marketplace. The Joint Steering Committee shall amend the Annual Marketing Plan
to reflect the selection of any Replacement Compound and/or Second Generation
Compounds and/or Outside Compounds.
6.2. Exclusive Right. MKG shall have the exclusive right to market and
distribute (by itself or through others) the Licensed Products in the Territory
subject to Metasyn's right to co- promote set forth in Section 6.6 below.
6.3. Diligence. MKG agrees to diligently seek to obtain approval to
commence commercial sale of the Licensed Products in each Major Market Country,
and, following such approval, MKG agrees to use diligent efforts to market the
Licensed Products in each such country consistent with those efforts used for
other MKG products with similar market potential; provided, however, that in any
event MKG's efforts shall be not less than those contemplated by the Base Case
Scenario Model, as it may be amended pursuant to Section 6.1 hereof. MKG also
agrees to use diligent efforts to obtain approval to market the Licensed
Products in all other countries in the Territory where MKG sells other products
and where a commercially viable market for the Licensed Products exists, and to
market the Licensed Products in such countries using efforts consistent with
those efforts used in marketing other MKG products with similar commercial
potential.
6.4. Labeling and Packaging. Subject to applicable laws and
regulations, the labelling and packaging for the Licensed Products shall bear
Metasyn's name, in a form to be mutually agreed upon by the Parties, in addition
to MKG's name and trademark.
6.5. Participation by Metasyn Employees in Field Sales Activities. MKG
shall permit Metasyn technical employees (but not sales and marketing personnel)
to participate with MKG's field sales force in field sales activities as
technical specialists for the Licensed Products. Such Metasyn employees shall be
under the direction and management of MKG's field sales management. The direct
and indirect costs specifically allocable to Metasyn employees who participated
in MKG's field sales activities pursuant to this Section 6.5 for any year or
portion thereof that such employees so participate shall be included in Sales
and Marketing Costs. The number of such Metasyn technical employees will,
subject to the approval of the Joint Steering Committee, be up to twenty-five
(25).
6.6. Co-Promotion Option. If, during any twelve-month period ending
before the [ ]* the First Commercial Sale of any Licensed Product, Net Sales
exceed [ ]*, then Metasyn shall have no right to co-promote Licensed Products in
the Territory at any time hereunder. However, if, after the [ ]* the First
Commercial Sale of the Licensed Products in the Territory and subject to Metasyn
obtaining any necessary licenses or consents, Net Sales have not exceeded [ ]*
in any twelve-month period ending prior to such anniversary, then Metasyn shall
have the right, but not the obligation, to co-promote the Licensed Products
alongside MKG in the
*Confidential information omitted and filed with the Commission.
16
<PAGE>
Territory, in which case Metasyn will have the right to purchase Licensed
Products from MKG at [ ]*, and to resell the Licensed Products under Metasyn's
trademark. Such co-promotion may be accomplished by Metasyn only through the use
of its own personnel and not with any assistance of any kind from any agent or
distributor. In such event, (i) MKG shall, to the extent legally permissible,
grant Metasyn a non-exclusive right and license to use any technology, know-how
or other intellectual property rights developed by MKG or its Third Party
manufacturer, if any, that is necessary or useful in the manufacture of such
Licensed Product, (ii) MKG shall provide Metasyn with reasonable assistance as
may be requested from time to time by Metasyn [ ]* and (iii) each Party shall
retain all profits from its sale of such Licensed Products.
ARTICLE 7. MANAGEMENT OF THE COLLABORATION
7.1. Joint Steering Committee.
7.1.1. General. A steering committee comprised of three (3)
named representatives of MKG and three (3) named representatives of Metasyn (the
"Joint Steering Committee") shall be appointed and shall meet as needed but not
less than once each calendar quarter. Such meetings shall be at times and places
or in such form as the members of the Joint Steering Committee shall agree. At
such meetings, the Joint Steering Committee will discuss and oversee the
Development Program (including but not limited to, the clinical testing of the
Licensed Compound, Outside Compounds, Second Generation Compounds and the
Licensed Products and the preparation of a core registration package for the
Licensed Products) and the marketing of the Licensed Products in the Territory.
The Joint Steering Committee will allocate responsibilities between the Parties
in such a manner as to minimize the time to market for the Licensed Products
taking into consideration the objectives set forth in Section 4.2 hereof. In the
event that at any time the Parties believe that either one or both of them is
required to obtain licenses or rights to patents or intellectual property not
included in the Patent Rights, the Metasyn Technology or the [ ]* during the
term of this Agreement, the cost of obtaining such licenses or rights and the
necessity therefor will be determined by the Joint Steering Committee and, if
the Joint Steering Committee determines that obtaining such licenses or rights
is appropriate, the costs therefor shall be treated as Development Costs.
A Party may change one or more of its representatives to the Joint
Steering Committee at any time. Members of the Joint Steering Committee may be
represented at any meeting by another member of the Joint Steering Committee, or
by an authorized designee. Any approval, determination or other action agreed to
by all members of the Joint Steering Committee or their authorized designees
present at the relevant Joint Steering Committee meeting shall be the approval,
determination or other action of the Joint Steering Committee, provided at least
two representatives of each Party are present at such meeting.
7.1.2. Chair. The Joint Steering Committee shall initially be
chaired by a Metasyn representative to the committee. The Metasyn representative
shall serve as the Chair of the Joint Steering Committee through and including
December 31, 1997. On January 1, 1998, a MKG representative shall become the
Chair of the Joint Steering Committee. Thereafter, the
*Confidential information omitted and filed with the Commission.
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Chair of the Joint Steering Committee shall rotate between representatives of
MKG and Metasyn, with each Chair serving for one calendar year.
7.1.3. Minutes. The Joint Steering Committee shall keep
accurate minutes of its deliberations which record all proposed decisions and
all actions recommended or taken. The Chair shall be responsible for the
preparation of draft minutes. Draft minutes shall be sent to all members of the
Joint Steering Committee within ten (10) working days after each meeting. The
draft minutes shall be edited by the Chair based on comments from the members of
the Joint Steering Committee and shall be distributed to the members prior to
the next meeting of the Joint Steering Committee for review and final approval
at such meeting. All records of the Joint Steering Committee shall at all times
be available to both Parties.
7.2. Disagreements. All disagreements within the Joint Steering
Committee shall be subject to the following:
(a) The representatives to the committee will negotiate in good faith
for a period of not more than sixty (60) days to attempt to resolve the dispute,
(b) If the representatives to the Committee are unable to resolve the
dispute, then the representatives of the committee shall promptly present the
disagreement to the Chief Executive Officer of Metasyn and the Chief Operating
Officer of MKG or their respective designees,
(c) Such executives shall meet or discuss in a telephone or video
conference each Party's view and explain the basis for such disagreement,
(d) If such executives cannot promptly resolve such disagreement within
sixty (60) days after such issue has been referred to them, then the matter
shall be referred to arbitration as described in Section 14.6.2 hereof.
ARTICLE 8. PAYMENTS
8.1. Fee. Upon approval of this Agreement by the Mallinckrodt Group
Inc. Board of Directors, MKG will pay Metasyn six million dollars ($6,000,000)
in United States dollars by wire transfer as the license fee for the license
rights granted to MKG pursuant to Section 3.1.1 above.
8.2. Milestone Payment. MKG shall make a two million dollar
($2,000,000) milestone payment to Metasyn (i) within ten (10) days business days
following the [ ]* or (ii) on [ ]*, whichever is earlier. The payment to be made
pursuant to this Section 8.2 shall be made in the United States dollars and
shall be non-refundable.
*Confidential information omitted and filed with the Commission.
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8.3. Funding of the Development Program.
8.3.1. Sharing of Development Costs. [ ]* the Parties shall
bear [ ]* of the Development Costs incurred by either Party after the Effective
Date as well as [ ]* of the aggregate amount of all advances made by Metasyn
prior to the Effective Date with respect to the Phase I trial of the Licensed
Compound; provided, however, that with respect to any compound included in the
Program as to which DRL has a license or obtains a license for Japan prior to
the date of the IND filing with the FDA for such compound, (i) MKG shall bear
[ ]* of the Development Costs for such compound incurred on and after the IND
filing date for such compound and Metasyn and/or DRL shall bear the balance of
such costs, as such costs may be apportioned in the agreement between Metasyn
and DRL, and (ii) Metasyn shall reimburse MKG for [ ]* of the Development Costs
for such compound incurred prior to the IND filing date.
8.3.2. Previously Incurred Production Costs. As Licensed
Products are consumed in Phase I and Phase II trials, the Direct Costs incurred
by Metasyn for the manufacture of the inventory of the Licensed Products in
existence as of the Effective Date will be included in the Development Costs and
will be shared in accordance with Section 8.3.1 above. "Direct Cost" for
purposes of the preceding sentence shall mean (i) Metasyn's cost of materials,
including costs payable by Metasyn to Third Parties relating to production of
the Licensed Compound, any Replacement Compound, Second Generation Compound or
Outside Compound and/or their corresponding Licensed Products and (ii) Metasyn's
direct labor costs incurred in the manufacture of the Licensed Compound, any
Replacement Compound, Second Generation Compound or Outside Compound and/or
their corresponding Licensed Products; provided that "Direct Cost" shall not
include any portion of pre-clinical cost incurred by Metasyn prior to the
Effective Date which will be recovered as a consequence of the payment by MKG of
the license fee payable by MKG in accordance with Section 8.1 above.
8.3.3. Advances. In the event that the Development Costs to be
initially borne by Metasyn under any approved Annual Development Plan are
greater than Metasyn's assigned percentage of the aggregate Development Costs
under such budget as determined pursuant to Section 8.3.1 above, MKG agrees to
advance to Metasyn within thirty (30) days after the beginning of each calendar
quarter an amount equal to the difference between Metasyn's estimated initial
share of the total Development Costs and Metasyn's assigned percentage of such
aggregate Development Costs as determined pursuant to Section 8.3.1 hereof for
such calendar quarter.
8.3.4. Annual Reconciliation. Within forty-five (45) days of
the close of each calendar year, Metasyn will provide to MKG a report setting
forth Metasyn's actual Development Costs for such year. MKG will, within one
hundred and twenty (120) days after the end of each calendar year, provide
Metasyn with a written report setting forth the total actual Development Costs
of the Parties for such calendar year, and reconciling the amounts of
Development Costs paid by each Party during such year (including any advance
paid by MKG to Metasyn) with the amounts due from each Party. Together with said
report, MKG will either make a payment to Metasyn or issue to Metasyn an invoice
for any balance due.
*Confidential information omitted and filed with the Commission.
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8.3.5. Notwithstanding any other provision hereof, it is
understood that, without prior written consent, neither Party shall be liable to
pay an amount in Development Costs hereunder with respect to the Licensed
Compound and any Replacement Compounds and their corresponding Licensed Products
of more than [ ]*.
8.4. Funding of the Research Program.
8.4.1. Sharing of Research Costs. [ ]* the Parties shall
bear [ ]* of the Research Costs with respect to any approved Research Program
incurred after the Effective Date; provided, however, that with respect to any
compound included in any approved Research Program as to which DRL obtains a
license for Japan prior to the date of the IND filing with the FDA for such
compound, (i) MKG shall bear [ ]* of the Research Costs for such compound
incurred on and after the IND filing date for such compound and Metasyn and/or
DRL will bear the balance of such costs, as such costs may be apportioned
between Metasyn and DRL in the agreement between Metasyn and DRL, and Metasyn
shall reimburse MKG for [ ]* of the Research Costs for such compound incurred
prior to the IND filing date. MKG or Metasyn, as the case may be, will reimburse
the Party who recommended an approved Research Program to the Joint Steering
Committee for the appropriate percentage of the Research Costs incurred by such
Party (prior to approval) with respect to such approved Research Program within
thirty (30) days of such approval.
8.4.2. Advances. MKG agrees to advance to Metasyn within
thirty (30) days after the beginning of each calendar quarter an amount equal to
MKG's assigned percentage of the total Research Costs for such calendar quarter.
8.4.3. Annual Reconciliation. Within forty-five (45) days of
the close of each calendar year, Metasyn will provide to MKG a report setting
forth Metasyn's actual Research Costs for such year. MKG will, within one
hundred and twenty (120) days after the end of each calendar year, provide
Metasyn with a written report setting forth the total actual Research Costs of
the Parties for such calendar year, and reconciling the amounts of Research
Costs paid by each Party during such year (including any advance paid by MKG to
Metasyn) with the amounts due from each Party. Together with said report,
Metasyn will either make a payment to MKG or issue to MKG an invoice for any
balance due.
8.5. Cash Flow Provisions. Metasyn shall use its reasonable efforts to
maintain an amount of cash and cash equivalents sufficient to cover its
anticipated operating expenses, including its estimated amount of the
Development Costs as set forth in the Annual Development Plan for such year and
Research Costs as set forth in the Annual Research Plan of such year, if any. If
at any time Metasyn's cash reserves are not sufficient to cover its anticipated
operating expenses, [ ]* shall, [ ]* the Development Costs and Research Costs,
if any, [ ]*, but not later than thirty (30) days after of the First Commercial
Sale of the first Licensed Product in the Territory. [ ]* from time to time
pursuant to this Section 8.5 provided that each such request shall
*Confidential information omitted and filed with the Commission.
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be made no earlier than ninety (90) days [ ]* for which such request is being
made. MKG [ ]* no later than twenty (20) days [ ]*.
8.6. Share of Operating Margins. Commencing upon the First Commercial
Sale of a Licensed Product, MKG agrees to pay Metasyn [ ]* of its Operating
Margin payable quarterly in United States dollars (in accordance with such
principles and procedures relative to exchange rates as the Parties shall agree)
within thirty (30) days of the close of each calendar quarter (each such payment
hereinafter referred to as a "Profit Payment"), subject to adjustment in
accordance with the audit provisions set forth in Section 8.8 below. It is also
the Parties intent that, should there be no distributable Operating Margin in
any given quarter but instead losses for that quarter, such losses shall be
borne solely by MKG.
8.7. Operating Margin Reports. During the term of this Agreement
following the First Commercial Sale of the Licensed Products in the Territory,
MKG shall within sixty (60) days after each calendar quarter furnish to Metasyn
a written quarterly report showing: (i) the gross sales of the Licensed Products
sold by MKG, its Affiliates, and its sublicensees during the reporting period
and the calculation of Net Sales from such gross sales; (ii) any other revenues
relating to the Licensed Products, including but not limited to royalties and
any other payments from sublicensees; (iii) the Costs of Goods Sold for the
reporting period; (iv) the Sales and Marketing Costs for the reporting period;
(v) the exchange rates used in determining the amount of United States dollars;
and (vi) the Profit Payment payable for such period. MKG shall keep complete and
accurate records in sufficient detail to properly reflect all gross sales, Net
Sales, Costs of Goods Sold and Sales and Marketing Costs, and to enable the
Profit Payments payable hereunder to be determined.
8.8. Audits by Metasyn. Upon the written request of Metasyn, MKG shall
permit an independent public accountant selected by Metasyn and acceptable to
MKG, which acceptance shall not be unreasonably withheld or delayed, to have
access during normal business hours to such records of MKG as may be reasonably
necessary to verify the accuracy of the reports of Development Costs and
Research Costs made by MKG pursuant to Sections 8.3.4 and 8.4.3 hereto,
respectively, and the Operating Margin reports described in Section 8.7 hereof,
in respect of any fiscal year ending not more than twelve (12) months prior to
the date of such request. All such verifications shall be conducted at Metasyn's
expense and not more than once in each calendar year. In the event such Metasyn
representative concludes that additional Profit Payments were owed to Metasyn
during such period, the additional Profit Payments, plus accrued interest at the
Applicable Interest Rate, shall be paid by MKG within thirty (30) days of the
date Metasyn delivers to MKG such representative's written report so concluding,
unless MKG shall have a good faith dispute as to the conclusions set forth in
such written report, in which case MKG shall provide written notice to Metasyn
within such thirty (30) day period of the nature of its disagreement with such
written report. The Parties shall thereafter, for a period of sixty (60) days,
attempt in good faith to resolve such dispute and if they are unable to do so
then the matter will be submitted to arbitration in accordance with Section
14.6.2. The fees charged by such representative shall be paid by Metasyn unless
the audit discloses that the Profit Payments payable by MKG for the audited
period are incorrect by more than ten percent (10%), in which case MKG shall pay
the reasonable fees and expenses charged by such representative. MKG
*Confidential information omitted and filed with the Commission.
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shall include in each Third Party sublicense granted by it pursuant to this
Agreement a provision requiring the sublicensee to make reports to MKG, to keep
and maintain records of sales made pursuant to such sublicense and to grant
access to such records by Metasyn's representatives to the same extent required
of MKG under this Agreement. Metasyn agrees that all information subject to
review under this Section 8.8 or under any sublicense agreement is confidential
and that it shall cause its representatives to retain all such information in
confidence in accordance with the requirements of Article 10 below.
8.9. Audits by MKG. Upon the written request of MKG, Metasyn shall
permit an independent public accountant selected by MKG and acceptable to
Metasyn, which acceptance shall not be unreasonably withheld or delayed, to have
access during normal business hours to such records of Metasyn as may be
reasonably necessary to verify Metasyn's Direct Costs under Section 8.3.2 hereof
and the reports of Development Costs and Research Costs made by Metasyn pursuant
to Sections 8.3.4 and 8.4.3 hereof, respectively, in respect of any fiscal year
ending not more than twelve (12) months prior to the date of such request. All
such verifications shall be conducted at MKG's expense and not more than once in
each calendar year. In the event that MKG's representative concludes that
adjustments should be made in MKG's favor with respect to such period, then any
appropriate payments shall be paid by Metasyn within thirty (30) days of the
date MKG delivers to Metasyn such representative's written report so concluding,
unless Metasyn shall have a good faith dispute as to the conclusions set forth
in such written report, in which case Metasyn shall provide written notice to
MKG within such thirty (30) day period of the nature of its disagreement with
such written report. The Parties shall thereafter, for a period of sixty (60)
days, attempt in good faith to resolve such dispute and if they are unable to do
so then the matter will be submitted to arbitration in accordance with Section
14.6.2 hereof. The fees charged by such representative shall be paid by MKG
unless the audit discloses that adjustments for the period are greater than ten
percent (10%), in which case Metasyn shall pay the reasonable fees and expenses
charged by such representative. MKG agrees that all information subject to
review under this Section 8.9 is confidential and that it shall cause its
representatives to retain all such information in confidence in accordance with
the requirements of Article 10 below.
ARTICLE 9. INTELLECTUAL PROPERTY
9.1. Filing, Prosecution and Maintenance of MGH Patent Rights.
9.1.1. Responsibility and Costs. Metasyn shall, in
coordination with MGH, be responsible for the preparation, filing, prosecution
and maintenance of all patent applications and patents included in MGH Patent
Rights in the Territory, keeping MKG informed. All costs ("Costs") incurred by
Metasyn for the preparation, filing, prosecution and maintenance of all patents
and patent applications included in MGH Patent Rights in the Territory shall be
the responsibility of Metasyn.
9.1.2. Abandonment. If MGH notifies Metasyn of its intention
to abandon the prosecution of any patent applications under the MGH Patent
Rights or of its intention to refrain from making any payment or taking any
other action necessary to obtain or maintain a patent
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under the MGH Patent Rights, Metasyn will thereafter, at its expense, take all
action necessary or appropriate to prosecute and/or maintain such MGH Patent
Rights in the Territory.
9.1.3. Notice of Infringement. MKG shall inform Metasyn
promptly in writing of any alleged infringement of MGH Patent Rights licensed
hereunder to MKG in the Territory by a Third Party of which it shall have
knowledge and provide any available evidence of such infringement to Metasyn and
Metasyn, in turn, shall promptly inform MGH of such alleged infringement of the
MGH Patent Rights.
9.1.4. Prosecution by MGH or Metasyn of MGH Patent Rights.
Under the MGH License, MGH has the first right to prosecute at its own expense
any infringements in the Territory of MGH Patent Rights in the Field. In the
event that MGH chooses not to prosecute such infringement of the MGH Patent
Rights in the Territory or, within six (6) months of receiving notice of such
infringement, is unsuccessful in causing the alleged infringer to desist and
shall not have brought or is not diligently enforcing an infringement action,
Metasyn has the right to bring such suit at Metasyn's expense. In such event,
Metasyn will so inform the Joint Steering Committee and it shall be the
responsibility of the Joint Steering Committee to determine which Party shall
bring such suit.
9.1.5. Prosecution Under the Direction of the Joint Steering
Committee. In the event that the Joint Steering Committee makes a determination
as to the appropriate Party to prosecute any infringement of which it is
informed pursuant to Section 9.1.4 above, the prosecution will be conducted
using counsel approved by the Joint Steering Committee, and no settlement,
consent judgment or other voluntary final disposition of the suit may be entered
into by either of the parties without the consent of the Joint Steering
Committee, which consent shall not unreasonably be withheld or delayed. In such
event, the costs of such prosecution will be considered Development Costs if
incurred during the Development Phase of any Licensed Product and Costs of Goods
Sold if incurred thereafter. Any recoveries will, after sharing with MGH as
provided in the MGH License, be treated as Net Sales. The Joint Steering
Committee will determine which Party will prosecute said infringement unless
both Parties agree it is in their best interest hereunder not to prosecute such
action.
9.1.6. Declaratory Actions. In the event that a declaratory
judgment action alleging invalidity or non-infringement of any of the MGH Patent
Rights in the Territory shall be brought against either Party, the Party against
which such action is brought shall notify the other Party and MGH in writing,
and the Parties shall consult concerning the action to be taken. MGH, at its
option, shall have the right within thirty (30) days after commencement of such
action to intervene and take over the sole defense of the action at its expense.
If MGH does not exercise the said option, the Parties shall have the right,
which they shall exercise, within sixty (60) days after commencement of such
action, to intervene, take over and duly prosecute the sole defense of the
action. No settlement, consent judgment or other voluntary final disposition of
the action may be entered into by the Parties without the consent of the Joint
Steering Committee. The costs of such defense will be considered Development
Costs if incurred during the Development Phase of any Licensed Product and Costs
of Goods Sold if incurred thereafter.
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9.2. Filing, Prosecution and Maintenance of Metasyn Patent Rights.
9.2.1. Prosecution and Maintenance. Metasyn shall be
responsible for maintenance of the Metasyn Patent Rights in the Territory in its
own name and at its own expense, keeping MKG informed.
9.2.2. Abandonment; Failure to Pay. Metasyn agrees that it
will not abandon the prosecution of any patent applications included within the
Metasyn Patent Rights nor shall it fall to make any payment or fail to take any
other action necessary to maintain a patent under the Metasyn Patent Rights.
9.2.3. Infringement by Others; Prosecution Under the Direction
of the Joint Steering Committee. Metasyn and MKG shall each promptly notify the
other in writing of any alleged or threatened infringement of patents or patent
applications included in the Metasyn Patent Rights licensed hereunder to MKG of
which they become aware, and the Joint Steering Committee shall consider the
action to be taken. In the event that the Joint Steering Committee elects to
prosecute the said infringement, it will determine which Party shall do so using
counsel approved by the Joint Steering Committee, and no settlement, consent
judgment or other voluntary final disposition of the suit may be entered into by
either of the Parties without the consent of the Joint Steering Committee. The
costs of such prosecution will be considered Development Costs if incurred
during the Development Phase of any Licensed Product and Costs of Goods Sold if
incurred thereafter. Any recoveries or damages derived from such action will be
treated as Net Sales.
9.2.4. Cooperation in Infringement Actions. In any
infringement suit instituted to enforce the Metasyn Patent Rights pursuant to
this Agreement, each Party shall cooperate in all respects and, to the extent
possible, have its employees testify when requested and make available relevant
records, papers, information, samples and the like.
9.2.5. Declaratory Actions. In the event that a declaratory
judgment action alleging invalidity or non-infringement of any of the Metasyn
Patent Rights in the Territory shall be brought against either Party, the Party
against which such action is brought shall notify the other Party in writing.
The Party against which such action is brought will defend said action using
counsel approved by the Joint Steering Committee, and no settlement, consent
judgment or other voluntary final disposition of the action may be entered into
by the Parties without the consent of the Joint Steering Committee. The costs of
such defense will be considered Development Costs if incurred during the
Development Phase of a Licensed Product and Costs of Goods Sold if incurred
thereafter.
9.3. Infringement Action Against Either Party. In the event that a suit
or action is brought against either Party alleging infringement of any Third
Party patent right as a result of the exercise of MKG's rights under Section
3.1, such Party shall so notify the Joint Steering Committee. The Joint Steering
Committee determine which Party will defend said action, using counsel approved
by the Joint Steering Committee, and no settlement, consent judgment or other
voluntary final disposition of the action may be entered into by either Party
without the consent of the Joint Steering Committee. The costs of such defense
will be considered Development
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Costs if incurred during the Development Phase of any Licensed Product and Costs
of Goods Sold if incurred thereafter.
9.4. MKG Patent Rights.
9.4.1. Maintenance of MKG Patent Rights. MKG shall be
responsible for maintenance of the MKG Patent Rights at its own expense, keeping
Metasyn informed. MKG further hereby covenants to maintain the [ ]* in effect
during the term of this Agreement.
9.4.2. Abandonment; Failure to Pay. MKG agrees that it will
not abandon the prosecution of any patent application included within the MKG
Patent Rights nor shall it fail to make any payment or fail to take any other
action necessary to maintain any patent under the MKG Patent Rights. Further,
MKG covenants to make all payments with respect to and to perform all
obligations under the [ ]* to the extent necessary to ensure that
the [ ]* and all of MKG's rights thereunder will remain in full
force and effect.
9.4.3. Infringement by Others; Prosecution Under the Direction
of the Joint Steering Committee. Metasyn and MKG shall each promptly notify the
other in writing of any alleged or threatened infringement of patents or patent
applications included in the MKG Patent Rights of which they become aware, and
the Joint Steering Committee shall consider the action to be taken. In the event
that the Joint Steering Committee elects to prosecute the said infringement, it
will determine which Party will do so using counsel approved by the Joint
Steering Committee, and no settlement, consent judgment or other voluntary final
disposition of the suit may be entered into by either of the Parties without the
consent of the Joint Steering Committee. The costs of such prosecution will be
considered Development Costs if incurred during the Development Phase of any
Licensed Product and Cost of Goods Sold if incurred thereafter. Any recoveries
or damages derived from such action will be treated as Net Sales.
9.4.4. Cooperation in Infringement Actions. In any
infringement suit instituted to enforce the MKG Patent Rights pursuant to this
Agreement, each Party shall cooperate in all respects and, to the extent
possible, have its employees testify when requested and make available relevant
records, papers, information, samples and the like.
9.4.5. Declaratory Actions. In the event that a declaratory
judgment action alleging invalidity or non-infringement of any of the MKG Patent
Rights in the Territory shall be brought against either Party, the Party against
which such action is brought shall notify the other Party in writing. The Joint
Steering Committee will determine which Party will defend said action using
counsel approved by the Joint Steering Committee, and no settlement, consent
judgment or other voluntary final disposition of the action may be entered into
by either of the Parties without the consent of the Joint Steering Committee.
The costs of such defense will be considered Development Costs if incurred
during the Development Phase of a Licensed Product and Costs of Goods Sold if
incurred thereafter.
9.5. Cooperation in Infringement Actions. In any infringement suit
either Party may institute to enforce or defend the Patent Rights or in which
either Party defend claims of
*Confidential information omitted and filed with the Commission.
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infringement of Third Party patents pursuant to this Agreement, the other Party
hereto shall, at the request of the Party initiating or defending such suit,
cooperate in all respects and, to the extent possible, have its employees
testify when requested and make available relevant records, papers, information,
samples and the like.
9.6. Cooperation. Each Party shall make available to the other Party
(or to the other Party's authorized attorneys, agents or representatives), its
employees, agents or consultants (at the former Party's reasonable expense) to
the extent reasonably necessary or appropriate to enable the appropriate Party
to file, prosecute and maintain patent applications and resulting patents as set
forth in this Article 9 for periods of time reasonably sufficient for such Party
to obtain the assistance it needs from such personnel. Where appropriate, each
Party shall sign or cause to have signed all documents relating to said patent
applications or patents at no charge to the other Party.
ARTICLE 10. CONFIDENTIALITY
10.1. Nondisclosure Obligations.
10.1.1. General. Except as otherwise provided in this Article
9, during the term of this Agreement and for a period of ten (10) years
thereafter, both Parties shall maintain in confidence and use only for purposes
specifically authorized under this Agreement (i) information and data received
from the other Party resulting from or related to the development of the
Licensed Compound and the Licensed Products and (ii) all information and data
not described in clause (i) but supplied by the other Party under this Agreement
marked "Confidential." For purposes of this Article 10, information and data
described in clause (i) or (ii) shall be referred to as "Information."
10.1.2. Limitations. To the extent it is reasonably necessary
or appropriate to fulfil its obligations or exercise its rights under this
Agreement, a Party may disclose Information it is otherwise obligated under this
Section 10.1 not to disclose to its Affiliates, sublicensees, consultants,
outside contractors and clinical investigators, on a need-to-know basis on
condition that such entities or persons agree to keep the Information
confidential for the same time periods and to the same extent as such Party is
required to keep the Information confidential. In addition a Party or its
Affiliates or sublicensees may disclose such Information to government or other
regulatory authorities to the extent that such disclosure is reasonably
necessary to obtain patents or authorizations to conduct clinical trials of, and
to commercially market, the Licensed Compound, any Replacement Compounds, Second
Generation Compounds or Outside Compounds and their corresponding Licensed
Products. The obligation not to disclose Information shall not apply to any part
of such Information that: (i) is or becomes part of the public domain other than
by unauthorized acts of the Party obligated not to disclose such Information or
those of its Affiliates or sublicensees; (ii) can be shown by written documents
to have been disclosed to the receiving Party or its Affiliates or sublicensees
by a Third Party, provided such Information was not obtained by such Third Party
directly or indirectly from the other Party under this Agreement pursuant to a
confidentiality agreement; (iii) can be shown by competent evidence, prior to
disclosure under this Agreement, to already have been in the
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possession of the receiving Party or its Affiliates or sublicensees, provided
such Information was not obtained directly or indirectly from the other Party
under this Agreement pursuant to a confidentiality agreement; (iv) can be shown
by written documents to have been independently developed by the receiving Party
or its Affiliates without breach of any of the provisions of this Agreement; or
(v) is disclosed by the receiving Party pursuant to interrogatories, requests
for information or documents, subpoena, civil investigative demand issued by a
court or governmental agency or as otherwise required by law, provided that the
receiving Party notifies the other Party immediately upon receipt thereof so
that such other Party (with the cooperation of the receiving Party) can seek a
protective order or other order limiting or preventing disclosure and provided
further that the disclosing Party furnishes only that portion of the Information
which it is advised by counsel is legally required under the circumstances.
10.2. Samples. Samples of the Licensed Compound, Outside Compounds,
Second Generation Compounds and/or any Replacement Compound provided by either
Party to the other Party in the course of the Program shall not be supplied or
sent by either party to any Third Party, other than to regulatory agencies,
except pursuant to a written materials transfer and/or confidentiality agreement
in a form typical of that utilized by the appropriate party in its ordinary and
normal course of business.
10.3. Terms of this Agreement. Except as provided in Section 10.4
hereof, Metasyn and MKG each agree not to disclose any terms or conditions of
this Agreement to any Third Party without the prior consent of the other Party,
except as required by applicable law. If either Party determines that it is
required to file this Agreement with the Securities and Exchange Commission or
other governmental agency for any reason, such Party shall request confidential
treatment of such portions of this Agreement as the Parties shall together
determine is appropriate. Notwithstanding the foregoing, prior to execution of
this Agreement, Metasyn and MKG have agreed upon the substance of information
that can be used as a routine reference in the usual course of business to
describe the terms of this transaction, and Metasyn and MKG may disclose such
information, as modified by mutual agreement from time to time, without the
other Party's consent as may be necessary from time to time.
10.4. Publications.
10.4.1. Procedure. Each Party recognizes the mutual interest
in obtaining patent protection for inventions which arise under this Agreement.
In the event that either Party, its employees or consultants or any other Third
Party under contract to such Party wishes to make a publication (including any
oral disclosure made without obligation of confidentiality) relating to work
performed under this Agreement (the "Publishing Party"), such Party shall
transmit to the other Party (the "Reviewing Party") a copy of the proposed
written publication at least forty-five (45) days prior to submission for
publication, or an abstract of such oral disclosure at least thirty (30) days
prior to submission of the abstract or the oral disclosure, whichever is
earlier. The Reviewing Party shall have the right (a) to propose modifications
to the publication for patent reasons, (b) to request a delay in publication or
presentation in order to protect patentable information, or (c) to request that
the information be maintained as a trade secret and, in such case, the
Publishing Party shall not make such publication.
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10.4.2. Delay. If the Reviewing Party requests a delay as
described in Section 10.4.1(b), the Publishing Party shall delay submission or
presentation of the publication for a period of ninety (90) days to enable
patent applications protecting each Party's rights in such information to be
filed.
10.4.3. Resolution. Upon the receipt of written approval of
the Reviewing Party, the Publishing Party may proceed with the written
publication or the oral presentation.
10.5. Injunctive Relief. The Parties hereto understand and agree that
remedies at law may be inadequate to protect against any breach of any of the
provisions of this Article 10 by either Party or their employees, agents,
officers or directors or any other person acting in concert with it or on its
behalf. Accordingly, each Party shall be entitled to the granting of injunctive
relief or other equitable relief by a court of competent jurisdiction against
any action that constitutes any such breach of this Article 10, in addition to
any monetary damages to which a Party may be entitled.
ARTICLE 11. REPRESENTATIONS AND WARRANTIES
11.1. Patent Validity. Nothing in this Agreement shall be construed as
a warranty or representation by Metasyn as to the validity or scope of any
Metasyn Technology or Patent Rights or that the exercise of the Patent Rights
will not infringe upon the rights of any Third Party. Notwithstanding the
immediately preceding sentence, except as may have been previously disclosed to
MKG, Metasyn is not aware that the [ ]* the patent rights or intellectual
property rights of any Third Party.
11.2. Accuracy of Exhibits C and E. Metasyn represents and warrants
that Exhibits C and E list all Patent Rights which are relevant to the
manufacture, use and sale of the Licensed Compound and its corresponding
Licensed Products in the Territory as of the Effective Date. To Metasyn's
knowledge, each of the [ ]*.
11.3. Authorization. Metasyn represents and warrants, to its actual
knowledge, it has all licenses or other rights to patents or intellectual
property that may be required to perform its obligations as contemplated
hereunder except as may have been previously disclosed to MKG.
11.4. [ ]*. MKG represents and warrants that it has a license from
[ ]* under certain patents of [ ]* as previously disclosed by MKG to Metasyn,
that such license is in full force and effect as of the effective date of this
Agreement and, to its actual knowledge and not based on any investigation or
inquiry, that such license is valid and enforceable.
*Confidential information omitted and filed with the Commission.
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ARTICLE 12. INDEMNITY
12.1. MKG Indemnity Obligations. Subject to the provisions of Section
12.3, MKG agrees to defend, indemnify and hold Metasyn, its Affiliates and their
respective directors, officers, employees and agents harmless from all costs,
judgments, liabilities and damages arising from claims asserted by a Third Party
against Metasyn, its Affiliates or their respective directors, officers,
employees or agents arising in connection with or as a result of: (a) actual or
asserted violations of any applicable law or regulation by MKG, its Affiliates,
sublicensees or Third Party manufacturer by virtue of which the Licensed
Products manufactured, distributed or sold by MKG shall be alleged or determined
to be adulterated, misbranded, mislabeled or otherwise not in compliance with
such applicable law or regulation; (b) claims for bodily injury, death or
property damage attributable to a recall ordered by a governmental agency, or
required by a confirmed failure, of Licensed Products to the extent caused by
any act or omission to act by MKG or its Affiliates or agents in connection with
the manufacture, distribution, or sale of Licensed Products hereunder; or (c)
any negligent or willful or intentional act or omission to act by MKG, its
Affiliates or agents in any manner in connection with performance hereunder.
12.2. Metasyn Indemnity Obligations. Subject to the provisions of
Section 12.3, Metasyn agrees to defend, indemnify and hold MKG, its Affiliates
and their respective directors, officers, employees and agents harmless from all
costs, judgments, liabilities and damages arising from claims asserted by a
Third Party against MKG, its Affiliates or their respective directors, officers,
employees or agents arising in connection with or as a result of: (a) actual or
asserted violations of any applicable law or regulation by Metasyn, its
Affiliates, sublicensees or Third Party manufacturer, if any, by virtue of which
the Licensed Products manufactured, distributed or sold by Metasyn shall be
alleged or determined to be adulterated, misbranded, mislabeled or otherwise not
in compliance with such applicable law or regulation; (b) claims for bodily
injury, death or property damage attributable to a recall ordered by a
governmental agency, or required by a confirmed failure, or Licensed Products to
the extent caused by any act or omission to act by Metasyn or its Affiliates or
agents in connection with the manufacture, distribution or sale of Licensed
Products hereunder; or (c) any negligent or willful or intentional act or
omission to act by Metasyn, its Affiliates or agents in any manner in connection
with performance hereunder.
12.3. Product Liability. MKG and Metasyn understand and agree that,
because of the nature of the collaborative effort set forth in this Agreement,
should any Third Party claims be asserted against either or both of them or any
of their Affiliates that are in the nature of product liability claims, the
Parties will cooperate to ensure that such claims are defended, settled and
compromised in a manner that best protects the interests of both Parties
hereunder. Unless and until the other Party can demonstrate otherwise (which it
may do by a preponderance of competent evidence), it shall be presumed that any
Third Party claims relating to toxicology shall primarily be the responsibility
and liability of Metasyn to defend and any Third Party claims relating to the
manufacture of Licensed Products shall primarily be the responsibility and
liability of MKG to defend. The Party presumed responsible for defending such
claim shall select counsel to defend any such claim, subject to the approval of
the Joint Steering Committee, and will have the daily responsibility for
managing the defense of such claim, keeping the other Party informed of any
developments, issues or decisions that arise as a consequence of such claim. As
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the Joint Steering Committee shall determine, the Parties may wish to procure
and maintain product liability insurance with responsible carriers in such
amounts and with such coverages and deductibles as the Joint Steering Committee
may deem appropriate under the circumstances.
12.4. Contribution. Notwithstanding any other provision of this Article
12, to the extent it is possible to determine with accuracy, each Party shall
only be responsible hereunder for and shall only have the duty to indemnify and
hold harmless the other Party hereunder (as applicable) for that portion of any
loss, cost, damages or expense attributable to its acts or omissions to act. If,
in connection with any Third Party claim for which both Parties have
responsibility for any loss, cost, damage or expense, it is impossible to
determine with accuracy the relative proportion of responsibility of the
Parties, they shall each be responsible for an equal share of any such loss,
cost, damage or expense. In the event there is any dispute between the Parties
concerning their relative proportion of responsibility with respect to any Third
Party claim the Parties shall attempt to resolve such dispute within sixty (60)
days of the date it arises but, if they are unable to do so, the matter shall be
referred to arbitration for resolution pursuant to Section 14.6.2.
12.5. Procedure. A Party or any of its Affiliates (the "Indemnitee")
that intends to claim indemnification under this Article 12 shall promptly
notify the other Party (the "Indemnitor") of any loss, claim, damage, liability
or action in respect of which the Indemnitee intends to claim such
indemnification, and the Indemnitor shall assume the defense thereof with
counsel mutually satisfactory to the Parties; provided, however, that an
Indemnitee shall have the right to retain its own counsel, with the fees and
expenses to be paid by the Indemnitor, if representation of such Indemnitee by
the counsel retained by the Indemnitor, in the opinion of an independent counsel
chosen by the Joint Steering Committee which counsel has not represented either
party, would be inappropriate due to actual or potential differing interests
between such Indemnitee and any other Party represented by such counsel in such
proceedings. An Indemnitee shall not be entitled to indemnification under this
Article 12 if any settlement or compromise of a claim is effected by the
Indemnitee without the consent of the Indemnitor, which consent shall not be
unreasonably withheld or delayed. The failure to deliver notice to the
Indemnitor within a reasonable time after the commencement of any such action,
if prejudicial to its ability to defend such action, shall relieve such
Indemnitor of any liability to the Indemnitee under this Article 12. The
Indemnitee under this Article 12, its employees and agents, shall cooperate
fully with the Indemnitor and its legal representatives in the investigation of
any action, claim or liability covered by this indemnification.
ARTICLE 13. EXPIRATION AND TERMINATION
13.1. The Development Phase.
13.1.1. Expiration of the Development Phase. Unless this
Agreement is sooner terminated in accordance with the provisions of this Article
13, the term of the Development Phase shall expire with respect to a particular
compound upon receipt of final marketing approval and all required registration
of Licensed Products comprising such compound in all Major Market Countries.
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13.1.2. Termination of Development Phase. The Development
Phase as to any compound may be terminated (a) at any time by the mutual consent
of the Parties or (b) by either Party upon written notice to the other if the
Joint Steering Committee has been unable to agree on the budget or scope of an
Annual Development Plan for a compound pursuant to Section 4.1.2 and, after the
matter has been submitted for arbitration pursuant to Section 7.2 hereof, the
terminating Party determines in good faith that it is unable to proceed with
development of such compound based on the determination of the arbitrator.
13.1.3. Existing Obligations. The expiration or termination of
the Development Phase with respect to any compound shall not relieve the Parties
of any obligation that accrued with respect thereto prior to such expiration or
termination.
13.1.4. Effect of Termination of the Development Program. In
the event that the Development Phase is terminated with respect to any compound
pursuant to Section 13.1.2, then such compound may not be designated as a Second
Generation Compound or a Replacement Compound by the Joint Steering Committee.
In such event, (a) all rights with respect to the use, manufacture, distribution
for sale and sale of such compound shall revert to the Party who was responsible
for adding such compound to the Program (the "Originating Party"), except that,
to the extent such compound has been jointly acquired through license, purchase
or otherwise, both Parties will have the right to use, manufacture, distribute
for sale and sell such compound on a non-exclusive basis, (b) to the extent
legally permissible, all additional action reasonably necessary shall be taken
by the Parties to assign all right, title and interest in and transfer
possession and control of the regulatory filings and regulatory approvals
relating to such compound to such Party and (c) the Originating Party shall be
free to develop or grant licenses to Third Parties with respect to such
compound. In the event that the Originating Party enters into an agreement with
a Third Party pursuant to clause (c) hereof and such Third Party will use data
generated during the Program, then the Originating Party shall provide in such
agreement that such Third Party shall reimburse the non-Originating Party for
the perceived value of such data, such value to be negotiated in good faith by
MKG and Metasyn taking into account the financial contributions of both Parties
to the generation of such data.
13.2. The Research Program.
13.2.1. Expiration of Research Phase. Unless this Agreement is
sooner terminated in accordance with the provisions of this Article 13, the
Research Phase with respect to a particular compound shall expire upon the
designation of such compound as a Second Generation Compound in accordance with
Section 4.1.4 hereof.
13.2.2. Termination of the Research Program. Unless this
Agreement is sooner terminated in accordance with the provisions of this Article
13, the Research Program with respect to any compound may be terminated (a) at
any time upon the mutual consent of the Parties or (b) by either Party upon
written notice to the other if the Joint Steering Committee has been unable to
agree on the budget or scope of an Annual Research Plan for a compound pursuant
to Section 5.2.2 and, after the matter has been submitted for arbitration
pursuant to Section 7.2 hereof, the terminating Party determines in good faith
that it is unable to proceed with development of such compound based on the
determination of the arbitrator.
31
<PAGE>
13.2.3. Existing Obligations. The expiration of the Research
Phase or termination of the Research Program with respect to any compound shall
not relieve the Parties of any obligation that accrued with respect thereto
prior to such expiration or termination.
13.2.4. Effect of Termination of the Research Program. In the
event that the Research Program is terminated with respect to any compound
pursuant to Section 13.2.2, then such compound may not be designated as a Second
Generation Compound or a Replacement Compound by the Joint Steering Committee.
In such event, (a) all rights with respect to the use, manufacture, distribution
for sale and sale of such compound shall revert to the Originating Party, except
that, to the extent such compound has been jointly acquired through license,
purchase or otherwise, both Parties will have the right to use, manufacture,
distribute for sale and sell such compound on a non-exclusive basis, (b) to the
extent legally permissible, all additional action reasonably necessary shall be
taken by the Parties to assign all right, title and interest in and transfer
possession and control of the regulatory filings and regulatory approvals
relating to such compound and (c) the Originating Party shall be free to develop
or grant licenses as Third Parties with respect to such compound. In the event
that the Originating Party enters into an agreement with a Third Party pursuant
to clause (c) hereof and such Third Party will use data generated during the
Program, then the Originating Party shall provide in such agreement that such
Third Party shall reimburse the non-Originating Party for the perceived value of
such data, such value to be negotiated in good faith by MKG and Metasyn taking
into account the financial contributions of both Parties to the generation of
such data.
13.3. Expiration of this Agreement. Unless this Agreement is sooner
terminated in accordance with the provisions of this Article 13 hereof, this
Agreement shall remain in effect for so long as Licensed Products are being sold
anywhere in the Territory.
13.4. Termination of this Agreement.
13.4.1. Termination by Either Party. This Agreement may be
terminated by either Party upon thirty (30) days notice (i) by reason of a
material breach (other than as provided in clauses (ii), (iii) or (iv) below) if
the breaching Party fails to remedy such breach within ninety (90) days after
written notice thereof by the non-breaching Party, (ii) if the other Party fails
to make any Profit Payment or any other payment of any kind as and when due in
accordance with the terms and procedures set forth herein and such failure is
not remedied within thirty (30) days after written notice thereof by the
nonbreaching party, (iii) if the other Party fails, for reasons within its
reasonable control, to meet one of its assigned product objectives listed in
Section 4.2 hereof within the specified period of time for such objective
(including any extensions granted pursuant to Section 4.2.3 hereof) or (iv) upon
bankruptcy, insolvency, dissolution or winding up of the other Party, except, in
the case of a petition in bankruptcy filed involuntarily against a Party, if
such petition is dismissed within sixty (60) days of the date of its filing.
13.4.2. Termination by Metasyn. This Agreement may be
terminated by Metasyn effective immediately if [ ]* (or such later date as the
Parties may mutually agree upon). In the event that Metasyn terminates this
Agreement pursuant to this Section 13.4.2,
*Confidential information omitted and filed with the Commission.
32
<PAGE>
MKG shall [ ]* in the event of such termination.
13.5. Effect of Expiration or Termination of This Agreement.
13.5.1. Existing Obligations. The expiration or termination of
this Agreement for any reason shall not relieve the Parties of any obligation
that accrued prior to such expiration or termination.
13.5.2. Effect of Termination by Metasyn. In the event that
this Agreement is terminated by Metasyn pursuant to Section 13.4, Metasyn shall
be entitled to claim from MKG in a court of competent jurisdiction all damages
or other relief which would otherwise be available to Metasyn at law or in
equity and (i) if Metasyn terminated pursuant to Section 13.4.1 above,
subsections (a)-(e) below shall apply and (ii) if Metasyn terminated pursuant to
Section 13.4.2 above, subsections (a)(i) and (d)(iv) below shall apply:
(a) Termination of Licenses. (i) All licenses and rights granted to MKG
hereunder shall terminate and (ii) except as provided in clauses (b) and (d)
below, MKG will immediately cease to manufacture and sell the Licensed Compound,
any Replacement Compounds, any Second Generation Compounds and any Outside
Compounds and/or the corresponding Licensed Products;
(b) Disposition of Inventory of Licensed Products. (i) MKG may dispose
of its inventory of Licensed Products on hand as of the effective date of
termination, and may fill any orders for Licensed Products accepted prior to the
effective date of termination, for a period of twelve (12) months after the
effective date of termination and (ii) within thirty (30) days after disposition
of such inventory and fulfillment of such orders (and in any event within
thirteen (13) months after termination) MKG will forward to Metasyn a final
report containing the details required by Section 8.7 hereof and pay Metasyn all
Profit Payments payable for such period;
(c) Assignment of Trademark. MKG shall take all action reasonably
necessary to assign all of its right, title and interest in any trademark which
MKG shall have marketed or sold the Licensed Products, together with the
goodwill associated therewith, to Metasyn; provided, however, that Metasyn shall
thereafter identify to any Third Parties Metasyn as the supplier of any Licensed
Products;
(d) Assignment of Regulatory Approvals; Manufacturing Rights; Clinical
Data; MKG Patent Rights. MKG shall, (i) to the extent legally permissible, take
all additional action reasonably necessary to assign all of its right, title and
interest in and transfer possession and control to Metasyn of the regulatory
filings prepared by MKG, and regulatory approvals received by MKG, to the extent
that such filings and approvals relate to the Licensed Compound, any Replacement
Compounds, Second Generation Compounds or Outside Compounds and/or their
corresponding Licensed Products, (ii) to the extent legally or contractually
permissible, grant Metasyn a worldwide, perpetual, exclusive, fully paid and
royalty-free right and license to use in
*Confidential information omitted and filed with the Commission.
33
<PAGE>
the manufacture of the Licensed Products any technology or know-how developed by
MKG and/or its Third-Party manufacturer, if any, that is necessary or useful in
the manufacture of the Licensed Products, (iii) deliver to Metasyn any and all
documents containing data relating to preclinical or clinical trials of the
Licensed Compound, any Replacement Compounds, Second Generation Compounds or
Outside Compounds and/or their corresponding Licensed Products not previously
delivered by MKG to Metasyn pursuant to Sections 4.4 and 5.2.5 hereof and (iv)
to the extent legally or contractually permissible, grant to Metasyn a
nonexclusive, worldwide, royalty-free license to the MKG Patent Rights; and
(e) Continuation of Manufacture. Subject to Metasyn having the
appropriate license rights or other consents, MKG shall continue to manufacture
Licensed Products and their respective compounds for Metasyn for a period of one
(1) year after such termination at [ ]* and thereafter at [ ]*; provided,
however, that in no event shall MKG be required to provide manufacturing of
Licensed Products and their respective compounds for Metasyn for a period beyond
the third anniversary of such termination by Metasyn. Metasyn agrees to use its
best efforts, subject to regulatory restraints, in transferring the manufacture
of Licensed Products and their respective compounds to a Third Party as soon
after any such termination as possible. For purposes of this Section 13.5.2(e),
Metasyn shall grant to MKG a nonexclusive, royalty-free worldwide sublicense
under the regulatory approvals and filings assigned to Metasyn pursuant to
Section 13.5.2(d)(i) and the right and license granted to Metasyn pursuant to
Section 13.5.2(d)(ii), which sublicense shall automatically terminate upon
Metasyn's written notice to MKG of the termination of MKG's manufacturing rights
hereunder.
13.5.3. Effect of Termination by MKG. In the event that this
Agreement is terminated by MKG pursuant to Section 13.4, MKG shall be entitled
to claim from Metasyn in a court of competent jurisdiction all damages or other
relief which would otherwise be available to MKG at law or in equity. Further,
in the event of any such termination by MKG pursuant to Section 13.4.1(i), (ii)
or (iii), and subject only to the provisions of Section 3.1.3, MKG's license
rights under Section 3.1 hereof shall (notwithstanding the provisions of Section
3.1) be considered to be exclusive, fully paid up and irrevocable, and shall not
otherwise be restricted or limited in any manner from the license grant and
related obligations set forth therein, and Metasyn shall grant to MKG a fully
paid up and irrevocable non-exclusive license in the Territory to the MGH Patent
Rights to the extent legally and contractually permissible.
13.5.4. Termination due to Termination of MGH License. In the
event this Agreement is terminated by MKG in accordance with Section 13.4 hereof
as a result of the termination of the MGH License, MKG shall have the rights
provided under Paragraph 10.7 of the MGH License to cause the licenses to the
MGH Patent Rights granted to it hereunder to remain in full force and effect.
13.5.5. Survival. The provisions of Articles 8 (with respect
only to payments accrued at the time of expiration or termination but not yet
paid) 9, 10 and 12, Section 14.10 and this Section 13.5 shall survive the
expiration or termination of this Agreement.
*Confidential information omitted and filed with the Commission.
34
<PAGE>
ARTICLE 14. MISCELLANEOUS
14.1. Force Majeure. Neither Party shall be held liable or responsible
to the other Party nor be deemed to have defaulted under or breached this
Agreement for failure or delay in fulfilling or performing any term of this
Agreement when such failure or delay is caused by or results from causes beyond
the reasonable control of the affected Party, including but not limited to fire,
floods, embargoes, war, acts of war (whether war is declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or the other Party; provided, however, that the Party so
affected shall use reasonable commercial efforts to avoid or remove such causes
of nonperformance, and shall continue performance hereunder with reasonable
dispatch whenever such causes are removed. Either Party shall provide the other
Party with prompt written notice of any delay or failure to perform that occurs
by reason of force majeure. The Parties shall mutually seek a resolution of the
delay or the failure to perform as noted above.
14.2. Assignment. This Agreement may not be assigned or otherwise
transferred by either Party without the prior written consent of the other
Party; provided, however, that either Metasyn or MKG may, without such consent,
assign its rights and obligations under this agreement (i) in connection with a
corporate reorganization, to any Affiliate, all or substantially all of the
equity interest of which is owned and controlled by such Party or its direct or
indirect parent corporation, or (ii) in connection with a merger, consolidation
or sale of substantially all of such Party's assets to an unrelated Third Party
(which shall include, in the case of MKG, a sale of substantially all of the
assets of MKG's Medical Imaging division); provided, however, that such Party's
rights and obligations under this Agreement shall be assumed in writing by its
successor in interest in any such transaction and shall not be transferred
separate from all or substantially all of its other business assets, including
those business assets that are the subject of this Agreement. Any purported
assignment in violation of the preceding sentence shall be void. Any permitted
assignee shall assume all obligations of its assignor under this Agreement.
14.3. Severability. Each Party hereby agrees that it does not intend,
by its execution hereof, to violate any public policy, statutory or common laws,
rules, regulations, treaty or decision of any government agency or executive
body thereof of any country or community or association of countries. Should one
or more provisions of this Agreement be or become invalid, the Parties hereto
shall substitute, by mutual consent, valid provisions for such invalid
provisions which valid provisions in their economic and other effects are
sufficiently similar to the invalid provisions that it can be reasonably assumed
that the Parties would have entered into this Agreement with such valid
provisions. In case such valid provisions cannot be agreed upon, the invalidity
of one or several provisions of this Agreement shall not affect the validity of
this Agreement as a whole or the validity of any portions hereof, unless the
invalid provisions are of such essential importance to this Agreement that it is
to be reasonably assumed that the Parties would not have entered into this
Agreement without the invalid provisions.
14.4. Notices. Any consent, notice or report required or permitted to
be given or made under this Agreement by one of the Parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by telephone, personal delivery or courier) or courier, postage
prepaid (where applicable), addressed to such other Party at its address
indicated
35
<PAGE>
below, or to such other address as the addressee shall have last furnished in
writing to the addressor and shall be effective upon receipt by the addressee.
If to Metasyn: Metasyn, Inc.
71 Rogers Street
Cambridge, Massachusetts 02142-1118
Attention: President
Telephone: 1-617-499-1400
Telecopy: 1-617-499-1414
with a copy to: Palmer & Dodge LLP
One Beacon Street
Boston, Massachusetts 02108
Attention: F. Andrew Anderson, Esq.
Telephone: 1-617-573-0100
Telecopy: 1-617-227-4420
If to MKG: Mallinckrodt Medical, Inc.
675 McDonnell Boulevard
St. Louis, Missouri 63134
Attention: President, Medical Imaging Division
Telephone: 1-314-895-2249
Telecopy: 1-314-895-7265
with a copy to: Mallinckrodt Group Inc.
7733 Forsyth Boulevard
Attention: General Counsel
Clayton, Missouri 63105
Telephone: 1-314-530-2040
Telecopy: 1-314-530-2486
14.5. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
the choice of laws provisions thereof.
14.6. Dispute Resolution.
14.6.1. The Parties hereby agree that they will attempt in
good faith to resolve any controversy or claim arising out of or relating to
this Agreement promptly by negotiations. If a controversy or claim should arise
hereunder, the representatives of the Parties will confer at least once and will
attempt to resolve the matter. Except as provided in Article 7 hereof, if the
matter has not been resolved within fourteen (14) days of their first meeting,
the representatives shall refer the matter to the Chief Executive Officer of
Metasyn and the Chief Operating Officer of MKG. If the matter has not been
resolved within thirty (30) days of the first meeting of the Chief Executive
Officer of Metasyn and the Chief Operating Officer of MKG (which period may be
extended by mutual agreement), subject to rights to injunctive relief and
specific performance,
36
<PAGE>
and unless otherwise specifically provided for herein, any controversy or claim
arising out of or relating to this Agreement, or the breach thereof, will be
settled as set forth in Section 14.6.2.
14.6.2. All disputes, controversies or differences which may
arise between the Parties out of or in relation to this Agreement or any default
or breach thereof may be resolved by arbitration in accordance with the American
Arbitration Association by one or more arbitrators appointed in accordance with
the said Rules. The arbitration shall take place in Chicago, Illinois. Any
decision or award resulting from the arbitration provided for herein shall be
final and binding on the Parties hereto. Notwithstanding the above, without
resort to arbitration in the first instance, either Party has the right to bring
suit in a court of competent jurisdiction against the other Party for (i) any
breach of such other Party's duties of confidentiality pursuant to Article 10 of
this Agreement and (ii) any infringement of its own proprietary rights by the
other Party. Judgment upon the arbitrator's award may be entered in any court of
competent jurisdiction. The award of the arbitrator may include compensatory
damages against either Party, but under no circumstances will the arbitrator be
authorized to, nor shall he, award punitive damages or multiple damages against
either Party. The Parties agree not to institute any litigation or proceedings
against each other in connection with this Agreement unless they have complied
with the provisions of this Section 14.6.2, as they may be applicable, unless
otherwise provided herein.
14.7. Public Announcements. The Parties agree that press releases and
other announcements to be made by either of them in relation to this Agreement
shall be subject to the written consent of the other Party, which consent shall
not be unreasonably withheld or delayed, except to the extent that any such
press release is required to be made by law and the consent of the other Party
is not obtained after reasonable efforts to do so. The Parties will agree to
issue a joint press release immediately following the execution of this
Agreement, the form and content of which shall be reasonably satisfactory to
both Parties.
14.8. Entire Agreement. This Agreement, together with the exhibits and
appendices hereto, contains the entire understanding of the Parties with respect
to the subject matter hereof. All express or implied agreements and
understandings, either oral or written, heretofore made are expressly merged in
and made a part of this Agreement. This Agreement may be amended, or any term
hereof modified, only by a written instrument duly executed by both Parties
hereto.
14.9. Headings. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are merely guides or labels to
assist in locating and reading the several Articles and Sections hereof.
14.10. Agreement Not to Solicit Employees. During the term of this
Agreement and for a period of two (2) years following the expiration pursuant to
Section 13.3 or termination pursuant to Section 13.4 of this Agreement, Metasyn
and MKG agree not to seek to persuade or induce any employee of the other
company to discontinue his or her employment with that company in order to
become employed by or associated with any business, enterprise or effort that is
associated with its own business.
37
<PAGE>
14.11. Exports. The Parties acknowledge that the export of technical
data, materials or products is subject to the exporting Party receiving any
necessary export licenses and that the Parties cannot be responsible for any
delays attributable to export controls which are beyond the reasonable control
of either Party. Metasyn and MKG agree not to export or reexport, directly or
indirectly, any information, technical data, the direct product of such data,
samples or equipment received or generated under this Agreement in violation of
any applicable export control laws or governmental regulations. Metasyn and MKG
agree to obtain similar covenants from their licensees, sublicensees and
contractors with respect to the subject matter of this Section 14.11.
14.12. Waiver. The waiver by either Party hereto of any right hereunder
or the failure to perform or of a breach by the other Party shall not be deemed
a waiver of any other right hereunder or of any other breach or failure by said
other Party whether of a similar nature or otherwise.
14.13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
38
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.
METASYN, INC.
By: /s/ Michael D. Webb
--------------------------
Name: Michael D. Webb
Title: President and Chief Executive Officer
MALLINCKRODT MEDICAL, INC.
By: /s/ Jim Carlile
--------------------------
Name: Jim Carlile
Title: President, Medical Imaging Division
MALLINCKRODT GROUP INC.
By: /s/ Mack G. Nichols
--------------------------
Name: Mack G. Nichols
Title: President and Chief Operating Officer
39
<PAGE>
EXHIBIT A
Base Case Scenario Model
[ ]*
Addendum to Base Case Scenario Model:
Nothing in the Base Case Scenario Model will be construed to replace or
supersede the provisions in the Agreement. Where conflict exists between the
provisions of the Agreement and the Base Case Scenario Model contained in this
Exhibit A, the provisions of the Agreement will prevail. It is specifically
acknowledged and agreed by the Parties that the following modifications will be
made to the Base Case Scenario Model as soon as practicable after the Effective
Date of the Agreement:
1. Japanese sales and operating margin will be modified to reflect the
provisions of Section 3.2.4 of the Agreement; and
2. The Base Case Scenario Model will be modified to exclude finance
charges.
* Confidential information omitted and filed with the Commission.
A-1
<PAGE>
EXHIBIT B
Chemical Structure of Compound MS-325
[ ]*
*Confidential information omitted and filed with the Commission.
B-1
<PAGE>
EXHIBIT C
MGH Patent Rights
1) U.S. Patent No. 4,899,755, "Hepatobiliary NMR Contrast Agents," Randall
B. Lauffer and Thomas J. Brady, Ser. No. 731,841, filed May 8, 1985,
issued February 13, 1990.
2) U.S. Patent No. 4,880,008, "In Vivo Enhancement of NMR Relaxivity,"
Randall B. Lauffer, Ser. No. 860,540, filed May 7, 1986, issued
November 14, 1989.
3) Canadian Patent No. 1,264,663, "Hepatobiliary NMR Contrast Agents,"
Randall B. Lauffer and Thomas J. Brady, Ser. No. 508,749, filed May 8,
1986, issued January 23, 1990.
4) [ ]*
5) [ ]*
6) [ ]*
*Confidential information omitted and filed with the Commission.
C-1
<PAGE>
EXHIBIT D
MKG Patent Rights
United States Patent No. 5,078,986 filed August 13, 1990 entitled
"Method For Enhancing Magnetic Resonance Imaging Using An Image Altering Agent
Containing An Excess of Chelating Agent" and issued January 7, 1992
by Mark E. Bosworth
Ronald M. Hopkins
Serial #567,850
D-1
<PAGE>
EXHIBIT E
Metasyn Patent Rights
1) [ ]*
2) [ ]*
*Confidential information omitted and filed with the Commission.
E-1
<PAGE>
EXHIBIT F
First Annual Development Plan
<TABLE>
<CAPTION>
Quarter 3 Quarter 4 Quarter 1 Quarter 2
(Jul-Sep 1996) (Oct-Dec 1996) (Jan-Mar 1997) (Apr-Jun 1997) Total
-------------- -------------- -------------- -------------- -----
<S> <C> <C> <C> <C> <C>
Metasyn:
- -------
Compounded prod. costs [ ]* [ ]* [ ]* [ ]* [ ]*
Phase I Clinical costs
Toxicology Studies
Phase II Clinical costs
Miscellaneous costs
Investigators Meeting
Overhead (1)
Personnel costs
- ---------------
Total
MKG:
Direct Supplies [ ]* [ ]* [ ]* [ ]* [ ]*
Direct Chemicals
Medical & Regulatory
Travel
Outside Personnel
Overhead (1)
Depreciation (Building 50)(2)
Personnel costs
Total
Project Total
</TABLE>
(1) [ ]* Personnel Costs
(2) Subject to approval by joint steering committee
*Confidential information omitted and filed with the Commission.
F-1
<PAGE>
APPENDIX I
MGH License
Filed herewith as Exhibit 10.14.
I-1
<PAGE>
APPENDIX II
Cost of Goods Sold
Cost of Goods Sold includes the following direct costs: direct materials,
inbound freight and freight between manufacturing sites and distribution
centers, direct labor including payroll taxes and reasonable fringe benefits,
containers and packaging materials and Launch Costs. Cost of Goods Sold excludes
the cost of syringes and delivery systems to the extent excluded from Net Sales.
Cost of Goods Sold also includes any royalties payable to MGH and other Third
Parties. The Parties hereby represent that there are currently no known Third
Parties other than MGH to whom royalties are or will be payable as of the
Effective Date of this Agreement.
It is the intent of the Parties that:
(a) Costs of Goods Sold will include only overhead that is ordinary and
necessary for the production of the Licensed Products;
(b) Cost of Goods Sold will not include overhead cost or variances
resulting from excess plant capacity, however, a reasonable allowance
may be made for the production of Licensed Products during the first
year of production; and
(c) Cost of Goods Sold will exclude all group level expenses and
allocations thereof.
Cost of Goods Sold includes a cost for overhead calculated as follows:
Overhead Related to the Production of Bulk Drug:
Allowable overhead includes costs for: indirect salaries and wages, payroll
taxes and fringe benefits, utilities, supplies and materials, outside services,
maintenance and repairs and depreciation; to the extent such costs are ordinary
and necessary for the manufacture of the Licensed Products.
The method of calculating and allocating overhead cost at the bulk production
facility will be determined and approved by the Joint Steering Committee at a
time a production facility is selected.
A standard product unit cost for the bulk drug manufacturing of Licensed Product
will be determined each fiscal year in conjunction with MKG budget process and
submitted for approval by the Joint Steering Committee. This standard product
cost will be used to cost units produced and sold. Variances from standard
related to the manufacturing of the Licensed Products will be allocated to Cost
of Goods Sold and Inventory, however unfavorable overhead variances caused by
decreases in plant capacity utilization are specifically excluded from Cost of
Goods Sold.
II-1
<PAGE>
Overhead Related to Formulation of Bulk Drug:
Allowable overhead includes indirect salaries and wages, payroll taxes and
fringe benefits, freight, utilities, supplies and materials, outside services,
maintenance and repairs, and depreciation to the extent such costs are ordinary
and necessary for the manufacture of the Licensed Products.
Annual budget units produced X Labor hours per
100 units = Total facility labor hours
required.
Total allowable overhead costs
Total facility labor hours required = Overhead rate per hour
Overhead rate per hour X Hours required to produce one unit = Overhead costs per
unit
A standard product cost for the formulation of Licensed Product will be
determined each fiscal year in conjunction with MKG budget process and submitted
for approval by the Joint Steering Committee. This standard product cost will be
used to cost units produced and sold. Variances from standard will be included
in Cost of Goods Sold if related to the manufacturing of the Licensed Product.
Unfavorable overhead variances caused by decreases in plant capacity utilization
are specifically excluded from Cost of Goods Sold.
Account Specification
The Parties agree to use their respective best efforts to specify within thirty
(30) days of the Effective Date of this Agreement the general ledger account
numbers of each Party that will be designated as either direct costs or overhead
costs.
Annual Review
The method overhead calculation allocation for both bulk drug production and
formulation will be reviewed annually and approved by the Joint Steering
Committee.
II-2
<PAGE>
APPENDIX III
Development Costs
Allowable Development Costs will include the following direct costs to the
extent they are ordinary and necessary for the development of the Licensed
Products:
Direct salary and wages based upon budgeted personnel at actual hours
and actual rates pursuant to the Annual Development Plan as amended
from time to time by the Joint Steering Committee
Payroll taxes and fringe benefits at a specified rate not to exceed
[ ]* of direct salary and wages
Travel
Direct materials and direct supplies, including specialized software
Direct costs for production of compound for clinical work or regulatory
filings Regulatory filing costs Costs for outside services contracted
with third parties related to performance
of clinical trials
External costs for consultants, temporary help and special studies.
It is the intent of the Parties that Development Costs will include only
overhead costs that are ordinary and necessary for the development of the
Licensed Products. Overhead costs will be charged by each Party to Development
Costs based on allowable cost items and an allocation method to be determined
and approved by the Joint Steering Committee. In no event will overhead,
exclusive of Building 50 depreciation, charged by the Parties to Development
Costs exceed [ ]* of their respective direct salaries and wages. Building 50
depreciation charged to Development Costs for the year ended June 30, 1997 will
not exceed [ ]*.
The Parties will use their respective best efforts to specify within thirty (30)
days of the Effective Date of this Agreement the general ledger account numbers
of each Party which will be designated as either direct costs or overhead costs.
Development Costs for any annual period will not exceed those budgeted under the
Annual Development Plan, unless approved by the Joint Steering Committee.
*Confidential information omitted and filed with the Commission.
III-1
<PAGE>
APPENDIX IV
Research Costs
Research Costs will include the following direct costs to the extent they are
ordinary and necessary to conduct approved Research Program(s) (including such
costs incurred by a Party in connection with an approved Research Program prior
to approval by the Joint Steering Committee):
Direct salary or wages
Payroll taxes
Fringe benefits
Travel
Direct supplies and direct materials
Regulatory filings costs
Costs for outside services contracted with third parties External costs
for consultants and special studies.
It is the intent of the Parties that Research Costs will include only overhead
costs that are ordinary and necessary for research related to approved Research
Programs. Overhead costs will charged by each Party to Research Costs based on
allowable cost items and an allocation method to be determined and approved by
the Joint Steering Committee.
Research Costs for any annual period will not exceed those budgeted in the
approved Annual Research Plan, unless approved by the Joint Steering Committee.
IV-1
<PAGE>
APPENDIX V
Sales and Marketing Costs
Direct Sales Costs include ordinary and necessary: salaries, bonus, other
incentive compensation, payroll taxes, fringe benefits, supplies, telephone,
postage, automobile lease, insurance, automobile travel costs, airfare, meals,
hotels, tips, entertainment, conventions, employee recruiting, training, and
product samples.
Allowable Indirect Sales Costs, including the costs associated with selling
activities combined with other non-licensed product lines, will be allocated on
a percentage of Net Sales to total Net Sales basis. Such costs include:
salaries, payroll taxes, fringe benefits, national accounts sales, customer
service, order entry, customer invoicing, invoice collections, outside services,
sales training, depreciation, and distribution costs to the extent they are
ordinary and necessary for the sale of the Licensed Products.
Direct Marketing Costs include ordinary and necessary: salaries, bonus, payroll
taxes, fringe benefits, supplies, telephone, software, hardware, postage,
travel, meals, entertainment, training, employee recruiting, consulting, market
research, conventions, product samples, journal advertising, promotions,
premiums, educational material, brochures, sales aids, direct mail, and
seminars.
Allowable Indirect Marketing Costs will be allocated on a percentage of Net
Sales to total Net Sales basis. Such costs include: marketing administration
salaries, bonus, payroll taxes, fringe benefits, reimbursement services,
convention costs, legal, and shared promotions, to the extent they are ordinary
and necessary for sale of the Licensed Products.
Sales and Marketing Costs specifically exclude any and all costs and cost
allocations of corporate (Mallinckrodt Group level) selling, marketing general
and general expenses, divisional level general and administrative expenses, and
any other expenses that are not ordinary and necessary for the sale and
marketing of the Licensed Products.
Sales and Marketing Costs for any annual period will not exceed amounts budgeted
under the Annual Marketing Plan unless approved by the Joint Steering Committee.
V-1
Exhibit 10.27
AMENDMENT NO. 2 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
This Amendment No. 2 dated as of December 6, 1996 (the
"Amendment") to the Third Amended and Restated Stockholders Rights Agreement
dated as of May 29, 1996, as amended by Amendment No. 1 dated as of May 31, 1996
(as heretofore amended, the "Rights Agreement"), is entered into by and among
EPIX Medical, Inc., a Delaware corporation (the "Company"), holders of shares of
the Company's Series A Convertible Preferred Stock, $.01 par value per share
(the "Series A Preferred"), and warrants convertible into Series A Preferred,
holders of the Company's Series B Convertible Preferred Stock, $.01 par value
per share (the "Series B Preferred"), and warrants convertible into Series B
Preferred, holders of the Company's Series C Convertible Preferred Stock, $.01
par value per share (the "Series C Preferred"), and warrants convertible into
Series C Preferred, holders of the Company's Series D Convertible Preferred
Stock, $.01 par value per share (the "Series D Preferred"), and warrants
convertible into Series D Preferred, and the holder of the Company's Series E
Convertible Preferred Stock, $.01 par value per share ("Series E Preferred")
listed on Schedule A to the Rights Agreement. All capitalized words and terms
used in this Amendment and not defined herein shall have the respective meanings
ascribed to them in the Rights Agreement.
WITNESSETH:
WHEREAS, the Company has recently changed its name from Metasyn, Inc. to
EPIX Medical, Inc.; and
WHEREAS, the Company has recently increased the number of shares authorized
for issuance under its 1992 Equity Incentive Plan.
NOW THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth and other good and valuable consideration, the
parties hereto agree as follows:
1. Amendment to Rights Agreement. The Rights Agreement is hereby amended as
follows:
Section 3. Right of First Refusal. That the number "1,749,852" on the 14th
line of Section 3(b) is hereby deleted and replaced with "2,299,852".
2. No Other Amendments. There have been no other changes, modifications or
alterations to the Rights Agreement except as amended hereby.
3. Entire Agreement. The Rights Agreement, as amended hereby, embodies the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
<PAGE>
4. Counterparts. This Amendment may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
5. Headings. The headings of the sections, subsections, and paragraphs of
this Amendment have been added for convenience only and shall not be deemed to
be a part of this Amendment.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the
day and year first above written.
EPIX MEDICAL, INC.
By: /s/ Michael D. Webb
------------------------
Michael D. Webb
President
/s/ Randall B. Lauffer
-------------------------
Randall B. Lauffer
- 2 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 2 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
SUMMIT PHARMACEUTICALS
INTERNATIONAL CORPORATION
By: /s/ A. Tamai
---------------------
Name: A. Tamai
Title: President and CEO
NIPPON SHOJI KAISHA, LTD.
By: /s/ Kazuhiro Shibata
----------------------
Name: Kazuhiro Shibata
Title: Managing Director
- 3 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 2 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
ACCEL IV L.P.
By: Accel IV Associates L.P.,
its General Partner
By: /s/ Luke Evnin
-------------------------------
Name: Luke Evnin
Title: General Partner
ACCEL INVESTORS '93 L.P.
By: /s/ G. Carter Sednaoui
-------------------------------
Name: G. Carter Sednaoui
Title: General Partner
ACCEL KEIRETSU L.P.
By: Accel Partners & Co., Inc.,
its General Partner
By: /s/ G. Carter Sednaoui
-------------------------------
Name: G. Carter Sednaoui
Title: General Partner
ELLMORE C. PATTERSON PARTNERS
By: /s/ G. Carter Sednaoui
-------------------------------
Name: G. Carter Sednaoui
Title: General Partner
PROSPER PARTNERS
By: /s/ G. Carter Sednaoui
-------------------------------
Name: G. Carter Sednaoui
Title: Attorney-in-Fact
- 4 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 2 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
*
-------------------------------
Neill H. Brownstein
*
-------------------------------
G. Felda Hardymon
*
-------------------------------
Christopher Gabrieli
*
-------------------------------
Gabrieli Family Foundation
*
-------------------------------
David J. Cowan
*
-------------------------------
C. Samantha Chen
*
-------------------------------
Rachel J. Erickson
*
-------------------------------
Gautam A. Prakash
*
-------------------------------
John K. Rodakis
*
-------------------------------
Rodney A. Cohen
*
-------------------------------
Richard R. Davis
- 5 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 2 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
*
-------------------------------
Adam P. Godfrey
*
-------------------------------
Barbara M. Henagan
*
-------------------------------
Belisarius Corporation
*
-------------------------------
Quentin Corporation
*
-------------------------------
Diane N. McPartlin
*
-------------------------------
Robi L. Soni
*
-------------------------------
Robert J. S. Roriston
*
-------------------------------
Russell D. Sternlicht
*
-------------------------------
William T. Burgin
*
-------------------------------
Brimstone Island Co. L.P.
*
-------------------------------
Michael Barach
*
-------------------------------
Ravi Mhatre
- 6 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 2 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
* By: /s/ Robert H. Buescher
-------------------------------
Name: Robert H. Buescher
Title: Attorney-in-Fact
/s/ Robert H. Buescher
-------------------------------
Robert H. Buescher
BESSEMER VENTURE PARTNERS III L.P.
By: Deer III & Co.,
General Partner
By: /s/ Robert H. Buescher
-------------------------------
Name: Robert H. Buescher
Title: General Partner
BVP III SPECIAL SITUATIONS L.P.
By: Deer III & Co.,
General Partner
By: /s/ Robert H. Buescher
-------------------------------
Name: Robert H. Buescher
Title: General Partner
- 7 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 2 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
DOMINION VENTURES, INC.
By: /s/ Randolph Werner
-------------------------------
Name: Randolph Werner
Title:
DOMINION FUND II
By: /s/ Randolph Werner
-------------------------------
Name: Randolph Werner
Title:
- 8 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 2 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
ROVENT II LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation, General
Partner
By: /s/ Paal Gisholt
-------------------------------------
Name: Paal Gisholt
Title: Investment Manager
ADVENT PERFORMANCE MATERIALS
LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation, General
Partner
By: /s/ Paal Gisholt
-------------------------------------
Name: Paal Gisholt
Title: Investment Manager
ADWEST LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation, General
Partner
By: /s/ Paal Gisholt
-------------------------------------
Name: Paal Gisholt
Title: Investment Manager
ADVENT PARTNERS LIMITED
PARTNERSHIP
By: Advent International Corporation, General
Partner
By: /s/ Paal Gisholt
-------------------------------------
Name: Paal Gisholt
Title: Investment Manager
- 9 -
<PAGE>
SIGNATURE PAGE TO AMENDMENT NO. 2 TO
THIRD AMENDED AND RESTATED STOCKHOLDERS' RIGHTS AGREEMENT
FIDELITY VENTURES, LTD.
By: /s/ Neal Yanofsky
------------------------------------
Name: Neal Yanofsky
Title: Vice President
DAICHII RADIOISOTOPE LABORATORIES, LTD.
By: /s/ Osamu Ikeda
------------------------------------
Name: Osamu Ikeda, M.D.
Title: President and Chief Executive Officer
Exhibit 10.28
EPIX MEDICAL, INC.
Amended and Restated 1992 Incentive Plan
Section 1. Purpose
The purpose of the EPIX Medical, Inc. Amended and Restated 1992
Incentive Plan (the "Plan") is to attract and retain key employees and
consultants to provide an incentive for them to assist the Company to achieve
long-range performance goals and to enable them to participate in the long-term
growth of the Company.
Section 2. Definitions
"Affiliate" means any business entity in which the Company owns
directly or indirectly 50% or more of the total combined voting power or has a
significant financial interest as determined by the Committee.
"Award" means any Option, Stock Appreciation Right, Performance Share,
Restricted Stock or Stock Unit awarded under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means one or more committees each comprised of not less
than two members of the Board appointed by the Board to administer the Plan or a
specified portion thereof. If a Committee is authorized to grant Options to a
Reporting Person or a "covered employee" within the meaning of Section 162(m) of
the Code, each member shall be a "Non-Employee Director" or the equivalent
within the meaning of Rule 16b-3 under the Exchange Act or an "outside director"
or the equivalent within the meaning of Section 162(m) of the Code,
respectively.
"Common Stock" or "Stock" means the Common Stock, $.01 par value per
share, of the Company.
"Company" means EPIX Medical, Inc.
"Designated Beneficiary" means the beneficiary designated by a
Participant, in a manner determined by the Committee, to receive amounts due or
exercise rights of the Participant in the event of the Participant's death. In
the absence of an effective designation by a Participant, Designated Beneficiary
shall mean the Participant's estate.
<PAGE>
"Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Committee
in good faith or in the manner established by the Committee from time to time.
"Incentive Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 which is intended to meet the
requirements of Section 422 of the Code or any successor provision.
"Nonstatutory Stock Option" means an option to purchase shares of
Common Stock awarded to a Participant under Section 6 which is not intended to
be an Incentive Stock Option.
"Option" means an Incentive Stock Option or a Nonstatutory Stock
Option.
"Participant" means a person selected by the Committee to receive an
Award under the Plan.
"Performance Cycle" or "Cycle" means the period of time selected by the
Committee during which performance is measured for the purpose of determining
the extent to which an award of Performance Shares has been earned.
"Performance Shares" mean shares of Common Stock which may be earned by
the achievement of performance goals awarded to a Participant under Section 8.
"Restricted Period" means the period of time selected by the Committee
during which an award of Restricted Stock may be forfeited to the Company.
"Restricted Stock" means shares of Common Stock subject to forfeiture
awarded to a Participant under Section 9.
"Stock Appreciation Right" or "SAR" means a right to receive any excess
in value of shares of Common Stock over the exercise price awarded to a
Participant under Section 7.
"Stock Unit" means an award of Common Stock or units that are valued in
whole or in part by reference to, or otherwise based on, the value of Common
Stock, awarded to a Participant under Section 10.
Section 3. Administration
The Plan shall be administered by the Committee, provided that the
Board may in any instance perform any of the functions of the Committee. The
Committee shall have authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Plan as it shall
from time to time consider advisable, and to interpret the provisions of the
2
<PAGE>
Plan. The Committee's decisions shall be final and binding. To the extent
permitted by applicable law, the Committee may delegate to one or more executive
officers of the Company the power to grant Awards to Participants who are not
Reporting Persons or covered employees and all determinations under the Plan
with respect thereto, provided that the Committee shall fix the maximum amount
of such Awards for all such Participants and a maximum for any one Participant.
Section 4. Eligibility
All employees (including part-time employees), and in the case of
Awards other than Incentive Stock Options, directors and consultants of the
Company or any Affiliate capable of contributing significantly to the successful
performance of the Company, other than a person who has irrevocably elected not
to be eligible, are eligible to be Participants in the Plan.
Section 5. Stock Available for Awards
(a) Subject to adjustment under subsection (b) below, Awards may be
made under the Plan for up to shares of Common Stock. If any Award expires or is
terminated unexercised or is forfeited without the Participant having had the
benefits of ownership (other than voting rights), the shares subject to such
Award, to the extent of such expiration, termination or forfeiture, shall again
be available for award under the Plan. Common Stock issued through the
assumption or substitution of outstanding grants from an acquired company shall
not reduce the shares available for Awards under the Plan. Shares issued under
the Plan may consist in whole or in part of authorized but unissued shares or
treasury shares.
(b) In the event that the Committee determines that any stock dividend,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares, warrants or rights offering to purchase Common
Stock at a price substantially below fair market value, or other similar
transaction affects the Common Stock such that an adjustment is required in
order to preserve the benefits or potential benefits intended to be made
available under the Plan, then the Committee, subject, in the case of Incentive
Stock Options, to any limitation required under the Code, shall equitably adjust
any or all of (i) the number and kind of shares in respect of which Awards may
be made under the Plan, (ii) the number and kind of shares subject to
outstanding Awards, and (iii) the award, exercise or conversion price with
respect to any of the foregoing, and if considered appropriate, the Committee
may make provision for a cash payment with respect to an outstanding Award,
provided that the number of shares subject to any Award shall always be a whole
number.
3
<PAGE>
Section 6. Stock Options
(a) General.
(i) Subject to the provisions of the Plan, the Committee may
award Incentive Stock Options and Nonstatutory Stock Options and determine the
number of shares to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the Option. The terms
and conditions of Incentive Stock Options shall be subject to and comply with
Section 422 of the Code, or any successor provision, and any regulations
thereunder. See subsection (b) below.
(ii) The Committee shall establish the option price at the
time each Option is awarded. In the case of Incentive Stock Options, such price
shall not be less than 100% of the Fair Market Value of the Common Stock on the
date of award.
(iii) Each Option shall be exercisable at such times and
subject to such terms and conditions as the Committee may specify in the
applicable Award or thereafter. The Committee may impose such conditions with
respect to the exercise of Options, including conditions relating to applicable
federal or state securities laws, as it considers necessary or advisable.
(iv) No shares shall be delivered pursuant to any exercise of
an Option until payment in full of the option price therefor is received by the
Company. Such payment may be made in whole or in part in cash or, to the extent
permitted by the Committee at or after the award of the Option, by delivery of a
note or shares of Common Stock owned by the optionee, or by retaining shares
otherwise issuable under the Plan, valued at their Fair Market Value on the date
of delivery, or such other lawful consideration as the Committee may determine.
(b) Incentive Stock Options.
Options granted under the Plan which are intended to be
Incentive Stock Options shall be subject to the following additional terms and
conditions:
(i) All Incentive Stock Options granted under the Plan shall,
at the time of grant, be specifically designated as such in the option agreement
covering such Incentive Stock Options. The Option exercise period shall not
exceed ten years from the date of grant.
(ii) If any employee to whom an Incentive Stock Option is to
be granted under the Plan is, at the time of the grant of such option, the owner
of stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company (after taking into account the attribution of
stock ownership rules of Section 424(d) of the Code), then the following special
provisions shall be applicable to the Incentive Stock Option granted to such
individual:
4
<PAGE>
(x) The purchase price per share of the Common Stock
subject to such Incentive Stock Option shall not be less than
110% of the Fair Market Value of one share of Common Stock at
the time of grant; and
(y) The option exercise period shall not exceed five
years from the date of grant.
(iii) For so long as the Code shall so provide, options
granted to any employee under the Plan (and any other incentive stock option
plans of the Company) which are intended to constitute Incentive Stock Options
shall not constitute Incentive Stock Options to the extent that such options, in
the aggregate, become exercisable for the first time in any one calendar year
for shares of Common Stock with an aggregate Fair Market Value (determined as of
the respective date or dates of grant) of more than $100,000.
Section 7. Stock Appreciation Rights
(a) Subject to the provisions of the Plan, the Committee may award SARs
in tandem with an Option (at or after the award of the Option), or alone and
unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem SARs are exercised. SARs granted in
tandem with Options shall have an exercise price of not less than the exercise
price of the related Option.
(b) An SAR related to an Option which can only be exercised during
limited periods following a change in control of the Company may entitle the
Participant to receive an amount based upon the highest price paid or offered
for Common Stock in any transaction relating to the change in control or paid
during the thirty-day period immediately preceding the occurrence of the change
in control in any transaction reported in any stock market in which the Common
Stock is usually traded.
Section 8. Performance Shares
(a) Subject to the provisions of the Plan, the Committee may award
Performance Shares and determine the number of such shares for each Performance
Cycle and the duration of each Performance Cycle. There may be more than one
Performance Cycle in existence at any one time, and the duration of Performance
Cycles may differ from each other. The payment value of Performance Shares shall
be equal to the Fair Market Value of the Common Stock on the date the
Performance Shares are earned or, in the discretion of the Committee, on the
date the Committee determines that the Performance Shares have been earned.
(b) The Committee shall establish performance goals for each Cycle, for
the purpose of determining the extent to which Performance Shares awarded for
such Cycle are earned, on
5
<PAGE>
the basis of such criteria and to accomplish such objectives as the Committee
may from time to time select. During any Cycle, the Committee may adjust the
performance goals for such Cycle as it deems equitable in recognition of unusual
or non-recurring events affecting the Company, changes in applicable tax laws or
accounting principles, or such other factors as the Committee may determine.
(c) As soon as practicable after the end of a Performance Cycle, the
Committee shall determine the number of Performance Shares which have been
earned on the basis of performance in relation to the established performance
goals. The payment values of earned Performance Shares shall be distributed to
the Participant or, if the Participant has died, to the Participant's Designated
Beneficiary, as soon as practicable thereafter. The Committee shall determine,
at or after the time of award, whether payment values will be settled in whole
or in part in cash or other property, including Common Stock or Awards.
Section 9. Restricted Stock
(a) Subject to the provisions of the Plan, the Committee may award
shares of Restricted Stock and determine the duration of the Restricted Period
during which, and the conditions under which, the shares may be forfeited to the
Company and the other terms and conditions of such Awards. Shares of Restricted
Stock shall be issued for no cash consideration or such minimum consideration as
may be required by applicable law.
(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as permitted by the Committee, during
the Restricted Period. Shares of Restricted Stock shall be evidenced in such
manner as the Committee may determine. Any certificates issued in respect of
shares of Restricted Stock shall be registered in the name of the Participant
and unless otherwise determined by the Committee, deposited by the Participant,
together with a stock power endorsed in blank, with the Company. At the
expiration of the Restricted Period, the Company shall deliver such certificates
to the Participant or if the Participant has died, to the Participant's
Designated Beneficiary.
Section 10. Stock Units
(a) Subject to the provisions of the Plan, the Committee may award
Stock Units subject to such terms, restrictions, conditions, performance
criteria, vesting requirements and payment rules as the Committee shall
determine.
(b) Shares of Common Stock awarded in connection with a Stock Unit
Award shall be issued for no cash consideration or such minimum consideration as
may be required by applicable law.
6
<PAGE>
Section 11. General Provisions Applicable to Awards
(a) Documentation. Each Award under the Plan shall be evidenced by a
writing delivered to the Participant specifying the terms and conditions thereof
and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Committee considers necessary or advisable to
achieve the purposes of the Plan or comply with applicable tax and regulatory
laws and accounting principles.
(b) Committee Discretion. Each type of Award may be made alone, in
addition to or in relation to any other type of Award. The terms of each type of
Award need not be identical, and the Committee need not treat Participants
uniformly. Except as otherwise provided by the Plan or a particular Award, any
determination with respect to an Award may be made by the Committee at the time
of award or at any time thereafter.
(c) Settlement. The Committee shall determine whether Awards are
settled in whole or in part in cash, Common Stock, other securities of the
Company, Awards or other property. The Committee may permit a Participant to
defer all or any portion of a payment under the Plan, including the crediting of
interest on deferred amounts denominated in cash and dividend equivalents on
amounts denominated in Common Stock.
(d) Dividends and Cash Awards In the discretion of the Committee, any
Award under the Plan may provide the Participant with (i) dividends or dividend
equivalents payable currently or deferred with or without interest, and (ii)
cash payments in lieu of or in addition to an Award.
(e) Termination of Employment. The Committee shall determine the effect
on an Award of the disability, death, retirement or other termination of
employment of a Participant and the extent to which, and the period during
which, the Participant's legal representative, guardian or Designated
Beneficiary may receive payment of an Award or exercise rights thereunder.
(f) Change in Control. In order to preserve a Participant's rights
under an Award in the event of a change in control of the Company (as defined by
the Committee), the Committee in its discretion may, at the time an Award is
made or at any time thereafter, take one or more of the following actions: (i)
provide for the acceleration of any time period relating to the exercise or
realization of the Award, (ii) provide for the purchase of the Award upon the
Participant's request for an amount of cash or other property that could have
been received upon the exercise or realization of the Award had the Award been
currently exercisable or payable, (iii) adjust the terms of the Award in a
manner determined by the Committee to reflect the change in control, (iv) cause
the Award to be assumed, or new rights substituted therefor, by another entity,
or (v) make such other provision as the Committee may consider equitable and in
the best interests of the Company.
7
<PAGE>
(g) Withholding Taxes. The Participant shall pay to the Company, or
make provision satisfactory to the Committee for payment of, any taxes required
by law to be withheld in respect of Awards under the Plan no later than the date
of the event creating the tax liability. The Company and its Affiliates may, to
the extent permitted by law, deduct any such tax obligations from any payment of
any kind otherwise due to the Participant. In the Committee's discretion, the
Participant may pay any taxes due with respect to an Award in whole or in part
in shares of Common Stock, including shares retained from the Award creating the
tax obligation, valued at their Fair Market Value on the date of retention or
delivery.
(h) Foreign Nationals. Awards may be made to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or comply with
applicable laws.
(i) Amendment of Award. The Committee may amend, modify or terminate
any outstanding Award, including substituting therefor another Award of the same
or a different type, changing the date of exercise or realization and converting
an Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the Committee
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.
Section 12. Miscellaneous
(a) No Right To Employment. No person shall have any claim or right to
be granted an Award, and the grant of an Award shall not be construed as giving
a Participant the right to continued employment. The Company expressly reserves
the right at any time to dismiss a Participant free from any liability or claim
under the Plan, except as expressly provided in the applicable Award.
(b) No Rights As Shareholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a shareholder with respect to any shares of Common Stock to be distributed
under the Plan until he or she becomes the holder thereof. A Participant to whom
Common Stock is awarded shall be considered the holder of the Stock at the time
of the Award except as otherwise provided in the applicable Award.
(c) Effective Date. The 1992 Equity Incentive Plan became effective on
July 10, 1992. Subject to the approval of the stockholders of the Company, this
Amended and Restated 1992 Equity Incentive Plan will be effective on November
___, 1996. Prior to such approval, Awards may be made under the Plan expressly
subject to such approval.
(d) Amendment of Plan. The Committee may amend, suspend or terminate
the Plan or any portion thereof at any time, subject to any shareholder approval
that the Committee determines to be necessary or advisable.
8
<PAGE>
(e) Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the Commonwealth of Massachusetts.
9
Exhibit 10.29
1992 ISO-_________ _________ Shares
EPIX MEDICAL, INC.
Amended and Restated 1992 Equity Incentive Plan
Incentive Stock Option Certificate
EPIX Medical, Inc., a Delaware corporation (the "Company"), hereby
grants to the person named below an option to purchase shares of Common Stock,
$.01 par value per share, of the Company (the "Option") under and subject to the
Company's Amended and Restated 1992 Equity Incentive Plan (the "Plan")
exercisable on the following terms and conditions and those set forth on the
reverse side of this Certificate:
Name of Optionholder: ______________________
Address: ______________________
______________________
Social Security No. ______________________
Number of Shares: ______________________
Option Price: ______________________
Date of Grant: ______________________
Exercisability
Schedule: After , 19 , as to ______ shares,
after , 19 , as to ______ additional shares,
after , 19 , as to ______ additional shares, and
after , 20 , as to ______ additional shares.
This Option is intended to be treated as an Incentive Stock Option
under section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
By signing this Stock Option Certificate and returning one signed
copy to the Company, the Optionholder accepts the Option described herein on the
terms and conditions set forth herein.
EPIX MEDICAL, INC. Accepted and agreed to:
By:
------------------------- ---------------------------
Michael D. Webb Optionholder
President
<PAGE>
EPIX MEDICAL, INC. AMENDED AND RESTATED 1992 EQUITY INCENTIVE PLAN
Incentive Stock Option Terms and Conditions
1. Plan Incorporated by Reference. The Option is issued pursuant
to the terms of the Plan. This Certificate does not set forth all of the terms
and conditions of the Plan, which are incorporated herein by reference.
Capitalized terms used and not otherwise defined herein have the meanings given
to them in the Plan. The Committee administers the Plan and its determinations
regarding the Plan are final and binding. Copies of the Plan may be obtained
upon written request without charge from the Company.
2. Option Price. The price to be paid for each share of Common
Stock upon exercise of the whole or any part of this Option shall be the amount
set forth as the Option Price on the face of this Certificate, which is not less
than 100% of the fair market value of a share of Common Stock, $0.01 par value,
of the Company on the Date of Grant.
3. Exercisability Schedule. This Option may be exercised with
respect to the aggregate number of shares set forth in the Exercisability
Schedule on the face of this Certificate at any time after the dates specified
in such schedule, provided, however, that this Option may not be exercised as to
any shares after the expiration of ten (10) years from the Date of Grant.
4. Method and Terms of Exercise. This Option may be exercised at
any time and from time to time, subject to the limitation of Section 2 above, up
to the aggregate number of shares specified herein, but in no event for the
purchase of other than full shares. Written notice of exercise shall be
delivered to the Company specifying the number of shares with respect to which
the Option is being exercised and a date not later than fifteen (15) days after
the date of the delivery of such notice as the date on which the Optionholder
will take up and pay for such shares. On the date specified in such notice, the
Company will deliver to the Optionholder a certificate for the number of shares
with respect to which the Option is being exercised against payment therefor in
cash, by certified check or in such other form, including shares of Common Stock
of the Company valued at their Fair Market Value on the date of delivery, as the
Committee may at the time of exercise approve. In connection with any purchase
of shares pursuant to an exercise of this Option, the Optionholder shall execute
a Stock Purchase and Right of First Refusal Agreement substantially in the form
of Exhibit 1 attached hereto.
5. Rights as a Stockholder or Employee. The Optionholder shall not
be deemed, for any purpose, to have any rights whatever in respect of shares to
which the Option shall not have been exercised and payment made as aforesaid.
The Optionholder shall not be deemed to have any rights to continued employment
by the Company by virtue of the grant of this Option.
6. Recapitalizations, Mergers, Etc. In the event that the
Committee in its discretion determines that any stock dividend, split-up,
combination or reclassification of shares, recapitalization or other similar
capital change affects the Common Stock of the Company such that adjustment is
required in order to preserve the benefits or potential benefits of this Option,
the maximum aggregate number and kind of shares or securities of the Company
subject to this Option and the exercise price of this Option shall be
appropriately adjusted by the Committee (whose determination shall be
conclusive) so that the proportionate number of shares or other securities
subject to this Option and the proportionate interest of the Optionholder shall
be maintained as before the occurrence of such event.
In the event of a consolidation or merger of the Company with
another corporation, or the sale or exchange of all or substantially all of the
assets of the Company, or a reorganization or liquidation of the Company, the
Optionholder shall be entitled to receive upon exercise and payment in
accordance with the terms of this Option the same shares, securities or property
as he would have been entitled to receive upon the occurrence of such event if
he had been, immediately prior to such event, the holder of the number of shares
of Common Stock purchasable under this Option, or if another corporation shall
be the survivor, such corporation shall substitute therefor substantially
equivalent shares, securities or property of such other corporation; provided,
however, that in lieu of the foregoing the Committee may upon written notice to
the Optionholder provide that this Option shall terminate on a date not less
than twenty (20) days after the date of such notice unless theretofore
exercised. In connection with such notice, the Committee may in its discretion
accelerate or waive any deferred exercise period.
7. Option Not Transferable. This Option is not transferable by the
Optionholder otherwise than by will or the laws of descent and distribution, and
is exercisable, during the Optionholder's lifetime, only by him.
8. Exercise of Option After Termination of Employment. If the
Optionholder's employment with (i) the Company, or (ii) a corporation (or parent
or subsidiary corporation of such corporation) issuing or assuming a stock
option in a transaction to which section 425(a) of the Code applies, is
terminated for any reason otherwise than by his death or disability (within the
meaning of section 105(d)(4) of the Code), he may exercise the rights which he
had hereunder at the time of such termination only within three months from the
date of termination. If his employment is terminated for reason of disability,
such rights may be exercised within twelve months from the date of termination.
Upon the death of the Optionholder, those entitled to do so by the
Optionholder's will or the laws of descent and distribution shall have the
right, at any time within twelve months after the date of death, to exercise in
whole or in part any rights which were available to the Optionholder at the time
of his death. This Option shall terminate, and no rights hereunder may be
exercised, after the expiration of the applicable exercise period.
Notwithstanding the foregoing provisions of this Section 7, no rights under this
Option may be exercised after the expiration of ten (10) years from the Date of
Grant.
9. Compliance with Securities Laws. It shall be a condition to the
Optionholder's right to purchase shares of Common Stock hereunder that the
Company may, in its discretion, require (a) that the shares of Common Stock
reserved for issue upon the exercise of this Option shall have been duly listed,
upon official notice of issuance, upon any national securities exchange on which
the Company's Common Stock may then be listed, (b) that either (i) a
registration statement under the Securities Act of 1933, as amended, with
respect to said shares shall be in effect, or (ii) in the opinion of counsel for
the Company the proposed purchase shall be exempt from registration under said
Act and the Optionholder shall have made such undertakings and agreements with
the Company as the Company may reasonably require, and (c) that such other
steps, if any, as counsel for the Company shall deem necessary to comply with
any law, rule or regulation applicable to the issue of such shares by the
Company shall have been taken by the Company or the Optionholder, or both. The
certificates representing the shares purchased under this Option may contain
such legends as counsel for the Company shall deem necessary to comply with any
applicable law, rule or regulation.
10. Payment of Taxes. Any exercise of this Option is conditioned
upon the payment, if the Company so requests, by the Optionholder or his heirs
by will or by the laws of descent and distribution, of all state and federal
taxes imposed upon the exercise of this Option and the issue to the Optionholder
of the shares of Common Stock covered hereby. In the Committee's discretion,
such tax obligations may be paid in whole or in part in shares of Common Stock,
including retention of shares being purchased by the Optionholder, valued at
their Fair Market Value on the date of delivery. The Company may to the extent
permitted by law deduct any such tax obligations from any payment of any kind
otherwise due to the Optionholder.
11. Notice of Sale of Shares Required. The Optionholder agrees to
notify the Company in writing within thirty (30) days of the disposition of one
or more shares of stock which were transferred to him pursuant to his exercise
of this Option if such disposition occurs within two years of the Date of Grant
or within one year after the transfer of such shares to him. Adopted 11/96
Exhibit 10.30
1992 NSO-_________ ________ Shares
EPIX MEDICAL, INC.
Amended and Restated 1992 Equity Incentive Plan
Nonstatutory Stock Option Certificate
EPIX Medical, Inc., a Delaware corporation (the "Company"), hereby
grants to the person named below an option to purchase shares of Common Stock,
$.01 par value per share, of the Company (the "Option") under and subject to the
Company's Amended and Restated 1992 Equity Incentive Plan (the "Plan")
exercisable on the following terms and conditions and those set forth on the
reverse side of this Certificate:
Name of Optionholder:
Address:
Social Security No.
Number of Shares:
Option Price:
Date of Grant:
The Option granted hereunder shall become exercisable on such
dates and for such number of shares as is indicated in the Exercisabiltiy
Schedule below, provided that as of each such date, the Optionholder is then
engaged as a consultant to the Company pursuant to a Consulting and
Confidentiality Agreement substantially in the form attached hereto:
Exercisability
Schedule: After , 19 , as to ______ shares,
after , 19 , as to ______ additional shares,
after , 19 , as to ______ additional shares, and
after , 20 , as to ______ additional shares.
This Option shall not be treated as an Incentive Stock Option
under section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
By signing this Stock Option Certificate and returning one signed
copy to the Company, the Optionholder accepts the Option described herein on the
terms and conditions set forth herein.
EPIX MEDICAL, INC. Accepted and agreed to:
By:
------------------------- ------------------------------
Michael D. Webb Optionholder
President
<PAGE>
EPIX MEDICAL, INC. AMENDED AND RESTATED 1992 EQUITY INCENTIVE PLAN
Nonstatutory Stock Option Terms and Conditions
1. Plan Incorporated by Reference. The Option is issued pursuant
to the terms of the Plan. This Certificate does not set forth all of the terms
and conditions of the Plan, which are incorporated herein by reference.
Capitalized terms used and not otherwise defined herein have the meanings given
to them in the Plan. The Committee administers the Plan and its determinations
regarding the Plan are final and binding. Copies of the Plan may be obtained
upon written request without charge from the Company.
2. Option Price. The price to be paid for each share of Common
Stock upon exercise of the whole or any part of this Option shall be the amount
set forth as the Option Price on the face of this Certificate.
3. Exercisability Schedule. This Option may be exercised with
respect to the aggregate number of shares set forth in the Exercisability
Schedule on the face of this Certificate at any time after the dates specified
in such schedule, provided, however, that this Option may not be exercised as to
any shares after the expiration of ten (10) years from the Date of Grant.
4. Method and Terms of Exercise. This Option may be exercised at
any time and from time to time, subject to the limitation of Section 2 above, up
to the aggregate number of shares specified herein, but in no event for the
purchase of other than full shares. Written notice of exercise shall be
delivered to the Company specifying the number of shares with respect to which
the Option is being exercised and a date not later than fifteen (15) days after
the date of the delivery of such notice as the date on which the Optionholder
will take up and pay for such shares. On the date specified in such notice, the
Company will deliver to the Optionholder a certificate for the number of shares
with respect to which the Option is being exercised against payment therefor in
cash, by certified check or in such other form, including shares of Common Stock
of the Company valued at their Fair Market Value on the date of delivery, as the
Committee may at the time of exercise approve. In connection with any purchase
of shares pursuant to an exercise of this Option, the Optionholder shall execute
a Stock Purchase and Right of First Refusal Agreement substantially in the form
of Exhibit 1 attached hereto.
5. Rights of Optionholder. The Optionholder shall not be deemed,
for any purpose, to have any rights whatever in respect of shares to which the
Option shall not have been exercised and payment made as aforesaid. The
Optionholder shall not be deemed to have any rights to continued employment by,
or other business relationship with, the Company by virtue of the grant of this
Option.
6. Recapitalizations, Mergers, Etc. In the event that the
Committee in its discretion determines that any stock dividend, split-up,
combination or reclassification of shares, recapitalization or other similar
capital change affects the Common Stock of the Company such that adjustment is
required in order to preserve the benefits or potential benefits of this Option,
the maximum aggregate number and kind of shares or securities of the Company
subject to this Option and the exercise price of this Option shall be
appropriately adjusted by the Committee (whose determination shall be
conclusive) so that the proportionate number of shares or other securities
subject to this Option and the proportionate interest of the Optionholder shall
be maintained as before the occurrence of such event.
In the event of a consolidation or merger of the Company with
another corporation, or the sale or exchange of all or substantially all of the
assets of the Company, or a reorganization or liquidation of the Company, the
Optionholder shall be entitled to receive upon exercise and payment in
accordance with the terms of this Option the same shares, securities or property
as he would have been entitled to receive upon the occurrence of such event if
he had been, immediately prior to such event, the holder of the number of shares
of Common Stock purchasable under this Option, or if another corporation shall
be the survivor, such corporation shall substitute therefor substantially
equivalent shares, securities or property of such other corporation; provided,
however, that in lieu of the foregoing the Committee may upon written notice to
the Optionholder provide that this Option shall terminate on a date not less
than twenty (20) days after the date of such notice unless theretofore
exercised. In connection with such notice, the Committee may in its discretion
accelerate or waive any deferred exercise period.
7. Option Not Transferable. This Option is not transferable by
the Optionholder otherwise than by will or the laws of descent and distribution,
and is exercisable, during the Optionholder's lifetime, only by him.
8. Exercise of Option After Termination of Consultancy. If the
Optionholder's consultancy with the Company is terminated for any reason
otherwise than by his death or disability (as determined by the Committee), he
may exercise the rights which he had hereunder at the time of such termination
only within three months from the date of termination. If his consultancy is
terminated for reason of disability, such rights may be exercised within twelve
months from the date of termination. Upon the death of the Optionholder, those
entitled to do so by the Optionholder's will or the laws of descent and
distribution shall have the right, at any time within twelve months after the
date of death, to exercise in whole or in part any rights which were available
to the Optionholder at the time of his death. This Option shall terminate, and
no rights hereunder may be exercised, after the expiration of the applicable
exercise period. Notwithstanding the foregoing provisions of this Section 7, no
rights under this Option may be exercised after the expiration of ten (10) years
from the Date of Grant.
9. Compliance with Securities Laws. It shall be a condition to the
Optionholder's right to purchase shares of Common Stock hereunder that the
Company may, in its discretion, require (a) that the shares of Common Stock
reserved for issue upon the exercise of this Option shall have been duly listed,
upon official notice of issuance, upon any national securities exchange on which
the Company's Common Stock may then be listed, (b) that either (i) a
registration statement under the Securities Act of 1933, as amended, with
respect to said shares shall be in effect, or (ii) in the opinion of counsel for
the Company the proposed purchase shall be exempt from registration under said
Act and the Optionholder shall have made such undertakings and agreements with
the Company as the Company may reasonably require, and (c) that such other
steps, if any, as counsel for the Company shall deem necessary to comply with
any law, rule or regulation applicable to the issue of such shares by the
Company shall have been taken by the Company or the Optionholder, or both. The
certificates representing the shares purchased under this Option may contain
such legends as counsel for the Company shall deem necessary to comply with any
applicable law, rule or regulation.
10. Payment of Taxes. Any exercise of this Option is conditioned
upon the payment, if the Company so requests, by the Optionholder or his heirs
by will or by the laws of descent and distribution, of all state and federal
taxes imposed upon the exercise of this Option and the issue to the Optionholder
of the shares of Common Stock covered hereby. In the Committee's discretion,
such tax obligations may be paid in whole or in part in shares of Common Stock,
including retention of shares being purchased by the Optionholder, valued at
their Fair Market Value on the date of delivery. The Company may to the extent
permitted by law deduct any such tax obligations from any payment of any kind
otherwise due to the Optionholder. Adopted 11/96
Exhibit 10.31
EPIX MEDICAL, INC.
1996 Director Stock Option Plan
1. Purpose.
This 1996 Director Stock Option Plan (the "Plan") governs options to
purchase Common Stock, $.01 par value per share (the "Common Stock"), of EPIX
Medical, Inc. (the "Company") granted by the Company to members of the Board of
Directors of the Company who are not also officers or employees of the Company.
The purpose of the Plan is to attract and retain qualified persons to serve as
Directors of the Company and to encourage ownership of the Common Stock of the
Company by such Directors.
2. Administration.
Grants of stock options under the Plan shall be automatic as provided
in Section 8. However, all questions of interpretation of the Plan or of any
options granted hereunder shall be determined by the Board of Directors of the
Company (the "Board"). Any and all powers of the Board under the Plan may be
exercised by a committee consisting of one or more Directors appointed by the
Board.
3. Eligibility.
Members of the Board who are not also officers or employees of the
Company shall be eligible to participate in the Plan.
4. Shares Subject to the Plan.
Options may be granted under the Plan in respect of a maximum of
100,000 shares of Common Stock, subject to adjustment as provided in Section 5
below. Shares to be issued upon the exercise of options granted under the Plan
may be either authorized but unissued shares or shares held by the Company in
its treasury. Whenever options under the Plan lapse or terminate or otherwise
become unexercisable, the shares of Common Stock which were available for such
options shall again be available for the grant of options under the Plan. The
Company shall at all times while the Plan is in force reserve such number of
shares of Common Stock as will be sufficient to satisfy the requirements of the
Plan.
5. Adjustment of Number of Option Shares.
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<PAGE>
In the event of a stock dividend, split-up, combination or
reclassification of shares, recapitalization or other similar capital change
relating to the Company's Common Stock, the maximum aggregate number and kind of
shares or securities of the Company as to which options may be granted under
this Plan and as to which options then outstanding shall be exercisable, and the
option price of such options shall be appropriately adjusted so that the
proportionate number of shares or other securities as to which options may be
granted and the proportionate interest of holders of outstanding options shall
be maintained as before the occurrence of such event.
In the event of any reorganization, consolidation or merger to which
the Company is a party and in which the Company does not survive, or upon the
dissolution or liquidation of the Company, all outstanding options shall
terminate; provided, however, that (i) in the event of the liquidation or
dissolution of the Company, or in the event of any such reorganization,
consolidation or merger in which the Company does not survive and with respect
to which the resulting or surviving corporation does not assume such outstanding
option or issue a substitute option therefor, such option shall be exercisable
in full, without regard to any installment restrictions on exercise imposed
pursuant to this Plan or any Option Agreement, during such period preceding the
effective date of such liquidation, dissolution, reorganization, consolidation
or merger (unless such option is terminated earlier by its terms) as may be
specified by the Board; and (ii) in the event of any such reorganization,
consolidation or merger, the Board may, in its good faith discretion, arrange to
have the resulting or surviving corporation assume such outstanding option or
issue a substitute option therefor.
No fraction of a share shall be purchasable or deliverable upon
exercise of an option, but, in the event any adjustment hereunder of the number
of shares covered by the option shall cause such number to include a fraction of
a share, such fraction shall be adjusted to the nearest smaller whole number of
shares.
6. Non-Statutory Stock Options.
All options granted under the Plan shall be non-statutory options not
entitled to special tax treatment under Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").
7. Form of Option Agreements.
Options shall be granted hereunder pursuant to the terms of Option
Agreements which shall be substantially in the form of the attached Exhibit A or
in such other form as the Board may from time to time determine.
8. Grant of Options and Option Terms.
Automatic Grant of Options. Options to purchase Common Stock shall
automatically be granted as follows:
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<PAGE>
(i) Commencing after the closing of the initial public
offering of the Company's Common Stock, each non-employee director of
the Company thereafter elected or reelected to the Board of Directors
shall, upon his or her election or reelection, automatically be granted
options to purchase 10,000 shares of Common Stock; and
(ii) Immediately following the annual meeting of stockholders
each year, each non-employee director of the Company continuing in
office after such meeting shall automatically be granted options to
purchase 10,000 shares of Common Stock.
No options shall be granted hereunder after ten years from the date on which
this Plan was initially approved and adopted by the Board.
Date of Grant. The "Date of Grant" for options granted under this Plan
shall be (i) the date of the respective director's election, for each grant
pursuant to clause (i) of the preceding paragraph and (ii) the date of the
respective annual meeting of stockholders, for each grant pursuant to clause
(ii) of the preceding paragraph.
Option Price. The option price for each option granted under this Plan
shall be the curent fair market value of a share of Common Stock of the Company
as determined by the Board of Directors in good faith, provided that if the
Company's Common Stock is then quoted on the National Association of Securities
Dealers Automated Quotations National Market ("Nasdaq") or traded on any other
exchange, then the current fair market value of a share of Common Stock of the
Company shall be the closing price for the Company's Common Stock as reported by
Nasdaq, or the principal exchange on which the Company's Common Stock is then
traded, on the last trading day prior to the Date of Grant.
Term of Option. The term of each option granted under the Plan shall
be ten years from the Date of Grant.
Period of Exercise. Options granted under the Plan shall become
exercisable in five equal installments on each of the first, second, third,
fourth and fifth anniversaries of the Date of Grant if and only if the option
holder is a member of the Board at the opening of business on that anniversary
date. Directors holding exercisable options under the Plan who cease to serve as
members of the Board of the Company for any reason other than death may, for a
period of seven months following the date of cessation of service, exercise the
rights they had under such options at the time they ceased being a Director. Any
rights that have not yet become exercisable shall terminate upon cessation of
membership on the Board. Upon the death of a Director, those entitled to do so
under the Director's will or the laws of descent and distribution shall have the
right, at any time within twelve months after the date of death, to exercise in
whole or in part any rights which were available to the Director at the time of
his death. The rights of the option holder may be exercised by the holder's
guardian or legal representative in the case of disability and by the
beneficiary designated by the holder in writing delivered to the Company or, if
none has been designated, by the holder's estate or his or her transferee on
death in accordance with this Plan, in the case of death. Options granted under
the Plan shall terminate, and no rights thereunder may be exercised, after the
expiration of the applicable exercise period. Notwithstanding the
- 3 -
<PAGE>
foregoing provisions, no rights under any options may be exercised after the
expiration of ten years from their Date of Grant.
Method of Exercise and Payment. Each exercise of an option hereunder
may be effected only by giving written notice, in the manner provided in Section
12 hereof, of intent to exercise the option, specifying the number of shares as
to which the option is being exercised, and accompanied by full payment of the
option price for the number of shares then being acquired. Such payment shall be
made in cash, by certified or bank check payable to the order of the Company,
credit to the Company's account at a financial or brokerage institution on the
date of exercise or a payment commitment of such an institution acceptable to
the Company, or if the option so provides, (i) in shares of Common Stock having
an aggregate Fair Market Value, at the time of such payment, equal to the total
option price for the number of shares of Common Stock for which payment is then
being made, or (ii) partly in cash or by certified or bank check payable to the
order of the Company and the balance in shares of Common Stock having an
aggregate Fair Market Value, at the time of such payment, equal to the
difference between the total option price for the number of shares of Common
Stock for which payment is then being made and the amount of the payment in cash
or by certified or bank check. Shares of Common Stock surrendered in payment of
all or part of the option price shall have been held by the person exercising
the option free of restrictions imposed by the Company for at least six months
unless otherwise permitted by the Board. For purposes hereof, the "Fair Market
Value" of the Common Stock shall be the current fair market value of a share of
Common Stock of the Common Stock of the Company as determined by the Board of
Directors in good faith, provided that if the Company's Common Stock is then
quoted on Nasdaq or traded on any other exchange, then the Fair Market Value
shall be the closing price for the Company's Common Stock as reported by Nasdaq,
or the principal exchange on which the Company's Common Stock is then traded,
for the business day immediately preceding the option exercise date.
Receipt by the Company of such notice and payment shall, for purposes
of this Plan, constitute exercise of the option or a part thereof. Within twenty
(20) days thereafter, the Company shall deliver or cause to be delivered to the
optionee a certificate or certificates for the number of shares of Common Stock
then being purchased by the optionee. Such shares shall be fully paid and
non-assessable. If any law or applicable regulation of the Securities and
Exchange Commission or other public regulatory authority (including, but not
limited to, a stock exchange) shall require the Company or the optionee (i) to
register or qualify, under the Securities Act of 1933, as amended (the
"Securities Act"), any similar federal statute then in force or any state law
regulating the sale of securities, any shares of Common Stock covered by an
option with respect to which notice of intent to exercise shall have been
delivered to the Company or (ii) to take any other action in connection with
such shares before issuance thereof may be effected, then the delivery of the
certificate or certificates for such shares shall be postponed until completion
of the necessary action, which the Company shall take in good faith and without
delay. All such action shall be taken by the Company at its own expense.
To the extent determined necessary by counsel to the Company to comply
with any applicable law, the Company may require an individual exercising an
option to represent that
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<PAGE>
his purchase of shares of Common Stock pursuant to such exercise is for his own
account, for investment and without a view to resale or distribution, and that
he will not sell or otherwise dispose of any such shares except pursuant to (i)
an effective registration statement covering such transaction filed with the
Securities and Exchange Commission and in compliance with all of the applicable
provisions of the Securities Act, and the rules and regulations thereunder, or
(ii) an opinion of Company counsel that such registration is not required.
Non-transferability. Options granted under the Plan shall not be
transferable by the holder thereof otherwise than by will or the laws of descent
and distribution or by such other means as may be permitted by Rule 16b-3 (or
any successor provision) under the Securities Exchange Act of 1934, as amended
("Rule 16b-3").
9. Limitation of Rights.
No Right to Continue as a Director. Neither the Plan, nor the granting
of an option or any other action taken pursuant to the Plan, shall constitute an
agreement or understanding, express or implied, that the Company will retain an
optionee as a Director for any period of time or at any particular rate of
compensation.
No Stockholders' Rights for Options. Directors shall have no rights as
stockholders with respect to the shares covered by their options until the date
they exercise such options and pay the option price to the Company, and no
adjustment will be made for dividends or other rights for which the record date
is prior to the date such option is exercised and paid for.
10. Stockholder Approval.
The Plan is subject to approval by the stockholders of the Company by
the affirmative vote of the holders of a majority of the shares of voting
capital stock present or represented and entitled to vote at a meeting of the
Company's stockholders. In the event such approval is not obtained, all options
granted under this Plan shall be void and without effect.
11. Amendment or Termination.
The Board may amend or terminate this Plan at any time subject to any
stockholder approval that the Board deems necessary.
12. Notices.
Any communication or notice required or permitted to be given under
this Plan shall be in writing and mailed by registered or certified mail or
delivered in hand, if to the Company, to its Vice President, Finance and
Administration at EPIX Medical, Inc., 71 Rogers Street, Cambridge, Massachusetts
02142-0118 and, if to an optionee, to such address as the optionee shall last
have furnished to the Company.
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<PAGE>
13. Governing Law.
The Plan shall be governed by and construed in accordance with the laws
of the Commonwealth of Massachusetts.
As adopted by the Board of Directors
on November ___, 1996
As approved by the Stockholders
on November __, 1996
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<PAGE>
EXHIBIT A
1996 DSO - _______ ________ Shares
EPIX MEDICAL, INC.
1996 Director Stock Option Plan
Non-statutory Stock Option Agreement
_______________ __, 199_
EPIX Medical, Inc. (the "Company"), a Delaware corporation, hereby
grants to the person named below an option to purchase shares of Common Stock,
$.01 par value per share of the Company (the "Option") under and subject to the
Company's 1996 Director Stock Option Plan (the "Plan") exercisable only on the
following terms and conditions and those set forth on the reverse side of this
Agreement:
Name of Optionee:
Address:
Social Security No.
Option Price:
Date of Grant:
Exercisability Schedule:
at any time on or after the first anniversary of the date hereof, as to
_________ shares,
at any time on or after the second anniversary of the date hereof, as
to _________ additional shares,
at any time on or after the third anniversary of the date hereof,
as to _________ additional shares,
at any time on or after the fourth anniversary of the date hereof,
as to _________ additional shares,
at any time on or after the fifth anniversary of the date
hereof, as to _________ additional shares,
provided that this Optionee is a member of the Board of Directors of the Company
(the "Board") at the opening of business on the date described above and
provided that this Option may not be exercised as to any shares after the
expiration of ten years from the date hereof.
By signing this Stock Option Agreement and returning on signed copy of
to the Company, the Optionee accepts the Option described herein on the terms
and conditions set forth herein or in the plan.
EPIX MEDICAL INC. Accepted and agreed to:
By: ____________________ _______________________
Title: Optionee
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<PAGE>
EPIX MEDICAL, INC.
1996 Director Stock Option Plan Terms and Conditions
1. This Option may be exercised from time to time in accordance with
the exercisability Schedule for up to the aggregate number of shares specified
herein, but in no event for the purchase of other than full shares; provided,
however, that this Option may not be exercised as to any shares after the
expiration of ten years from the date hereof. Written notice of exercise shall
be delivered to the Company specifying the number of shares with respect to
which the Option is being exercised. Not later than twenty days after the date
of the delivery of such notice the Company will deliver to the Optionee a
certificate for the number of shares with respect to which the Option is being
exercised against payment therefor in cash or by check, credit to the Company's
account at a financial or brokerage institution on the date of exercise or a
payment commitment of such an institution acceptable to the Company or by shares
of the Company's Common Stock, valued at their fair market value as of the date
of exercise as determined as provided in the Plan, or in any combination of
cash, check and shares of Common Stock. Shares of Common Stock surrendered in
payment of the option price shall have been held by the person exercising the
option free of restrictions imposed by the Company for at least six months
unless otherwise permitted by the Board.
2. The Optionee shall not be deemed, for any purpose, to have any
rights whatever in respect of shares to which the Option shall not have been
exercised and payment made as aforesaid. The Optionee shall not be deemed to
have any rights to continued service as director by virtue of the grant of this
Option.
3. In the event of stock dividend, split-up, combination or
reclassification of shares, recapitalization or other similar capital change
relating to the Common Stock, the maximum aggregate number and kind of shares of
securities of the Company subject to this Option and the exercise price of this
Option shall be appropriately adjusted by the Board (whose determination shall
be conclusive) so that the proportionate number of shares or other securities
subject to this Option and the proportionate interest of the Optionholder shall
be maintained as before the occurrence of such event.
4. In the event of any reorganization, consolidation or merger to which
the Company is a party and in which the Company does not survive, or upon the
dissolution or liquidation of the Company, this option, to the extent
outstanding and unexercised, shall terminate; provided, however, that (i) in the
event of the liquidation of dissolution of the Company, or in the event of any
such reorganization, consolidation or merger in which the Company does not
survive and with respect to which the resulting or surviving corporation does
not assume such outstanding option or issue a substitute option herefor, this
option shall be exercisable in full, without regard to any installment
restrictions on exercise imposed pursuant to the Plan or this Option Agreement,
during such period preceding the effective date of such liquidation,
dissolution, reorganization, consolidation or merger (unless this option is
terminated earlier by its terms) as may be specified by the Board; and (ii) in
the event of any such reorganization, consolidation or merger, the Board may, in
its good faith discretion, arrange to have the resulting or surviving
corporation assume this option, to the extent outstanding and unexercised, or
issue a substitute option therefor.
5. This Option is not transferable by the Optionee otherwise than by
will or the laws of descent and distribution or by such other means as may be
permitted by Rule 16b-3 (or any successor provision) under the Securities
Exchange Act of 1934, as amended. This Option is exercisable during the
Optionee's lifetime only by the Optionee, provided that this Option may be
exercised by the Optionholder's guardian or legal representative in the case of
disability and by the beneficiary designated by the Optionholder in writing
delivered to the Company, or, if none has been designated, by the Optionholder's
estate or his or her transferee on death in accordance with this Section, in the
case of death.
6. If the Optionee ceases to serve as a member of the Board for any
reason other than death, the Optionee may, for a period of seven months
following such cessation of service, exercise the rights which the Optionee had
hereunder at the time the Optionee ceased being a director. Upon the death of
the Optionee, those entitled to do so shall have the right, at any time within
twelve months after the date of death (subject to the prior expiration of the
Option exercise period), to exercise in whole or in part any rights which were
available to the Optionee at the time of the Optionee's death. This Option shall
terminate after the expiration of the applicable exercise period.
Notwithstanding the foregoing provisions of this Section 6, no rights under this
Option may be exercised after the expiration of ten years from the date hereof.
7. It shall be a condition to the Optionee's right to purchase shares
of Common Stock hereunder that the Company may, in its discretion, require (a)
that the shares of Common Stock reserved for issue upon the exercise of this
Option shall have been duly listed, upon official notice of issuance, upon any
national securities exchange on which the Company's Common Stock may then be
listed, (b) that either (i) a Registration Statement under the Securities Act of
1933, as amended, with respect to said shares shall be in effect, or (ii) in the
opinion of counsel for the Company the proposed purchase shall be exempt from
registration under said Act and the Optionee shall have made such undertakings
and agreements with the Company as the Company may reasonably require, and (c)
that such other steps, if any, as counsel for the Company shall deem necessary
to comply with any law, rule or regulation applicable to the issue of such
shares by the Company shall have been taken by the Company or the Optionee, or
both. The certificates representing the shares purchased under this Option may
contain such legends as counsel for the Company shall deem necessary to comply
with any applicable law, rule or regulation.
8. Any exercise of this Option is conditioned upon the payment, if the
Company so requests, by the Optionee or such other person who may be entitled to
exercise this Option in accordance with the terms hereof, of all state and
federal taxes imposed upon the exercise of this Option and the issue to the
Optionee of the shares covered hereby.
9. This Option shall not be treated as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended.
10. This Option is issued pursuant to the terms of the Plan. This
Certificate does not set forth all of the terms and conditions of the Plan,
which are incorporated herein by reference. Capitalized terms used and not
otherwise defined herein have the meanings given to them in the Plan. Copies of
the Plan may be obtained upon written request without charge from the Company.
- 8 -
Exhibit 10.32
EPIX MEDICAL, INC.
1996 Employee Stock Purchase Plan
1. Purpose.
The purpose of this 1996 Employee Stock Purchase Plan (the "Plan") is
to provide employees of EPIX Medical, Inc. (the "Company"), who wish to become
shareholders of the Company an opportunity to purchase Common Stock of the
Company (the "Shares"). The Plan is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended (the "Code").
2. Eligible Employees.
Subject to the provisions of Sections 7, 8 and 9 below, any individual
who is a full-time employee (as defined below) of the Company, or any of its
subsidiaries (as defined in Section 424(f) of the Code) the employees of which
are designated by the Board of Directors as eligible to participate in the Plan,
is eligible to participate in any Offering of Shares (as defined in Section 3
below) made by the Company hereunder. Full-time employees shall include all
employees whose customary employment is:
(a) 20 hours or more per week and
(b) more than five months
in the calendar year during which said Offering Date occurs or in the calendar
year immediately preceding such year.
3. Offering Dates.
From time to time, the Company, by action of the Board of Directors,
will grant rights to purchase Shares to employees eligible to participate in the
Plan pursuant to one or more offerings (each of which is an "Offering" on a date
or series of dates (each of which is an "Offering Date") designated for this
purpose by the Board of Directors.
4. Prices.
The price per share for each grant of rights hereunder shall be the
lesser of:
(a) eighty-five percent (85%) of the fair market value of a
Share on the Offering Date on which such right was granted; or
(b) eighty-five percent (85%) of the fair market value of a
Share on the date such right is exercised.
At its discretion, the Board of Directors may determine a higher price for a
grant of rights.
- 1 -
<PAGE>
5. Exercise of Rights and Method of Payment.
(a) Rights granted under the Plan will be exercisable
periodically on specified dates as determined by the Board of Directors.
(b) The method of payment for Shares purchased upon exercise
of rights granted hereunder shall be through regular payroll deductions or by
lump sum cash payment or both, as determined by the Board of Directors. No
interest shall be paid upon payroll deductions unless specifically provided for
by the Board of Directors.
(c) Any payments received by the Company from a participating
employee and not utilized for the purchase of Shares upon exercise of a right
granted hereunder shall be promptly returned to such employee by the Company
after termination of the right to which the payment relates.
6. Term of Rights.
The total period from an Offering Date to the last date on which rights
granted on that Offering Date are exercisable (the "Offering Period") shall in
no event be longer than twenty-seven (27) months. The Board of Directors when it
authorizes an Offering may designate one or more exercise periods during the
Offering Period. Rights granted on an Offering Date shall be exercisable in full
on the Offering Date or in such proportion on the last day of each exercise
period as the Board of Directors determines.
7. Shares Subject to the Plan.
No more than 100,000 Shares may be sold pursuant to rights granted
under the Plan. Appropriate adjustments in the above figure, in the number of
Shares covered by outstanding rights granted hereunder, in the exercise price of
the rights and in the maximum number of Shares which an employee may purchase
(pursuant to Section 9 below) shall be made to give effect to any mergers,
consolidations, reorganizations, recapitalizations, stock splits, stock
dividends or other relevant changes in the capitalization of the Company
occurring after the effective date of the Plan, provided that no fractional
Shares shall be subject to a right and each right shall be adjusted downward to
the nearest full Share. Any agreement of merger or consolidation will include
provisions for protection of the then existing rights of participating employees
under the Plan. Either authorized and unissued Shares or issued Shares
heretofore or hereafter reacquired by the Company may be made subject to rights
under the Plan. If for any reason any right under the Plan terminates in whole
or in part, Shares subject to such terminated right may again be subjected to a
right under the Plan.
8. Limitations on Grants.
(a) No employee shall be granted a right hereunder if such
employee, immediately after the right is granted, would own stock or rights to
purchase stock
- 2 -
<PAGE>
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company, or of any subsidiary, computed in
accordance with Section 423(b)(3) of the Code.
(b) No employee shall be granted a right which permits his
right to purchase shares under all employee stock purchase plans of the Company
and its subsidiaries to accrue at a rate which exceeds twenty-five thousand
dollars ($25,000) (or such other maximum as may be prescribed from time to time
by the Code) of the fair market value of such Shares (determined at the time
such right is granted) for each calendar year in which such right is outstanding
at any time in accordance with the provisions of Section 423(b)(8) of the Code.
(c) No right granted to any participating employee under an
Offering, when aggregated with rights granted under any other Offering still
exercisable by the participating employee, shall cover more shares than may be
purchased at an exercise price equal to fifteen percent (15%) of the employee's
annual rate of compensation on the date the employee elects to participate in
the Offering or such lesser percentage as the Board of Directors may determine.
9. Limit on Participation.
Participation in an Offering shall be limited to eligible employees who
elect to participate in such Offering in the manner, and within the time
limitations, established by the Board of Directors when it authorizes the
Offering.
10. Cancellation of Election to Participate.
An employee who has elected to participate in an Offering may cancel
such election as to all (but not part) of the unexercised rights granted under
such Offering by giving written notice of such cancellation to the Company
before the expiration of any exercise period. Any amounts paid by the employee
for the Shares or withheld for the purchase of Shares from the employee's
compensation through payroll deductions shall be paid to the employee, without
interest, unless otherwise determined by the Board of Directors, upon such
cancellation.
11. Termination of Employment.
Upon the termination of employment for any reason, including the death
of the employee, before the date on which any rights granted under the Plan are
exercisable, all such rights shall immediately terminate and amounts paid by the
employee for the Shares or withheld for the purchase of Shares from the
employee's compensation through payroll deductions shall be paid to the employee
or to the employee's estate, without interest unless otherwise determined by the
Board of Directors.
- 3 -
<PAGE>
12. Employees' Rights as Shareholders.
No participating employee shall have any rights as a shareholder in the
Shares covered by a right granted hereunder until such right has been exercised,
full payment has been made for the corresponding Shares and the Share
certificate is actually issued.
13. Rights Not Transferable.
Rights under the Plan are not assignable or transferable by a
participating employee and are exercisable only by the employee.
14. Amendments to or Discontinuation of the Plan.
The Board of Directors of the Company shall have the right to amend,
modify or terminate the Plan at any time without notice; provided, however, that
the then existing rights of all participating employees shall not be adversely
affected thereby, and provided further that, subject to the provisions of
Section 7 above, no such amendment to the Plan shall, without the approval of
the shareholders of the Company, increase the total number of Shares which may
be offered under the Plan.
15. Effective Date and Approvals.
This Plan became effective on November ___, 1996, the date it was
adopted by the Board of Directors, provided that it is approved by the
shareholders of the Company within twelve (12) months before or after the date
of adoption.
The Company's obligation to offer, sell and deliver its Shares under
the Plan is subject to (i) the approval of any governmental authority required
in connection with the authorized issuance or sale of such Shares, (ii)
satisfaction of the listing requirements of any national securities exchange on
which the Shares are then listed and (iii) compliance, in the opinion of the
Company's counsel with, all applicable federal and state securities and other
laws.
16. Term of Plan.
No rights shall be granted under the Plan after November ___, 2006.
17. Administration of the Plan.
The Board of Directors or any committee or person(s) to whom it
delegates its authority (the "Administrator") shall administer, interpret and
apply all provisions of the Plan as it deems necessary to meet special
circumstances not anticipated or covered expressly by the Plan. Nothing
contained in this Section shall be deemed to authorize the Administrator to
- 4 -
<PAGE>
alter or administer the provisions of the Plan in a manner inconsistent with the
provisions of Section 423 of the Code.
- 5 -
Exhibit 10.33
METASYN, INC.
CONSULTING AND CONFIDENTIALITY AGREEMENT
THIS CONSULTING AND CONFIDENTIALITY AGREEMENT is made as of this day of
(the "Effective Date") by and between Metasyn, Inc., a Delaware
corporation (hereinafter referred to as "METASYN"), and ,(hereinafter
referred to as "CONSULTANT"), address.
WHEREAS, the CONSULTANT is a scientist specializing in areas related to
METASYN's Field of Interest (as defined below);
WHEREAS, METASYN wishes to avail itself of the services of the
CONSULTANT to perform certain tasks for the benefit of METASYN, and the
CONSULTANT is willing to perform such services on the terms and conditions set
forth below.
NOW, THEREFORE, METASYN and the CONSULTANT, in consideration of the
mutual promises contained herein, hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
as set forth below:
"METASYN's Field of Interest" means the design, development,
manufacture and use of devices or drugs for medical imaging, together with such
other fields as may be subsequently agreed upon by METASYN and the CONSULTANT in
writing.
"Consultancy" means the current or anticipated or subsequent retention
of the CONSULTANT by METASYN as a CONSULTANT hereunder, or any other period
during which the CONSULTANT receives compensation from METASYN in any capacity.
"Intellectual Property" means any Invention (as defined below),
writing, trade name, trademark, service mark or any other material registered or
otherwise protected or protectible under state, federal or foreign patent,
trademark, copyright or similar laws.
"Inventions" includes ideas, concepts, discoveries, inventions,
developments, improvements, data, information, materials, products, models,
writings, drawings or documentation created, developed or otherwise invented by
the CONSULTANT in the course of providing services to METASYN hereunder, whether
or not reduced to practice and whether or not patentable or otherwise within the
definition of Intellectual Property.
"Proprietary Information" includes any scientific, technical, trade or
business secrets of METASYN and any scientific, technical, biological, chemical,
trade or business materials that are treated
<PAGE>
by METASYN as confidential or proprietary, including, but not limited to, the
Inventions and confidential information obtained by or given to METASYN about or
belonging to its suppliers, licensors, licensees, partners, affiliates,
customers, potential customers or others.
The definition of "Proprietary Information" herein shall not include
Proprietary Information which (i) was known by the CONSULTANT prior to its
disclosure by METASYN; (ii) is publicly known through publication or otherwise
through no wrongful act of the CONSULTANT; (iii) is received from a third party
who rightfully discloses it to the CONSULTANT without restriction on its
subsequent disclosure; or (iv) is disclosed pursuant to the lawful requirement
of a governmental agency or by order of court of competent jurisdiction,
provided that such disclosure is subject to all applicable governmental or
judicial protection available for like material.
2. SERVICES
2.1. Services. The CONSULTANT's services hereunder shall include:
(a) Advice in METASYN's Field of Interest,
(b) Consultation with METASYN's Board of Directors, officers,
employees and agents, at such time as may be reasonably
requested by METASYN, with respect to the above-mentioned
activity; and
(c) Such other services as shall be mutually agreed upon by
METASYN and the CONSULTANT.
2.2. Status. METASYN and the CONSULTANT agree that the CONSULTANT will
be an independent contractor for all purposes including, but not limited to,
payroll and tax purposes, and that the CONSULTANT shall not in any way
represent himself to be an employee or officer of METASYN.
2.3. METASYN's Field of Interest. The CONSULTANT agrees and
acknowledges that, although METASYN has retained his consulting services on a
non-exclusive basis, during the term of this Agreement, the CONSULTANT will not
enter into any other agreement, arrangement, understanding or other relationship
pursuant to which he is obligated to render advice and services to a commercial
entity in METASYN's Field of Interest and that he will limit the rendering of
advice and services in METASYN's Field of Interest to METASYN.
3. TERM
3.1. Term. This Agreement will be for an initial term beginning as of
the Effective Date and ending on the first anniversary thereof, and may be
extended for an additional period
<PAGE>
or periods of one (1) year by mutual written agreement by the CONSULTANT and
METASYN prior to the end of the term set forth above.
3.2. Termination by METASYN. METASYN may terminate this Agreement for
cause at any time by giving 30 days written notice to the CONSULTANT. "Cause"
shall mean: (i) the physical or mental incapacity of the CONSULTANT to perform
substantially all of the duties set forth in or contemplated by the Agreement
for any consecutive three-month period or for any six-month period within any
consecutive twelve-month period; (ii) conviction of any crime constituting a
felony; or (iii) unsatisfactory performance of CONSULTANT's duties, as
determined in good faith by the Board of Directors, which shall continue after
specific notice thereof has been received by the CONSULTANT from the President
or the Board of Directors of METASYN, and a period of 30 days shall have passed
after the receipt of such notice during which the CONSULTANT fails to cure such
specific unsatisfactory performance.
3.3. Termination by Either Party. Either party may terminate this
Agreement by giving sixty (60) days prior written notice to the other.
4. COMPENSATION AND EXPENSES
4.1. Compensation. As full compensation for the CONSULTANT's services
pursuant to subsection 2.1 above, the Company shall pay the CONSULTANT $1,000
per day of service (based on 8 hours of services per day and prorated
accordingly for partial days) payable monthly on the last business day of the
month.
4.2 Expenses. The CONSULTANT shall be entitled to reimbursement for
reasonable travel and other out-of-pocket expenses incurred in the performance
of his duties hereunder, provided such expenses are agreed upon in advance,
following submission of written statements and bills.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS
The CONSULTANT hereby represents, warrants and covenants to METASYN
that the CONSULTANT is under no contractual, policy or other restriction or
obligation which is inconsistent with his execution or performance of this
Agreement. During the term hereof, the CONSULTANT will not enter into any
agreement either written or oral in conflict with this Agreement, and will
perform his obligations hereunder in such a manner that his services will not
conflict with his responsibilities under any other agreement, policy,
arrangement or understanding or pursuant to any employment, consulting or other
relationship which the CONSULTANT has at any time with any third party. The
CONSULTANT understands that METASYN does not desire to acquire from him any
trade secrets, know-how or confidential business information that he may have
acquired from others. Therefore, the CONSULTANT agrees that during his
<PAGE>
employment with METASYN, he will not improperly use or disclose any proprietary
information or trade secrets of any former or concurrent employer, or any other
person or entity with whom he has an agreement or to whom he owes a duty to keep
such information in confidence.
6. OWNERSHIP
6.1. Proprietary Information. METASYN retains all rights of ownership
to all Proprietary Information furnished to the CONSULTANT hereunder. No
proprietary rights or licenses are granted by METASYN under this Agreement.
Furthermore, Proprietary Information shall include any advisory and opinion
documents prepared by the CONSULTANT hereunder at the request of METASYN
related to the CONSULTANT's services hereunder.
6.2. Inventions and Intellectual Property. All Inventions and
Intellectual Property created, developed or otherwise invented by the CONSULTANT
hereunder, including all materials, products, models, data, information,
documentation and other results of the CONSULTANT's services hereunder, are and
shall be the exclusive property of METASYN, and METASYN may use or pursue them
without restriction or additional compensation. The CONSULTANT shall maintain
and furnish to METASYN complete and current records of all such Inventions and
Intellectual Property and disclose to METASYN in writing all such Inventions and
Intellectual Property. The CONSULTANT: (i) hereby assigns, sets over and
transfers to METASYN all of his right, title and interest in and to such
Inventions and Intellectual Property; (ii) agrees that the CONSULTANT and his
agents shall, during and after the period the CONSULTANT is retained by METASYN,
upon reasonable request of METASYN, cooperate fully in obtaining patent,
trademark, service mark, copyright or other proprietary protection for such
Inventions and Intellectual Property, all in the name of METASYN (but only at
METASYN's expense), and, without limitation, shall execute all requested
applications, assignments and other documents in furtherance of obtaining such
protection or registration and confirming full ownership by METASYN of such
Inventions and Intellectual Property; and (iii) shall, upon termination of his
Consultancy, provide to METASYN in writing a full, signed statement of all
Inventions and Intellectual Property in which the CONSULTANT participated prior
to termination of his Consultancy to METASYN.
6.3. Third Party Claims. Unless covered by an appropriate agreement
between any third party and METASYN, the CONSULTANT shall not engage in any
activities or use any facilities whereby claims of ownership to any results
hereunder may be made by such third party.
7. CONFIDENTIALITY
7.1. CONSULTANT Acknowledgement. METASYN has developed and will
develop its Proprietary Information over a substantial period of time at a
substantial expense, and its Proprietary Information
<PAGE>
is integral to the goodwill of METASYN. During the course of Consultancy to
METASYN, the CONSULTANT may develop or become aware of Proprietary Information.
Protection of the Proprietary Information is necessary to conduct METASYN's
business, and METASYN is and shall at all times remain the sole owner of
METASYN's Proprietary Information.
7.2. METASYN and the CONSULTANT agree that any and all Proprietary
Information, specifications, data, know-how, patent applications, materials,
plans and all other communications, oral or written, disclosed or provided to
CONSULTANT by METASYN, whether provided before or after the date hereof,
regarding METASYN'S proprietary magnetic resonance imaging contrast media, other
METASYN products or technology, or any METASYN business plans or financial
information (hereinafter referred to as the "INFORMATION") shall be subject to
the following obligations:
(a) CONSULTANT will keep all Information confidential and will not,
without the prior written consent of METASYN, disclose any INFORMATION to any
third party except to CONSULTANT'S colleagues with a need to know INFORMATION
for the purposes described in (b) below.
(b) CONSULTANT will not, without the prior written consent of METASYN,
use, either directly or indirectly, any INFORMATION for any purpose whatsoever,
other than for the purpose of performing research for METASYN or determining
CONSULTANT'S interest in entering into a further business relationship with
METASYN.
(c) All tangible INFORMATION including, without limitation, monographs,
specifications, flow sheets, descriptions, data, materials, samples, computer
media and other tangible material pertaining thereto shall remain the property
of METASYN. Immediately upon the request of METASYN, CONSULTANT shall return all
tangible INFORMATION, and all copies thereof, to METASYN.
The foregoing obligations of confidentiality and non-use shall not
apply to:
(a) Information which CONSULTANT can demonstrate by documentary evidence was
known to CONSULTANT prior to the date of its disclosure pursuant to the
Agreement and not obtained or derived directly or indirectly from METASYN; or
(b) Information which is or becomes public or available to the general
public otherwise than through CONSULTANT's act or default; or
(c) Information obtained subsequent to disclosure under this Agreement by
METASYN from a third party who is lawfully in possession of same and not under
any obligation of confidence with respect thereto.
<PAGE>
7.3. Nothing herein shall be construed as giving CONSULTANT any right,
title, interest in or ownership of INFORMATION or of any right under any patent
or other intellectual property right pertaining thereto.
7.4. METASYN warrants that the INFORMATION is owned by or licensed to
METASYN and that METASYN has full right to disclose it to CONSULTANT for the
purpose of evaluating a business relationship or performing research, and that
to the extent all or part of the INFORMATION is owned by others that METASYN is
the authorized representative of any such persons with full right to make
disclosure to CONSULTANT.
7.5. Non-Solicitation. The CONSULTANT shall not during the term of this
Agreement or at any time during the five (5) years following termination of this
Agreement solicit any person who is employed by or a CONSULTANT to METASYN or
any affiliate or subsidiary of METASYN either during the CONSULTANT's period of
Consultancy or during such five (5) year period, to terminate such person's
employment by or consultancy to METASYN, such affiliate or subsidiary. As used
herein, the term "solicit" shall include, without limitation, requesting,
encouraging, assisting or causing, directly or indirectly, any such employee or
CONSULTANT to terminate such person's employment by or consultancy to METASYN,
affiliate or subsidiary.
7.6. Continued Obligations. The CONSULTANT's obligations under this
Section 7 and Section 6 shall not be affected: (i) by any termination of the
CONSULTANT's Consultancy, including termination upon METASYN's initiative; nor
(ii) by any change in the CONSULTANT's position, title or function with METASYN;
nor (iii) by any interruption in consultancy during which the CONSULTANT leaves
and then rejoins METASYN for any period within a period of one year and for any
reason.
8. NOTICES
For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered personally or by overnight courier with a receipt obtained
therefor or when mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
To METASYN: To CONSULTANT:
Michael D. Webb
President
Metasyn Inc.
71 Rogers Street
<PAGE>
Cambridge, MA 02142-1118
or to such other address as either party may furnish to the other in writing in
accordance with this Section, except that notices of changes of address shall be
effective upon receipt.
9. OTHER PROVISIONS
9.1. Publicity. The CONSULTANT consents to the use by METASYN of
his name and likeness in written materials or oral presentations to current or
prospective customers, investors or others; provided that such materials or
presentations accurately describe the nature of the CONSULTANT'S relationship
with or contribution to METASYN.
9.2. Remedies. In the event of any breach by the CONSULTANT of any of
the provisions of this Agreement, METASYN shall be entitled, in addition to
monetary damages and to any other remedies available to METASYN under this
Agreement and at law, to equitable relief, including injunctive relief, and to
payment by the CONSULTANT of all costs incurred by METASYN in enforcement
against the CONSULTANT of the provisions of this Agreement, including reasonable
attorneys' fees.
9.3. No Waiver. Waiver of any provision of this Agreement, in whole or
in part, in any one instance shall not constitute a waiver of any other
provision in the same instance, nor any waiver of the same provision in another
instance, but each provision shall continue in full force and effect with
respect to any other then-existing or subsequent breach.
9.4. Headings. The paragraph headings have been inserted for
purposes of convenience only and shall not be used for interpretive purposes.
9.5. Assignment. Any assignment by CONSULTANT of the rights and
obligations under this Agreement without the prior written consent of METASYN
shall be void. This Agreement is binding upon CONSULTANT for a period of five
(5) years from the date hereof, and inures to the benefit of and shall be
enforceable by METASYN and its successors.
9.6. Entire Agreement. This Agreement constitutes the entire agreement
of the parties with regard to the subject matter hereof, and supersedes all
previous written or oral representations, agreements and understandings between
METASYN and the CONSULTANT, whether expressed or implied. This Agreement may be
executed in one or more counterparts, each of which shall be deemed to be an
original, but all of which together will constitute one and the same agreement.
9.7. Amendment. Any amendment or modification of this Agreement or
waiver of any right, in whole or in part, will be effective only if it is in
writing and signed by the parties
<PAGE>
hereto.
9.8. Applicable Law and Severability. This Agreement shall be governed
by the laws of The Commonwealth of Massachusetts. If a court of competent
jurisdiction determines that any provision of this Agreement is invalid or
unenforceable, then the validity or unenforceability of that provision shall not
affect the validity or enforceability of any other provision of this Agreement,
and all other provisions shall remain in full force and effect. If any of the
provisions of this Agreement is held to be excessively broad, it shall be
reformed and construed by limiting and reducing it so as to be enforceable to
the maximum extent permitted by law.
The CONSULTANT and METASYN have executed and delivered this Agreement
as a document under seal as of the Effective Date.
"METASYN" "CONSULTANT"
Metasyn Inc.
By: By:
Michael D. Webb
Title: President and CEO Title:
Date: Date:
S.S. No.
Exhibit 10.34
INVENTION AND NON-DISCLOSURE AGREEMENT
This Agreement is made between Metasyn, Inc., a Delaware corporation
(hereinafter referred to collectively with any subsidiaries as the "Company"),
and _________________ (the "Employee").
In consideration of the employment or the continued employment of the
Employee by the Company, the Company and the Employee agree as follows:
1. Proprietary Information.
(a) The Employee agrees that all information, whether or not in
writing, of a private, secret or confidential nature concerning the Company's
business, business relationships or financial affairs (collectively,
"Proprietary Information") is and shall be the exclusive property of the
Company. By way of illustration, but not limitation, Proprietary Information may
include inventions, products, processes, methods, techniques, formulas,
compositions, compounds, projects, developments, plans, research data, clinical
data, financial data, personnel data, computer programs, customer and supplier
lists, and contacts at or knowledge of customers or prospective customers of the
Company. The Employee will not disclose any Proprietary Information to any
person or entity other than employees of the Company or use the same for any
purposes (other than in the performance of his/her duties as an employee of the
Company) without written approval by an officer of the Company, either during or
after his/her employment with the Company, unless and until such Proprietary
Information has become public knowledge without fault by the Employee.
(b) The Employee agrees that all files, letters, memoranda, reports,
records, data, sketches, drawings, laboratory notebooks, program listings, or
other written, photographic, or other tangible material containing Proprietary
Information, whether created by the Employee or others, which shall come into
his/her custody or possession, shall be and are the exclusive property of the
Company to be used by the Employee only in the performance of his/her duties for
the Company. All such materials or copies thereof and all tangible property of
the Company in the custody or possession of the Employee shall be delivered to
the Company, upon the earlier of (i) a request by the Company or (ii)
termination of his/her employment. After such delivery, the Employee shall not
retain any such materials or copies thereof or any such tangible property.
(c) The Employee agrees that his/her obligation not to disclose or to
use information and materials of the types set forth in paragraphs (a) and (b)
above, and his/her obligation to return materials and tangible property, set
forth in paragraph (b) above, also extends to such types of information,
materials and tangible property of customers of the Company or suppliers to the
Company or other third parties, including licensors
<PAGE>
and licensees, who may have disclosed or entrusted the same to the Company or
to the Employee.
2. Developments.
(a) The Employee will make full and prompt disclosure to the Company of
all inventions, improvements, discoveries, methods, developments, software, and
works of authorship, whether patentable or not, which are created, made,
conceived or reduced to practice by him/her or under his/her direction or
jointly with others during his/her employment by the Company, whether or not
during normal working hours or on the premises of the Company (all of which are
collectively referred to in this Agreement as "Developments").
(b) The Employee agrees to assign and does hereby assign to the Company
(or any person or entity designated by the Company) all his/her right, title and
interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications. However, this paragraph
2(b) shall not apply to Developments which do not relate to the present or
planned business or research and development of the Company and which are made
and conceived by the Employee not during normal working hours, not on the
Company's premises and not using the Company's tools, devices, equipment or
Proprietary Information. The Employee understands that, to the extent this
Agreement shall be construed in accordance with the laws of any state which
precludes a requirement in an employee agreement to assign certain classes of
inventions made by an employee, this paragraph 2(b) shall be interpreted not to
apply to any invention which a court rules and/or the Company agrees falls
within such classes. The Employee also hereby waives all claims to moral rights
in any Developments.
(c) The Employee agrees to cooperate fully with the Company, both
during and after his/her employment with the Company, with respect to the
procurement, maintenance and enforcement of copyrights, patents and other
intellectual property rights (both in the United States and foreign countries)
relating to Developments. The Employee shall sign all papers, including, without
limitation, copyright applications, patent applications, declarations, oaths,
formal assignments, assignments of priority rights, and powers of attorney,
which the Company may deem necessary or desirable in order to protect its rights
and interests in any Development. The Employee further agrees that if the
Company is unable, after reasonable effort, to secure the signature of the
Employee on any such papers, any executive officer of the Company shall be
entitled to execute any such papers as the agent and the attorney-in-fact of the
Employee, and the Employee hereby irrevocably designates and appoints each
executive officer of the Company as his/her agent and attorney-in-fact to
execute any such papers on his/her behalf, and to take any and all actions as
the Company may deem necessary or desirable in order to protect its rights and
interests in any Development, under the conditions described in this sentence.
3. Other Agreements.
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<PAGE>
The Employee hereby represents that, except as the Employee has
disclosed in writing to the Company, the Employee is not bound by the terms of
any agreement with any previous employer or other party to refrain from using or
disclosing any trade secret or confidential or proprietary information in the
course of his/her employment with the Company or to refrain from competing,
directly or indirectly, with the business of such previous employer or any other
party. The Employee further represents that his/her performance of all the terms
of this Agreement and as an employee of the Company does not and will not breach
any agreement to keep in confidence proprietary information, knowledge or data
acquired by the Employee in confidence or in trust prior to his/her employment
with the Company, and the Employee will not disclose to the Company or induce
the Company to use any confidential or proprietary information or material
belonging to any previous employer or others.
4. United States Government Obligations.
The Employee acknowledges that the Company from time to time may have
agreements with the other persons or with the United States Government, or
agencies thereof, which impose obligations or restrictions on the Company
regarding inventions made during the course of work under such agreements or
regarding the confidential nature of such work. The Employee agrees to be bound
by all such obligations and restrictions which are made known to the Employee
and to take all action necessary to discharge the obligations of the Company
under such agreements.
5. No Employment Contract.
The Employee understands that this Agreement does not constitute a
contract of employment and does not imply that his/ her employment will continue
for any period of time.
6. Miscellaneous.
(a) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(b) This Agreement supersedes all prior agreements, written or oral,
between the Employee and the Company relating to the subject matter of this
Agreement. This Agreement may not be modified, changed or discharged in whole or
in part, except by an agreement in writing signed by the Employee and the
Company. The Employee agrees that any change or changes in his/her duties,
salary or compensation after the signing of this Agreement shall not affect the
validity or scope of this Agreement.
(c) This Agreement will be binding upon the Employee's heirs, executors
and administrators and will inure to the benefit of the Company and its
successors and assigns.
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<PAGE>
(d) No delay or omission by the Company in exercising any right under
this Agreement will operate as a waiver of that or any other right. A waiver or
consent given by the Company on any one occasion is effective only in that
instance and will not be construed as a bar to or waiver of any right on any
other occasion.
(e) The Employee expressly consents to be bound by the provisions of
this Agreement for the benefit of the Company or any subsidiary or affiliate
thereof to whose employ the Employee may be transferred without the necessity
that this Agreement be resigned at the time of such transfer.
(f) The restrictions contained in this Agreement are necessary for the
protection of the business and goodwill of the Company and are considered by the
Employee to be reasonable for such purpose. The Employee agrees that any breach
of this Agreement is likely to cause the Company substantial and irrevocable
damage and therefore, in the event of any such breach, the Employee agrees that
the Company, in addition to such other remedies which may be available, shall be
entitled to specific performance and other injunctive relief.
(g) This Agreement is governed by and will be construed as a sealed
instrument under and in accordance with the laws of the Commonwealth of
Massachusetts. Any action, suit, or other legal proceeding which is commenced to
resolve any matter arising under or relating to any provision of this Agreement
shall be commenced only in a court of the Commonwealth of Massachusetts (or, if
appropriate, a federal court located within Massachusetts), and the Company and
the Employee each consents to the jurisdiction of such a court.
THE EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS CAREFULLY READ
THIS AGREEMENT AND UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS
IN THIS AGREEMENT.
WITNESS: METASYN, INC.
Date:____________________ By:__________________________
--------------------------
(print name and title)
EMPLOYEE:
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Date:____________________ _____________________________
(signature)
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Exhibit 10.35
NON-COMPETITION AND NON-SOLICITATION AGREEMENT
This Agreement between the undersigned individual (the "Employee") and
Metasyn, Inc., a Delaware corporation (collectively with its subsidiaries, if
any, the "Company"), is made in consideration of the Employee's employment or
the continuance of the Employee's employment with the Company, and for other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
1. Non-Competition; Non-Solicitation. The Employee agrees that while
he is employed by the Company and for a period of one year after the termination
or cessation of such employment (for any reason or for no reason), he will not
directly or indirectly:
(a) as an individual proprietor, partner, stockholder,
officer, employee, director, joint venturer, investor, lender, or in any other
capacity whatsoever (other than as the holder of not more than one per cent (1%)
of the combined voting power of the outstanding stock of a publicly held
company), engage in the business of developing, producing, marketing, or selling
products or services competitive with those that were developed or being
developed, produced, marketed or sold by the Company while the Employee was
employed by the Company; or
(b) recruit, solicit, or induce or attempt to recruit,
solicit, or induce any of the Company's employees or consultants to terminate
their employment or relationship with the Company; or
(c) solicit, divert, or take away or attempt to solicit,
divert, or take away the business or patronage of any of the Company's actual or
prospective clients, customers or accounts that were contacted, solicited or
served by the Employee while the Employee was employed by the Company.
2. Interpretation. The parties to this Agreement believe that the
foregoing restrictions are necessary and reasonable for the protection of the
business and goodwill of the Company. If any of those restrictions is found by
any court of competent jurisdiction to be invalid or unenforceable because it
extends over too long a period of time, too great a range of activities, or too
broad a geographic area, it shall be deemed to extend only over the maximum
period of time, range of activities or geographic area as to which it may be
enforceable.
3. Severability. If any provision of this Agreement is determined by a
court of competent jurisdiction to be invalid or unenforceable under applicable
law, such invalidity or unenforceability shall not affect the remaining
provisions of this Agreement.
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4. Waiver of Rights. No delay or omission by the Company in exercising
any right under this Agreement will operate as a waiver of that or any other
right. A waiver or consent given by the Company on any occasion is effective
only in that instance and will not be construed as a bar to or waiver of any
right on any other occasion.
5. Equitable Remedies. The Employee hereby stipulates and agrees that
any breach of this Agreement will cause the Company substantial and irrevocable
damage. In the event of any such breach, in addition to such other remedies that
may be available, the Company shall be entitled to specific performance and
injunctive relief and to recover all costs and expenses including, without
limitation, reasonable attorneys' fees and court costs.
6. No Conflict. The Employee represents that the execution and
performance by him of this Agreement does not and will not conflict with or
breach the terms of any other agreement by which the Employee is bound.
7. Not Employment Contract. The Employee acknowledges that this
Agreement does not constitute a contract of employment and does not imply that
the Company will continue his employment for any period of time.
8. Governing Law. This Agreement shall be governed by and interpreted
and construed in accordance with the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Employee has executed and delivered this
Agreement to the Company as of the date indicated below.
Dated: ___________________ ______________________________
(Signature of Employee)
Print Name: __________________
METASYN, INC.
Dated: ___________________ By: __________________________
Name: ________________________
Title: _______________________
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Exhibit 10.36
COMMON STOCK PURCHASE AGREEMENT
This Agreement is made as of the ____ day of ________________, 199_, by
and between Metasyn, Inc., a Delaware corporation (the "Company"), and [name of
purchaser] (the "Purchaser").
WHEREAS, the Company has agreed to sell to the Purchaser and the
Purchaser has agreed to purchase from the Company shares of the Company's Common
Stock, $.01 par value (the "Common Stock"); and
WHEREAS, the Company desires to issue and the Purchaser desires to
acquire the Common Stock on the terms and conditions hereinafter set forth, and
it is agreed between the parties as follows:
1. The Company agrees to issue to the Purchaser ______ shares of the
Common Stock (the "Shares") subject to the Purchaser's payment of $____ per
share for the Shares and execution and delivery of this Agreement. The
consummation of this transaction shall occur at such time and place as the
parties may mutually agree.
2. All of the Shares being acquired by the Purchaser pursuant to this
Agreement (hereinafter sometimes collectively referred to as the "Stock") shall
be subject to the repurchase right ("Repurchase Right") set forth in this
Section 2.
(a) For the purposes of this Agreement, the Stock
purchased pursuant hereto shall be deemed vested as follows:
For Services Rendered: Percentage of Shares
Vested:
On or after _______________ but 20%
before ___________________
[year 1]
On or after _______________ remaining 80% of Shares shall vest
and until _________________ at the rate of 1/48th per month.
[year 5]
(b) Upon the termination of the Employee's employment for any
reason, with or without cause, the Company may exercise the Repurchase Right at
the same purchase price per share paid by the Purchaser and set forth in Section
1 above (the "Repurchase Price") with respect to all unvested stock.
(c) If the Purchaser:
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(i) files a voluntary petition under any bankruptcy
or insolvency law or a petition for the appointment of a receiver or makes an
assignment for the benefit of creditors;
(ii) is subjected involuntarily to such a petition or
assignment or to an attachment or other legal or equitable interest with respect
to his Stock and such involuntary petition or assignment or attachment is not
discharged within 60 days after its date; or
(iii) is required to transfer his Stock by operation
of law (other than death of the Purchaser) or by order or decree of any court;
then the Company shall have the option (in addition to the Repurchase Right set
forth in clause (b) above), exercisable at any time during the period of sixty
(60) days after receiving notice thereof, to purchase all of the vested Shares
of Stock which are owned by the Purchaser for the fair market value of the
Shares, as determined by the Board of Directors of the Company.
(d) Nothing in this Agreement shall affect in any manner
whatsoever the right or power of the Company to terminate the Purchaser's
association with the Company.
3. The Repurchase Right shall be exercised by written notice signed by
an officer of the Company and delivered or mailed as provided in Section 11
hereof. The Repurchase Price shall be payable, at the option of the Company, in
cancellation of all or a portion of any outstanding indebtedness of the
Purchaser to the Company or in cash (by check) or both.
4. If, from time to time during the term of the Repurchase Right:
(a) There is any stock dividend or liquidating dividend of
cash or property, stock split or other change in the character or amount of any
of the outstanding securities of the Company; or
(b) There is any consolidation, merger or sale of all or
substantially all, of the assets of the Company, then, in such event, any and
all new, substituted or additional securities or other property (other than
cash) to which the Purchaser is entitled by reason of his ownership of Stock
shall be immediately subject to the Repurchase Right and be included in the word
"Stock" for all purposes of the Repurchase Right with the same force and effect
as the shares of Stock subject to the Repurchase Right under the terms of
Section 2 hereof. While the total Repurchase Price shall remain the same after
each such event, the Repurchase Price per share of Stock upon exercise of the
Repurchase Right shall be appropriately adjusted. Stock acquired as provided in
clauses (a) or (b) shall be deemed to have been acquired at the time of
acquisition of the Stock on which such Stock was distributed.
5. Rights of First Refusal.
(a) The Purchaser agrees that he shall not sell, transfer,
pledge, hypothecate, or otherwise dispose of (collectively, "transfer") any
unvested Shares at any time, and shall not transfer any vested Shares, whether
now owned or hereafter acquired by
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him, except for "Permitted Transfers" (as defined in clause (f) below) or
pursuant to this Section 5.
(b) If the Purchaser wishes to transfer vested Shares, other
than as a Permitted Transfer, he shall deliver a written notice (the "Sale
Notice") to the Company, and the Company shall in turn forward a copy of such
notice to the holders of the Company's Series B Convertible Preferred Stock
("Series B Stock") identified on Exhibit 1 hereto (the "Series B Stockholders").
The Sale Notice shall set forth the identity of the proposed transferee and the
terms and conditions of the proposed transfer.
For 15 days following its receipt of the Sale Notice, the
Company shall have the option to purchase all, but not less than all, of the
vested Shares to be transferred (the "Offered Shares") at the price and upon the
terms set forth in the Sale Notice. The Company shall give written notice of its
decision whether or not to purchase the Offered Shares to the Purchaser (the
"Company Notice") within such 15-day period, and the settlement of any sale of
such Offered Shares to the Company shall be made as provided below in clause
(d). The Company shall simultaneously deliver a copy of the Company Notice to
the Series B Stockholder.
(c) If the Company elects not to purchase the Offered Shares,
the Series B Stockholders shall have the option, for 15 days following their
receipt of the Company Notice indicating the Company's election not to purchase
the Offered Shares, to purchase all, but not less than all, of the Offered
Shares at the price and upon the terms set forth in the Sale Notice. In the
event the Series B Stockholders elect to purchase the remaining Offered Shares,
they shall give written notice of their election to the Purchaser within such
15-day period (the "Series B Stockholder Notice"), and the settlement of the
sale of such Offered Shares shall be made as provided below in clause (d).
Each Series B Stockholder shall have the right to purchase its
pro rata share of the Offered Shares, which pro rata share represents the ratio
of shares of Series B Stock held by the Series B Stockholder to the total number
of shares of Series B Stock issued and outstanding. If any Series B Stockholder
declines to purchase any of the Offered Shares, the pro rata share of the Series
B Stockholders intending to purchase the Offered Shares shall be determined
after subtracting the pro rata share of the nonparticipating Series B
Stockholder(s) from the total number of shares of Series B Stock.
(d) The closing of the purchase and sale of the Offered Shares
shall take place on a date agreed upon by the Purchaser and the Company and/or
the Series B Stockholders, but in any event within 60 days following the latter
of the date of the Sale Notice or the Company Notice, at the principal office of
the Company.
(e) If neither the Company nor the Series B Stockholders
elects to purchase all of the Offered Shares, the Purchaser may transfer the
Offered Shares at a price and on terms no more favorable to the transferee than
those specified in the Sale Notice, during the 120-day period immediately
following the date of the Sale Notice. Any Offered Shares not sold or
transferred during such 120-day period will again be subject to the provisions
of this Section 5.
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<PAGE>
(f) For purposes of this Section 5, a "Permitted Transfer"
shall mean a transfer of Shares to or for the benefit of any spouse, child,
grandchild, parent or sibling, niece or nephew, or to a trust for their benefit
if, following such transfer, voting control over such shares is retained by the
transferor; provided that such transferred Shares shall remain subject to this
Section 5 and such permitted transferee shall, as a condition to such transfer,
deliver to the Company a written instrument confirming that such transferees
shall be bound by all of the terms and conditions of this Section 5.
(g) The rights of the Company and the Series B Stockholders
set forth in this Section 5 shall terminate and be of no further force and
effect upon the Company's initial registered public offering of shares of equity
securities.
6. All certificates representing any shares of Stock subject to
the provisions of this Agreement shall have endorsed thereon the following
legends:
(a) "Any disposition of any interest in the securities
represented by this certificate is subject to restrictions, and the securities
represented by this certificate are subject to a repurchase right and a right of
first refusal contained in a certain agreement between the record holder hereof
and the corporation, a copy of which will be mailed to any holder of this
certificate without charge within 5 days of receipt by the corporation of a
written request therefor."
(b) Any legend required to be placed thereon by federal
or state securities laws.
7. The Purchaser acknowledges that he is aware that the Stock to be
issued to him by the Company pursuant to this Agreement has not been registered
under the Securities Act of 1933, as amended. In this connection, the Purchaser
warrants and represents to the Company as follows:
(a) The Purchaser is acquiring the Stock solely for his own
account for investment and not with a view to or for sale or distribution of the
Stock or any portion thereof and not with any present intention of selling,
offering to sell or otherwise disposing of or distributing the Stock or any
portion thereof. The Purchaser also represents that the entire legal and
beneficial interest of the Stock which the Purchaser is acquiring is being
acquired for, and will be held for the account of, the Purchaser only and
neither in whole nor in part for any other person.
(b) The Purchaser has heretofore discussed the Company and its
plans, operations and financial condition with its officers and the Purchaser
has heretofore received all such information as the Purchaser deems necessary
and appropriate to enable him to evaluate the financial risk inherent in making
an investment in the Stock of the Company, and the Purchaser further represents
and warrants that he has received satisfactory and complete information
concerning the business and financial condition of the Company in response to
all inquiries in respect thereof.
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<PAGE>
(c) The Purchaser realizes that his acquisition of the Stock
will be a highly speculative investment and that the Purchaser is able, without
impairing his financial condition, to hold the Stock for an indefinite period of
time and to suffer a complete loss on his investment.
(d) The Company has disclosed (or hereby does disclose) to the
Purchaser in writing:
(i) the sale of the Stock which he is
acquiring has not been registered under
the Securities Act of 1933, as amended
(the "Act"), and the Securities must be
held indefinitely unless a transfer of
them is subsequently registered under the
Act or an exemption from such
registration is available;
(ii) the share certificate representing the
Stock will be stamped with the legends
restricting transfer specified in this
Agreement between the Company and the
Purchaser; and
(iii) the Company will make a notation in its
records of the aforementioned
restrictions on transfer and legends.
(e) The Purchaser understands that the shares of Stock are
restricted securities within the meaning of Rule 144 promulgated under the Act;
that the exemption from registration under Rule 144 will not be available in any
event for at least two years from the date of sale of the Stock to him, and even
then will not be available unless (i) a public trading market then exists for
the Stock of the Company, (ii) adequate current public information concerning
the Company is then available to the public, (iii) he has been the beneficial
owner and he has paid the full purchase price for the Stock at least two years
prior to the sale, and (iv) other terms and conditions of Rule 144 are complied
with; and that any sale of the Stock may be made by him only in limited amounts
in accordance with such terms and conditions, as amended from time to time.
(f) Without in any way limiting its representations set forth
above, the Purchaser further agrees that he shall in no event make any
disposition of all or any portion of the Stock which he is acquiring unless and
until:
(i) There is then in effect a Registration
Statement under the Act covering such
proposed disposition and such disposition
is made in accordance with said
Registration Statement: or
(ii) (A) He shall have notified the Company of
the proposed disposition and shall have
furnished the Company with a detailed
statement of circumstances surrounding
the proposed disposition, (B) he shall
have furnished the Company with an
opinion of his own counsel to the effect
that such disposition will not require
registration of such shares under the
Act, and (C) such opinion of his counsel
shall have been concurred in
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by counsel for the Company and the Company shall have advised it of such
concurrence.
8. The Company shall not be required (a) to transfer on its books any
shares of Stock of the Company which shall have been sold or transferred in
violation of any of the provisions set forth in this Agreement or (ii) to treat
as owner of such shares or to accord the right to vote as such owner or to pay
dividends to any transferee to whom such shares shall have been so transferred.
9. Subject to the provisions of this Agreement, the Purchaser shall,
during the term of this Agreement, exercise all rights and privileges of a
shareholder of the Company with respect to the Stock.
10. The parties agree to execute such further instruments and to take
such further action as may reasonably be necessary to carry out the intent of
this Agreement.
11. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to the other party hereto at his address
hereinafter shown below his signature or at such other address as such party may
designate by ten days' advance written notice to the other party hereto.
12. This Agreement shall inure to the benefit of the successors and
assigns of the Company and be binding upon the Purchaser and his heirs,
executors, administrators, successors and assigns.
13. This Agreement shall be governed by and interpreted under the laws
of the Commonwealth of Massachusetts.
14. This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the day and year first above written.
METASYN, INC.
By:______________________________
Title:___________________________
PURCHASER
-----------------------------------
Address: _______________________
-----------------------
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<PAGE>
Exhibit 1
Holders of Series B Convertible Preferred Stock
Accel IV L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Accel Investors '93 L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Accel Keiretsu L.P.
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Ellmore C. Patterson Partners
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Prosper Partners
c/o Accel Partners
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Bessemer Venture Partners III L.P.
83 Walnut Street
Wellesley Hills, MA 02181
Neil H. Brownstein
c/o Robert H. Buescher
Bessemer Securities Corp.
1025 Old Country Road, Suite 205
Westbury, NY 11590
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<PAGE>
Robert H. Buescher
Bessemer Securities Corp.
1025 Old Country Road, Suite 205
Westbury, NY 11590
G. Felda Hardymon
c/o Robert H. Buescher
Bessemer Securities Corp.
1025 Old Country Road, Suite 205
Westbury, NY 11590
Christopher Gabrieli
c/o Robert H. Buescher
Bessemer Securities Corp.
1025 Old Country Road, Suite 205
Westbury, NY 11590
Gabrieli Family Foundation
c/o Robert H. Buescher
Bessemer Securities Corp.
1025 Old Country Road, Suite 205
Westbury, NY 11590
David J. Cowan
c/o Robert H. Buescher
Bessemer Securities Corp.
1025 Old Country Road, Suite 205
Westbury, NY 11590
Samantha C. Chen
c/o Robert H. Buescher
Bessemer Securities Corp.
1025 Old Country Road, Suite 205
Westbury, NY 11590
Rachel J. Erickson
c/o Robert H. Buescher
Bessemer Securities Corp.
1025 Old Country Road, Suite 205
Westbury, NY 11590
Gautam A. Prakash
c/o Robert H. Buescher
Bessemer Securities Corp.
1025 Old Country Road, Suite 205
Westbury, NY 11590
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<PAGE>
John K. Rodakis
c/o Robert H. Buescher
Bessemer Securities Corp.
1025 Old Country Road, Suite 205
Westbury, NY 11590
Rodney A. Cohen
c/o Robert H. Buescher
Bessemer Securities Corp.
1025 Old Country Road, Suite 205
Westbury, NY 11590
Richard R. Davis
c/o Robert H. Buescher
Bessemer Securities Corp.
1025 Old Country Road, Suite 205
Westbury, NY 11590
Adam P. Godfrey
c/o Robert H. Buescher
Bessemer Securities Corp.
1025 Old Country Road, Suite 205
Westbury, NY 11590
Barbara M. Henagan
c/o Robert H. Buescher
Bessemer Securities Corp.
1025 Old Country Road, Suite 205
Westbury, NY 11590
Robert D. Lindsay
c/o Robert H. Buescher
Bessemer Securities Corp.
1025 Old Country Road, Suite 205
Westbury, NY 11590
Ward W. Woods, Jr.
c/o Robert H. Buescher
Bessemer Securities Corp.
1025 Old Country Road, Suite 205
Westbury, NY 11590
- 10 -
Exhibit 10.37
STOCK PURCHASE AND RIGHT OF FIRST REFUSAL AGREEMENT
This Stock Purchase and Right of First Refusal Agreement (the "Agreement")
dated __________ __, 199_ is between Metasyn, Inc., a Delaware corporation (the
"Company"), and the undersigned purchaser of shares of capital stock of the
Company (the "Stockholder").
WITNESSETH:
WHEREAS, the Stockholder is purchasing on the date hereof the number of
shares of the Company's Common Stock, $.01 par value per share (the "Common
Stock"), set forth opposite his name on the signature page hereto; and
WHEREAS, this Agreement is entered into as a condition to the purchase by
the Stockholder of the Company's Common Stock;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Rights of First Refusal.
(a) The Stockholder agrees that he shall not sell, transfer,
pledge, hypothecate, or otherwise dispose of (collectively, "transfer") any
shares of Common Stock, Preferred Stock or other securities or the Company
convertible into Common Stock of the Company, whether now owned or hereafter
acquired by him (the "Shares"), except for "Permitted Transfers" (as defined in
paragraph (d) below) or pursuant to this Section 1. Each certificate
representing Shares shall include the following legend:
"The securities represented hereby are subject to the provisions
of a Stock Purchase and Right of First Refusal Agreement, as amended from time
to time, by and among the registered owner of this certificate and the Company,
a copy of which is on file at the principal office of the Company, with respect
to transfers of securities, and no transfer hereof may be made except in
accordance with the provisions of said agreement."
The Company agrees to use reasonable efforts promptly to retrieve any
certificates representing outstanding Shares and to add the foregoing legend to
such certificates.
(b) If the Stockholder wishes to transfer Shares, other than a s
a Permitted Transfer, he shall deliver a written notice (the "Sale Notice") to
the Company setting forth the identity of the proposed transferee and the terms
and conditions of the proposed transfer. For 15 days following its receipt of
the Sale Notice, the Company shall have the option to purchase all or any lesser
part of the Shares to be transferred (the "Offered Shares") at the price and
upon the terms set forth in the Sale Notice. In the event the Company elects to
purchase all or any portion of the Offered Shares, it shall give written notice
of its election
<PAGE>
to the Stockholder within such 15-day period and the settlement of the sale of
such Offered Shares shall be made as provided below in paragraph (c).
(c) The closing of the purchase and sale of the Offered Shares
shall take place on a date agreed upon by the Stockholder and the Company, but
in any event within 60 days following the date of the Sale Notice, at the
principal office of the Company. If the Company does not elect to purchase all
of the Offered Shares, the Stockholder may transfer the Offered Shares not
purchased by the Company at a price and on terms no more favorable to the
transferee than those specified in the Sale Notice, during the 120-day period
immediately following the date of the Sale Notice. Any Offered Shares not sold
or transferred during such 120-day period will again be subject to the
provisions of this Section 1.
(d) For purposes of this Section 1, a "Permitted Transfer" shall
mean a transfer of Shares to or for the benefit of any spouse, child,
grandchild, parent or sibling, niece or nephew, or to a trust for their benefit
if, following such transfer, voting control over such shares is retained by the
transferor; provided that such transferred Shares shall remain subject to this
Section 1 and such permitted transferee shall, as a condition to such transfer,
deliver to the Company a written instrument confirming that such transferees
shall be bound by all of the terms and conditions of this Section 1.
2. Investment Representations. The Stockholder represents, warrants and
covenants as follows:
2.1. Investment. The Stockholder is purchasing the Shares for his own
account for investment only, and not with a view to, or for sale in connection
with, any distribution of the Shares in violation of the Securities Act of 1933
(the "Securities Act"), or any rule or regulation under the Securities Act.
2.2. Information. He has had such opportunity as he had deemed
adequate to obtain from representatives of the Company such information as is
necessary to permit him to evaluate the merits and risks of his investment in
the Company.
2.3. Experience. He has sufficient experience in business, financial
and investment matters to be able to evaluate the risks involved in the purchase
of the Shares and to make an informed investment decision with respect to such
purchase.
2.4. Economic Risk. He can afford a complete loss of the value of the
Shares and is able to bear the economic risk of holding such Shares for an
indefinite period.
2.5. Restricted Securities. He understands that (a) the Shares have
not been registered under the Securities Act and are "restricted securities"
within the meaning of Rule 144 under the Securities Act, (b) the Shares cannot
be sold, transferred or otherwise disposed of unless they are subsequently
registered under the Securities Act or an exemption from registration is then
available; (c) in any event, the exemption from registration under Rule 144 will
not be available for at least two years and even then will not be available
unless a public market then exists for the Common Stock, adequate information
concerning the
- 2 -
<PAGE>
Company is then available to the public, and other terms and conditions of Rule
144 are complied with; and (d) there is now no registration statement on file
with the Securities and Exchange Commission with respect to any stock of the
Company and the Company has no obligation or current intention to register the
Shares under the Securities Act.
2.6. Legend. A legend substantially in the following form will be
placed on the certificate representing the Shares:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold, transferred
or otherwise disposed of in the absence of an effective registration statement
under such Act or an opinion of counsel satisfactory to the corporation to the
effect that such registration is not required."
3. Successors and Assigns. Except as otherwise provided herein, the
provisions of this Agreement shall be binding upon, and inure to the benefit of,
the respective successors and assigns of the parties hereto.
4. Amendments. Except as otherwise expressly set forth in this Agreement,
any term of this Agreement may be amended or modified only with the written
consent of the Company and the Stockholder. No waivers of or exceptions to any
term, condition or provision of this Agreement in any one or more instances
shall be deemed to be, or construed as, a further or continuing waiver of any
such term, condition or provision.
5. Notices. All notices, requests, consents and other communications under
this Agreement shall be in writing and shall be delivered by hand or mailed by
first class certified or registered mail, return receipt requested, postage
prepaid:
If to the Company, at 71 Rogers St., Cambridge, MA 02142-1118, Attention:
President, or at such other address or addresses as may have been furnished in
writing by the Company to the Stockholder.
If to the Stockholder, at his address set forth below his signature hereto,
or at such other address or address as may have been furnished in writing to the
Companyt by the Stockholder.
6. Entire Agreement. With respect to the subject matter hereof, this
Agreement embodies the entire agreement and understanding between the
Stockholder and the Company, and supersedes in their entirety all prior
agreements and understanding relating to such subject matter.
7. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
8. Headings. The headings of the sections, subsections and the paragraphs
of this Agreement have been added for convenience only and shall not be deemed
to be a part of this Agreement.
- 3 -
<PAGE>
9. Governing Law. The validity, performance and enforcement of this
Agreement with respect to each of the parties shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the
day and year first written above.
METASYN, INC.
By:___________________________
Name: Randall B. Lauffer
Title: Chairman
STOCKHOLDER
No. of Shares __________ ________________________________
Name:
Address:________________________
________________________________
- 4 -
Exhibit 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the captions "Selected Financial
Data" and "Experts" and to the use of our report dated April 12, 1996
(except for Note 14, as to which the date is August 30, 1996) in the
Registration Statement (Form S-1) and the related Prospectus of EPIX Medical,
Inc. for the registration of 2,300,000 shares of its common stock.
/s/ Ernst & Young LLP
Ernst & Young LLP
Boston, Massachusetts
December 10, 1996
Exhibit 24.2
EPIX MEDICAL, INC.
Certificate of Assistant Secretary
I, William T. Whelan, being the duly elected and acting Assistant
Secretary of EPIX Medical, Inc., a Delaware corporation (the "Company"), hereby
certify that the following is a true, correct and complete copy of a resolution
duly adopted by the Board of Directors of the Company by unanimous written
consent dated November 29, 1996 and that said resolution has not been amended or
rescinded and is now in full force and effect.
RESOLVED: That Michael D. Webb and William T. Whelan, and each of them acting
singly, be and hereby are designated as attorneys-in-fact of the
Corporation and of any officer or director executing the
Registration Statement and any related Rule 462(b) registration
statement on behalf of the Corporation, or otherwise, with full
power of substitution and resubstitution, for each of them in any
and all capacities, to execute and file the Registration Statement
and any amendments (including pre- and post-effective amendments),
any related Rule 462(b) registration statement, and any and all
supplements, schedules or exhibits thereto or requests for
acceleration thereof, and that any such officer or director of the
Corporation be and hereby is authorized to execute and deliver an
appropriate power of attorney reflecting such authorization and to
do and perform any and all acts and things whatsoever necessary,
appropriate or desirable to be done in the premises, all in the
name, place and stead of the Corporation, as fully and to all
intents and purposes as such officer or director might or could do
in person, and such acts of such attorneys or any of them and any
such substitute are hereby ratified and approved.
WITNESS my signature and the seal of the Company affixed this 10th day
of December, 1996.
[CORPORATE SEAL] /s/ William T. Whelan
William T. Whelan, Assistant Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF EPIX MEDICAL, INC. AS OF DECEMBER 31, 1995 AND FOR THE NINE MONTHS
ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0001027702
<NAME> EPIX MEDICAL, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-1-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 149,686
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 221,804
<PP&E> 1,841,338
<DEPRECIATION> 984,426
<TOTAL-ASSETS> 1,210,765
<CURRENT-LIABILITIES> 1,548,617
<BONDS> 0
5,437,600
1,037,664
<COMMON> 15,638
<OTHER-SE> (9,871,010)
<TOTAL-LIABILITY-AND-EQUITY> 1,210,765
<SALES> 0
<TOTAL-REVENUES> 900,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,669,751
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 151,057
<INCOME-PRETAX> (4,892,928)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,892,928)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,892,928)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF EPIX MEDICAL, INC. AS OF SEPTEMBER 30, 1996 AND FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0001027702
<NAME> EPIX MEDICAL, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 11,734,588
<SECURITIES> 0
<RECEIVABLES> 665,088
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,484,608
<PP&E> 2,354,418
<DEPRECIATION> 1,372,920
<TOTAL-ASSETS> 13,815,278
<CURRENT-LIABILITIES> 1,602,253
<BONDS> 0
20,491,052
1,037,664
<COMMON> 15,396
<OTHER-SE> (9,529,546)
<TOTAL-LIABILITY-AND-EQUITY> 13,815,278
<SALES> 0
<TOTAL-REVENUES> 9,635,088
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,163,738
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 273,640
<INCOME-PRETAX> (2,337,832)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,337,832)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,337,832)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF EPIX MEDICAL, INC. AS OF MARCH 31, 1995 AND FOR THE YEAR THEN ENDED
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0001027702
<NAME> EPIX MEDICAL, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 1,079,355
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,151,851
<PP&E> 1,493,489
<DEPRECIATION> 602,675
<TOTAL-ASSETS> 2,140,747
<CURRENT-LIABILITIES> 635,840
<BONDS> 0
4,790,800
1,037,664
<COMMON> 14,417
<OTHER-SE> (4,445,094)
<TOTAL-LIABILITY-AND-EQUITY> 2,140,747
<SALES> 0
<TOTAL-REVENUES> 411,509
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,231,882
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 78,672
<INCOME-PRETAX> (2,778,200)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,778,200)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,778,200)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
