<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 18, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
CHEMGENICS PHARMACEUTICALS INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 8099 06-1334380
(State or other jurisdiction
of Incorporation or (Primary Standard Industrial (I.R.S. Employer
Organization) Classification Code Number) Identification Number)
</TABLE>
------------------------
ONE KENDALL SQUARE
BUILDING 300
CAMBRIDGE, MASSACHUSETTS 02139
(617) 374-9090
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------
BARRY A. BERKOWITZ, PH.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CHEMGENICS PHARMACEUTICALS INC.
ONE KENDALL SQUARE
BUILDING 300
CAMBRIDGE, MASSACHUSETTS 02139
(617) 374-9090
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
COPIES TO:
<TABLE>
<S> <C>
LEWIS J. GEFFEN, ESQUIRE ALAN L. JAKIMO, ESQUIRE
MINTZ, LEVIN, COHN, FERRIS, BROWN & WOOD LLP
GLOVSKY AND POPEO, P.C. ONE WORLD TRADE CENTER
ONE FINANCIAL CENTER 58TH FLOOR
BOSTON, MA 02111 NEW YORK, NY 10048
(617) 542-6000 (212) 839-5300
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
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, please check the following box
and list the Securities Act registration statement 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 statement 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,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SHARE(2) PRICE(2) FEE
- --------------------------------------------------------------------------------------------------
Common Stock, $.001 par value..... 2,875,000 $13.00 $37,375,000 $11,326
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes 375,000 shares which the Underwriters have the option to purchase
from the Company to cover over-allotments, if any.
(2) Estimated solely for purposes of calculating the amount of the registration
fee pursuant to Rule 457(a).
------------------------
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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
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.
PROSPECTUS (SUBJECT TO COMPLETION)
DATED DECEMBER 18, 1996
2,500,000 SHARES
CHEMGENICS PHARMACEUTICALS INC.
COMMON STOCK
-------------------------------
All of the shares of Common Stock, par value $.001 per share (the "Common
Stock"), offered are being sold by ChemGenics Pharmaceuticals Inc. ("ChemGenics"
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 $11.00 and $13.00 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 "CGNS."
-------------------------------
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 6 OF THIS PROSPECTUS.
-------------------------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
Per Share........................ $ $ $
Total(3)......................... $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting estimated offering expenses payable by the Company
estimated to be $750,000.
(3) The Company has granted the Underwriters an option, exercisable within 30
days of the date hereof, to purchase an aggregate of up to 375,000
additional shares at the Price to Public less Underwriting Discounts and
Commissions to cover over-allotments, if any. If all of such additional
shares are purchased, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."
-------------------------------
The Common Stock is offered by the several Underwriters named herein when,
as and if received and accepted by them, subject to their right to reject orders
in whole or in part and subject to certain other conditions. It is expected that
delivery of the certificates for the shares will be made at the offices of Cowen
& Company, New York, New York, on or about , 1997.
-------------------------------
COWEN & COMPANY MONTGOMERY SECURITIES
, 1997
<PAGE> 3
DESCRIPTION OF FIGURES
Inside front cover (2 page gatefold)
The diagram is of the drug discovery process indicating each of the steps in
the process, the rate limiting steps, and the applicable ChemGenics'
technologies. In addition, there are three pictorial representations. The first
is of a piece of DNA inserting into a yeast cell to genetically transform it.
The second is of ChemGenics' drug source, listing and graphically displaying the
Company's biorational collection of fungi, genetic manipulation of fungi, and
information-based QuickScan index. The third is an illustration of some of the
Company's Advanced Drug Selection technologies, depicting a mixture of
molecules going through chromatographic columns and a mass spectrometer to
yield a drug lead.
<PAGE> 4
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a Registration Statement (which term
shall include all amendments, exhibits and schedules thereto) on Form S-1 under
the Securities Act of 1933, as amended (the "Securities Act") with respect to
Common Stock offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Statements made in this Prospectus
as to the contents of any contract, agreement or other document are not
necessarily complete and, in each instance where such documents are filed as an
exhibit to the Registration Statement, reference is made in each instance to the
copy of such document filed as exhibit to the Registration Statement for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference. The Registration Statement
and the exhibits thereto may be inspected without charge and copies obtained at
prescribed rates at the public reference facilities maintained by the Commission
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the regional offices of the Commission located at Seven World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. In addition, the Commission
maintains a web site that contains reports, proxy and information statements and
other information regarding registrants (including the Company) that file
electronically with the Commission, which can be accessed at http://www:sec.gov.
---------------------
As a result of this offering, the Company will become subject to the
information and reporting requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and in accordance therewith will be required to
file periodic reports, proxy statements and other information with the
Securities and Exchange Commission. The Company intends to distribute to its
stockholders annual reports containing consolidated financial statements audited
by its independent accountants and will make available copies of quarterly
reports for the first three quarters of each fiscal year containing unaudited
consolidated financial information.
---------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY 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.
---------------------
QuickScan(TM), Drug Discovery Genomics(TM) and BioCombinatorial(TM) are
trademarks of ChemGenics Pharmaceuticals Inc. for which United States trademark
registration applications have been filed. All other trademarks or trade names
referred to in this Prospectus are the property of their respective owners.
2
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information including "Risk Factors" and the Financial Statements and Notes
thereto appearing elsewhere in this Prospectus. Except as otherwise noted, all
information in this Prospectus assumes no exercise of the Underwriters'
over-allotment option and reflects (i) a 1-for-2.65 reverse stock split,
effected prior to the closing of this offering and (ii) the conversion of all
outstanding shares of convertible preferred stock into 4,458,528 shares of
Common Stock upon the closing of this offering.
THE COMPANY
ChemGenics is a drug discovery company that applies its two complementary
technology platforms, Drug Discovery Genomics and Advanced Drug Selection
Technologies, to key rate limiting steps in identifying new drugs. These rate
limiting steps are the translation of genomic information into novel drug
targets and the selection and identification from sources of chemical diversity
of drug leads that interact with drug targets. The Company's Drug Discovery
Genomics platform includes proprietary gene technologies and expertise in
microbial model systems used to determine the function of genes and to
prioritize drug targets. The Company's Advanced Drug Selection Technologies
combine the steps of drug screening, chemical selection and structural analysis
into an integrated process designed to identify drug leads faster than
conventional methods. These technology platforms are used with the Company's
growing drug source of 50,000 chemical-producing fungi collected worldwide. The
breadth of the Company's technology platforms allows it to pursue multiple
pharmaceutical and biotechnology alliances, such as its alliances with Pfizer,
Inc. ("Pfizer") and Wyeth-Ayerst Laboratories, the pharmaceutical division of
American Home Products Corporation ("Wyeth-Ayerst").
In January 1995, the Company entered into a strategic collaboration with
Pfizer for the discovery of novel drug leads for treating human fungal
infections, which could provide over $50 million in equity, research funding and
development milestone payments, plus potential royalties. In December 1996, the
Company entered into a strategic collaboration with Wyeth-Ayerst for the
discovery of novel drug leads for treating human bacterial infections, which
provides for up to $70 million in equity research funding and development
milestone payments, plus potential royalties. The Company is conducting
additional drug discovery programs in cancer, peptic ulcer disease (Helicobacter
pylori), immune system regulation, inflammatory disease and viral infections. In
May, November and December 1996, the Company entered into agreements with
PerSeptive Biosystems, Inc. ("PerSeptive") under which, in exchange for a
substantial equity interest in ChemGenics and a $3 million promissory note, the
Company acquired certain assets and a worldwide, royalty-free license to present
and future technology of PerSeptive for use in the field of drug discovery.
Current rate limiting steps in drug discovery provide opportunities for
innovative technologies that can increase the speed, efficiency and productivity
of this process. A significant rate limiting step is the translation of genomic
information into novel drug targets. Genomics is a powerful technique that can
identify disease genes, but is unlikely by itself to produce the next generation
of drug targets. Once a gene is identified, its function in disease and utility
as a drug target must be determined. A second significant rate limiting step is
separation and identification of drug leads from large sources of chemical
diversity. Advances in combinatorial chemistry and other drug sourcing
technologies have expanded the size and diversity of chemical libraries, but
separation and identification of individual drug leads remain time consuming and
expensive. The Company has designed its Drug Discovery Genomics and Advanced
Drug Selection Technologies to integrate the process of drug target and drug
lead discovery to enhance speed, efficiency and productivity.
ChemGenics' Drug Discovery Genomics platform encompasses proprietary gene
technologies and expertise in microbial model systems and is applied to gene
discovery, determination of gene function, selection of drug targets,
configuration of drug screens and genetic manipulation of fungi to produce a
novel drug source. The Company believes that model organisms, such as its
microbial systems, offer solutions to translate efficiently genes and genomic
information into novel drug targets. ChemGenics is translating genomic
information into useful drug targets by identifying essential genes for cell
function, using fungal homologs of human disease genes and measuring expression
levels of genes in model organisms to determine
3
<PAGE> 6
the function of unknown microbial and human genes. The Company is applying its
Drug Discovery Genomics platform to the discovery of both anti-infective drugs
and drugs targeting other human diseases.
ChemGenics' Advanced Drug Selection Technologies are designed to select
drug leads rapidly and cost effectively from large, complex chemical mixtures by
combining drug screening and chemical and structural analysis into a single
flow-through process. These technologies are supported and enhanced by
miniaturization, high throughput screening, automation and informatics. The
Company has demonstrated that its Advanced Drug Selection Technologies are
highly sensitive and capable of identifying drug leads that cannot readily be
found using conventional methods and permit the direct quantification and
prioritization of drug leads. The Company believes that the technology it
acquired from PerSeptive has enhanced its Advanced Drug Selection Technologies
platform.
ChemGenics has assembled a large, diverse and productive collection of over
50,000 fungi as a drug source. The Company has developed proprietary
BioCombinatorial methods of genetically manipulating these fungi to enhance
their chemical diversity. The Company has also developed a proprietary,
informatics-based index to its fungal chemical source, referred to as QuickScan,
that has been used to increase the speed of identifying natural product drug
leads by five- to ten-fold compared to previous methods used by the Company.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered hereby........................ 2,500,000 shares
Common Stock to be outstanding after this
offering......................................... 10,103,815 shares(1)
Use of proceeds.................................... For repayment of the $3 million
promissory note to PerSeptive, research
and development, expansion of its
laboratory facilities, working capital
and general corporate purposes.
Proposed Nasdaq National Market symbol............. CGNS
</TABLE>
- ---------------
(1) Excludes 911,260 shares issuable upon the exercise of options with a
weighted average exercise price of $1.88 per share and 1,914,496 shares
issuable upon exercise of warrants with a weighted average exercise price of
$12.90 per share. See "Capitalization," "Management -- Employee Benefit
Plans" and "Description of Capital Stock -- Stock Purchase Warrants."
4
<PAGE> 7
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
--------------------------------------- --------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
--------------------------
STATEMENT OF OPERATIONS DATA:
Revenues....................... $ -- $ 218,095 $ 2,903,179 $ 2,090,535 $ 2,171,015
Operating expenses:
Research and development..... 2,432,021 3,870,375 4,949,925 3,617,950 5,191,117
General and administrative... 796,624 883,219 1,011,505 732,926 1,034,105
Acquired in-process research
and development(1)........... -- -- -- -- 6,783,900
----------- ----------- ----------- ----------- ------------
Total operating
expenses................ 3,228,645 4,753,594 5,961,430 4,350,876 13,009,122
----------- ----------- ----------- ----------- ------------
Interest income (expense),
net.......................... 22,596 (84,609) 662,969 471,112 398,251
----------- ----------- ----------- ----------- ------------
Net loss....................... $(3,206,049) $(4,620,108) $(2,395,282) $(1,789,229) $(10,439,856)
========== ========== ========== ========== ===========
Pro forma net loss per common
share(2)..................... $ (0.31) $ (1.35)
========== ===========
Shares used in computing pro
forma net loss per common
share(2)..................... 7,746,243 7,750,433
========== ===========
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------------------------------
PRO FORMA
AS
ACTUAL PRO FORMA(3) ADJUSTED(3)(4)
------------ ------------ ------------
(UNAUDITED)
------------------------------------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and marketable
securities.................................... $ 9,352,551 $ 14,352,555 $ 38,502,555
Total assets.................................... 12,757,535 17,757,539 41,907,539
Promissory note................................. 3,000,000 3,000,000 --
Deficit accumulated during the development
stage(1)...................................... (21,669,717) (21,669,717) (21,669,717)
Total stockholders' equity...................... 7,588,746 12,588,750 39,738,750
</TABLE>
- ---------------
(1) Reflects a one-time charge equal to the value placed on technology acquired
from PerSeptive that is in the research stage and has no alternative future
use. Such value was determined by independent appraisal and was charged to
operations because the future net realizable value of the technology is
uncertain. See Note 3 of Notes to Financial Statements.
(2) Computed on the basis described in Note 2(g) of Notes to Financial
Statements.
(3) Gives effect to (i) the sale on December 2, 1996 of 833,334 shares of Series
E Convertible Preferred Stock to Wyeth-Ayerst (which shares will be
converted into 314,465 shares of Common Stock upon the consummation of this
offering) and the receipt of $5,000,004 of proceeds therefrom and (ii) the
automatic conversion of all outstanding convertible preferred stock into
4,458,528 shares of Common Stock upon the consummation of this offering.
(4) Gives effect to the sale of the 2,500,000 shares of Common Stock offered by
the Company hereby at an assumed initial public offering price of $12.00 per
share and the application of the net proceeds therefrom (including the
payment of the $3,000,000 promissory note payable to PerSeptive), after
deducting underwriting discounts and commissions and estimated offering
expenses payable by the Company. See "Use of Proceeds."
5
<PAGE> 8
RISK FACTORS
An investment in the shares of Common Stock being offered hereby involves a
high degree of risk. Accordingly, prospective investors should consider
carefully the following risk factors, as well as the other information contained
in this Prospectus, before purchasing the shares of Common Stock offered hereby.
This Prospectus contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Actual results and the timing of certain events could differ
materially from those projected in the forward-looking statements as a result of
the risk factors set forth below and other factors discussed elsewhere in this
Prospectus.
EARLY STAGE OF DEVELOPMENT; UNCERTAINTIES RELATING TO THE COMPANY'S DRUG
DISCOVERY TECHNOLOGY
The Company is at an early stage of development. To date, the Company has
not developed, commercialized or commenced clinical development of any products
based on its technological approaches, nor does the Company expect that any drug
lead resulting from its research efforts will be developed or commercially
available for a significant number of years, if at all. There can be no
assurance that any of these drug leads will be developed as drugs or that the
Company's approach to drug discovery will result in any additional drug leads
that will be selected for development as drugs.
ChemGenics is a drug discovery company that applies its two complementary
technology platforms, Drug Discovery Genomics and Advanced Drug Selection
Technologies, to key rate limiting steps in identifying new drugs. This approach
of discovering drug targets and subsequently drug leads for development as drugs
is subject to the risks of failure inherent in new technologies as well as the
widely acknowledged risks of failure in drug discovery in general. The Company's
Drug Discovery Genomics technologies for discovering novel drug targets are
dependent in large part on performing molecular genetics techniques with various
species of microbes, particularly fungi, the existence of similarities
(homologies) between the sequences of human genes related to the disease, the
sequences of counterpart fungal genes and the ability to clone and express those
human genes in fungal cells. Although there has been a clear demonstration of
homologies between the human genome and fungal genomes and the techniques to
clone and express human genes in fungal cells, no assurance can be given that
these homologies and cloning and expression techniques can be successfully
exploited to discover drug targets for non-infectious human disease. It is
possible that certain diseases in humans for which the Company is seeking to
discover novel drug leads will be associated with a human gene that has no
homolog in fungal genomes because the human genome is larger and more complex
than fungal genomes. In addition, since the function of a gene in a fungal
species may not be the same as that of its homolog in humans, the use of the
target encoded by that gene may not lead to a safe or effective drug for
treating the human disease associated with that gene. Also, the function of a
human gene cloned and expressed in a fungal cell may not be similar to the
function of that gene in a human cell.
The Company's chemical diversity technology for producing compounds to
screen against targets is significantly dependent on the breadth and utility of
the Company's collection of fungi. While many commercially successful drugs have
been derived by third parties from compounds produced by fungi, no assurance can
be given that the Company will be able to discover any novel compounds from its
fungal collection that will be safe and effective and otherwise capable of being
developed into drugs for treating disease. The Company's Advanced Drug Selection
Technologies have been engineered to address certain rate limiting steps in the
drug discovery process by increasing the speed and lowering the cost of
selecting and analyzing compounds that interact with targets (referred to by the
Company as drug leads), and the integration of technologies developed at
PerSeptive into the Company's overall Advanced Drug Selection Technologies has
led to certain early results. However, no assurance can be given that the pace
at which these early results have occurred will continue or that the Company's
Advanced Drug Selection Technologies will result in the discovery of any novel
drug targets or drug leads.
UNCERTAINTIES RELATING TO DRUG DEVELOPMENT AND COMMERCIALIZATION
The Company's success will depend on the ability of the Company and its
strategic collaborators to develop and commercialize drugs based on the drug
leads discovered by using the Company's drug discovery
6
<PAGE> 9
technologies. No assurance can be given that any drug lead discovered using the
Company's drug discovery technologies will be successfully developed and
commercialized as a drug. Development and commercialization of new drugs is
highly uncertain, and uncontrollable or unanticipated events, including delays
in clinical trials, unexpected adverse side effects or inadequate therapeutic
efficacy, and delays in obtaining regulatory approval, may slow or prevent
development efforts of the Company or its strategic collaborators and may have a
material adverse effect on the Company's business, financial condition and
results of operations. In the United States and elsewhere, extensive preclinical
studies and clinical trials demonstrating a drug's safety and efficacy in
treating a particular disease indication are required prior to obtaining
regulatory approval to market the drug for that indication. Preclinical studies
and clinical trials for a drug for a particular indication usually take a number
of years, and the time required to complete such studies and trials cannot be
predicted. There can be no assurance that any drugs based on drug leads
discovered with the Company's technology by the Company or any of its strategic
collaborators will be shown to be safe and effective in clinical trials, meet
applicable regulatory standards, be capable of being manufactured in commercial
quantities at reasonable costs, be accepted by physicians, patients, hospital
formularies, insurers, health maintenance organizations, pharmacy benefit
managers or similar entities, be patentable by the Company or its strategic
collaborators and free of proprietary rights held by third parties, and be at
least as effective as any competing drugs. See "--Government Regulation; No
Assurances of Regulatory Approval."
RELIANCE ON STRATEGIC COLLABORATORS
The Company's strategy for funding a substantial portion of its drug
discovery operations and developing and commercializing drugs from drug leads
discovered with its technology includes the formation of strategic
collaborations and licensing arrangements with pharmaceutical and biotechnology
companies that have substantial resources devoted to conducting preclinical
studies and clinical trials of drug candidates, obtaining regulatory approval
for drug candidates and manufacturing and marketing drugs. The failure of the
Company to obtain additional collaborations and further funding for its drug
discovery operations from strategic collaborations and licensing arrangements
would require it to scale back or terminate certain of its drug discovery
programs. Also, in the absence of additional strategic collaborations and
licensing arrangements, it is unlikely that the Company would be able to obtain
the capital and other resources necessary to develop and commercialize drugs
based on drug leads that it discovers. In any strategic collaboration or
licensing arrangement, the Company will be subject to significant discretion on
the part of the strategic collaborator or licensee to proceed with, and to
control the amount and timing of resources devoted to, the development and
commercialization of drugs based on drug leads covered by the collaboration or
arrangement. There can be no assurance that any strategic collaborator or
licensee will pursue the development and commercialization of any such drug
leads, that the interests of any strategic collaborator or licensee will
continue to coincide with those of the Company, that disputes will not arise
over proprietary interests such as whether a specific drug lead was discovered
by the Company or with the Company's technology, that any strategic collaborator
or licensee will not pursue, (independently or with third parties), the
development and commercialization of alternative drug leads in preference to or
in competition with those discovered by the Company or using the Company's
technology, or that any such development or commercialization would be
successful and generate royalties for the Company. The Company will rely on its
collaborative relationships to market, sell, manufacture and distribute its
product candidates. Under its existing collaborations, and to the extent the
Company enters into future collaborations, any revenue received by the Company
under these collaborations will depend upon the efforts of third parties. There
can be no assurance that any such efforts by third parties will be successful.
If any strategic collaborator or licensee were to breach or terminate its
agreement with the Company or otherwise fail to conduct its collaborative
activities successfully and in a timely manner, the development and
commercialization of drug leads covered by that agreement would be delayed or
terminated. Any such delay or termination could materially and adversely affect
the Company's business, financial condition and results of operations. To date,
the Company has entered into strategic alliances with Pfizer and with
Wyeth-Ayerst relating to the discovery, development and commercialization of
drugs for treating fungal and bacterial infections, respectively, in humans. The
Company's agreements with Pfizer and Wyeth-Ayerst are subject to termination
under certain circumstances. Wyeth-Ayerst has an option to terminate its
agreement with the Company if the Company fails to reach certain research
objectives by the end of the third year of the collaboration. The Company
anticipates receiving significant milestone payments from Pfizer and Wyeth-
7
<PAGE> 10
Ayerst, although there can be no assurance that such milestones will be
achieved. In addition, there can be no assurance that the Company will be able
to establish additional strategic collaborations or licensing arrangements with
other companies on terms that are favorable to the Company. See "Business --
Collaborations."
RISKS ASSOCIATED WITH PERSEPTIVE AGREEMENTS
In connection with the Company's agreements with PerSeptive, the Company
and PerSeptive entered into a Voting Agreement pursuant to which, as long as it
owns at least 20% of the Company's outstanding voting stock, PerSeptive is
entitled to require the nomination of two PerSeptive nominees for election to
the Company's Board of Directors (if comprised of six or seven directors) or
three PerSeptive nominees if the Company's Board of Directors is comprised of
eight or more total directors. If PerSeptive owns less than 20% of the Company's
outstanding capital stock, but at least 10%, it is entitled to require the
nomination of one PerSeptive nominee for election to the Company's Board of
Directors. Certain stockholders of the Company, who own an aggregate of 93.8% of
the Company's capital stock prior to the offering, have agreed to vote in favor
of the election of such nominees. In addition, PerSeptive has entered into a
standstill agreement, pursuant to which it has agreed not to acquire any
additional Company equity securities and to restrict its ability to sell any
equity securities of the Company, and, as long as PerSeptive owns at least 20%
of the Company's equity securities, to vote its shares in accordance with the
recommendation of ChemGenics' Board of Directors. This agreement will remain in
effect until June 30, 2006. By virtue of PerSeptive's representation on the
Company's Board of Directors, PerSeptive will have the ability to influence the
direction and policies of the Company. Although under the terms of the
agreements PerSeptive's representatives on the Board of Directors would abstain
from voting on any matter that involved a direct conflict of interest between
ChemGenics and PerSeptive, PerSeptive's ownership of a significant percentage of
the Company's Common Stock, and its representation on ChemGenics' Board of
Directors, could permit PerSeptive to exercise a degree of influence on any such
matter. Dr. Noubar B. Afeyan, Chief Executive Officer of PerSeptive, currently
serves as Chairman of ChemGenics' Board of Directors.
Pursuant to the PerSeptive agreements, PerSeptive has agreed not to engage
in drug discovery or enter into any similar collaborative research and/or
development agreement for drug discovery with any party other than ChemGenics.
In addition, PerSeptive has agreed to provide ChemGenics with early and
preferred access to its technology. However, PerSeptive may sell and offer full
product support for its equipment and reagents to third parties, which the third
parties may use for any purpose, including drug discovery. In addition, during
the first five years of its collaboration with PerSeptive, the Company will have
an 18-month period of exclusivity for inventions or improvements developed
jointly by the parties which are primarily useful in drug discovery, during
which period PerSeptive will not sell, license, or distribute products
incorporating such joint inventions or improvements. After the first five years
of such collaboration, the Company will no longer be entitled to any such period
of exclusivity for joint inventions or improvements which are primarily useful
in drug discovery, unless PerSeptive so agrees. There can be no assurance that
PerSeptive will so agree or, if it does so agree, that such agreement will be
upon terms commercially reasonable to the Company. The Company also acquired
certain supplies and other assets related to drug discovery programs at
PerSeptive, including the right to use without charge (i) certain equipment
until the earlier of the successful conclusion of an initial public offering by
the Company or June 30, 1997 and (ii) up to $500,000 of supplies of the type
manufactured or distributed by PerSeptive until the later of the successful
conclusion of an initial public offering by the Company or March 31, 1997.
Thereafter, the Company will pay PerSeptive's fully burdened manufacturing cost
for such equipment and supplies.
The Company is dependent on technology developed by PerSeptive, and may
continue to be so in the future. Accordingly, the occurrence of an event which
materially affects the ability of PerSeptive to perform its obligations under
its agreements with the Company, may have a material adverse affect upon the
Company's ability to continue the development of certain of its technologies. In
addition, if PerSeptive were to terminate its agreements with the Company or
otherwise fail to comply with its covenants and agreements in a timely manner,
such terminations or failures could have a material adverse affect on the
Company's business, financial condition and results of operations. See "Business
- -- Collaborations -- PerSeptive Biosystems," and "Certain Transactions --
Agreement with PerSeptive Biosystems."
8
<PAGE> 11
HISTORY OF OPERATING LOSSES; ANTICIPATION OF FUTURE LOSSES
As of September 30, 1996, the Company had an accumulated deficit of
approximately $21.7 million, including a one-time charge of $6.8 million
associated with the acquisition of in-process research and development from
PerSeptive. The Company is currently operating at a loss and expects to incur
operating losses over at least the next several years. Even if the Company
succeeds in developing a commercial product, the Company expects to incur
significant losses for at least the next several years and that such losses will
increase as the Company expands its research and development activities
including preclinical studies and clinical trials. To achieve profitability, the
Company, alone or with others, must successfully develop its drug candidates,
conduct clinical trials, obtain required regulatory approvals and successfully
manufacture, introduce and market such drugs. The time required to reach
commercial revenue and profitability is highly uncertain and there can be no
assurance that the Company will be able to achieve any such revenue and
profitability on a sustained basis, if at all. See "Selected Financial Data,"
"Management Discussion and Analysis of Financial Condition and Results of
Operations," and "Business."
FUTURE CAPITAL REQUIREMENTS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company has experienced no net cash flows from operations since its
inception. The Company has funded its activities to date through issuances of
equity securities, research funding and interest income and expects capital and
operating expenditures to increase over the next several years as it expands its
infrastructure and its research and development activities. The Company's actual
future capital requirements will depend on many factors, including, without
limitation, the progress of the Company's research and development; achievement
of milestones under strategic alliance arrangements; the ability of the Company
to establish and maintain additional strategic collaborations and licensing
arrangements; the progress of the development efforts of the Company's strategic
collaborators; competing technological and market developments; the cost of
filing, prosecuting, defending and enforcing patent claims and other
intellectual property rights; and the purchase of additional capital equipment.
These factors also include the level of the Company's activities relating to
commercialization rights it has retained in its strategic collaborations and the
costs and timing of regulatory approvals. Any such strategic collaborations or
licensing arrangements could result in limitation on the Company's ability to
control the research and development of potential drugs and commercialization of
resulting drugs if any, and could limit profits, if any, therefrom. Should the
Company choose to develop, manufacture or market any drugs it discovers, the
Company will require substantial funds for research and development, preclinical
studies, clinical trials, manufacturing and marketing of any of its
pharmaceutical products. The Company believes that the anticipated net proceeds
from this offering, together with existing cash, investment securities, and the
anticipated cash flow from existing strategic alliances, will be sufficient to
support the Company's operations for the next two years. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."
The Company expects that it will require significant additional financing
in the future, which it may seek to raise through public or private equity
offerings, debt financing or additional strategic collaborations and licensing
arrangements. No assurance can be given that additional financing will be
available when needed, or that, if available, such financing will be obtained on
terms favorable to the Company or its stockholders. To the extent the Company
raises additional capital by issuing equity securities, ownership dilution to
existing stockholders may result. To the extent that the Company raises
additional funds through strategic collaborations and licensing arrangements,
the Company may be required to relinquish rights to certain of its technologies
or product candidates, or to grant licenses on terms that are not favorable to
the Company, either of which could have a material adverse effect on the
Company's business, financial condition and results of operations. In the event
that adequate funds are not available, the Company may be required to reduce the
scope of or eliminate one or more of its research and development programs or
certain personnel and related expenses, which could have a material adverse
affect on the Company.
COMPETITION; RISK OF TECHNOLOGICAL OBSOLESCENCE
Drug discovery and development is a highly competitive field characterized
by extensive research efforts and rapid technological development. The Company
faces, and will continue to face, intense and increasing
9
<PAGE> 12
competition from organizations such as pharmaceutical and biotechnology
companies, as well as academic and research institutions and government
agencies. The Company is also subject to significant competition from
organizations that are pursuing the same or similar technologies as those being
pursued by the Company and from organizations that are pursuing pharmaceutical
products that are competitive with the Company's potential products, and such
competition is likely to increase.
Many of the Company's competitors have substantially greater financial,
technical and personnel resources than the Company. Although the Company
believes that it has identified new and distinct approaches to drug discovery,
there are other companies with drug discovery programs, at least some of the
objectives of which are the same or similar to those of the Company. Competing
technologies may be developed which would render the Company's technology
obsolete or noncompetitive. The Company is aware of many pharmaceutical and
biotechnology companies that are engaged in efforts to treat each of the
diseases for which the Company is seeking to develop therapeutic products. There
can be no assurance that competitors of the Company will not develop competing
technologies or drugs that are more effective than those developed by the
Company and its collaborators, thereby rendering the Company's and its
collaborators' technologies or drugs obsolete or non-competitive. Moreover,
there can be no assurance that the Company's competitors will not obtain patent
protection or other intellectual property rights that would limit the Company's
or its collaborators' ability to use the Company's technologies or commercialize
its or their drugs.
Each of the Company's strategic collaborators may be conducting multiple
product development efforts within each disease area that is the subject of its
strategic collaboration with the Company. Generally, the Company's strategic
collaborations do not restrict its strategic collaborators from pursuing
competing development efforts. Any product candidate of the Company, therefore,
may be subject to competition with a potential product under development by a
strategic collaborator. See " -- Reliance on Strategic Collaborators" and
"Business -- Competition."
PATENTS AND PROPRIETARY RIGHTS; THIRD PARTY RIGHTS
The Company's commercial success depends in part on its ability to obtain
and enforce patent and certain other proprietary rights relating to its gene
discoveries, drug targets, screening technologies and drug leads. As of December
1, 1996, the Company had 10 patents pending in the United States, and two U.S.
patents based on the Company's discoveries had issued. There can be no assurance
that any present or future patent application will result in a patent or that
any present or future patent will protect a commercially viable product, will
provide the Company with any competitive advantages or will not be challenged by
third parties, or that the patents of others will not have an adverse effect on
the ability of the Company to do business. Furthermore, there can be no
assurance that others will not independently develop similar or alternative
technologies, duplicate any of the Company's technologies, or, if patents are
issued to the Company, design around the patented technologies developed by the
Company. In addition, the Company could incur substantial costs in litigation if
it is required to defend itself in patent suits brought by third parties or if
it initiates such suits.
Patent law as it relates to inventions in the biotechnology field is still
evolving and legal principles are not firmly established. Accordingly, there can
be no assurance that patents will be granted with respect to any of the
Company's pending patent applications or with respect to any patent applications
filed by the Company in the future. In addition, even if such patents are
granted, there can be no assurance that in the event any claims in such patents
are challenged that any court or patent authority would determine that such
patent claims are valid and enforceable or sufficiently broad in scope to
protect the Company's proprietary rights. Moreover, because patent applications
in the United States are maintained in secrecy until patents issue, because
patent applications in certain other countries generally are not published until
more than eighteen months after they are filed, because publication of
technological developments in the scientific or patent literature often lags
behind the date of such developments, and because searches of prior art may not
reveal all relevant prior inventions, the Company cannot be certain that it was
the first to invent the subject matter covered by its patent applications or
that it was the first to file patent applications for such inventions.
10
<PAGE> 13
The commercial success of the Company will depend in part on not infringing
patents or proprietary rights of others, and there can be no assurance that the
technologies and products used or developed by the Company will not infringe
such rights. If such infringement occurs and the Company is not able to obtain a
license from the relevant third party, the Company will not be able to continue
the development, manufacture, use or sale of any such infringing technology or
product. There can be no assurance that necessary licenses to third-party
technology will be available at all, or on commercially reasonable terms.
Failure by the Company to obtain a license to technology that it may require to
utilize its technologies or commercialize its products could have a material
adverse effect on the Company. In some cases, litigation or other proceedings
may be necessary to defend against or assert claims of infringement, to enforce
patents issued to the Company, to protect trade secrets, know-how or other
intellectual property rights owned by the Company or to determine the scope and
validity of the proprietary rights of third parties. Any potential litigation
could result in substantial costs to, and diversion of, resources by the Company
and could have a material and adverse impact on the Company. There can be no
assurance that any of the Company's issued or licensed patents would ultimately
be held valid or that efforts to defend any of its patents, trade secrets,
know-how or other intellectual property rights would be successful. An adverse
outcome in any such litigation or proceeding could subject the Company to
significant liabilities, require the Company to cease using the subject
technology or require the company to license the subject technology from the
third party, all of which could have a material adverse effect on the Company's
business. See "Business--Patents."
In addition to patent protection, the Company relies upon trade secrets,
proprietary know-how and continuing technological advances to develop and
maintain its competitive position. To maintain the confidentiality of its trade
secrets and proprietary information, the Company requires its employees,
consultants and collaborators to execute confidentiality agreements upon the
commencement of their relationships with the Company. In the case of employees,
the agreements also provide that all inventions resulting from work performed by
them while in the employ of the Company will be the exclusive property of the
Company. There can be no assurance, however, that these agreements will not be
breached, that the Company would have adequate remedies in the event of any such
breach or that the Company's trade secrets or proprietary information will not
otherwise become known or developed independently by others.
The Company is party to various license agreements which give it rights to
use certain technologies in its research and development processes. There can be
no assurance that the Company will be able to continue to license such
technology on commercially reasonable terms, if at all. Failure by the Company
to maintain rights to such technology could have a material adverse effect on
the Company's business, financial condition and results of operations.
GOVERNMENT REGULATION; NO ASSURANCES OF REGULATORY APPROVAL
The Company's drug discovery activities and the potential commercialization
of its product candidates will be subject to extensive regulation by the United
States Food and Drug Administration (the "FDA") and other regulatory authorities
in the United States. These activities will also be regulated in countries
outside the United States where the Company's product candidates may be tested
and sold. Significant time and cost will be expended in response to government
regulations which require the Company and its collaborators to provide extensive
safety and efficacy data to the FDA. The regulatory process, which includes
preclinical studies and clinical trials of each product candidate, takes many
years and requires the expenditure of substantial resources. Data obtained from
preclinical and clinical activities are susceptible to varying interpretations
that could delay, limit or prevent FDA regulatory approval. In addition, delays
or rejections may be encountered based upon changes in FDA policy for drug
approval during the period of product development and FDA regulatory review of
each submitted new drug application ("NDA"). Similar delays may also be
encountered in foreign countries. There can be no assurance that even after such
time and expenditures, regulatory approval will be obtained for any drugs
developed by the Company and its collaborators. Moreover, if regulatory approval
of a drug is granted, such approval may entail limitations on the indicated uses
for which it may be marketed. Further, even if such regulatory approval is
obtained, a marketed drug and its manufacturing facilities are subject to
continual review and periodic inspections, and later discovery of previously
unknown problems with a product, manufacturer or facility may result in
11
<PAGE> 14
restrictions on such product or manufacturer, including withdrawal of the
product from the market. Failure to comply with the applicable regulatory
requirements can, among other things, result in fines, suspensions of regulatory
approvals, product recalls, operating restrictions and criminal prosecutions.
Further, additional governmental regulation may be established that could
prevent or delay regulatory approval of the Company's products.
The Company's business is also subject to regulation under state and
federal laws regarding environmental protection and hazardous substances
control, including the Occupational Safety and Health Act, the Environmental
Protection Act, and the Toxic Substance Control Act. The Company could be held
liable for any damages that result from violations of these laws and any such
liability could exceed the resources of the Company. There can be no assurance
that the Company will not be required to incur significant costs to comply with
environmental laws and regulations in the future. In addition, there can be no
assurance that statutes or regulations applicable to the Company's business will
not be adopted that impose substantial additional costs or otherwise materially
adversely affect the Company's operations. See "Business -- Government
Regulation."
ATTRACTION AND RETENTION OF KEY EMPLOYEES
The Company is highly dependent on the principal members of its management
and scientific staff, including Dr. Barry A. Berkowitz and Dr. William E.
Timberlake. The loss of services of any of these personnel could have an adverse
effect on the Company. Furthermore, recruiting and retaining qualified
scientific personnel will also be critical to the Company's success as a result
of the intense competition for qualified management and scientific staff in the
pharmaceutical and biotechnology industries. There can be no assurance that the
Company will be able to attract and retain such personnel on acceptable terms
and the failure to recruit and retain such personnel may have a material adverse
effect on the Company.
PRODUCT LIABILITY AND LIMITED INSURANCE
The Company's business exposes it to potential product liability claims,
which are inherent in the development, testing, manufacturing, marketing and
sales of human therapeutics. The use of the Company's product candidates in
clinical trials also exposes the Company to product liability claims and
possible adverse publicity. These risks increase with respect to the Company's
product candidates, if any, that receive regulatory approval for
commercialization. The Company currently has no product liability insurance
coverage for the clinical use of its products. Moreover, there can be no
assurance that the Company will be able to obtain such insurance coverage on
acceptable terms, if at all, or that a product liability claim would not
materially adversely affect the business of the Company.
UNCERTAINTY OF PHARMACEUTICAL PRICING AND COST CONTAINMENT INITIATIVES
The Company expects that all of its revenue in the foreseeable future will
be derived from services and products provided to the Company's pharmaceutical
and biotechnology customers. The Company's success will therefore be directly
dependent upon the success of the companies within these industries. The level
of revenue and profitability of the Company's customers may be adversely
impacted by the continuing efforts of governmental and third party payors,
including health maintenance organizations, to contain or reduce health care
costs, including drug prices, through various means and the initiatives of third
party payors with respect to the availability of reimbursement. In certain
foreign markets pricing or profitability of pharmaceuticals is subject to
government control. In the U.S., there have been and will continue to be state
and federal proposals to implement similar government control. To the extent
that such proposals or reforms impact the business, financial condition and
profitability of pharmaceutical companies that are current or proposed
collaborators with the Company, the Company's business, financial condition and
results of operations could be materially and adversely affected.
SHARES ELIGIBLE FOR FUTURE SALES; REGISTRATION RIGHTS
Sales of substantial amounts of Common Stock in the public market following
this offering could adversely affect the prevailing market price of the Common
Stock and the Company's ability to raise capital in the future. Upon completion
of this offering, the Company will have a total of 10,103,815 shares of Common
12
<PAGE> 15
Stock outstanding, of which the 2,500,000 shares offered hereby will be freely
tradeable without restriction by persons other than "affiliates" of the Company,
as such term is defined under the Securities Act. The remaining 7,603,815 shares
of Common Stock outstanding are "restricted securities" as the term is defined
by Rule 144 promulgated under the Securities Act (the "Restricted Shares"). Of
the 7,603,815 Restricted Shares, 159,556 shares may be sold immediately after
this offering under Rule 144(k). An additional 4,549,535 shares will become
eligible for sale 90 days after completion of the offering pursuant to Rule 144
and Rule 701 promulgated under the Securities Act. The remaining 2,894,724
shares will be eligible for sale upon the expiration of their respective holding
periods as set forth in Rule 144. The Securities and Exchange Commission has
proposed certain amendments to Rule 144 that would reduce by one year the
holding periods required for shares subject to Rule 144 to become eligible for
resale in the public market. This proposal, if adopted, would permit earlier
resale of shares of Common Stock currently subject to holding periods under Rule
144. No assurance can be given concerning whether or when the proposal will be
adopted by the Securities and Exchange Commission. Furthermore, 5,013,030 of the
Restricted Shares are subject to lock-up agreements expiring 180 days following
the date of this Prospectus, and 2,563,275 of the Restricted Shares, which are
held by PerSeptive, are subject to a separate, more extended lock-up agreement
with the Company. The 180-day lock-up agreements provide that Cowen & Company
may, in its sole discretion and at any time without notice, release all or a
portion of the shares subject to these lock-up agreements. Upon the expiration
of these lock-up agreements, 4,549,535 of the 7,603,815 Restricted Shares may be
sold pursuant to Rule 144 or 701, subject in some cases to certain volume
restrictions imposed thereby. Certain existing shareholders have rights to
include shares of Common Stock owned by them in future registrations by the
Company for the sale of Common Stock or to request that the Company register
their shares under the Securities Act. See "Description of Capital Stock --
Registration Rights." Following the date of this Prospectus, the Company intends
to register on one or more registration statements on Form S-8 approximately
1,500,000 shares of Common Stock issuable under its stock option plan. Of the
1,500,000 shares issuable under its stock option plan, 861,736 shares are
subject to outstanding options as of September 30, 1996, of which 653,214 shares
are subject to lock-up agreements. Shares covered by such registration
statements will immediately be eligible for sale in the public market upon the
filing of such registration statements. See "Shares Eligible for Future Sale,"
and "Description of Capital Stock -- Registration Rights."
EFFECT OF ANTI-TAKEOVER PROVISIONS
The Company's Board of Directors is authorized to issue up to 5,000,000
shares of Preferred Stock and to determine the price, rights, preferences and
privileges of those shares without any further vote or action by the Company's
stockholders. The rights of the holders of Common Stock will be subject to, and
may be adversely affected by, the rights of the holders of any shares of
Preferred Stock that may be issued in the future. While the Company has no
present intention to issue shares of Preferred Stock, such issuance, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire a majority of the outstanding voting stock of the
Company. In addition, such Preferred Stock may have other rights, including
economic rights senior to the Common Stock, and, as a result, the issuance
thereof could have a material adverse effect on the market value of the Common
Stock. The Company's Restated Certificate of Incorporation provides for a
classified Board of Directors commencing with the 1997 annual meeting of
stockholders, and members of the Board of Directors may be removed only for
cause upon the affirmative vote of holders of at least a majority of the shares
of capital stock of the Company entitled to vote. Furthermore, the Company is
subject to the anti-takeover provisions of Section 203 of the Delaware General
Corporation Law, which prohibit the Company from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person first becomes an "interested
stockholder," unless the business combination is approved in a prescribed
manner. The application of these provisions could have the effect of delaying or
preventing a change of control of the Company. Certain other provisions of the
Company's Restated Certificate of Incorporation, including provisions
eliminating the right of stockholders to act by written consent, eliminating the
right of stockholders to call special meetings and requiring special notice
provisions for stockholder proposals or nominations, could also have the effect
of delaying or preventing changes of control or management of the Company, which
could adversely affect the market price of the
13
<PAGE> 16
Company's Common Stock. See "Description of Capital Stock -- Delaware Law and
Certain Charter Provisions."
NO PRIOR PUBLIC MARKET; POSSIBLE STOCK PRICE VOLATILITY
Prior to this offering, there has been no public market for the Common
Stock of the Company. There can be no assurance that an active trading market
will develop or, if one does develop, that it will be maintained. The public
offering price of the Common Stock will be established by negotiations between
the Company and the Representatives of the Underwriters. See "Underwriting." The
market price of the shares of Common Stock, like that of the common stock of
many other biotechnology companies, may be highly volatile. Factors such as
announcements of technological innovations or new commercial products by the
Company or its competitors, disclosure of results of clinical testing or
regulatory proceedings, governmental regulation and approvals, developments in
patent or other proprietary rights, public concern as to the safety of products
developed by the Company and general market conditions may have a significant
effect on the market price of the Common Stock. In addition, the stock market
has experienced extreme price and volume fluctuations. This volatility has
significantly affected the market prices of securities of many biotechnology and
pharmaceutical companies for reasons frequently unrelated to the operating
performance of these companies. These broad market fluctuations may adversely
affect the market price of the Company's Common Stock.
CONTROL BY EXISTING STOCKHOLDERS; CONCENTRATION OF STOCK OWNERSHIP
Following this offering, the Company's directors, executive officers and
affiliated entities will beneficially own approximately 62.9% of the outstanding
shares of Common Stock. Accordingly, such persons will have the ability to
exercise significant influence over the management and policies of the Company
and to control the election of the Company's Board of Directors and other
stockholder actions. See "Principal Stockholders."
DILUTION; ABSENCE OF DIVIDENDS
Investors purchasing shares of Common Stock in this offering will incur
immediate and substantial dilution in tangible book value per share. In
addition, investors purchasing shares of Common Stock in this offering will
incur additional dilution to the extent outstanding options and warrants are
exercised. See "Dilution," "Management -- Employee Benefit Plans" and
"Description of Capital Stock -- Stock Purchase Warrants." The Company has never
paid cash dividends and does not intend to pay cash dividends in the foreseeable
future. See "Dilution; Dividend Policy."
14
<PAGE> 17
THE COMPANY
ChemGenics Pharmaceuticals Inc., formerly Myco Pharmaceuticals Inc., was
incorporated in Delaware in January 1992. As used herein, the "Company" refers
to ChemGenics Pharmaceuticals Inc. and its predecessor. The Company's principal
executive offices are located at One Kendall Square, Building 300, Cambridge,
Massachusetts 02139 and its telephone number is (617) 374-9090.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,500,000 shares of
Common Stock offered hereby are estimated to be $27,150,000 ($31,335,000 if the
Underwriters exercise their over-allotment option in full), assuming an initial
public offering price of $12.00 per share and after deducting the underwriting
discounts and commissions and estimated offering expenses payable by the
Company. The Company intends to use the net proceeds of this offering for
repayment of the $3 million promissory note issued to PerSeptive and for
research and development, expansion of its laboratory facilities, working
capital and general corporate purposes. See "Business -- Collaborations --
PerSeptive Biosystems." The Company may also use a portion of such net proceeds
to acquire or invest in businesses, products and technologies that are
complementary to those of the Company, although no such acquisitions are planned
or being negotiated as of the date of this Prospectus, and no portion of the net
proceeds has been allocated to any specific acquisition.
The amount and timing of expenditures for each purpose may vary
significantly depending upon numerous factors, including progress of the
Company's research programs, the number and scope of these programs, achievement
of milestones under collaborative arrangements, the ability of the Company to
establish and maintain additional collaborative and licensing arrangements and
the progress of the development efforts of the Company's strategic
collaborators. Additional factors include the level of the competing
technological and market developments, the costs involved in filing, prosecuting
and enforcing patent claims and other intellectual property rights, the costs
and timing of regulatory approvals and administrative and legal expenses.
Until used, the Company intends to invest the net proceeds of this offering
in interest-bearing, investment-grade securities. While the net proceeds are so
invested, the interest earned by the Company on such proceeds will be limited by
available market rates. The Company intends to invest and use such proceeds so
as to avoid being required to register as an "investment company" under the
Investment Company Act of 1940, as amended.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its Common
Stock and does not anticipate paying cash dividends on its Common Stock for the
foreseeable future. The Company intends to retain future earnings, if any, for
use in the operation of its business. See "Risk Factors -- Dilution; Absence of
Dividends."
15
<PAGE> 18
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 30, 1996 (i) on an actual basis, (ii) on a pro forma basis to give
effect to the sale on December 2, 1996 of 833,334 shares of Series E Convertible
Preferred Stock to Wyeth-Ayerst (which shares will be converted into 314,465
shares of Common Stock upon the consummation of this offering) and the receipt
of $5,000,004 of proceeds therefrom and the automatic conversion of all
outstanding shares of Convertible Preferred Stock into an aggregate of 4,458,528
shares of Common Stock upon consummation of this offering and (iii) on a pro
forma as adjusted basis to reflect the sale of 2,500,000 shares of Common Stock
pursuant to this offering and the application of the estimated net proceeds
therefrom as set forth in "Use of Proceeds." This table should be read in
conjunction with the Financial Statements and the Notes thereto appearing
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------------ ------------ ------------
<S> <C> <C> <C>
Capital lease obligations, net of current
portion(1).......................................... $ 992,461 $ 992,461 $ 992,461
Promissory note....................................... 3,000,000 3,000,000 --
Stockholders' equity (2)(3):
Convertible Preferred Stock, $.01 par value:
13,441,667 shares authorized; 10,981,837 issued
and outstanding actual; no shares issued and
outstanding pro forma and pro forma as
adjusted....................................... 109,818 -- --
Preferred Stock, $.001 par value: 5,000,000
shares authorized; no shares issued and
outstanding actual,
pro forma and pro forma as adjusted............ -- -- --
Common Stock, $.001 par value: 25,000,000 shares
authorized; 3,140,684 shares issued and
outstanding actual; 7,599,212 shares pro forma;
10,099,212 shares pro forma as adjusted........ 3,141 7,599 10,099
Additional paid-in-capital....................... 29,145,504 34,250,868 61,398,368
Deficit accumulated during the development
stage.......................................... (21,669,717) (21,669,717) (21,669,717)
------------ ------------ ------------
Total stockholders' equity....................... 7,588,746 12,588,750 39,738,750
------------ ------------ ------------
Total capitalization........................ $ 11,581,207 $ 16,581,211 $ 40,731,211
=========== =========== ===========
</TABLE>
- ---------------
(1) See Note 7 of Notes to Financial Statements.
(2) Excludes 861,736 shares issuable upon exercise of options outstanding with a
weighted average exercise price of $1.50 per share and 1,914,496 shares
issuable upon exercise of warrants outstanding with a weighted average
exercise price of $12.90 per share.
(3) Upon the closing of this offering, the Company's Certificate of
Incorporation will be amended and restated to, among other things, reduce
the number of authorized shares of Common Stock from 33,866,667 to
25,000,000 and of Preferred Stock from 13,441,667 to 5,000,000.
16
<PAGE> 19
DILUTION
The Company's pro forma net tangible book value at September 30, 1996, was
approximately $12.6 million, or $1.59 per share of Common Stock after giving
effect to the sale on December 2, 1996 of 833,334 shares of Series E Convertible
Preferred Stock (which shares will be converted into 314,465 shares of Common
Stock upon the consummation of this offering) and the receipt of $5,000,004 in
proceeds therefrom and the automatic conversion of all outstanding shares of
Convertible Preferred Stock into 4,458,528 shares of Common Stock upon
consummation of this offering. Pro forma net tangible book value per share
represents the amount of the Company's total tangible assets, less total
liabilities, divided by 7,599,212, the pro forma number of shares of Common
Stock outstanding as of September 30, 1996. After giving effect to the sale of
2,500,000 shares of Common Stock in this offering at an assumed initial public
offering price of $12.00 per share and the application of the estimated net
proceeds therefrom, the Company's pro forma net tangible book value at September
30, 1996 would have been approximately $39.6 million, or $3.92 per share. This
represents an immediate increase in pro forma net tangible book value of $2.33
per share to existing stockholders and an immediate dilution in pro forma net
tangible book value of $8.08 per share to purchasers of Common Stock in this
offering. The following table illustrates the per share dilution in pro forma
net tangible book value to new investors:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................... $ 12.00
Pro forma net tangible book value per share at September 30,
1996........................................................ $ 1.59
Increase per share attributable to new investors............. 2.33
------
Pro forma as adjusted net tangible book value per share after this
offering........................................................ 3.92
-------
Pro forma net tangible book value dilution per share to new
investors....................................................... $ 8.08
======
</TABLE>
The following table sets forth on a pro forma basis as described above the
number of shares of Common Stock purchased from the Company, the total
consideration paid and the average price per share paid by the existing
stockholders and to be paid (at the assumed initial public offering price of
$12.00 per share) by new investors purchasing shares of Common Stock in this
offering (before deducting underwriting discounts, commissions and estimated
offering expenses payable by the Company):
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------------- ------------------------ AVERAGE PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
---------- ---------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Existing Stockholders..................... 7,599,212 75% $34,258,467 53% $ 4.51
New Investors............................. 2,500,000 25% 30,000,000 47% 12.00
---------- --- ----------- ---
Total................................. 10,099,212 100% 64,258,467 100%
========== =========== ============ ===========
</TABLE>
The foregoing tables exclude 1,490,302 shares of Common Stock reserved for
issuance under the 1992 Employee, Director and Consultant Stock Option Plan
(under which, as of September 30, 1996, an aggregate of 861,736 shares of Common
Stock issuable upon the exercise of outstanding options at a weighted average
price of $1.50 per share were outstanding) and 1,914,496 shares of Common Stock
reserved for issuance upon the exercise of outstanding warrants at a weighted
average exercise price of $12.90 per share. Since September 30, 1996, the
Company granted options to purchase an additional 54,623 shares of Common Stock
at an exercise price of $7.56 per share and 4,603 shares were issued upon the
exercise of outstanding stock options. To the extent that outstanding options
and warrants are exercised, there will be further dilution in pro forma net
tangible book value per share to new investors. See "Management -- Employee
Benefit Plans," "Description of Capital Stock -- Stock Purchase Warrants" and
Note 5 of Notes to Financial Statements.
17
<PAGE> 20
SELECTED FINANCIAL DATA
The selected financial data set forth below as of December 31, 1994 and
1995 and for the three years in the period ending December 31, 1995 are derived
from the Company's financial statements, which have been audited by Arthur
Andersen LLP whose report with respect thereto is included elsewhere in this
Prospectus. The selected financial data set forth below as of December 31, 1992
and 1993 and for the year ended December 31, 1992 are derived from the Company's
financial statements, which have been audited by Arthur Andersen LLP which are
not included herein. The balance sheet data as of September 30, 1996 and the
statement of operations data for the nine months ended September 30, 1995 and
1996 are derived from the Company's unaudited financial statements. In the
opinion of management of the Company, the unaudited financial statements have
been prepared on the same basis as the audited financial statements and include
all adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the financial condition and results of operations for the periods
presented. The results for the nine months ended September 30, 1996 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1996. The financial data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's financial statements and related
notes included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
INCEPTION
THROUGH
NINE MONTHS SEPTEMBER
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30, 30,
-------------------------------------------------- ------------------------- ------------
1992(1) 1993 1994 1995 1995 1996 1996
----------- ----------- ----------- ----------- ----------- ------------ ------------
(UNAUDITED)
---------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues........................... $ -- $ -- $ 218,095 $ 2,903,179 $ 2,090,535 $ 2,171,015 $ 5,292,289
Operating expenses:
Research and development....... 652,668 2,432,021 3,870,375 4,949,925 3,617,950 5,191,117 17,096,106
General and administrative..... 397,748 796,624 883,219 1,011,505 732,926 1,034,105 4,146,927
Acquired in-process research
and development(2)........... -- -- -- -- -- 6,783,900 6,783,900
----------- ----------- ----------- ----------- ----------- ------------ ------------
Total operating expenses........... 1,050,416 3,228,645 4,753,594 5,961,430 4,350,876 13,009,122 28,026,933
----------- ----------- ----------- ----------- ----------- ------------ ------------
Interest income (expense), net..... 41,994 22,596 (84,609) 662,969 471,112 398,251 1,064,927
----------- ----------- ----------- ----------- ----------- ------------ ------------
Net loss........................... $(1,008,422) $(3,206,049) $(4,620,108) $(2,395,282) $.(1,789,229) $(10,439,856) $(21,669,717)
========== ========== ========== ========== ========== =========== ===========
Pro forma net loss per common
share(3)......................... $ (0.31) $ (1.35)
========== ===========
Shares used in computing pro forma
net loss per common share(3)..... 7,746,243 7,750,433
========== ===========
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
DECEMBER 31, ---------------------------------------------
-------------------------------------------------- PRO FORMA AS
1992(1) 1993 1994 1995 ACTUAL PRO FORMA(4) ADJUSTED(4)(5)
----------- ----------- ----------- ----------- ------------ ------------ -----------------
(UNAUDITED)
---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and
marketable securities...... $ 1,048,615 $ 17,082 $ 653,781 $13,080,663 $ 9,352,551 $ 14,352,555 $ 38,502,555
Total assets................. 1,076,478 1,881,639 2,863,194 15,550,255 12,757,535 17,757,539 41,907,539
Promissory note.............. -- -- -- -- 3,000,000 3,000,000 --
Deficit accumulated during
the development stage(2)... (1,008,422) (4,214,471) (8,834,579) (11,229,861) (21,669,717) (21,669,717) (21,669,717)
Total stockholders'
equity (deficit)........... 944,812 (237,237) 1,125,148 13,721,716 7,588,746 12,588,750 39,738,750
</TABLE>
- ---------------
(1) Operations of the Company commenced in January 1992.
(2) Reflects a one-time charge equal to the value placed on technology acquired
from PerSeptive that is in the research stage and has no alternative future
use. Such value was determined by independent appraisal and was charged to
operations because the future net realizable value of the technology is
uncertain. See Note 3 of Notes to Financial Statements.
(3) Computed on the basis described in Note 2(g) of Notes to Financial
Statements.
(4) Gives effect to (i) the sale on December 2, 1996 of 833,334 shares of Series
E Convertible Preferred Stock to Wyeth-Ayerst (which shares will be
converted into 314,465 shares of Common Stock upon the consummation of this
offering) and the receipt of
18
<PAGE> 21
$5,000,004 of proceeds therefrom and (ii) the automatic conversion of all
outstanding convertible preferred stock into 4,458,528 shares of Common
Stock upon the consummation of this offering.
(5) Gives effect to the sale of the 2,500,000 shares of Common Stock offered by
the Company hereby at an assumed initial public offering price of $12.00 per
share and the application of net proceeds therefrom (including the payment
of the $3,000,000 promissory note payable to PerSeptive), after deducting
underwriting discounts and commissions and estimated offering expenses
payable by the Company. See "Use of Proceeds."
19
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the financial
statements and the related notes thereto included elsewhere in this Prospectus.
OVERVIEW
ChemGenics is a drug discovery company that applies its two complementary
technology platforms, Drug Discovery Genomics and Advanced Drug Selection
Technologies, to key rate limiting steps in identifying new drugs. Since January
1995, the Company has been engaged in a research and development collaboration
in the field of human antifungal therapeutics with Pfizer. In December 1996, the
Company entered into a strategic alliance with Wyeth-Ayerst for the discovery of
novel drug leads for treating human bacterial infections. In May, November and
December 1996, the Company entered into agreements with PerSeptive covering the
May 1996 acquisition of certain assets and technologies for use in the field of
drug discovery.
In January 1995, the Company entered into a strategic collaboration with
Pfizer for the discovery of novel drug leads for treating human fungal
infections, which could provide over $50 million in equity, research funding and
development milestone payments, plus potential royalties. Pursuant to the
agreements, Pfizer is funding a drug discovery program over a four-year term,
which began in January 1995. Pfizer has waived its one-time option to terminate
the agreement. In connection with the collaboration, Pfizer purchased 2,700,000
shares of Series D Convertible Preferred Stock (which will be converted into
1,018,867 shares of common stock upon the consummation of this offering) for
$13.5 million. Pfizer has agreed to provide the Company with up to $11.7 million
in research funding over the agreement's four-year term and may become obligated
to make payments to the Company upon achievement of certain milestones which
could total up to an additional $32.5 million. If the collaboration is
successful in identifying targets and leads for products to treat human fungal
disease, Pfizer will pay all costs related to its product development and
commercialization, including, without limitation, clinical trials, regulatory
filings and marketing and will also pay ChemGenics royalties on product sales,
if any, which result from the collaboration. The Company has received $4.4
million in research funding under these agreements through September 30, 1996.
See "Business -- Collaborations -- Pfizer."
In December 1996, the Company entered into a strategic collaboration with
Wyeth-Ayerst for the discovery of novel drug leads for treating human bacterial
infections which provides up to $70 million in equity, research funding and
development milestone payments, plus potential royalties. In connection with the
collaboration, Wyeth-Ayerst purchased 833,334 shares of Series E Convertible
Preferred Stock (which will be converted into 314,465 shares of Common Stock
upon the consummation of this offering) for approximately $5 million and is
committed, subject to ChemGenics' meeting certain research performance
objectives, to a second purchase of $5 million of Common Stock to occur no
sooner than June 2, 1997 and a third purchase of $3 million of Common Stock to
occur no sooner than December 2, 1998. The second and third purchases will be
priced at 115% of the then current market price of the Common Stock following
the Company's initial public offering, or at $15.90 per common share if no such
offering has been completed. Assuming the collaboration concludes its five-year
term, Wyeth-Ayerst is obligated to pay ChemGenics $15 million in research
funding (adjusted for inflation in certain circumstances) and may be obligated
to pay up to an additional $9 million in research performance payments.
ChemGenics may also receive up to an additional $33 million in development
milestone payments. If the collaboration is successful in identifying targets
and leads for products to treat bacterial disease, Wyeth-Ayerst will pay all
costs related to its product development and commercialization, including,
without limitation, clinical trials, regulatory filings and marketing and will
also pay ChemGenics royalties on product sales, if any, which result from the
collaboration. ChemGenics has received $750,000 in research funding through
December 1996. See "Business -- Collaborations -- Wyeth-Ayerst."
In May, November and December 1996, the Company entered into agreements
with PerSeptive under which the Company exchanged a substantial equity interest
in ChemGenics and a $3 million promissory note payable to PerSeptive for certain
assets and a worldwide, royalty-free license for use in the field of drug
20
<PAGE> 23
discovery to all of PerSeptive's existing patents and technology, including
selection technologies, all future patented and unpatented technology, early and
preferred access to all technology and certain other assets, and for a period of
five years to all prototype equipment. Upon execution of the agreements,
ChemGenics hired 10 employees of PerSeptive and entered into a temporary
sublease agreement for approximately 5,000 square feet of laboratory and office
space in Framingham, Massachusetts. Under the agreements, PerSeptive acquired
2,563,275 shares of the Company's Common Stock of which 250,000 shares are
subject to forfeiture lapsing over a three-year period in the event PerSeptive
fails to provide certain services, equipment use, supplies and other assets.
PerSeptive also received a warrant, expiring in June 2000, to purchase an
additional 1,847,673 shares of Common Stock at an exercise price of $13.25 per
share, for an aggregate exercise price of approximately $24.5 million. In
addition, the Company also issued PerSeptive a $3 million promissory note which
the Company intends to pay out of the net proceeds of this offering. This
transaction was accounted for as a purchase. See Note 3 of Notes to Financial
Statements. PerSeptive expended approximately $20 to $25 million in research and
development expenses for the purchased technology prior to its purchase by the
Company. See "Business -- Collaborations -- PerSeptive Biosystems."
As of September 30, 1996, the Company has derived all of its revenue from
payments from Pfizer and United States government research grants. The Company
will not receive royalties on product sales until such time, if ever, that
products based on its drug discovery efforts are commercialized. Although the
Company intends to enter into additional strategic alliances, it also expects to
incur increasing expenses and additional losses for at least the next several
years, primarily due to expansion of its research programs. The Company has
incurred significant losses since inception, with an accumulated deficit of
approximately $21.7 million at September 30, 1996. The Company's results of
operations have fluctuated from period to period and may continue to fluctuate
in the future based upon the timing and composition of funding under existing
collaborative agreements and the investment of resources in research programs.
Therefore, the Company's results of operations for any period may not be
comparable to the results of operations for any other period.
RESULTS OF OPERATIONS
Nine Months Ended September 30, 1996 and September 30, 1995
Revenues increased to approximately $2.2 million for the nine months ended
September 30, 1996 from approximately $2.1 million for the nine months ended
September 30, 1995. Revenues for the nine months ended September 30, 1996
consisted of research revenues of approximately $1.9 million from Pfizer and
$225,000 from United States government grants. Revenues for the nine months
ended September 30, 1995 consisted of research revenues of approximately $1.8
million from Pfizer and $173,000 from United States government grants.
The Company's total operating expenses increased to approximately $13.0
million for the nine months ended September 30, 1996 from approximately $4.4
million for the nine months ended September 30, 1995, primarily due to an
approximately $6.8 million one-time charge for acquired in-process research and
development associated with the PerSeptive agreements. Research and development
expenses increased to approximately $5.2 million for the nine months ended
September 30, 1996 from approximately $3.6 million for the nine months ended
September 30, 1995, primarily due to the expansion of the Company's research
programs. The Company expects research and development expense to increase in
future periods in connection with the Wyeth-Ayerst collaboration and expansion
of research programs and personnel. General and administrative expenses
increased to approximately $1.0 million for the nine months ended September 30,
1996 from approximately $733,000 for the nine months ended September 30, 1995
primarily due to increased staffing.
Interest income declined from approximately $546,000 for the nine months
ended September 30, 1996 from approximately $624,000 for the nine months ended
September 30, 1995, primarily due to a reduction in funds available for
investment. Interest expense remained consistent for the nine months ended
September 30, 1996 and 1995, approximately $147,000 and $153,000 respectively.
Years Ended December 31, 1995 and December 31, 1994
Revenues increased to approximately $2.9 million for the year ended
December 31, 1995 from $218,000 for the year ended December 31, 1994. Revenues
for the year ended December 31, 1995 consisted of research
21
<PAGE> 24
revenues of approximately $2.5 million from Pfizer and $441,000 from United
States government grants. Revenues for the year ended December 31, 1994
consisted solely of research revenue from United States government grants.
The Company's total operating expenses increased to approximately $6.0
million for the year ended December 31, 1995, from approximately $4.8 million
for the year ended December 31, 1994. Research and development expenses
increased to approximately $4.9 million for the year ended December 31, 1995
from approximately $3.9 million for the year ended December 31, 1994 primarily
due to the expansion of the Company's research programs. General and
administrative expenses increased to approximately $1.0 million for the year
ended December 31, 1995 from $883,000 for the year ended December 31, 1994
primarily due to the hiring of additional finance and business development
personnel.
Interest income increased to $838,000 for the year ended December 31, 1995
from $49,000 for the year ended December 31, 1994 resulting from increased funds
available for investment as a result of the Company's sale of equity securities
in January 1995. Interest expense increased to $175,000 for the year ended
December 31, 1995 from $134,000 for the year ended December 31, 1994, resulting
from an increase in the average outstanding balances of the Company's capital
lease obligations.
Years Ended December 31, 1994 and December 31, 1993
Revenues of $218,000 for the year ended December 31, 1994 consisted of
research revenues from United States government grants. The Company had no
revenues for the year ended December 31, 1993.
The Company's total operating expenses increased to approximately $4.8
million for the year ended December 31, 1994 from approximately $3.2 million for
the year ended December 31, 1993. Research and development expenses increased to
approximately $3.9 million for the year ended December 31, 1994 from
approximately $2.4 million for the year ended December 31, 1993 primarily due to
the expansion of the Company's research programs. General and administrative
expenses increased to $883,000 for the year ended December 31, 1994 from
$797,000 for the year ended December 31, 1993 primarily resulting from increases
in Company staff.
Interest income remained consistent for the years ended December 31, 1994
and 1993. Interest expense increased to $134,000 for the year ended December 31,
1994 from $19,000 for the year ended December 31, 1993, primarily due to an
increase in the average outstanding balances of the Company's capital lease
obligation.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company's primary sources of cash have been proceeds
from the sale of equity securities, revenue from collaborative research
agreements and government grants and borrowings under a capital lease
arrangement. Through September 30, 1996, the Company has financed its operations
primarily with approximately $25.0 million from private placements of equity
securities, $4.4 million from its collaboration with Pfizer, approximately $3.0
million in capital lease funding, $1.5 million in interest income and $884,000
from United States government grants. The Company has used $23.7 million of cash
to finance operating activities from inception through September 30, 1996. In
addition, the Company has made payments of $1.3 million on its capital lease
obligation through September 30, 1996. Since inception the Company has acquired
approximately $4.2 million of property and equipment, including approximately
$2.9 million of assets acquired under capital leases and $700,000 of equipment
acquired from PerSeptive. At September 30, 1996, the Company had approximately
$308,000 available under its capital lease arrangement to finance additional
equipment purchases. The Company currently estimates that it will incur costs of
approximately $4.5 million for capital equipment and leasehold improvements over
the next 12 months, a portion of which will be financed under the capital lease
arrangement.
At December 31, 1995, the Company had available net operating loss
carryforwards for financial reporting and income tax purposes of approximately
$11.2 million and $1.5 million, respectively. The difference primarily relates
to expenses reflected in the financial statements not yet deductible for tax
purposes. The Company also has approximately $222,000 of research and
development and tax credits. These
22
<PAGE> 25
losses and tax credits are available to reduce federal taxable income and
federal income taxes, respectively, in future years, if any. These losses and
tax credits are subject to review and possible adjustment by the Internal
Revenue Service and may be limited in the event of certain cumulative changes in
ownership interests of significant shareholders over a three-year period in
excess of 50%. The Company believes that it has experienced cumulative ownership
changes in excess of 50% and that it may experience an additional change in
ownership in excess of 50% upon completion of the proposed initial public
offering. The Company does not believe that these changes in ownership will
significantly impact the Company's ability to utilize its net operating loss
carryforwards.
As of September 30, 1996, the Company had cash, cash equivalents and
marketable securities of approximately $9.4 million and working capital of
approximately $8.6 million. As described above, the Company received
approximately $5.0 million from the sale of convertible preferred stock in
connection with the Wyeth-Ayerst collaboration. The Company anticipates that its
existing capital resources, including the net proceeds of this offering and
interest earned thereon, will be adequate to maintain its current and planned
operations for at least the next two years, although no assurance can be given
that changes will not occur that would consume available capital resources
before such time. The Company's future capital requirements will be substantial
and will depend on many factors, including progress of the Company's research
programs, the number and scope of these programs, achievement of milestones
under strategic alliance arrangements, the ability of the Company to establish
and maintain additional strategic alliance and licensing arrangements, the cost
involved in enforcing patent claims and other intellectual property rights and
the costs and timing of regulatory approvals.
23
<PAGE> 26
BUSINESS
OVERVIEW
ChemGenics is a drug discovery company that applies its two complementary
technology platforms, Drug Discovery Genomics and Advanced Drug Selection
Technologies, to key rate limiting steps in identifying new drugs. These rate
limiting steps are the translation of genomic information into novel drug
targets and the selection and identification from sources of chemical diversity
of drug leads that interact with drug targets. The Company's Drug Discovery
Genomics platform includes proprietary gene technologies and expertise in
microbial model systems used to determine the function of genes and to
prioritize drug targets. The Company's Advanced Drug Selection Technologies
combine the steps of drug screening, chemical selection and structural analysis
into an integrated process to identify drug leads faster than conventional
methods. These technology platforms are used with the Company's growing drug
source of 50,000 chemical-producing fungi collected worldwide. The breadth of
the Company's technology platforms allows it to pursue multiple pharmaceutical
and biotechnology alliances, such as its alliances with Pfizer and Wyeth-Ayerst.
In January 1995, the Company entered into a strategic collaboration with
Pfizer for the discovery of novel drug leads for treating human fungal
infections, which could provide for over $50 million in equity, research funding
and development milestone payments, plus potential royalties. In December 1996,
the Company entered into a strategic collaboration with Wyeth-Ayerst for the
discovery of novel drug leads for treating human bacterial infections, which
provides for up to $70 million in equity, research funding and development
milestone payments, plus potential royalties. The Company is conducting
additional drug discovery programs in cancer, peptic ulcer disease (Helicobacter
pylori), immune system regulation, inflammatory disease and viral infections. In
May, November and December 1996, the Company entered into agreements with
PerSeptive under which, in exchange for a substantial equity interest in
ChemGenics and a $3 million promissory note, the Company acquired certain assets
and a worldwide, royalty-free license to present and future technology of
PerSeptive for use in the field of drug discovery.
THE DRUG DISCOVERY PROCESS
Drug discovery is a multi-disciplinary process involving elucidation of the
biology of disease and the identification of chemical compounds that can
selectively interact with a drug target to produce a desired therapeutic result.
During the past two decades, the number of new chemical entities approved as
novel drugs by the FDA has remained relatively constant despite a ten-fold
increase in research and development spending. Industry estimates suggest the
need for a more than five-fold improvement in research productivity to achieve
the growth objectives of most major pharmaceutical companies. The pace of drug
discovery is limited by two significant challenges: identification of biological
drug targets; and selection from sources of chemical diversity of drug leads
that are active against chosen drug targets. The Company believes that an
efficient drug discovery process needs to integrate biology and chemistry and be
iterative, with information from each step influencing previous and subsequent
steps. However, the focus of many biotechnology companies on either drug targets
or drug leads has limited the integration of the drug discovery process.
Drug discovery typically includes: (1) identification of a drug target, (2)
configuration of a screening assay, (3) sourcing of chemical diversity, (4) high
throughput screening, (5) deconvolution, (6) drug lead identification and (7)
drug lead optimization.
Identification of a Drug Target. Drug discovery begins with identification
of a drug target, typically a protein, with important biological functions in
the disease process that can be stimulated, inhibited, or mimicked by a drug to
produce a desired therapeutic effect. For example, Pfizer's antifungal drug
Diflucan interferes with a target enzyme, sterol 14-a-demethylase, required for
fungal cell growth. Pharmaceutical and biotechnology companies use the tools of
biology, including model systems, to understand a disease process and identify
potentially useful drug targets.
Configuration of a Screening Assay. Once a target is identified, it must
be configured into a screening assay for drug lead discovery. Assays can be
configured based on biochemical reactions or affinity binding, to detect direct
interaction of targets with chemical sources. Assays can also be based on living
cells that have
24
<PAGE> 27
been genetically engineered to provide a rapidly measured signal when the target
is affected. An assay identifies from large numbers of chemical compounds those
few compounds that bind optimally to, and modify the biological function of, a
drug target and therefore may be useful as drugs. Typically, screening assays
are configured in 96-well microtiter plates so that a large number of chemical
compounds can be tested rapidly. The assay system in each well should report
activity by a change in appearance or physical characteristics (color,
absorption of light or radioactivity).
Sourcing of Chemical Diversity. Broad diversity of chemical compounds is
desired for screening because the drug discovery process produces a high number
of inactive or non-selective compounds. The larger and more diverse the source
of chemical compounds, the greater the probability of identifying a compound
with appropriate three-dimensional shape and physical-chemical properties to
interact with a drug target. To provide broad chemical diversity, pharmaceutical
and biotechnology companies have assembled large libraries of hundreds of
thousands of chemical compounds from a variety of different sources.
High Throughput Screening. The screening process combines chemical
diversity with targets configured into assays. High throughput screening
utilizes robotics and information systems to combine chemical sources and drug
targets, read assay results, and collect and evaluate data. Due to the
increasing size of chemical libraries, some pharmaceutical and biotechnology
companies have developed capabilities for screening in excess of one million
microtiter wells per year. In addition, chemical sources are often screened in
mixtures of 10 to 1,000 compounds per well in an attempt to speed the screening
process. The assay system reports a positive signal if one or more of the
compounds in a mixture is active.
Deconvolution. Deconvolution is the process of identifying the
component(s) in a complex screening mixture responsible for a desired activity.
With simple mixtures, it is possible to carry out a separate screen of each of
the individual components and determine activity against a drug target, although
this approach may be expensive and time consuming. Many sources of chemical
diversity are utilized in formats where the exact content of the mixture is not
known. For example, combinatorial chemistry libraries may contain unknown
chemical structures resulting from side reactions among the components of the
mixture. Therefore, it is necessary to select the active compound(s) from the
mixture by using techniques of chemistry and biochemistry. Frequently this
process involves multiple steps of separating the mixture into fractions, often
using chromatography, and re-assaying for activity until a drug lead is isolated
for further study.
Drug Lead Identification. Following isolation of a drug lead, its exact
chemical structure must be determined. Multiple analytical technologies, such as
mass spectrometry, nuclear magnetic resonance spectroscopy, x-ray
crystallography and Fourier transform infrared spectroscopy, are used to
determine the precise arrangement of atoms that make up the drug lead.
Collectively, the process of chemical separation and identification of a single
drug lead can take months, depending on the nature of the compound and the
source.
Drug Lead Optimization. It is unusual for an initial drug lead to possess
optimal qualities of potency, selectivity, and desired physical-chemical
properties to serve as a drug candidate. The process of chemically modifying the
drug lead and assessing its biological activity in order to improve its
potential safety, efficacy and physical characteristics is referred to as lead
optimization.
Rate Limiting Steps of Drug Discovery
Two of the most significant rate limiting steps of drug discovery are (i)
translation of genomic information into novel drug targets and (ii) selection
and identification of drug leads from large sources of chemical diversity.
Translation of Genomic Information Into Novel Drug Targets. Most potential
drug targets are proteins encoded by the DNA sequence of genes. Consequently,
many potent tools for the identification of novel drug targets are emerging
today from advances in genomics. Although genomics has augmented the
opportunities for drug target identification, this field also has increased the
challenges involved due to the vast amount of information it generates. The
Human Genome Project and related efforts are identifying numerous genes encoding
potential drug targets. Many genes and their related proteins may be associated
with a disease, but generally only a few play a critical role that can be
regulated by a drug in order to produce a therapeutic effect.
25
<PAGE> 28
Once a gene is identified and determined to be associated with disease, it is
still necessary to understand its specific function and relative importance in
the disease process. It is necessary to determine how genes interact with other
biological molecules and if the gene or its protein product can be selectively
modified by a potential drug without inducing undesirable biological responses
that could result in toxicity. The use of information systems and gene
databases, a bioinformatics process referred to as sequence analysis, can
provide insights into the class of protein encoded by a gene of interest, but
rarely provides enough information to identify a useful drug target. Thus,
translation of biological information into useful drug targets remains rate
limiting and is not fully enabled by gene sequences or sequence analysis.
Selection and Identification of Drug Leads from Large Sources of Chemical
Diversity. To find potential drug leads, pharmaceutical companies assemble
large chemical libraries to increase the probability of success in screening
against drug targets. Advances in generating chemical diversity have resulted in
the expansion of libraries and the complexity of mixtures used in screening. The
increasing size and number of these collections, and the diverse methods by
which they are generated and stored, have created new opportunities for
identifying potential drug leads. They have also created new challenges in the
cost- and time-effective separation and identification of drug leads, a process
that is often rate limiting. Three major types of chemical libraries, each
presenting different challenges for chemical separation and identification are:
Natural products. Natural products are chemical compounds generated
by living organisms. The Company believes that natural products are the
most diverse source of chemical structures, but provide the greatest
challenges in drug lead selection and identification. Unlike other sources
of chemical diversity, the content of complex chemical mixtures produced by
living organisms is often completely unknown and consists of hundreds to
thousands of compounds. Historically, the identification of a single drug
lead from an active natural products mixture can take over a year.
Combinatorial chemistry libraries. Combinatorial chemistry libraries,
generated by combining varying chemical compounds, are frequently produced
and screened as complex chemical mixtures. These mixtures generally contain
10 to 100 chemical structures that are the intended result of combinatorial
synthesis. In addition, these mixtures may contain unknown chemical
structures resulting from side reactions among the mixture's constituents.
Each of the intended structures can be individually re-synthesized and
tested or a chemical tag can be used to identify the active compound.
Although generally useful, these approaches often add considerable cost and
time to the drug lead identification process. However, when a chemical
structure resulting from a side reaction is responsible for activity,
current techniques cannot efficiently identify the active component. As a
result, pharmaceutical companies observe that some of the activities that
they see in screening are lost when the individual components are tested.
Thus separation and identification of lead structures often remains rate
limiting.
Historical chemical files. Historical chemical files consist of
compounds synthesized by medicinal and organic chemists, accumulated over
years or decades and maintained in large libraries by pharmaceutical
companies. Some of the contents of these libraries are not precisely known
due to the instability of libraries stored over time. These files are often
screened in mixtures of 10 to 50 compounds. Separating and identifying
active components in these mixtures is often rate limiting because of the
need to re-test individual compounds once activity has been detected and
because the exact content of the mixture is sometimes unknown.
Integration of Drug Discovery Steps
Drug discovery is an integrated and iterative process, with each step
producing information and reagents that are valuable for refining upstream and
downstream steps. For example, discovery of the ulcer drug Tagamet resulted from
an evolving understanding both of the biology of histamine and its receptors as
targets, as well as the chemistry of histamine antagonists as drugs. The
interaction of biological and chemical data led to the identification and
validation of the histamine-2 receptor as a drug target. This target and the
chemical information were then used in an integrated, iterative program to
discover and optimize further histamine-2 receptor antagonists as anti-ulcer
drugs. Many biotechnology companies focus on supplying either drug targets or
chemical compound libraries to pharmaceutical companies for use in drug
discovery. The lack of integration
26
<PAGE> 29
of the biology of drug targets and sources of chemical diversity leads to a
suboptimal discovery process. The Company believes that its own discovery
programs, including its collaborations with Pfizer and Wyeth-Ayerst, confirm the
benefits of integrating the biology and chemistry of drug discovery.
CHEMGENICS TECHNOLOGIES
ChemGenics' two complementary technology platforms, Drug Discovery Genomics
and Advanced Drug Selection Technologies, enable a high degree of integration of
the steps and related information flow within the drug discovery process. For
example, Drug Discovery Genomics makes it possible to use the same microbial
systems in identifying a gene, determining its function and identifying
potential drug targets. These microbial systems can be used further for
expressing the drug target proteins and configuring them into a selective assay
to find drug leads. Advanced Drug Selection Technologies combine screening,
separation and rapid identification of drug leads into an integrated process.
Advanced Drug Selection Technologies were in part developed by the Company and
accelerated by the Company's license of proprietary chemical selection and
analysis technologies from PerSeptive. The Company believes that it achieves
competitive advantages in speed and efficiency through these broad and
integrated platform technologies.
Drug Discovery Genomics
Drug Discovery Genomics includes the Company's proprietary gene
technologies and the Company's expertise with microbial model systems. This
platform is applied by the Company to multiple steps within the drug discovery
process, including methods for gene discovery, rapid determination of gene
function and identification of drug targets. The Company also applies its
related gene technologies to expression of drug targets for use in selection of
drug leads and efficient configuration of assays for use in high throughput
screening. The Company's staff and advisors include leading scientists
responsible for important advances in microbial molecular biology, including:
(i) demonstration of fungal transformation, the insertion and incorporation of
foreign DNA into a yeast cell; (ii) subtractive hybridization, a widely used
method for detecting differentially expressed genes; and (iii) demonstration of
fundamental genetic regulatory mechanisms.
The Use of Microbial Model Systems. The Company's Drug Discovery Genomics
platform uses microbial model systems to translate genes into drug targets by
determining the functions of unknown genes and their relevance as drug targets
and setting up early-phase screening options. The Company has significant
expertise with these systems and believes that microbes, including fungi such as
the budding yeast Saccharomyces cerevisiae and Aspergillus nidulans and the
bacterium Escherichia coli ("E. coli"), offer a number of advantages for
discovering novel drug targets for human diseases rapidly and cost-effectively.
Although the Company believes that model systems are useful for identifying
biological targets for drug development, there can be no assurance that drug
leads identified and validated through these systems will result in compounds
efficacious in humans.
The Company believes that microorganisms offer several important
advantages. First, the complete DNA sequences of yeast and a number of other
microbes are known and their genomes have been extensively analyzed. Second,
experiments with microbes can be carried out rapidly because of relatively short
times between generations. Third, use of microbial model systems is relatively
inexpensive because experiments with microbes can be carried out cost
effectively in microtiter plates, test tubes, and petri dishes, with no
requirement for animal facilities. Finally, microbes can be used to configure
assays for high throughput screening and to produce target proteins encoded by
human genes.
An additional advantage of using microbes as model systems for drug
discovery is that they are responsible for some of the most important human
diseases. Sales of bacterial and fungal antibiotics were over $25 billion in
1995. There is a clear need for new antibacterial and antifungal drugs because
of the development of drug resistance in infectious microbes, inadequate
treatment of many infectious diseases, and side effects of existing drugs.
ChemGenics has focused its initial efforts on these two therapeutic areas, both
to develop potential products and to build its core gene technologies based on
model systems. The Company has expanded the application of its microbial model
systems in therapeutic areas outside of infectious diseases.
27
<PAGE> 30
The Company believes that microorganisms, particularly yeast and
Aspergillus, are also very useful model systems for certain human processes and
that these systems have contributed significantly to the understanding of the
molecular biology of human cells. Both human and fungal cells are eukaryotic,
possessing a nucleus that contains genetic information. Fungal and human cells
share much of the same organization and basic cellular processes. Many genes
involved in human disease have close homologs in fungi, which the Company
believes makes these systems applicable in many major therapeutic areas.
Identifying Drug Targets. ChemGenics uses several complementary approaches
to translate efficiently genes into useful drug targets:
Essentiality libraries. ChemGenics has developed or acquired
technologies for rapidly identifying the most essential genes for the life
of an organism. The Company has assembled a library of approximately 500
genes which it believes are among the most important for growth and
division of eukaryotic cells as well as approximately 300 of the most
important genes in bacteria. ChemGenics has used these libraries to
identify new targets in its anti-infective programs as well as for diseases
involving cell proliferation, including cancer and inflammation. The
Company believes that its knowledge of the essentiality of these genes is
proprietary and has filed and intends to file additional patent
applications on specific genes derived from this approach that demonstrate
utility as drug targets.
Fungal homologs. The Company has developed techniques for using
fungal homologs of human disease genes to determine gene function,
prioritize drug targets and configure high throughput screens. For example,
the Company has configured screens in yeast for important drug targets
which the Company believes are useful in discovering drugs for treating
cancer. It has also discovered several drug leads using these approaches
that are currently undergoing chemical optimization.
Gene Expression Spectroscopy. ChemGenics is developing gene
expression spectroscopy to measure expression levels of substantially all
of the genes in a model organism to determine the functions of unknown
genes. Altered patterns of gene expression may suggest the functions of
unknown genes introduced into a model organism. The utility of gene
expression spectroscopy in determining function is expected to increase as
data on known genes is collected and analyzed. ChemGenics is developing
proprietary databases for this purpose. This approach includes technologies
from Perseptive which the Company expects will enhance quantification of
gene expression.
Drug Screens for Use with Genes of Unknown Function. One of the
greatest challenges in drug discovery is assessing the role of genes of
unknown function as potential targets for drug discovery. The Company has
developed methods based on yeast and bacterial expression systems and
Advanced Drug Selection Technologies for rapidly screening for drugs that
modulate genes of unknown function. These modulators can be used to
understand more about the biology and chemistry of a potential target and
determine its usefulness in drug discovery. This approach potentially
provides an early path to lead compounds for modulating gene products whose
role in a disease appears important or has been established, but whose
precise biological function is unknown.
Product Profile Approach. Many companies use a gene-driven approach
in which the starting point for drug discovery is a disease gene that may
or may not be useful as a drug target. ChemGenics' Drug Discovery Genomics
platform enables the use of genomics in a product profile-driven approach
that the Company believes is highly efficient. ChemGenics begins with a
detailed profile of the therapeutic characteristics of a drug with large
market opportunities. The Company uses this profile to identify genes that
encode potential drug targets that may allow the discovery of such a drug.
The chart below indicates how an antifungal product profile has been used
by the Company to prioritize genes for drug discovery.
28
<PAGE> 31
CHEMGENICS PRODUCT PROFILE DRIVEN APPROACH TO DRUG DISCOVERY
<TABLE>
<S> <C> <C>
SAMPLE PRODUCT PROFILE: ACCOMPANYING TARGET
ANTIFUNGAL PRODUCT CHARACTERISTIC CHEMGENICS TECHNOLOGY
Kills fungal cells W Essential for the life of the W Drug Discovery Genomics to
fungal cell identify essential genes and
novel fungal targets
Active against major fungal W Present in all major fungal W Drug Discovery Genomics and
pathogens in humans pathogens bioinformatics to validate
genes in pathogens
Readily measurable predictors W Readily able to be configured W Screen configuration using
of efficacy into a screen expertise in fungal molecular
biology
Non-toxic to humans W Not present in humans W Drug Discovery Genomics and
bioinformatics to confirm not
in humans
Orally available small Target type modulated by W Advanced Drug Selection
molecule W small molecule Technologies; novel drug
source;
QuickScan
</TABLE>
Target to Screen. Once a target is identified, ChemGenics' technologies
permit the rapid completion of the next step in drug discovery, screen
configuration. The Company believes that its ability to express both microbial
and human genes in microbial cells provides an advantage in drug discovery
because it greatly facilitates screen development. In one approach, genetically
engineered microbes are used as cell-based screens to report whether or not a
specific target of interest has been affected by a chemical inhibitor. In a
second approach, bacteria or fungi are used to express large amounts of the
target protein of interest that are then used in an affinity selection or
biochemical assay based on the Company's Advanced Drug Selection Technologies.
The Company's technologies permit the selection of what should be the most
appropriate system for the target of interest. A number of the Company's
screening systems and related technologies are the subject of patent
applications.
Advanced Drug Selection Technologies
The Company's selection approach directly combines screening, chemical
separation and drug lead identification in an integrated process to achieve
advantages over conventional methods in speed, quantification, sensitivity,
flexibility and cost.
Increased speed. The Company has demonstrated that the use of a
continuous process in its selection technologies can significantly speed
the identification of drug leads compared to conventional techniques. A
continuous process is achieved by using a flow-through screening approach
rather than a conventional microtiter batch process. In this flow-through
approach, drug leads flow from an affinity selection column that screens
for compounds binding to the drug target, into a second column that
separates the drug leads from other components of the mixture, and then
directly into an ultraviolet detector and specially designed mass
spectrometer for structural analysis. In conventional microtiter screens,
the output is generally a signal, as opposed to chemical compounds that can
move directly into downstream steps of separation and analysis. Efficient
coupling is made possible by the Company's proprietary techniques directly
interfaced with ultra-sensitive, mass spectrometers developed by
PerSeptive.
Quantification. The Company's Advanced Drug Selection Technologies
permit direct quantification of the strength of binding between drug leads
and the drug target. Conventional microtiter screens typically provide only
a positive or negative signal. This quantitative output can be used to
prioritize drug leads based on level of binding and to direct drug lead
optimization.
29
<PAGE> 32
Sensitivity. Increased screening sensitivity permits the
cost-effective identification of side reactants from combinatorial mixtures
and the discovery of compounds not previously accessible from natural
products. ChemGenics' application of affinity selection and proprietary
delayed extraction mass spectrometry technologies provides sufficient
sensitivity to detect minute amounts of a compound (as little as 10(-15)
moles). For example, the Company has demonstrated in its antibacterial
program that a natural products mixture determined by conventional
techniques to contain one active compound actually contained three such
compounds, providing structural activity data and a compound previously
undiscovered.
Flexibility. In addition, the Company's Advanced Drug Selection
Technologies can be applied to a variety of drug targets and chemical
sources. The Company has used its Advanced Drug Selection Technologies
successfully with natural product, combinatorial chemical, and synthetic
chemical sources. In addition, Advanced Drug Selection Technologies permit
the use of targets in drug discovery that have been difficult to screen
using conventional techniques. Microtiter assays are best suited to enzymes
or receptors. However, many genes identified by genomics do not code for
products that fit into these categories but may still represent attractive
drug targets. Advanced Drug Selection Technologies have, for example, been
used to identify inhibitors of protein-protein interactions.
Protein-protein interactions represent an important type of drug target but
have previously presented significant challenges for screening.
Cost. The Company's Advanced Drug Selection Technologies permit
screening, separation, and identification to be carried out with smaller
amounts of expensive drug target, drug source, and associated reagents. In
addition, the rate limiting steps of chemical separation and analysis are
conventionally highly labor intensive and expensive. Advanced Drug
Selection Technologies automate most of the drug lead identification
process.
Miniaturization. The Company is developing a new generation of its
Advanced Drug Selection Technologies by using mass spectrometry and
miniaturized screening formats to achieve further increases in speed and
reductions in cost. The Company has demonstrated in feasibility studies
that it can collect data simultaneously on activity of compounds for a drug
target, the level of binding and chemical structure.
High Throughput Screening. ChemGenics complements selection-based
approaches with microtiter-based high throughput screening techniques in its own
drug lead programs and in its collaborations with Pfizer and Wyeth-Ayerst. The
Company has developed proprietary robotics and associated information systems to
enable cost effective high-throughput screening that it believes are comparable
to major pharmaceutical companies. The flexible robotic systems permit fully
automated sample preparation, configuration of screening plates, and addition of
assays. The Company has the capacity to screen up to eight million assay wells
per year. In the future, the Company expects to develop improved robotics
capabilities to support additional corporate alliances and new assay formats.
ChemGenics anticipates that it will have the capacity to double its high-
throughput screening capacity during 1997.
Automated Chemical Separations. ChemGenics has designed, constructed, and
implemented automated chromatography systems coupled to chemical analysis
systems to speed and reduce the cost of separating and analyzing chemical
mixtures containing drug leads. The Company is creating a proprietary database
containing separations and analysis information from its natural product source,
and the Company expects to use this database and associated informatics systems
to accelerate the identification of active drug leads.
Novel Chemical Source
Microorganisms are among the most versatile of natural product sources,
producing thousands of different compounds in many different structural classes.
Fungi represent a particularly large and diverse class of microorganisms that
have played a prominent role in the pharmaceutical industry as sources of
important drugs, such as the antibacterial classes of penicillins and
cephalosporins, the immunosuppressant cyclosporin and the precursor of the
cholesterol-lowering agent Mevacor. An advantage of fungi is the relatively low
cost of production and storage of specimens which can subsequently be recultured
to produce additional supply. It
30
<PAGE> 33
is estimated that there are more than 1.5 million fungal species of which fewer
than 5% have been collected from nature and even fewer have been used in drug
discovery. Thus, fungi represent a large and diverse resource for the discovery
of new classes of pharmaceuticals.
ChemGenics has assembled a diverse collection of over 50,000 fungi as a
source of chemicals for drug discovery by using (i) biorational methods for
collecting organisms that produce therapeutically relevant compounds and (ii) a
BioCombinatorial approach based on the genetic manipulation of organisms to
enhance chemical diversity. The Company has also developed QuickScan, an
informatics-based index to the Company's natural products library that permits
rapid screening of the collection for drug discovery. The Company believes that
its fungal collection, which is expected to grow by more than 20,000 organisms
per year, is the largest, most diverse collection assembled for drug discovery.
Biorational Natural Collection. The Company has worked with leaders in the
field of mycology, the study of fungi, to construct a highly diverse collection
of organisms from around the world. The organisms have been chosen by experts
based on their potential for producing compounds with important therapeutic
activities, a procedure referred to as biorational collecting. These organisms
are stored by ChemGenics and can then be reconstituted. The Company has compiled
a proprietary database that relates each organism to its origin and to each drug
screen in which it has been used. These data are used to guide ongoing
collecting activities to select for increasingly productive and valuable
organisms.
BioCombinatorial Sourcing. The Company uses three proprietary methods,
collectively termed BioCombinatorial, to engineer fungal genomes and achieve
further chemical diversity. In the first approach, the Company has developed a
genetic method for accessing the chemical diversity of non-culturable organisms
by isolating their DNA and expressing their genes in well understood laboratory
organisms. The Company believes that these transgenic fungi may produce many
classes of compounds previously unexplored by the pharmaceutical industry. In
the second approach, the Company activates many of the genes responsible for
chemical production that are normally inactive in the laboratory. Finally, the
Company uses a hybridization process that may produce thousands of genetically
distinct offspring from distantly related parents. The Company has demonstrated
that these offspring produce chemical compounds not generated by the parents.
The BioCombinatorial approaches of the Company are the subject of an issued
patent and several patent applications.
QuickScan. Screening for drug activity of very large numbers of natural
product samples presents a significant challenge. ChemGenics has integrated its
diverse collection with the power of information systems to develop a
proprietary new approach to indexing its natural products called QuickScan. The
Company has selected approximately 1,000 organisms that are representative of
the diversity and productivity of the larger collection by analysis of
biological, screening, and chemical data from many thousands of diverse
organisms. For a given target, this indexed collection is screened first and
active samples are used to guide ChemGenics scientists back into the larger
collection to find related organisms that may produce variants of active
compounds and may help advance drug lead optimization. Organisms showing
activity can then be subjected to BioCombinatorial methods to alter production
of active compounds quantitatively and qualitatively. In some instances, the
QuickScan results may direct additional collecting activities to expand on a
drug lead. The Company has demonstrated that the use of QuickScan results in a
five- to ten-fold increase in the speed of screening the collection and
identifying lead activities compared to other approaches used by the Company. In
the future, the Company plans to produce additional indices of its collection,
including the rapidly growing number of BioCombinatorial organisms. The Company
has filed several patent applications relating to QuickScan.
BUSINESS STRATEGY
The Company's objective is to become a leading drug discovery company. The
Company's strategy to achieve this objective consists of four main components:
Continue Development of Drug Discovery Technology Platforms. ChemGenics
intends to continue to develop its drug discovery technologies that translate
genes into drug targets and chemical diversity into novel drug structures and to
expand and diversify its fungal and natural products chemical drug source
library. These
31
<PAGE> 34
enabling technologies can be applied in multiple therapeutic areas and
pharmaceutical programs in order to generate drug leads.
Form Multiple Types of Strategic Alliances. The Company intends to
leverage its core drug discovery technologies in three types of alliances:
therapeutic, technology and drug lead. First, the Company intends to enter into
strategic collaborations in specific disease areas, such as its antifungal and
antibacterial drug discovery collaborations with Pfizer and Wyeth-Ayerst,
respectively. In addition, ChemGenics currently has active drug discovery
programs in cancer, peptic ulcer disease (Helicobacter pylori),
immunoregulation/inflammation, and anti-virals, in which one or more broad
therapeutic alliances may be sought. Second, each of the Company's enabling
technologies may serve as the basis for one or more collaborations. For example,
the Company may collaborate with different pharmaceutical companies by using its
Advanced Drug Selection Technologies for specific targets of interest. Finally,
the Company may license specific drug leads to a pharmaceutical or biotechnology
company for development and commercialization.
Diversify Risk and Minimize Operating Losses. The Company diversifies its
risk by reducing its dependence on any single alliance, therapeutic area,
disease program, target or technology. The Company believes its strategy creates
opportunities for multiple royalty streams from various sources. This diversity
of strategic alliances also permits the Company to minimize its operating losses
and accelerate the commercialization of its discoveries.
Focus on Large Market Opportunities. ChemGenics focuses primarily on
therapeutic areas with high unmet medical need and substantial market
opportunity. In addition, the Company believes that its product profile driven
effort emphasizes high value approaches within each of these therapeutic areas.
Information from the medical community, the market and pharmaceutical partners
is used to define highly attractive product profiles. ChemGenics uses its Drug
Discovery Genomics technologies to identify drug targets that could permit the
discovery of a drug with such a profile.
DRUG DISCOVERY PROGRAMS
Antifungal Program
Fungal infections have become an increasing medical problem, in part due to
the growing number of patients whose immune systems are compromised due to HIV
infection, chemotherapy treatments, increased use of immunosuppressant drugs,
and aging. Treatments to combat fungal infections are a growing segment of the
anti-infective market, with worldwide sales of approximately $3.5 billion in
1995. Despite current approaches to treatment, the mortality rate in patients
with systemic fungal infections is extremely high, ranging from 30% to 80%,
depending on the disease.
There is a clear need for improved therapies to overcome the inadequacies
of existing treatments. There are only two major classes of antifungal drugs in
use today. Amphotericin-B, the only drug generally effective against Candida,
Aspergillus, and Cryptococcus, must be administered intravenously and has
serious side effects at therapeutic doses in many patients, such as reduced
kidney function, heart rhythm disturbances, low blood pressure, breathing
abnormalities, anemias, pain, vomiting and fever. The other major type of
antifungals, which belong to the chemical class known as azoles, are well
tolerated and available in orally active forms. However, the azoles currently
marketed may be ineffective against one or more pathogenic species such as
Aspergillus. Moreover, drug resistant strains have emerged, particularly in
patients with AIDS.
ChemGenics is collaborating with Pfizer to discover and develop new
antifungal compounds for human use. The Company is using its Drug Discovery
Genomics platform to discover antifungal drug targets and its Advanced Drug
Selection Technologies to identify drug leads for these targets. The Company has
used proprietary approaches to determine which essential yeast genes are also
essential in the targeted fungal pathogens. Under the Pfizer collaboration,
ChemGenics is applying its system for prioritizing drug targets based on their
likelihood of identifying drugs with lower probabilities of major toxicities and
their appropriateness for drug discovery. ChemGenics has identified a number of
novel drug targets that are being used in screen configuration. The
collaboration has resulted in the discovery of several series of drug leads that
are the subject of ongoing research.
32
<PAGE> 35
Antibacterial Program
The Company believes that there is a need for new treatments for bacterial
infections. Infectious diseases are the third leading cause of death in the
United States, with mortality rates on the rise. There have been few new
antibacterial products or treatments based on new drug targets discovered and
commercialized in the last 20 years, yet the market is large and growing, with
worldwide sales of products to treat bacterial infections exceeding $22 billion
in 1995.
Bacterial resistance to existing antibiotics, including the betalactams,
which include penicillins and cephalosporins, makes discovery of novel
antibacterial therapies a medical priority. Resistance is increasing in
Streptococcus pneumonia, the bacterium that causes pneumonia, and other common
disease-causing bacteria. Enterococci, a leading cause of post-surgical
infections, have already developed resistance to all major classes of
antibiotics including vancomycin. Methicillin-resistant Staphylococcus aureus
("MRSA") is an extremely dangerous bacterium that can only be treated
effectively by intravenous administration of vancomycin. If MRSA becomes
resistant to vancomycin, there will be no effective treatment for this serious
infection, likely resulting in significant increases in morbidity, mortality and
health care costs.
ChemGenics is collaborating with Wyeth-Ayerst to discover and develop new
antibacterial compounds for human use. The Company is using its core technology
platforms to discover novel antibacterial drug targets and to identify drug
leads for these targets. The Company is using proprietary approaches to identify
and prioritize essential bacterial genes. Under the Wyeth-Ayerst collaboration,
ChemGenics is applying its systems for prioritizing drug targets based on their
likelihood of identifying drugs with lower probabilities of major toxicities and
their appropriateness for drug discovery. ChemGenics has identified a number of
novel drug targets that are being considered for screen configuration.
Prior to the Wyeth-Ayerst collaboration, the Company configured and ran
high throughput screens for six antibacterial targets. Advanced Drug Screening
Technologies were used in this program to identify drug leads that were not
identified by conventional screening methods. The Company has also used its
fungal drug source and its QuickScan technology in the program to identify
several series of drug leads of interest that are the subject of ongoing
research.
Anti-Cancer Program
There is a clear need for new drug classes to treat various cancers by
targeting mechanisms responsible for cancer. Most cancers are still treated
inadequately and have high morbidity and mortality rates, and cancer therapies
have serious side effects. Chemotherapy and radiation treatments attempt to
eradicate rapidly dividing cancer cells. However, because these treatments are
nonspecific, they are also toxic to the body's normal cells, causing
immunosuppression, bleeding disorders, anemias, and gastrointestinal side
effects. These side effects limit the doses of cancer agents that can be used
and therefore restrict their efficacy. In addition, resistance develops to most
chemotherapeutic drugs.
The Company believes that its expertise in eukaryotic and fungal model
systems provides significant advantage in discovering novel cancer targets and
drug leads. The Company has identified several human genes corresponding to
fungal genes, has designed cellular assays for inhibitors of the human function,
run these assays in high throughput screens, and has discovered drug leads. In
addition, the Company has shown as proof of principle that it can configure
fungal cells as screens for two cancer targets, the targets of the drugs Taxol
and Camptothecan. The Company has run high throughput screens for these targets
and drug leads have been identified. The Company currently plans to seek a
pharmaceutical collaborator for further development and commercialization of its
anticancer program in the next 18 months.
Helicobacter Pylori ("H. pylori") Program
H. pylori, a Gram-negative bacterium, is now generally considered to be the
primary cause of gastric ulcer disease and chronic gastritis and has been
implicated in cancer of the stomach as well as other cancers. Current antibiotic
treatments for H. pylori suffer from sub-optimal success rates, resistance
development and poor patient compliance. ChemGenics is using its proprietary
bacterial gene discovery approaches to identify novel targets for
focused-spectrum antibiotics with enhanced efficacy and reduced side effects for
eradication
33
<PAGE> 36
of H. pylori from infected individuals. In addition, the Company believes it has
identified lead compounds that kill H. pylori in vitro by a novel mechanism and
is planning preliminary in vivo studies. Drugs to treat the symptoms of ulcer
disease and gastritis had sales over $7 billion in 1995. The Company currently
intends to enter into an agreement with a pharmaceutical collaborator for
further development and commercialization of its H. pylori program in the
future.
Immune Regulation Program
The Company has identified several specific targets in the areas of immune
suppression, autoimmune disease, and inflammatory disease, has configured
screens, and has discovered several lead activities by using its Drug Discovery
Genomics and its Advanced Drug Selection Technologies. In addition, ChemGenics
believes that drug candidates derived from its large and diverse collection of
fungi may have significant potential for immune regulation. Cyclosporin, the
market leading immunosuppressive agent with sales of approximately $1.3 billion
in 1995, and the recently approved drug mycophenolate mofetil, are derived from
fungi.
Anti-Viral Program
The Company has a number of screens in research feasibility studies and has
identified several viral inhibitors. The Company believes that its unique fungal
drug source may provide potential leads useful in the area of virology because
fungi are resistant to many viruses. The Company intends to explore the use of
its fungal drug source and other technologies to discover compounds for the
prevention and treatment of viral infections.
COLLABORATIONS
Pfizer
ChemGenics is working in collaboration with Pfizer to discover and develop
human antifungal drugs for human use. Pursuant to the agreements, Pfizer is
funding and collaborating in a drug discovery program with ChemGenics over an
initial four year term, which began in January 1995. In September 1995, the
parties executed an additional agreement which shifted responsibility for a
portion of the program from Pfizer to ChemGenics, pursuant to which ChemGenics
will perform DNA sequencing and bioinformatics services in the antifungal area
for the remaining term of the Pfizer agreement in exchange for increased
compensation. Pfizer has waived its one-time option to terminate its
collaboration with the Company. Pfizer purchased 2,700,000 shares of Series D
Convertible Preferred Stock at a price of $5.00 per share (which will be
converted into 1,018,867 shares of Common Stock upon the consummation of this
offering) and has agreed to provide the Company with up to $11.7 million in
research funding over the agreement's four-year term, and is obligated to make
payments to the Company contingent upon the achievement of certain milestones
which could total an additional $32.5 million. ChemGenics has recognized $4.4
million in research revenue and $13.5 million in equity funding under these
agreements through September 30, 1996. The agreements provide Pfizer the option
for a period ending one year after the end of the research program to acquire
exclusive worldwide rights to develop and commercialize products to treat human
fungal infections discovered as part of the collaboration. If the option is not
exercised for a particular product candidate, and Pfizer is not developing
another product with a similar profile of activity under the agreements, then
all program rights to that product revert to the Company after the expiration of
the option period. If ChemGenics or a licensee of ChemGenics sells any such
product, a royalty payment to Pfizer may be required. In the event the
collaboration is successful in identifying targets and leads for products to
treat human fungal disease, Pfizer will pay all costs related to its product
development and commercialization, including, without limitation, clinical
trials, regulatory filings and marketing and will also pay ChemGenics royalties
on product sales, if any, which result from the collaboration. ChemGenics
receives the same milestone and royalty payments on any product that advances
from the collaboration whether it originates from ChemGenics or Pfizer. Under
certain circumstances, if ChemGenics develops and markets compounds from the
alliance, it will owe royalties to Pfizer. A joint steering committee, comprised
of an equal number of participants from the two companies, is responsible for
the decision making and coordination of all aspects of drug discovery pursuant
to the collaboration.
34
<PAGE> 37
Wyeth-Ayerst
ChemGenics is working in collaboration with Wyeth-Ayerst to discover and
develop antibacterial drugs for human use. Pursuant to the agreements,
Wyeth-Ayerst is funding and collaborating with ChemGenics over a five-year
period in a program aimed at the comprehensive identification and prioritization
of the genes that encode potential new molecular drug targets in important
bacterial pathogens. Wyeth-Ayerst also has a right of first refusal for products
for the prevention and treatment of bacterial diseases in animals and a right of
first negotiation for drugs to treat H. pylori infection of humans. If the
alliance successfully concludes its five-year term, ChemGenics could receive
funds of up to $70 million. Pursuant to the agreements, on December 2, 1996
American Home Products Corporation purchased 833,334 shares of Series E
Convertible Preferred Stock at $6.00 per share (which will be converted into
314,465 shares of Common Stock upon the consummation of this offering) and is
committed, subject to ChemGenics' meeting certain research performance
objectives, to a second purchase of $5 million of Common Stock to occur no
sooner than June 2, 1997 and a third purchase of $3 million of Common Stock to
occur no sooner than December 2, 1998. The second and third purchases will be
priced at 115% of the then current market price of the Common Stock following
the Company's initial public offering, or at $15.90 per share of Common Stock if
no such offering has been completed. Assuming the agreements conclude their
five-year term, Wyeth-Ayerst will become obligated to pay ChemGenics $15 million
in research funding (adjusted for inflation, under certain circumstances) and
may be obligated to pay up to an additional $9 million in research performance
payments. ChemGenics may also receive up to an additional $33 million in
development milestone payments. In the event the collaboration is successful in
identifying targets and leads for products to treat bacterial infection,
Wyeth-Ayerst will pay all costs related to its product development and
commercialization, including, without limitation, clinical trials, regulatory
filings and marketing and will also pay ChemGenics royalties on product sales,
if any, which result from the collaboration. Pursuant to the agreements
ChemGenics has received $750,000 in research funding through December 1996.
If certain research performance checkpoints are not achieved by ChemGenics
by the end of the third year, Wyeth-Ayerst has an option to terminate the
agreements. The agreements provide Wyeth-Ayerst the ability to acquire exclusive
worldwide rights to develop and commercialize products discovered as part of the
collaboration to treat human bacterial infections. Commencing one year after the
end of the research term, ChemGenics will have the exclusive right, by itself or
with a third party in the field, to develop and commercialize any ChemGenics
product and a first refusal right to any Wyeth-Ayerst product arising from the
collaboration, provided Wyeth-Ayerst is not developing a product from the
collaboration with the same activity profile. In the event the collaboration is
successful in identifying targets and leads for products to treat human
bacterial infections, Wyeth-Ayerst will pay all costs related to its development
and commercialization including, without limitation, clinical trials, regulatory
filings, manufacture and marketing. Wyeth-Ayerst will also pay ChemGenics
royalties on product sales. ChemGenics receives the same milestone and royalty
payments on any product that advances from the collaboration whether it
originates from ChemGenics or Wyeth-Ayerst. A joint steering committee,
comprised of an equal number of participants from each company, is responsible
for decision making and coordination of the joint drug discovery efforts
pursuant to the collaboration.
PerSeptive Biosystems
In May, November and December 1996, the Company entered into agreements
with PerSeptive under which the Company exchanged a substantial equity interest
in ChemGenics and a $3 million promissory note payable to PerSeptive for certain
assets and a worldwide, royalty-free license for use in the field of drug
discovery to all of PerSeptive's existing patents (over 80 patents and
applications) and technology, including selection technologies, all future
patented and unpatented technology, early and preferred access to all technology
and certain other assets, and for a period of five years, to all prototype
equipment. ChemGenics received a world-wide royalty free exclusive license to
all PerSeptive patents and technology arising out of certain drug discovery
programs previously conducted by PerSeptive for the purpose of developing,
making, using or selling the drugs of those programs. The Company believes that
PerSeptive is an innovative, worldwide leader in the development of new
reagents, equipment and systems useful as tools for biotechnology. PerSeptive
has agreed not to engage in drug discovery or enter into any similar research
and/or
35
<PAGE> 38
development agreement or other collaborative arrangement for drug discovery with
any party other than ChemGenics, although the foregoing limitation will not
preclude PerSeptive or any of its affiliates, licensees or sub-licensees from
engaging in its or their current business of developing, selling and licensing
products and instrumentation systems for the purification, synthesis, sequencing
or analysis of biomolecules and providing tools to the life sciences industry,
or for selling or licensing, to any person and for any purpose within or outside
the field of drug discovery instruments, reagents, compounds and other materials
or from providing any services outside the field of drug discovery or pre- and
post-sale services, consistent with PerSeptive's current practice, related to
the development, manufacture or sale of PerSeptive products or for license of
the foregoing within the field of drug discovery. During the first five years of
the collaboration, ChemGenics will have an 18-month period of exclusivity for
inventions or improvements jointly developed by the parties primarily useful in
drug discovery, during which period PerSeptive will not sell, license, or
distribute products incorporating such inventions or improvements. The Company
also acquired certain equipment, supplies and other assets related to drug
discovery programs at PerSeptive, including the right to use without charge (i)
certain equipment until the earlier of the successful conclusion of an initial
public offering by the Company or June 30, 1997 and (ii) up to $500,000 of
supplies of the type manufactured or distributed by PerSeptive until the later
of the successful conclusion of an initial public offering by the Company or
March 31, 1997. Thereafter, the Company will pay PerSeptive's fully burdened
manufacturing cost for such equipment and supplies. ChemGenics has agreed not to
commercially sell equipment or reagents for the purification, analysis,
sequencing or synthesis of molecules, but may use for its collaborations or
license to others inventions or improvements, including equipment or reagents,
developed by ChemGenics.
The agreements provide for PerSeptive and ChemGenics to collaborate in
integrating the technologies of PerSeptive with ChemGenics' expertise in drug
discovery. PerSeptive will provide senior management consultation services to
the Company without charge for five years. ChemGenics hired the 10 member
research team primarily responsible for applying PerSeptive's technology to drug
discovery and entered into a sublease agreement for approximately 5,000 square
feet of space in Framingham, Massachusetts. The Company will pay no rent on the
subleased facility until the successful conclusion of an initial public offering
by the Company, and will pay rent equal to PerSeptive's fully burdened cost of
the Company's facility thereafter.
Under the agreements, PerSeptive acquired 2,563,275 shares of the Company's
Common Stock of which 250,000 shares are subject to forfeiture lapsing over a
three-year period in the event PerSeptive fails to provide certain services,
equipment use, supplies and other assets as described above. PerSeptive also
received a warrant, expiring in June 2000, to purchase an additional 1,847,673
shares of Common Stock at an exercise price of $13.25 per share, for an
aggregate exercise price of approximately $24.5 million. In addition, the
Company issued PerSeptive a $3 million promissory note, which the Company
intends to pay out of the proceeds of this offering. See Note 3 of Notes to
Financial Statements.
The Company and PerSeptive entered into a Voting Agreement pursuant to
which, as long as PerSeptive owns at least 20% of the Company's outstanding
voting stock, PerSeptive is entitled to require the nomination of two PerSeptive
nominees as members of the Company's Board of Directors (if comprised of six or
seven directors) or three PerSeptive nominees if the Company's Board of
Directors is comprised of eight or more total directors. If PerSeptive owns less
than 20% of the Company's outstanding capital stock, but at least 10%, it is
entitled to require the nomination of one PerSeptive nominee as a member of the
Company's Board of Directors. Certain stockholders of the Company, who own 93.8%
of the Company's capital stock prior to the offering, have agreed to vote in
favor of the election of such nominees. In addition, PerSeptive entered into a
standstill agreement, pursuant to which it agrees not to acquire any additional
Company equity securities and to restrict its ability to sell any equity
securities of the Company, and, as long as PerSeptive owns at least 20% of the
Company's equity securities, to vote its shares in accordance with the
recommendation of ChemGenics' Board of Directors. This agreement will remain in
effect until June 30, 2006.
Other
ChemGenics has a number of alliances with leading scientists and academic
centers, governmental agencies and research institutes. In the area of
antifungal drugs and fungal molecular biology, the Company has been awarded a
National Drug Discovery Research Grant under which the Company collaborates with
Dr.
36
<PAGE> 39
Phillips Robbins of the Massachusetts Institute of Technology. Dr. Gerald Fink,
Director of the Whitehead Institute of Biomedical Research, an affiliate of MIT,
is an advisor for this grant. Additionally, the Company is collaborating with
Dr. Jeffrey Becker of the University of Tennessee in the area of antifungal
drugs and fungal molecular biology. See "Management -- Scientific Advisory
Board." The Company is also collaborating with Dr. George Sachs of Veterans
Administration West Los Angeles Medical Center on approaches to treating H.
pylori infection.
PATENTS
The Company's commercial success depends in part on its ability to obtain
and enforce patent and certain other proprietary rights relating to its gene
discoveries, drug targets, screening technologies and drug leads. As of December
1, 1996, the Company had 10 patents pending in the United States, and two U.S.
patents based on the Company's discoveries had issued. There can be no assurance
that any present or future patent application will result in a patent or that
any present or future patent will protect a commercially viable product. These
patents and applications cover core technology, chemical compounds and specific
genes. It is the Company's policy is to seek, when appropriate, patent
applications in the United States and internationally.
Patent law as it relates to inventions in the biotechnology field is still
evolving, and involves complex legal and factual questions for which legal
principles are not firmly established. Accordingly, there can be no assurance
that patents will be granted with respect to any of the Company's pending patent
applications or with respect to any patent applications filed by the Company in
the future. In addition, even if such patents are granted, there can be no
assurance that in the event any claims in such patents are challenged, that any
court or patent authority would determine that such patent claims are valid and
enforceable or sufficiently broad in scope to protect the Company's proprietary
rights. Moreover, because patent applications in the United States are
maintained in secrecy until patents issue, because patent applications in
certain other countries generally are not published until more than 18 months
after they are filed, because publication of technological developments in the
scientific or patent literature often lags behind the date of such developments,
and because searches of prior art may not be conducted or may not reveal all
relevant prior inventions, the Company cannot be certain that it was the first
to invent the subject matter covered by its patent applications or that it was
the first to file patent applications for such inventions.
The commercial success of the Company will depend in part on not infringing
patents or proprietary rights of others, and there can be no assurance that the
technologies and products used or developed by the Company will not infringe
such rights. If such infringement occurs and the Company is not able to obtain a
license from the relevant third party, the Company will not be able to continue
the development, manufacture, use or sale of any such infringing technology or
product. There can be no assurance that licenses to any third-party technology
will be available at all, or on commercially reasonable terms. Failure by the
Company to obtain a license to technology that it may require to utilize its
technologies or commercialize its products may have a material adverse effect on
the Company. In some cases, litigation or other proceedings may be necessary to
defend against or assert claims of infringement, to enforce patents issued to
the Company, to protect trade secrets, know-how or other intellectual property
rights owned by the Company, or to determine the scope and validity of the
propriety rights of third parties. Any potential litigation could result in
substantial costs to and diversion of resources by the Company and could have a
material adverse impact on the Company. There can be no assurance that any of
the Company's issued or licensed patents would ultimately be held valid or that
efforts to defend any of its patents, trade secrets, know-how or other
intellectual property rights would be successful. An adverse outcome in any such
litigation or proceeding could subject the Company to significant liabilities,
require the Company to cease using the subject technology or require the Company
to license the subject technology from the third party, all of which could have
a material adverse effect on the Company's business.
In addition to patent protection, the Company relies upon trade secrets,
proprietary know-how and continuing technological advances to develop and
maintain its competitive position. To maintain the confidentiality of its trade
secrets and propriety information, the Company requires its employees,
consultants and collaborators to execute confidentiality agreements upon the
commencement of their relationships with
37
<PAGE> 40
the Company. In the case of employees, the agreements also provide that all
inventions resulting from work performed by them while in the employ of the
Company will be the exclusive property of the Company. There can be no
assurance, however, that these agreements will not be breached, that the Company
would have adequate remedies in the event of any such breach or that the
Company's trade secrets or propriety information will not otherwise become known
or developed independently by others. See "Risk Factors -- Patents and
Proprietary Rights, Third Party Rights."
COMPETITION
The drug discovery business is characterized by intense competition and
rapid technological change. In particular there are a significant number of
organizations competing in the field of genomics-based drug discovery. In
addition, there are a significant number of organizations competing in the field
of drug identification and optimization (including chemical diversity and
screening). These organizations include combinatorial chemistry companies and
companies which utilize genomics-based target identification and advanced
screening methods for antibacterial drug leads. The Company's competitors are
also engaged in drug discovery through methods that do not include genomics
research. Many of the Company's competitors, particularly large pharmaceutical
companies, biotechnology companies, academic and research institutions and
government agencies, have substantially greater financial resources and research
and development capabilities than the Company.
The Company expects that its strategic collaborators will be engaged in a
number of product development efforts, both in and outside the disease area or
areas covered by an alliance or collaboration with the Company. The Company's
product candidates could, therefore, be in competition with other products
developed by its strategic collaborators. In addition, although the Company has
licensed certain technology from PerSeptive in the field of drug discovery and
certain aspects of these technologies are exclusive to ChemGenics, and although
PerSeptive has agreed not to enter into drug discovery collaborations,
PerSeptive may still sell components of this technology to other organizations
which compete with the Company. See "Risk Factors -- Competition; Risk of
Technological Obsolescence."
GOVERNMENT REGULATION
The Company's research and development activities, and the preclinical
studies and clinical trials, and ultimately the manufacturing, marketing and
labeling of its drug candidates, are subject to extensive regulation by FDA and
other regulatory authorities in the United States and other countries. The
United States Federal Food, Drug, and Cosmetic Act and the regulations
promulgated thereunder and other federal and state statutes and regulations
govern, among other things, the testing, manufacture, safety, efficacy,
labeling, storage, record keeping, approval, advertising and promotion of
pharmaceutical products. Preclinical study and clinical trial requirements and
the regulatory approval processes take years to complete and require the
expenditure of substantial resources. Additional government regulation may be
established that could prevent or delay regulatory approval of the Company's
product candidates. Delays or rejections in obtaining regulatory approvals would
adversely affect the Company's ability to commercialize any product candidates
developed by the Company or its strategic collaborators and the Company's
ability to receive product revenues or royalties. If regulatory approval of a
product candidate is granted, the approval may include significant limitations
on the indicated uses for which the product may be marketed.
The steps required before a pharmaceutical agent may be marketed in the
United States include (a) preclinical laboratory, in vivo, and formulation
studies, (b) the submission to FDA of an Investigational New Drug application
("IND"), which must become effective before human clinical trials may commence,
(c) adequate and well-controlled human clinical trials to establish the safety
and efficacy of the drug, (d) the submission of an NDA to FDA, and (e) FDA
approval of the NDA, including approval of all product labeling and advertising.
Preclinical tests include laboratory evaluation of product chemistry,
formulation and stability, as well as animal studies to assess the potential
safety and efficacy of each product candidate. Preclinical safety tests must be
conducted by laboratories that comply with FDA regulations regarding Good
Laboratory Practices.
38
<PAGE> 41
The results of the preclinical tests are submitted to FDA as part of an IND and
are reviewed by FDA before the commencement of human clinical trials. Unless FDA
objects to an IND, the IND will become effective 30 days following its receipt
by FDA. There can be no assurance that submission of an IND will result in FDA
authorization to commence clinical trials or that the lack of an objection means
that FDA will ultimately approve an NDA.
Clinical trials involve the administration of the investigational new drug
to humans under the supervision of a qualified principal investigator. Clinical
trials must be conducted in accordance with good clinical practices under
protocols that detail the objectives of the study, the parameters to be used to
monitor safety, and efficacy criteria to be evaluated. Each protocol must be
submitted to FDA as part of the IND. Also, each clinical trial must be approved
and conducted under the auspices an Institutional Review Board ("IRB") at each
location where such clinical trials take place. Each IRB will consider, among
other things, ethical factors, the safety of human subjects, and the possible
liability of the institution conducting the clinical trials.
The results of preclinical studies and clinical trials, if successful, are
submitted in an NDA to seek FDA approval to market and commercialize the product
candidates for a specified use. The testing and approval process will require
substantial time and effort, and there can be no assurance that any approval
will be granted for any product or that approval will be granted according to
any schedule. FDA may deny an NDA if it believes that applicable regulatory
criteria are not satisfied. FDA may also require additional testing for safety
and efficacy of the drug. Moreover, if regulatory approval of a product
candidates granted, the approval will be limited to specific indications.
Because the Company intends to rely on its strategic collaborators for the
commercialization of its product candidates, the Company will have little or no
control over significant aspects of such development and commercialization,
including the conduct of clinical trials and the manufacturing of the products.
See "Business -- Business Strategy -- Strategic Alliances." There can be no
assurance that any of the Company's product candidates will receive regulatory
approval for commercialization. See "Risk Factors -- Government Regulation; No
Assurances of Regulatory Approval."
FDA has implemented an accelerated review process for pharmaceutical agents
that treat serious or life threatening diseases and conditions, subject to
payment of user fees. If appropriate, the Company's strategic collaborators may
pursue opportunities for accelerated review of its product candidates. The
Company cannot predict the ultimate effect of the new review process on the
timing or likelihood of FDA review of any of its product candidates.
Even if regulatory approvals for the Company's product candidates are
obtained, the Company, its product candidates, and the facilities used to
manufacture the Company's products (presumably those facilities owned or
controlled by the Company's strategic collaborators) will be subject to
continual review and periodic inspection. FDA will require postmarketing
reporting to monitor the safety of the Company's products. FDA stringently
applies regulatory standards of manufacturing. Discovery of previously unknown
problems with respect to a product, manufacturer or facility may result in
restrictions on the product, manufacturer or facility, including warning
letters, suspensions of regulatory approvals, operating restrictions, delays in
obtaining new product approvals, withdrawal of the product from the market,
product recalls, fines, injunctions, and criminal prosecution. Each United
States drug manufacturing establishment must be registered with FDA. Domestic
manufacturing establishments are subject to biennial inspections by FDA and must
comply with FDA's Good Manufacturing Practices. To supply drug products for use
in the United States, foreign manufacturing establishments must comply with
FDA's Good Manufacturing Practices and are subject to periodic inspection by FDA
or by regulatory authorities in those countries under reciprocal agreements with
FDA. In complying with Good Manufacturing Standards, manufacturers must expend
funds, time and effort in the area of production and quality control to ensure
full technical compliance. The Company does not have any drug manufacturing
capability and must rely on its strategic collaborators or outside firms for
this capability. See "Risk Factors -- Reliance on Strategic Collaborators."
39
<PAGE> 42
Before drug products resulting from the Company's product candidates can be
marketed outside of the United States, they are subject to regulatory approval
similar to FDA requirements in the United States, although the requirements
governing the conduct of clinical trials, product licensing, pricing, and
reimbursement vary widely from country to country. No action can be taken to
market any drug product in a country until an appropriate application has been
approved by the regulatory authorities in that country. FDA approval does not
assure approval by other regulatory authorities. The current approval process
varies from country to country, and the time spent in gaining approval varies
from that required for FDA approval. In some countries, the sale price of a drug
product must also be approved. The pricing review period often begins after
market approval is granted. Even if a foreign regulatory authority approves any
of the Company's product candidates, no assurance can be given that it will
approve satisfactory prices for the products.
The Company's research and development involves the controlled use of
hazardous materials, chemicals, fungi, bacteria or viruses, and various
radioactive compounds. Although the Company believes that its procedures for
handling and disposing of those materials comply with state and federal
regulations, the risk of accidental contamination or injury from these materials
cannot be eliminated. If such an accident occurs, the Company could be held
liable for resulting damages, which could be material to the Company's financial
condition and business. The Company is also subject to numerous environmental,
health and workplace safety laws and regulations, including those governing
laboratory procedures, exposure to blood-borne pathogens, and the handling of
biohazardous materials. Additional federal, state and local laws and regulations
affecting the Company may be adopted in the future. Any violation of, and the
cost of compliance with, these laws and regulations could materially and
adversely affect the Company.
In addition to regulations enforced by the FDA, the Company also is subject
to regulation under the Occupational Safety and Health Act, the Environmental
Protection Act, the Toxic Substances Control Act, the Resource Conservation and
Recovery Act and other existing and potential future federal, state and local
regulations.
Prior to the commencement of marketing a product in other countries,
regulatory approval in such countries is required, whether or not FDA approval
has been obtained for such product. The requirements governing the conduct of
clinical trials and product approvals vary widely from country to country, and
the time required for approval may be longer or shorter than the time required
for FDA approval. Although there are some procedures for unified filings for
certain European countries, in general, each country has its own procedures and
requirements.
FACILITIES
ChemGenics occupies 11,526 square feet of laboratory and office space in
Cambridge, Massachusetts, under a lease that expires in 2003. The Company has
entered into a short-term lease arrangement for an additional 2,000 square feet
of office space, which has an initial term of less than one year. In addition,
the Company subleases approximately 5,000 square feet of laboratory and office
space in Framingham, Massachusetts under the terms of a short-term arrangement
with PerSeptive. The Company intends to use a portion of the proceeds of this
offering to expand its laboratory and office space. With this expansion,
ChemGenics believes that its facilities will be adequate to meet its anticipated
level of operations for the foreseeable future.
EMPLOYEES
As of December 1, 1996, the Company had 68 full-time employees, 32 of whom
hold a Ph.D. degree. The Company considers its relations with its employees to
be good. None of the Company's employees is covered by a collective bargaining
agreement. The Company has entered into confidentiality agreements with all of
its employees, members of its Scientific Advisory Board and consultants and
non-competition agreements with its staff scientists and management.
LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings.
40
<PAGE> 43
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
The following table provides information concerning the executive officers,
directors and certain key employees of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---------------------------------------- ---- --------------------------------------------
<S> <C> <C>
Barry A. Berkowitz, Ph.D.(1)............ 53 President, Chief Executive Officer and
Director
William E. Timberlake, Ph.D............. 48 Executive Vice President, Research
Alan L. Crane........................... 33 Vice President, Business Development
Janet C. Bush........................... 43 Interim Chief Financial Officer
Yigal Koltin, Ph.D...................... 59 Vice President, Molecular and Cellular
Biology
Sean O'Connor, Ph.D. ................... 56 Vice President, Advanced Screening Research
Reimar C. Bruening, Ph.D., R.Ph. ....... 47 Vice President, Chemical Sciences and
Technologies
Noubar B. Afeyan, Ph.D.................. 34 Chairman of the Board of Directors
Gary J. Anderson, M.D.(1)............... 56 Director
Hubert J. P. Schoemaker, Ph.D.(1)....... 46 Director
Christopher F. O. Gabrieli(1)(2)........ 36 Director
Edwin M. Kania, Jr.(2).................. 38 Director
</TABLE>
- -----------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
Executive officers are elected annually by the Board of Directors to serve
in their respective capacities, subject to the discretion of the Board of
Directors, until the next annual meeting of Directors of the Company or until
their successors are appointed. There are no family relationships among any
Directors or executive officers of the Company. A brief biography of each
executive officer and member of the Board of Directors and certain key employees
follows:
Barry A. Berkowitz, Ph.D., President, Chief Executive Officer and Director.
Dr. Berkowitz founded the Company in January 1992. Previously he was a founder
of Magainin Pharmaceuticals, Inc. (formerly Magainin Science, Inc.) and from
1989 to 1991 served in positions including President, Chief Executive Officer,
and Chairman. From 1978 to 1989 he held senior executive positions including the
Vice President of Biological Research and Development, Vice President of
Compound Acquisitions and Development, and Director of Pharmacology of Smith
Kline & French. From 1968 to 1978 he was an Assistant Member and then Associate
Member of the Roche Institute of Molecular Biology. Dr. Berkowitz received his
Ph.D. in pharmacology in 1968 from the University of California, San Francisco.
William E. Timberlake, Ph.D., Executive Vice President, Research. Dr.
Timberlake was a founding member of the Scientific Advisory Board and joined the
Company in 1993. Previously, he was Professor of Genetics and Research Professor
of Genetics at the University of Georgia from 1986 to 1993, Professor of Plant
Pathology at the University of California, Davis from 1981 to 1986, and
Assistant and Associate Professor of Biological Sciences at Wayne State
University from 1974 to 1981. Dr. Timberlake was a member of the founding
scientific advisory board of Calgene, Inc. and senior consultant for
Zymogenetics Inc. Dr. Timberlake received his Ph.D. in biochemistry in 1973 from
Syracuse University.
Alan L. Crane, Vice President, Business Development. Mr. Crane has been
with the Company since 1995. Prior to joining the Company, he served as Vice
President, Business Development at Organogenesis Inc. from 1994 to 1995. He was
also Worldwide Product Manager and Associate Director at The DuPont Merck
Pharmaceutical Company from 1992 to 1994 and a consultant to pharmaceutical
companies from 1988 to 1992. Mr. Crane received his M.B.A. in 1992 and his M.A.
in cellular biology in 1986, both from Harvard University.
41
<PAGE> 44
Janet C. Bush, Interim Chief Financial Officer. Ms. Bush joined the Company
in December 1996 as its Interim Chief Financial Officer, a part-time position.
From 1992 to 1996 she was a consultant and teacher in various biotechnology and
non-profit organizations. Ms. Bush was a co-founder of ImmuLogic Pharmaceutical
Corporation and its Vice President of Finance and Administration and Treasurer
from 1987 to 1992. She held financial management positions in two privately held
companies from 1984 to 1987 and was a Certified Public Accountant at Coopers and
Lybrand from 1980 to 1984. Ms. Bush received her Masters in Public and Private
Management from Yale in 1980, and her Masters in Education from Harvard
University in 1993. Consistent with the Company's agreement with Ms. Bush, the
Company plans to hire a permanent, full-time Chief Financial Officer in 1997.
Yigal Koltin, Ph.D., Vice President, Molecular and Cellular Biology. Dr.
Koltin is a Company founder and a founding member of the Scientific Advisory
Board and joined the Company in 1993. He served as a Visiting Professor at
Massachusetts Institute of Technology Cancer Center from 1993 to 1996. From 1973
to 1993, he was Professor of Genetics in the Department of Molecular
Microbiology and Biotechnology and he is former chairman of the Department of
Microbiology at Tel Aviv University. He also served as consultant for SmithKline
Beecham and Schering Corporation from 1982 to 1992. Dr. Koltin received his
Ph.D. in biology and genetics in 1967 from Harvard University.
Sean O'Connor, Ph.D., Vice President, Advanced Screening Research. Dr.
O'Connor joined the Company in 1992, having previously served as Director of
Screening and Biological Evaluation at Bristol-Myers Squibb from 1982 to 1992.
From 1966 to 1982 he was involved in natural products research at Eli Lilly &
Co. Dr. O'Connor received his Ph.D. in organic chemistry in 1965 from the
National University of Ireland.
Reimar C. Bruening, Ph.D., R.Ph., Vice President, Chemical Sciences and
Technologies. Dr. Bruening joined the Company in 1995. From 1990 to 1995, Dr.
Bruening was Chief Scientist and Director of Drug Discovery at Shaman
Pharmaceuticals. He also served as an Assistant Professor at the University of
Hawaii, a Senior Research Associate at Columbia University and a Postdoctoral
Research Fellow at the University of Nagoya, Japan. He received his Ph.D. in
1979 and a government pharmacy license in 1974 from the University of Munich.
Noubar B. Afeyan, Ph.D., Chairman of the Board of Directors. Dr. Afeyan
became Chairman of the Board of Directors in May 1996. Since July 1992, Dr.
Afeyan has served as Chief Executive Officer of PerSeptive Biosystems, Inc., and
has been a Director of PerSeptive Biosystems, Inc. since 1987, and Chairman of
the Board of Directors of PerSeptive Biosystems, Inc. since 1993. Dr. Afeyan
served as PerSeptive Biosystems Inc.'s President from 1992 to 1996 and its
Executive Vice President -- Technology and Operations from 1987 to 1992. He was
President and a Director of PerSeptive Technologies II Corporation from 1993 to
1996. He received his Ph.D. in biochemical engineering in 1987 from the
Massachusetts Institute of Technology.
Gary J. Anderson, M.D., Director. Dr. Anderson served as Chairman of the
Company's Board of Directors from February 1992 until May 1996. Dr. Anderson has
been a managing director of Technology Leaders Management L.P. since 1991, a
general partner of Technology Leaders Management L.P. since 1995 and a managing
general partner of Technology Leaders II Management L.P. since 1994. Dr.
Anderson served as Executive Vice President, Fund Management of Safeguard
Scientifics, Inc. from November 1993 to December 1994. Previously, Dr. Anderson
served as Executive Vice President of Safeguard Scientifics, Inc. from 1988 to
1991. He is also a director of Applied Technology Genetics Corporation and
Datamatics, Inc.
Hubert J. P. Schoemaker, Ph.D., Director. Dr. Schoemaker has served as
Chairman of the Board of Directors of Centocor, Inc. since 1987. Previously, Dr.
Schoemaker was Centocor's Chief Executive Officer from 1987 to 1992, and
President from 1983 to 1987, and has been associated with Centocor since 1980.
He is also a director of Apollon, Inc., Avitech Diagnostic Inc., and Safeguard
Scientifics, Inc.
Christopher F. O. Gabrieli, Director. Mr. Gabrieli is general partner of
Deer II & Co. and Deer III & Co., the general partner of Bessemer Venture
Partners II L.P. and Bessemer Venture Partners III L.P., affiliated venture
capital partnerships with which he has been affiliated since 1986. He was a
founder and President of GMIS Inc., and is a director of Opta Food Ingredients,
Inc., Isis Pharmaceuticals, Inc. and several privately held health care
companies.
42
<PAGE> 45
Edwin M. Kania, Jr., Director. Mr. Kania is managing general partner of One
Liberty Ventures, a venture capital firm, where he has been employed since 1985.
Through affiliate funds, Morgan Holland Fund II L.P. and Gilde Investment Fund
B.V., One Liberty Ventures is a shareholder in the Company. Mr. Kania is also a
director of PerSeptive Biosystems, Inc., Cytyc Corporation and Anesta
Corporation, as well as several private companies.
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 programs, recommend personnel to the Company and advise
the Company on technical matters. In addition to its Scientific Advisory Board,
ChemGenics has established consulting relationships with a number of scientific
experts who advise the Company on a project-specific basis.
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 may devote only a small
portion of their time to the Company. The members of the Company's Scientific
Advisory Board are:
Gerald R. Fink, Ph.D., Chairman of the Company's Scientific Advisory Board;
Director, The Whitehead Institute for Biomedical Research; American Cancer
Society Professor of Genetics, Massachusetts Institute of Technology. Dr. Fink
is a founding member and has chaired the Scientific Advisory Board since the
Company's inception. He is recognized as an international leader in genetics and
molecular biology. He is a member of the National Academy of Sciences, the
National Academy of Sciences Institute of Medicine and the American Academy of
Arts and Sciences, and was the recipient of the National Academy of
Sciences/U.S. Steel Foundation award in molecular biology. Dr. Fink's pioneering
work in science has combined genetics and state-of-the-art molecular biology,
and has made extensive use of yeast and fungi to provide answers to fundamental
biological questions. Dr. Fink received his Ph.D. from Yale University.
Anthony G. M. Barrett, Ph.D., Chairman of Chemistry, Imperial College of
Science, Technology and Medicine. He is a founding member of the Scientific
Advisory Board. Dr. Barrett is an international leader in the medicinal
chemistry of antibacterial and antifungal drugs. Previously, he was Professor of
Chemistry at Northwestern University and Colorado State University. He has
received numerous awards from the Royal Society of Chemistry. Dr. Barrett holds
a Ph.D. from the Imperial College of Science and Technology.
Jeffrey M. Becker, Ph.D., Professor of Microbiology and Director of the
Interdepartmental Graduate Program in Cellular, Molecular and Developmental
Biology, University of Tennessee, Knoxville. He is a Company founder and a
founding member of the Scientific Advisory Board. Dr. Becker is internationally
known for his research in mycology focused on membrane transport and receptors,
and peptide structure and function. Dr. Becker obtained his Ph.D. from the
University of Cincinnati.
Richard D. Diamond, M.D., Professor of Medicine and Biochemistry. Dr.
Diamond is an expert in the science and therapeutics of fungal diseases of man.
He is a founding member of the Scientific Advisory Board. He is a fellow at the
Infectious Diseases Society of America, and a member of the American Society of
Microbiology. Dr. Diamond earned his M.D. at Harvard Medical School.
John E. Edwards, Jr., M.D., Professor of Medicine, University of California
at Los Angeles; Head of the Division of Infectious Diseases, Harbor UCLA Medical
Center. He is a founding member of the Scientific Advisory Board. Dr. Edwards is
a worldwide clinical leader in the diagnosis and treatment of infectious
diseases, with a focus on fungal diseases. Dr. Edwards is the Associate Editor
of Reviews of Infectious Diseases. Dr. Edwards received his M.D. from the
University of California at Irvine.
Richard Losick, Ph.D., Chairman, Department of Molecular and Cellular
Biology, Harvard University and Maria Moors Cabot Professor of Biology. He
joined the Scientific Advisory Board in 1995. Dr. Losick is a world leader in
the genetics and molecular biology of bacteria. He is a member of the National
Academy of
43
<PAGE> 46
Sciences and a Fellow of the American Academy of Sciences. Dr. Losick is on the
editorial boards of Science and Cell. He received his Ph.D. from the
Massachusetts Institute of Technology.
N. Ronald Morris, M.D., Professor of Pharmacology, University of Medicine
and Dentistry of New Jersey. Dr. Morris is a recognized world leader in cell
cycle control, fungal genetics, biochemistry and molecular biology. He is a
founding member of the Scientific Advisory Board and of the Cancer Institute. He
is on the editorial boards of the Journal of Cell Biology and Molecular Biology
of the Cell. Dr. Morris earned his M.D. at Yale School of Medicine.
Koji Nakanishi, Ph.D., Centennial Professor of Chemistry, Columbia
University; former Director of the Suntory Institute for Bio-Organic Research,
Osaka, Japan. He is a founding member of the Scientific Advisory Board. Dr.
Nakanishi was the recipient of the 1990 Japan Academy Prize and the Imperial
Prize, the highest Japanese honor a scholar can receive. He received a B.S. and
a Ph.D. in Chemistry from Nagoya University.
Phillips W. Robbins, Ph.D., Professor of Biochemistry, Massachusetts
Institute of Technology. Dr. Robbins is a world leader in carbohydrate,
glycoprotein and microbial membrane research. He is a founding member of the
Scientific Advisory Board. He is a member of the National Academy of Sciences,
and is a member of the American Society of Biochemistry and Molecular Biology,
and the American Society of Microbiology. Dr. Robbins received his Ph.D. from
the University of Illinois.
Jerry A. Weisbach, Ph.D., technical and business consultant. He is a
Company founder and founding member of the Scientific Advisory Board. From 1988
to 1994, Dr. Weisbach served as Director of Technology Transfer and Adjunct
Professor at Rockefeller University. Dr. Weisbach served as Vice President of
Warner-Lambert Company from 1981 to 1987 and as President of the Pharmaceutical
Research Division from 1979 to 1987. He served in various positions at Smith
Kline & French Laboratories from 1960 to 1979, including as Vice President,
Research. Dr. Weisbach received his M.A. and his Ph.D. in chemistry from Harvard
University.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established (i) a Compensation Committee, which
is responsible for determining salaries, incentives and other forms of
compensation for officers and other employees of the Company and administers
various incentive compensation and benefit plans; and (ii) an Audit Committee,
which reviews the results and scope of the annual audit and other services
provided by the Company's independent public accountants.
ELECTION AND COMPENSATION OF DIRECTORS
Following this offering, the Board of Directors will be divided into three
classes as nearly equal in size as possible, each of whose members will serve
for a staggered three-year term. At each annual meeting of stockholders, a class
of directors will be elected for a three-year term to succeed the directors of
the same class whose terms are then expiring. The initial terms of the three
classes of directors will expire upon the election and qualification of
successor directors at the annual meeting of stockholders held during the
calendar years 1998, 1999, and 2000, respectively, and such directors shall
serve until their respective successors are duly elected and qualified, or until
their earlier resignation or removal. The classification of the Board of
Directors could have the effect of increasing the length of time necessary to
change the composition of a majority of the Board of Directors and could
therefore make it more difficult for a third party to acquire, or discourage a
third party from acquiring, control of the Company. In general, at least two
annual meetings of stockholders will be necessary for stockholders to effect a
change in a majority of the members of the Board of Directors. See "Description
of Capital Stock -- Delaware Law and Certain Charter and By-Law Provisions."
Each officer serves at the discretion of the Board of Directors. There are no
family relationships among any of the directors or executive officers of the
Company.
Dr. Afeyan was elected to the Board of Directors pursuant to a Voting
Agreement among the Company, PerSeptive and certain of the Company's
securityholders (the "PerSeptive Voting Agreement"). Pursuant to the PerSeptive
Voting Agreement, as long as PerSeptive owns at least 20% of the Company's
capital stock on a fully
44
<PAGE> 47
diluted basis, PerSeptive may require the nomination of two representatives of
PerSeptive (the "PerSeptive Nominees") to the Company's Board of Directors, and
the parties to the agreement have agreed to vote in favor of the PerSeptive
Nominees. The parties have agreed to vote their shares to fix and maintain the
size of the Board of Directors at not less than six and not more than nine
members. In the event the size of the Board of Directors is increased to eight
members, PerSeptive may require the nomination of, and the parties will vote in
favor of, a third PerSeptive Nominee; thus the Board of Directors will be
increased to nine members. As long as Dr. Afeyan remains an officer and director
of PerSeptive he shall be one of the PerSeptive Nominees; as long as Mr. Kania
remains on the Company's Board of Directors, he shall be the other PerSeptive
Nominee. If PerSeptive owns less than 20% but more than 10% of the Company's
capital stock on a fully diluted basis, PerSeptive may require the nomination
of, and parties to the agreement have agreed to vote in favor of, one PerSeptive
Nominee. The PerSeptive Voting Agreement provides that the PerSeptive Nominees
shall be evenly distributed among the classes of Directors, and initially shall
be placed in the classes with the longest terms. The PerSeptive Voting Agreement
will terminate on the earliest to occur of (i) a sale of all or substantially
all of the assets or stock of Company, (ii) June 28, 2006 or (iii) the date on
which PerSeptive owns less than 10% of the Company's capital stock on a fully
diluted basis. Drs. Berkowitz, Anderson and Schoemaker and Messrs. Kania and
Gabrieli were elected to the Board of Directors pursuant to a Second Amended and
Restated Voting Agreement (the "Voting Agreement") among the Company, certain of
the Company's stockholders and venture capital purchasers of the Company's
Preferred Stock. The provision in the Voting Agreement relating to election of
directors of the Company will terminate upon the consummation of this offering.
Directors of the Company do not receive cash compensation for their service
on the Board of Directors. The Company reimburses non-employee directors for
expenses incurred in attending meetings of the Board of Directors and its
committees. In addition, under the Company's 1992 Stock Option Plan,
non-employee directors who join the Board of Directors after the Company's
initial public offering will receive an automatic grant of non-qualified options
to purchase 10,000 shares of Common Stock. These options vest in equal
installments over five years, assuming continued membership on the Board. Also,
on June 1 of each year, all non-employee directors will receive a non-qualified
option to purchase 2,500 shares of Common Stock. These options vest in one year,
assuming continued membership on the Board. All such options have exercise
prices equal to the fair market value of the Common Stock on the date of grant.
See "-- 1992 Stock Option Plan."
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes the compensation paid to and earned by the
Company's Chief Executive Officer and other executive officers of the Company
whose combined salary and bonus for services rendered in all capacities during
fiscal 1995 exceeded $100,000 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
------------------------------------------ SECURITIES
NAME AND 1995 OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1) OPTIONS COMPENSATION (2)
- ------------------------------- ------ -------- -------- -------------------- ------------ --------------------
<S> <C> <C> <C> <C> <C> <C>
Barry A. Berkowitz, Ph.D....... 1995 $195,000 $43,500 $ -- -- $4,800
President and Chief
Executive Officer
William E. Timberlake, Ph.D.... 1995 172,695 37,500 2,500 -- --
Executive Vice President,
Research
Yigal Koltin, Ph.D............. 1995 130,000 5,000 -- -- --
Vice President, Molecular
and Cellular Biology
Sean O'Connor, Ph.D............ 1995 116,412 5,000 -- 18,867 --
Vice President, Advanced
Screening Research
</TABLE>
- -----------
(1) Consists of additional compensation to the named executive officer for the
purchase of term life and disability insurance.
(2) Reflects automobile allowance.
45
<PAGE> 48
Option Grants
The following table sets forth certain information regarding stock options
granted during fiscal 1995 by the Company to its Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZED
--------------------------------------------------- VALUE AT ASSUMED
PERCENTAGE OF ANNUAL RATES OF
NUMBER OF TOTAL STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED 1995 PER SHARE DATE 5% 10%
- ----------------------------- ---------- ------------- ----------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Barry A. Berkowitz, Ph.D..... -- -- $-- -- $ -- $ --
William E. Timberlake,
Ph.D....................... -- -- -- -- -- --
Yigal Koltin, Ph.D........... -- -- -- -- -- --
Sean O'Connor, Ph.D.......... 13,207(2) 5.9% 1.33 05/01/05 11,006 27,891
5,660(3) 2.6% 1.33 05/01/05 4,717 11,954
</TABLE>
- ---------------
(1) Amounts represent hypothetical gains that could be achieved for the options
if they are exercised at the end of the option term. Those gains are based
on assumed rates of stock price appreciation of 5% and 10% compounded
annually from the date the option was granted through the expiration date.
(2) Options granted are incentive stock options under the 1992 Stock Option Plan
that become exercisable in five equal amounts on each of the first five
anniversaries of the date of grant.
(3) Options granted are incentive stock options under the 1992 Stock Option
Plan. The options become exercisable upon the achievement of certain
performance milestones.
Option Exercises and Year-End Option Values
The following table provides information about the number of shares issued
upon option exercises by the Named Executive Officers during 1995, and the value
realized by the Named Executive Officers. The table also provides information
about the number and value of options held by the Named Executive Officers at
December 31, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT
SHARES OPTIONS AT FY END FY END(1)
ACQUIRED ON VALUE ----------------------------- -----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ------------ -------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Barry A. Berkowitz,
Ph.D..................... -- $ -- -- -- $ -- $ --
William E. Timberlake,
Ph.D. ................... -- -- 51,320 148,679 379,800 1,099,200
Yigal Koltin, Ph.D. ....... -- -- 38,490 18,113 285,600 134,400
Sean O'Connor, Ph.D. ...... -- -- 11,320 26,415 84,000 181,000
</TABLE>
- ---------------
(1) Based on the deemed fair market value of the Common Stock at September 30,
1996 ($7.95 per share as determined by the Board of Directors) less the
exercise price per share.
EMPLOYMENT CONTRACTS
In January 1992, the Company entered into an employment and non-competition
agreement with Barry A. Berkowitz, Ph.D., President and Chief Executive Officer
of the Company. Pursuant to such agreement,
46
<PAGE> 49
Dr. Berkowitz received an initial annual base salary of $195,000 subject to
increase on an annual basis as agreed by the Board of Directors. Also pursuant
to such agreement, Dr. Berkowitz receives an annual bonus of up to $28,500 or
such greater amount per year as determined by the Board of Directors. In
addition, the Company provides Dr. Berkowitz with life insurance and
reimbursement for automobile expenses. In the event that the Company terminates
Dr. Berkowitz's employment without cause, as defined in the employment
agreement, or in the event that Dr. Berkowitz terminates his employment because
of a material change in the duties imposed upon him by the Board of Directors or
because of a breach by the Company of its obligations to Dr. Berkowitz, the
Company will continue to pay Dr. Berkowitz's base salary and cost of health
insurance for a period of one year following termination, less any income earned
by Dr. Berkowitz from full time employment with another entity during this one
year period.
In December 1992, the Company entered into an employment agreement with no
specified duration with William E. Timberlake, Ph.D., Executive Vice President,
Research. Pursuant to such agreement Dr. Timberlake received an initial salary
of $170,000, a signing bonus of $60,000, and options to purchase 90,566 shares
of Common Stock. Pursuant to the agreement, options for an additional 75,471
shares of Common Stock were granted to Dr. Timberlake at a price of
approximately $.53 per share. In the event that the Company terminates Dr.
Timberlake's employment without cause, the Company will continue to pay Dr.
Timberlake's base salary for a period of up to one year following such
termination or until he accepts full time employment. The Company provided Dr.
Timberlake with a $100,000 loan for use as a down payment on a home. The loan
bears an interest rate of prime rate as published from time to time in the Wall
Street Journal (8.25% at September 30, 1996) and is for a four-year term. See
"Certain Transactions."
The Company entered into employment agreements without specified durations
with Drs. Koltin and O'Connor in March 1993 and August 1992, respectively.
Pursuant to these agreements, Drs. Koltin and O'Connor received initial salaries
of $125,000 and $102,000 and grants of 11,320 and 18,867 options to purchase
Common Stock, respectively, along with contingent bonuses.
Each of the Named Executive Officers has entered into non-competition and
confidentiality agreements with the Company (the "Non-Compete Agreements"),
which restrict such officer from competing with the Company and from soliciting,
diverting or attempting to solicit or divert any customers or employees of the
Company during the term of the officer's employment and for a time or until he
accepts full time employment after termination of such employment. The
Non-Compete Agreements also oblige the Named Executive Officer not to reveal any
confidential information of the Company both during and after the term of the
officer's employment. The Non-Compete Agreements requires the Named Executive
Officers to assign all right and interest in any intellectual property developed
by the officer during the term of the officer's employment with the Company.
The Company currently has no compensatory plan or arrangement with any of
the Named Executive Officers that is activated upon resignation, termination or
retirement of any such officer upon a change in control of the Company.
EMPLOYEE BENEFIT PLANS
1992 Stock Option Plan
The Company's 1992 Employee, Director and Consultant Stock Option Plan (the
"1992 Stock Option Plan") was initially approved by the Company's Board of
Directors and stockholders in February 1992. The Company has reserved an
aggregate of 1,500,000 shares of Common Stock for issuance pursuant to the 1992
Stock Option Plan. The 1992 Stock Option Plan is administered by the
Compensation Committee of the Board of Directors which, among other things,
determines the persons to whom options will be granted, the number of shares of
Common Stock to be covered by each grant and the terms and conditions upon which
options may be granted.
Options granted under the 1992 Stock Option Plan may be either (i) options
intended to qualify as "incentive stock options" under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or (ii) options that are
not incentive stock options ("non-qualified stock options"). Incentive stock
options may be granted under the 1992 Stock Option Plan to employees of the
Company and its affiliates.
47
<PAGE> 50
Non-qualified stock options may be granted to consultants, directors and
employees of the Company and its affiliates. Under the 1992 Stock Option Plan,
non-employee directors who join the Board of Directors after the Company's
initial public offering will receive an automatic grant of non-qualified options
to purchase 10,000 shares of Common Stock. These options vest in equal
installments over five years, assuming continued membership on the Board. Also,
on June 1 of each year, all non-employee directors will receive a non-qualified
option to purchase 2,500 shares of Common Stock. These options vest in one year,
assuming continued membership on the Board. See " -- Election and Compensation
of Directors."
Incentive stock options granted under the 1992 Stock Option Plan may not be
granted at a price less than 100% of the fair market value of the Common Stock
on the date of grant (or 110% of fair market value in the case of employees or
officers holding 10% or more of the voting stock of the Company). Incentive
stock options granted under the 1992 Stock Option Plan expire not more than ten
years from the date of grant, or not more than five years from the date of grant
in the case of incentive stock options granted to an employee or officer holding
10% or more of the voting stock of the Company. The aggregate fair market value
(determined at the time of grant) of shares issuable pursuant to incentive stock
options which become exercisable by an employee in any calendar year under any
incentive stock option plan of the Company may not exceed $100,000.
Non-qualified stock options granted under the 1992 Stock Option Plan may not be
granted at an exercise price less than the par value per share of Common Stock.
Generally, incentive stock options granted under the 1992 Stock Option Plan
are exercisable for up to 90 days following termination of the option holder's
employment with the Company (other than by reason of death, disability or
termination "for cause" as defined in the 1992 Stock Option Plan) to the extent
exercisable on the date of such termination, provided that such incentive stock
option has not expired on the date of such exercise. In granting any
non-qualified stock option, the Compensation Committee may specify that such
non-qualified stock option shall be subject to such termination or cancellation
provisions as the Compensation Committee may specify. Generally, in the event of
the option holder's death or disability, both incentive stock options and
non-qualified stock options may be exercised, to the extent exercisable on the
date of death or disability, by the option holder's survivors at any time prior
to the earlier of the option's specified expiration date or one year from the
date of the option holder's death or disability. As of September 30, 1996,
options to purchase an aggregate of 861,736 shares of Common Stock were
outstanding under the 1992 Stock Option Plan.
Under the 1992 Stock Option Plan, if the Company is consolidated with or
acquired by another entity, the administrator of the Plan or Board of Directors
of the successor entity will provide for the continuation of such options by
substituting for the shares subject to the options any consideration payable
with respect to the outstanding shares of Common Stock in connection with the
acquisition or merger or securities of the successor entity. Alternatively, upon
written notice, the administrator of the Plan or Board of Directors of the
successor entity may make all options granted immediately exercisable or else
terminated within a specified period of time of such notice or may terminate all
options in exchange for a cash payment equal to the excess of the fair market
value of the shares subject to the options over the exercise price of such
options.
401(k) Plan
In December 1994, the Company adopted a tax-qualified employee savings and
retirement plan (the "401(k) Plan") covering all of the Company's employees age
21 and over. Pursuant to the 401(k) Plan, employees may elect to defer a portion
of their current compensation in an amount up to the lesser of the statutorily
prescribed annual limit ($9,500 in 1996) or 15% of their compensation annually
and have the amount of such reduction contributed to the 401(k) Plan. The 401(k)
Plan also allows additional contributions by the Company on behalf of all
participants. The Company has not made any such additional contributions to
date. The 401(k) Plan is intended to qualify under Section 401 of the Code so
that employee deferrals and Company contributions to the 401(k) Plan, and income
earned on 401(k) Plan contributions, are not taxable to employees until
withdrawn from the 401(k) Plan, and employee deferrals and contributions by the
Company, if any, will be deductible by the Company for the fiscal year to which
they relate. On July 1,
48
<PAGE> 51
1996, the Company appointed Strong Retirement Plan Services as the 401(k) Plan
Administrator and Firstar Trust Company as Trustee.
COMPENSATION COMMITTEE AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Directors
Anderson, Gabrieli and Schoemaker. Dr. Berkowitz, President and Chief Executive
Officer of the Company, participates in all discussions and decisions regarding
salaries and incentive compensation for all employees and consultants of the
Company, except that Dr. Berkowitz is excluded from discussions regarding his
own salary and incentive compensation.
Certain members of the Company's Board of Directors are parties to
transactions with the Company. See "Certain Transactions."
49
<PAGE> 52
CERTAIN TRANSACTIONS
PROMOTERS
Dr. Berkowitz, Dr. Timberlake and a number of consultants participated in
the founding and organization of the Company, and each may be considered a
promoter of the Company.
In January 1992, Dr. Berkowitz purchased 126,792 shares of Common Stock for
an aggregate price of $336.00. In February 1992, he purchased 324,528 shares of
Common Stock for an aggregate price of $860.00, which are subject to certain
registration rights. See "Description of Capital Stock -- Registration Rights."
Scientific and Financial Advisors. In February 1992, the Company sold an
aggregate of 94,337 shares of Common Stock for an aggregate price of
approximately $253.00 to the scientific and financial advisors named in the
table below who participated in the founding of the Company. Since that time,
those advisors have been granted options to purchase an aggregate of 475,093
shares of Common Stock in connection with services provided to the Company. The
following table sets forth the number of shares purchased on their becoming
advisors to the Company and options granted individually to such persons
thereafter:
<TABLE>
<CAPTION>
SHARES OPTIONS
NAME PURCHASED GRANTED
- ------------------------------------------------------------------------ --------- -------
<S> <C> <C>
Yigal Koltin, Ph.D. .................................................... 22,641 83,773
Jeffrey M. Becker, Ph.D. ............................................... 22,641 45,283
Jerry A. Weisbach, Ph.D. ............................................... 11,320 22,641
William E. Timberlake, Ph.D. ........................................... 7,547 200,000
Gerald R. Fink, Ph.D.................................................... 30,188 79,245
Robert W. Morgan........................................................ -- 44,151
</TABLE>
CONVERTIBLE PREFERRED STOCK FINANCINGS
Convertible Preferred Stock Issuances. References to the Company's
convertible preferred stock, $.01 par value per share (the "Convertible
Preferred Stock"), in the following paragraph and table are presented on an
actual basis. Upon the consummation of this offering, each share of Convertible
Preferred Stock will automatically convert on a 1-for-2.65 basis into 4,458,528
shares of Common Stock.
Since inception, the Company has issued in private placements shares of its
Convertible Preferred Stock as follows: (i) in February 1992, the Company sold
an aggregate of 2,000,000 shares of Series A Convertible Preferred Stock at a
price of $1.00 per share, (ii) in January 1993, the Company sold an aggregate of
2,024,000 shares of Series A Convertible Preferred Stock at a price of $1.00 per
share, (iii) in January 1994, the Company sold 1,952,568 shares of Series A
Convertible Preferred Stock at a price of $1.00 per share and 976,284 shares of
Series B Convertible Preferred Stock at a price of $1.50 per share, (iv) in July
1994, the Company sold an aggregate of 174,165 shares of Series A Convertible
Preferred Stock at a price of $1.00 per share, 87,081 shares of Series B
Convertible Preferred Stock at a price of $1.50 per share and 767,739 shares of
Series C Convertible Preferred Stock at a price of $3.00 per share, (v) in
February 1995, the Company sold an aggregate of 3,000,000 shares of Series D
Convertible Preferred Stock at a price of $5.00 per share and (vi) in December
1996, the Company sold an aggregate of 833,334 shares of Series E Convertible
Preferred Stock at a price of $6.00 per share. Holders of Common Stock issuable
upon such conversion are entitled to certain registration rights. See
"Description of Capital Stock -- Registration Rights." Certain holders of the
Series A, B, C and D Convertible Preferred Stock have entered into a voting
agreement with the Company pursuant to which each party has agreed to vote in
favor of electing the following persons as directors of the Company: (i) four
representatives of the holders of such series of Convertible Preferred Stock (or
the Common Stock issued on conversion or exchange thereof), each of which shall
be selected jointly by Technology Leaders L.P., Technology Leaders Offshore
C.V., Bessemer Venture Partners II L.P., Morgan Holland Ventures and Pfizer,
Inc., (ii) Barry Berkowitz, so long as he is materially involved with the
Company and (iii) a person chosen by the then Chief Executive Officer of the
Company and approved by the holders of at least 60% of the outstanding shares of
the Series A, B, C and D Convertible Preferred Stock. The provisions of this
agreement will terminate upon consummation of this offering. The following table
sets forth
50
<PAGE> 53
the shares of Convertible Preferred Stock purchased by the Company's directors,
executive officers, five percent shareholders and their respective affiliates:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF CONVERTIBLE PREFERRED STOCK COMMON SHARES
------------------------------------------------------ AS CONVERTED
INVESTOR SERIES A SERIES B SERIES C SERIES D SERIES E (1)
- -------------------------------------- --------- -------- -------- --------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bessemer Venture Partners II and III
L.P.(2)(3).......................... 2,571,428 285,714 300,000 119,733 -- 1,236,556
Wyeth-Ayerst.......................... -- -- -- -- 833,334 314,465
Pfizer, Inc........................... -- -- -- 2,700,000 -- 1,018,867
Technology Leaders Offshore C.V.(4)... 1,366,318 149,990 159,930 63,829 -- 656,629
Technology Leaders L.P.(4)............ 1,196,650 131,364 140,070 55,903 -- 575,089
Morgan Holland Fund II, L.P.(5)....... 857,142 428,571 150,000 54,447 -- 562,324
Barry A. Berkowitz, Ph.D.............. 23,878 11,939 1,072 -- -- 13,920
</TABLE>
- ---------------
(1) Upon the consummation of this offering, each share of convertible preferred
stock will automatically convert on a 1-for-2.65 basis into shares of Common
Stock.
(2) Includes an aggregate of 322,986 convertible preferred shares held by
individual associates of Bessemer Venture Partners L.P., including 82,284,
9,143 and 9,600 shares of Series A, B and C Convertible Preferred Stock,
respectively, purchased by Christopher F. O. Gabrieli, a director of the
Company.
(3) The Company borrowed $125,000 and $175,000 in December 1993 and September
1993, respectively, from Bessemer Venture Partners L.P. Both loans were
cancelled as part of the consideration paid by Bessemer Venture Partners
L.P. for shares of Series A and B Convertible Preferred Stock.
(4) The Company borrowed $175,000 and $125,000 in October 1993 and December
1993, respectively, from Technology Leaders L.P. and its affiliate,
Technology Leaders FR Corp. Both loans were converted as part of the
consideration paid by Technology Leaders L.P. for shares of Series A and B
Convertible Preferred Stock.
(5) Includes 8,570, 4,285, 1,500 and 544 shares of Series A, B, C and D
Convertible Preferred Stock, respectively, purchased by Gilde Investment
Fund B.V., an affiliate of Morgan Holland Fund II, L.P.
Wyeth-Ayerst Collaboration. In December 1996, the Company entered into a
strategic collaboration with Wyeth-Ayerst for the discovery of novel drug leads
for treating human bacterial infections which provides for up to $70 million in
equity, research funding and development milestone payments, plus potential
royalties. In connection with the collaboration, Wyeth-Ayerst purchased 833,334
shares of Series E Convertible Preferred Stock (which will be converted into
314,465 shares of Common Stock upon the consummation of this offering) for
approximately $5 million and is committed, subject to ChemGenics' meeting
certain research performance objectives, to a second purchase of $5 million of
Common Stock to occur no sooner than June 2, 1997 and a third purchase of $3
million of Common Stock to occur no sooner than December 2, 1998. The second and
third purchases will be priced at 115% of the then current market price of the
Common Stock following the Company's initial public offering, or at $15.90 per
common share if no such offering has been completed. Assuming the agreements
conclude their 5-year term, Wyeth-Ayerst is obligated to pay ChemGenics $15
million in research funding (adjusted for inflation in certain circumstances)
and is obligated to pay up to an additional $9 million in research performance
payments. ChemGenics may also receive up to an additional $33 million in
development milestone payments. If the collaboration is successful in
identifying targets and leads for products to treat bacterial disease,
Wyeth-Ayerst will pay all costs related to its product development and
commercialization including, without limitation, clinical trials, regulatory
filings and marketing, and will also pay ChemGenics royalties on product sales,
if any, which result from the collaboration. Pursuant to these agreements,
ChemGenics has received $750,000 in research funding through December 1996. See
"Business -- Collaborations -- Wyeth-Ayerst."
Pfizer Collaboration. In connection with sale of Series D Convertible
Preferred Stock to Pfizer, the Company is working in collaboration with Pfizer
to discover and develop anti-fungal drugs. Under the terms of the agreements,
Pfizer is funding a discovery program at ChemGenics over an initial four-year
term, which began in January 1995. Pfizer has agreed to provide the Company with
up to $11.7 million in research funding over the agreement's four-year term, and
may make payments contingent upon certain milestones which could total an
additional $32.5 million. ChemGenics has received $4.4 million in research
funding and $13.5 million in equity funding through the purchase of the Series D
Convertible Preferred Stock under these agreements through December 1996. In the
event the collaboration is successful in identifying targets and leads for
51
<PAGE> 54
products to treat human fungal disease, Pfizer will also pay all costs related
to product development and commercialization, including, without limitation,
clinical trials, regulatory filings and marketing and a royalty on product
sales, if any, which result from the collaboration. See "Business --
Collaborations -- Pfizer."
Agreement with PerSeptive Biosystems
In May, November and December 1996, the Company entered into agreements
with PerSeptive under which the Company exchanged a substantial equity interest
in ChemGenics and a $3 million promissory note payable to PerSeptive for certain
assets and a worldwide, royalty-free license for use in the field of drug
discovery to all of PerSeptive's existing patents (over 80 patents and
applications) and technology, including selection technologies, all future
patented and unpatented technology, early and preferred access to all technology
and certain other assets, and for a period of five years to all prototype
equipment. Upon execution of the agreements, ChemGenics hired 10 employees of
PerSeptive and entered into a temporary sublease agreement for approximately
5,000 square feet of laboratory and office space in Framingham, Massachusetts.
Under the agreements, PerSeptive acquired 2,563,275 shares of the Company's
Common Stock of which 250,000 shares are subject to forfeiture lapsing over a
three-year period in the event PerSeptive fails to provide certain services,
equipment use, supplies and other assets as described above. PerSeptive also
received a warrant, expiring in June 2000, to purchase an additional 1,847,673
shares of Common Stock at an exercise price of $13.25 per share, for an
aggregate exercise price of approximately $24.5 million. In addition, the
Company also issued PerSeptive a $3 million promissory note which the Company
intends to pay out of the proceeds of this offering. This transaction was
accounted for as a purchase. See Note 3 of Notes to Financial Statements.
PerSeptive expended approximately $20 to $25 million in research and development
expenses for the purchased technology prior to its purchase by the Company. See
"Business -- Collaborations -- PerSeptive Biosystems."
LOANS TO CERTAIN OFFICERS OF THE COMPANY
In October 1993, the Company loaned $100,000 to William E. Timberlake,
Ph.D., the Company's Executive Vice President for Research. The principal and
accrued interest is repaid through annual bonuses. The loan bears interest at
the prime rate as published from time to time in the Wall Street Journal (8.25%
at September 30, 1996) and is secured by a second mortgage on Dr. Timberlake's
home. As of December 31, 1994 and December 31, 1995 and September 30, 1996, the
outstanding balance of the loan was $84,725, $57,225 and $17,584, respectively.
In March 1996, the Company loaned $10,000 to Reimar C. Bruening, Ph.D.,
R.Ph., the Company's Vice President, Chemical Sciences and Technologies. The
principal and accrued interest is payable in three equal payments plus accrued
interest, annually on the anniversary date of the loan. The loan bears interest
at the prime rate, as published from time to time in the Wall Street Journal. At
September 30, 1996, the outstanding balance of the loan was $10,000.
52
<PAGE> 55
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock (including Common Stock issuable upon conversion
of the Company's preferred stock) as of December 16, 1996, and as adjusted to
reflect the sale of the shares offered hereby, by (i) each person who is known
by the Company to own beneficially more than 5% of the outstanding shares of
Common Stock, (ii) each director and Named Executive Officer of the Company, and
(iii) all directors and executive officers of the Company as a group. Unless
otherwise indicated below, to the knowledge of the Company, all persons listed
below have sole voting and investment power with respect to their shares of
Common Stock, except to the extent authority is shared by spouses under
applicable law. Unless otherwise noted, the address for the individuals listed
below is: c/o ChemGenics Pharmaceuticals Inc., One Kendall Square, Building 300
Cambridge, Massachusetts 02139.
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL(2)
--------------------------
NUMBER OF SHARES BEFORE THE AFTER THE
BENEFICIAL OWNER BENEFICIALLY OWNED(1) OFFERING OFFERING
- ------------------------------------------------------------- --------------------- ---------- -----------
<S> <C> <C> <C>
PerSeptive Biosystems, Inc.(3)............................... 3,313,275 39.7% 30.5%
500 Old Connecticut Path
Framingham, MA 01701
Bessemer Venture Partners III L.P.(4) ....................... 1,134,511 14.9% 11.2%
83 Walnut Street
Wellesley Hills, MA 02181
Pfizer, Inc.................................................. 1,018,867 13.4% 10.1%
Eastern Point Road
Groton, CT 06340
Technology Leaders Offshore C.V.(5).......................... 656,629 8.6% 6.5%
800 Safeguard Building
435 Devon Park Drive
Wayne, PA 19807-1945
Technology Leaders L.P.(5)................................... 575,089 7.6% 5.7%
800 Safeguard Building
435 Devon Park Drive
Wayne, PA 19807-1945
Morgan Holland Fund II, L.P.(6).............................. 562,324 7.4% 5.6%
c/o One Liberty Ventures
One Liberty Square - Suite 840
Boston, MA 02109
Barry A. Berkowitz, Ph.D.(7)................................. 465,239 6.1% 4.6%
William E. Timberlake, Ph.D.(8).............................. 96,602 1.3% 1.0%
Yigal Koltin, Ph.D.(9)....................................... 61,131 * *
Sean O'Connor, Ph.D.(10)..................................... 11,320 * *
Christopher F. O. Gabrieli(11)............................... 1,172,633 15.4% 11.6%
Noubar B. Afeyan, Ph.D.(12).................................. 3,313,275 39.7% 30.5%
Gary J. Anderson, M.D.(13)................................... 1,231,718 16.2% 12.2%
Hubert J. P. Schoemaker, Ph.D.(14)........................... 1,231,718 * *
Edwin M. Kania, Jr.(15)...................................... 562,324 7.4% 5.6%
All executive officers and directors as a group (9)
persons.................................................... 6,914,242 81.4% 62.9%
</TABLE>
- ---------------
* Represents less than 1% of the outstanding Common Stock or voting power.
(1) The number of shares beneficially owned by each stockholder is determined
under rules promulgated by the Securities and Exchange Commission, and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, beneficial ownership includes any shares
as to which the individual has sole or shared voting power or investment
power and also any shares which the individual has the right to acquire
within 60 days after December 16, 1996 through the exercise of any stock
option, warrant or other right. The inclusion herein of such shares,
however, does not constitute an admission that the named stockholder is a
direct or indirect beneficial owner of such shares. Unless otherwise
indicated, each person or entity named in the table has sole voting power
and investment power (or shares such power with his or her spouse) with
respect to all shares of capital stock listed as owned by such person or
entity.
53
<PAGE> 56
(2) Percentage of ownership is based on 7,603,815 shares of Common Stock
outstanding before this offering and 10,103,815 shares of Common Stock
outstanding after this offering.
(3) Consists of 2,563,275 shares of Common Stock owned by PerSeptive (including
250,000 shares of Common Stock subject to forfeiture under certain
circumstances) and 750,000 shares of Common Stock subject to currently
exercisable warrants. Does not include 1,097,673 shares of Common Stock
subject to warrants which will not become exercisable until six months
after this offering.
(4) Includes 1,114,675 shares of Common Stock held by Bessemer Venture Partners
III L.P. ("Bessemer III"). Does not include 99,884 shares held by partners
of Deer III & Co., which is the general partner of Bessemer III. Includes
19,836 shares held by persons associated with Bessemer Securities
Corporation, which is the limited partner of Bessemer III, as to which
shares Bessemer III has the power to vote.
(5) Technology Leaders Offshore C.V. and Technology Leaders L.P. are affiliated
venture capital funds, with overlapping management, but each disclaims
beneficial ownership of the shares held by the other.
(6) Includes 5,622 shares of Common Stock held by Gilde Investment Fund B.V.,
an affiliate of Morgan Holland Fund II, L.P.
(7) Includes 18,866 shares of Common Stock owned by Dr. Berkowitz's children,
as to which Dr. Berkowitz disclaims beneficial ownership.
(8) Includes 51,320 shares of Common Stock issuable to Dr. Timberlake within 60
days of December 16, 1996 upon exercise of stock options and 37,735 shares
issuable upon exercise of stock options based upon achieved milestones.
(9) Includes 38,490 shares of Common Stock issuable to Dr. Koltin within 60
days of December 16, 1996 upon exercise of stock options.
(10) Includes 11,320 shares of Common Stock issuable to Dr. O'Connor within 60
days of December 16, 1996 upon exercise of stock options.
(11) Includes 1,114,675 shares of Common Stock owned by Bessemer III. Mr.
Gabrieli is a partner of Deer III & Co., which is the general partner of
Bessemer III. Also includes 19,836 shares owned by persons associated with
Bessemer Securities Corporation, which is the limited partner of Bessemer
III, as to which shares Bessemer III, and therefore Mr. Gabrieli, have
voting power. Mr. Gabrieli disclaims beneficial ownership of the foregoing
shares.
(12) Consists of 3,313,275 shares of Common Stock held by PerSeptive. Dr. Afeyan
is a Director and the Chief Executive Officer of PerSeptive. In such
capacities, Dr. Afeyan may be deemed to share voting and investment control
of such shares and may be deemed to have beneficial ownership of such
shares, although he disclaims such beneficial ownership. See Note 3 above.
(13) Includes 656,629 shares of Common Stock held by Technology Leaders Offshore
C.V. and 575,089 shares of Common Stock held by Technology Leaders L.P. Dr.
Anderson is a general partner, Managing Director, and member of the
Executive Committee of Technology Leader Management, L.P. and the general
partner of Technology Leaders L.P. and Technology Leaders Offshore C.V. In
such capacity, Dr. Anderson may be deemed to share voting and investment
control of the shares owned by those partnerships, although he disclaims
beneficial ownership of such shares.
(14) Includes 656,629 shares of Common Stock held by Technology Leaders Offshore
C.V. and 575,089 shares of Common Stock held by Technology Leaders L.P. Dr.
Schoemaker is a member of the Executive Committee and controls a corporate
general partner of Technology Leaders Management L.P. In such capacity, Dr.
Schoemaker may be deemed to share voting and investment control of the
shares owned by Technology Leaders L.P. and Technology Leaders Offshore
C.V., although he disclaims beneficial ownership of such shares.
(15) Includes 556,702 shares of Common Stock held by Morgan Holland Fund II L.P.
and 5,622 shares held by Gilde Investment Fund B.V. Mr. Kania is a general
partner of Morgan Holland Fund II L.P. and Gilde Investment Fund B.V. In
such capacities, Mr. Kania may be deemed to share investment and voting
control of the shares held by Morgan Holland Fund II L.P. and Gilde and may
be deemed to be the beneficial owner of such shares, although he disclaims
such beneficial ownership.
54
<PAGE> 57
DESCRIPTION OF CAPITAL STOCK
Upon the closing of this offering, the authorized capital stock of the
Company will consist of 25,000,000 shares of Common Stock, par value $.001 per
share, and 5,000,000 shares of Preferred Stock, par value $.001 per share.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of the stockholders and do not have cumulative
voting rights. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared by the Board of Directors out of
funds legally available therefor, subject to any preferential dividend rights of
outstanding Preferred Stock. Upon the liquidation, dissolution or winding up of
the Company, the holders of Common Stock are entitled to receive ratably the net
assets of the Company available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding Preferred Stock.
Holders of the Common Stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of Common Stock are, and the shares
offered by the Company in this offering will be, when issued and paid for, fully
paid and nonassessable. The rights, preferences and privileges of holders of
Common Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of Preferred Stock that the Company may
designate and issue in the future. Upon the closing of this offering, there will
be no shares of Convertible Preferred Stock outstanding.
CONVERTIBLE PREFERRED STOCK
Prior to this offering, there were authorized and outstanding 13,441,667
shares of Convertible Preferred Stock, of which 6,400,000 were designated Series
A Convertible Preferred Stock, 1,100,000 were designated Series B Convertible
Preferred Stock, 775,000 were designated Series C Convertible Preferred Stock,
3,000,000 were designated Series D Convertible Preferred Stock and 2,166,667
were designated Series E Convertible Preferred Stock. All outstanding shares of
series of Convertible Preferred Stock will be automatically converted on a
1-for-2.65 basis into an aggregate of 4,458,528 shares of Common Stock upon the
closing of this offering, and such shares of Convertible Preferred Stock will no
longer be authorized, issued or outstanding.
PREFERRED STOCK
The Board of Directors will be authorized, subject to certain limitations
prescribed by law, without further stockholder approval, to issue from time to
time up to an aggregate of 5,000,000 shares of Preferred Stock in one or more
series and to fix or alter the designations, preferences, rights and any
qualifications, limitations or restrictions of the shares of each such series
thereof, including the dividend rights, dividend rates, conversion rights,
voting rights, terms of redemption (including sinking fund provisions),
redemption price or prices, liquidation preferences and the number of shares
constituting any series or designations of such series. The Company believes
that this power to issue preferred stock will provide flexibility in connection
with possible corporate transactions. The issuance of Preferred Stock, however,
could adversely affect the voting power of holders of Common Stock and restrict
their rights to receive payments upon liquidation, and could have the effect of
delaying, deferring or preventing a change of control of the Company. The
Company has no present plans to issue any shares of Preferred Stock.
STOCK PURCHASE WARRANTS
In connection with a June 1993 capital lease agreement, the Company granted
the leasing company warrants to purchase 177,083 shares of Series A Convertible
Preferred Stock, exercisable for 66,823 shares of Common Stock (on a post split
basis) at an exercise price of $3.18 per common share (the "Series A Warrants").
The Series A Warrants are fully exercisable and expire upon the earlier of 10
years from the date of issuance or five years from the effective date of the
Company's initial public offering.
55
<PAGE> 58
In connection with the Company's transaction with PerSeptive, the Company
issued to PerSeptive warrants to purchase 1,847,673 shares of Common Stock at an
exercise price of $13.25 per share. The warrants are fully exercisable with
respect to 727,656 shares, and the remaining 1,120,017 shares become exercisable
six months after the closing of this offering. The warrants expire 4 years from
the date of issuance.
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS
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. In general, Section 203 prohibits certain publicly-held Delaware
corporations from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person or entity became an interested stockholder, unless, among other
exceptions, (i) prior to the date the interested stockholder attained such
status the Board of Directors approved either the business combination or the
transaction which resulted in the stockholder becoming an interested
stockholder, (ii) the holders of two-thirds of the outstanding voting stock not
owned by the interested stockholder approved the business combination, or (iii)
the interested stockholder acquired 85% or more of the outstanding voting stock
of the corporation in the same transaction that makes it an interested
stockholder (excluding shares owned by persons who are both officers and
directors of the corporation, and shares held by certain employee stock
ownership plans). For purposes of Section 203, a "business combination" is
defined broadly to include mergers, asset sales and other transactions resulting
in a financial benefit to the interested stockholder. Subject to certain
exceptions, an "interested stockholder" is a person or entity who, together with
affiliates and associates, owns, or within the three immediately preceding years
of a business combination did own, 15% or more of the corporation's outstanding
voting stock.
The Company's Restated Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by the Delaware General Corporation
Law. The Company believes that these provisions will assist the Company in
attracting and retaining qualified individuals to serve as directors and
officers. See "-- Limitation of Liability and Indemnification Matters."
The Company's Restated Certificate of Organization and Restated By-Laws
will provide for a Board of Directors classified into three classes, with the
initial terms of each class expiring at the 1998, 1999 and 2000 annual
stockholders' meetings, respectively. After the expiration of each initial term,
the directors in each class will be elected for three year terms. The Board of
Directors has not determined which of the current directors will be nominated
for election to each particular class. See "Management." The Board of Directors
is authorized to create new directorships and to fill such positions so created.
After the classification of the Board of Directors, the Board of Directors will
be permitted to specify to which class such new position is assigned, provided
that the newly created directorship shall if reasonably possible be (a)
apportioned among the three classes of directors so that no one class has more
than one director more than any other class and (b) if consistent with (a),
added to those classes whose terms of office are to expire at the latest dates.
The person filling such position will serve for the term applicable to that
class. The Board of Directors (or its remaining members, even though less than a
quorum) is also empowered to fill vacancies on the Board of Directors occurring
for any reason for the remainder of the term of the class of directors in which
the vacancy occurred. The Company's Restated Certificate of Incorporation
provides that Directors may be removed with cause by the vote of the holders of
at least two-thirds (66.6%) of the voting power of the outstanding stock of the
Company. These provisions are likely to increase the time necessary for
stockholders to change the composition of the Board of Directors and could
therefore make it more difficult for a third party to acquire, or discourage a
third party from acquiring, control of the Company. In general, at least two
annual meetings of the stockholders will be necessary for stockholders to effect
a change in a majority of the members of the Board of Directors.
The Company's Restated By-Laws provide that for nominations for the Board
of Directors or for other business to be properly brought by a stockholder
before a meeting of stockholders, the stockholder must first have given timely
notice thereof in writing to the Secretary of the Company. To be timely, a
stockholder's notice generally must be delivered not less than sixty days nor
more than ninety days prior to the annual meeting. If the meeting is not an
annual meeting, the notice must generally be delivered not more than ninety days
prior to the special meeting and not later than the later of sixty days prior to
the special meeting or ten
56
<PAGE> 59
days following the day on which public announcement of the meeting is first made
by the Company. The notice must contain, among other things, certain information
about the stockholder delivering the notice and, as applicable, background about
the nominee or a description of the proposed business to be brought before the
meeting.
The Company's Restated Certificate of Incorporation and Restated By-Laws
provide that any action required or permitted to be taken by the stockholders of
the Company shall be taken only at a duly called annual or special meeting of
the stockholders, not by written consent. Special meetings may be called only by
the Board of Directors, the Chairman of the Board, the Chief Executive Officer
or the President of the Company. These provisions could have the effect of
delaying until the next annual stockholders' meeting stockholder actions which
are favored by the holders of a majority of the outstanding voting securities of
the Company. These provisions may also discourage another person or entity from
making a tender offer for the Company's Common Stock, because such person or
entity, even if it acquired a majority of the outstanding voting securities of
the Company, would be able to take action as a stockholder (such as electing new
directors or approving a merger) only at a duly called stockholders' meeting,
and not by written consent.
The Delaware General Corporation Law provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation's certificate of incorporation or by-laws,
unless the corporation's certificate of incorporation or by-laws, as the case
may be, requires a greater percentage. The Company's Restated Certificate of
Incorporation requires the affirmative vote of the holders of at least
two-thirds (66.6%) of the outstanding voting stock of the Company to amend or
repeal any of the foregoing provisions in the Company's Restated Certificate of
Incorporation, and to reduce the number of authorized shares of Common Stock and
Preferred Stock. Such two-thirds vote is also required to amend or repeal the
Company's Restated By-Laws. The Restated By-Laws may also be amended or repealed
by a majority vote of the Board of Directors. Such two-thirds stockholder vote
would be in addition to any separate class vote that might in the future be
required pursuant to the terms of any Preferred Stock that might be outstanding
at the time any such amendments are submitted to the stockholders.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Restated Certificate of Incorporation contains provisions
eliminating or limiting the personal financial liability of the Company's
directors to the fullest extent permitted by Delaware General Corporation Law.
Delaware law provides that directors will not be personally liable to a
corporation or its stockholders for monetary damages for breach of their
fiduciary duties as directors, except for liability where there has been a
breach of the duty of loyalty, a failure to act in good faith, an act of
intentional misconduct, a knowing violation of law, certain unlawful payments of
dividends, stock repurchases or redemptions, or any transaction from which the
director derives an improper personal benefit. In addition, the Company's
Restated Certificate of Incorporation and Restated By-Laws include provisions to
indemnify its officers, directors and Scientific Advisory Board and certain
persons serving at the request of the Company to the fullest extent permitted by
Delaware General Corporation Law against expenses, judgments, fines and amounts
paid in connection with threatened, pending or completed suits and proceedings
against such persons by reason of having served as officers, directors, members
of the Scientific Advisory Board or in other capacities. The Company's Restated
Bylaws also provide that the Company may grant such rights to indemnification
and to the advancement of expenses to any employee or agent of the Company.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company 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.
The Company intends to obtain director and officer liability insurance with
respect to liabilities arising out of certain matters, including matters arising
under the Securities Act.
57
<PAGE> 60
REGISTRATION RIGHTS
Dr. Berkowitz has certain registration rights with respect to 324,528
shares of Common Stock. Under the terms of a Stock Purchase and Repurchase
Agreement, if the Company proposes to register any of its Common Stock under the
Securities Act (other than pursuant to a Form S-8, Form S-4 or comparable
registration statement), Dr. Berkowitz is entitled to notice of such
registration and has "piggyback" rights to request that the Company include such
shares of Common Stock in the registration. The rights are subject to certain
conditions and limitations, such as the right of the underwriters of a
registered offering to limit for marketing reasons the number of shares included
in such registration.
The holders of the Convertible Preferred Stock and the Series A Warrants
each have certain registration rights with respect to the 4,458,528 shares of
Common Stock issuable upon conversion of the Convertible Preferred Stock and the
66,823 shares of Common Stock issuable upon exercise of the Series A Warrants,
respectively. If the Company proposes to register any of its equity securities
under the Securities Act (other than pursuant to a Form S-8, Form S-4 or
comparable registration statement), such holders are entitled to notice of such
registration and have "piggyback" rights to request that the Company include
such shares in the registration. Such rights are subject to certain conditions
and limitations, such as the right of the underwriters of a registered offering
to limit for marketing reasons the number of shares included in such
registration. Also, except during the 180-day period following the effective
date of a registration statement filed by the Company, such holders have certain
"demand" rights to request (so long as a certain percentage of such holders
request the registration of a certain percentage of such shares) that the
Company prepare and file, on three occasions (unless two offerings contemplated
thereby are consummated), a registration statement on Form S-1 so as to permit a
public offering and sale of their shares of Common Stock, provided that the
market value of the securities to be registered is estimated to be at least
$3,000,000 at the time of filing such registration statement. The "demand
rights" are subject to the right of the Company to delay any such registration
in view of the Company's current circumstances. In addition, such holders have
"S-3 demand rights," subject to certain conditions and limitations, to have the
Company register its shares for resale on Form S-3, except during the 180-day
period following the effective date of a registration statement filed by the
Company or while the Company is preparing a registration statement, provided
that the Company is eligible to use Form S-3 at such times and provided that the
market value of the securities to be registered is estimated to be at least
$1,000,000 at the time of filing such registration statement. The "piggyback
rights," "S-3 demand rights" and "demand rights" of any such stockholder are
suspended for any period of time during which such holder's shares represent
less than 2% of the outstanding Common Stock of the Company and are terminated
if and when such shares become eligible for resale pursuant to Rule 144(k) of
the Securities Act.
PerSeptive has certain registration rights with respect to (i) 2,563,275
shares of Common Stock, for which such rights will become available in June
1999, and (ii) 1,847,673 shares of Common Stock underlying a warrant, for which
such rights will generally become available for such shares which PerSeptive
agrees to acquire by exercise of the warrant, in each case in accordance with
the terms of a Standstill and Registration Rights Agreement. Pursuant to such
agreement, if the Company proposes to register any of its equity securities
under the Securities Act (other than pursuant to a Form S-8, Form S-4 or
comparable registration statement), PerSeptive is entitled to notice of such
registration and has "piggyback" rights to request that the Company include such
shares in the registration. Such rights are subject to certain conditions and
limitations, such as the right of the underwriters of a registered offering to
limit for marketing reasons the number of shares included in such registration.
In addition, PerSeptive has the right, subject to certain conditions and
limitations, to require the Company to register its shares and/or warrant shares
for resale on Form S-3, except during the 180-day period following the effective
date of a registration statement filed by the Company or while the Company is
preparing a registration statement, provided that the Company is eligible to use
Form S-3 at such times. In addition, these registration rights are subject to an
agreement between the Company and PerSeptive pursuant to which PerSeptive has
agreed not to sell or distribute its Company securities for specified periods of
time. See "Shares Eligible for Future Sale."
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Company's Common Stock is
ChaseMellon Shareholder Services, L.L.C. of East Hartford, Connecticut.
58
<PAGE> 61
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have 10,103,815 shares
of Common Stock outstanding, assuming no exercise of any outstanding warrants or
any options to purchase Common Stock after December 16, 1996. Of these shares,
the 2,500,000 shares of Common Stock sold in this offering will be freely
transferable without restriction under the Securities Act unless they are held
by the Company's affiliates as that term is used in Rule 144 under the
Securities Act.
The remaining 7,603,815 shares of Common Stock outstanding are "restricted
securities" as the term is defined by Rule 144 promulgated under the Securities
Act (the "Restricted Shares"). Of the 7,603,815 Restricted Shares, 159,556
shares may be sold immediately after this offering under Rule 144(k). An
additional 4,549,535 shares will become eligible for sale 90 days after
completion of the offering pursuant to Rule 144 and Rule 701 under the
Securities Act. The remaining 2,894,724 shares will be eligible for sale upon
the expiration of their respective holding periods as set forth in Rule 144. The
Securities and Exchange Commission has proposed certain amendments to Rule 144
that would reduce by one year the holding periods required for shares subject to
Rule 144 to become eligible for resale in the public market. This proposal, if
adopted, would permit earlier resale of shares of Common Stock currently subject
to holding periods under Rule 144. No assurance can be given concerning whether
or when the proposal will be adopted by the Securities and Exchange Commission.
Furthermore, 5,013,030 of the Restricted Shares are subject to lock-up
agreements expiring 180 days following the date of this Prospectus and 2,563,275
of the Restricted Shares, which are held by PerSeptive, are subject to a
separate, more extended lock-up agreement with the Company (the "PerSeptive
Lock-up"), the terms of which are described in greater detail below. The 180-day
lock-up agreements provide that Cowen & Company may, in its sole discretion and
at any time without notice, release all or a portion of the shares subject to
these lock-up agreements. Upon the expiration of these lock-up agreements,
4,549,535 of the 7,603,815 Restricted Shares may be sold pursuant to Rule 144 or
701, subject in some cases to certain volume restrictions imposed thereby.
Certain existing shareholders have rights to include shares of Common Stock
owned by them in future registrations by the Company for the sale of Common
Stock or to request that the Company register their shares under the Securities
Act. See "Description of Capital Stock -- Registration Rights." Following the
date of this Prospectus, the Company intends to register on one or more
registration statements on Form S-8 approximately 1,500,000 shares of Common
Stock issuable under its stock option plan. Additionally, 911,260 shares are
subject to outstanding options as of December 16, 1996, of which 686,418 shares
are subject to lock-up agreements. Shares covered by such registration
statements will immediately be eligible for sale in the public market upon the
filing of such registration statements.
In general, under Rule 144, a person (or persons whose shares are
aggregated), shareholders, including an affiliate, who has beneficially owned
shares for at least two years is entitled to sell in broker transactions, within
any three-month period, commencing 90 days after this offering, a number of
shares that does not exceed the greater of (i) 1% of the then outstanding Common
Stock (approximately 101,038 shares immediately after this offering assuming no
exercise of the Underwriters' over-allotment option) or (ii) the average weekly
trading volume in the Common Stock during the four calendar weeks preceding the
sale, subject to the filing of a Form 144 with respect to the sale and other
limitations. In general, shares issued in compliance with Rule 701 may be sold
by non-affiliates subject to the manner of sale requirements of Rule 144, but
without compliance with the other requirements of Rule 144. Affiliates may sell
shares they acquired under Rule 701 in compliance with the provisions of Rule
144, except that there is no required holding period. A person who is not an
affiliate, has not been an affiliate within three months prior to sale and has
beneficially owned the Restricted Shares for at least three years, is entitled
to sell such shares under Rule 144 without regard to any of the limitations
described above.
The Company has also agreed not to offer, sell, contract to sell or
otherwise dispose of any shares of Common Stock or any securities convertible
into or exercises or exchangeable for Common Stock or any rights to acquire
Common Stock for a period of 180 days after the date of this Prospectus, without
the prior written consent of the Underwriters, subject to certain limited
exceptions (including exercises of stock options and warrants). At the
completion of this offering, certain persons will be entitled to certain rights
with respect
59
<PAGE> 62
to registration under the Securities Act of approximately 7,346,331 shares. See
"Description of Capital Stock -- Registration Rights."
The PerSeptive Lock-up generally provides that PerSeptive will not
distribute any shares of Common Stock or warrants convertible into Common Stock
to its stockholders until the earlier of (i) twelve months following the closing
of the Company's initial public offering or (ii) December 30, 1998 (such earlier
date being the "Release Date"), and it will not sell any shares of Common Stock
or warrants convertible into Common Stock until the earlier of (i) eighteen
months after the closing of the Company's initial public offering or (ii)
December 30, 1998. In addition, during any six-month period commencing after the
Release Date PerSeptive may only sell or distribute to its stockholders an
amount of shares equal to one-third of the number of shares of Common Stock held
by it as of the date of the Company's initial public offering plus up to
one-third of the number of shares issued to PerSeptive upon exercise of its
warrant from the Company. The foregoing restrictions on transfer and
distribution terminate on the earlier of June 30, 1999 or 24 months after the
closing of the Company's initial public offering if such offering occurs prior
to June 30, 1997 and are subject to certain exceptions including that following
the closing of a public offering, PerSeptive is permitted to sell such number of
shares as would reduce its ownership to 19.99% or less, if necessary to avoid
including its proportionate share of the Company's losses on its income
statement, and that PerSeptive may sell its shares pursuant to a tender offer
for all of the common stock which is approved by the Company's Board of
Directors.
Prior to this offering, there has been no public market for the Common
Stock of the Company. No prediction can be made regarding the effect, if any,
that the sale or availability for sale of shares of additional Common Stock will
have on the market price of the Common Stock. Nevertheless, sales of substantial
numbers of shares by existing shareholders or by shareholders purchasing in
their offering could have a negative effect on the market price of the Common
Stock.
60
<PAGE> 63
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters"), through their Representatives,
Cowen & Company and Montgomery Securities, have severally agreed to purchase
from the Company the following respective numbers of shares of Common Stock at
the initial public offering price less the underwriting discounts and
commissions set forth on the cover page of this Prospectus.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
UNDERWRITER COMMON STOCK
------------
<S> <C>
Cowen & Company..............................................................
Montgomery Securities........................................................
---------
Total..................................................................... 2,500,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all shares of the Common Stock offered hereby if any
of such shares are purchased.
The Company has been advised by the Representatives of the Underwriters
that the Underwriters propose to offer the shares of Common Stock 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, the offering price and other selling terms may be
changed by the Representatives of the Underwriters.
The Company has granted to the Underwriters an option, exercisable not
later than 30 days after the date of this Prospectus, to purchase up to 375,000
additional shares of Common Stock at the initial public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will have a firm commitment to purchase approximately the same
percentage thereof that the number of shares of Common Stock to be purchased by
it shown in the above table bears to 2,500,000, and the Company will be
obligated, pursuant to the option, to sell such shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of the Common Stock offered hereby. If purchased, the
Underwriters will offer such additional shares on the same terms as those on
which the 2,500,000 shares are being offered.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act.
The Company, its directors, executive officers, stockholders and other
securityholders have entered into agreements providing that, for a period of 180
days after the date of this Prospectus, they will not, without the prior written
consent of Cowen & Company, offer, sell, contract to sell or otherwise dispose
of any shares of Common Stock or any securities convertible into, or
exchangeable for, or warrants to purchase, any shares of Common Stock, or grant
any option to purchase or right to acquire or any option to dispose of any
shares of Common Stock, except in certain limited circumstances. See "Shares
Eligible for Future Sale."
The Representatives of the Underwriters have advised the Company that the
Underwriters do not intend to confirm sales to any accounts over which they
exercise discretionary authority.
Prior to this offering, there has been no public market for the Common
Stock of the Company. Consequently, the initial public offering price for the
Common Stock will be determined by negotiations between the Company and the
Representatives of the Underwriters. Among the factors to be considered in such
negotiations are prevailing market conditions, the results of operations of the
Company in recent periods, the market capitalizations and stages of development
of other companies that the Company and the
61
<PAGE> 64
Representatives of the Underwriters believe to be comparable to the Company,
estimates of the business potential of the Company, the present state of the
Company's development and other factors deemed relevant.
LEGAL MATTERS
The validity of the shares of Common Stock offered by the Company hereby
will be passed upon for the Company by Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C., Boston, Massachusetts. Brown & Wood LLP, New York, New York, have
acted as counsel for the Underwriters in connection with this offering.
EXPERTS
The financial statements of the Company as of December 31, 1994 and 1995
and for each of the three years in the period ended December 31, 1995 included
in this Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
The statements in this Prospectus set forth under the caption "Risk Factors
- -- Patents and Proprietary Rights; Third Party Rights" and "Business -- Patents"
have been reviewed and approved by Carella, Byrne, Bain, Gilfallan, Cecchi,
Stewart & Olstein, Roseland, New Jersey, patent counsel to the Company, as
experts on such matters, and are included herein in reliance upon that review
and approval.
62
<PAGE> 65
CHEMGENICS PHARMACEUTICALS INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Report of Independent Public Accountants............................................... F-2
Balance Sheets as of December 31, 1994 and 1995, September 30, 1996 (Unaudited) and Pro
Forma September 30, 1996 (Unaudited)................................................. F-3
Statements of Operations for the Years Ended December 31, 1993, 1994 and 1995, for the
Nine Months Ended September 30, 1995 and 1996 (Unaudited) and for the Period from
Inception (January 13, 1992) to September 30, 1996 (Unaudited)....................... F-4
Statements of Stockholders' Equity (Deficit) for the Period from Inception (January 13,
1992) to December 31, 1995 and for the Nine Months Ended September 30, 1996
(Unaudited) and Pro Forma September 30, 1996 (Unaudited)............................. F-5
Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and 1995, for the
Nine Months Ended September 30, 1995 and 1996 (Unaudited) and for the Period from
Inception (January 13, 1992) to September 30, 1996 (Unaudited)....................... F-6
Notes to Financial Statements.......................................................... F-7
</TABLE>
F-1
<PAGE> 66
After the 1-for-2.65 reverse stock split discussed in Note 5(a) to the
Company's financial statements is effected, we expect to be in a position to
render the following audit report.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
December 18, 1996
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To ChemGenics Pharmaceuticals Inc.:
We have audited the accompanying balance sheets of ChemGenics
Pharmaceuticals Inc. (a Delaware corporation in the development stage) as of
December 31, 1994 and 1995, and the related statements of operations,
stockholders' equity (deficit) and cash flows for each of the three years in the
period ended December 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.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ChemGenics Pharmaceuticals
Inc. as of December 31, 1994 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
Boston, Massachusetts
February 12, 1996 (except with respect
to the matters discussed in Notes 5(a), as to
which the date is January , 1997)
F-2
<PAGE> 67
CHEMGENICS PHARMACEUTICALS INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31 SEPTEMBER 30,
----------------------- SEPTEMBER 30, 1996
1994 1995 1996 (NOTE 2(B))
--------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
(UNAUDITED)
------------------------------
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 653,781 $8,050,821 $ 4,260,961 $ 9,260,965
Marketable securities..................................... -- -- 5,091,590 5,091,590
Accounts receivable....................................... 73,573 154,090 77,991 77,991
Prepaid expenses and other current assets................. 111,322 323,144 234,714 234,714
---------- ----------- ----------- -----------
Total current assets.................................... 838,676 8,528,055 9,665,256 14,665,260
---------- ----------- ----------- -----------
Property and Equipment, at Cost:
Equipment under capital leases............................ 1,867,336 2,322,724 2,961,152 2,961,152
Laboratory equipment...................................... 273,072 303,690 1,056,611 1,056,611
Office furniture and equipment............................ 68,545 80,492 84,201 84,201
Leasehold improvements.................................... 51,024 66,351 66,351 66,351
---------- ----------- ----------- -----------
2,259,977 2,773,257 4,168,315 4,168,315
---------- ----------- ----------- -----------
Less -- Accumulated depreciation and amortization......... 579,463 1,183,716 1,768,929 1,768,929
---------- ----------- ----------- -----------
1,680,514 1,589,541 2,399,386 2,399,386
---------- ----------- ----------- -----------
Other Assets:
Marketable securities..................................... -- 5,029,842 -- --
Other assets, net......................................... 344,004 402,817 692,893 692,893
---------- ----------- ----------- -----------
344,004 5,432,659 692,893 692,893
---------- ----------- ----------- -----------
$2,863,194 $15,550,255 $12,757,535 $17,757,539
========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of capital lease obligations.............. $ 435,735 $ 599,464 $ 718,676 $ 718,676
Accounts payable.......................................... 65,258 22,258 110,616 110,616
Accrued expenses.......................................... 162,695 283,403 311,014 311,014
Deferred revenue.......................................... -- 26,199 36,022 36,022
---------- ----------- ----------- -----------
Total current liabilities............................... 663,688 931,324 1,176,328 1,176,328
---------- ----------- ----------- -----------
Capital Lease Obligations, net of current portion........... 1,074,358 897,215 992,461 992,461
---------- ----------- ----------- -----------
Promissory Note to PerSeptive Biosystems, Inc............... -- -- 3,000,000 3,000,000
---------- ----------- ----------- -----------
Commitments (Note 8)
Stockholders' Equity:
Convertible preferred stock, $.01 par value --
Authorized -- 11,275,000 shares and no shares pro forma
Issued and outstanding -- 7,981,837 shares in 1994,
10,981,837 shares in 1995 and 1996 and no shares pro
forma................................................. 79,818 109,818 109,818 --
Preferred stock, $.001 par value --
Authorized 5,000,000 shares pro forma
Issued and outstanding -- none.......................... -- -- -- --
Common stock, $.001 par value --
Authorized -- 33,866,667 shares and 25,000,000 shares
pro forma
Issued and outstanding -- 569,862 shares in 1994,
573,636 shares in 1995, 3,140,684 shares in 1996 and
7,599,212 shares pro forma............................ 570 574 3,141 7,599
Additional paid-in capital................................ 9,879,339 24,841,185 29,145,504 34,250,868
Deficit accumulated during the development stage.......... (8,834,579) (11,229,861) (21,669,717) (21,669,717)
---------- ----------- ----------- -----------
Total stockholders' equity.............................. 1,125,148 13,721,716 7,588,746 12,588,750
---------- ----------- ----------- -----------
$2,863,194 $15,550,255 $12,757,535 $17,757,539
========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 68
CHEMGENICS PHARMACEUTICALS INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
INCEPTION
NINE MONTHS ENDED (JANUARY 13,
YEARS ENDED DECEMBER 31, SEPTEMBER 30, 1992) TO
-------------------------------------- -------------------------- SEPTEMBER 30,
1993 1994 1995 1995 1996 1996
---------- ---------- ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
-------------------------------------------
Revenues......................... $ -- $ 218,095 $2,903,179 $ 2,090,535 $ 2,171,015 $ 5,292,289
----------- ----------- ----------- ----------- ----------- ------------
Operating Expenses:
Research and development....... 2,432,021 3,870,375 4,949,925 3,617,950 5,191,117 17,096,106
General and administrative..... 796,624 883,219 1,011,505 732,926 1,034,105 4,146,927
Acquired in-process research
and development.............. -- -- -- -- 6,783,900 6,783,900
----------- ----------- ----------- ----------- ----------- ------------
Total operating expenses..... 3,228,645 4,753,594 5,961,430 4,350,876 13,009,122 28,026,933
----------- ----------- ----------- ----------- ----------- ------------
Loss from Operations......... (3,228,645) (4,535,499) (3,058,251) (2,260,341) (10,838,107) (22,734,644)
----------- ----------- ----------- ----------- ----------- ------------
Interest Income.................. 41,597 49,315 837,750 624,012 545,695 1,521,078
Interest Expense................. (19,001) (133,924) (174,781) (152,900) (147,444) (456,151)
----------- ----------- ----------- ----------- ----------- ------------
Net loss..................... $(3,206,049) $(4,620,108) $(2,395,282) $(1,789,229) $(10,439,856) $(21,669,717)
=========== =========== =========== =========== =========== ============
Pro Forma Net Loss Per Common
Share.......................... $ (0.31) $ (1.35)
=========== ===========
Shares Used in Computing Pro
Forma Net Loss Per Common
Share.......................... 7,746,243 7,750,433
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 69
CHEMGENICS PHARMACEUTICALS INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
CONVERTIBLE
PREFERRED STOCK COMMON STOCK DEFICIT
---------------------- ----------------- ACCUMULATED TOTAL
NUMBER $.01 NUMBER $.001 ADDITIONAL DURING THE STOCKHOLDERS'
OF PAR OF PAR PAID-IN DEVELOPMENT EQUITY
SHARES VALUE SHARES VALUE CAPITAL STAGE (DEFICIT)
---------- --------- -------- ------ ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Initial Stock Issuance (January 13,
1992)............................. -- $ -- 568,301 $ 568 $ 938 $ -- $ 1,506
Sale of Series A convertible
preferred stock, net of issuance
costs of $48,272................ 2,000,000 20,000 -- -- 1,931,728 -- 1,951,728
Net loss.......................... -- -- -- -- -- (1,008,422) (1,008,422)
----------- --------- --------- ------ ----------- ------------ -----------
Balance, December 31, 1992.......... 2,000,000 20,000 568,301 568 1,932,666 (1,008,422) 944,812
Sale of Series A convertible
preferred stock................. 2,024,000 20,240 -- -- 2,003,760 -- 2,024,000
Net loss.......................... -- -- -- -- -- (3,206,049) (3,206,049)
----------- --------- --------- ------ ----------- ------------ -----------
Balance, December 31, 1993.......... 4,024,000 40,240 568,301 568 3,936,426 (4,214,471) (237,237)
Conversion of demand note payable
to Series A and B convertible
preferred stock................. 440,620 4,406 -- -- 436,214 -- 440,620
Sale of Series A and B convertible
preferred stock, net of issuance
costs of $26,895................ 2,749,478 27,495 -- -- 3,226,771 -- 3,254,266
Sale of Series C convertible
preferred stock, net of issuance
costs of $16,450................ 767,739 7,677 -- -- 2,279,090 -- 2,286,767
Exercise of common stock
options......................... -- -- 1,561 2 838 -- 840
Net loss.......................... -- -- -- -- -- (4,620,108) (4,620,108)
----------- --------- --------- ------ ----------- ------------ -----------
Balance, December 31, 1994.......... 7,981,837 79,818 569,862 570 9,879,339 (8,834,579) 1,125,148
Sale of Series D convertible
preferred stock, net of issuance
costs of $10,450................ 3,000,000 30,000 -- -- 14,959,550 -- 14,989,550
Exercise of common stock
options......................... -- -- 3,774 4 2,296 -- 2,300
Net loss.......................... -- -- -- -- -- (2,395,282) (2,395,282)
----------- --------- --------- ------ ----------- ------------ -----------
Balance, December 31, 1995.......... 10,981,837 109,818 573,636 574 24,841,185 (11,229,861) 13,721,716
Issuance of common stock and
common stock purchase warrants
to PerSeptive Biosystems, Inc.
in exchange for technology and
other assets (unaudited)........ -- -- 2,563,275 2,564 4,301,336 -- 4,303,900
Exercise of common stock options
(unaudited)..................... -- -- 3,773 3 2,983 -- 2,986
Net loss (unaudited).............. -- -- -- -- -- (10,439,856) (10,439,856)
----------- --------- --------- ------ ----------- ------------ -----------
Balance, September 30, 1996
(unaudited)....................... 10,981,837 109,818 3,140,684 3,141 29,145,504 (21,669,717) 7,588,746
Sale of Series E convertible
preferred stock on December 2,
1996 (unaudited)................ 833,334 8,333 -- -- 4,991,671 -- 5,000,004
Conversion of convertible
preferred stock into common
stock (unaudited)............... (11,815,171) (118,151) 4,458,528 4,458 113,693 -- --
----------- --------- --------- ------ ----------- ------------ -----------
Pro Forma Balance, September 30,
1996 (unaudited).................. -- $ -- 7,599,212 $7,599 $34,250,868 $(21,669,717) $12,588,750
=========== ========= ========= ====== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 70
CHEMGENICS PHARMACEUTICALS INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
INCEPTION
NINE MONTHS ENDED (JANUARY 13,
YEARS ENDED DECEMBER 31, SEPTEMBER 30, 1992) TO
------------------------------------ ------------------------ SEPTEMBER 30,
1993 1994 1995 1995 1996 1996
---------- ---------- ---------- ---------- ----------- -------------
(UNAUDITED)
----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss....................................... $(3,206,049) $(4,620,108) $(2,395,282) $(1,789,229) $(10,439,856) $(21,669,717)
Adjustments to reconcile net loss to net cash
used in operating activities --
Depreciation and amortization................ 131,001 482,668 634,765 508,306 645,953 1,897,513
Acquired in-process research development..... -- -- -- -- 6,783,900 6,783,900
Changes in current assets and liabilities --
Accounts receivable........................ -- (38,848) (80,517) 54,589 76,099 (77,991)
Prepaid expenses and other current
assets................................... (23,723) (82,655) (211,822) (71,977) 88,430 (234,714)
Accounts payable........................... 160,496 (101,333) (43,000) 133,248 88,358 110,616
Accrued expenses........................... (40,915) 78,039 120,707 171,748 27,611 311,014
Deferred revenue........................... -- -- 26,199 -- 9,823 36,022
---------- ---------- ---------- ---------- ---------- -----------
Net cash used in operating activities.... (2,979,190) (4,282,237) (1,948,950) (993,315) (2,719,682) (12,843,357)
---------- ---------- ---------- ---------- ---------- -----------
Cash Flows from Investing Activities:
Purchases of marketable securities, net........ -- -- (5,029,842) (12,541,318) (61,748) (5,091,590)
Purchases of property and equipment............ (269,757) (96,838) (57,892) (40,274) (56,449) (496,983)
Increase in other assets....................... (333,062) (83,000) (89,324) (82,280) (350,817) (821,478)
Cash paid in connection with the PerSeptive
transaction.................................. -- -- -- -- (180,000) (180,000)
---------- ---------- ---------- ---------- ---------- -----------
Net cash used in investing activities.... (602,819) (179,838) (5,177,058) (12,663,872) (649,014) (6,590,051)
---------- ---------- ---------- ---------- ---------- -----------
Cash Flows from Financing Activities:
Proceeds from sale of common stock............. -- -- -- -- -- 1,506
Proceeds from exercise of common stock
options...................................... -- 840 2,300 2,300 2,986 6,126
Net proceeds from sale of preferred stock...... 2,024,000 5,541,033 14,989,550 14,989,550 -- 24,506,311
Payments on capital lease obligations.......... (73,524) (283,719) (468,802) (330,009) (424,150) (1,260,194)
Payment of demand notes payable to
stockholders................................. -- (159,380) -- -- -- (159,380)
Proceeds from demand notes payable to
stockholders................................. 600,000 -- -- -- -- 600,000
---------- ---------- ---------- ---------- ---------- -----------
Net cash provided by (used in) financing
activities.............................. 2,550,476 5,098,774 14,523,048 14,661,841 (421,164) 23,694,369
---------- ---------- ---------- ---------- ---------- -----------
Net Increase (Decrease) in Cash and Cash
Equivalents.................................... (1,031,533) 636,699 7,397,040 1,004,654 (3,789,860) 4,260,961
Cash and Cash Equivalents, beginning of
period......................................... 1,048,615 17,082 653,781 653,781 8,050,821 --
---------- ---------- ---------- ---------- ---------- -----------
Cash and Cash Equivalents, end of period........ $ 17,082 $ 653,781 $8,050,821 $1,658,435 $ 4,260,961 $ 4,260,961
========== ========== ========== ========== ========== ===========
Supplemental Disclosure of Cash Flow
Information:
Cash paid for interest......................... $ 16,796 $ 127,482 $ 154,396 $ 136,604 $ 142,780 $ 442,687
========== ========== ========== ========== ========== ===========
Noncash Investing and Financing Activities:
In connection with the acquisition of certain
technology and other assets of PerSeptive
(see Note 3), the following noncash
transactions occurred --
Fair value of assets acquired................ $ -- $ -- $ -- $ -- $ 7,483,900 $ 7,483,900
Issuance of common stock and common stock
purchase warrants.......................... -- -- -- -- (4,303,900) (4,303,900)
Issuance of promissory note to PerSeptive
--......................................... -- -- -- -- (3,000,000) (3,000,000)
---------- ---------- ---------- ---------- ---------- -----------
Cash paid for acquisition costs............ $ -- $ -- $ -- $ -- $ 180,000 $ 180,000
========== ========== ========== ========== ========== ===========
Property and equipment acquired under capital
leases....................................... $1,341,153 $ 526,183 $ 455,388 $ 420,881 $ 638,608 $ 2,971,332
========== ========== ========== ========== ========== ===========
Conversion of demand notes payable to
stockholder to preferred stock............... $ -- $ (440,620) $ -- $ -- $ -- $ (440,620)
========== ========== ========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 71
CHEMGENICS PHARMACEUTICALS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
1. OPERATIONS
ChemGenics Pharmaceuticals Inc., formerly Myco Pharmaceuticals Inc., (the
Company or ChemGenics) was incorporated in Delaware on January 13, 1992.
ChemGenics is a drug discovery company which applies two complementary
technology platforms, Drug Discovery Genomics and Advanced Selection
Technologies, to key rate limiting steps in identifying new drugs. The Company
is in the development stage and is devoting substantially all of its efforts
toward product research and development and raising capital. Since inception the
Company has incurred significant operating losses and as of September 30, 1996
had an accumulated deficit of approximately $21,670,000 which includes a
one-time charge of $6,783,900 associated with the acquisition of in-process
research and development from PerSeptive Biosystems, Inc. (PerSeptive) (see Note
3).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements reflect the application of certain
accounting policies described below and elsewhere in the notes to financial
statements.
A. INTERIM FINANCIAL STATEMENTS
The financial statements as of September 30, 1996 and for the nine months
ended September 30, 1995 and 1996 and for the period from inception (January 13,
1992) through September 30, 1996 are unaudited. In the opinion of management,
these unaudited financial statements have been prepared on the same basis as the
audited financial statements and include all adjustments, consisting of only
normal recurring adjustments, necessary to present fairly the financial
condition and results of operations for the periods presented. The unaudited
results for the nine months ended September 30, 1996, are not necessarily
indicative of the results expected for the entire fiscal year.
B. PRO FORMA BALANCE SHEET INFORMATION
The unaudited pro forma balance sheet information as of September 30, 1996
reflects (i) the sale to Wyeth-Ayerst on December 2, 1996 of 833,334 shares of
Series E Convertible Preferred Stock (which shares will be converted into
314,465 shares of common stock upon the consummation of the Company's proposed
initial public offering) and the receipt of $5,000,004 of proceeds therefrom
(see Note 4(a)) and (ii) the automatic conversion of all outstanding shares of
Convertible Preferred Stock into an aggregate of 4,458,528 shares of common
stock, which will occur upon the closing of the Company's proposed initial
public offering.
C. REVENUE RECOGNITION
Revenues consist of research and contract revenues which are derived from
government grants as well as under collaborative agreements. Research revenues
under government grants and collaborative research and development arrangements
are recognized as earned. Milestone payments under collaborative research and
development arrangements are recognized when they are achieved. Deferred revenue
represents amounts received prior to revenue recognition.
D. CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES
The Company considers all highly liquid investments with original
maturities of six months or less to be cash equivalents. The Company applies
Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for
Certain Investments in Debt and Equity Securities. Under SFAS No. 115,
securities that the
F-7
<PAGE> 72
CHEMGENICS PHARMACEUTICALS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)
Company has the positive intent and ability to hold to maturity are reported at
amortized cost and are classified as held-to-maturity. At December 31, 1995 and
September 30, 1996, the Company's cash equivalents and marketable securities
consist of commercial paper and a U.S. Treasury Bill which are recorded at
amortized cost.
E. DEPRECIATION AND AMORTIZATION
The Company provides for depreciation and amortization by charges to
operations using the straight-line method over an estimated useful life of five
years. Equipment under capital leases is depreciated over four years. Leasehold
improvements are amortized over the life of the lease.
F. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
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.
G. PRO FORMA NET LOSS PER COMMON SHARE
For the year ended December 31, 1995 and the nine months ended September
30, 1996, pro forma net loss per common share is computed by dividing the net
loss by the pro forma weighted average number of common shares outstanding
during the period which consist of (i) the weighted average number of common
shares outstanding, (ii) the automatic conversion of all outstanding shares of
Series A, B, C, D, and E convertible preferred stock into an aggregate of
4,458,528 shares of common stock and (iii) issuances of common stock and stock
options granted after November 30, 1995, which have been reflected as
outstanding, as required by the Securities and Exchange Commission, using the
treasury stock method. Common stock equivalents issued in earlier periods have
not been included, as the effect would be antidilutive. Historical net loss per
share data has not been presented, as such information is not considered to be
relevant or meaningful.
H. RESEARCH AND DEVELOPMENT
The Company expenses all research and development expenses as incurred.
I. CONCENTRATION OF CREDIT RISK
SFAS No. 105, Disclosure of Information about Financial Instruments with
Off-Balance-Sheet Risk and Financial Instruments with Concentration of Credit
Risk, requires disclosure of any significant off-balance-sheet and credit risk
concentrations. The Company has no significant off-balance-sheet risks or
financial instruments with concentration of credit risk. The Company maintains
its cash and cash equivalent balances with several financial institutions, and
its accounts receivable balances are all domestic. The Company has not written
off any of its accounts receivable to date. The Company recorded revenues of
greater than 10% of total revenues under its corporate collaborative research
and licensing agreement with Pfizer (see Note 4(b)).
J. FINANCIAL INSTRUMENTS
The estimated fair value of the Company's financial instruments, which
include cash equivalents, marketable securities, accounts receivable, capital
lease obligations, and the promissory note to PerSeptive approximates their
carrying value.
F-8
<PAGE> 73
CHEMGENICS PHARMACEUTICALS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)
3. ACQUISITION OF TECHNOLOGY AND OTHER ASSETS FROM PERSEPTIVE BIOSYSTEMS, INC.
The Company received a worldwide, royalty-free license to certain present
and future patented and unpatented technology of PerSeptive, including early and
preferred access to all technology and five years' access to all prototype
equipment, for use in the field of drug discovery under agreements dated May,
November and December 1996. Under the terms of the agreements, the Company also
acquired certain equipment, supplies and other assets related to drug discovery
programs at PerSeptive. In the event that PerSeptive fails to provide certain
services, access to equipment or supplies within three years, it would forfeit
up to 250,000 of the shares issued to it. In exchange for the license and other
assets, the Company issued PerSeptive 2,563,275 shares of its common stock, a
$3,000,000 promissory note and a warrant to purchase 1,847,673 shares of its
common stock at a purchase price of $13.25 per share exercisable through June
2000 of which warrants to purchase 750,000 shares are exercisable immediately
and warrants to purchase 1,097,673 shares, become exercisable six months after
the closing of the Company's initial public offering of Common Stock
contemplated herein. The promissory note bears interest at the Applicable
Federal Rate of Interest and becomes payable in full if the Company successfully
consummates an initial public offering yielding gross proceeds in excess of
$15.0 million or if the Company is acquired. In the event an initial public
offering yields gross proceeds of less than $15.0 million, the Company is
required to utilize 10% of the gross proceeds of such offering to pay down the
promissory note and is required to pay down the remaining balance of the
promissory note in two equal installments in either cash or shares of common
stock on the six and twelve month anniversaries of the initial public offering.
In the event the Company does not complete an initial public offering by
December 31, 1998, the promissory note plus accrued interest would be payable,
in either cash or shares of Common Stock, on December 31, 2002, with earlier
payment at the Company's option. Upon execution of the agreement, the Company
hired 10 employees of PerSeptive and entered into a temporary sublease agreement
for approximately 5,000 square feet of laboratory and office space in
Framingham, Massachusetts.
In connection with the issuance of the shares and the warrants, the Company
and PerSeptive have entered into a Standstill and Registration Rights Agreement,
as amended, pursuant to which PerSeptive has agreed that it will not distribute
any shares of Common Stock or warrants convertible into Common Stock to its
stockholders until the earlier of (i) twelve months following the closing of the
Company's initial public offering or (ii) December 30, 1998 (such earlier date
being the "Release Date"), and it will not sell any shares of Common Stock until
the earlier of (i) eighteen months after the closing of the Company's initial
public offering or (ii) December 30, 1998. In addition, during any six-month
period commencing after the Release Date PerSeptive may only sell or distribute
to its stockholders an amount of shares equal to one-third of the number of
shares of Common Stock held by it as of the date of the Company's initial public
offering plus up to one-third of the number of shares issued to PerSeptive upon
exercise of its warrant from the Company. The foregoing restrictions on transfer
and distribution terminate on the earlier of June 30, 1999 or 24 months after
the closing of the Company's initial public offering if such offering occurs
prior to June 30, 1997 and are subject to certain exceptions including that
following the closing of a public offering, PerSeptive is permitted to sell such
number of shares as would reduce its ownership to 19.99% or less, if necessary
to avoid including its proportionate share of the Company's losses on its income
statement, and that PerSeptive may sell its shares pursuant to a tender offer
for all of the common stock which is approved by the Company's Board of
Directors. The Company has agreed to provide certain piggyback registration
rights to PerSeptive, subordinate to those of existing investors, and certain
registration rights pursuant to a registration statement on Form S-3, which
would not be available until at least one year after the registration of the
Company's securities under the Securities Exchange Act of 1934.
F-9
<PAGE> 74
CHEMGENICS PHARMACEUTICALS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)
The agreement with PerSeptive also stipulates that in the event the Company
does not complete an initial public offering by June 30, 1997, the Company will
repurchase 754,716 shares of its common stock for a promissory note of
$2,000,000 with terms similar to those of the $3,000,000 promissory note
including repayment no later than December 31, 2002.
The PerSeptive transaction was accounted for as a purchase. Accordingly,
the initial purchase price, which consisted of the value of the common stock and
warrants issued to PerSeptive, as determined by an independent appraiser, the
$3,000,000 promissory note, and the estimated acquisition costs were allocated
to the acquired assets as follows:
<TABLE>
<S> <C>
In-process research and development.......................... $6,783,900
Equipment.................................................... 700,000
----------
$7,483,900
=========
</TABLE>
In order for the technology acquired from PerSeptive to be commercialized,
the Company will need to expend a substantial amount on additional research and
development, preclinical test and clinical trials, regulatory clearances, and
manufacturing, distribution and marketing arrangements. Accordingly, the net
realizable value of the acquired research and development is uncertain.
PerSeptive incurred approximately $20 to $25 million in research and development
costs related to the purchased technology.
4. CORPORATE ALLIANCES
A. WYETH-AYERST LABORATORIES
In December 1996, the Company entered into a collaboration with
Wyeth-Ayerst Laboratories, the pharmaceutical division of American Home Products
Corporation (Wyeth-Ayerst) to discover and develop antibacterial drugs for human
use. Pursuant to the agreements, Wyeth-Ayerst is funding and collaborating with
the Company over a five-year period in a program aimed at the comprehensive
identification and prioritization of the genes that encode potential new
molecular drug targets in important bacterial pathogens. Wyeth-Ayerst also has a
right of first refusal for products for the prevention and treatment of
bacterial diseases in animals and a right of first negotiation for drugs to
treat H. pylori infection of humans. If the alliance successfully concludes its
five-year term, the Company could receive up to $70 million. Pursuant to the
agreements, on December 2, 1996 Wyeth-Ayerst purchased 833,334 shares of Series
E Convertible Preferred Stock for $5,000,004, or $15.90 per common share, (which
shares will be converted into 314,465 shares of common stock upon the
consummation of the Company's proposed initial public offering) and is
committed, subject to ChemGenics' meeting certain research performance
objectives, to a second purchase of $5 million of common stock to occur no
sooner than June 2, 1997 and a third purchase of $3 million of common stock to
occur no sooner than December 2, 1998. The second and third purchases will be
priced at 115% of the then current market price of the Common Stock following
the Company's initial public offering, or at $15.90 per common share if no such
offering has been completed. Assuming the agreements conclude their five-year
term, Wyeth-Ayerst will become obligated to pay ChemGenics $15 million in
research funding (adjusted for inflation under certain circumstances) and may be
obligated to pay up to an additional $9 million in research performance
payments. ChemGenics may also receive up to an additional $33 million in
development milestone payments. In the event the collaboration is successful in
identifying targets and leads for products to treat bacterial infection,
Wyeth-Ayerst will pay all costs related to its product development and
commercialization, including, without limitation, clinical trials, regulatory
filings and marketing, and will also pay ChemGenics royalties on product sales,
if any, which result from the collaboration. Pursuant to the agreements,
ChemGenics has received $750,000 in research funding.
F-10
<PAGE> 75
CHEMGENICS PHARMACEUTICALS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)
If certain research performance checkpoints are not achieved by ChemGenics
by the end of the third year, Wyeth-Ayerst has an option to terminate the
agreements. The agreements provide Wyeth-Ayerst the ability to acquire exclusive
worldwide rights to develop and commercialize products discovered as part of the
collaboration to treat human bacterial infections. Commencing one year after the
end of the research term, ChemGenics will have the exclusive right, by itself,
or with a third party in the field, to develop and commercialize any ChemGenics
product and a first refusal right to any Wyeth-Ayerst product arising from the
collaboration, provided Wyeth-Ayerst is not developing a product from the
collaboration with the same activity profile. In the event the collaboration is
successful in identifying targets and leads for products to treat human
bacterial infections, Wyeth-Ayerst will pay all costs related to its development
and commercialization, including without limitation, clinical trials, regulatory
filings, manufacture and marketing. Wyeth-Ayerst will also pay ChemGenics
royalties on product sales. ChemGenics receives the same milestone and royalty
payments on any product that advances from the collaboration whether it
originates from ChemGenics or Wyeth-Ayerst.
B. PFIZER, INC.
In January 1995, the Company entered into a research and development
collaboration and licensing agreement with Pfizer, Inc. (Pfizer) to discover and
develop antifungal treatments for human use. Pfizer has the exclusive option to
acquire royalty-bearing licenses to develop and commercialize lead compounds
identified by the research program. Under the terms of the agreement, Pfizer is
funding a discovery program at the Company over a four-year term, which began in
January 1995. In connection with the agreement, Pfizer purchased 2,700,000
shares of the Company's Series D preferred stock (which shares will be converted
into 1,018,867 shares of the Company's common stock upon the consummation of the
Company's proposed initial public offering) (see Note 5(c)). In addition, Pfizer
has agreed to provide the Company with up to $11.7 million in research funding
over a four-year term of the agreement, as well as milestone and equity payments
based on the achievement of certain program accomplishments, which could total
up to an additional $32.5 million. In the year ended December 31, 1995, and in
the nine months ended September 30, 1995 and 1996, the Company recognized
approximately $2,462,000, $1,827,000 and $1,946,000, respectively, under these
agreements, which represents 85%, 87% and 90%, respectively, of revenues for the
respective periods.
5. STOCKHOLDERS' EQUITY (DEFICIT)
A. STOCK SPLIT AND AMENDMENT TO CHARTER
On December 16, 1996, the Company's Board of Directors approved, subject to
stockholder approval, a 1-for-2.65 reverse stock split of the Company's common
stock prior to the closing of the Company's initial public offering of common
stock contemplated herein and amended the conversion terms of the Company's
convertible Preferred Stock, effective upon the closing of the Company's
proposed initial public offering of common stock contemplated herein.
Accordingly, all share and per share amounts of common stock for all periods
presented have been retroactively adjusted to reflect the reverse stock split.
Upon completion of the Company's initial public offering, the Company will be
authorized to issue 25,000,000 shares of common stock, $.001 par value, and
5,000,000 shares of undesignated preferred stock, $.001 par value.
B. COMMON STOCK
In 1992, the Company sold 568,301 shares of common stock to an officer and
to consultants of the Company for $.001 per share, subject to vesting. The
Company has the right of first refusal on shares offered for sale by the officer
or the consultants. In the event that the officer ceases to be employed by the
Company,
F-11
<PAGE> 76
CHEMGENICS PHARMACEUTICALS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)
the Company may repurchase any unvested shares at $.001 per share. As of
September 30, 1996, 81,131 shares of common stock are subject to the Company's
right of repurchase.
In connection with the acquisition of technology and other assets from
PerSeptive (see Note 3), the Company issued 2,563,275 shares of common stock to
PerSeptive.
C. CONVERTIBLE PREFERRED STOCK
On December 16, 1996, the Company's preferred shareholders approved the
conversion of the Company's Convertible Preferred Stock into common stock
effective upon the closing of the Company's proposed initial public offering of
common stock as contemplated herein. As of December 16, 1996, the Company has
authorized 13,441,667 shares of Convertible Preferred Stock and designated
6,400,000, 1,100,000, 775,000, 3,000,000 and 833,334 of such shares as Series A,
B, C, D and E convertible preferred stock (Series A, B, C, D and E convertible
Preferred Stock), respectively.
The Company issued Series A, B, C, D, and E Convertible Preferred Stock as
follows:
<TABLE>
<CAPTION>
NUMBER
OF PRICE PER
DATE OF ISSUANCE DESCRIPTION SHARES SHARE
- ------------------------------------- ------------------------------------ -------- ---------
<S> <C> <C> <C>
February 1992, January 1993, January
and July 1994...................... Series A Convertible Preferred Stock 6,150,732 $1.00
January and July 1994................ Series B Convertible Preferred Stock 1,063,366 $1.50
July 1994............................ Series C Convertible Preferred Stock 767,739 $3.00
February 1995........................ Series D Convertible Preferred Stock 3,000,000 $5.00
December 1996........................ Series E Convertible Preferred Stock 833,334 $6.00
</TABLE>
The rights, preferences and privileges of Series A, B, C, D, and E
Convertible Preferred Stock are as follows:
CONVERSION
The Convertible Preferred Stock is convertible, as amended, into common
stock at the rate of one share of common stock for every 2.65 shares of
Convertible Preferred Stock, adjustable for certain dilutive events. The
conversion is at the option of the preferred stockholder, but becomes automatic
upon the closing of a public offering of common stock with gross proceeds to the
Company of at least $9,000,000. In addition, the Convertible Preferred Stock
automatically converts into common stock with the consent of at least 60% of the
outstanding holders of Convertible Preferred Stock or, with respect to each
series of Convertible Preferred Stock, at such time as less than 250,000 shares
of each series of Convertible Preferred Stock are outstanding. The Company has
reserved sufficient shares of common stock for issuance upon the conversion of
the outstanding shares of Convertible Preferred Stock.
LIQUIDATION PREFERENCE
The holders of the Convertible Preferred Stock have preference in the event
of liquidation or dissolution of the Company in an amount equal to the greater
of $1.00, $1.50, $3.00, $5.00 and $6.00 per share for Series A, B, C, D and E
Convertible Preferred Stock, respectively, or an amount that would have been
payable had each share of Convertible Preferred Stock been converted into common
stock immediately preceding the liquidation or dissolution. The pro forma
aggregate liquidation value at September 30, 1996 is $30,049,002.
F-12
<PAGE> 77
CHEMGENICS PHARMACEUTICALS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)
VOTING RIGHTS
The holders of the Convertible Preferred Stock shall be entitled to the
number of votes equal to the number of shares of common stock into which each
share of Convertible Preferred Stock may be converted. Additionally, the holders
of 60% of the Convertible Preferred Stock shall be entitled to elect four
directors of the Company.
DIVIDENDS
Dividends may be declared and paid upon the consent of the holders of at
least 60% of the outstanding shares of the Convertible Preferred Stock. Upon the
declaration by the Board of Directors of a dividend payable on the then
outstanding shares of common stock, the holders of the Convertible Preferred
Stock shall be entitled to the amount of dividends per share as would be payable
on the number of shares of common stock into which each share of the Convertible
Preferred Stock could be converted.
REORGANIZATIONS, CONSOLIDATIONS OF CONVERTIBLE PREFERRED STOCK, MERGERS AND
SALE OF ASSETS
The holders of at least 60% of the outstanding shares of Convertible
Preferred Stock, voting together as a single class, have to approve such
transactions, as defined.
REGISTRATION RIGHTS
If at any time the Company registers any of its securities, for certain
events as defined, each shareholder of Convertible Preferred Stock has the right
to register their shares, with certain limitations as defined, upon written
notification to the Company.
RIGHT OF FIRST REFUSAL
Before the Company agrees to, or issues, sells or exchanges any shares of
equity or convertible debt securities, as defined, it shall first offer to sell
such securities to those individuals then holding Convertible Preferred Stock of
the Company in proportion to the number of shares of Convertible Preferred Stock
held on an as-converted basis to the total number of outstanding shares of
capital stock of the Company, including shares issuable upon the conversion of
the Company's Convertible Preferred Stock outstanding.
D. STOCK OPTION PLAN
The Company established the 1992 Stock Option Plan (the Plan) which
provides for the grant of incentive and nonqualified stock options for the
purchase of up to 1,500,000 shares of common stock, as amended. Incentive stock
options are granted at a price not less than fair value at the date of grant, as
determined by the Board of Directors. Options granted under the Plan generally
vest over four to five years; however, options to purchase up to 182,405 shares
of common stock become vested at the end of five years or earlier, upon the
achievement of certain milestones. There are 574,508 shares available under the
Plan.
F-13
<PAGE> 78
CHEMGENICS PHARMACEUTICALS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)
The following table summarizes option activity under the Plan.
<TABLE>
<CAPTION>
NUMBER EXERCISE PRICE
OF OPTIONS PER SHARE
---------- ----------------
<S> <C> <C>
Outstanding, December 31, 1993............... 467,643 $.53
Granted.................................... 69,868 .61- .80
Exercised.................................. (1,561) .53
Terminated................................. (893) .53
-----------
-------
Outstanding, December 31, 1994............... 535,057 .53- .80
Granted.................................... 223,245 .80- 1.33
Exercised.................................. (3,774) .61
Terminated................................. (33,943) .53- 1.33
-----------
-------
Outstanding, December 31, 1995............... 720,585 .53- 1.33
Granted.................................... 162,641 1.33- 7.95
Exercised.................................. (3,773) .53- 1.33
Terminated................................. (17,717) .61- 7.95
-----------
-------
Outstanding, September 30, 1996.............. 861,736 $ .53-$7.95
======= ===========
Exercisable, September 30, 1996.............. 461,033 $ .53-$1.33
======= ===========
</TABLE>
Subsequent to September 30, 1996, the Company granted options for the
purchase of 54,623 shares of common stock at $7.95 per share.
E. WARRANTS
As of September 30, 1996, the Company has the following outstanding
warrants:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON EXERCISE
STOCK PRICE EXPIRATION DATE
--------- -------- -----------------------------
<S> <C> <C> <C>
Warrants issued in connection with the
acquisition of technology and other
assets (see Note 3).................... 1,847,673 $13.25 June 2000
Warrants issued in connection with
capital lease obligations (see Note
7)..................................... 66,823 $ 3.18 June 2003, or five years from
the effective date of an
initial public offering
</TABLE>
6. INCOME TAXES
The Company applies the provisions of SFAS No. 109, Accounting for Income
Taxes. Under the provisions of SFAS No. 109, the Company recognizes a current
tax liability or asset for current taxes payable or refundable and a deferred
tax liability or asset for the estimated future tax effects of temporary
differences between the carrying value of assets and liabilities for financial
reporting and their tax bases and carryforwards to the extent they are
realizable.
At December 31, 1995, the Company had available net operating loss
carryforwards for financial reporting and income tax purposes of approximately
$11,230,000 and $1,451,000, respectively. The difference relates primarily to
expenses reflected in the financial statements not yet deductible for tax
purposes. These net operating loss carryforwards may be used to reduce future
taxable income, if any, and expire through 2011.
F-14
<PAGE> 79
CHEMGENICS PHARMACEUTICALS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)
The Company also has approximately $171,000 and $222,000 of research and
development credits and investment tax credits available to offset future
federal and state income taxes, respectively, if any. Net operating loss
carryforwards and credits are subject to review and possible adjustments by the
Internal Revenue Service and may be limited in the event of certain cumulative
changes in the ownership interest of significant shareholders over a three-year
period in excess of 50%. The Company believes it has experienced a change in
ownership in excess of 50% and that it may experience an additional change in
ownership in excess of 50% upon completion of the proposed initial public
offering. The Company does not believe that these changes in ownership will
significantly impact the Company's ability to utilize its net operating loss
carryforwards.
The components of the Company's deferred tax asset are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1994 1995
--------- ---------
<S> <C> <C>
Operating loss carryforwards.................... $ 308,000 $ 580,000
Capitalized research and development............ 2,355,000 3,071,000
Tax credit carryforwards........................ 171,000 222,000
Temporary differences........................... 846,000 868,000
--------- ---------
3,680,000 4,741,000
Less -- Valuation allowance..................... 3,680,000 4,741,000
--------- ---------
$ -- $ --
========= =========
</TABLE>
Due to the uncertainty of the realization of these potential tax benefits,
the Company has recorded a valuation allowance against its deferred tax assets.
The increase in the valuation allowance during these periods primarily relates
to the Company's operating results.
7. CAPITAL LEASES
During 1993, the Company entered into a capital lease agreement for the
acquisition of laboratory equipment. The agreement allows the Company to finance
purchases of up to $3,500,000 of equipment. Under the agreement, the Company
leased equipment valued at approximately $2,961,000 as of September 30, 1996.
The Company may purchase up to an additional $308,000 of equipment under this
agreement, which expires in June 1997. In connection with the capital lease
agreement, the Company granted the leasing company warrants to purchase 177,083
shares of Series A Convertible Preferred Stock which will be converted into
66,823 shares of the Company's common stock at $3.18 per share. The warrants are
fully exercisable and expire upon the earlier of 10 years or five years from the
effective date of the Company's initial public offering.
F-15
<PAGE> 80
CHEMGENICS PHARMACEUTICALS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)
Future minimum payments under the capital lease agreement are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
------------------------------------------------------------- ---------
<S> <C>
1996....................................................... $ 696,868
1997....................................................... 646,812
1998....................................................... 249,502
1999....................................................... 100,703
----------
Total lease payments.................................... 1,693,885
Less -- Amounts representing interest........................ 197,206
----------
Present value of minimum lease payments................. 1,496,679
Less -- Current portion...................................... 599,464
----------
$ 897,215
==========
</TABLE>
8. COMMITMENTS
A. OPERATING LEASES
The Company leases office and laboratory facilities under an operating
lease which expires on June 30, 2003. Minimum future lease payments pursuant to
the agreement, exclusive of operating costs and real estate taxes, are as
follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------------------------------------------
<S> <C>
1996...................................................... $ 323,000
1997...................................................... 332,000
1998...................................................... 256,000
1999...................................................... 175,000
2000...................................................... 175,000
Thereafter................................................ 436,000
----------
$1,697,000
==========
</TABLE>
Rent expense was approximately $121,000, $317,000, $306,000, $ 252,000 and
$258,000 for the years ended December 31, 1993, 1994 and 1995 and for the nine
months ended September 30, 1995 and 1996, respectively. The Company has entered
into a short-term facilities lease in connection with the PerSeptive transaction
(see Note 3).
The Company's facilities lease has declining lease payments. Accordingly,
the Company has levelized its lease expense over the life of the lease. The
cumulative difference between the cash paid and rent expense was $65,405,
$119,615 and $180,628 at December 31, 1994 and 1995 and September 30, 1996,
respectively, and is included in other assets on the accompanying balance
sheets.
B. LICENSE AGREEMENTS
Certain technologies utilized by the Company have been obtained under
license agreements whereby the Company has been granted exclusive and
nonexclusive licenses for certain patent rights. Pursuant to the agreements, the
Company is required to pay royalties on net sales of products covered by the
patent rights. As of September 30, 1996, the Company has not had any product
sales related to these patent rights.
F-16
<PAGE> 81
CHEMGENICS PHARMACEUTICALS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)
9. NOTE RECEIVABLE FROM EMPLOYEE
In October 1993, the Company loaned $100,000 to an officer/stockholder of
the Company. The principal and accrued interest is repaid through annual
bonuses. The loan bears interest at the prime rate as published from time to
time in the Wall Street Journal (8.5% at December 31, 1995) and is secured by a
second mortgage on the officer/stockholders' residence. In March 1996, the
Company loaned $10,000 to an officer of the Company. The principal and accrued
interest is payable in three equal payments plus accrued interest, annually on
the anniversary date. The loan bears interest at the prime rate. As of December
31, 1994 and 1995 and September 30, 1996, the aggregate outstanding balance of
these loans was $84,725, $57,225 and $27,584, respectively. The current and
long-term portion of these note receivables are included as a component of
account receivables and other assets on the accompanying balance sheets.
10. OTHER ASSETS
Other assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- SEPTEMBER 30,
1994 1995 1996
-------- -------- -------------
<S> <C> <C> <C>
Deferred offering costs............................ -- -- 223,817
Deferred rent...................................... 65,405 119,615 180,628
Deposits........................................... 154,994 152,900 160,652
Patents and licenses............................... 73,605 107,802 121,129
Note receivable from employee, net of current
portion.......................................... 50,000 22,500 6,667
-------- -------- ----------
$344,004 $402,817 $ 692,893
======== ======== ==========
</TABLE>
11. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- SEPTEMBER 30,
1994 1995 1996
-------- -------- -------------
<S> <C> <C> <C>
Payroll and related expenses....................... $ 36,156 $117,377 $ 99,865
Professional and consulting fees................... 34,800 37,174 49,371
All other.......................................... 91,739 128,852 161,778
-------- -------- ----------
$162,695 $283,403 $ 311,014
======== ======== ==========
</TABLE>
F-17
<PAGE> 82
[art work]
Inside back cover
The figure is a pictorial representation of the Company's drug source, listing
and graphically displaying the Company's biorational collection of fungi,
genetic manipulation of fungi, and information-based QuickScan index. In
addition, a picture of the earth from outerspace is depicted in the background
to indicate that the collection is from around the world.
<PAGE> 83
- ------------------------------------------------------------
- ------------------------------------------------------------
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 ANY OF THE UNDERWRITERS OR ANY OTHER PERSON. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED HEREBY, NOR DOES
IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................... 3
Risk Factors............................. 6
The Company.............................. 15
Use of Proceeds.......................... 15
Dividend Policy.......................... 15
Capitalization........................... 16
Dilution................................. 17
Selected Financial Data.................. 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................. 20
Business................................. 24
Management............................... 41
Certain Transactions..................... 50
Principal Stockholders................... 53
Description of Capital Stock............. 55
Shares Eligible for Future Sale.......... 59
Underwriting............................. 61
Legal Matters............................ 62
Experts.................................. 62
Index to Financial Statements............ F-1
</TABLE>
------------------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
2,500,000 SHARES
CHEMGENICS
PHARMACEUTICALS INC.
COMMON STOCK
------------------------------
PROSPECTUS
------------------------------
COWEN & COMPANY
MONTGOMERY SECURITIES
[ ], 1997
- ------------------------------------------------------------
- ------------------------------------------------------------
<PAGE> 84
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the Registrant's costs and expenses, other
than underwriting discounts and commissions, expected to be incurred in
connection with the issuance and distribution of the securities being
registered. Except for the SEC Registration Fee, the NASD Filing Fee and the
Nasdaq National Market Fees, the amounts listed below are estimates:
<TABLE>
<S> <C>
SEC Registration Fee..................................................... $ 14,375
NASD Filing Fee.......................................................... 4,669
Nasdaq National Market Fees.............................................. 47,498
Legal Fees and Expenses.................................................. 400,000
Accounting Fees and Expenses............................................. 135,000
Blue Sky Fees and Expenses (including legal fees)........................ 25,000
Printing and Engraving Fees.............................................. 75,000
Transfer Agent and Registrar Fees........................................ 3,000
Miscellaneous............................................................ 45,458
--------
Total............................................................... $750,000
========
</TABLE>
The Registrant shall bear all expenses shown above.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware General Corporation Law and the Registrant's Certificate of
Incorporation and By-Laws provide for indemnification of the Registrant's
directors and officers for liabilities and expenses that they may incur in such
capacities. Reference is made to the Registrant's Restated Certificate of
Incorporation and Restated By-Laws filed as Exhibits 3.1 and 3.2 hereto,
respectively.
Section 145(a) of the General Corporation Law of the State of Delaware
("Delaware Corporation Law") provides, in general, that a corporation shall have
the power to indemnify any 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 (other than an action
by or in the right of the corporation), by reason of the fact that he is or was
a director of officer of the corporation. Such indemnity may be against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding, if the indemnified party acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and if, with respect to any criminal action or proceeding, the
indemnified party did not have reasonable cause to believe his conduct was
unlawful.
Section 145(b) of the Delaware Corporation Law provides, in general, that a
corporation shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director or officer of the
corporation, against any expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation.
Section 145(g) of the Delaware Corporation law provides, in general, that a
corporation shall have the power to purchase and maintain insurance on behalf of
any person who is or was a director or officer of the corporation against any
liability asserted against him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to indemnify
him against such liability under the provisions of the law.
II-1
<PAGE> 85
Article EIGHTH of the Registrant's Restated Certificate of Incorporation
provides that, to the fullest extent permitted by the Delaware General
Corporation Law as the same now exists or may hereafter be amended, the
Corporation shall indemnify, and advance expenses to, its directors, officers
and members of its Scientific Advisory Board and any person who is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, or of a partnership, joint venture, trust or other
enterprise, if such person was or is made a party to or is threatened to be made
a party to or is otherwise involved (including, without limitation, as a
witness) in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director or officer of the Corporation or a member of the Corporation's
Scientific Advisory Board or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, or of a
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan. However, Article V of the Registrant's
Restated By-laws provides that, except as provided in Section 3 of such Article
with respect to proceedings to enforce rights to indemnification or as otherwise
required by law, the Corporation shall not be required to indemnify or advance
expenses to any such Indemnitee in connection with a proceeding (or part
thereof) initiated by such Indemnitee unless such proceeding (or part thereof)
was authorized by the board of directors of the Corporation.
Article EIGHTH further provides that the indemnification and advancement of
expenses provided by, or granted pursuant to, such Article shall not be deemed
exclusive of any other rights to which a person seeking indemnification or
advancement of expenses may be entitled under any By-Law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
Article NINTH of the Registrant's Restated Certificate of Incorporation
provides that no director shall be personally liable to the Corporation or its
stockholders for any monetary damages for breaches of fiduciary duty as a
director, notwithstanding any provision of law imposing such liability; provided
that this provision shall not eliminate or limit the liability of a director, to
the extent that such liability is imposed by applicable law, (i) for any 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) under Section 174 or successor provisions
of the General Corporation Law of the State of Delaware; or (iv) for any
transaction from which the director derived an improper personal benefit.
Article NINTH further provides that it shall not eliminate or limit the
liability of a director for any act or omission if such elimination or
limitation is prohibited by the General Corporation Law of the State of
Delaware.
The Registrant intends to obtain insurance that insures the officers and
directors of the Registrant against certain losses and that insures the
Registrant against certain of its obligations to indemnify such officers and
directors.
In addition, the Underwriting Agreement, the form of which will be filed as
Exhibit 1.1 hereto, contains provisions for indemnification by the Underwriters
of the Registrant and its officers, directors and controlling stockholders
against certain liabilities under the Securities Act.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
In the three years preceding the filing of this Registration Statement, the
Company has sold the following securities that were not registered under the
Securities Act.
On December 2, 1996, the Registrant sold an aggregate of 833,334 shares of
Series E Convertible Preferred Stock to American Home Products Corporation
acting through its Wyeth-Ayerst Laboratory Division in connection with a
Collaborative Research and License Agreement, at a purchase price of $6.00 per
share for an aggregate cash consideration of approximately $5 million.
Pursuant to agreements entered into in May, November and December, 1996,
the Registrant sold an aggregate of 6,792,679 shares of Common Stock, together
with warrants to purchase 4,896,335 shares of common stock at an exercise price
of $5.00 per share and a $3 million promissory note payable to PerSeptive
Biosystems, Inc. ("PerSeptive") in exchange for certain assets and a worldwide,
royalty-free license for use in
II-2
<PAGE> 86
the field of drug discovery to all of PerSeptive's existing patents and
technology, including selection technologies, all future patented and unpatented
technology, early and preferred access to all technology and certain other
assets, and for a period of five years, to all prototype equipment.
On February 9, 1995, the Registrant sold an aggregate of 3,000,000 shares
of Series D Convertible Preferred Stock at a purchase price of $5.00 per share
for an aggregate cash consideration of $15 million. Of the 3,000,000 shares
sold, 2,700,000 shares were sold to Pfizer, Inc. in connection with a
Collaborative Research Agreement and License Option, License and Royalty
Agreement, and 300,000 shares were sold to existing stockholders of the
Registrant.
On July 27, 1994, the Registrant sold an aggregate of 767,739 shares of
Series C Convertible Preferred Stock to a group of investors at a purchase price
of $3.00 per share for an aggregate cash consideration of approximately
$2,303,000. Each of the 767,739 shares were sold to existing stockholders of the
Registrant.
On January 11, 1994 and July 13, 1994, the Registrant sold an aggregate of
1,063,366 shares of Series B Convertible Preferred Stock at a purchase price of
$1.50 per share for an aggregate cash consideration of approximately $1,595,000.
Each of the 1,063,366 shares were sold to existing stockholders of the
Registrant.
On January 11, 1994, February 22, 1994 and July 13, 1994, the Registrant
sold an aggregate of 3,020,648 shares of Series A Convertible Preferred Stock to
a group of investors at a purchase price of $1.00 per share for an aggregate
cash consideration of $3,020,648.
During the past three years, the Registrant has issued options to purchase
an aggregate of 465,853 shares of Common Stock under the ChemGenics
Pharmaceuticals Inc. 1992 Stock Option Plan, exercisable at a weighted average
price of $3.18 per share. Options to purchase an aggregate of 13,712 shares of
Common Stock have been exercised during the past three years.
No person acted as an underwriter with respect to the transactions set
forth above. In each of the foregoing instances, the Registrant relied on
Section 4(2) or Rule 701 of the Securities Act for the exemption from the
registration requirements of the Securities Act, since no public offering was
involved.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
A. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- -------- --------------------------------------------------------------------------------
<C> <S>
*(1.1 ) Form of Underwriting Agreement
(3.1 ) Restated Certificate of Incorporation
(3.2 ) Form of Restated Certificate of Incorporation, effective upon the consummation
of the offering
(3.3 ) Restated By-Laws
(3.4 ) Form of Restated By-Laws, effective upon the consummation of the offering
(4.1 ) See Exhibits 3.1 and 3.2 for provisions of the Registrant's Certificate of
Incorporation and By-Laws defining the rights of securityholders
(4.2 ) Form of Common Stock Certificate
(4.3 ) Form of Lock-Up Letter Agreement
*(5.1 ) Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. with respect to
the legality of the shares of Common Stock being registered
(10.1 ) Series A Preferred Stock Purchase Agreement, dated as of February 25, 1992, by
and between the Registrant and the Purchasers listed in Schedule 1.01 hereto
(10.2 ) Series A and B Preferred Stock Purchase Agreement, dated as of January 11, 1994,
by and between the Registrant and the Purchasers listed in Schedule 1.01 thereto
(10.3 ) Series A and B Preferred Stock Purchase Agreement, dated as of July 13, 1994, by
and between the Registrant and the Purchasers listed in Schedule 1.01 thereto
(10.4 ) Series C Preferred Stock Purchase Agreement, dated as of July 27, 1994, by and
between the Registrant and the Purchasers listed in Schedule 1.01 thereto
</TABLE>
II-3
<PAGE> 87
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- -------- --------------------------------------------------------------------------------
<C> <S>
+(10.5 ) Series D Preferred Stock Purchase Agreement, dated as of February 9, 1995, by
and between the Registrant and the Purchasers listed in Schedule 1.01 thereto
(10.6 ) Series E Preferred Stock Purchase Agreement, dated as of November 27, 1996, by
and between the Registrant and American Home Products Corporation, acting
through its Wyeth-Ayerst Laboratories Division
(10.7 ) Standstill Agreement, dated as of November 27, 1996, by and between the
Registrant and American Home Products Corporation, acting through its
Wyeth-Ayerst Laboratories Division
+(10.8 ) Collaborative Research Agreement, dated as of January 1, 1995, by and between
the Registrant and Pfizer, Inc.
+(10.9 ) License Option, License and Royalty Agreement, dated as of January 1, 1995, by
and between the Registrant and Pfizer, Inc.
+(10.10 ) Collaborative Research and License Agreement, dated as of November 1, 1996, by
and between the Registrant and American Home Products Corporation, represented
by its Wyeth-Ayerst Laboratories Division
+(10.11 ) License Agreement, dated as of June 28, 1996, by and between the Registrant and
PerSeptive Biosystems, Inc.
(10.12 ) Second Amended and Restated Voting and Co-Sale Agreement, dated as of February
9, 1995, by and between the Registrant and certain of the Registrant's security
holders
(10.13 ) Standstill Agreement, dated as of February 9, 1995, by and between the
Registrant and Pfizer, Inc.
(10.14 ) The Registrant's 1992 Employee, Director and Consultant Stock Option Plan, as
amended through December 16, 1996
(10.15 ) Master Agreement, dated as of May 7, 1996, by and between the Registrant and
PerSeptive Biosystems, Inc.
(10.16 ) Amendment, dated November 22, 1996, to the Master Agreement dated May 7, 1996
between the Registrant and PerSeptive Biosystems, Inc. and the Warrant to
purchase Common Stock issued to PerSeptive Biosystems, Inc.
*(10.17 ) Omnibus Amendment Agreement dated December 18, 1996 between the Registrant and
PerSeptive Biosystems, Inc.
(10.18 ) Consulting and Interim Services Agreement, dated as of June 28, 1996, by and
between the Registrant and PerSeptive Biosystems, Inc.
(10.19 ) Confidentiality and Non-Competition Agreement, dated as of June 28, 1996, by and
between the Registrant and PerSeptive Biosystems, Inc.
(10.20 ) Voting Agreement, dated as of June 28, 1996, by and between the Registrant and
PerSeptive Biosystems, Inc.
(10.21 ) Standstill and Registration Rights Agreement, dated as of June 28, 1996, by and
between the Registrant and PerSeptive Biosystems, Inc.
(10.22 ) Employment and Non-Competition Agreement, dated as of January 1, 1992, by and
between the Registrant and Barry A. Berkowitz, Ph.D.
(10.23 ) Confidentiality Agreement, dated as of January 1, 1992, between the Registrant
and Barry A. Berkowitz, Ph.D.
(10.24 ) Stock Purchase and Repurchase Agreement, dated February 19, 1992, by and between
the Registrant and Barry A. Berkowitz, Ph.D.
(10.25 ) Employment Agreement, dated December 23, 1992, between the Registrant and
William E. Timberlake, Ph.D.
(10.26 ) Confidentiality Agreement, dated March 1, 1993, between the Registrant and
William E. Timberlake, Ph.D.
</TABLE>
II-4
<PAGE> 88
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- -------- --------------------------------------------------------------------------------
<C> <S>
(10.27 ) Non-Competition Agreement, dated January 22, 1993, between the Registrant and
William E. Timberlake, Ph.D.
(10.28 ) Employment Agreement, dated November 11, 1995, between the Registrant and Reimar
Bruening, Ph.D.
(10.29 ) Confidentiality Agreement, dated as of November 15, 1995, by and between the
Registrant and Reimar Bruening, Ph.D.
(10.30 ) Non-Competition Agreement, dated November 15, 1995, between the Registrant and
Reimar Bruening, Ph.D.
(10.31 ) Employment Agreement, dated August 26, 1992, between the Registrant and Sean
O'Connor, Ph.D.
(10.32 ) Confidentiality Agreement, dated December 16, 1992, between the Registrant and
Sean O'Connor, Ph.D.
(10.33 ) Non-Competition Agreement, dated December 16, 1992, between the Registrant and
Sean O'Connor, Ph.D.
(10.34 ) Employment Agreement, dated March 12, 1993, between the Registrant and Yigal
Koltin, Ph.D.
(10.35 ) Confidentiality Agreement, dated June 1, 1993, between the Registrant and Yigal
Koltin, Ph.D.
(10.36 ) Non-Competition Agreement, dated May 11, 1993, between the Registrant and Yigal
Koltin, Ph.D.
(10.37 ) Employment Agreement, dated June 21, 1995, between the Registrant and Alan Crane
(10.38 ) Confidentiality Agreement, dated June 21, 1995, between the Registrant and Alan
Crane
(10.39 ) Non-Competition Agreement, dated June 21, 1995, between the Registrant and Alan
Crane
(10.40 ) Warrant Agreement, dated as of June 17, 1993, between the Registrant and
Comdisco, Inc.
(10.41 ) Warrant Agreement, dated as of May 24, 1994, between the Registrant and
Comdisco, Inc.
*(10.42 ) Warrant to purchase Common Stock of the Registrant issued to PerSeptive
Biosystems, Inc.
(10.43 ) Form of Consulting Agreement by and between the Registrant and members of the
Registrant's Scientific Advisory Board
(10.44 ) Lease Agreement between the Registrant and Old Cambridge Realty Trust, Inc.
(10.45 ) Form of Sub-Lease Agreement, dated June 28, 1996, by and between the Registrant
and PerSeptive Biosystems, Inc.
(10.46 ) Equipment Lease, dated as of June 17, 1993, by and between the Registrant and
Comdisco, Inc.
*(10.47 ) Sublease dated May 14, 1993 by and between the Registrant and MYOCRT, Inc.
(11.1 ) Statement Re: Computation of Earnings
**(23.1 ) Consent of Arthur Andersen LLP (see page II-9)
*(23.2 ) Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (included in
Exhibit 5.1)
(23.3 ) Consent of Carella, Byrne, Bain, Gilfallan, Cecchi, Stewart & Olstein
**(24.1 ) Power of Attorney
(27.1 ) Financial Data Schedule
</TABLE>
- ---------------
* To be filed by amendment.
** As filed in Part II of this Registration Statement.
+ Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.
II-5
<PAGE> 89
B. FINANCIAL STATEMENT SCHEDULES.
All Financial Statement Schedules have been omitted because the information
is not applicable or is not material or because other information required is
included in the financial statements or the notes thereto.
ITEM 17. UNDERTAKINGS
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 foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the 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 of the Registrant 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.
The Registrant hereby undertakes:
(1) 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.
(2) that 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 part of this Registration
Statement as of the time it was declared effective.
(3) that 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-6
<PAGE> 90
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-1 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston, Commonwealth of Massachusetts, on the 18th
day of December, 1996.
CHEMGENICS PHARMACEUTICALS INC.
/s/ BARRY A. BERKOWITZ, PH.D.
By:.................................
BARRY A. BERKOWITZ, PH.D.
ITS PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Each person whose signature appears below constitutes and appoints Barry A.
Berkowitz, Ph.D., Janet C. Bush and Kimberly A. Larson, and each of them, his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution in each of them for him and in his name, place and stead, and
in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement (or any other
Registration Statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933), and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as full to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them or their or his substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities held on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------------- ---------------------------------- ------------------
<S> <C> <C>
/s/ BARRY A. BERKOWITZ, PH.D. President and Chief Executive December 18, 1996
..................................... Officer
BARRY A. BERKOWITZ, PH.D. (principal executive officer) and
Director
/s/ JANET C. BUSH Interim Chief Financial Officer December 18, 1996
..................................... (principal financial officer)
JANET C. BUSH
/s/ KIMBERLY A. LARSON Manager of Accounting December 18, 1996
..................................... (principal accounting officer)
KIMBERLY A. LARSON
/s/ NOUBAR B. AFEYAN, PH.D. Chairman of the Board and Director December 18, 1996
.....................................
NOUBAR B. AFEYAN, PH.D.
/s/ GARY J. ANDERSON, M.D. Director December 18, 1996
.....................................
GARY J. ANDERSON, M.D.
/s/ HUBERT J. P. SCHOEMAKER Director December 18, 1996
.....................................
HUBERT J. P. SCHOEMAKER
/s/ CHRISTOPHER F. O. GABRIELI Director December 18, 1996
.....................................
CHRISTOPHER F. O. GABRIELI
/s/ EDWIN M. KANIA, JR. Director December 18, 1996
.....................................
EDWIN M. KANIA, JR.
</TABLE>
II-7
<PAGE> 91
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- -------- --------------------------------------------------------------------------------
<C> <S>
*(1.1 ) Form of Underwriting Agreement
(3.1 ) Restated Certificate of Incorporation
(3.2 ) Form of Restated Certificate of Incorporation, effective upon the consummation
of the offering
(3.3 ) Restated By-Laws
(3.4 ) Form of Restated By-Laws, effective upon the consummation of the offering
(4.1 ) See Exhibits 3.1 and 3.2 for provisions of the Registrant's Certificate of
Incorporation and By-Laws defining the rights of securityholders
(4.2 ) Form of Common Stock Certificate
(4.3 ) Form of Lock-Up Letter Agreement
*(5.1 ) Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. with respect to
the legality of the shares of Common Stock being registered
(10.1 ) Series A Preferred Stock Purchase Agreement, dated as of February 25, 1992, by
and between the Registrant and the Purchasers listed in Schedule 1.01 hereto
(10.2 ) Series A and B Preferred Stock Purchase Agreement, dated as of January 11, 1994,
by and between the Registrant and the Purchasers listed in Schedule 1.01 thereto
(10.3 ) Series A and B Preferred Stock Purchase Agreement, dated as of July 13, 1994, by
and between the Registrant and the Purchasers listed in Schedule 1.01 thereto
(10.4 ) Series C Preferred Stock Purchase Agreement, dated as of July 27, 1994, by and
between the Registrant and the Purchasers listed in Schedule 1.01 thereto
+(10.5 ) Series D Preferred Stock Purchase Agreement, dated as of February 9, 1995, by
and between the Registrant and the Purchasers listed in Schedule 1.01 thereto
(10.6 ) Series E Preferred Stock Purchase Agreement, dated as of November 27, 1996, by
and between the Registrant and American Home Products Corporation, acting
through its Wyeth-Ayerst Laboratories Division
(10.7 ) Standstill Agreement, dated as of November 27, 1996, by and between the
Registrant and American Home Products Corporation, acting through its
Wyeth-Ayerst Laboratories Division
+(10.8 ) Collaborative Research Agreement, dated as of January 1, 1995, by and between
the Registrant and Pfizer, Inc.
+(10.9 ) License Option, License and Royalty Agreement, dated as of January 1, 1995, by
and between the Registrant and Pfizer, Inc.
+(10.10 ) Collaborative Research and License Agreement, dated as of November 1, 1996, by
and between the Registrant and American Home Products Corporation, represented
by its Wyeth-Ayerst Laboratories Division
+(10.11 ) License Agreement, dated as of June 28, 1996, by and between the Registrant and
PerSeptive Biosystems, Inc.
(10.12 ) Second Amended and Restated Voting and Co-Sale Agreement, dated as of February
9, 1995, by and between the Registrant and certain of the Registrant's security
holders
(10.13 ) Standstill Agreement, dated as of February 9, 1995, by and between the
Registrant and Pfizer, Inc.
(10.14 ) The Registrant's 1992 Employee, Director and Consultant Stock Option Plan, as
amended through December 16, 1996
(10.15 ) Master Agreement, dated as of May 7, 1996, by and between the Registrant and
PerSeptive Biosystems, Inc.
(10.16 ) Amendment, dated November 22, 1996, to the Master Agreement dated May 7, 1996
between the Registrant and PerSeptive Biosystems, Inc. and the Warrant to
purchase Common Stock issued to PerSeptive Biosystems, Inc.
*(10.17 ) Omnibus Amendment Agreement dated December 18, 1996 between the Registrant and
PerSeptive Biosystems, Inc.
(10.18 ) Consulting and Interim Services Agreement, dated as of June 28, 1996, by and
between the Registrant and PerSeptive Biosystems, Inc.
(10.19 ) Confidentiality and Non-Competition Agreement, dated as of June 28, 1996, by and
between the Registrant and PerSeptive Biosystems, Inc.
(10.20 ) Voting Agreement, dated as of June 28, 1996, by and between the Registrant and
PerSeptive Biosystems, Inc.
(10.21 ) Standstill and Registration Rights Agreement, dated as of June 28, 1996, by and
between the Registrant and PerSeptive Biosystems, Inc.
(10.22 ) Employment and Non-Competition Agreement, dated as of January 1, 1992, by and
between the Registrant and Barry A. Berkowitz, Ph.D.
(10.23 ) Confidentiality Agreement, dated as of January 1, 1992, between the Registrant
and Barry A. Berkowitz, Ph.D.
(10.24 ) Stock Purchase and Repurchase Agreement, dated February 19, 1992, by and between
the Registrant and Barry A. Berkowitz, Ph.D.
(10.25 ) Employment Agreement, dated December 23, 1992, between the Registrant and
William E. Timberlake, Ph.D.
(10.26 ) Confidentiality Agreement, dated March 1, 1993, between the Registrant and
William E. Timberlake, Ph.D.
(10.27 ) Non-Competition Agreement, dated January 22, 1993, between the Registrant and
William E. Timberlake, Ph.D.
(10.28 ) Employment Agreement, dated November 11, 1995, between the Registrant and Reimar
Bruening, Ph.D.
(10.29 ) Confidentiality Agreement, dated as of November 15, 1995, by and between the
Registrant and Reimar Bruening, Ph.D.
(10.30 ) Non-Competition Agreement, dated November 15, 1995, between the Registrant and
Reimar Bruening, Ph.D.
(10.31 ) Employment Agreement, dated August 26, 1992, between the Registrant and Sean
O'Connor, Ph.D.
(10.32 ) Confidentiality Agreement, dated December 16, 1992, between the Registrant and
Sean O'Connor, Ph.D.
(10.33 ) Non-Competition Agreement, dated December 16, 1992, between the Registrant and
Sean O'Connor, Ph.D.
(10.34 ) Employment Agreement, dated March 12, 1993, between the Registrant and Yigal
Koltin, Ph.D.
(10.35 ) Confidentiality Agreement, dated June 1, 1993, between the Registrant and Yigal
Koltin, Ph.D.
(10.36 ) Non-Competition Agreement, dated May 11, 1993, between the Registrant and Yigal
Koltin, Ph.D.
(10.37 ) Employment Agreement, dated June 21, 1995, between the Registrant and Alan Crane
(10.38 ) Confidentiality Agreement, dated June 21, 1995, between the Registrant and Alan
Crane
(10.39 ) Non-Competition Agreement, dated June 21, 1995, between the Registrant and Alan
Crane
(10.40 ) Warrant Agreement, dated as of June 17, 1993, between the Registrant and
Comdisco, Inc.
(10.41 ) Warrant Agreement, dated as of May 24, 1994, between the Registrant and
Comdisco, Inc.
*(10.42 ) Warrant to purchase Common Stock of the Registrant issued to PerSeptive
Biosystems, Inc.
(10.43 ) Form of Consulting Agreement by and between the Registrant and members of the
Registrant's Scientific Advisory Board
(10.44 ) Lease Agreement between the Registrant and Old Cambridge Realty Trust, Inc.
(10.45 ) Form of Sub-Lease Agreement, dated June 28, 1996, by and between the Registrant
and PerSeptive Biosystems, Inc.
(10.46 ) Equipment Lease, dated as of June 17, 1993, by and between the Registrant and
Comdisco, Inc.
*(10.47 ) Sublease dated May 14, 1993 by and between the Registrant and MYOCRT, Inc.
(11.1 ) Statement Re: Computation of Earnings
**(23.1 ) Consent of Arthur Andersen LLP (see page II-9)
*(23.2 ) Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (included in
Exhibit 5.1)
(23.3 ) Consent of Carella, Byrne, Bain, Gilfallan, Cecchi, Stewart & Olstein
**(24.1 ) Power of Attorney
(27.1 ) Financial Data Schedule
</TABLE>
- ---------------
* To be filed by amendment.
** As filed in Part II of this Registration Statement.
+ Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CHEMGENICS PHARMACEUTICALS INC.
(Pursuant to Sections 242 and 245 of the General Corporation Law of the State of
Delaware)
ChemGenics Pharmaceuticals Inc., a Delaware corporation, hereby
certifies as follows:
1. The name of the corporation is ChemGenics Pharmaceuticals Inc. The
date of filing of its original Certificate of Incorporation with the Secretary
of State was January 13, 1992.
2. This Restated Certificate of Incorporation amends, restates and
integrates the provisions of the Restated Certificate of Incorporation of said
corporation filed on February 9, 1995, as amended by the Certificate of
Amendment thereto filed on June 6, 1996, and has been duly adopted pursuant to a
resolution adopted by the Board of Directors (including all of the Preferred
Stock Directors) and by the holders of at least 60% of the outstanding shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock voting together as a single class, by not less than a
majority of the outstanding shares of Common Stock, Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock,
voting together as a single class, and by not less than a majority of the
outstanding shares of Common Stock voting as a separate class, acting by written
consent in accordance with the provisions of Section 228 of the General
Corporation Law of the State of Delaware. Written notice of the taking of such
action has been given in accordance with Section 228(d) of the General
Corporation Law of the State of Delaware.
3. The text of the Restated Certificate of Incorporation is hereby
amended and restated to read in full as follows:
FIRST. The name of the Corporation is ChemGenics
Pharmaceuticals Inc.
SECOND. The address, including street, number, city, and
county, of the registered office of the Corporation in the State of
Delaware is 32 Loockerman Square, Suite L-100, City of Dover, County of
Kent; and the name of the registered agent of the Corporation in the
State of Delaware is The Prentice-Hall Corporation System, Inc.
THIRD. The nature of the business to be conducted and the
purposes of the Corporation are:
To research, develop and commercialize
pharmaceutical products and processes;
To purchase or otherwise acquire, invest in,
own, lease, mortgage, pledge, sell, assign and
transfer or otherwise dispose of, trade and deal in
and with real property and personal property of every
kind, class and description (including, without
limitation, goods, wares and merchandise
<PAGE> 2
of every kind, class and description), to manufacture
goods, wares and merchandise of every kind, class and
description, both on its own account and for others;
To make and perform agreements and contracts
of every kind and description;
To develop and acquire, manage, exploit,
license and alienate patents, processes or formulas,
trademarks and copyrights, including all related
rights;
To purchase or otherwise acquire, invest in,
own, lease, mortgage, pledge, sell, assign and
transfer or otherwise dispose of, trade and deal in
and with real property and personal property of every
kind, class and description (including, without
limitation, goods, wares and merchandise of every
kind, class and description), to manufacture goods,
wares and merchandise of every kind, class and
description, both on its own account and for others;
To borrow or lend money, and to make and
issue notes, bonds, debentures, obligations and
evidences of indebtedness of all kinds, whether or
not secured by mortgage, pledge, or otherwise,
without limit as to amount, and to secure the same by
mortgage, pledge, or otherwise, and generally to make
and perform agreements and contracts of every kind
and description; and
Generally to engage in any lawful act or
activity or carry on any business for which
corporations may be organized under the Delaware
General Corporation law or any successor statute.
FOURTH: The Corporation shall be authorized to issue a total
of 47,308,334 shares of capital stock, which shall be divided into two
classes as follows: (i) 33,866,667 shares of Common Stock, with a par
value of one tenth of one cent ($.001) per share (the "Common Stock")
and (ii) 13,441,667 shares of Preferred Stock divided into (a)
6,400,000 shares of Series A Convertible Preferred Stock, with a par
value of one cent ($.01) per share (the "Series A Preferred Stock"),
(b) 1,100,000 shares of Series B Convertible Preferred Stock, with a
par value of one cent ($.01) per share (the "Series B Preferred
Stock"), (c) 775,000 shares of Series C Convertible Preferred Stock,
with a par value of one cent ($.01) per share (the "Series C Preferred
Stock"), (d) 3,000,000 shares of Series D Convertible Preferred Stock,
with a par value of one cent ($.01) per share (the "Series D Preferred
Stock") and (e) 2,166,667 shares of Series E Convertible Preferred
Stock, with a par value of one cent ($.01) per share (the "Series E
Preferred Stock"); the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock and
the Series E Preferred Stock shall be collectively known herein as the
"Preferred Stock".
- 2 -
<PAGE> 3
The following is a statement of the designations, preferences, voting
powers, qualifications, special or relative rights and privileges in respect of
the authorized capital stock of the Corporation.
I. PREFERRED STOCK
A. DESCRIPTION AND DESIGNATION OF SERIES A PREFERRED STOCK, SERIES B
PREFERRED STOCK, SERIES C PREFERRED STOCK, SERIES D PREFERRED STOCK AND
SERIES E PREFERRED STOCK.
1. DESIGNATION.
(a) SERIES A PREFERRED STOCK. A total of 6,400,000 shares of
the Corporation's Preferred Stock shall be designated the "Series A Preferred
Stock".
(b) SERIES B PREFERRED STOCK. A total of 1,100,000 shares of
the Corporation's Preferred Stock shall be designated the "Series B Preferred
Stock".
(c) SERIES C PREFERRED STOCK. A total of 775,000 shares of the
Corporation's Preferred Stock shall be designated the "Series C Preferred
Stock".
(d) SERIES D PREFERRED STOCK. A total of 3,000,000 shares of
the Corporation's Preferred Stock shall be designated the "Series D Preferred
Stock".
(e) SERIES E PREFERRED STOCK. A total of 2,166,667 shares of
the Corporation's Preferred Stock shall be designated the "Series E Preferred
Stock".
2. DIVIDENDS.
(a) RESTRICTIONS ON DISTRIBUTIONS. Except to the extent in any
instance approval is provided in writing by the holders of sixty percent (60%)
of the outstanding shares of Preferred Stock (voting together as a single
class), the Corporation shall not declare or pay any dividends, or purchase,
redeem, retire, or otherwise acquire for value any shares of its capital stock
(or rights, options or warrants to purchase such shares) now or hereafter
outstanding, return any capital to its stockholders as such, or make any
distribution of assets to its stockholders as such, or permit any Subsidiary to
do any of the foregoing. "Subsidiary" or "Subsidiaries" means any corporation,
partnership or joint venture of which the Corporation and/or any of its other
Subsidiaries (as herein defined) directly or indirectly owns at the time at
least fifty percent (50%) of the outstanding voting shares or similar interests
other than directors' qualifying shares.
Notwithstanding the foregoing, Subsidiaries may declare and
make payment of cash and stock dividends, return capital and make distributions
of assets to the Corporation, and if such Subsidiary is not wholly-owned, pari
passu to other owners. Furthermore, nothing herein contained shall prevent the
Corporation from: (i) effecting a stock split or declaring or paying any
dividend consisting of shares of any class of capital stock paid to the holders
of
- 3 -
<PAGE> 4
shares of such class of capital stock; (ii) complying with any specific
provision of the terms of the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock or the Series
E Preferred Stock (including, without limitation, redemption of the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stock or the Series E Preferred Stock in accordance with
their respective terms), (iii) declaring and paying dividends on the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stock or the Series E Preferred Stock; (iv) redeeming any
stock of a deceased stockholder out of insurance held by the Corporation on that
stockholder's life; (v) redeeming capital stock, options, or warrants issued in
connection with leasing or financing activities in an aggregate amount not to
exceed $150,000; or (vi) repurchasing any stock of any director, officer,
employee, consultant or other person or entity, subject to a stock repurchase
agreement or stock restriction agreement under which the Corporation has the
right or obligation to repurchase such shares in the event of termination of
employment or of the consulting arrangement, or other similar discontinuation of
a business relationship; provided, however, that any such repurchase under this
clause (vi) shall not exceed $50,000 in any twelve-month period without the
consent of a majority of the Preferred Stock Directors (as defined in Section
4(b) below).
(b) PARTICIPATING DIVIDENDS. In the event that the Board of
Directors of the Corporation shall declare a dividend payable upon the then
outstanding shares of Common Stock (other than a stock dividend on the Common
Stock distributed solely in the form of additional shares of Common Stock), the
holders of the Preferred Stock shall be entitled to the amount of dividends per
share of Preferred Stock as would be declared payable on the largest number of
whole shares of Common Stock into which each share of Preferred Stock held by
each holder thereof could be converted pursuant to the provisions of Section 5
hereof, such number determined as of the record date for the determination of
holders of Common Stock entitled to receive such dividend.
3. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) TREATMENT AT LIQUIDATION, DISSOLUTION OR WINDING UP. In
the event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, or in the event of its insolvency, before any
distribution or payment is made to any holders of Common Stock or any other
class or series of capital stock of the Corporation designated to be junior to
the Preferred Stock, the holders of each share of Preferred Stock shall be
entitled to be paid, on a pari passu basis, first out of the assets of the
Corporation available for distribution to holders of the Corporation's capital
stock of all classes whether such assets are capital, surplus or earnings (the
"Available Assets"), an amount equal to the greater of:
(i) (A) $1.00 per share of Series A Preferred
Stock; and
(B) $1.50 per share of Series B Preferred
Stock; and
(C) $3.00 per share of Series C Preferred
Stock; and
(D) $5.00 per share of Series D Preferred
Stock; and
- 4 -
<PAGE> 5
(E) $6.00 per share of Series E Preferred
Stock; or
(ii) such amount per share of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock or Series E Preferred Stock as would
have been payable had each share of the applicable Preferred
Stock been converted to Common Stock immediately prior to such
event of liquidation, dissolution or winding up pursuant to
the provisions of Section 5 hereof.
The amounts set forth above shall be subject to equitable adjustment
whenever there shall occur a stock dividend, stock split, combination,
reorganization, recapitalization, reclassification or other similar event
involving a change in the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock, or the Series
E Preferred Stock.
After such payment has been made in full to the holders of the
Preferred Stock or funds necessary for such payment shall have been set aside by
the Corporation in trust for the account of the holders of Preferred Stock so as
to be available for such payment, the remaining Available Assets available for
distribution shall be distributed ratably among the holders of the Common Stock.
If, upon liquidation, dissolution or winding up of the Corporation, the
Available Assets shall be insufficient to pay the holders of Preferred Stock the
full amount to which they otherwise would be entitled, the holders of Preferred
Stock shall share ratably in any distribution of Available Assets pro rata in
proportion to the respective liquidation preference amounts which would
otherwise be payable upon liquidation with respect to the outstanding shares of
Preferred Stock if all liquidation preference dollar amounts with respect to
such shares were paid in full.
(b) TREATMENT OF REORGANIZATIONS, CONSOLIDATIONS, MERGERS, AND
SALES OF ASSETS. A Reorganization (as defined in Section 5(h)) shall be regarded
as a liquidation, dissolution or winding up of the affairs of the Corporation
within the meaning of this Section 3; provided, however, that the holders of at
least sixty percent (60%) of the outstanding shares of Preferred Stock, voting
together as a single class, shall have the right to elect the benefits of the
provisions of Section 5(h) hereof for the Preferred Stock in lieu of receiving
payment in liquidation, dissolution or winding up of the Corporation pursuant to
this Section 3.
The provisions of this Section 3(b) shall not apply to any
reorganization, merger or consolidation involving (1) only a change in the state
of incorporation of the Corporation, (2) a merger of the Corporation with or
into a wholly-owned Subsidiary of the Corporation that is incorporated in the
United States of America, or (3) an acquisition by merger, reorganization or
consolidation, of which the Corporation is substantively the acquiring
corporation and operates as a going concern, of another corporation incorporated
in the United States of America that is engaged in a business similar or related
to the business of the Corporation and which does not involve a change in the
terms of the Series A Preferred Stock, the Series B Preferred Stock, the Series
C Preferred Stock, the Series D Preferred Stock or the Series E Preferred Stock.
- 5 -
<PAGE> 6
(c) DISTRIBUTIONS OTHER THAN CASH. Whenever the distribution
provided for in this Section 3 shall be payable in property other than cash, the
value of such distribution shall be the fair market value of such property as
determined in good faith by the Board of Directors of the Corporation. All
distributions (including distributions other than cash) made hereunder shall be
made pro rata with respect to the holders of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock in proportion to their respective liquidation preference amounts
as set forth in Section 3(a) above. In the event of any dispute between the
holders of Preferred Stock on the one hand, and the Corporation, on the other
hand, regarding the determination of the fair market value of non-cash
distributions, at the election of the holders of 60% of the outstanding shares
of Preferred Stock voting together as a single class, the Corporation shall
engage a consulting or investment banking firm selected by the Board of
Directors and approved (which approval shall not be unreasonably withheld) by
the holders of sixty percent (60%) of the outstanding shares of Preferred Stock,
voting together as a single class, to prepare an independent appraisal of the
fair market value of such property to be distributed. The expenses of any
appraisal by such consulting or investment banking firm shall be borne by the
Corporation.
4. VOTING POWER.
(a) GENERAL. Except as otherwise expressly provided in this
Section 4 or Section 6 hereof, or as otherwise required by law, each holder of
Preferred Stock shall be entitled to vote on all matters and shall be entitled
to that number of votes equal to the largest number of whole shares of Common
Stock into which such holder's shares of Preferred Stock could be converted,
pursuant to the provisions of Section 5 hereof, at the record date for the
determination of stockholders entitled to vote on such matter or, if no such
record date is established, at the date such vote is taken or any written
consent of stockholders is solicited. Except as otherwise expressly provided in
this instrument or as otherwise required by law, the holders of shares of
Preferred Stock and Common Stock shall vote together (or render written consents
in lieu of a vote) as a single class on all matters submitted to the
stockholders of the Corporation.
(b) PREFERRED STOCK DIRECTOR ELECTION RIGHT. The holders of
sixty percent (60%) of the outstanding shares of Preferred Stock, voting
together as a single class, shall be entitled to elect four (4) directors of the
Corporation (the "Preferred Stock Directors"). At any annual or special meeting
of the Corporation (or in a written consent in lieu thereof) held for the
purpose of electing directors, the presence in person or by proxy (or by written
consent) of the holders of sixty percent (60%) of the outstanding shares of
Preferred Stock shall constitute a quorum for the election of the Preferred
Stock Directors. The holders of sixty percent (60%) of the shares of Preferred
Stock present in person or by proxy at any meeting relating to the election of
directors (calculated after the determination of a quorum) shall then be
entitled to elect the Preferred Stock Directors.
Any Preferred Stock Director may be removed during his or her term of
office, without cause, by and only by, the affirmative vote or written consent
of the holders of sixty percent (60%) of the outstanding shares of the Preferred
Stock. A vacancy in a seat held by a Preferred
- 6 -
<PAGE> 7
Stock Director shall be filled by vote or written consent of the holders of
sixty percent (60%) of the outstanding shares of Preferred Stock.
Notwithstanding anything contained in this Section 4(b), (a) the
holders of Preferred Stock shall forfeit the right to nominate and elect two of
the four Preferred Stock Directors if at any time the number of outstanding
shares of Preferred Stock falls below 33% but is greater than 20% of the number
of shares of capital stock of all classes (on an as converted basis) then
outstanding; (b) the holders of Preferred Stock shall forfeit the right to
nominate and elect three of the four Preferred Stock Directors if at any time
the number of outstanding shares of Preferred Stock falls below 20% but is
greater than 5% of the number of shares of capital stock of all classes (on an
as converted basis) then outstanding; and (c) the holders of Preferred Stock
shall forfeit the right to nominate and elect any Preferred Stock Directors if
at any time the number of outstanding shares of Preferred Stock falls below 5%
of the number of shares of capital stock of all classes (on an as converted
basis) then outstanding.
The rights in this Section 4 shall terminate at such time as the
Corporation closes an underwritten public offering of Common Stock pursuant to
an offering registered under the Securities Act of 1933 and filed with the
Securities and Exchange Commission on Form S-1 or SB-2 in which the aggregate
gross proceeds to the Corporation exceeds $9,000,000 and in which the price per
share of such Common Stock equals or exceeds $5.00 (such price subject to
equitable adjustment in the event of any stock split, stock dividend,
combination, reorganization, reclassification or other similar event).
(c) SPECIAL DIRECTOR ELECTION RIGHT FOR DEFAULT. In addition
to all rights conferred above with respect to the election of directors, the
holders of shares of Preferred Stock, voting together as a single class, shall
have the following rights with respect to the election of directors of the
Corporation upon the occurrence of an Event of Noncompliance as described in
this Section 4(c):
(i) DEFINITION OF EVENT OF NONCOMPLIANCE. An "Event of
Noncompliance" will be deemed to have occurred if:
(A) the Corporation breaches or otherwise
fails to perform or observe (i) the liquidation or conversion
rights of the Preferred Stock or (ii) Article IV, Sections
4.02 or 4.03(a), (b) and (c), Article V and/or Article VI of
the Stock Purchase Agreement relating to the issuance of the
Series E Preferred Stock, and any breach or failure is not
cured in all material respects by the Corporation within 60
days after notice thereof is furnished to, or if earlier,
after the Corporation discovers such breach; or
(B) (i) the Corporation or any of its
Subsidiaries shall commence any case, proceeding or other
action (a) under any existing or future law of any
jurisdiction relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order
of relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with
- 7 -
<PAGE> 8
respect to it or its debts, or (b) seeking appointment of a
receiver, trustee, custodian or other similar official for it
or for all or any substantial part of its assets, or the
Corporation or any of its Subsidiaries shall make a general
assignment for the benefit of its creditors; or (ii) there
shall be commenced against the Corporation or any of its
Subsidiaries any case, proceeding or other action of a nature
referred to in clause (i) above which (a) results in the entry
of an order for relief or any such adjudication or
appointment, or (b) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be
commenced against the Corporation or any of its Subsidiaries
any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, or similar process against
all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) the Corporation
or any of its Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(C) the Corporation shall fail to meet the
projections or proposed licensing activities as set forth in
its business plan (as revised from time to time by the Board
of Directors) for more than six months and which has a
material adverse effect on the Corporation's business
prospects, operations and viability.
(ii) CONSEQUENCES OF CERTAIN EVENTS OF NONCOMPLIANCE. If
any Event of Noncompliance has occurred and is continuing beyond any applicable
grace period, the number of directors constituting the Corporation's Board of
Directors will, at the request and approval of the holders of sixty percent
(60%) of the outstanding shares of Preferred Stock, voting together as a single
class, be increased by such number as will constitute a minimum majority of the
Board of Directors, and the holders of sixty percent (60%) of the outstanding
shares of Preferred Stock will have the special right, voting together as a
single class (with each share being entitled to one vote) and to the exclusion
of all other classes of the Corporation's capital stock, to elect individuals to
fill such newly created directorships, to remove any individuals elected to such
directorships, and to fill any vacancies in such directorships. The special
right of the holders of Preferred Stock to elect a majority of the members of
the Board of Directors may be exercised at the special meeting called pursuant
to this subparagraph (ii), at any annual or special meeting of stockholders and,
to the extent and in the manner permitted by applicable law, pursuant to a
written consent in lieu of a stockholders' meeting. Such special right to elect
additional directors will continue until such time as there is no longer any
Event of Noncompliance in existence, at which time such special right will
terminate subject to revesting upon the occurrence and continuation of any Event
of Noncompliance which gives rise to such special right hereunder; provided that
any director so elected will continue to serve as a director to the extent
provided in the penultimate paragraph of this Section.
At any time when an Event of Noncompliance has occurred and is
continuing, a proper officer of the Corporation shall, upon the written request
of the holders of at least 10% of the Preferred Stock then outstanding,
addressed to the Secretary or Assistant Secretary of the Corporation, call a
special meeting of the holders of Preferred Stock for the purpose of electing
- 8 -
<PAGE> 9
directors pursuant to this Section. Such meeting shall be held at the earliest
legally permissible date at the principal office of the Corporation, or at such
other place designated by the holders of at least sixty percent (60%) of the
shares of Preferred Stock then outstanding. If such meeting has not been called
by a proper officer of the Corporation within 10 days after delivery of such
written request upon the Secretary or Assistant Secretary of the Corporation or
within 20 days after mailing it to the Secretary or Assistant Secretary of the
Corporation at its principal office, then the holders of at least 10% of the
Preferred Stock then outstanding may designate in writing one of their number to
call such meeting at the expense of the Corporation, and such meeting may be
called by such holder so designated upon the notice required for annual meetings
of stockholders and shall be held at the Corporation's principal office, or at
such other place designated by the holders of at least 10% of the Preferred
Stock then outstanding. Any holder of Preferred Stock so designated shall be
given access to the stock record books of the Corporation for the purpose of
causing a meeting of the holders of the Preferred Stock to be called pursuant to
this Section.
At any meeting or at any adjournment thereof at which the holders of
Preferred Stock have the special right to elect directors, the presence, in
person or by proxy, of the holders of sixty percent (60%) of the Preferred Stock
then outstanding shall be required to constitute a quorum for the election or
removal of any director by the holders of the Preferred Stock exercising such
special right. The vote of the holders of sixty percent (60%) of the shares of
Preferred Stock or written consent (given at such meeting or otherwise to the
Corporation and calculated following the determination of a quorum) shall be
required to elect or remove any such director.
Any director so elected by the holders of Preferred Stock shall
continue to serve as a director until the expiration of the lesser of (a) a
period of three months following the date on which there is no longer any Event
of Noncompliance in existence, or (b) the remaining period of the full term for
which such director has been elected. After the expiration of such three-month
period or when the full term for which such director has been elected ceases
(provided that the special right to elect directors has terminated), as the case
may be, the number of directors constituting the Board of Directors of the
Corporation shall decrease to such number as constituted the whole Board of
Directors of the Corporation immediately prior to the occurrence of the Event or
Events of Noncompliance giving rise to this special right of the holders of
Preferred Stock to elect directors. At any time an Event of Noncompliance
exists, each holder of Preferred Stock shall also have any other rights which
such holder is entitled to under any contract or agreement at any time and any
other rights which such holder may have pursuant to applicable law.
The rights under this Section shall terminate as to the Series A
Preferred Stock when there are less than 500,000 shares of Series A Preferred
Stock outstanding, as to the Series B Preferred Stock when there are less than
500,000 shares of Series B Preferred Stock outstanding, as to the Series C
Preferred Stock when there are less than 500,000 shares of Series C Preferred
Stock outstanding, as to the Series D Preferred Stock when there are less than
500,000 shares of Series D Preferred Stock outstanding and as to the Series E
Preferred Stock when there are less than 500,000 shares of Series E Preferred
Stock outstanding.
- 9 -
<PAGE> 10
5. CONVERSION RIGHTS. The holders of shares of Preferred Stock shall
have the following rights with respect to the conversion of such shares into
shares of Common Stock:
(a) GENERAL. Subject to and in compliance with the provisions
of this Section 5, any shares of Preferred Stock may, at the option of
any holder, be converted at any time and from time to time into
fully-paid and non-assessable shares of Common Stock. The number of
shares of Common Stock to which a holder of shares of Preferred Stock
shall be entitled to receive upon conversion shall be the product
obtained by multiplying the Applicable Conversion Rate (determined as
provided in Section 5(b)) by the number of shares of the applicable
series of Preferred Stock being converted at any time.
(b) APPLICABLE CONVERSION RATE.
(i) The conversion rate in effect at any time
for the Series A Preferred Stock shall be the quotient
obtained by dividing $1.00 by the Series A Applicable
Conversion Value, calculated as provided in Section 5(c)(i)
(the "Series A Applicable Conversion Rate");
(ii) The conversion rate in effect at any time
for the Series B Preferred Stock shall be the quotient
obtained by dividing $1.50 by the Series B Applicable
Conversion Value, calculated as provided in Section 5(c)(ii)
(the "Series B Applicable Conversion Rate");
(iii) The conversation rate in effect at any
time for the Series C Preferred Stock shall be the quotient
obtained by dividing $3.00 by the Series C Applicable
Conversion Value, calculated as provided in Section 5(c)(iii)
(the "Series C Applicable Conversion Rate");
(iv) The conversion rate in effect at any time
for the Series D Preferred Stock shall be the quotient
obtained by dividing $5.00 by the Series D Applicable
Conversion Value, calculated as provided in Section 5(c)(iv)
(the "Series D Applicable Conversion Rate"); and
(v) The conversion rate in effect at any time
for the Series E Preferred Stock shall be the quotient
obtained by dividing $6.00 by the Series E Applicable
Conversion Value, calculated as provided in Section 5(c)(v)
(the "Series E Applicable Conversion Rate").
(c) APPLICABLE CONVERSION VALUE.
(i) The Series A Applicable Conversion Value
in effect from time to time, except as adjusted in accordance
with Section 5(d)(i) hereof, shall be $1.00 (the "Series A
Applicable Conversion Value");
- 10 -
<PAGE> 11
(ii) The Series B Applicable Conversion Value
in effect from time to time, except as adjusted in accordance
with Section 5(d)(ii) hereof, shall be $1.50 (the "Series B
Applicable Conversion Value");
(iii) The Series C Applicable Conversion Value
in effect from time to time, except as adjusted in accordance
with Section 5(d)(iii) hereof, shall be $3.00 (the "Series C
Applicable Conversion Value");
(iv) The Series D Applicable Conversion Value
in effect from time to time, except as adjusted in accordance
with Section 5(d)(iv) hereof, shall be $5.00 (the "Series D
Applicable Conversion Value"); and
(v) The Series E Applicable Conversion Value
in effect from time to time, except as adjusted in accordance
with Section 5(d)(v) hereof, shall be $6.00 (the "Series E
Applicable Conversion Value").
(d) ADJUSTMENTS TO APPLICABLE CONVERSION VALUE OF EACH SERIES
OF PREFERRED STOCK.
(i) Upon the happening of an Extraordinary
Common Stock Event (as hereinafter defined), the Series A Applicable
Conversion Value (and all other conversion values set forth in Section
5(c)(i) above) shall, simultaneously with the happening of such
Extraordinary Common Stock Event, be adjusted by multiplying the Series
A Applicable Conversion Value by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding immediately
prior to such Extraordinary Common Stock Event and the denominator of
which shall be the number of shares of Common Stock outstanding
immediately after such Extraordinary Common Stock Event, and the
product so obtained shall thereafter be the Series A Applicable
Conversion Value. The Series A Applicable Conversion Value (as the case
may be), as so adjusted, shall be readjusted in the same manner upon
the happening of any successive Extraordinary Common Stock Event or
Events.
(ii) Upon the happening of an Extraordinary
Common Stock Event, the Series B Applicable Conversion Value (and all
other conversion values set forth in Section 5(c)(ii) above) shall,
simultaneously with the happening of such Extraordinary Common Stock
Event, be adjusted by multiplying the Series B Applicable Conversion
Value by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such
Extraordinary Common Stock Event and the denominator of which shall be
the number of shares of Common Stock outstanding immediately after such
Extraordinary Common Stock Event, and the product so obtained shall
thereafter be the Series B Applicable Conversion Value. The Series B
Applicable Conversion Value (as the case may be), as so adjusted, shall
be readjusted in the same manner upon the happening of any successive
Extraordinary Common Stock Event or Events.
- 11 -
<PAGE> 12
(iii) Upon the happening of an Extraordinary
Common Stock Event, the Series C Applicable Conversion Value (and all
other conversion values set forth in Section 5(c)(iii) above) shall,
simultaneously with the happening of such Extraordinary Common Stock
Event, be adjusted by multiplying the Series C Applicable Conversion
Value by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such
Extraordinary Common Stock Event and the denominator of which shall be
the number of shares of Common Stock outstanding immediately after such
Extraordinary Common Stock Event, and the product so obtained shall
thereafter be the Series C Applicable Conversion Value. The Series C
Applicable Conversion Value (as the case may be), as so adjusted, shall
be readjusted in the same manner upon the happening of any successive
Extraordinary Common Stock Event or Events.
(iv) Upon the happening of an Extraordinary
Common Stock Event, the Series D Applicable Conversion Value (and all
other conversion values set forth in Section 5(c)(iv) above) shall,
simultaneously with the happening of such Extraordinary Common Stock
Event, be adjusted by multiplying the Series D Applicable Conversion
Value by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such
Extraordinary Common Stock Event and the denominator of which shall be
the number of shares of Common Stock outstanding immediately after such
Extraordinary Common Stock Event, and the product so obtained shall
thereafter be the Series D Applicable Conversion Value. The Series D
Applicable Conversion Value (as the case may be), as so adjusted, shall
be readjusted in the same manner upon the happening of any successive
Extraordinary Common Stock Event or Events.
(v) Upon the happening of an Extraordinary
Common Stock Event, the Series E Applicable Conversion Value (and all
other conversion values set forth in Section 5(c)(v) above) shall,
simultaneously with the happening of such Extraordinary Common Stock
Event, be adjusted by multiplying the Series E Applicable Conversion
Value by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such
Extraordinary Common Stock Event and the denominator of which shall be
the number of shares of Common Stock outstanding immediately after such
Extraordinary Common Stock Event, and the product so obtained shall
thereafter be the Series E Applicable Conversion Value. The Series E
Applicable Conversion Value (as the case may be), as so adjusted, shall
be readjusted in the same manner upon the happening of any successive
Extraordinary Common Stock Event or Events.
An "Extraordinary Common Stock Event" shall mean (i) the issue
of additional shares of Common Stock as a dividend or other
distribution on outstanding shares of Common Stock, (ii) a subdivision
of outstanding shares of Common Stock into a greater number of shares
of Common Stock, or (iii) a combination or reverse stock split of
outstanding shares of Common Stock into a smaller number of shares of
the Common Stock.
- 12 -
<PAGE> 13
(e) MANDATORY CONVERSION UPON PUBLIC OFFERING OR ELECTION OF
PREFERRED STOCK.
(i) MANDATORY CONVERSION OF PREFERRED STOCK.
Immediately (A) prior to the closing of an underwritten public offering
on a firm commitment basis pursuant to an effective registration
statement filed pursuant to the Securities Act of 1933, as amended,
covering the offer and sale of Common Stock for the account of the
Corporation in which the Corporation actually receives gross proceeds
equal to or greater than $9,000,000 (calculated after deducting
underwriters' discounts and commissions but before calculation of
expenses), and in which the price per share of Common Stock equals or
exceeds $5.00 (such price subject to equitable adjustment in the event
of any stock dividend, stock split, combination, reorganization,
recapitalization, reclassification or other similar event involving a
change in the Common Stock) all outstanding shares of all Series of
Preferred Stock shall be converted automatically into the number of
shares of Common Stock into which such shares of Preferred Stock are
then convertible pursuant to Section 5 hereof as of the stated date of
approval of such holders of Preferred Stock, without any further action
by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Corporation or its
transfer agent, (B) upon the approval, set forth in a written notice to
the Corporation, of the holders of at least sixty percent (60%) of the
then outstanding shares of all Series of Preferred Stock, voting as a
single class, of an election to convert the outstanding shares of
Preferred Stock into Common Stock, all outstanding shares of all Series
of Preferred Stock shall be converted automatically into the number of
shares of Common Stock into which such shares of Preferred Stock are
then convertible pursuant to Section 5 hereof as of the stated date of
approval of such holders of Preferred Stock, without any further action
by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Corporation or its
transfer agent, or (C) at such time as less than 250,000 shares of any
Series of Preferred Stock shall be outstanding, then all outstanding
shares of such Series of Preferred Stock shall be converted
automatically into the number of shares of Common Stock into which such
shares of such Series of Preferred Stock are then convertible pursuant
to Section 5 hereof as of such time as less than 250,000 shares of such
Series of Preferred Stock shall be outstanding, without any further
action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the
Corporation or its transfer agent.
(ii) SURRENDER OF CERTIFICATES UPON MANDATORY
CONVERSION. Upon the occurrence of the applicable conversion events
specified in the preceding paragraph (i), the holders of the Preferred
Stock so converting shall, upon notice from the Corporation, surrender
the certificates representing such shares at the office of the
Corporation or of its transfer agent for the Common Stock. Thereupon,
there shall be issued and delivered to such holders a certificate or
certificates for the number of shares of Common Stock into which the
shares of Preferred Stock so surrendered were convertible on the date
on which such conversion occurred. The Corporation shall not be
obligated to issue such certificates unless certificates evidencing the
shares of Preferred Stock being converted are either delivered to the
Corporation or any such transfer agent, or the holder notifies the
Corporation that such certificates have been lost,
- 13 -
<PAGE> 14
stolen or destroyed and executes an agreement satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it
in connection therewith. After any such conversion in accordance with
Section 5(e)(i), all certificates evidencing the shares of Preferred
Stock so converted shall be deemed to represent the number of shares of
Common Stock into which such shares of Preferred Stock have been so
converted.
(f) DIVIDENDS. In the event the Corporation shall make or
issue, or shall fix a record date for the determination of holders of
Common Stock entitled to receive a dividend or other distribution
(other than a distribution in liquidation or other distribution
otherwise provided for herein) with respect to the Common Stock payable
in (i) securities of the Corporation other than shares of Common Stock,
or (ii) other assets (excluding cash dividends or distributions), then
and in each such event provision shall be made so that the holders of
shares of Preferred Stock shall receive upon conversion thereof in
addition to the number of shares of Common Stock receivable thereupon,
the number of securities or such other assets of the Corporation which
they would have received had their shares of Preferred Stock been
converted into Common Stock on the date of such event and had they
thereafter, during the period from the date of such event to and
including the Conversion Date (as that term is hereafter defined in
Section 5(j)), retained such securities or such other assets receivable
by them during such period, giving application to all other adjustments
called for during such period under this Section 5 with respect to the
rights of the holders of the Preferred Stock.
(g) CAPITAL REORGANIZATION OR RECLASSIFICATION. If the Common
Stock issuable upon the conversion of the Preferred Stock shall be
changed into the same or different number of shares of any class or
classes of capital stock, whether by capital reorganization,
recapitalization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend provided for
elsewhere in this Section 5, or the sale of all or substantially all of
the Corporation's capital stock or assets to any other person), then
and in each such event the holder of each share of Preferred Stock
shall have the right thereafter to convert such share into the kind and
amount of shares of capital stock and other securities and property
receivable upon such reorganization, recapitalization, reclassification
or other change by the holders of the number of shares of Common Stock
into which such shares of Preferred Stock might have been converted
immediately prior to such reorganization, recapitalization,
reclassification or change, all subject to further adjustment as
provided herein.
(h) CAPITAL REORGANIZATION, MERGER OR SALE OF ASSETS. If at
any time or from time to time there shall be a capital reorganization
of the Common Stock (other than a subdivision, combination,
recapitalization, reclassification or exchange of shares provided for
elsewhere in this Section 5) or a merger, or consolidation of the
Corporation with or into another corporation, or the sale of all or
substantially all of the Corporation's capital stock or assets to any
other person, or any other form of business combination or
reorganization in which control of the Corporation is transferred (a
"Reorganization"), then, as a part of such Reorganization, provision
shall be made so that the holders of shares of Preferred Stock shall
thereafter be entitled to receive upon conversion of the Preferred
Stock the same kind and amount of stock or other securities
- 14 -
<PAGE> 15
or property (including cash) of the Corporation, or of the successor
corporation resulting from such Reorganization to which such holder
would have been entitled if such holder had converted its shares of
Preferred Stock immediately prior to the effective time of such
Reorganization. In any such case, appropriate adjustment shall be made
in the application of the provisions of this Section 5 to the end that
the provisions of this Section 5 (including adjustment of the Series A
Applicable Conversion Value, the Series B Applicable Conversion Value,
the Series C Applicable Conversion Value, the Series D Applicable
Conversion Value and the Series E Applicable Conversion Value then in
effect and the number of shares of Common Stock or other securities
issuable upon conversion of shares of Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock
and Series E Preferred Stock) shall be applicable after that event in
as nearly equivalent a manner as may be reasonably practicable.
In the case of a transaction to which both this Section 5(h)
and Section 3(b) apply, the holders of at least sixty percent (60%) of
the outstanding shares of Preferred Stock, voting together as a single
class, upon the occurrence of a Reorganization shall have the option of
electing treatment for the shares of Preferred Stock under either this
Section 5(h) or Section 3(b) hereof, notice of which election shall be
submitted in writing to the Corporation at its principal office no
later than five (5) business days before the effective date of such
event. If no such election shall be made, the provisions of Section
3(b), and not this Section 5(h), shall apply.
The provisions of this Section 5(h) shall not apply to any
reorganization, merger or consolidation involving (1) only a change in
the state of incorporation of the Corporation, (2) a merger of the
Corporation with or into a wholly-owned subsidiary of the Corporation
that is incorporated in the United States of America, or (3) an
acquisition by merger, reorganization or consolidation, of which the
Corporation is substantively the surviving corporation and operates as
a going concern, of another corporation incorporated in the United
States of America that is engaged in a business similar or related to
the business of the Corporation and which does not involve a change in
the terms of the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock, the
Series E Preferred Stock or Common Stock.
(i) CERTIFICATE AS TO ADJUSTMENTS; NOTICE BY CORPORATION. In
each case of an adjustment or readjustment of the Series A Applicable
Conversion Rate, the Series B Applicable Conversion Rate, the Series C
Applicable Conversion Rate, the Series D Applicable Conversion Rate or
the Series E Applicable Conversion Rate, the Corporation at its expense
will furnish each holder of the applicable shares of Preferred Stock so
affected with a certificate prepared by the Treasurer or Chief
Financial Officer of the Corporation, showing such adjustment or
readjustment, and stating in detail the facts upon which such
adjustment or readjustment is based.
(j) EXERCISE OF CONVERSION PRIVILEGE. To exercise its
conversion privilege, a holder of Preferred Stock shall surrender the
certificate or certificates representing the
- 15 -
<PAGE> 16
shares being converted to the Corporation at its principal office, and
shall give written notice to the Corporation at that office that such
holder elects to convert such shares. Such notice shall also state the
name or names (with address or addresses) in which the certificate or
certificates for shares of Common Stock issuable upon such conversion
shall be issued. The certificate or certificates for shares of
Preferred Stock surrendered for conversion shall be accompanied by
proper assignment thereof to the Corporation or in blank. The date when
such written notice is received by the Corporation, together with the
certificate or certificates representing the shares of Preferred Stock
being converted, shall be the "Conversion Date". As promptly as
practicable after the Conversion Date, the Corporation shall issue and
deliver to the holder of the shares of Preferred Stock being converted,
or on such holder's written order, such certificate or certificates as
it may request for the number of whole shares of Common Stock issuable
upon the conversion of such shares of Preferred Stock in accordance
with the provisions of this Section 5, and cash, as provided in Section
5(k), in respect of any fraction of a share of Common Stock issuable
upon such conversion. Such conversion shall be deemed to have been
effected immediately prior to the close of business on the Conversion
Date, and at such time the rights of the holder as holder of the
converted shares of Preferred Stock shall cease and the person(s) in
whose name(s) any certificate(s) for shares of Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder
or holders of record of the shares of Common Stock represented thereby.
(k) CASH IN LIEU OF FRACTIONAL SHARES. No fractional shares of
Common Stock or scrip representing fractional shares shall be issued
upon the conversion of shares of Preferred Stock. Instead of any
fractional shares of Common Stock which would otherwise be issuable
upon conversion any shares of Preferred Stock, the Corporation shall
pay to the holder of the shares of Preferred Stock which were
converted, a cash adjustment in respect of such fractional shares in an
amount equal to the same fraction of the market price per share of the
Common Stock (as determined in a reasonable manner prescribed by the
Board of Directors) at the close of business on the Conversion Date.
The determination as to whether or not any fractional shares are
issuable shall be based upon the aggregate number of shares of
Preferred Stock being converted at any one time by any holder thereof,
not upon each share of Preferred Stock being converted.
(l) PARTIAL CONVERSION. In the event some but not all of the
shares of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock,
as applicable, represented by a certificate(s) surrendered by a holder
are converted, the Corporation shall execute and deliver to or on the
order of the holder, at the expense of the Corporation, a new
certificate representing the number of shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock or Series E Preferred Stock, as applicable, which were
not converted.
(m) RESERVATION OF COMMON STOCK. The Corporation shall at all
times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of Preferred Stock, such number of its shares
of Common Stock as shall from time to time be sufficient to effect
- 16 -
<PAGE> 17
the conversion of all outstanding shares of Preferred Stock (including
any shares of Preferred Stock represented by any warrants, options,
subscription or purchase rights for Preferred Stock and if at any time
the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of all then outstanding shares
of Preferred Stock (including any shares of Preferred Stock represented
by any warrants, options, subscriptions or purchase rights for such
Preferred Stock), the Corporation shall take such action as may be
necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.
(n) NO REISSUANCE OF PREFERRED STOCK. No share or shares of
Preferred Stock acquired by the Corporation by reason of redemption,
purchase, conversion or otherwise shall be reissued, and all such
shares shall be cancelled, retired and eliminated from the shares which
the Corporation shall be authorized to issue. The Corporation shall
from time to time take such appropriate corporate action as may be
necessary to reduce the authorized number of shares of Series A
Preferred Stock, Series B Preferred Stock, the Series C Preferred
Stock, the Series D Preferred Stock and the Series E Preferred Stock.
6. RESTRICTIONS AND LIMITATIONS. The holders of the Preferred Stock
shall have the following rights with respect to corporate action by the
Corporation:
(a) The Corporation shall not take any corporate action or
otherwise amend its Restated Certificate of Incorporation without the approval
by vote or written consent of the holders of at least sixty percent (60%) of the
then outstanding shares of Preferred Stock, each share of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock and Series E Preferred Stock to be entitled to one vote in each instance,
if such corporate action or amendment would change any of the rights,
preferences, privileges of or limitations provided for herein for the benefit of
any shares of Preferred Stock or materially adversely affect the rights of the
holders of the Preferred Stock, provided, however, that if such action or
amendment would impact only the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock or the Series
E Preferred Stock, or impact such series in a different manner, such action or
amendment shall be governed by paragraph (b), (c), (d), (e) or (f) below.
Without limiting the generality of the foregoing, the Corporation will not amend
its Restated Certificate of Incorporation or take any other corporate action
without the approval by the holders of at least sixty percent (60%) of the then
outstanding shares of Preferred Stock, voting together as a single class, if
such amendment or corporate action would:
(i) cause or authorize the Corporation to redeem,
purchase or otherwise acquire for value (or pay into or set aside for a
sinking fund for such purpose) or to distribute or sell any assets to
the holders of, any share or shares of equity securities of the
Corporation in their capacity as such, other than as provided for in
Sections 2 or 3 hereof; or
- 17 -
<PAGE> 18
(ii) authorize, create or issue, or obligate the
Corporation to authorize, create or issue, additional shares of any
class of stock ranking senior to or on a parity with the Preferred
Stock with respect to liquidation preferences or dividend rights,
except for the designation and issuance of shares of stock approved in
any instance by either a majority of the Board of Directors (including
all of the Preferred Stock Directors) or by the holders of at least
sixty percent (60%) of the outstanding shares of Preferred Stock; or
(iii) provide for the voluntary liquidation,
dissolution, recapitalization, reorganization or winding up of the
Corporation; or
(iv) cause or authorize any Reorganization
transaction, whether by merger, consolidation, reorganization, sale of
capital stock or sale of substantially all of the Corporation's assets,
in which control of the voting securities or assets of the Corporation
is transferred in any way to persons or entities who were not
stockholders of the Corporation immediately prior to any such event; or
(v) otherwise amend the Restated Corporation's
Certificate of Incorporation.
(b) The Corporation shall not take any corporate action or
otherwise amend its Restated Certificate of Incorporation without the approval
by vote or written consent of the holders of at least sixty percent (60%) of the
then outstanding shares of Series A Preferred Stock, each share of Series A
Preferred Stock to be entitled to one vote in each instance, if such corporate
action or amendment would change any of the rights, preferences, privileges of
or limitations provided for herein for the benefit of any shares of Series A
Preferred Stock or materially adversely affect the rights of the holders of the
Series A Preferred Stock. Without limiting the generality of the foregoing, the
Corporation will not amend its Certificate of Incorporation or take any other
corporate action without the approval by the holders of at least sixty percent
(60%) of the then outstanding shares of Series A Preferred Stock voting as a
separate class, if such amendment or corporate action would:
(i) reduce the amount payable to the holders of the
Series A Preferred Stock upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; or
(ii) adversely affect the liquidation preferences,
dividend rights or voting rights of the holders of the Series A
Preferred Stock; or
(iii) cancel or modify the conversion rights of the
holders of the Series A Preferred Stock provided for in Section 5
herein.
(c) The Corporation shall not take any corporate action or
otherwise amend its Certificate of Incorporation without the approval by vote or
written consent of the holders of at least sixty percent (60%) of the then
outstanding shares of Series B Preferred Stock, each share of Series B Preferred
Stock to be entitled to one vote in each instance, if such corporate
- 18 -
<PAGE> 19
action or amendment would change any of the rights, preferences, privileges of
or limitations provided for herein for the benefit of any shares of Series B
Preferred Stock or materially adversely affect the rights of the holders of the
Series B Preferred Stock. Without limiting the generality of the foregoing, the
Corporation will not amend its Certificate of Incorporation or take any other
corporate action without the approval by the holders of at least sixty percent
(60%) of the then outstanding shares of Series B Preferred Stock voting as a
separate class, if such amendment or corporate action would:
(i) reduce the amount payable to the holders of the
Series B Preferred Stock upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; or
(ii) adversely affect the liquidation preferences,
dividend rights or voting rights of the holders of the Series B
Preferred Stock; or
(iii) cancel or modify the conversion rights of the
holders of the Series B Preferred Stock provided for in Section 5
herein.
(d) The Corporation shall not take any corporate action or
otherwise amend its Restated Certificate of Incorporation without the approval
by vote or written consent of the holders of at least sixty percent (60%) of the
then outstanding shares of Series C Preferred Stock, each share of Series C
Preferred Stock to be entitled to one vote in each instance, if such corporate
action or amendment would change any of the rights, preferences, privileges of
or limitations provided for herein for the benefit of any shares of Series C
Preferred Stock or materially adversely affect the rights of the holders of the
Series C Preferred Stock. Without limiting the generality of the foregoing, the
Corporation will not amend its Certificate of Incorporation or take any other
corporate action without the approval by the holders of at least sixty percent
(60%) of the then outstanding shares of Series C Preferred Stock voting as a
separate class, if such amendment or corporate action would:
(i) reduce the amount payable to the holders of the
Series C Preferred Stock upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; or
(ii) adversely affect the liquidation preferences,
dividend rights or voting rights of the holders of the Series C
Preferred Stock; or
(iii) cancel or modify the conversion rights of the
holders of the Series C Preferred Stock provided for in Section 5
herein.
(e) The Corporation shall not take any corporate action or
otherwise amend its Restated Certificate of Incorporation without the approval
by vote or written consent of the holders of at least sixty percent (60%) of the
then outstanding shares of Series D Preferred Stock, each share of Series D
Preferred Stock to be entitled to one vote in each instance, if such corporate
action or amendment would change any of the rights, preferences, privileges of
or limitations provided for herein for the benefit of any shares of Series D
Preferred Stock or
- 19 -
<PAGE> 20
materially adversely affect the rights of the holders of the Series D Preferred
Stock. Without limiting the generality of the foregoing, the Corporation will
not amend its Certificate of Incorporation or take any other corporate action
without the approval by the holders of at least sixty percent (60%) of the then
outstanding shares of Series D Preferred Stock voting as a separate class, if
such amendment or corporate action would:
(i) reduce the amount payable to the holders of the
Series D Preferred Stock upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; or
(ii) adversely affect the liquidation preferences,
dividend rights or voting rights of the holders of the Series D
Preferred Stock; or
(iii) cancel or modify the conversion rights of the
holders of the Series D Preferred Stock provided for in Section 5
herein.
(f) The Corporation shall not take any corporate action or
otherwise amend its Restated Certificate of Incorporation without the approval
by vote or written consent of the holders of at least sixty percent (60%) of the
then outstanding shares of Series E Preferred Stock, each share of Series E
Preferred Stock to be entitled to one vote in each instance, if such corporate
action or amendment would change any of the rights, preferences, privileges of
or limitations provided for herein for the benefit of any shares of Series E
Preferred Stock or materially adversely affect the rights of the holders of the
Series E Preferred Stock. Without limiting the generality of the foregoing, the
Corporation will not amend its Certificate of Incorporation or take any other
corporate action without the approval by the holders of at least sixty percent
(60%) of the then outstanding shares of Series E Preferred Stock voting as a
separate class, if such amendment or corporate action would:
(i) reduce the amount payable to the holders of the
Series E Preferred Stock upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; or
(ii) adversely affect the liquidation preferences,
dividend rights or voting rights of the holders of the Series E
Preferred Stock; or
(iii) cancel or modify the conversion rights of the
holders of the Series E Preferred Stock provided for in Section 5
herein.
7. NO DILUTION OR IMPAIRMENT. The Corporation will not, by amendment of
its Restated Certificate of Incorporation or through any reorganization,
transfer of capital stock or 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 of the Preferred Stock set forth
herein, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holders of the Preferred Stock
against dilution or other impairment. Without limiting the generality of the
foregoing, the Corporation (a) will not increase the par
- 20 -
<PAGE> 21
value of any shares of stock receivable on the conversion of the Preferred Stock
above the amount payable therefor on such conversion, and (b) will take all such
action as may be necessary or appropriate in order that the Corporation may
validly and legally issue fully paid and nonassessable shares of stock on the
conversion of all Preferred Stock from time to time outstanding.
8. NOTICES OF RECORD DATE. In the event of
(a) any taking by the Corporation of a record of the holders
of any class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of capital stock of any
class or any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the Corporation,
any merger or consolidation of the Corporation, or any transfer of all or
substantially all of the assets of the Corporation to any other Corporation, or
any other entity or person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, then and in each such event the Corporation shall
deliver or cause to be delivered to each holder of Preferred Stock a notice
specifying (i) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right and a description of such dividend,
distribution or right, (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding up is expected to become effective, and
(iii) the time, if any, that is to be fixed, as to when the holders of record of
Common Stock (or other securities) shall be entitled to exchange their shares of
Common Stock (or other securities) for securities or other property deliverable
upon such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding up. Such notice shall
be delivered by facsimile transmission, hand delivery or overnight courier
service to the holders of the Preferred Stock at the address given to the
Corporation, for notice purposes, at least ten (10) days prior to the date
specified in such notice on which such action is to be taken, except in the case
of an involuntary dissolution, which notice shall be provided within three (3)
days following the date upon which the Corporation receives notice of such
event.
9. AMENDMENTS AND WAIVERS. Subject to the provisions of Paragraph 6
hereof, any term hereof may be amended and the observance of any term hereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), with the written consent of the Corporation and the written
consent of the holders of 60% of the then-outstanding shares of Preferred Stock,
taken together as a class for this purpose, provided that if such amendment or
waiver would affect only one such series of Preferred Stock, only the written
consent of the holders of 60% of the then outstanding shares of such series
shall be required. Any amendment or waiver so effected shall be binding upon the
Corporation and any holder of Preferred Stock.
- 21 -
<PAGE> 22
II. COMMON STOCK
1. PRIORITY. All preferences, voting powers, relative, participating,
optional or other special rights and privileges, and qualifications, limitations
or restrictions of the Common Stock are expressly made subject to and
subordinate to those that may be fixed with respect to the Preferred Stock.
2. VOTING RIGHTS. Each holder of record of Common Stock shall be
entitled to one vote for each share of Common Stock standing in his name on the
books of the Corporation. Except as otherwise required by law, this Restated
Certificate of Incorporation, and any Certificate of Designation with respect to
any Preferred Stock, the holders of Common Stock and Preferred Stock shall vote
together as a single class on all matters submitted to stockholders for a vote.
3. DIVIDENDS. Subject to provisions of law, this Restated Certificate
of Incorporation and any Certificate of Designation with respect to any
Preferred Stock, the holders of Common Stock shall be entitled to receive
dividends out of funds legally available therefor at such times and in such
amounts as the Board of Directors may determine in their sole discretion.
4. LIQUIDATION. Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after the payment or provision
for payment of all debts and liabilities of the Corporation and all preferential
amounts to which the holders of the Preferred Stock are entitled with respect to
the distribution of assets in liquidation, the holders of Common stock shall be
entitled to share ratably in the remaining assets of the Corporation available
for distribution, subject to any rights of holders of Preferred Stock to
participate with the holders of Common Stock in any such distribution of
remaining assets.
FIFTH. The Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal the by-laws of the Corporation with the
vote or written consent of two-thirds of the members of the Board of Directors.
SIXTH. The Corporation shall, to the maximum extent permitted from time
to time under the laws of the State of Delaware, indemnify and upon request
shall advance expenses to any person who is or was a party or is threatened to
be made a party to any threatened, pending or completed action, suit, proceeding
or claim, whether civil, criminal, administrative or investigative, by reason of
the fact that he is or was or has agreed to be a director, officer of the
Corporation or while a director or officer is or was serving at the request of
the Corporation as a director, officer, partner, trustee, employee or agent of
any corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, against any and all
expenses (including attorney's fees and expenses), judgments, fines, penalties
and amounts paid in settlement or incurred in connection with the investigation,
preparation to defend or defense of such action, suit, proceeding or claim;
provided, however, that the foregoing shall not require the Corporation to
indemnify or advance expenses to any person in connection with any action, suit,
proceeding, claim or counterclaim initiated by or on behalf of such person. Such
indemnification shall not be exclusive of other indemnification rights arising
under any by-law, agreement, vote of directors or stockholders or otherwise and
shall inure to
- 22 -
<PAGE> 23
the benefit of the heirs and legal representatives of such person. Any repeal or
modification of the foregoing provisions of this Article Sixth shall not
adversely affect any right or protection of a director or officer of this
Corporation existing at the time of such repeal or modification.
SEVENTH. A director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent that such exemption from liability or
limitation thereof is not permitted under the Delaware General Corporation Law
as currently in effect or as the same may hereafter be amended. No amendment,
modification or repeal of this Article SEVENTH shall adversely affect any right
or protection of a director that exists at the time of such amendment,
modification or repeal.
EIGHTH. The Corporation is to have perpetual existence.
IN WITNESS WHEREOF, ChemGenics Pharmaceuticals Inc. has caused this
certificate to be signed by its President and Secretary, on the 26th day of
November, 1996.
CHEMGENICS PHARMACEUTICALS INC.
By: /s/ Barry A. Berkowitz
----------------------
Title: President and CEO
--------------------
- 23 -
<PAGE> 1
Exhibit 3.2
RESTATED
CERTIFICATE OF INCORPORATION
OF
CHEMGENICS PHARMACEUTICALS INC.
Adopted in accordance with the
provisions of Sections 242 and 245
of the Delaware General Corporation Law
ChemGenics Pharmaceuticals Inc., a Delaware corporation, hereby
certifies as follows:
1. The name of the corporation is ChemGenics Pharmaceuticals Inc. The
date of filing of its original Certificate of Incorporation with the Secretary
of State was January 13, 1992.
2. This Restated Certificate of Incorporation amends, restates and
integrates the provisions of the Restated Certificate of Incorporation of said
corporation and has been duly adopted pursuant to a resolution adopted by the
Board of Directors (including all of the Preferred Stock Directors) and by the
holders of at least 60% of the outstanding shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock voting together as a single class, by not less than a
majority of the outstanding shares of Common Stock, Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock, voting together as a single class, by not less than a
majority of the outstanding shares of Common Stock voting as a separate class
and by not less than a majority of the outstanding shares of each of the Series
D Preferred Stock and the Series E Preferred Stock, each voting as a separate
class, acting by written consent in accordance with the provisions of Section
228 of the General Corporation Law of the State of Delaware. Written notice of
the taking of such action has been given in accordance with Section 228(d) of
the General Corporation Law of the State of Delaware.
3. The text of the Restated Certificate of Incorporation is hereby
amended and restated to read in full as follows:
FIRST. The name of the Corporation is ChemGenics
Pharmaceuticals Inc.
SECOND. The address, including street, number, city, and
county, of the registered office of the Corporation in the State of
Delaware is 32 Loockerman Square, Suite L-100, City of Dover, County of
Kent; and the name of the registered agent of the Corporation in the
State of Delaware is The Prentice-Hall Corporation System, Inc.
<PAGE> 2
THIRD. The nature of the business to be conducted and the
purposes of the Corporation are:
To research, develop and commercialize pharmaceutical
products and processes;
To purchase or otherwise acquire, invest in, own,
lease, mortgage, pledge, sell, assign and transfer or
otherwise dispose of, trade and deal in and with real property
and personal property of every kind, class and description
(including, without limitation, goods, wares and merchandise
of every kind, class and description), to manufacture goods,
wares and merchandise of every kind, class and description,
both on its own account and for others;
To make and perform agreements and contracts of every
kind and description;
To develop and acquire, manage, exploit, license and
alienate patents, processes or formulas, trademarks and
copyrights, including all related rights;
To purchase or otherwise acquire, invest in, own,
lease, mortgage, pledge, sell, assign and transfer or
otherwise dispose of, trade and deal in and with real property
and personal property of every kind, class and description
(including, without limitation, goods, wares and merchandise
of every kind, class and description), to manufacture goods,
wares and merchandise of every kind, class and description,
both on its own account and for others;
To borrow or lend money, and to make and issue notes,
bonds, debentures, obligations and evidences of indebtedness
of all kinds, whether or not secured by mortgage, pledge, or
otherwise, without limit as to amount, and to secure the same
by mortgage, pledge, or otherwise, and generally to make and
perform agreements and contracts of every kind and
description; and
Generally to engage in any lawful act or activity or
carry on any business for which corporations may be organized
under the Delaware General Corporation law or any successor
statute.
- 2 -
<PAGE> 3
FOURTH: A. Designation and Number of Shares.
The total number of shares of capital stock of all classes which the
Corporation is authorized to issue is 30,000,000, of which shares 25,000,000 of
the par value of $.001 each shall be designated "Common Stock", and 5,000,000 of
the par value of $.001 each shall be a class designated "Preferred Stock".
The relative powers, designations, preferences, rights, and
qualifications, limitations and restrictions and other matters relating to such
Common Stock and the Preferred Stock are as set forth below in this Article
FOURTH.
B. Preferred Stock
(1) Shares of Preferred Stock may be issued in one or more series at
such time or times and for such consideration as the Board of Directors may
determine. All shares of any one series shall be of equal rank and identical in
all respects.
(2) Authority is hereby expressly granted to the Board of Directors
to fix from time to time, by resolution or resolutions providing for the
establishment and/or issuance of any series of Preferred Stock, the designation
of such series and the powers, preferences and rights of the shares of such
series, and the qualifications, limitations or restrictions thereof, including,
without limitation, the following:
(a) The distinctive designation and number of shares
comprising such series, which number may (except where otherwise
provided by the Board of Directors in creating such series) be
increased or decreased (but not below the number of shares then
outstanding) from time to time by action of the Board of Directors;
(b) The rate of dividends, if any, on the shares of that
series, whether dividends shall be non-cumulative, cumulative to the
extent earned or cumulative (and, if cumulative, from which date or
dates), whether dividends shall be payable in cash, property or rights,
or in shares of the Corporation's capital stock, and the relative
rights of priority, if any, of payment of dividends on shares of that
series over shares of any other series or class;
(c) Whether 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) or the property
or rights, including securities of any other corporation, payable in
case of redemption;
- 3 -
<PAGE> 4
(d) Whether the series shall have a sinking fund for the
redemption or purchase of shares of that series and, if so, the terms
and amounts payable into such sinking fund;
(e) The rights to which the holders of the shares of that
series shall be entitled 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 in any such event;
(f) Whether the shares of that series shall be convertible
into or exchangeable for shares of stock of any other class or any
other series and, if so, the terms and conditions of such conversion or
exchange, including the rate or rates of conversion or exchange, the
date or dates upon or after which they shall be convertible or
exchangeable, the duration for which they shall be convertible or
exchangeable, the event or events upon or after which they shall be
convertible or exchangeable or at whose option they shall be
convertible or exchangeable, and the method (if any) of adjusting the
rates of conversion or exchange in the event of a stock split, stock
dividend, combination of shares or similar event;
(g) Whether the issuance of any additional shares of such
series, or of any shares of any other series, shall be subject to
restrictions as to issuance, or as to the powers, preferences or rights
of any such other series;
(h) Whether or not the shares of that series shall have voting
rights, the extent of such voting rights on specified matters or on all
matters, the number of votes to which the holder of shares of such
series shall be entitled in respect of each share of such series,
whether such series shall vote generally with the Common Stock on all
matters or (either generally or upon the occurrence of specified
circumstances) shall vote separately as a class or with other series of
Preferred Stock; and
(i) Any other preferences, privileges and powers and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions of such series, as the Board of Directors
may deem advisable and as shall not be inconsistent with the provisions
of this Restated Certificate of Incorporation and to the full extent
now or hereafter permitted by the laws of the State of Delaware.
C. Common Stock.
1. General. The voting, dividend and liquidation and other rights of
the holders of the Common Stock are subject to and qualified by the rights of
the holders of Preferred Stock, if any.
2. Voting. The holders of the Common Stock are entitled to one vote
for each share held. There shall be no cumulative voting.
- 4 -
<PAGE> 5
3. Dividends. Dividends may be declared and paid on the Common Stock
from funds lawfully available therefor if, as and when determined by the Board
of Directors, subject to any provision of this Restated Certificate of
Incorporation, as amended from time to time, and subject to the relative rights
and preferences of any shares of Preferred Stock authorized and issued
hereunder.
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, however, to the liquidation rights of the holders of
Preferred Stock authorized and issued hereunder.
FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
A. The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. In addition to the powers and
authority expressly conferred upon them by statute or by this Restated
Certificate of Incorporation or the By-Laws of the Corporation as in effect from
time to time, the directors are hereby empowered to exercise all such powers and
do all such acts and things as may be exercised or done by the Corporation.
B. The directors of the Corporation need not be elected by written
ballot unless the By-Laws so provide.
C. Any action required or permitted to be taken by the stockholders of
the Corporation may be effected only at a duly called annual or special meeting
of stockholders of the Corporation.
SIXTH: A. Subject to the rights of the holders of any series of
Preferred Stock then outstanding to elect additional directors under specified
circumstances, the number of directors shall be fixed from time to time
exclusively by the Board of Directors pursuant to a resolution adopted by a
majority of the Board.
B. On or prior to the date on which the Corporation first provides
notice of an annual meeting of the stockholders (or a special meeting in lieu
thereof) in 1997, the Board of Directors of the Corporation shall divide the
directors nominated for election at such meeting into three classes, as nearly
equal in number as reasonably possible, with the term of office of the first
class to expire at the 1998 annual meeting of stockholders or any special
meeting in lieu thereof, the term of office of the second class to expire at the
1999 annual meeting of stockholders or any special meeting in lieu thereof, and
the term of office of the third class to expire at the 2000 annual meeting of
stockholders or any special meeting in lieu thereof. At each annual meeting of
stockholders or special meeting in lieu thereof following such initial
classification, directors elected to succeed those directors whose terms expire
shall be elected for a term of office to
- 5 -
<PAGE> 6
expire at the third succeeding annual meeting of stockholders or special meeting
in lieu thereof after their election and until their successors are duly elected
and qualified.
C. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, newly created directorships resulting from any increase
in the authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause may be filled only by a majority vote of the directors
then in office even though less than a quorum, or by a sole remaining director.
In the event of any increase or decrease in the authorized number of directors,
(i) each director then serving as such shall nevertheless continue as a director
of the class of which he is a member until the expiration of his current term or
his prior death, retirement, removal or resignation and (ii) the newly created
or eliminated directorships resulting from such increase or decrease shall if
reasonably possible be apportioned by the Board of Directors among the three
classes of directors so as to ensure that no one class has more than one
director more than any other class. To the extent reasonably possible,
consistent with the foregoing rule, any newly created directorships shall be
added to those classes whose terms of office are to expire at the latest dates
following such allocation and newly eliminated directorships shall be subtracted
from those classes whose terms of office are to expire at the earliest dates
following such allocation, unless otherwise provided for from time to time by
resolution adopted by a majority of the directors then in office, although less
than a quorum. 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 of Directors until the vacancy is filled.
D. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner provided in the
By-Laws of the Corporation.
E. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, any director, or the entire Board of Directors, may be
removed from office at any time only for cause. A director may be removed for
cause only after a reasonable notice and opportunity to be heard before the body
proposing to remove him.
SEVENTH: The Board of Directors is expressly empowered to adopt, amend
or repeal By-Laws of the Corporation. Any adoption, amendment or repeal of the
By-Laws of the Corporation by the Board of Directors shall require the approval
of a majority of the Board. The stockholders shall also have power to adopt,
amend or repeal the By-Laws of the Corporation; provided, however, that, in
addition to any vote of the holders of any class or series of stock of the
Corporation required by law or by this Restated Certificate of Incorporation,
the affirmative vote of the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of all of the then outstanding shares of the
capital stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required for the
stockholders to adopt, amend or repeal any provision of the By-Laws of the
Corporation.
- 6 -
<PAGE> 7
EIGHTH: 1. To the fullest extent permitted by the Delaware General
Corporation Law as the same now exists or may hereafter be amended, the
Corporation shall indemnify, and advance expenses to, its directors, officers
and members of its Scientific Advisory Board and any person who is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, or of a partnership, joint venture, trust or other
enterprise, if such person was or is made a party to or is threatened to be made
a party to or is otherwise involved (including, without limitation, as a
witness) in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director or officer of the Corporation or a member of the Corporation's
Scientific Advisory Board or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, or of a
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan; provided, however, that except with respect
to proceedings to enforce rights to indemnification or as is otherwise required
by law, the By-Laws of the Corporation may provide that the Corporation shall
not be required to indemnify, and advance expenses to, any director, officer or
other person in connection with a proceeding (or part thereof) initiated by such
director, officer or other person, unless such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The Corporation, by
action of its Board of Directors, may provide indemnification or advance
expenses to employees and other agents of the Corporation or other persons only
on such terms and conditions and to the extent determined by the Board of
Directors in its sole and absolute discretion.
2. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article EIGHTH shall not be deemed exclusive of any
other rights to which a person seeking indemnification or advancement of
expenses may be entitled under any By-Law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
3. The Corporation 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 Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, or of a
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under this Article EIGHTH.
4. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article EIGHTH shall, unless otherwise specified when
authorized or ratified, continue as to a person who has ceased to be a director,
officer or member of the Corporation's Scientific Advisory Board and shall inure
to the benefit of the heirs, executors and administrators of such director,
officer or member of the Corporation's Scientific Advisory Board. The
indemnification and rights to advancement of expenses that may have been
provided to an employee or agent of the Corporation by action of the Board of
Directors, pursuant to the last sentence of Paragraph 1 of this Article EIGHTH,
shall, unless otherwise specified when
- 7 -
<PAGE> 8
authorized or ratified, continue as to a person who has ceased to be an employee
or agent of the Corporation and shall inure to the benefit of the heirs,
executors and administrators of such person, after the time such person has
ceased to be an employee or agent of the Corporation, only on such terms and
conditions and to the extent determined by the Board of Directors in its sole
discretion. No repeal or amendment of this Article EIGHTH shall adversely affect
any rights of any person pursuant to this Article EIGHTH which existed at the
time of such repeal or amendment with respect to acts or omissions occurring
prior to such repeal or amendment.
NINTH: No director shall be personally liable to the Corporation or its
stockholders for any monetary damages for breaches of fiduciary duty as a
director, notwithstanding any provision of law imposing such liability; provided
that this provision shall not eliminate or limit the liability of a director, to
the extent that such liability is imposed by applicable law, (i) for any 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) under Section 174 or successor provisions
of the General Corporation Law of the State of Delaware; or (iv) for any
transaction from which the director derived an improper personal benefit. This
provision shall not eliminate or limit the liability of a director for any act
or omission if such elimination or limitation is prohibited by the General
Corporation Law of the State of Delaware. No amendment to or repeal of this
provision shall apply to or have any effect on the liability or alleged
liability of any director for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal. If the Delaware General
Corporation Law is amended to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended.
TENTH: The Corporation reserves the right to amend or repeal any
provision contained in this Restated Certificate of Incorporation in the manner
prescribed by the laws of the State of Delaware and all rights conferred upon
stockholders are granted subject to this reservation; provided, however, that in
addition to the vote of the holders of any class or series of stock of the
Corporation required by law or by this Restated Certificate of Incorporation,
the affirmative vote of the holders of shares of voting stock of the Corporation
representing at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required to (i) reduce or eliminate the
number of authorized shares of Common Stock or the number of authorized shares
of Preferred Stock set forth in Article FOURTH, (ii) remove any director from
office at any time, only for cause and only after such director has been
afforded reasonable notice and an opportunity to be heard before the body
proposing to remove such director or (iii) amend or repeal, or adopt any
provision inconsistent with, Articles FIFTH, SIXTH, SEVENTH, EIGHTH, NINTH and
this Article TENTH of this Restated Certificate of Incorporation.
ELEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its
- 8 -
<PAGE> 9
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting
of the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths (3/4) in value of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, agree to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
[THIS SPACE INTENTIONALLY LEFT BLANK]
- 9 -
<PAGE> 10
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by its President this day of 199 .
CHEMGENICS PHARMACEUTICALS INC.
By:_____________________________________
Barry A. Berkowitz
President and Chief Executive Officer
- 10 -
<PAGE> 1
EXHIBIT 3.3
MYCO PHARMACEUTICALS INC.
RESTATED BY-LAWS
ARTICLE I - STOCKHOLDERS
Section 1. Annual Meeting.
An annual meeting of the stockholders, for the election of directors to
succeed those whose terms expire and for the transaction of such other business
as may properly come before the meeting, shall be held at such place, on such
date, and at such time as the Board of Directors shall each year fix.
Section 2. Special Meetings.
Subject to the rights of the holders of any class or series of preferred
stock of the Corporation, special meetings of stockholders of the Corporation
may be called by any two directors, the Board of Directors pursuant to a
resolution adopted by a majority of the total number of directors authorized, by
the President, the Chief Executive Officer, or by any holder or holders of at
least 25% of the outstanding shares of any class or series of capital stock of
the Corporation, voting as a separate class. Special meetings of the
stockholders may be held at such place within or without the State of Delaware
as may be stated in such resolution.
Section 3. Notice of Meetings.
Written notice of the place, date, and time of all meetings of the
stockholders shall be given, not less than ten (10) nor more than sixty (60)
days before the date on which the meeting is to be held, to each stockholder
entitled to vote at such meeting, except as otherwise provided herein or
required by law (meaning, here and hereinafter, as required from time to time by
the Delaware General Corporation Law or the Certificate of Incorporation of the
Corporation).
When a meeting is adjourned to another place, date or time, written
notice need not be given of the adjourned meeting if the place, date and time
thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than thirty
(30) days after the date for which the meeting was originally noticed, or if a
new record date is fixed for the adjourned meeting, written notice of the place,
date, and time of the adjourned meeting shall be given in conformity herewith.
At any adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
<PAGE> 2
Section 4. Quorum.
At any meeting of the stockholders, the holders of a majority of all of
the shares of the stock entitled to vote at the meeting, present in person or by
proxy, shall constitute a quorum for all purposes, unless or except to the
extent that the presence of a larger number may be required by law. Where a
separate vote by a class or classes, or series thereof, is required, a majority
of the voting power of the outstanding shares of such class or classes, or
series, present in person or represented by proxy shall constitute a quorum
entitled to take action with respect to that vote on that matter.
If a quorum shall fail to attend any meeting, the chairman of the
meeting or the holders of a majority of the shares of stock entitled to vote who
are present, in person or by proxy, may adjourn the meeting to another place,
date, or time.
Section 5. Organization.
The Chairman of the Board of Directors or, in his or her absence, such
person as the Board of Directors may have designated or, in his or her absence,
the chief executive officer of the Corporation or, in his or her absence, such
person as may be chosen by the holders of a majority of the shares entitled to
vote who are present, in person or by proxy, shall call to order any meeting of
the stockholders and act as chairman of the meeting. In the absence of the
Secretary of the Corporation, the secretary of the meeting shall be such person
as the chairman of the meeting appoints.
Section 6. Conduct of Business.
The Chairman of the Board of Directors or his or her designee or, if
neither the Chairman of the Board nor his or her designee is present at the
meeting, then a person appointed by a majority of the Board of Directors, shall
preside at, and act as chairman of, any meeting of the stockholders. The
chairman of any meeting of stockholders shall determine the order of business
and the procedures at the meeting, including such regulation of the manner of
voting and the conduct of discussion as he or she deems to be appropriate.
Section 7. Proxies and Voting.
At any meeting of the stockholders, every stockholder entitled to vote
may vote in person or by proxy authorized by an instrument in writing filed in
accordance with the procedure established for the meeting.
Each stockholder shall have one (1) vote for every share of stock
entitled to vote which is registered in his or her name on the record date for
the meeting, except as otherwise provided herein or required by law.
- 2-
<PAGE> 3
All voting, including on the election of directors but excepting where
otherwise required by law, may be by a voice vote; provided, however, that upon
demand therefor by a stockholder entitled to vote or his or her proxy, a vote by
ballot shall be taken.
Except as otherwise provided in the terms of any class or series of
preferred stock of the Corporation, all elections shall be determined by a
plurality of the votes cast, and except as otherwise required by law, all other
matters shall be determined by a majority of the votes cast.
Section 8. Action Without Meeting.
Any action required to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be (1) signed and dated by 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 thereon
were present and voted and (2) delivered to the Corporation within sixty (60)
days of the earliest dated consent by delivery to its registered office in the
State of Delaware (in which case delivery shall be by hand or by certified or
registered mail, return receipt requested), its principal place of business, or
an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
Section 9. Stock List.
A complete list of stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in his
or her name, shall be open to the examination of any such stockholder, for any
purpose germane to the meeting, during ordinary business hours for a period of
at least ten (10) days prior to the meeting, either at a place within the city
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 stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such stockholder
who is present. Such list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.
- 3-
<PAGE> 4
ARTICLE II - BOARD OF DIRECTORS
Section 1. Number, Election, Tenure and Qualification.
The number of directors which shall constitute the whole board shall be
6, or such lesser number as determined by resolution of the Board of Directors
or by the stockholders at the annual meeting or at any special meeting of
stockholders. The directors shall be elected at the annual meeting or at any
special meeting of the stockholders, except as provided in Section 2 of this
Article, and each director elected shall hold office until his or her successor
is elected and qualified, unless sooner displaced. Directors need not be
stockholders.
Section 2. Vacancies and Newly Created Directorships.
Subject to the rights of the holders of any class or series of preferred
stock of the Corporation to elect directors, newly created directorships
resulting from any increase in the authorized number of directors or any
vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may be filled
only by a majority vote of the directors then in office, though less than a
quorum, or the sole remaining director. No decrease in the number of authorized
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
Section 3. Resignation and Removal.
Any director may resign at any time upon written notice to the
Corporation at its principal place of business or to the chief executive officer
or secretary. Such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the happening of some other
event. Unless otherwise specified by law or the Certificate of Incorporation,
any director or the entire Board of Directors may be removed, with or without
cause, by the holders of a majority of the shares then entitled to vote at an
election of directors, except that directors elected by holders of a particular
class or series may be removed without cause only by the holders of a majority
of the outstanding shares of such class or series.
Section 4. Regular Meetings.
Regular meetings of the Board of Directors shall be held at such place
or places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all directors. A
written notice of each regular meeting shall not be required.
- 4-
<PAGE> 5
Section 5. Special Meetings.
Special meetings of the Board of Directors may be called by the Chairman
of the Board of Directors, if any, the President, the Treasurer, the Secretary
or one or more of the directors then in office and shall be held at such place,
on such date, and at such time as they or he or she shall fix. Notice of the
place, date, time and purpose of each such special meeting shall be given each
director by whom it is not waived by mailing written notice not less than three
(3) days before the meeting, by sending written notice by recognized overnight
courier service not less than two (2) days before the meeting, or orally, by
telegraph, telex, facsimile, cable or telecopy given not less than twenty-four
(24) hours before the meeting. Unless otherwise indicated in the notice thereof,
any and all business may be transacted at a special meeting.
Section 6. Quorum.
At any meeting of the Board of Directors, a majority of the total number
of members of the Board of Directors shall constitute a quorum for all purposes,
provided that at any time during which the holders of Preferred Stock shall have
the right to elect one or more directors, at least one such director shall be
required for a quorum. If a quorum shall fail to attend any meeting, a majority
of those present may adjourn the meeting to another place, date, or time,
without further notice or waiver thereof.
Section 7. Action by Consent.
Unless otherwise restricted by the Certificate of Incorporation or these
By-Laws, 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,
if all members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
Section 8. Participation in Meetings By Conference Telephone.
Members of the Board of Directors, or of any committee thereof, may
participate in a meeting of such Board or 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 such participation shall
constitute presence in person at such meeting.
Section 9. Conduct of Business.
At any meeting of the Board of Directors, business shall be transacted
in such order and manner as the Board may from time to time determine, and all
matters shall be determined by the vote of a majority of the directors present,
except as otherwise provided herein or required by law.
- 5-
<PAGE> 6
Section 10. Powers.
The Board of Directors may, except as otherwise required by law,
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation, including, without limiting the generality of the
foregoing, the unqualified power:
(1) To declare dividends from time to time in accordance
with law;
(2) To purchase or otherwise acquire any property, rights
or privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such
form as it may determine, of written obligations of
every kind, negotiable or non-negotiable, secured or
unsecured, to borrow funds and guarantee obligations,
and to do all things necessary in connection therewith;
(4) To remove any officer of the Corporation with or
without cause, and from time to time to devolve the
powers and duties of any officer upon any other person
for the time being;
(5) To confer upon any officer of the Corporation the power
to appoint, remove and suspend subordinate officers,
employees and agents;
(6) To adopt from time to time such stock, option, stock
purchase, bonus or other compensation plans for
directors, officers, employees and agents of the
Corporation and its subsidiaries as it may determine;
(7) To adopt from time to time such insurance, retirement,
and other benefit plans for directors, officers,
employees and agents of the Corporation and its
subsidiaries as it may determine; and,
(8) To adopt from time to time regulations, not
inconsistent with these By-Laws, for the management of
the Corporation's business and affairs.
Section 11. Compensation of Directors.
Directors, as such, may receive, pursuant to a resolution of the Board
of Directors, fixed fees and other compensation for their services as directors,
including, without limitation, their services as members of committees of the
Board of Directors.
- 6-
<PAGE> 7
ARTICLE III - COMMITTEES
Section 1. Committees of the Board of Directors.
The Board of Directors, by a vote of a majority of the Board of
Directors, may from time to time designate committees of the Board, with such
lawfully delegable powers and duties as it thereby confers, to serve at the
pleasure of the Board and shall, for those committees and any others provided
for herein, elect a director or directors to serve as the member or members,
designating, if it desires, other directors as alternate members who may replace
any absent or disqualified member at any meeting of the committee. Any such
committee, to the extent provided in the resolution of the Board of Directors,
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 the 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
to the stockholders a dissolution of the Corporation or a revocation of a
dissolution, or amending the By-Laws of the Corporation. Any committee so
designated may exercise the power and authority of the Board of Directors to
declare a dividend, to authorize the issuance of stock or to adopt a certificate
of ownership and merger pursuant to Section 253 of the Delaware General
Corporation Law if the resolution which designates the committee or a
supplemental resolution of the Board of Directors shall so provide. In the
absence or disqualification of any member of any committee and any alternate
member in his or her place, the member or members of the committee present at
the meeting and not disqualified from voting, whether or not he or she or they
constitute a quorum, may by unanimous vote appoint another member of the Board
of Directors to act at the meeting in the place of the absent or disqualified
member.
Section 2. Conduct of Business.
Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; one-third (1/3) of the members shall
constitute a quorum, provided, however that at any time during which the holders
of Preferred Stock shall have the right to elect one or more directors, at least
one such director shall be required for a quorum. All matters shall be
determined by a majority vote of the members present. Action may be taken by any
committee without a meeting if all members thereof consent thereto in writing,
and the writing or writings are filed with the minutes of the proceedings of
such committee.
- 7-
<PAGE> 8
ARTICLE IV - OFFICERS
Section 1. Enumeration.
The officers of the Corporation shall be the President, the Treasurer,
the Secretary and such other officers as the Board of Directors or the Chairman
of the Board may determine, including, but not limited to, the Chairman of the
Board of Directors, one or more Vice Presidents, Assistant Treasurers and
Assistant Secretaries.
Section 2. Election.
The Chairman of the Board, if any, the President, the Treasurer and the
Secretary shall be elected annually by the Board of Directors at their first
meeting following the annual meeting of the stockholders. The Board of Directors
may, from time to time, elect or appoint such other officers as it may
determine, including, but not limited to, one or more Vice Presidents, Assistant
Treasurers and Assistant Secretaries.
Section 3. Qualification.
No officer need be a stockholder. The Chairman of the Board, if any, and
any Vice Chairman appointed to act in the absence of the Chairman, if any, shall
be elected by and from the Board of Directors, but no other officer need be a
director. Two or more offices may be held by any one person. If required by vote
of the Board of Directors, an officer shall give bond to the Corporation for the
faithful performance of his or her duties, in such form and amount and with such
sureties as the Board of Directors may determine. The premiums for such bonds
shall be paid by the Corporation.
Section 4. Tenure and Removal.
Each officer elected or appointed by the Board of Directors shall hold
office until the first meeting of the Board of Directors following the next
annual meeting of the stockholders and until his or her successor is elected or
appointed and qualified, or until he or she dies, resigns, is removed or becomes
disqualified, unless a shorter term is specified in the vote electing or
appointing said officer. Each officer appointed by the Chairman of the Board, if
any, shall hold office until his or her successor is elected or appointed and
qualified, or until he or she dies, resigns, is removed or becomes disqualified,
unless a shorter term is specified by any agreement or other instrument
appointing such officer. Any officer may resign by giving written notice of his
or her resignation to the Chairman of the Board, if any, the President, or the
Secretary, or to the Board of Directors at a meeting of the Board, and such
resignation shall become effective at the time specified therein. Any officer
elected or appointed by the Board of Directors may be removed from office with
or without cause by vote of a majority of the
- 8-
<PAGE> 9
directors. Any officer appointed by the Chairman of the Board, if any, may be
removed with or without cause by the Chairman of the Board.
Section 5. Chairman of the Board.
The Chairman of the Board, if any, shall preside at all meetings of the
Board of Directors and stockholders at which he or she is present and shall have
such authority and perform such duties as may be prescribed by these By-Laws or
from time to time be determined by the Board of Directors. The Chairman of the
Board shall also have the power and authority to determine the compensation and
duties of all officers, employees and agents of the Corporation.
Section 6. President.
The President shall, subject to the control and direction of the Board
of Directors, have and perform such powers and duties as may be prescribed by
these By-Laws or from time to time be determined by the Board of Directors.
Section 7. Vice Presidents.
The Vice Presidents, if any, in the order of their election, or in such
other order as the Board of Directors may determine, shall have and perform the
powers and duties of the President (or such of the powers and duties as the
Board of Directors may determine) whenever the President is absent or unable to
act. The Vice Presidents, if any, shall also have such other powers and duties
as may from time to time be determined by the Board of Directors.
Section 8. Treasurer and Assistant Treasurers.
The Treasurer shall, subject to the control and direction of the Board
of Directors, have and perform such powers and duties as may be prescribed in
these By-Laws or be determined from time to time by the Board of Directors. All
property of the Corporation in the custody of the Treasurer shall be subject at
all times to the inspection and control of the Board of Directors. Unless
otherwise voted by the Board of Directors, each Assistant Treasurer, if any,
shall have and perform the powers and duties of the Treasurer whenever the
Treasurer is absent or unable to act, and may at any time exercise such of the
powers of the Treasurer, and such other powers and duties, as may from time to
time be determined by the Board of Directors.
Section 9. Secretary and Assistant Secretaries.
The Board of Directors shall appoint a Secretary and, in his or her
absence, an Assistant Secretary. The Secretary or, in his or her absence, any
Assistant Secretary, shall attend all meetings of the directors and shall record
all votes of the Board of Directors and minutes of the proceedings at such
meetings. The Secretary or, in his or her absence, any Assistant Secretary,
shall notify the directors of their meetings, and shall have and perform such
other powers and
- 9-
<PAGE> 10
duties as may from time to time be determined by the Board of Directors. If the
Secretary or an Assistant Secretary is elected but is absent from any meeting of
directors, a temporary secretary may be appointed by the directors at the
meeting.
Section 10. Bond.
If required by the Board of Directors, any officer shall give the
Corporation a bond in such sum and with such surety or sureties and upon such
terms and conditions as shall be satisfactory to the Board of Directors,
including without limitation a bond for the faithful performance of the duties
of his office and for the restoration to the Corporation of all books, papers,
vouchers, money and other property of whatever kind in his or her possession or
under his control and belonging to the Corporation.
Section 11. Action with Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors, the President, the
Treasurer or any officer of the Corporation authorized by the President shall
have power to vote and otherwise act on behalf of the Corporation, in person or
by proxy, at any meeting of stockholders of or with respect to any action of
stockholders of any other corporation in which this Corporation may hold
securities and otherwise to exercise any and all rights and powers which this
Corporation may possess by reason of its ownership of securities in such other
corporation.
ARTICLE V - STOCK
Section 1. Certificates of Stock.
Each stockholder shall be entitled to a certificate signed by, or in the
name of the Corporation by the Chairman of the Board of Directors, or the
President or a Vice President, and by the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary, certifying the number of shares
owned by him or her. Any or all of the signatures on the certificate may be by
facsimile.
Section 2. Transfers of Stock.
Transfers of stock shall be made only upon the transfer books of the
Corporation kept at an office of the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation. Except where a
certificate is issued in accordance with Section 4 of this Article of these
By-Laws, an outstanding certificate for the number of shares involved shall be
surrendered for cancellation before a new certificate is issued therefor.
- 10-
<PAGE> 11
Section 3. Record Date.
In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders, or to receive payment of
any dividend or other distribution or allotment of any rights or to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date on which the resolution
fixing the record date is adopted and which record date shall not be more than
sixty (60) nor less than ten (10) days before the date of any meeting of
stockholders, nor more than sixty (60) days prior to the time for such other
action as hereinbefore described; provided, however, that if no record date is
fixed by the Board of Directors, 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 next preceding the day on which notice is given or,
if notice is waived, at the close of business on the day next preceding the day
on which the meeting is held, and, for determining stockholders entitled to
receive payment of any dividend or other distribution or allotment of rights or
to exercise any rights of change, conversion or exchange of stock or for any
other purpose, the record date shall be at the close of business on the day on
which the Board of Directors adopts a resolution relating thereto.
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 4. Lost, Stolen or Destroyed Certificates.
In the event of the loss, theft or destruction of any certificate of
stock, another may be issued in its place pursuant to such regulations as the
Board of Directors may establish concerning proof of such loss, theft or
destruction and concerning the giving of a satisfactory bond or bonds of
indemnity.
Section 5. Regulations.
The issue, transfer, conversion and registration of certificates of
stock shall be governed by such other regulations as the Board of Directors may
establish.
Section 6. Interpretation.
The Board of Directors shall have the power to interpret all of the
terms and provisions of these By-Laws, which interpretation shall be conclusive.
- 11-
<PAGE> 12
ARTICLE VI - NOTICES
Section 1. Notices.
Except as otherwise specifically provided herein or required by law, all
notices required to be given to any stockholder, director, officer, employee or
agent shall be in writing and may in every instance be effectively given by hand
delivery to the recipient thereof, by depositing such notice in the mail,
postage paid, or by sending such notice by recognized courier service, prepaid
telegram or mailgram, or telecopy, facsimile, cable, or telex. Any such notice
shall be addressed to such stockholder, director, officer, employee or agent at
his or her last known address as the same appears on the books of the
Corporation. The time when such notice is received, if hand delivered, or
dispatched, if delivered through the mail or by courier, telegram, mailgram,
telecopy, cable, or telex shall be the time of the giving of the notice.
Section 2. Waiver of Notice.
A written waiver of any notice, signed by a stockholder, director,
officer, employee or agent, whether before or after the time of the event for
which notice is to be given, shall be deemed equivalent to the notice required
to be given to such stockholder, director, officer, employee or agent. Neither
the business nor the purpose of any meeting need be specified in such a waiver.
Attendance of a director or stockholder at a meeting without protesting prior
thereto or at its commencement the lack of notice shall also constitute a waiver
of notice by such director or stockholder.
ARTICLE VII - INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or an officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "Indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as a director, officer,
employee or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than such law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
Indemnitee
- 12-
<PAGE> 13
in connection therewith; provided, however, that, except as provided in Section
3 of this Article with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such Indemnitee in
connection with a proceeding (or part thereof) initiated by such Indemnitee only
if such proceeding (or part thereof) was authorized by the board of directors of
the Corporation.
Section 2. Right to Advancement of Expenses. The right to
indemnification conferred in Section 1 of this Article shall include the right
to be paid by the Corporation the expenses (including attorney's fees) incurred
in defending any such proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law requires, an advancement
of expenses incurred by an Indemnitee in his capacity as a director or officer
(and not in any other capacity in which service was or is rendered by such
Indemnitee, including, without limitation, service to an employee benefit plan)
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such Indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal that such Indemnitee is not entitled to be indemnified
for such expenses under this Section 2 or otherwise. The rights to
indemnification and to the advancement of expenses conferred in Sections 1 and 2
of this Article shall be contract rights and such rights shall continue as to an
Indemnitee who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the Indemnitee's heirs, executors and administrators.
Any repeal or modification of any of the provisions of this Article shall not
adversely affect any right or protection of an Indemnitee existing at the time
of such repeal or modification.
Section 3. Right of Indemnitees to Bring Suit. If a claim under Section
1 or 2 of this Article is not paid in full by the Corporation within sixty (60)
days after a written claim has been received by the Corporation, except in the
case of a claim for an advancement of expenses, in which case the applicable
period shall be twenty (20) days, the Indemnitee may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit, or in a suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the Indemnitee shall also be entitled to be paid the expenses of
prosecuting or defending such suit. In (i) any suit brought by the Indemnitee to
enforce a right to indemnification hereunder (but not in a suit brought by the
Indemnitee to enforce a right to an advancement of expenses) it shall be a
defense that, and (ii) in any suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the Corporation
shall be entitled to recover such expenses upon a final adjudication that, the
Indemnitee has not met any applicable standard for indemnification set forth in
the Delaware General Corporation Law. Neither the failure of the Corporation
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the Indemnitee is proper in the circumstances
because the Indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its board of directors, independent legal counsel, or its
stockholders) that the Indemnitee has not met such applicable standard of
conduct, shall create a presumption that
- 13-
<PAGE> 14
the Indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the Indemnitee, be a defense to such suit. In any suit
brought by the Indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the Indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Article or otherwise shall be on the
Corporation.
Section 4. Non-Exclusivity of Rights. The rights to indemnification and
to the advancement of expenses conferred in this Article shall not be exclusive
of any other right which any person may have or hereafter acquire under any
statute, the Corporation's Certificate of Incorporation as amended from time to
time, these by-laws, any agreement, any vote of stockholders or disinterested
directors or otherwise.
Section 5. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
Section 6. Indemnification of Employees and Agents of the Corporation.
The Corporation may, to the extent authorized from time to time by the board of
directors, grant rights to indemnification and to the advancement of expenses to
any employee or agent of the Corporation to the fullest extent of the provisions
of this Article with respect to the indemnification and advancement of expenses
of directors and officers of the Corporation.
ARTICLE VIII - CERTAIN TRANSACTIONS
Section 3. Transactions with Interested Parties.
No contract or transaction between the Corporation and one or more of
its directors or officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board or
committee thereof which authorizes the contract or transaction or solely because
the votes of such director or officer are counted for such purpose, if:
(a) The material facts as to his or her 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
- 14-
<PAGE> 15
(b) The material facts as to his or her 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
(c) 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 thereof, or the stockholders.
Section 4. Quorum.
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.
ARTICLE IX - MISCELLANEOUS
Section 5. Facsimile Signatures.
In addition to the provisions for use of facsimile signatures elsewhere
specifically authorized in these By-Laws, facsimile signatures of any officer or
officers of the Corporation may be used whenever and as authorized by the Board
of Directors or a committee thereof.
Section 6. Corporate Seal.
The Board of Directors may provide a suitable seal, containing the name
of the Corporation, which seal shall be in the charge of the Secretary. If and
when so directed by the Board of Directors or a committee thereof, duplicates of
the seal may be kept and used by the Secretary or Treasurer or by an Assistant
Secretary or Assistant Treasurer.
Section 7. Reliance upon Books, Reports and Records.
Each director, each member of any committee designated by the Board of
Directors, and each officer of the Corporation shall, in the performance of his
or her duties, be fully protected in relying in good faith upon the books of
account or other records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of its officers or
employees, or committees of the Board of Directors so designated, or by any
other person as to matters which such director or committee member reasonably
believes are within such other person's professional or expert competence and
who has been selected with reasonable care by or on behalf of the Corporation.
- 15-
<PAGE> 16
Section 8. Fiscal Year.
Except as otherwise determined by the Board of Directors from time to
time, the fiscal year of the Corporation shall end on the last day of December
of each year.
Section 9. Time Periods.
In applying any provision of these By-Laws which requires that an act be
done or not be done a specified number of days prior to an event or that an act
be done during a period of a specified number of days prior to an event,
calendar days shall be used, the day of the doing of the act shall be excluded,
and the day of the event shall be included.
ARTICLE X AMENDMENTS
These By-Laws may be amended, added to, rescinded or repealed by the
stockholders or by the Board of Directors, when such power is conferred upon the
Board of Directors by the Certificate of Incorporation, at any meeting of the
stockholders or of the Board of Directors, provided notice of the proposed
change was given in the notice of the meeting or, in the case of a meeting of
the Board of Directors, in a notice given not less than two (2) days prior to
the meeting.
- 16-
<PAGE> 1
EXHIBIT 3.4
CHEMGENICS PHARMACEUTICALS INC.
RESTATED BY-LAWS
ARTICLE I - STOCKHOLDERS
Section 1. Annual Meeting. An annual meeting of the stockholders, for
the election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place, on such date, and at such time as the Board of
Directors shall each year fix.
Section 2. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes prescribed in the notice of the meeting, may be called
by the Chairman of the Board, the Chief Executive Officer, the President (each
only with the approval of the Executive Committee of the Board of Directors) or
the Board of Directors by the affirmative vote of a majority of the Whole Board
(as defined below). Special meetings of the stockholders shall be held at such
place, on such date, and at such time as shall be fixed by the Board of
Directors or the person calling the meeting. The term "Whole Board" as used
herein shall mean the total number of authorized directors, whether or not there
exists any vacancies in previously authorized directorships.
Section 3. Notice of Meetings. Written notice of the place, date, and
time of all meetings of the stockholders shall be given, not less than ten (10)
nor more than sixty (60) days before the date on which the meeting is to be
held, to each stockholder entitled to vote at such meeting, except as otherwise
provided herein or required by law (meaning, here and hereinafter, as required
from time to time by the Delaware General Corporation Law or the Certificate of
Incorporation of the Corporation, as amended and restated from time to time).
When a meeting is adjourned to another place, date or time, written
notice need not be given of the adjourned meeting if the place, date and time
thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than thirty
(30) days after the date for which the meeting was originally noticed, or if a
new record date is fixed for the adjourned meeting, written notice of the place,
date, and time of the adjourned meeting shall be given in conformity herewith.
At any adjourned meeting, any business may be transacted that might have been
transacted at the original meeting.
Section 4. Quorum. At any meeting of the stockholders, the holders of a
majority of the voting power of the outstanding shares of the stock entitled to
vote at the meeting present, in person or by proxy, shall constitute a quorum
for all purposes, unless or except to the extent that the presence of a larger
number may be required by law. Where a separate vote by a class or classes, or
series thereof, is required, the holders of a majority of the voting power of
the outstanding shares of such class or classes, or series, present, in person
or by proxy, shall constitute a quorum entitled to take action with respect to
that vote on that matter.
<PAGE> 2
If a quorum shall fail to attend any meeting, the chairman of the
meeting or the holders of a majority of the voting power of the shares of stock
entitled to vote who are present, in person or by proxy, may adjourn the meeting
to another place, date, or time.
Section 5. Organization. Such person as the Board of Directors may have
designated or, in the absence of such a person, the Chairman of the Board, if
any, or, in his absence, the Chief Executive Officer, if any, or, in his
absence, the President, or, in his absence, such person as may be chosen by the
holders of a majority of the shares entitled to vote who are present, in person
or by proxy, shall call to order any meeting of the stockholders and act as
chairman of the meeting. In the absence of the Secretary of the Corporation, the
secretary of the meeting shall be such person as the chairman of the meeting
appoints.
Section 6. Conduct of Business. The chairman of any meeting of
stockholders shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as may seem to him in order. The date and time of the opening and
closing of the polls for each matter upon which the stockholders will vote at
the meeting shall be announced at the meeting.
Section 7. Notice of Stockholder Business and Nominations.
A. Annual Meetings of Stockholders.
Nominations of persons for election to the Board of Directors
and the proposal of business to be considered by the stockholders may be made at
an annual meeting of stockholders (a) pursuant to the Corporation's notice of
meeting, (b) by or at the direction of the Board of Directors or (c) by any
stockholder of the Corporation who was a stockholder of record at the time of
giving of notice provided for in this Section , who is entitled to vote at the
meeting and who complies with the notice procedures set forth in this Section.
B. Special Meetings of Stockholders.
Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
notice of meeting given pursuant to Section 2 above. Nominations of persons for
election to the Board of Directors may be made at a special meeting of
stockholders at which directors are to be elected (a) by or at the direction of
the Board of Directors or (b) provided that the Board of Directors has
determined that directors shall be elected at such meeting, by any stockholder
of the Corporation who is a stockholder of record at the time of giving of
notice of the special meeting, who shall be entitled to vote at the meeting and
who complies with the notice procedures set forth in this Section.
C. Certain Matters Pertaining to Stockholder Business and
Nominations.
(1) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (c) of paragraph A
of this Section or a special meeting pursuant to paragraph B of this Section,
the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation and such other business must otherwise
-2-
<PAGE> 3
be a proper matter for stockholder action. To be timely, a stockholder's notice
pertaining to an annual meeting shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the sixtieth (60) day nor earlier than the close of business on the
ninetieth (90th) day prior to the first anniversary of the preceding year's
annual meeting; provided, however, that in the event that the date of the annual
meeting is more than thirty (30) days before or more than sixty (60) days after
such an anniversary date, notice by the stockholder to be timely must be so
delivered not earlier than the close of business on the ninetieth (90) day prior
to such annual meeting and not later than the close of business on the later of
the sixtieth (60th) day prior to such annual meeting or the close of business on
the tenth (10th) day following the day on which public announcement of the date
of such meeting is first made by the Corporation. Such stockholder's notice for
an annual meeting or a special meeting shall set forth (a) as to each person
whom the stockholder proposes to nominate for election or reelection as a
director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case, pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (b) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (c) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
stockholder, as they appear on the Corporation's books, and of such beneficial
owner and (ii) the class and number of shares of the Corporation that are owned
beneficially and held of record by such stockholder and such beneficial owner. A
stockholder shall also comply with all applicable requirements of the Exchange
Act (or any successor provision), and the rules and regulations thereunder with
respect to the matters set forth in these by-laws.
(2) Notwithstanding anything in the second sentence of
paragraph C (1) of this Section to the contrary, in the event that the number of
directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement by the Corporation naming all of
the nominees for director or specifying the size of the increased Board of
Directors at least seventy (70) days prior to the first anniversary of the
preceding year's annual meeting (or, if the annual meeting is held more than
thirty (30) days before or sixty (60) days after such anniversary date, at least
seventy (70) days prior to such annual meeting), a stockholder's notice required
by this Section shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it shall be
delivered to the Secretary at the principal executive office of the Corporation
not later than the close of business on the tenth (10th) day following the day
on which such public announcement is first made by the Corporation.
(3) In the event the Corporation calls a special meeting of
stockholders for the purpose of electing one or more directors to the Board of
Directors, any such stockholder may nominate a person or persons (as the case
may be), for election to such position(s) as specified in the Corporation's
notice of meeting, if the stockholder's notice required by paragraph C(1) of
this Section shall be delivered to the Secretary at the principal executive
offices of the
-3-
<PAGE> 4
Corporation not earlier than the ninetieth (90th) day prior to such special
meeting nor later than the close of business on the later of the sixtieth (60th)
day prior to such special meeting, or the tenth (10th) day following the day on
which public announcement is first made of the date of the special meeting and
of the nominees proposed by the Board of Directors to be elected at such
meeting.
D. General.
(1) Only such persons who are nominated in accordance with the
procedures set forth in this Section shall be eligible to serve as directors and
only such business shall be conducted at a meeting of stockholders as shall have
been brought before the meeting in accordance with the procedures set forth in
this Section. Except as otherwise provided by law or these by-laws, the
chairman of the meeting shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the meeting was made or
proposed, as the case may be, in accordance with the procedures set forth in
this Section and, if any proposed nomination or business is not in compliance
herewith to declare that such defective proposal or nomination shall be
disregarded.
(2) For purposes of this Section, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section,
a stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth herein. Nothing in this Section shall be deemed to affect any rights (i)
of stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders
of any series of Preferred Stock to elect directors under specified
circumstances.
Section 8. Proxies and Voting. At any meeting of the stockholders,
every stockholder entitled to vote may vote in person or by proxy authorized by
an instrument in writing or by a transmission permitted by law filed in
accordance with the procedure established for the meeting. Any copy, facsimile
telecommunication or other reliable reproduction of the writing or transmission
created pursuant to this Section may be substituted or used in lieu of the
original writing or transmission for any and all purposes for which the original
writing or transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of the
entire original writing or transmission.
All voting, including on the election of directors but excepting where
otherwise required by law, may be by voice vote. Any vote not taken by voice
shall be taken by ballots, each of which shall state the name of the stockholder
or proxy voting and such other information as may be required under the
procedure established for the meeting. The Corporation may, and to the extent
required by law, shall, in advance of any meeting of stockholders, appoint one
or more inspectors to act at the meeting and make a written report thereof. The
Corporation may designate one or more persons as alternate inspectors to replace
any inspector who fails to act.
-4-
<PAGE> 5
If no inspector or alternate is able to act at a meeting of stockholders, the
person presiding at the meeting may, and to the extent required by law, shall,
appoint one or more inspectors to act at the meeting. Each inspector, before
entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his ability.
Except as otherwise provided in the terms of any class or series of
Preferred Stock of the Corporation, all elections at any meeting of stockholders
shall be determined by a plurality of the votes cast, and except as otherwise
required by law or these by-laws, all other matters determined by stockholders
at a meeting shall be determined by a majority of the votes cast affirmatively
or negatively.
Section 9. Stock List. A complete list of stockholders entitled to vote
at any meeting of stockholders, arranged in alphabetical order for each class of
stock and showing the address of each such stockholder and the number of shares
registered in such stockholder's name, shall be open to the examination of any
such stockholder, for any purpose germane to the meeting, during ordinary
business hours for a period of at least ten (10) days prior to the meeting
either at a place within the city 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 stock list shall also be kept at the place of the meeting during
the whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the identity
of the stockholders entitled to vote at the meeting and the number of shares
held by each of them.
ARTICLE II - BOARD OF DIRECTORS
Section 1. General Powers, Number and Term of Office. The business and
affairs of the Corporation shall be managed by or under the direction of its
Board of Directors. The number of directors who shall constitute the Whole Board
shall be such number as the Board of Directors shall from time to time have
designated. Commencing with the Corporation's annual meeting of stockholders (or
any special meeting in lieu thereof) in 1997, the Board of Directors shall be
divided into three classes, as nearly equal in number as reasonably possible.
The term of office of the first class shall expire at the annual meeting of
stockholders or any special meeting in lieu thereof in 1998, the term of office
of the second class shall expire at the annual meeting of stockholders or any
special meeting in lieu thereof in 1999, the term of office of the third class
shall expire at the annual meeting of stockholders or any special meeting in
lieu thereof in 2000, and with respect to each class, until their successors are
duly elected and qualified. At each annual meeting of stockholders or special
meeting in lieu thereof following such initial classification, directors elected
to succeed those directors whose terms expire shall be elected for a term of
office to expire at the third succeeding annual meeting of stockholders or
special meeting in lieu thereof after their election and until their successors
are duly elected and qualified.
Section 2. Vacancies and Newly Created Directorships. Subject to the
rights of the holders of any class or series of Preferred Stock, and except as
otherwise determined by the
-5-
<PAGE> 6
Board of Directors or required by law, newly created directorships resulting
from any increase in the authorized number of directors or any vacancies in the
Board of Directors resulting from death, resignation, retirement,
disqualification, removal from office or other cause may be filled only by a
majority vote of the directors then in office, though less than a quorum, or the
sole remaining director; a director so chosen shall hold office for a term
expiring at the annual meeting of stockholders at which the term of office of
the class to which he has been elected expires, if applicable, and if no such
classes have been established, at the next annual meeting of stockholders and
until such director's successor shall have been duly elected and qualified. In
the event of any increase or decrease in the authorized number of directors, (i)
each director then serving as such shall nevertheless continue as a director of
the class of which he is a member until the expiration of his current term or
his prior death, retirement, removal or resignation and (ii) the newly created
or eliminated directorships resulting from such increase or decrease shall if
reasonably possible be apportioned by the Board of Directors among the three
classes of directors so as to ensure that no one class has more than one
director more than any other class. To the extent reasonably possible,
consistent with the foregoing rule, any newly created directorships shall be
added to those classes whose terms of office are to expire at the latest dates
following such allocation and newly eliminated directorships shall be subtracted
from those classes whose terms of office are to expire at the earliest dates
following such allocation, unless otherwise provided for from time to time by
resolution adopted by a majority of the directors then in office, although less
than a quorum. No decrease in the number of authorized directors constituting
the Board shall shorten the term of any incumbent director.
Section 3. Resignation. Any director may resign at any time upon
written notice to the Corporation at its principal place of business or to the
Chief Executive Officer, President or Secretary. Such resignation shall be
effective upon receipt unless it is specified to be effective at some other time
or upon the happening of some other event.
Section 4. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such place or places, on such date or dates, and at such time
or times as shall have been established by the Board of Directors and publicized
among all directors. A notice of each regular meeting shall not be required.
Section 5. Special Meetings. Special meetings of the Board of Directors
may be called by a majority of the Whole Board or by the Chairman of the Board,
if any, by the Chief Executive Officer, if a director, or by the President, if a
director, and shall be held at such place, on such date, and at such time as
they or he shall fix. Notice of the place, date, and time of each such special
meeting shall be given each director by whom it is not waived by mailing written
notice not less than five (5) days before the meeting, by sending written notice
by recognized overnight courier service not less than two (2) days before the
meeting or by telegraphing or telexing or by facsimile transmission of the same
not less than twenty-four (24) hours before the meeting. Unless otherwise
indicated in the notice thereof, any and all business may be transacted at a
special meeting.
Section 6. Quorum. At any meeting of the Board of Directors, a majority
of the Whole Board shall constitute a quorum for all purposes. If a quorum shall
fail to attend any meeting,
-6-
<PAGE> 7
a majority of those present may adjourn the meeting to another place, date, or
time, without further notice or waiver thereof.
Section 7. Participation in Meetings by Conference Telephone. Members
of the Board of Directors, or of any committee thereof, may participate in a
meeting of the Board of Directors or 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 such participation shall constitute
presence in person at such meeting.
Section 8. Conduct of Business. At any meeting of the Board of
Directors, business shall be transacted in such order and manner as the Board of
Directors may from time to time determine, and all matters shall be determined
by the vote of a majority of the directors present, except as otherwise provided
herein or required by law. Action may be taken by the Board of Directors without
a meeting if all members of the Board of Directors who are then in office
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board of Directors.
Section 9. Powers. The Board of Directors may, except as otherwise
required by law, exercise all such powers and do all such acts and things as may
be exercised or done by the Corporation, including, without limiting the
generality of the foregoing, the unqualified power:
(1) To declare dividends from time to time in accordance with law;
(2) To purchase or otherwise acquire any property, rights or privileges
on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such form as it
may determine, of written obligations of every kind, negotiable or
non-negotiable, secured or unsecured, to borrow funds and guarantee obligations,
and to do all things necessary in connection therewith;
(4) To remove any officer of the Corporation with or without cause, and
from time to time to devolve the powers and duties of any officer upon any other
person for the time being;
(5) To confer upon any officer of the Corporation the power to appoint,
remove and suspend subordinate officers, employees and agents;
(6) To adopt from time to time such stock option, stock purchase, bonus
or other compensation plans for directors, officers, employees and agents of the
Corporation and its subsidiaries as it may determine;
(7) To adopt from time to time such insurance, retirement, and other
benefit plans for directors, officers, employees and agents of the Corporation
and its subsidiaries as it may determine; and
(8) To adopt from time to time regulations not inconsistent herewith,
for the management of the Corporation's business and affairs.
-7-
<PAGE> 8
Section 10. Compensation of Directors. Directors, as such, may receive,
pursuant to resolution of the Board of Directors, fixed fees and other
compensation for their services as directors, including, without limitation,
their services as members of committees of the Board of Directors.
ARTICLE III - COMMITTEES
Section 1. Committees of the Board of Directors. The Board of
Directors, by a vote of a majority of the Whole Board, may from time to time
designate committees of the Board of Directors, with such lawfully delegable
powers and duties as it thereby confers, to serve at the pleasure of the Board
of Directors and shall, for those committees and any others provided for herein,
elect a director or directors to serve as the member or members, designating, if
it desires, other directors as alternate members who may replace any absent or
disqualified member at any meeting of a committee. Any committee so designated
may exercise the power and authority of the Board of Directors to declare a
dividend, to authorize the issuance of stock or to adopt a certificate of
ownership and merger pursuant to Section 253 of the Delaware General Corporation
Law if the resolution that designates the committee or a supplemental resolution
of the Board of Directors shall so provide. In the absence or disqualification
of any member of any committee and any alternate member in his place, the member
or members of the committee present at the meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may by unanimous vote
appoint another member of the Board of Directors to act at the meeting in the
place of the absent or disqualified member.
Section 2. Conduct of Business. Each committee of the Board of
Directors may determine the procedural rules for meeting and conducting its
business and shall act in accordance therewith, except as otherwise provided
herein or required by law. Adequate provisions shall be made for notice to
members of all meetings of committees. One-third (1/3) of the members of any
committee shall constitute a quorum unless the committee shall consist of one
(1) or two (2) members, in which event one (1) member shall constitute a quorum;
and all matters shall be determined by a majority vote of the members present.
Action may be taken by any committee without a meeting if all members thereof
consent thereto in writing, and the writing or writings are filed with the
minutes of the proceedings of such committee.
ARTICLE IV - OFFICERS
Section 1. Generally. The officers of the Corporation shall consist of
a President, one or more Vice Presidents, a Secretary, a Treasurer and such
other officers as may from time to time be appointed by the Board of Directors,
including, without limiting the generality of the foregoing, a Chairman of the
Board, a Chief Executive Officer, a Vice Chairman of the Board and one or more
Assistant Secretaries and Assistant Treasurers. Officers shall be elected by the
Board of Directors, which shall consider that subject at its first meeting after
every annual meeting of stockholders. The Chief Executive Officer may be
empowered to appoint from time to time Vice Presidents, Assistant Secretaries
and Assistant Treasurers. Each officer shall hold office until his successor is
elected and qualified or if earlier, until he dies, resigns, is removed
-8-
<PAGE> 9
or becomes disqualified, unless a shorter term is specified by the Board of
Directors at the time of election of such officer. Any number of offices may be
held by the same person.
Section 2. Chairman of the Board. Unless otherwise provided by
resolution of the Board of Directors, the Chairman of the Board, if any, shall
preside at all meetings of the stockholders and all meetings of the Board of
Directors at which he is present and shall have such authority and perform such
duties as may be prescribed by these by-laws or from time to time determined by
the Board of Directors. The Chairman of the Board shall have power to sign all
stock certificates, contracts and other instruments of the Corporation which are
authorized.
Section 3. Vice Chairman of the Board. The Vice Chairman of the Board,
if any, shall have such powers and duties as may be delegated to him by the
Board of Directors. To the extent not otherwise provided herein, the Vice
Chairman of the Board shall perform the duties and exercise the powers of the
Chairman of the Board in the event of the Chairman's absence or disability.
Section 4. Chief Executive Officer. The Chief Executive Officer shall
be the chief executive officer of the Corporation and shall, subject to the
direction of the Board of Directors, have general supervision and control of its
business. Unless otherwise provided by resolution of the Board of Directors, in
the absence of the Chairman of the Board, if any, the Chief Executive Officer
shall preside at all meetings of the stockholders and, if a director, meetings
of the Board of Directors. The Chief Executive Officer shall have general
supervision and direction of all of the officers, employees and agents of the
Corporation.
Section 5. President. Except for meetings at which the Chief Executive
Officer or the Chairman of the Board, if any, presides, the President shall, if
present, preside at all meetings of stockholders, and if a director, at all
meetings of the Board of Directors. The President shall, subject to the control
and direction of the Chief Executive Officer and the Board of Directors, have
and perform such powers and duties as may be prescribed by these by-laws or from
time to time be determined by the Chief Executive Officer or the Board of
Directors. The President shall have power to sign all stock certificates,
contracts and other instruments of the Corporation which are authorized. In the
absence of a Chief Executive Officer, the President shall be the chief executive
officer of the Corporation and shall, subject to the direction of the Board of
Directors, have general supervision and control of its business and shall have
general supervision and direction of all of the officers, employees and agents
of the Corporation.
Section 6. Vice President. Each Vice President shall have such powers
and duties as may be delegated to him by the Board of Directors, the Chief
Executive Officer and the President. The Board of Directors may designate a Vice
President to perform the duties and exercise the powers of the President in the
event of the President's absence or disability.
Section 7. Treasurer. The Treasurer shall have the responsibility for
maintaining the financial records of the Corporation. The Treasurer shall make
such disbursements of the funds of the Corporation as are authorized and shall
render from time to time an account of all such transactions and of the
financial condition of the Corporation. The Treasurer shall also perform such
other duties as the Board of Directors may from time to time prescribe.
-9-
<PAGE> 10
Section 8. Secretary. The Secretary shall issue all authorized notices
for, and shall keep minutes of, all meetings of the stockholders and the Board
of Directors. The Secretary shall have charge of the corporate books and shall
perform such other duties as the Board of Directors may from time to time
prescribe.
Section 9. Delegation of Authority. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officers
or agents, notwithstanding any provisions hereof.
Section 10. Removal. Any officer of the Corporation may be removed at
any time, with or without cause, by the Board of Directors. Any officer elected
or appointed by the Chief Executive Officer may be removed at any time by the
Board of Directors or by the Chief Executive Officer.
Section 11. Resignation. Any officer may resign by giving written
notice of his resignation to the Chairman of the Board, if any, the Chief
Executive Officer, if any, the President, or the Secretary, or to the Board of
Directors, and such resignation shall become effective at the time specified
therein.
Section 12. Bond. If required by the Board of Directors, any officer
shall give the Corporation a bond in such sum and with such surety or sureties
and upon such terms and conditions as shall be satisfactory to the Board of
Directors, including without limitation a bond for the faithful performance of
the duties of his office and for the restoration to the Corporation of all
books, papers, vouchers, money and other property of whatever kind in his
possession or under his control and belonging to the Corporation.
Section 13. Action with Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors, the President or the Chief
Executive Officer or any officer of the Corporation authorized by the President
or the Chief Executive Officer shall have power to vote and otherwise act on
behalf of the Corporation, in person or by proxy, at any meeting of stockholders
of or with respect to any action of stockholders of any other corporation in
which this Corporation may hold securities and otherwise to exercise any and all
rights and powers which this Corporation may possess by reason of its ownership
of securities in such other corporation.
ARTICLE V - INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved
(including, without limitation, as a witness) in any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director or an officer of the Corporation or a member of the
Corporation's Scientific Advisory Board or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan (hereinafter an
"Indemnitee"), whether the basis of such proceeding is
-10-
<PAGE> 11
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) reasonably incurred or suffered by such Indemnitee in
connection therewith; provided, however, that, except as provided in Section 3
of this Article with respect to proceedings to enforce rights to indemnification
or as otherwise required by law, the Corporation shall not be required to
indemnify or advance expenses to any such Indemnitee in connection with a
proceeding (or part thereof) initiated by such Indemnitee unless such proceeding
(or part thereof) was authorized by the board of directors of the Corporation.
Section 2. Right to Advancement of Expenses. The right to
indemnification conferred in Section 1 of this Article shall include the right
to be paid by the Corporation the expenses (including attorney's fees) incurred
in defending any such proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law requires, an advancement
of expenses incurred by an Indemnitee in his capacity as a director or officer
(and not in any other capacity in which service was or is rendered by such
Indemnitee, including, without limitation, service to an employee benefit plan)
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such Indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal that such Indemnitee is not entitled to be indemnified
for such expenses under this Section 2 or otherwise. The rights to
indemnification and to the advancement of expenses conferred in Sections 1 and 2
of this Article shall be contract rights and such rights shall continue as to an
Indemnitee who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the Indemnitee's heirs, executors and administrators.
Any repeal or modification of any of the provisions of this Article shall not
adversely affect any right or protection of an Indemnitee existing at the time
of such repeal or modification.
Section 3. Right of Indemnitees to Bring Suit. If a claim under Section
1 or 2 of this Article is not paid in full by the Corporation within sixty (60)
days after a written claim has been received by the Corporation, except in the
case of a claim for an advancement of expenses, in which case the applicable
period shall be twenty (20) days, the Indemnitee may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit, or in a suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the Indemnitee shall also be entitled to be paid the expenses of
prosecuting or defending such suit. In (i) any suit brought by the Indemnitee to
enforce a right to indemnification hereunder (but not in a suit brought by the
Indemnitee to enforce a right to an advancement of expenses) it shall be a
defense that, and (ii) in any suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the Corporation
shall be entitled to recover such expenses upon a final adjudication that, the
Indemnitee has not met any applicable standard for indemnification set forth in
the Delaware General Corporation Law. Neither the failure of the Corporation
-11-
<PAGE> 12
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the Indemnitee is proper in the circumstances
because the Indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its board of directors, independent legal counsel, or its
stockholders) that the Indemnitee has not met such applicable standard of
conduct, shall create a presumption that the Indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or brought by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking, the burden of proving that the Indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
Article or otherwise shall be on the Corporation.
Section 4. Non-Exclusivity of Rights. The rights to indemnification and
to the advancement of expenses conferred in this Article shall not be exclusive
of any other right which any person may have or hereafter acquire under any
statute, the Corporation's Certificate of Incorporation as amended from time to
time, these by-laws, any agreement, any vote of stockholders or disinterested
directors or otherwise.
Section 5. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
Section 6. Indemnification of Employees and Agents of the Corporation.
The Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the advancement of expenses to
any employee or agent of the Corporation to the fullest extent of the provisions
of this Article with respect to the indemnification and advancement of expenses
of directors and officers of the Corporation and members of the Corporation's
Scientific Advisory Board.
ARTICLE VI - STOCK
Section 1. Certificates of Stock. Each stockholder shall be entitled to
a certificate signed by, or in the name of the Corporation by, the Chairman or
Vice-Chairman of the Board of Directors, the President or a Vice President, and
by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant
Treasurer, certifying the number of shares owned by him. Any or all of the
signatures on the certificate may be by facsimile.
Section 2. Transfers of Stock. Transfers of stock shall be made only
upon the transfer books of the Corporation kept at an office of the Corporation
or by transfer agents designated to transfer shares of the stock of the
Corporation. Except where a certificate is issued in accordance with Section 4
of this Article, an outstanding certificate for the number of shares involved
shall be surrendered for cancellation before a new certificate is issued
therefor.
-12-
<PAGE> 13
Section 3. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders, or
to receive payment of any dividend or other distribution or allotment of any
rights or to exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date on
which the resolution fixing the record date is adopted and which record date
shall not be more than sixty (60) nor less than ten (10) days before the date of
any meeting of stockholders, nor more than sixty (60) days prior to the time for
such other action as hereinbefore described; provided, however, that if no
record date is fixed by the Board of Directors, 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 next preceding the day on which notice is
given or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held, and, for determining
stockholders entitled to receive payment of any dividend or other distribution
or allotment of rights or to exercise any rights of change, conversion or
exchange of stock or for any other purpose, the record date shall be at the
close of business on the day on which the Board of Directors adopts a resolution
relating thereto.
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 4. Lost, Stolen or Destroyed Certificates. In the event of the
loss, theft or destruction of any certificate of stock, another may be issued in
its place pursuant to such regulations as the Board of Directors may establish
concerning proof of such loss, theft or destruction and concerning the giving of
a satisfactory bond or bonds of indemnity.
Section 5. Regulations. The issue, transfer, conversion and
registration of certificates of stock shall be governed by such other
regulations as the Board of Directors may establish.
ARTICLE VII - NOTICES
Section 1. Notices. Except as otherwise specifically provided herein or
required by law, all notices required to be given to any stockholder, director,
officer, employee or agent shall be in writing and may in every instance be
effectively given by hand delivery to the recipient thereof, by depositing such
notice in the mails, postage paid, or by sending such notice by recognized
courier service, prepaid telegram, telex, mailgram or by facsimile transmission.
Any such notice shall be addressed to such stockholder, director, officer,
employee or agent at his last known address as the same appears on the books of
the Corporation. The time when such notice is received, if hand delivered, or
dispatched, if delivered through the mails, by courier or by telegram, telex,
facsimile transmission or mailgram, shall be the time of the giving of the
notice.
Section 2. Waivers. A written waiver of any notice, signed by a
stockholder, director, officer, employee or agent, whether before or after the
time of the event for which notice is to be given, shall be deemed equivalent to
the notice required to be given to such stockholder,
-13-
<PAGE> 14
director, officer, employee or agent. Neither the business nor the purpose of
any meeting need be specified in such a waiver.
ARTICLE VIII - MISCELLANEOUS
Section 1. Facsimile Signatures. In addition to the provisions for use
of facsimile signatures elsewhere specifically authorized in these by-laws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors or a committee thereof.
Section 2. Corporate Seal. The Board of Directors may provide a
suitable seal, containing the name of the Corporation, which seal shall be in
the charge of the Secretary. If and when so directed by the Board of Directors
or a committee thereof, duplicates of the seal may be kept and used by the
Secretary or Treasurer or by an Assistant Secretary or Assistant Treasurer.
Section 3. Reliance upon Books, Reports and Records. Each director,
each member of any committee designated by the Board of Directors, and each
officer of the Corporation shall, in the performance of his duties, be fully
protected in relying in good faith upon the books of account or other records of
the Corporation and upon such information, opinions, reports or statements
presented to the Corporation by any of its officers or employees or committees
of the Board of Directors so designated, or by any other person as to matters
which such director or committee member reasonably believes are within such
other person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation.
Section 4. Fiscal Year. The fiscal year of the Corporation shall be as
fixed by the Board of Directors.
Section 5. Time Periods. In applying any provision of these by-laws
that requires that an act be done or not be done a specified number of days
prior to an event or that an act be done during a period of a specified number
of days prior to an event, calendar days shall be used, the day of the doing of
the act shall be excluded, and the day of the event shall be included.
Section 6. Pronouns. Whenever the context may require, any pronouns
used in these by-laws shall include the corresponding masculine, feminine or
neuter forms.
-14-
<PAGE> 15
ARTICLE IX - AMENDMENTS
These by-laws may be amended or repealed by the affirmative vote of a
majority of the Whole Board at any meeting or by the stockholders by the
affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the
outstanding voting power of the then-outstanding shares of capital stock of the
Corporation, entitled to vote generally in the election of directors, at any
meeting at which a proposal to amend or repeal these by-laws is properly
presented.
-15-
<PAGE> 1
EXHIBIT 4.2
ChemGenics Pharmaceuticals Inc.
Common
CERTIFICATE
NO. ___________
For * * Shares
Issued to
*Specimen*__________________________
____________________________________
____________________________________
Dated Specimen ____________________
FROM WHOM TRANSFERRED
Dated Specimen ____________________
NO. ORIGINAL NO. ORIGINAL NO. OF SHARES
CERTIFICATE SHARES TRANSFERRED
______________________________________________
Received Certificate No.____________
Specimen
For * Specimen * Shares
this ______ day of __________________
_____________________________________
*Specimen*
_____________________________________
================================================================================
RESTRICTED SECURITIES SEE REVERSE SIDE
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
No. Specimen *Specimen* Shares
ChemGenics Pharmaceuticals Inc.
This Certifies That *Specimen* ________________________________________________
is the owner of *Specimen* _____________________________________________ Shares
of the Common Capital Stock of
ChemGenics Pharmaceuticals Inc.
transferable only on the books of the Corporation by the holder hereof in
person or by Attorney upon surrender of this Certificate properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this
Certificate to be signed by its duly authorized officers and
its Corporate Seal to be hereunto affixed this ______ day of
_______________A.D. _______
__________________________________
[SEAL] President or Vice President
__________________________________
Secretary or Assistant Secretary
SHARES 0.01 Par Value EACH
<PAGE> 2
================================================================================
C E R T I F I C A T E
FOR
* *
SHARES
of the
Common Capital Stock
of
ChemGenics Pharmaceuticals Inc.
ISSUED TO
*Specimen*
DATE
Specimen
===============================================================================
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAW AND THEY MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED BY ANY PERSON, INCLUDING A PLEDGEE, UNLESS (1) EITHER (a)
A REGISTRATION STATEMENT WITH RESPECT TO SUCH SHARES SHALL BE EFFECTIVE UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (b) THE CORPORATION SHALL HAVE
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACTS IS THEN AVAILABLE, AND (2) THERE
SHALL HAVE BEEN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS.
THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OR SERIES OF STOCK.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS
THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL, OR
OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS SET
FORTH IN THE 1992 INCENTIVE STOCK OPTION AGREEMENT WITH THIS COMPANY, A COPY OF
WHICH AGREEMENT IS AVAILABLE FOR INSPECTION AT THE OFFICES OF THE COMPANY OR
WILL BE MADE AVAILABLE UPON REQUEST.
================================================================================
For Value Received, ____ hereby sell, assign and transfer unto
________________________________________________________________________________
________________________________________________________________________ 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 _________________
In presence of _________________________________________________
NOTICE. THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
<PAGE> 1
EXHIBIT 4.3
LETTER AGREEMENT
____________, 1996
Cowen and Company
Montgomery Securities
As Representatives of the Several
Underwriters
c/o Cowen and Company
Financial Square, 30th Floor
New York, NY 10005
Ladies and Gentlemen:
The undersigned, at the date hereof, is the owner of (or has the right to direct
the disposition of) ____________ shares (including shares issuable upon the
exercise of options or warrants, whether or not presently exercisable) (the
"Shares") of common stock, par value $.01 per share (the "Common Stock"), of
ChemGenics Pharmaceuticals Inc. (the "Company"). The undersigned understands
that the Company has filed a registration statement on Form S-1 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Act"), for registration of the sale of _________ shares of Common Stock
(including shares subject to an over-allotment option). The undersigned further
understands that you are contemplating entering into an underwriting agreement
(the "Underwriting Agreement") with the Company in connection with the public
offering of such shares of Common Stock (the "Offering").
In order to induce the Company and you to enter into the Underwriting Agreement
and to proceed with the Offering, the undersigned agrees for the benefit of the
Company and you that the undersigned will not, without the prior written consent
of Cowen and Company, directly or indirectly, offer, sell, assign, transfer,
encumber, contract to sell, grant an option to purchase or otherwise dispose of
any shares of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock (including, without limitation, Common Stock of
the Company which may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations under the Act) during the 180 days
following the date on which the price of Common Stock to be purchased by the
Underwriters is set.
Further, the undersigned agrees that prior to the effective date of the
Registration Statement, the undersigned will not, without the prior written
consent of Cowen and Company, offer, sell or grant any option for the sale or
otherwise dispose of any shares of Common Stock or any securities convertible
into or exercisable for any shares of Common Stock, owned by the
<PAGE> 2
undersigned, either directly or indirectly, without first requiring any such
offering or acquiring parties to execute and deliver to you an agreement of
substantially the tenor thereof.
Notwithstanding the foregoing, the undersigned may transfer any or all of the
Shares either during his or her lifetime or on death by gift, will or intestate
succession to his or her immediate family or to a trust the beneficiaries of
which are exclusively the undersigned and/or a member or members of his or her
immediate family; provided, however, that in any such case it shall be a
condition to the transfer that the transferee execute an agreement stating that
the transferee is receiving and holding the Shares subject to the provisions of
this letter agreement, and there shall be no further transfer of such Shares
except in accordance with the letter agreement.
For purposes of this letter agreement, "immediate family" shall mean spouse and
lineal descendent, father, mother, brother or sister of the transferor or his
spouse.
It is understood that, if the Underwriting Agreement does not become effective,
or if the Underwriting Agreement (other than the provisions thereof which
survive termination) shall terminate or be terminated prior to payment for and
delivery of the Shares, you will release the undersigned from any obligations
under the letter agreement.
Sincerely,
_______________________________
_______________________________ ___________________________
Print Name Date
- 2 -
<PAGE> 1
EXHIBIT 10.1
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
MYCO PHARMACEUTICALS INC.
5 Pine Tree Place
Fort Washington, PA 19034
As of February 25, 1992
To the Persons listed on Exhibit 1.01 hereto
Re: Series A Preferred Stock
Ladies and Gentlemen:
Myco Pharmaceuticals Inc. (the "Company"), a Delaware corporation, and,
solely with respect to Article III, Barry Berkowitz, Ph.D. ("Berkowitz"), each
agrees with each of you as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF SHARES
1.01. The Preferred Shares. The Company has authorized the issuance,
sale and exchange of up to 6,000,000 shares (the "Preferred Shares") of its
authorized but unissued shares of Series A Preferred Stock, $.01 par value (the
"Preferred Stock"), at a purchase price of $1.00 per share to the persons
(collectively, the "Purchasers" and, individually, a "Purchaser") and in the
respective amounts set forth in Exhibit 1.01A and Exhibit 1.0lB hereto. The
designation, rights, preferences and other terms and provisions of the Preferred
Stock are set forth in Exhibit A hereto.
1.02. The Conversion Shares. The Company has authorized and has
reserved and covenants to continue to reserve, free of preemptive rights and
other similar contractual rights of shareholders, a sufficient number of its
authorized but unissued shares of Common Stock to satisfy the rights of
conversion of the holders of the Preferred Shares. Any shares of Common Stock
issuable upon conversion of the Preferred Shares (and such shares when issued)
are herein referred to as the "Conversion Shares". The Preferred Shares and
Conversion Shares are sometimes collectively referred to as the "Shares".
<PAGE> 2
- 2 -
1.03. Purchase Price and Closings.
(a) Initial Closing. The Company agrees to issue, sell and
exchange to the Purchasers and, in consideration of and in express reliance upon
the representations, warranties, covenants, terms and conditions of this
Agreement, the Purchasers, severally but not jointly, agree to purchase, that
number of the Preferred Shares set forth opposite their respective names in
Exhibit 1.01A. The aggregate purchase price of the Preferred Shares being
acquired by each Purchaser is set forth opposite such Purchaser's name in
Exhibit 1.01A. The closing of the purchase, sale and exchange of the Preferred
Shares to be acquired by the Purchasers from the Company under this Agreement
shall take place at the offices of Messrs. Testa, Hurwitz & Thibeault, 53 State
Street, Boston, Massachusetts at 10:00 a.m. on February 25, 1992, or at such
time and date thereafter as the Purchasers and the Company may agree (the
"Initial Closing"). At the Initial Closing, the Company will deliver to each
Purchaser certificates for the number and series of Preferred Shares set forth
opposite its name under the headings "Number of Series A Shares" in Exhibit
1.01A registered in such Purchaser's name (or its nominee), against delivery of
a check or checks payable to the order of the Company, or a transfer of funds to
the account of the Company by wire transfer, representing the net cash
consideration set forth opposite each such Purchaser's name on Exhibit 1.01A,
and the cancellation of an aggregate of $150,000 of principal of indebtedness of
the Company to the Series A Purchasers as so set forth on Exhibit 1.01A, as
payment in full of the purchase price of the Shares. At the Initial Closing, the
Purchasers will deliver to the Company (i) the Term Promissory Notes marked
"paid in full," each dated January 15, 1992, made by the Company to the
respective orders of the Purchasers, in lieu of the payment of $150,000, as
described in Exhibit 1.01A, (ii) the Pledge Agreements dated January 15, 1992
between such Purchaser and the Company and (iii) the collateral, and the Company
will deliver to each Purchaser by check all accrued interest therein through the
date of Closing.
(b) Call Closings. Provided that the Company is in compliance
in all material respects with this Agreement and subject to the provisions set
forth herein, at any time on two occasions and from time to time, on or after
the date which is six months from the Initial Closing and on or before the date
which is 24 months from the date hereof, the Purchasers hereby agree, severally
but not jointly, to purchase up to that number of shares of Series A Preferred
Stock set forth opposite each of their respective names under the heading "Call
Closing Shares" in Exhibit 1.0lB (such shares to be purchased on a pro rata
basis based on their respective percentage of the aggregate amount of Preferred
<PAGE> 3
- 3 -
Shares purchased at the Initial Closing), at the same price, terms and
conditions of Initial Closing and in increments of not less than 2,000,000
shares of Preferred Stock in the aggregate in any such Call Closing, provided
that, in addition to the other terms and conditions hereof,
A. (i) the performance milestones set forth in
Exhibit 1.03 have been achieved in accordance with the terms
set forth in such exhibit; (ii) the business outlook for
proposed research and development activities and licensing
opportunities and the financial condition of the Company have
not materially adversely changed from the date of the Initial
Closing; (iii) the Company is not subject to any pending or
threatened claim, litigation, governmental proceeding or
investigation which is reasonably likely to materially
adversely affect the Company's business prospects taken as a
whole, its management or key personnel, proposed research and
development activities, joint ventures and licensing
opportunities in the Company; (iv) there has been no material
adverse change in the prospects, affairs, operations,
management or key personnel, licensing rights and other rights
relating to technology, existing or proposed joint ventures,
or the progress of research and development of the Company and
third parties since the Initial Closing; (v) there has been no
material adverse change to the representations and warranties
of Article III as made at the Initial Closing; all to the
reasonable satisfaction of the Purchasers;
B. the Company requests such purchase by written
notice to each of the Purchasers at least fifteen (15) days
prior to the date proposed by the Company to be the date of
any such Call Closing, such notice to contain the date of the
Call Closing, the aggregate number of shares of Preferred
Stock to be purchased by the Purchasers and the number of
shares of Preferred Stock to be purchased by each Purchaser;
and
C. the Company but not Berkowitz shall update in
writing the representations and warranties of Article III
herein, and shall deliver such update to the Purchasers at
least ten (10) days prior to any Call Closing; and the Company
shall deliver to the Purchasers for their review an opinion of
counsel for the Company substantially similar to Exhibit
2.02(b) with respect to the sale and issuance of the Preferred
Shares purchased at such Call Closing not later than five (5)
business days prior to the Call Closing.
All parties shall consummate any Call Closings within 30 days of
delivery of such notice of a Call Closing. Notwithstanding
<PAGE> 4
- 4 -
the foregoing, any or all of the conditions may be waived at the sole
discretion of a Purchaser as to such Purchaser's purchase hereunder.
(c) Put Closing. The Purchasers shall have the right (but not
the obligation) at any time on two occasions and from time to time, after the
Initial Closing until on or before the date which is 24 months from the date
hereof, to purchase up to a maximum of that number of shares of Preferred Stock
set forth opposite each of their respective names under the heading "Put
Closing Shares" in Exhibit 1.0lB (such shares to be purchased on a pro rata
basis based on their respective percentage of Preferred Shares purchased at the
Initial Closing), and in increments of not less than 2,000,000 shares of
Preferred Stock in the aggregate in any such Put Closing, at the same price,
terms and conditions as Initial Closing, provided that:
(i) the Purchasers shall inform the Company by written notice
at least forty-five (45) days prior to the date proposed by the
Purchasers to be the date of the closing of such purchase (the "Put
Closing");
(ii) the Company updates in writing the representations and
warranties of Article III herein, and delivers such updated disclosure
to the Purchasers at least ten (10) days prior to the Put Closing; and,
to the Purchaser's satisfaction, there has been no adverse change from
the Initial Closing with respect to such representations and
warranties;
(iii) an opinion of counsel for the Company substantially similar
to Exhibit 2.02(b) hereto is delivered to the Purchasers for their
review with respect to the sale and issuance of the Put Closing Shares
no later than five (5) business days prior to the Put Closing; and
(iv) the notice for the Put Closing pursuant to Section
1.03(c)(ii) shall occur no later than 45 days prior to 24 months from
the date hereof.
All parties shall consummate the Put Closing within 45 days of the
delivery of such notice of a Put Closing. Notwithstanding the foregoing any or
all of these conditions may be waived at the sole discretion of a Purchaser as
to such Purchaser's purchase hereunder.
(d) Upon consummation of one or more Call Closings for the sale
of at least 4,000,000 shares of Preferred Stock (including any shares of
Preferred Stock sold in any Put Closings), the Purchasers' and Company's rights
under Section 1.03(c) shall terminate. Upon consummation of one or more Put
Closings for the sale of at least 4,000,000 shares of
<PAGE> 5
- 5 -
Preferred Stock (including any shares sold in any Call Closings), the Company's
and Purchasers' rights under Section 1.03(b) shall terminate. Under no
circumstances shall the Purchasers be obligated under this Section 1.03 to
purchase, or have the right to purchase, more than 4,000,000 shares in Preferred
Stock at $1.00 per share (for an aggregate of $4,000,000) from the Company under
any combination of Call Closings or Put Closings.
(e) For purposes of this Agreement, the term "Closing" shall
refer to the Initial Closing and the Call Closing or the Put Closing, as the
case may be. In addition, any shares of Preferred Stock purchased pursuant to a
Call Closing or a Put Closing shall be included in the definition of "Preferred
Shares."
1.04. Use of Proceeds. The Company shall use the cash proceeds from the
sale of the Preferred Shares for working capital and general corporate purposes.
1.05. Representations by the Purchasers.
(a) Investment Representations. Each of the Purchasers
represents severally, but not jointly, that it is its present intention to
acquire the Shares to be acquired by it for its own account (and it will be
the sole beneficial owner thereof) and that the Shares are being and will be
acquired by it for the purpose of investment and not with a view to
distribution or resale thereof except pursuant to registration under the
Securities Act or exemption therefrom. The acquisition by each Purchaser of
the Preferred Shares acquired by it shall constitute a confirmation of this
representation by each such Purchaser. Each Purchaser is purchasing with its
own funds and not with the funds of any pension or employee benefit plan.
Each of the Purchasers further represents that it understands and agrees
that, until registered under the Securities Act or transferred pursuant to
the provisions of Rule 144 or Rule 144A as promulgated by the Commission,
all certificates evidencing any of the Shares, whether upon initial issuance
or upon any transfer thereof, shall bear a legend, prominently stamped or
printed thereon, reading substantially as follows:
"The securities represented by this certificate have not
been registered under the Securities Act of 1933 or applicable
state securities laws. These securities have been acquired
for investment and not with a view to distribution or resale.
These securities may not be offered for sale, sold, delivered
after sale, transferred, pledged or hypothecated in the
absence of an effective registration statement covering such
shares under the Act and any applicable state securities
laws, or
<PAGE> 6
- 6 -
the availability, in the opinion of counsel satisfactory
to the Company, of an exemption from registration thereunder."
(b) Sophistication and Knowledge. Each Purchaser or his
representative has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the purchase
of the Preferred Shares. Each Purchaser can bear the economic risks of this
investment and can afford a complete loss of his investment.
(c) Transfer Restrictions Imposed by Securities Laws. Each
Purchaser understands that: no state or governmental authority has made any
finding or determination relating to the fairness of the terms of the investment
in the Company proposed hereunder and the Shares have not been registered under
the Securities Act and applicable state securities laws, and, therefore, cannot
be resold unless they are subsequently registered under the Securities Act and
applicable state securities laws or unless an exemption from such registration
is available; each Purchaser is and must be purchasing the Shares for investment
for the account of such Purchaser and not for the account or benefit of others,
and not with any present view toward resale or other distribution thereof. Each
Purchaser agrees not to resell or otherwise dispose of all or any part of the
Shares purchased by him, except as permitted by law, including, without
limitation, any regulations under the Securities Act and applicable state
securities laws; the Company does not have any present intention and is under no
obligation to register the Shares under the Securities Act and applicable state
securities laws, except as provided in Article V hereof; and Rule 144 or Rule
144A under the Securities Act may not be available as a basis for exemption from
registration of the Shares thereunder.
(d) Lack of Liquidity. Each Purchaser has no present need for
liquidity in connection with his purchase of the Preferred Shares.
(e) Suitability and Investment Objectives. The purchase of the
Preferred Shares by each Purchaser is consistent with the general investment
objectives of the Purchaser. The Purchaser understands that the purchase of the
Preferred Shares involves a high degree of risk in view of the fact that, among
other things, the Company is a start-up enterprise, and there may never be an
established market for the Company's capital stock.
(f) Accredited Investors Status. Each Purchaser except for
those listed on Exhibit 1.05 is an "Accredited Investor" as that term is defined
in Rule 501 of Regulation D promulgated under the Securities Act.
<PAGE> 7
- 7 -
(g) Access to Information. Each Purchaser has had the
opportunity to ask questions and receive answers from the officers and other
employees of the Company regarding the terms and conditions of this
Agreement, the transactions contemplated hereby (including, without
limitation, its acquisition of Shares), as well as the affairs of the
Company and related matters, and it has obtained such information and has
had the opportunity to obtain additional information necessary to verify the
accuracy of all information so obtained.
(h) Corporate and Partnership Representation. If a
Purchaser is a corporation, partnership, trust or other entity, it
represents and warrants that (i) the individual executing this Agreement on
its behalf has been duly authorized to execute and deliver this Agreement;
(ii) the signature of such individual is binding upon such partnership,
corporation, trust or other entity; (iii) the Purchaser is duly organized,
validly existing and in good standing in its jurisdiction of incorporation
or organization and has all requisite power and authority to execute and
deliver this Agreement; and (iv) the execution and delivery of this
Agreement and the purchase of the Shares hereunder will not result in the
violation of, constitute a breach or default under, or conflict with, any
term or provision of the charter, bylaws or other governing document of the
Purchaser or, to its knowledge, material breach or default under any
material agreement, judgment, decree, order, statute or regulation by which
it is bound or applicable to it.
(i) Additional Representations. Each Purchaser
understands that the Company is a start up enterprise which currently has no
assets or employees. The Company intends to engage in research activities
which will require substantial funds which may not be available. For this
and other reasons, the Company's prospects are highly speculative.
Accordingly, each Purchaser acknowledges that he, she or it may lose her,
his or its entire investment in the Company. Each of the Bessemer Purchasers
is relying on the information provided by Bessemer Venture Partners L.P.
with respect to its investment in the Company. Bessemer Venture Partners
L.P. represents that it has provided to each of such purchasers access to
all of the information which it has regarding the Company.
ARTICLE II
CONDITIONS TO PURCHASERS' OBLIGATION
The obligation of each Purchaser to purchase and pay for the Preferred
Shares to be purchased by it at a Closing is subject to the following conditions
(all of which shall be deemed satisfied or waived by the Purchasers at or prior
to the Closing in the
<PAGE> 8
- 8 -
event all of the transactions contemplated to be effected at the Closing are
consummated and all or any of which in any case may be waived by the Purchasers
prior to a Closing):
2.01. Representations and Warranties. Each of the representations and
warranties of the Company set forth in Article III hereof shall be true,
accurate and correct on the date of the Closing. Each of the representations and
warranties of Berkowitz set forth in Article III hereof shall be, to Berkowitz's
actual knowledge, true, accurate and correct on the date of the Initial Closing.
2.02. Documentation at Closing. The Purchasers shall have received
prior to or at the Closing all of the following materials, each in form and
substance reasonably satisfactory to the Purchasers and their special counsel,
and each of the following events shall have occurred, or each of the following
documents shall have been delivered, prior to or simultaneous with the Closing:
(a) A copy of the Certificate of Incorporation of the
Company, as amended or restated to date, together with such evidence as is
satisfactory to the Purchasers of the filing thereof; a copy of the
resolutions of the Board of Directors providing for the approval of the
Restated Certificate of Incorporation of the Company in the form attached as
Exhibit A, the approval of this Agreement, the issuance of the Preferred
Shares, such amendment of the By-laws of the Company as may be reasonably
requested by the Purchasers, and all other agreements or matters
contemplated hereby or executed in connection herewith; a copy of a consent
of stockholders of the Company approving the Restated Certificate of
Incorporation of the Company; and a copy of the By-laws of the Company, all
of which have been certified by the Secretary of the Company to be true,
complete and correct in every particular; and certified copies of all
documents evidencing other necessary corporate or other action and
governmental approvals, if any, required to be obtained at or prior to the
Closing with respect to this Agreement and the issuance of the Preferred
Shares.
(b) The favorable opinion of Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., counsel for the Company, in the form set forth in
Exhibit 2.02(b).
(c) A certificate of the Secretary or an Assistant
Secretary of the Company which shall certify the names of the officers of
the Company authorized to sign this Agreement, the certificates for the
Preferred Shares and the other documents, instruments or certificates to be
delivered pursuant to this Agreement by the Company or any of its officers,
together with the true signatures of such officers.
<PAGE> 9
- 9 -
(d) A certificate of the President and the Treasurer of the
Company and Berkowitz stating that the representations and warranties of the
Company contained in Article III hereof are (in the case of Berkowitz, to his
actual knowledge) true and correct as of the time of the Closing and that all
conditions required to be performed by the Company prior to or at the Closing
have been performed as of the Closing.
(e) The Company shall have obtained any consents or waivers
necessary to be obtained at or prior to the Closing to execute and deliver this
Agreement, the Preferred Shares and the other agreements and instruments
executed and delivered by the Company in connection herewith and to carry out
the transactions contemplated hereby and thereby, and such consents and waivers
shall be in full force and effect at the Closing. All corporate and other action
and governmental filings necessary to effectuate the terms of this Agreement,
the Preferred Shares and the other agreements and instruments executed and
delivered by the Company in connection herewith shall have been made or taken.
(f) The Certificate of Incorporation of the Company shall have
been amended and restated in the form set forth in Exhibit A attached hereto.
(g) A Certificate of the Secretary of State of the State of
Delaware as to the due incorporation and good standing of the Company and a
certificate of the Secretary of State of each jurisdiction in which the Company
is required to qualify to do business as a foreign corporation shall have been
provided to the Purchasers and their special counsel.
(h) Payment for the costs, attorneys' fees, expenses, taxes
and filing fees identified in Section 8.04.
(i) Each of the employees listed on Exhibit 2.02(i) shall have
entered into Nondisclosure and Assignment of Inventions Agreements in the form
attached as Exhibit B1 and Exhibit B2 hereto (the "Nondisclosure Agreement") and
Berkowitz shall have entered into an Employment and Non-Competition Agreement in
the form attached to Exhibit 2.02 hereto (the "Non-Competition Agreement") and
copies thereof shall have been delivered to counsel for the Purchasers.
(j) Each of the Purchasers, the Company and the other
shareholders thereto shall have entered into a Voting and Co-Sale Agreement in
the form attached as Exhibit C hereto (the "Voting and Co-Sale Agreement").
(k) The members of the Board of Directors of the Company (the
"Board") immediately following the Closing shall consist of four (4) members,
which members shall include
<PAGE> 10
- 10 -
Gary J. Anderson, M.D., Hubert Schoemaker, Ph.D., Christopher Gabrieli, and
Barry Berkowitz, Ph.D. (for so long as he is an officer, employee or
otherwise materially involved with the Company as determined by the Board of
Directors, including the Investor Directors (including Christopher Gabrieli
or his successor)
(1) This Agreement shall have been executed by Purchasers
that are obligated to purchase an aggregate of at least 2,000,000 shares of
Series A Preferred Stock at the Initial Closing in the amounts set forth in
Exhibit 1.01A, such Purchasers shall have delivered to the Company the full
purchase price for such Series A Preferred Stock.
(m) A Scientific Advisory Board of the Company composed of
individuals acceptable to the Purchasers in their sole discretion shall have
been constituted.
(n) Each Purchaser (other than the Bessemer Purchasers)
shall have simultaneously with the other Purchasers (other than the Bessemer
Purchasers) purchased the shares of Series A Preferred Stock at a Closing
that such Purchaser is obligated to purchase hereunder and shall have paid
the full purchase price therefor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and Berkowitz (solely as to the Initial Closing) each, jointly
and severally, represents and warrants (and solely in the case of Berkowitz on
the Initial Closing, represents and warrants to his actual knowledge) as of each
Closing as follows:
3.01. Organization and Standing of the Company. The Company is a duly
organized and validly existing corporation in good standing under the laws of
the State of Delaware and has all requisite corporate power and authority for
the ownership and operation of its properties and for the carrying on of its
business as now conducted and as now proposed to be conducted and to execute and
deliver this Agreement, the Voting and Co-Sale Agreement and any other agreement
to which it is a party hereunder, to issue, sell and deliver the Preferred
Shares and to issue and deliver the Conversion Shares and to perform its other
obligations pursuant hereto and thereto. The Company is duly licensed or
qualified and in good standing as a foreign corporation authorized to do
business in all jurisdictions wherein the character of the property owned or
leased or the nature of the activities conducted by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a material adverse effect on the business, operations or
financial condition of the Company.
<PAGE> 11
- 11 -
3.02. Corporate Action. This Agreement, the Voting and Co-Sale
Agreement and any other agreement to which it is a party hereunder have been
duly authorized, executed and delivered by the Company and constitute the legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms.
3.03. Governmental Approvals. Except for the filing of any notice
prior or subsequent to the Closing that may be required under applicable state
and/or Federal securities laws, and the filing of the Certificate of
Designations, Preferences and Rights of Series A Preferred Stock (which, if
required, shall be filed on a timely basis), no authorization, consent,
approval, license, exemption of or filing or registration with any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, is or will be necessary for, or in connection with, the
execution and delivery by the Company of this Agreement, for the offer, issue,
sale, execution or delivery of the Preferred Shares, or for the performance by
the Company of its obligations under this Agreement.
3.04. Litigation. There is no litigation or governmental proceeding
or investigation pending or, to the knowledge of the Company, threatened against
the Company affecting any of its properties or assets, or, to the knowledge of
the Company, against any officer, Key Employee or the holder of more than ten
percent (10%) of the capital stock of the Company relating to the Company or its
business, nor, to the knowledge of the Company, has there occurred any event or
does there exist any condition on the basis of which it is reasonably likely
that any litigation, proceeding or investigation might properly be instituted.
There are no actions or proceedings pending or, to the Company's knowledge,
threatened (or any basis therefor known to the Company) which might result,
either in any case or in the aggregate, in any material adverse change in the
business, operations, Intellectual Property Rights, affairs or financial
condition of the Company or in any of its properties or assets, or which might
call into question the validity of this Agreement, any of the Preferred Shares,
or any action taken or to be taken pursuant hereto or thereto.
3.05. Certain Agreements of Officers and Employees. To the Company's
knowledge, no officer, employee or consultant of the Company is, or is now or is
expected to be, in violation of any material term of any employment contract,
patent disclosure agreement, proprietary information agreement, noncompetition
agreement, nonsolicitation agreement, confidentiality agreement, or any other
similar contract or agreement or any restrictive covenant, relating to the right
of any such officer, employee, or consultant to be employed or engaged by the
Company because of the nature of the business conducted or to be conducted by
the Company or relating to the use of trade secrets or proprietary information
of others, and to the Company's knowledge and belief,
<PAGE> 12
- 12 -
the continued employment or engagement of the Company's officers, employees or
consultants does not subject the Company or any Purchaser to any material
liability with respect to any of the foregoing matters.
3.06. Compliance with Other Instruments. The Company is in compliance
in all respects with the terms and provisions of this Agreement and of its
Certificate of Incorporation and By-laws, each as amended and/or restated to
date, and in all respects with the terms and provisions of all mortgages,
indentures, leases, agreements and other instruments by which it is bound or to
which it or any of its properties or assets are subject where noncompliance
would have a material adverse affect on the business, assets, operations, or
financial condition of the Company. The Company is in compliance in all respects
with all judgments, decrees, governmental orders, laws, statutes, rules or
regulations by which it is bound or to which it or any of its properties or
assets are subject where noncompliance with which would have a material adverse
affect on the business, assets, operations, or financial condition of the
Company. Neither the execution, issuance and delivery of this Agreement, the
Voting and Co-Sale Agreement, or the Preferred Shares, nor the consummation of
any transaction contemplated hereby or thereby, has constituted or resulted in
or will constitute or result in a default or violation of any term or provision
of any of the foregoing documents, instruments, judgments, agreements, decrees,
orders, statutes, rules and regulations where noncompliance with which would
have a material adverse affect on the business, assets, operations, or financial
condition of the Company.
3.07. Title to Assets, Patents. The Company has good and marketable
title in fee to such of its fixed assets as are real property and purported to
be owned, and good and merchantable title to all of its other assets, tangible
and intangible, free of any mortgages, pledges, charges, liens, security
interests or other encumbrances, except those indicated in Exhibit 3.07. The
Company enjoys peaceful and undisturbed possession under all leases under which
it is operating, and all said leases are valid and subsisting and in full force
and effect. All of such assets and leases are listed in Exhibit 3.07.
The Company owns or has a valid right to use the Intellectual
Property Rights being used to conduct its business (i) as now operated and (ii)
as now proposed to be operated (a complete list of licenses, contract rights and
registrations of such Intellectual Property Rights is attached hereto as Exhibit
3.07); and the conduct of its business as now operated and as now proposed to be
operated does not and will not conflict with or infringe upon the intellectual
property rights of others. Except as set forth on Exhibit 3.07, no claim is
pending or threatened against the Company and/or, to the Company's knowledge,
its officers, employees and consultants to the effect that any such
<PAGE> 13
- 13 -
Intellectual Property Right owned or licensed by the Company, or which the
Company otherwise has the right to use, is invalid or unenforceable by the
Company or subject to any claim of infringement. Except pursuant to the terms of
any licenses specified on Exhibit 3.07, the Company has no obligation to
compensate any Person for the use of any such Intellectual Property Rights and
the Company has not granted any Person any license or other right to use any of
the Intellectual Property Rights of the Company or otherwise has licensed from
others the intellectual property rights of third parties, whether requiring the
payment of royalties or not.
The Company has taken reasonable measures in accordance with
industry standards to protect and preserve the security, confidentiality and
value of its Intellectual Property Rights, including its trade secrets and other
confidential information. All employees and consultants of the Company involved
in the design, review, evaluation or development of inventions or Intellectual
Property Rights have executed nondisclosure and assignment of inventions
agreements in the forms attached as Exhibits B1 and B2. To the best knowledge of
the Company, all trade secrets and other confidential information of the Company
are presently valid and protectible and are not part of the public domain or
knowledge, nor, to the best knowledge of the Company, have they been used,
divulged or appropriated for the benefit of any person other than the Company or
otherwise to the detriment of the Company. To the best of the Company's
knowledge, no employee or consultant of the Company has used any trade secrets
or other confidential or proprietary information or techniques of any other
person in the course of their work for the Company or is expected to use such
secrets or information or techniques when conducting the business which the
Company presently intends to conduct. The Company is the exclusive owner of all
right, title and interest in its Intellectual Property Rights as purported to be
owned by the Company, and such Intellectual Property Rights are valid and in
full force and effect. Neither the Company, nor any of its employees or
consultants has received notice of, and to the best of the Company's knowledge
after reasonable investigation, there are no claims that the Company's
Intellectual Property Rights or the use or ownership thereof by the Company
infringes, violates or conflicts with any such right of any third party. No
university, hospital, government agency (whether federal or state) or other
organization which sponsored research and development conducted by the Company
has any claim of right to or ownership of or other encumbrance upon the
Intellectual Property Rights of the Company except as disclosed in Exhibit 3.07.
3.08. Transactions with Affiliates. Except as set forth in Exhibit
3.08 there are no loans, leases, royalty agreements or other continuing
transactions between (a) the Company or, to the Company's best knowledge, any of
its customers or suppliers, and (b) any officer, employee, consultant or
director of the Company
<PAGE> 14
- 14 -
or any Person owning five percent (5%) or more of the capital stock of the
Company, or to the Company's knowledge, any member of the immediate family of
such officer, employee, consultant, director or stockholder or any corporation
or other entity controlled by such officer, employee, consultant, director or
stockholder, or a member of the immediate family of such officer, employee,
consultant, director or stockholder.
3.09. Indebtedness; Assumptions or Guaranties of Indebtedness of Other
Persons. The Company has no Indebtedness except as set forth in Exhibit 3.09.
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 payment,
to supply funds to or otherwise invest in the debtor or otherwise to assure the
creditor against loss), any Indebtedness of any other Person except as set forth
in Exhibit 3.09.
3.10. Investments in Other Persons. Except as set forth in Exhibit
3.10, the Company has not made any loans or advances in excess of $10,000 in the
aggregate to any Person which is outstanding on the date of this Agreement, nor
is it committed or obligated to make any such loan or advance, nor does the
Company own any capital stock, assets comprising the business of, obligations
of, or any interest in, any Person. The Company does not have, and has not since
its incorporation had, any Subsidiaries.
3.11. Securities Act of 1933. 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 Preferred Shares hereunder. Neither the Company
nor anyone authorized to act on its behalf has or will sell, offer to sell or
solicit offers to buy the Preferred Shares or similar securities to, or solicit
offers with respect thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any Person, so as to bring the issuance and
sale of the Preferred Shares under the registration provisions of the Securities
Act and applicable state securities laws.
3.12. Disclosure. Neither this Agreement, nor any other agreement or
statement, whether oral or written, furnished to any of the Purchasers or their
special counsel by or on behalf of the Company in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances in which made, not
misleading. Projections made in the Business Plan are not considered to be facts
for the purpose of this Section. Such projections were prepared in good faith on
the basis of reasonable assumptions. There is no fact within the knowledge of
the Company or any of its executive officers which has not been disclosed herein
or in writing by them to the Purchasers and which materially adversely affects,
or in the
<PAGE> 15
- 14 -
or any Person owning five percent (5%) or more of the capital stock of the
Company, or to the Company's knowledge, any member of the immediate family of
such officer, employee, consultant, director or stockholder or any corporation
or other entity controlled by such officer, employee, consultant, director or
stockholder, or a member of the immediate family of such officer, employee,
consultant, director or stockholder.
3.09. Indebtedness; Assumptions or Guaranties of Indebtedness of Other
Persons. The Company has no Indebtedness except as set forth in Exhibit 3.09.
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 payment,
to supply funds to or otherwise invest in the debtor or otherwise to assure the
creditor against loss), any Indebtedness of any other Person except as set forth
in Exhibit 3.09.
3.10. Investments in Other Persons. Except as set forth in Exhibit
3.10, the Company has not made any loans or advances in excess of $10,000 in the
aggregate to any Person which is outstanding on the date of this Agreement, nor
is it committed or obligated to make any such loan or advance, nor does the
Company own any capital stock, assets comprising the business of, obligations
of, or any interest in, any Person. The Company does not have, and has not since
its incorporation had, any Subsidiaries.
3.11. Securities Act of 1933. 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 Preferred Shares hereunder. Neither the Company
nor anyone authorized to act on its behalf has or will sell, offer to sell or
solicit offers to buy the Preferred Shares or similar securities to, or solicit
offers with respect thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any Person, so as to bring the issuance and
sale of the Preferred Shares under the registration provisions of the Securities
Act and applicable state securities laws.
3.12. Disclosure. Neither this Agreement, nor any other agreement or
statement, whether oral or written, furnished to any of the Purchasers or their
special counsel by or on behalf of the Company in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances in which made, not
misleading. Projections made in the Business Plan are not considered to be facts
for the purpose of this Section. Such projections were prepared in good faith on
the basis of reasonable assumptions. There is no fact within the knowledge of
the Company or any of its executive officers which has not been disclosed herein
or in writing by them to the Purchasers and which materially adversely affects,
or in the
<PAGE> 16
- 15 -
future in their opinion may, insofar as they can now foresee, materially
adversely affect the business, operations, properties, Intellectual Property
Rights, assets or condition, financial or other, of the Company. Without
limiting the foregoing, the Company has no knowledge that there exists, or there
is pending or planned, any patent, invention, device, application or principle
or any statute, rule, law, regulation, standard or code which would materially
adversely affect the business, prospects, operations, Intellectual Property
Rights, affairs or financial condition of the Company.
3.13. Capitalization; Status of Capital Stock. As of the Closing,
the Company will have a total authorized capitalization consisting of (i)
11,000,000 shares of Common Stock, $.001 par value, and (ii) 6,200,000 shares of
Preferred Stock, $.01 par value, of which 6,200,000 shares will be designated as
Series A Preferred Stock. As of the Closing, 1,506,000 shares of Common Stock
will be issued and outstanding and/or committed for issuance without giving
effect to the transactions contemplated hereby. A complete list of the capital
stock of the Company which has been previously issued and the names in which
such capital stock is registered on the stock transfer book of the Company is
set forth in Exhibit 3.13 hereto. All the outstanding shares of capital stock of
the Company have been duly authorized, and are validly issued, fully paid and
non-assessable. The Shares when issued and delivered in accordance with the
terms hereof, and the Conversion Shares, when issued and delivered upon
conversion of the Preferred Shares, will be duly authorized, validly issued,
fully-paid and non-assessable. Except for 2,112,000 shares of Common Stock that
will be reserved for issuance upon exercise of stock options, 70,000 shares of
Common Stock that have been reserved for issuance to certain individuals with
the approval of the Board of Directors including a majority of the Investor
Directors (including Christopher Gabrieli or his successor), 200,000 shares of
Series A Preferred Stock that have been reserved for issuance to certain
individuals with the approval of the Board of Directors including a
majority of the Investor Directors (including Christopher Gabrieli or his
successor), all as further set forth in Exhibit 3.13, no options, warrants,
subscriptions or purchase rights of any nature to acquire from the Company, or
commitments of the Company to issue, shares of capital stock or other securities
are authorized, issued or outstanding, nor is the Company obligated in any other
manner to issue shares or rights to acquire any of its capital stock or other
securities except as contemplated by this Agreement. None of the Company's
outstanding securities or authorized capital stock or the Preferred Stock are
subject to any rights of redemption, repurchase, rights of first refusal,
preemptive rights or other similar rights, whether contractual, statutory or
otherwise, for the benefit of the Company, any stockholder, or any other Person,
except pursuant hereto and the
<PAGE> 17
- 16 -
Voting and Co-Sale Agreement or as set forth on Exhibit 3.13. Except as set
forth in Exhibit 3.13, there are no restrictions on the transfer of shares of
capital stock of the Company other than those imposed by relevant federal and
state securities laws and as otherwise contemplated by this Agreement. The offer
and sale of all capital stock and other securities of the Company issued before
the Closing complied with or were exempt from all applicable federal and state
securities laws and no stockholder has a right of rescission or damages with
respect thereto.
3.14. Material Agreements. Except as set forth in Exhibit 3.14 the
Company is not a party to any material written or oral contract, instrument,
agreement, commitment, obligation, plan or arrangement, or any other material
agreement which could adversely affect the business, assets, liabilities,
Intellectual Property Rights, financial condition or operations of the Company.
The Company, and to the best of the Company's knowledge, each other party
thereto have in all material respects performed all the obligations required to
be performed by them to date, have received no notice of default and are not in
default in any material respect under any lease, agreement or contract now in
effect to which the Company is a party or by which it or its property may be
bound. Each of the contracts or agreements listed in Exhibit 3.14 is in full
force and effect with no default, anticipated or threatened material default or
material failure of performance or observance of any obligations or conditions
contained therein, and none of the foregoing parties nor the Company has
provided any notice of default or of its intention to terminate these
agreements.
3.15. Absence of Certain Developments. The Company is not a party to any
written or material oral contract or instrument or other corporate restriction
which individually or in the aggregate could adversely affect the business,
prospectus, financial condition, operations, Intellectual Property Rights,
property or affairs of the Company other than the terms of this Agreement. The
Company has no liability or obligation, whether absolute, contingent, or
otherwise as set forth in Exhibit 3.15, except for those incurred in the
ordinary course.
3.16. Environmental and Safety Laws. To the best of the Company's
knowledge after due investigation, it is not in violation of any applicable
statute, law or regulation relating to the environment or occupational safety
and health in any material respect, and to the best of its knowledge after due
investigation, no material expenditures will be required in order to comply with
any such statute, law or regulation except in the ordinary course of doing
business.
3.17. U.S. Real Property Holding Corporation. The Company is not now
and has never been a "United States Real Property Holding Corporation" as
defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service.
<PAGE> 18
- 17 -
ARTICLE IV
COVENANTS OF THE COMPANY
4.01. Affirmative Covenants of the Company Other Than Reporting
Requirements. Without limiting any other covenants and provisions hereof, and
except to the extent the following covenants and provisions of this Section 4.01
are waived in any instance by either (i) including a majority of the Investor
Directors (including Christopher Gabrieli or his successor) or (ii) by the
holders of at least 60% of the outstanding shares of Preferred Stock, the
Company covenants and agrees that until the consummation of a Qualified Public
Offering, it will perform and observe the following covenants and provisions,
and will cause each Subsidiary, if and when such Subsidiary exists, to perform
and observe such of the following covenants and provisions as are applicable to
such Subsidiary:
(a) Maintenance of Key Man Insurance. Within 90 days from the
date hereof, maintain term life insurance on the life of Barry
Berkowitz in the amount of $1,000,000, in each case for so long as such
person remains an officer or employee of the Company, the proceeds of
which are payable to the Company. The Company will add Technology
Leaders L.P., Technology Leaders Offshore C.V. and Bessemer Venture
Partner II L.P. as a notice party to such policy and will request that
the issuer of such policy provide such party with at least twenty (20)
days' notice before such policy is modified or terminated (for failure
to pay premium or otherwise) or assigned, or before any change is made
in the designation of the beneficiary thereof.
(b) Budgets Approval. At least thirty (30) days prior to the
commencement of each fiscal year, prepare and submit to, and obtain in
respect thereof the approval of two-thirds of the members of the Board
of Directors, a business plan and monthly operating budget in detail
for each fiscal year, monthly operating expenses and profit and loss
projections, quarterly cash flow projections and a capital expenditure
budget for the fiscal year, and including a summary of proposed
research and development activities for the forthcoming year, the
status and proposed activities for any joint venture or other licensing
arrangements with third parties, including pharmaceutical companies,
universities, hospitals and others.
(c) New Developments. Cause all technological developments,
patentable or unpatentable inventions, discoveries or improvements by
the Company's or any Subsidiary's employees or consultants to be
documented in accordance with industry practice and, where possible and
<PAGE> 19
- 18 -
appropriate, to file and prosecute United States and foreign patent, copyright,
trademark, or other Intellectual Property Right applications relating to and
protecting the Company's inventions, discoveries or developments on behalf of
the Company or any Subsidiary.
(d) Agreements of Officers and Employees. Cause each employee
of the Company or any Subsidiary now or hereafter employed to execute and
deliver a Nondisclosure and Assignment of Inventions Agreement (or agreement
otherwise approved by the Board of Directors of the Company, including
a majority of the Investor Directors (including Christopher Gabrieli or his
successor) and cause each Key Employee of the Company or any Subsidiary
hereafter employed to execute and deliver a Non-Competition Agreement,
Nondisclosure and Assignment of Inventions (or an agreement otherwise approved
by the Board of Directors of the Company, including a majority of the Investor
Directors (including Christopher Gabrieli or his successor)), and use its best
efforts to cause all consultants of the Company involved in the design, review,
evaluation or development of inventions or Intellectual Property Rights to
execute and deliver a Nondisclosure and Assignment of Inventions Agreement (or
an agreement otherwise approved by the Board of Directors, including a majority
of the Investor Directors (including Christopher Gabrieli or his successor)).
The Company shall not amend or waive any of the material provisions of such
Agreements.
(e) By-laws; Meetings and Indemnification. The Company shall
at all times cause its By-laws to provide that, (A) unless otherwise required by
the laws of the state of its incorporation, (i) any two directors or (ii) any
holder or holders of at least 25% of the outstanding shares of Preferred Stock,
voting as a separate class, shall have the right to call a meeting of the Board
of Directors or stockholders, respectively, and (B) a quorum for a meeting of
the Board of Directors or any Committee hereof of which an Investor Director is
a member shall require the attendance of at least two Investor Directors
(including Christopher Gabrieli or his successor). The Company shall at all
times maintain provisions in its By-laws or Certificate of Incorporation
indemnifying all directors against liability to the maximum extent permitted
under the laws of the state of its incorporation.
(f) Expenses of Directors. Promptly reimburse in full each
director of the Company for all of his reasonable out-of-pocket expenses
incurred in attending each meeting of the Board of Directors of the Company or
any Committee thereof.
<PAGE> 20
- 19 -
(g) Size of Board. Fix and maintain the number of Directors on
the Board of Directors of the Company at no more than six (6) members,
including one (1) representative of the holders of Common Stock, Berkowitz,
three (3) representatives of the Series A Purchasers and one (1) member
designated by the chief executive officer of the Company.
(h) Rule 144A Information. At all times during which the
Company is neither subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act, nor exempt from reporting pursuant to Rule 12g3-2(b) under
the Exchange Act, the Company will provide as promptly as practicable (in any
event not later than twenty (20) days after initial request) in written form,
upon the written request of any Purchaser or a prospective buyer of Shares from
any Purchaser, all information required by Rule 144A(d)(4)(i) of the General
Regulations promulgated by the Commission under the Securities Act ("Rule 144A
Information"). The Company further covenants, upon written request, as promptly
as practicable (in any event not later than twenty (20) days after initial
request) to cooperate with and assist any Purchaser or any member of the
National Association of Securities Dealers, Inc. system for Private Offerings
Resales and Trading through Automated Linkage ("PORTAL") in applying to
designate and thereafter maintain the eligibility of the Shares for trading
through PORTAL. The Company's obligations under this Section 4.01(h) shall at
all times be contingent upon the relevant Purchaser's obtaining from a
prospective purchaser an agreement to take all reasonable precautions to
safeguard the Rule 144A Information from disclosure to anyone other than a
person who will assist such purchaser in evaluating the purchase of the Shares.
(i) Stock Plan. The Company has created a stock option plan
and has reserved an aggregate of 2,112,000 options for the purchase of Common
Stock for issuance to employees, officers and consultants of the Company and to
members of the Company's Scientific Advisory Board. All options to be granted
(or stock issued directly) under any Stock Plan or otherwise shall vest and
become exercisable in equal annual installments over a four-year period and be
subject to a right of refusal of the Company, unless otherwise approved by a
majority of the Board of Directors including a majority of the Investor
Directors (including Christopher Gabrieli or his successor).
(j) Meetings of Directors and Committees. Hold meetings of the
Company's Board of Directors not less than on a quarterly basis; if the Company
appoints an Executive Committee of the Board of Directors, such committee shall
be composed of at least three (3) Directors, including at least
<PAGE> 21
- 20 -
three (3) Investor Directors; and appoint and maintain a Stock
Option/Compensation Committee of the Board of Directors composed of at least
three (3) Directors, including at least three (3) Investor Directors.
4.02. Negative Covenants of the Company. The Company covenants and
agrees that until the consummation of a Qualified Public Offering, it will
comply with and observe the following negative covenants and provisions, and
will cause each Subsidiary to comply with and observe such of the following
covenants and provisions as are applicable to such Subsidiary, if and when such
Subsidiary exists, and will not without (i) the written consent or written
waiver of the holders of at least 60% of the outstanding shares of the Series A
Preferred Stock or (ii) a majority of the members of the Board of Directors
including a majority of the Investor Directors (including Christopher Gabrieli
or his successor):
(a) Dealings with Affiliates. Enter into any transaction,
including, without limitation, any loans or extensions of credit or other
agreements with any employee, consultant, officer or director of the Company
or any Subsidiary or holder of five percent (5%) of any class of capital
stock of the Company or any Subsidiary, or any member of their respective
immediate families or any corporation or other entity directly or indirectly
controlled by one or more of such employees, consultants, officers,
directors or 5% stockholders or members of their immediate families, on
terms less favorable to the Company or any Subsidiary than it would obtain
in a transaction between unrelated parties except in the case of any
transaction or series of transactions entered into in the ordinary course of
business, so long as these are approved by the disinterested members of
Board of Directors (including a majority of the Investor Directors
(including Christopher Gabrieli or his successor). The Company has entered
into certain agreements with Berkowitz set forth on Exhibit 4.02; which are
hereby ratified.
(b) Issuance of Equity Securities. Authorize or issue, or
obligate itself to issue, any additional shares or capital stock of the
Company of any class (including any options, warrants or other rights to
purchase capital stock), provided, however, that the provisions of this
Section 4.02(b) shall not apply to the issuance of: (i) the Conversion
Shares; or (ii) up to 2,112,000 shares of Common Stock or options, warrants
or other rights exercisable therefor, issued on or after the date hereof to
directors, officers, employees or consultants of the Company and any
Subsidiary (including members of the Scientific Advisory Board) pursuant to
any qualified or non-qualified stock option plan or agreement, employee
stock ownership plan, employee benefit plan, stock purchase agreement, stock
plan, stock restriction agreement, or consulting agreement or such
<PAGE> 22
- 21 -
other options, equity arrangements, agreements or plans approved by
two-thirds of the members of the Board of Directors of the Company
(including a majority of the Investor Directors (including Christopher
Gabrieli or his successor)); or (iii) up to 70,000 shares of Common Stock to
certain individuals with the approval of the Board of Directors, including a
majority of the Investor Directors (including Christopher Gabrieli or his
successor); or (iv) up to 200,000 shares of Series A Preferred Stock at
$1.00 per share to certain individuals with the approval of the Board of
Directors, including a majority of the Investor Directors (including
Christopher Gabrieli or his successor); or (v) issuing the shares identified
on Exhibit 3.13.
(c) Transfers of Technology. Transfer, sell, dispose of,
encumber, pledge, grant a lien on or security interest in, assign, lease,
license or donate any ownership or interest in, or material rights relating
to, any of its technology, or other Intellectual Property Rights to any
person or entity which is not a member of the "consolidated group" of the
Company and its Subsidiaries; provided, however, that this Section shall not
apply to licenses of technology or Intellectual Property Rights accomplished
in the ordinary course of business as proposed to be conducted in the
Company's Business Plan.
(d) Restrictions on Indebtedness. The Company covenants
that it will not, and will not permit any of its Subsidiaries to, incur,
create, or assume any Indebtedness other than trade debt, loans to employees
in an annual aggregate amount not to exceed $50,000 and property leases, all
as approved by the Board of Directors, including a majority of the Investor
Directors (including Christopher Gabrieli or his successor).
(e) Assumptions or Guaranties of Indebtedness of Other
Persons. Assume, guarantee, endorse or otherwise become directly or
contingently liable on, or permit any Subsidiary to assume, guarantee,
endorse 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 payment, to supply funds to or otherwise
invest in the debtor or otherwise to assure the creditor against loss) any
Indebtedness of any other Person, except for guaranties by endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business.
(f) Amendments. Amend the Certificate of Incorporation or
By-laws of the Company.
4.03. Reporting Requirements. Until the consummation of the Initial Public
Offering, the Company will furnish the following to each Person who is the
holder of not less than 5% of the Shares issued pursuant to this Agreement:
<PAGE> 23
- 22 -
(a) Monthly Reports: as soon as available and in any event
within 45 days after the end of each calendar month, balance sheets,
statements of income and retained earnings and a summary statement of
monthly cash flow and expenses of the Company and its Subsidiaries for such
month and for the period commencing at the end of the previous fiscal year
and ending with the end of such month, setting forth in each case in
comparative form the corresponding figures for the corresponding period of
the preceding fiscal year, and including comparisons to the monthly budget
or business plan and an analysis of the variances from the budget or plan,
prepared in accordance with generally accepted accounting principles
consistently applied;
(b) Annual Reports: as soon as available and in any event
within 120 days after the end of each fiscal year of the Company, a copy of
the annual audit report for such year for the Company and its Subsidiaries,
including therein consolidated and consolidating balance sheets of the
Company and its Subsidiaries as of the end of such fiscal year and
consolidated and consolidating statements of income and retained earnings
and of changes in financial position of the Company and its Subsidiaries for
such fiscal year, setting forth in each case in comparative form the
corresponding figures for the preceding fiscal year, all such consolidated
statements to be duly certified by the chief financial officer of the
Company and an independent public accountant of recognized national standing
approved by the Board of Directors including a majority of the Investor
Directors (including Christopher Gabrieli or his successor);
(c) Budgets and Operating Plan: as soon as available and in
any event at least 30 days before the beginning of each fiscal year of the
Company, a business plan and monthly and quarterly operating budgets for the
forthcoming fiscal year, and as soon as available and in any event within 30
days after the end of each calendar month, monthly comparisons against the
business plan and monthly operating budgets (including a summary of proposed
research and development activities, and the status and proposed activities
for any joint venture or other licensing arrangements with any third party).
(d) Notice of Adverse Changes: promptly after the
occurrence thereof and in any event within five (5) business days after it
becomes aware of each occurrence, notice of any material adverse change in
the business, assets, Intellectual Property Rights, management, licensing
activities, operations or financial condition of the Company; and
<PAGE> 24
- 23 -
(e) Reports and Other Information: promptly upon receipt,
publication, commencement or occurrence provide to each Purchaser copies of
all material consulting reports, notices of all material actions, suits or
proceedings, copies of all accountant's reviews, and reports to management,
and such other information as the Company shall make available to its
directors or stockholders or the Purchasers shall reasonably request.
ARTICLE V
REGISTRATION RIGHTS
5.01. "Piggy-Back" Registrations. If at any time the Company shall
determine to register for its own account or the account of others under the
Securities Act (including pursuant to the Qualified Public Offering, the Initial
Public Offering or a demand for registration of any stockholder of the Company
other than the Purchasers) any of its equity securities, other than on Form S-8
or Form S-4 or their then equivalents or otherwise relating to shares of Common
Stock to be issued solely in connection with any acquisition of any entity or
business or shares of Common Stock issuable in connection with stock option or
other employee benefit plans, it shall send to each holder of Registrable
Shares, including each holder who has the right to acquire Registrable Shares,
written notice of such determination and, if within ten (10) business days after
receipt of such notice, such holder shall so request in writing, the Company
shall use its best efforts to include in such registration statement all or any
part of the Registrable Shares such holder requests to be registered.
If, in connection with any offering involving an underwriting, the
managing underwriter shall impose a limitation on the number of shares of such
Common Stock which may be included in the registration statement because, in its
judgment, such limitation is necessary to effect an orderly public distribution,
then the Company shall be obligated to include in such registration statement
only such limited portion (which may be none) of the Registrable Shares with
respect to which such holder has requested inclusion pursuant hereto as may
reasonably be determined by the managing underwriters; provided, however, as
between the Company, other stockholders holding contractual registration rights,
and the holders of Registrable Shares, in no event shall the Registrable Shares
included in such offering be limited to less than twenty-five percent (25%) of
the aggregate shares offered. Any inclusion of Registrable Shares in the
offering, when the managing underwriter has so limited the number of Registrable
Shares that may be included in the offering, shall be allocated pro rata among
the holders of Registrable Shares (or their permitted assigns) seeking to
include such shares and the
<PAGE> 25
- 24 -
holders of other registration rights seeking to include their shares, in
proportion to the number of Registrable Shares (whether or not such shares are
sought to be included in such offering) held by such persons. No incidental
right under this Section 5.01 shall be construed to limit any registration
required under Section 5.02. The obligations of the Company under this Section
5.01 may be waived at any time upon the written consent of holders of sixty
percent (60%) in interest of the Conversion Shares who are participating in the
offering and shall expire on the seventh anniversary following the consummation
of an Initial Public Offering or, if earlier, as set forth in Section 5.15. The
Company shall have the right to withdraw any registration initiated by it
pursuant to Section 5.01.
5.02. Required Registrations. If on any one occasion (providing the
offering is consummated) one or more holders of at least 60% of the Shares shall
notify the Company in writing that it or they desire to offer or cause to be
offered for public sale at least thirty percent (30%) of the Registrable Shares,
the Company will so notify all holders of Registrable Shares, including all
holders who have a right to acquire Registrable Shares. Upon written request of
any holder given within fifteen (15) days after the receipt by such holder from
the Company of such notification, the Company will use its best efforts to cause
such of the Registrable Shares as may be requested by any holder thereof
(including the holder or holders giving the initial notice of intent to offer)
to be registered under the Securities Act as expeditiously as possible on Form
S-1 or Form S-18 or their respective successor registration statement forms
(providing the offering is consummated). The Company shall not be required to
effect more than one registration pursuant to this Section 5.02. If the Company
determines to include shares to be sold by it or by other selling shareholders
in any registration request pursuant to this Section 5.02, such registration
shall be deemed to have been a "piggy back" registration under Section 5.01, and
not a "demand" registration under this Section 5.02 if the holders of
Registrable Shares are unable to include in any such registration statement
eighty-five percent (85%) of the Registrable Shares initially requested for
inclusion in such registration statement. The Company shall not be required to
effect a registration pursuant to this Section 5.02 unless the minimum market
value of any offering and registration of Registrable Shares made pursuant
thereto is at least $3,000,000, before calculation of underwriting discounts and
commissions. The holders of Registrable Shares may not exercise their rights
under this Section 5.02 until the earlier to occur of (i) forty-eight (48)
months following the date of the Closing or (ii) 180 days after the
effectiveness of any registration statement covering the Initial Public
Offering. No request for registration under this Section 5.02 may be made within
the one hundred and eighty day period after the effective date of a registration
statement filed by the Company or while the Company
<PAGE> 26
- 25 -
is in the process of preparing a registration statement. The Company shall have
the right to delay any registration under this section for up to 90 days if the
Company's Board of Directors reasonably determines such delay is necessary in
view of the Company's current circumstances.
5.03. Registrations on Forms S-2 or S-3. In addition to the rights
provided the holder of Registrable Shares in Sections 5.01 and 5.02 above, if
the registration of Registrable Shares under the Securities Act can be effected
on Forms S-2 or S-3 (or any similar form promulgated by the Commission), then
upon the written request of one or more holders of a majority of the Registrable
Shares, the Company will so notify each holder of Registrable Shares, including
each holder who has a right to acquire Registrable Shares, and then will, as
expeditiously as possible, use its best efforts to effect qualification and
registration under the Securities Act on Forms S-2 or S-3 of all or such portion
of the Registrable Shares as the holder or holders shall specify; provided,
however, the Company shall not be required to effect a registration pursuant to
this Section 5.03 unless the market value of the Registrable Shares to be sold
in any such registration shall be estimated to be at least $1,000,000 at the
time of filing such registration statement, and further provided that the
Company shall not be required to effect more than two (2) registrations during
any twelve (12) month period pursuant to this Section 5.03 and four (4)
registrations in the aggregate under this Section 5.03. No request for
registration under this Section 5.03 may be made within the one hundred and
eighty day period after the effective date of a registration statement filed by
the Company or while the Company is in the process of preparing a registration
statement.
5.04. Effectiveness. The Company will use its best efforts to maintain
the effectiveness for up to 90 days (or such shorter period of time as the
underwriters need to complete the distribution of the registered offering, or
six months in the case of any registration relating to Registrable Shares) of
any registration statement pursuant to which any of the Registrable Shares are
being offered, and from time to time will amend or supplement such registration
statement and the prospectus contained therein to the extent necessary to comply
with the Securities Act and any applicable state securities statute or
regulation. The Company will also provide each holder of Registrable Shares with
as many copies of the prospectus contained in any such registration statement as
it may reasonably request. For a period not to exceed 60 days, the Company shall
not be obligated to prepare and file, or be prevented from delaying or
abandoning, a registration statement pursuant to this Agreement at any time when
the Company, in its good faith judgment with advice of counsel, reasonably
believes
<PAGE> 27
- 26 -
(a) that the filing thereof at the time requested, or the
offering of Registrable Shares pursuant thereto, would materially and
adversely affect (a) a pending or scheduled public offering of the Company's
securities, (b) an acquisition, merger, recapitalization, consolidation,
reorganization or similar transaction by or of the Company, (c) pre-existing
and continuing negotiations, discussions or pending proposals with respect
to any of the foregoing transactions, or (d) the financial condition of the
Company in view of the disclosure of any pending or threatened litigation,
claim, assessment or governmental investigation which may be required
thereby; and
(b) that the failure to disclose any material information
with respect to the foregoing would cause a violation of the Securities Act
or the Exchange Act.
5.05. Indemnification of Holder of Registrable Shares. In the event
that the Company registers any of the Registrable Shares under the Securities
Act, the Company will indemnify and hold harmless each holder and each
underwriter of Registrable Shares (including their officers, directors,
affiliates and partners and including any broker or dealer through whom
Registrable Shares may be sold in such registration) and each Person, if any,
who controls such holder or any such underwriter within the meaning of Section
15 of the Securities Act from and against any and all losses, claims, damages,
expenses or liabilities, joint or several, to which they or any of them become
subject under the Securities Act, applicable state securities laws or under any
other statute or at common law or otherwise, as incurred, and, except as
hereinafter provided, will reimburse each such holder, each such underwriter and
each such controlling Person, if any, for any legal or other expenses reasonably
incurred by them or any of them in connection with investigating or defending
any actions whether or not resulting in any liability, as incurred, insofar as
such losses, claims, damages, expenses, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the registration statement, in any preliminary or amended
preliminary prospectus or in the final prospectus (or the registration statement
or prospectus as from time to time amended or supplemented by the Company) or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or any violation by the Company of any rule
or regulation promulgated under the Securities Act or any state securities laws
applicable to the Company and relating to action or inaction required of the
Company in connection with such registration, unless (i) such untrue statement
or alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary or amended preliminary prospectus or final
prospectus in reliance upon and in conformity with information
<PAGE> 28
- 27 -
furnished in writing to the Company in connection therewith by any such holder
of Registrable Shares (in the case of indemnification of such holder), any such
underwriter (in the case of indemnification of such underwriter) or any such
controlling Person (in the case of indemnification of such controlling person)
expressly for use therein, or unless (ii) in the case of a sale directly by such
holder of Registrable Shares (including a sale of such Registrable Shares
through any underwriter retained by such holder of Registrable Shares to engage
in a distribution solely on behalf of such holder of Registrable Shares), such
untrue statement or alleged untrue statement or omission or alleged omission was
contained in a preliminary prospectus and corrected in a final or amended
prospectus copies of which were delivered to such holder of Registrable Shares
or such underwriter on a timely basis, and such holder of Registrable Shares
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.
Promptly after receipt by any holder of Registrable Shares, any
underwriter or any controlling Person of notice of the commencement of any
action in respect of which indemnity may be sought against the Company, such
holder of Registrable Shares, or such underwriter or such controlling person, as
the case may be, shall notify the Company in writing of the commencement thereof
(provided, that failure to so notify the Company shall not relieve the Company
from any liability it may have hereunder, except to the extent prejudiced by
such failure) and, subject to the provisions hereinafter stated, the Company
shall be entitled to assume the defense of such action (including the employment
of counsel, who shall be counsel reasonably satisfactory to such holder of
Registrable Shares, such underwriter or such controlling Person, as the case may
be) and the payment of expenses insofar as such action shall relate to any
alleged liability in respect of which indemnity may be sought against the
Company.
Such holder of Registrable Shares, any such underwriter or any
such controlling Person shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel subsequent to any assumption of the defense by the Company shall
not be at the expense of the Company unless the employment of such counsel has
been specifically authorized in writing by the Company; provided, however, that,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests
of the
<PAGE> 29
- 28 -
indemnifying party, the indemnified party shall have the right to select a
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed by the
indemnifying party as incurred. At any time, any holder of Registrable Shares
may select separate counsel and assume its own legal defense with the expenses
and fees of such separate counsel and other expenses related to such separate
counsel to be borne by such holder electing separate counsel. The Company shall
not be liable to indemnify any Person for any settlement of any such action
effected without the Company's written consent. The Company shall not, except
with the approval of each party being indemnified under this Section 5.05,
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 the parties being so indemnified of a release from all liability in respect
to such claim or litigation.
In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which any holder of
Registrable Shares exercising rights under this Article V, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 5.05 but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that this Section 5.05
provides for indemnification in such case, then, the Company and such holder
will contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and of
the holder of Registrable Shares on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of the holder of Registrable Shares on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company on the one
hand or by the holder of Registrable Shares on the other, and each party's
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, however, that, in any such case,
(A) no such holder will be required to contribute any amount in excess of the
public offering price of all such Registrable Shares offered by it pursuant to
such registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
<PAGE> 30
- 29 -
The indemnities provided in this Section 5.05 shall survive the transfer
of any Registrable Shares by such holder.
5.06. Indemnification of Company. In the event that the Company
registers any of the Registrable Shares under the Securities Act, each holder of
the Registrable Shares so registered will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed or
otherwise participated in the preparation of the registration statement, each
underwriter of the Registrable Shares so registered (including any broker or
dealer through whom such of the shares may be sold) and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act from
and against any and all losses, claims, damages, expenses or liabilities, joint
or several, to which they or any of them may become subject under the Securities
Act, applicable state securities laws or under any other statute or at common
law or otherwise, and, except as hereinafter provided, will reimburse the
Company and each such director, officer, underwriter or controlling Person for
any legal or other expenses reasonably incurred by them or any of them in
connection with investigating or defending any actions whether or not resulting
in any liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, in any
preliminary or amended preliminary prospectus or in the final prospectus (or in
the registration statement or prospectus as from time to time amended or
supplemented) or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, but only insofar as any
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company in connection therewith by such
holder of Registrable shares expressly for use therein; provided, however, that
such holder's obligations hereunder shall be limited to an amount equal to the
proceeds received by such holder of Registrable Shares sold in such
registration.
Promptly after receipt of notice of the commencement of any
action in respect of which indemnity may be sought against such holder of
Registrable Shares, the Company shall notify such holder of Registrable Shares
in writing of the commencement thereof (provided, that failure to so notify such
holder shall not relieve such holder from any liability it may have hereunder,
except to the extent prejudiced by such failure), and such holder of Registrable
Shares shall, subject to the provisions hereinafter stated, be entitled to
assume the defense of such action (including the employment of counsel, who
shall be counsel reasonably satisfactory to the Company) and the payment of
expenses insofar as such action shall relate to the alleged
<PAGE> 31
- 30 -
liability in respect of which indemnity may be sought against such holder of
Registrable Shares. The Company and each such director, officer, underwriter or
controlling Person shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel subsequent to any assumption of the defense by such holder of
Registrable Shares shall not be at the expense of such holder of Registrable
Shares unless employment of such counsel has been specifically authorized in
writing by such holder of Registrable Shares. Such holder of Registrable Shares
shall not be liable to indemnify any Person for any settlement of any such
action effected without such holder's written consent.
In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which the Company exercising
its rights under this Article V, makes a claim for indemnification pursuant to
this Section 5.06, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding that this
Section 5.06 provides for indemnification, in such case, then, the Company and
such holder will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion as is appropriate to reflect the relative fault of the Company
on the one hand and of the holder of Registrable Shares on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of the
holder of Registrable Shares on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or by the holder of
Registrable Shares on the other, and each party's relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission; provided, however, that, in any such case, (A) no such holder will be
required to contribute any amount in excess of the public offering price of all
such Registrable Shares offered by it pursuant to such registration statement;
and (B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such fraudulent
misrepresentation.
5.07. Exchange Act Registration. If the Company at any time shall
list any class of equity securities of the type which may be issued upon the
conversion of the Preferred Stock on any national securities exchange and shall
register such class of equity securities under the Exchange Act, the Company
will, at
<PAGE> 32
- 31 -
its expense, simultaneously list on such exchange and maintain such listing of,
the Common Stock. If the Company becomes subject to the reporting requirements
of either Section 13 or Section 15(d) of the Exchange Act, the Company will use
its best efforts to timely file with the Commission such information as the
Commission may require under either of said Sections; and in such event, the
Company shall use its best efforts to take all action as may be required as a
condition to the availability of Rule 144 or Rule 144A under the Securities Act
(or any successor exemptive rule hereinafter in effect) with respect to such
Common Stock. The Company shall furnish to any holder of Registrable Shares
forthwith upon request (i) a written statement by the Company as to its
compliance with the reporting requirements of Rule 144, (ii) a copy of the most
recent annual or quarterly report of the Company as filed with the Commission,
and (iii) such other reports and documents as a holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing a holder to
sell any such Registrable Securities without registration. After the occurrence
of the Initial Public Offering, the Company agrees to use its best efforts to
facilitate and expedite transfers of the Shares pursuant to Rule 144 under the
Securities Act, which efforts shall include timely notice to its transfer agent
to expedite such transfers of Shares.
5.08. Damages. The Company recognizes and agrees that the holder of
Registrable Shares will not have an adequate remedy if the Company fails to
comply with this Article V and that damages may not be readily ascertainable,
and the Company expressly agrees that, in the event of such failure, it shall
not oppose an application by the holder of Registrable Shares or any other
Person entitled to the benefits of this Article V requiring specific performance
of any and all provisions hereof or enjoining the Company from continuing to
commit any such breach of this Article V.
5.09. Further Obligations of the Company. Whenever under the
preceding Sections of this Article V, the Company is required hereunder to
register Registrable Shares, it agrees that it shall also do the following:
(a) Furnish to each selling holder such copies of each
preliminary and final prospectus and such other documents as said holder may
reasonably request to facilitate the public offering of its Registrable
Shares;
(b) Use its best efforts to register or qualify the
Registrable Shares covered by said registration statement under the
applicable securities or "blue sky" laws of such jurisdictions as any
selling holder may reasonably request; provided, however, that the Company
shall not be obligated to qualify to do business in any jurisdictions where
it is not then so qualified or to take any action which would subject it to
the service of process in suits other than those arising out of the offer or
sale of the securities covered by the registration statement in any
jurisdiction where it is not then so subject;
<PAGE> 33
- 32 -
(c) Furnish to each selling holder a signed counterpart,
addressed to the selling holders, of
(i) opinions of counsel for the Company, dated the
effective date of the registration statement, and covering such matters as
are required by the Securities Act and such matters as may reasonably be
requested by the underwriters, and
(ii) "comfort" letters signed by the Company's
independent public accountants who have examined and reported on the
Company's financial statements included in the registration statement, to
the extent permitted by the standards of the American Institute of Certified
Public Accountants, as the Company is required to deliver or cause the
delivery of to the underwriters in an underwritten public offering of
securities;
(d) Permit each selling holder of Registrable Shares who
holds not less than 5% of the Registrable Shares or his counsel or other
representatives to inspect and copy such corporate documents and records as
may reasonably be requested by them, after reasonable advance notice and
without undue interference with the operation of the Company's business;
(e) Furnish to each selling holder of Registrable Shares a
copy of all documents filed with and all correspondence from or to the
Commission in connection with any such offering of securities;
(f) Use its best efforts to insure the obtaining of all
necessary approvals from the National Association of Securities Dealers,
Inc; and
(g) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, an earning
statement covering the period of at least twelve months, but not more than
eighteen months, beginning with the first month after the effective date of
the registration statement covering the Initial Public Offering, which
earning statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.
Whenever under the preceding Sections of this Article V the
holders of Registrable Shares are registering such shares pursuant to any
registration statement, each such holder agrees to (i) timely provide to the
Company, at its request, such information and materials as it may reasonably
request in order
<PAGE> 34
- 33 -
to effect the registration of such Registrable Shares, (ii) convert all shares
of Preferred Stock included in any registration statement to shares of Common
Stock, such conversion to be effective at the closing of such offering pursuant
to such registration statement, and (iii) if the offering is underwritten,
execute an underwriting agreement containing customary conditions.
5.10. Expenses. In the case of each registration effected under
Section 5.01, 5.02 or 5.03, the Company shall bear all reasonable costs and
expenses of each such registration on behalf of the selling holders of
Registrable Shares, including, but not limited to, the Company's printing, legal
and accounting fees and expenses, Commission and NASD filing fees and "Blue Sky"
fees and expenses and the reasonable fees and disbursements (such fees not to
exceed $25,000 for any registration) of one counsel for the selling holders of
Registrable Shares in connection with the registration of their Registrable
Shares; provided, however, that the Company shall have no obligation to pay or
otherwise bear any portion of the underwriters' commissions or discounts or
transfer taxes attributable to the Registrable Shares being offered and sold by
the holders of Registrable Shares, or the fees and expenses of more than one
counsel for the selling holders of Registrable Shares in connection with the
registration of the Registrable Shares. The Company shall pay all expenses of
the holders of the Registrable Shares in connection with any registration
initiated pursuant to this Article V which is withdrawn, delayed or abandoned by
the Company, except if such withdrawal, delay or abandonment is caused by the
fraud, material misstatement or omission of a material fact by a holder of
Registrable Shares to be included in such registration.
5.11. Approval of Underwriter. Any managing underwriter engaged in
any registration made pursuant to Section 5.02 shall be a nationally recognized
firm requiring the approval in writing of the holders of 60% of the Registrable
Shares requesting such registration.
5.12. Transferability. For all purposes of Article V of this
Agreement, the holder of Registrable Shares shall include not only the
Purchasers named in Exhibit 1.01 hereof but (i) any assignee or transferee of
the Registrable Shares who acquires at least ten percent (10%) of the
Registrable Shares and who is not a competitor of the Company, or (ii) any
general or limited partner or any officer or director of any Purchaser or their
affiliates, including, but not limited to, their immediate family, irrevocable
trusts for estate planning purposes and personal representatives; provided,
however, that such assignee or transferee agrees in writing at the time it
acquires such shares to be bound by all of the provisions of this Agreement,
including, without limitation, Section 5.13 hereof.
<PAGE> 35
- 34 -
5.13. "Lock-Up" Agreement.
(a) Each holder of Registrable Shares agrees, if so
requested by the Company and an underwriter of Common Stock or other
securities of the Company, not to sell, grant any option or right to buy or
sell, or otherwise transfer or dispose of in any manner, whether in
privately-negotiated or open-market transactions, any Common Stock or other
securities of the Company held by it during the 90-day period following the
effective date of a registration statement filed pursuant to the Initial
Public Offering, provided that:
(i) Such agreement shall apply only to the Initial
Public Offering; and
(ii) All holders of Registrable Shares, any other
security holders whose securities are included in such registration
statement, and all officers, directors and Key Employees of the Company
shall also enter into similar agreements.
Such "lock-up" agreement shall be in writing and in form and
substance satisfactory to the Company and such underwriter. The Company may
impose stop-transfer instructions with respect to the shares subject to the
foregoing restrictions until the end of said 90-day period. No holder of
Registrable Shares shall be so restricted unless all holders are similarly and
proportionately restricted.
5.14. Mergers, Etc. The Company shall not, directly or indirectly, enter
into any merger, consolidation or reorganization in which the Company shall not
be the surviving corporation unless the proposed surviving corporation shall,
prior to such merger, consolidation or reorganization, agree in writing to
assume the obligations of the Company under Article V of this Agreement, and for
that purpose references hereunder to Registrable Shares shall be deemed to be
references to the securities which the Purchasers would be entitled to receive
in exchange for Registrable Shares under any such merger, consolidation or
reorganization; provided, however, that the provisions of this Section 5.14
shall not apply in the event of any merger, consolidation, or reorganization in
which the Company is not the surviving corporation if all stockholders are
entitled to receive in exchange for their Registrable Shares consideration
consisting solely of (i) cash, (ii) securities of the acquiring corporation
which may be immediately sold to the public without registration under the
Securities Act, or (iii) securities of the acquiring corporation which the
acquiring corporation has agreed to register within 90 days of completion of the
transaction for resale to the public pursuant to the Securities Act.
<PAGE> 36
- 35 -
5.15. Termination; Further Registration Rights. Notwithstanding any other
term or provision of this Article V, at such time as any Purchaser or transferee
owning less than 2% of the outstanding Common Stock of the Company (on an
as-converted basis) is free to sell the Registrable Shares without registration
pursuant to Rule 144(k) of the Securities Act, all rights of such Purchaser as
to such Registrable Shares under Sections 5.01, 5.02 and 5.03 of this Article V
shall terminate. The Company shall not grant to any third party any registration
rights so long as any of the registration rights under this Agreement remains in
effect without the consent of the holders of 60% of the then outstanding
Registrable Shares.
ARTICLE VI
RIGHT OF FIRST REFUSAL
6.01. Right of First Refusal. Before the Company shall issue, sell or
exchange, agree or obligate itself to issue, sell or exchange, or reserve or set
aside for issuance, sale or exchange, any (i) shares of Common Stock, (ii) any
other equity security of the Company, including without limitation, shares of
Preferred Stock, (iii) any convertible debt security of the Company, including
without limitation, any debt security which by its terms is convertible into or
exchangeable for any equity security of the Company, (iv) any security of the
Company that is a combination of debt and equity, or (v) any option, warrant or
other right to subscribe for, purchase or otherwise acquire any interest
relating to such equity or debt security of the Company, the Company shall, in
each case, first offer to sell such securities (the "Offered Securities") to
those Purchasers then holding capital stock of the Company as follows: The
Company shall offer to sell to each Purchaser (a) that portion of the Offered
Securities as the number of shares of Preferred Stock (on an as-converted basis)
and Conversion Shares then held by a Purchaser bears to the total number of
outstanding shares of capital stock of the Company including the shares issuable
upon conversion of the Preferred Stock (the "Basic Amount"), and (b) such
additional portion of the Offered Securities as such Purchaser shall indicate it
will purchase should the other Purchasers subscribe for less than their Basic
Amounts (the "Undersubscription Amount"), at a price and on such other terms as
shall have been specified by the Company in writing delivered to the Purchasers
(the "Offer"), which Offer by its terms shall remain open and irrevocable for a
period of twenty (20) days from receipt of the Offer. This right of first
refusal shall only apply to Purchasers who hold at least 5% of the then total
outstanding shares of Series A Preferred Stock or Conversion Shares and to the
Bessemer Purchasers holding in the aggregate at least 5% of the then outstanding
shares of Series A Preferred Stock or Conversion Shares.
<PAGE> 37
- 36 -
6.02. Notice of Acceptance. Notice of each Purchaser's intention to
accept, in whole or in part, any Offer made pursuant to Section 6.01 shall be
evidenced by a writing signed by such Purchaser and delivered to the Company
prior to the end of the 20-day period of such offer, setting forth such of the
Purchaser's Basic Amount as such Purchaser elects to purchase and, if such
Purchaser shall elect to purchase all of its Basic Amount, such
Undersubscription Amount as such Purchaser shall elect to purchase (the "Notice
of Acceptance"). If the Basic Amounts subscribed for by all Purchasers are less
than the total Offered Securities, then each Purchaser who has set forth
Undersubscription Amounts in its Notice of Acceptance shall purchase, in
addition to the Basic Amounts subscribed for, all Undersubscription Amounts it
has subscribed for; provided, however, that should the Undersubscription Amounts
subscribed for exceed the difference between the Offered Securities and the
Basic Amounts subscribed for (the "Available Undersubscription Amount"), each
Purchaser who has subscribed for any Undersubscription Amount shall purchase
only that portion of the Available Undersubscription Amount as the
Undersubscription Amount subscribed for by such Purchaser bears to the total
Undersubscription Amounts subscribed for by all Purchasers, subject to rounding
by the Board of Directors to the extent it reasonably deems necessary.
6.03. Conditions to Acceptances and Purchase.
(a) Permitted Sales of Refused Securities. In the
event that Notices of Acceptance are not given by the Purchasers in respect
of all the Offered Securities, the Company shall have ninety (90) days from
the end of said 20-day period to sell any such Offered Securities as to
which a Notice of Acceptance has not been given by the Purchasers (the
"Refused Securities") to the Person or Persons specified in the Offer, but
only for cash and otherwise in all respects upon terms and conditions,
including, without limitation, unit price and interest rates, which are no
more favorable, in the aggregate, to such other Person or Persons or less
favorable to the Company than those set forth in the Offer.
(b) Reduction in Amount of Offered Securities. In
the event the Company shall propose to sell less than all of the Refused
Securities (any such sale to be in the manner and on the terms specified in
Section 6.03(a) above), then each Purchaser shall reduce the number of
shares or other units of the Offered Securities specified in its respective
Notices of Acceptance to an amount which shall be not less than the amount
of the Offered Securities which the Purchaser elected to purchase pursuant
to Section 6.02 multiplied by a fraction, (i) the numerator of which shall
be the amount of Offered Securities which the Company actually proposes to
sell, and (ii) the denominator of which shall be the amount
<PAGE> 38
- 37 -
of all Offered Securities. In the event that any Purchaser so elects to
reduce the number or amount of Offered Securities specified in its
respective Notices of Acceptance, the Company may not sell or otherwise
dispose of more than the reduced amount of the Offered Securities until such
securities have again been offered to the Purchasers in accordance with
Section 6.01.
(c) Closing. Upon the closing, which shall include
full payment to the Company, of the sale to such other Person or Persons of
all or less than all the Refused Securities, the Purchasers shall purchase
from the Company, and the Company shall sell to the Purchasers, the number
of Offered Securities specified in the Notices of Acceptance, as reduced
pursuant to Section 6.03(b) if the Purchasers have so elected, upon the
terms and conditions specified in the Offer. The purchase by the Purchasers
of any Offered Securities is subject in all cases to the preparation,
execution and delivery by the Company and the Purchasers of a purchase
agreement relating to such Offered Securities reasonably satisfactory in
form and substance to the Purchasers and their respective counsel.
6.04. Further Sale. In each case, any Offered Securities not
purchased by the Purchasers or other Person or Persons in accordance with
Section 6.03 may not be sold or otherwise disposed of until they are again
offered to the Purchasers under the procedures specified in Sections 6.01, 6.02
and 6.03.
6.05. Termination and Waiver of Right of First Refusal. The rights of
the Purchasers under this Article VI may be waived only upon the prior written
consent of the holders of 60% of the outstanding shares of Preferred Stock and
shall terminate immediately prior to the effectiveness of the registration
statement with respect to the Initial Public Offering, but expressly conditioned
on the consummation of the Initial Public Offering.
6.06. Exception. The rights of the Purchasers under this Article VI
shall not apply to:
(a) Common Stock issued as a stock dividend to
holders of Common Stock or upon any subdivision or combination of shares of
Common Stock;
(b) Preferred Stock issued as a dividend to holders
of Preferred Stock upon any subdivision or combination of shares of
Preferred Stock;
(c) the Conversion Shares;
<PAGE> 39
- 38 -
(d) up to 2,112,000 shares of Common Stock, or
options or warrants exercisable therefor, issued on or after the date hereof
to directors, officers, employees or consultants of the Company and any
Subsidiary (including members of the Scientific Advisory Board) pursuant to
any qualified or non-qualified stock option plan or agreement, employee
stock ownership plan, employee benefit plan, stock purchase agreement, stock
plan, stock restriction agreement, or consulting agreement or such other
options, warrants, equity arrangements, agreements or plans approved by
two-thirds of the members of the Board of Directors of the Company
(including a majority of the Investor Directors (including Christopher
Gabrieli or his successor);
(e) up to 70,000 shares of Common Stock and up to
200,000 shares of Series A Preferred Stock to certain individuals with the
approval of the Board of Directors including a majority of the Investor
Directors (including Christopher Gabrieli or his successor);
(f) shares of capital stock or options or warrants
therefor, to be issued to equipment leasing organizations in connection with
any equipment leasing arrangements to which the Company is a party and which
have been approved by the Board of Directors including a majority of the
Investor Directors (including Christopher Gabrieli or his successor); or
(g) shares of capital stock issued in connection
with a merger or acquisition approved by the Board of Directors including a
majority of the Investor Directors (including Christopher Gabrieli or his
successor); or
(h) shares of capital stock set forth on Exhibit
3.13.
Each of the foregoing numbers shall be subject to equitable
adjustment in the event of any stock dividend, stock split, combination,
reorganization, recapitalization, reclassification or other similar event.
In addition to amendments pursuant to Section 8.02, the
provisions regarding Notice of Offer, Notice of Acceptance and all other
provisions provided for in Section 6.01 through 6.03 and 6.06 may be waived or
amended by those Purchasers holding at least 60% of the Shares who have elected
to exercise their rights under this Article VI to participate in any financing
with respect to a transaction effected under this Article for the purpose of
effecting a transaction on a more expeditious basis.
<PAGE> 40
- 39 -
ARTICLE VII
DEFINITIONS AND ACCOUNTING TERMS
7.01. Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Accredited Investor" shall have the meaning assigned to that
term in Rule 501 under the Securities Act.
"Agreement" means this Preferred Stock Purchase Agreement as
from time to time amended and in effect between the parties, including all
Exhibits hereto.
"Basic Amount" shall have the meaning assigned to that term in
Section 6.01.
"Bessemer Purchasers" shall mean those Purchasers other than
Technology Leaders L.P., Technology Leaders Offshore C.V. and Bessemer Venture
Partners II L.P.
"Board of Directors" means the board of directors of the
Company as constituted from time to time.
"Closing" shall have the meaning assigned to that term in
Section 1.03.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act or Exchange
Act.
"Common Stock" includes (a) the Company's Common Stock, $.001
par value, as authorized on the date of this Agreement, (b) any other capital
stock of any class or classes (however designated) (except for Preferred Stock)
of the Company, authorized on or after the date hereof, the holders of which
shall have the right, without limitation as to amount, either to all or to a
share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference, and
the holders of which shall ordinarily, in the absence of contingencies or in the
absence of any provision to the contrary in the Company's Certificate of
Incorporation, be entitled to vote for the election of directors of the Company
(even though the right so to vote has been suspended by the happening of such a
contingency or provision), and (c) any other securities into which or for which
any of the securities described in (a) or (b) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.
<PAGE> 41
- 40 -
"Company" means Myco Pharmaceuticals Inc., a Delaware
corporation, and its successors and assigns.
"Consolidated" and "consolidating" when used with reference to
any term defined herein mean that term as applied to the accounts of the Company
and its Subsidiaries consolidated in accordance with generally accepted
accounting principles consistently applied throughout reporting periods.
"Conversion Shares" shall have the meaning assigned to that
term in Section 1.02 of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission (or of any other Federal agency then administering the Exchange Act)
thereunder, all as the same shall be in effect at the time.
"Indebtedness" means (i) any liability for borrowed money or
evidenced by a note or similar obligation given in connection with the
acquisition of any property or other assets (other than trade accounts payable
incurred in the ordinary course of business); (ii) all guaranties, endorsements
and other contingent obligations, in respect of Indebtedness of others, whether
or not the same are or should be reflected in the Company's balance sheet (or
the notes thereto), except guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business; and (iii) the present value of any lease payments due under leases
required to be capitalized in accordance with applicable Statements of Financial
Accounting Standards, determined by discounting all such payments at the
interest rate determined in accordance with applicable Statements of Financial
Accounting Standards.
"Initial Public Offering" means the first underwritten public
offering of Common Stock of the Company and offered on a "firm commitment" basis
pursuant to an offering registered under the Securities Act with the Commission
on Form S-l, Form S-18 or their then equivalents.
"Intellectual Property Rights" means any and all, whether
domestic or foreign, patents, patent applications, patent rights, trade secrets,
confidential business information, formula, biological or chemical processes,
compounds, cell lines, fungi, yeast, laboratory notebooks, algorithms,
copyrights, mask works, claims of infringement against third parties, licenses,
permits, license rights to or of technologies, contract rights with employees,
consultants or third parties, trademarks,
<PAGE> 42
-41-
trademark rights, inventions and discoveries, and other such rights generally
classified as intangible, intellectual property assets in accordance with
generally accepted accounting principles.
"Investor Directors" mean those directors of the Company who
are representatives of the Purchasers, initially Dr. Hubert Schoemaker,
Christopher Gabrieli and Dr. Gary J. Anderson.
"Key Employee" means and includes the Chairman, President;
Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, any
Vice President or Director of any functional area such as research and
development, engineering, technology, sales and marketing, finance and
administration or any other individual so designated by the Board of Directors
of the Company or by including a majority of the Investor Directors (including
Christopher Gabrieli or his successor).
"Non-competition Agreement" shall have the meaning assigned to
that term in Section 2.02(i).
"Nondisclosure and Assignment of Inventions Agreement" shall
have the meaning assigned to that term in Section 2.20(j).
"Notice of Acceptance" shall have the meaning assigned to that
term in Section 6.02.
"Offer" shall have the meaning assigned to that term in Section
6.01.
"Offered Securities" shall have the meaning assigned to that
term in Section 6.01.
"Person" means an individual, corporation, partnership, joint
venture, trust, university, or unincorporated organization, or a government or
any agency or political subdivision thereof.
"Preferred Shares" shall have the meaning assigned to that term
in Section 1.01.
"Purchaser" and "Purchasers" shall have the meaning assigned to
that term in Section 1.01 of this Agreement and shall include the original
Purchasers and also any other permitted transferee.
"Qualified Public Offering" means a fully underwritten, firm
commitment public offering pursuant to an effective registration under the
Securities Act covering the offer and sale by the Company of its Common Stock in
which the aggregate gross proceeds to the Company exceed $9,000,000 and in which
the price per share of such Common Stock equals or exceeds $4.50 (such price
subject to equitable adjustment in the event of any stock split, stock dividend,
combination, reorganization, reclassification or other similar event).
<PAGE> 43
- 42 -
"Refused Securities" shall have the meaning assigned to that
term in Section 6.03.
"Registrable Shares" shall mean and include (i) the Conversion
Shares; and (ii) the shares of capital stock of the Company acquired by the
Purchasers pursuant to Article VI hereof or any shares of capital stock of the
Company acquired after the date hereof by any such Purchaser, including shares
of Common Stock issuable on the conversion of other securities acquired by the
Purchasers pursuant to Article VI hereof or otherwise; provided, however, that
shares of Common Stock which are Registrable Shares shall cease to be
Registrable Shares upon the consummation of any sale pursuant to a registration
statement, Section 4(1) of the Securities Act or Rule 144 under the Securities
Act or upon any transfer other than as permitted under Section 5.12 hereof.
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 the Conversion Shares even if such conversion has not
yet been effected.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
(or of any other Federal agency then administering the Securities Act)
thereunder, all as the same shall be in effect at the time.
"Series A Preferred Stock" means the Series A Preferred Stock
of the Company, $.01 par value, having the rights, powers, privileges and
preferences set forth in Exhibit A2 hereto.
"Series A Shares" shall have the meaning assigned to that term
in Section 1.01 of this Agreement.
"Shares" means, collectively, the Preferred Shares and the
Conversion Shares.
"Subsidiary" or "Subsidiaries" means any Person of which the
Company and/or any of its other Subsidiaries (as herein defined) directly or
indirectly owns at the time at least fifty percent (50%) of the outstanding
voting shares of every class of such corporation or trust other than directors'
qualifying shares.
"Undersubscription Amount" shall have the meaning assigned to
that term in Section 6.01.
7.02. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistently applied, and all financial data submitted pursuant to
this Agreement shall be prepared in accordance with such principles.
<PAGE> 44
- 43 -
ARTICLE VIII
MISCELLANEOUS
8.01. No Waiver; Cumulative Remedies. No failure or delay on the part
of any party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
8.02. Amendments, Waivers and Consents. Any provision in the
Agreement to the contrary notwithstanding, and except as hereinafter provided,
changes in, termination or amendments of or additions to this Agreement may be
made, and compliance with any covenant or provision set forth herein may be
omitted or waived, if the Company (i) shall obtain consent thereto in writing
from the holder or holders of at least 60% of the outstanding shares of Series A
Shares and/or Conversion Shares issued upon conversion thereof and (ii) shall
deliver copies of such consent in writing to any holders who did not execute
such consent; provided that no consents shall be effective to reduce the
percentage in interest of the Shares the consent of the holders of which is
required under this Section 8.02. Any waiver or consent may be given subject to
satisfaction of conditions stated therein and any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
8.03. Addresses for Notices. All notices, requests, demands and other
communications provided for hereunder shall be in writing (including telegraphic
communication) and delivered to each applicable party at the address set forth
in Exhibit 1.01 hereto or at such other address as to which such party may
inform the other parties in writing in compliance with the terms of this
Section, it being understood only one notice is required to be provided to the
Bessemer Purchasers at the following address or at such other address as to
which such party may inform the other parties in writing in compliance with the
terms of this Section:
Mr. Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, New York 11590
with a copy to: Mr. Christopher Gabrieli
Bessemer Venture Partners
83 Walnut Street
Wellesley Hills, MA 02181
<PAGE> 45
- 44 -
If to any other holder of the Shares: at such holder's address
for notice as set forth in the register maintained by the Company, or, as to
each of the foregoing, at the addresses set forth in Exhibit 1.01 hereto or at
such other address as shall be designated by such Person in a written notice to
the other parties complying as to delivery with the terms of this Section.
If to the Company: at the address set forth on page 1 hereof, or
at such other address as shall be designated by the Company in a written notice
to the other parties complying as to delivery with the terms of this Section.
All such notices, requests, demands and other communications
shall be considered to be delivered when actually delivered at the foregoing
address of the party to be notified.
8.04. Costs, Expenses and Taxes. As a condition precedent to the
closing, the Company agrees to pay at the Closing in connection with the
preparation, execution and delivery of this Agreement and the issuance of the
Preferred Shares at the Closing, the reasonable legal fees, not to exceed
$15,000 (unless any increase thereto is agreed to by the Company), and other
reasonable out-of-pocket expenses of Messrs. Testa, Hurwitz & Thibeault, special
counsel for the Purchasers. In addition, the Company shall pay any and all
stamp, or other similar taxes payable or determined to be payable in connection
with the execution and delivery of this Agreement, the issuance of the Preferred
Shares and the other instruments and documents to be delivered hereunder or
thereunder, and agrees to save the Purchasers harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes.
8.05. Binding Effect; Assignment. Except as provided in Section 5.12,
this Agreement shall be binding upon and inure to the benefit of the Company and
the Purchasers and their respective heirs, successors and assigns, except that
the Company shall not have the right to delegate its obligations hereunder or to
assign its rights hereunder or any interest herein without the prior written
consent of the holders of at least 60% of the outstanding Shares.
8.06. Survival of Representations and Warranties. All representations
and warranties made in this Agreement, the Shares, or any other instrument or
document delivered in connection herewith or therewith, shall survive the
execution and delivery hereof or thereof.
8.07. Prior Agreements. This Agreement, the terms of the Preferred
Stock, and the other agreements executed and delivered herewith constitute the
entire agreement between the parties and supersedes any prior understandings or
agreements concerning the subject matter hereof.
<PAGE> 46
- 45 -
8.08. Severability. The provisions of this Agreement, the Voting and
Co-Sale Agreement and the terms of the Preferred Stock are severable and, in the
event that any court of competent jurisdiction shall determine that any one or
more of the provisions or part of a provision contained in this Agreement, the
Voting and Co-Sale Agreement, or the terms of the Preferred Stock shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
or part of a provision of this Agreement, the Voting and Co-Sale Agreement, or
the terms of the Preferred Stock; but this Agreement, the Voting and Co-Sale
Agreement, and the terms of the Preferred Stock shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of a
provision, had never been contained herein, and such provisions or part reformed
so that it would be valid, legal and enforceable to the maximum extent possible.
8.09. 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 through no fault of such Purchaser, to the
public; provided, however, that a Purchaser may disclose such information (i) on
a confidential basis to its attorneys, accountants, consultants and other
professionals to the extent necessary to obtain their services in connection
with its investment in the Company, (ii) to any prospective purchaser of any
Preferred Shares or Conversion Shares from such Purchaser as long as such
prospective purchaser agrees in writing to be bound by the provisions of this
Section 8.09, (iii) to any affiliate or partner of such Purchaser on a "need to
know basis" and (iv) as required by applicable law. If a Purchaser is required
in any legal or administrative or other governmental proceeding to disclose any
of such information, such Purchaser shall give the Company timely notice of the
pending requirement and use its best efforts to provide the Company an
opportunity to obtain protective provisions against further disclosure.
8.10. Governing Law. This Agreement shall be governed by, and
construed in accordance with the General Corporation Law of the State of
Delaware as to matters within the scope thereof and as to all other matters
shall be governed by and construed in accordance with the internal laws of the
Commonwealth of Massachusetts, without giving effect to choice of laws
provisions.
<PAGE> 47
- 46 -
8.11. Headings. Article, section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
8.12. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.13. Further Assurances. From and after the date of this Agreement,
upon the request of any Purchaser or the Company, the Company and the Purchasers
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the Shares.
8.14. Additional Preferred Stock. If the Company issues after the
date hereof any other class or series of Preferred Stock, such class or series
may, upon the written consent of 60% of the outstanding Shares, become entitled
to the rights and preferences and be bound by the obligations under this
Agreement, and all references to Series A Preferred Stock shall be expressly
modified to include within the meaning of the term Series A Preferred Stock, the
class or series of Preferred Stock so issued in any financing.
*********************
[Remainder of Page Intentionally Left Blank]
[Signature Pages Immediately Follow]
<PAGE> 48
IN WITNESS WHEREOF, the parties hereto have caused this Series A
Preferred Stock Purchase Agreement to be executed as of the date first above
written.
MYCO PHARMACEUTICALS INC.
/s/ Barry Berkowitz
- ------------------------
Barry Berkowitz
By:
/s/ Barry Berkowitz
--------------------------
President
TECHNOLOGY LEADERS L.P.
By: Technology Leaders Management,
Inc. (General Partner)
By: /s/ Gary J. Anderson
--------------------------
Title: Managing Director
TECHNOLOGY LEADERS OFFSHORE C.V.
By: Technology Leaders Management,
Inc. (General Partner)
By: /s/ Gary J. Anderson
--------------------------
Title: Managing Director
--------------------------
BESSEMER VENTURE PARTNERS II L.P.
By: /s/
--------------------------
General Partner
---------------------------------
* William T. Burgin
BRIMSTONE ISLAND CO., L.P.
By:*
--------------------------
Title:
--------------------------
---------------------------------
* Neill H. Brownstein
<PAGE> 49
/s/ Robert H. Buescher
---------------------------------
Robert H. Buescher
---------------------------------
* G. Felda Hardymon
---------------------------------
* Christopher Gabrieli
---------------------------------
* Michael I. Barach
---------------------------------
* Daniel S. Martin
---------------------------------
* Richard R. Davis
---------------------------------
* Barbara M. Henegan
---------------------------------
* Thomas F. Ruhm
---------------------------------
* Ward W. Woods, Jr.
---------------------------------
* Goeffrey L. Berger
---------------------------------
* Robert D. Lindsay
---------------------------------
* Michael S. Mathews
/s/ Robert H. Buescher
---------------------------------
Robert H. Buescher, signing
as Attorney-in-Fact for each
of the individuals beside whose
name an asterisk appears
<PAGE> 50
Exhibit B1
CONFIDENTIALITY AGREEMENT
This confidentiality agreement is made as of this ___ day of _____________
19__, by and between Myco Pharmaceuticals Inc., a Delaware corporation
("Company") , and _________________________("Consultant").
WITNESSETH:
WHEREAS, the Company desires to retain Consultant as a consultant to
the Company and Consultant wishes to be retained by the Company as a consultant
to the Company (the written arrangement of such consultancy to be referred to as
the "Consulting Agreement");
WHEREAS, the Company has developed, and the Company and/or Consultant
may continue to develop during the period Consultant is so retained by the
Company, certain Proprietary Information, Inventions and Intellectual Property
(as those terms are hereinafter defined), that the Company wishes to protect and
maintain as confidential;
WHEREAS, the Company from time to time has received, and may continue
to receive during the period Consultant is so retained by the Company, the
Proprietary Information of others, and the Company wishes to maintain the
confidentiality of such Proprietary Information; and
WHEREAS, the Company has developed, and will continue to develop during
the period Consultant is so retained by the Company, goodwill by, among other
things, substantial expenditure of money and effort;
NOW, THEREFORE, in consideration of the premises set forth below and
the mutual covenants and undertakings contained in this agreement, and for other
good and valuable consideration, receipt and sufficiency of which are hereby
mutually acknowledged, IT IS AGREED:
1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(a) Agreement means this confidentiality agreement, including
all exhibits, schedules and annexations, as all may be amended from time to time
in the manner provided in this Agreement.
(b) Consultancy means the current or anticipated or
subsequent retention of Consultant by the Company as a part-time consultant or
otherwise, or any other period during which
<PAGE> 51
Consultant receives compensation from the Company in any capacity.
(c) Intellectual Property means any Invention, 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.
(d) Inventions includes ideas, discoveries, inventions,
developments and improvements, whether or not reduced to practice and whether or
not patentable or otherwise within the definition of Intellectual Property.
(e) Proprietary Information includes any scientific,
technical, trade or business secrets of the Company and any scientific,
technical, trade or business materials that are treated by the Company as
confidential or proprietary, including, but not limited to, Inventions belonging
to the Company and confidential information obtained by or given to the Company
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 Consultant prior to its
disclosure by the Company; (ii) is publicly known through publication or
otherwise through no wrongful act of Consultant; (iii) is received from a third
party who rightfully discloses it to 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. Consultant Acknowledgements. The Company has developed and will
develop its Proprietary Information and Intellectual Property over a substantial
period of time and at a substantial expense, and its Proprietary Information and
Intellectual Property are integral to the goodwill of the Company. During the
course of consultancy to the Company, Consultant may develop or become aware of
Proprietary Information and/or Intellectual Property. Protection of the
Proprietary Information and Intellectual Property is necessary to conduct the
Company's business, and the Company is and shall at all times remain the sole
owner of the Company's Proprietary Information and Intellectual Property.
3. Confidentiality. Consultant shall at all times, both during and
after any termination of Consultant's consultancy to the Company by either the
Company or Consultant, maintain in confidence and not utilize the Proprietary
Information or the
- 2 -
<PAGE> 52
Intellectual Property of the Company, and/or technology or proprietary
information of others under confidential evaluation by the Company except in
performing services for the Company under the Consulting Agreement. Maintaining
such Proprietary Information and Intellectual Property in confidence shall
include refraining from disclosing such Proprietary Information or Intellectual
Property to any third party (except when duly and specifically authorized in
writing to do so for purpose of furthering the business of the Company), and
refraining from using such Proprietary Information or Intellectual Property for
the account of Consultant or for any other person or business entity. Consultant
will not file patents based on the Company's technology or confidential
information, nor seek to make improvements thereon, without the Company's
written approval. Consultant agrees not to make any copies of the Proprietary
Information or Intellectual Property of the Company (except when appropriate for
the furtherance of the business of the Company or duly and specifically
authorized to do so) and promptly upon request, whether during or after the
period of consultancy to the Company, to return to the Company any and all
documentary, machine-readable or other elements or evidence of such Proprietary
Information, Intellectual Property, and any copies of either that may be in
Consultant's possession or under Consultant's control.
4. Rights to Inventions and Intellectual Property. In connection with
Consultant's consultancy to the Company, or by use of the resources of the
Company, whether or not Consultant is then retained by the Company, Consultant
may produce, develop, create, invent, conceive or reduce to practice Inventions
and Intellectual Property related to the business of the Company. Consultant
shall maintain and furnish to the Company complete and current records of all
such Inventions and Intellectual Property and disclose to the Company in writing
any such Inventions and Intellectual Property. Consultant agrees that all such
Inventions and Intellectual Property are and shall be the exclusive property of
the Company, and that the Company may use or pursue them without restriction or
additional compensation. Consultant: (i) hereby assigns, sets over and transfers
to the Company all of his right, title and interest in and to such Inventions
and Intellectual Property; (ii) agrees that Consultant and his agents shall,
during and after the period Consultant is retained by the Company, cooperate
fully in obtaining patent, trademark, service mark, copyright or other
proprietary protection for such Inventions and Intellectual Property, all in the
name of the Company (but only at Company 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 the Company of such Inventions and Intellectual Property; and (iii)
shall, upon leaving the Company, provide to the Company in writing a full,
signed statement of all Inventions and
<PAGE> 53
Intellectual Property in which Consultant participated prior to termination of
the consultancy to the Company. Consultant hereby designates the Company as its
agent, and grants to the Company a power of attorney with full substitution,
which power of attorney shall be deemed coupled with an interest, for the
purposes of effecting the foregoing assignments from the Consultant to the
Company.
5. Non-Solicitation. Consultant shall not during the term of the
Consulting Agreement or at any time during the five (5) years following
termination of the Consulting Agreement solicit any person who is employed by or
a consultant to the Company or any affiliate or subsidiary of the Company either
during Consultant's period of consultancy or during such five (5) year period,
to terminate such person's employment by or consultancy to the Company, 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 the Company, affiliate or subsidiary.
6. Continued Obligations. Consultant's obligations under this Agreement
shall not be affected: (i) by any termination of Consultant's consultancy,
including termination upon the Company's initiative; nor (ii) by any change in
Consultant's position, title or function with the Company; nor (iii) by any
interruption in consultancy during which Consultant leaves and then rejoins the
Company for any period within a period of one year and for any reason. Nothing
herein shall be construed as constituting an employment agreement or an
undertaking by the Company to retain Consultant's services for any stated period
of time.
7. No Conflicting Agreements. Consultant represents and warrants that
execution and performance of this Agreement does not and will not violate,
conflict with, or constitute a default under any contract, commitment,
agreement, understanding, arrangement, or restriction, or any adjudication,
order, injunction or finding of any kind by any court or agency to which
Consultant may be a party or by which Consultant may be bound.
8. Remedies. In the event of any breach by Consultant of any of the
provisions of this Agreement, the Company shall be entitled, in addition to
monetary damages and to any other remedies available to the Company under this
Agreement and at law, to equitable relief, including injunctive relief, and to
payment by Consultant of all costs incurred by the Company in enforcement
against Consultant of the provisions of this Agreement, including reasonable
attorneys' fees.
9. General Provisions.
-4-
<PAGE> 54
(a) 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.
(b) Notice. 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:
If to Consultant, to:
----------------------------
----------------------------
If to the Company, to: Dr. Barry Berkowitz
Myco Pharmaceuticals Inc.
5 Pinetree Place
Fort Washington, PA 19034
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.
(c) Severability. If any provision of this Agreement shall be
found to be invalid, inoperative or unenforceable in law or equity, such finding
shall not affect the validity of any other provisions of this Agreement, which
shall be construed, reformed and enforced to effect the purposes of this
Agreement to the fullest extent permitted by law.
(d) Miscellaneous. This Agreement: (i) may be executed in any
number of counterparts, each of which, when executed by both parties to this
Agreement shall be deemed to be an original, and all of which counterparts
together shall constitute one and the same instrument; (ii) shall be governed by
and construed under the law of the Commonwealth of Massachusetts, without
application of principles of conflicts of laws; (iii) along with the Consulting
Agreement, constitute the entire agreement of the parties with respect to the
subject matter hereof, superseding all prior oral and written communications,
proposals, negotiations, representations, understandings, courses of dealing,
agreements, contracts, and the like between the parties in such respect; (iv)
may be amended, modified, or terminated, and any right under this Agreement may
be waived in whole or in part, only by a writing signed by both parties; (v)
contains headings only for convenience, which headings do not
-5-
<PAGE> 55
form part, and shall not be used in construction, of this Agreement; (vi) shall
bind and inure to the benefit of the parties and their respective legal
representatives, successors and assigns, except that no party may delegate any
of its or his obligations under this Agreement, or assign this Agreement,
without the prior written consent of the other party, except the Company may
assign this Agreement in connection with the merger, consolidation, or sale of
all or substantially all assets of the Company; and (vii) be enforced only in
courts located within the Commonwealth of Massachusetts and the parties hereby
agree that such courts shall have venue and exclusive subject matter and
personal jurisdiction, and consent to service of process by registered mail,
return receipt requested, or by any other manner provided by law.
Executed under seal as of the date first above written.
COMPANY:
By:
----------------------------------
Title
CONSULTANT
-------------------------------------
- 6 -
<PAGE> 56
Exhibit B2
FORM OF NONCOMPETITION AGREEMENT
MYCO PHARMACEUTICALS INC.
5 Pinetree Place
Fort Washington, PA 19034
[Date], 1992
[Name of Consultant or Employee]
- -----------------------------
- -----------------------------
Dear [Name of Consultant or Employee]:
This letter is to confirm our understanding with respect to (i) your
agreement not to compete with the Company and (ii) your agreement to protect and
preserve information and property which is confidential and proprietary to the
Company or other third parties with whom the Company does business (the terms
and conditions agreed to in this letter shall hereinafter be referred to as the
"Agreement"). In consideration of the mutual promises and covenants contained in
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, we have agreed as follows:
1. Prohibited Competition. We have discussed, and you recognize and
acknowledge the competitive and proprietary nature of the Company's business
operations.
You acknowledge and agree that a business will be deemed competitive
with the Company if it performs any of the services, manufactures or sells any
of the products provided or offered by the Company or is involved in the
research, or development of processes, products or techniques in the Company's
Field of Interest (such business to be referred to as a "competitive business").
The term Company's "Field of Interest" currently means the development of
products or processes as anti-infective therapeutics or diagnostics with an
initial emphasis on anti- fungals and commercial use of fungis or yeasts in drug
screening, production, development or testing. The Company may modify the
definition of its Field of Interest by written notice to you based on the
activities in which the Company is then engaged or in which the Company then
proposes to be engaged.
<PAGE> 57
You further acknowledge and agree that during the course of performing
services for the Company as a [consultant/employee], the Company will furnish,
disclose or make available to you confidential and proprietary information
related to the Company's business and that the Company may provide you with
unique and specialized training. You also acknowledge that such confidential
information and the training to be provided by the Company have been developed
and will be developed by the Company and others with whom the Company has a
relationship through the expenditure by the Company and others of substantial
time, effort and money and that all such confidential information and training
could be used by you to compete with the Company.
Accordingly, you hereby agree in consideration of the Company's
agreement to engage you as a [consultant/employee] and your compensation thereof
and in view of the confidential position to be held by you, the unique and
specialized training which the Company may provide you and the confidential
nature and proprietary value of the information which the Company may share with
you, and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, as follows:
During the period during which you perform services for or at the
request of the Company (the "Term") and for a period of one year following the
expiration or termination of the Term (the "Restricted Term"), whether such
termination is voluntary or involuntary, you shall not, without the prior
written consent of the Company:
(i) For yourself or on behalf of any other, directly or
indirectly, either as principal, agent, stockholder, employee, consultant,
representative or in any other capacity, own, manage, operate or control,
or be concerned, connected or employed by, or otherwise associate in any
manner with, engage in or have a financial interest in any business which
is directly or indirectly competitive with the business of the Company
within the World (the "Restricted Territory"), except that nothing
contained herein shall preclude you from purchasing or owning stock in any
such business if such stock is publicly traded, and provided that your
holdings do not exceed three (3%) percent of the issued and outstanding
capital stock of such business.
(ii) Either individually or on behalf of or through any third
party, solicit, divert or appropriate or attempt to solicit, divert or
appropriate, for the purpose of competing with the Company or any present
or future parent, subsidiary or other affiliate of the Company which is
engaged in a similar business as the Company, any customers or patrons of
the Company, or any prospective customers or patrons with
- 2 -
<PAGE> 58
respect to which the Company has developed or made a sales presentation (or
similar offering of services), located within the Restricted Territory.
(iii) Either individually or on behalf of or through any third
party, directly or indirectly, solicit, entice or persuade or attempt to
solicit, entice or persuade any other employees of or consultants to the
Company or any parent or future parent or affiliate of the Company to leave
the services of the Company or any parent or future parent or affiliate for
any reason.
[IF APPLICABLE - NOTWITHSTANDING THE ABOVE, WE ACKNOWLEDGE AND AGREE
THAT THIS AGREEMENT SHALL NOT PROHIBIT YOU FROM_______________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________.]
You further recognize and acknowledge that (i) the types of employment
which are prohibited by this paragraph are narrow and reasonable in relation to
the skills which represent your principal salable asset both to the Company and
to your other prospective employers, and (ii) the specific but broad
geographical scope of the provisions of this paragraph is reasonable, legitimate
and fair to you in light of the Company's need to market its services and sell
its products in a large geographic area in order to have a sufficient customer
base to make the Company's business profitable and in light of the limited
restrictions on the type of employment prohibited herein compared to the types
of employment for which you are qualified to earn your livelihood.
If any part of this section should be determined by a court of
competent jurisdiction to be unreasonable in duration, geographic area, or
scope, then this section is intended to and shall extend only for such period of
time, in such area and with respect to such activity as is determined to be
reasonable.
2. Protected Information. Upon execution of this Agreement, you shall
execute and deliver a Confidentiality Agreement in the form attached hereto as
Annex A.
3. Continuing Obligations. Your obligations under this Agreement other
than the provisions of this Agreement shall not be affected: (i) by any
termination of your consulting or employment arrangement, including termination
upon the Company's initiative; nor (ii) by any change in your position, title or
function with the Company; nor (iii) by any interruption in the consulting or
employment arrangement during which you leave and rejoin the Company.
-3-
<PAGE> 59
4. Records. Upon termination of your relationship with the Company, you
shall deliver to the Company any property of the Company which may be in your
possession including products, materials, memoranda, notes, records, reports, or
other documents or photocopies of the same.
5. No Conflicting Agreements. You hereby represent and warrant that you
have no commitments or obligations inconsistent with this Agreement and you
hereby agree to indemnify and hold the Company harmless against any claim based
upon circumstances alleged to be inconsistent with such representation and
warranty.
6. No Employment Created. This Agreement does not constitute, and shall
not be construed as constituting, an undertaking by the Company to hire you as
an employee or consultant of the Company.
7. Waiver of Provisions. Failure of any party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted hereunder or of the future performance of any such term or
condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by or on behalf of the waiving party.
8. Notices. Any notice or other communication required or permitted
hereunder shall be deemed sufficiently given if sent by registered or certified
mail, postage and fees prepaid, addressed to the party to be notified as
follows: if to the Company to its address set forth above, with a copy to Peter
F. Demuth, Esquire, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One
Financial Center, Boston, MA 02111 and if to you to your address set forth
above, or in each case to such other address as either party may from time to
time designate in writing to the other. Such notice or communication shall be
deemed to have been given as of the date deposited with the United States Postal
Service.
9. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Massachusetts,
without application of the conflicts of law provisions thereof.
10. Entire Agreement. This Agreement, together with Annex A hereto,
embodies the entire agreement and understanding between the parties hereto and
supersedes all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, warranty, covenant or
agreement of any kind not set forth in this Agreement shall affect, or be used
to interpret, change or restrict, the express terms and provisions of this
Agreement.
- 4 -
<PAGE> 60
11. Invalidity. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations. If any provision of this Agreement, or the
application thereof to any person or circumstance, shall, for any reason and to
any extent, be invalid or unenforceable, the remainder of this Agreement and the
application of such provisions to other persons or circumstances shall not be
affected thereby, but rather shall be construed, reformed and enforced to the
greatest extent permitted by law.
12. Injunctive Relief. You hereby expressly acknowledge that any breach
or threatened breach of any of the terms and/or conditions set forth in this
Agreement will result in substantial, continuing and irreparable injury to the
Company. Therefore, you hereby agree that, in addition to any other remedy that
may be available to the Company, the Company shall be entitled to injunctive or
other equitable relief by a court of appropriate jurisdiction in the event of
any breach or threatened breach of the terms of this Agreement.
13. Assignment. The Company may assign its rights and obligations
hereunder to any person or entity who succeeds to all or substantially all of
the Company's business or that aspect of the Company's business in which you are
principally involved. Your rights and obligations under this Agreement may not
be assigned without the prior written consent of the Company.
14. Expenses. Should any party breach this Agreement, in addition to
all other remedies available at law or in equity, such party shall pay all of
any other party's costs and expenses resulting therefrom and/or incurred in
enforcing this Agreement, including legal fees and expenses.
15. Modification and Amendment. This Agreement shall not be modified or
amended except by an instrument in writing signed by or on behalf of the parties
hereto.
16. Parties Benefitted. Subject to the foregoing, this Agreement shall
be binding upon and inure to the benefit of the Company and any parent,
subsidiary or other affiliate of the Company, and their respective successors
and assigns, and shall be binding upon and inure to the benefit of you and your
heirs, executors and administrators.
17. Headings. Section and other headings contained in this Agreement
are for reference purposes only and are in no way intended to define, interpret,
describe or otherwise limit the scope, extent or intent of this Agreement or any
of its provisions each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
- 5 -
<PAGE> 61
18. Counterparts. This Agreement may be executed in one or more
counterparts each of which will be deemed an original, but all of which together
shall constitute one and the same instrument.
If the foregoing accurately sets forth our agreement, please so
indicate by signing and returning to us the enclosed copy of this letter.
Very truly yours,
MYCO Pharmaceuticals Inc.
_______________________________
Accepted and Approved
_____________________________
[Name of Consultant/Employee]
Dated: ______________________
- 6 -
<PAGE> 62
ANNEX A
CONFIDENTIALITY AGREEMENT
This confidentiality agreement is made as of this ______ day of
_______________________________________ 19__, by and between Myco
Pharmaceuticals Inc., a Delaware corporation ("Company"), and _______________
___________________ ("Consultant" ).
W I T N E S S E T H:
WHEREAS, the Company desires to retain Consultant as a consultant to
the Company and Consultant wishes to be retained by the Company as a consultant
to the Company (the written arrangement of such consultancy to be referred to as
the "Consulting Agreement");
WHEREAS, the Company has developed, and the Company and/or Consultant
may continue to develop during the period Consultant is so retained by the
Company, certain Proprietary Information, Inventions and Intellectual Property
(as those terms are hereinafter defined), that the Company wishes to protect and
maintain as confidential;
WHEREAS, the Company from time to time has received, and may continue
to receive during the period Consultant is so retained by the Company, the
Proprietary Information of others, and the Company wishes to maintain the
confidentiality of such Proprietary Information; and
WHEREAS, the Company has developed, and will continue to develop during
the period Consultant is so retained by the Company, goodwill by, among other
things, substantial expenditure of money and effort;
NOW, THEREFORE, in consideration of the premises set forth below and
the mutual covenants and undertakings contained in this agreement, and for other
good and valuable consideration, receipt and sufficiency of which are hereby
mutually acknowledged, IT IS AGREED:
1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(a) Agreement means this confidentiality agreement, including
all exhibits, schedules and annexations, as all may be amended from time to time
in the manner provided in this Agreement.
(b) Consultancy means the current or anticipated or
subsequent retention of Consultant by the Company as a part-time consultant or
otherwise, or any other period during which
<PAGE> 63
Consultant receives compensation from the Company in any capacity.
(c) Intellectual Property means any Invention, writing, trade
name, trademark, service mark or any other material registered or otherwise
protected or protectable under state, federal, or foreign patent, trademark,
copyright, or similar laws.
(d) Inventions includes ideas, discoveries, inventions,
developments and improvements, whether or not reduced to practice and whether or
not patentable or otherwise within the definition of Intellectual Property.
(e) Proprietary Information includes any scientific,
technical, trade or business secrets of the Company and any scientific,
technical, trade or business materials that are treated by the Company as
confidential or proprietary, including, but not limited to, Inventions belonging
to the Company and confidential information obtained by or given to the Company
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 Consultant prior to its
disclosure by the Company; (ii) is publicly known through publication or
otherwise through no wrongful act of Consultant; (iii) is received from a third
party who rightfully discloses it to 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. Consultant Acknowledgements. The Company has developed and will
develop its Proprietary Information and Intellectual Property over a substantial
period of time and at a substantial expense, and its Proprietary Information and
Intellectual Property are integral to the goodwill of the Company. During the
course of consultancy to the Company, Consultant may develop or become aware of
Proprietary Information and/or Intellectual Property. Protection of the
Proprietary Information and Intellectual Property is necessary to conduct the
Company's business, and the Company is and shall at all times remain the sole
owner of the Company's Proprietary Information and Intellectual Property.
3. Confidentiality. Consultant shall at all times, both during and
after any termination of Consultant's consultancy to the Company by either the
Company or Consultant, maintain in confidence and not utilize the Proprietary
Information or the
-2-
<PAGE> 64
Intellectual Property of the Company, and/or technology or proprietary
information of others under confidential evaluation by the Company except in
performing services for the Company under the Consulting Agreement. Maintaining
such Proprietary Information and Intellectual Property in confidence shall
include refraining from disclosing such Proprietary Information or Intellectual
Property to any third party (except when duly and specifically authorized in
writing to do so for purpose of furthering the business of the Company), and
refraining from using such Proprietary Information or Intellectual Property for
the account of Consultant or for any other person or business entity. Consultant
will not file patents based on the Company's technology or confidential
information, nor seek to make improvements thereon, without the Company's
written approval. Consultant agrees not to make any copies of the Proprietary
Information or Intellectual Property of the Company (except when appropriate for
the furtherance of the business of the Company or duly and specifically
authorized to do so) and promptly upon request, whether during or after the
period of consultancy to the Company, to return to the Company any and all
documentary, machine-readable or other elements or evidence of such Proprietary
Information, Intellectual Property, and any copies of either that may be in
Consultant's possession or under Consultant's control.
4. Rights to Inventions and Intellectual Property. In connection with
Consultant's consultancy to the Company, or by use of the resources of the
Company, whether or not Consultant is then retained by the Company, Consultant
may produce, develop, create, invent, conceive or reduce to practice Inventions
and Intellectual Property related to the business of the Company. Consultant
shall maintain and furnish to the Company complete and current records of all
such Inventions and Intellectual Property and disclose to the Company in writing
any such Inventions and Intellectual Property. Consultant agrees that all such
Inventions and Intellectual Property are and shall be the exclusive property of
the Company, and that the Company may use or pursue them without restriction or
additional compensation. Consultant: (i) hereby assigns, sets over and transfers
to the Company all of his right, title and interest in and to such Inventions
and Intellectual Property; (ii) agrees that Consultant and his agents shall,
during and after the period Consultant is retained by the Company, cooperate
fully in obtaining patent, trademark, service mark, copyright or other
proprietary protection for such Inventions and Intellectual Property, all in the
name of the Company (but only at Company 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 the Company of such Inventions and Intellectual Property; and (iii)
shall, upon leaving the Company, provide to the Company in writing a full,
signed statement of all Inventions and
- 3 -
<PAGE> 65
Intellectual Property in which Consultant participated prior to termination of
the consultancy to the Company. Consultant hereby designates the Company as its
agent, and grants to the Company a power of attorney with full substitution,
which power of attorney shall be deemed coupled with an interest, for the
purposes of effecting the foregoing assignments from the Consultant to the
Company.
5. Non-Solicitation. Consultant shall not during the term of the
Consulting Agreement or at any time during the five (5) years following
termination of the Consulting Agreement solicit any person who is employed by or
a consultant to the Company or any affiliate or subsidiary of the Company either
during Consultant's period of consultancy or during such five (5) year period,
to terminate such person's employment by or consultancy to the Company, 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 the Company, affiliate or subsidiary.
6. Continued Obligations. Consultant's obligations under this Agreement
shall not be affected: (i) by any termination of Consultant's consultancy,
including termination upon the Company's initiative; nor (ii) by any change in
Consultant's position, title or function with the Company; nor (iii) by any
interruption in consultancy during which Consultant leaves and then rejoins the
Company for any period within a period of one year and for any reason. Nothing
herein shall be construed as constituting an employment agreement or an
undertaking by the Company to retain Consultant's services for any stated period
of time.
7. No Conflicting Agreements. Consultant represents and warrants that
execution and performance of this Agreement does not and will not violate,
conflict with, or constitute a default under any contract, commitment,
agreement, understanding, arrangement, or restriction, or any adjudication,
order, injunction or finding of any kind by any court or agency to which
Consultant may be a party or by which Consultant may be bound.
8. Remedies. In the event of any breach by Consultant of any of the
provisions of this Agreement, the Company shall be entitled, in addition to
monetary damages and to any other remedies available to the Company under this
Agreement and at law, to equitable relief, including injunctive relief, and to
payment by Consultant of all costs incurred by the Company in enforcement
against Consultant of the provisions of this Agreement, including reasonable
attorneys' fees.
9. General Provisions.
-4-
<PAGE> 66
(a) 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.
(b) Notice. 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:
If to Consultant, to:
______________________________
______________________________
If to the Company, to: Dr. Barry Berkowitz
Myco Pharmaceuticals Inc.
5 Pinetree Place
Fort Washington, PA 19034
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.
(c) Severability. If any provision of this Agreement shall be
found to be invalid, inoperative or unenforceable in law or equity, such finding
shall not affect the validity of any other provisions of this Agreement, which
shall be construed, reformed and enforced to effect the purposes of this
Agreement to the fullest extent permitted by law.
(d) Miscellaneous. This Agreement: (i) may be executed in any
number of counterparts, each of which, when executed by both parties to this
Agreement shall be deemed to be an original, and all of which counterparts
together shall constitute one and the same instrument; (ii) shall be governed by
and construed under the law of the Commonwealth of Massachusetts, without
application of principles of conflicts of laws; (iii) along with the Consulting
Agreement, constitute the entire agreement of the parties with respect to the
subject matter hereof, superseding all prior oral and written communications,
proposals, negotiations, representations, understandings, courses of dealing,
agreements, contracts, and the like between the parties in such respect; (iv)
may be amended, modified, or terminated, and any right under this Agreement may
be waived in whole or in part, only by a writing signed by both parties; (v)
contains headings only for convenience, which headings do not
-5-
<PAGE> 67
form part, and shall not be used in construction, of this Agreement; (vi) shall
bind and inure to the benefit of the parties and their respective legal
representatives, successors and assigns, except that no party may delegate any
of its or his obligations under this Agreement, or assign this Agreement,
without the prior written consent of the other party, except the Company may
assign this Agreement in connection with the merger, consolidation, or sale of
all or substantially all assets of the Company; and (vii) be enforced only in
courts located within the Commonwealth of Massachusetts and the parties hereby
agree that such courts shall have venue and exclusive subject matter and
personal jurisdiction, and consent to service of process by registered mail,
return receipt requested, or by any other manner provided by law.
Executed under seal as of the date first above written.
COMPANY:
By: __________________________
Title
CONSULTANT
______________________________
-6-
<PAGE> 68
EXHIBIT 1.01A
Schedule of Purchasers - Preferred Stock
<TABLE>
<CAPTION>
Aggregate
Purchase Indebtedness
Price of of Company Number of
Series A to be Net Series A
Shares Cancelled Cash Due Shares
Name and Address at Initial at Initial at Initial at Initial
of Purchaser Closing Closing Closing Closing
- ------------ ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Technology Leaders L.P. $370,000 $ 27,750 $342,250 370,000
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19057
Technology Leaders Offshore $630,000 $ 47,250 $582,750 630,000
C.V
c/o ABN Trust Company
15 Pietermail
Curacao, Netherlands Antilles
Bessemer Venture Partners II $893,916 $ 75,000 $818,916 893,916
L.P.
83 Walnut Street
Wellesley Hills, MA 02181
William T. Burgin $ 15,000 0 $ 15,000 15,000
83 Walnut Street
Wellesley, MA 02181
Brimstone Island Co. L.P. $ 15,000 0 $ 15,000 15,000
83 Walnut Street
Wellesley, MA 02181
Neill H. Brownstein $ 10,000 0 $ 10,000 10,000
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Robert H. Buescher $ 3,000 0 $ 3,000 3,000
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
</TABLE>
<PAGE> 69
- 2 -
<TABLE>
<S> <C> <C> <C> <C>
G. Felda Hardymon $10,000 0 $10,000 10,000
83 Walnut Street
Wellesley, MA 02181
Christopher Gabrieli $32,000 0 $32,000 32,000
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Michael I. Barach $ 2,500 0 $ 2,500 2,500
83 Walnut Street
Wellesley, MA 02181
Daniel S. Martin $ 2,000 0 $ 2,000 2,000
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Richard R. Davis $ 3,334 0 $ 3,334 3,334
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Thomas F. Ruhm $ 750 0 $ 750 750
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Ward W. Woods, Jr $ 5,000 0 $ 5,000 5,000
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
</TABLE>
<PAGE> 70
- 3 -
<TABLE>
<S> <C> <C> <C> <C>
Geoffrey L. Berger $ 500 0 $ 500 500
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Robert D. Lindsay $ 2,000 0 $ 2,000 2,000
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Michael S. Mathews $ 2,000 0 $ 2,000 2,000
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Barbara M. Henagan $ 3,000 0 $ 3,000 3,000
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
========== ========== ========== =========
$2,000,000 $ 150,000 $1,850,000 2,000,000
</TABLE>
<PAGE> 71
Exhibit 1.0lB
<TABLE>
<CAPTION>
Maximum Maximum
Aggregate Aggregate
Purchase Maximum Purchase Maximum
Price of Number of Price of Number of
Series A Series A Series A Series A
Name and Address Shares at Shares at Shares at Shares at
of Purchasers Call Closing Call Closing Put Closing Put Closing
------------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Technology Leaders, L.P. $ 740,000 740,000 $ 740,000 740,000
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19057
Technology Leaders Offshore, $1,260,000 1,260,000 $1,260,000 1,260,000
C.V
c/o ABN Trust Company
15 Pietermaii
Curacao, Netherlands
Antilles
Bessemer Venture $1,787,832 1,787,832 $1,787,832 1,787,832
Partners II L.P.
83 Walnut Street
Wellesley Hills, MA 02181
William T. Burgin $ 30,000 30,000 $ 30,000 30,000
83 Walnut Street
Wellesley, MA 02181
Brimstone Island Co. L.P. $ 30,000 30,000 $ 30,000 30,000
83 Walnut Street
Wellesley, MA 02181
Neill H. Brownstein $ 20,000 20,000 $ 20,000 20,000
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Robert H. Buescher $ 6,000 6,000 $ 6,000 6,000
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
</TABLE>
<PAGE> 72
- 2 -
<TABLE>
<S> <C> <C> <C> <C>
G. Felda Hardymon $20,000 20,000 $20,000 20,000
83 Walnut Street
Wellesley, MA 02181
Christopher Gabrieli $64,000 64,000 $64,000 64,000
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Michael I. Barach $ 5,000 5,000 $ 5,000 5,000
83 Walnut Street
Wellesley, MA 02181
Daniel S. Martin $ 4,000 4,000 $ 4,000 4,000
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Richard R. Davis $ 6,668 6,668 $ 6,668 6,668
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Thomas F. Ruhm $ 1,500 1,500 $ 1,500 1,500
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Ward W. Woods, Jr $10,000 10,000 $10,000 10,000
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
</TABLE>
<PAGE> 73
- 3 -
<TABLE>
<S> <C> <C> <C> <C>
Geoffrey L. Berger $ 1,000 1,000 $ 1,000 1,000
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Robert D. Lindsay $ 4,000 4,000 $ 4,000 4,000
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Michael S. Mathews $ 4,000 4,000 $ 4,000 4,000
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Barbara M. Henagan $ 6,000 0 $ 6,000 6,000
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
$4,000,000 4,000,000 $4,000,000 4,000,000
</TABLE>
<PAGE> 74
EXHIBIT 1.03
The specific performance milestones are attached. The progress of these
milestones and/or the majority of the milestones for good performance shall have
been met or shall be proceeding satisfactorily, all in the reasonable judgment
of the Purchasers.
<PAGE> 75
MYCO PHARMACEUTICALS INC. MILESTONES: NEXT 12 MONTHS
<TABLE>
<CAPTION>
GOOD EXCELLENT
MILESTONE PERFORMANCE PERFORMANCE
<S> <C> <C>
Begin research Launch contract Launch contract
operations research - 6 months; research - 4 months
2 approaches 3 approaches
(feasibility studies) (feasibility studies)
Hire VP R & D Accomplished - Accomplished -
6 months 3 months
Complete Accomplished - Accomplished -
agreements 5 months 2 months
with SAB and
begin regular
meetings
Academic (a) Accomplished - (a) Accomplished -
collaborations 6 months 3 months
(a) reviewed and (b) Accomplished - (b) Accomplished -
prioritized; (b) 9 months 4 months
1-3 collaborations
in place
Lead compounds Screens in place; Screening of compounds
first potential underway - 12 months;
product profile 1 project plan
profile defined - presented to board
12 months
Acquisitions Review opportunities Acquire compound/
(In license) and decide go/no go - advanced project -
6 months 12 months
Strategic Strategy set/agreed. 1st corporate strategic
alliances Initial discussions alliance in place -
underway with 12 months
potential partners -
12 months
Private placement decide go/no go - Assets in place to
9 months allow go decision -
12 months
VP business Begin search/identify VP in place - 6 months
development candidates - 6 months
Enabling Begin operations - Begin operations -
technologies 9 months 5 months; 2 smart
(smart screens) screen developed -
business unit 12 months
</TABLE>
<PAGE> 76
<TABLE>
<CAPTION>
<S> <C> <C>
Natural products Begins operations - begins operations -
(drug discovery) 12 months 9 months; lead broths
business unit under study -
12 months
Drug development strategy set/agreed - begins operations -
business unit 12 months 12 months
Patents 2 patents in prepara- 2 patents filed; 2
tion; disclosures patents in preparation
made
facility lab plans complete - lab plans complete -
12 months 9 months; ready to
occupy - 12 months
</TABLE>
<PAGE> 77
EXHIBIT 1.05
Non-Accredited Investors
Michael I. Barach
Daniel S. Martin
<PAGE> 78
Exhibit 2.02(i)
Employees/Nondisclosure Agreements
None
**********
As of the date hereof the only employee of the Company is Dr.
Barry Berkowitz, who has entered into an Employment and Noncompetition
Agreement in the form attached hereto.
The Company has engaged or is in the process of engaging the
persons listed on the attachment to Exhibit 3.13 hereto as consultants to
the Company, each of whom has or will be required to execute an Agreement
in substantially the form attached hereto.
Exhibit 3.07
Title to Assets, Patents
The Company owns a facsimile machine, the purchase price of which
was approximately $1,400 and a personal computer, the purchase price of
which was approximately $5,000.
Exhibit 3.08
Transactions with Affiliates
The Company has entered into the following agreements
with Barry Berkowitz: (i) Employment and Noncompetition
Agreement; (ii) Confidentiality Agreement, and (iii) Stock
Purchase and Repurchase Agreement.
Exhibit 3.09
Guaranties of Indebtedness
None
Exhibit 3.10
Investments
None
<PAGE> 79
Exhibit 3.13
Capitalization/Restrictions on Transfer
COMMON STOCK
The Company has issued and/or committed for issuance (i) 336,000 shares
of Common Stock to Barry A. Berkowitz, Ph.D, which are owned outright by him,
(ii) 860,000 shares of Common Stock to Barry A. Berkowitz, Ph.D, which are
subject to a four-year vesting arrangement and (iii) 310,000 shares of Common
Stock pursuant to one-year vesting arrangements, in the amounts and to the
persons listed on the Attachment to this Exhibit 3.13.
OPTIONS TO PURCHASE COMMON STOCK
The Company has granted and/or committed to grant options to purchase
Common Stock of the Company for $0.20 per share pursuant to four year vesting
arrangements in the amounts and to the persons listed in the Attachment to this
Exhibit 3.13. In addition, the Company has agreed with Robert Morgan that he
will receive options to purchase Common Stock of the Company as part of his
compensation package, the terms of which will be submitted for approval to the
Board of Directors of the Company.
PREFERRED STOCK
The Company has committed for issuance 200,000 shares of the Company's
Series A Preferred Stock to be issued to persons chosen by the Company's Chief
Executive Officer at a purchase price of $1.00 per share.
<PAGE> 80
Attachment to Exhibit 3.13
SAB/CONSULTANTS COMPENSATION
<TABLE>
<CAPTION>
NUMBER OF
SHARES OPTIONS
----------- -------------
CASH (ONE YEAR (FOUR YEAR
NAME POSITION COMPENSATION VESTING) VESTING)
<S> <C> <C> <C> <C>
Dr. Gerry SAB $40,000 (up 100,000 200,000
Fink Chairman/ to 50,000 if
Founder leaves Merck
Dr. Yigal EC/Founder $40,000 60,000 120,000
Koltin
Dr. Jeff EC/Founder $30,000 60,000 120,000
Becker
Dr. Jerry EC Founder $24,000 30,000 60,000
Weisbach,
Ph.D.
Dr. Bill EC $20,000 20,000 40,000
Timberlake
Dr. EC $20,000 20,000 40,000
Phillips
Robbins
N. Ron Member $ 6,000 5,000 10,000
Morris
Dr. Jack E. Member $ 6,000 5,000 10,000
Edwards
Dr. Richard Member $ 6,000 5,000 10,000
Diamond
Dr. Koji Member $ 6,000 5,000 10,000
Nakanishi 310,000 620,000
P. Lempke Consultant $ 3,000 N/A N/A
F. Naider Consultant $ 3,000 N/A N/A
T. Barrett Consultant $ 3,000 N/A N/A
D. Cane Consultant $ 3,000 N/A N/A
J. Gloer Consultant $ 3,000 N/A N/A
H. VanEtten Consultant $ 3,000 N/A N/A
</TABLE>
<PAGE> 81
Exhibit 3.14
Material Agreements
See Exhibit 3.08
<PAGE> 1
Exhibit 10.2
SERIES A AND B PREFERRED STOCK PURCHASE AGREEMENT
MYCO PHARMACEUTICALS INC.
One Kendall Square
Building 300 - Third Floor
Cambridge, MA 02139
As of January 11, 1994
To the Persons listed on Exhibit 1.01 hereto
Re: Series A and Series B Preferred Stock
Ladies and Gentlemen:
Myco Pharmaceuticals Inc. (the "Company"), a Delaware
corporation, agrees with each of you as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF SHARES
1.01. THE PREFERRED SHARES. The Company has authorized the issuance,
sale and exchange of 976,284 units, each unit consisting of two shares of its
authorized but unissued shares of Series A Preferred Stock, $.01 par value (the
"Series A Preferred Stock"), at a purchase price of $1.00 per share and one
share of its authorized but unissued shares of Series B Preferred Stock, $.01
per share (the "Series B Preferred Stock") at a purchase price of $1.50 per
share (the Series A Preferred Stock and the Series B Preferred Stock are
referred to collectively as the "Preferred Stock" or the "Preferred Shares") to
the persons (collectively, the "Purchasers" and, individually, a "Purchaser")
and in the respective amounts set forth in Exhibit 1.01A hereto. The
designation, rights, preferences and other terms and provisions of the Preferred
Stock are set forth in Exhibit A hereto.
1.02. THE CONVERSION SHARES. The Company has authorized and has
reserved and covenants to continue to reserve, free of preemptive rights and
other similar contractual rights of shareholders, a sufficient number of its
authorized but unissued shares of Common Stock to satisfy the rights of
conversion of the holders of the Preferred Shares. Any shares of Common Stock
issuable upon conversion of the Preferred Shares (and such shares when issued)
are herein referred to as the "Conversion Shares". The Preferred Shares and
Conversion Shares are sometimes collectively referred to as the "Shares".
<PAGE> 2
1.03. PURCHASE PRICE AND CLOSING.
(a) CLOSING. The Company agrees to issue, sell and exchange to
the Purchasers and, in consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement,
the Purchasers, severally but not jointly, agree to purchase, that number of the
Preferred Shares set forth opposite their respective names in Exhibit 1.01A. The
aggregate purchase price of the Preferred Shares being acquired by each
Purchaser is set forth opposite such Purchaser's name in Exhibit 1.01A. The
closing of the purchase, sale and exchange of the Preferred Shares to be
acquired by the Purchasers from the Company under this Agreement shall take
place at the offices of Messrs. Testa, Hurwitz & Thibeault, 53 State Street,
Boston, Massachusetts at 10:00 a.m. on January 11, 1994, or at such time and
date thereafter as the Purchasers and the Company may agree (the "Closing"). At
the Closing, the Company will deliver to each Purchaser certificates for the
number and series of Preferred Shares set forth opposite its name in Exhibit
1.01A registered in such Purchaser's name (or its nominee), against delivery of
a check or checks payable to the order of the Company, or a transfer of funds to
the account of the Company by wire transfer, representing the net cash
consideration set forth opposite each such Purchaser's name on Exhibit 1.01A,
and the cancellation of an aggregate of $440,070 of principal of indebtedness of
the Company to certain Purchasers as so set forth on Exhibit 1.01A, as payment
in full of the purchase price of the Shares. At the Closing, certain Purchasers
will deliver to the Company (i) the Promissory Notes marked "paid in full," made
by the Company to the respective orders of such Purchasers, in lieu of the
payment of $440,070, as described in Exhibit 1.01A and (ii) the Company will
deliver to such Purchasers by check all accrued interest therein through the
date of Closing.
(b) ADDITIONAL SHARES AND CLOSING(S). At any time and from
time to time between the date hereof and sixty (60) days from the date hereof,
the Company may, in its discretion, issue and sell up to an additional
$4,000,000 of Preferred Shares on the same terms and conditions set forth in
this Agreement, to the Purchasers and/or Persons who are not parties to this
Agreement, provided that such purchasers shall become parties to this Agreement
by an amendment to this Agreement to increase the number of Preferred Shares to
be purchased and sold, to add such purchasers, and to appropriately update the
provisions of this Agreement to take into account such additional shares and
closing(s) and to provide for the mechanics of such closing(s). Each Purchaser
consents to such amendment(s) and such issuances and sales and agrees to take
such actions as are reasonably requested by the Company to facilitate such
transactions, including executing consents or proxies to vote at a meeting to
enable the Company to amend its Restated Certificate of
- 2 -
<PAGE> 3
Incorporation to authorize the additional shares of Series A Preferred Stock and
Series B Preferred Stock which would be required in connection with such
transactions.
1.04. USE OF PROCEEDS. The Company shall use the cash proceeds from the
sale of the Preferred Shares for working capital and general corporate purposes,
including the repayment of bridge loans to an affiliate of Technology Leaders
L.P. in the principal amount of $159,930.
1.05. REPRESENTATIONS BY THE PURCHASERS.
(a) INVESTMENT REPRESENTATIONS. Each of the
Purchasers represents severally, but not jointly, that it is its
present intention to acquire the Shares to be acquired by it for its
own account (and it will be the sole beneficial owner thereof) and that
the Shares are being and will be acquired by it for the purpose of
investment and not with a view to distribution or resale thereof except
pursuant to registration under the Securities Act or exemption
therefrom. The acquisition by each Purchaser of the Preferred Shares
acquired by it shall constitute a confirmation of this representation
by each such Purchaser. Each Purchaser is purchasing with its own funds
and not with the funds of any pension or employee benefit plan. Each of
the Purchasers further represents that it understands and agrees that,
until registered under the Securities Act or transferred pursuant to
the provisions of Rule 144 or Rule 144A as promulgated by the
Commission, all certificates evidencing any of the Shares, whether upon
initial issuance or upon any transfer thereof, shall bear a legend,
prominently stamped or printed thereon, reading substantially as
follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 or applicable
state securities laws. These securities have been acquired for
investment and not with a view to distribution or resale.
These securities may not be offered for sale, sold, delivered
after sale, transferred, pledged or hypothecated in the
absence of an effective registration statement covering such
shares under the Act and any applicable state securities laws,
or the availability, in the opinion of counsel satisfactory to
the Company, of an exemption from registration thereunder."
(b) SOPHISTICATION AND KNOWLEDGE. Each Purchaser or
his representative has such knowledge and experience in
- 3 -
<PAGE> 4
financial and business matters that it is capable of evaluating the
merits and risks of the purchase of the Preferred Shares. Each
Purchaser can bear the economic risks of this investment and can afford
a complete loss of his investment.
(c) TRANSFER RESTRICTIONS IMPOSED BY SECURITIES LAWS.
Each Purchaser understands that: no state or governmental authority has
made any finding or determination relating to the fairness of the terms
of the investment in the Company proposed hereunder and the Shares have
not been registered under the Securities Act and applicable state
securities laws, and, therefore, cannot be resold unless they are
subsequently registered under the Securities Act and applicable state
securities laws or unless an exemption from such registration is
available; each Purchaser is and must be purchasing the Shares for
investment for the account of such Purchaser and not for the account or
benefit of others, and not with any present view toward resale or other
distribution thereof. Each Purchaser agrees not to resell or otherwise
dispose of all or any part of the Shares purchased by him, except as
permitted by law, including, without limitation, any regulations under
the Securities Act and applicable state securities laws; the Company
does not have any present intention and is under no obligation to
register the Shares under the Securities Act and applicable state
securities laws, except as provided in Article V hereof; and Rule 144
or Rule 144A under the Securities Act may not be available as a basis
for exemption from registration of the Shares thereunder.
(d) LACK OF LIQUIDITY. Each Purchaser has no present
need for liquidity in connection with his purchase of the Preferred
Shares.
(e) SUITABILITY AND INVESTMENT OBJECTIVES. The
purchase of the Preferred Shares by each Purchaser is consistent with
the general investment objectives of the Purchaser. The Purchaser
understands that the purchase of the Preferred Shares involves a high
degree of risk in view of the fact that, among other things, the
Company is a development stage enterprise, and there may never be an
established market for the Company's capital stock.
(f) ACCREDITED INVESTORS STATUS. Each Purchaser
except for those listed on Exhibit 1.05 is an "Accredited Investor" as
that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act.
(g) ACCESS TO INFORMATION. Each Purchaser has had the
opportunity to ask questions and receive answers from the officers and
other employees of the Company
- 4 -
<PAGE> 5
regarding the terms and conditions of this Agreement, the transactions
contemplated hereby (including, without limitation, its acquisition of
Shares), as well as the affairs of the Company and related matters, and
it has obtained such information and has had the opportunity to obtain
additional information necessary to verify the accuracy of all
information so obtained.
(h) CORPORATE AND PARTNERSHIP REPRESENTATION. If a
Purchaser is a corporation, partnership, trust or other entity, it
represents and warrants that (i) the individual executing this
Agreement on its behalf has been duly authorized to execute and deliver
this Agreement; (ii) the signature of such individual is binding upon
such partnership, corporation, trust or other entity; (iii) the
Purchaser is duly organized, validly existing and in good standing in
its jurisdiction of incorporation or organization and has all requisite
power and authority to execute and deliver this Agreement; and (iv) the
execution and delivery of this Agreement and the purchase of the Shares
hereunder will not result in the violation of, constitute a breach or
default under, or conflict with, any term or provision of the charter,
bylaws or other governing document of the Purchaser or, to its
knowledge, material breach or default under any material agreement,
judgment, decree, order, statute or regulation by which it is bound or
applicable to it.
(i) ADDITIONAL REPRESENTATIONS. Each Purchaser
understands that the Company is a research and development stage
enterprise with limited resources. The Company is engaged and intends
to engage in research activities which will require substantial funds
which may not be available. For this and other reasons, the Company's
prospects are highly speculative. Accordingly, each Purchaser
acknowledges that he, she or it may lose her, his or its entire
investment in the Company. Each of the Bessemer Purchasers is relying
on the information provided by Bessemer Venture Partners L.P. with
respect to its investment in the Company. Bessemer Venture Partners
L.P. represents that it has provided to each of such purchasers access
to all of the information which it has regarding the Company.
ARTICLE II
CONDITIONS TO PURCHASERS' OBLIGATION
The obligation of each Purchaser to purchase and pay for the Preferred
Shares to be purchased by it at the Closing is subject to the following
conditions (all of which shall be deemed satisfied or waived by the Purchasers
at or prior to the Closing
- 5 -
<PAGE> 6
in the event all of the transactions contemplated to be effected at the Closing
are consummated and all or any of which in any case may be waived by the
Purchasers prior to a Closing):
2.01. REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Company set forth in Article III hereof shall be true,
accurate and correct on the date of the Closing.
2.02. DOCUMENTATION AT CLOSING. The Purchasers shall have received
prior to or at the Closing all of the following materials, each in form and
substance reasonably satisfactory to the Purchasers and their special counsel,
and each of the following events shall have occurred, or each of the following
documents shall have been delivered, prior to or simultaneous with the Closing:
(a) A copy of the Certificate of Incorporation of the
Company, as amended or restated to date, together with such evidence as
is satisfactory to the Purchasers of the filing thereof; a copy of the
resolutions of the Board of Directors providing for the approval of the
Restated Certificate of Incorporation of the Company in the form
attached as Exhibit A, the approval of this Agreement, the issuance of
the Preferred Shares, such amendment of the By-laws of the Company as
may be reasonably requested by the Purchasers, and all other agreements
or matters contemplated hereby or executed in connection herewith; a
copy of a consent of stockholders of the Company approving the Restated
Certificate of Incorporation of the Company; and a copy of the By-laws
of the Company, all of which have been certified by the Secretary of
the Company to be true, complete and correct in every particular; and
certified copies of all documents evidencing other necessary corporate
or other action and governmental approvals, if any, required to be
obtained at or prior to the Closing with respect to this Agreement and
the issuance of the Preferred Shares.
(b) The favorable opinion of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., counsel for the Company, in the form
set forth in Exhibit 2.02(b).
(c) A certificate of the Secretary or an Assistant
Secretary of the Company which shall certify the names of the officers
of the Company authorized to sign this Agreement, the certificates for
the Preferred Shares and the other documents, instruments or
certificates to be delivered pursuant to this Agreement by the Company
or any of its officers, together with the true signatures of such
officers.
- 6 -
<PAGE> 7
(d) A certificate of the President and the Treasurer
of the Company stating that the representations and warranties of the
Company contained in Article III hereof are true and correct as of the
time of the Closing and that all conditions required to be performed by
the Company prior to or at the Closing have been performed as of the
Closing.
(e) The Company shall have obtained any consents or
waivers necessary to be obtained at or prior to the Closing to execute
and deliver this Agreement, the Preferred Shares and the other
agreements and instruments executed and delivered by the Company in
connection herewith and to carry out the transactions contemplated
hereby and thereby, and such consents and waivers shall be in full
force and effect at the Closing. All corporate and other action and
governmental filings necessary to effectuate the terms of this
Agreement, the Preferred Shares and the other agreements and
instruments executed and delivered by the Company in connection
herewith shall have been made or taken.
(f) The Certificate of Incorporation of the Company
shall have been amended and restated in the form set forth in Exhibit A
attached hereto.
(g) A Certificate of the Secretary of State of the
State of Delaware as to the due incorporation and good standing of the
Company and a certificate of the Secretary of State of each
jurisdiction in which the Company is required to qualify to do business
as a foreign corporation shall have been provided to the Purchasers and
their special counsel.
(h) Payment for the costs, attorneys' fees, expenses,
taxes and filing fees identified in Section 8.04.
(i) Each of the employees listed on Exhibit 2.02(i)
shall have entered into Nondisclosure and Assignment of Inventions
Agreements in the form attached as Exhibit B1 and Exhibit B2 hereto
(the "Nondisclosure Agreement") and Barry A. Berkowitz shall have
entered into an Employment and Non-Competition Agreement in the form
attached to Exhibit 2.02 hereto (the "Non-Competition Agreement") and
copies thereof shall have been delivered to counsel for the Purchasers.
(j) Each of the Purchasers, the Company and the other
shareholders thereto shall have entered into an Amended and Restated
Voting and Co-Sale Agreement in the form attached as Exhibit C hereto
(the "Voting and Co-Sale Agreement").
- 7 -
<PAGE> 8
(k) The members of the Board of Directors of the
Company (the "Board") immediately following the Closing shall consist
of five (5) members, which members shall include Gary J. Anderson,
M.D., Hubert Schoemaker, Ph.D., Christopher Gabrieli, Barry Berkowitz,
Ph.D. (for so long as he is an officer, employee or otherwise
materially involved with the Company as determined by the Board of
Directors, including the Investor Directors and Edwin M. Kania.
(l) This Agreement shall have been executed by
Purchasers that are obligated to purchase an aggregate of at least
$3,000,000 of Preferred Shares at the Closing in the amounts set forth
in Exhibit 1.01A and such Purchasers shall have delivered to the
Company the full purchase price for such Preferred Shares.
(m) A Scientific Advisory Board of the Company
composed of individuals acceptable to the Purchasers in their sole
discretion shall have been constituted.
(n) Each Purchaser (other than the Bessemer
Purchasers and the Company Friends) shall have simultaneously with the
other Purchasers (other than the Bessemer Purchasers and the Company
Friends) purchased the Preferred Shares at the Closing that such
Purchaser is obligated to purchase hereunder and shall have paid the
full purchase price therefor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as follows:
3.01. ORGANIZATION AND STANDING OF THE COMPANY. The Company is a duly
organized and validly existing corporation in good standing under the laws of
the State of Delaware and has all requisite corporate power and authority for
the ownership and operation of its properties and for the carrying on of its
business as now conducted and as now proposed to be conducted and to execute and
deliver this Agreement, the Voting and Co-Sale Agreement and any other agreement
to which it is a party hereunder, to issue, sell and deliver the Preferred
Shares and to issue and deliver the Conversion Shares and to perform its other
obligations pursuant hereto and thereto. The Company is duly licensed or
qualified and in good standing as a foreign corporation authorized to do
business in all jurisdictions wherein the character of the property owned or
leased or the nature of the activities conducted by it makes such licensing or
qualification necessary, except where the failure to be so
- 8 -
<PAGE> 9
licensed or qualified would not have a material adverse effect on the business,
operations or financial condition of the Company.
3.02. CORPORATE ACTION. This Agreement, the Voting and Co-Sale
Agreement and any other agreement to which it is a party hereunder have been
duly authorized, executed and delivered by the Company and constitute the legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms.
3.03. GOVERNMENTAL APPROVALS. Except for the filing of any notice
prior or subsequent to the Closing that may be required under applicable state
and/or Federal securities laws, and the filing of the Restated Certificate of
Incorporation (which, if required, shall be filed on a timely basis), no
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be necessary
for, or in connection with, the execution and delivery by the Company of this
Agreement, for the offer, issue, sale, execution or delivery of the Preferred
Shares, or for the performance by the Company of its obligations under this
Agreement.
3.04. LITIGATION. There is no litigation or governmental proceeding
or investigation pending or, to the knowledge of the Company, threatened against
the Company affecting any of its properties or assets, or, to the knowledge of
the Company, against any officer, Key Employee or the holder of more than ten
percent (10%) of the capital stock of the Company relating to the Company or its
business, nor, to the knowledge of the Company, has there occurred any event or
does there exist any condition on the basis of which it is reasonably likely
that any such litigation, proceeding or investigation might properly be
instituted. There are no actions or proceedings pending or, to the Company's
knowledge, threatened (or any basis therefor known to the Company) which might
result, either in any case or in the aggregate, in any material adverse change
in the business, operations, Intellectual Property Rights, affairs or financial
condition of the Company or in any of its properties or assets, or which might
call into question the validity of this Agreement, any of the Preferred Shares,
or any action taken or to be taken pursuant hereto or thereto.
3.05. CERTAIN AGREEMENTS OF OFFICERS AND EMPLOYEES. To the Company's
knowledge, no officer, employee or consultant of the Company is, or is now or is
expected to be, in violation of any material term of any employment contract,
patent disclosure agreement, proprietary information agreement, noncompetition
agreement, nonsolicitation agreement, confidentiality agreement, or any other
similar contract or agreement or any restrictive covenant, relating to the right
of any such officer, employee, or
- 9 -
<PAGE> 10
consultant to be employed or engaged by the Company because of the nature of the
business conducted or to be conducted by the Company or relating to the use of
trade secrets or proprietary information of others, and to the Company's
knowledge and belief, the continued employment or engagement of the Company's
officers, employees or consultants does not subject the Company or any Purchaser
to any material liability with respect to any of the foregoing matters.
3.06. COMPLIANCE WITH OTHER INSTRUMENTS. The Company is in compliance
in all respects with the terms and provisions of this Agreement and of its
Certificate of Incorporation and By-laws, each as amended and/or restated to
date, and in all respects with the terms and provisions of all mortgages,
indentures, leases, agreements and other instruments by which it is bound or to
which it or any of its properties or assets are subject where noncompliance
would have a material adverse affect on the business, assets, operations, or
financial condition of the Company. The Company is in compliance in all respects
with all judgments, decrees, governmental orders, laws, statutes, rules or
regulations by which it is bound or to which it or any of its properties or
assets are subject where noncompliance with which would have a material adverse
affect on the business, assets, operations, or financial condition of the
Company. Neither the execution, issuance and delivery of this Agreement, the
Voting and Co-Sale Agreement, or the Preferred Shares, nor the consummation of
any transaction contemplated hereby or thereby, has constituted or resulted in
or will constitute or result in a default or violation of any term or provision
of any of the foregoing documents, instruments, judgments, agreements, decrees,
orders, statutes, rules and regulations where noncompliance with which would
have a material adverse affect on the business, assets, operations, or financial
condition of the Company.
3.07. TITLE TO ASSETS, PATENTS. The Company has good and marketable
title in fee to such of its fixed assets as are real property and purported to
be owned, and good and merchantable title to all of its other assets, tangible
and intangible, free of any mortgages, pledges, charges, liens, security
interests or other encumbrances, except those indicated in Exhibit 3.07. The
Company enjoys peaceful and undisturbed possession under all leases under which
it is operating, and all said leases are valid and subsisting and in full force
and effect. All of such assets and leases are listed in Exhibit 3.07.
The Company owns or has a valid right to use the Intellectual
Property Rights being used to conduct its business (i) as now operated and (ii)
as now proposed to be operated (a complete list of licenses, contract rights and
registrations of such Intellectual Property Rights is attached hereto as Exhibit
- 10 -
<PAGE> 11
3.07); and the conduct of its business as now operated and as now proposed to be
operated does not and is not expected to conflict with or infringe upon the
intellectual property rights of others. Except as set forth on Exhibit 3.07, no
claim is pending or threatened against the Company and/or, to the Company's
knowledge, its officers, employees and consultants to the effect that any such
Intellectual Property Right owned or licensed by the Company, or which the
Company otherwise has the right to use, is invalid or unenforceable by the
Company or subject to any claim of infringement. Except pursuant to the terms of
any licenses specified on Exhibit 3.07, the Company has no obligation to
compensate any Person for the use of any such Intellectual Property Rights and
the Company has not granted any Person any license or other right to use any of
the Intellectual Property Rights of the Company or otherwise has licensed from
others the intellectual property rights of third parties, whether requiring the
payment of royalties or not.
The Company has taken reasonable measures in accordance with
industry standards to protect and preserve the security, confidentiality and
value of its Intellectual Property Rights, including its trade secrets and other
confidential information. All employees and consultants of the Company involved
in the design, review, evaluation or development of inventions or Intellectual
Property Rights have executed nondisclosure and assignment of inventions
agreements in the forms attached as Exhibits B1 and B2. To the best knowledge of
the Company, all trade secrets and other confidential information of the Company
are presently valid and protectible and are not part of the public domain or
knowledge, nor, to the best knowledge of the Company, have they been used,
divulged or appropriated for the benefit of any person other than the Company or
otherwise to the detriment of the Company. To the best of the Company's
knowledge, no employee or consultant of the Company has used any trade secrets
or other confidential or proprietary information or techniques of any other
person in the course of their work for the Company or is expected to use such
secrets or information or techniques when conducting the business which the
Company presently intends to conduct. The Company is the exclusive owner of all
right, title and interest in its Intellectual Property Rights as purported to be
owned by the Company, and such Intellectual Property Rights are valid and in
full force and effect. Neither the Company, nor any of its employees or
consultants has received notice of, and to the best of the Company's knowledge
after reasonable investigation, there are no claims that the Company's
Intellectual Property Rights or the use or ownership thereof by the Company
infringes, violates or conflicts with any such right of any third party. No
university, hospital, government agency (whether federal or state) or other
organization which sponsored research and development conducted by the Company
has any claim of right to or ownership of or other
- 11 -
<PAGE> 12
encumbrance upon the Intellectual Property Rights of the Company except as
disclosed in Exhibit 3.07.
3.08. TRANSACTIONS WITH AFFILIATES. Except as set forth in Exhibit 3.08
there are no loans, leases, royalty agreements or other continuing transactions
between (a) the Company or, to the Company's best knowledge, any of its
customers or suppliers, and (b) any officer, employee, consultant or director of
the Company or any Person owning five percent (5%) or more of the capital stock
of the Company, or to the Company's knowledge, any member of the immediate
family of such officer, employee, consultant, director or stockholder or any
corporation or other entity controlled by such officer, employee, consultant,
director or stockholder, or a member of the immediate family of such officer,
employee, consultant, director or stockholder.
3.09. INDEBTEDNESS; ASSUMPTIONS OR GUARANTIES OF INDEBTEDNESS OF OTHER
PERSONS. The Company has no Indebtedness except as set forth in Exhibit 3.09.
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 payment,
to supply funds to or otherwise invest in the debtor or otherwise to assure the
creditor against loss), any Indebtedness of any other Person except as set forth
in Exhibit 3.09.
3.10. INVESTMENTS IN OTHER PERSONS. Except as set forth in Exhibit
3.10, the Company has not made any loans or advances in excess of $10,000 in the
aggregate to any Person which is outstanding on the date of this Agreement, nor
is it committed or obligated to make any such loan or advance, nor does the
Company own any capital stock, assets comprising the business of, obligations
of, or any interest in, any Person. The Company does not have, and has not since
its incorporation had, any Subsidiaries.
3.11. SECURITIES ACT OF 1933. 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 Preferred Shares hereunder. Neither the Company
nor anyone authorized to act on its behalf has or will sell, offer to sell or
solicit offers to buy the Preferred Shares or similar securities to, or solicit
offers with respect thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any Person, so as to bring the issuance and
sale of the Preferred Shares under the registration provisions of the Securities
Act and applicable state securities laws.
3.12. DISCLOSURE. Neither this Agreement, nor any other agreement or
statement, furnished to any of the Purchasers or their special counsel by or on
behalf of the Company in
- 12 -
<PAGE> 13
connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances in which made, not misleading. Projections made in the Business
Plan are not considered to be facts for the purpose of this Section. Such
projections were prepared in good faith on the basis of reasonable assumptions.
There is no fact within the knowledge of the Company or any of its executive
officers which has not been disclosed herein or in writing by them to the
Purchasers and which materially adversely affects, or in the future in their
opinion may, insofar as they can now foresee, materially adversely affect the
business, operations, properties, Intellectual Property Rights, assets or
condition, financial or other, of the Company. Without limiting the foregoing,
the Company has no knowledge that there exists, or there is pending or planned,
any patent, invention, device, application or principle or any statute, rule,
law, regulation, standard or code which would materially adversely affect the
business, prospects, operations, Intellectual Property Rights, affairs or
financial condition of the Company.
3.13. CAPITALIZATION; STATUS OF CAPITAL STOCK. As of the Closing, the
Company will have a total authorized capitalization consisting of (i) 12,000,000
shares of Common Stock, $.001 par value and (ii) 7,200,000 shares of Preferred
Stock, $.01 par value, of which 6,200,000 shares will be designated as Series A
Preferred Stock and 1,000,000 shares will be designated as Series B Preferred
Stock. As of the Closing, 1,506,000 shares of Common Stock will be issued and
outstanding. A complete list of the capital stock of the Company which has been
previously issued and the names in which such capital stock is registered on the
stock transfer book of the Company is set forth in Exhibit 3.13 hereto. All the
outstanding shares of capital stock of the Company have been duly authorized,
and are validly issued, fully paid and non-assessable. The Shares when issued
and delivered in accordance with the terms hereof, and the Conversion Shares,
when issued and delivered upon conversion of the Preferred Shares, will be duly
authorized, validly issued, fully-paid and non-assessable. Except for 2,112,000
shares of Common Stock that are reserved for issuance upon exercise of stock
options, 177,083 shares of Series A Preferred Stock that have been reserved for
issuance upon exercise of Warrants issued or to be issued to Comdisco (the
"Comdisco Leasing Warrants") and the shares of Common Stock reserved for
issuance upon the conversion of the currently outstanding Series A Preferred
Stock and the Series A Preferred Stock which may be issued upon exercise of the
Comdisco Leasing Warrants, all as further set forth in Exhibit 3.13, no options,
warrants, subscriptions or purchase rights of any nature to acquire from the
Company, or commitments of the Company to issue, shares of capital stock or
other securities are authorized, issued or outstanding, nor is
- 13 -
<PAGE> 14
the Company obligated in any other manner to issue shares or rights to acquire
any of its capital stock or other securities except as contemplated by this
Agreement. None of the Company's outstanding securities or authorized capital
stock or the Preferred Stock are subject to any rights of redemption,
repurchase, rights of first refusal, preemptive rights or other similar rights,
whether contractual, statutory or otherwise, for the benefit of the Company, any
stockholder, or any other Person, except pursuant hereto and the Voting and
Co-Sale Agreement or as set forth on Exhibit 3.13. Except as set forth in
Exhibit 3.13, there are no restrictions on the transfer of shares of capital
stock of the Company other than those imposed by relevant federal and state
securities laws and as otherwise contemplated by this Agreement. The offer and
sale of all capital stock and other securities of the Company issued before the
Closing complied with or were exempt from all applicable federal and state
securities laws and no stockholder has a right of rescission or damages with
respect thereto.
3.14. MATERIAL AGREEMENTS. Except as set forth in Exhibit 3.14 the
Company is not a party to any material written or oral contract, instrument,
agreement, commitment, obligation, plan or arrangement, or any other material
agreement which could adversely affect the business, assets, liabilities,
Intellectual Property Rights, financial condition or operations of the Company.
The Company, and to the best of the Company's knowledge, each other party
thereto have in all material respects performed all the obligations required to
be performed by them to date, have received no notice of default and are not in
default in any material respect under any lease, agreement or contract now in
effect to which the Company is a party or by which it or its property may be
bound. Each of the contracts or agreements listed in Exhibit 3.14 is in full
force and effect with no default, anticipated or threatened material default or
material failure of performance or observance of any obligations or conditions
contained therein, and none of the foregoing parties nor the Company has
provided any notice of default or of its intention to terminate these
agreements.
3.15. ABSENCE OF CERTAIN DEVELOPMENTS. The Company is not a party to
any written or material oral contract or instrument or other corporate
restriction which individually or in the aggregate is reasonably likely to
adversely affect the business, prospects, financial condition, operations,
Intellectual Property Rights, property or affairs of the Company. The Company
has no liability or obligation, whether absolute, contingent, or otherwise as
set forth in Exhibit 3.15, except for those incurred in the ordinary course.
3.16. ENVIRONMENTAL AND SAFETY LAWS. To the best of the Company's
knowledge after due investigation, it is not in violation of any applicable
statute, law or regulation relating
- 14 -
<PAGE> 15
to the environment or occupational safety and health in any material respect,
and to the best of its knowledge after due investigation, no material
expenditures will be required in order to comply with any such statute, law or
regulation except in the ordinary course of doing business.
3.17. U.S. REAL PROPERTY HOLDING CORPORATION. The Company is not now
and has never been a "United States Real Property Holding Corporation" as
defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service.
ARTICLE IV
COVENANTS OF THE COMPANY
4.01. AFFIRMATIVE COVENANTS OF THE COMPANY OTHER THAN REPORTING
REQUIREMENTS. Without limiting any other covenants and provisions hereof, and
except to the extent the following covenants and provisions of this Section 4.01
are waived in any instance by either (i) a majority of the Investor Directors or
(ii) the holders of at least 60% of the outstanding shares of Preferred Stock,
the Company covenants and agrees that until the consummation of a Qualified
Public Offering, it will perform and observe the following covenants and
provisions, and will cause each Subsidiary, if and when such Subsidiary exists,
to perform and observe such of the following covenants and provisions as are
applicable to such Subsidiary:
(a) MAINTENANCE OF KEY MAN INSURANCE. Maintain term
life insurance on the life of Barry Berkowitz in the amount of
$1,000,000, for so long as such person remains an officer or employee
of the Company, the proceeds of which are payable to the Company. The
Company will add Technology Leaders L.P., Technology Leaders Offshore
C.V. and Bessemer Venture Partner II L.P. as a notice party to such
policy and will request that the issuer of such policy provide such
party with at least twenty (20) days' notice before such policy is
modified or terminated (for failure to pay premium or otherwise) or
assigned, or before any change is made in the designation of the
beneficiary thereof.
(b) BUDGETS APPROVAL. At least thirty (30) days prior
to the commencement of each fiscal year, prepare and submit to, and
obtain in respect thereof the approval of two-thirds of the members of
the Board of Directors, a business plan and monthly operating budget in
detail for each fiscal year, monthly operating expenses and profit and
loss projections, quarterly cash flow projections and a capital
expenditure budget for the fiscal year, and including a summary of
proposed research and development
- 15 -
<PAGE> 16
activities for the forthcoming year, the status and proposed activities
for any joint venture or other licensing arrangements with third
parties, including pharmaceutical companies, universities, hospitals
and others.
(c) NEW DEVELOPMENTS. Cause all technological
developments, patentable or unpatentable inventions, discoveries or
improvements by the Company's or any Subsidiary's employees or
consultants to be documented in accordance with industry practice and,
where possible and appropriate, to file and prosecute United States and
foreign patent, copyright, trademark, or other Intellectual Property
Right applications relating to and protecting the Company's inventions,
discoveries or developments on behalf of the Company or any Subsidiary.
(d) AGREEMENTS OF OFFICERS AND EMPLOYEES. Cause each
employee of the Company or any Subsidiary now or hereafter employed to
execute and deliver a Nondisclosure and Assignment of Inventions
Agreement (or agreement otherwise approved by the Board of Directors of
the Company, including a majority of the Investor Directors and cause
each Key Employee of the Company or any Subsidiary hereafter employed
to execute and deliver a Non-Competition Agreement, Nondisclosure and
Assignment of Inventions (or an agreement otherwise approved by the
Board of Directors of the Company, including a majority of the Investor
Directors), and use its best efforts to cause all consultants of the
Company involved in the design, review, evaluation or development of
inventions or Intellectual Property Rights to execute and deliver a
Nondisclosure and Assignment of Inventions Agreement (or an agreement
otherwise approved by the Board of Directors, including a majority of
the Investor Directors). The Company shall not amend or waive any of
the material provisions of such Agreements.
(e) BY-LAWS; MEETINGS AND INDEMNIFICATION. The
Company shall at all times cause its By-laws to provide that, (A)
unless otherwise required by the laws of the state of its
incorporation, (i) any two directors or (ii) any holder or holders of
at least 25% of the outstanding shares of Preferred Stock, voting as a
separate class, shall have the right to call a meeting of the Board of
Directors or stockholders, respectively, and (B) a quorum for a meeting
of the Board of Directors or any Committee hereof of which an Investor
Director is a member shall require the attendance of at least two
Investor Directors. The Company shall at all times maintain provisions
in its By-laws or Certificate of Incorporation indemnifying all
directors against liability to the maximum extent permitted under the
laws of the state of its incorporation.
- 16 -
<PAGE> 17
(f) EXPENSES OF DIRECTORS. Promptly reimburse in full
each director of the Company for all of his reasonable out-of-pocket
expenses incurred in attending each meeting of the Board of Directors
of the Company or any Committee thereof.
(g) SIZE OF BOARD. Fix and maintain the number of
Directors on the Board of Directors of the Company at no more than six
(6) members, including one (1) representative of the holders of Common
Stock, Barry A. Berkowitz, three (3) representatives of the Purchasers
and one (1) member designated by the chief executive officer of the
Company.
(h) RULE 144A INFORMATION. At all times during which
the Company is neither subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act, nor exempt from reporting pursuant to
Rule 12g3-2(b) under the Exchange Act, the Company will provide as
promptly as practicable (in any event not later than twenty (20) days
after initial request) in written form, upon the written request of any
Purchaser or a prospective buyer of Shares from any Purchaser, all
information required by Rule 144A(d)(4)(i) of the General Regulations
promulgated by the Commission under the Securities Act ("Rule 144A
Information"). The Company further covenants, upon written request, as
promptly as practicable (in any event not later than twenty (20) days
after initial request) to cooperate with and assist any Purchaser or
any member of the National Association of Securities Dealers, Inc.
system for Private Offerings Resales and Trading through Automated
Linkage ("PORTAL") in applying to designate and thereafter maintain the
eligibility of the Shares for trading through PORTAL. The Company's
obligations under this Section 4.01(h) shall at all times be contingent
upon the relevant Purchaser's obtaining from a prospective purchaser an
agreement to take all reasonable precautions to safeguard the Rule 144A
Information from disclosure to anyone other than a person who will
assist such purchaser in evaluating the purchase of the Shares.
(i) STOCK PLAN. The Company has created a stock
option plan and has reserved an aggregate of 2,112,000 options for the
purchase of Common Stock for issuance to employees, officers and
consultants of the Company and to members of the Company's Scientific
Advisory Board. All options to be granted (or stock issued directly)
under any Stock Plan or otherwise shall vest and become exercisable in
equal annual installments over a four-year period and be subject to a
right of refusal of the Company, unless otherwise approved by a
majority of the Board of Directors including a majority of the Investor
Directors.
- 17 -
<PAGE> 18
(j) MEETINGS OF DIRECTORS AND COMMITTEES. Hold
meetings of the Company's Board of Directors not less than on a
quarterly basis; if the Company appoints an Executive Committee of the
Board of Directors, such committee shall be composed of at least three
(3) Directors, including at least three (3) Investor Directors; and
appoint and maintain a Stock Option/Compensation Committee of the Board
of Directors composed of at least three (3) Directors, including at
least three (3) Investor Directors.
4.02. NEGATIVE COVENANTS OF THE COMPANY. The Company covenants and
agrees that until the consummation of a Qualified Public Offering, it will
comply with and observe the following negative covenants and provisions, and
will cause each Subsidiary to comply with and observe such of the following
covenants and provisions as are applicable to such Subsidiary, if and when such
Subsidiary exists, and will not without (i) the written consent or written
waiver of the holders of at least 60% of the outstanding shares of the Preferred
Stock or (ii) a majority of the members of the Board of Directors including a
majority of the Investor Directors:
(a) DEALINGS WITH AFFILIATES. Enter into any
transaction, including, without limitation, any loans or extensions of
credit or other agreements with any employee, consultant, officer or
director of the Company or any Subsidiary or holder of five percent
(5%) of any class of capital stock of the Company or any Subsidiary, or
any member of their respective immediate families or any corporation or
other entity directly or indirectly controlled by one or more of such
employees, consultants, officers, directors or 5% stockholders or
members of their immediate families, on terms less favorable to the
Company or any Subsidiary than it would obtain in a transaction between
unrelated parties except in the case of any transaction or series of
transactions entered into in the ordinary course of business, so long
as these are approved by the disinterested members of Board of
Directors (including a majority of the Investor Directors). The Company
has entered into certain agreements with Barry Berkowitz and with
William Timberlake set forth on Exhibit 4.02; which are hereby
ratified.
(b) ISSUANCE OF EQUITY SECURITIES. Authorize or
issue, or obligate itself to issue, any additional shares or capital
stock of the Company of any class (including any options, warrants or
other rights to purchase capital stock), provided, however, that the
provisions of this Section 4.02(b) shall not apply to the issuance of:
(i) the Conversion Shares; or (ii) up to 2,112,000 shares of Common
Stock or options, warrants or other rights exercisable therefor, issued
on or after the date hereof to directors,
- 18 -
<PAGE> 19
officers, employees or consultants of the Company and any Subsidiary
(including members of the Scientific Advisory Board) pursuant to any
qualified or non-qualified stock option plan or agreement, employee
stock ownership plan, employee benefit plan, stock purchase agreement,
stock plan, stock restriction agreement, or consulting agreement or
such other options, equity arrangements, agreements or plans approved
by two-thirds of the members of the Board of Directors of the Company
(including a majority of the Investor Directors); or (iii) shares
issued upon conversion of the outstanding shares of Series A Preferred
Stock; or (iv) the Comdisco Leasing Warrants, shares of Series A
Preferred Stock issued upon exercise thereof or shares of Common Stock
issued upon conversion of shares of Series A Preferred Stock issued
upon exercise of the Comdisco Leasing Warrants; or (v) issuing the
shares identified on Exhibit 3.13.
(c) TRANSFERS OF TECHNOLOGY. Transfer, sell, dispose
of, encumber, pledge, grant a lien on or security interest in, assign,
lease, license or donate any ownership or interest in, or material
rights relating to, any of its technology, or other Intellectual
Property Rights to any person or entity which is not a member of the
"consolidated group" of the Company and its Subsidiaries; provided,
however, that this Section shall not apply to licenses of technology or
Intellectual Property Rights accomplished in the ordinary course of the
Company's business.
(d) RESTRICTIONS ON INDEBTEDNESS. The Company
covenants that it will not, and will not permit any of its Subsidiaries
to, incur, create, or assume any Indebtedness other than trade debt,
loans to employees in an annual aggregate amount not to exceed $50,000
and property leases, all as approved by the Board of Directors,
including a majority of the Investor Directors.
(e) ASSUMPTIONS OR GUARANTIES OF INDEBTEDNESS OF
OTHER PERSONS. Assume, guarantee, endorse or otherwise become directly
or contingently liable on, or permit any Subsidiary to assume,
guarantee, endorse 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 payment, to
supply funds to or otherwise invest in the debtor or otherwise to
assure the creditor against loss) any Indebtedness of any other Person,
except for guaranties by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business.
(f) AMENDMENTS. Amend the Certificate of
Incorporation or By-laws of the Company.
- 19 -
<PAGE> 20
4.03. REPORTING REQUIREMENTS. Until the consummation of the Initial
Public Offering, the Company will furnish the following to each Person who is
the holder of not less than 5% of the Shares issued pursuant to this Agreement:
(a) MONTHLY REPORTS: as soon as available and in any
event within 45 days after the end of each calendar month, balance
sheets, statements of income and retained earnings and a summary
statement of monthly cash flow and expenses of the Company and its
Subsidiaries for such month and for the period commencing at the end of
the previous fiscal year and ending with the end of such month, setting
forth in each case in comparative form the corresponding figures for
the corresponding period of the preceding fiscal year, and including
comparisons to the monthly budget or business plan and an analysis of
the variances from the budget or plan, prepared in accordance with
generally accepted accounting principles consistently applied;
(b) ANNUAL REPORTS: as soon as available and in any
event within 120 days after the end of each fiscal year of the Company,
a copy of the annual audit report for such year for the Company and its
Subsidiaries, including therein consolidated and consolidating balance
sheets of the Company and its Subsidiaries as of the end of such fiscal
year and consolidated and consolidating statements of income and
retained earnings and of changes in financial position of the Company
and its Subsidiaries for such fiscal year, setting forth in each case
in comparative form the corresponding figures for the preceding fiscal
year, all such consolidated statements to be duly certified by the
chief financial officer of the Company and an independent public
accountant of recognized national standing approved by the Board of
Directors including a majority of the Investor Directors;
(c) BUDGETS AND OPERATING PLAN: as soon as available
and in any event at least 30 days before the beginning of each fiscal
year of the Company, a business plan and monthly and quarterly
operating budgets for the forthcoming fiscal year, and as soon as
available and in any event within 30 days after the end of each
calendar month, monthly comparisons against the business plan and
monthly operating budgets (including a summary of proposed research and
development activities, and the status and proposed activities for any
joint venture or other licensing arrangements with any third party).
(d) NOTICE OF ADVERSE CHANGES: promptly after the
occurrence thereof and in any event within five (5) business days after
it becomes aware of each occurrence, notice of any material adverse
change in the business,
- 20 -
<PAGE> 21
assets, Intellectual Property Rights, management, licensing
activities, operations or financial condition of the
Company; and
(e) REPORTS AND OTHER INFORMATION: promptly upon
receipt, publication, commencement or occurrence provide to each
Purchaser copies of all material consulting reports, notices of all
material actions, suits or proceedings, copies of all accountant's
reviews, and reports to management, and such other information as the
Company shall make available to its directors or stockholders or the
Purchasers shall reasonably request.
ARTICLE V
REGISTRATION RIGHTS
5.01. "PIGGY-BACK" REGISTRATIONS. If at any time the Company shall
determine to register for its own account or the account of others under the
Securities Act (including pursuant to the Qualified Public Offering, the Initial
Public Offering or a demand for registration of any stockholder of the Company
other than the Purchasers) any of its equity securities, other than on Form S-8
or Form S-4 or their then equivalents or otherwise relating to shares of Common
Stock to be issued solely in connection with any acquisition of any entity or
business or shares of Common Stock issuable in connection with stock option or
other employee benefit plans, it shall send to each holder of Registrable
Shares, including each holder who has the right to acquire Registrable Shares,
written notice of such determination and, if within ten (10) business days after
receipt of such notice, such holder shall so request in writing, the Company
shall use its best efforts to include in such registration statement all or any
part of the Registrable Shares such holder requests to be registered.
If, in connection with any offering involving an underwriting, the
managing underwriter shall impose a limitation on the number of shares of such
Common Stock which may be included in the registration statement because, in its
judgment, such limitation is necessary to effect an orderly public distribution,
then the Company shall be obligated to include in such registration statement
only such limited portion (which may be none) of the Registrable Shares with
respect to which such holder has requested inclusion pursuant hereto as may
reasonably be determined by the managing underwriters; provided, however, as
between the Company, other stockholders holding contractual registration rights,
and the holders of Registrable Shares, in no event shall the Registrable Shares
included in such offering be limited to less than twenty-five percent (25%) of
the aggregate shares offered. Any inclusion of Registrable Shares in the
- 21 -
<PAGE> 22
offering, when the managing underwriter has so limited the number of Registrable
Shares that may be included in the offering, shall be allocated pro rata among
the holders of Registrable Shares (or their permitted assigns) seeking to
include such shares and the holders of other registration rights seeking to
include their shares, in proportion to the number of Registrable Shares (whether
or not such shares are sought to be included in such offering) held by such
persons. No incidental right under this Section 5.01 shall be construed to limit
any registration required under Section 5.02. The obligations of the Company
under this Section 5.01 may be waived at any time upon the written consent of
holders of sixty percent (60%) in interest of the Conversion Shares who are
participating in the offering and shall expire on the seventh anniversary
following the consummation of an Initial Public Offering or, if earlier, as set
forth in Section 5.15. The Company shall have the right to withdraw any
registration initiated by it pursuant to Section 5.01.
5.02. REQUIRED REGISTRATIONS. If on any one occasion (providing the
offering is consummated) one or more holders of at least 60% of the Registrable
Shares shall notify the Company in writing that it or they desire to offer or
cause to be offered for public sale at least thirty percent (30%) of the
Registrable Shares, the Company will so notify all holders of Registrable
Shares, including all holders who have a right to acquire Registrable Shares.
Upon written request of any holder given within fifteen (15) days after the
receipt by such holder from the Company of such notification, the Company will
use its best efforts to cause such of the Registrable Shares as may be requested
by any holder thereof (including the holder or holders giving the initial notice
of intent to offer) to be registered under the Securities Act as expeditiously
as possible on Form S-1 or Form SB-2 or their respective successor registration
statement forms. The Company shall not be required to effect more than one
registration pursuant to this Section 5.02 (providing the offering is
consummated). If the Company determines to include shares to be sold by it or by
other selling shareholders in any registration request pursuant to this Section
5.02, such registration shall be deemed to have been a "piggy back" registration
under Section 5.01, and not a "demand" registration under this Section 5.02 if
the holders of Registrable Shares are unable to include in any such registration
statement eighty-five percent (85%) of the Registrable Shares initially
requested for inclusion in such registration statement. The Company shall not be
required to effect a registration pursuant to this Section 5.02 unless the
minimum market value of any offering and registration of Registrable Shares made
pursuant thereto is at least $3,000,000, before calculation of underwriting
discounts and commissions. The holders of Registrable Shares may not exercise
their rights under this Section 5.02 until the earlier to occur of (i)
twenty-six (26) months following the date of the
- 22 -
<PAGE> 23
Closing or (ii) 180 days after the effectiveness of any registration statement
covering the Initial Public Offering. No request for registration under this
Section 5.02 may be made within the one hundred and eighty day period after the
effective date of a registration statement filed by the Company or while the
Company is in the process of preparing a registration statement. The Company
shall have the right to delay any registration under this section for up to 90
days if the Company's Board of Directors reasonably determines such delay is
necessary in view of the Company's current circumstances.
5.03. REGISTRATIONS ON FORMS S-2 OR S-3. In addition to the rights
provided the holder of Registrable Shares in Sections 5.01 and 5.02 above, if
the registration of Registrable Shares under the Securities Act can be effected
on Forms S-2 or S-3 (or any similar form promulgated by the Commission), then
upon the written request of one or more holders of a majority of the Registrable
Shares, the Company will so notify each holder of Registrable Shares, including
each holder who has a right to acquire Registrable Shares, and then will, as
expeditiously as possible, use its best efforts to effect qualification and
registration under the Securities Act on Forms S-2 or S-3 of all or such portion
of the Registrable Shares as the holder or holders shall specify; provided,
however, the Company shall not be required to effect a registration pursuant to
this Section 5.03 unless the market value of the Registrable Shares to be sold
in any such registration shall be estimated to be at least $1,000,000 at the
time of filing such registration statement, and further provided that the
Company shall not be required to effect more than two (2) registrations during
any twelve (12) month period pursuant to this Section 5.03 and five (5)
registrations in the aggregate under this Section 5.03. No request for
registration under this Section 5.03 may be made within the one hundred and
eighty day period after the effective date of a registration statement filed by
the Company or while the Company is in the process of preparing a registration
statement.
5.04. EFFECTIVENESS. The Company will use its best efforts to
maintain the effectiveness for up to 90 days (or such shorter period of time as
the underwriters need to complete the distribution of the registered offering,
or six months in the case of any registration relating to Registrable Shares
pursuant to Section 5.02 or 5.03) of any registration statement pursuant to
which any of the Registrable Shares are being offered, and from time to time
will amend or supplement such registration statement and the prospectus
contained therein to the extent necessary to comply with the Securities Act and
any applicable state securities statute or regulation. The Company will also
provide each holder of Registrable Shares with as many copies of the prospectus
contained in any such registration statement as it may reasonably request. For a
period not to exceed 60 days, the
- 23 -
<PAGE> 24
Company shall not be obligated to prepare and file, or be prevented from
delaying or abandoning, a registration statement pursuant to this Agreement at
any time when the Company, in its good faith judgment with advice of counsel,
reasonably believes
(a) that the filing thereof at the time requested, or
the offering of Registrable Shares pursuant thereto, would materially
and adversely affect (a) a pending or scheduled public offering of the
Company's securities, (b) an acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction by or of the
Company, (c) pre-existing and continuing negotiations, discussions or
pending proposals with respect to any of the foregoing transactions, or
(d) the financial condition of the Company in view of the disclosure of
any pending or threatened litigation, claim, assessment or governmental
investigation which may be required thereby; and
(b) that the failure to disclose any material
information with respect to the foregoing would cause a violation of
the Securities Act or the Exchange Act.
5.05. INDEMNIFICATION OF HOLDER OF REGISTRABLE SHARES. In the event
that the Company registers any of the Registrable Shares under the Securities
Act, the Company will indemnify and hold harmless each holder and each
underwriter of Registrable Shares (including their officers, directors,
affiliates and partners and including any broker or dealer through whom
Registrable Shares may be sold in such registration) and each Person, if any,
who controls such holder or any such underwriter within the meaning of Section
15 of the Securities Act from and against any and all losses, claims, damages,
expenses or liabilities, joint or several, to which they or any of them become
subject under the Securities Act, applicable state securities laws or under any
other statute or at common law or otherwise, as incurred, and, except as
hereinafter provided, will reimburse each such holder, each such underwriter and
each such controlling Person, if any, for any legal or other expenses reasonably
incurred by them or any of them in connection with investigating or defending
any actions whether or not resulting in any liability, as incurred, insofar as
such losses, claims, damages, expenses, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the registration statement, in any preliminary or amended
preliminary prospectus or in the final prospectus (or the registration statement
or prospectus as from time to time amended or supplemented by the Company) or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or any violation by the Company of any rule
or regulation
- 24 -
<PAGE> 25
promulgated under the Securities Act or any state securities laws applicable to
the Company and relating to action or inaction required of the Company in
connection with such registration, unless (i) such untrue statement or alleged
untrue statement or omission or alleged omission was made in such registration
statement, preliminary or amended preliminary prospectus or final prospectus in
reliance upon and in conformity with information furnished in writing to the
Company in connection therewith by any such holder of Registrable Shares (in the
case of indemnification of such holder), any such underwriter (in the case of
indemnification of such underwriter) or any such controlling Person (in the case
of indemnification of such controlling person) expressly for use therein, or
unless (ii) in the case of a sale directly by such holder of Registrable Shares
(including a sale of such Registrable Shares through any underwriter retained by
such holder of Registrable Shares to engage in a distribution solely on behalf
of such holder of Registrable Shares), such untrue statement or alleged untrue
statement or omission or alleged omission was contained in a preliminary
prospectus and corrected in a final or amended prospectus copies of which were
delivered to such holder of Registrable Shares or such underwriter on a timely
basis, and such holder of Registrable Shares 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.
Promptly after receipt by any holder of Registrable Shares,
any underwriter or any controlling Person of notice of the commencement of any
action in respect of which indemnity may be sought against the Company, such
holder of Registrable Shares, or such underwriter or such controlling person, as
the case may be, shall notify the Company in writing of the commencement thereof
(provided, that failure to so notify the Company shall not relieve the Company
from any liability it may have hereunder, except to the extent prejudiced by
such failure) and, subject to the provisions hereinafter stated, the Company
shall be entitled to assume the defense of such action (including the employment
of counsel, who shall be counsel reasonably satisfactory to such holder of
Registrable Shares, such underwriter or such controlling Person, as the case may
be) and the payment of expenses insofar as such action shall relate to any
alleged liability in respect of which indemnity may be sought against the
Company.
Such holder of Registrable Shares, any such underwriter or any
such controlling Person shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel subsequent to any assumption of the defense by the Company shall
not be at the expense of the Company unless the employment of
- 25 -
<PAGE> 26
such counsel has been specifically authorized in writing by the Company;
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the indemnifying
party or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified party
shall have the right to select a separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred. At any
time, any holder of Registrable Shares may select separate counsel and assume
its own legal defense with the expenses and fees of such separate counsel and
other expenses related to such separate counsel to be borne by such holder
electing separate counsel. The Company shall not be liable to indemnify any
Person for any settlement of any such action effected without the Company's
written consent. The Company shall not, except with the approval of each party
being indemnified under this Section 5.05, 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 the parties being so
indemnified of a release from all liability in respect to such claim or
litigation.
In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which any holder of
Registrable Shares exercising rights under this Article V, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 5.05 but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that this Section 5.05
provides for indemnification in such case, then, the Company and such holder
will contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and of
the holder of Registrable Shares on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of the holder of Registrable Shares on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company on the one
hand or by the holder of Registrable Shares on the other, and each party's
relative intent, knowledge, access to
- 26 -
<PAGE> 27
information and opportunity to correct or prevent such statement or omission;
provided, however, that, in any such case, (A) no such holder will be required
to contribute any amount in excess of the public offering price of all such
Registrable Shares offered by it pursuant to such registration statement; and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such fraudulent
misrepresentation.
The indemnities provided in this Section 5.05 shall survive the
transfer of any Registrable Shares by such holder.
5.06. INDEMNIFICATION OF COMPANY. In the event that the Company
registers any of the Registrable Shares under the Securities Act, each holder of
the Registrable Shares so registered will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed or
otherwise participated in the preparation of the registration statement, each
underwriter of the Registrable Shares so registered (including any broker or
dealer through whom such of the shares may be sold) and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act from
and against any and all losses, claims, damages, expenses or liabilities, joint
or several, to which they or any of them may become subject under the Securities
Act, applicable state securities laws or under any other statute or at common
law or otherwise, and, except as hereinafter provided, will reimburse the
Company and each such director, officer, underwriter or controlling Person for
any legal or other expenses reasonably incurred by them or any of them in
connection with investigating or defending any actions whether or not resulting
in any liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, in any
preliminary or amended preliminary prospectus or in the final prospectus (or in
the registration statement or prospectus as from time to time amended or
supplemented) or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, but only insofar as any
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company in connection therewith by such
holder of Registrable Shares expressly for use therein; provided, however, that
such holder's obligations hereunder shall be limited to an amount equal to the
proceeds received by such holder of Registrable Shares sold in such
registration.
Promptly after receipt of notice of the commencement of
any action in respect of which indemnity may be sought against
- 27 -
<PAGE> 28
such holder of Registrable Shares, the Company shall notify such holder of
Registrable Shares in writing of the commencement thereof (provided, that
failure to so notify such holder shall not relieve such holder from any
liability it may have hereunder, except to the extent prejudiced by such
failure), and such holder of Registrable Shares shall, subject to the provisions
hereinafter stated, be entitled to assume the defense of such action (including
the employment of counsel, who shall be counsel reasonably satisfactory to the
Company) and the payment of expenses insofar as such action shall relate to the
alleged liability in respect of which indemnity may be sought against such
holder of Registrable Shares. The Company and each such director, officer,
underwriter or controlling Person shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel subsequent to any assumption of the defense by
such holder of Registrable Shares shall not be at the expense of such holder of
Registrable Shares unless employment of such counsel has been specifically
authorized in writing by such holder of Registrable Shares. Such holder of
Registrable Shares shall not be liable to indemnify any Person for any
settlement of any such action effected without such holder's written consent.
In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which the Company, its
officers, directors or controlling persons ("Company Indemnitees") exercising
its rights under this Article V, makes a claim for indemnification pursuant to
this Section 5.06, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding that this
Section 5.06 provides for indemnification, in such case, then, the Company
Indemnitees and such holder will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from
others) in such proportion as is appropriate to reflect the relative fault of
the Company Indemnitees on the one hand and of the holder of Registrable Shares
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative fault of the Company Indemnitees on the
one hand and of the holder of Registrable Shares on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company Indemnitees on the
one hand or by the holder of Registrable Shares on the other, and each party's
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, however, that, in any such case,
(A) no such holder will be required to
- 28 -
<PAGE> 29
contribute any amount in excess of the public offering price of all such
Registrable Shares offered by it pursuant to such registration statement; and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such fraudulent
misrepresentation.
5.07. EXCHANGE ACT REGISTRATION. If the Company at any time shall list
any class of equity securities of the type which may be issued upon the
conversion of the Preferred Stock on any national securities exchange and shall
register such class of equity securities under the Exchange Act, the Company
will, at its expense, simultaneously list on such exchange and maintain such
listing of, the Common Stock. If the Company becomes subject to the reporting
requirements of either Section 13 or Section 15(d) of the Exchange Act, the
Company will use its best efforts to timely file with the Commission such
information as the Commission may require under either of said Sections ; and in
such event, the Company shall use its best efforts to take all action as may be
required as a condition to the availability of Rule 144 or Rule 144A under the
Securities Act (or any successor exemptive rule hereinafter in effect) with
respect to such Common Stock. The Company shall furnish to any holder of
Registrable Shares forthwith upon request (i) a written statement by the Company
as to its compliance with the reporting requirements of Rule 144, (ii) a copy of
the most recent annual or quarterly report of the Company as filed with the
Commission, and (iii) such other reports and documents as a holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a holder to sell any such Registrable Securities without
registration. After the occurrence of the Initial Public Offering, the Company
agrees to use its best efforts to facilitate and expedite transfers of the
Shares pursuant to Rule 144 under the Securities Act, which efforts shall
include timely notice to its transfer agent to expedite such transfers of
Shares.
5.08. DAMAGES. The Company recognizes and agrees that the holder of
Registrable Shares will not have an adequate remedy if the Company fails to
comply with this Article V and that damages may not be readily ascertainable,
and the Company expressly agrees that, in the event of such failure, it shall
not oppose an application by the holder of Registrable Shares or any other
Person entitled to the benefits of this Article V requiring specific performance
of any and all provisions hereof or enjoining the Company from continuing to
commit any such breach of this Article V.
5.09. FURTHER OBLIGATIONS OF THE COMPANY. Whenever under the preceding
Sections of this Article V, the Company is
- 29 -
<PAGE> 30
required hereunder to register Registrable Shares, it agrees that it shall also
do the following:
(a) Furnish to each selling holder such copies of
each preliminary and final prospectus and such other documents as said
holder may reasonably request to facilitate the public offering of its
Registrable Shares;
(b) Use its best efforts to register or qualify the
Registrable Shares covered by said registration statement under the
applicable securities or "blue sky" laws of such jurisdictions as any
selling holder may reasonably request; provided, however, that the
Company shall not be obligated to qualify to do business in any
jurisdictions where it is not then so qualified or to take any action
which would subject it to the service of process in suits other than
those arising out of the offer or sale of the securities covered by the
registration statement in any jurisdiction where it is not then so
subject;
(c) Furnish to each selling holder a signed
counterpart, addressed to the selling holders, of
(i) opinions of counsel for the Company,
dated the effective date of the registration statement, and covering
such matters as are required by the Securities Act and such matters as
may reasonably be requested by the underwriters, and
(ii) "comfort" letters signed by the
Company's independent public accountants who have examined and reported
on the Company's financial statements included in the registration
statement, to the extent permitted by the standards of the American
Institute of Certified Public Accountants, as the Company is required
to deliver or cause the delivery of to the underwriters in an
underwritten public offering of securities;
(d) Permit each selling holder of Registrable Shares
who holds not less than 5% of the Registrable Shares or his counsel or
other representatives to inspect and copy such corporate documents and
records as may reasonably be requested by them, after reasonable
advance notice and without undue interference with the operation of the
Company's business;
(e) Furnish to each selling holder of Registrable
Shares a copy of all documents filed with and all correspondence from
or to the Commission in connection with any such offering of
securities;
- 30 -
<PAGE> 31
(f) Use its best efforts to insure the obtaining of
all necessary approvals from the National Association of Securities
Dealers, Inc; and
(g) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earning
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first month after the
effective date of the registration statement covering the Initial
Public Offering, which earning statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder.
Whenever under the preceding Sections of this Article V the
holders of Registrable Shares are registering such shares pursuant to any
registration statement, each such holder agrees to (i) timely provide to the
Company, at its request, such information and materials as it may reasonably
request in order to effect the registration of such Registrable Shares, (ii)
convert all shares of Preferred Stock included in any registration statement to
shares of Common Stock, such conversion to be effective at the closing of such
offering pursuant to such registration statement, and (iii) if the offering is
underwritten, execute an underwriting agreement containing customary conditions.
5.10. EXPENSES. In the case of each registration effected under
Section 5.01, 5.02 or 5.03, the Company shall bear all reasonable costs and
expenses of each such registration on behalf of the selling holders of
Registrable Shares, including, but not limited to, the Company's printing, legal
and accounting fees and expenses, Commission and NASD filing fees and "Blue Sky"
fees and expenses and the reasonable fees and disbursements (such fees not to
exceed $25,000 for any registration) of one counsel for the selling holders of
Registrable Shares in connection with the registration of their Registrable
Shares; provided, however, that the Company shall have no obligation to pay or
otherwise bear any portion of the underwriters' commissions or discounts or
transfer taxes attributable to the Registrable Shares being offered and sold by
the holders of Registrable Shares, or the fees and expenses of more than one
counsel for the selling holders of Registrable Shares in connection with the
registration of the Registrable Shares. The Company shall pay all expenses of
the holders of the Registrable Shares in connection with any registration
initiated pursuant to this Article V which is withdrawn, delayed or abandoned by
the Company, except if such withdrawal, delay or abandonment is caused by the
fraud, material misstatement or omission of a material fact by a holder of
Registrable Shares to be included in such registration.
- 31 -
<PAGE> 32
5.11. APPROVAL OF UNDERWRITER. Any managing underwriter engaged in any
registration made pursuant to Section 5.02 shall be a nationally recognized firm
requiring the approval in writing of the holders of 60% of the Registrable
Shares requesting such registration.
5.12. TRANSFERABILITY. For all purposes of Article V of this Agreement,
the holder of Registrable Shares shall include not only the Purchasers named in
Exhibit 1.01 hereof but (i) any assignee or transferee of the Registrable Shares
who acquires at least ten percent (10%) of the Registrable Shares and who is not
a competitor of the Company, or (ii) any general or limited partner or any
officer or director of any Purchaser or their affiliates, including, but not
limited to, their immediate family, irrevocable trusts for estate planning
purposes and personal representatives; provided, however, that such assignee or
transferee agrees in writing at the time it acquires such shares to be bound by
all of the provisions of this Agreement, including, without limitation, Section
5.13 hereof.
5.13. "LOCK-UP" AGREEMENT.
(a) Each holder of Registrable Shares agrees, if so
requested by the Company and an underwriter of Common Stock or other
securities of the Company, not to sell, grant any option or right to
buy or sell, or otherwise transfer or dispose of in any manner, whether
in privately-negotiated or open-market transactions, any Common Stock
or other securities of the Company held by it during the 90-day period
following the effective date of a registration statement filed pursuant
to the Initial Public Offering, provided that:
(i) Such agreement shall apply only to the
Initial Public Offering; and
(ii) All holders of Registrable Shares, any
other security holders whose securities are included in such
registration statement, and all officers, directors and Key Employees
of the Company shall also enter into similar agreements.
Such "lock-up" agreement shall be in writing and in form and
substance satisfactory to the Company and such underwriter. The Company may
impose stop-transfer instructions with respect to the shares subject to the
foregoing restrictions until the end of said 90-day period. No holder of
Registrable Shares shall be so restricted unless all holders are similarly and
proportionately restricted.
5.14. MERGERS, ETC. The Company shall not, directly or indirectly,
enter into any merger, consolidation or
- 32 -
<PAGE> 33
reorganization in which the Company shall not be the surviving corporation
unless the proposed surviving corporation shall, prior to such merger,
consolidation or reorganization, agree in writing to assume the obligations of
the Company under Article V of this Agreement, and for that purpose references
hereunder to Registrable Shares shall be deemed to be references to the
securities which the Purchasers would be entitled to receive in exchange for
Registrable Shares under any such merger, consolidation or reorganization;
provided, however, that the provisions of this Section 5.14 shall not apply in
the event of any merger, consolidation, or reorganization in which the Company
is not the surviving corporation if all stockholders are entitled to receive in
exchange for their Registrable Shares consideration consisting solely of (i)
cash, (ii) securities of the acquiring corporation which may be immediately sold
to the public without registration under the Securities Act, or (iii) securities
of the acquiring corporation which the acquiring corporation has agreed to
register within 90 days of completion of the transaction for resale to the
public pursuant to the Securities Act.
5.15. TERMINATION; FURTHER REGISTRATION RIGHTS. Notwithstanding any
other term or provision of this Article V, at such time as any Purchaser or
transferee owning less than 2% of the outstanding Common Stock of the Company
(on an as-converted basis) is free to sell the Registrable Shares without
registration pursuant to Rule 144(k) of the Securities Act, all rights of such
Purchaser as to such Registrable Shares under Sections 5.01, 5.02 and 5.03 of
this Article V shall terminate. The Company shall not grant to any third party
any registration rights so long as any of the registration rights under this
Agreement remains in effect without the consent of the holders of 60% of the
then outstanding Registrable Shares.
ARTICLE VI
RIGHT OF FIRST REFUSAL
6.01. RIGHT OF FIRST REFUSAL. Before the Company shall issue, sell or
exchange, agree or obligate itself to issue, sell or exchange, or reserve or set
aside for issuance, sale or exchange, any (i) shares of Common Stock, (ii) any
other equity security of the Company, including without limitation, shares of
Preferred Stock, (iii) any convertible debt security of the Company, including
without limitation, any debt security which by its terms is convertible into or
exchangeable for any equity security of the Company, (iv) any security of the
Company that is a combination of debt and equity, or (v) any option, warrant or
other right to subscribe for, purchase or otherwise acquire any interest
relating to such equity or debt security of the Company, the Company shall, in
each case, first offer to sell such securities (the "Offered Securities") to
those Purchasers then
- 33 -
<PAGE> 34
holding capital stock of the Company as follows: The Company shall offer to sell
to each Purchaser (a) that portion of the Offered Securities as the number of
shares of Preferred Stock (on an as-converted basis) and Conversion Shares then
held by a Purchaser bears to the total number of outstanding shares of capital
stock of the Company including the shares issuable upon conversion of the
Preferred Stock (the "Basic Amount"), and (b) such additional portion of the
Offered Securities as such Purchaser shall indicate it will purchase should the
other Purchasers subscribe for less than their Basic Amounts (the
"Undersubscription Amount"), at a price and on such other terms as shall have
been specified by the Company in writing delivered to the Purchasers (the
"Offer"), which Offer by its terms shall remain open and irrevocable for a
period of twenty (20) days from receipt of the Offer. This right of first
refusal shall only apply to Purchasers who hold at least 5% of the then total
outstanding shares of Preferred Stock or Conversion Shares, to the Company
Friends provided that they continue to own the Preferred Shares owned by them as
of the date hereof and after giving effect to the transactions contemplated
hereby and to the Bessemer Purchasers holding in the aggregate at least 5% of
the then outstanding shares of Preferred Stock or Conversion Shares.
6.02. NOTICE OF ACCEPTANCE. Notice of each Purchaser's intention to
accept, in whole or in part, any Offer made pursuant to Section 6.01 shall be
evidenced by a writing signed by such Purchaser and delivered to the Company
prior to the end of the 20-day period of such offer, setting forth such of the
Purchaser's Basic Amount as such Purchaser elects to purchase and, if such
Purchaser shall elect to purchase all of its Basic Amount, such
Undersubscription Amount as such Purchaser shall elect to purchase (the "Notice
of Acceptance"). If the Basic Amounts subscribed for by all Purchasers are less
than the total Offered Securities, then each Purchaser who has set forth
Undersubscription Amounts in its Notice of Acceptance shall purchase, in
addition to the Basic Amounts subscribed for, all Undersubscription Amounts it
has subscribed for; provided, however, that should the Undersubscription Amounts
subscribed for exceed the difference between the Offered Securities and the
Basic Amounts subscribed for (the "Available Undersubscription Amount"), each
Purchaser who has subscribed for any Undersubscription Amount shall purchase
only that portion of the Available Undersubscription Amount as the
Undersubscription Amount subscribed for by such Purchaser bears to the total
Undersubscription Amounts subscribed for by all Purchasers, subject to rounding
by the Board of Directors to the extent it reasonably deems necessary.
6.03. CONDITIONS TO ACCEPTANCES AND PURCHASE.
(a) PERMITTED SALES OF REFUSED SECURITIES. In the
event that Notices of Acceptance are not given by the
- 34 -
<PAGE> 35
Purchasers in respect of all the Offered Securities, the Company shall
have ninety (90) days from the end of said 20-day period to sell any
such Offered Securities as to which a Notice of Acceptance has not been
given by the Purchasers (the "Refused Securities") to the Person or
Persons specified in the Offer, but only for cash and otherwise in all
respects upon terms and conditions, including, without limitation, unit
price and interest rates, which are no more favorable, in the
aggregate, to such other Person or Persons or less favorable to the
Company than those set forth in the Offer.
(b) REDUCTION IN AMOUNT OF OFFERED SECURITIES. In the
event the Company shall propose to sell less than all of the Refused
Securities (any such sale to be in the manner and on the terms
specified in Section 6.03(a) above), then each Purchaser shall reduce
the number of shares or other units of the Offered Securities specified
in its respective Notices of Acceptance to an amount which shall be not
less than the amount of the Offered Securities which the Purchaser
elected to purchase pursuant to Section 6.02 multiplied by a fraction,
(i) the numerator of which shall be the amount of Offered Securities
which the Company actually proposes to sell, and (ii) the denominator
of which shall be the amount of all Offered Securities. In the event
that any Purchaser so elects to reduce the number or amount of Offered
Securities specified in its respective Notices of Acceptance, the
Company may not sell or otherwise dispose of more than the reduced
amount of the Offered Securities until such securities have again been
offered to the Purchasers in accordance with Section 6.01.
(c) CLOSING. Upon the closing, which shall include
full payment to the Company, of the sale to such other Person or
Persons of all or less than all the Refused Securities, the Purchasers
shall purchase from the Company, and the Company shall sell to the
Purchasers, the number of Offered Securities specified in the Notices
of Acceptance, as reduced pursuant to Section 6.03(b) if the Purchasers
have so elected, upon the terms and conditions specified in the Offer.
The purchase by the Purchasers of any Offered Securities is subject in
all cases to the preparation, execution and delivery by the Company and
the Purchasers of a purchase agreement relating to such Offered
Securities reasonably satisfactory in form and substance to the
Purchasers and their respective counsel.
6.04. FURTHER SALE. In each case, any Offered Securities not purchased
by the Purchasers or other Person or Persons in accordance with Section 6.03 may
not be sold or otherwise disposed of until they are again offered to the
- 35 -
<PAGE> 36
Purchasers under the procedures specified in Sections 6.01, 6.02 and 6.03.
6.05. TERMINATION AND WAIVER OF RIGHT OF FIRST REFUSAL. The rights of
the Purchasers under this Article VI may be waived only upon the prior written
consent of the holders of 60% of the outstanding shares of Preferred Stock and
shall terminate immediately prior to the effectiveness of the registration
statement with respect to the Initial Public Offering, but expressly conditioned
on the consummation of the Initial Public Offering.
6.06. EXCEPTION. The rights of the Purchasers under this Article VI
shall not apply to:
(a) Common Stock issued as a stock dividend to
holders of Common Stock or upon any subdivision or combination of
shares of Common Stock;
(b) Preferred Stock issued as a dividend to holders
of Preferred Stock upon any subdivision or combination of shares of
Preferred Stock;
(c) the Conversion Shares or shares issued upon
conversion of currently outstanding shares of Series A Preferred Stock;
(d) up to 2,112,000 shares of Common Stock, or
options or warrants exercisable therefor (including 1,239,250 granted
prior to the date hereof), issued on or after the date hereof to
directors, officers, employees or consultants of the Company and any
Subsidiary (including members of the Scientific Advisory Board)
pursuant to any qualified or non-qualified stock option plan or
agreement, employee stock ownership plan, employee benefit plan, stock
purchase agreement, stock plan, stock restriction agreement, or
consulting agreement or such other options, warrants, equity
arrangements, agreements or plans approved by two-thirds of the members
of the Board of Directors of the Company (including a majority of the
Investor Directors);
(e) up to 177,083 shares of Series A Preferred Stock
issued pursuant to the Comdisco Leasing Warrants, and shares of Common
Stock issued upon conversion of such shares; or
(f) shares of capital stock or options or warrants
therefor, to be issued to equipment leasing organizations in connection
with any equipment leasing arrangements to which the Company is a party
and which have been approved by the Board of Directors including a
majority of the Investor Directors; or
- 36 -
<PAGE> 37
(g) shares of capital stock issued in connection with
a merger or acquisition approved by the Board of Directors including a
majority of the Investor Directors; or
(h) shares issued in accordance with Section 1.03(b)
of this Agreement, or shares issued upon conversion of such shares; or
(i) shares of capital stock set forth on Exhibit
3.13.
Each of the foregoing numbers shall be subject to equitable
adjustment in the event of any stock dividend, stock split, combination,
reorganization, recapitalization, reclassification or other similar event.
In addition to amendments pursuant to Section 8.02, the
provisions regarding Notice of Offer, Notice of Acceptance and all other
provisions provided for in Section 6.01 through 6.03 and 6.06 may be waived or
amended by those Purchasers holding at least 60% of the Preferred Shares who
have elected to exercise their rights under this Article VI to participate in
any financing with respect to a transaction effected under this Article for the
purpose of effecting a transaction on a more expeditious basis.
ARTICLE VII
DEFINITIONS AND ACCOUNTING TERMS
7.01. CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"ACCREDITED INVESTOR" shall have the meaning assigned to that
term in Rule 501 under the Securities Act.
"AGREEMENT" means this Preferred Stock Purchase Agreement as
from time to time amended and in effect between the parties, including all
Exhibits hereto.
"BASIC AMOUNT" shall have the meaning assigned to that term in
Section 6.01.
"BESSEMER PURCHASERS" shall mean those Purchasers other than
Technology Leaders L.P., Technology Leaders Offshore C.V., Bessemer Venture
Partners II L.P., Morgan Holland Ventures, Comdisco, Inc., Barry A. Berkowitz,
Robert Morgan and Gary Takata.
- 37 -
<PAGE> 38
"BOARD OF DIRECTORS" means the board of directors of the
Company as constituted from time to time.
"CLOSING" shall have the meaning assigned to that term in
Section 1.03.
"COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act or Exchange
Act.
"COMMON STOCK" includes (a) the Company's Common Stock, .001
par value, as authorized on the date of this Agreement, (b) any other capital
stock of any class or classes (however designated) (except for Preferred Stock)
of the Company, authorized on or after the date hereof, the holders of which
shall have the right, without limitation as to amount, either to all or to a
share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference, and
the holders of which shall ordinarily, in the absence of contingencies or in the
absence of any provision to the contrary in the Company's Certificate of
Incorporation, be entitled to vote for the election of directors of the Company
(even though the right so to vote has been suspended by the happening of such a
contingency or provision), and (c) any other securities into which or for which
any of the securities described in (a) or (b) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.
"COMPANY" means Myco Pharmaceuticals Inc., a Delaware
corporation, and its successors and assigns.
"COMPANY FRIENDS" means Barry A. Berkowitz, Robert Morgan,
Gary Takata and J. Robert Scott, Inc. in their capacity as Purchasers under this
Agreement.
"CONSOLIDATED" and "CONSOLIDATING" when used with reference to
any term defined herein mean that term as applied to the accounts of the Company
and its Subsidiaries consolidated in accordance with generally accepted
accounting principles consistently applied throughout reporting periods.
"CONVERSION SHARES" shall have the meaning assigned to that
term in Section 1.02 of this Agreement and shall also include Common Stock
issued upon conversion of the currently outstanding shares of Series A Preferred
Stock.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
- 38 -
<PAGE> 39
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission (or of any other Federal agency then administering the Exchange Act)
thereunder, all as the same shall be in effect at the time.
"INDEBTEDNESS" means (i) any liability for borrowed money or
evidenced by a note or similar obligation given in connection with the
acquisition of any property or other assets (other than trade accounts payable
incurred in the ordinary course of business); (ii) all guaranties, endorsements
and other contingent obligations, in respect of Indebtedness of others, whether
or not the same are or should be reflected in the Company's balance sheet (or
the notes thereto), except guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business, and (iii) the present value of any lease payments due under leases
required to be capitalized in accordance with applicable Statements of Financial
Accounting Standards, determined by discounting all such payments at the
interest rate determined in accordance with applicable Statements of Financial
Accounting Standards.
"INITIAL PUBLIC OFFERING" means the first underwritten public
offering of Common Stock of the Company and offered on a "firm commitment" basis
pursuant to an offering registered under the Securities Act with the Commission
on Form S-1, Form S-18 or their then equivalents.
"INTELLECTUAL PROPERTY RIGHTS" means any and all, whether
domestic or foreign, patents, patent applications, patent rights, trade secrets,
confidential business information, formula, biological or chemical processes,
compounds, cell lines, fungi, yeast, laboratory notebooks, algorithms,
copyrights, mask works, claims of infringement against third parties, licenses,
permits, license rights to or of technologies, contract rights with employees,
consultants or third parties, trademarks, trademark rights, inventions and
discoveries, and other such rights generally classified as intangible,
intellectual property assets in accordance with generally accepted accounting
principles.
"INVESTOR DIRECTORS" mean those directors of the Company who
are representatives of the Purchasers, initially Dr. Hubert Schoemaker,
Christopher Gabrieli, Dr. Gary J. Anderson and Edwin M. Kania.
"KEY EMPLOYEE" means and includes the Chairman, President,
Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, any
Vice President or Director of any functional area such as research and
development, engineering, technology, sales and marketing, finance and
administration or
- 39 -
<PAGE> 40
any other individual so designated by the Board of Directors of the Company or
by including a majority of the Investor Directors.
"NON-COMPETITION AGREEMENT" shall have the meaning assigned to
that term in Section 2.02(i).
"NONDISCLOSURE AND ASSIGNMENT OF INVENTIONS AGREEMENT" shall
have the meaning assigned to that term in Section 2.02(j).
"NOTICE OF ACCEPTANCE" shall have the meaning assigned to that
term in Section 6.02.
"OFFER" shall have the meaning assigned to that term in
Section 6.01.
"OFFERED SECURITIES" shall have the meaning assigned to that
term in Section 6.01.
"PERSON" means an individual, corporation, partnership, joint
venture, trust, university, or unincorporated organization, or a government or
any agency or political subdivision thereof.
"PREFERRED SHARES" shall have the meaning assigned to that
term in Section 1.01 and shall also include the currently outstanding shares of
Series A Preferred Stock.
"PREFERRED STOCK" shall have the meaning assigned to that term
in Section 1.01 and shall also include the currently outstanding shares of
Series A Preferred Stock.
"PURCHASER" and "PURCHASERS" shall have the meaning assigned
to that term in Section 1.01 of this Agreement and shall include the original
Purchasers and also any other permitted transferee.
"QUALIFIED PUBLIC OFFERING" means a fully underwritten, firm
commitment public offering pursuant to an effective registration under the
Securities Act covering the offer and sale by the Company of its Common Stock in
which the aggregate gross proceeds to the Company exceed $9,000,000 and in which
the price per share of such Common Stock equals or exceeds $4.50 (such price
subject to equitable adjustment in the event of any stock split, stock dividend,
combination, reorganization, reclassification or other similar event).
"REFUSED SECURITIES" shall have the meaning assigned to that
term in Section 6.03.
"REGISTRABLE SHARES" shall mean and include (i) the Conversion
Shares; (ii) shares of Common Stock which are or may be acquired by any
Purchaser upon conversion of Series A
- 40 -
<PAGE> 41
Preferred Stock currently held by the Purchasers and (iii) the shares of capital
stock of the Company acquired by the Purchasers pursuant to Article VI hereof or
any shares of capital stock of the Company acquired after the date hereof by any
such Purchaser, including shares of Common Stock issuable on the conversion of
other securities acquired by the Purchasers pursuant to Article VI hereof or
otherwise; provided, however, that shares of Common Stock which are Registrable
Shares shall cease to be Registrable Shares upon the consummation of any sale
pursuant to a registration statement, Section 4(1) of the Securities Act or Rule
144 under the Securities Act or upon any transfer other than as permitted under
Section 5.12 hereof. 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 the Conversion Shares even if
such conversion has not yet been effected.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
(or of any other Federal agency then administering the Securities Act)
thereunder, all as the same shall be in effect at the time.
"SERIES A PREFERRED STOCK" means the Series A Preferred Stock
of the Company, $.01 par value, having the rights, powers, privileges and
preferences set forth in Exhibit A2 hereto.
"SERIES B PREFERRED STOCK" means the Series B Preferred Stock
of the Company, $.01 par value, having the rights, powers, privileges and
preferences set forth in Exhibit A2 hereto.
"SHARES" means, collectively, the Preferred Shares and the
Conversion Shares.
"SUBSIDIARY" or "SUBSIDIARIES" means any Person of which the
Company and/or any of its other Subsidiaries (as herein defined) directly or
indirectly owns at the time at least fifty percent (50%) of the outstanding
voting shares of every class of such corporation or trust other than directors'
qualifying shares.
"UNDERSUBSCRIPTION AMOUNT" shall have the meaning assigned to
that term in Section 6.01.
7.02. ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistently applied, and all financial data submitted pursuant to
this Agreement shall be prepared in accordance with such principles.
ARTICLE VIII
- 41 -
<PAGE> 42
MISCELLANEOUS
8.01. NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part
of any party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
8.02. AMENDMENTS, WAIVERS AND CONSENTS. Any provision in the
Agreement to the contrary notwithstanding, and except as hereinafter provided,
changes in, termination or amendments of or additions to this Agreement may be
made, and compliance with any covenant or provision set forth herein may be
omitted or waived, if the Company (i) shall obtain consent thereto in writing
from the holder or holders of at least 60% of the outstanding shares of
Preferred Stock and/or Conversion Shares issued upon conversion thereof and (ii)
shall deliver copies of such consent in writing to any holders who did not
execute such consent; provided that no consents shall be effective to reduce the
percentage in interest of the Shares the consent of the holders of which is
required under this Section 8.02. Any waiver or consent may be given subject to
satisfaction of conditions stated therein and any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
8.03. ADDRESSES FOR NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing (including telegraphic
communication) and delivered to each applicable party at the address set forth
in Exhibit 1.01 hereto or at such other address as to which such party may
inform the other parties in writing in compliance with the terms of this
Section , it being understood only one notice is required to be provided to the
Bessemer Purchasers at the following address or at such other address as to
which such party may inform the other parties in writing in compliance with the
terms of this Section :
Mr. Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, New York 11590
with a copy to: Mr. Christopher Gabrieli
Bessemer Venture Partners
83 Walnut Street
Wellesley Hills, MA 02181
If to any other holder of the Shares: at such holder's address
for notice as set forth in the register maintained by the Company, or, as to
each of the foregoing, at the addresses set
- 42 -
<PAGE> 43
forth in Exhibit 1.01 hereto or at such other address as shall be designated by
such Person in a written notice to the other parties complying as to delivery
with the terms of this Section.
If to the Company: at the address set forth on page 1 hereof,
or at such other address as shall be designated by the Company in a written
notice to the other parties complying as to delivery with the terms of this
Section.
All such notices, requests, demands and other communications
shall be considered to be delivered when actually delivered at the foregoing
address of the party to be notified.
8.04. COSTS, EXPENSES AND TAXES. As a condition precedent to the
closing, the Company agrees to pay at the Closing in connection with the
preparation, execution and delivery of this Agreement and the issuance of the
Preferred Shares at the Closing, the reasonable legal fees, not to exceed
$10,000 (unless any increase thereto is agreed to by the Company), and other
reasonable out-of-pocket expenses of Messrs. Testa, Hurwitz & Thibeault, special
counsel for the Purchasers. In addition, the Company shall pay any and all
stamp, or other similar taxes payable or determined to be payable in connection
with the execution and delivery of this Agreement, the issuance of the Preferred
Shares and the other instruments and documents to be delivered hereunder or
thereunder, and agrees to save the Purchasers harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes.
8.05. BINDING EFFECT; ASSIGNMENT. Except as provided in Section 5.12,
this Agreement shall be binding upon and inure to the benefit of the Company and
the Purchasers and their respective heirs, successors and assigns, except that
the Company shall not have the right to delegate its obligations hereunder or to
assign its rights hereunder or any interest herein without the prior written
consent of the holders of at least 60% of the outstanding Preferred Shares.
8.06. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in this Agreement, the Shares, or any other instrument or
document delivered in connection herewith or therewith, shall survive the
execution and delivery hereof or thereof.
8.07. PRIOR AGREEMENTS. This Agreement, the terms of the Preferred
Stock, and the other agreements executed and delivered herewith constitute the
entire agreement between the parties and supersedes any prior understandings or
agreements concerning the subject matter hereof including, without limitation,
that certain Series A Preferred Stock Purchase
- 43 -
<PAGE> 44
Agreement dated as of February 25, 1992, and those certain agreements between
the Company and Messrs. Robert Morgan and Gary Takata, each of which is hereby
terminated.
8.08. SEVERABILITY. The provisions of this Agreement, the Voting and
Co-Sale Agreement and the terms of the Preferred Stock are severable and, in the
event that any court of competent jurisdiction shall determine that any one or
more of the provisions or part of a provision contained in this Agreement, the
Voting and Co-Sale Agreement, or the terms of the Preferred Stock shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
or part of a provision of this Agreement, the Voting and Co-Sale Agreement, or
the terms of the Preferred Stock; but this Agreement, the Voting and Co-Sale
Agreement, and the terms of the Preferred Stock shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of a
provision, had never been contained herein, and such provisions or part reformed
so that it would be valid, legal and enforceable to the maximum extent possible.
8.09. 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 through no fault of such Purchaser, to the
public; provided, however, that a Purchaser may disclose such information (i) on
a confidential basis to its attorneys, accountants, consultants and other
professionals to the extent necessary to obtain their services in connection
with its investment in the Company, (ii) to any prospective purchaser of any
Preferred Shares or Conversion Shares from such Purchaser as long as such
prospective purchaser agrees in writing to be bound by the provisions of this
Section 8.09, (iii) to any affiliate or partner of such Purchaser on a "need to
know basis" and (iv) as required by applicable law. If a Purchaser is required
in any legal or administrative or other governmental proceeding to disclose any
of such information, such Purchaser shall give the Company timely notice of the
pending requirement and use its best efforts to provide the Company an
opportunity to obtain protective provisions against further disclosure.
8.10. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with the General Corporation Law of the State of Delaware as to
matters within the scope thereof and as to all other matters shall be governed
by and construed in accordance with the internal laws of the Commonwealth of
- 44 -
<PAGE> 45
Massachusetts, without giving effect to choice of laws provisions.
8.11. HEADINGS. Article, section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
8.12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.13. FURTHER ASSURANCES. From and after the date of this Agreement,
upon the request of any Purchaser or the Company, the Company and the Purchasers
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the Shares.
8.14. ADDITIONAL PREFERRED STOCK. If the Company issues after the date
hereof any other class or series of Preferred Stock, such class or series may,
upon the written consent of 60% of the outstanding Shares, become entitled to
the rights and preferences and be bound by the obligations under this Agreement,
and all references to Preferred Stock shall be expressly modified to include
within the meaning of the term Preferred Stock, the class or series of Preferred
Stock so issued in any financing.
***************
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGES IMMEDIATELY FOLLOW]
- 45 -
<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have caused this Series A and
Series B Preferred Stock Purchase Agreement to be executed as of the date first
above written.
MYCO PHARMACEUTICALS INC.
By:
---------------------------------
President
TECHNOLOGY LEADERS L.P.
By: Technology Leaders Management,
Inc. (General Partner)
By:
---------------------------------
Title:
TECHNOLOGY LEADERS OFFSHORE C.V.
By: Technology Leaders Management,
Inc. (General Partner)
By:
---------------------------------
Title:
BESSEMER VENTURE PARTNERS II L.P.
By:
---------------------------------
General Partner
MORGAN HOLLAND FUND II, L.P.
By: its general partner,
Morgan Holland Partners II L.P.
By:
---------------------------------
Name: Edwin M. Kania, Jr.
Title: General Partner
- 46 -
<PAGE> 47
GILDE INVESTMENT FUND B.V.
By:
-----------------------------
Name: Edwin M. Kania Jr. general
partner of Morgan Holland
Partners II L.P.
COMDISCO, INC.
By:
-----------------------------
Title:
BRIMSTONE ISLAND CO., L.P.
By:*
----------------------------
Title:
*
--------------------------------
William T. Burgin
*
--------------------------------
Neill H. Brownstein
--------------------------------
Robert H. Buescher
*
--------------------------------
G. Felda Hardymon
*
--------------------------------
Christopher Gabrieli
*
--------------------------------
Michael I. Barach
*
--------------------------------
Daniel S. Martin
- 47 -
<PAGE> 48
*
---------------------------------
Richard R. Davis
---------------------------------
Barbara M. Henegan
*
---------------------------------
Thomas F. Ruhm
*
---------------------------------
Ward W. Woods, Jr.
*
---------------------------------
Geoffrey L. Berger
*
---------------------------------
Robert D. Lindsay
*
---------------------------------
Michael S. Mathews
---------------------------------
Robert H. Buescher, signing
as Attorney-in-Fact for each
of the individuals beside whose
name an asterisk appears
---------------------------------
Barry A. Berkowitz
---------------------------------
Robert Morgan
---------------------------------
Gary Takata
J. Robert Scott, Inc.
By:
----------------------------
Title:
-------------------------
- 48 -
<PAGE> 49
EXHIBITS TO MYCO PHARMACEUTICALS INC. SERIES A
AND SERIES B PREFERRED STOCK PURCHASE AGREEMENT
Exhibit A
Restated Certificate of Incorporation
Exhibit B1
Form of Nondisclosure and Assignment of Inventions Agreement
Exhibit B2
Form of Noncompetition Agreement
Exhibit C
Form of Amended and Restated Voting and Co-Sale Agreement
Exhibit 1.01A
Purchasers' Ownership of Preferred Shares at Closing
Exhibit 1.05
Unaccredited Investors
Michael Barach
Daniel Martin
Exhibit 2.02(b)
Opinion of Counsel to Company
<PAGE> 50
Exhibit B1
CONFIDENTIALITY AGREEMENT
This confidentiality agreement is made as of this ___ day of _____________
19__, by and between Myco Pharmaceuticals Inc., a Delaware corporation
("Company") , and _________________________("Consultant").
WITNESSETH:
WHEREAS, the Company desires to retain Consultant as a consultant to
the Company and Consultant wishes to be retained by the Company as a consultant
to the Company (the written arrangement of such consultancy to be referred to as
the "Consulting Agreement");
WHEREAS, the Company has developed, and the Company and/or Consultant
may continue to develop during the period Consultant is so retained by the
Company, certain Proprietary Information, Inventions and Intellectual Property
(as those terms are hereinafter defined), that the Company wishes to protect and
maintain as confidential;
WHEREAS, the Company from time to time has received, and may continue
to receive during the period Consultant is so retained by the Company, the
Proprietary Information of others, and the Company wishes to maintain the
confidentiality of such Proprietary Information; and
WHEREAS, the Company has developed, and will continue to develop during
the period Consultant is so retained by the Company, goodwill by, among other
things, substantial expenditure of money and effort;
NOW, THEREFORE, in consideration of the premises set forth below and
the mutual covenants and undertakings contained in this agreement, and for other
good and valuable consideration, receipt and sufficiency of which are hereby
mutually acknowledged, IT IS AGREED:
1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(a) Agreement means this confidentiality agreement, including
all exhibits, schedules and annexations, as all may be amended from time to time
in the manner provided in this Agreement.
(b) Consultancy means the current or anticipated or
subsequent retention of Consultant by the Company as a part-time consultant or
otherwise, or any other period during which
<PAGE> 51
Consultant receives compensation from the Company in any capacity.
(c) Intellectual Property means any Invention, 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.
(d) Inventions includes ideas, discoveries, inventions,
developments and improvements, whether or not reduced to practice and whether or
not patentable or otherwise within the definition of Intellectual Property.
(e) Proprietary Information includes any scientific,
technical, trade or business secrets of the Company and any scientific,
technical, trade or business materials that are treated by the Company as
confidential or proprietary, including, but not limited to, Inventions belonging
to the Company and confidential information obtained by or given to the Company
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 Consultant prior to its
disclosure by the Company; (ii) is publicly known through publication or
otherwise through no wrongful act of Consultant; (iii) is received from a third
party who rightfully discloses it to 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. Consultant Acknowledgements. The Company has developed and will
develop its Proprietary Information and Intellectual Property over a substantial
period of time and at a substantial expense, and its Proprietary Information and
Intellectual Property are integral to the goodwill of the Company. During the
course of consultancy to the Company, Consultant may develop or become aware of
Proprietary Information and/or Intellectual Property. Protection of the
Proprietary Information and Intellectual Property is necessary to conduct the
Company's business, and the Company is and shall at all times remain the sole
owner of the Company's Proprietary Information and Intellectual Property.
3. Confidentiality. Consultant shall at all times, both during and
after any termination of Consultant's consultancy to the Company by either the
Company or Consultant, maintain in confidence and not utilize the Proprietary
Information or the
- 2 -
<PAGE> 52
Intellectual Property of the Company, and/or technology or proprietary
information of others under confidential evaluation by the Company except in
performing services for the Company under the Consulting Agreement. Maintaining
such Proprietary Information and Intellectual Property in confidence shall
include refraining from disclosing such Proprietary Information or Intellectual
Property to any third party (except when duly and specifically authorized in
writing to do so for purpose of furthering the business of the Company), and
refraining from using such Proprietary Information or Intellectual Property for
the account of Consultant or for any other person or business entity. Consultant
will not file patents based on the Company's technology or confidential
information, nor seek to make improvements thereon, without the Company's
written approval. Consultant agrees not to make any copies of the Proprietary
Information or Intellectual Property of the Company (except when appropriate for
the furtherance of the business of the Company or duly and specifically
authorized to do so) and promptly upon request, whether during or after the
period of consultancy to the Company, to return to the Company any and all
documentary, machine-readable or other elements or evidence of such Proprietary
Information, Intellectual Property, and any copies of either that may be in
Consultant's possession or under Consultant's control.
4. Rights to Inventions and Intellectual Property. In connection with
Consultant's consultancy to the Company, or by use of the resources of the
Company, whether or not Consultant is then retained by the Company, Consultant
may produce, develop, create, invent, conceive or reduce to practice Inventions
and Intellectual Property related to the business of the Company. Consultant
shall maintain and furnish to the Company complete and current records of all
such Inventions and Intellectual Property and disclose to the Company in writing
any such Inventions and Intellectual Property. Consultant agrees that all such
Inventions and Intellectual Property are and shall be the exclusive property of
the Company, and that the Company may use or pursue them without restriction or
additional compensation. Consultant: (i) hereby assigns, sets over and transfers
to the Company all of his right, title and interest in and to such Inventions
and Intellectual Property; (ii) agrees that Consultant and his agents shall,
during and after the period Consultant is retained by the Company, cooperate
fully in obtaining patent, trademark, service mark, copyright or other
proprietary protection for such Inventions and Intellectual Property, all in the
name of the Company (but only at Company 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 the Company of such Inventions and Intellectual Property; and (iii)
shall, upon leaving the Company, provide to the Company in writing a full,
signed statement of all Inventions and
<PAGE> 53
Intellectual Property in which Consultant participated prior to termination of
the consultancy to the Company. Consultant hereby designates the Company as its
agent, and grants to the Company a power of attorney with full substitution,
which power of attorney shall be deemed coupled with an interest, for the
purposes of effecting the foregoing assignments from the Consultant to the
Company.
5. Non-Solicitation. Consultant shall not during the term of the
Consulting Agreement or at any time during the five (5) years following
termination of the Consulting Agreement solicit any person who is employed by or
a consultant to the Company or any affiliate or subsidiary of the Company either
during Consultant's period of consultancy or during such five (5) year period,
to terminate such person's employment by or consultancy to the Company, 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 the Company, affiliate or subsidiary.
6. Continued Obligations. Consultant's obligations under this Agreement
shall not be affected: (i) by any termination of Consultant's consultancy,
including termination upon the Company's initiative; nor (ii) by any change in
Consultant's position, title or function with the Company; nor (iii) by any
interruption in consultancy during which Consultant leaves and then rejoins the
Company for any period within a period of one year and for any reason. Nothing
herein shall be construed as constituting an employment agreement or an
undertaking by the Company to retain Consultant's services for any stated period
of time.
7. No Conflicting Agreements. Consultant represents and warrants that
execution and performance of this Agreement does not and will not violate,
conflict with, or constitute a default under any contract, commitment,
agreement, understanding, arrangement, or restriction, or any adjudication,
order, injunction or finding of any kind by any court or agency to which
Consultant may be a party or by which Consultant may be bound.
8. Remedies. In the event of any breach by Consultant of any of the
provisions of this Agreement, the Company shall be entitled, in addition to
monetary damages and to any other remedies available to the Company under this
Agreement and at law, to equitable relief, including injunctive relief, and to
payment by Consultant of all costs incurred by the Company in enforcement
against Consultant of the provisions of this Agreement, including reasonable
attorneys' fees.
9. General Provisions.
-4-
<PAGE> 54
(a) 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.
(b) Notice. 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:
If to Consultant, to:
----------------------------
----------------------------
If to the Company, to: Dr. Barry Berkowitz
Myco Pharmaceuticals Inc.
5 Pinetree Place
Fort Washington, PA 19034
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.
(c) Severability. If any provision of this Agreement shall be
found to be invalid, inoperative or unenforceable in law or equity, such finding
shall not affect the validity of any other provisions of this Agreement, which
shall be construed, reformed and enforced to effect the purposes of this
Agreement to the fullest extent permitted by law.
(d) Miscellaneous. This Agreement: (i) may be executed in any
number of counterparts, each of which, when executed by both parties to this
Agreement shall be deemed to be an original, and all of which counterparts
together shall constitute one and the same instrument; (ii) shall be governed by
and construed under the law of the Commonwealth of Massachusetts, without
application of principles of conflicts of laws; (iii) along with the Consulting
Agreement, constitute the entire agreement of the parties with respect to the
subject matter hereof, superseding all prior oral and written communications,
proposals, negotiations, representations, understandings, courses of dealing,
agreements, contracts, and the like between the parties in such respect; (iv)
may be amended, modified, or terminated, and any right under this Agreement may
be waived in whole or in part, only by a writing signed by both parties; (v)
contains headings only for convenience, which headings do not
-5-
<PAGE> 55
form part, and shall not be used in construction, of this Agreement; (vi) shall
bind and inure to the benefit of the parties and their respective legal
representatives, successors and assigns, except that no party may delegate any
of its or his obligations under this Agreement, or assign this Agreement,
without the prior written consent of the other party, except the Company may
assign this Agreement in connection with the merger, consolidation, or sale of
all or substantially all assets of the Company; and (vii) be enforced only in
courts located within the Commonwealth of Massachusetts and the parties hereby
agree that such courts shall have venue and exclusive subject matter and
personal jurisdiction, and consent to service of process by registered mail,
return receipt requested, or by any other manner provided by law.
Executed under seal as of the date first above written.
COMPANY:
By:
----------------------------------
Title
CONSULTANT
-------------------------------------
- 6 -
<PAGE> 56
Exhibit B2
FORM OF NONCOMPETITION AGREEMENT
MYCO PHARMACEUTICALS INC.
5 Pinetree Place
Fort Washington, PA 19034
[Date], 1992
[Name of Consultant or Employee]
- -----------------------------
- -----------------------------
Dear [Name of Consultant or Employee]:
This letter is to confirm our understanding with respect to (i) your
agreement not to compete with the Company and (ii) your agreement to protect and
preserve information and property which is confidential and proprietary to the
Company or other third parties with whom the Company does business (the terms
and conditions agreed to in this letter shall hereinafter be referred to as the
"Agreement"). In consideration of the mutual promises and covenants contained in
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, we have agreed as follows:
1. Prohibited Competition. We have discussed, and you recognize and
acknowledge the competitive and proprietary nature of the Company's business
operations.
You acknowledge and agree that a business will be deemed competitive
with the Company if it performs any of the services, manufactures or sells any
of the products provided or offered by the Company or is involved in the
research, or development of processes, products or techniques in the Company's
Field of Interest (such business to be referred to as a "competitive business").
The term Company's "Field of Interest" currently means the development of
products or processes as anti-infective therapeutics or diagnostics with an
initial emphasis on anti- fungals and commercial use of fungis or yeasts in drug
screening, production, development or testing. The Company may modify the
definition of its Field of Interest by written notice to you based on the
activities in which the Company is then engaged or in which the Company then
proposes to be engaged.
<PAGE> 57
You further acknowledge and agree that during the course of performing
services for the Company as a [consultant/employee], the Company will furnish,
disclose or make available to you confidential and proprietary information
related to the Company's business and that the Company may provide you with
unique and specialized training. You also acknowledge that such confidential
information and the training to be provided by the Company have been developed
and will be developed by the Company and others with whom the Company has a
relationship through the expenditure by the Company and others of substantial
time, effort and money and that all such confidential information and training
could be used by you to compete with the Company.
Accordingly, you hereby agree in consideration of the Company's
agreement to engage you as a [consultant/employee] and your compensation thereof
and in view of the confidential position to be held by you, the unique and
specialized training which the Company may provide you and the confidential
nature and proprietary value of the information which the Company may share with
you, and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, as follows:
During the period during which you perform services for or at the
request of the Company (the "Term") and for a period of one year following the
expiration or termination of the Term (the "Restricted Term"), whether such
termination is voluntary or involuntary, you shall not, without the prior
written consent of the Company:
(i) For yourself or on behalf of any other, directly or
indirectly, either as principal, agent, stockholder, employee, consultant,
representative or in any other capacity, own, manage, operate or control,
or be concerned, connected or employed by, or otherwise associate in any
manner with, engage in or have a financial interest in any business which
is directly or indirectly competitive with the business of the Company
within the World (the "Restricted Territory"), except that nothing
contained herein shall preclude you from purchasing or owning stock in any
such business if such stock is publicly traded, and provided that your
holdings do not exceed three (3%) percent of the issued and outstanding
capital stock of such business.
(ii) Either individually or on behalf of or through any third
party, solicit, divert or appropriate or attempt to solicit, divert or
appropriate, for the purpose of competing with the Company or any present
or future parent, subsidiary or other affiliate of the Company which is
engaged in a similar business as the Company, any customers or patrons of
the Company, or any prospective customers or patrons with
- 2 -
<PAGE> 58
respect to which the Company has developed or made a sales presentation (or
similar offering of services), located within the Restricted Territory.
(iii) Either individually or on behalf of or through any third
party, directly or indirectly, solicit, entice or persuade or attempt to
solicit, entice or persuade any other employees of or consultants to the
Company or any parent or future parent or affiliate of the Company to leave
the services of the Company or any parent or future parent or affiliate for
any reason.
[IF APPLICABLE - NOTWITHSTANDING THE ABOVE, WE ACKNOWLEDGE AND AGREE
THAT THIS AGREEMENT SHALL NOT PROHIBIT YOU FROM_______________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________.]
You further recognize and acknowledge that (i) the types of employment
which are prohibited by this paragraph are narrow and reasonable in relation to
the skills which represent your principal salable asset both to the Company and
to your other prospective employers, and (ii) the specific but broad
geographical scope of the provisions of this paragraph is reasonable, legitimate
and fair to you in light of the Company's need to market its services and sell
its products in a large geographic area in order to have a sufficient customer
base to make the Company's business profitable and in light of the limited
restrictions on the type of employment prohibited herein compared to the types
of employment for which you are qualified to earn your livelihood.
If any part of this section should be determined by a court of
competent jurisdiction to be unreasonable in duration, geographic area, or
scope, then this section is intended to and shall extend only for such period of
time, in such area and with respect to such activity as is determined to be
reasonable.
2. Protected Information. Upon execution of this Agreement, you shall
execute and deliver a Confidentiality Agreement in the form attached hereto as
Annex A.
3. Continuing Obligations. Your obligations under this Agreement other
than the provisions of this Agreement shall not be affected: (i) by any
termination of your consulting or employment arrangement, including termination
upon the Company's initiative; nor (ii) by any change in your position, title or
function with the Company; nor (iii) by any interruption in the consulting or
employment arrangement during which you leave and rejoin the Company.
-3-
<PAGE> 59
4. Records. Upon termination of your relationship with the Company, you
shall deliver to the Company any property of the Company which may be in your
possession including products, materials, memoranda, notes, records, reports, or
other documents or photocopies of the same.
5. No Conflicting Agreements. You hereby represent and warrant that you
have no commitments or obligations inconsistent with this Agreement and you
hereby agree to indemnify and hold the Company harmless against any claim based
upon circumstances alleged to be inconsistent with such representation and
warranty.
6. No Employment Created. This Agreement does not constitute, and shall
not be construed as constituting, an undertaking by the Company to hire you as
an employee or consultant of the Company.
7. Waiver of Provisions. Failure of any party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted hereunder or of the future performance of any such term or
condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by or on behalf of the waiving party.
8. Notices. Any notice or other communication required or permitted
hereunder shall be deemed sufficiently given if sent by registered or certified
mail, postage and fees prepaid, addressed to the party to be notified as
follows: if to the Company to its address set forth above, with a copy to Peter
F. Demuth, Esquire, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One
Financial Center, Boston, MA 02111 and if to you to your address set forth
above, or in each case to such other address as either party may from time to
time designate in writing to the other. Such notice or communication shall be
deemed to have been given as of the date deposited with the United States Postal
Service.
9. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Massachusetts,
without application of the conflicts of law provisions thereof.
10. Entire Agreement. This Agreement, together with Annex A hereto,
embodies the entire agreement and understanding between the parties hereto and
supersedes all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, warranty, covenant or
agreement of any kind not set forth in this Agreement shall affect, or be used
to interpret, change or restrict, the express terms and provisions of this
Agreement.
- 4 -
<PAGE> 60
11. Invalidity. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations. If any provision of this Agreement, or the
application thereof to any person or circumstance, shall, for any reason and to
any extent, be invalid or unenforceable, the remainder of this Agreement and the
application of such provisions to other persons or circumstances shall not be
affected thereby, but rather shall be construed, reformed and enforced to the
greatest extent permitted by law.
12. Injunctive Relief. You hereby expressly acknowledge that any breach
or threatened breach of any of the terms and/or conditions set forth in this
Agreement will result in substantial, continuing and irreparable injury to the
Company. Therefore, you hereby agree that, in addition to any other remedy that
may be available to the Company, the Company shall be entitled to injunctive or
other equitable relief by a court of appropriate jurisdiction in the event of
any breach or threatened breach of the terms of this Agreement.
13. Assignment. The Company may assign its rights and obligations
hereunder to any person or entity who succeeds to all or substantially all of
the Company's business or that aspect of the Company's business in which you are
principally involved. Your rights and obligations under this Agreement may not
be assigned without the prior written consent of the Company.
14. Expenses. Should any party breach this Agreement, in addition to
all other remedies available at law or in equity, such party shall pay all of
any other party's costs and expenses resulting therefrom and/or incurred in
enforcing this Agreement, including legal fees and expenses.
15. Modification and Amendment. This Agreement shall not be modified or
amended except by an instrument in writing signed by or on behalf of the parties
hereto.
16. Parties Benefitted. Subject to the foregoing, this Agreement shall
be binding upon and inure to the benefit of the Company and any parent,
subsidiary or other affiliate of the Company, and their respective successors
and assigns, and shall be binding upon and inure to the benefit of you and your
heirs, executors and administrators.
17. Headings. Section and other headings contained in this Agreement
are for reference purposes only and are in no way intended to define, interpret,
describe or otherwise limit the scope, extent or intent of this Agreement or any
of its provisions each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
- 5 -
<PAGE> 61
18. Counterparts. This Agreement may be executed in one or more
counterparts each of which will be deemed an original, but all of which together
shall constitute one and the same instrument.
If the foregoing accurately sets forth our agreement, please so
indicate by signing and returning to us the enclosed copy of this letter.
Very truly yours,
MYCO Pharmaceuticals Inc.
_______________________________
Accepted and Approved
_____________________________
[Name of Consultant/Employee]
Dated: ______________________
- 6 -
<PAGE> 62
ANNEX A
CONFIDENTIALITY AGREEMENT
This confidentiality agreement is made as of this ______ day of
_______________________________________ 19__, by and between Myco
Pharmaceuticals Inc., a Delaware corporation ("Company"), and _______________
___________________ ("Consultant" ).
W I T N E S S E T H:
WHEREAS, the Company desires to retain Consultant as a consultant to
the Company and Consultant wishes to be retained by the Company as a consultant
to the Company (the written arrangement of such consultancy to be referred to as
the "Consulting Agreement");
WHEREAS, the Company has developed, and the Company and/or Consultant
may continue to develop during the period Consultant is so retained by the
Company, certain Proprietary Information, Inventions and Intellectual Property
(as those terms are hereinafter defined), that the Company wishes to protect and
maintain as confidential;
WHEREAS, the Company from time to time has received, and may continue
to receive during the period Consultant is so retained by the Company, the
Proprietary Information of others, and the Company wishes to maintain the
confidentiality of such Proprietary Information; and
WHEREAS, the Company has developed, and will continue to develop during
the period Consultant is so retained by the Company, goodwill by, among other
things, substantial expenditure of money and effort;
NOW, THEREFORE, in consideration of the premises set forth below and
the mutual covenants and undertakings contained in this agreement, and for other
good and valuable consideration, receipt and sufficiency of which are hereby
mutually acknowledged, IT IS AGREED:
1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(a) Agreement means this confidentiality agreement, including
all exhibits, schedules and annexations, as all may be amended from time to time
in the manner provided in this Agreement.
(b) Consultancy means the current or anticipated or
subsequent retention of Consultant by the Company as a part-time consultant or
otherwise, or any other period during which
<PAGE> 63
Consultant receives compensation from the Company in any capacity.
(c) Intellectual Property means any Invention, writing, trade
name, trademark, service mark or any other material registered or otherwise
protected or protectable under state, federal, or foreign patent, trademark,
copyright, or similar laws.
(d) Inventions includes ideas, discoveries, inventions,
developments and improvements, whether or not reduced to practice and whether or
not patentable or otherwise within the definition of Intellectual Property.
(e) Proprietary Information includes any scientific,
technical, trade or business secrets of the Company and any scientific,
technical, trade or business materials that are treated by the Company as
confidential or proprietary, including, but not limited to, Inventions belonging
to the Company and confidential information obtained by or given to the Company
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 Consultant prior to its
disclosure by the Company; (ii) is publicly known through publication or
otherwise through no wrongful act of Consultant; (iii) is received from a third
party who rightfully discloses it to 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. Consultant Acknowledgements. The Company has developed and will
develop its Proprietary Information and Intellectual Property over a substantial
period of time and at a substantial expense, and its Proprietary Information and
Intellectual Property are integral to the goodwill of the Company. During the
course of consultancy to the Company, Consultant may develop or become aware of
Proprietary Information and/or Intellectual Property. Protection of the
Proprietary Information and Intellectual Property is necessary to conduct the
Company's business, and the Company is and shall at all times remain the sole
owner of the Company's Proprietary Information and Intellectual Property.
3. Confidentiality. Consultant shall at all times, both during and
after any termination of Consultant's consultancy to the Company by either the
Company or Consultant, maintain in confidence and not utilize the Proprietary
Information or the
-2-
<PAGE> 64
Intellectual Property of the Company, and/or technology or proprietary
information of others under confidential evaluation by the Company except in
performing services for the Company under the Consulting Agreement. Maintaining
such Proprietary Information and Intellectual Property in confidence shall
include refraining from disclosing such Proprietary Information or Intellectual
Property to any third party (except when duly and specifically authorized in
writing to do so for purpose of furthering the business of the Company), and
refraining from using such Proprietary Information or Intellectual Property for
the account of Consultant or for any other person or business entity. Consultant
will not file patents based on the Company's technology or confidential
information, nor seek to make improvements thereon, without the Company's
written approval. Consultant agrees not to make any copies of the Proprietary
Information or Intellectual Property of the Company (except when appropriate for
the furtherance of the business of the Company or duly and specifically
authorized to do so) and promptly upon request, whether during or after the
period of consultancy to the Company, to return to the Company any and all
documentary, machine-readable or other elements or evidence of such Proprietary
Information, Intellectual Property, and any copies of either that may be in
Consultant's possession or under Consultant's control.
4. Rights to Inventions and Intellectual Property. In connection with
Consultant's consultancy to the Company, or by use of the resources of the
Company, whether or not Consultant is then retained by the Company, Consultant
may produce, develop, create, invent, conceive or reduce to practice Inventions
and Intellectual Property related to the business of the Company. Consultant
shall maintain and furnish to the Company complete and current records of all
such Inventions and Intellectual Property and disclose to the Company in writing
any such Inventions and Intellectual Property. Consultant agrees that all such
Inventions and Intellectual Property are and shall be the exclusive property of
the Company, and that the Company may use or pursue them without restriction or
additional compensation. Consultant: (i) hereby assigns, sets over and transfers
to the Company all of his right, title and interest in and to such Inventions
and Intellectual Property; (ii) agrees that Consultant and his agents shall,
during and after the period Consultant is retained by the Company, cooperate
fully in obtaining patent, trademark, service mark, copyright or other
proprietary protection for such Inventions and Intellectual Property, all in the
name of the Company (but only at Company 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 the Company of such Inventions and Intellectual Property; and (iii)
shall, upon leaving the Company, provide to the Company in writing a full,
signed statement of all Inventions and
- 3 -
<PAGE> 65
Intellectual Property in which Consultant participated prior to termination of
the consultancy to the Company. Consultant hereby designates the Company as its
agent, and grants to the Company a power of attorney with full substitution,
which power of attorney shall be deemed coupled with an interest, for the
purposes of effecting the foregoing assignments from the Consultant to the
Company.
5. Non-Solicitation. Consultant shall not during the term of the
Consulting Agreement or at any time during the five (5) years following
termination of the Consulting Agreement solicit any person who is employed by or
a consultant to the Company or any affiliate or subsidiary of the Company either
during Consultant's period of consultancy or during such five (5) year period,
to terminate such person's employment by or consultancy to the Company, 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 the Company, affiliate or subsidiary.
6. Continued Obligations. Consultant's obligations under this Agreement
shall not be affected: (i) by any termination of Consultant's consultancy,
including termination upon the Company's initiative; nor (ii) by any change in
Consultant's position, title or function with the Company; nor (iii) by any
interruption in consultancy during which Consultant leaves and then rejoins the
Company for any period within a period of one year and for any reason. Nothing
herein shall be construed as constituting an employment agreement or an
undertaking by the Company to retain Consultant's services for any stated period
of time.
7. No Conflicting Agreements. Consultant represents and warrants that
execution and performance of this Agreement does not and will not violate,
conflict with, or constitute a default under any contract, commitment,
agreement, understanding, arrangement, or restriction, or any adjudication,
order, injunction or finding of any kind by any court or agency to which
Consultant may be a party or by which Consultant may be bound.
8. Remedies. In the event of any breach by Consultant of any of the
provisions of this Agreement, the Company shall be entitled, in addition to
monetary damages and to any other remedies available to the Company under this
Agreement and at law, to equitable relief, including injunctive relief, and to
payment by Consultant of all costs incurred by the Company in enforcement
against Consultant of the provisions of this Agreement, including reasonable
attorneys' fees.
9. General Provisions.
-4-
<PAGE> 66
(a) 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.
(b) Notice. 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:
If to Consultant, to:
______________________________
______________________________
If to the Company, to: Dr. Barry Berkowitz
Myco Pharmaceuticals Inc.
5 Pinetree Place
Fort Washington, PA 19034
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.
(c) Severability. If any provision of this Agreement shall be
found to be invalid, inoperative or unenforceable in law or equity, such finding
shall not affect the validity of any other provisions of this Agreement, which
shall be construed, reformed and enforced to effect the purposes of this
Agreement to the fullest extent permitted by law.
(d) Miscellaneous. This Agreement: (i) may be executed in any
number of counterparts, each of which, when executed by both parties to this
Agreement shall be deemed to be an original, and all of which counterparts
together shall constitute one and the same instrument; (ii) shall be governed by
and construed under the law of the Commonwealth of Massachusetts, without
application of principles of conflicts of laws; (iii) along with the Consulting
Agreement, constitute the entire agreement of the parties with respect to the
subject matter hereof, superseding all prior oral and written communications,
proposals, negotiations, representations, understandings, courses of dealing,
agreements, contracts, and the like between the parties in such respect; (iv)
may be amended, modified, or terminated, and any right under this Agreement may
be waived in whole or in part, only by a writing signed by both parties; (v)
contains headings only for convenience, which headings do not
-5-
<PAGE> 67
form part, and shall not be used in construction, of this Agreement; (vi) shall
bind and inure to the benefit of the parties and their respective legal
representatives, successors and assigns, except that no party may delegate any
of its or his obligations under this Agreement, or assign this Agreement,
without the prior written consent of the other party, except the Company may
assign this Agreement in connection with the merger, consolidation, or sale of
all or substantially all assets of the Company; and (vii) be enforced only in
courts located within the Commonwealth of Massachusetts and the parties hereby
agree that such courts shall have venue and exclusive subject matter and
personal jurisdiction, and consent to service of process by registered mail,
return receipt requested, or by any other manner provided by law.
Executed under seal as of the date first above written.
COMPANY:
By: __________________________
Title
CONSULTANT
______________________________
-6-
<PAGE> 68
EXHIBIT 1.01A
SCHEDULE OF PURCHASERS - PREFERRED STOCK
<TABLE>
<CAPTION>
Aggregate
Purchase Indebtedness Number of Number of
Price of of Company Shares of Shares of
Preferred to be Net Series A Series B
Shares Cancelled Cash Due Preferred Preferred
Name and Address at Closing at Closing at Closing Stock Stock
- ---------------- ---------- ---------- ---------- ----- -----
<S> <C> <C> <C> <C> <C>
Technology Leaders L.P. $ 466,900.00 $ 140,070.00 $ 326,830 266,800 133,400
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087
Technology Leaders Offshore C.V $ 533,099.00 0 $ 533,099.00 304,628 152,314
c/o ABN Trust Company
15 Pietermaii
Curacao, Netherlands Antilles
Bessemer Venture Partners II L.P. $ 893,917.50 $ 300,000.00 $ 593,917.50 510,810 255,405
83 Walnut Street
Wellesley Hills, MA 02181
Morgan Holland Fund II, L.P. $1,237,498.50 0 $1,237,498.50 707,142 353,571
One Liberty Square - Suite 840
Boston, MA 02109
Gilde Investment Fund B.V $ 12,498.50 0 $ 12,498.50 7,142 3,571
c/o Morgan Holland Fund II, L.P.
One Liberty Square - Suite 840
Boston, MA 02109
Comdisco, Inc. $ 99,998.50 0 $ 99,998.50 57,142 28,571
One Newton Executive Park
Newton Lower Falls, MA 02160
William T. Burgin $ 15,001.00 0 $ 15,001.00 8,572 4,286
83 Walnut Street
Wellesley, MA 02181
Brimstone Island Co. L.P. $ 15,001.00 0 $ 15,001.00 8,572 4,286
83 Walnut Street
Wellesley, MA 02181
</TABLE>
- 49 -
<PAGE> 69
EXHIBIT 1.01A
SCHEDULE OF PURCHASERS - PREFERRED STOCK
<TABLE>
<CAPTION>
Aggregate
Purchase Indebtedness Number of Number of
Price of of Company Shares of Shares of
Preferred to be Net Series A Series B
Shares Cancelled Cash Due Preferred Preferred
Name and Address at Closing at Closing at Closing Stock Stock
- ---------------- ---------- ---------- ---------- ----- -----
<S> <C> <C> <C> <C> <C>
Neill H. Brownstein $ 9,999.50 0 $ 9,999.50 5,714 2,857
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Robert H. Buescher $ 2,999.50 0 $ 2,999.50 1,714 857
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
G. Felda Hardymon $ 9,999.50 0 $ 9,999.50 5,714 2,857
83 Walnut Street
Wellesley, MA 02181
Christopher Gabrieli $32,000.50 0 $32,000.50 18,286 9,143
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Michael I. Barach $ 2,499.00 0 $ 2,499.00 1,428 714
83 Walnut Street
Wellesley, MA 02181
Daniel S. Martin $ 1,998.50 0 $ 1,998.50 1,142 571
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
</TABLE>
- 50 -
<PAGE> 70
EXHIBIT 1.01A
SCHEDULE OF PURCHASERS - PREFERRED STOCK
<TABLE>
<CAPTION>
Aggregate
Purchase Indebtedness Number of Number of
Price of of Company Shares of Shares of
Preferred to be Net Series A Series B
Shares Cancelled Cash Due Preferred Preferred
Name and Address at Closing at Closing at Closing Stock Stock
- ---------------- ---------- ---------- ---------- ----- -----
<S> <C> <C> <C> <C> <C>
Richard R. Davis $3,335.50 0 $3,335.50 1,906 953
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Thomas F. Ruhm $ 749.00 0 $ 749.00 428 214
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Ward W. Woods, Jr $5,001.50 0 $5,001.50 2,858 1,429
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Geoffrey L. Berger $ 500.50 0 $ 500.50 286 143
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Robert D. Lindsay $1,998.50 0 $1,998.50 1,142 571
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
</TABLE>
- 51 -
<PAGE> 71
EXHIBIT 1.01A
SCHEDULE OF PURCHASERS - PREFERRED STOCK
<TABLE>
<CAPTION>
Aggregate
Purchase Indebtedness Number of Number of
Price of of Company Shares of Shares of
Preferred to be Net Series A Series B
Shares Cancelled Cash Due Preferred Preferred
Name and Address at Closing at Closing at Closing Stock Stock
- ---------------- ---------- ---------- ---------- ----- -----
<S> <C> <C> <C> <C> <C>
Michael S. Mathews $ 1,998.50 0 $ 1,998.50 1,142 571
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Barbara M. Henagan $ 2,999.50 0 $ 2,999.50 1,714 857
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Barry A. Berkowitz $ 40,001.50 0 $ 40,001.50 22,858 11,429
One Kendall Square
Building 300
Cambridge, MA 02139
Robert Morgan $ 5,999.00 0 $ 5,999.00 3,428 1,714
123 Ember Lane
Carlisle, MA 01741
Gary Takata $ 5,999.00 0 $ 5,999.00 3,428 1,714
330 East 38th Street
New York, NY 10016
J. Robert Scott, Inc. $ 15,001.00 0 $ 15,001.00 8,572 4,286
27 State Street
Boston, MA 02108
$3,416,994.00 $440,070.0 $2,976,924.00 1,952,568 976,284
</TABLE>
- 52 -
<PAGE> 72
Exhibit 2.02(i)
Employees/Nondisclosure Agreements
All employees of the Company are required to enter into
Nondisclosure and Assignment of Inventions Agreements in
substantially the form of Exhibit B1.
Dr. Barry Berkowitz has entered into an Employment
Agreement and Noncompetition Agreement in the form attached
hereto.
************
Exhibit 3.07
Title to Assets, Patents
At December 30, 1993, the Company has title to tangible assets
in these approximate amounts:
Leasehold improvements $ 567,000
Laboratory Equipment 741,000
Office Equipment and Computers 163,000
Office Furniture 30,000
----------
Purchase Price $1,501,000
Book Depreciation 84,000
----------
$1,417,000
The Company also has the right to use intangible property
pursuant to and subject to the terms of the agreements listed in
Exhibit 3.14.
The Company has acquired most of the above furnishings,
equipment and leasehold improvements subject to an equipment lease with
Comdisco Venture Group. The original principal balance of the lease
related to the above Purchase Price of the assets was $1,200,000
against which principal payments approximating $40,000 have
subsequently been made.
See Exhibit 3.14.
Exhibit 3.08
Transactions with Affiliates
The Company has entered into the following agreements with
Barry Berkowitz: (i) Employment and Noncompetition Agreement; (ii)
Confidentiality Agreement, and (iii) Stock Purchase and Repurchase
Agreement. The Company has also
<PAGE> 73
entered into Stock Option Agreements, an Employment Agreement and
Noncompetition and Confidentiality Agreement with Dr. William
Timberlake. Pursuant to the Employment Agreement, the Company has
loaned Dr. Timberlake the principal amount of $100,000, and the Company
has a second mortgage on certain real property held by Dr. Timberlake.
Interest on the loan is charged at the prime rate, and any bonus
awarded may be used to pay this loan. In any year in which Dr.
Timberlake is not awarded a bonus, no principal payment is due.
See Exhibit 3.10
Exhibit 3.09
Guaranties of Indebtedness
The Company has leased 12,500 square feet of space from
MYCORT, Inc., a sublessee of Old Cambridge Realty Trust. The sub-lessor
has financed $576,310 improvement work for office and laboratory at
these facilities.
As described in Exhibit 3.07, the Company has acquired assets
subject to an equipment lease with Comdisco. The lease provides a total
commitment of up to $4,500,000, with the first tranche being in the
amount of approximately $1,500,000 with a forty-eight month term and a
10% interest rate, plus warrants. Copies of the lease documentation are
available at the offices of the Company.
The Company has borrowed an aggregate of approximately $600,000 from
Technology Leaders L.P. and its affiliates and Bessemer Venture Partners L.P.
which is being repaid in connection with the closing of the transactions
contemplated by this Agreement.
Exhibit 3.10
Investments
As described in Exhibit 3.08, the Company has an outstanding
loan of $100,000 to Dr. William Timberlake.
<PAGE> 74
Exhibit 3.13
Capitalization/Restrictions on Transfer
OUTSTANDING CAPITAL STOCK
As of the date hereof the Company has 1,506,000 issued and outstanding
shares of Common Stock and 4,024,000 issued and outstanding shares of Series A
Preferred Stock which are issued to the persons set forth on attachment A to
Exhibit 3.13. 860,000 shares of Common Stock issued to Barry A. Berkowitz, Ph.D,
are subject to a vesting arrangement.
OPTIONS TO PURCHASE CAPITAL STOCK
The Company has granted options to purchase a total of 1,239,250 shares
of Common Stock of the Company to the persons listed in the Attachment to this
Exhibit 3.13.
The Company has issued a warrant to Comdisco, Inc. for the purchase of
up to 106,250 shares of the Company's Series A Preferred Stock and agreed to
issue to Comdisco warrants to purchase up to an aggregate of 177,083 shares of
the Company's Series A Preferred Stock (including the warrant already issued) in
connection with certain equipment leasing transactions.
COMMITMENTS TO ISSUE CAPITAL STOCK
The Company is a party to the Series A Preferred Stock purchase
Agreement dated as of February 25, 1992 and certain agreements with Messrs.
Robert Morgan and Gary Takata, pursuant to which the Company has issued a total
of 4,024,000 shares of Series A Preferred Stock and committed to issue
additional shares of the Company's Series A Preferred Stock. These agreements
are being terminated in connection with this Agreement.
Exhibit 3.14
Material Agreements
See Exhibits 3.08, 3.13 and the attached list of agreements.
Exhibit 4.02
See Exhibit 3.08.
<PAGE> 75
Attachment A To Exhibit 3.13
MYCO PHARMACEUTICALS INC.
STOCKHOLDERS LIST
<TABLE>
<CAPTION>
NAME CERTIFICATE DATE NUMBER OF
- ---- NUMBER ---- SHARES
----------- ---------
<S> <C> <C> <C>
Dr. Barry Berkowitz C001 1-13-92 336,000
Dr. Barry Berkowitz C0002 2-19-92 860,000
Dr. Yigal Koltin C0003 2-20-92 60,000
Dr. Jeff Becker C0004 2-20-92 60,000
Dr. Jerry Weisbach, Ph.D C0005 2-20-92 30,000
Dr. Bill Timberlake C0006 2-20-92 20,000
Dr. Phillips Robbins C0007 2-20-92 20,000
N. Ron Morris C0008 2-20-92 5,000
Dr. Jack E. Edwards C0009 2-20-92 5,000
Dr. Richard Diamond C0010 2-20-92 5,000
Dr. Koji Nakanishi C0011 2-20-92 5,000
Dr. Gerry Fink C0012 2-20-92 100,000
TOTAL COMMON 1,506,000
</TABLE>
<PAGE> 76
Attachement A To Exhibit 3.13
Series A Preferred
<TABLE>
<CAPTION>
NAME CERTIFICATE DATE NUMBER OF
- ---- NUMBER ---- SHARES
----------- ---------
<S> <C> <C> <C>
Technology Leaders, L.P. SP0001 2-25-92 370,000
Technology Leaders Offshore SP0002 2-25-92 630,000
C.V
Bessemer Venture Partners, SP0003 2-25-92 893,916
II, L.P.
William T. Burgin SP0004 2-25-92 15,000
Brimstone Island Co., L.P. SP0005 2-25-92 15,000
Neill H. Brownstein SP0006 2-25-92 10,000
Robert H. Buescher SP0007 2-25-92 3,000
G. Felda Hardymon SP0008 2-25-92 10,000
Christopher Gabrieli SP0009 2-25-92 32,000
Michael I. Barach SP0010 2-25-92 2,500
Daniel S. Martin SP0011 2-25-92 2,000
Richard R. Davis SP0012 2-25-92 3,334
Thomas F. Ruhm SP0013 2-25-92 750
Ward W. Woods, Jr SP0014 2-25-92 5,000
Geoffrey L. Berger SP0015 2-25-92 500
Robert D. Lindsay SP0016 2-25-92 2,000
Michael S. Mathews SP0017 2-25-92 2,000
Barbara M. Henagan SP0018 2-25-92 3,000
</TABLE>
-2-
<PAGE> 77
Attachment A To Exhibit 3.13
Series A Preferred
<TABLE>
<CAPTION>
CERTIFICATE NUMBER OF
NAME NUMBER DATE SHARES
- ---- ----------- ---- ---------
<S> <C> <C> <C>
Technology Leaders, L.P. SP0019 1-27-93 370,000
Technology Leaders Offshore SP0020 1-27-93 630,000
C.V
Bessemer Venture Partners, SP0021 1-27-93 893,916
II, L.P.
William T. Burgin SP0022 1-27-93 15,000
Brimstone Island Co., L.P. SP0023 1-27-93 15,000
Neill H. Brownstein SP0024 1-27-93 10,000
Robert H. Buescher SP0025 1-27-93 3,000
G. Felda Hardymon SP0026 1-27-93 10,000
Christopher Gabrieli SP0027 1-27-93 32,000
Michael I. Barach SP0028 1-27-93 2,500
Daniel S. Martin SP0029 1-27-93 2,000
Richard R. Davis SP0030 1-27-93 3,334
Thomas F. Ruhm SP0031 1-27-93 750
Ward W. Woods, Jr. SP0032 1-27-93 5,000
Geoffrey L. Berger SP0033 1-27-93 500
Robert D. Lindsay SP0034 1-27-93 2,000
Michael S. Mathews SP0035 1-27-93 2,000
Barbara M. Henagan SP0036 1-27-93 3,000
Gary Takata SP0037 1-29-93 12,000
Robert W. Morgan, CPA SP0038 1-29-93 12,000
Profit Sharing Plan
TOTAL ISSUED 4,024,000
</TABLE>
-3-
<PAGE> 78
Attachment B To Exhibit 3.13
MYCO PHARMACEUTICALS INC.
STOCK OPTIONS GRANTED
DECEMBER 31, 1993
<TABLE>
<CAPTION>
INDIVIDUAL HOLDER
OPTION EMPLOYEE # OF OPTION VESTING % OF OPTIONS
DATE SAB/CONSULTANT SHARES PRICE SCHEDULE AWARDED
- --------- -------------------------------- --------- ------ -------- ------------
<S> <C> <C> <C> <C> <C>
01-Jan-92 FINK 200,000 $0.20 * 16.14%
01-Jan-92 KOLTIN 120,000 $0.20 * 9.68%
01-Jan-92 BECKER 120,000 $0.20 * 9.68%
01-Jan-92 WEISBACH 60,000 $0.20 * 4.84%
01-Jan-92 TIMBERLAKE 40,000 $0.20 * 3.23%
01-Jan-92 ROBBINS 40,000 $0.20 * 3.23%
01-Jan-92 MORRIS 10,000 $0.20 * 0.81%
14-Jun-93 Morris 2500 $0.20 # 0.20%
01-Jan-92 EDWARDS 10,000 $0.20 * 0.81%
14-Jun-93 Edwards 2500 $0.20 # 0.20%
01-Jan-92 DIAMOND 10,000 $0.20 * 0.81%
14-Jun-93 Diamond 2500 $0.20 # 0.20%
01-Jan-92 NAKANISHI 10,000 $0.20 * 0.81%
02-Jan-92 MORGAN, R. W. 8,000 $0.20 ** 0.65%
22-Jun-92 BULAWA 3,750 $0.20 * 0.30%
14-Jun-93 Bulawa 1875 $0.20 # 0.15%
14-Jun-93 Bulawa 1875 $0.20 ? 0.15%
19-Oct-92 O'CONNOR 50,000 $0.20 # 4.03%
01-Jan-93 BARRETT 15,000 $0.20 * 1.21%
01-Jan-93 STANKIS 1,000 $0.20 # 0.08%
14-Jun-93 Stankis 4000 $0.20 # 0.32%
01-Mar-93 TIMBERLAKE 240,000 $0.20 ## 19.37%
01-Mar-93 TIMBERLAKE 200,000 $0.20 ## 16.14%
14-Jun-93 Morgan, T. V. 15,000 $0.20 # 1.21%
14-Jun-93 Lee, Thomas 1,000 $0.20 # 0.08%
14-Jun-93 Rothstein, David 15,000 $0.20 # 1.21%
14-Jun-93 Koltin, Yagal 30,000 $0.20 @ 2.42%
14-Jun-93 Winter, Kenneth 750 $0.20 # 0.06%
21-Jun-93 Gachet, Louise 1,000 $0.20 # 0.08%
23-Jun-93 Perlo, Barbara 1,000 $0.20 # 0.08%
07-Jul-93 Reeves, Scott 1,000 $0.20 # 0.08%
02-Aug-93 Jiang, Weidong 10,000 $0.20 # 0.81%
11-Aug-93 Knight, Benjamin 750 $0.20 # 0.06%
23-Aug-93 Shu, Nvngi 500 $0.20 # 0.04%
27-Sep-93 Lu, Chun 1,000 $0.20 # 0.08%
15-Nov-93 Caso, Nicole 500 $0.20 # 0.04%
01-Dec-93 Chen, Yanni 750 $0.20 # 0.06%
02-Jan-93 Morgan, R.W. & Chviauk, T.A. 8,000 $0.20 ** 0.65%
--------- ---------
STOCK OPTION PLAN-GRANTS 1,239,250 1
STOCK OPTION PLAN-AVAIL. 872,750
---------
STOCK OPTION PLAN-TOTAL AUTH. 2,112,000
=========
</TABLE>
* Options vest at 25% per year
** Options vested 12/31/92
# Options vest at 20% per year
? Options vest based on attainment of a milestone to be agreed upon by
employee and supervisor within 6 months.
## Options vest at the rate of 100,000 for each event for (1) approval of an IND
and the launch of clinical trials in humans for a Myco compound, and/or
(2) demonstration of safety and efficacy of a Myco compound in Phase II
clinical trials. Option expires 12/31/95.
@ Options vest over 5 years based on attainment of yearly milestones for
division. Milestones to be agreed upon by the Company and YK prior to the
start of each year.
<PAGE> 79
Attachment to Exhibit 3.14
In addition to the matters discussed in Exhibit 3.13, at December 28, 1993, the
Company has entered into the following agreements:
<TABLE>
<CAPTION>
Approximate
Annual
Description Contract Term Amount
----------- ------------- -----------
<S> <C> <C>
CFO Services (Morgan/Chvisuk) 1/01/94-12/31/94 $ 24,000
Comdisco Venture Group equipment lease 6/93 - 5/97 $ 360,000
MYOCRT, Inc. real estate lease 7//93- 6/2004 $ 350,000
</TABLE>
LICENSE/RESEARCH AGREEMENTS
[ See Attachment to Exhibit 3.14 in Exhibit 10.5 ]
<PAGE> 1
Exhibit 10.3
MYCO PHARMACEUTICALS INC.
ONE KENDALL SQUARE
BUILDING 300 - THIRD FLOOR
CAMBRIDGE, MA 02139
July 13, 1994
Comdisco, Inc.
6111 North River Road
Rosemont, Illinois 60018
Morgan Holland Fund II, L.P,
One Liberty Square - Suite 840
Boston, MA 02109
Gilde Investment Fund B.V.
c/o Morgan Holland Venture Corporation
One Liberty Square - Suite 840
Boston, MA 02109
Barry A. Berkowitz
c/o Myco Pharmaceuticals Inc.
One Kendall Square, Building 300
Cambridge, MA 02139
Ladies and Gentlemen:
Reference is made to that certain Series A and Series B Preferred Stock
Purchase Agreement (the "Agreement") dated as of January 11, 1994, pursuant to
which each of you purchased units ("Units") consisting of two shares of Series A
Preferred Stock, and one share of Series B Preferred Stock of Myco
Pharmaceuticals Inc. (the "Company"), for a purchase price of $3.50 per Unit. We
understand that each of you desires to purchase additional Units, on the terms
and conditions set forth in this letter. Accordingly, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, we
have agreed as follows:
1. Purchase and Sale of the Units. The Company has authorized the
issuance and sale of an aggregate of 87,082 additional Units. On the date
hereof, the Company shall issue and sell, and each of you, severally, agrees to
purchase, the number of Units set forth below, at an aggregate purchase price of
$3.50 per Unit:
<PAGE> 2
<TABLE>
<CAPTION>
No. of Shares No. of Shares
of Series A of Series B Purchase
Purchaser Preferred Stock Preferred Stock Price
- --------- --------------- --------------- --------
<S> <C> <C> <C>
Comdisco, Inc. 30,286 15,143 $ 53,000.50
Morgan Holland
Fund II, L.P. 141,430 70,715 $247,502.50
Gilde Investment
Fund, B.V 1,428 714 $ 2,499.00
Barry A. Berkowitz 1,020 510 $ 1,785.00
------- ------ -----------
TOTAL 174,164 87,082 $304,787.00
</TABLE>
Upon execution and delivery of this Agreement, the Company will issue
certificates in your respective names, representing the shares of Preferred
Stock included in the Units, against payment for such Units, by wire transfer or
check made payable to the Company.
2. Representations and Warranties. The Company represents and warrants
that there has been no material adverse change in the Company's business from
that set forth in the Agreement. The Company continues to need working capital.
Each of the Purchasers, severally and not jointly, hereby represents and
warrants to the Company that the representations and warranties made by it in
the Agreement are true and correct and in full force and effect as of the date
hereof with respect to the purchase of the additional Units hereunder.
3. Benefits of the Agreement. The Agreement shall remain in full force
and effect except as expressly modified hereby. The parties acknowledge and
agree that the shares being purchased hereby shall have all of the rights
attributable to shares purchased under the Agreement, and the shares of Common
Stock issuable upon conversion of the shares of Series A and Series B Preferred
Stock included in the Units shall be treated as Registerable Shares pursuant to
the Agreement.
If the forgoing accurately sets forth your understanding, please so
indicate by signing the enclosed copy of this letter.
Very truly yours,
MYCO PHARMACEUTICALS INC.
By:________________________
Barry A. Berkowitz,
President
<PAGE> 3
Acknowledged and Agreed:
Comdisco, Inc.
By:_______________________
Morgan Holland Fund II, L.P.
By: its general partner,
Morgan Holland Partners II L.P.
By:
---------------------------------
Edwin M. Kania, Jr.
General Partner
Gilde Investment Fund, B.V.
By:
---------------------------------
Edwin M. Kania, Jr.
General Partner of
Morgan Holland Partners II L.P.
- ----------------------------
Barry A. Berkowitz
<PAGE> 4
The undersigned, being all of the Purchasers under the Agreement, other
than those set forth above, hereby consent to the transactions contemplated by
this letter, and waive their respective rights, if any, to purchase shares of
Series A and Series B Preferred Stock on the terms set forth in this letter.
TECHNOLOGY LEADERS L.P.
By: Technology Leaders Management,
Inc. (General Partner)
By:
--------------------------------
Title:
TECHNOLOGY LEADERS OFFSHORE C.V.
By: Technology Leaders Management,
Inc. (General Partner)
By:
--------------------------------
Title:
BESSEMER VENTURE PARTNERS II L.P.
By:
--------------------------------
General Partner
BRIMSTONE ISLAND CO., L.P.
By:
--------------------------------
Title:
*
-----------------------------------
William T. Burgin
*
-----------------------------------
Neil H. Brownstein
-----------------------------------
Robert H. Buescher
<PAGE> 5
*
---------------------------------
G. Felda Hardymon
*
---------------------------------
Christopher Gabrieli
*
---------------------------------
Michael I. Barach
*
---------------------------------
Daniel S. Martin
*
---------------------------------
Richard R. Davis
*
---------------------------------
Barbara M. Henegan
*
---------------------------------
Thomas F. Ruhm
*
---------------------------------
Ward W. Woods, Jr.
*
---------------------------------
Geoffrey L. Berger
*
---------------------------------
Robert D. Lindsay
*
---------------------------------
Michael S. Mathews
---------------------------------
Robert H. Buescher, signing as
Attorney-in-Fact for each of the
individuals beside whose name
an asterisk appears
<PAGE> 6
----------------------------------
Robert Morgan
----------------------------------
Gary Takata
J. ROBERT SCOTT, INC.
By:
------------------------------
Title:
<PAGE> 1
EXHIBIT 10.4
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
MYCO PHARMACEUTICALS INC.
One Kendall Square
Building 300 - Third Floor
Cambridge, MA 02139
July 27, 1994
To the Persons listed on Exhibit 1.01 hereto
and Certain Other Stockholders of
Myco Pharmaceuticals Inc.
Re: Series C Preferred Stock
Ladies and Gentlemen:
Myco Pharmaceuticals Inc. (the "Company"), a Delaware corporation,
agrees with each of you as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF SHARES
1.01. THE SERIES C PREFERRED STOCK. The Company has authorized the
issuance, sale and exchange of up to an aggregate of 767,739 shares of its
authorized but unissued Series C Convertible Preferred Stock, $.01 par value per
share (the "Series C Preferred Stock") at a purchase price of $3.00 per share to
the persons (collectively, the "Purchasers" and, individually, a "Purchaser")
and in the respective amounts set forth in Exhibit 1.01 hereto. The designation,
rights, preferences and other terms and provisions of the Series C Preferred
Stock are set forth in Exhibit A hereto.
1.02. THE CONVERSION SHARES. The Company has authorized and has
reserved and covenants to continue to reserve, free of preemptive rights and
other similar contractual rights of shareholders, a sufficient number of its
authorized but unissued shares of Common Stock to satisfy the rights of
conversion of the holders of the Series C Preferred Stock. Any shares of Common
Stock issuable upon conversion of the Series C Preferred Stock (and such shares
when issued) are herein referred to as the "Conversion Shares". The shares of
Series C Preferred Stock to be issued pursuant to this Agreement (the "Series C
Preferred Shares") and Conversion Shares are sometimes collectively referred to
as the "Shares".
<PAGE> 2
1.03. PURCHASE PRICE AND CLOSING. The Company agrees to issue, sell and
exchange to the Purchasers and, in consideration of and in express reliance upon
the representations, warranties, covenants, terms and conditions of this
Agreement, the Purchasers, severally but not jointly, agree to purchase, that
number of Series C Preferred Shares set forth opposite their respective names in
Exhibit 1.01. The aggregate purchase price of the Series C Preferred Shares
being acquired by each Purchaser is set forth opposite such Purchaser's name in
Exhibit 1.01. The closing of the purchase, sale and exchange of the Series C
Preferred Stock to be acquired by the Purchasers from the Company under this
Agreement shall take place at the offices of Messrs. Testa, Hurwitz & Thibeault,
53 State Street, Boston, Massachusetts at 10:00 a.m. on July 27, 1994, or at
such time and date thereafter as the Purchasers and the Company may agree (the
"Closing"). At the Closing, the Company will deliver to each Purchaser
certificates for the number of Series C Preferred Shares set forth opposite its
name in Exhibit 1.01 registered in such Purchaser's name (or its nominee),
against delivery of a check or checks payable to the order of the Company, or a
transfer of funds to the account of the Company by wire transfer, representing
the aggregate purchase price set forth opposite each such Purchaser's name on
Exhibit 1.01, as payment in full of the purchase price of the Shares.
1.04. USE OF PROCEEDS. The Company shall use the cash proceeds from the
sale of the Series C Preferred Stock for working capital and general corporate
purposes.
1.05. REPRESENTATIONS BY THE PURCHASERS.
(a) INVESTMENT REPRESENTATIONS. Each of the
Purchasers represents severally, but not jointly, that it is its
present intention to acquire the Shares to be acquired by it for its
own account (and it will be the sole beneficial owner thereof) and that
the Shares are being and will be acquired by it for the purpose of
investment and not with a view to distribution or resale thereof except
pursuant to registration under the Securities Act or exemption
therefrom. The acquisition by each Purchaser of the Shares acquired by
it shall constitute a confirmation of this representation by each such
Purchaser. Each Purchaser is purchasing with its own funds and not with
the funds of any pension or employee benefit plan. Each of the
Purchasers further represents that it understands and agrees that,
until registered under the Securities Act or transferred pursuant to
the provisions of Rule 144 or Rule 144A as promulgated by the
Commission, all certificates evidencing any of the Shares, whether upon
initial issuance or upon any transfer thereof, shall bear a legend,
prominently stamped or printed thereon, reading substantially as
follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 or applicable
state securities laws. These securities have been acquired for
investment and not with a view to distribution or resale.
These securities may not be offered for sale, sold, delivered
after sale, transferred, pledged or hypothecated in the
absence of an effective registration statement covering such
shares under the Act and any
- 2 -
<PAGE> 3
applicable state securities laws, or the availability, in the
opinion of counsel satisfactory to the Company, of an
exemption from registration thereunder."
(b) SOPHISTICATION AND KNOWLEDGE. Each Purchaser or
his representative has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks
of the purchase of the Shares. Each Purchaser can bear the economic
risks of this investment and can afford a complete loss of his
investment.
(c) TRANSFER RESTRICTIONS IMPOSED BY SECURITIES LAWS.
Each Purchaser understands that: no state or governmental authority has
made any finding or determination relating to the fairness of the terms
of the investment in the Company proposed hereunder and the Shares have
not been registered under the Securities Act and applicable state
securities laws, and, therefore, cannot be resold unless they are
subsequently registered under the Securities Act and applicable state
securities laws or unless an exemption from such registration is
available; each Purchaser is and must be purchasing the Shares for
investment for the account of such Purchaser and not for the account or
benefit of others, and not with any present view toward resale or other
distribution thereof. Each Purchaser agrees not to resell or otherwise
dispose of all or any part of the Shares purchased by him, except as
permitted by law, including, without limitation, any regulations under
the Securities Act and applicable state securities laws; the Company
does not have any present intention and is under no obligation to
register the Shares under the Securities Act and applicable state
securities laws, except as provided in Article V hereof; and Rule 144
or Rule 144A under the Securities Act may not be available as a basis
for exemption from registration of the Shares thereunder.
(d) LACK OF LIQUIDITY. Each Purchaser has no present
need for liquidity in connection with his purchase of the Shares.
(e) SUITABILITY AND INVESTMENT OBJECTIVES. The
purchase of the Shares by each Purchaser is consistent with the general
investment objectives of the Purchaser. The Purchaser understands that
the purchase of the Shares involves a high degree of risk in view of
the fact that, among other things, the Company is a development stage
enterprise, and there may never be an established market for the
Company's capital stock.
(f) ACCREDITED INVESTORS STATUS. Each Purchaser is an
"Accredited Investor" as that term is defined in Rule 501 of Regulation
D promulgated under the Securities Act.
(g) ACCESS TO INFORMATION. Each Purchaser has had the
opportunity to ask questions and receive answers from the officers and
other employees of the Company regarding the terms and conditions of
this Agreement, the transactions
- 3 -
<PAGE> 4
contemplated hereby (including, without limitation, its acquisition of
Shares), as well as the affairs of the Company and related matters, and
it has obtained such information and has had the opportunity to obtain
additional information necessary to verify the accuracy of all
information so obtained.
(h) CORPORATE AND PARTNERSHIP REPRESENTATION. If a
Purchaser is a corporation, partnership, trust or other entity, it
represents and warrants that (i) the individual executing this
Agreement on its behalf has been duly authorized to execute and deliver
this Agreement; (ii) the signature of such individual is binding upon
such partnership, corporation, trust or other entity; (iii) the
Purchaser is duly organized, validly existing and in good standing in
its jurisdiction of incorporation or organization and has all requisite
power and authority to execute and deliver this Agreement; and (iv) the
execution and delivery of this Agreement and the purchase of the Shares
hereunder will not result in the violation of, constitute a breach or
default under, or conflict with, any term or provision of the charter,
bylaws or other governing document of the Purchaser or, to its
knowledge, material breach or default under any material agreement,
judgment, decree, order, statute or regulation by which it is bound or
applicable to it.
(i) ADDITIONAL REPRESENTATIONS. Each Purchaser
understands that the Company is a research and development stage
enterprise with limited resources. The Company is engaged and intends
to engage in research activities which will require substantial funds
which may not be available. For this and other reasons, the Company's
prospects are highly speculative. Accordingly, each Purchaser
acknowledges that he, she or it may lose her, his or its entire
investment in the Company. Each of the Bessemer Purchasers is relying
on the information provided by Bessemer Venture Partners L.P. with
respect to its investment in the Company. Bessemer Venture Partners
L.P. represents that it has provided to each of such purchasers access
to all of the information which it has regarding the Company.
ARTICLE II
CONDITIONS TO PURCHASERS' OBLIGATION
The obligation of each Purchaser to purchase and pay for the Series C
Preferred Shares to be purchased by it at the Closing is subject to the
following conditions (all of which shall be deemed satisfied or waived by the
Purchasers at or prior to the Closing in the event all of the transactions
contemplated to be effected at the Closing are consummated and all or any of
which in any case may be waived by the Purchasers prior to a Closing):
2.01. REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Company set forth in Article III hereof shall be true,
accurate and correct on the date of the Closing.
- 4 -
<PAGE> 5
2.02. DOCUMENTATION AT CLOSING. The Purchasers shall have received
prior to or at the Closing all of the following materials, each in form and
substance reasonably satisfactory to the Purchasers and their special counsel,
and each of the following events shall have occurred, or each of the following
documents shall have been delivered, prior to or simultaneous with the Closing:
(a) A copy of the Restated Certificate of
Incorporation of the Company, as amended or restated to date, together
with such evidence as is satisfactory to the Purchasers of the filing
thereof; a copy of the resolutions of the Board of Directors providing
for the approval of the Restated Certificate of Incorporation of the
Company in the form attached as Exhibit A, the approval of this
Agreement, the issuance of the Series C Preferred Shares and all other
agreements or matters contemplated hereby or executed in connection
herewith; a copy of a consent of stockholders of the Company approving
the Restated Certificate of Incorporation of the Company; and a copy of
the By-laws of the Company, all of which have been certified by the
Secretary of the Company to be true, complete and correct in every
particular; and certified copies of all documents evidencing other
necessary corporate or other action and governmental approvals, if any,
required to be obtained at or prior to the Closing with respect to this
Agreement and the issuance of the Series C Preferred Shares.
(b) The favorable opinion of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., counsel for the Company, in the form
set forth in Exhibit 2.02(b).
(c) A certificate of the Secretary or an Assistant
Secretary of the Company which shall certify the names of the officers
of the Company authorized to sign this Agreement, the certificates for
the Series C Preferred Stock and the other documents, instruments or
certificates to be delivered pursuant to this Agreement by the Company
or any of its officers, together with the true signatures of such
officers.
(d) A certificate of the President and the Treasurer
of the Company stating that the representations and warranties of the
Company contained in Article III hereof are true and correct as of the
time of the Closing and that all conditions required to be performed by
the Company prior to or at the Closing have been performed as of the
Closing.
(e) The Company shall have obtained any consents or
waivers necessary to be obtained at or prior to the Closing to execute
and deliver this Agreement, the Series C Preferred Stock and the other
agreements and instruments executed and delivered by the Company in
connection herewith and to carry out the transactions contemplated
hereby and thereby, and such consents and waivers shall be in full
force and effect at the Closing. All corporate and other action and
governmental filings necessary to effectuate the terms of this
Agreement, the Series C Preferred Stock and the other agreements and
instruments executed and delivered by the Company in connection
herewith shall have been made or taken.
- 5 -
<PAGE> 6
(f) The Restated Certificate of Incorporation of the
Company shall have been amended and restated in the form set forth in
Exhibit A attached hereto.
(g) A Certificate of the Secretary of State of the
State of Delaware as to the due incorporation and good standing of the
Company and a certificate of the Secretary of State of each
jurisdiction in which the Company is required to qualify to do business
as a foreign corporation shall have been provided to the Purchasers and
their special counsel.
(h) Payment for the costs, attorneys' fees, expenses,
taxes and filing fees identified in Section 8.04.
(i) The members of the Board of Directors of the
Company (the "Board") immediately following the Closing shall consist
of five (5) members, which members shall include Gary J. Anderson,
M.D., Hubert Schoemaker, Ph.D., Christopher Gabrieli, Barry Berkowitz,
Ph.D. (for so long as he is an officer, employee or otherwise
materially involved with the Company, as determined by the Board of
Directors, including the Investor Directors), and Edwin M. Kania.
(j) This Agreement shall have been executed by
Purchasers that are obligated to purchase an aggregate of at least
$2,303,217 of Series C Preferred Stock at the Closing in the amounts
set forth in Exhibit 1.01 and such Purchasers shall have delivered to
the Company the full purchase price for the Series C Preferred Shares
being purchased.
(k) A Scientific Advisory Board of the Company
composed of individuals acceptable to the Purchasers in their sole
discretion shall continue to be constituted.
(l) At the Closing, each Purchaser (other than the
Bessemer Purchasers and the Company Friends) shall have simultaneously
with the other Purchasers (other than the Bessemer Purchasers and the
Company Friends) purchased the Series C Preferred Shares that such
Purchaser is obligated to purchase hereunder and shall have paid the
full purchase price therefor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as follows:
3.01. ORGANIZATION AND STANDING OF THE COMPANY. The Company is a duly
organized and validly existing corporation in good standing under the laws of
the State of Delaware and has all requisite corporate power and authority for
the ownership and operation
- 6 -
<PAGE> 7
of its properties and for the carrying on of its business as now conducted and
as now proposed to be conducted and to execute and deliver this Agreement and
any other agreement to which it is a party hereunder, to issue, sell and deliver
the Series C Preferred Shares, to issue and deliver the Conversion Shares and to
perform its other obligations pursuant hereto and thereto. The Company is duly
licensed or qualified and in good standing as a foreign corporation authorized
to do business in all jurisdictions wherein the character of the property owned
or leased or the nature of the activities conducted by it makes such licensing
or qualification necessary, except where the failure to be so licensed or
qualified would not have a material adverse effect on the business, operations
or financial condition of the Company.
3.02. CORPORATE ACTION. This Agreement and any other agreement to
which it is a party hereunder have been duly authorized, executed and delivered
by the Company and constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms.
3.03. GOVERNMENTAL APPROVALS. Except for the filing of any notice
prior or subsequent to the Closing that may be required under applicable state
and/or Federal securities laws, and the filing of the Restated Certificate of
Incorporation (which, if required, shall be filed on a timely basis), no
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be necessary
for, or in connection with, the execution and delivery by the Company of this
Agreement, for the offer, issue, sale, execution or delivery of the Series C
Preferred Shares, or for the performance by the Company of its obligations under
this Agreement.
3.04. LITIGATION. There is no litigation or governmental proceeding
or investigation pending or, to the knowledge of the Company, threatened against
the Company affecting any of its properties or assets, or, to the knowledge of
the Company, against any officer, Key Employee or the holder of more than ten
percent (10%) of the capital stock of the Company relating to the Company or its
business, nor, to the knowledge of the Company, has there occurred any event or
does there exist any condition on the basis of which it is reasonably likely
that any such litigation, proceeding or investigation might properly be
instituted. There are no actions or proceedings pending or, to the Company's
knowledge, threatened (or any basis therefor known to the Company) which might
result, either in any case or in the aggregate, in any material adverse change
in the business, operations, Intellectual Property Rights, affairs or financial
condition of the Company or in any of its properties or assets, or which might
call into question the validity of this Agreement, the Series C Preferred Stock,
or any action taken or to be taken pursuant hereto or thereto.
3.05. CERTAIN AGREEMENTS OF OFFICERS AND EMPLOYEES. To the Company's
knowledge, no officer, employee or consultant of the Company is, or is now or is
expected to be, in violation of any material term of any employment contract,
patent disclosure agreement, proprietary information agreement, noncompetition
agreement, nonsolicitation agreement, confidentiality agreement, or any other
similar contract or agreement or any restrictive covenant,
- 7 -
<PAGE> 8
relating to the right of any such officer, employee, or consultant to be
employed or engaged by the Company because of the nature of the business
conducted or to be conducted by the Company or relating to the use of trade
secrets or proprietary information of others, and to the Company's knowledge and
belief, the continued employment or engagement of the Company's officers,
employees or consultants does not subject the Company or any Purchaser to any
material liability with respect to any of the foregoing matters.
3.06. COMPLIANCE WITH OTHER INSTRUMENTS. The Company is in compliance
in all respects with the terms and provisions of this Agreement and of its
Restated Certificate of Incorporation and By-laws, each as amended and/or
restated to date, and in all respects with the terms and provisions of all
mortgages, indentures, leases, agreements and other instruments by which it is
bound or to which it or any of its properties or assets are subject where
noncompliance would have a material adverse affect on the business, assets,
operations, or financial condition of the Company. The Company is in compliance
in all respects with all judgments, decrees, governmental orders, laws,
statutes, rules or regulations by which it is bound or to which it or any of its
properties or assets are subject where noncompliance with which would have a
material adverse affect on the business, assets, operations, or financial
condition of the Company. Neither the execution, issuance and delivery of this
Agreement or the Series C Preferred Shares, nor the consummation of any
transaction contemplated hereby or thereby, has constituted or resulted in or
will constitute or result in a default or violation of any term or provision of
any of the foregoing documents, instruments, judgments, agreements, decrees,
orders, statutes, rules and regulations where noncompliance with which would
have a material adverse affect on the business, assets, operations, or financial
condition of the Company.
3.07. TITLE TO ASSETS, PATENTS. The Company has good and marketable
title in fee to such of its fixed assets as are real property and purported to
be owned, and good and merchantable title to all of its other assets, tangible
and intangible, free of any mortgages, pledges, charges, liens, security
interests or other encumbrances, except those indicated in Exhibit 3.07. The
Company enjoys peaceful and undisturbed possession under all leases under which
it is operating, and all said leases are valid and subsisting and in full force
and effect. All of such assets and leases are listed in Exhibit 3.07.
The Company owns or has a valid right to use the Intellectual
Property Rights being used to conduct its business (i) as now operated and (ii)
as now proposed to be operated (a complete list of licenses, contract rights and
registrations of such Intellectual Property Rights is attached hereto as Exhibit
3.07); and the conduct of its business as now operated and as now proposed to be
operated does not and is not expected to conflict with or infringe upon the
intellectual property rights of others. Except as set forth on Exhibit 3.07, no
claim is pending or threatened against the Company and/or, to the Company's
knowledge, its officers, employees and consultants to the effect that any such
Intellectual Property Right owned or licensed by the Company, or which the
Company otherwise has the right to use, is invalid or unenforceable by the
Company or subject to any claim of infringement. Except pursuant to the terms of
any licenses specified on Exhibit 3.07, the Company has no obligation to
compensate any Person for
- 8 -
<PAGE> 9
the use of any such Intellectual Property Rights and the Company has not granted
any Person any license or other right to use any of the Intellectual Property
Rights of the Company or otherwise has licensed from others the intellectual
property rights of third parties, whether requiring the payment of royalties or
not.
The Company has taken reasonable measures in accordance with
industry standards to protect and preserve the security, confidentiality and
value of its Intellectual Property Rights, including its trade secrets and other
confidential information. All employees and consultants of the Company involved
in the design, review, evaluation or development of inventions or Intellectual
Property Rights have executed nondisclosure and assignment of inventions
agreements in the Company's customary form. To the best knowledge of the
Company, all trade secrets and other confidential information of the Company are
presently valid and protectible and are not part of the public domain or
knowledge, nor, to the best knowledge of the Company, have they been used,
divulged or appropriated for the benefit of any person other than the Company or
otherwise to the detriment of the Company. To the best of the Company's
knowledge, no employee or consultant of the Company has used any trade secrets
or other confidential or proprietary information or techniques of any other
person in the course of their work for the Company or is expected to use such
secrets or information or techniques when conducting the business which the
Company presently intends to conduct. The Company is the exclusive owner of all
right, title and interest in its Intellectual Property Rights as purported to be
owned by the Company, and such Intellectual Property Rights are valid and in
full force and effect. Neither the Company, nor any of its employees or
consultants has received notice of, and to the best of the Company's knowledge
after reasonable investigation, there are no claims that the Company's
Intellectual Property Rights or the use or ownership thereof by the Company
infringes, violates or conflicts with any such right of any third party. No
university, hospital, government agency (whether federal or state) or other
organization which sponsored research and development conducted by the Company
has any claim of right to or ownership of or other encumbrance upon the
Intellectual Property Rights of the Company except as disclosed in Exhibit 3.07.
3.08. TRANSACTIONS WITH AFFILIATES. Except as set forth in Exhibit 3.08
there are no loans, leases, royalty agreements or other continuing transactions
between (a) the Company or, to the Company's best knowledge, any of its
customers or suppliers, and (b) any officer, employee, consultant or director of
the Company or any Person owning five percent (5%) or more of the capital stock
of the Company, or to the Company's knowledge, any member of the immediate
family of such officer, employee, consultant, director or stockholder or any
corporation or other entity controlled by such officer, employee, consultant,
director or stockholder, or a member of the immediate family of such officer,
employee, consultant, director or stockholder.
3.09. INDEBTEDNESS; ASSUMPTIONS OR GUARANTIES OF INDEBTEDNESS OF OTHER
PERSONS. The Company has no Indebtedness except as set forth in Exhibit 3.09.
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
- 9 -
<PAGE> 10
purchase, to provide funds for payment, to supply funds to or otherwise invest
in the debtor or otherwise to assure the creditor against loss), any
Indebtedness of any other Person except as set forth in Exhibit 3.09.
3.10. INVESTMENTS IN OTHER PERSONS. Except as set forth in Exhibit
3.10, the Company has not made any loans or advances in excess of $10,000 in the
aggregate to any Person which is outstanding on the date of this Agreement, nor
is it committed or obligated to make any such loan or advance, nor does the
Company own any capital stock, assets comprising the business of, obligations
of, or any interest in, any Person. The Company does not have, and has not since
its incorporation had, any Subsidiaries.
3.11. SECURITIES ACT OF 1933. 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 Series C Preferred Shares hereunder. Neither the
Company nor anyone authorized to act on its behalf has or will sell, offer to
sell or solicit offers to buy the Series C Preferred Shares or similar
securities to, or solicit offers with respect thereto from, or enter into any
preliminary conversations or negotiations relating thereto with, any Person, so
as to bring the issuance and sale of the Series C Preferred Shares under the
registration provisions of the Securities Act and applicable state securities
laws.
3.12. DISCLOSURE. Neither this Agreement, nor any other written
agreement or statement, furnished to any of the Purchasers or their special
counsel by or on behalf of the Company in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances in which made, not misleading.
Projections made in the Business Plan are not considered to be facts for the
purpose of this Section. Such projections were prepared in good faith on the
basis of reasonable assumptions. There is no fact within the knowledge of the
Company or any of its executive officers which has not been disclosed herein or
in writing by them to the Purchasers and which materially adversely affects, or
in the future in their opinion may, insofar as they can now foresee, materially
adversely affect the business, operations, properties, Intellectual Property
Rights, assets or condition, financial or other, of the Company. Without
limiting the foregoing, the Company has no knowledge that there exists, or that
there is pending or planned, any patent, invention, device, application or
principle or any statute, rule, law, regulation, standard or code which would
materially adversely affect the business, prospects, operations, Intellectual
Property Rights, affairs or financial condition of the Company.
3.13. CAPITALIZATION; STATUS OF CAPITAL STOCK. As of the Closing, the
Company will have a total authorized capitalization consisting of (i) 13,000,000
shares of Common Stock, $.001 par value and (ii) 8,275,000 shares of preferred
stock, $.01 par value ("Preferred Stock"), of which 6,400,000 shares will be
designated as Series A Convertible Preferred Stock, $.01 par value ("Series A
Preferred Stock"), 1,100,000 shares will be designated as Series B Convertible
Preferred Stock, $.01 par value ("Series B Preferred Stock") and 775,000 shares
will be designated as Series C Preferred Stock. As of the Closing, 1,506,000
shares of Common Stock
- 10 -
<PAGE> 11
will be issued and outstanding, 6,150,732 shares of Series A Preferred Stock
will be issued and outstanding and 1,063,366 shares of Series B Preferred Stock
will be issued and outstanding. A complete list of the capital stock of the
Company which has been previously issued and the names in which such capital
stock is registered on the stock transfer book of the Company is set forth in
Exhibit 3.13 hereto. All the outstanding shares of capital stock of the Company
have been duly authorized, and are validly issued, fully paid and
non-assessable. The Series C Preferred Shares when issued and delivered in
accordance with the terms hereof, and the Conversion Shares, when issued and
delivered upon conversion of the Series C Preferred Shares, will be duly
authorized, validly issued, fully-paid and non-assessable. Except for 2,112,000
shares of Common Stock that are reserved for issuance upon exercise of stock
options, 177,083 shares of Series A Preferred Stock that have been reserved for
issuance upon exercise of Warrants issued or to be issued to Comdisco, Inc. (the
"Comdisco Leasing Warrants") and the shares of Common Stock reserved for
issuance upon the conversion of the currently outstanding shares of Series A
Preferred Stock, Series B Preferred Stock, and Series A Preferred Stock which
may be issued upon exercise of the Comdisco Leasing Warrants, all as further set
forth in Exhibit 3.13, no options, warrants, subscriptions or purchase rights of
any nature to acquire from the Company, or commitments of the Company to issue,
shares of capital stock or other securities are authorized, issued or
outstanding, nor is the Company obligated in any other manner to issue shares or
rights to acquire any of its capital stock or other securities except as
contemplated by this Agreement. None of the Company's outstanding securities or
authorized capital stock, including the Series C Preferred Stock, are subject to
any rights of redemption, repurchase, rights of first refusal, preemptive rights
or other similar rights, whether contractual, statutory or otherwise, for the
benefit of the Company, any stockholder, or any other Person, except pursuant
hereto, pursuant to the Amended and Restated Voting and Co-Sale Agreement, dated
as of January 11, 1994 (the "Voting and Co-Sale Agreement") or as set forth on
Exhibit 3.13. Except as set forth in Exhibit 3.13, there are no restrictions on
the transfer of shares of capital stock of the Company other than those imposed
by relevant Federal and state securities laws and as otherwise contemplated by
this Agreement and the Voting and Co-Sale Agreement. The offer and sale of all
capital stock and other securities of the Company issued before the Closing
complied with or were exempt from all applicable Federal and state securities
laws and no stockholder has a right of rescission or damages with respect
thereto.
3.14. MATERIAL AGREEMENTS. Except as set forth in Exhibit 3.14 the
Company is not a party to any material written or oral contract, instrument,
agreement, commitment, obligation, plan or arrangement, or any other material
agreement which could adversely affect the business, assets, liabilities,
Intellectual Property Rights, financial condition or operations of the Company.
The Company, and to the best of the Company's knowledge, each other party
thereto have in all material respects performed all the obligations required to
be performed by them to date, have received no notice of default and are not in
default in any material respect under any lease, agreement or contract now in
effect to which the Company is a party or by which it or its property may be
bound. Each of the contracts or agreements listed in Exhibit 3.14 is in full
force and effect with no default, anticipated or threatened material default or
material failure of performance or observance of any obligations or conditions
contained therein, and
- 11 -
<PAGE> 12
none of the foregoing parties nor the Company has provided any notice of default
or of its intention to terminate these agreements.
3.15. ABSENCE OF CERTAIN DEVELOPMENTS. The Company is not a party to
any written or material oral contract or instrument or other corporate
restriction which individually or in the aggregate is reasonably likely to
adversely affect the business, prospects, financial condition, operations,
Intellectual Property Rights, property or affairs of the Company. The Company
has no liability or obligation, whether absolute, contingent, or otherwise,
except for those incurred in the ordinary course.
3.16. ENVIRONMENTAL AND SAFETY LAWS. To the best of the Company's
knowledge after due investigation, it is not in violation of any applicable
statute, law or regulation relating to the environment or occupational safety
and health in any material respect, and to the best of its knowledge after due
investigation, no material expenditures will be required in order to comply with
any such statute, law or regulation except in the ordinary course of doing
business.
3.17. U.S. REAL PROPERTY HOLDING CORPORATION. The Company is not now
and has never been a "United States Real Property Holding Corporation" as
defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service.
ARTICLE IV
COVENANTS OF THE COMPANY
The following provisions supersede and amend and restate in their
entirety the covenants of the Company set forth in Article IV of the Series A
and B Agreement. The Purchasers, in their capacity as Purchasers of Shares and
in their capacity as holders of at least 60% of the outstanding shares of Series
A Preferred Stock and Series B Preferred Stock, hereby consent to the amendment
and restatement of such covenants and agree that the following provisions shall
supersede and amend and restate in their entirety the provisions of Article IV
of the Series A and B Agreement. For purposes of this Article IV, and Article V
and Article VI, (a) the term "Purchaser" or "Purchasers" also shall mean and
include the Purchasers as defined in the Series A and B Agreement, (b) the term
"Shares" also shall mean and include the shares of Series A Preferred Stock and
Series B Preferred Stock issued pursuant to the Series A and B Agreement and
shares of Common Stock issuable upon conversion thereof and (c) the term
"Conversion Shares" also shall mean and include the shares of Common Stock
issuable upon conversion of the Series A Preferred Stock and the Series B
Preferred Stock.
4.01. AFFIRMATIVE COVENANTS OF THE COMPANY OTHER THAN REPORTING
REQUIREMENTS. Without limiting any other covenants and provisions hereof, and
except to the extent the following covenants and provisions of this Section 4.01
are waived in any instance by either (i) a majority of the Investor Directors or
(ii) the holders of at least 60% of the
- 12 -
<PAGE> 13
outstanding shares of Serial Preferred Stock, the Company covenants and agrees
that until the consummation of a Qualified Public Offering, it will perform and
observe the following covenants and provisions, and will cause each Subsidiary,
if and when such Subsidiary exists, to perform and observe such of the following
covenants and provisions as are applicable to such Subsidiary:
(a) MAINTENANCE OF KEY MAN INSURANCE. Maintain term
life insurance on the life of Barry Berkowitz in the amount of
$1,000,000, for so long as such person remains an officer or employee
of the Company, the proceeds of which are payable to the Company. The
Company will maintain Technology Leaders L.P., Technology Leaders
Offshore C.V. and Bessemer Venture Partners III L.P. as notice parties
to such policy and shall use reasonable efforts to ensure that the
issuer of such policy provides each such party with at least twenty
(20) days' notice before such policy is modified or terminated (for
failure to pay premium or otherwise) or assigned, or before any change
is made in the designation of the beneficiary thereof.
(b) BUDGETS APPROVAL. At least thirty (30) days prior
to the commencement of each fiscal year, prepare and submit to, and
obtain in respect thereof the approval of two-thirds of the members of
the Board of Directors, a business plan and monthly operating budget in
detail for each fiscal year, monthly operating expenses and profit and
loss projections, quarterly cash flow projections and a capital
expenditure budget for the fiscal year, and including a summary of
proposed research and development activities for the forthcoming year,
the status and proposed activities for any joint venture or other
licensing arrangements with third parties, including pharmaceutical
companies, universities, hospitals and others.
(c) NEW DEVELOPMENTS. Cause all technological
developments, patentable or unpatentable inventions, discoveries or
improvements by the Company's or any Subsidiary's employees or
consultants to be documented in accordance with industry practice and,
where possible and appropriate, to file and prosecute United States and
foreign patent, copyright, trademark, or other Intellectual Property
Right applications relating to and protecting the Company's inventions,
discoveries or developments on behalf of the Company or any Subsidiary.
(d) AGREEMENTS OF OFFICERS AND EMPLOYEES. Cause each
employee of the Company or any Subsidiary now or hereafter employed to
execute and deliver nondisclosure and assignment of inventions
agreements (in the Company's customary form or agreements otherwise
approved by the Board of Directors of the Company, including a majority
of the Investor Directors) and cause each Key Employee of the Company
or any Subsidiary hereafter employed to execute and deliver
non-competition, nondisclosure and assignment of inventions agreements
(in the Company's customary form or agreements otherwise approved by
the Board of Directors of the Company, including a majority of the
Investor Directors), and use its best efforts to cause all consultants
of the Company involved in the design, review, evaluation or
development
- 13 -
<PAGE> 14
of inventions or Intellectual Property Rights to execute and deliver
nondisclosure and assignment of inventions agreements (in the Company's
customary form or agreements otherwise approved by the Board of
Directors, including a majority of the Investor Directors). The Company
shall not amend or waive any of the material provisions of such
agreements.
(e) BY-LAWS; MEETINGS AND INDEMNIFICATION. The
Company shall at all times cause its By-laws to provide that, (A)
unless otherwise required by the laws of the state of its
incorporation, (i) any two directors or (ii) any holder or holders of
at least 25% of the outstanding shares of Preferred Stock, voting as a
separate class, shall have the right to call a meeting of the Board of
Directors or stockholders, respectively, and (B) a quorum for a meeting
of the Board of Directors or any Committee hereof of which an Investor
Director is a member shall require the attendance of at least two
Investor Directors. The Company shall at all times maintain provisions
in its By-laws or Restated Certificate of Incorporation indemnifying
all directors against liability to the maximum extent permitted under
the laws of the state of its incorporation.
(f) EXPENSES OF DIRECTORS. Promptly reimburse in full
each director of the Company for all of his reasonable out-of-pocket
expenses incurred in attending each meeting of the Board of Directors
of the Company or any Committee thereof.
(g) SIZE OF BOARD. Fix and maintain the number of
Directors on the Board of Directors of the Company at no more than six
(6) members, including Barry A. Berkowitz, four (4) representatives of
the holders of Serial Preferred Stock and one (1) member designated by
the chief executive officer of the Company.
(h) RULE 144A INFORMATION. At all times during which
the Company is neither subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act, nor exempt from reporting pursuant to
Rule 12g3-2(b) under the Exchange Act, the Company will provide as
promptly as practicable (in any event not later than twenty (20) days
after initial request) in written form, upon the written request of any
Purchaser or a prospective buyer of Shares from any Purchaser, all
information required by Rule 144A(d)(4)(i) of the General Regulations
promulgated by the Commission under the Securities Act ("Rule 144A
Information"). The Company further covenants, upon written request, as
promptly as practicable (in any event not later than twenty (20) days
after initial request) to cooperate with and assist any Purchaser or
any member of the National Association of Securities Dealers, Inc.
system for Private Offerings Resales and Trading through Automated
Linkage ("PORTAL") in applying to designate and thereafter maintain the
eligibility of the Shares for trading through PORTAL. The Company's
obligations under this Section 4.01(h) shall at all times be contingent
upon the relevant Purchaser's obtaining from a prospective purchaser an
agreement to take all reasonable precautions to safeguard the Rule 144A
Information from disclosure to anyone other than a person who will
assist such purchaser in evaluating the purchase of the Shares.
- 14 -
<PAGE> 15
(i) STOCK PLAN. The Company has created a stock
option plan and has reserved an aggregate of 2,112,000 options for the
purchase of Common Stock for issuance to employees, officers and
consultants of the Company and to members of the Company's Scientific
Advisory Board. All options to be granted (or stock issued directly)
under any Stock Plan or otherwise shall vest and become exercisable in
equal annual installments over either a four-year or five-year period
and be subject to a right of refusal of the Company, unless otherwise
approved by a majority of the Board of Directors including a majority
of the Investor Directors.
(j) MEETINGS OF DIRECTORS AND COMMITTEES. Hold
meetings of the Company's Board of Directors not less than on a
quarterly basis; if the Company appoints an Executive Committee of the
Board of Directors, such committee shall be composed of at least four
(4) Directors, including at least three (3) Investor Directors; and
appoint and maintain a Stock Option/Compensation Committee of the Board
of Directors composed of at least four (4) Directors, including at
least three (3) Investor Directors.
4.02. NEGATIVE COVENANTS OF THE COMPANY. The Company covenants and
agrees that until the consummation of a Qualified Public Offering, it will
comply with and observe the following negative covenants and provisions, and
will cause each Subsidiary to comply with and observe such of the following
covenants and provisions as are applicable to such Subsidiary, if and when such
Subsidiary exists, and will not without (i) the written consent or written
waiver of the holders of at least 60% of the outstanding shares of the Serial
Preferred Stock or (ii) a majority of the members of the Board of Directors
including a majority of the Investor Directors:
(a) DEALINGS WITH AFFILIATES. Enter into any
transaction, including, without limitation, any loans or extensions of
credit or other agreements with any employee, consultant, officer or
director of the Company or any Subsidiary or holder of five percent
(5%) of any class of capital stock of the Company or any Subsidiary, or
any member of their respective immediate families or any corporation or
other entity directly or indirectly controlled by one or more of such
employees, consultants, officers, directors or 5% stockholders or
members of their immediate families, on terms less favorable to the
Company or any Subsidiary than it would obtain in a transaction between
unrelated parties except in the case of any transaction or series of
transactions entered into in the ordinary course of business, so long
as these are approved by the disinterested members of Board of
Directors (including a majority of the Investor Directors). The Company
has entered into certain agreements with Barry Berkowitz and with
William Timberlake set forth on Exhibit 4.02, which are hereby
ratified.
(b) ISSUANCE OF EQUITY SECURITIES. Authorize or
issue, or obligate itself to issue, any additional shares of capital
stock of the Company of any class (including any options, warrants or
other rights to purchase capital stock), provided, however, that the
provisions of this Section 4.02(b) shall not apply to the issuance of:
- 15 -
<PAGE> 16
(i) the Conversion Shares; or (ii) up to 2,112,000 shares of Common
Stock or options, warrants or other rights exercisable therefor, issued
on or after the date hereof to directors, officers, employees or
consultants of the Company and any Subsidiary (including members of the
Scientific Advisory Board) pursuant to any qualified or non-qualified
stock option plan or agreement, employee stock ownership plan, employee
benefit plan, stock purchase agreement, stock plan, stock restriction
agreement, or consulting agreement or such other options, equity
arrangements, agreements or plans approved by two-thirds of the members
of the Board of Directors of the Company (including a majority of the
Investor Directors); or (iii) shares issued upon conversion of the
outstanding shares of Series A Preferred Stock and Series B Preferred
Stock; or (iv) the Comdisco Leasing Warrants, shares of Series A
Preferred Stock issued upon exercise of the Comdisco Leasing Warrants
or shares of Common Stock issued upon conversion of shares of Series A
Preferred Stock issued upon exercise thereof.
(c) TRANSFERS OF TECHNOLOGY. Transfer, sell, dispose
of, encumber, pledge, grant a lien on or security interest in, assign,
lease, license or donate any ownership or interest in, or material
rights relating to, any of its technology, or other Intellectual
Property Rights to any person or entity which is not a member of the
"consolidated group" of the Company and its Subsidiaries; provided,
however, that this Section shall not apply to licenses of technology or
Intellectual Property Rights accomplished in the ordinary course of the
Company's business.
(d) RESTRICTIONS ON INDEBTEDNESS. The Company
covenants that it will not, and will not permit any of its Subsidiaries
to, incur, create, or assume any Indebtedness other than trade debt,
loans to employees in an annual aggregate amount not to exceed $50,000
and property leases, all as approved by the Board of Directors,
including a majority of the Investor Directors.
(e) ASSUMPTIONS OR GUARANTIES OF INDEBTEDNESS OF
OTHER PERSONS. Assume, guarantee, endorse or otherwise become directly
or contingently liable on, or permit any Subsidiary to assume,
guarantee, endorse 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 payment, to
supply funds to or otherwise invest in the debtor or otherwise to
assure the creditor against loss) any Indebtedness of any other Person,
except for guaranties by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business.
(f) AMENDMENTS. Amend the Restated Certificate of
Incorporation or By-laws of the Company.
4.03. REPORTING REQUIREMENTS. Until the consummation of the Initial
Public Offering, the Company will furnish the following to each Person who is
the holder of not less than 5% of the Shares:
- 16 -
<PAGE> 17
(a) MONTHLY REPORTS: as soon as available and in any
event within 45 days after the end of each calendar month, balance
sheets, statements of income and retained earnings and a summary
statement of monthly cash flow and expenses of the Company and its
Subsidiaries for such month and for the period commencing at the end of
the previous fiscal year and ending with the end of such month, setting
forth in each case in comparative form the corresponding figures for
the corresponding period of the preceding fiscal year, and including
comparisons to the monthly budget or business plan and an analysis of
the variances from the budget or plan, prepared in accordance with
generally accepted accounting principles consistently applied;
(b) ANNUAL REPORTS: as soon as available and in any
event within 120 days after the end of each fiscal year of the Company,
a copy of the annual audit report for such year for the Company and its
Subsidiaries, including therein consolidated and consolidating balance
sheets of the Company and its Subsidiaries as of the end of such fiscal
year and consolidated and consolidating statements of income and
retained earnings and of changes in financial position of the Company
and its Subsidiaries for such fiscal year, setting forth in each case
in comparative form the corresponding figures for the preceding fiscal
year, all such consolidated statements to be duly certified by the
chief financial officer of the Company and an independent public
accountant of recognized national standing approved by the Board of
Directors including a majority of the Investor Directors;
(c) BUDGETS AND OPERATING PLAN: as soon as available
and in any event at least 30 days before the beginning of each fiscal
year of the Company, a business plan and monthly and quarterly
operating budgets for the forthcoming fiscal year, and as soon as
available and in any event within 30 days after the end of each
calendar month, monthly comparisons against the business plan and
monthly operating budgets (including a summary of proposed research and
development activities, and the status and proposed activities for any
joint venture or other licensing arrangements with any third party).
(d) NOTICE OF ADVERSE CHANGES: promptly after the
occurrence thereof and in any event within five (5) business days after
it becomes aware of each occurrence, notice of any material adverse
change in the business, assets, Intellectual Property Rights,
management, licensing activities, operations or financial condition of
the Company; and
(e) REPORTS AND OTHER INFORMATION: promptly upon
receipt, publication, commencement or occurrence provide to each
Purchaser copies of all material consulting reports, notices of all
material actions, suits or proceedings, copies of all accountant's
reviews, and reports to management, and such other information as the
Company shall make available to its directors or stockholders or the
Purchasers shall reasonably request.
- 17 -
<PAGE> 18
ARTICLE V
REGISTRATION RIGHTS
The following provisions supersede and amend and restate in their
entirety the provisions regarding registration rights set forth in Article V of
the Series A and B Agreement. The Purchasers, in their capacity as Purchasers of
Shares and in their capacity as holders of at least 60% of the outstanding
shares of Series A Preferred Stock and Series B Preferred Stock, hereby consent
to the amendment and restatement of such registration rights and agree that the
following provisions shall supersede and amend and restate in their entirety the
provisions of Article V of the Series A and B Agreement.
5.01. "PIGGY-BACK" REGISTRATIONS. If at any time the Company shall
determine to register for its own account or the account of others under the
Securities Act (including pursuant to the Qualified Public Offering, the Initial
Public Offering or a demand for registration of any stockholder of the Company
other than the Purchasers) any of its equity securities, other than on Form S-8
or Form S-4 or their then equivalents or otherwise relating to shares of Common
Stock to be issued solely in connection with any acquisition of any entity or
business or shares of Common Stock issuable in connection with stock option or
other employee benefit plans, it shall send to each holder of Registrable
Shares, including each holder who has the right to acquire Registrable Shares,
written notice of such determination and, if within ten (10) business days after
receipt of such notice, such holder shall so request in writing, the Company
shall use its best efforts to include in such registration statement all or any
part of the Registrable Shares such holder requests to be registered.
If, in connection with any offering involving an underwriting, the
managing underwriter shall impose a limitation on the number of shares of such
Common Stock which may be included in the registration statement because, in its
judgment, such limitation is necessary to effect an orderly public distribution,
then the Company shall be obligated to include in such registration statement
only such limited portion (which may be none) of the Registrable Shares with
respect to which such holder has requested inclusion pursuant hereto as may
reasonably be determined by the managing underwriters; provided, however, as
between the Company, other stockholders holding contractual registration rights,
and the holders of Registrable Shares, in no event shall the Registrable Shares
included in such offering be limited to less than twenty-five percent (25%) of
the aggregate shares offered. Any inclusion of Registrable Shares in the
offering, when the managing underwriter has so limited the number of Registrable
Shares that may be included in the offering, shall be allocated pro rata among
the holders of Registrable Shares (or their permitted assigns) seeking to
include such shares and the holders of other registration rights seeking to
include their shares, in proportion to the number of Registrable Shares (whether
or not such shares are sought to be included in such offering) held by such
persons. No incidental right under this Section 5.01 shall be construed to limit
any registration required under Section 5.02. The obligations of the Company
under this Section 5.01 may be waived at any time upon the written consent of
holders of sixty percent (60%) in interest of the Registrable Shares who are
participating in the offering and shall expire on the seventh anniversary
following the consummation of an Initial Public Offering or, if earlier, as set
forth in Section
- 18 -
<PAGE> 19
5.15. The Company shall have the right to withdraw any registration initiated by
it pursuant to Section 5.01.
5.02. REQUIRED REGISTRATIONS. If on any two occasions (providing the
offering is consummated) one or more holders of at least 60% of the Registrable
Shares shall notify the Company in writing that it or they desire to offer or
cause to be offered for public sale at least thirty percent (30%) of the
Registrable Shares, the Company will so notify all holders of Registrable
Shares, including all holders who have a right to acquire Registrable Shares.
Upon written request of any holder given within fifteen (15) days after the
receipt by such holder from the Company of such notification, the Company will
use its best efforts to cause such of the Registrable Shares as may be requested
by any holder thereof (including the holder or holders giving the initial notice
of intent to offer) to be registered under the Securities Act as expeditiously
as possible on Form S-1 or Form SB-2 or their respective successor registration
statement forms. The Company shall not be required to effect more than two
registrations pursuant to this Section 5.02 (providing the offering is
consummated). If the Company determines to include shares to be sold by it or by
other selling shareholders in any registration request pursuant to this Section
5.02, such registration shall be deemed to have been a "piggy back" registration
under Section 5.01, and not a "demand" registration under this Section 5.02 if
the holders of Registrable Shares are unable to include in any such registration
statement eighty-five percent (85%) of the Registrable Shares initially
requested for inclusion in such registration statement. The Company shall not be
required to effect a registration pursuant to this Section 5.02 unless the
minimum market value of any offering and registration of Registrable Shares made
pursuant thereto is at least $3,000,000, before calculation of underwriting
discounts and commissions. The holders of Registrable Shares may not exercise
their rights under this Section 5.02 until the earlier to occur of (i) twenty
(20) months following the date of the Closing or (ii) 180 days after the
effectiveness of any registration statement covering the Initial Public
Offering. No request for registration under this Section 5.02 may be made within
the one hundred and eighty day period after the effective date of a registration
statement filed by the Company or while the Company is in the process of
preparing a registration statement. The Company shall have the right to delay
any registration under this section for up to 90 days if the Company's Board of
Directors reasonably determines such delay is necessary in view of the Company's
current circumstances.
5.03. REGISTRATIONS ON FORMS S-2 OR S-3. In addition to the rights
provided the holder of Registrable Shares in Sections 5.01 and 5.02 above, if
the registration of Registrable Shares under the Securities Act can be effected
on Forms S-2 or S-3 (or any similar form promulgated by the Commission), then
upon the written request of one or more holders of a majority of the Registrable
Shares, the Company will so notify each holder of Registrable Shares, including
each holder who has a right to acquire Registrable Shares, and then will, as
expeditiously as possible, use its best efforts to effect qualification and
registration under the Securities Act on Forms S-2 or S-3 of all or such portion
of the Registrable Shares as the holder or holders shall specify; provided,
however, the Company shall not be required to effect a registration pursuant to
this Section 5.03 unless the market value of the Registrable Shares to be sold
in any such registration shall be estimated to be at least $1,000,000 at the
time of filing
- 19 -
<PAGE> 20
such registration statement, and further provided that the Company shall not be
required to effect more than two (2) registrations during any twelve (12) month
period pursuant to this Section 5.03 and six (6) registrations in the aggregate
under this Section 5.03. No request for registration under this Section 5.03 may
be made within the one hundred and eighty day period after the effective date of
a registration statement filed by the Company or while the Company is in the
process of preparing a registration statement.
5.04. EFFECTIVENESS. The Company will use its best efforts to
maintain the effectiveness for up to 90 days (or such shorter period of time as
the underwriters need to complete the distribution of the registered offering,
or six months in the case of any registration relating to Registrable Shares
pursuant to Section 5.02 or 5.03) of any registration statement pursuant to
which any of the Registrable Shares are being offered, and from time to time
will amend or supplement such registration statement and the prospectus
contained therein to the extent necessary to comply with the Securities Act and
any applicable state securities statute or regulation. The Company will also
provide each holder of Registrable Shares with as many copies of the prospectus
contained in any such registration statement as it may reasonably request. For a
period not to exceed 60 days, the Company shall not be obligated to prepare and
file, or be prevented from delaying or abandoning, a registration statement
pursuant to this Agreement at any time when the Company, in its good faith
judgment with advice of counsel, reasonably believes
(a) that the filing thereof at the time requested, or
the offering of Registrable Shares pursuant thereto, would materially
and adversely affect (a) a pending or scheduled public offering of the
Company's securities, (b) an acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction by or of the
Company, (c) pre-existing and continuing negotiations, discussions or
pending proposals with respect to any of the foregoing transactions, or
(d) the financial condition of the Company in view of the disclosure of
any pending or threatened litigation, claim, assessment or governmental
investigation which may be required thereby; and
(b) that the failure to disclose any material
information with respect to the foregoing would cause a violation of
the Securities Act or the Exchange Act.
5.05. INDEMNIFICATION OF HOLDER OF REGISTRABLE SHARES. In the event
that the Company registers any of the Registrable Shares under the Securities
Act, the Company will indemnify and hold harmless each holder and each
underwriter of Registrable Shares (including their officers, directors,
affiliates and partners and including any broker or dealer through whom
Registrable Shares may be sold in such registration) and each Person, if any,
who controls such holder or any such underwriter within the meaning of Section
15 of the Securities Act from and against any and all losses, claims, damages,
expenses or liabilities, joint or several, to which they or any of them become
subject under the Securities Act, applicable state securities laws or under any
other statute or at common law or otherwise, as incurred, and, except as
hereinafter provided, will reimburse each such holder, each such underwriter and
each such controlling Person, if any, for any legal or other expenses reasonably
incurred by them or any of them in
- 20 -
<PAGE> 21
connection with investigating or defending any actions whether or not resulting
in any liability, as incurred, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement, in any preliminary or amended preliminary prospectus or
in the final prospectus (or the registration statement or prospectus as from
time to time amended or supplemented by the Company) or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act or any state securities laws
applicable to the Company and relating to action or inaction required of the
Company in connection with such registration, unless (i) such untrue statement
or alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary or amended preliminary prospectus or final
prospectus in reliance upon and in conformity with information furnished in
writing to the Company in connection therewith by any such holder of Registrable
Shares (in the case of indemnification of such holder), any such underwriter (in
the case of indemnification of such underwriter) or any such controlling Person
(in the case of indemnification of such controlling person) expressly for use
therein, or unless (ii) in the case of a sale directly by such holder of
Registrable Shares (including a sale of such Registrable Shares through any
underwriter retained by such holder of Registrable Shares to engage in a
distribution solely on behalf of such holder of Registrable Shares), such untrue
statement or alleged untrue statement or omission or alleged omission was
contained in a preliminary prospectus and corrected in a final or amended
prospectus copies of which were delivered to such holder of Registrable Shares
or such underwriter on a timely basis, and such holder of Registrable Shares
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.
Promptly after receipt by any holder of Registrable Shares,
any underwriter or any controlling Person of notice of the commencement of any
action in respect of which indemnity may be sought against the Company, such
holder of Registrable Shares, or such underwriter or such controlling person, as
the case may be, shall notify the Company in writing of the commencement thereof
(provided, that failure to so notify the Company shall not relieve the Company
from any liability it may have hereunder, except to the extent prejudiced by
such failure) and, subject to the provisions hereinafter stated, the Company
shall be entitled to assume the defense of such action (including the employment
of counsel, who shall be counsel reasonably satisfactory to such holder of
Registrable Shares, such underwriter or such controlling Person, as the case may
be) and the payment of expenses insofar as such action shall relate to any
alleged liability in respect of which indemnity may be sought against the
Company.
Such holder of Registrable Shares, any such underwriter or any
such controlling Person shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel subsequent to any assumption of the defense by the Company shall
not be at the expense of the Company unless the employment of such counsel has
been specifically authorized in writing by the Company; provided, however,
- 21 -
<PAGE> 22
that, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party or if
the interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, the indemnified party shall have the
right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred. At any time, any holder
of Registrable Shares may select separate counsel and assume its own legal
defense with the expenses and fees of such separate counsel and other expenses
related to such separate counsel to be borne by such holder electing separate
counsel. The Company shall not be liable to indemnify any Person for any
settlement of any such action effected without the Company's written consent.
The Company shall not, except with the approval of each party being indemnified
under this Section 5.05, 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 the parties being so indemnified of a release from
all liability in respect to such claim or litigation.
In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which any holder of
Registrable Shares exercising rights under this Article V, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 5.05 but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that this Section 5.05
provides for indemnification in such case, then, the Company and such holder
will contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and of
the holder of Registrable Shares on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of the holder of Registrable Shares on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company on the one
hand or by the holder of Registrable Shares on the other, and each party's
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, however, that, in any such case,
(A) no such holder will be required to contribute any amount in excess of the
public offering price of all such Registrable Shares offered by it pursuant to
such registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
The indemnities provided in this Section 5.05 shall survive the
transfer of any Registrable Shares by such holder.
- 22 -
<PAGE> 23
5.06. INDEMNIFICATION OF COMPANY. In the event that the Company
registers any of the Registrable Shares under the Securities Act, each holder of
the Registrable Shares so registered will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed or
otherwise participated in the preparation of the registration statement, each
underwriter of the Registrable Shares so registered (including any broker or
dealer through whom such of the shares may be sold) and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act from
and against any and all losses, claims, damages, expenses or liabilities, joint
or several, to which they or any of them may become subject under the Securities
Act, applicable state securities laws or under any other statute or at common
law or otherwise, and, except as hereinafter provided, will reimburse the
Company and each such director, officer, underwriter or controlling Person for
any legal or other expenses reasonably incurred by them or any of them in
connection with investigating or defending any actions whether or not resulting
in any liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, in any
preliminary or amended preliminary prospectus or in the final prospectus (or in
the registration statement or prospectus as from time to time amended or
supplemented) or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, but only insofar as any
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company in connection therewith by such
holder of Registrable Shares expressly for use therein; provided, however, that
such holder's obligations hereunder shall be limited to an amount equal to the
proceeds received by such holder of Registrable Shares sold in such
registration.
Promptly after receipt of notice of the commencement of any
action in respect of which indemnity may be sought against such holder of
Registrable Shares, the Company shall notify such holder of Registrable Shares
in writing of the commencement thereof (provided, that failure to so notify such
holder shall not relieve such holder from any liability it may have hereunder,
except to the extent prejudiced by such failure), and such holder of Registrable
Shares shall, subject to the provisions hereinafter stated, be entitled to
assume the defense of such action (including the employment of counsel, who
shall be counsel reasonably satisfactory to the Company) and the payment of
expenses insofar as such action shall relate to the alleged liability in respect
of which indemnity may be sought against such holder of Registrable Shares. The
Company and each such director, officer, underwriter or controlling Person shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof, but the fees and expenses of such counsel subsequent to
any assumption of the defense by such holder of Registrable Shares shall not be
at the expense of such holder of Registrable Shares unless employment of such
counsel has been specifically authorized in writing by such holder of
Registrable Shares. Such holder of Registrable Shares shall not be liable to
indemnify any Person for any settlement of any such action effected without such
holder's written consent.
In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which the Company, its
officers, directors or controlling persons
- 23 -
<PAGE> 24
("Company Indemnitees") exercising its rights under this Article V, makes a
claim for indemnification pursuant to this Section 5.06, but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding that this Section 5.06 provides for indemnification, in such
case, then, the Company Indemnitees and such holder will contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion as is appropriate to reflect
the relative fault of the Company Indemnitees on the one hand and of the holder
of Registrable Shares on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Company Indemnitees on the one hand and of the holder of Registrable Shares on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
Indemnitees on the one hand or by the holder of Registrable Shares on the other,
and each party's relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission; provided, however,
that, in any such case, (A) no such holder will be required to contribute any
amount in excess of the public offering price of all such Registrable Shares
offered by it pursuant to such registration statement; and (B) no person or
entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
5.07. EXCHANGE ACT REGISTRATION. If the Company at any time shall
list any class of equity securities of the type which may be issued upon the
conversion of the Series C Preferred Stock on any national securities exchange
and shall register such class of equity securities under the Exchange Act, the
Company will, at its expense, simultaneously list on such exchange and maintain
such listing of, the Common Stock. If the Company becomes subject to the
reporting requirements of either Section 13 or Section 15(d) of the Exchange
Act, the Company will use its best efforts to timely file with the Commission
such information as the Commission may require under either of said Sections ;
and in such event, the Company shall use its best efforts to take all action as
may be required as a condition to the availability of Rule 144 or Rule 144A
under the Securities Act (or any successor exemptive rule hereinafter in effect)
with respect to such Common Stock. The Company shall furnish to any holder of
Registrable Shares forthwith upon request (i) a written statement by the Company
as to its compliance with the reporting requirements of Rule 144, (ii) a copy of
the most recent annual or quarterly report of the Company as filed with the
Commission, and (iii) such other reports and documents as a holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a holder to sell any such Registrable Securities without
registration. After the occurrence of the Initial Public Offering, the Company
agrees to use its best efforts to facilitate and expedite transfers of the
Shares pursuant to Rule 144 under the Securities Act, which efforts shall
include timely notice to its transfer agent to expedite such transfers of
Shares.
- 24 -
<PAGE> 25
5.08. DAMAGES. The Company recognizes and agrees that the holder of
Registrable Shares will not have an adequate remedy if the Company fails to
comply with this Article V and that damages may not be readily ascertainable,
and the Company expressly agrees that, in the event of such failure, it shall
not oppose an application by the holder of Registrable Shares or any other
Person entitled to the benefits of this Article V requiring specific performance
of any and all provisions hereof or enjoining the Company from continuing to
commit any such breach of this Article V.
5.09. FURTHER OBLIGATIONS OF THE COMPANY. Whenever under the preceding
Sections of this Article V, the Company is required hereunder to register
Registrable Shares, it agrees that it shall also do the following:
(a) Furnish to each selling holder such copies of
each preliminary and final prospectus and such other documents as said
holder may reasonably request to facilitate the public offering of its
Registrable Shares;
(b) Use its best efforts to register or qualify the
Registrable Shares covered by said registration statement under the
applicable securities or "blue sky" laws of such jurisdictions as any
selling holder may reasonably request; provided, however, that the
Company shall not be obligated to qualify to do business in any
jurisdictions where it is not then so qualified or to take any action
which would subject it to the service of process in suits other than
those arising out of the offer or sale of the securities covered by the
registration statement in any jurisdiction where it is not then so
subject;
(c) Furnish to each selling holder a signed
counterpart, addressed to the selling holders, of
(i) opinions of counsel for the Company, dated
the effective date of the registration statement, and
covering such matters as are required by the
Securities Act and such matters as may reasonably be
requested by the underwriters, and
(ii) "comfort" letters signed by the Company's
independent public accountants who have examined and
reported on the Company's financial statements
included in the registration statement, to the extent
permitted by the standards of the American Institute
of Certified Public Accountants, as the Company is
required to deliver or cause the delivery of to the
underwriters in an underwritten public offering of
securities;
(d) Permit each selling holder of Registrable Shares
who holds not less than 5% of the Registrable Shares or his counsel or
other representatives to inspect and copy such corporate documents and
records as may reasonably be requested by them, after reasonable
advance notice and without undue interference with the operation of the
Company's business;
- 25 -
<PAGE> 26
(e) Furnish to each selling holder of Registrable
Shares a copy of all documents filed with and all correspondence from
or to the Commission in connection with any such offering of
securities;
(f) Use its best efforts to insure the obtaining of
all necessary approvals from the National Association of Securities
Dealers, Inc; and
(g) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earning
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first month after the
effective date of the registration statement covering the Initial
Public Offering, which earning statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder.
Whenever under the preceding Sections of this Article V the
holders of Registrable Shares are registering such shares pursuant to any
registration statement, each such holder agrees to (i) timely provide to the
Company, at its request, such information and materials as it may reasonably
request in order to effect the registration of such Registrable Shares, (ii)
convert all shares of Series C Preferred Stock included in any registration
statement to shares of Common Stock, such conversion to be effective at the
closing of such offering pursuant to such registration statement, and (iii) if
the offering is underwritten, execute an underwriting agreement containing
customary conditions.
5.10. EXPENSES. In the case of each registration effected under
Section 5.01, 5.02 or 5.03, the Company shall bear all reasonable costs and
expenses of each such registration on behalf of the selling holders of
Registrable Shares, including, but not limited to, the Company's printing, legal
and accounting fees and expenses, Commission and NASD filing fees and "Blue Sky"
fees and expenses and the reasonable fees and disbursements (such fees not to
exceed $25,000 for any registration) of one counsel for the selling holders of
Registrable Shares in connection with the registration of their Registrable
Shares; provided, however, that the Company shall have no obligation to pay or
otherwise bear any portion of the underwriters' commissions or discounts or
transfer taxes attributable to the Registrable Shares being offered and sold by
the holders of Registrable Shares, or the fees and expenses of more than one
counsel for the selling holders of Registrable Shares in connection with the
registration of the Registrable Shares. The Company shall pay all expenses of
the holders of the Registrable Shares in connection with any registration
initiated pursuant to this Article V which is withdrawn, delayed or abandoned by
the Company, except if such withdrawal, delay or abandonment is caused by the
fraud, material misstatement or omission of a material fact by a holder of
Registrable Shares to be included in such registration.
5.11. APPROVAL OF UNDERWRITER. Any managing underwriter engaged in
any registration made pursuant to Section 5.02 shall be a nationally recognized
firm requiring the approval in writing of the holders of 60% of the Registrable
Shares requesting such registration.
- 26 -
<PAGE> 27
5.12. TRANSFERABILITY. For all purposes of Article V of this Agreement,
the holder of Registrable Shares shall include not only the Purchasers but (i)
any assignee or transferee of the Registrable Shares who acquires at least ten
percent (10%) of the Registrable Shares and who is not a competitor of the
Company, or (ii) any general or limited partner or any officer or director of
any Purchaser or their affiliates, including, but not limited to, their
immediate family, irrevocable trusts for estate planning purposes and personal
representatives; provided, however, that such assignee or transferee agrees in
writing at the time it acquires such shares to be bound by all of the provisions
of this Agreement, including, without limitation, Section 5.13 hereof.
5.13. "LOCK-UP" AGREEMENT. Each holder of Registrable Shares agrees, if
so requested by the Company and an underwriter of Common Stock or other
securities of the Company, not to sell, grant any option or right to buy or
sell, or otherwise transfer or dispose of in any manner, whether in
privately-negotiated or open-market transactions, any Common Stock or other
securities of the Company held by it during the 180-day period following the
effective date of a registration statement filed pursuant to the Initial Public
Offering, provided that:
(a) Such agreement shall apply only to the Initial
Public Offering; and
(b) All holders of Registrable Shares, any other
security holders whose securities are included in such registration
statement, and all officers, directors and Key Employees of the Company
shall also enter into similar agreements.
Such "lock-up" agreement shall be in writing and in form and substance
satisfactory to the Company and such underwriter. The Company may impose
stop-transfer instructions with respect to the Shares (or securities) subject to
the foregoing restrictions until the end of said 180-day period. No holder of
Registrable Shares shall be so restricted unless all holders are similarly and
proportionately restricted.
5.14. MERGERS, ETC. The Company shall not, directly or indirectly,
enter into any merger, consolidation or reorganization in which the Company
shall not be the surviving corporation unless the proposed surviving corporation
shall, prior to such merger, consolidation or reorganization, agree in writing
to assume the obligations of the Company under Article V of this Agreement, and
for that purpose references hereunder to Registrable Shares shall be deemed to
be references to the securities which the Purchasers would be entitled to
receive in exchange for Registrable Shares under any such merger, consolidation
or reorganization; provided, however, that the provisions of this Section 5.14
shall not apply in the event of any merger, consolidation, or reorganization in
which the Company is not the surviving corporation if all stockholders are
entitled to receive in exchange for their Registrable Shares consideration
consisting solely of (i) cash, (ii) securities of the acquiring corporation
which may be immediately sold to the public without registration under the
Securities Act, or (iii) securities of the acquiring corporation which the
acquiring corporation has agreed to register within 90 days of completion of the
transaction for resale to the public pursuant to the Securities Act.
- 27 -
<PAGE> 28
5.15. TERMINATION; FURTHER REGISTRATION RIGHTS. Notwithstanding any
other term or provision of this Article V, at such time as any Purchaser or
transferee owning less than 2% of the outstanding Common Stock of the Company
(on an as-converted basis) is free to sell the Registrable Shares without
registration pursuant to Rule 144(k) of the Securities Act, all rights of such
Purchaser as to such Registrable Shares under Sections 5.01, 5.02 and 5.03 of
this Article V shall terminate. The Company shall not grant to any third party
any registration rights so long as any of the registration rights under this
Agreement remains in effect without the consent of the holders of 60% of the
then outstanding Registrable Shares.
ARTICLE VI
RIGHT OF FIRST REFUSAL
The following provisions supersede and amend and restate in their
entirety the provisions regarding rights or first refusal set forth in Article
VI of the Series A and B Agreement. The Purchasers, in their capacity as
Purchasers of Shares and in their capacity as holders of at least 60% of the
outstanding shares of Series A Preferred Stock and Series B Preferred Stock,
hereby consent to the amendment and restatement of such rights of first refusal
and agree that the following provisions shall supersede and amend and restate in
their entirety the provisions of Article VI of the Series A and B Agreement. In
addition, the Purchasers, other than the Purchasers pursuant to this Agreement,
in their capacity as holders of shares of Series A Preferred Stock and Series B
Preferred Stock, hereby consent to the transactions contemplated by this
Agreement, and waive their respective rights to purchase shares of Series C
Preferred Stock on the terms set forth in this Agreement.
6.01. RIGHT OF FIRST REFUSAL. Before the Company shall issue, sell or
exchange, agree or obligate itself to issue, sell or exchange, or reserve or set
aside for issuance, sale or exchange, any (i) shares of Common Stock, (ii) any
other equity security of the Company, including without limitation, shares of
Preferred Stock, (iii) any convertible debt security of the Company, including
without limitation, any debt security which by its terms is convertible into or
exchangeable for any equity security of the Company, (iv) any security of the
Company that is a combination of debt and equity, or (v) any option, warrant or
other right to subscribe for, purchase or otherwise acquire any interest
relating to such equity or debt security of the Company, the Company shall, in
each case, first offer to sell such securities (the "Offered Securities") to
those Purchasers then holding capital stock of the Company as follows: The
Company shall offer to sell to each Purchaser (a) that portion of the Offered
Securities as the number of shares of Preferred Stock (on an as-converted basis)
and Conversion Shares then held by a Purchaser bears to the total number of
outstanding shares of capital stock of the Company including the shares issuable
upon conversion of the Preferred Stock (the "Basic Amount"), and (b) such
additional portion of the Offered Securities as such Purchaser shall indicate it
will purchase should the other Purchasers subscribe for less than their Basic
Amounts (the "Undersubscription Amount"), at a price and on such other terms as
shall have been specified by the Company in writing delivered to the Purchasers
(the "Offer"), which Offer by its terms
- 28 -
<PAGE> 29
shall remain open and irrevocable for a period of twenty (20) days from receipt
of the Offer. This right of first refusal shall only apply to Purchasers who
hold at least 5% of the then total outstanding shares of Preferred Stock or
Conversion Shares, to the Company Friends provided that they continue to own the
shares of Preferred Stock owned by them after giving effect to the transactions
contemplated by this Agreement and to the Bessemer Purchasers holding in the
aggregate at least 5% of the then outstanding shares of Preferred Stock or
Conversion Shares.
6.02. NOTICE OF ACCEPTANCE. Notice of each Purchaser's intention to
accept, in whole or in part, any Offer made pursuant to Section 6.01 shall be
evidenced by a writing signed by such Purchaser and delivered to the Company
prior to the end of the 20-day period of such offer, setting forth such of the
Purchaser's Basic Amount as such Purchaser elects to purchase and, if such
Purchaser shall elect to purchase all of its Basic Amount, such
Undersubscription Amount as such Purchaser shall elect to purchase (the "Notice
of Acceptance"). If the Basic Amounts subscribed for by all Purchasers are less
than the total Offered Securities, then each Purchaser who has set forth
Undersubscription Amounts in its Notice of Acceptance shall purchase, in
addition to the Basic Amounts subscribed for, all Undersubscription Amounts it
has subscribed for; provided, however, that should the Undersubscription Amounts
subscribed for exceed the difference between the Offered Securities and the
Basic Amounts subscribed for (the "Available Undersubscription Amount"), each
Purchaser who has subscribed for any Undersubscription Amount shall purchase
only that portion of the Available Undersubscription Amount as the
Undersubscription Amount subscribed for by such Purchaser bears to the total
Undersubscription Amounts subscribed for by all Purchasers, subject to rounding
by the Board of Directors to the extent it reasonably deems necessary.
6.03. CONDITIONS TO ACCEPTANCES AND PURCHASE.
(a) PERMITTED SALES OF REFUSED SECURITIES. In the
event that Notices of Acceptance are not given by the Purchasers in
respect of all the Offered Securities, the Company shall have ninety
(90) days from the end of said 20-day period to sell any such Offered
Securities as to which a Notice of Acceptance has not been given by the
Purchasers (the "Refused Securities") to the Person or Persons
specified in the Offer, but only for cash and otherwise in all respects
upon terms and conditions, including, without limitation, unit price
and interest rates, which are no more favorable, in the aggregate, to
such other Person or Persons or less favorable to the Company than
those set forth in the Offer.
(b) REDUCTION IN AMOUNT OF OFFERED SECURITIES. In the
event the Company shall propose to sell less than all of the Refused
Securities (any such sale to be in the manner and on the terms
specified in Section 6.03(a) above), then each Purchaser shall reduce
the number of shares or other units of the Offered Securities specified
in its respective Notices of Acceptance to an amount which shall be not
less than the amount of the Offered Securities which the Purchaser
elected to purchase pursuant to Section 6.02 multiplied by a fraction,
(i) the numerator of which shall be the amount of Offered Securities
which the Company actually proposes to sell, and (ii) the
- 29 -
<PAGE> 30
denominator of which shall be the amount of all Offered Securities. In
the event that any Purchaser so elects to reduce the number or amount
of Offered Securities specified in its respective Notices of
Acceptance, the Company may not sell or otherwise dispose of more than
the reduced amount of the Offered Securities until such securities have
again been offered to the Purchasers in accordance with Section 6.01.
(c) CLOSING. Upon the closing, which shall include
full payment to the Company, of the sale to such other Person or
Persons of all or less than all the Refused Securities, the Purchasers
shall purchase from the Company, and the Company shall sell to the
Purchasers, the number of Offered Securities specified in the Notices
of Acceptance, as reduced pursuant to Section 6.03(b) if the Purchasers
have so elected, upon the terms and conditions specified in the Offer.
The purchase by the Purchasers of any Offered Securities is subject in
all cases to the preparation, execution and delivery by the Company and
the Purchasers of a purchase agreement relating to such Offered
Securities reasonably satisfactory in form and substance to the
Purchasers and their respective counsel.
6.04. FURTHER SALE. In each case, any Offered Securities not purchased
by the Purchasers or other Person or Persons in accordance with Section 6.03 may
not be sold or otherwise disposed of until they are again offered to the
Purchasers under the procedures specified in Sections 6.01, 6.02 and 6.03.
6.05. TERMINATION AND WAIVER OF RIGHT OF FIRST REFUSAL. The rights of
the Purchasers under this Article VI may be waived only upon the prior written
consent of the holders of 60% of the outstanding shares of Preferred Stock and
shall terminate immediately prior to the effectiveness of the registration
statement with respect to the Initial Public Offering, but expressly conditioned
on the consummation of the Initial Public Offering.
6.06. EXCEPTION. The rights of the Purchasers under this Article VI
shall not apply to:
(a) Common Stock issued as a stock dividend to
holders of Common Stock or upon any subdivision or combination of
shares of Common Stock;
(b) Preferred Stock issued as a dividend to holders
of Preferred Stock upon any subdivision or combination of shares of
Preferred Stock;
(c) Conversion Shares;
(d) up to 2,112,000 shares of Common Stock, or
options or warrants exercisable therefor (including 1,364,700 granted
prior to the date hereof), issued on or after the date hereof to
directors, officers, employees or consultants of the Company and any
Subsidiary (including members of the Scientific Advisory Board)
pursuant to any qualified or non-qualified stock option plan or
agreement, employee stock ownership
- 30 -
<PAGE> 31
plan, employee benefit plan, stock purchase agreement, stock plan,
stock restriction agreement, or consulting agreement or such other
options, warrants, equity arrangements, agreements or plans approved by
two-thirds of the members of the Board of Directors of the Company
(including a majority of the Investor Directors);
(e) up to 177,083 shares of Series A Preferred Stock
issued pursuant to the Comdisco Leasing Warrants, and shares of Common
Stock issued upon conversion of such shares; or
(f) shares of capital stock or options or warrants
therefor, to be issued to equipment leasing organizations in connection
with any equipment leasing arrangements to which the Company is a party
and which have been approved by the Board of Directors including a
majority of the Investor Directors; or
(g) shares of capital stock issued in connection with
a merger or acquisition approved by the Board of Directors including a
majority of the Investor Directors.
Each of the foregoing numbers shall be subject to equitable
adjustment in the event of any stock dividend, stock split, combination,
reorganization, recapitalization, reclassification or other similar event.
In addition to amendments pursuant to Section 8.02, the
provisions regarding Notice of Offer, Notice of Acceptance and all other
provisions provided for in Section 6.01 through 6.03 and 6.06 may be waived or
amended by those Purchasers holding at least 60% of the outstanding shares of
Serial Preferred Stock who have elected to exercise their rights under this
Article VI to participate in any financing with respect to a transaction
effected under this Article for the purpose of effecting a transaction on a more
expeditious basis.
ARTICLE VII
DEFINITIONS AND ACCOUNTING TERMS
7.01. CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"ACCREDITED INVESTOR" shall have the meaning assigned to that
term in Rule 501 under the Securities Act.
"AGREEMENT" means this Series C Preferred Stock Purchase
Agreement as from time to time amended and in effect between the parties,
including all Exhibits hereto.
- 31 -
<PAGE> 32
"BASIC AMOUNT" shall have the meaning assigned to that term in
Section 6.01.
"BESSEMER PURCHASERS" shall mean those Purchasers other than
Technology Leaders L.P., Technology Leaders Offshore C.V., Bessemer Venture
Partners III L.P., Morgan Holland Fund II L.P., Gilde Investment Fund B.V.,
Comdisco, Inc., and the Company Friends.
"BOARD OF DIRECTORS" means the board of directors of the
Company as constituted from time to time.
"CLOSING" shall have the meaning assigned to that term in
Section 1.03.
"COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act or Exchange
Act.
"COMMON STOCK" includes (a) the Company's Common Stock, $.001
par value, as authorized on the date of this Agreement, (b) any other capital
stock of any class or classes (however designated) (except for Preferred Stock)
of the Company, authorized on or after the date hereof, the holders of which
shall have the right, without limitation as to amount, either to all or to a
share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference, and
the holders of which shall ordinarily, in the absence of contingencies or in the
absence of any provision to the contrary in the Company's Restated Certificate
of Incorporation, be entitled to vote for the election of directors of the
Company (even though the right so to vote has been suspended by the happening of
such a contingency or provision), and (c) any other securities into which or for
which any of the securities described in (a) or (b) may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.
"COMPANY" means Myco Pharmaceuticals Inc., a Delaware
corporation, and its successors and assigns.
"COMPANY FRIENDS" means Barry A. Berkowitz, Robert Morgan,
Gary Takata and J. Robert Scott, Inc. in their capacity as Purchasers under this
Agreement.
"CONSOLIDATED" and "CONSOLIDATING" when used with reference to
any term defined herein mean that term as applied to the accounts of the Company
and its Subsidiaries consolidated in accordance with generally accepted
accounting principles consistently applied throughout reporting periods.
"CONVERSION SHARES" shall have the meaning assigned to that
term in Section 1.02 of this Agreement (except as otherwise provided in Article
IV hereto).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
- 32 -
<PAGE> 33
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission (or of any other Federal agency then administering the Exchange Act)
thereunder, all as the same shall be in effect at the time.
"INDEBTEDNESS" means (i) any liability for borrowed money or
evidenced by a note or similar obligation given in connection with the
acquisition of any property or other assets (other than trade accounts payable
incurred in the ordinary course of business); (ii) all guaranties, endorsements
and other contingent obligations, in respect of Indebtedness of others, whether
or not the same are or should be reflected in the Company's balance sheet (or
the notes thereto), except guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business, and (iii) the present value of any lease payments due under leases
required to be capitalized in accordance with applicable Statements of Financial
Accounting Standards, determined by discounting all such payments at the
interest rate determined in accordance with applicable Statements of Financial
Accounting Standards.
"INITIAL PUBLIC OFFERING" means the first underwritten public
offering of Common Stock of the Company and offered on a "firm commitment" basis
pursuant to an offering registered under the Securities Act with the Commission
on Form S-1, Form S-18 or their then equivalents.
"INTELLECTUAL PROPERTY RIGHTS" means any and all, whether
domestic or foreign, patents, patent applications, patent rights, trade secrets,
confidential business information, formula, biological or chemical processes,
compounds, cell lines, fungi, yeast, laboratory notebooks, algorithms,
copyrights, mask works, claims of infringement against third parties, licenses,
permits, license rights to or of technologies, contract rights with employees,
consultants or third parties, trademarks, trademark rights, inventions and
discoveries, and other such rights generally classified as intangible,
intellectual property assets in accordance with generally accepted accounting
principles.
"INVESTOR DIRECTORS" mean those directors of the Company who
are representatives of the Purchasers, initially Dr. Hubert Schoemaker,
Christopher F.O. Gabrieli, Dr. Gary J. Anderson and Edwin M. Kania.
"KEY EMPLOYEE" means and includes the Chairman, President,
Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, any
Vice President or Director of any functional area such as research and
development, engineering, technology, sales and marketing, finance and
administration or any other individual so designated by the Board of Directors
of the Company or by including a majority of the Investor Directors.
"NOTICE OF ACCEPTANCE" shall have the meaning assigned to that
term in Section 6.02.
"OFFER" shall have the meaning assigned to that term in
Section 6.01.
- 33 -
<PAGE> 34
"OFFERED SECURITIES" shall have the meaning assigned to that
term in Section 6.01.
"PERSON" means an individual, corporation, partnership, joint
venture, trust, university, or unincorporated organization, or a government or
any agency or political subdivision thereof.
"PREFERRED STOCK" shall have the meaning assigned to that term
in Section 3.13.
"PURCHASER" and "PURCHASERS" shall have the meaning assigned
to that term in Section 1.01 of this Agreement (except as otherwise provided in
Article IV hereto) and shall include the original Purchasers and also any other
permitted transferee.
"QUALIFIED PUBLIC OFFERING" means a fully underwritten, firm
commitment public offering pursuant to an effective registration under the
Securities Act covering the offer and sale by the Company of its Common Stock in
which the aggregate gross proceeds to the Company exceed $9,000,000 and in which
the price per share of such Common Stock equals or exceeds $4.50 (such price
subject to equitable adjustment in the event of any stock split, stock dividend,
combination, reorganization, reclassification or other similar event).
"REFUSED SECURITIES" shall have the meaning assigned to that
term in Section 6.03.
"REGISTRABLE SHARES" shall mean and include (i) the Conversion
Shares; (ii) shares of Common Stock which are or may be acquired by any
Purchaser upon conversion of Series A Preferred Stock and Series B Preferred
Stock currently held by the Purchasers and (iii) the shares of capital stock of
the Company acquired by the Purchasers pursuant to Article VI hereof or any
shares of capital stock of the Company acquired after the date hereof by any
such Purchaser, including shares of Common Stock issuable on the conversion of
other securities acquired by the Purchasers pursuant to Article VI hereof or
otherwise; provided, however, that shares of Common Stock which are Registrable
Shares shall cease to be Registrable Shares upon the consummation of any sale
pursuant to a registration statement, Section 4(1) of the Securities Act or Rule
144 under the Securities Act or upon any transfer other than as permitted under
Section 5.12 hereof. 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 the Conversion Shares even if
such conversion has not yet been effected.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
(or of any other Federal agency then administering the Securities Act)
thereunder, all as the same shall be in effect at the time.
"SERIAL PREFERRED STOCK" means the Series A Preferred Stock,
the Series B Preferred Stock and the Series C Preferred Stock, voting together
as a single class.
- 34 -
<PAGE> 35
"SERIES A AND B AGREEMENT" mean the Series A and Series B
Preferred Stock Purchase Agreement, dated as of January 11, 1994, between the
Company and certain stockholders of the Company.
"SERIES C PREFERRED SHARES" shall have the meaning assigned to
that term in Section 1.02.
"SERIES A PREFERRED STOCK" shall have the meaning assigned to
that term in Section 3.13.
"SERIES B PREFERRED STOCK" shall have the meaning assigned to
that term in Section 3.13.
"SERIES C PREFERRED STOCK" means the Series C Preferred Stock
of the Company, $.01 par value, having the rights, powers, privileges and
preferences set forth in Exhibit A hereto.
"SHARES" means, collectively, the Series C Preferred Shares
and the Conversion Shares (except as otherwise provided in Article IV hereto).
"SUBSIDIARY" or "SUBSIDIARIES" means any Person of which the
Company and/or any of its other Subsidiaries (as herein defined) directly or
indirectly owns at the time at least fifty percent (50%) of the outstanding
voting shares of every class of such corporation or trust other than directors'
qualifying shares.
"UNDERSUBSCRIPTION AMOUNT" shall have the meaning assigned to
that term in Section 6.01.
"VOTING AND CO-SALE AGREEMENT" means the Amended and Restated
Voting and Co-Sale Agreement, dated as of January 11, 1994, between the Company
and certain stockholders of the Company.
7.02. ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistently applied, and all financial data submitted pursuant to
this Agreement shall be prepared in accordance with such principles.
ARTICLE VIII
MISCELLANEOUS
8.01. NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part
of any party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy
- 35 -
<PAGE> 36
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy hereunder. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
8.02. AMENDMENTS, WAIVERS AND CONSENTS. Any provision in the
Agreement to the contrary notwithstanding, and except as hereinafter provided,
changes in, termination or amendments of or additions to this Agreement may be
made, and compliance with any covenant or provision set forth herein may be
omitted or waived, if the Company (i) shall obtain consent thereto in writing
from the holder or holders of at least 60% of the outstanding shares of Series C
Preferred Stock and/or Conversion Shares issued upon conversion thereof and (ii)
shall deliver copies of such consent in writing to any holders who did not
execute such consent; provided, (a) that the consent in writing from the holder
or holders of at least 60% of the outstanding shares of Serial Preferred Stock
and/or shares of Common Stock issued upon conversion thereof (including, but not
limited to, the Conversion Shares) shall be required to change, terminate, amend
or add to the provisions of Articles IV, V and VI hereto, and (b) that no
change, amendment or addition to the provisions of Section 5.13 hereto shall be
binding upon any holder of shares of Serial Preferred Stock and/or shares of
Common Stock issued upon conversion thereof (including, but not limited to, the
Conversion Shares), unless such holder consents in writing to such change,
amendment or addition; and, provided, further, that no consents shall be
effective to reduce the percentage in interest of the Shares the consent of the
holders of which is required under this Section 8.02. Any waiver or consent may
be given subject to satisfaction of conditions stated therein and any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
8.03. ADDRESSES FOR NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing (including telegraphic
communication) and delivered to each applicable party at the address set forth
in Exhibit 1.01 hereto or at such other address as to which such party may
inform the other parties in writing in compliance with the terms of this
Section , it being understood only one notice is required to be provided to the
Bessemer Purchasers at the following address or at such other address as to
which such party may inform the other parties in writing in compliance with the
terms of this Section:
Mr. Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, New York 11590
with a copy to: Mr. Christopher F.O. Gabrieli
Bessemer Venture Partners
83 Walnut Street
Wellesley Hills, MA 02181
- 36 -
<PAGE> 37
If to any other holder of the Shares: at such holder's address
for notice as set forth in the register maintained by the Company, or, as to
each of the foregoing, at the addresses set forth in Exhibit 1.01 hereto or at
such other address as shall be designated by such Person in a written notice to
the other parties complying as to delivery with the terms of this Section .
If to the Company: at the address set forth on page 1 hereof,
or at such other address as shall be designated by the Company in a written
notice to the other parties complying as to delivery with the terms of this
Section.
All such notices, requests, demands and other communications
shall be considered to be delivered when actually delivered at the foregoing
address of the party to be notified.
8.04. COSTS, EXPENSES AND TAXES. As a condition precedent to the
closing, the Company agrees to pay at the Closing in connection with the
preparation, execution and delivery of this Agreement and the issuance of the
Series C Preferred Shares at the Closing, the reasonable legal fees, not to
exceed $5,000 (unless any increase thereto is agreed to by the Company), and
other reasonable out-of-pocket expenses of Messrs. Testa, Hurwitz & Thibeault,
special counsel for the Purchasers. In addition, the Company shall pay any and
all stamp, or other similar taxes payable or determined to be payable in
connection with the execution and delivery of this Agreement, the issuance of
the Series C Preferred Shares and the other instruments and documents to be
delivered hereunder or thereunder, and agrees to save the Purchasers harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes.
8.05. BINDING EFFECT; ASSIGNMENT. Except as provided in Section 5.12,
this Agreement shall be binding upon and inure to the benefit of the Company and
the Purchasers and their respective heirs, successors and assigns, except that
the Company shall not have the right to delegate its obligations hereunder or to
assign its rights hereunder or any interest herein without the prior written
consent of the holders of at least 60% of the outstanding shares of Series C
Preferred Stock.
8.06. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in this Agreement, the Shares, or any other instrument or
document delivered in connection herewith or therewith, shall survive the
execution and delivery hereof or thereof.
8.07. PRIOR AGREEMENTS. This Agreement, the terms of the Series C
Preferred Stock, and the other agreements executed and delivered herewith
constitute the entire agreement between the parties and supersedes any prior
understandings or agreements concerning the subject matter hereof, other than
the Series A and B Agreement, the terms of the Series A Preferred Stock and the
Series B Preferred Stock, and the Voting and Co-Sale Agreement, each of which,
except as modified by the terms of this Agreement, shall remain in full force
and effect.
- 37 -
<PAGE> 38
8.08. SEVERABILITY. The provisions of this Agreement, the Series A and
B Agreement, the Voting and Co-Sale Agreement and the terms of the Preferred
Stock are severable and, in the event that any court of competent jurisdiction
shall determine that any one or more of the provisions or part of a provision
contained in this Agreement, the Series A and B Agreement, the Voting and
Co-Sale Agreement, or the terms of the Preferred Stock shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part of a
provision of this Agreement, the Series A and B Agreement, the Voting and
Co-Sale Agreement, or the terms of the Preferred Stock; but this Agreement, the
Series A and B Agreement, the Voting and Co-Sale Agreement, and the terms of the
Preferred Stock shall be reformed and construed as if such invalid or illegal or
unenforceable provision, or part of a provision, had never been contained
herein, and such provisions or part reformed so that it would be valid, legal
and enforceable to the maximum extent possible.
8.09. 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 through no fault of such Purchaser, to the
public; provided, however, that a Purchaser may disclose such information (i) on
a confidential basis to its attorneys, accountants, consultants and other
professionals to the extent necessary to obtain their services in connection
with its investment in the Company, (ii) to any prospective purchaser of any
Series C Preferred Shares or Conversion Shares from such Purchaser as long as
such prospective purchaser agrees in writing to be bound by the provisions of
this Section 8.09, (iii) to any affiliate or partner of such Purchaser on a
"need to know basis" and (iv) as required by applicable law. If a Purchaser is
required in any legal or administrative or other governmental proceeding to
disclose any of such information, such Purchaser shall give the Company timely
notice of the pending requirement and use its best efforts to provide the
Company an opportunity to obtain protective provisions against further
disclosure.
8.10. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with the General Corporation Law of the State of Delaware as to
matters within the scope thereof and as to all other matters shall be governed
by and construed in accordance with the internal laws of The Commonwealth of
Massachusetts, without giving effect to choice of laws provisions.
8.11. HEADINGS. Article, section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
8.12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
- 38 -
<PAGE> 39
8.13. FURTHER ASSURANCES. From and after the date of this Agreement,
upon the request of any Purchaser or the Company, the Company and the Purchasers
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the Shares.
* * * * * * *
[Remainder of Page Intentionally Left Blank]
[Signature Pages Immediately Follow]
- 39 -
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have caused this Series C
Preferred Stock Purchase Agreement to be executed as of the date first above
written.
MYCO PHARMACEUTICALS INC.
By:
----------------------------------
President
TECHNOLOGY LEADERS L.P.
By: Technology Leaders Management,
Inc. (General Partner)
By:
----------------------------------
Title:
TECHNOLOGY LEADERS OFFSHORE C.V.
By: Technology Leaders Management,
Inc. (General Partner)
By:
----------------------------------
Title:
BESSEMER VENTURE PARTNERS III L.P.
By:
----------------------------------
General Partner
- 40 -
<PAGE> 41
MORGAN HOLLAND FUND II L.P.
By: its general partner,
Morgan Holland Partners II L.P.
By:
----------------------------------
Name: Edwin M. Kania, Jr.
Title: General Partner
GILDE INVESTMENT FUND B.V.
By:
----------------------------------
Name: Edwin M. Kania Jr. general
partner of Morgan Holland
Partners II L.P.
COMDISCO, INC.
By:
----------------------------------
Title:
J. ROBERT SCOTT, INC.
By:
----------------------------------
Title:
-------------------------------
BRIMSTONE ISLAND CO., L.P.
By:*
----------------------------------
Title:
*
----------------------------------
William T. Burgin
- 41 -
<PAGE> 42
*
----------------------------------
Neill H. Brownstein
*
----------------------------------
Robert H. Buescher
*
----------------------------------
G. Felda Hardymon
*
----------------------------------
Christopher Gabrieli
*
----------------------------------
Michael I. Barach
*
----------------------------------
Daniel S. Martin
*
----------------------------------
Richard R. Davis
*
----------------------------------
Barbara M. Henegan
*
----------------------------------
Thomas F. Ruhm
*
----------------------------------
Ward W. Woods, Jr.
*
----------------------------------
Geoffrey L. Berger
- 42 -
<PAGE> 43
*
-------------------------------------
Robert D. Lindsay
*
-------------------------------------
Michael S. Mathews
*
-------------------------------------
Robert H. Buescher, signing
as Attorney-in-Fact for each
of the individuals beside whose
name an asterisk appears
-------------------------------------
Barry A. Berkowitz
-------------------------------------
Robert Morgan
-------------------------------------
Gary Takata
[NOTE: A AND B PURCHASERS, EVEN THOSE WHO ARE NOT
PURCHASERS UNDER THIS AGREEMENT, SHOULD SIGN THIS AGREEMENT
WITH RESPECT TO ARTICLES IV, V AND VI OF THIS AGREEMENT.]
- 43 -
<PAGE> 44
EXHIBITS TO MYCO PHARMACEUTICALS INC. SERIES C
PREFERRED STOCK PURCHASE AGREEMENT
Exhibit A
Restated Certificate of Incorporation
Exhibit 1.01
Purchasers' Ownership of Series C Preferred Stock at Closing
Exhibit 2.02(b)
Opinion of Counsel to Company
<PAGE> 45
EXHIBIT 1.01
SCHEDULE OF PURCHASERS - SERIES C PREFERRED STOCK
<TABLE>
<CAPTION>
Aggregate
Purchase Number of
Price of Shares of
Series C Series C
Preferred Preferred
Name and Address Shares Stock
- ---------------- ------ -----
<S> <C> <C>
Technology Leaders L.P. $420,210 140,070
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087
Technology Leaders Offshore C.V $479,790 159,930
c/o ABN Trust Company
15 Pietermaii
Curacao, Netherlands Antilles
Bessemer Venture Partners III L.P. $849,072 283,024
83 Walnut Street
Wellesley Hills, MA 02181
Morgan Holland Fund II, L.P. $445,500 148,500
One Liberty Square - Suite 840
Boston, MA 02109
Gilde Investment Fund B.V $ 4,500 1,500
c/o Morgan Holland Fund II, L.P.
One Liberty Square - Suite 840
Boston, MA 02109
Comdisco, Inc. $ 50,001 16,667
One Newton Executive Park
Newton Lower Falls, MA 02160
Robert H. Buescher $ 2,700 900
Bessemer Venture Partners
1025 Old Colony Road
Suite 205
Westbury, NY 11590
Christopher F.O. Gabrieli $ 28,800 9,600
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Colony Road
Suite 205
Westbury, NY 11590
</TABLE>
- 44 -
<PAGE> 46
EXHIBIT 1.01
SCHEDULE OF PURCHASERS - SERIES C PREFERRED STOCK
<TABLE>
<CAPTION>
Aggregate
Purchase Number of
Price of Shares of
Series C Series C
Preferred Preferred
Name and Address Shares Stock
- ---------------- ------ -----
<S> <C> <C>
Richard R. Davis $3,003 1,001
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Thomas F. Ruhm $ 675 225
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Ward W. Woods, Jr $4,500 1,500
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Geoffrey L. Berger $ 450 150
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Robert D. Lindsay $1,800 600
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
</TABLE>
- 45 -
<PAGE> 47
EXHIBIT 1.01
SCHEDULE OF PURCHASERS - SERIES C PREFERRED STOCK
<TABLE>
<CAPTION>
Aggregate
Purchase Number of
Price of Shares of
Series C Series C
Preferred Preferred
Name and Address Shares Stock
<S> <C> <C>
G. Felda Hardyman $ 9,000 3,000
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Barry A. Berkowitz $ 3,216 1,072
One Kendall Square
Building 300
Cambridge, MA 02139
$2,303,217 767,739
</TABLE>
- 46 -
<PAGE> 48
Exhibit 3.07
At May 31, 1994, the Company has title to tangible assets in these
approximate amounts:
<TABLE>
<S> <C>
Leasehold improvements $ 567,000
Laboratory Equipment 977,000
Office Equipment and Computers 178,000
Office Furniture 38,000
----------
Purchase Price $1,760,000
Book Depreciation 267,000
----------
$1,493,000
</TABLE>
The Company also has the right to use intangible property pursuant to
and subject to the terms of the agreements listed in Exhibit 3.14.
The Company has acquired most of the above furnishings, equipment and
leasehold improvements subject to an equipment lease with Comdisco Venture
Group. The original principal balance of the lease related to the above Purchase
Price of the assets was $1,500,000 against which principal payments
approximating $161,000 have subsequently been made.
See Exhibit 3.14.
Exhibit 3.08
Transactions with Affiliates
The Company has entered into the following agreements with Barry
Berkowitz: (i) Employment and Noncompetition Agreement; (ii) Confidentiality
Agreement, and (iii) Stock Purchase and Repurchase Agreement. The Company has
also entered into Stock Option Agreements, an Employment Agreement and
Noncompetition and Confidentiality Agreement with Dr. William Timberlake.
Pursuant to the Employment Agreement, the Company loaned Dr. Timberlake the
principal amount of $100,000, of which $86,738 is currently outstanding, and the
Company has a second mortgage on certain real property held by Dr. Timberlake.
Interest on the loan is charged at the prime rate, and any bonus awarded may be
used to pay this loan. In any year in which Dr. Timberlake is not awarded a
bonus, no principal payment is due.
See Exhibit 3.10
<PAGE> 49
Exhibit 3.09
Guaranties of Indebtedness
The Company has leased 12,500 square feet of space from
MYCORT, Inc., a sublessee of Old Cambridge Realty Trust. The sub-lessor
has financed $576,310 improvement work for office and laboratory at
these facilities.
As described in Exhibit 3.07, the Company has acquired assets
subject to an equipment lease with Comdisco. The lease provides a total
commitment of up to $4,500,000. The first tranche of $1,500,000 was
fully drawn down during May 1994. The second tranche of $1,000,000
became available June 1, 1994. The lease provides for a term for each
tranche of forty-eight months at an 10% interest rate, plus warrants to
be issued to Comdisco (See Exhibit 3.13). Copies of the lease
documentation are available at the offices of the Company.
Exhibit 3.10
Investments
As described in Exhibit 3.08, the Company has an outstanding
loan of $86,738 to Dr. William Timberlake.
Exhibit 3.13
Capitalization/Restrictions on Transfer
Outstanding Capital Stock
As of the date hereof the Company has 1,506,000 issued and
outstanding shares of Common Stock, 6,150,732 issued and outstanding
shares of Series A Preferred Stock and 1,063,366 issued and outstanding
shares of Series B Preferred Stock which are issued to the persons set
forth on Attachment A to Exhibit 3.13. 860,000 shares of Common Stock
issued to Barry A. Berkowitz, Ph.D, are subject to a vesting
arrangement.
Options to Purchase Capital Stock
The Company has granted options to purchase a total of
1,364,700 shares of Common Stock of the Company to the persons listed
in the Attachment to this Exhibit 3.13.
The Company has issued a warrant to Comdisco, Inc. for the
purchase of up to 177,083 shares of the Company's Series A Preferred
Stock in connection with certain equipment leasing transactions.
<PAGE> 50
MYCO PHARMACEUTICALS INC.
STOCKHOLDERS LIST
COMMON STOCK
<TABLE>
<CAPTION>
NAME CERTIFICATE DATE NUMBER OF
- ---- ----
NUMBER SHARES
------ ------
<S> <C> <C> <C>
Dr. Barry Berkowitz C001 1-13-92 336,000
Dr. Barry Berkowitz C0002 2-19-92 860,000
Dr. Yigal Koltin C0003 2-20-92 60,000
Dr. Jeff Becker C0004 2-20-92 60,000
Dr. Jerry Weisbach, Ph.D. C0005 2-20-92 30,000
Dr. Bill Timberlake C0006 2-20-92 20,000
Dr. Phillips Robbins C0007 2-20-92 20,000
N. Ron Morris C0008 2-20-92 5,000
Dr. Jack E. Edwards C0009 2-20-92 5,000
Dr. Richard Diamond C0010 2-20-92 5,000
Dr. Koji Nakanishi C0011 2-20-92 5,000
Dr. Gerry Fink C0012 2-20-92 100,000
TOTAL COMMON 1,506,000
</TABLE>
<PAGE> 51
SERIES A PREFERRED STOCK
<TABLE>
<CAPTION>
NAME CERTIFICATE DATE NUMBER OF
- ---- ----
NUMBER SHARES
------ ------
<S> <C> <C> <C>
Technology Leaders, L.P. SP0001 2-25-92 370,000
Technology Leaders Offshore SP0002 2-25-92 630,000
C.V.
William T. Burgin SP0004 2-25-92 15,000
Brimstone Island Co., L.P. SP0005 2-25-92 15,000
Neill H. Brownstein SP0006 2-25-92 10,000
Robert H. Buescher SP0007 2-25-92 3,000
G. Felda Hardymon SP0008 2-25-92 10,000
Christopher Gabrieli SP0009 2-25-92 32,000
Michael I. Barach SP0010 2-25-92 2,500
Daniel S. Martin SP0011 2-25-92 2,000
Richard R. Davis SP0012 2-25-92 3,334
Thomas F. Ruhm SP0013 2-25-92 750
Ward W. Woods, Jr. SP0014 2-25-92 5,000
Geoffrey L. Berger SP0015 2-25-92 500
Robert D. Lindsay SP0016 2-25-92 2,000
Michael S. Mathews SP0017 2-25-92 2,000
Barbara M. Henagan SP0018 2-25-92 3,000
Technology Leaders, L.P. SP0019 1-27-93 370,000
Technology Leaders Offshore SP0020 1-27-93 630,000
C.V.
William T. Burgin SP0022 1-27-93 15,000
Brimstone Island Co., L.P. SP0023 1-27-93 15,000
Neill H. Brownstein SP0024 1-27-93 10,000
Robert H. Buescher SP0025 1-27-93 3,000
G. Felda Hardymon SP0026 1-27-93 10,000
Christopher Gabrieli SP0027 1-27-93 32,000
</TABLE>
<PAGE> 52
SERIES A PREFERRED STOCK
<TABLE>
<CAPTION>
NAME CERTIFICATE DATE NUMBER OF
- ---- ----
NUMBER SHARES
------ ------
<S> <C> <C> <C>
Michael I. Barach SP0028 1-27-93 2,500
Daniel S. Martin SP0029 1-27-93 2,000
Richard R. Davis SP0030 1-27-93 3,334
Thomas F. Ruhm SP0031 1-27-93 750
Ward W. Woods, Jr. SP0032 1-27-93 5,000
Geoffrey L. Berger SP0033 1-27-93 500
Robert D. Lindsay SP0034 1-27-93 2,000
Michael S. Mathews SP0035 1-27-93 2,000
Barbara M. Henagan SP0036 1-27-93 3,000
Gary Takata SP0037 1-29-93 12,000
Robert W. Morgan, CPA SP0038 1-29-93 12,000
Profit Sharing Plan
William T. Burgin SP0039 1/11/94 8,752
Brimstone Island Co., L.P. SP0040 1/11/94 8,572
Neill H. Brownstein SP0041 1/11/94 5,714
Robert H. Buescher SP0042 1/11/94 1,714
G. Felda Hardyman SP0043 1/11/94 5,714
Christopher Gabrieli SP0044 1/11/94 18,286
Michael S. Barach SP0045 1/11/94 1,428
Daniel S. Martin SP0046 1/11/94 1,142
Richard R. Davis SP0047 1/11/94 1,906
Thomas F. Ruhn SP0048 1/11/94 428
Ward W. Woods, Jr. SP0049 1/11/94 2,858
Geoffrey L. Berger SP0050 1/11/94 286
Robert D. Lindsay SP0051 1/11/94 1,142
Michael S. Mathews SP0052 1/11/94 1,142
Barbara M. Henagan SP0053 1/11/94 1,714
</TABLE>
-2-
<PAGE> 53
SERIES A PREFERRED STOCK
<TABLE>
<CAPTION>
NAME CERTIFICATE DATE NUMBER OF
- ---- ----
NUMBER SHARES
------ ------
<S> <C> <C> <C>
Robert Morgan SP0054 1/11/94 3,428
Gary Takata SP0055 1/11/94 3,428
J. Robert Scott, Inc. SP0056 1/11/94 8,572
Technology Leaders L.P. SP0057 1/11/94 266,800
Technology Leaders SP0058 1/11/94 304,628
Offshore C.V.
Morgan Holland SP0060 1/11/94 707,142
Fund II, L.P.
Gilde Investment Fund B.V. SP0061 1/11/94 7,142
Comdisco, Inc. SP0062 1/11/94 57,142
Barry A. Berkowitz SP0063 1/11/94 22,858
Bessemer SP0065 2/24/94 893,916
Venture Partners III, L.P.
Bessemer SP0067 2/24/94 510,810
Venture Partners III, L.P.
Bessemer SP0069 2/24/94 893,916
Venture Partners III, L.P.
Comdisco, Inc. SP0070 7/13/94 30,286
Morgan Holland Fund II, SP0071 7/13/94 141,430
L.P.
Gilde Investment Fund, B.V. SP0072 7/13/94 1,428
Barry A. Berkowitz SP0073 7/13/94 1,020
TOTAL ISSUED 6,150,732
</TABLE>
-3-
<PAGE> 54
SERIES B PREFERRED
<TABLE>
<CAPTION>
NAME CERTIFICATE DATE NUMBER OF
- ---- ----
NUMBER SHARES
------ ------
<S> <C> <C> <C>
William T. Burgin PB0001 1/11/94 4,286
Brimstone Island Co. L.P. PB0002 1/11/94 4,286
Neill H. Brownstien PB0003 1/11/94 2,857
Robert H. Buescher PB0004 1/11/94 857
G. Felda Hardyman PB0005 1/11/94 2,857
Christopher Gabrieli PB0006 1/11/94 9,143
Michael I. Barach PB0007 1/11/94 714
Daniel S. Martin PB0008 1/11/94 571
Richard R. Davis PB0009 1/11/94 953
Thomas F. Ruhn PB0010 1/11/94 214
Ward W. Woods, Jr. PB0011 1/11/94 1,429
Geoffrey L. Berger PB0012 1/11/94 143
Robert D. Lindsay PB0013 1/11/94 571
Michael S. Mathews PB0014 1/11/94 571
Barbara M. Henagan PB0015 1/11/94 857
Robert Morgan PB0016 1/11/94 1,714
Gary Takata PB0017 1/11/94 1,714
Technology Leaders L.P. PB0018 1/11/94 133,400
Technology Leaders PB0019 1/11/94 152,314
Offshore C.V.
Morgan Holland PB0021 1/11/94 353,571
Fund II, L.P.
Gilde Investment PB0022 1/11/94 3,571
Fund B.V.
Comdisco, Inc. PB0023 1/11/94 28,571
J. Robert Scott, Inc. PB0024 1/11/94 4,286
Barry A. Berkowitz PB0025 1/11/94 11,429
Bessemer Venture Partners PB0027 2/24/94 255,405
III, L.P.
Comdisco, Inc. PB0028 7/13/94 15,143
</TABLE>
<PAGE> 55
SERIES B PREFERRED
<TABLE>
<CAPTION>
NAME CERTIFICATE DATE NUMBER OF
- ---- ----
NUMBER SHARES
------ ------
<S> <C> <C> <C>
Morgan Holland Fund II, PB0029 7/13/94 70,715
L.P.
Gilde Investment Fund, PB0030 7/13/94 714
B.V.
Barry A. Berkowitz PB0031 7/13/94 510
TOTAL ISSUED 1,063,366
</TABLE>
-2-
<PAGE> 56
Myco Pharmaceuticals Inc.
Stock Options Granted
June 1, 1994
<TABLE>
<CAPTION>
INDIVIDUAL HOLDER
Option Employee # of Option Vesting % of Options
Date SAB/Consultant Shares Price Schedule Awarded
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1/1/92 Fink 200,000 $0.20 * 14.66%
1/1/92 Koltin 120,000 $0.20 * 8.79%
1/1/92 Becker 120,000 $0.20 * 8.79%
1/1/92 Weisbach 60,000 $0.20 * 4.40%
1/1/92 Timberlake 40,000 $0.20 * 2.93%
1/1/92 Robbins 40,000 $0.20 * 2.93%
1/1/92 Morris 10,000 $0.20 * 0.73%
6/14/93 Morris 2,500 $0.20 # 0.18%
1/1/92 Edwards 10,000 $0.20 * 0.73%
6/14/93 Edwards 2,500 $0.20 # 0.18%
3/4/94 Edwards 12,500 $0.23 # 0.92%
1/1/92 Diamond 10,000 $0.20 * 0.73%
6/14/93 Diamond 2,500 $0.20 # 0.18%
1/1/92 Nakanishi 10,000 $0.20 * 0.73%
1/2/92 Morgan, R.W. 8,000 $0.20 ** 0.59%
6/22/92 Bulawa 3,750 $0.20 * 0.27%
6/14/93 Bulawa 1,875 $0.20 # 0.14%
6/14/93 Bulawa 1,875 $0.20 ? 0.14%
3/4/94 Bulawa 5,000 $0.23 # 0.37%
10/19/92 O'Connor 50,000 $0.20 # 3.66%
1/1/93 Barrett 15,000 $0.20 * 1.10%
1/1/93 Stankis 1,000 $0.20 # 0.07%
6/14/93 Stankis 4,000 $0.20 # 0.29%
6/13/94 Stankis 5,000 $0.30 # 0.37%
3/1/93 Tlmberlake 240,000 $0.20 ## 17.59%
3/1/93 Timberlake 200,000 $0.20 ## 14.66%
6/13/94 Timberlake 50,000 $0.30 # 3.66%
6/14/93 Morgan,T.V. 15,000 $0.20 # 1.10%
6/14/93 Lee, Thomas 1,000 $0.20 # 0.07%
6/14/93 Rothstein, David 15,000 $0.20 # 1.10%
6/14/93 Koltin, Yigal 30,000 $0.20 # 2.20%
6/14/93 Winter, Kenneth 750 $0.20 # 0.05%
6/21/93 Gachet, Louise 1,000 $0.20 # 0.07%
6/23/93 Perlo, Barbara 1,000 $0.20 # 0.07%
7/7/93 Reeves, Scott 1,000 $0.20 # 0.07%
8/2/93 Jiang, Weldong 10,000 $0.20 # 0.73%
8/11/93 Knight, Benjamin 750 $0.20 # 0.05%
8/23/93 Shu, Nyngi 500 $0.20 # 0.04%
12/1/93 Chen, Yanni 750 $0.20 # 0.05%
1/2/93 Morgan, R. W. & Chvisuk, T.A. 8,000 $0.20 ** 0.59%
1/31/94 Jacobs, Christina 750 $0.20 # 0.05%
2/1/94 Clifford, Julie 1,200 $0.23 # 0.09%
3/7/94 Poland, Anna 500 $0.23 # 0.04%
3/28/94 Olson, Spencer 1,000 $0.23 # 0.07%
4/4/94 Iartchouk, Natalia 1,000 $0.23 # 0.07%
6/1/94 Galigher, Rex 50,000 $0.23 # 3.66%
--------- -----
Stock Option Plan-Grants 1,364,700 1
Stock Option Plan-Available 747,300
---------
Stock Option Plan-Total Auth. 2,112,000
=========
</TABLE>
- ----------
* Options vest at 25% per year
** Options vested 12/31/92
# Option vest at 20% per year
? Options vest based on attainment of a milestone to be agreed upon by employee
and supervisor within 6 months.
## Options vest at the rate of 100,000 for each event for (1) approval of an IND
and the launch of clinical trials in humans for a Myco compound, and/or (2)
demonstration of safety and efficacy of a Myco compound in Phase II clinical
trials. Option expires 12/31/95.
@ Options vest over 5 years based on attainment of yearly milestones for
division. Milestones to be agreed upon by the Company and YK prior to the
start of each year.
<PAGE> 57
Exhibit 3.14
Material Agreements
See Exhibits 3.08, 3.13 and the Attachment to this Exhibit 3.14.
Exhibit 4.02
See Exhibit 3.08.
<PAGE> 58
EXHIBIT
Attachment to Exhibit 3.14
In addition to the matters discussed in Exhibits 3.08 and 3.13, at May 31, 1994,
the Company has entered into the following agreements:
<TABLE>
<CAPTION>
Approximate
Annual
Description Contract Term Amount
----------- ------------- -----------
<S> <C> <C>
CFO Services (Morgan/Chvisuk) 1/01/94-12/31/94 $ 24,000
Comdisco Venture Group equipment lease 6/93-5/97 $ 561,000
MYOCRT, Inc. real estate lease 7/93-6/2004 $ 350,000
</TABLE>
LICENSE/RESEARCH AGREEMENTS
[ See Attachment to Exhibit 3.14 in Exhibit 10.5 ]
LICENSES:
<PAGE> 1
EXHIBIT 10.5
CHEMGENICS PHARMACEUTICALS INC. HAS OMITTED FROM THIS PART OF EXHIBIT 10.5
PORTIONS OF THE AGREEMENT FOR WHICH CHEMGENICS PHARMACEUTICALS INC. HAS
REQUESTED CONFIDENTIAL TREATMENT FROM THE SECURITIES AND EXCHANGE COMMISSION.
THE PORTIONS OF THE AGREEMENT FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED ARE MARKED "[ ]" AND SUCH CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
MYCO PHARMACEUTICALS INC.
One Kendall Square
Building 300 - Third Floor
Cambridge, MA 02139
February 9, 1995
To the Persons listed on Exhibit 1.01 hereto
and Certain Other Stockholders of
Myco Pharmaceuticals Inc.
Re: Series D Preferred Stock
Ladies and Gentlemen:
Myco Pharmaceuticals Inc. (the "Company"), a Delaware corporation,
agrees with each of you as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF SHARES
1.01. THE SERIES D PREFERRED STOCK. The Company has authorized the
issuance, sale and exchange of up to an aggregate of 3,000,000 shares of its
authorized but unissued Series D Convertible Preferred Stock, $.01 par value per
share (the "Series D Preferred Stock") at a purchase price of $5.00 per share to
the persons (collectively, the "Purchasers" and, individually, a "Purchaser")
and in the respective amounts set forth in Exhibit 1.01 hereto. The designation,
rights, preferences and other terms and provisions of the Series D Preferred
Stock are set forth in Exhibit A hereto.
1.02. THE CONVERSION SHARES. The Company has authorized and has
reserved and covenants to continue to reserve, free of preemptive rights and
other similar contractual rights of shareholders, a sufficient number of its
authorized but unissued shares of Common Stock to satisfy the rights of
conversion of the holders of the Series D Preferred Stock. Any shares of Common
Stock issuable upon conversion of the Series D Preferred Stock (and such shares
when issued) are herein referred to as the "Conversion Shares". The shares of
Series D Preferred Stock to be issued pursuant to this Agreement (the "Series D
Preferred Shares") and Conversion Shares are sometimes collectively referred to
as the "Shares".
<PAGE> 2
1.03. PURCHASE PRICE AND CLOSING. The Company agrees to issue, sell and
exchange to the Purchasers and, in consideration of and in express reliance upon
the representations, warranties, covenants, terms and conditions of this
Agreement, the Purchasers, severally but not jointly, agree to purchase, that
number of Series D Preferred Shares set forth opposite their respective names in
Exhibit 1.01. The aggregate purchase price of the Series D Preferred Shares
being acquired by each Purchaser is set forth opposite such Purchaser's name in
Exhibit 1.01. The closing of the purchase, sale and exchange of the Series D
Preferred Stock to be acquired by the Purchasers from the Company under this
Agreement shall take place at the offices of at 10:00 a.m. on
February , 1995, or at such time and date thereafter as the Purchasers and
the Company may agree (the "Closing"). At the Closing, the Company will deliver
to each Purchaser certificates for the number of Series D Preferred Shares set
forth opposite its name in Exhibit 1.01 registered in such Purchaser's name (or
its nominee), against delivery of a check or checks payable to the order of the
Company, or a transfer of funds to the account of the Company by wire transfer,
representing the aggregate purchase price set forth opposite each such
Purchaser's name on Exhibit 1.01, as payment in full of the purchase price of
the Shares.
1.04. USE OF PROCEEDS. The Company shall use the cash proceeds from the
sale of the Series D Preferred Stock for working capital and general corporate
purposes.
1.05. REPRESENTATIONS BY THE PURCHASERS.
(a) INVESTMENT REPRESENTATIONS. Each of the
Purchasers represents severally, but not jointly, that it is its
present intention to acquire the Shares to be acquired by it for its
own account (and it will be the sole beneficial owner thereof) and that
the Shares are being and will be acquired by it for the purpose of
investment and not with a view to distribution or resale thereof except
pursuant to registration under the Securities Act or exemption
therefrom. The acquisition by each Purchaser of the Shares acquired by
it shall constitute a confirmation of this representation by each such
Purchaser. Each Purchaser is purchasing with its own funds and not with
the funds of any pension or employee benefit plan. Each of the
Purchasers further represents that it understands and agrees that,
until registered under the Securities Act or transferred pursuant to
the provisions of Rule 144 or Rule 144A as promulgated by the
Commission, all certificates evidencing any of the Shares, whether upon
initial issuance or upon any transfer thereof, shall bear a legend,
prominently stamped or printed thereon, reading substantially as
follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 as amended (the
"Act") or applicable state securities laws. These securities
have been acquired for investment and not with a view to
distribution or resale. These securities may not be offered
for sale, sold, delivered after sale, transferred, pledged or
hypothecated in the absence of an effective registration
statement covering such shares
- 2 -
<PAGE> 3
under the Act and any applicable state securities laws, or the
availability, in the opinion of counsel satisfactory to the
Company, of an exemption from registration thereunder."
(b) SOPHISTICATION AND KNOWLEDGE. Each Purchaser or
his representative has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks
of the purchase of the Shares. Each Purchaser can bear the economic
risks of this investment and can afford a complete loss of his
investment.
(c) TRANSFER RESTRICTIONS IMPOSED BY SECURITIES LAWS.
Each Purchaser understands that: no state or governmental authority has
made any finding or determination relating to the fairness of the terms
of the investment in the Company proposed hereunder and the Shares have
not been registered under the Securities Act and applicable state
securities laws, and, therefore, cannot be resold unless they are
subsequently registered under the Securities Act and applicable state
securities laws or unless an exemption from such registration is
available; each Purchaser is and must be purchasing the Shares for
investment for the account of such Purchaser and not for the account or
benefit of others, and not with any present view toward resale or other
distribution thereof. Each Purchaser agrees not to resell or otherwise
dispose of all or any part of the Shares purchased by him, except as
permitted by law, including, without limitation, any regulations under
the Securities Act and applicable state securities laws; the Company
does not have any present intention and is under no obligation to
register the Shares under the Securities Act and applicable state
securities laws, except as provided in Article V hereof; and Rule 144
or Rule 144A under the Securities Act may not be available as a basis
for exemption from registration of the Shares thereunder.
(d) LACK OF LIQUIDITY. Each Purchaser has no present
need for liquidity in connection with his purchase of the Shares.
(e) SUITABILITY AND INVESTMENT OBJECTIVES. The
purchase of the Shares by each Purchaser is consistent with the general
investment objectives of the Purchaser. The Purchaser understands that
the purchase of the Shares involves a high degree of risk in view of
the fact that, among other things, the Company is a development stage
enterprise, and there may never be an established market for the
Company's capital stock.
(f) ACCREDITED INVESTORS STATUS. Each Purchaser is an
"Accredited Investor" as that term is defined in Rule 501 of Regulation
D promulgated under the Securities Act.
(g) ACCESS TO INFORMATION. Each Purchaser has had the
opportunity to ask questions and receive answers from the officers and
other employees of the Company regarding the terms and conditions of
this Agreement, the transactions
- 3 -
<PAGE> 4
contemplated hereby (including, without limitation, its acquisition of
Shares), as well as the affairs of the Company and related matters, and
it has obtained such information and has had the opportunity to obtain
additional information necessary to verify the accuracy of all
information so obtained.
(h) CORPORATE AND PARTNERSHIP REPRESENTATION. If a
Purchaser is a corporation, partnership, trust or other entity, it
represents and warrants that (i) the individual executing this
Agreement on its behalf has been duly authorized to execute and deliver
this Agreement; (ii) the signature of such individual is binding upon
such partnership, corporation, trust or other entity; (iii) the
Purchaser is duly organized, validly existing and in good standing in
its jurisdiction of incorporation or organization and has all requisite
power and authority to execute and deliver this Agreement; and (iv) the
execution and delivery of this Agreement and the purchase of the Shares
hereunder will not result in the violation of, constitute a breach or
default under, or conflict with, any term or provision of the charter,
bylaws or other governing document of the Purchaser or, to its
knowledge, material breach or default under any material agreement,
judgment, decree, order, statute or regulation by which it is bound or
applicable to it.
(i) ADDITIONAL REPRESENTATIONS. Each Purchaser
understands that the Company is a research and development stage
enterprise with limited resources. The Company is engaged and intends
to engage in research activities which will require substantial funds
which may not be available. For this and other reasons, the Company's
prospects are highly speculative. Accordingly, each Purchaser
acknowledges that he, she or it may lose her, his or its entire
investment in the Company. Each of the Bessemer Purchasers is relying
on the information provided by Bessemer Venture Partners III, L.P. with
respect to its investment in the Company. Bessemer Venture Partners
III, L.P. represents that it has provided to each of such purchasers
access to all of the information which it has regarding the Company.
ARTICLE II
CONDITIONS TO CLOSING
2.01. CONDITIONS TO PURCHASERS' OBLIGATIONS. The obligation of each
Purchaser to purchase and pay for the Series D Preferred Shares to be purchased
by it at the Closing is subject to the following conditions (all of which shall
be deemed satisfied or waived by the Purchasers at or prior to the Closing in
the event all of the transactions contemplated to be effected at the Closing are
consummated and all or any of which in any case may be waived by the Purchasers
prior to a Closing):
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Company set forth in Article III
hereof shall be true, accurate and correct on the date of the Closing.
- 4 -
<PAGE> 5
(b) DOCUMENTATION AT CLOSING. The Purchasers shall have
received prior to or at the Closing all of the following materials,
each in form and substance reasonably satisfactory to the Purchasers
and their counsel, and each of the following events shall have
occurred, or each of the following documents shall have been delivered,
prior to or simultaneous with the Closing:
(i) A copy of the Restated Certificate of
Incorporation of the Company, as amended or restated to date, together
with such evidence as is satisfactory to the Purchasers of the filing
thereof; a copy of the resolutions of the Board of Directors providing
for the approval of the Restated Certificate of Incorporation of the
Company in the form attached as Exhibit A, the approval of this
Agreement, the issuance of the Shares and all other agreements or
matters contemplated hereby or executed in connection herewith; a copy
of a consent of stockholders of the Company approving the Restated
Certificate of Incorporation of the Company; and a copy of the By-laws
of the Company, all of which have been certified by the Secretary of
the Company to be true, complete and correct in every particular; and
certified copies of all documents evidencing other necessary corporate
or other action and governmental approvals, if any, required to be
obtained at or prior to the Closing with respect to this Agreement and
the issuance of the Series D Preferred Shares.
(ii) The favorable opinion of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., counsel for the Company, in the form
set forth in Exhibit 2.02(b).
(iii) A certificate of the Secretary or an Assistant
Secretary of the Company which shall certify the names of the officers
of the Company authorized to sign this Agreement, the certificates for
the Series D Preferred Stock and the other documents, instruments or
certificates to be delivered pursuant to this Agreement by the Company
or any of its officers, together with the true signatures of such
officers.
(iv) A certificate of the President and the Treasurer
of the Company stating that the representations and warranties of the
Company contained in Article III hereof are true and correct as of the
time of the Closing and that all conditions required to be performed by
the Company prior to or at the Closing have been performed as of the
Closing.
(v) The Company shall have obtained any consents or
waivers necessary to be obtained at or prior to the Closing to execute
and deliver this Agreement, the Series D Preferred Shares and the other
agreements and instruments executed and delivered by the Company in
connection herewith and to carry out the transactions contemplated
hereby and thereby, and such consents and waivers shall be in full
force and effect at the Closing. All corporate and other action and
governmental filings necessary to effectuate the terms of this
Agreement, the Series D Preferred Stock and the other agreements and
instruments executed and delivered by the Company in connection
herewith shall have been made or taken.
- 5 -
<PAGE> 6
(vi) A Certificate of the Secretary of State of the
State of Delaware as to the due incorporation and good standing of the
Company and a certificate of the Secretary of State of each
jurisdiction in which the Company is required to qualify to do business
as a foreign corporation shall have been provided to the Purchasers.
(vii) Payment for the costs, expenses, taxes and
filing fees identified in Section 8.04.
(viii) This Agreement shall have been executed by
Purchasers that are obligated to purchase an aggregate of at least
$15,000,000 of Series D Preferred Stock at the Closing in the amounts
set forth in Exhibit 1.01 and such Purchasers shall have delivered to
the Company the full purchase price for the Series D Preferred Shares
being purchased.
2.02 CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligation of the
Company to issue and sell to the Purchasers the Series D Preferred Shares to be
sold at the Closing is subject to the following conditions:
(a) VOTING AND CO-SALE AGREEMENT. The Purchasers, the
Company and certain other parties shall have entered into a Second
Amended and Restated Voting and Co-Sale Agreement (the "Voting and
Co-Sale Agreement").
(b) STANDSTILL AGREEMENT. Pfizer, Inc. shall have entered
into a Standstill Agreement in substantially the form attached hereto
as Exhibit B.
(c) COLLABORATIVE RESEARCH AGREEMENT AND LICENSE OPTION,
LICENSE AND ROYALTY AGREEMENT. Pfizer, Inc. and the Company shall have
entered into a Collaborative Research Agreement and License Option,
License and Royalty Agreement in the forms attached hereto as Exhibit
C.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as follows:
3.01. ORGANIZATION AND STANDING OF THE COMPANY. The Company is a duly
organized and validly existing corporation in good standing under the laws of
the State of Delaware and has all requisite corporate power and authority for
the ownership and operation of its properties and for the carrying on of its
business as now conducted and as now proposed to be conducted and to execute and
deliver this Agreement and any other agreement to which it is a party hereunder,
to issue, sell and deliver the Series D Preferred Shares, to issue and deliver
the Conversion Shares and to perform its other obligations pursuant hereto and
thereto. The Company is duly licensed or qualified and in good standing as a
foreign corporation
- 6 -
<PAGE> 7
authorized to do business in all jurisdictions wherein the character of the
property owned or leased or the nature of the activities conducted by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified would not have a material adverse effect on the business,
operations or financial condition of the Company.
3.02. CORPORATE ACTION. This Agreement and any other agreement to
which it is a party hereunder have been duly authorized, executed and delivered
by the Company and constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms.
3.03. GOVERNMENTAL APPROVALS. Except for the filing of any notice
prior or subsequent to the Closing that may be required under applicable state
and/or Federal securities laws, and the filing of the Restated Certificate of
Incorporation (which, if required, shall be filed on a timely basis), no
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be necessary
for, or in connection with, the execution and delivery by the Company of this
Agreement, for the offer, issue, sale, execution or delivery of the Series D
Preferred Shares, or for the performance by the Company of its obligations under
this Agreement.
3.04. LITIGATION. There is no litigation or governmental proceeding
or investigation pending or, to the knowledge of the Company, threatened against
the Company affecting any of its properties or assets, or, to the knowledge of
the Company, against any officer, Key Employee or the holder of more than ten
percent (10%) of the capital stock of the Company relating to the Company or its
business, nor, to the knowledge of the Company, has there occurred any event or
does there exist any condition on the basis of which it is reasonably likely
that any such litigation, proceeding or investigation might properly be
instituted. There are no actions or proceedings pending or, to the Company's
knowledge, threatened (or any basis therefor known to the Company) which might
result, either in any case or in the aggregate, in any material adverse change
in the business, operations, Intellectual Property Rights, affairs or financial
condition of the Company or in any of its properties or assets, or which might
call into question the validity of this Agreement, the Series D Preferred Stock,
or any action taken or to be taken pursuant hereto or thereto.
3.05. CERTAIN AGREEMENTS OF OFFICERS AND EMPLOYEES. To the Company's
knowledge, no officer, employee or consultant of the Company is, or is now or is
expected to be, in violation of any material term of any employment contract,
patent disclosure agreement, proprietary information agreement, noncompetition
agreement, nonsolicitation agreement, confidentiality agreement, or any other
similar contract or agreement or any restrictive covenant, relating to the right
of any such officer, employee, or consultant to be employed or engaged by the
Company because of the nature of the business conducted or to be conducted by
the Company or relating to the use of trade secrets or proprietary information
of others, and to the Company's knowledge and belief, the continued employment
or engagement of the Company's
- 7 -
<PAGE> 8
officers, employees or consultants does not subject the Company or any Purchaser
to any material liability with respect to any of the foregoing matters.
3.06. COMPLIANCE WITH OTHER INSTRUMENTS. The Company is in compliance
in all respects with the terms and provisions of this Agreement and of its
Restated Certificate of Incorporation and By-laws, each as amended and/or
restated to date, and in all respects with the terms and provisions of all
mortgages, indentures, leases, agreements and other instruments by which it is
bound or to which it or any of its properties or assets are subject where
noncompliance would have a material adverse affect on the business, assets,
operations, or financial condition of the Company. The Company is in compliance
in all respects with all judgments, decrees, governmental orders, laws,
statutes, rules or regulations by which it is bound or to which it or any of its
properties or assets are subject where noncompliance would have a material
adverse affect on the business, assets, operations, or financial condition of
the Company. Neither the execution, issuance and delivery of this Agreement or
the Series D Preferred Shares, nor the consummation of any transaction
contemplated hereby or thereby, has constituted or resulted in or will
constitute or result in a default or violation of any term or provision of any
of the foregoing documents, instruments, judgments, agreements, decrees, orders,
statutes, rules and regulations where noncompliance with which would have a
material adverse affect on the business, assets, operations, or financial
condition of the Company.
3.07. TITLE TO ASSETS, PATENTS. The Company has good and marketable
title in fee to such of its fixed assets as are real property and purported to
be owned, and good and merchantable title to all of its other assets, tangible
and intangible, free of any mortgages, pledges, charges, liens, security
interests or other encumbrances, except those indicated in Exhibit 3.07. The
Company enjoys peaceful and undisturbed possession under all leases under which
it is operating, and all said leases are valid and subsisting and in full force
and effect. All of such assets and leases are listed in Exhibit 3.07.
The Company owns or has a valid right to use the Intellectual
Property Rights being used to conduct its business (i) as now operated and (ii)
as now proposed to be operated (a complete list of licenses, contract rights and
registrations of such Intellectual Property Rights is attached hereto as Exhibit
3.07); and the conduct of its business as now operated and as now proposed to be
operated does not and is not expected to conflict with or infringe upon the
intellectual property rights of others. Except as set forth on Exhibit 3.07, no
claim is pending or threatened against the Company and/or, to the Company's
knowledge, its officers, employees and consultants to the effect that any such
Intellectual Property Right owned or licensed by the Company, or which the
Company otherwise has the right to use, is invalid or unenforceable by the
Company or subject to any claim of infringement. Except pursuant to the terms of
any licenses specified on Exhibit 3.07, the Company has no obligation to
compensate any Person for the use of any such Intellectual Property Rights and
the Company has not granted any Person any license or other right to use any of
the Intellectual Property Rights of the Company or otherwise has licensed from
others the intellectual property rights of third parties, whether requiring the
payment of royalties or not.
- 8 -
<PAGE> 9
The Company has taken reasonable measures in accordance with
industry standards to protect and preserve the security, confidentiality and
value of its Intellectual Property Rights, including its trade secrets and other
confidential information. All employees and consultants of the Company involved
in the design, review, evaluation or development of inventions or Intellectual
Property Rights have executed nondisclosure and assignment of inventions
agreements in the Company's customary form. To the best knowledge of the
Company, all trade secrets and other confidential information of the Company are
presently valid and protectible and are not part of the public domain or
knowledge, nor, to the best knowledge of the Company, have they been used,
divulged or appropriated for the benefit of any person other than the Company or
otherwise to the detriment of the Company. To the best of the Company's
knowledge, no employee or consultant of the Company has used any trade secrets
or other confidential or proprietary information or techniques of any other
person in the course of their work for the Company or is expected to use such
secrets or information or techniques when conducting the business which the
Company presently intends to conduct. The Company is the exclusive owner of all
right, title and interest in its Intellectual Property Rights as purported to be
owned by the Company, and such Intellectual Property Rights are valid and in
full force and effect. Neither the Company, nor any of its employees or
consultants has received notice of, and to the best of the Company's knowledge
after reasonable investigation, there are no claims that the Company's
Intellectual Property Rights or the use or ownership thereof by the Company
infringes, violates or conflicts with any such right of any third party. No
university, hospital, government agency (whether federal or state) or other
organization which sponsored research and development conducted by the Company
has any claim of right to or ownership of or other encumbrance upon the
Intellectual Property Rights of the Company except as disclosed in Exhibit 3.07.
3.08. TRANSACTIONS WITH AFFILIATES. Except as set forth in Exhibit
3.08 there are no loans, leases, royalty agreements or other continuing
transactions between (a) the Company or, to the Company's best knowledge, any of
its customers or suppliers, and (b) any officer, employee, consultant or
director of the Company or any Person owning five percent (5%) or more of the
capital stock of the Company, or to the Company's knowledge, any member of the
immediate family of such officer, employee, consultant, director or stockholder
or any corporation or other entity controlled by such officer, employee,
consultant, director or stockholder, or a member of the immediate family of such
officer, employee, consultant, director or stockholder.
3.09. INDEBTEDNESS; ASSUMPTIONS OR GUARANTIES OF INDEBTEDNESS OF
OTHER PERSONS. The Company has no Indebtedness except as set forth in Exhibit
3.09. 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
payment, to supply funds to or otherwise invest in the debtor or otherwise to
assure the creditor against loss), any Indebtedness of any other Person except
as set forth in Exhibit 3.09.
- 9 -
<PAGE> 10
3.10. INVESTMENTS IN OTHER PERSONS. The Company has not made any
loans or advances in excess of $100,000 in the aggregate to any Person which is
outstanding on the date of this Agreement, nor is it committed or obligated to
make any such loan or advance, nor does the Company own any capital stock,
assets comprising the business of, obligations of, or any interest in, any
Person. The Company does not have, and has not since its incorporation had, any
Subsidiaries.
3.11. SECURITIES ACT OF 1933. 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 Series D Preferred Shares hereunder. Neither
the Company nor anyone authorized to act on its behalf has or will sell, offer
to sell or solicit offers to buy the Series D Preferred Shares or similar
securities to, or solicit offers with respect thereto from, or enter into any
preliminary conversations or negotiations relating thereto with, any Person, so
as to bring the issuance and sale of the Series D Preferred Shares under the
registration provisions of the Securities Act and applicable state securities
laws.
3.12. DISCLOSURE. Neither this Agreement, nor any other written
agreement or statement, furnished to any of the Purchasers by or on behalf of
the Company in connection with the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein, in light of the
circumstances in which made, not misleading. Projections made in the Business
Plan are not considered to be facts for the purpose of this Section . Such
projections were prepared in good faith on the basis of reasonable assumptions.
There is no fact within the knowledge of the Company or any of its executive
officers which has not been disclosed herein or in writing by them to the
Purchasers and which materially adversely affects, or in the future in their
opinion may, insofar as they can now foresee, materially adversely affect the
business, operations, properties, Intellectual Property Rights, assets or
condition, financial or other, of the Company. Without limiting the foregoing,
the Company has no knowledge that there exists, or that there is pending or
planned, any patent, invention, device, application or principle or any statute,
rule, law, regulation, standard or code which would materially adversely affect
the business, prospects, operations, Intellectual Property Rights, affairs or
financial condition of the Company.
3.13. CAPITALIZATION; STATUS OF CAPITAL STOCK. As of the Closing, the
Company will have a total authorized capitalization consisting of (i) 16,000,000
shares of Common Stock, $.001 par value and (ii) 11,275,000 shares of preferred
stock, $.01 par value ("Preferred Stock"), of which 6,400,000 shares will be
designated as Series A Convertible Preferred Stock, $.01 par value ("Series A
Preferred Stock"), 1,100,000 shares will be designated as Series B Convertible
Preferred Stock, $.01 par value ("Series B Preferred Stock"), 775,000 shares
will be designated as Series C Convertible Preferred Stock, $.01 par value
("Series C Preferred Stock"), and 3,000,000 shares will be designated as Series
D Preferred Stock. As of the Closing, 1,510,200 shares of Common Stock will be
issued and outstanding, 6,150,732 shares of Series A Preferred Stock will be
issued and outstanding, 1,063,366 shares of Series B Preferred Stock will be
issued and outstanding and 767,739 shares of Series C Preferred Stock
- 10 -
<PAGE> 11
will be issued and outstanding. A complete list of the capital stock of the
Company which has been previously issued and the names in which such capital
stock is registered on the stock transfer book of the Company is set forth in
Exhibit 3.13 hereto. All the outstanding shares of capital stock of the Company
have been duly authorized, and are validly issued, fully paid and
non-assessable. The Series D Preferred Shares when issued and delivered in
accordance with the terms hereof, and the Conversion Shares, when issued and
delivered upon conversion of the Series D Preferred Shares, will be duly
authorized, validly issued, fully-paid and non-assessable. Except for 2,107,800
shares of Common Stock that are reserved for issuance upon exercise of stock
options, 177,083 shares of Series A Preferred Stock that have been reserved for
issuance upon exercise of Warrants issued or to be issued to Comdisco, Inc. (the
"Comdisco Leasing Warrants"), the shares of Common Stock reserved for issuance
upon the conversion of the currently outstanding shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and upon the
conversion of the shares of Series A Preferred Stock which may be issued upon
exercise of the Comdisco Leasing Warrants, all as further set forth in Exhibit
3.13, no options, warrants, subscriptions or purchase rights of any nature to
acquire from the Company, or commitments of the Company to issue, shares of
capital stock or other securities are authorized, issued or outstanding, nor is
the Company obligated in any other manner to issue shares or rights to acquire
any of its capital stock or other securities except as contemplated by this
Agreement. None of the Company's outstanding securities or authorized capital
stock, including the Series D Preferred Stock, are subject to any rights of
redemption, repurchase, rights of first refusal, preemptive rights or other
similar rights, whether contractual, statutory or otherwise, for the benefit of
the Company, any stockholder, or any other Person, except pursuant hereto,
pursuant to the Voting and Co-Sale Agreement or as set forth on Exhibit 3.13.
Except as set forth in Exhibit 3.13, there are no restrictions on the transfer
of shares of capital stock of the Company other than those imposed by relevant
Federal and state securities laws and as otherwise contemplated by this
Agreement and the Voting and Co-Sale Agreement. The offer and sale of all
capital stock and other securities of the Company issued before the Closing
complied with or were exempt from all applicable Federal and state securities
laws and no stockholder has a right of rescission or damages with respect
thereto.
3.14. MATERIAL AGREEMENTS. Except as set forth in Exhibit 3.14 the
Company is not a party to any material written or oral contract, instrument,
agreement, commitment, obligation, plan or arrangement, or any other material
agreement which could adversely affect the business, assets, liabilities,
Intellectual Property Rights, financial condition or operations of the Company.
The Company, and to the best of the Company's knowledge, each other party
thereto have in all material respects performed all the obligations required to
be performed by them to date, have received no notice of default and are not in
default in any material respect under any lease, agreement or contract now in
effect to which the Company is a party or by which it or its property may be
bound. Each of the contracts or agreements listed in Exhibit 3.14 is in full
force and effect with no default, anticipated or threatened material default or
material failure of performance or observance of any obligations or conditions
contained therein, and none of the foregoing parties nor the Company has
provided any notice of default or of its intention to terminate these
agreements.
- 11 -
<PAGE> 12
3.15. ABSENCE OF CERTAIN DEVELOPMENTS. The Company is not a party to
any written or material oral contract or instrument or other corporate
restriction which individually or in the aggregate is reasonably likely to
adversely affect the business, prospects, financial condition, operations,
Intellectual Property Rights, property or affairs of the Company. The Company
has no liability or obligation, whether absolute, contingent, or otherwise,
except for those incurred in the ordinary course.
3.16. ENVIRONMENTAL AND SAFETY LAWS. To the best of the Company's
knowledge after due investigation, it is not in violation of any applicable
statute, law or regulation relating to the environment or occupational safety
and health in any material respect, and to the best of its knowledge after due
investigation, no material expenditures will be required in order to comply with
any such statute, law or regulation except in the ordinary course of doing
business.
3.17. U.S. REAL PROPERTY HOLDING CORPORATION. The Company is not now
and has never been a "United States Real Property Holding Corporation" as
defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service.
ARTICLE IV
COVENANTS OF THE COMPANY
The following provisions supersede and amend and restate in their
entirety the covenants of the Company set forth in Article IV of the Series C
Agreement. The Purchasers, in their capacity as Purchasers of Shares and certain
of the Purchasers, in their capacity as holders of at least 60% of the
outstanding shares of Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock, hereby consent to the amendment and restatement of
such covenants and agree that the following provisions shall supersede and amend
and restate in their entirety the provisions of Article IV of the Series C
Agreement. For purposes of this Article IV, and of Article V and Article VI, (a)
the term "Purchaser" or "Purchasers" also shall mean and include the Purchasers
as defined in the Series A and B Agreement and the Series C Agreement, (b) the
term "Shares" also shall mean and include the shares of Series A Preferred Stock
and Series B Preferred Stock issued pursuant to the Series A and B Agreement,
the shares of Series C Preferred Stock issued pursuant to the Series C
Agreement, and shares of Common Stock issuable upon conversion thereof and (c)
the term "Conversion Shares" also shall mean and include the shares of Common
Stock issuable upon conversion of the Series A Preferred Stock, the Series B
Preferred Stock and the Series C Preferred Stock.
4.01. AFFIRMATIVE COVENANTS OF THE COMPANY OTHER THAN REPORTING
REQUIREMENTS. Without limiting any other covenants and provisions hereof, and
except to the extent the following covenants and provisions of this Section 4.01
are waived in any instance by either (i) a majority of the Investor Directors or
(ii) the holders of at least 60% of the outstanding shares of Serial Preferred
Stock, the Company covenants and agrees that until the
- 12 -
<PAGE> 13
consummation of a Qualified Public Offering, it will perform and observe the
following covenants and provisions, and will cause each Subsidiary, if and when
such Subsidiary exists, to perform and observe such of the following covenants
and provisions as are applicable to such Subsidiary:
(a) MAINTENANCE OF KEY MAN INSURANCE. Maintain term
life insurance on the life of Barry Berkowitz in the amount of
$1,000,000, for so long as such person remains an officer or employee
of the Company, the proceeds of which are payable to the Company. The
Company will maintain Technology Leaders L.P., Technology Leaders
Offshore C.V. and Bessemer Venture Partners III L.P. as notice parties
to such policy and shall use reasonable efforts to ensure that the
issuer of such policy provides each such party with at least twenty
(20) days' notice before such policy is modified or terminated (for
failure to pay premium or otherwise) or assigned, or before any change
is made in the designation of the beneficiary thereof.
(b) BUDGETS APPROVAL. At least thirty (30) days prior
to the commencement of each fiscal year, prepare and submit to, and
obtain in respect thereof the approval of two-thirds of the members of
the Board of Directors, a strategic plan and monthly operating budget
in detail for each fiscal year, monthly operating expenses and profit
and loss projections, quarterly cash flow projections and a capital
expenditure budget for the fiscal year, and including a summary of
proposed research and development activities for the forthcoming year,
the status and proposed activities for any joint venture or other
licensing arrangements with third parties, including pharmaceutical
companies, universities, hospitals and others.
(c) NEW DEVELOPMENTS. Cause all technological
developments, patentable or unpatentable inventions, discoveries or
improvements by the Company's or any Subsidiary's employees or
consultants to be documented in accordance with industry practice and,
where possible and appropriate, to file and prosecute United States and
foreign patent, copyright, trademark, or other Intellectual Property
Right applications relating to and protecting the Company's inventions,
discoveries or developments on behalf of the Company or any Subsidiary.
(d) AGREEMENTS OF OFFICERS AND EMPLOYEES. Cause each
employee of the Company or any Subsidiary now or hereafter employed to
execute and deliver nondisclosure and assignment of inventions
agreements (in the Company's customary form or agreements otherwise
approved by the Board of Directors of the Company, including a majority
of the Investor Directors) and cause each Key Employee of the Company
or any Subsidiary hereafter employed to execute and deliver
non-competition, nondisclosure and assignment of inventions agreements
(in the Company's customary form or agreements otherwise approved by
the Board of Directors of the Company, including a majority of the
Investor Directors), and use its best efforts to cause all consultants
of the Company involved in the design, review, evaluation or
development of inventions or Intellectual Property Rights to execute
and deliver nondisclosure and
- 13 -
<PAGE> 14
assignment of inventions agreements (in the Company's customary form or
agreements otherwise approved by the Board of Directors, including a
majority of the Investor Directors). The Company shall not amend or
waive any of the material provisions of such agreements.
(e) BY-LAWS; MEETINGS AND INDEMNIFICATION. The
Company shall at all times cause its By-laws to provide that, (A)
unless otherwise required by the laws of the state of its
incorporation, (i) any two directors or (ii) any holder or holders of
at least 25% of the outstanding shares of Preferred Stock, voting as a
separate class, shall have the right to call a meeting of the Board of
Directors or stockholders, respectively, and (B) a quorum for a meeting
of the Board of Directors or any Committee thereof of which an Investor
Director is a member shall require the attendance of at least two
Investor Directors. The Company shall at all times maintain provisions
in its By-laws or Restated Certificate of Incorporation indemnifying
all directors against liability to the maximum extent permitted under
the laws of the state of its incorporation.
(f) EXPENSES OF DIRECTORS. Promptly reimburse in full
each director of the Company for all of his reasonable out-of-pocket
expenses incurred in attending each meeting of the Board of Directors
of the Company or any Committee thereof.
(g) SIZE OF BOARD. Fix and maintain the number of
Directors on the Board of Directors of the Company at no more than six
(6) members, including Barry A. Berkowitz, four (4) representatives of
the holders of Serial Preferred Stock and one (1) member designated by
the chief executive officer of the Company.
(h) RULE 144A INFORMATION. At all times during which
the Company is neither subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act, nor exempt from reporting pursuant to
Rule 12g3-2(b) under the Exchange Act, the Company will provide as
promptly as practicable (in any event not later than twenty (20) days
after initial request) in written form, upon the written request of any
Purchaser or a prospective buyer of Shares from any Purchaser, all
information required by Rule 144A(d)(4)(i) of the General Regulations
promulgated by the Commission under the Securities Act ("Rule 144A
Information"). The Company further covenants, upon written request, as
promptly as practicable (in any event not later than twenty (20) days
after initial request) to cooperate with and assist any Purchaser or
any member of the National Association of Securities Dealers, Inc.
system for Private Offerings Resales and Trading through Automated
Linkage ("PORTAL") in applying to designate and thereafter maintain the
eligibility of the Shares for trading through PORTAL. The Company's
obligations under this Section 4.01(h) shall at all times be contingent
upon the relevant Purchaser's obtaining from a prospective purchaser an
agreement to take all reasonable precautions to safeguard the Rule 144A
Information from disclosure to anyone other than a person who will
assist such purchaser in evaluating the purchase of the Shares.
- 14 -
<PAGE> 15
(i) STOCK PLAN. The Company has created a stock
option plan and currently has reserved an aggregate of 2,107,800
options for the purchase of Common Stock for issuance to employees,
officers and consultants of the Company and to members of the Company's
Scientific Advisory Board. All options to be granted (or stock issued
directly) under any stock plan or otherwise shall vest and become
exercisable in such manner as shall be approved by a majority of the
Board of Directors and shall be subject to a right of refusal of the
Company, unless otherwise approved by a majority of the Board of
Directors including a majority of the Investor Directors.
(j) MEETINGS OF DIRECTORS AND COMMITTEES. Hold
meetings of the Company's Board of Directors not less than on a
quarterly basis; if the Company appoints an Executive Committee of the
Board of Directors, such committee shall be composed of at least four
(4) Directors, including at least three (3) Investor Directors.
4.02. NEGATIVE COVENANTS OF THE COMPANY. The Company covenants and
agrees that until the consummation of a Qualified Public Offering, it will
comply with and observe the following negative covenants and provisions, and
will cause each Subsidiary to comply with and observe such of the following
covenants and provisions as are applicable to such Subsidiary, if and when such
Subsidiary exists, and will not without (i) the written consent or written
waiver of the holders of at least 60% of the outstanding shares of the Serial
Preferred Stock or (ii) a majority of the members of the Board of Directors
including a majority of the Investor Directors:
(a) DEALINGS WITH AFFILIATES. Enter into any
transaction, including, without limitation, any loans or extensions of
credit or other agreements with any employee, consultant, officer or
director of the Company or any Subsidiary or holder of five percent
(5%) of any class of capital stock of the Company or any Subsidiary, or
any member of their respective immediate families or any corporation or
other entity directly or indirectly controlled by one or more of such
employees, consultants, officers, directors or 5% stockholders or
members of their immediate families, on terms less favorable to the
Company or any Subsidiary than it would obtain in a transaction between
unrelated parties except in the case of any transaction or series of
transactions entered into in the ordinary course of business, so long
as these are approved by the disinterested members of Board of
Directors (including a majority of the Investor Directors). The Company
has entered into certain agreements with Barry Berkowitz and with
William Timberlake set forth on Exhibit 4.02, which are hereby
ratified.
(b) ISSUANCE OF EQUITY SECURITIES. Authorize or
issue, or obligate itself to issue, any additional shares of capital
stock of the Company of any class (including any options, warrants or
other rights to purchase capital stock), provided, however, that the
provisions of this Section 4.02(b) shall not apply to the issuance of:
(i) the Conversion Shares; or (ii) up to 2,107,800 shares of Common
Stock or options, warrants or other rights exercisable therefor, issued
on or after the date hereof to directors, officers, employees or
consultants of the Company and any Subsidiary
- 15 -
<PAGE> 16
(including members of the Scientific Advisory Board) pursuant to any
qualified or non-qualified stock option plan or agreement, employee
stock ownership plan, employee benefit plan, stock purchase agreement,
stock plan, stock restriction agreement, or consulting agreement or
such other options, equity arrangements, agreements or plans approved
by two-thirds of the members of the Board of Directors of the Company
(including a majority of the Investor Directors); or (iii) the Comdisco
Leasing Warrants, shares of Series A Preferred Stock issued upon
exercise of the Comdisco Leasing Warrants or shares of Common Stock
issued upon conversion of shares of Series A Preferred Stock issued
upon exercise thereof.
(c) TRANSFERS OF TECHNOLOGY. Transfer, sell, dispose
of, encumber, pledge, grant a lien on or security interest in, assign,
lease, license or donate any ownership or interest in, or material
rights relating to, any of its technology, or other Intellectual
Property Rights to any person or entity which is not a member of the
"consolidated group" of the Company and its Subsidiaries; provided,
however, that this Section shall not apply to licenses of technology or
Intellectual Property Rights accomplished in the ordinary course of the
Company's business or pursuant to the express terms of the agreements
entered into with Pfizer, Inc. on the date hereof.
(d) RESTRICTIONS ON INDEBTEDNESS. The Company
covenants that it will not, and will not permit any of its Subsidiaries
to, incur, create, or assume any Indebtedness other than trade debt,
loans to employees in an annual aggregate amount not to exceed $50,000
and property leases, all as approved by the Board of Directors,
including a majority of the Investor Directors.
(e) ASSUMPTIONS OR GUARANTIES OF INDEBTEDNESS OF
OTHER PERSONS. Assume, guarantee, endorse or otherwise become directly
or contingently liable on, or permit any Subsidiary to assume,
guarantee, endorse 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 payment, to
supply funds to or otherwise invest in the debtor or otherwise to
assure the creditor against loss) any Indebtedness of any other Person,
except for guaranties by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business.
(f) AMENDMENTS. Amend the Restated Certificate of
Incorporation or By-laws of the Company.
4.03. REPORTING REQUIREMENTS. Until the consummation of the Initial
Public Offering, the Company will furnish the following to each Person who is
the holder of not less than 5% of the Shares:
(a) MONTHLY REPORTS: as soon as available and in any
event within 45 days after the end of each calendar month, balance
sheets, statements of income and retained earnings and a summary
statement of monthly cash flow and expenses of the
- 16 -
<PAGE> 17
Company and its Subsidiaries for such month and for the period
commencing at the end of the previous fiscal year and ending with the
end of such month, setting forth in each case in comparative form the
corresponding figures for the corresponding period of the preceding
fiscal year, and including comparisons to the monthly budget or
business plan and an analysis of the variances from the budget or plan,
prepared in accordance with generally accepted accounting principles
consistently applied;
(b) ANNUAL REPORTS: as soon as available and in any
event within 120 days after the end of each fiscal year of the Company,
a copy of the annual audit report for such year for the Company and its
Subsidiaries, including therein consolidated and consolidating balance
sheets of the Company and its Subsidiaries as of the end of such fiscal
year and consolidated and consolidating statements of income and
retained earnings and of changes in financial position of the Company
and its Subsidiaries for such fiscal year, setting forth in each case
in comparative form the corresponding figures for the preceding fiscal
year, all such consolidated statements to be duly certified by the
chief financial officer of the Company and an independent public
accountant of recognized national standing approved by the Board of
Directors including a majority of the Investor Directors;
(c) BUDGETS AND OPERATING PLAN: as soon as available
and in any event at least 30 days before the beginning of each fiscal
year of the Company, a strategic plan and monthly and quarterly
operating budgets for the forthcoming fiscal year, and as soon as
available and in any event within 30 days after the end of each
calendar month, monthly comparisons against the business plan and
monthly operating budgets (including a summary of proposed research and
development activities, and the status and proposed activities for any
joint venture or other licensing arrangements with any third party).
(d) NOTICE OF ADVERSE CHANGES: promptly after the
occurrence thereof and in any event within five (5) business days after
it becomes aware of each occurrence, notice of any material adverse
change in the business, assets, Intellectual Property Rights,
management, licensing activities, operations or financial condition of
the Company; and
(e) REPORTS AND OTHER INFORMATION: promptly upon
receipt, publication, commencement or occurrence provide to each
Purchaser copies of all material consulting reports, notices of all
material actions, suits or proceedings, copies of all accountant's
reviews, and reports to management, and such other information as the
Company shall make available to its directors or stockholders or the
Purchasers shall reasonably request.
- 17 -
<PAGE> 18
ARTICLE V
REGISTRATION RIGHTS
The following provisions supersede and amend and restate in their
entirety the provisions regarding registration rights set forth in Article V of
the Series C Agreement. The Purchasers, in their capacity as Purchasers of
Shares and certain of the Purchasers in their capacity as holders of at least
60% of the outstanding shares of Series A Preferred Stock, Series B Preferred
Stock, and Series C Preferred Stock hereby consent to the amendment and
restatement of such registration rights and agree that the following provisions
shall supersede and amend and restate in their entirety the provisions of
Article V of the Series C Agreement.
5.01. "PIGGY-BACK" REGISTRATIONS. If at any time the Company shall
determine to register for its own account or the account of others under the
Securities Act (including pursuant to the Qualified Public Offering, the Initial
Public Offering or a demand for registration of any stockholder of the Company
other than the Purchasers) any of its equity securities, other than on Form S-8
or Form S-4 or their then equivalents or otherwise relating to shares of Common
Stock to be issued solely in connection with any acquisition of any entity or
business or shares of Common Stock issuable in connection with stock option or
other employee benefit plans, it shall send to each holder of Registrable
Shares, including each holder who has the right to acquire Registrable Shares,
written notice of such determination and, if within ten (10) business days after
receipt of such notice, such holder shall so request in writing, the Company
shall use its best efforts to include in such registration statement all or any
part of the Registrable Shares such holder requests to be registered.
If, in connection with any offering involving an underwriting, the
managing underwriter shall impose a limitation on the number of shares of such
Common Stock which may be included in the registration statement because, in its
judgment, such limitation is necessary to effect an orderly public distribution,
then the Company shall be obligated to include in such registration statement
only such limited portion (which may be none) of the Registrable Shares with
respect to which such holder has requested inclusion pursuant hereto as may
reasonably be determined by the managing underwriters; provided, however, as
between the Company, other stockholders holding contractual registration rights,
and the holders of Registrable Shares, in no event shall the Registrable Shares
included in such offering be limited to less than twenty-five percent (25%) of
the aggregate shares offered. Any inclusion of Registrable Shares in the
offering, when the managing underwriter has so limited the number of Registrable
Shares that may be included in the offering, shall be allocated pro rata among
the holders of Registrable Shares (or their permitted assigns) seeking to
include such shares and the holders of other registration rights seeking to
include their shares, in proportion to the number of Registrable Shares (whether
or not such shares are sought to be included in such offering) held by such
persons. No incidental right under this Section 5.01 shall be construed to limit
any registration required under Section 5.02. The obligations of the Company
under this Section 5.01 may be waived at any time upon the written consent of
holders of sixty percent (60%) in interest of the Registrable Shares who are
participating in the offering and shall expire on the seventh anniversary
following the consummation of an Initial Public Offering or, if earlier, as set
forth in Section
- 18 -
<PAGE> 19
5.15. The Company shall have the right to withdraw any registration initiated by
it pursuant to Section 5.01.
5.02. REQUIRED REGISTRATIONS. If on any two occasions (providing the
offering is consummated) one or more holders of at least 60% of the Registrable
Shares shall notify the Company in writing that it or they desire to offer or
cause to be offered for public sale at least thirty percent (30%) of the
Registrable Shares, the Company will so notify all holders of Registrable
Shares, including all holders who have a right to acquire Registrable Shares.
Upon written request of any holder given within fifteen (15) days after the
receipt by such holder from the Company of such notification, the Company will
use its best efforts to cause such of the Registrable Shares as may be requested
by any holder thereof (including the holder or holders giving the initial notice
of intent to offer) to be registered under the Securities Act as expeditiously
as possible on Form S-1 or Form SB-2 or their respective successor registration
statement forms. The Company shall not be required to effect more than two
registrations pursuant to this Section 5.02 (providing the offering is
consummated). If the Company determines to include shares to be sold by it or by
other selling shareholders in any registration request pursuant to this Section
5.02, such registration shall be deemed to have been a "piggy back" registration
under Section 5.01, and not a "demand" registration under this Section 5.02 if
the holders of Registrable Shares are unable to include in any such registration
statement at least eighty-five percent (85%) of the Registrable Shares initially
requested for inclusion in such registration statement. The Company shall not be
required to effect a registration pursuant to this Section 5.02 unless the
minimum market value of any offering and registration of Registrable Shares made
pursuant thereto is at least $3,000,000, before calculation of underwriting
discounts and commissions. The holders of Registrable Shares may not exercise
their rights under this Section 5.02 until the earlier to occur of (i)
thirty-six (36) months following the date of the Closing or (ii) 180 days after
the effectiveness of any registration statement covering the Initial Public
Offering. No request for registration under this Section 5.02 may be made within
the one hundred and eighty day period after the effective date of a registration
statement filed by the Company or while the Company is in the process of
preparing a registration statement. The Company shall have the right to delay
any registration under this section for up to 90 days if the Company's Board of
Directors reasonably determines such delay is necessary in view of the Company's
current circumstances.
5.03. REGISTRATIONS ON FORMS S-2 OR S-3. In addition to the rights
provided the holder of Registrable Shares in Sections 5.01 and 5.02 above, if
the registration of Registrable Shares under the Securities Act can be effected
on Forms S-2 or S-3 (or any similar form promulgated by the Commission), then
upon the written request of one or more holders of a majority of the Registrable
Shares, the Company will so notify each holder of Registrable Shares, including
each holder who has a right to acquire Registrable Shares, and then will, as
expeditiously as possible, use its best efforts to effect qualification and
registration under the Securities Act on Forms S-2 or S-3 of all or such portion
of the Registrable Shares as the holder or holders shall specify; provided,
however, the Company shall not be required to effect a registration pursuant to
this Section 5.03 unless the market value of the Registrable Shares to be sold
in any such registration shall be estimated to be at least $1,000,000 at the
time of filing
- 19 -
<PAGE> 20
such registration statement, and further provided that the Company shall not be
required to effect more than two (2) registrations during any twelve (12) month
period pursuant to this Section 5.03 and six (6) registrations in the aggregate
under this Section 5.03. No request for registration under this Section 5.03 may
be made within the one hundred and eighty day period after the effective date of
a registration statement filed by the Company or while the Company is in the
process of preparing a registration statement.
5.04. EFFECTIVENESS. The Company will use its best efforts to
maintain the effectiveness for up to 90 days (or such shorter period of time as
the underwriters need to complete the distribution of the registered offering,
or six months in the case of any registration relating to Registrable Shares
pursuant to Section 5.02 or 5.03) of any registration statement pursuant to
which any of the Registrable Shares are being offered, and from time to time
will amend or supplement such registration statement and the prospectus
contained therein to the extent necessary to comply with the Securities Act and
any applicable state securities statute or regulation. The Company will also
provide each holder of Registrable Shares with as many copies of the prospectus
contained in any such registration statement as it may reasonably request. For a
period not to exceed 60 days, the Company shall not be obligated to prepare and
file, or be prevented from delaying or abandoning, a registration statement
pursuant to this Agreement at any time when the Company, in its good faith
judgment with advice of counsel, reasonably believes
(a) that the filing thereof at the time requested, or
the offering of Registrable Shares pursuant thereto, would materially
and adversely affect (a) a pending or scheduled public offering of the
Company's securities, (b) an acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction by or of the
Company, (c) pre-existing and continuing negotiations, discussions or
pending proposals with respect to any of the foregoing transactions, or
(d) the financial condition of the Company in view of the disclosure of
any pending or threatened litigation, claim, assessment or governmental
investigation which may be required thereby; and
(b) that the failure to disclose any material
information with respect to the foregoing would cause a violation of
the Securities Act or the Exchange Act.
5.05. INDEMNIFICATION OF HOLDER OF REGISTRABLE SHARES. In the event
that the Company registers any of the Registrable Shares under the Securities
Act, the Company will indemnify and hold harmless each holder and each
underwriter of Registrable Shares (including their officers, directors,
affiliates and partners and including any broker or dealer through whom
Registrable Shares may be sold in such registration) and each Person, if any,
who controls such holder or any such underwriter within the meaning of Section
15 of the Securities Act from and against any and all losses, claims, damages,
expenses or liabilities, joint or several, to which they or any of them become
subject under the Securities Act, applicable state securities laws or under any
other statute or at common law or otherwise, as incurred, and, except as
hereinafter provided, will reimburse each such holder, each such underwriter and
each such controlling Person, if any, for any legal or other expenses reasonably
incurred by them or any of them in
- 20 -
<PAGE> 21
connection with investigating or defending any actions whether or not resulting
in any liability, as incurred, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement, in any preliminary or amended preliminary prospectus or
in the final prospectus (or the registration statement or prospectus as from
time to time amended or supplemented by the Company) or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act or any state securities laws
applicable to the Company and relating to action or inaction required of the
Company in connection with such registration, unless (i) such untrue statement
or alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary or amended preliminary prospectus or final
prospectus in reliance upon and in conformity with information furnished in
writing to the Company in connection therewith by any such holder of Registrable
Shares (in the case of indemnification of such holder), any such underwriter (in
the case of indemnification of such underwriter) or any such controlling Person
(in the case of indemnification of such controlling person) expressly for use
therein, or unless (ii) in the case of a sale directly by such holder of
Registrable Shares (including a sale of such Registrable Shares through any
underwriter retained by such holder of Registrable Shares to engage in a
distribution solely on behalf of such holder of Registrable Shares), such untrue
statement or alleged untrue statement or omission or alleged omission was
contained in a preliminary prospectus and corrected in a final or amended
prospectus copies of which were delivered to such holder of Registrable Shares
or such underwriter on a timely basis, and such holder of Registrable Shares
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.
Promptly after receipt by any holder of Registrable Shares,
any underwriter or any controlling Person of notice of the commencement of any
action in respect of which indemnity may be sought against the Company, such
holder of Registrable Shares, or such underwriter or such controlling person, as
the case may be, shall notify the Company in writing of the commencement thereof
(provided, that failure to so notify the Company shall not relieve the Company
from any liability it may have hereunder, except to the extent prejudiced by
such failure) and, subject to the provisions hereinafter stated, the Company
shall be entitled to assume the defense of such action (including the employment
of counsel, who shall be counsel reasonably satisfactory to such holder of
Registrable Shares, such underwriter or such controlling Person, as the case may
be) and the payment of expenses insofar as such action shall relate to any
alleged liability in respect of which indemnity may be sought against the
Company.
Such holder of Registrable Shares, any such underwriter or any
such controlling Person shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel subsequent to any assumption of the defense by the Company shall
not be at the expense of the Company unless the employment of such counsel has
been specifically authorized in writing by the Company; provided, however,
- 21 -
<PAGE> 22
that, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party or if
the interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, the indemnified party shall have the
right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred. At any time, any holder
of Registrable Shares may select separate counsel and assume its own legal
defense with the expenses and fees of such separate counsel and other expenses
related to such separate counsel to be borne by such holder electing separate
counsel. The Company shall not be liable to indemnify any Person for any
settlement of any such action effected without the Company's written consent.
The Company shall not, except with the approval of each party being indemnified
under this Section 5.05, 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 the parties being so indemnified of a release from
all liability in respect to such claim or litigation.
In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which any holder of
Registrable Shares exercising rights under this Article V, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 5.05 but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that this Section 5.05
provides for indemnification in such case, then, the Company and such holder
will contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and of
the holder of Registrable Shares on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of the holder of Registrable Shares on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company on the one
hand or by the holder of Registrable Shares on the other, and each party's
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, however, that, in any such case,
(A) no such holder will be required to contribute any amount in excess of the
public offering price of all such Registrable Shares offered by it pursuant to
such registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
The indemnities provided in this Section 5.05 shall survive the
transfer of any Registrable Shares by such holder.
- 22 -
<PAGE> 23
5.06. INDEMNIFICATION OF COMPANY. In the event that the Company
registers any of the Registrable Shares under the Securities Act, each holder of
the Registrable Shares so registered will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed or
otherwise participated in the preparation of the registration statement, each
underwriter of the Registrable Shares so registered (including any broker or
dealer through whom such of the shares may be sold) and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act from
and against any and all losses, claims, damages, expenses or liabilities, joint
or several, to which they or any of them may become subject under the Securities
Act, applicable state securities laws or under any other statute or at common
law or otherwise, and, except as hereinafter provided, will reimburse the
Company and each such director, officer, underwriter or controlling Person for
any legal or other expenses reasonably incurred by them or any of them in
connection with investigating or defending any actions whether or not resulting
in any liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, in any
preliminary or amended preliminary prospectus or in the final prospectus (or in
the registration statement or prospectus as from time to time amended or
supplemented) or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, but only insofar as any
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company in connection therewith by such
holder of Registrable Shares expressly for use therein; provided, however, that
such holder's obligations hereunder shall be limited to an amount equal to the
proceeds received by such holder of Registrable Shares sold in such
registration.
Promptly after receipt of notice of the commencement of any
action in respect of which indemnity may be sought against such holder of
Registrable Shares, the Company shall notify such holder of Registrable Shares
in writing of the commencement thereof (provided, that failure to so notify such
holder shall not relieve such holder from any liability it may have hereunder,
except to the extent prejudiced by such failure), and such holder of Registrable
Shares shall, subject to the provisions hereinafter stated, be entitled to
assume the defense of such action (including the employment of counsel, who
shall be counsel reasonably satisfactory to the Company) and the payment of
expenses insofar as such action shall relate to the alleged liability in respect
of which indemnity may be sought against such holder of Registrable Shares. The
Company and each such director, officer, underwriter or controlling Person shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof, but the fees and expenses of such counsel subsequent to
any assumption of the defense by such holder of Registrable Shares shall not be
at the expense of such holder of Registrable Shares unless employment of such
counsel has been specifically authorized in writing by such holder of
Registrable Shares. Such holder of Registrable Shares shall not be liable to
indemnify any Person for any settlement of any such action effected without such
holder's written consent.
In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which the Company, its
officers, directors or controlling persons
- 23 -
<PAGE> 24
("Company Indemnitees") exercising its rights under this Article V, makes a
claim for indemnification pursuant to this Section 5.06, but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding that this Section 5.06 provides for indemnification, in such
case, then, the Company Indemnitees and such holder will contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion as is appropriate to reflect
the relative fault of the Company Indemnitees on the one hand and of the holder
of Registrable Shares on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Company Indemnitees on the one hand and of the holder of Registrable Shares on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
Indemnitees on the one hand or by the holder of Registrable Shares on the other,
and each party's relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission; provided, however,
that, in any such case, (A) no such holder will be required to contribute any
amount in excess of the public offering price of all such Registrable Shares
offered by it pursuant to such registration statement; and (B) no person or
entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
5.07. EXCHANGE ACT REGISTRATION. If the Company at any time shall
list any class of equity securities of the type which may be issued upon the
conversion of the Serial Preferred Stock on any national securities exchange and
shall register such class of equity securities under the Exchange Act, the
Company will, at its expense, simultaneously list on such exchange and maintain
such listing of, the Common Stock. If the Company becomes subject to the
reporting requirements of either Section 13 or Section 15(d) of the Exchange
Act, the Company will use its best efforts to timely file with the Commission
such information as the Commission may require under either of said Sections ;
and in such event, the Company shall use its best efforts to take all action as
may be required as a condition to the availability of Rule 144 or Rule 144A
under the Securities Act (or any successor exemptive rule hereinafter in effect)
with respect to such Common Stock. The Company shall furnish to any holder of
Registrable Shares forthwith upon request (i) a written statement by the Company
as to its compliance with the reporting requirements of Rule 144, (ii) a copy of
the most recent annual or quarterly report of the Company as filed with the
Commission, and (iii) such other reports and documents as a holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a holder to sell any such Registrable Securities without
registration. After the occurrence of the Initial Public Offering, the Company
agrees to use its best efforts to facilitate and expedite transfers of the
Shares pursuant to Rule 144 under the Securities Act, which efforts shall
include timely notice to its transfer agent to expedite such transfers of
Shares.
- 24 -
<PAGE> 25
5.08. DAMAGES. The Company recognizes and agrees that the holder of
Registrable Shares will not have an adequate remedy if the Company fails to
comply with this Article V and that damages may not be readily ascertainable,
and the Company expressly agrees that, in the event of such failure, it shall
not oppose an application by the holder of Registrable Shares or any other
Person entitled to the benefits of this Article V requiring specific performance
of any and all provisions hereof or enjoining the Company from continuing to
commit any such breach of this Article V.
5.09. FURTHER OBLIGATIONS OF THE COMPANY. Whenever under the preceding
Sections of this Article V, the Company is required hereunder to register
Registrable Shares, it agrees that it shall also do the following:
(a) Furnish to each selling holder such copies of
each preliminary and final prospectus and such other documents as said
holder may reasonably request to facilitate the public offering of its
Registrable Shares;
(b) Use its best efforts to register or qualify the
Registrable Shares covered by said registration statement under the
applicable securities or "blue sky" laws of such jurisdictions as any
selling holder may reasonably request; provided, however, that the
Company shall not be obligated to qualify to do business in any
jurisdictions where it is not then so qualified or to take any action
which would subject it to the service of process in suits other than
those arising out of the offer or sale of the securities covered by the
registration statement in any jurisdiction where it is not then so
subject;
(c) Furnish to each selling holder a signed
counterpart, addressed to the selling holders, of
(i) opinions of counsel for the Company, dated
the effective date of the registration statement, and
covering such matters as are required by the
Securities Act and such matters as may reasonably be
requested by the underwriters, and
(ii) "comfort" letters signed by the Company's
independent public accountants who have examined and
reported on the Company's financial statements
included in the registration statement, to the extent
permitted by the standards of the American Institute
of Certified Public Accountants, as the Company is
required to deliver or cause the delivery of to the
underwriters in an underwritten public offering of
securities;
(d) Permit each selling holder of Registrable Shares
who holds not less than 5% of the Registrable Shares or his counsel or
other representatives to inspect and copy such corporate documents and
records as may reasonably be requested by them, after reasonable
advance notice and without undue interference with the operation of the
Company's business;
- 25 -
<PAGE> 26
(e) Furnish to each selling holder of Registrable
Shares a copy of all documents filed with and all correspondence from
or to the Commission in connection with any such offering of
securities;
(f) Use its best efforts to insure the obtaining of
all necessary approvals from the National Association of Securities
Dealers, Inc; and
(g) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earning
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first month after the
effective date of the registration statement covering the Initial
Public Offering, which earning statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder.
Whenever under the preceding Sections of this Article V the
holders of Registrable Shares are registering such shares pursuant to any
registration statement, each such holder agrees to (i) timely provide to the
Company, at its request, such information and materials as it may reasonably
request in order to effect the registration of such Registrable Shares, (ii)
convert all shares of Preferred Stock included in any registration statement to
shares of Common Stock, such conversion to be effective at the closing of such
offering pursuant to such registration statement, and (iii) if the offering is
underwritten, execute an underwriting agreement containing customary conditions.
5.10. EXPENSES. In the case of each registration effected under
Section 5.01, 5.02 or 5.03, the Company shall bear all reasonable costs and
expenses of each such registration on behalf of the selling holders of
Registrable Shares, including, but not limited to, the Company's printing, legal
and accounting fees and expenses, Commission and NASD filing fees and "Blue Sky"
fees and expenses and the reasonable fees and disbursements (such fees not to
exceed $25,000 for any registration) of one counsel for the selling holders of
Registrable Shares in connection with the registration of their Registrable
Shares; provided, however, that the Company shall have no obligation to pay or
otherwise bear any portion of the underwriters' commissions or discounts or
transfer taxes attributable to the Registrable Shares being offered and sold by
the holders of Registrable Shares, or the fees and expenses of more than one
counsel for the selling holders of Registrable Shares in connection with the
registration of the Registrable Shares. The Company shall pay all expenses of
the holders of the Registrable Shares in connection with any registration
initiated pursuant to this Article V which is withdrawn, delayed or abandoned by
the Company, except if such withdrawal, delay or abandonment is caused by the
fraud, material misstatement or omission of a material fact by a holder of
Registrable Shares to be included in such registration.
5.11. APPROVAL OF UNDERWRITER. Any managing underwriter engaged in
any registration made pursuant to Section 5.02 shall be a nationally recognized
firm requiring the approval in writing of the holders of 60% of the Registrable
Shares requesting such registration.
- 26 -
<PAGE> 27
5.12. TRANSFERABILITY. For all purposes of Article V of this Agreement,
the holder of Registrable Shares shall include not only the Purchasers but (i)
any assignee or transferee of the Registrable Shares who acquires at least ten
percent (10%) of the Registrable Shares and who is not a competitor of the
Company, or (ii) any general or limited partner or any officer or director of
any Purchaser or their affiliates, including, but not limited to, their
immediate family, irrevocable trusts for estate planning purposes and personal
representatives; provided, however, that such assignee or transferee agrees in
writing at the time it acquires such shares to be bound by all of the provisions
of this Agreement, including, without limitation, Section 5.13 hereof.
5.13. "LOCK-UP" AGREEMENT. Each holder of Registrable Shares agrees, if
so requested by the Company and an underwriter of Common Stock or other
securities of the Company, not to sell, grant any option or right to buy or
sell, or otherwise transfer or dispose of in any manner, whether in
privately-negotiated or open-market transactions, any Common Stock or other
securities of the Company held by it during the 180-day period following the
effective date of a registration statement filed pursuant to the Initial Public
Offering, provided that:
(a) Such agreement shall apply only to the Initial
Public Offering; and
(b) All holders of Registrable Shares, any other
security holders whose securities are included in such registration
statement, and all officers, directors and Key Employees of the Company
shall also enter into similar agreements.
Such "lock-up" agreement shall be in writing and in form and substance
satisfactory to the Company and such underwriter. The Company may impose
stop-transfer instructions with respect to the Shares (or securities) subject to
the foregoing restrictions until the end of said 180-day period. No holder of
Registrable Shares shall be so restricted unless all holders are similarly and
proportionately restricted.
5.14. MERGERS, ETC. The Company shall not, directly or indirectly,
enter into any merger, consolidation or reorganization in which the Company
shall not be the surviving corporation unless the proposed surviving corporation
shall, prior to such merger, consolidation or reorganization, agree in writing
to assume the obligations of the Company under Article V of this Agreement, and
for that purpose references hereunder to Registrable Shares shall be deemed to
be references to the securities which the Purchasers would be entitled to
receive in exchange for Registrable Shares under any such merger, consolidation
or reorganization; provided, however, that the provisions of this Section 5.14
shall not apply in the event of any merger, consolidation, or reorganization in
which the Company is not the surviving corporation if all stockholders are
entitled to receive in exchange for their Registrable Shares consideration
consisting solely of (i) cash, (ii) securities of the acquiring corporation
which may be immediately sold to the public without registration under the
Securities Act, or (iii) securities of the acquiring corporation which the
acquiring corporation has agreed to register within 90 days of completion of the
transaction for resale to the public pursuant to the Securities Act.
- 27 -
<PAGE> 28
5.15. TERMINATION; FURTHER REGISTRATION RIGHTS. Notwithstanding any
other term or provision of this Article V, at such time as any Purchaser or
transferee owning less than 2% of the outstanding Common Stock of the Company
(on an as-converted basis) is free to sell the Registrable Shares without
registration pursuant to Rule 144(k) of the Securities Act, all rights of such
Purchaser as to such Registrable Shares under Sections 5.01, 5.02 and 5.03 of
this Article V shall terminate. The Company shall not grant to any third party
any registration rights so long as any of the registration rights under this
Agreement remains in effect without the consent of the holders of 60% of the
then outstanding Registrable Shares.
ARTICLE VI
RIGHT OF FIRST REFUSAL
The following provisions supersede and amend and restate in their
entirety the provisions regarding rights or first refusal set forth in Article
VI of the Series C Agreement. The Purchasers, in their capacity as Purchasers of
Shares and certain of the Purchasers in their capacity as holders of at least
60% of the outstanding shares of Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock, hereby consent to the amendment and
restatement of such rights of first refusal and agree that the following
provisions shall supersede and amend and restate in their entirety the
provisions of Article VI of the Series C Agreement. In addition, the Purchasers,
in their capacity as holders of shares of Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock, hereby consent to the transactions
contemplated by this Agreement, and waive their respective rights to purchase
shares of Series D Preferred Stock on the terms set forth in this Agreement.
6.01. RIGHT OF FIRST REFUSAL. Before the Company shall issue, sell or
exchange, agree or obligate itself to issue, sell or exchange, or reserve or set
aside for issuance, sale or exchange, any (i) shares of Common Stock, (ii) any
other equity security of the Company, including without limitation, shares of
Preferred Stock, (iii) any convertible debt security of the Company, including
without limitation, any debt security which by its terms is convertible into or
exchangeable for any equity security of the Company, (iv) any security of the
Company that is a combination of debt and equity, or (v) any option, warrant or
other right to subscribe for, purchase or otherwise acquire any interest
relating to such equity or debt security of the Company, the Company shall, in
each case, first offer to sell such securities (the "Offered Securities") to
those Purchasers then holding capital stock of the Company as follows: The
Company shall offer to sell to each Purchaser (a) that portion of the Offered
Securities as the number of shares of Preferred Stock (on an as-converted basis)
and Conversion Shares then held by a Purchaser bears to the total number of
outstanding shares of capital stock of the Company including the shares issuable
upon conversion of the Preferred Stock (the "Basic Amount"), and (b) such
additional portion of the Offered Securities as such Purchaser shall indicate it
will purchase should the other Purchasers subscribe for less than their Basic
Amounts (the "Undersubscription Amount"), at a price and on such other terms as
shall have been specified by the Company in writing delivered to the Purchasers
(the "Offer"), which Offer by its terms shall remain open and irrevocable for a
period of twenty (20) days from receipt of the Offer.
- 28 -
<PAGE> 29
This right of first refusal shall only apply to Purchasers who hold at least 5%
of the then total outstanding shares of Preferred Stock or Conversion Shares, to
the Company Friends provided that they continue to own the shares of Preferred
Stock owned by them after giving effect to the transactions contemplated by this
Agreement and to the Bessemer Purchasers holding in the aggregate at least 5% of
the then outstanding shares of Preferred Stock or Conversion Shares.
6.02. NOTICE OF ACCEPTANCE. Notice of each Purchaser's intention to
accept, in whole or in part, any Offer made pursuant to Section 6.01 shall be
evidenced by a writing signed by such Purchaser and delivered to the Company
prior to the end of the 20-day period of such offer, setting forth such of the
Purchaser's Basic Amount as such Purchaser elects to purchase and, if such
Purchaser shall elect to purchase all of its Basic Amount, such
Undersubscription Amount as such Purchaser shall elect to purchase (the "Notice
of Acceptance"). If the Basic Amounts subscribed for by all Purchasers are less
than the total Offered Securities, then each Purchaser who has set forth
Undersubscription Amounts in its Notice of Acceptance shall purchase, in
addition to the Basic Amounts subscribed for, all Undersubscription Amounts it
has subscribed for; provided, however, that should the Undersubscription Amounts
subscribed for exceed the difference between the Offered Securities and the
Basic Amounts subscribed for (the "Available Undersubscription Amount"), each
Purchaser who has subscribed for any Undersubscription Amount shall purchase
only that portion of the Available Undersubscription Amount as the
Undersubscription Amount subscribed for by such Purchaser bears to the total
Undersubscription Amounts subscribed for by all Purchasers, subject to rounding
by the Board of Directors to the extent it reasonably deems necessary.
6.03. CONDITIONS TO ACCEPTANCES AND PURCHASE.
(a) PERMITTED SALES OF REFUSED SECURITIES. In the
event that Notices of Acceptance are not given by the Purchasers in
respect of all the Offered Securities, the Company shall have ninety
(90) days from the end of said 20-day period to sell any such Offered
Securities as to which a Notice of Acceptance has not been given by the
Purchasers (the "Refused Securities") to the Person or Persons
specified in the Offer, but only for cash and otherwise in all respects
upon terms and conditions, including, without limitation, unit price
and interest rates, which are no more favorable, in the aggregate, to
such other Person or Persons or less favorable to the Company than
those set forth in the Offer.
(b) REDUCTION IN AMOUNT OF OFFERED SECURITIES. In the
event the Company shall propose to sell less than all of the Refused
Securities (any such sale to be in the manner and on the terms
specified in Section 6.03(a) above), then each Purchaser shall reduce
the number of shares or other units of the Offered Securities specified
in its respective Notices of Acceptance to an amount which shall be not
less than the amount of the Offered Securities which the Purchaser
elected to purchase pursuant to Section 6.02 multiplied by a fraction,
(i) the numerator of which shall be the amount of Offered Securities
which the Company actually proposes to sell, and (ii) the denominator
of which shall be the amount of all Offered Securities. In the event
that any
- 29 -
<PAGE> 30
Purchaser so elects to reduce the number or amount of Offered
Securities specified in its respective Notices of Acceptance, the
Company may not sell or otherwise dispose of more than the reduced
amount of the Offered Securities until such securities have again been
offered to the Purchasers in accordance with Section 6.01.
(c) CLOSING. Upon the closing, which shall include
full payment to the Company, of the sale to such other Person or
Persons of all or less than all the Refused Securities, the Purchasers
shall purchase from the Company, and the Company shall sell to the
Purchasers, the number of Offered Securities specified in the Notices
of Acceptance, as reduced pursuant to Section 6.03(b) if the Purchasers
have so elected, upon the terms and conditions specified in the Offer.
The purchase by the Purchasers of any Offered Securities is subject in
all cases to the preparation, execution and delivery by the Company and
the Purchasers of a purchase agreement relating to such Offered
Securities reasonably satisfactory in form and substance to the
Purchasers and their respective counsel.
6.04. FURTHER SALE. In each case, any Offered Securities not purchased
by the Purchasers or other Person or Persons in accordance with Section 6.03 may
not be sold or otherwise disposed of until they are again offered to the
Purchasers under the procedures specified in Sections 6.01, 6.02 and 6.03.
6.05. TERMINATION AND WAIVER OF RIGHT OF FIRST REFUSAL. The rights of
the Purchasers under this Article VI may be waived only upon the prior written
consent of the holders of 60% of the outstanding shares of Serial Preferred
Stock and shall terminate immediately prior to the effectiveness of the
registration statement with respect to the Initial Public Offering, but
expressly conditioned on the consummation of the Initial Public Offering.
6.06. EXCEPTION. The rights of the Purchasers under this Article VI
shall not apply to:
(a) Common Stock issued as a stock dividend to
holders of Common Stock or upon any subdivision or combination of
shares of Common Stock;
(b) Preferred Stock issued as a dividend to holders
of Preferred Stock upon any subdivision or combination of shares of
Preferred Stock;
(c) Conversion Shares;
(d) up to 2,107,800 shares of Common Stock, or
options or warrants exercisable therefor (including 1,417,900 granted
prior to the date hereof), issued on or after the date hereof to
directors, officers, employees or consultants of the Company and any
Subsidiary (including members of the Scientific Advisory Board)
pursuant to any qualified or non-qualified stock option plan or
agreement, employee stock ownership plan, employee benefit plan, stock
purchase agreement, stock plan, stock restriction
- 30 -
<PAGE> 31
agreement, or consulting agreement or such other options, warrants,
equity arrangements, agreements or plans approved by two-thirds of the
members of the Board of Directors of the Company (including a majority
of the Investor Directors);
(e) up to 177,083 shares of Series A Preferred Stock
issued pursuant to the Comdisco Leasing Warrants, and shares of Common
Stock issued upon conversion of such shares; or
(f) shares of capital stock or options or warrants
therefor, to be issued to equipment leasing organizations in connection
with any equipment leasing arrangements to which the Company is a party
and which have been approved by the Board of Directors including a
majority of the Investor Directors; or
(g) shares of capital stock issued in connection with
a merger or acquisition approved by the Board of Directors including a
majority of the Investor Directors.
Each of the foregoing numbers shall be subject to equitable
adjustment in the event of any stock dividend, stock split, combination,
reorganization, recapitalization, reclassification or other similar event.
In addition to amendments pursuant to Section 8.02, the
provisions regarding Notice of Offer, Notice of Acceptance and all other
provisions provided for in Section 6.01 through 6.03 and 6.06 may be waived or
amended by those Purchasers holding at least 60% of the outstanding shares of
Serial Preferred Stock who have elected to exercise their rights under this
Article VI to participate in any financing with respect to a transaction
effected under this Article for the purpose of effecting a transaction on a more
expeditious basis.
ARTICLE VII
DEFINITIONS AND ACCOUNTING TERMS
7.01. CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"ACCREDITED INVESTOR" shall have the meaning assigned to that
term in Rule 501 under the Securities Act.
"AGREEMENT" means this Series D Preferred Stock Purchase
Agreement as from time to time amended and in effect between the parties,
including all Exhibits hereto.
"BASIC AMOUNT" shall have the meaning assigned to that term in
Section 6.01.
- 31 -
<PAGE> 32
"BESSEMER PURCHASERS" shall mean those Purchasers (as defined
in Article IV) other than Technology Leaders L.P., Technology Leaders Offshore
C.V., Bessemer Venture Partners III L.P., Morgan Holland Fund II L.P., Gilde
Investment Fund B.V., Comdisco, Inc., Pfizer, Inc. and the Company Friends.
"BOARD OF DIRECTORS" means the board of directors of the
Company as constituted from time to time.
"CLOSING" shall have the meaning assigned to that term in
Section 1.03.
"COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act or Exchange
Act.
"COMMON STOCK" includes (a) the Company's Common Stock, $.001
par value, as authorized on the date of this Agreement, (b) any other capital
stock of any class or classes (however designated) (except for Preferred Stock)
of the Company, authorized on or after the date hereof, the holders of which
shall have the right, without limitation as to amount, either to all or to a
share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference, and
the holders of which shall ordinarily, in the absence of contingencies or in the
absence of any provision to the contrary in the Company's Restated Certificate
of Incorporation, be entitled to vote for the election of directors of the
Company (even though the right so to vote has been suspended by the happening of
such a contingency or provision), and (c) any other securities into which or for
which any of the securities described in (a) or (b) may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.
"COMPANY" means Myco Pharmaceuticals Inc., a Delaware
corporation, and its successors and assigns.
"COMPANY FRIENDS" means Barry A. Berkowitz, Robert Morgan,
Gary Takata and J. Robert Scott, Inc. in their capacity as Purchasers under this
Agreement.
"CONSOLIDATED" and "CONSOLIDATING" when used with reference to
any term defined herein mean that term as applied to the accounts of the Company
and its Subsidiaries consolidated in accordance with generally accepted
accounting principles consistently applied throughout reporting periods.
"CONVERSION SHARES" shall have the meaning assigned to that
term in Section 1.02 of this Agreement (except as otherwise provided in Article
IV hereto).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
- 32 -
<PAGE> 33
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission (or of any other Federal agency then administering the Exchange Act)
thereunder, all as the same shall be in effect at the time.
"INDEBTEDNESS" means (i) any liability for borrowed money or
evidenced by a note or similar obligation given in connection with the
acquisition of any property or other assets (other than trade accounts payable
incurred in the ordinary course of business); (ii) all guaranties, endorsements
and other contingent obligations, in respect of Indebtedness of others, whether
or not the same are or should be reflected in the Company's balance sheet (or
the notes thereto), except guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business, and (iii) the present value of any lease payments due under leases
required to be capitalized in accordance with applicable Statements of Financial
Accounting Standards, determined by discounting all such payments at the
interest rate determined in accordance with applicable Statements of Financial
Accounting Standards.
"INITIAL PUBLIC OFFERING" means the first underwritten public
offering of Common Stock of the Company and offered on a "firm commitment" basis
pursuant to an offering registered under the Securities Act with the Commission
on Form S-1, SB-2, Form S-18 or their then equivalents.
"INTELLECTUAL PROPERTY RIGHTS" means any and all, whether
domestic or foreign, patents, patent applications, patent rights, trade secrets,
confidential business information, formula, biological or chemical processes,
compounds, cell lines, fungi, yeast, laboratory notebooks, algorithms,
copyrights, mask works, claims of infringement against third parties, licenses,
permits, license rights to or of technologies, contract rights with employees,
consultants or third parties, trademarks, trademark rights, inventions and
discoveries, and other such rights generally classified as intangible,
intellectual property assets in accordance with generally accepted accounting
principles.
"INVESTOR DIRECTORS" means those directors of the Company who
are representatives of the holders of Serial Preferred Stock.
"KEY EMPLOYEE" means and includes the Chairman, President,
Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, any
Vice President or Director of any functional area such as research and
development, engineering, technology, sales and marketing, finance and
administration or any other individual so designated by the Board of Directors
of the Company or by including a majority of the Investor Directors.
"NOTICE OF ACCEPTANCE" shall have the meaning assigned to that
term in Section 6.02.
"OFFER" shall have the meaning assigned to that term in
Section 6.01.
- 33 -
<PAGE> 34
"OFFERED SECURITIES" shall have the meaning assigned to that
term in Section 6.01.
"PERSON" means an individual, corporation, partnership, joint
venture, trust, university, or unincorporated organization, or a government or
any agency or political subdivision thereof.
"PREFERRED STOCK" shall have the meaning assigned to that term
in Section 3.13.
"PURCHASER" and "PURCHASERS" shall have the meaning assigned
to that term in Section 1.01 of this Agreement (except as otherwise provided in
Article IV hereto) and shall include the original Purchasers and also any
permitted transferee.
"QUALIFIED PUBLIC OFFERING" means a fully underwritten, firm
commitment public offering pursuant to an effective registration under the
Securities Act covering the offer and sale by the Company of its Common Stock in
which the aggregate gross proceeds to the Company exceed $9,000,000 and in which
the price per share of such Common Stock equals or exceeds $5.00 (such price
subject to equitable adjustment in the event of any stock split, stock dividend,
combination, reorganization, reclassification or other similar event).
"REFUSED SECURITIES" shall have the meaning assigned to that
term in Section 6.03.
"REGISTRABLE SHARES" shall mean and include (i) the Conversion
Shares; (ii) shares of Common Stock which are or may be acquired by any
Purchaser upon conversion of Series A Preferred Stock, Series B Preferred Stock
and Series C Preferred Stock currently held by the Purchasers (as defined in
Article IV) and (iii) the shares of capital stock of the Company acquired by the
Purchasers (as defined in Article IV) pursuant to Article VI hereof or any
shares of capital stock of the Company acquired after the date hereof by any
such Purchaser, including shares of Common Stock issuable on the conversion of
other securities acquired by the Purchasers pursuant to Article VI hereof or
otherwise; provided, however, that shares of Common Stock which are Registrable
Shares shall cease to be Registrable Shares upon the consummation of any sale
pursuant to a registration statement, Section 4(1) of the Securities Act or Rule
144 under the Securities Act or upon any transfer other than as permitted under
Section 5.12 hereof. 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 the Conversion Shares (as defined
in Article IV) even if such conversion has not yet been effected.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
(or of any other Federal agency then administering the Securities Act)
thereunder, all as the same shall be in effect at the time.
- 34 -
<PAGE> 35
"SERIAL PREFERRED STOCK" means the Series A Preferred Stock,
the Series B Preferred Stock, the Series C Preferred Stock, and the Series D
Preferred Stock, voting together as a single class.
"SERIES A AND B AGREEMENT" mean the Series A and Series B
Preferred Stock Purchase Agreement, dated as of January 11, 1994, between the
Company and certain stockholders of the Company.
"SERIES C AGREEMENT" means the Series C Preferred Stock
Purchase Agreement, dated July 27, 1994, between the Company and certain
stockholders of the Company.
"SERIES A PREFERRED STOCK" shall have the meaning assigned to
that term in Section 3.13.
"SERIES B PREFERRED STOCK" shall have the meaning assigned to
that term in Section 3.13.
"SERIES C PREFERRED STOCK" shall have the meaning assigned to
that term in Section 3.13.
"SERIES D PREFERRED SHARES" shall have the meaning assigned to
that term in Section 1.02.
"SHARES" means, collectively, the Series D Preferred Shares
and the Conversion Shares (except as otherwise provided in Article IV hereto).
"SUBSIDIARY" or "SUBSIDIARIES" means any Person of which the
Company and/or any of its other Subsidiaries (as herein defined) directly or
indirectly owns at the time at least fifty percent (50%) of the outstanding
voting shares of every class of such corporation or trust other than directors'
qualifying shares.
"UNDERSUBSCRIPTION AMOUNT" shall have the meaning assigned to
that term in Section 6.01.
"VOTING AND CO-SALE AGREEMENT" shall have the meaning assigned
to that term in Section 2.02(a).
7.02. ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistently applied, and all financial data submitted pursuant to
this Agreement shall be prepared in accordance with such principles.
- 35 -
<PAGE> 36
ARTICLE VIII
MISCELLANEOUS
8.01. NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part
of any party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
8.02. AMENDMENTS, WAIVERS AND CONSENTS. Any provision in the
Agreement to the contrary notwithstanding, and except as hereinafter provided,
changes in, termination or amendments of or additions to this Agreement may be
made, and compliance with any covenant or provision set forth herein may be
omitted or waived, if the Company (i) shall obtain consent thereto in writing
from the holder or holders of at least 60% of the outstanding shares of Series D
Preferred Stock and/or Conversion Shares issued upon conversion thereof and (ii)
shall deliver copies of such consent in writing to any holders who did not
execute such consent; provided, (a) that only the consent in writing from the
Company and the holder or holders of at least 60% of the outstanding shares of
Serial Preferred Stock and/or shares of Common Stock issued upon conversion
thereof (including, but not limited to, the Conversion Shares) shall be required
to change, terminate, amend or add to the provisions of Articles IV, V and VI
hereto, and (b) that no change, amendment or addition to the provisions of
Section 5.13 hereto shall be binding upon any holder of shares of Serial
Preferred Stock and/or shares of Common Stock issued upon conversion thereof
(including, but not limited to, the Conversion Shares), unless such holder
consents in writing to such change, amendment or addition; and, provided,
further, that no consents shall be effective to reduce the percentage in
interest of the Shares the consent of the holders of which is required under
this Section 8.02. Any waiver or consent may be given subject to satisfaction of
conditions stated therein and any waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
8.03. ADDRESSES FOR NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing (including telegraphic
communication) and delivered to each applicable party at the address set forth
in Exhibit 1.01 hereto or at such other address as to which such party may
inform the other parties in writing in compliance with the terms of this
Section, it being understood that only one notice is required to be provided to
the Bessemer Purchasers at the following address or at such other address as to
which such party may inform the other parties in writing in compliance with the
terms of this Section:
Mr. Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, New York 11590
- 36 -
<PAGE> 37
with a copy to: Mr. Christopher F.O. Gabrieli
Bessemer Venture Partners
83 Walnut Street
Wellesley Hills, MA 02181
If to any other holder of the Shares: at such holder's address
for notice as set forth in the register maintained by the Company, or, as to
each of the foregoing, at the addresses set forth in Exhibit 1.01 hereto or at
such other address as shall be designated by such Person in a written notice to
the other parties complying as to delivery with the terms of this Section.
If to the Company: at the address set forth on page 1 hereof,
or at such other address as shall be designated by the Company in a written
notice to the other parties complying as to delivery with the terms of this
Section.
All such notices, requests, demands and other communications
shall be considered to be delivered when actually delivered at the foregoing
address of the party to be notified.
8.04. COSTS, EXPENSES AND TAXES. The Company shall pay any and all
stamp, or other similar taxes payable or determined to be payable in connection
with the execution and delivery of this Agreement, the issuance of the Series D
Preferred Shares and the other instruments and documents to be delivered
hereunder or thereunder, and agrees to save the Purchasers harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes.
8.05. BINDING EFFECT; ASSIGNMENT. Except as provided in Section 5.12,
this Agreement shall be binding upon and inure to the benefit of the Company and
the Purchasers and their respective heirs, successors and assigns, except that
the Company shall not have the right to delegate its obligations hereunder or to
assign its rights hereunder or any interest herein without the prior written
consent of the holders of at least 60% of the outstanding shares of Series D
Preferred Stock except that with respect to Articles IV, V and VI, the prior
written consent of the holders of at least 60% of the shares of Serial Preferred
Stock shall be required.
8.06. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in this Agreement, the Shares, or any other instrument or
document delivered in connection herewith or therewith, shall survive the
execution and delivery hereof or thereof.
8.07. PRIOR AGREEMENTS. This Agreement, the terms of the Series D
Preferred Stock, and the other agreements executed and delivered herewith
constitute the entire agreement between the parties and supersedes any prior
understandings or agreements concerning the subject matter hereof, other than
the Series A and B Agreement, the Series C Agreement, the terms of the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock and
the Series C Preferred Stock, and the Voting and Co-Sale Agreement, each of
which, except as modified by the terms of this Agreement, shall remain in full
force and effect.
- 37 -
<PAGE> 38
8.08. SEVERABILITY. The provisions of this Agreement, the Series A and
B Agreement, the Series C Agreement, the Voting and Co-Sale Agreement and the
terms of the Preferred Stock are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of a provision contained in this Agreement, the Series A and B Agreement,
the Series C Agreement, the Voting and Co-Sale Agreement, or the terms of the
Preferred Stock shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision or part of a provision of this Agreement,
the Series A and B Agreement, the Series C Agreement, the Voting and Co-Sale
Agreement, or the terms of the Preferred Stock; but this Agreement, the Series A
and B Agreement, the Series C Agreement, the Voting and Co-Sale Agreement, and
the terms of the Preferred Stock shall be reformed and construed as if such
invalid or illegal or unenforceable provision, or part of a provision, had never
been contained herein, and such provisions or part reformed so that it would be
valid, legal and enforceable to the maximum extent possible.
8.09. 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 through no fault of such Purchaser, to the
public; provided, however, that a Purchaser may disclose such information (i) on
a confidential basis to its attorneys, accountants, consultants and other
professionals to the extent necessary to obtain their services in connection
with its investment in the Company, (ii) to any prospective purchaser of any
Series D Preferred Shares or Conversion Shares from such Purchaser as long as
such prospective purchaser agrees in writing to be bound by the provisions of
this Section 8.09, (iii) to any affiliate or partner of such Purchaser on a
"need to know basis" and (iv) as required by applicable law. If a Purchaser is
required in any legal or administrative or other governmental proceeding to
disclose any of such information, such Purchaser shall give the Company timely
notice of the pending requirement and use its best efforts to provide the
Company an opportunity to obtain protective provisions against further
disclosure.
8.10. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with the General Corporation Law of the State of Delaware as to
matters within the scope thereof and as to all other matters shall be governed
by and construed in accordance with the internal laws of The Commonwealth of
Massachusetts, without giving effect to choice of laws provisions.
8.11. HEADINGS. Article, section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
- 38 -
<PAGE> 39
8.12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.13. FURTHER ASSURANCES. From and after the date of this Agreement,
upon the request of any Purchaser or the Company, the Company and the Purchasers
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the Shares.
* * * * * * *
[Remainder of Page Intentionally Left Blank]
[Signature Pages Immediately Follow]
- 39 -
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have caused this Series D
Preferred Stock Purchase Agreement to be executed as of the date first above
written.
MYCO PHARMACEUTICALS INC.
By:
---------------------------------
President
PFIZER, INC.
By:
---------------------------------
Title:
---------------------------------
TECHNOLOGY LEADERS L.P.
By: Technology Leaders Management,
Inc. (General Partner)
By:
---------------------------------
Title:
---------------------------------
TECHNOLOGY LEADERS OFFSHORE C.V.
By: Technology Leaders Management,
Inc. (General Partner)
By:
---------------------------------
Title:
---------------------------------
BESSEMER VENTURE PARTNERS III L.P.
By:
---------------------------------
General Partner
- 40 -
<PAGE> 41
MORGAN HOLLAND FUND II L.P.
By: its general partner,
Morgan Holland Partners II L.P.
By:
---------------------------------
Name: Edwin M. Kania, Jr.
Title: General Partner
GILDE INVESTMENT FUND B.V.
---------------------------------
Name: Edwin M. Kania Jr. general
partner of Morgan Holland
Partners II L.P.
COMDISCO, INC.
By:
---------------------------------
Title:
J. ROBERT SCOTT, INC.
By:
---------------------------------
Title:
---------------------------------
BRIMSTONE ISLAND CO., L.P.
By:*
---------------------------------
Title:
*
---------------------------------
William T. Burgin
- 41 -
<PAGE> 42
*
---------------------------------
Neill H. Brownstein
*
---------------------------------
Robert H. Buescher
*
---------------------------------
G. Felda Hardymon
*
---------------------------------
Christopher Gabrieli
*
---------------------------------
Michael I. Barach
*
---------------------------------
Daniel S. Martin
*
---------------------------------
Richard R. Davis
*
---------------------------------
Barbara M. Henegan
*
---------------------------------
Thomas F. Ruhm
*
---------------------------------
Ward W. Woods, Jr.
*
---------------------------------
Geoffrey L. Berger
- 42 -
<PAGE> 43
*
---------------------------------
Robert D. Lindsay
*
---------------------------------
Michael S. Mathews
*
---------------------------------
Robert H. Buescher, signing
as Attorney-in-Fact for each
of the individuals beside whose
name an asterisk appears
----------------------------------
Barry A. Berkowitz
----------------------------------
Robert Morgan
----------------------------------
Gary Takata
[NOTE: A, B AND C PURCHASERS, EVEN THOSE WHO ARE NOT
PURCHASERS UNDER THIS AGREEMENT, SHOULD SIGN THIS AGREEMENT
WITH RESPECT TO ARTICLES IV, V AND VI OF THIS AGREEMENT.]
- 43 -
<PAGE> 44
EXHIBIT 1.01
SCHEDULE OF PURCHASERS - SERIES D PREFERRED STOCK
<TABLE>
<CAPTION>
Aggregate
Purchase Number of
Price of Shares of
Series D Series D
Preferred Preferred
Name and Address Shares Stock
- ---------------- ------ -----
<S> <C> <C>
Pfizer, Inc. $13,500,000 2,700,000
235 E. 42nd Street
New York, NY 10017
Technology Leaders L.P. $ 279,515 55,903
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087
Technology Leaders Offshore C.V $ 319,145 63,829
c/o ABN Trust Company
15 Pietermaii
Curacao, Netherlands Antilles
Bessemer Venture Partners III L.P. $ 584,090 116,818
83 Walnut Street
Wellesley Hills, MA 02181
Morgan Holland Fund II, L.P. $ 269,515 53,903
One Liberty Square - Suite 840
Boston, MA 02109
Gilde Investment Fund B.V $ 2,720 544
c/o Morgan Holland Fund II, L.P.
One Liberty Square - Suite 840
Boston, MA 02109
Comdisco, Inc. $ 28,025 5,605
One Newton Executive Park
Newton Lower Falls, MA 02160
Richard R. Davis $ 2,000 400
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
</TABLE>
- 44 -
<PAGE> 45
EXHIBIT 1.01
SCHEDULE OF PURCHASERS - SERIES D PREFERRED STOCK
<TABLE>
<CAPTION>
Aggregate
Purchase Number of
Price of Shares of
Series D Series D
Preferred Preferred
Name and Address Shares Stock
- ---------------- ------ -----
<S> <C> <C>
Thomas F. Ruhm $ 450 90
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Ward W. Woods, Jr $3,000 600
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Barbara M. Henagan $1,630 326
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Geoffrey L. Berger $ 300 60
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Robert D. Lindsay $1,200 240
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
</TABLE>
- 45 -
<PAGE> 46
EXHIBIT 1.01
SCHEDULE OF PURCHASERS - SERIES D PREFERRED STOCK
<TABLE>
<CAPTION>
Aggregate
Purchase Number of
Price of Shares of
Series D Series D
Preferred Preferred
Name and Address Shares Stock
<S> <C> <C>
G. Felda Hardymon $5,995 1,199
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
J Robert Scott, Inc. $2,415 483
</TABLE>
====== =====
$
- 46 -
<PAGE> 47
Exhibit 3.07
Title to Assets, Patents
At May 31, 1994, the Company has title to tangible assets in
these approximate amounts:
<TABLE>
<S> <C>
Leasehold improvements $ 567,000
Laboratory Equipment 977,000
Office Equipment and Computers 178,000
Office Furniture 38,000
----------
Purchase Price $1,760,000
Book Depreciation 267,000
----------
$1,493,000
</TABLE>
The Company also has the right to use intangible property
pursuant to and subject to the terms of the agreements listed in
Exhibit 3.14.
The Company has acquired most of the above furnishings,
equipment and leasehold improvements subject to an equipment lease with
Comdisco Venture Group. The original principal balance of the lease
related to the above Purchase Price of the assets was $1,500,000
against which principal payments approximating $161,000 have
subsequently been made.
See Exhibit 3.14.
Exhibit 3.08
Transactions with Affiliates
The Company has entered into the following agreements with
Barry Berkowitz: (i) Employment and Noncompetition Agreement; (ii)
Confidentiality Agreement, and (iii) Stock Purchase and Repurchase
Agreement. The Company has also entered into Stock Option Agreements,
an Employment Agreement and Noncompetition and Confidentiality
Agreement with Dr. William Timberlake. Pursuant to the Employment
Agreement, the Company loaned Dr. Timberlake the principal amount of
$100,000, of which $86,738 is currently outstanding, and the Company
has a second mortgage on certain real property held by Dr. Timberlake.
Interest on the loan is charged at the prime rate, and any bonus
awarded may be used to pay this loan. In any year in which Dr.
Timberlake is not awarded a bonus, no principal payment is due.
See Exhibit 3.10
<PAGE> 48
Exhibit 3.09
Guaranties of Indebtedness
The Company has leased 12,500 square feet of space from
MYCORT, Inc., a sublessee of Old Cambridge Realty Trust. The sub-lessor
has financed $576,310 improvement work for office and laboratory at
these facilities.
As described in Exhibit 3.07, the Company has acquired assets
subject to an equipment lease with Comdisco. The lease provides a total
commitment of up to $4,500,000. The first tranche of $1,500,000 was
fully drawn down during May 1994. The second tranche of $1,000,000
became available June 1, 1994. The lease provides for a term for each
tranche of forty-eight months at an 10% interest rate, plus warrants to
be issued to Comdisco (See Exhibit 3.13). Copies of the lease
documentation are available at the offices of the Company.
Exhibit 3.10
Investments
As described in Exhibit 3.08, the Company has an outstanding
loan of $86,738 to Dr. William Timberlake.
Exhibit 3.13
Capitalization/Restrictions on Transfer
OUTSTANDING CAPITAL STOCK
As of the date hereof the Company has 1,506,000 issued and
outstanding shares of Common Stock, 6,150,732 issued and outstanding
shares of Series A Preferred Stock and 1,063,366 issued and outstanding
shares of Series B Preferred Stock which are issued to the persons set
forth on Attachment A to Exhibit 3.13. 860,000 shares of Common Stock
issued to Barry A. Berkowitz, Ph.D, are subject to a vesting
arrangement.
OPTIONS TO PURCHASE CAPITAL STOCK
The Company has granted options to purchase a total of
1,364,700 shares of Common Stock of the Company to the persons listed
in the Attachment to this Exhibit 3.13.
The Company has issued a warrant to Comdisco, Inc. for the
purchase of up to 177,083 shares of the Company's Series A Preferred
Stock in connection with certain equipment leasing transactions.
<PAGE> 49
Exhibit 3.14
Material Agreements
See Exhibits 3.08, 3.13 and the Attachment to this Exhibit 3.14.
Exhibit 4.02
See Exhibit 3.08.
<PAGE> 50
EXHIBITS TO MYCO PHARMACEUTICALS INC. SERIES D
PREFERRED STOCK PURCHASE AGREEMENT
Exhibit A
Restated Certificate of Incorporation
Exhibit 1.01
Purchasers' Ownership of Series D Preferred Stock at Closing
Exhibit 2.02(b)
Opinion of Counsel to Company
<PAGE> 51
Exhibit 3.07
Title to Assets, Patents
At December 31, 1994, the Company has title to tangible assets
in these approximate amounts:
Leasehold improvements $ 585,000
Laboratory Equipment 1,454,000
Office Equipment and Computers 181,000
Office Furniture 38,000
----------
Purchase Price $2,258,000
Book Depreciation 578,000
----------
$1,680,000
The Company also has the right to use intangible property
pursuant to and subject to the terms of the agreements listed in
Exhibit 3.14.
The Company has acquired most of the above furnishings,
equipment and leasehold improvements subject to an equipment lease with
Comdisco Venture Group. The original principal balance of the lease
related to the above Purchase Price of the assets was $1,865,000
against which principal payments approximating $355,000 have
subsequently been made.
See Exhibit 3.14.
Exhibit 3.08
Transactions with Affiliates
The Company has entered into the following agreements with
Barry Berkowitz: (i) Employment and Noncompetition Agreement; (ii)
Confidentiality Agreement, and (iii) Stock Purchase and Repurchase
Agreement. The Company has also entered into Stock Option Agreements,
an Employment Agreement and Noncompetition and Confidentiality
Agreement with Dr. William Timberlake. Pursuant to the Employment
Agreement, the Company loaned Dr. Timberlake the principal amount of
$100,000, of which $84,725 is currently outstanding, and the Company
has a second mortgage on certain real property held by Dr. Timberlake.
Interest on the loan is charged at the prime rate, and any bonus
awarded may be used to pay this loan. In any year in which Dr.
Timberlake is not awarded a bonus, no principal payment is due.
See Exhibit 3.10
<PAGE> 52
Exhibit 3.09
Guaranties of Indebtedness
The Company has leased 12,500 square feet of space from
MYCORT, Inc., a sublessee of Old Cambridge Realty Trust. The sub-lessor
has financed $576,310 improvement work for office and laboratory at
these facilities.
As discussed in Exhibit 3.07, the Company has acquired assets
subject to an equipment lease with Comdisco. The lease provides a total
commitment of up to $3,500,000, in three installments. The first
installment of $1,500,000 was closed in May, 1994. The second
installment, of $1,000,000, became available June 1, 1994 and expires
May 31, 1995. The third installment, of $1,000,000, may become
available after May 31, 1995, subject to certain conditions. The lease
provides for a term for each installment of forty-eight months at a 10%
interest rate, plus warrants to be issued to Comdisco (See Exhibit
3.13). Copies of the lease documentation are available at the offices
of the Company.
Exhibit 3.10
Investments
As described in Exhibit 3.08, the Company has an
outstanding loan of $84,725 to Dr. William Timberlake.
Exhibit 3.13
Capitalization/Restrictions on Transfer
OUTSTANDING CAPITAL STOCK
As of the date hereof the Company has 1,510,200 issued and
outstanding shares of Common Stock, 6,150,732 issued and outstanding
shares of Series A Preferred Stock; 1,063,366 issued and outstanding
shares of Series B Preferred Stock and 767,739 issued and outstanding
shares of Series C Preferred Stock which are issued to the persons set
forth on Attachment A to Exhibit 3.13. Certain shares of Common Stock
issued to Barry A. Berkowitz, Ph.D, are subject to a vesting
arrangement.
OPTIONS TO PURCHASE CAPITAL STOCK
The Company has granted options to purchase a total of
1,416,400 shares of Common Stock of the Company to the persons listed
in the Attachment to this Exhibit 3.13.
The Company has issued a warrant to Comdisco, Inc. for
the purchase of up to 177,083 shares of the Company's Series
<PAGE> 53
A Preferred Stock in connection with certain equipment leasing
transactions.
Exhibit 3.14
Material Agreements
See Exhibits 3.08, 3.13 and the Attachment to this Exhibit 3.14.
Exhibit 4.02
See Exhibit 3.08.
<PAGE> 54
MYC0 PHARMACEUTICALS INC.
STOCKHOLDERS LIST
COMMON STOCK
<TABLE>
<CAPTION>
NAME CERTIFICATE DATE NUMBER OF
- ---- NUMBER ---- SHARES
----------- ---------
<S> <C> <C> <C>
Dr. Barry Berkowitz C001 1-13-92 336,000
Dr. Barry Berkowitz C0002 2-19-92 860,000
Dr. Yigal Koltin C0003 2-20-92 60,000
Dr. Jeff Becker C0004 2-20-92 60,000
Dr. Jerry Weisbach, Ph.D. C0005 2-20-92 30,000
Dr. Bill Timerlake C0006 2-20-92 20,000
Dr. Phillips Robbins C0007 2-20-92 20,000
N. Ron Morris C0008 2-20-92 5,000
Dr. Jack E. Edwards C0009 2-20-92 5,000
Dr. Richard Diamond C0010 2-20-92 5,000
Dr. Koji Nakanishi C0011 2-20-92 5,000
Dr. Gerry Fink C0012 2-20-92 100,000
Theresa A. Chvisuk C0013 10-11-94 4,000
Barbara Perlo C0014 11-16-94 200
TOTAL COMMON 1,510,200
</TABLE>
<PAGE> 55
SERIES A PREFERRED STOCK
<TABLE>
<CAPTION>
NAME CERTIFICATE DATE NUMBER OF
- ---- NUMBER ---- SHARES
----------- ---------
<S> <C> <C> <C>
Technology Leaders, L.P. SP0001 2-25-92 370,000
Technology Leaders Offshore SP0002 2-25-92 630,000
William T. Burgin SP0004 2-25-92 15,000
Brimstone Island Co., L.P. SP0005 2-25-92 15,000
Neill H. Brownstein SP0006 2-25-92 10,000
Robert H. Buescher SP0007 2-25-92 3,000
G. Felda Hardymon SP0008 2-25-92 10,000
Christopher Gabrieli SP0009 2-25-92 32,000
Michael I. Barach SP0010 2-25-92 2,500
Daniel S. Martin SP0011 2-25-92 2,000
Richard R. Davis SP0012 2-25-92 3,334
Thomas F. Ruhm SP0013 2-25-92 750
Ward W. Woods, Jr. SP0014 2-25-92 5,000
Geoffrey L. Berger SP0015 2-25-92 500
Robert D. Lindsay SP0016 2-25-92 2,000
Michael S. Mathews SP0017 2-25-92 2,000
Barbara M. Henagan SP0018 2-25-92 3,000
Technology Leaders, L.P. SP0019 1-27-93 370,000
Technology Leaders Offshore SP0020 1-27-93 630,000
C.V.
William T. Burgin SP0022 1-27-93 15,000
Brimstone Island Co., L.P. SP0023 1-27-93 15,000
Neill H. Brownstein SP0024 1-27-93 10,000
Robert H. Buescher SP0025 1-27-93 3,000
G. Felda Hardymon SP0026 1-27-93 10,000
Christopher Gabrieli SP0027 1-27-93 32,000
</TABLE>
<PAGE> 56
SERIES A PREFERRED STOCK
<TABLE>
<CAPTION>
NAME CERTIFICATE DATE NUMBER OF
- ---- NUMBER ---- SHARES
----------- ---------
<S> <C> <C> <C>
Michael I. Barach SP0028 1-27-93 2,500
Daniel S. Martin SP0029 1-27-93 2,000
Richard R. Davis SP0030 1-27-93 3,334
Thomas F. Ruhm SP0031 1-27-93 750
Ward W. Woods, Jr. SP0032 1-27-93 5,000
Geoffrey L. Berger SP0033 1-27-93 500
Robert D. Lindsay SP0034 1-27-93 2,000
Michael S. Mathews SP0035 1-27-93 2,000
Barbara M. Henagan SP0036 1-27-93 3,000
Gary Takata SP0037 1-29-93 12,000
Robert W. Morgan, CPA SP0038 1-29-93 12,000
Profit Sharing Plan
William T. Burgin SP0039 1/11/94 8,572
Brimstone Island Co., L.P. SP0040 1/11/94 8,572
Neill H. Brownstein SP0041 1/11/94 5,714
Robert H. Buescher SP0042 1/11/94 1,714
G. Felda Hardyman SP0043 1/11/94 5,714
Christopher Gabrieli SP0044 1/11/94 18,286
Michael S. Barach SP0045 1/11/94 1,428
Daniel S. Martin SP0046 1/11/94 1,142
Richard R. Davis SP0047 1/11/94 1,906
Thomas F. Ruhn SP0048 1/11/94 428
Ward W. Woods, Jr. SP0049 1/11/94 2,858
Geoffrey L. Berger SP0050 1/11/94 286
Robert D. Lindsay SP0051 1/11/94 1,142
Michael S. Mathews SP0052 1/11/94 1,142
Barbara M. Henagan SP0053 1/11/94 1,714
</TABLE>
-2-
<PAGE> 57
SERIES A PREFERRED STOCK
<TABLE>
<CAPTION>
NAME CERTIFICATE DATE NUMBER OF
- ---- NUMBER ---- SHARES
----------- ---------
<S> <C> <C> <C>
Robert Morgan SP0054 1/11/94 3,428
Gary Takata SP0055 1/11/94 3,428
J. Robert Scott, Inc. SP0056 1/11/94 8,572
Technology Leaders L.P. SP0057 1/11/94 266,800
Technology Leaders SP0058 1/11/94 304,628
Offshore C.V.
Morgan Holland SP0060 1/11/94 707,142
Fund II, L.P.
Gilde Investment Fund B.V. SP0061 1/11/94 7,142
Comdisco, Inc. SP0062 1/11/94 57,142
Barry A. Berkowitz SP0063 1/11/94 22,858
Bessemer SP0065 2/24/94 893,916
Venture Partners III, L.P.
Bessemer SP0067 2/24/94 510,810
Venture Partners III, L.P.
Bessemer SP0069 2/24/94 893,916
Venture Partners III, L.P.
Comdisco, Inc. SP0070 7/13/94 30,286
Morgan Holland Fund II, SP0071 7/13/94 141,430
L.P.
Gilde Investment Fund, B.V. SP0072 7/13/94 1,428
Barry A. Berkowitz SP0073 7/13/94 1,020
TOTAL ISSUED 6,150,732
</TABLE>
-3-
<PAGE> 58
SERIES B PREFERRED
<TABLE>
<CAPTION>
NAME CERTIFICATE DATE NUMBER OF
- ---- NUMBER ---- SHARES
----------- ---------
<S> <C> <C> <C>
William T. Burgin PB0001 1/11/94 4,286
Brimstone Island Co. L.P. PB0002 1/11/94 4,286
Neill H. Brownstien PB0003 1/11/94 2,857
Robert H. Buescher PB0004 1/11/94 857
G. Felda Hardyman PB0005 1/11/94 2,857
Christopher Gabrieli PB0006 1/11/94 9,143
Michael I. Barach PB0007 1/11/94 714
Daniel S. Martin PB0008 1/11/94 571
Richard R. Davis PB0009 1/11/94 953
Thomas F. Ruhn PB0010 1/11/94 214
Ward W. Woods, Jr. PB0011 1/11/94 1,429
Geoffrey L. Berger PB0012 1/11/94 143
Robert D. Lindsay PB0013 1/11/94 571
Michael S. Mathews PB0014 1/11/94 571
Barbara M. Henagan PB0015 1/11/94 857
Robert Morgan PB0016 1/11/94 1,714
Gary Takata PB0017 1/11/94 1,714
Technology Leaders L.P. PB0018 1/11/94 133,400
Technology Leaders PB0019 1/11/94 152,314
Offshore C.V.
Morgan Holland PB0021 1/11/94 353,571
Fund II, L.P.
Gilde Investment PB0022 1/11/94 3,571
Fund B.V.
Comdisco, Inc. PB0023 1/11/94 28,571
J. Robert Scott, Inc. PB0024 1/11/94 4,286
Barry A. Berkowitz PB0025 1/11/94 11,429
Bessemer Venture Partners PB0027 2/24/94 255,405
III, L.P.
Comdisco, Inc. PB0028 7/13/94 15,143
</TABLE>
<PAGE> 59
SERIES B PREFERRED
<TABLE>
<CAPTION>
NAME CERTIFICATE DATE NUMBER OF
- ---- NUMBER ---- SHARES
----------- ---------
<S> <C> <C> <C>
Morgan Holland Fund II, PB0029 7/13/94 70,715
L.P.
Gilde Investment Fund, PB0030 7/13/94 714
B.V.
Barry A. Berkowitz PB0031 7/13/94 510
TOTAL ISSUED 1,063,366
</TABLE>
-2-
<PAGE> 60
MYCC PHARMACEUTICALS INC.
STOCKHOLDERS LIST
SERIES C PREFERRED
<TABLE>
<CAPTION>
NAME CERTIFICATE DATE NUMBER OF
- ---- NUMBER ---- SHARES
----------- ---------
<S> <C> <C> <C>
Technology Leaders L.P. PC0001 7/27/94 140,070
Technology Leaders PC0002 7/27/94 159,930
Offshore C.V.
Bessemer Venture Partners PC0003 7/27/94 283,024
III L.P.
Morgan Holland Fund II, PC0004 7/27/94 148,500
L.P.
Gilde Investment Fund PC0005 7/27/94 1,500
B. V.
Comdisco, Inc. PC0006 7/27/94 16,667
Robert H. Buescher PC0007 7/27/94 900
Christopher F.O. PC0008 7/27/94 9,600
Gabrieli
Richard R. Davis PC0009 7/27/94 1,001
Thomas F. Ruhm PC0010 7/27/94 225
Ward W. Woods, Jr. PC0011 7/27/94 1,500
Geoffrey L. Berger PC0012 7/27/94 150
Robert D. Lindsay PC0013 7/27/94 600
G. Felda Hardymon PC0014 7/27/94 3,000
Barry A. Berkowitz PC0015 7/27/94 1,072
TOTAL 767,739
</TABLE>
<PAGE> 61
MYCO PHARMACEUTICALS, INC.
STOCK OPTIONS GRANTED
JANUARY 31, 1995
<TABLE>
<CAPTION>
OPTION # OF OPTION VESTING
DATE EMPLOYEE/CONSULTANT SHARES PRICE SCHEDULE
- ------ ------------------------- ------ ------ --------
<S> <C> <C> <C> <C>
10-Mar-92 FINK 200,000 $0.20 4 Year Vesting
12-Mar-92 BECKER 120,000 $0.20 4 Year Vesting
11-Mar-92 WEISBACH 60,000 $0.20 4 Year Vesting
01-Mar-92 ROBBINS 40,000 $0.20 4 Year Vesting
01-Mar-92 MORRIS 10,000 $0.20 4 Year Vesting
14-Jun-93 MORRIS 2,500 $0.20 5 Year Vesting
01-Mar-92 EDWARDS 10,000 $0.20 4 Year Vesting
14-Jun-93 EDWARDS 2,500 $0.20 5 Year Vesting
04-Mar-94 EDWARDS 12,500 $0.23 6 Year Vesting
01-Mar-92 DIAMOND 10,000 $0.20 4 Year Vesting
14-Jun-93 DIAMOND 2,500 $0.20 5 Year Vesting
01-Mar-92 NAKANISHI 10,000 $0.20 4 Year Vesting
02-Jan-92 MORGAN, R.W. 8,000 $0.20 12/31/92
02-Jan-93 MORGAN, R.W. 4,000 $0.20 12/31/93
31-Jan-94 MORGAN, R.W. 6,000 $0.23 12/31/94
22-Jun-92 Bulawa 3,760 $0.20 5 Year Vesting
14-Jun-93 Bulawa 1,875 $0.20 5 Year Vesting
14-Jun-93 Bulawa 1,875 $0.20 Milestone
04-Mar-94 Bulawa 5,000 $0.23 5 Year Vesting
19-Oct-92 O'Connor 50,000 $0.20 5 Year Vesting
01-Jan-93 DARRETT 15,000 $0.20 4 Year Vesting
01-Jan-93 Starkis 1,000 $0.20 5 Year Vesting
14-Jun-93 Starkis 4,000 $0.20 5 Year Vesting
13-Jun-94 Starkis 5,000 $0.30 5 Year Vesting
05-Mar-92 TIMBERLAKE 40,000 $0.20 4 Year Vesting
01-Mar-93 Timberlake 240,000 $0.20 5 Year Vesting
01-Mar-93 Timberlake 200,000 $0.20 Milestone
13-Jun-04 Timberlake 50,000 $0.30 Milestone
15-Jun-93 Morgan, Vance 15,000 $0.20 5 Year Vesting
14-Jun-93 Rothstein, David 15,000 $0.20 5 Year Vesting
01-Jul-94 Rothstein, David 2,000 $0.30 5 Year Vesting
10-Mar-92 KOLTIN 120,000 $0.20 4 Year Vesting
14-Jun-93 Koltin, Yigal 30,000 $0.20 Milestone
23-Jun-93 Winter, Kenneth 750 $0.20 5 Year Vesting
21-Jun-93 Cachet, Louise 1,000 $0.20 5 Year Vesting
07-Jul-93 Reeves, Scott 1,000 $0.20 5 Year Vesting
02-Aug-93 Jiang, Waldong 10,000 $0.20 5 Year Vesting
01-Aug-94 Jiang, Waldong 1,500 $0.30 5 Year Vesting
11-Aug-93 Knight, Benjamin 750 $0.20 5 Year Vesting
01-Apr-94 Knight, Benjamin 750 $0.23 5 Year Vesting
01-Sep-94 Knight, Benjamin 250 $0.30 5 Year Vesting
01-Dec-93 Chen, Yanni 750 $0.20 5 Year Vesting
31-Jan-94 Jacobs, Christina 750 $0.23 5 Year Vesting
01-Feb-94 Clifford, Julie 1,200 $0.20 5 Year Vesting
07-Mar-94 Poland, Anne 500 $0.23 5 Year Vesting
28-Mar-94 Olsen, Spenser 1,000 $0.23 5 Year Vesting
04-Apr-94 Iarchauk, Natalie 1,000 $0.23 5 Year Vesting
01-Jun-94 Galagher, Rex 58,000 $0.23 5 Year Vesting
01-Aug-94 Slutsky, Alexander 10,000 $0.30 5 Year Vesting
25-Aug-94 Jiang, Zhi-Dong 10,000 $0.30 5 Year Vesting
25-Aug-94 Jiang, Zhi-Dong 15,000 $0.20 Milestone
08-Sep-94 Liu, Qin 7,500 $0.30 5 Year Vesting
12-Sep-94 Marc Hickey 1,000 $0.30 5 Year Vesting
03-0ct-94 Colleen McNancy 1,200 $0.30 5 Year Vesting
28-Oct-94 Nan Clark 1,000 $0.30 5 Year Vesting
---------
STOCK OPTION PLAN-GRANTS 1,416,400
STOCK OPTION PLAN-AVAIL 691,400
STOCK OPTION PLAN-ISSUED 4,200
---------
STOCK OPTION PLAN-TOTAL AUTH. 2,112,000
---------
</TABLE>
<PAGE> 62
Attachment to Exhibit 3.14
In addition to the matters discussed in Exhibits 3.08 and 3.13, at December 31,
1994, the Company has entered into the following agreements:
<TABLE>
<CAPTION>
Approximate
Annual
Description Contract Term Amount
----------- ------------- ------
<S> <C> <C>
Comdisco Venture Group equipment lease 6/93 - 5/97 $ 561,000
MYOCRT, real estate lease 7//93- 6/2004 $ 350,000
</TABLE>
LICENSE/RESEARCH AGREEMENTS
[See Attachment to Exhibit 3.14 in Exhibit 10.5]
<PAGE> 1
EXHIBIT 10.6
SERIES E PREFERRED STOCK PURCHASE AGREEMENT
CHEMGENICS PHARMACEUTICALS INC.
One Kendall Square
Building 300 - Third Floor
Cambridge, MA 02139
November 27, 1996
To American Home Products Corporation
Acting Through Its
Wyeth-Ayerst Laboratories Division
Five Giralda Farms
Madison, NJ 07940
and Certain Other Stockholders of
ChemGenics Pharmaceuticals Inc.
Re: Series E Preferred Stock
Ladies and Gentlemen:
ChemGenics Pharmaceuticals Inc. (the "Company"), a Delaware
corporation, agrees with you as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF SHARES
1.01. THE SERIES E PREFERRED STOCK. The Company has authorized the
issuance and sale of up to an aggregate of 2,166,667 shares of its authorized
but unissued Series E Convertible Preferred Stock, $.01 par value per share (the
"Series E Preferred Stock") at a purchase price of $6.00 per share to American
Home Products Corporation, a Delaware corporation, acting through its
Wyeth-Ayerst Laboratories Division (the "Purchaser") and in the amounts and at
such times as set forth in Section 1.03. The Company has also authorized the
issuance and sale to the Purchaser of Shares of its Common Stock, $.001 par
value per share (the "Common Stock"), in the amounts and under the circumstances
set forth in Sections 1.03(b)(ii) and 1.03(c)(ii). The designation, rights,
preferences and other terms and provisions of the Series E Preferred Stock are
set forth in Exhibit A hereto.
<PAGE> 2
1.02. THE CONVERSION SHARES. The Company has authorized and has
reserved and covenants to continue to reserve, free of preemptive rights, other
similar contractual rights of shareholders or any other rights to purchase such
shares, a sufficient number of its authorized but unissued shares of Common
Stock to satisfy the rights of conversion of the holders of the Series E
Preferred Stock. Any shares of Common Stock issuable upon conversion of the
Series E Preferred Stock (and such shares when issued) are herein referred to as
the "Conversion Shares". The shares of Series E Preferred Stock to be issued
pursuant to this Agreement (the "Series E Preferred Shares"), the Conversion
Shares and any Common Stock issued at the Second Closing and/or the Third
Closing are collectively referred to as the "Shares".
1.03. PURCHASE PRICE AND CLOSINGS. The Company agrees to issue and sell
to the Purchaser and, in consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement,
the Purchaser agrees to purchase, that number of Series E Preferred Shares (or,
as more particularly set forth below, shares of Common Stock) set forth below at
three closings (the "First Closing," "Second Closing," and "Third Closing"). The
aggregate purchase price of the Series E Preferred Shares or shares of Common
Stock to be acquired by Purchaser is Thirteen Million Dollars ($13,000,000).
Each closing of the purchase and sale of the Series E Preferred Stock or shares
of Common Stock to be acquired by the Purchasers from the Company under this
Agreement shall take place at a mutually agreeable location at 10:00 a.m. on the
date set forth below, or at such time and date thereafter as the Purchasers and
the Company may agree (the "Closings"). At each Closing, the Company will
deliver to the Purchaser a certificate for the number of Series E Preferred
Shares or shares of Common Stock to be purchased at such Closing registered in
such Purchaser's name (or its nominee), against delivery of a check or checks
payable to the order of the Company, or a transfer of funds to the account of
the Company by wire transfer, representing the aggregate purchase price set
forth below, as payment in full of the purchase price of the Shares.
(a) FIRST CLOSING. The First Closing shall take place
simultaneously with the execution hereof. At the First Closing, the
Purchaser shall purchase 833,334 Series E Preferred Shares for a total
purchase price of $5,000,004.
(b) SECOND CLOSING. Subject to the condition set
forth in Section 2.03 hereof and except as set forth in Section
1.03(d), the Second Closing shall take place at the later of (x) six
months after the date hereof, or (y) five (5) business days after the
satisfaction of the conditions set forth in Section 2.03 hereof. Except
as set forth in Section 1.03(d), at the Second Closing: (i) if the IPO
(defined below) has not taken place, the Purchaser shall purchase
833,333 Series E Preferred Shares for a total purchase price of
$4,999,998; or (ii) if the IPO has taken place, the Purchaser shall
purchase shares of Common Stock for a total purchase price of
$4,999,998, the number of which shall be determined by dividing
$4,999,998 by 115% of the Market Price (defined below) on the date of
the Second Closing.
- 2 -
<PAGE> 3
(c) THIRD CLOSING. Subject to the condition set forth
in Section 2.04 hereof and except as set forth in Section 1.03(d), the
Third Closing shall take place at the later of (x) two years after the
date hereof or (y) five (5) business days after the satisfaction of the
conditions set forth in Section 2.04 hereof. Except as set forth in
Section 1.03(d), at the Third Closing: (i) if the IPO (defined below)
has not taken place, the Purchaser shall purchase 500,000 Series E
Preferred Shares for a total purchase price of $3,000,000; or (ii) if
the IPO has taken place, the Purchaser shall purchase shares of Common
Stock for a total purchase price of $3,000,000, the number of which
shall be determined by dividing $3,000,000 by 115% of the Market Price
on the date of the Third Closing.
(d) Notwithstanding Section 1.03(b) and 1.03(c), (i)
in the event the IPO has taken place within ninety (90) days prior to
the date set forth in such Section for the Second Closing or the Third
Closing, then the date of such Closing shall be postponed to the
ninetieth (90th) day following the closing of the IPO, and (ii) in the
event the Second Closing or the Third Closing takes place as part of
the IPO, then the Purchaser shall purchase shares of Common Stock at
the offering price of the IPO.
(e) As used herein, "Market Price" shall mean the
average of the high and low trading prices of the Company's Common
Stock as reported by the Wall Street Journal (or the principal stock
exchange or interdealer quotation system on which the Company's Common
Stock is quoted, if not regularly reported in the Journal) for each of
the twenty trading days ending on the fifth trading day before each of
the applicable Closings.
(f) As used herein, "IPO" shall mean the Company's
first underwritten public offering of securities registered under the
Securities Act of 1933 followed by listing with a national stock
exchange or automated quotation system.
1.04. USE OF PROCEEDS. The Company shall use the cash proceeds from the
sale of the Series E Preferred Stock for working capital and general corporate
purposes.
1.05. REPRESENTATIONS BY THE PURCHASER.
(a) INVESTMENT REPRESENTATIONS. The Purchaser
represents that it is its present intention to acquire the Shares to be
acquired by it for its own account (and it will be the sole beneficial
owner thereof) and that the Shares are being and will be acquired by it
for the purpose of investment and not with a view to distribution or
resale thereof except pursuant to registration under the Securities Act
or exemption therefrom. The acquisition by the Purchaser of the Shares
acquired by it shall constitute a confirmation of this representation
by the Purchaser. The Purchaser is purchasing with its own funds and
not with the funds of any pension or employee benefit plan. The
Purchaser further represents that it understands and agrees that, until
registered under the Securities Act or transferred pursuant to the
provisions of Rule 144 or Rule 144A as
- 3 -
<PAGE> 4
promulgated by the Commission or other applicable exemption from
registration and/or the receipt by the Company of an opinion of counsel
(which may be the inside corporate counsel of Purchaser) in a form
reasonably acceptable to the Company, all certificates evidencing any
of the Shares, whether upon initial issuance or upon any transfer
thereof, shall bear a legend, prominently stamped or printed thereon,
reading substantially as follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 as amended (the
"Act") or applicable state securities laws. These securities
have been acquired for investment and not with a view to
distribution or resale. These securities may not be offered
for sale, sold, delivered after sale, transferred, pledged or
hypothecated in the absence of an effective registration
statement covering such shares under the Act and any
applicable state securities laws, or the availability, in the
opinion of counsel satisfactory to the Company, of an
exemption from registration thereunder."
(b) SOPHISTICATION AND KNOWLEDGE. The Purchaser or
its representative has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks
of the purchase of the Shares. The Purchaser can bear the economic
risks of this investment and can afford a complete loss of its
investment.
(c) TRANSFER RESTRICTIONS IMPOSED BY SECURITIES LAWS.
The Purchaser understands that: no state or governmental authority has
made any finding or determination relating to the fairness of the terms
of the investment in the Company proposed hereunder and the Shares have
not been registered under the Securities Act and applicable state
securities laws, and, therefore, cannot be resold unless they are
subsequently registered under the Securities Act and applicable state
securities laws or unless an exemption from such registration is
available; the Purchaser is and must be purchasing the Shares for
investment for the account of the Purchaser and not for the account or
benefit of others, and not with any present view toward resale or other
distribution thereof. The Purchaser agrees not to resell or otherwise
dispose of all or any part of the Shares purchased by it, except as
permitted by law, including, without limitation, any regulations under
the Securities Act and applicable state securities laws; the Company
does not have any present intention and is under no obligation to
register the Shares under the Securities Act and applicable state
securities laws, except as provided in Article V hereof; and Rule 144
or Rule 144A or other exemption under the Securities Act may not be
available as a basis for exemption from registration of the Shares
thereunder.
(d) LACK OF LIQUIDITY. The Purchaser has no present
need for liquidity in connection with its purchase of the Shares.
- 4 -
<PAGE> 5
(e) SUITABILITY AND INVESTMENT OBJECTIVES. The
purchase of the Shares by the Purchaser is consistent with the general
investment objectives of the Purchaser. The Purchaser understands that
the purchase of the Shares involves a high degree of risk in view of
the fact that, among other things, the Company is a development stage
enterprise, and there may never be an established market for the
Company's capital stock.
(f) ACCREDITED INVESTOR STATUS. The Purchaser is an
"Accredited Investor" as that term is defined in Rule 501 of Regulation
D promulgated under the Securities Act.
(g) ACCESS TO INFORMATION. The Purchaser has had the
opportunity to ask questions and receive answers from the officers and
other employees of the Company regarding the terms and conditions of
this Agreement, the transactions contemplated hereby (including,
without limitation, its acquisition of Shares), as well as the affairs
of the Company and related matters, and it has obtained such
information and has had the opportunity to obtain additional
information necessary to verify the accuracy of all information so
obtained.
(h) CORPORATE REPRESENTATION. The Purchaser, as a
corporation, represents and warrants that (i) the individual executing
this Agreement on its behalf has been duly authorized to execute and
deliver this Agreement; (ii) the signature of such individual is
binding upon such corporation; (iii) the Purchaser is duly organized,
validly existing and in good standing in its jurisdiction of
incorporation or organization and has all requisite power and authority
to execute and deliver this Agreement; and (iv) the execution and
delivery of this Agreement and the purchase of the Shares hereunder
will not result in the violation of, constitute a breach or default
under, or conflict with, any term or provision of the charter, bylaws
or other governing document of the Purchaser or, to its knowledge, a
material breach or default under any material agreement, judgment,
decree, order, statute or regulation by which it is bound or applicable
to it.
(i) ADDITIONAL REPRESENTATIONS. The Purchaser
understands that the Company is a research and development stage
enterprise with limited resources. The Company is engaged and intends
to engage in research activities which will require substantial funds
which may not be available. For this and other reasons, the Company's
prospects are highly speculative. Accordingly, the Purchaser
acknowledges that it may lose its entire investment in the Company.
ARTICLE II
CONDITIONS TO CLOSING
2.01. CONDITIONS TO PURCHASERS' OBLIGATIONS. The obligation of the
Purchaser to purchase and pay for the Series E Preferred Shares to be purchased
by it at each Closing is subject to the following conditions (all of which shall
be deemed satisfied or waived by the
- 5 -
<PAGE> 6
Purchaser at or prior to a Closing in the event all of the transactions
contemplated to be effected at the Closing are consummated and all or any of
which in any case may be waived by the Purchaser prior to a Closing):
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Company set forth in Article III
hereof shall be true, accurate and correct in all material respects on
the date of the Closing, except in the case of the Second Closing and
the Third Closing to the extent that conditions and facts have changed
over time, which changes in conditions and facts shall be enumerated
and disclosed in a certificate of a duly authorized officer of the
Company delivered to Purchaser at or prior to each of the Second
Closing and the Third Closing; provided, however, that the
representations and warranties in Sections 3.01, 3.02 and 3.11 shall be
true, accurate and correct in all material respects as of the Second
Closing and the Third Closing and, with respect to the representations
and warranties in Section 3.03, any requirement for any additional
authorization, consent, approval, license, exemption of or filing or
registration for the Second or Third Closing shall have been satisfied.
(b) DOCUMENTATION AT CLOSING. The Purchaser shall have
received prior to or at the Closing all of the following materials,
each in form and substance reasonably satisfactory to the Purchaser and
its counsel, and each of the following events shall have occurred, or
each of the following documents shall have been delivered, prior to or
simultaneous with the Closing:
(i) A copy of the Restated Certificate of
Incorporation of the Company, as amended or restated to date, certified
by the Delaware Secretary of State as of the most recent practical
date, together with such evidence as is satisfactory to the Purchaser
of the filing thereof; a copy of the resolutions of the Board of
Directors providing for the approval of the Restated Certificate of
Incorporation of the Company in the form attached as Exhibit A, the
approval of this Agreement, the issuance of the Shares and all other
agreements or matters contemplated hereby or executed in connection
herewith; a copy of a consent of stockholders of the Company approving
the Restated Certificate of Incorporation of the Company; and a copy of
the By-laws of the Company, all of which have been certified by the
Secretary of the Company to be true, complete and correct in every
particular; and certified copies of all documents evidencing other
necessary corporate or other action and governmental approvals, if any,
required to be obtained at or prior to the Closing with respect to this
Agreement and the issuance of the Series E Preferred Shares.
(ii) The favorable opinion of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., counsel for the Company, in the form
set forth in Exhibit 2.02(b).
(iii) A certificate of the Secretary or an Assistant
Secretary of the Company which shall certify the names of the officers
of the Company authorized to sign this Agreement, the certificates for
the Series E Preferred Stock or Common Stock to be
- 6 -
<PAGE> 7
issued at the Closing and the other documents, instruments or
certificates to be delivered pursuant to this Agreement by the Company
or any of its officers, together with the true signatures of such
officers.
(iv) A certificate of the President and the Treasurer
of the Company stating that the condition set forth in Section 2.01(a)
has been satisfied, and that all conditions required to be performed by
the Company prior to or at the Closing have been performed as of the
Closing.
(v) The Company shall have obtained any consents or
waivers necessary to be obtained at or prior to the Closing to execute
and deliver this Agreement, the Series E Preferred Shares (or shares of
Common Stock) and the other agreements and instruments executed and
delivered by the Company in connection herewith and to carry out the
transactions contemplated hereby and thereby, and such consents and
waivers shall be in full force and effect at the Closing. All corporate
and other action and governmental filings necessary to effectuate the
terms of this Agreement, the Series E Preferred Stock and the other
agreements and instruments executed and delivered by the Company in
connection herewith shall have been made or taken.
(vi) A Certificate of the Secretary of State of the
State of Delaware as to the due incorporation and good standing of the
Company and a certificate of the Secretary of State of each
jurisdiction in which the Company is required to qualify to do business
as a foreign corporation shall have been provided to the Purchaser.
(vii) Payment for the costs, expenses, taxes and
filing fees identified in Section 8.04.
2.02 CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligation of the
Company to issue and sell to the Purchaser the Series E Preferred Shares to be
sold at each Closing is subject to the following conditions:
(a) COLLABORATIVE RESEARCH AND LICENSE AGREEMENT. The
Purchaser and the Company shall have entered into a Collaborative
Research and License Agreement (the "Collaboration Agreement").
(b) STANDSTILL AGREEMENT. The Purchaser shall have entered
into a Standstill Agreement in substantially the form attached hereto
as Exhibit B.
2.03 CONDITIONS APPLICABLE TO THE SECOND CLOSING. The obligation of the
Purchaser to purchase and pay for Series E Preferred Shares or shares of Common
Stock at the Second Closing is subject to the additional condition that two
Accepted Targets shall have been approved by the JSC pursuant to Sections 1.0
and 2.2.1 of the Collaboration Agreement.
- 7 -
<PAGE> 8
2.04 CONDITIONS APPLICABLE TO THE THIRD CLOSING. The obligation of the
Purchaser to purchase and pay for Series E Preferred Shares or shares of Common
Stock at the Third Closing is subject to the additional condition that four
Accepted Targets shall have been approved by the JSC pursuant to Sections 1.0
and 2.2.1 of the Collaboration Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as of the date hereof as follows:
3.01. ORGANIZATION AND STANDING OF THE COMPANY. The Company is a duly
organized and validly existing corporation in good standing under the laws of
the State of Delaware and has all requisite corporate power and authority for
the ownership and operation of its properties and for the carrying on of its
business as now conducted and as now proposed to be conducted and to execute and
deliver this Agreement and any other agreement to which it is a party hereunder,
to issue, sell and deliver the Series E Preferred Shares or shares of Common
Stock, to issue and deliver the Conversion Shares and to perform its other
obligations pursuant hereto and thereto. The Company is duly licensed or
qualified and in good standing as a foreign corporation authorized to do
business in all jurisdictions wherein the character of the property owned or
leased or the nature of the activities conducted by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a material adverse effect on the business, operations or
financial condition of the Company.
3.02. CORPORATE ACTION. This Agreement and any other agreement to which
it is a party hereunder have been duly authorized, executed and delivered by the
Company and constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms.
3.03. GOVERNMENTAL APPROVALS. Except for the filing of any notice prior
or subsequent to the Closing that may be required under applicable state and/or
federal securities laws, and the filing of the Restated Certificate of
Incorporation (which, if required, shall be filed on a timely basis), no
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be necessary
for, or in connection with, the execution and delivery by the Company of this
Agreement, including but not limited to compliance with any applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended and the rules promulgated thereunder, for the offer, issue, sale,
execution or delivery of the Series E Preferred Shares or shares of Common
Stock, or for the performance by the Company of its obligations under this
Agreement.
3.04. LITIGATION. There is no litigation or governmental proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company affecting any of its properties or assets, or, to the knowledge of
the Company, against any officer, Key Employee or the holder of more than ten
percent (10%) of the capital stock of the Company
- 8 -
<PAGE> 9
relating to the Company or its business, nor, to the knowledge of the Company,
has there occurred any event or does there exist any condition on the basis of
which it is reasonably likely that any such litigation, proceeding or
investigation might properly be instituted. There are no actions or proceedings
pending or, to the Company's knowledge, threatened (or any basis therefor known
to the Company) which might result, either in any case or in the aggregate, in
any material adverse change in the business, operations, Intellectual Property
Rights, affairs or financial condition of the Company or in any of its
properties or assets, or which might call into question the validity of this
Agreement, the Series E Preferred Stock or Common Stock, or any action taken or
to be taken pursuant hereto or thereto.
3.05. CERTAIN AGREEMENTS OF OFFICERS AND EMPLOYEES. To the Company's
knowledge, no officer, employee or consultant of the Company is in violation of
any material term of any employment contract, patent disclosure agreement,
proprietary information agreement, noncompetition agreement, nonsolicitation
agreement, confidentiality agreement, or any other similar contract or agreement
or any restrictive covenant, relating to the right of any such officer,
employee, or consultant to be employed or engaged by the Company because of the
nature of the business conducted or to be conducted by the Company or relating
to the use of trade secrets or proprietary information of others, and to the
Company's knowledge and belief, the continued employment or engagement of the
Company's officers, employees or consultants does not subject the Company or the
Purchaser to any material liability with respect to any of the foregoing
matters.
3.06. COMPLIANCE WITH OTHER INSTRUMENTS. The Company is in compliance
in all respects with the terms and provisions of this Agreement and of its
Restated Certificate of Incorporation and By-laws, each as amended and/or
restated to date, and in all respects with the terms and provisions of all
mortgages, indentures, leases, agreements and other instruments by which it is
bound or to which it or any of its properties or assets are subject where
noncompliance would have a material adverse affect on the business, assets,
operations, or financial condition of the Company. The Company is in compliance
in all respects with all judgments, decrees, governmental orders, laws,
statutes, rules or regulations by which it is bound or to which it or any of its
properties or assets are subject where noncompliance would have a material
adverse affect on the business, assets, operations, or financial condition of
the Company. Neither the execution, issuance and delivery of this Agreement or
the Series E Preferred Shares or shares of Common Stock, nor the consummation of
any transaction contemplated hereby or thereby, has constituted or resulted in
or will constitute or result in a default or violation of any term or provision
of any of the foregoing documents, instruments, judgments, agreements, decrees,
orders, statutes, rules and regulations where noncompliance with which would
have a material adverse affect on the business, assets, operations, or financial
condition of the Company.
3.07. TITLE TO ASSETS, PATENTS. The Company has good and marketable
title in fee to such of its fixed assets as are real property and purported to
be owned, and good and merchantable title to all of its other assets, tangible
and intangible, free of any mortgages, pledges, charges, liens, security
interests or other encumbrances, except those indicated in
- 9 -
<PAGE> 10
Exhibit 3.07. The Company enjoys peaceful and undisturbed possession under all
leases under which it is operating, and all said leases are valid and subsisting
and in full force and effect.
The Company owns or has a valid right to use the Intellectual Property
Rights being used to conduct its business (i) as now operated and (ii) as now
proposed to be operated (a complete list of licenses, contract rights and
registrations of such Intellectual Property Rights has been delivered to the
Purchaser in connection with this transaction); and the conduct of its business
as now operated and as now proposed to be operated does not and is not expected
to conflict with or infringe upon the intellectual property rights of others.
Except as set forth on Exhibit 3.07, no claim is pending or threatened against
the Company and/or, to the Company's knowledge, its officers, employees and
consultants to the effect that any such Intellectual Property Right owned or
licensed by the Company, or which the Company otherwise has the right to use, is
invalid or unenforceable by the Company or subject to any claim of infringement.
Except pursuant to the terms of any licenses previously disclosed to the
Purchaser in connection with this transaction, the Company has no obligation to
compensate any Person for the use of any such Intellectual Property Rights and
the Company has not granted any Person any license or other right to use any of
the Intellectual Property Rights of the Company or otherwise has licensed from
others the intellectual property rights of third parties, whether requiring the
payment of royalties or not.
The Company has taken reasonable measures in accordance with industry
standards to protect and preserve the security, confidentiality and value of its
Intellectual Property Rights, including its trade secrets and other confidential
information. All employees and consultants of the Company involved in the
design, review, evaluation or development of inventions or Intellectual Property
Rights have executed nondisclosure and assignment of inventions agreements in
the Company's customary form. To the best knowledge of the Company, all trade
secrets and other confidential information of the Company are presently valid
and protectible and are not part of the public domain or knowledge, nor, to the
best knowledge of the Company, have they been used, divulged or appropriated for
the benefit of any person other than the Company or otherwise to the detriment
of the Company. To the best of the Company's knowledge, no employee or
consultant of the Company has used any trade secrets or other confidential or
proprietary information or techniques of any other person in the course of their
work for the Company or is expected to use such secrets or information or
techniques when conducting the business which the Company presently intends to
conduct. The Company is the exclusive owner of all right, title and interest in
its Intellectual Property Rights as purported to be owned by the Company, and
such Intellectual Property Rights are valid and in full force and effect.
Neither the Company, nor any of its employees or consultants has received notice
of, and to the best of the Company's knowledge after reasonable investigation,
there are no claims that the Company's Intellectual Property Rights or the use
or ownership thereof by the Company infringes, violates or conflicts with any
such right of any third party. No university, hospital, government agency
(whether federal or state) or other organization which sponsored research and
development conducted by the Company has any claim of right to or ownership of
or other encumbrance upon the Intellectual Property Rights of the Company except
as set forth in Exhibit 3.07.
- 10 -
<PAGE> 11
3.08. TRANSACTIONS WITH AFFILIATES. Except as set forth in Exhibit 3.08
there are no material leases, royalty agreements or other continuing
transactions, other than in the ordinary course of business, between (a) the
Company or, to the Company's best knowledge, any of its customers or suppliers,
and (b) any officer, employee, consultant or director of the Company or any
Person owning five percent (5%) or more of the capital stock of the Company, or
to the Company's knowledge, any member of the immediate family of such officer,
employee, consultant, director or stockholder or any corporation or other entity
controlled by such officer, employee, consultant, director or stockholder, or a
member of the immediate family of such officer, employee, consultant, director
or stockholder.
3.09. INDEBTEDNESS; ASSUMPTIONS OR GUARANTIES OF INDEBTEDNESS OF OTHER
PERSONS. The Company has no Indebtedness except as set forth in Exhibit 3.09.
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 payment,
to supply funds to or otherwise invest in the debtor or otherwise to assure the
creditor against loss), any Indebtedness of any other Person except as set forth
in Exhibit 3.09.
3.10. INVESTMENTS IN OTHER PERSONS. The Company has not made any loans
or advances in excess of $100,000 in the aggregate to any Person which is
outstanding on the date of this Agreement, nor is it committed or obligated to
make any such loan or advance, nor does the Company own any capital stock,
assets comprising the business of, obligations of, or any interest in, any
Person. The Company does not have, and has not since its incorporation had, any
Subsidiaries.
3.11. SECURITIES ACT OF 1933. 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 Series E Preferred Shares or shares of Common
Stock hereunder. Neither the Company nor anyone authorized to act on its behalf
has or will sell, offer to sell or solicit offers to buy the Series E Preferred
Shares or similar securities to, or solicit offers with respect thereto from, or
enter into any preliminary conversations or negotiations relating thereto with,
any Person, so as to bring the issuance and sale of the Series E Preferred
Shares under the registration provisions of the Securities Act and applicable
state securities laws.
3.12. DISCLOSURE. Neither this Agreement, nor any other written
agreement or financial statement, furnished to the Purchaser by or on behalf of
the Company in connection with the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein, in light of the
circumstances in which made, not misleading. There is no fact within the
knowledge of the Company or any of its executive officers which has not been
disclosed herein or in writing by them to the Purchaser and which materially
adversely affects, or in the future in their opinion may, insofar as they can
now foresee, materially adversely affect the business, operations, properties,
Intellectual Property Rights, assets or condition, financial or other, of the
Company. Without limiting the foregoing, the Company has no knowledge that there
exists, or that there
- 11 -
<PAGE> 12
is pending or planned, any patent, invention, device, application or principle
or any statute, rule, law, regulation, standard or code which would materially
adversely affect the business, prospects, operations, Intellectual Property
Rights, affairs or financial condition of the Company.
3.13. CAPITALIZATION; STATUS OF CAPITAL STOCK. As of the Closing, the
Company will have a total authorized capitalization consisting of (i) 33,866,667
shares of Common Stock, $.001 par value and (ii) 13,441,667 shares of preferred
stock, $.01 par value ("Preferred Stock"), of which 6,400,000 shares will be
designated as Series A Convertible Preferred Stock, $.01 par value ("Series A
Preferred Stock"), 1,100,000 shares will be designated as Series B Convertible
Preferred Stock, $.01 par value ("Series B Preferred Stock"), 775,000 shares
will be designated as Series C Convertible Preferred Stock, $.01 par value
("Series C Preferred Stock"), 3,000,000 shares will be designated as Series D
Convertible Preferred Stock, $.01 par value ("Series D Preferred Stock") and
2,166,667 shares will be designated as Series E Convertible Preferred Stock. As
of the Closing, 11,334,279 shares of Common Stock will be issued and
outstanding, 6,150,732 shares of Series A Preferred Stock will be issued and
outstanding, 1,063,366 shares of Series B Preferred Stock will be issued and
outstanding, 767,739 shares of Series C Preferred Stock will be issued and
outstanding 3,000,000 shares of Series D Preferred Stock will be issued and
outstanding and 833,334 shares of Series E Preferred Stock will be issued and
outstanding. A complete list of the capital stock of the Company which has been
previously issued and the names in which such capital stock is registered on the
stock transfer book of the Company has been provided to the Purchaser. All the
outstanding shares of capital stock of the Company have been duly authorized,
and are validly issued, fully paid and non-assessable. The Series E Preferred
Shares or shares of Common Stock when issued and delivered in accordance with
the terms hereof, and the Conversion Shares, when issued and delivered upon
conversion of the Series E Preferred Shares, will be duly authorized, validly
issued, fully-paid and non-assessable. Except for 2,964,400 shares of Common
Stock that are reserved for issuance upon exercise of stock options, 4,896,335
shares of Common Stock that are reserved for issuance upon the exercise of
Warrants held by PerSeptive Biosystems, Inc. (the "PBIO Warrants"), 177,083
shares of Series A Preferred Stock that have been reserved for issuance upon
exercise of Warrants issued or to be issued to Comdisco, Inc. (the "Comdisco
Leasing Warrants"), the shares of Common Stock reserved for issuance upon the
conversion of the currently outstanding shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
upon the conversion of the shares of Series A Preferred Stock which may be
issued upon exercise of the Comdisco Leasing Warrants, all as further set forth
in Exhibit 3.13, no options, warrants, subscriptions or purchase rights of any
nature to acquire from the Company, or commitments of the Company to issue,
shares of capital stock or other securities are authorized, issued or
outstanding, nor is the Company obligated in any other manner to issue shares or
rights to acquire any of its capital stock or other securities except as
contemplated by this Agreement. None of the Company's outstanding securities or
authorized capital stock, including the Series E Preferred Stock, are subject to
any rights of redemption, repurchase, rights of first refusal, preemptive rights
or other similar rights, whether contractual, statutory or otherwise, for the
benefit of the Company, any stockholder, or any other Person, except pursuant
hereto, or as set forth on Exhibit 3.13. Except as set forth in Exhibit 3.13,
there are no restrictions on
- 12 -
<PAGE> 13
the transfer of shares of capital stock of the Company other than those imposed
by relevant federal and state securities laws and as otherwise contemplated by
this Agreement. The offer and sale of all capital stock and other securities of
the Company issued before the Closing complied with or were exempt from all
applicable federal and state securities laws and no stockholder has a right of
rescission or damages with respect thereto.
3.14. MATERIAL AGREEMENTS. Except as set forth in Exhibit 3.14, the
Company is not a party to any material written or oral contract, instrument,
agreement, commitment, obligation, plan or arrangement, or any other material
agreement which could adversely affect the business, assets, liabilities,
Intellectual Property Rights, financial condition or operations of the Company.
The Company, and to the best of the Company's knowledge, each other party
thereto have in all material respects performed all the obligations required to
be performed by them to date, have received no notice of default and are not in
default in any material respect under any lease, agreement or contract now in
effect to which the Company is a party or by which it or its property may be
bound. Each of the contracts or agreements set forth in Exhibit 3.14 is in full
force and effect with no default, anticipated or threatened material default or
material failure of performance or observance of any obligations or conditions
contained therein, and none of the foregoing parties nor the Company has
provided any notice of default or of its intention to terminate these
agreements.
3.15. ABSENCE OF CERTAIN DEVELOPMENTS. The Company is not a party to
any written or material oral contract or instrument or other corporate
restriction which individually or in the aggregate is reasonably likely to
adversely affect the business, prospects, financial condition, operations,
Intellectual Property Rights, property or affairs of the Company. The Company
has no liability or obligation, whether absolute, contingent, or otherwise,
except for those incurred in the ordinary course.
3.16. ENVIRONMENTAL AND SAFETY LAWS. To the best of the Company's
knowledge after due investigation, it is not in violation of any applicable
statute, law or regulation relating to the environment or occupational safety
and health in any material respect, and to the best of its knowledge after due
investigation, no material expenditures will be required in order to comply with
any such statute, law or regulation except in the ordinary course of doing
business.
3.17. U.S. REAL PROPERTY HOLDING CORPORATION. The Company is not now
and has never been a "United States Real Property Holding Corporation" as
defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service.
ARTICLE IV
COVENANTS OF THE COMPANY
For purposes of this Article IV, and of Articles V and VI, (a) the term
"Purchaser" or "Purchasers" also shall mean and include the Purchasers as
defined in the Series A and B Agreement, the Series C Agreement and the Series D
Agreement, (b) the term "Shares" also
- 13 -
<PAGE> 14
shall mean and include the shares of Series A Preferred Stock and Series B
Preferred Stock issued pursuant to the Series A and B Agreement, the shares of
Series C Preferred Stock issued pursuant to the Series C Agreement, the shares
of Series D Preferred Stock issued pursuant to the Series D Agreement, and
shares of Common Stock issuable upon conversion thereof and (c) the term
"Conversion Shares" also shall mean and include the shares of Common Stock
issuable upon conversion of the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock and the Series D Preferred Stock. The
following provisions supersede and amend and restate in their entirety the
covenants of the Company set forth in Article IV of the Series D Agreement.
American Home Products Corporation, acting through its Wyeth-Ayerst Laboratories
Division, in its capacity as Purchaser hereunder, and certain of the Purchasers,
in their capacity as holders of at least 60% of the outstanding shares of Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series
D Preferred Stock, hereby consent to the amendment and restatement of such
covenants and agree that the following provisions shall supersede and amend and
restate in their entirety the provisions of Article IV of the Series D
Agreement.
4.01. AFFIRMATIVE COVENANTS OF THE COMPANY OTHER THAN REPORTING
REQUIREMENTS. Without limiting any other covenants and provisions hereof, and
except to the extent the following covenants and provisions of this Section 4.01
are waived in any instance by either (i) a majority of the Investor Directors or
(ii) the holders of at least 60% of the outstanding shares of Serial Preferred
Stock, the Company covenants and agrees that until the consummation of a
Qualified Public Offering, it will perform and observe the following covenants
and provisions, and will cause each Subsidiary, if and when such Subsidiary
exists, to perform and observe such of the following covenants and provisions as
are applicable to such Subsidiary:
(a) BUDGETS APPROVAL. At least thirty (30) days prior
to the commencement of each fiscal year, prepare and submit to, and
obtain in respect thereof the approval of two-thirds of the members of
the Board of Directors, a strategic plan and monthly operating budget
in detail for each fiscal year, monthly operating expenses and profit
and loss projections, quarterly cash flow projections and a capital
expenditure budget for the fiscal year, and including a summary of
proposed research and development activities for the forthcoming year,
the status and proposed activities for any joint venture or other
licensing arrangements with third parties, including pharmaceutical
companies, universities, hospitals and others.
(b) NEW DEVELOPMENTS. Cause all technological
developments, patentable or unpatentable inventions, discoveries or
improvements by the Company's or any Subsidiary's employees or
consultants to be documented in accordance with industry practice and,
where possible and appropriate, to file and prosecute United States and
foreign patent, copyright, trademark, or other Intellectual Property
Right applications relating to and protecting the Company's inventions,
discoveries or developments on behalf of the Company or any Subsidiary.
- 14 -
<PAGE> 15
(c) AGREEMENTS OF OFFICERS AND EMPLOYEES. Cause each
employee of the Company or any Subsidiary now or hereafter employed to
execute and deliver nondisclosure and assignment of inventions
agreements (in the Company's customary form or agreements otherwise
approved by the Board of Directors of the Company, including a majority
of the Investor Directors) and cause each Key Employee of the Company
or any Subsidiary hereafter employed to execute and deliver
non-competition, nondisclosure and assignment of inventions agreements
(in the Company's customary form or agreements otherwise approved by
the Board of Directors of the Company, including a majority of the
Investor Directors), and use its best efforts to cause all consultants
of the Company involved in the design, review, evaluation or
development of inventions or Intellectual Property Rights to execute
and deliver nondisclosure and assignment of inventions agreements (in
the Company's customary form or agreements otherwise approved by the
Board of Directors, including a majority of the Investor Directors).
The Company shall not amend or waive any of the material provisions of
such agreements.
(d) BY-LAWS; MEETINGS AND INDEMNIFICATION. The
Company shall at all times cause its By-laws to provide that, (A)
unless otherwise required by the laws of the state of its
incorporation, (i) any two directors or (ii) any holder or holders of
at least 25% of the outstanding shares of Preferred Stock, voting as a
separate class, shall have the right to call a meeting of the Board of
Directors or stockholders, respectively, and (B) a quorum for a meeting
of the Board of Directors or any Committee thereof of which an Investor
Director is a member shall require the attendance of at least two
Investor Directors. The Company shall at all times maintain provisions
in its By-laws or Restated Certificate of Incorporation indemnifying
all directors against liability to the maximum extent permitted under
the laws of the state of its incorporation.
(e) EXPENSES OF DIRECTORS. Promptly reimburse in full
each director of the Company for all of his reasonable out-of-pocket
expenses incurred in attending each meeting of the Board of Directors
of the Company or any Committee thereof.
(f) SIZE OF BOARD. Fix and maintain the number of
Directors on the Board of Directors of the Company at no more than nine
(9) members, including Barry A. Berkowitz, four (4) representatives of
the holders of Serial Preferred Stock and one (1) member designated by
the chief executive officer of the Company.
(g) RULE 144A INFORMATION. At all times during which
the Company is neither subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act, nor exempt from reporting pursuant to
Rule 12g3-2(b) under the Exchange Act, the Company will provide as
promptly as practicable (in any event not later than twenty (20) days
after initial request) in written form, upon the written request of any
Purchaser or a prospective buyer of Shares from any Purchaser, all
information required by Rule 144A(d)(4)(i) of the General Regulations
promulgated by the Commission under the Securities Act ("Rule 144A
Information"). The Company further covenants, upon
- 15 -
<PAGE> 16
written request, as promptly as practicable (in any event not later
than twenty (20) days after initial request) to cooperate with and
assist any Purchaser or any member of the National Association of
Securities Dealers, Inc. system for Private Offerings Resales and
Trading through Automated Linkage ("PORTAL") in applying to designate
and thereafter maintain the eligibility of the Shares for trading
through PORTAL. The Company's obligations under this Section 4.01(g)
shall at all times be contingent upon the relevant Purchaser's
obtaining from a prospective purchaser an agreement to take all
reasonable precautions to safeguard the Rule 144A Information from
disclosure to anyone other than a person who will assist such purchaser
in evaluating the purchase of the Shares.
(h) STOCK PLAN. The Company has created a stock
option plan and currently has reserved an aggregate of 3,000,000
options for the purchase of Common Stock for issuance to employees,
officers and consultants of the Company and to members of the Company's
Scientific Advisory Board. All options to be granted (or stock issued
directly) under any stock plan or otherwise shall vest and become
exercisable in such manner as shall be approved by a majority of the
Board of Directors and shall be subject to a right of refusal of the
Company, unless otherwise approved by a majority of the Board of
Directors including a majority of the Investor Directors.
(i) MEETINGS OF DIRECTORS AND COMMITTEES. Hold
meetings of the Company's Board of Directors not less than on a
quarterly basis.
4.02. NEGATIVE COVENANTS OF THE COMPANY. The Company covenants and
agrees that until the consummation of a Qualified Public Offering, it will
comply with and observe the following negative covenants and provisions, and
will cause each Subsidiary to comply with and observe such of the following
covenants and provisions as are applicable to such Subsidiary, if and when such
Subsidiary exists, and will not without (i) the written consent or written
waiver of the holders of at least 60% of the outstanding shares of the Serial
Preferred Stock or (ii) a majority of the members of the Board of Directors
including a majority of the Investor Directors:
(a) DEALINGS WITH AFFILIATES. Enter into any material
transaction, including, without limitation, any loans or extensions of
credit or other agreements with any employee, consultant, officer or
director of the Company or any Subsidiary or holder of five percent
(5%) of any class of capital stock of the Company or any Subsidiary, or
any member of their respective immediate families or any corporation or
other entity directly or indirectly controlled by one or more of such
employees, consultants, officers, directors or 5% stockholders or
members of their immediate families, on terms less favorable to the
Company or any Subsidiary than it would obtain in a transaction between
unrelated parties except in the case of any transaction or series of
transactions entered into in the ordinary course of business, so long
as such transactions are approved by the disinterested members of Board
of Directors. The Company has entered into certain agreements with
Barry Berkowitz and with William Timberlake set forth on Exhibit 3.08.
- 16 -
<PAGE> 17
(b) ISSUANCE OF EQUITY SECURITIES. Authorize or
issue, or obligate itself to issue, any additional shares of capital
stock of the Company of any class (including any options, warrants or
other rights to purchase capital stock), provided, however, that the
provisions of this Section 4.02(b) shall not apply to the issuance of:
(i) the Conversion Shares; or (ii) up to 3,000,000 shares of Common
Stock or options, warrants or other rights exercisable therefor, issued
on or after the date hereof to directors, officers, employees or
consultants of the Company and any Subsidiary (including members of the
Scientific Advisory Board) pursuant to any qualified or non-qualified
stock option plan or agreement, employee stock ownership plan, employee
benefit plan, stock purchase agreement, stock plan, stock restriction
agreement, or consulting agreement or such other options, equity
arrangements, agreements or plans approved by two-thirds of the members
of the Board of Directors of the Company (including a majority of the
Investor Directors); or (iii) the Comdisco Leasing Warrants, shares of
Series A Preferred Stock issued upon exercise of the Comdisco Leasing
Warrants or shares of Common Stock issued upon conversion of shares of
Series A Preferred Stock issued upon exercise thereof.
(c) TRANSFERS OF TECHNOLOGY. Transfer, sell, dispose
of, encumber, pledge, grant a lien on or security interest in, assign,
lease, license or donate any ownership or interest in, or material
rights relating to, any of its technology, or other Intellectual
Property Rights to any person or entity which is not a member of the
"consolidated group" of the Company and its Subsidiaries; provided,
however, that this Section shall not apply to licenses of technology or
Intellectual Property Rights accomplished in the ordinary course of the
Company's business or pursuant to the express terms of the agreements
entered into with Wyeth-Ayerst Laboratories on the date hereof.
(d) RESTRICTIONS ON INDEBTEDNESS. The Company
covenants that it will not, and will not permit any of its Subsidiaries
to, incur, create, or assume any Indebtedness other than trade debt,
loans to employees in an annual aggregate amount not to exceed $150,000
and property leases, all as approved by the Board of Directors,
including a majority of the Investor Directors.
(e) ASSUMPTIONS OR GUARANTIES OF INDEBTEDNESS OF
OTHER PERSONS. Assume, guarantee, endorse or otherwise become directly
or contingently liable on, or permit any Subsidiary to assume,
guarantee, endorse 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 payment, to
supply funds to or otherwise invest in the debtor or otherwise to
assure the creditor against loss) any Indebtedness of any other Person,
except for guaranties by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business.
(f) AMENDMENTS. Amend the Restated Certificate of
Incorporation or By-laws of the Company.
- 17 -
<PAGE> 18
4.03. REPORTING REQUIREMENTS. Until the consummation of the Initial
Public Offering, the Company will furnish the following to each Person who is
the holder of not less than 5% of the Shares:
(a) MONTHLY REPORTS: as soon as available and in any
event within 45 days after the end of each calendar month, balance
sheets, statements of income and retained earnings and a summary
statement of monthly cash flow and expenses of the Company and its
Subsidiaries for such month and for the period commencing at the end of
the previous fiscal year and ending with the end of such month, setting
forth in each case in comparative form the corresponding figures for
the corresponding period of the preceding fiscal year, and including
comparisons to the monthly budget or business plan and an analysis of
the variances from the budget or plan, prepared in accordance with
generally accepted accounting principles consistently applied;
(b) ANNUAL REPORTS: as soon as available and in any
event within 120 days after the end of each fiscal year of the Company,
a copy of the annual audit report for such year for the Company and its
Subsidiaries, including therein consolidated and consolidating balance
sheets of the Company and its Subsidiaries as of the end of such fiscal
year and consolidated and consolidating statements of income and
retained earnings and of changes in financial position of the Company
and its Subsidiaries for such fiscal year, setting forth in each case
in comparative form the corresponding figures for the preceding fiscal
year, all such consolidated statements to be duly certified by the
chief financial officer of the Company and an independent public
accountant of recognized national standing approved by the Board of
Directors including a majority of the Investor Directors;
(c) BUDGETS AND OPERATING PLAN: as soon as available
and in any event at least 30 days before the beginning of each fiscal
year of the Company, a strategic plan and monthly and quarterly
operating budgets for the forthcoming fiscal year, and as soon as
available and in any event within 30 days after the end of each
calendar month, monthly comparisons against the business plan and
monthly operating budgets (including a summary of proposed research and
development activities, and the status and proposed activities for any
joint venture or other licensing arrangements with any third party).
(d) NOTICE OF ADVERSE CHANGES: promptly after the
occurrence thereof and in any event within five (5) business days after
it becomes aware of each occurrence, notice of any material adverse
change in the business, assets, Intellectual Property Rights,
management, licensing activities, operations or financial condition of
the Company; and
(e) REPORTS AND OTHER INFORMATION: promptly upon
receipt, publication, commencement or occurrence provide to each
Purchaser copies of all material consulting reports, notices of all
material actions, suits or proceedings, copies
- 18 -
<PAGE> 19
of all accountant's reviews, and reports to management, and such other
information as the Company shall make available to its directors or
stockholders or the Purchasers shall reasonably request.
4.04. NO SALE OF ADDITIONAL SERIES E PREFERRED STOCK. The Company
covenants with the Purchaser that it will not sell any Series E Preferred Stock
to any party other than American Home Products Corporation, without the prior
written consent of American Home Products Corporation.
ARTICLE V
REGISTRATION RIGHTS
The following provisions supersede and amend and restate in their
entirety the provisions regarding registration rights set forth in Article V of
the Series D Agreement. The Purchasers, in their capacity as Purchasers of
Shares and certain of the Purchasers in their capacity as holders of at least
60% of the outstanding shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock hereby consent to
the amendment and restatement of such registration rights and agree that the
following provisions shall supersede and amend and restate in their entirety the
provisions of Article V of the Series D Agreement.
5.01. "PIGGY-BACK" REGISTRATIONS. If at any time the Company shall
determine to register for its own account or the account of others under the
Securities Act (including pursuant to the Qualified Public Offering, the Initial
Public Offering or a demand for registration of any stockholder of the Company
other than the Purchasers) any of its equity securities, other than on Form S-8
or Form S-4 or their then equivalents or otherwise relating to shares of Common
Stock to be issued solely in connection with any acquisition of any entity or
business or shares of Common Stock issuable in connection with stock option or
other employee benefit plans, it shall send to each holder of Registrable
Shares, including each holder who has the right to acquire Registrable Shares,
written notice of such determination and, if within ten (10) business days after
receipt of such notice, such holder shall so request in writing, the Company
shall use its best efforts to include in such registration statement all or any
part of the Registrable Shares such holder requests to be registered.
If, in connection with any offering involving an underwriting, the
managing underwriter shall impose a limitation on the number of shares of such
Common Stock which may be included in the registration statement because, in its
judgment, such limitation is necessary to effect an orderly public distribution,
then the Company shall be obligated to include in such registration statement
only such limited portion (which may be none) of the Registrable Shares with
respect to which such holder has requested inclusion pursuant hereto as may
reasonably be determined by the managing underwriters; provided, however, as
between the Company, other stockholders holding contractual registration rights,
and the holders of Registrable Shares, in no event shall the Registrable Shares
included in such offering be limited to less than twenty-five percent (25%) of
the aggregate shares offered. Any inclusion of Registrable Shares in the
offering, when the managing underwriter has so limited the number of Registrable
Shares that may be included in
- 19 -
<PAGE> 20
the offering, shall be allocated pro rata among the holders of Registrable
Shares (or their permitted assigns) seeking to include such shares and the
holders of other registration rights seeking to include their shares, in
proportion to the number of Registrable Shares (whether or not such shares are
sought to be included in such offering) held by such persons. No incidental
right under this Section 5.01 shall be construed to limit any registration
required under Section 5.02. The obligations of the Company under this Section
5.01 with respect to any offering may be waived at any time upon the written
consent of holders of sixty percent (60%) in interest of the Registrable Shares
who are participating in such offering and this Section 5.01 shall expire on the
seventh anniversary following the consummation of an Initial Public Offering or,
if earlier, as set forth in Section 5.15. The Company shall have the right to
withdraw any registration initiated by it pursuant to Section 5.01.
5.02. REQUIRED REGISTRATIONS. If on any three occasions (providing the
offering is consummated) one or more holders of at least 60% of the Registrable
Shares shall notify the Company in writing that it or they desire to offer or
cause to be offered for public sale at least thirty percent (30%) of the
Registrable Shares, the Company will so notify all holders of Registrable
Shares, including all holders who have a right to acquire Registrable Shares.
Upon written request of any holder given within fifteen (15) days after the
receipt by such holder from the Company of such notification, the Company will
use its best efforts to cause such of the Registrable Shares as may be requested
by any holder thereof (including the holder or holders giving the initial notice
of intent to offer) to be registered under the Securities Act as expeditiously
as possible on Form S-1 or Form SB-2 or their respective successor registration
statement forms. The Company shall not be required to effect more than two
registrations pursuant to this Section 5.02 (providing the offering is
consummated). If the Company determines to include shares to be sold by it or by
other selling shareholders in any registration request pursuant to this Section
5.02, such registration shall be deemed to have been a "piggy back" registration
under Section 5.01, and not a "demand" registration under this Section 5.02 if
the holders of Registrable Shares are unable to include in any such registration
statement at least eighty-five percent (85%) of the Registrable Shares initially
requested for inclusion in such registration statement. The Company shall not be
required to effect a registration pursuant to this Section 5.02 unless the
minimum market value of any offering and registration of Registrable Shares made
pursuant thereto is at least $3,000,000, before calculation of underwriting
discounts and commissions. The holders of Registrable Shares may not exercise
their rights under this Section 5.02 until the earlier to occur of (i)
thirty-six (36) months following the date of the Closing or (ii) 180 days after
the effectiveness of any registration statement covering the Initial Public
Offering. No request for registration under this Section 5.02 may be made within
the one hundred and eighty day period after the effective date of a registration
statement filed by the Company or for a period of sixty (60) days while the
Company is actively in the process of preparing a registration statement. The
Company shall have the right to delay any registration under this section for up
to 90 days if the Company's Board of Directors reasonably determines such delay
is necessary in view of the Company's current circumstances.
- 20 -
<PAGE> 21
5.03. REGISTRATIONS ON FORMS S-2 OR S-3. In addition to the rights
provided the holder of Registrable Shares in Sections 5.01 and 5.02 above, if
the registration of Registrable Shares under the Securities Act can be effected
on Forms S-2 or S-3 (or any similar form promulgated by the Commission), then
upon the written request of one or more holders of a majority of the Registrable
Shares, the Company will so notify each holder of Registrable Shares, including
each holder who has a right to acquire Registrable Shares, and then will, as
expeditiously as possible, use its best efforts to effect qualification and
registration under the Securities Act on Forms S-2 or S-3 of all or such portion
of the Registrable Shares as the holder or holders shall specify; provided,
however, the Company shall not be required to effect a registration pursuant to
this Section 5.03 unless the market value of the Registrable Shares to be sold
in any such registration shall be estimated to be at least $1,000,000 at the
time of filing such registration statement before calculation of underwriting
discounts and commissions, and further provided that the Company shall not be
required to effect more than two (2) registrations during any twelve (12) month
period pursuant to this Section 5.03 and six (6) registrations in the aggregate
under this Section 5.03. No request for registration under this Section 5.03 may
be made within the one hundred and eighty day period after the effective date of
a registration statement filed by the Company or for a period of sixty (60) days
while the Company is actively in the process of preparing a registration
statement.
5.04. EFFECTIVENESS. The Company will use its best efforts to maintain
the effectiveness for up to 90 days (or such shorter period of time as the
underwriters need to complete the distribution of the registered offering, or
six months in the case of any registration relating to Registrable Shares
pursuant to Section 5.02 or 5.03) of any registration statement pursuant to
which any of the Registrable Shares are being offered, and from time to time
will amend or supplement such registration statement and the prospectus
contained therein to the extent necessary to comply with the Securities Act and
any applicable state securities statute or regulation. The Company will also
provide each holder of Registrable Shares with as many copies of the prospectus
contained in any such registration statement as it may reasonably request. For a
period not to exceed 60 days, the Company shall not be obligated to prepare and
file, or be prevented from delaying or abandoning, a registration statement
pursuant to this Agreement at any time when the Company, in its good faith
judgment with advice of counsel, reasonably believes
(a) that the filing thereof at the time requested, or
the offering of Registrable Shares pursuant thereto, would materially
and adversely affect (a) a pending or scheduled public offering of the
Company's securities, (b) an acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction by or of the
Company, (c) pre-existing and continuing negotiations, discussions or
pending proposals with respect to any of the foregoing transactions, or
(d) the financial condition of the Company in view of the disclosure of
any pending or threatened litigation, claim, assessment or governmental
investigation which may be required thereby; and
(b) that the failure to disclose any material
information with respect to the foregoing would cause a violation of
the Securities Act or the Exchange Act.
- 21 -
<PAGE> 22
5.05. INDEMNIFICATION OF HOLDER OF REGISTRABLE SHARES. In the event
that the Company registers any of the Registrable Shares under the Securities
Act, the Company will indemnify and hold harmless each holder and each
underwriter of Registrable Shares (including their officers, directors,
affiliates and partners and including any broker or dealer through whom
Registrable Shares may be sold in such registration) and each Person, if any,
who controls such holder or any such underwriter within the meaning of Section
15 of the Securities Act from and against any and all losses, claims, damages,
expenses or liabilities, joint or several, to which they or any of them become
subject under the Securities Act, applicable state securities laws or under any
other statute or at common law or otherwise, as incurred, and, except as
hereinafter provided, will reimburse each such holder, each such underwriter and
each such controlling Person, if any, for any legal or other expenses reasonably
incurred by them or any of them in connection with investigating or defending
any actions whether or not resulting in any liability, as incurred, insofar as
such losses, claims, damages, expenses, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the registration statement, in any preliminary or amended
preliminary prospectus or in the final prospectus (or the registration statement
or prospectus as from time to time amended or supplemented by the Company) or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or any violation by the Company of any rule
or regulation promulgated under the Securities Act or any state securities laws
applicable to the Company and relating to action or inaction required of the
Company in connection with such registration, unless (i) such untrue statement
or alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary or amended preliminary prospectus or final
prospectus in reliance upon and in conformity with information furnished in
writing to the Company in connection therewith by any such holder of Registrable
Shares (in the case of indemnification of such holder), any such underwriter (in
the case of indemnification of such underwriter) or any such controlling Person
(in the case of indemnification of such controlling person) expressly for use
therein, or unless (ii) in the case of a sale directly by such holder of
Registrable Shares (including a sale of such Registrable Shares through any
underwriter retained by such holder of Registrable Shares to engage in a
distribution solely on behalf of such holder of Registrable Shares), such untrue
statement or alleged untrue statement or omission or alleged omission was
contained in a preliminary prospectus and corrected in a final or amended
prospectus copies of which were delivered to such holder of Registrable Shares
or such underwriter on a timely basis, and such holder of Registrable Shares
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.
Promptly after receipt by any holder of Registrable Shares, any
underwriter or any controlling Person of notice of the commencement of any
action in respect of which indemnity may be sought against the Company, such
holder of Registrable Shares, or such underwriter or such controlling person, as
the case may be, shall notify the Company in writing of the commencement thereof
(provided, that failure to so notify the Company shall not relieve the Company
from any liability it may have hereunder, except to the extent prejudiced by
such
- 22 -
<PAGE> 23
failure) and, subject to the provisions hereinafter stated, the Company shall be
entitled to assume the defense of such action (including the employment of
counsel, who shall be counsel reasonably satisfactory to such holder of
Registrable Shares, such underwriter or such controlling Person, as the case may
be) and the payment of expenses insofar as such action shall relate to any
alleged liability in respect of which indemnity may be sought against the
Company.
Such holder of Registrable Shares, any such underwriter or any such
controlling Person shall have the right to employ separate counsel in any such
action and to participate in the defense thereof but the fees and expenses of
such counsel subsequent to any assumption of the defense by the Company shall
not be at the expense of the Company unless the employment of such counsel has
been specifically authorized in writing by the Company; provided, however, that,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests
of the indemnifying party, the indemnified party shall have the right to select
a separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred. At any time, any holder of
Registrable Shares may select separate counsel and assume its own legal defense
with the expenses and fees of such separate counsel and other expenses related
to such separate counsel to be borne by such holder electing separate counsel.
The Company shall not be liable to indemnify any Person for any settlement of
any such action effected without the Company's written consent. The Company
shall not, except with the approval of each party being indemnified under this
Section 5.05, 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 the parties being so indemnified of a release from all
liability in respect to such claim or litigation.
In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which any holder of
Registrable Shares exercising rights under this Article V, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 5.05 but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that this Section 5.05
provides for indemnification in such case, then, the Company and such holder
will contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and of
the holder of Registrable Shares on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of the holder of Registrable Shares on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state
- 23 -
<PAGE> 24
a material fact relates to information supplied by the Company on the one hand
or by the holder of Registrable Shares on the other, and each party's relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission; provided, however, that, in any such case, (A) no
such holder will be required to contribute any amount in excess of the public
offering price of all such Registrable Shares offered by it pursuant to such
registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
The indemnities provided in this Section 5.05 shall survive the
transfer of any Registrable Shares by such holder.
5.06. INDEMNIFICATION OF COMPANY. In the event that the Company
registers any of the Registrable Shares under the Securities Act, each holder of
the Registrable Shares so registered will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed or
otherwise participated in the preparation of the registration statement, each
underwriter of the Registrable Shares so registered (including any broker or
dealer through whom such of the shares may be sold) and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act from
and against any and all losses, claims, damages, expenses or liabilities, joint
or several, to which they or any of them may become subject under the Securities
Act, applicable state securities laws or under any other statute or at common
law or otherwise, and, except as hereinafter provided, will reimburse the
Company and each such director, officer, underwriter or controlling Person for
any legal or other expenses reasonably incurred by them or any of them in
connection with investigating or defending any actions whether or not resulting
in any liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, in any
preliminary or amended preliminary prospectus or in the final prospectus (or in
the registration statement or prospectus as from time to time amended or
supplemented) or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, but only insofar as any
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company in connection therewith by such
holder of Registrable Shares expressly for use therein; provided, however, that
such holder's obligations hereunder shall be limited to an amount equal to the
proceeds received by such holder of Registrable Shares sold in such
registration.
Promptly after receipt of notice of the commencement of any action in
respect of which indemnity may be sought against such holder of Registrable
Shares, the Company shall notify such holder of Registrable Shares in writing of
the commencement thereof (provided, that failure to so notify such holder shall
not relieve such holder from any liability it may have hereunder, except to the
extent prejudiced by such failure), and such holder of Registrable Shares shall,
subject to the provisions hereinafter stated, be entitled to assume the defense
of such action (including the employment of counsel, who shall be counsel
reasonably satisfactory to the
- 24 -
<PAGE> 25
Company) and the payment of expenses insofar as such action shall relate to the
alleged liability in respect of which indemnity may be sought against such
holder of Registrable Shares. The Company and each such director, officer,
underwriter or controlling Person shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel subsequent to any assumption of the defense by
such holder of Registrable Shares shall not be at the expense of such holder of
Registrable Shares unless employment of such counsel has been specifically
authorized in writing by such holder of Registrable Shares. Such holder of
Registrable Shares shall not be liable to indemnify any Person for any
settlement of any such action effected without such holder's written consent.
In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which the Company, its
officers, directors or controlling persons ("Company Indemnitees") exercising
its rights under this Article V, makes a claim for indemnification pursuant to
this Section 5.06, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding that this
Section 5.06 provides for indemnification, in such case, then, the Company
Indemnitees and such holder will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from
others) in such proportion as is appropriate to reflect the relative fault of
the Company Indemnitees on the one hand and of the holder of Registrable Shares
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative fault of the Company Indemnitees on the
one hand and of the holder of Registrable Shares on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company Indemnitees on the
one hand or by the holder of Registrable Shares on the other, and each party's
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, however, that, in any such case,
(A) no such holder will be required to contribute any amount in excess of the
public offering price of all such Registrable Shares offered by it pursuant to
such registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
5.07. EXCHANGE ACT REGISTRATION. If the Company at any time shall list
any class of equity securities of the type which may be issued upon the
conversion of the Serial Preferred Stock on any national securities exchange and
shall register such class of equity securities under the Exchange Act, the
Company will, at its expense, simultaneously list on such exchange and maintain
such listing of, the Common Stock. If the Company becomes subject to the
reporting requirements of either Section 13 or Section 15(d) of the Exchange
Act, the Company will use its best efforts to timely file with the Commission
such information as the Commission may require under either of said Sections ;
and in such event, the Company shall use its best efforts to take all action as
may be required as a condition to the availability of Rule 144 or Rule 144A
- 25 -
<PAGE> 26
under the Securities Act (or any successor exemptive rule hereinafter in effect)
with respect to such Common Stock. The Company shall furnish to any holder of
Registrable Shares forthwith upon request (i) a written statement by the Company
as to its compliance with the reporting requirements of Rule 144, (ii) a copy of
the most recent annual or quarterly report of the Company as filed with the
Commission, and (iii) such other reports and documents as a holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a holder to sell any such Registrable Securities without
registration. After the occurrence of the Initial Public Offering, the Company
agrees to use its best efforts to facilitate and expedite transfers of the
Shares pursuant to Rule 144 under the Securities Act, which efforts shall
include timely notice to its transfer agent to expedite such transfers of
Shares.
5.08. SPECIFIC PERFORMANCE. The Company recognizes and agrees that the
holder of Registrable Shares will not have an adequate remedy if the Company
fails to comply with this Article V and that damages may not be readily
ascertainable, and the Company expressly agrees that, in the event of such
failure, it shall not oppose an application by the holder of Registrable Shares
or any other Person entitled to the benefits of this Article V requiring
specific performance of any and all provisions hereof or enjoining the Company
from continuing to commit any such breach of this Article V.
5.09. FURTHER OBLIGATIONS OF THE COMPANY. Whenever under the preceding
Sections of this Article V, the Company is required hereunder to register
Registrable Shares, it agrees that it shall also do the following:
(a) Furnish to each selling holder such copies of
each preliminary and final prospectus and such other documents as said
holder may reasonably request to facilitate the public offering of its
Registrable Shares;
(b) Use its best efforts to register or qualify the
Registrable Shares covered by said registration statement under the
applicable securities or "blue sky" laws of such jurisdictions as any
selling holder may reasonably request; provided, however, that the
Company shall not be obligated to qualify to do business in any
jurisdictions where it is not then so qualified or to take any action
which would subject it to the service of process in suits other than
those arising out of the offer or sale of the securities covered by the
registration statement in any jurisdiction where it is not then so
subject;
(c) Furnish to each selling holder a signed
counterpart, addressed to the selling holders, of
(i) opinions of counsel for the Company, dated
the effective date of the registration statement, and
covering such matters as are required by the
Securities Act and such matters as may reasonably be
requested by the underwriters, and
- 26 -
<PAGE> 27
(ii) "comfort" letters signed by the Company's
independent public accountants who have examined and
reported on the Company's financial statements
included in the registration statement, to the extent
permitted by the standards of the American Institute
of Certified Public Accountants, as the Company is
required to deliver or cause the delivery of to the
underwriters in an underwritten public offering of
securities;
(d) Permit each selling holder of Registrable Shares
who holds not less than 5% of the Registrable Shares or his counsel or
other representatives to inspect and copy such corporate documents and
records as may reasonably be requested by them, after reasonable
advance notice and without undue interference with the operation of the
Company's business;
(e) Furnish to each selling holder of Registrable
Shares a copy of all documents filed with and all correspondence from
or to the Commission in connection with any such offering of
securities;
(f) Cooperate with the underwriters with respect to
all road shows and other marketing activities as may be reasonably
requested by such underwriters;
(g) Use its best efforts to insure the obtaining of
all necessary approvals from the National Association of Securities
Dealers, Inc; and
(h) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earning
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first month after the
effective date of the registration statement covering the Initial
Public Offering, which earning statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder.
Whenever under the preceding Sections of this Article V the holders of
Registrable Shares are registering such shares pursuant to any registration
statement, each such holder agrees to (i) timely provide to the Company, at its
request, such information and materials as it may reasonably request in order to
effect the registration of such Registrable Shares, (ii) convert all shares of
Preferred Stock included in any registration statement to shares of Common
Stock, such conversion to be effective at the closing of such offering pursuant
to such registration statement, and (iii) if the offering is underwritten,
execute an underwriting agreement containing customary conditions.
5.10. EXPENSES. In the case of each registration effected under Section
5.01, 5.02 or 5.03, the Company shall bear all reasonable costs and expenses of
each such registration on behalf of the selling holders of Registrable Shares,
including, but not limited to, the Company's printing, legal and accounting fees
and expenses, Commission and NASD filing fees and "Blue
- 27 -
<PAGE> 28
Sky" fees and expenses and the reasonable fees and disbursements (such fees not
to exceed $25,000 for any registration) of one counsel for the selling holders
of Registrable Shares in connection with the registration of their Registrable
Shares; provided, however, that the Company shall have no obligation to pay or
otherwise bear any portion of the underwriters' commissions or discounts or
transfer taxes attributable to the Registrable Shares being offered and sold by
the holders of Registrable Shares, or the fees and expenses of more than one
counsel for the selling holders of Registrable Shares in connection with the
registration of the Registrable Shares. The Company shall pay all expenses of
the holders of the Registrable Shares in connection with any registration
initiated pursuant to this Article V which is withdrawn, delayed or abandoned by
the Company, except if such withdrawal, delay or abandonment is caused by the
fraud, material misstatement or omission of a material fact by a holder of
Registrable Shares to be included in such registration.
5.11. APPROVAL OF UNDERWRITER. Any managing underwriter engaged in any
registration made pursuant to Section 5.02 shall be a nationally recognized firm
requiring the approval in writing of the holders of 60% of the Registrable
Shares requesting such registration.
5.12. TRANSFERABILITY. For all purposes of Article V of this Agreement,
the holder of Registrable Shares shall include not only the Purchasers but also
(i) any assignee or transferee of the Registrable Shares who acquires the lesser
of (x) seven and one-half percent (7.5%) of the Registrable Shares or (y) all of
the Registrable Shares held by the Purchaser provided that the Purchaser holds
and transfers to the assignee or transferee at least three percent (3%) of the
Registrable Shares and who is not a competitor of the Company, or (ii) any
general or limited partner or any officer or director of any Purchaser or their
affiliates, including, but not limited to, their immediate family, irrevocable
trusts for estate planning purposes and personal representatives; provided,
however, that such assignee or transferee agrees in writing at the time it
acquires such shares to be bound by all of the provisions of this Agreement,
including, without limitation, Section 5.13 hereof.
5.13. "LOCK-UP" AGREEMENT. As long as such holder has any rights with
respect to registration of its Registrable Shares hereunder, each holder of
Registrable Shares shall agree, if so requested by the Company and an
underwriter of Common Stock or other securities of the Company, not to sell,
grant any option or right to buy or sell, or otherwise transfer or dispose of in
any manner, whether in privately-negotiated or open-market transactions, any
Common Stock or other securities of the Company held by it for up to a 180-day
period following the effective date of a registration statement filed pursuant
to any public offering (other than shares sold pursuant to such registration
statement), provided that:
(a) All holders of Registrable Shares, any other
security holders whose securities are included in such registration
statement, and all officers, directors and Key Employees of the Company
shall also enter into similar agreements.
- 28 -
<PAGE> 29
Such "lock-up" agreement shall be in writing and in form and substance
satisfactory to the Company and such underwriter. The Company may impose
stop-transfer instructions with respect to the Shares (or securities) subject to
the foregoing restrictions until the end of said 180-day period. No holder of
Registrable Shares shall be so restricted unless all holders are similarly and
proportionately restricted.
5.14. MERGERS, ETC. The Company shall not, directly or indirectly,
enter into any merger, consolidation or reorganization in which the Company
shall not be the surviving corporation unless the proposed surviving corporation
shall, prior to such merger, consolidation or reorganization, agree in writing
to assume the obligations of the Company under Article V of this Agreement, and
for that purpose references hereunder to Registrable Shares shall be deemed to
be references to the securities which the Purchasers would be entitled to
receive in exchange for Registrable Shares under any such merger, consolidation
or reorganization; provided, however, that the provisions of this Section 5.14
shall not apply in the event of any merger, consolidation, or reorganization in
which the Company is not the surviving corporation if all stockholders are
entitled to receive in exchange for their Registrable Shares consideration
consisting solely of (i) cash, (ii) securities of the acquiring corporation
which may be immediately sold to the public without registration under the
Securities Act, or (iii) securities of the acquiring corporation which the
acquiring corporation has agreed to register within 90 days of completion of the
transaction for resale to the public pursuant to the Securities Act.
5.15. TERMINATION; FURTHER REGISTRATION RIGHTS. Notwithstanding any
other term or provision of this Article V, at such time as any Purchaser or
transferee owning less than 2% of the outstanding Common Stock of the Company
(on an as-converted basis) is free to sell the Registrable Shares without
registration pursuant to Rule 144(k) of the Securities Act, all rights and
obligations of such Purchaser as to such Registrable Shares under Sections 5.01,
5.02 and 5.03 of this Article V shall terminate. The Company shall not grant to
any third party any registration rights so long as any of the registration
rights under this Agreement remains in effect without the consent of the holders
of 60% of the then outstanding Registrable Shares.
ARTICLE VI
RIGHT OF FIRST REFUSAL
The following provisions supersede and amend and restate in their
entirety the provisions regarding rights or first refusal set forth in Article
VI of the Series D Agreement. The Purchaser, in its capacity as Purchaser
hereunder and certain of the Purchasers in their capacity as holders of at least
60% of the outstanding shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock, hereby consent to
the amendment and restatement of such rights of first refusal and agree that the
following provisions shall supersede and amend and restate in their entirety the
provisions of Article VI of the Series D Agreement. In addition, the Purchasers,
in their capacity as holders of shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, hereby
consent to the transactions contemplated by this Agreement, and waive their
- 29 -
<PAGE> 30
respective rights to purchase shares of Series E Preferred Stock on the terms
set forth in this Agreement.
6.01. RIGHT OF FIRST REFUSAL. Before the Company shall issue, sell or
exchange, agree or obligate itself to issue, sell or exchange, or reserve or set
aside for issuance, sale or exchange, any (i) shares of Common Stock, (ii) any
other equity security of the Company, including without limitation, shares of
Preferred Stock, (iii) any convertible debt security of the Company, including
without limitation, any debt security which by its terms is convertible into or
exchangeable for any equity security of the Company, (iv) any security of the
Company that is a combination of debt and equity, or (v) any option, warrant or
other right to subscribe for, purchase or otherwise acquire any interest
relating to such equity or debt security of the Company, the Company shall, in
each case, first offer to sell such securities (the "Offered Securities") to
those Purchasers then holding capital stock of the Company as follows: The
Company shall offer to sell to each Purchaser (a) that portion of the Offered
Securities as the number of shares of Preferred Stock (on an as-converted basis)
and Conversion Shares then held by a Purchaser bears to the total number of
outstanding shares of capital stock of the Company including the shares issuable
upon conversion of the Preferred Stock (the "Basic Amount"), and (b) such
additional portion of the Offered Securities as such Purchaser shall indicate it
will purchase should the other Purchasers subscribe for less than their Basic
Amounts (the "Undersubscription Amount"), at a price and on such other terms as
shall have been specified by the Company in writing delivered to the Purchasers
(the "Offer"), which Offer by its terms shall remain open and irrevocable for a
period of twenty (20) days from receipt of the Offer. This right of first
refusal shall only apply to Purchasers who hold at least 5% of the then total
outstanding shares of Preferred Stock or Conversion Shares, to the Company
Friends provided that they continue to own the shares of Preferred Stock owned
by them after giving effect to the transactions contemplated by this Agreement
and to the Bessemer Purchasers holding in the aggregate at least 5% of the then
outstanding shares of Preferred Stock or Conversion Shares.
6.02. NOTICE OF ACCEPTANCE. Notice of each Purchaser's intention to
accept, in whole or in part, any Offer made pursuant to Section 6.01 shall be
evidenced by a writing signed by such Purchaser and delivered to the Company
prior to the end of the 20-day period of such offer, setting forth such of the
Purchaser's Basic Amount as such Purchaser elects to purchase and, if such
Purchaser shall elect to purchase all of its Basic Amount, such
Undersubscription Amount as such Purchaser shall elect to purchase (the "Notice
of Acceptance"). If the Basic Amounts subscribed for by all Purchasers are less
than the total Offered Securities, then each Purchaser who has set forth
Undersubscription Amounts in its Notice of Acceptance shall purchase, in
addition to the Basic Amounts subscribed for, all Undersubscription Amounts it
has subscribed for; provided, however, that should the Undersubscription Amounts
subscribed for exceed the difference between the Offered Securities and the
Basic Amounts subscribed for (the "Available Undersubscription Amount"), each
Purchaser who has subscribed for any Undersubscription Amount shall purchase
only that portion of the Available Undersubscription Amount as the
Undersubscription Amount subscribed for by such Purchaser bears to the total
Undersubscription Amounts subscribed for by all Purchasers, subject to rounding
by the Board of Directors to the extent it reasonably deems necessary.
- 30 -
<PAGE> 31
6.03. CONDITIONS TO ACCEPTANCES AND PURCHASE.
(a) PERMITTED SALES OF REFUSED SECURITIES. In the
event that Notices of Acceptance are not given by the Purchasers in
respect of all the Offered Securities, the Company shall have ninety
(90) days from the end of said 20-day period to sell any such Offered
Securities as to which a Notice of Acceptance has not been given by the
Purchasers (the "Refused Securities") to the Person or Persons
specified in the Offer, but only for cash and otherwise in all respects
upon terms and conditions, including, without limitation, unit price
and interest rates, which are no more favorable, in the aggregate, to
such other Person or Persons or less favorable to the Company than
those set forth in the Offer.
(b) REDUCTION IN AMOUNT OF OFFERED SECURITIES. In the
event the Company shall propose to sell less than all of the Refused
Securities (any such sale to be in the manner and on the terms
specified in Section 6.03(a) above), then each Purchaser shall reduce
the number of shares or other units of the Offered Securities specified
in its respective Notices of Acceptance to an amount which shall be not
less than the amount of the Offered Securities which the Purchaser
elected to purchase pursuant to Section 6.02 multiplied by a fraction,
(i) the numerator of which shall be the amount of Offered Securities
which the Company actually proposes to sell, and (ii) the denominator
of which shall be the amount of all Offered Securities. In the event
that any Purchaser so elects to reduce the number or amount of Offered
Securities specified in its respective Notices of Acceptance, the
Company may not sell or otherwise dispose of more than the reduced
amount of the Offered Securities until such securities have again been
offered to the Purchasers in accordance with Section 6.01.
(c) CLOSING. Upon the closing, which shall include
full payment to the Company, of the sale to such other Person or
Persons of all or less than all the Refused Securities, the Purchasers
shall purchase from the Company, and the Company shall sell to the
Purchasers, the number of Offered Securities specified in the Notices
of Acceptance, as reduced pursuant to Section 6.03(b) if the Purchasers
have so elected, upon the terms and conditions specified in the Offer.
The purchase by the Purchasers of any Offered Securities is subject in
all cases to the preparation, execution and delivery by the Company and
the Purchasers of a purchase agreement relating to such Offered
Securities in a customary form reasonably satisfactory in form and
substance to the Purchasers and their respective counsel.
6.04. FURTHER SALE. In each case, any Offered Securities not purchased
by the Purchasers or other Person or Persons in accordance with Section 6.03 may
not be sold or otherwise disposed of until they are again offered to the
Purchasers under the procedures specified in Sections 6.01, 6.02 and 6.03.
- 31 -
<PAGE> 32
6.05. TERMINATION AND WAIVER OF RIGHT OF FIRST REFUSAL. The rights of
the Purchasers under this Article VI may be waived only upon the prior written
consent of the holders of 60% of the outstanding shares of Serial Preferred
Stock and shall terminate immediately prior to the effectiveness of the
registration statement with respect to the Initial Public Offering, but
expressly conditioned on the consummation of the Initial Public Offering.
6.06. EXCEPTION. The rights of the Purchasers under this Article VI
shall not apply to:
(a) Common Stock issued as a stock dividend to
holders of Common Stock or upon any subdivision or combination of
shares of Common Stock;
(b) Preferred Stock issued as a dividend to holders
of Preferred Stock upon any subdivision or combination of shares of
Preferred Stock;
(c) Conversion Shares;
(d) up to 3,000,000 shares of Common Stock, or
options or warrants exercisable therefor (including 2,200,000 granted
prior to the date hereof), issued on or after the date hereof to
directors, officers, employees or consultants of the Company and any
Subsidiary (including members of the Scientific Advisory Board)
pursuant to any qualified or non-qualified stock option plan or
agreement, employee stock ownership plan, employee benefit plan, stock
purchase agreement, stock plan, stock restriction agreement, or
consulting agreement or such other options, warrants, equity
arrangements, agreements or plans approved by two-thirds of the members
of the Board of Directors of the Company (including a majority of the
Investor Directors);
(e) up to 177,083 shares of Series A Preferred Stock
issued pursuant to the Comdisco Leasing Warrants, and shares of Common
Stock issued upon conversion of such shares; or
(f) shares of capital stock or options or warrants
therefor, to be issued to equipment leasing organizations in connection
with any equipment leasing arrangements to which the Company is a party
and which have been approved by the Board of Directors including a
majority of the Investor Directors; or
(g) shares of capital stock issued in connection with
a merger or acquisition approved by the Board of Directors including a
majority of the Investor Directors; or
(h) up to 4,896,335 shares of Common Stock to be
issued pursuant to warrants held by PerSeptive Biosystems, Inc.
- 32 -
<PAGE> 33
Each of the foregoing numbers shall be subject to equitable adjustment
in the event of any stock dividend, stock split, combination, reorganization,
recapitalization, reclassification or other similar event.
In addition to amendments pursuant to Section 8.02, the provisions
regarding Notice of Offer, Notice of Acceptance and all other provisions
provided for in Section 6.01 through 6.03 and 6.06 may be waived or amended by
those Purchasers holding at least 60% of the outstanding shares of Serial
Preferred Stock who have elected to exercise their rights under this Article VI
to participate in any financing with respect to a transaction effected under
this Article for the purpose of effecting a transaction on a more expeditious
basis.
ARTICLE VII
DEFINITIONS AND ACCOUNTING TERMS
7.01. CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"ACCREDITED INVESTOR" shall have the meaning assigned to that
term in Rule 501 under the Securities Act.
"AGREEMENT" means this Series E Preferred Stock Purchase
Agreement as from time to time amended and in effect between the parties,
including all Exhibits hereto.
"BASIC AMOUNT" shall have the meaning assigned to that term in
Section 6.01.
"BESSEMER PURCHASERS" shall mean those Purchasers (as defined in
Article IV) other than Technology Leaders L.P., Technology Leaders Offshore
C.V., Bessemer Venture Partners III L.P., Morgan Holland Fund II L.P., Gilde
Investment Fund B.V., Comdisco, Inc., Wyeth-Ayerst Laboratories and the Company
Friends.
"BOARD OF DIRECTORS" means the board of directors of the Company
as constituted from time to time.
"CLOSING" shall have the meaning assigned to that term in Section
1.03.
"COMMISSION" shall mean the Securities and Exchange Commission or
any other federal agency then administering the Securities Act or Exchange Act.
"COMMON STOCK" includes (a) the Company's Common Stock, $.001 par
value, as authorized on the date of this Agreement, (b) any other capital stock
of any class or classes (however designated) (except for Preferred Stock) of the
Company, authorized on or after the date hereof, the holders of which shall have
the right, without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the payment
- 33 -
<PAGE> 34
of dividends and distributions on any shares entitled to preference, and the
holders of which shall ordinarily, in the absence of contingencies or in the
absence of any provision to the contrary in the Company's Restated Certificate
of Incorporation, be entitled to vote for the election of directors of the
Company (even though the right so to vote has been suspended by the happening of
such a contingency or provision), and (c) any other securities into which or for
which any of the securities described in (a) or (b) may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.
"COMPANY" means ChemGenics Pharmaceuticals Inc., a Delaware
corporation, and its successors and assigns.
"COMPANY FRIENDS" means Barry A. Berkowitz, Robert W. Morgan,
Gary Takata and J. Robert Scott, Inc. in their capacity as Purchasers under this
Agreement.
"CONSOLIDATED" and "CONSOLIDATING" when used with reference to
any term defined herein mean that term as applied to the accounts of the Company
and its Subsidiaries consolidated in accordance with generally accepted
accounting principles consistently applied throughout reporting periods.
"CONVERSION SHARES" shall have the meaning assigned to that
term in Section 1.02 of this Agreement (except as otherwise provided in Article
IV hereto).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission (or of any other Federal agency then administering the Exchange Act)
thereunder, all as the same shall be in effect at the time.
"INDEBTEDNESS" means (i) any liability for borrowed money or
evidenced by a note or similar obligation given in connection with the
acquisition of any property or other assets (other than trade accounts payable
incurred in the ordinary course of business); (ii) all guaranties, endorsements
and other contingent obligations, in respect of Indebtedness of others, whether
or not the same are or should be reflected in the Company's balance sheet (or
the notes thereto), except guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business, and (iii) the present value of any lease payments due under leases
required to be capitalized in accordance with applicable Statements of Financial
Accounting Standards, determined by discounting all such payments at the
interest rate determined in accordance with applicable Statements of Financial
Accounting Standards.
- 34 -
<PAGE> 35
"INITIAL PUBLIC OFFERING" means the first underwritten public
offering of Common Stock of the Company and offered on a "firm commitment" basis
pursuant to an offering registered under the Securities Act with the Commission
on Form S-1, SB-2, Form S-18 or their then equivalents.
"INTELLECTUAL PROPERTY RIGHTS" means any and all, whether
domestic or foreign, patents, patent applications, patent rights, trade secrets,
confidential business information, formula, biological or chemical processes,
compounds, cell lines, fungi, yeast, laboratory notebooks, algorithms,
copyrights, mask works, claims of infringement against third parties, licenses,
permits, license rights to or of technologies, contract rights with employees,
consultants or third parties, trademarks, trademark rights, inventions and
discoveries, and other such rights generally classified as intangible,
intellectual property assets in accordance with generally accepted accounting
principles.
"INVESTOR DIRECTORS" means those directors of the Company who
are representatives of the holders of Serial Preferred Stock.
"KEY EMPLOYEE" means and includes the Chairman, President,
Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, any
Vice President or Director of any functional area such as research and
development, engineering, technology, sales and marketing, finance and
administration or any other individual so designated by the Board of Directors
of the Company or by including a majority of the Investor Directors.
"NOTICE OF ACCEPTANCE" shall have the meaning assigned to that
term in Section 6.02.
"OFFER" shall have the meaning assigned to that term in
Section 6.01.
"OFFERED SECURITIES" shall have the meaning assigned to that
term in Section 6.01.
"PERSON" means an individual, corporation, partnership, joint
venture, trust, university, or unincorporated organization, or a government or
any agency or political subdivision thereof.
"PREFERRED STOCK" shall have the meaning assigned to that term
in Section 3.13.
"PURCHASER" and "PURCHASERS" shall have the meaning assigned
to that term in Section 1.01 of this Agreement (except as otherwise provided in
Article IV hereto) and shall include the original Purchasers and also any
permitted transferee.
"QUALIFIED PUBLIC OFFERING" means a fully underwritten, firm
commitment public offering pursuant to an effective registration under the
Securities Act covering the offer and sale by the Company of its Common Stock in
which the aggregate gross proceeds to the Company exceed $9,000,000 and in which
the price per share of such Common Stock equals or exceeds
- 35 -
<PAGE> 36
$5.00 (such price subject to equitable adjustment in the event of any stock
split, stock dividend, combination, reorganization, reclassification or other
similar event).
"REFUSED SECURITIES" shall have the meaning assigned to that
term in Section 6.03.
"REGISTRABLE SHARES" shall mean and include (i) the Conversion
Shares; (ii) shares of Common Stock which are or may be acquired by any
Purchaser upon conversion of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock currently held by the
Purchasers (as defined in Article IV) and (iii) the shares of capital stock of
the Company acquired by the Purchasers (as defined in Article IV) pursuant to
Article VI hereof or any shares of capital stock of the Company acquired after
the date hereof by any such Purchaser, including shares of Common Stock issuable
on the conversion of other securities acquired by the Purchasers pursuant to
Article VI hereof or otherwise; provided, however, that shares of Common Stock
which are Registrable Shares shall cease to be Registrable Shares upon the
consummation of any sale pursuant to a registration statement, Section 4(1) of
the Securities Act or Rule 144 under the Securities Act or upon any transfer
other than as permitted under Section 5.12 hereof. 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 the
Conversion Shares (as defined in Article IV) even if such conversion has not yet
been effected.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
(or of any other Federal agency then administering the Securities Act)
thereunder, all as the same shall be in effect at the time.
"SERIAL PREFERRED STOCK" means the Series A Preferred Stock,
the Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock and the Series E Preferred Stock, voting together as a single
class.
"SERIES A AND B AGREEMENT" mean the Series A and Series B
Preferred Stock Purchase Agreement, dated as of January 11, 1994, between the
Company and certain stockholders of the Company.
"SERIES C AGREEMENT" means the Series C Preferred Stock
Purchase Agreement, dated July 27, 1994, between the Company and certain
stockholders of the Company.
"SERIES D AGREEMENT" means the Series D Preferred Stock
Purchase Agreement, dated February 9, 1995, between the Company and certain
stockholders of the Company.
"SERIES A PREFERRED STOCK" shall have the meaning assigned to
that term in Section 3.13.
- 36 -
<PAGE> 37
"SERIES B PREFERRED STOCK" shall have the meaning assigned to
that term in Section 3.13.
"SERIES C PREFERRED STOCK" shall have the meaning assigned to
that term in Section 3.13.
"SERIES D PREFERRED STOCK" shall have the meaning assigned to
that term in Section 3.13.
"SERIES E PREFERRED SHARES" shall have the meaning assigned to
that term in Section 1.02.
"SHARES" means, collectively, the Series E Preferred Shares
and the Conversion Shares (except as otherwise provided in Article IV hereto).
"SUBSIDIARY" or "SUBSIDIARIES" means any Person of which the
Company and/or any of its other Subsidiaries (as herein defined) directly or
indirectly owns at the time at least fifty percent (50%) of the outstanding
voting shares of every class of such corporation or trust other than directors'
qualifying shares.
"UNDERSUBSCRIPTION AMOUNT" shall have the meaning assigned to
that term in Section 6.01.
"VOTING AND CO-SALE AGREEMENT" shall mean the Second Amended
and Restated Voting and Co-Sale Agreement, dated as of February 9, 1995, between
the Company and certain shareholders.
7.02. ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistently applied, and all financial data submitted pursuant to
this Agreement shall be prepared in accordance with such principles.
ARTICLE VIII
MISCELLANEOUS
8.01. NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part
of any party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
- 37 -
<PAGE> 38
8.02. AMENDMENTS, WAIVERS AND CONSENTS. Any provision in the Agreement
to the contrary notwithstanding, and except as hereinafter provided, changes in,
termination or amendments of or additions to this Agreement may be made, and
compliance with any covenant or provision set forth herein may be omitted or
waived, if the Company (i) shall obtain consent thereto in writing from the
holder or holders of at least 60% of the outstanding shares of Series E
Preferred Stock and/or Conversion Shares issued upon conversion thereof and (ii)
shall deliver copies of such consent in writing to any holders who did not
execute such consent; provided, (a) that only the consent in writing from the
Company and the holder or holders of at least 60% of the outstanding shares of
Serial Preferred Stock and/or shares of Common Stock issued upon conversion
thereof (including, but not limited to, the Conversion Shares) shall be required
to change, terminate, amend or add to the provisions of Articles IV, V and VI
hereto unless the effect of such change, termination, amendment or addition is
adverse to the rights of holders of Series E Preferred Stock in a manner
different from the effect on the holders of other series of Serial Preferred
Stock and (b) that no change, amendment or addition to the provisions of Section
5.13 hereto shall be binding upon any holder of shares of Serial Preferred Stock
and/or shares of Common Stock issued upon conversion thereof (including, but not
limited to, the Conversion Shares), unless such holder consents in writing to
such change, amendment or addition and, provided, further, that no consents
shall be effective to reduce the percentage in interest of the Shares the
consent of the holders of which is required under this Section 8.02. Any waiver
or consent may be given subject to satisfaction of conditions stated therein and
any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
8.03. ADDRESSES FOR NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing (including telegraphic
communication) and delivered to each applicable party at the address set forth
on page 1 hereof or at such other address as to which such party may inform the
other parties in writing in compliance with the terms of this Section.
If to any other holder of the Shares: at such holder's address
for notice as set forth in the register maintained by the Company, or at such
other address as shall be designated by such Person in a written notice to the
other parties complying as to delivery with the terms of this Section.
All such notices, requests, demands and other communications
shall be considered to be delivered when actually delivered at the foregoing
address of the party to be notified.
8.04. COSTS, EXPENSES AND TAXES. The Company shall pay any and all
stamp, or other similar taxes payable or determined to be payable in connection
with the execution and delivery of this Agreement, the issuance of the Series E
Preferred Shares and the other instruments and documents to be delivered
hereunder or thereunder, and agrees to save the Purchasers harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes.
- 38 -
<PAGE> 39
8.05. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Company and the Purchaser and their respective
heirs, successors and assigns, except that the Company shall not have the right
to delegate its obligations hereunder or to assign its rights hereunder or any
interest herein without the prior written consent of the holders of at least 60%
of the outstanding shares of Series E Preferred Stock except that with respect
to Articles IV, V and VI, the prior written consent only of the holders of at
least 60% of the shares of Serial Preferred Stock shall be required, unless such
delegation or assignment affects the rights of holders of Series E Preferred
Stock in a manner different from the effect on the rights of holders of other
series of Series Preferred Stock.
8.06. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in this Agreement, the Shares, or any other instrument or
document delivered in connection herewith or therewith, shall survive the
execution and delivery hereof or thereof.
8.07. PRIOR AGREEMENTS. This Agreement, the terms of the Series E
Preferred Stock, and the Standstill Agreement executed and delivered herewith
constitute the entire agreement between the parties with respect to the purchase
and sale of the Shares and supersede any prior understandings or agreements
concerning the subject matter hereof, other than the Series A and B Agreement,
the Series C Agreement, the Series D Agreement, the terms of the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock and
the Series D Preferred Stock, each of which, except as modified by the terms of
this Agreement, shall remain in full force and effect.
8.08. SEVERABILITY. The provisions of this Agreement the Series A and B
Agreement, the Series C Agreement, the Series D Agreement and the terms of the
Preferred Stock are severable and, in the event that any court of competent
jurisdiction shall determine that any one or more of the provisions or part of a
provision contained in this Agreement, the Series A and B Agreement, the Series
C Agreement, the Series D Agreement or the terms of the Preferred Stock shall,
for any reason, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision or part of a provision of this Agreement, the Series A and B
Agreement, the Series C Agreement, the Series D Agreement, or the terms of the
Preferred Stock; but this Agreement, the Series A and B Agreement, the Series C
Agreement, the Series D Agreement, and the terms of the Preferred Stock shall be
reformed and construed as if such invalid or illegal or unenforceable provision,
or part of a provision, had never been contained herein, and such provisions or
part reformed so that it would be valid, legal and enforceable to the maximum
extent possible.
8.09. CONFIDENTIALITY. For a period of five (5) years from receipt
thereof, the 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 the Purchaser pursuant
to this Agreement, or pursuant to visitation or inspection rights granted
hereunder, unless such information (i) is known, or until such information
becomes known through no fault of the Purchaser, to the public, (ii) was in the
possession of the Purchaser prior to disclosure
- 39 -
<PAGE> 40
by the Company, (iii) is disclosed to Purchaser by a third party without
violation of a confidentiality obligation, or (iv) is independently developed by
the Purchaser by individuals having no access to such information of the
Company; provided, however, that the Purchaser may disclose such information (i)
on a confidential basis to its attorneys, accountants, consultants and other
professionals to the extent necessary to obtain their services in connection
with its investment in the Company, (ii) to any prospective purchaser of any
Series E Preferred Shares or Conversion Shares from the Purchaser as long as
such prospective purchaser agrees in writing to be bound by the provisions of
this Section 8.09, (iii) to any affiliate or partner of the Purchaser on a "need
to know basis" and (iv) as required by applicable law. If the Purchaser is
required in any legal or administrative or other governmental proceeding to
disclose any of the information, the Purchaser shall give the Company prompt
notice of the pending requirement and use its reasonable efforts to provide the
Company an opportunity to obtain protective provisions against further
disclosure.
8.10. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with the General Corporation Law of the State of Delaware as to
matters within the scope thereof and as to all other matters shall be governed
by and construed in accordance with the internal laws of The Commonwealth of
Massachusetts, without giving effect to choice of laws provisions.
8.11. HEADINGS. Article, section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
8.12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.13. FURTHER ASSURANCES. From and after the date of this Agreement,
upon the request of any Purchaser or the Company, the Company and the Purchasers
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the Shares.
* * * * * * *
[Remainder of Page Intentionally Left Blank]
[Signature Pages Immediately Follow]
- 40 -
<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have caused this Series E
Preferred Stock Purchase Agreement to be executed as of the date first above
written.
CHEMGENICS PHARMACEUTICALS INC.
By:_________________________________
President
AMERICAN HOME PRODUCTS CORPORATION
ACTING THROUGH ITS
WYETH-AYERST LABORATORIES DIVISION
By:_________________________________
Title:______________________________
TECHNOLOGY LEADERS L.P.
By: Technology Leaders Management,
Inc. (General Partner)
By:_________________________________
Title:
TECHNOLOGY LEADERS OFFSHORE C.V.
By: Technology Leaders Management,
Inc. (General Partner)
By:________________________________
Title:
BESSEMER VENTURE PARTNERS III L.P.
By:________________________________
General Partner
- 41 -
<PAGE> 42
MORGAN HOLLAND FUND II L.P.
By: its general partner,
Morgan Holland Partners II L.P.
By:________________________________
Name: Edwin M. Kania, Jr.
Title: General Partner
GILDE INVESTMENT FUND B.V.
___________________________________
Name: Edwin M. Kania Jr. general
partner of Morgan Holland
Partners II L.P.
COMDISCO, INC.
By:________________________________
Title:
PFIZER, INC.
By:________________________________
Title:_____________________________
J. ROBERT SCOTT, INC.
By:________________________________
Title:_____________________________
- 42 -
<PAGE> 43
BRIMSTONE ISLAND CO., L.P.
By:*______________________________
Title:
*_________________________________
William T. Burgin
*_________________________________
Neill H. Brownstein
*_________________________________
Robert H. Buescher
*_________________________________
G. Felda Hardymon
*_________________________________
Christopher Gabrieli
*_________________________________
Michael I. Barach
*_________________________________
Daniel S. Martin
*_________________________________
Richard R. Davis
*_________________________________
Barbara M. Henegan
- 43 -
<PAGE> 44
*_________________________________
Thomas F. Ruhm
*_________________________________
Ward W. Woods, Jr.
*_________________________________
Geoffrey L. Berger
*_________________________________
Robert D. Lindsay
*_________________________________
Michael S. Mathews
*_________________________________
Robert H. Buescher, signing
as Attorney-in-Fact for each
of the individuals beside whose
name an asterisk appears
__________________________________
Barry A. Berkowitz
__________________________________
Robert Morgan
__________________________________
Gary Takata
[NOTE: A, B, C AND D PURCHASERS, EVEN THOSE WHO ARE NOT
PURCHASERS UNDER THIS AGREEMENT, SHOULD SIGN THIS AGREEMENT
WITH RESPECT TO ARTICLES IV, V AND VI OF THIS AGREEMENT.]
- 44 -
<PAGE> 1
EXHIBIT 10.7
CHEMGENICS PHARMACEUTICALS INC.
STANDSTILL AGREEMENT
THIS AGREEMENT, dated as of November 27, 1996, is between American Home
Products Corporation ("AHPC"), a Delaware Corporation, acting through its
Wyeth-Ayerst Laboratories Division, ("Wyeth-Ayerst"), and ChemGenics
Pharmaceuticals Inc., a Delaware corporation (the "Company").
WITNESSETH:
WHEREAS on the date hereof, AHPC is acquiring 833,334 shares of Series
E Convertible Preferred Stock, par value $0.01 per share, of the Company (the
"Series E Preferred Stock") for investment purposes pursuant to the terms of a
Series E Preferred Stock Purchase Agreement, dated as of the date hereof (the
"Series E Agreement") and will, subject to certain conditions, purchase
additional shares of Series E Preferred Stock and/or shares of the Company's
Common Stock, $0.001 par value per share ("Common Stock");
WHEREAS the execution and delivery of this Agreement by AHPC is a
condition precedent to the Company's obligations under the Series E Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration the receipt of which is hereby acknowledged, the parties,
intending to be legally bound hereby, agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
AHPC hereby represents and warrants to the Company as follows:
(a) AHPC has full legal right, power and authority to enter
into and perform this Agreement. The execution and delivery of this Agreement by
AHPC and the consummation by AHPC of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on behalf of AHPC. This
Agreement is a valid and binding obligation of AHPC enforceable against AHPC in
accordance with its terms, except that such enforcement may be subject to (i)
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
<PAGE> 2
(b) Neither the execution and delivery of this Agreement by
AHPC nor the consummation by AHPC of the transactions contemplated hereby
conflicts with or constitutes a violation of or default under the charter or
by-laws of AHPC, any statute, law, regulation, order or decree applicable to
AHPC, or any contract, commitment, agreement, arrangement or restriction of any
kind to which AHPC is a party or by which AHPC is bound.
ARTICLE II
LIMITATIONS AND RESTRICTIONS
Section 2.01 Restrictions on Certain Actions by AHPC. Except pursuant
to the terms of the Series E Agreement or upon conversion of the Series E
Preferred Stock into Common Stock, AHPC agrees that during the term of this
Agreement, AHPC will not, nor will it permit any of its affiliates or associates
(as such terms are used in Rule 12b-2 of the Securities Exchange Act of 1934
(the "Exchange Act"), these terms to have such meaning throughout this
Agreement), from and after the date that such person becomes an affiliate or
associate unless in any such case specifically invited to do so by the Board of
Directors of the Company, to:
(a) acquire, announce an intention to acquire, offer or
propose to acquire, solicit an offer to sell or agree to acquire by purchase, by
gift, by joining a partnership, limited partnership, syndicate or other "group"
(as such term is used in Section 13(d)(3) of the Exchange Act, such term to have
such meaning throughout this Agreement) or otherwise, any (i) material assets,
businesses or properties of the Company other than in the ordinary course of
business or pursuant to the express terms of the Collaborative Research and
License Agreement dated the date hereof between Wyeth-Ayerst and the Company, or
(ii) shares of Common Stock, any additional shares of the Series E Preferred
Stock or any other Company securities convertible into, exchangeable for or
exercisable for Common Stock (all such securities, collectively, "Voting
Securities") except that the foregoing shall not apply to purchases (i) made by
certain affiliates of AHPC on their own accounts without the consent or approval
of AHPC which are majority owned by AHPC but AHPC is under certain contractual
restrictions preventing control of such affiliates or (ii) directly or
indirectly, which would not otherwise increase AHPC's ownership position in the
Company by more than 2% in addition to purchases under the Series E Agreement.
(b) participate in the formation or encourage the formation
of, or join or in any way participate with, any "person" (as such term is used
in Section 13(d)(3) of the Exchange Act and Section 2(2) of the Securities Act
of 1933 (the "Securities Act"), such term to have such meaning throughout this
Agreement) which owns or seeks to acquire beneficial ownership of any Voting
Securities;
- 2 -
<PAGE> 3
(c) solicit, or participate in any "solicitation" of "proxies"
or become a "participant" in any "election contest" (as such terms are defined
or used in Regulation 14A under the Exchange Act, these terms to have such
meaning throughout this Agreement) with respect to the Company;
(d) initiate, propose or otherwise solicit stockholders for
the approval of one or more stockholder proposals with respect to the Company or
induce any other person to initiate any stockholder proposal;
(e) seek to place any representative on the Board of Directors
of the Company, or seek to have called any meeting of the stockholders of the
Company;
(f) deposit any Voting Securities in a voting trust or, unless
specifically contemplated by this Agreement or the Series E Agreement subject
them to a voting agreement or other agreement or arrangement with respect to the
voting of such Voting Securities; or
(g) otherwise act, alone or in concert with others, to seek to
control the management, Board of Directors, policies or affairs of the Company
or solicit, propose, seek to effect or negotiate with any other person
(including, without limitation, the Company) with respect to any form of
business combination or other extraordinary transaction with the Company or any
of its subsidiaries or any restructuring, recapitalization, similar transaction
or other transaction not in the ordinary course of business with respect to the
Company or any of its subsidiaries, solicit, make or propose or negotiate with
any other person with respect to, or announce an intent to make, any tender
offer or exchange offer for any securities of the Company or any of its
subsidiaries, or publicly disclose an intent, purpose, plan or proposal with
respect to the Company, any of its subsidiaries or any securities or assets of
the Company or any of its subsidiaries, that would violate the provisions of
this Section 2.01, or assist, participate in, facilitate or solicit any effort
or attempt by any person to do so or seek to do any of the foregoing.
ARTICLE III
MISCELLANEOUS
Section 3.01 Interpretation. For all purposes of this Agreement, the
term Company Common Stock shall include any securities of any issuer entitled to
vote generally for the election of directors of such issuer which securities the
holders of the Company Common Stock shall have received or as a matter of right
be entitled to receive as a result of (i) any capital reorganization or
reclassification of the capital stock of the Company, (ii) any consolidation,
merger or share exchange of the Company with or into another corporation or
(iii) any sale of all or substantially all the assets of the Company.
- 3 -
<PAGE> 4
Section 3.02 Enforcement. (a) AHPC acknowledges and agrees that
irreparable damage would occur if any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
materially breached. Accordingly, the Company will be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
its provisions in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which the Company
may be entitled at law or in equity.
(b) No failure or delay on the part of the Company in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.
Section 3.03 Entire Agreement. This Agreement, together with the
applicable provisions of the Series E Agreement, constitutes the entire
understanding of the parties with respect to the transactions contemplated by
them. This Agreement may be amended only by an agreement in writing executed by
all the parties.
Section 3.04 Severability. If any provision of this Agreement is held
by a court of competent jurisdiction to be unenforceable, the remaining
provisions shall remain in full force and effect. It is declared to be the
intention of the parties that they would have executed the remaining provisions
without including any that may be declared unenforceable.
Section 3.05 Headings. Descriptive headings are for convenience only
and will not control or affect the meaning or construction of any provision of
this Agreement.
Section 3.06 Counterparts. This Agreement may be executed in two or
more counterparts, and each such executed counterpart will be an original
instrument.
Section 3.07 Notices. All notices, consents, requests, instructions,
approvals and other communications provided for in this Agreement and all legal
process in regard to this Agreement will be validly given, made or served, if in
writing and delivered personally or by courier service providing evidence of
receipt, by telecopy (except for legal process) or sent by registered or
certified mail, return receipt requested postage paid.
if to the Company: ChemGenics Pharmaceuticals Inc.
One Kendall Square
Building 300, Third Floor
Cambridge, MA 02139
Fax: (617) 225-2997
Attention: Chief Executive Officer
- 4 -
<PAGE> 5
with a copy to: Jeffrey M. Wiesen, Esq.
Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Fax: (617) 542-2241
if to AHPC: American Home Products Corporation
Five Giralda Farms
Madison, NJ 07940
Attention: Senior Vice President and
General Counsel
or to such other address or telecopy number as any party may, from time to time,
designate in a written notice given in a like manner. Notice by telecopy shall
be deemed delivered on the day telephone confirmation of receipt is given.
Section 3.08 Successors and Assigns. This Agreement shall bind the
successors and assigns of the parties, and inure to the benefit of any successor
or assign of any of the parties; provided, however, that no party may assign
this Agreement without the other party's prior written consent.
Section 3.09 Term. The term of this Agreement shall be the period from
the date first referred to above through and including November 26, 2006.
Section 3.10 Governing Law. This Agreement will be governed by and
construed and enforced in accordance with the law of The Commonwealth of
Massachusetts, without giving effect to the conflict of laws principles thereof.
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first referred to above.
CHEMGENICS PHARMACEUTICALS INC.
By:__________________________
AMERICAN HOME PRODUCTS
CORPORATION
ACTING THROUGH ITS WYETH-AYERST
LABORATORIES DIVISION
By:__________________________
- 6 -
<PAGE> 1
EXHIBIT 10.8
CHEMGENICS PHARMACEUTICALS INC. HAS OMITTED FROM THIS PART OF EXHIBIT 10.8
PORTIONS OF THE AGREEMENT FOR WHICH CHEMGENICS PHARMACEUTICALS INC. HAS
REQUESTED CONFIDENTIAL TREATMENT FROM THE SECURITIES AND EXCHANGE COMMISSION.
THE PORTIONS OF THE AGREEMENT FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED ARE MARKED "[ ]" AND SUCH CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
COLLABORATIVE RESEARCH AGREEMENT
This COLLABORATIVE RESEARCH AGREEMENT is entered into as of January 1, 1995 by
and between PFIZER INC ("Pfizer"), a Delaware corporation, having an office at
235 East 42nd Street, New York, New York 10017 and its Affiliates, and MYCO
PHARMACEUTICALS INC. ("Myco") a Delaware corporation, having an office at 1
Kendall Square, Building 300, Boston, Massachusetts 02139.
WHEREAS, Myco has expertise in drug discovery [
]; and
WHEREAS, Pfizer has the capability to undertake research for the discovery and
evaluation of agents for treatment of disease and also the capability for
clinical analysis, manufacturing and marketing with respect to [ ]
in animals and humans;
NOW, THEREFORE, the parties agree as follows:
1. Definitions
Whenever used in this Agreement, the terms defined in this Section 1 shall have
the meanings specified.
1.1 "Affiliate" means any corporation or other legal entity owning,
directly or indirectly, fifty percent (50%) or more of the voting capital shares
or similar voting securities of Pfizer or Myco; any corporation or other legal
entity fifty percent (50%) or more of the voting capital shares or similar
voting rights of which is owned, directly or indirectly, by Pfizer or Myco or
any corporation or other legal entity fifty percent (50%) or more of the voting
capital shares or similar voting rights of which is owned, directly or
indirectly, by a corporation or other legal entity which owns, directly or
indirectly, fifty percent (50%) or more of the voting capital shares or similar
voting securities of Pfizer or Myco.
<PAGE> 2
- 2 -
1.2 "Annual Commitment" means the maximum amount to be paid to Myco by
Pfizer to fund the Research Program for any Commitment Year.
1.3 "Annual Research Plan" means the written plan describing the
research and budgets in the Area to be carried out during each Commitment Year
by Pfizer and Myco pursuant to this Agreement. Each Annual Research Plan will be
attached to and made a part of this Agreement as Exhibit A.
1.4 "Research Program" is the collaborative research program in the
Area conducted by Pfizer and Myco pursuant to the Annual Research Plans in
effect during the Contract Period.
1.5 "Effective Date" is January 1, 1995.
1.6 "Contract Period" means the period beginning on the Effective Date
and ending on the date on which this Agreement terminates.
1.7 "Commitment Year" means a twelve-month period commencing on each
anniversary of the Effective Date.
1.8 "Area" means research or development with respect to drugs [
].
1.9 "Profile of Activity" means each of those profiles in the Area set
forth in detail in Exhibits B1, B2 and B3.
1.10 "Animal Health" means the treatment of [
].
1.11 "Technology" means and includes all materials, technology,
technical information, know-how, expertise and trade secrets within the Area.
1.12 "Myco Non-Program Technology" means Technology that is or was:
(a) developed by employees of or consultants to Myco
alone or jointly with third parties prior to the
Effective Date or since that date in the course of
activities not described in an Annual Research Plan;
or
<PAGE> 3
- 3 -
(b) acquired, under terms which permit the sublicensing
thereof, by purchase, license, assignment or other
means from third parties by Myco prior to the
Effective Date or since that date that would not be
otherwise part of Myco Program Technology.
For the avoidance of doubt, it is agreed that Myco's fungi collections
and other Myco drug sources, whether developed prior to or after the Effective
Date, shall be Myco Non-Program Technology.
1.13 "Myco Program Technology" means Technology that is or was
developed by employees of or consultants to Myco during the Contract Period in
the course of activities described in a then applicable Annual Research Plan.
1.14 "Joint Technology" means Technology that is or was:
(a) developed by employees of or consultants to Pfizer
and Myco jointly with each other during the Contract
Period in the course of activities described in an
Annual Research Plan; or
(b) acquired, under terms which permit the sublicensing
thereof, by purchase, license, assignment or other
means from third parties by Myco or Pfizer during the
Contract Period pursuant to an Annual Research Plan
for inclusion in the Research Program.
1.15 "Pfizer Non-Program Technology" means Technology that is or was:
(a) developed by employees of or consultants to Pfizer
alone or jointly with third parties prior to the
Effective Date or since that date in the course of
activities not described in an Annual Research Plan;
or
(b) acquired by purchase, license, assignment or to other
means from third parties by Pfizer prior to the
Effective Date or since that date that would
<PAGE> 4
- 4 -
not be otherwise part of Pfizer Program Technology.
For the avoidance of doubt, it is agreed that Pfizer's fungi
collections and other Pfizer drug sources, whether developed prior to or after
the Effective Date, shall be Pfizer Non-Program Technology.
1.16 "Pfizer Program Technology" means Technology that is or was
developed by employees of or consultants to Pfizer during the Contract Period in
the course of activities described in a then applicable Annual Research Plan.
1.17 "Myco Confidential Information" means all information about any
element of the Myco or Joint Technology which is disclosed by Myco to Pfizer and
designated "Confidential" in writing by Myco at the time of disclosure to Pfizer
to the extent that such information as of the date of disclosure to Pfizer is
not (i) demonstrably known to Pfizer other than by virtue of a prior
confidential disclosure to Pfizer by Myco; or (ii) disclosed in published
literature, or otherwise generally known to the public through no fault or
omission of Pfizer; or (iii) obtained from a third party free from any
obligation of confidentiality to Myco.
1.18 "Pfizer Confidential Information" means all information about any
element of Pfizer or Joint Technology which is disclosed by Pfizer to Myco and
designated "Confidential" in writing by Pfizer at the time of disclosure to Myco
to the extent that such information as of the date of disclosure to Myco is not
(i) demonstrably known to Myco other than by virtue of a prior confidential
disclosure to Myco by Pfizer or (ii) disclosed in published literature, or
otherwise generally known to the public through no fault or omission of Myco; or
(iii) obtained from a third party free from any obligation of confidentiality to
Pfizer.
1.19 "Patent Rights" shall mean the issued patents and pending patent
applications, whether domestic or foreign, claiming all inventions deemed
patentable within Pfizer Program
<PAGE> 5
- 5 -
Technology, Myco Program Technology, Myco Non-Program Technology and Joint
Technology, including all continuations, continuations-in-part, divisions, and
renewals, all letters patent granted thereon, and all reissues, reexaminations
and extensions thereof.
1.20 "Product" means [ ] the manufacture, use or
sale of which in the absence of a license (i) would infringe a claim of an
issued patent within Patent Rights, (ii) would be covered by a claim of a
pending patent application within Patent Rights, or (iii) the discovery,
development, manufacture, use or sale of which employs or employed Myco Program
Technology, Myco Non-Program Technology or Joint Technology but which is not
within clauses (i) or (ii) of this Section 1.20, but which is within the claims
of a patent or patent application owned or controlled by Pfizer.
1.20 "Cost/person year" means [ ].
2. Collaborative Research Program
2.1.1 Purpose Myco and Pfizer shall conduct the Research Program
throughout the Contract Period. The objective of the Research Program is to
discover and develop Products.
2.1.2 Annual Research Plan. The Annual Research Plan for the first
Commitment Year is described in the attached Exhibit A. For each Commitment year
after the first, the Annual Research Plan shall be prepared by the Research
Committee for submission to and approval by Pfizer and Myco no later than [_____
___________________] days before the end of the prior Commitment Year. Each new
Annual Research Plan for each succeeding Commitment Year shall be appended to
Exhibit A and made part of this Agreement.
2.1.3 Screening. Both parties may conduct screening, as further
described in Exhibit A, at their own sites with respect to both natural products
and compound files; provided, however, Myco's screening activities shall be
consistent with its ability to perform its assigned tasks under the then
applicable Annual Research Plan.
<PAGE> 6
- 6 -
2.1.4 Exclusivity.
2.1.4(i) Area. Exhibit C sets forth a list of all research
sponsored by Myco at other institutions and all research at Myco being sponsored
by other institutions. Except as set forth in Exhibit C, Myco agrees that during
the Contract Period, neither Myco nor any of its Affiliates shall engage in any
research sponsored by any third party in the Area without Pfizer's consent. If
Myco develops or obtains rights to any prospective [ ] or candidate
Product for human use during the Contract Period outside of its activities in
the Research Program, or if Myco has rights or acquires rights from any third
party during the Contract Period to any prospective Antifungal Drug outside of
the Research Program, including any sponsored research noted in Exhibit C, then
such prospective Antifungal Drug shall be subject to the option set forth in
Article II of the License Agreement on the same basis as any prospective
Antifungal Drug developed in the Research Program.
2.1.4(ii) Animal Health. If Myco decides to seek a partner for
the discovery and development of Animal Health drugs, it will notify Pfizer of
that decision before notifying any third party. Pfizer shall have [
] to determine whether to enter negotiations of any Animal Health research
collaboration with Myco. If the [ ] period expires without notice from
Pfizer or if, during the [ ] period Pfizer notifies Myco that Pfizer
will not begin such negotiation, Myco is free to enter an Animal Health research
collaboration with any third party without further obligation to Pfizer;
provided, however, Pfizer Program Technology, whenever acquired, shall remain
subject to the confidentiality provisions of this agreement and shall not be
divulged to any third party Animal Health collaborator. If, on the other hand,
Pfizer agrees during the [ ] period to attempt to negotiate an Animal
Health research collaboration agreement with Myco, the parties shall negotiate
in good faith for a period of [ ] to
conclude such agreement. If the parties fail to
<PAGE> 7
- 7 -
reach agreement during such [ ] period, the negotiations
shall terminate, at the request of either party, and neither party shall have
any further obligation to the other with respect to Animal Health. If the
parties reach agreement, they shall each have an additional [ ] days to
obtain the approval of their respective managements. If either party fails to
obtain such approval, the agreement reached shall be null and void without
further action of either party and neither party shall have any further
obligation to the other with respect to Animal Health. If negotiations fail or
either party fails to obtain management approval, Pfizer Program Technology
shall be treated in the manner set forth above as if Pfizer had declined to
negotiate.
2.2 Research Committee
2.2.1 Purpose. Pfizer and Myco shall establish a Research
Committee (the "Research Committee");
(a) to review and evaluate progress under each Annual Research
Plan;
(b) to prepare the Annual Research Plan for each Commitment
Year; and
(c) to coordinate and monitor publication of research results
obtained from and the exchange of information and materials that relate to the
Research Program. (This function shall survive the termination of this
Agreement.)
2.2 Membership. Pfizer and Myco each shall appoint, in its sole
discretion, three members to the Research Committee.
Substitutes may be appointed at any time.
The members initially shall be:
Pfizer Appointees: [ ]
[ ]
[ ]
Myco Appointees: [ ]
[ ]
[ ]
<PAGE> 8
- 8 -
2.2.3 Chair. The Research Committee shall be chaired by two
co-chairpersons, one appointed by Pfizer and the other appointed by Myco.
2.2.4 Meetings. The Research Committee shall meet at least quarterly,
at places and on dates selected by each party in turn. Representatives of Pfizer
or Myco or both, in addition to members of the Research Committee, may attend
such meetings at the invitation of either party.
2.2.5 Minutes. The Research Committee shall keep accurate minutes of
its deliberations which record all proposed decisions and all actions
recommended or taken. Drafts of the minutes shall be delivered to all Research
Committee members within five (5) business days after each meeting. The party
hosting the meeting shall be responsible for the preparation and circulation of
the draft minutes. Draft minutes shall be edited by the co-chairpersons and
shall be issued in final form only with their approval and agreement.
2.2.6 Decisions. All technical decisions of the Research Committee
shall be made by majority of the members.
2.2.7 Expenses. Pfizer and Myco shall each bear all expenses of their
respective members related to their participation on the Research Committee.
2.3 Reports and Materials.
2.3.1 Reports. During the Contract Period, Pfizer and Myco
each shall furnish to the Research Committee summary written reports within [
] after the end of each three month period commencing on the
Effective Date, describing its progress under the Annual Research Plan.
2.3.2 Materials. Myco and Pfizer shall, during the Contract Period, as
a matter of course as described in the Annual Research Plan, or upon each
other's written or oral request, furnish to each other samples of biochemical,
biological or synthetic chemical materials which are part of Pfizer Non-Program
Technology, Pfizer Program Technology, Myco Program Technology, Myco Non-Program
Technology or Joint Technology and which are
<PAGE> 9
- 9 -
necessary for each party to carry out its responsibilities under the Annual
Research Plan. To the extent that the quantities of materials requested by
either party exceed the quantities set forth in the Annual Research Plan, the
requesting party shall reimburse the other party for the reasonable costs of
such materials if they are furnished.
2.4 Laboratory Facilities and Personnel. Myco and Pfizer shall each
provide suitable laboratory facilities, equipment and personnel for the work to
be done respectively by Myco and Pfizer in carrying out the Research Program.
2.5 Diligent Efforts Pfizer and Myco each shall use reasonably diligent
efforts to achieve the objectives of the Research Program. Myco will use
reasonably diligent efforts to achieve the assigned tasks listed in each Annual
Research Plan and Pfizer will use reasonably diligent efforts to assist Myco in
each Annual Research Plan in the pursuit of Myco's assigned tasks, to pursue
Pfizer's assigned tasks listed in each Annual Research Plan and to establish a
development plan for the Products.
3. Funding the Research Program.
3.1 The Annual Commitment for each Commitment Year is as follows:
COMMITMENT YEAR ANNUAL COMMITMENT
[ ]
[ ]
[ ]
[ ]
3.2 Payments by Pfizer to cover Myco's research costs (the "Funding
Payments") shall not exceed the Annual Commitment in any Commitment Year. The
amount of Funding Payments for each quarter shall be the number of person months
expended in the Research Program in the quarter multiplied by one-twelfth of the
Cost/person year for the applicable Commitment Year.
3.2.1 All Funding Payments shall be made quarterly in advance
for research and development activities scheduled to
<PAGE> 10
- 10 -
be performed by Myco during any three (3) month quarterly period, against Myco's
invoice for such three (3) month quarterly period. Adjustments as necessary to
reflect the person months by employee actually expended by Myco shall be made
within ninety (90) days of the end of each three (3) month quarterly period and
shall be reflected in Myco's next invoice.
3.2.2 Each Funding Payment shall be paid by Pfizer in U.S.
currency by check or by other mutually materially acceptable means on the first
day of the quarter or thirty (30) days after receipt of invoice, whichever is
later.
3.2.3 Myco shall keep for three (3) years from the conclusion
of each Commitment Year complete and accurate records of its expenditures of
effort and use of personnel on the Research Program. The records shall conform
to good accounting principles as applied to a similar company situated. Pfizer
shall have the right at its own expense during the term of this Agreement and
during the subsequent three-year period to appoint an independent certified
public accountant reasonably acceptable to Myco to inspect said records to
verify the accuracy of such expenditures of effort, pursuant to each Annual
Research Plan. Upon reasonable notice by Pfizer, Myco shall make its records
available for inspection by the independent certified public accountant during
regular business hours at the place or places where such records are customarily
kept, to verify the accuracy of the expenditures of effort. This right of
inspection shall not be exercised more than once in any calendar year and not
more than once with respect to records covering any specific period of time. All
information concerning such expenditures of effort, and all information learned
in the course of any audit or inspection, shall be deemed to be Myco
Confidential Information, except to the extent that it is necessary for Pfizer
to reveal the information in order to enforce any rights it may have pursuant to
this Agreement or if disclosure is required by law. The failure of Pfizer to
request verification of any expenditures of effort before or during the
three-year period shall be
<PAGE> 11
- 11 -
considered acceptance by Pfizer of the accuracy of such expenditures, and Myco
shall have no obligation to maintain any records pertaining to such report or
statement beyond such three- year period. The results of such inspection, if
any, shall be binding on the parties.
4. Treatment of Confidential Information
4.1 Confidentiality
4.1.1 Pfizer and Myco each recognize that the other's
Confidential Information constitutes highly valuable, confidential information.
Subject to the terms and conditions of the License Option, License and Royalty
Agreement between the parties of even date with this Agreement (the "License
Agreement"), the obligations set forth in Section 4.3 and the publication rights
set forth in Section 4.2, Pfizer and Myco each agree that during the term of
this Agreement and for five (5) years thereafter, it will keep confidential, and
will cause its Affiliates to keep confidential, all Myco Confidential
Information or Pfizer Confidential Information, as the case may be, that is
disclosed to it, or to any of its Affiliates pursuant to this Agreement. Neither
Pfizer nor Myco or any of their respective Affiliates shall use such
Confidential Information of the other party except as expressly permitted in
this Agreement or the License Agreement.
4.1.2 Pfizer and Myco each agree that any disclosure of the other's
Confidential Information to any officer, employee, consultant or agent of the
other party or of any of its Affiliates shall be made only if and to the extent
necessary to carry out its responsibilities under this Agreement and shall be
limited to the maximum extent possible consistent with such responsibilities.
Pfizer and Myco each agree not to disclose the other's Confidential Information
to any third parties under any circumstance without written permission from the
other party, except as expressly permitted by this Agreement or the License
Agreement. Each party shall take such action, and shall cause its Affiliates to
take such action, to preserve the
<PAGE> 12
- 12 -
confidentiality of each other's Confidential Information as it would customarily
take to preserve the confidentiality of its own Confidential Information. Each
party, upon the other's request, will return all the Confidential Information
disclosed to it by the other party pursuant to this Agreement, including all
copies and extracts of documents, within sixty (60) days of the request upon the
termination of this Agreement except for one (1) copy which may be kept for the
purpose of complying with continuing obligations under this Agreement.
4.1.3 Myco and Pfizer each represent that all of its employees, and any
consultants to such party, participating in the Research Program who shall have
access to Pfizer Program Technology, Pfizer Non-Program Technology, Myco Program
Technology or Myco Non-Program Technology or Joint Technology and Pfizer
Confidential Information and Myco Confidential Information are bound by
agreement to maintain such information in confidence.
4.2 Publication. Notwithstanding any matter set forth with
particularity in this Agreement to the contrary, results obtained in the course
of the Research Program may be submitted for publication following scientific
review by the Research Committee and subsequent approval by Myco's and Pfizer's
managements, which approval shall not be unreasonably withheld. After receipt of
the proposed publication by both Pfizer's and Myco's managements written
approval or disapproval shall be provided within [ ] days for a
manuscript, within [ ] days for an abstract for presentation at, or
inclusion in the proceedings of a scientific meeting, and within [ ]
days for a transcript of an oral presentation to be given at a scientific
meeting.
4.3 Publicity. Except as required by law, neither party may disclose
the terms of this Agreement nor the research described in it without the written
consent of the other party, which consent shall not be unreasonably withheld;
provided, however, the parties, upon the execution of this Agreement, will
<PAGE> 13
- 13 -
agree to a news release for publication in general circulation periodicals. The
parties may disclose the existence of this Agreement without the consent of the
other and, once a particular item has been generally disclosed, may further
disclose such item without the consent of the other.
4.4 Disclosure of Inventions. Each party shall promptly inform the
other about all inventions in the Area that are conceived, made or developed in
the course of carrying out the Research Program by employees of, or consultants
to, either of them solely, or jointly with employees of, or consultants to the
other.
4.5 Restrictions on Transferring Materials. Pfizer and Myco recognize
that the biological, synthetic chemical and biochemical materials which are part
of Pfizer Non-Program Technology, Pfizer Program Technology, Myco Program
Technology, Myco Non-Program Technology or Joint Technology, (collectively, the
"Materials") represent valuable commercial assets. Therefore, throughout the
Contract Period and the Option Period under the License Agreement and for [ ]
years thereafter, Myco and Pfizer agree not to transfer such materials which are
part of Joint Technology or the other party's Technology to any third party,
unless prior written consent for any such transfer is obtained from the other
party, except as expressly permitted in this Agreement or the License Agreement.
Furthermore, throughout the Contract Period and the Option Period under the
License Agreement Myco agrees not to transfer such materials which are part of
the Myco Non-Program Technology or Myco Program Technology to any third party
for use in the Area.
5. Intellectual Property Rights. The following provisions relate to
rights in the intellectual property developed by Myco or Pfizer, or both, during
the course of carrying out the Research Program.
5.1 Ownership. (i) All Myco Confidential Information and Myco Program
Technology and Myco Non-Program Technology shall be owned by Myco. All Pfizer
Confidential Information and Pfizer
<PAGE> 14
- 14 -
Program Technology and Pfizer Non-Program Technology shall be owned by Pfizer.
All Joint Technology shall be owned jointly by Myco and Pfizer. All Patent
Rights shall be assigned to and owned by Myco, Pfizer or jointly by both of them
in accordance with their inventorship.
(ii) [
]
(iii) Notwithstanding anything herein or in the License
Agreement to the contrary, Myco shall have the unrestricted right to use and
license its [ ] and other drug sources and its screening technology
for any purpose outside the Area.
5.2 Grants of Research Licenses. Myco and Pfizer each grants to the
other a nonexclusive, irrevocable, worldwide, royalty-free, perpetual license,
including the right to grant sublicenses to Affiliates, (i) to make and use
Confidential Information, Technology and Patent Rights for all research purposes
under the Research Program and (ii) [
]
5.3 Rights outside the Area and Animal Health. Subject to any agreement
between the parties for Animal Health entered into pursuant to Section
2.1.4(ii), Myco shall have the exclusive right to use and license Myco
Non-Program Technology and Myco
<PAGE> 15
- 15 -
Program Technology (and all related Materials and Confidential Information)
outside the Area.
5.4 Joint Technology outside the Area. [
]
6.1 Filing, Prosecution and Maintenance by Myco. With respect to Patent
Rights claiming Myco Program Technology and Myco Non-Program Technology ("Myco
Patent Rights"), Myco shall have the exclusive right and obligation:
(a) to file applications for letters patent on any invention
deemed patentable included in Myco Program Technology and Myco Non-Program
Technology; provided, however, that Myco shall consult with Pfizer regarding
countries in which such patent applications should be filed and shall file
patent applications in those countries where Pfizer requests that Myco file such
applications; and, further provided, that Myco, at its option and expense, may
file in countries where Pfizer does not request that Myco file such
applications;
<PAGE> 16
- 16 -
(b) to take reasonable steps to prosecute all pending and new
patent applications included within Myco Patent Rights;
(c) to respond to oppositions, nullity actions,
re-examinations, revocation actions and similar proceedings filed by third
parties against the grant of letters patent for such applications;
(d) to maintain in force any letters patent included in Myco
Patent Rights by duly filing all necessary papers and paying any fees required
by the patent laws of the particular county in which such letters patent were
granted; and
(e) to cooperate fully with, and take all necessary actions
requested by, Pfizer in connection with the preparation, prosecution and
maintenance of any letters patent included in Myco Patent Rights.
Myco shall notify Pfizer in a timely manner of any decision to abandon
a pending patent application or an issued patent included in Myco Patent Rights.
Thereafter, Pfizer shall have the option, at its expense, of continuing to
prosecute any such pending patent application or of keeping the issued patent in
force.
6.1.1 Copies of Documents. Myco shall provide to Pfizer copies
of all patent applications that are part of Myco Patent Rights prior to filing,
for the purpose of obtaining substantive comment of Pfizer patent counsel. For
the same purpose Myco shall also provide to Pfizer copies of all documents
relating to prosecution of all such patent applications in a timely manner for
such review and shall provide to Pfizer every six (6) months a report detailing
their status.
6.1.2 Reimbursement of Costs for Filing Prosecuting and
Maintaining Patent Rights. Within thirty (30) days of receipt of invoices from
Myco, Pfizer shall reimburse Myco for all the costs of filing, prosecuting,
responding to opposition and the like and maintaining patent applications and
patents (including without limitation costs incurred by Myco with respect to
Patent Rights licensed to Myco by third parties) in countries
<PAGE> 17
- 17 -
where Pfizer requests that patent applications be filed, prosecuted and
maintained. Such reimbursement shall be in addition to Funding Payments.
However, Pfizer may, upon sixty (60) days notice, request that Myco discontinue
filing or prosecution of patent applications in any country and discontinue
reimbursing Myco for the costs of filing, prosecuting, responding to opposition
and the like or maintaining such patent application or patent in any country.
Myco shall pay all costs in those countries in which Pfizer does not request
that Myco file, prosecute or maintain patent applications and patents, but in
which Myco, at its option, elects to do so.
6.1.3 Pfizer shall have the right to file on behalf of and as
an agent for Myco all applications and take all actions necessary to obtain
patent extensions pursuant to 35 USC Section 156 and foreign counterparts for
Myco or Joint Patent Rights described in this Section 6.1 licensed to Pfizer.
Myco agrees to sign, at Pfizer's expense, such further documents and take such
further actions as may be requested by Pfizer in this regard. If Pfizer
determines not to apply for any such extension, Pfizer shall so notify Myco at
least ninety (90) days prior to the deadline for such application, and Myco may
do so and Pfizer shall cooperate fully with Myco and provide all necessary
information within Pfizer's control to Myco for use therein.
6.2 Filing, Prosecution and Maintenance by Pfizer. With respect to
Patent Rights claiming Pfizer Technology ("Pfizer Patent Rights") and Patent
Rights claiming Joint Technology ("Joint Patent Rights"), Pfizer shall have
those rights and duties ascribed to Myco in Section 6.1.
6.3 Neither party may disclaim Patent Rights without the consent of the
other.
7. Acquisition of Rights from Third Parties. During the Contract Period, Myco
and Pfizer shall each promptly notify each other of any and all acquisitions
from third parties of technology or patents which may be useful in the Research
Program. Such acquired rights shall become part of the
<PAGE> 18
- 18 -
Confidential Information, Technology or Patent Rights, whichever is appropriate,
of the acquiring party or Joint Technology, as the case may be.
8. Other Agreements, Condition Precedent.
8.1 Concurrently with the execution of this Agreement, Myco and Pfizer
shall enter into the License Agreement appended to and made part of this
Agreement as Exhibit ____ and the Stock Purchase Agreement appended to and made
a part of this Agreement as Exhibit ____. This Agreement, the Stock Purchase
Agreement and the License Agreement are the sole agreements with respect to the
subject matter and supersede all other agreements and understandings between the
parties with respect to same.
9. Term, Termination and Disengagement.
9.1 Term. Unless sooner terminated or extended, this Agreement shall
expire on December 31, 1998.
9.2 Events of Termination. The following events shall constitute events
of termination ("Events of Termination"):
(a) any written representation or warranty by Myco or Pfizer,
or any of its officers, made under or in connection with this Agreement shall
prove to have been incorrect in any material respect when made.
(b) Myco or Pfizer shall fail in any material respect to
perform or observe any term, covenant or understanding contained in this
Agreement or in any of the other documents or instruments delivered pursuant to,
or concurrently with, this Agreement, and any such failure shall remain
unremedied for thirty (30) days after written notice to the failing party.
9.3 Termination.
9.3.1 Upon the occurrence of any Event of Termination, the
party not responsible may, by notice to the other party, terminate this
Agreement.
9.3.2 If Pfizer terminates this Agreement pursuant to Section
9.3.1, the License Agreement shall continue according to its terms. If Myco
terminates this Agreement pursuant to Section 9.3.1, the License Agreement shall
terminate immediately.
<PAGE> 19
- 19 -
9.4 Termination by Pfizer. After this Agreement has been in effect for
a period of [ ] months, during the next ensuring [ ],
Pfizer may by notice terminate this Agreement, with or without cause. If Pfizer
terminates this Agreement pursuant to this Section, it will make a termination
payment within [ ] days equal to the Funding Payments which would
otherwise have been due for the [ ] period from [
] and will retain all rights and duties set forth in the License
Agreement. If Pfizer does not elect to terminate this Agreement during the [
] period described in this Section, the Agreement will continue according
to its terms until its termination date.
9.5 Termination of this Agreement by either party, with or without
cause, will not terminate the licenses granted pursuant to Section 5.2.
9.6 Termination of this Agreement for any reason shall be without
prejudice to:
(a) the rights and obligations of the parties provided in
Section 4 and 12;
(b) Myco's right to receive all payments accrued under
Section 3; or
(c) any other remedies which either party may otherwise
have.
10. Representations and Warranties. Myco and Pfizer each represents and warrants
as follows:
10.1 It is a corporation duly organized, validly existing and is in
good standing under the laws of the State of Delaware and the State of Delaware,
respectively, is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the conduct of its business or the
ownership of its properties requires such qualification and has all requisite
power and authority, corporate or otherwise, to conduct its business as now
being conducted, to own, lease and operate its properties and to execute,
deliver and perform this Agreement.
<PAGE> 20
- 20 -
10.2 The execution, delivery and performance by it of this Agreement
have been duly authorized by all necessary corporate action and do not and will
not (a) require any consent or approval of its stockholders, (b) violate any
provision of any law, rule, regulations, order, writ, judgment, injunctions,
decree, determination or award presently in effect having applicability to it or
any provision of its certificate of incorporation or by-laws or (c) result in a
breach of or constitute a default under any material agreement, mortgage, lease,
license, permit or other instrument or obligation to which it is a party or by
which it or its properties may be bound or affected.
10.3 This Agreement is a legal, valid and binding obligation of it
enforceable against it in accordance with its terms and conditions, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws, from time to time in effect,
affecting creditor's rights generally.
10.4 It is not under any obligation to any person, or entity,
contractual or otherwise, that is conflicting or inconsistent in any respect
with the terms of this Agreement or that would impede the diligent and complete
fulfillment of its obligations.
10.5 It has good and marketable title to or valid leases or licenses
for, all of its properties, rights and assets necessary for the fulfillment of
its responsibilities under the Research Program, subject to no claim of any
third party other than the relevant lessors or licensors.
11. Covenants of Myco and Pfizer Other Than Reporting Requirements. Throughout
the Contract Period, Myco and Pfizer each shall
11.1 maintain and preserve its corporate existence, rights, franchises
and privileges in the jurisdiction of its incorporation, and qualify and remain
qualified as a foreign corporation in good standing in each jurisdiction in
which such
<PAGE> 21
- 21 -
qualification is from time to time necessary in order to carry out the Research
Program.
11.2 comply in all material respects with the requirements of all
applicable laws, rules, regulations and orders of any government authority to
the extent necessary to conduct the Research Program, except for those laws,
rules, regulations, and orders it may be contesting in good faith.
12. Indemnification.
12.1 Indemnification of Myco by Pfizer. Pfizer shall indemnify, defend
and hold harmless Myco and its directors, officers, employees, and agents and
their respective successors, heirs and assigns (the "Myco Indemnitees"), against
any liability, damage, loss or expense (including reasonable attorneys' fees and
expenses of litigation) incurred by or imposed upon the Myco Indemnitees, or any
one of them, in connection with any claims, suits, actions, demands or judgments
of third parties, including without limitation personal injury and product
liability matters (except in cases where such claims, suits, actions, demands or
judgments result from the material breach, negligence or willful misconduct on
the part of Myco), arising out of the production, manufacture, promotion, sale
or use by any person of any Product or Antifungal Drug which is manufactured or
sold by Pfizer or by an Affiliate, sublicensee, distributor or agent of Pfizer.
12.2 Indemnification of Pfizer by Myco. Myco shall indemnify, defend
and hold harmless Pfizer and its directors, officers, employees, and agents and
their respective successors, heirs and assigns (the "Pfizer Indemnitees"),
against any liability, damage, loss or expense (including reasonable attorneys'
fees and expenses of litigation) incurred by or imposed upon the Pfizer
Indemnitees, or any one of them, in connection with any claims, suits, actions,
demands or judgments of third parties, including without limitation claims of
suppliers and Myco employees (except in cases where such claims, suits, actions,
demands or judgments result from the material
<PAGE> 22
- 22 -
breach, negligence or willful misconduct on the part of Pfizer), arising out of
the activities of Myco in the performance of the Research Program.
12.3 The foregoing indemnification shall not apply if an Indemnitee
fails to give the indemnitor prompt notice of any claim it receives and such
failure materially prejudices the indemnitor with respect to any claim or action
to which a party's obligation pursuant to this Section applies. The indemnifying
party, in its sole discretion, shall choose legal counsel, shall control the
defense of such claim or action and shall have the right to settle same on such
terms and conditions it deems advisable. 13. Notices. All notices shall be in
writing mailed via certified mail, return receipt requested, courier, or
facsimile transmission addressed as follow, or to such other address as may be
designated from time to time:
If to Pfizer: To Pfizer at its address as set forth at
the beginning of this Agreement.
Attention: President, Central Research
with copy to: Office of the General
Counsel.
If to Myco: Myco at its address as set forth at the
beginning of this Agreement. Attention:
President
Notices shall be deemed given as of the date received.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
15. Miscellaneous.
15.1 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective legal representatives,
successors and permitted assigns.
15.2 Headings. Paragraph headings are inserted for convenience of
reference only and do not form a part of this Agreement.
<PAGE> 23
- 23 -
15.3 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original.
15.4 Amendment; Waiver; etc. This Agreement may be amended, modified,
superseded or canceled, and any of the terms may be waived, only by a written
instrument executed by each party or, in the case of waiver, by the party or
parties waiving compliance. The delay or failure of any party at any time or
times to require performance of any provisions shall in no manner affect the
rights at a later time to enforce the same. No waiver by any party of any
condition or of the breach of any term contained in this Agreement, whether by
conduct, or otherwise, in any one or more instances, shall be deemed to be, or
considered as, a further or continuing waiver of any such condition or of the
breach of such term or any other term of this Agreement.
15.5 No Third Party Beneficiaries. Except as set forth in Section 12
hereof, no third party including any employee of any party to this Agreement,
shall have or acquire any rights by reason of this Agreement. Nothing contained
in this Agreement shall be deemed to constitute the parties as agents for the
other or as partners with each other or any third party.
15.6 Assignment and Successors. This Agreement may not be assigned by
either party, except that each party may assign this Agreement and the rights
and interests of such party, in whole or in part, to any of its Affiliates, any
purchaser of all or substantially all of its assets or to any successor
corporation resulting from any merger or consolidation of such party with or
into such corporations.
15.7 Force Majeure. Neither Pfizer nor Myco shall be liable for failure
of or delay in performing obligations set forth in this Agreement, and neither
shall be deemed in breach of its obligations, if such failure or delay is due to
natural disasters or any causes reasonably beyond the control of Pfizer or Myco.
15.8 Severability. If any provision of this Agreement is or becomes
invalid or is ruled invalid by any court of competent
<PAGE> 24
- 24 -
jurisdiction or is deemed unenforceable; it is the intention of the parties that
the remainder of the Agreement shall not be affected. IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed by their duly authorized
representatives.
PFIZER INC.
By: ____________________
Title: _________________
Date: _________________
MYCO PHARMACEUTICALS INC.
By: ____________________
Title: _________________
Date: _________________
cc: Pfizer Inc, Legal Division, Groton, CT 06340
<PAGE> 1
EXHIBIT 10.9
CHEMGENICS PHARMACEUTICALS INC. HAS OMITTED FROM THIS PART OF EXHIBIT 10.9
PORTIONS OF THE AGREEMENT FOR WHICH CHEMGENICS PHARMACEUTICALS INC. HAS
REQUESTED CONFIDENTIAL TREATMENT FROM THE SECURITIES AND EXCHANGE COMMISSION.
THE PROTIONS OF THE AGREEMENT FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED ARE MARKED "[ ]" AND SUCH CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
LICENSE OPTION, LICENSE AND ROYALTY AGREEMENT
This LICENSE OPTION, LICENSE AND ROYALTY AGREEMENT is entered into as
of January 1, 1995 (the "Effective Date") by and between PFIZER INC. ("Pfizer"),
a Delaware corporation, having an office at 235 East 42nd Street, New York, New
York 10017 and its Affiliates and MYCO PHARMACEUTICALS INC. ("Myco"), a Delaware
corporation, having an office at 1 Kendall Square, Building 300, Boston,
Massachusetts 02139.
WHEREAS, Pfizer desires to obtain an option to an exclusive license to
Myco's right, title and interest in the Myco and Joint Patent Rights so that
Pfizer exclusively can manufacture, use or sell the Products; and
WHEREAS, Myco is willing to grant such license option;
Therefore, in consideration of the mutual covenants and promises set
forth in this Agreement, the parties agree as follows:
1. DEFINITIONS.
The capitalized terms used in this Agreement and not defined elsewhere
in it shall have the meanings specified for such terms in this Section 1 and in
the Research Agreement.
1.1 "RESEARCH AGREEMENT" means the Collaborative Research Agreement
between Pfizer and Myco effective January 1, 1995.
1.2 "NET SALES" means the gross amount invoiced by Pfizer or any
sublicensee of Pfizer for sales to a third party or parties of Products, less
normal and customary trade discounts actually allowed, rebates, returns,
credits, taxes the legal incidence of which is on the purchaser and separately
shown on Pfizer's or any sublicensee of Pfizer's invoices and transportation,
insurance and postage charges, if prepaid by Pfizer or any sublicensee of Pfizer
and billed on Pfizer's or any sublicensee of Pfizer's invoices as a separate
item.
1.3 "MAJOR MARKET" means [
].
<PAGE> 2
1.4 "LICENSED PRODUCT" means a Product for which Pfizer has
rights under a License pursuant to this Agreement.
2. TERM AND GRANT OF LICENSE OPTION, EXERCISE OF OPTION, TERM
AND GRANT OF LICENSE, RIGHTS AND OBLIGATIONS.
2.1 LICENSE OPTION GRANTED TO PFIZER UNDER THE PATENT
RIGHTS.
During the term of the Research Agreement and for [ ]
after its termination ("Option Term"), Myco grants to Pfizer an exclusive option
("Option") to an exclusive, worldwide license ("License") including the right to
grant sublicenses, to manufacture, use and sell each prospective Product
identified in the Research Program and each prospective [ ] developed by
Myco outside of its activities under the Research Program under all Myco's
right, title and interest in the Myco and Joint Patent Rights. Pfizer may
exercise the Option in accordance with the procedure set forth in Section 2.2
upon notice to Myco in a manner prescribed in Section 11.
2.2 PROCEDURE FOR EXERCISE OF OPTION.
2.2.1 Whenever Pfizer or Myco, individually or jointly,
identifies a compound in the course of the Research Program which it believes
may qualify as a candidate Product which satisfies a Profile of Activity, it
shall present the available information on the compound to the Research
Committee. The Research Committee shall review the data and determine whether it
believes the compound satisfies a Profile of Activity and is a bona fide
candidate for development as an [ ] and will so advise the parties
within [ ] days after the presentation of the data to it.
2.2.2 If the Research Committee determines that a compound
should be proposed as a candidate Product which satisfies a Profile of Activity
and is a bona fide candidate for development as an [ ], it shall so
notify the parties and shall issue a "Candidate Alert Notice," or equivalent, in
accordance with Pfizer's internal procedures. Pfizer shall then have
[ ] days to determine whether to exercise the Option
2
<PAGE> 3
for such candidate Product. If Pfizer exercises the Option for such candidate
Product, it will become a "Licensed Product" hereunder. If Pfizer does not
exercise the Option for such candidate Product, it shall nevertheless have the
right to reconsider such exercise and may exercise the Option for such candidate
Product at any time during the Option Term. If Pfizer does not exercise the
Option for such candidate Product during the Option Term, Myco will be free to
develop and commercialize such candidate Product itself or with third parties
after the expiration of the Option Term, if but only if Pfizer is not developing
or selling a Product with the same Profile of Activity pursuant to this
Agreement. If Myco commercializes such candidate Product, Myco shall be
obligated to pay a royalty to Pfizer with respect to commercial sales of such
Product, as set forth in Section 3.10. In such circumstances, Pfizer shall have
no rights to such candidate Product or any resulting Product.
2.3 TERM OF LICENSE.
Unless terminated earlier as provided below, if Pfizer
exercises the Option, the License for the Licensed Product in question shall
commence on the date of exercise and shall terminate on the date of the last to
expire of the Patent Rights.
2.4 PFIZER OBLIGATIONS.
During the term of any License:
2.4.1 Pfizer shall use reasonably diligent efforts to exploit
the Licensed Product to which such License applies commercially, including
conducting clinical trials and obtaining regulatory approvals. If Pfizer
determines to cease diligent efforts to exploit the Licensed Product, Pfizer
shall so notify Myco, whereupon Myco may terminate the License for such Licensed
Product in the manner (and with the consequences) set forth in Section 9 hereof.
2.4.2 If Pfizer grants a sublicense to a third party, Pfizer
shall guarantee that any such sublicensee fulfills all of Pfizer's obligations
under this Agreement; provided,
3
<PAGE> 4
however, that Pfizer shall not be relieved of its obligations pursuant to this
Agreement.
2.5 TECHNICAL ASSISTANCE.
During the term of any License, Myco shall provide Pfizer or
any sublicensee of Pfizer, at Pfizer's request and expense, any technical
assistance reasonably necessary to enable Pfizer or such sublicensee to
manufacture, use or sell each Licensed Product and to enjoy fully all rights
granted to Pfizer pursuant to this Agreement; provided, however, that Myco is
reasonably capable of providing that assistance.
2.6 NEGOTIATION OF MUTUAL OBLIGATIONS.
During the term of any License:
2.6.1 [
].
2.6.2 In general, Pfizer shall be responsible for the
manufacture of all Licensed Products; provided, however, that if (i) Myco
acquires the capacity or ability to manufacture or supply drug products by a
fermentation method consistent with FDA
4
<PAGE> 5
Drug Good Manufacturing Practices; and (ii) Pfizer is then manufacturing or
having manufactured a Licensed Product by a similar fermentation method, then
Pfizer will, in good faith, discuss with Myco, the manufacture by Myco of part
of Pfizer's requirements for such Product in the United Sates and elsewhere.
Pfizer shall have no obligation place an order with Myco for its US requirements
if Myco quotes a price more than [ ] above the price Pfizer is
then paying for such Licensed Product and for its foreign requirements if Myco
quotes a price which exceeds the [ ] price including savings for
taxes and duty. Under no circumstances shall Myco have the right to be the sole
source for any Licensed Product.
3. PAYMENT OF ROYALTIES, ROYALTY RATES, ACCOUNTING FOR ROYALTIES, RECORDS,
MILESTONE PAYMENTS, ADDITIONAL STOCK PURCHASE.
3.1 PAYMENT OF ROYALTIES.
During the term of any License, Pfizer shall pay Myco a
royalty based on the Net Sales of each Licensed Product. Such royalty shall be
paid with respect to each country of the world from the date of the first
commercial sale (the date of the invoice of Pfizer or any sublicensee of Pfizer
with respect to such sales) of such Licensed Product in each such country until
the expiration of the last Patent Right to expire with respect to each such
country and each such Licensed Product. By way of further explanation, Pfizer
shall pay royalties pursuant to Section 3.2.3 with respect to the manufacture of
products whose manufacture would infringe or be covered by Patent Rights if it
were done by an unlicensed third party, such royalties to be paid on the Net
Sales of such Licensed Products even if the actual sale of such Licensed
Products would not alone infringe or be covered by Patent Rights if such sales
were made by an unlicensed third party.
3.2 ROYALTY RATES.
3.2.1 During the term of any License, Pfizer shall pay Myco a
royalty for the sale of each Licensed Product as set forth in Section 3.2.3;
provided, however, that the royalty rate
5
<PAGE> 6
otherwise applicable to Net Sales of a Licensed Product set
forth below shall be reduced by [ ] until [ ] after that
Licensed Product has been approved for sale by the US Food and Drug
Administration ("FDA") and one of its regulatory counterparts in a Major Market;
provided, however, that such reduction shall in no event continue for more than
[ ] years and shall be terminated if worldwide sales of affected
Licensed Product exceed [ ] for any year. Moreover, if [
],
the otherwise applicable royalty rate set forth below shall be reduced by [
]; provided, however, that in no event shall the applicable royalty rates after
any reduction required under this Section 3.2.1 and under Section 3.2.2 be
reduced to a percentage lower than that set forth in Section 3.2.3 in the column
labeled "Minimum Royalty Rates as a Percentage of net Sales."
3.2.2 THIRD PARTY LICENSES. If the manufacture, use or sale by
Pfizer of a Licensed Product in any country would, in the opinion of both Pfizer
and Myco infringe a patent owned by a third party, Pfizer and Myco shall attempt
to obtain a license under such patent. If Pfizer obtains a license under such
patent, [ ] of any payments made by Pfizer to such third party shall be
deductible from royalty payments due from Pfizer to Myco pursuant to this
Agreement; provided, however, that in no event shall royalties payable to Myco
be reduced by more than [ ] in any year as a result of all such
deductions under this Section 3.2.2. All such
6
<PAGE> 7
computations, payments and adjustments shall be on a country by
country and patent by patent basis.
3.2.3 The royalty paid by Pfizer to Myco shall be the sum of
the Net Sales in each Tier multiplied by the applicable royalty rate for that
Tier. Royalty rates with respect to Products are as follows:
NET SALES IN ROYALTY RATES AS MINIMUM ROYALTY
MILLIONS OF DOLLARS A PERCENTAGE OF RATES AS A PERCENTAGE OF
("TIERS") NET SALES OF NET SALES
- --------------------------------------------------------------------------------
[ ]
[ ]
[ ]
[ ]
[ ]
The Minimum Royalty Rate in the third column is the absolute
minimum after all offsets and deductions permitted under this
Agreement, except for the credit permitted by Section 3.8.
3.3 RENEGOTIATION OF ROYALTY RATES.
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
3.4 PAYMENT DATES.
Royalties shall be paid by Pfizer on Net Sales within sixty
(60) days after the end of each calendar quarter in which
7
<PAGE> 8
such Net Sales are made. Such payments shall be accompanied by a statement
showing the Net Sales of each Licensed Product by Pfizer or any sublicensee of
Pfizer in each country, the applicable royalty rate for such Licensed Product,
and a calculation of the amount of royalty due.
3.5 ACCOUNTING.
The Net Sales used for computing the royalties payable to Myco
by Pfizer shall be computed and paid in US dollars by check or other mutually
acceptable means. For purposes of determining the amount of royalties due, the
amount of Net Sales in any foreign currency shall be computed by (a) converting
such amount into dollars at the prevailing commercial rate of exchange for
purchasing dollars with such foreign currency as quoted by Citibank in New York
on the last business day of the calendar quarter for which the relevant royalty
payment is to be made by Pfizer and (b) deducting the amount of any governmental
tax, duty, charge, or other fee actually paid in respect of such conversion
into, and remittance of dollars.
3.6 ROYALTIES WITH RESPECT TO PRODUCTS WHICH EMPLOY MYCO OR
JOINT TECHNOLOGY BUT WHICH DO NOT INFRINGE PATENT RIGHTS.
In those countries of the world in which Pfizer sells [ ]
which employ Myco Program Technology, Myco Non-Program Technology or Joint
Technology but which, even in the absence of a license, do not infringe an
issued patent within Patent Rights claiming Myco Program Technology, Myco
Non-Program Technology or Joint Technology, and are not covered by a claim of a
pending patent application within Patent Rights claiming Myco Program
Technology, Myco Non-Program Technology or Joint Technology and are not within
the claims of any patent or patent application owned or controlled by Pfizer,
Pfizer will pay Myco a royalty equal to [ ] of Net Sales of such
[ ]. Sections 3.2.2, 3.4, 3.5, 3.7 and 3.8 shall apply to such
royalties, but [
]
8
<PAGE> 9
3.7 RECORDS.
Pfizer shall keep for three (3) years from the date of each
payment of royalties complete and accurate records of sales by Pfizer of each
Product in sufficient detail to allow the accruing royalties to be determined
accurately. Myco shall have the right for a period of three (3) years after
receiving any report or statement with respect to royalties due and payable to
appoint at its expense an independent certified public accountant reasonably
acceptable to Pfizer to inspect the relevant records of Pfizer to verify such
report or statement. Pfizer shall make its records available for inspection by
such independent certified public accountant during regular business hours at
such place or places where such records are customarily kept, upon reasonable
notice from Myco to verify the accuracy of the reports and payments. Such
inspection right shall not be exercised more than once in any calendar year nor
more than once with respect to sales in any given period. Myco agrees to hold in
strict confidence all information concerning royalty payments and reports, and
all information learned in the course of any audit or inspection, except to the
extent necessary for Myco to reveal such information in order to enforce its
rights under this Agreement or if disclosure is required by law. The failure of
Myco to request verification of any report or statement during said three-year
period shall be considered acceptance of the accuracy of such report, and Pfizer
shall have no obligation to maintain records pertaining to such report or
statement beyond said three-year period. The results of each inspection, if any,
shall be binding on both parties.
3.8 MILESTONE PAYMENTS.
Pfizer shall pay Myco, within sixty (60) days of the
completion of each respective event set forth below ("Event"), the payment
listed opposite that Event. payments shall be made in US dollars by check or
other mutually acceptable means. Pfizer shall be obligated to make each payment
only once with respect to the first Licensed Product in each Activity Profile
9
<PAGE> 10
affected by an Event so that the occurrence of an event with respect to
additional Licensed Products contemplated in each Activity Profile will not
require Pfizer to make an additional payment with respect to that Event. All
payments made by Pfizer pursuant to this Section 3.8 shall be credited against
all sums due to Myco pursuant to Section 3.2 of this Agreement; provided,
however, that the sums due pursuant to Section 3.2 in any calendar year shall
not be reduced by virtue of this credit by more than [ ].
EVENT AMOUNT
[
]
3.9 ADDITIONAL STOCK PURCHASE.
If and [
], Pfizer will purchase
additional shares of Myco common stock in accordance with the terms and
conditions of the Stock Purchase Agreement. Pfizer will invest [ ] at the rate
of [ ] per share (adjusted for any stock split, stock dividend or reverse stock
split) if Myco common stock is not publicly traded or at the [ ] if Myco stock
is publicly traded on that date. The purchase price will not be applied to
royalties due to Myco pursuant to this
10
<PAGE> 11
Agreement and Pfizer shall be obligated to make such purchase once only during
the term of this Agreement.
3.10 MYCO ROYALTY PAYMENTS.
In the event Myco shall have the right to develop and
commercialize any Product pursuant to Section 2.2, 2.4 or 9.3, Myco shall be
obligated to pay royalties to Pfizer on commercial sales of such Product for
patient treatment pursuant to an approved NDA or foreign equivalent. In the case
of such sales by Myco or its Affiliates, such royalty shall be equal to [
] of Net Sales by Myco or its Affiliates of such Product (Net Sales
having the meaning set forth in Section 1.2 with Myco substituted for Pfizer).
In the case of such sales by a licensee of Myco, such royalty shall be the
lesser of (i) [ ] of the licensee's Net Sales of such Product (Net
Sales having the meaning set forth above) or (ii) [ ] of royalties
received by Myco from the licensee with respect to such commercial sales of the
Product by the licensee. For the avoidance of doubt, it is acknowledged that
equity investments, payments for services and payments for the purchase of goods
are not considered royalties with respect to commercial sales by the licensee.
In the event Myco is obligated to pay royalties to Pfizer
pursuant to this Section 3.10, Sections 3.2.1 (after the first semi-colon),
3.2.2, 3.3, 3.4, 3.5 and 3.7 shall apply, with the rights and obligations of
Pfizer and Myco thereunder being reversed.
3.11 MYCO OBLIGATIONS TO LICENSORS. Myco shall be responsible for any
payment due as a result of this Agreement to any third party which has
heretofore licensed any Technology to Myco.
11
<PAGE> 12
4. LEGAL ACTION.
4.1 ACTUAL OR THREATENED INFRINGEMENT.
Subject to Myco's obligations to licensors, if any, of
Myco Patent Rights or Joint Patent Rights, when information comes to the
attention of Pfizer to the effect that any Myco or Joint Patent Rights relating
to a Licensed Product have been or are threatened to be unlawfully infringed
Pfizer shall have the right at its expense to take such action as it may deem
necessary to prosecute or prevent such unlawful infringement. Pfizer shall
notify Myco promptly of the receipt of any such information and of the
commencement of any such suit, action or proceeding. If Pfizer determines that
it is necessary or desirable for Myco to join any such suit, action or
proceeding, Myco shall, at Pfizer's expense, execute all papers and perform such
other acts as may be reasonably required to permit Pfizer to act in Myco's name.
If Pfizer brings a suit, it shall have the right first to reimburse itself out
of any sums recovered in such suit or in its settlement for all costs and
expenses, including attorney's fees, related to such suit or settlement, and
[ ] of any funds that shall remain from said recovery shall be
paid to Myco and the balance of such funds shall be retained by Pfizer. If
Pfizer does not, within one hundred twenty (120) days after giving notice to
Myco of the above-described information, notify Myco of Pfizer's intent to bring
suit against any infringer, Myco shall have the right to bring suit for such
alleged infringement, but it shall not be obligated to do so, and may join
Pfizer as party plaintiff, if appropriate, in which event Myco shall hold Pfizer
free, clear and harmless from any and all costs and expenses of such litigation,
including attorney's fees, and any sums recovered in any such suit or in its
settlement shall belong to Myco. However, [
] of any such sum received by Myco, after deduction of all costs and
expenses related to such suit or settlement, including attorney's fees paid,
shall be paid to Pfizer. Each party shall always have the right to be
represented by counsel of its own
12
<PAGE> 13
selection and at its own expense in any suit instituted by the other for
infringement under the terms of this Section . If Pfizer lacks standing and Myco
has standing to bring any such suit, action or proceeding, then Myco shall do so
at the request of Pfizer and at Pfizer's expense.
4.2 DEFENSE OF INFRINGEMENT CLAIMS.
Myco will cooperate with Pfizer at Pfizer's expense in the
defense of any suit, action or proceeding against Pfizer or any sublicensee of
Pfizer alleging the infringement of the intellectual property rights of a third
party by reason of the use of Myco, Pfizer or Joint Patent Rights in the
manufacture, use or sale of the Licensed Product. Pfizer shall give Myco prompt
written notice of the commencement of any such suit, action or proceeding or
claim of infringement and will furnish Myco a coy of each communication relating
to the alleged infringement. Myco shall give to Pfizer all authority (including
the right to exclusive control of the defense of any such suit, action or
proceeding and the exclusive right after consultation with Myco, to compromise,
litigate, settle or to otherwise dispose of any such suit, action or
proceeding), information and assistance necessary to defend or settle any such
suit, action or proceeding; provided, however, Pfizer shall obtain Myco's prior
consent to such part of any settlement which requires payment or other action by
Myco or has a material adverse effect on Myco's business. If the parties agree
that Myco should institute or join any suit, action or proceeding pursuant to
this Section , Pfizer may at Pfizer's expense, join Myco s a defendant if
necessary or desirable, and Myco shall execute all documents and take all other
actions, including giving testimony, which may reasonably be required in
connection with the prosecution of such suit, action or proceeding.
5. REPRESENTATION AND WARRANTY, HOLD HARMLESS.
5.1 Myco represents and warrants to Pfizer that it has the right to
grant the Option and License pursuant to this Agreement and that the Option and
Licenses so granted do not conflict with
13
<PAGE> 14
or violate the terms of any agreement between Myco and any third party.
5.2 Myco agrees to defend, protect, indemnify and hold harmless Pfizer
and any sublicensee of Pfizer, from and against any loss or expense arising from
any proven claim of a third party that it has been granted rights by Myco that
Pfizer or any sublicensee of Pfizer in exercising their rights granted to Pfizer
by Myco pursuant to this Agreement, has infringed upon such rights granted to
such third party by Myco.
6. TREATMENT OF CONFIDENTIAL INFORMATION.
6.1 Pfizer and Myco each recognize that the other's
Confidential Information constitutes highly valuable, confidential information.
Subject to rights and obligations of the parties pursuant this Agreement and the
Research Agreement, Pfizer and Myco each agree that during the term of the
Research Agreement and for five (5) years thereafter, it will keep confidential,
and will cause its Affiliates to keep confidential, all Myco Confidential
Information or Pfizer Confidential Information, as the case may be, that is
disclosed to it or to any of its Affiliates pursuant to this Agreement. Neither
Pfizer nor Myco nor any of their respective Affiliates shall use such
Confidential Information of the other party except as expressly permitted in
this Agreement or the Research Agreement.
6.1.1 Subject to the parties' rights and obligations pursuant
to this Agreement and the License Agreement, Pfizer and Myco each agree that any
disclosure of the other's Confidential Information to any officer, employee or
agent of the other party or of any of its Affiliates shall be made only if and
to the extent necessary to carry out its responsibilities under this Agreement
and shall be limited to the maximum extent possible consistent with such
responsibilities. Subject to the parties' rights and obligations pursuant to
this Agreement and the License Agreement, Pfizer and Myco each agree not to
disclose the other's Confidential Information to any third parties under any
circumstance without written permission from the other party.
14
<PAGE> 15
Each party shall take such action, and shall cause its Affiliates to take such
action, to preserve the confidentiality of each other's Confidential Information
as it would customarily take to preserve the confidentiality of its own
Confidential Information. Each party, upon the other's request, will return all
the Confidential Information disclosed to it by the other party pursuant to this
Agreement, including all copies and extracts of documents, within sixty (60)
days of the request upon the termination of this Agreement except for one (1)
copy which may be kept for the purpose of complying with continuing obligations
under this Agreement.
6.1.2 Myco and Pfizer each represent that all of its
employees, and any consultants to such party, who shall have access to Pfizer
Program Technology, Pfizer Non-Program Technology, Myco Program Technology, Myco
Non-Program Technology or Joint Technology and Pfizer Confidential Information
and Myco Confidential Information are bound by agreement to maintain such
information in confidence.
6.1.3 Notwithstanding anything to the contrary set forth
herein or in the Research Agreement, in the event Myco shall have the right to
develop and commercialize a Product pursuant to this Agreement or the Research
Agreement, Myco shall have the right to disclose and transfer (i) Confidential
Information and Materials which are part of the Myco Program Technology or Myco
Non-Program Technology with respect to such Product and (ii) Confidential
Information and Materials other than compounds which are part of the Joint
Technology with respect to such Product, to third parties who execute a
Confidentiality agreement with respect thereto.
6.2 PUBLICITY.
Except as required by law, neither party may disclose the
terms of this Agreement without the written consent of the other party, which
consent shall not be unreasonably withheld; provided, however, the parties, upon
the execution of this Agreement, will agree to a news release for publication in
15
<PAGE> 16
general circulation periodicals. The parties may disclose the existence of this
Agreement without the consent of the other and, once a particular item has been
generally disclosed, may further disclose such item without the consent of the
other.
6.3 DISCLOSURE OF INVENTIONS.
Each party shall promptly inform the other about all
inventions in the Area that are conceived, made or developed in the course of
carrying out the Research Program by employees of, consultants to, either of
them solely, or jointly with employees of, or consultants to the other.
7. PROVISIONS CONCERNING THE FILING, PROSECUTION AND
MAINTENANCE OF PATENT RIGHTS.
The following provisions relate to the filing, prosecution and
maintenance of Patent Rights during the term of this Agreement:
7.1 FILING, PROSECUTION, AND MAINTENANCE BY MYCO.
With respect to Myco Patent Rights, Myco shall have the
exclusive right and obligation:
(a) to file applications for letters patent on any patentable
invention included in Myco Program Technology and Myco Non-Program Technology;
provided, however, that Myco shall consult with Pfizer regarding countries in
which such patent applications should be filed and shall file patent
applications in those countries where Pfizer requests that Myco file such
applications; and, further provided, that Myco, at its option and expense, may
file in countries where Pfizer does not request that Myco file such
applications;
(b) to prosecute all pending and new patent applications
included within Myco Patent Rights;
(c) to respond to oppositions, nullity actions, re-
examinations, revocation actions and similar proceedings filed by third parties
against the grant of letters patent for such applications;
(d) to maintain in force any letters patent included in Myco
Patent Rights by duly filing all necessary papers and
16
<PAGE> 17
paying any fees required by the patent laws of the particular country in which
such letters patent were granted.
(e) to cooperate fully with, and take all necessary actions
requested by, Pfizer in connection with the preparation, prosecution and
maintenance of any letters patent included in Myco Patent Rights.
Myco shall notify Pfizer in a timely manner of any decision to
abandon a pending patent application or an issued patent included in Myco Patent
Rights. Thereafter, Pfizer shall have the option, at its expense, of continuing
to prosecute any such pending patent application or of keeping the issued patent
in force.
7.1.1 COPIES OF DOCUMENTS. Myco shall provide to Pfizer copies
of all patent applications that are part of Myco Patent Rights prior to filing,
for the purpose of obtaining substantive comment of Pfizer patent counsel. For
the same purpose Myco shall also provide to Pfizer copies of all documents
relating to prosecution of all such patent applications in a timely manner for
such review and shall provide to Pfizer every six (6) months a report detailing
their status.
7.1.2 REIMBURSEMENT OF COSTS FOR FILING, PROSECUTING AND
MAINTAINING PATENT RIGHTS. Within thirty (30) days of receipt of invoices from
Myco, Pfizer shall reimburse Myco for all the costs of filing, prosecuting,
responding to opposition and the like and maintaining patent applications and
patents (including without limitation costs incurred by Myco with respect to
Patent Rights licensed to Myco by third parties) in countries where Pfizer
requests that patent applications be filed, prosecuted and maintained. Such
reimbursement shall be in addition to Funding Payments. However, Pfizer may,
upon sixty (60) days notice, request that Myco discontinue filing or prosecution
of patent applications in any country and discontinue reimbursing Myco for the
costs of filing, prosecuting, responding to opposition and the like or
maintaining such patent application or patent in any country. Myco shall pay all
costs in those
17
<PAGE> 18
countries in which Pfizer does not request that Myco file, prosecute or maintain
patent applications and patents, but in which Myco, at is option, elects to do
so.
7.1.3 Pfizer shall have the right to file on behalf of Myco
all applications and take all actions necessary to obtain patent extensions
pursuant to 35 USC Section 156 for Myco or Joint Patent Rights described in this
Section 7.1 licensed to Pfizer. Myco agrees to sign, at Pfizer's expense, such
further documents and take such further actions as may be requested by Pfizer in
this regard. If Pfizer determines not to apply for any such extension, Pfizer
shall so notify Myco in writing at least ninety (90) days prior to the deadline
for such application, and Myco may do so and Pfizer shall cooperate fully with
Myco and provide all necessary information within Pfizer's control to Myco for
use therein.
7.2 FILING, PROSECUTION AND MAINTENANCE BY PFIZER.
With respect to Pfizer Patent Rights and Patent Rights
claiming Joint Technology, Pfizer shall have those rights and duties ascribed to
Myco in Section 7.1
7.3 Neither party may disclaim a Patent Rights without the
consent of the other.
8. OTHER AGREEMENTS, CONDITION PRECEDENT.
8.1 Concurrently with the execution of this Agreement, Myco and Pfizer
shall enter into the Research Agreement and the Stock Purchase Agreement. This
Agreement, the Stock Purchase Agreement and the Research Agreement are the sole
agreements with respect to the subject matter and supersede all other agreements
and understandings between the parties with respect to the same.
9. TERMINATION AND DISENGAGEMENT.
9.1 EVENTS OF TERMINATION.
The following events shall constitute events of termination
("Events of Termination"):
(a) Any written representation or warranty by Myco or
Pfizer, or any of its officers, made under or in connection with
18
<PAGE> 19
this Agreement shall prove to have been incorrect in any material respect when
made.
(b) Myco or Pfizer shall fail in any material respect to
perform or observe any term, covenant or understanding contained in this
Agreement or in any of the other documents or instruments delivered pursuant to,
or concurrently with, this Agreement, and such failure shall remain unremedied
for thirty (30) days after written notice to the filing party.
9.2 TERMINATION.
Upon the occurrence of any Event of Termination, the party not
responsible may, by notice to the other party, terminate this Agreement.
9.3 Upon termination of this Agreement, all Licenses granted hereunder
shall terminate. In such event, all rights to Licensed Products covered by such
Licenses shall become the sole property of Myco and Myco will be free to develop
and commercialize such Products itself or with third parties after the
expiration of the Option Term, if, but only if Pfizer is not developing or
selling a Product with the same Profile of Activity pursuant to this Agreement.
Notwithstanding the foregoing, in the event Myco shall have the right to
terminate this Agreement as a result of an Event of Termination committed by
Pfizer, Myco may, in its sole discretion, terminate the License covering the
Licensed Product with respect to which the Event of Termination occurred, rather
than terminating this Agreement, in which event only Pfizer's rights to such
Licensed Product shall become the sole property of Myco and Myco shall only have
the right to develop and commercialize such Product, itself or with third
parties, after the expiration of the Option Term, if but only if Pfizer is not
developing or selling a Product with the same Profile of Activity pursuant to
this Agreement. In the event Myco shall develop and sell commercially any
Product for which Pfizer's License has terminated, or in the event Myco shall
license the rights to such Product to a third party, Myco shall be obligated to
pay royalties in accordance with Section 3.10.
19
<PAGE> 20
9.4 Termination of this Agreement by either party, with or without
cause, will not terminate the licenses granted pursuant to Section 5.2 of the
Research Agreement.
9.5 Termination of this Agreement for any reason shall be without
prejudice to:
(a) the rights and obligations of the parties provided in
Sections 6 and 10;
(b) Myco's right to receive all royalty payments accrued
hereunder; or
(c) any other remedies which either party may otherwise have.
10. INDEMNIFICATION.
10.1 INDEMNIFICATION OF MYCO BY PFIZER.
Pfizer shall indemnify, defend and hold harmless Myco
and its directors, officers, employees, and agents and their respective
successors, heirs and assigns (the "Myco Indemnitees"), against any liability,
damage, loss or expense (including reasonable attorneys' fees and expenses of
litigation) incurred by or imposed upon the Myco Indemnitees, or any one of
them, in connection with any claims, suits, actions, demands or judgments,
including without limitation personal injury and product liability matters
(except in cases where such claims, suits, actions, demands or judgments result
from the material breach, negligence or willful misconduct on the part of Myco),
arising out of the production, manufacture, promotion, sale or use by any person
of any Product or Antifungal Drug which is manufactured or sold by Pfizer or by
an Affiliate, sublicensee, distributor or agent of Pfizer.
10.2 The foregoing indemnification shall not apply if an Indemnitee
fails to give Pfizer prompt notice of any claim it receives and such failure
materially prejudices Pfizer with respect to any claim or action to which
Pfizer's obligation pursuant to this Section applies. Pfizer, in its sole
discretion, shall choose legal counsel, shall control the defense
20
<PAGE> 21
of such claim or action and shall have the right to settle same on such terms
and conditions it deems advisable.
11. NOTICES.
All notices shall be in writing mailed via certified mail, return
receipt requested, courier, or facsimile transmission addressed as follows, or
to such other address as may be designated from time to time:
If to Pfizer: To Pfizer at its address as set forth at
the beginning of this Agreement
Attention: President, Central Research
with copy to: General Counsel
If to Myco: To Myco at its address as set forth at
the beginning of this Agreement
Attention: President
Notices shall be deemed given as of the date received.
12. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
13. MISCELLANEOUS.
13.1 BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit
of the parties and their respective legal representatives, successors and
permitted assigns.
13.2 HEADINGS.
Paragraph headings are inserted for convenience of reference
only and do not form a part of this Agreement.
13.3 COUNTERPARTS.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
13.4 AMENDMENT; WAIVER; ETC.
This Agreement may be amended, modified, superseded or
canceled, and any of the terms may be waived, only by a written instrument
executed by each party or, in the case of waiver, by the party or parties
waiving compliance. The delay or failure of any party at any time or times to
require performance of any
21
<PAGE> 22
provisions shall in no manner affect the rights at a later time to enforce the
same. No waiver by any party of any condition or of the breach of any term
contained in this Agreement, whether by conduct, or otherwise, in any one or
more instances, shall be deemed to be, or considered as, a further or continuing
waiver of any such condition or of the breach of such term or any other term of
this Agreement.
13.5 NO THIRD PARTY BENEFICIARIES.
Except as set forth in Section 10 hereof, no third party
including any employee of any party to this Agreement, shall have or acquire any
rights by reason of this Agreement. Nothing contained in this Agreement shall be
deemed to constitute the parties as agents for the other or as partners with
each other or any third party.
13.6 ASSIGNMENT AND SUCCESSORS.
This Agreement may not be assigned by either party, except
that each party may assign this Agreement and the rights and interests of such
party, in whole or in part, to any of its Affiliates, any purchaser of all or
substantially all of its assets or to any successor corporation resulting from
any merger or consolidation of such party with or into such corporations.
13.7 FORCE MAJEURE.
Neither Pfizer nor Myco shall be liable for failure or delay
in performing obligations set forth in this Agreement, and neither shall be
deemed in breach of its obligations, if such failure or delay is due to natural
disasters or any causes reasonably beyond the control of Pfizer or Myco.
13.8 SEVERABILITY.
If any provision of this Agreement is or becomes invalid or is
ruled invalid by any court of competent jurisdiction or is deemed unenforceable,
it is the intention of the parties that the remainder of the Agreement shall not
be affected.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
22
<PAGE> 23
PFIZER INC. MYCO PHARMACEUTICALS INC.
By: ______________________ By: _______________________
Title: ___________________ Title: ____________________
Date: ____________________ Date: _____________________
cc: Pfizer Inc, Legal Division, Groton, CT 06430
23
<PAGE> 1
EXHIBIT 10.10
THIS AGREEMENT WITH CERTAIN CONFIDENTIAL PORTIONS DELETED IS BEING FILED AS PART
OF EXHIBIT 10.10 TO CHEMGENICS PHARMACEUTICALS INC'S REGISTRATION STATEMENT ON
FORM S-1 BEING FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (REGISTRATION
NO. 333- ____)
COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
This COLLABORATIVE RESEARCH AND LICENSE AGREEMENT (the "Agreement") is entered
into as of November 1, 1996 by and between AMERICAN HOME PRODUCTS CORPORATION, a
Delaware corporation, represented by its Wyeth-Ayerst Laboratories Division
having its principal place of business at 555 East Lancaster Avenue, St. Davids,
Pennsylvania 19087 ("WYETH-AYERST"), and CHEMGENICS Pharmaceuticals Inc.
("CHEMGENICS"), a Delaware corporation, having its registered office at One
Kendall Square, Building 300, Cambridge, Massachusetts 02139, U.S.A.
WHEREAS, CHEMGENICS has expertise in the discovery of bacterial genes and
antibacterial drug targets, the use of bacterial molecular biology and genetics
and the development and use of screening systems for the discovery of targets
and compounds for treating bacterial diseases and has developed a drug source,
including libraries of natural sources, for patentable therapeutic compounds;
and
WHEREAS, WYETH-AYERST has expertise in discovering, developing, testing,
obtaining regulatory approvals, manufacturing and marketing human therapeutic
products for bacterial diseases; and
WHEREAS, WYETH-AYERST and CHEMGENICS wish to enter into this Agreement in order
to collaborate in the performance of research to discover and develop
antibacterial drugs; and
<PAGE> 2
WHEREAS, CHEMGENICS will perform research which will be funded and supported by
WYETH-AYERST in order to discover drug targets and Compounds for use in the
Field and will license the results of such research to WYETH-AYERST in the
Territory for the purpose of research for Antibacterial Products for human use,
including drug discovery, and the development, testing, obtaining regulatory
approval, manufacture and sale of Antibacterial Products for human use;
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
for other good and valuable consideration, the parties hereby agree as follows:
1. DEFINITIONS
-----------
Whenever used in this Agreement with an initial capital letter, the terms
defined in this Section 1 shall have the meanings specified.
1.0 "ACCEPTED TARGET" means an antibacterial target for which an assay has been
developed, that is accepted by the Joint Steering Committee ("JSC") for
development of [
]
<PAGE> 3
[
]
1.1 "ACTIVITY PROFILE" means one of the activity profiles set forth in Exhibit
1, or any other activity profile agreed upon by the Joint Steering Committee.
1.2 "AFFILIATE" means any corporation, firm, limited liability company,
partnership or other entity which directly or indirectly controls or is
controlled by or is under common control with a party to this Agreement.
"Control" means ownership, directly or through one or more Affiliates, of fifty
percent (50%) or more of the shares of stock entitled to vote for the election
of directors, in the case of a corporation, or fifty percent (50%) or more of
the equity interests in the case of any other type of legal entity, status as a
general partner in any partnership, or any other arrangement whereby a party
controls or has the right to control the Board of Directors or equivalent
governing body of a corporation or other entity.
<PAGE> 4
1.3 "ANTIBACTERIAL PRODUCT" means any product which incorporates a CHEMGENICS
Product or a WYETH-AYERST Product (including analogs, derivatives or
modifications thereof) listed on Schedule I hereto, as amended from time to
time, in accordance with Section 2.4 hereof, and any product in the Field which
is discovered during the Research Term of this Agreement and a period of [ ]
thereafter, whether or not under the R & D Program, utilizing any Compound,
which discovery would not have occurred but for such utilization of such
Compound.
1.4 "BACTERIAL DISEASE" means a disease in humans caused by infection
with bacterial organisms and which is capable of being treated by pharmaceutical
agents targeting the bacterial organisms. Bacterial disease shall not include
the treatment of H. pylori infection for peptic ulcer disease or gastritis.
1.5 "CHEMGENICS OWNED TECHNOLOGY" has the meaning set forth in Section 6.2.1.
1.6 "CHEMGENICS PRODUCT" means a Compound provided by CHEMGENICS that has been
designated an Antibacterial Product. "CHEMGENICS Product" shall also include any
other compound discovered or developed during the Research Term of this
Agreement and a period of [ ] thereafter using any such CHEMGENICS
Compound or using structural, chemical, or biological information relating to
any such CHEMGENICS Compound.
1.7 "COMMERCIAL LICENSE TERM" means the time period referenced in Section 8.2
hereof.
<PAGE> 5
1.8 "COMPOUND" means a chemical compound or mixture of compounds that is
discovered or developed in the R & D Program by either party alone or jointly by
both parties, which is identified as having antibacterial activity [
] Without limiting the generality of the foregoing, a Compound will be
deemed "discovered" in the R & D Program if the potential utility or mode of
action of such Compound in the Field is identified or investigated in the R & D
Program.
1.9 "CONFIDENTIAL INFORMATION" means all Technology and all information
(including but not limited to information about any element of Technology or a
party's business) which is disclosed by one party to the other hereunder or
under the Superseded Confidentiality Agreement (as defined in Section 12.14) and
indicated as confidential by the disclosing party except to the extent that such
information (i) as of the date of disclosure is demonstrably known to the party
receiving such disclosure or its Affiliates, as shown by written documentation,
other than by virtue of a prior confidential disclosure to such party or its
Affiliates; (ii) as of the date of disclosure is in, or subsequently enters, the
public domain, through no fault or omission of the party receiving such
disclosure; or (iii) as of the date of disclosure or thereafter is obtained from
a third party free from any obligation of confidentiality to the disclosing
party.
<PAGE> 6
1.10 "COST OF GOODS" means the following direct and indirect costs incurred by
WYETH-AYERST in the production of the Antibacterial Products: [
]
The amount to be allocated for departmental administrative and overhead
shall be determined by computing the percent of direct labor and materials
dollars applicable to the work performed in the production of the Antibacterial
Products in a given department as a proportion to all direct labor and materials
dollars charged to projects in that department, and multiplying that percent by
the total overhead dollars related to that department. The percentage amounts
used to determine the allocated amounts will be calculated using WYETH-AYERST's
accounting system which will compute such rates on a consistent basis. Should
WYETH-AYERST change its method of allocating overhead and administrative costs
to its projects it will so advise CHEMGENICS and the parties will renegotiate
the basis for
<PAGE> 7
allocating such costs to the work performed in the production of Antibacterial
Products.
1.11 "CPMP" means the Committee on Proprietary Medical Products of the European
Union.
1.12 "DISCOVERY PROJECT STATUS" means a designation given to a Compound when the
JSC determines that [
]
1.13 "EFFECTIVE DATE" means the date of full execution of this Agreement by the
parties.
1.14 "FIELD" means drugs for the prevention and treatment of Bacterial Diseases
in humans.
1.15 "FIRST COMMERCIAL SALE" means the date of the first sale of an
Antibacterial Product in the ordinary course of business in any country by
WYETH-AYERST or an Affiliate or distributor, licensee or sublicensee of such
party.
1.16 "FISCAL QUARTER" means one quarter of WYETH-AYERST's Fiscal Year.
1.17 "FISCAL YEAR" means the twelve month period beginning January 1 and ending
December 31 of a calendar year.
1.18 "JOINT STEERING COMMITTEE" or "JSC" means the committee created pursuant to
Section 2.2.
1.19 "JOINT TECHNOLOGY" has the meaning set forth in Section 6.2.3.
<PAGE> 8
1.20 "NDA" means a New Drug Application, as defined by the U.S. FDA, or the
equivalent in any other country in the Territory.
1.21 "NET SALES" means with respect to an Antibacterial Product, the gross
amount invoiced by WYETH-AYERST, its Affiliates and/or its licensees and
sublicensees, on sales or other dispositions of the Antibacterial Product to
unrelated third parties, less the following items, provided that such items are
actually included in the price charged and do not exceed reasonable and
customary amounts in the country in which such sale occurred:
[
]
Such amounts shall be determined from the books and records of
WYETH-AYERST, its Affiliates and/or its licensees or sublicensees, maintained in
accordance with generally accepted accounting principles, consistently applied.
If an Antibacterial Product is sold in bulk (as distinguished from packaged
pharmaceutical form) for resale in packaged or finished form, Net Sales shall be
calculated by
<PAGE> 9
determining the quantity of Antibacterial Product in packaged pharmaceutical
form that would reasonably be produced from the bulk quantity of Antibacterial
Product so sold, and by multiplying such quantity by the average price for such
Antibacterial Product in packaged pharmaceutical form during the applicable
royalty reporting period. If an Antibacterial Product is sold, or otherwise
commercially disposed of for value (including, without limitation, disposition
in connection with the delivery of other products or services), in a transaction
that is not a sale for cash to an independent third party, then the gross amount
invoiced in such transaction shall be deemed to be the gross amount that would
have been paid had there been such a sale at the average sale price of such
Antibacterial Product during the applicable royalty reporting period; provided,
however, that sale of Antibacterial Product in bulk to a third party end user
who repackages but does not resell such Antibacterial Product shall be
calculated at the actual transaction price.
Net Sales shall not include any consideration received by WYETH-AYERST,
its Affiliates or its licensees or sublicensees in respect of the sale, use or
other disposition of an Antibacterial Product in a country as part of a clinical
trial prior to the receipt of all regulatory approvals required to commence full
commercial sales of such Antibacterial Product in such country, except sales
under "treatment INDs," "named patient sales," "compassionate use sales," or
their equivalents pursuant to which
<PAGE> 10
WYETH-AYERST, its Affiliates or licensees and sublicensees is/are entitled,
under applicable regulatory policies, to recover costs incurred in providing
such products to the patients.
1.23 "PATENT RIGHTS" means the rights and interests in and to issued patents and
pending patent applications in any country, including, but not limited to, all
provisional applications, substitutions, continuations, continuations-in-part,
divisions, and renewals, all letters patent granted thereon, and all reissues,
reexaminations and extensions thereof, whether owned solely or jointly by a
party or licensed in by a party with the right to sublicense. "CHEMGENICS Patent
Rights" shall mean Patent Rights owned or licensed by CHEMGENICS, with the right
to sublicense, which are necessary to develop, make, use or sell Antibacterial
Products, "WYETH-AYERST Patent Rights" shall mean Patent Rights owned or
licensed by WYETH-AYERST, with the right to sublicense, which are necessary to
develop, make, use or sell Antibacterial Products, and "Joint Patent Rights"
shall mean such Patent Rights owned or licensed jointly by the parties.
1.24 "PRE-PROJECT STATUS" means a WYETH-AYERST research designation for a
Compound that is a candidate for IND track, given to a Compound by WYETH-AYERST
in accordance with its customary drug development practices, and when, at a
minimum, it has been demonstrated to WYETH's satisfaction, consistent with its
customary criteria, [
]
<PAGE> 11
[
]
1.25 "PROJECT COMMENCEMENT DATE" means December 1, 1996.
1.26 "R & D PROGRAM" means the research and development program, to be conducted
by CHEMGENICS and WYETH-AYERST pursuant to Section 2 of this Agreement and
reflected in the Work Plans.
1.27 "RESEARCH PHASE" means research relating to Compounds that have not yet
received Pre-Project Status designation.
1.28 "TECHNOLOGY" means and includes all inventions, discoveries, improvements,
proprietary materials, compounds, biological substances, data, know-how and
trade secrets, whether or not patentable, including any negative results.
1.29 "TERRITORY" means all the countries of the world.
1.30 "VALID CLAIM" means any claim of a pending patent application or an
unexpired patent which has not been held unenforceable, unpatentable or invalid
by a decision of a court or other governmental agency of competent jurisdiction,
unappealed or unappealable within the time allowed for appeal, and which has not
been admitted to be invalid or unenforceable through reissue, reexamination,
disclaimer or otherwise.
1.31 "WORK PLAN" means the written plan describing the activities to be carried
out during each year of the R & D Program pursuant to this Agreement. Each Work
Plan will be set forth in a written document prepared by CHEMGENICS and
WYETH-AYERST approved by the Joint Steering Committee.
<PAGE> 12
1.32 "WYETH-AYERST OWNED TECHNOLOGY" has the meaning set forth in Section 6.2.2.
1.33 "WYETH-AYERST PRODUCT" means a Compound provided by WYETH-AYERST that has
been designated an Antibacterial Product. "WYETH-AYERST Product" shall also
include any other Compound discovered or developed during the Research Term of
this Agreement and a period of [ ] thereafter using any such WYETH-
AYERST Compound or using structural, chemical, or biological information
relating to any such WYETH-AYERST Compound.
2. R & D PROGRAM
-------------
2.1 IMPLEMENTATION OF R & D PROGRAM.
-------------------------------
2.1.1 Basic Provisions of Program.
---------------------------
The objective of the Research Phase of the R & D Program shall be the
discovery and characterization of Accepted Targets in areas covered by the four
Activity Profiles contained in Exhibit 1 and any other Activity Profiles
designated by the JSC from time to time. The objective of the development phase
of the R & D Program shall be the development of Compounds receiving Pre-Project
Status designation and the testing and regulatory approval of Antibacterial
Products in areas covered by such Activity Profiles. In carrying out the R & D
Program, CHEMGENICS shall devote an average of at least [ ] full-time
equivalent employees per year to the Research Phase of the R & D Program over
its five year duration, and shall ensure that a reasonable number of such
employees are devoted solely to the R &
<PAGE> 13
D Program, and that key members of such group will be Ph.D. level researchers.
CHEMGENICS and WYETH-AYERST shall each use commercially reasonable efforts to
perform such tasks as are set forth to be performed by it in the Work Plans,
including the provision of such facilities, materials, equipment and consultants
as each deems necessary to the achievement of such Work Plans.
2.1.2 Collaborative Efforts and Reports.
---------------------------------
The parties agree that the successful execution of the R & D Program will
require the collaborative use of both parties' areas of expertise. The parties
shall keep the JSC and each other fully informed about the status of the
portions of the R & D Program they respectively perform. In particular, without
limitation, each party shall furnish to the JSC and each other a quarterly
written report, describing the progress of its activities in reasonable detail,
no later than thirty (30) days after the end of each Fiscal Quarter.
Scientists at CHEMGENICS and WYETH-AYERST shall cooperate in the
performance of the R & D Program and, subject to any confidentiality obligations
to third parties, shall exchange information and materials as necessary to carry
out the R & D Program, but subject to the provisions of Sections 4 and 5 hereof.
Each party will attempt to accommodate any reasonable request of the other party
to send or receive personnel for purposes of collaborating or exchanging
information under the R & D Program. Such visits and/or access will have defined
<PAGE> 14
purposes and be scheduled in advance. The requesting party will bear the travel
and lodging costs of any such personnel.
2.1.3 Work Plans.
----------
The Work Plan for the first year of the R & D Program shall be prepared by
CHEMGENICS and WYETH-AYERST and approved by the JSC as promptly as practical
after the Effective Date. For each year of the R & D Program commencing with the
second year, the Work Plan shall be prepared by CHEMGENICS and WYETH-AYERST and
approved by the JSC no later than thirty (30) days before the end of the prior
year. The Work Plan shall set forth specific research and development
objectives, milestones and resource allocation requirements and shall be
designed to facilitate the earliest practical identification of Accepted Targets
and the fastest practical testing, regulatory approval and marketing of safe and
effective Antibacterial Products.
Each Work Plan shall be in writing and shall set forth with reasonable
specificity tasks for the period covered by the Work Plan. The JSC may make
adjustments in the Work Plan at its quarterly meetings or otherwise as it may
determine.
2.1.4 Exclusivity.
-----------
CHEMGENICS agrees that for the duration of the "Research Term" (Research
Phase of the R & D Program as specified in Section 2.3 below) and for a period
of four (4) months thereafter, CHEMGENICS will not collaborate with or grant
license rights to any other party in the Field, except as otherwise permitted
hereby. WYETH-AYERST agrees that for the duration of
<PAGE> 15
this Agreement, WYETH-AYERST will not utilize any CHEMGENICS Owned Technology,
as hereinafter defined, for any purpose other than (i) as provided herein or
(ii) otherwise for the benefit of CHEMGENICS.
2.2 JOINT STEERING COMMITTEE, PROJECT MANAGEMENT TEAM AND PROJECT LEADERS.
---------------------------------------------------------------------
2.2.1 Establishment and Functions of JSC.
----------------------------------
CHEMGENICS and WYETH-AYERST shall establish a "Joint Steering Committee"
(the "JSC"). The JSC will act on behalf of the two companies and will be
responsible for planning and monitoring of the R & D Program (until Pre-Project
Status designation by WYETH-AYERST with respect to any individual Compound) and
for setting forth specific research and development objectives, milestones,
determining when milestones are met, and resource allocation requirements. In
particular, the activities of the JSC shall include reviewing progress in the
R & D Program and recommending necessary adjustments to the R & D Program as the
research and development progresses, supervising the Project Management Team, [
] Subject to Section 4.1, any technology in the Field to be considered for
in-licensing by either party during
<PAGE> 16
the Research Term, as hereinafter defined, shall be initially presented to the
JSC for discussion, utilizing only public, non-confidential information. Upon
review of such non-confidential information, the JSC may request the further
involvement of the JSC in any evaluation of such technology or may decline any
such involvement.
In planning and monitoring the R & D Program, the JSC shall assign tasks
and responsibilities taking into account each party's respective specific
capabilities and expertise in order in particular to avoid duplication and
enhance efficiency and synergies.
2.2.2 JSC Membership.
--------------
CHEMGENICS and WYETH-AYERST each shall appoint, in their sole discretion,
three members to the JSC, which shall include a Chair to be designated by
WYETH-AYERST and a Co-Chair to be designated by CHEMGENICS. Substitutes or
alternates for the Chair and Co-Chair or other JSC members may be appointed at
any time by notice in writing to the other party. The parties may mutually agree
to change the size of the JSC as long as there shall be an equal number of
representatives of each party on the JSC.
The initial Chair, Co-Chair and other JSC members shall be designated by
the parties upon execution of this Agreement.
2.2.3 Meetings.
--------
The JSC shall meet at least quarterly, with such meetings to be held,
alternately, in Cambridge or Framingham, Massachusetts
<PAGE> 17
and Pearl River, New York, unless the parties agree otherwise. Any additional
meetings shall be held at places and on dates selected by the Co-Chairs of the
JSC. In addition, the JSC may act without a formal meeting by a written
memorandum signed by the Co-Chairs of the JSC. Whenever any action by the JSC is
called for hereunder during a time period in which the JSC is not scheduled to
meet, the Co-Chairs of the JSC shall cause the JSC to take the action in the
requested time period by calling a special meeting or by action without a
meeting. Subject to the obligations set forth in Section 5, representatives of
each party or of its Affiliates, in addition to the members of the JSC, may
attend JSC meetings at the invitation of either party with the prior approval of
the other party, which shall not be unreasonably withheld.
2.2.4 Minutes.
-------
The JSC shall keep accurate minutes of its deliberations which record all
proposed decisions and all actions recommended or taken. Drafts of the minutes
shall be delivered to the Co-Chairs of the JSC within twenty (20) days after the
meeting. The party hosting the meeting shall be responsible for the preparation
and circulation of the draft minutes. Draft minutes shall be edited by the
Co-Chairs and shall be issued in final form only with their approval and
agreement as evidenced by their signatures on the minutes.
<PAGE> 18
2.2.5 Quorum; Voting; Decisions.
-------------------------
At each JSC meeting, at least two (2) member(s) appointed by each party
shall constitute a quorum. Each JSC member shall have one vote on all matters
before the JSC, provided that the member or members of each party present at a
JSC meeting shall have the authority to cast the votes of any of such party's
members on the JSC who are absent from the meeting. All decisions of the JSC
shall be made by majority vote, provided that such vote is supported by at least
one representative from each party. All JSC member actions shall be made in
consultation with the management of the party appointing such member. In the
event that the JSC is unable to resolve any matter before it, such matter shall
be referred at the request of either party to the Chief Executive Officer of
CHEMGENICS or some other individual nominated by him or her, and the President
of Wyeth-Ayerst Research or some other individual nominated by him or her, for
attempted resolution by good faith negotiations. If such officers cannot resolve
the matter, each party may, at its own expense, appoint an unaffiliated
scientific or other appropriate expert to advise such officers on the matter.
The scientific or other appropriate experts shall be reasonably acceptable to
the other party and shall be chosen based on their experience and expertise in
the particular type of issue which is unresolved. The experts shall render a
written advisory opinion to such officers, which may be considered by such
officers in an attempt to resolve the issue.
<PAGE> 19
2.2.6 Expenses.
--------
CHEMGENICS and WYETH-AYERST shall each bear all expenses of their
respective JSC members related to their participation on the JSC and attendance
at JSC meetings, and of any scientific experts appointed by them pursuant to
Section 2.2.5.
2.2.7 Project Leaders.
---------------
CHEMGENICS and WYETH-AYERST shall each appoint a "Project Leader" who shall
serve as such party's primary technical liaison with the other party to discuss
technical matters pertaining to the R & D Program.
2.2.8 Project Management Team.
-----------------------
CHEMGENICS and WYETH-AYERST shall establish a "Project Management Team"
(the "PMT"), which will act on behalf of the two companies and which shall
manage the R & D Program as directed by the JSC. CHEMGENICS and WYETH-AYERST
each shall appoint, in their sole discretion, three members to the PMT, which
shall include the Project Leaders. Substitutes or alternates for the Project
Leaders or other PMT members may be appointed at any time by notice in writing
to the other party. The parties may mutually agree to change the size of the PMT
as long as there shall be an equal number of representatives of each party on
the PMT.
The initial Project Leaders and other PMT members shall be designated by
the parties upon execution of this Agreement. The PMT shall meet, keep minutes
and establish operating procedures as directed by the JSC.
<PAGE> 20
The PMT shall be chaired by the two Project Leaders.
2.3 RESEARCH AND DEVELOPMENT TERM.
-----------------------------
2.3.1 Term of the R & D Program.
-------------------------
The Research Phase of the R & D Program shall terminate five (5) years
after the Project Commencement Date unless extended as provided below or unless
earlier terminated by either party pursuant to the termination provisions below
(hereinafter the "Research Term").
2.3.2 Extension of the Research Term.
------------------------------
The Research Term may be extended upon six (6) months prior notice by
mutual written agreement of the parties on terms to be agreed upon between the
parties.
2.3.3 Early Termination of the R & D Program.
--------------------------------------
(a) The R & D Program may be terminated by either party upon breach by the
other of the obligation to pay any amount due hereunder, or upon breach of any
other material obligation or condition, effective thirty (30) days after giving
written notice to the other of such termination in the case of a payment breach
and ninety (90) days after giving written notice to the other of such
termination in the case of any other breach, which notice shall describe such
breach in reasonable detail. The foregoing notwithstanding, (i) if the default
or breach is cured or shown to be non-existent within the aforesaid thirty (30)
or ninety (90) day period, the notice shall be deemed automatically withdrawn
and of no effect, and (ii) as to an alleged breach expressly set forth with
reasonable detail to be the subject of a
<PAGE> 21
good faith dispute as to whether or not such payment is due and owing or whether
a breach of any other material obligation or condition has occurred, within the
aforesaid thirty (30) day or ninety (90) day period, the running of the
remainder of the thirty (30) day or ninety (90) day period shall be tolled until
the dispute is resolved.
(b) If either party files for protection under bankruptcy laws, makes an
assignment for the benefit of creditors, appoints or suffers appointment of a
receiver or trustee over its property, files a petition under any bankruptcy or
insolvency act or has any such petition filed against it which is not discharged
within ninety (90) days of the filing thereof, then the other party may
terminate the R & D Program upon notice to such party.
(c) WYETH-AYERST may terminate the R & D Program at its sole discretion (i)
in the event of the "Acquisition" of CHEMGENICS by a third party, (ii) if
CHEMGENICS is no longer generally engaged in drug discovery as a primary
business activity or is generally unable to perform the types of obligations set
forth herein or (iii) if there have not been at least [ ] Accepted Targets
approved by the JSC by the [ ] anniversary of the Project Commencement Date
and there have not been at least [ ] Discovery Projects designated by the
JSC by such [ ] anniversary. For purposes hereof, an "Acquisition" shall be
deemed to have occurred if CHEMGENICS shall consolidate or merge with another
entity, or convey, sell or lease to another entity all or substantially all of
the stock, assets or business
<PAGE> 22
of CHEMGENICS and its subsidiaries, taken as a whole, or suffer a Change in
Control in which another entity shall come to control CHEMGENICS. Change of
Control as used herein shall mean any transaction or event as a result of which
any other entity acquires or for the first time controls and is able to vote
without restriction (directly or through nominees or beneficial ownership) fifty
percent (50%) or more of the capital stock of CHEMGENICS outstanding at the time
having the power ordinarily to vote for directors of CHEMGENICS.
(d) Any termination of the R & D Program shall be without prejudice to the
rights of either party against the other, then accruing or otherwise accrued
under this Agreement.
(e) Upon any early termination of the R & D Program by CHEMGENICS under
section 2.3.3(a) or (b), the provisions of Sections 8.7.3(a), (b), and (c) shall
apply as if all licenses granted to WYETH-AYERST under Section 8.1 had been
terminated.
(f) The licenses granted to WYETH-AYERST pursuant to Section 8.1(b) hereof
shall survive early termination of the R & D Program by WYETH-AYERST under this
Section 2.3.3. Further, as of the effective date of such early termination by
WYETH-AYERST of the R & D Program, WYETH-AYERST shall be released from its
future obligations of equity funding and research funding, pursuant to Sections
3.1, 3.2, and 3.3 hereof, except for any obligations which have accrued but have
not been satisfied as of such termination date.
<PAGE> 23
2.4 PRODUCT DEVELOPMENT
-------------------
2.4.1 Identification of Candidate Compounds for Pre-Project Status.
-------------------------------------------------------------
WYETH-AYERST and CHEMGENICS agree that a priority of the R & D Program
shall be to demonstrate as quickly as possible the antibacterial activity in
humans of a safe and effective Antibacterial Product in each Activity Profile.
At such time as CHEMGENICS or WYETH-AYERST has identified a CHEMGENICS Compound
or a WYETH-AYERST Compound discovered or developed by it (or jointly by it and
the other party) in the R & D Program which it believes should receive
Pre-Project Status, it shall notify the JSC in writing, and shall provide to the
JSC the data and information demonstrating that the Compound satisfies the
criteria for Pre-Project Status.
2.4.2 Designation of Antibacterial Products
-------------------------------------
At the request of CHEMGENICS or WYETH-AYERST, within thirty (30) days after
receipt of notice pursuant to 2.4.1 above, the JSC shall review the data and
information and shall notify the parties in writing of its determination as to
whether or not it believes the Compound should be given Pre-Project Status and
therefore be designated as a candidate for Pre-Project Status (a "Pre-Project
Status Candidate"). At the request of the JSC, either party, as appropriate,
shall provide the JSC with such additional data as the JSC shall reasonably
request, provided such party can reasonably obtain same. Any negative
determination by the JSC that it does not so recommend, shall be accompanied by
a detailed explanation of the reasons therefor.
<PAGE> 24
If the JSC does not act within such thirty (30) day period, it will be deemed to
have designated the Compound as a Pre-Project Status Candidate. Upon designation
of a Compound as a Pre-Project Status Candidate, [
] Upon issuance of
an "Antibacterial Product Designation" the Compound will become an
"Antibacterial Product," Schedule I will be amended to include such Compound,
and such Antibacterial Product shall be deemed to
<PAGE> 25
be included in the license to WYETH-AYERST pursuant to Section 8 hereof. If a
Compound is designated as an Antibacterial Product, its development will no
longer be under the purview of the JSC, but will be the sole responsibility of
WYETH-AYERST. WYETH-AYERST will appoint Discovery and Pre-Project Teams to
manage the development thereof, with CHEMGENICS having at least one
representative on each such Team.
2.4.3 Pre-Project Status Compounds Not Selected by WYETH-AYERST as
------------------------------------------------------------
Antibacterial Products.
----------------------
In case of failure by WYETH-AYERST to issue an Antibacterial Product
Designation with respect to a particular CHEMGENICS Compound as provided in
Section 2.4.2, CHEMGENICS will not market nor grant rights in the Field in the
Territory to such Compound to any party for the longer of: (i) so long as
WYETH-AYERST is actively and diligently involved in the development and/or the
marketing of an Antibacterial Product in the Field in the Territory in the same
Activity Profile or (ii) until one year after the end of the Research Term.
CHEMGENICS shall have rights with respect to the commercialization of such
CHEMGENICS Compounds in the Territory solely as set forth in Section 2.5 hereof.
2.4.4 Development Obligations.
-----------------------
WYETH-AYERST agrees that it will exert commercially reasonable drug
development and marketing efforts that are consistent with those efforts
undertaken in its own global pharmaceutical business to develop and market in
the Field, throughout such areas of the Territory as it may reasonably
<PAGE> 26
determine, at its own expense, Antibacterial Products incorporating or derived
from any Compounds which receive Antibacterial Product Designation (a "Drug
Development Program").
2.4.5 Reports.
-------
WYETH-AYERST will keep CHEMGENICS fully informed concerning the status of
the Drug Development Program for each Antibacterial Product, it being understood
that all such information is Confidential Information subject to all the terms
and conditions of this Agreement, and particularly Article 5 hereof. WYETH-
AYERST shall (a) report to CHEMGENICS in reasonable detail no less frequently
than quarterly concerning all aspects of such development and commercialization
activities; (b) provide CHEMGENICS with access to Technology and Confidential
Information employed in or arising out of such development and commercialization
activities; (c) provide CHEMGENICS with summaries of all regulatory filings
filed in connection with such Products, together with all clinical protocols and
material correspondence with regulatory authorities in the United States and
other countries; and (d) provide such other information concerning such
development and commercialization activities as CHEMGENICS shall reasonably
request.
2.5 COMMERCIALIZATION RIGHTS.
------------------------
(a) Except as otherwise provided herein, (i) WYETH-AYERST shall have the
exclusive right to develop and commercialize Antibacterial Products
which are derived from either CHEMGENICS Products or WYETH-AYERST
Products in the Territory for use in the Field; and
<PAGE> 27
(ii) commencing one year after the end of the Research Term,
CHEMGENICS shall have the exclusive right in the Territory and in the
Field to develop and commercialize any Compound which is a CHEMGENICS
Product, but not an Antibacterial Product being developed by
WYETH-AYERST, by itself or with a third party and shall have an
exclusive right of first refusal as set forth in Section 2.6 hereof to
develop and commercialize by itself or with a third party, any
WYETH-AYERST Product that WYETH-AYERST makes available for licensing
in the Field; provided, however, that CHEMGENICS shall have no such
rights under subsection (ii) hereof if WYETH-AYERST has designated
and is developing another Compound as an Antibacterial Product
hereunder, which has the same Activity Profile; and, provided further,
that CHEMGENICS shall not have the right of first refusal set forth
above for WYETH-AYERST Products if WYETH-AYERST has terminated the
R & D Program in accordance with Section 2.3.3(a), 2.3.3(b), or
clause (i) of Section 2.3.3(c) hereof. Licenses for all such rights
shall be granted in accordance with the terms of Section 8 hereof.
<PAGE> 28
(b) Except as set forth in Section 2.5(c) or Section 2.7, if either party
wishes to develop and commercialize an Antibacterial Product listed on
Schedule I for use outside the Field, it shall notify the other party.
If both parties have the right to engage in such development and
commercialization, then such opportunities shall be reasonably
considered by both parties and shall only be pursued upon terms
mutually agreeable to both parties.
(c) Notwithstanding the foregoing, WYETH-AYERST will have an exclusive
right of first refusal as set forth in Section 2.6 hereof to license
Compounds and related Technology which reach Pre-Project Status for
use in the prevention and treatment of bacterial disease in animals,
said right vesting in WYETH-AYERST as of the date of designation of
such Compound as an Antibacterial Product.
(d) If at any time WYETH-AYERST elects to discontinue the development or
commercialization of an Antibacterial Product in the Field, (i) it
shall promptly notify CHEMGENICS, whereupon, WYETH-AYERST's license to
such Antibacterial Product from CHEMGENICS will be terminated, and,
(ii) commencing one year after the end of the Research Term and
provided that WYETH-AYERST is not actively developing another
Antibacterial Product in the same Activity Profile, (a) CHEMGENICS
will have the right to develop and commercialize any such
<PAGE> 29
Antibacterial Product which is a CHEMGENICS Product itself or with a
third party on the same basis as if the license for such Antibacterial
Product had been terminated by CHEMGENICS pursuant to Section 8.7.2
hereof and (b) CHEMGENICS shall have a right of first refusal as set
forth in Section 2.6 hereof related to any such Antibacterial Product
which is a WYETH-AYERST Product that WYETH-AYERST makes available for
licensing in the Field.
(e) In the event CHEMGENICS exercises its right to develop and
commercialize any Antibacterial Product as permitted in Section 2.5(a)
or 2.5(d) above, it shall give WYETH-AYERST written notice specifying
the Antibacterial Product to be developed and commercialized.
(f) At the request of CHEMGENICS, and provided that CHEMGENICS can
reasonably demonstrate to WYETH-AYERST that it has appropriate
capabilities, the parties will discuss CHEMGENICS' participation in
marketing, co-marketing, co-promoting or manufacturing Antibacterial
Products, but WYETH-AYERST will not be obligated to agree to
CHEMGENICS' participation in such activities.
(g) For the purposes of this Section, any Product which is within the
definition of both a WYETH-AYERST Product (as set forth in Section
1.33) and a CHEMGENICS Product
<PAGE> 30
(as set forth in Section 1.6) shall be treated for the purposes hereof
as being jointly owned and the provisions applying to CHEMGENICS
Products shall apply to CHEMGENICS' ownership interest therein and the
provisions applying to WYETH-AYERST Products shall apply to
WYETH-AYERST's ownership interest therein.
2.6 RIGHT OF FIRST REFUSAL.
----------------------
In the event that either party has a right of first refusal hereunder, the
other party (the "Offering Party") shall give written notice to the party having
such right (the "Receiving Party") specifying in reasonable detail the rights
that the Offering Party intends to license (the "Offer"). The Receiving Party
shall have thirty (30) days after the date of the Offer to provide a written
response to the Offering Party (the "Response") as to whether or not it wishes
to enter into negotiations with the Offering Party with respect to such rights.
If the Response states that the Receiving Party wishes to enter into
negotiations with the Offering Party, the parties shall negotiate in good faith
the licensing of such rights for a period of ninety (90) days from the date of
the Response. If the Response is not received within the thirty (30) day
response period or if the Receiving Party declines to enter into negotiations or
if the parties do not agree upon and execute a written agreement within the
ninety (90) day negotiation period, the Offering Party shall thereafter have the
right to negotiate with third parties with respect to such rights. However,
prior to the execution of any definitive agreement with any third party, the
Offering Party
<PAGE> 31
shall provide the complete terms of such agreement to the Receiving Party and
the Receiving Party shall have a period of fifteen (15) days in which to accept
such agreement for itself or to decline the execution of such agreement, after
which time the Offering Party may execute such Agreement with any other party.
2.7 RIGHT OF FIRST NEGOTIATION FOR H. PYLORI INFECTION.
--------------------------------------------------
In addition to the foregoing commercialization rights granted hereunder to
WYETH-AYERST, during the Research Term, in the event that CHEMGENICS determines
to undertake a program to develop and commercialize for itself or to license to
any non-Affiliate rights to develop, make, use, offer for sale, sell and import
any product having potential use for treatment of H. pylori infection in humans
for use in peptic ulcer disease or gastritis (an "H. pylori Program"),
CHEMGENICS shall give written notice to WYETH-AYERST, specifying in reasonable
detail the H. pylori Program that CHEMGENICS intends to pursue and any rights
CHEMGENICS intends to license or the product which it intends to develop (the
"CHEMGENICS Notice"). WYETH-AYERST shall have thirty (30) days after the date of
the CHEMGENICS Notice to provide a written response to CHEMGENICS ("WYETH-AYERST
Response") as to whether or not it wishes to enter into negotiations with
CHEMGENICS concerning such H. pylori Program. If CHEMGENICS does not receive a
WYETH-AYERST Response within such thirty (30) day period or if WYETH-AYERST
declines to enter into negotiations, CHEMGENICS shall thereafter have the right,
alone or in collaboration with a third party, to pursue
<PAGE> 32
development, commercialization or licensing of the rights which were the subject
of the CHEMGENICS Notice free of any restriction or limitation, or duty to
WYETH-AYERST whatsoever. If the WYETH-AYERST Response states that WYETH-AYERST
wishes to enter into negotiations with CHEMGENICS, the parties shall negotiate
in good faith the licensing of such rights to WYETH-AYERST for a period of sixty
(60) days from the date of the WYETH-AYERST Response.
If the parties do not agree upon and execute a written agreement for such
rights within such sixty (60) day period, as such period may be extended by
written agreement of both parties, WYETH-AYERST shall set forth in writing in
detail its "last best offer" with respect to such development, commercialization
or licensing of rights. If CHEMGENICS does not accept such last best offer,
CHEMGENICS will furnish WYETH-AYERST with a written statement that it rejects
such last best offer, and CHEMGENICS shall thereafter have the right, alone or
in collaboration with a third party, to pursue development, commercialization or
licensing of the rights which were the subject of the CHEMGENICS Notice, but
only on terms reasonably believed by CHEMGENICS to be more favorable in the
aggregate to CHEMGENICS than WYETH-AYERST's last best offer. Both parties
recognize that in evaluating the favorability to CHEMGENICS of development,
commercialization or licensing terms, numerous factors may be taken into account
and given appropriate weight, including without limitation, the amount of
upfront payments, the amount and timing of subsequent payments, the royalty
rate(s), the definition of territory, the purchase and pricing of equity, the
identity, experience and
<PAGE> 33
market position of the other party in the relevant markets, and the contribution
of patent or other intellectual property rights material to the commercial
success of CHEMGENICS. Moreover, WYETH-AYERST agrees that CHEMGENICS is entitled
to assign reasonable value to comarketing, copromotion, manufacturing or patent
rights or other consideration that CHEMGENICS receives in return for the rights
granted by CHEMGENICS.
2.8 RETAINED RIGHTS.
---------------
Except as set forth herein, and in particular as set forth in Sections
2.5(b) and 2.5(c) hereof, nothing in this Agreement shall limit in any respect
the right of either party to conduct research and development with respect to
and market products outside the Field using any of such party's technology,
information, or otherwise.
3. FUNDING
-------
3.1 EQUITY INVESTMENTS.
------------------
WYETH-AYERST will make three equity investments in CHEMGENICS in accordance
with the terms of a Series E Preferred Stock Purchase Agreement of even date
herewith (the "Stock Purchase Agreement"):
1. $5 million on the Effective Date of this Agreement
2. $5 million as set forth in Section 1.03(b) of the Stock Purchase
Agreement.
3. $3 million as set forth in Section 1.03(c) of the Stock Purchase
Agreement.
<PAGE> 34
3.2 RESEARCH FUNDING.
----------------
In partial consideration of the work to be done by CHEMGENICS in the R & D
Program, WYETH-AYERST will pay CHEMGENICS non-refundable research payments of
[ ] per month during the initial three-year-period of the Research Term
commencing retroactively as of October 1, 1996. During the fourth and fifth
years of the Research Term, WYETH-AYERST will pay CHEMGENICS [
] Such payments will
be made in advance, on or before the first day of each calendar quarter, with
the first and last payments prorated in the event that the Effective Date is not
the first day of a calendar quarter. The first research payment shall be made
simultaneously with the execution of this Agreement and shall include all
amounts necessary to make WYETH-AYERST current in research payments due since
October 1, 1996. WYETH-AYERST will fund its own activities under the R & D
Program.
3.3 ADDITIONAL R&D PAYMENTS.
-----------------------
WYETH-AYERST will make additional research payments to CHEMGENICS within 30
days of the determination (as set forth in
<PAGE> 35
Section 3.5) of the achievement of certain research goals as set forth below. If
any goal is achieved during the term of this Agreement, the payment for such
goal will be absolutely due and payable.
[
]
<PAGE> 36
[
]
3.4 MILESTONE PAYMENTS.
------------------
WYETH-AYERST will make payments to CHEMGENICS within thirty (30) days after
the determination (as set forth in Section 3.5) of the achievement of each of
the milestones set forth below for each of the Activity Profiles to be pursued
under the R & D Program. If any milestone is achieved during the term of this
Agreement, the payment for such milestone will be absolutely due and payable.
Milestone Payment
- --------- -------
[
]
<PAGE> 37
[
]
3.5 DETERMINATION THAT GOALS AND MILESTONES ARE ACHIEVED.
----------------------------------------------------
In the event that CHEMGENICS believes any research goal or milestone has
been achieved, it shall so notify the JSC in writing and shall provide to the
JSC the data and information demonstrating that the research goal or milestone
has been achieved. Within thirty (30) days, the JSC shall review the data and
information and shall certify in writing whether or not the research goal or
milestone has been achieved. Any negative determination shall be accompanied by
a detailed explanation of the reasons therefor. If the JSC does not take action
within such thirty (30) day period, the research goal or milestone shall be
deemed to have been achieved.
3.6 RESEARCH AND DEVELOPMENT TAX CREDITS.
------------------------------------
Each party shall be entitled to seek the benefit of any research and
development tax credits arising out of any research paid for by such party or
its Affiliates. CHEMGENICS acknowledges that, to the extent appropriate,
research payments made hereunder, including Sections 3.2, 3.3 and 3.4, are made
in furtherance of research, and may entitle WYETH-AYERST to seek research tax
credits.
<PAGE> 38
4. OTHER TECHNOLOGY
----------------
4.1 OTHER TECHNOLOGY.
----------------
The parties hereto acknowledge that WYETH-AYERST may engage in development
and commercialization of antibacterial products, through internal research
efforts and in collaboration with others, and that both WYETH-AYERST and
CHEMGENICS may engage in discussions or may enter into agreements with other
parties relative to development and commercialization of other pharmaceutical
products. Accordingly, nothing contained in this Agreement shall be construed as
limiting the right of either party to engage in any such discussions or third
party agreements, and any benefits or obligations arising from such independent
transactions shall inure solely to the party participating therein.
Notwithstanding the foregoing, but subject to Section 2.2.1, it is
contemplated hereunder that WYETH-AYERST may elect, at its sole discretion, to
place other technologies at its disposal into the collaboration hereunder to the
extent it is permitted to do so. If WYETH-AYERST makes such an election, it will
in no way affect the rights and obligations of the parties hereto except as
expressly set forth herein without the prior written consent of CHEMGENICS,
which consent shall not be unreasonably withheld.
<PAGE> 39
5. TREATMENT OF CONFIDENTIAL INFORMATION
-------------------------------------
5.1 CONFIDENTIALITY.
---------------
5.1.1 General.
-------
CHEMGENICS and WYETH-AYERST each recognize that the other party's
Confidential Information constitutes highly valuable and proprietary
confidential information. Subject to the terms and conditions of Section 8,
CHEMGENICS and WYETH-AYERST each agree that during the R & D Program and the
License Term and for five (5) years thereafter, it will keep confidential, and
will cause its employees, consultants, Affiliates and licensees and sublicensees
to keep confidential, all Confidential Information of the other party that is
disclosed to it, or to any of its employees, consultants, Affiliates and
licensees and sublicensees, pursuant to or in connection with this Agreement.
Neither CHEMGENICS nor WYETH-AYERST nor any of their respective employees,
consultants, Affiliates and licensees and sublicensees shall use Confidential
Information of the other party for any purpose whatsoever except as expressly
permitted in this Agreement. Notwithstanding the foregoing, WYETH-AYERST will
reasonably cooperate with CHEMGENICS in the making of reasonable, confidential
disclosures of Confidential Information to investment bankers, investors and
potential investors of CHEMGENICS.
5.1.2 Restricted Access.
-----------------
CHEMGENICS and WYETH-AYERST each agree that any disclosure of the other
party's Confidential Information to any of its officers, employees, consultants
or agents or those of any of its
<PAGE> 40
Affiliates and licensees and sublicensees shall be made only if and to the
extent necessary to carry out its rights and responsibilities under this
Agreement with respect to the Field, shall be limited to the maximum extent
possible consistent with such rights and responsibilities and shall only be made
to persons who are bound by written confidentiality agreements to maintain the
confidentiality thereof and not to use such Confidential Information except as
expressly permitted by this Agreement. CHEMGENICS and WYETH-AYERST, for
themselves and their Affiliates, each agree not to disclose the other party's
Confidential Information to any third parties under any circumstance without
prior written approval from the other party, except as required in any patent
application or patent prosecution, in any application for regulatory approval
for testing, manufacture or sale of an Antibacterial Product subject to this
Agreement, or as otherwise required by law, and except as otherwise reasonably
required to exercise such party's rights under this Agreement. However, before
disclosing the other party's Confidential Information in connection with a
patent application, patent prosecution or regulatory application or as otherwise
required by law, the disclosing party shall provide a copy of such intended
disclosure to the other party. If the other party so requests and where
permitted by law or regulation, the disclosing party shall redact such portion
of the intended disclosure as reasonably requested. Each party shall take such
action, and shall cause its Affiliates and licensees and sublicensees to take
such action, to preserve the confidentiality
<PAGE> 41
of each other's Confidential Information as it would customarily take to
preserve the confidentiality of its own Confidential Information, and in no
event, less than reasonable care. Each party, upon the other's request, will
return all the Confidential Information disclosed to it by the other party
pursuant to this Agreement, including all copies and extracts of documents,
within sixty (60) days of the request following the termination of this
Agreement; provided that a party may retain Confidential Information of the
other party relating to any license or right to use Technology which survives
such termination and one copy of all other Confidential Information may be
retained in confidential and inactive archives solely for the purpose of
establishing the contents thereof.
5.1.3 Employee Confidentiality Agreements.
-----------------------------------
CHEMGENICS and WYETH-AYERST each represents that all of its employees and
all of the employees of its Affiliates, and any consultants to such party or its
Affiliates, participating in the R & D Program who shall have access to
Confidential Information of the other party are bound by written agreements to
maintain such information in confidence and not to use such information except
as expressly permitted herein. Each party agrees to enforce confidentiality
obligations to which its employees and consultants (and those of its Affiliates)
are obligated.
<PAGE> 42
5.2 PUBLICITY.
---------
Neither party may disclose the existence or terms of this Agreement without
the prior written consent of the other party; provided, however, that either
party may make such a disclosure to the extent required by law, subject to the
provisions of redaction set forth in 5.1.2 hereof, and that CHEMGENICS may make
a disclosure of the existence and terms of this Agreement to investors,
prospective investors, lenders and other financing sources, or for products for
which rights in the Field are granted to CHEMGENICS hereunder, and subject to
the provisions of redaction set forth in 5.1.2 hereof. The parties, upon the
execution of this Agreement and from time to time thereafter, will agree to news
releases for publication in general circulation periodicals and newswires. Once
any written statement is approved for disclosure by both parties, either party
may make subsequent public disclosure of the contents of such statement without
the further approval of the other party.
5.3 PUBLICATION.
-----------
It is expected that each party may wish to publish the results of its
research under this Agreement. In order to safeguard intellectual property
rights, the party wishing to publish or otherwise publicly disclose the results
of its research hereunder shall first submit a draft of the proposed scientific
manuscripts, abstracts or other proposed public presentations, to the JSC for
review, comment and consideration of appropriate patent action at least four (4)
weeks prior to any submission for publication or other public disclosure. Within
<PAGE> 43
twenty (20) days of receipt of the prepublication materials, the JSC will advise
the party seeking publication as to whether a patent application will be
prepared and filed or whether trade secret protection should be pursued and, if
so, the JSC will, in cooperation with both parties, determine the appropriate
timing and content of any such publications.
5.4 PROHIBITION ON HIRING.
---------------------
Neither WYETH-AYERST nor its Affiliates shall, without CHEMGENICS' prior
written approval, during the R & D Program, but in any event for at least five
(5) years from the Effective Date, solicit (directly or indirectly) or hire any
person who was employed by CHEMGENICS or its Affiliates, whether such person is
hired as an employee, investigator, independent contractor or otherwise, without
the express written consent of CHEMGENICS. This restriction shall not apply to
any CHEMGENICS employee who did not participate in the R&D Program and who
actively seeks employment with WYETH-AYERST and initiates contact with WYETH-
AYERST regarding same.
6. INTELLECTUAL PROPERTY RIGHTS
----------------------------
6.1 DISCLOSURE OF INVENTIONS.
------------------------
Each party shall promptly inform the other and the JSC about all inventions
in the Field that are conceived, made or developed in the course of carrying out
the R & D Program by employees or consultants of either of them or their
Affiliates alone or jointly with employees or consultants of the other party or
its
<PAGE> 44
Affiliates. The following provisions shall apply to rights in the intellectual
property developed by CHEMGENICS or WYETH-AYERST, or both, during the course of
carrying out the R & D Program.
6.2 OWNERSHIP.
---------
6.2.1 CHEMGENICS Intellectual Property Rights.
---------------------------------------
CHEMGENICS shall have sole and exclusive ownership of all right, title and
interest on a worldwide basis in and to any Technology developed solely by
CHEMGENICS (collectively, the "CHEMGENICS Owned Technology"), with full rights
to license or sublicense, subject to WYETH-AYERST's rights hereunder. Without
limiting the foregoing, subject to the licenses granted in Section 8 hereof and
WYETH-AYERST's rights under Section 8.6 hereof, CHEMGENICS shall be the sole
owner of all Patent Rights, all trade secret rights and any other intellectual
property rights in the CHEMGENICS Owned Technology, including the sole and
exclusive right to exclude others from making, using, selling, offering for sale
or importing the CHEMGENICS Owned Technology or any products based on or derived
from the CHEMGENICS Compounds or any other CHEMGENICS Owned Technology.
6.2.2 WYETH-AYERST Intellectual Property Rights.
-----------------------------------------
WYETH-AYERST shall have sole and exclusive ownership of all right, title
and interest on a worldwide basis in and to any Technology developed solely by
WYETH-AYERST without use of CHEMGENICS Technology, including any compounds
obtained by WYETH-AYERST other than as a result of the R&D Program
("WYETH-AYERST Owned Technology"), with full rights to license or sublicense,
<PAGE> 45
subject to CHEMGENICS' rights hereunder. Without limiting the foregoing, subject
to the licenses granted hereunder and CHEMGENICS' rights under Section 8.6
hereof, WYETH-AYERST shall be the sole owner of all Patent Rights, all trade
secret rights and any other intellectual property rights in the WYETH-AYERST
Owned Technology, including the sole and exclusive right to exclude others from
making, using, selling, offering for sale or importing the WYETH-AYERST Owned
Technology or any products based on or derived from the WYETH-AYERST Compounds
or any other WYETH-AYERST Owned Technology.
6.2.3 Joint Technology.
----------------
WYETH-AYERST and CHEMGENICS shall jointly own (a) all Technology jointly
invented by both CHEMGENICS and WYETH-AYERST in the R & D Program without the
use of CHEMGENICS Technology and (b) all Technology developed by WYETH-AYERST
with the use of CHEMGENICS Technology (the "Joint Technology") and shall jointly
own all Joint Patent Rights. Each party shall have rights to use Joint
Technology and Joint Patent Rights outside the Field, subject to the provisions
of Article 2.5 hereof.
6.2.4 Rights Outside the Field.
------------------------
Except as specifically set forth herein, each party shall have the sole and
exclusive right, including rights under its own interests in any Joint
Technology and any Patent Rights thereon and rights to grant sublicenses
thereunder, to develop, have developed, make, have made, use, distribute for
sale, sell, offer for sale and import any products which are derived from its
<PAGE> 46
Compounds other than Antibacterial Products listed on Schedule I for all uses
outside the Field.
6.3 PATENT COORDINATORS.
-------------------
CHEMGENICS and WYETH-AYERST shall each appoint a Patent Coordinator who
shall serve as such party's primary liaison with the other party on matters
relating to patent filing, prosecution, maintenance and enforcement. Each party
may replace its Patent Coordinator at any time by notice in writing to the other
party. The initial Patent Coordinators shall be designated by the parties upon
execution of this Agreement.
6.4 INVENTORSHIP.
------------
In case of dispute between CHEMGENICS and WYETH-AYERST over inventorship,
the JSC, with the advice of the parties and mutually acceptable outside patent
counsel, shall make the determination of the inventor(s) by application of the
standards contained in United States patent law. The JSC, with the advice of the
Patent Coordinators and mutually acceptable outside patent counsel, shall also,
in the case of dispute, make the determination as to whether an invention is
Joint Technology.
6.5 TRADEMARKS.
----------
WYETH-AYERST, its Affiliates, distributors, assignees, licensees and
sublicensees, shall have the absolute right to use, and in its sole discretion,
register any trademarks, tradenames and/or tradedress WYETH-AYERST may choose,
in connection with the Antibacterial Products licensed to it hereunder provided
that the label for any such Antibacterial Product shall contain the words
<PAGE> 47
"Manufactured under license from ChemGenics Pharmaceuticals Inc." in reasonably
prominent type, consistent with applicable regulatory and labeling requirements.
Except as provided by Section 8.7.3(b)(i) hereof, CHEMGENICS shall have no
right, title, or interest in or to any trademark, tradenames or tradedress which
WYETH-AYERST, its Affiliates, distributors, assignees, licensees or sublicensees
may use on or in connection with Antibacterial Products, or the packaging,
advertising, promotion, labeling, marketing or selling thereof. Further, and for
so long as WYETH-AYERST, its Affiliates, distributors, assignees, licensees or
sublicensees shall have any interest in or to any such trademarks, tradenames,
or tradedress whether as proprietor, owner, licensee, or licensor, in the
Territory or any part thereof, CHEMGENICS shall not adopt, use, apply for
registration, register, own or acquire such trademark, tradename or tradedress,
or any mark, name or tradedress confusingly similar thereto.
7. PROVISIONS CONCERNING THE FILING, PROSECUTION
---------------------------------------------
AND MAINTENANCE OF PATENT RIGHTS
--------------------------------
The following provisions relate to the filing, prosecution and maintenance
of Patent Rights during the term of this Agreement:
7.1 FILING OF PATENTS.
-----------------
In consultation with the Patent Coordinators, the JSC will coordinate the
determination of what patents will be filed on Technology developed under the R
& D Program. Each party will be responsible for the filing and prosecution
(including the defense
<PAGE> 48
of interferences and similar proceedings) of any such patents for which it is
the sole inventor, provided that the other party will have the opportunity to
provide substantive review and comment on any such filing and prosecution.
Responsibility for filing and prosecution of patents (including the defense of
interferences and similar proceedings) on Joint Technology will be agreed upon
by the parties on a case-by-case basis and handled by mutually acceptable
outside patent counsel charged with the duty to act in the best interests of
both parties. Each party shall also promptly give notice to the other of the
grant, lapse, revocation, surrender, invalidation or abandonment of any Patent
Rights for which it has responsibility. If at any time, either party wishes to
discontinue the prosecution of any such patent(s) owned solely by it, such party
shall promptly give notice of such intention to the other party. The party
receiving such notice shall have the right, but not the obligation, to assume
responsibility for the prosecution of any such patent(s) by giving notice to the
party wishing to discontinue such prosecution of such intention within thirty
(30) days and such patents shall thereafter be exclusively licensed to the party
assuming the responsibility for prosecution or maintenance of the Patent Right
under this Agreement, in accordance with the license grant of Section 8 hereof.
7.2 EXPENSES.
--------
CHEMGENICS will bear the costs of the prosecution and maintenance of all
patents for which it has prosecution and
<PAGE> 49
maintenance responsibilities pursuant to Section 7.1 hereof in the territories
of the United States, countries covered by the European Patent Office and Japan.
WYETH-AYERST will determine the countries in which patent applications will be
filed and shall bear the costs of the prosecution and maintenance of all patents
filed pursuant to this Agreement except as set forth in the preceding sentence
or the following sentence. If CHEMGENICS wishes to file a patent application on
CHEMGENICS Technology in a country not selected by WYETH-AYERST, CHEMGENICS may
do so at its own expense. The parties shall cooperate with each other in gaining
patent term restoration or similar extensions or continuations of rights under
Patent Rights.
8. LICENSE RIGHTS
--------------
8.1 LICENSE GRANTS.
--------------
(a) CHEMGENICS hereby grants to WYETH-AYERST a license under Technology,
Confidential Information, and Patent Rights and CHEMGENICS' interests in Joint
Technology and Joint Patent Rights, co-exclusive with CHEMGENICS, to research,
discover, develop, and make Compounds and to use Accepted Targets solely to
discover and develop Antibacterial Products for use in the Field in accordance
with the R&D Program and during the R&D Term.
(b) During the Commercial License Term, as to each Antibacterial Product
listed on Schedule I hereto pursuant to the provisions of Section 2.4.2 hereof
which is derived from either a CHEMGENICS Compound or a WYETH-AYERST Compound,
CHEMGENICS hereby grants to WYETH-AYERST an exclusive license in the Territory
<PAGE> 50
including the right to grant sublicenses, to develop, have developed, make, have
made, use, distribute for sale, offer for sale, sell and import such
Antibacterial Product for use in the Field under any and all Patent Rights,
Confidential Information, and Technology covering such Antibacterial Product
owned by or licensed (with the right to grant sublicenses) to CHEMGENICS
(including CHEMGENICS' interests in Joint Technology and Joint Patent Rights).
Upon the expiration of the Commercial License Term for each Antibacterial
Product, WYETH-AYERST shall have a paid up royalty free license to any and all
Patent Rights, Confidential Information and Technology covering such
Antibacterial Product for purposes of the manufacture, use, sale or import
thereof.
(c) For the avoidance of doubt, it is acknowledged that, pursuant to the
terms of this Agreement (i) WYETH-AYERST shall have no license from CHEMGENICS
under, access to or right to use, any Patent Rights or Technology owned by or
licensed to CHEMGENICS, for any purpose other than those expressly set forth in
the preceding paragraphs (a) and (b) hereof, including diagnostic purposes, and
(ii) CHEMGENICS shall have no license from WYETH-AYERST under, access to or
right to use, any Patent Rights or Technology owned by or licensed to
WYETH-AYERST, for any purpose other than those expressly set forth herein,
including diagnostic purposes.
<PAGE> 51
8.2 TERM OF COMMERCIAL LICENSE.
--------------------------
The Commercial License Term as to each Antibacterial Product shall commence
upon the issuance of an Antibacterial Product Designation pursuant to Section
2.4.2 with respect to the Antibacterial Product. The Commercial License Term for
each Antibacterial Product shall continue on a country-by-country and
product-by-product basis until the last to expire of the CHEMGENICS Patent
Rights, WYETH-AYERST Patent Rights or Joint Patent Rights in any country in the
Territory to which the license pertains, having at least one composition, method
of manufacture, or therapeutic use Valid Claim that covers such composition,
method of manufacture or therapeutic use, or until the expiration of [ ]
from the First Commercial Sale in such country by WYETH-AYERST or its
Affiliates, licensees or sublicensees of each Antibacterial Product, whichever
is later. The license for each such Antibacterial Product shall be deemed a
license separate and severable from licenses to other Antibacterial Products.
8.3 LICENSES AND SUBLICENSES TO THIRD PARTIES.
-----------------------------------------
If WYETH-AYERST grants a license or sublicense to a third party,
WYETH-AYERST shall guarantee that such licensee or sublicensee will fulfill all
of WYETH-AYERST's obligations under this Agreement; provided, however, that
WYETH-AYERST shall not be relieved of its obligations pursuant to this Agreement
as a result of such license or sublicense.
<PAGE> 52
8.4 PAYMENT OF ROYALTIES, ROYALTY RATES, ACCOUNTING FOR
---------------------------------------------------
ROYALTIES AND RECORDS.
---------------------
8.4.1 Payment of Royalties to CHEMGENICS
----------------------------------
The payment of royalties by WYETH-AYERST is in consideration of the
provision of and licenses to Patents, Technology and Confidential Information
granted hereunder, and for lead time provided for the acceleration of
identifying novel compounds as potential products. WYETH-AYERST shall pay
CHEMGENICS a royalty based on the Net Sales of Antibacterial Products in each
country during the Commercial License Term for each such Antibacterial Product.
For each Antibacterial Product, the royalty shall be calculated as follows:
[
]
Such royalty shall be determined based on total annual Net Sales of WYETH-AYERST
and its Affiliates, licensees and sublicensees of each Antibacterial Product in
each Fiscal Year.
8.4.2 Credits and Offsets.
-------------------
Notwithstanding the foregoing, for all Net Sales by WYETH-AYERST or its
Affiliates, licensees or sublicensees in the Territory of each particular
Antibacterial Product, the royalty payments due to CHEMGENICS as specified above
are subject to a credit equal to [ ] of any Milestone Payments made by
WYETH-AYERST on such Antibacterial Product pursuant to the
<PAGE> 53
provisions of Section 3.4 hereof; provided that such credits shall not reduce
the royalty payable on any Antibacterial Product in any year by more than [ ]
of the amount otherwise payable. Such [ ] of Milestone Payments will be
carried forward until credited in full against royalty payments on such
Antibacterial Product.
8.4.3 Reductions.
----------
[
]
8.4.4 Outside Technology.
------------------
If, solely as a result of the incorporation of any Outside Technology in
the R & D Program as envisioned in Section 4.1, after application of the credits
and reductions set forth in 8.4.2 and 8.4.3 above, the commercialization of any
Antibacterial
<PAGE> 54
Product hereunder becomes infeasible because of the overall level of royalties
payable thereon, the parties will in good faith discuss the modification of the
economic terms hereof in order to attempt to mitigate such circumstances.
8.4.5 Payment Dates and Reports.
-------------------------
Royalties shall be paid by WYETH-AYERST on Net Sales within thirty (30)
days after the end of each Fiscal Quarter in the Fiscal Year in which such Net
Sales are made. Such payments shall be accompanied by a report showing the
quantity and Net Sales of each Antibacterial Product sold by WYETH-AYERST or any
Affiliate, licensee or sublicensee in each country, the applicable royalty rate
for such Antibacterial Product, any credits or offsets to be applied, and a
calculation of the amount of royalty due.
8.4.6 Accounting.
----------
The Net Sales used for computing the royalties payable to CHEMGENICS
hereunder shall be computed, and royalties shall be paid, in U.S. dollars. For
purposes of determining the amount of royalties due, the amount of Net Sales in
any foreign currency shall be computed by converting such amount into U.S.
dollars at the prevailing commercial rate of exchange for purchasing dollars
with such foreign currency as reported in The Wall Street Journal on the last
business day of the period to which a royalty payment relates.
CHEMGENICS agrees that any tax burden levied by any countries foreign to
the United States covered by this Agreement on receipt by CHEMGENICS of
royalties from WYETH-AYERST under
<PAGE> 55
this Agreement shall be borne by CHEMGENICS. In the event that such tax is
required to be withheld by WYETH-AYERST, its Affiliates, licensees or
sublicensees, it shall deliver to CHEMGENICS a statement including the amount of
tax withheld and justification therefor, and such other information as may be
necessary for United States foreign tax credit purposes.
8.4.7 Records.
-------
WYETH-AYERST, its Affiliates, licensees and sublicensees shall keep for
five (5) years from the date of each payment of royalties complete and accurate
records of sales by WYETH-AYERST and its Affiliates, licensees and sublicensees
of each Antibacterial Product in sufficient detail to allow the accruing
royalties to be determined accurately. CHEMGENICS shall have the right for a
period of five (5) years after receiving any report or statement with respect to
royalties due and payable to appoint an independent certified public accountant
reasonably acceptable to WYETH-AYERST to inspect the relevant records of
WYETH-AYERST and its Affiliates, licensees and sublicensees to verify such
report or statement. WYETH-AYERST and its Affiliates, licensees and sublicensees
shall make its records available for inspection by such independent certified
public accountant during regular business hours at such place or places where
such records are customarily kept, upon reasonable notice from CHEMGENICS,
solely to verify the accuracy of the reports and payments. Such inspection right
shall not be exercised more than once in any Fiscal Year nor more than once with
respect to sales of any
<PAGE> 56
Antibacterial Product in any given payment period. CHEMGENICS agrees, and will
require that any such certified public accountant shall agree, to hold in strict
confidence all information concerning royalty payments and reports, and all
information learned in the course of any audit or inspection, except to the
extent necessary for CHEMGENICS to reveal such information in order to enforce
its rights under this Agreement or if disclosure is required by law. The results
of each inspection, if any, shall be binding on both parties. CHEMGENICS shall
pay for such inspections, except that in the event there is any upward
adjustment in aggregate royalties payable for any Fiscal Year of the inspected
party shown by such inspection of more than five percent (5%) of the amount
paid, WYETH-AYERST shall pay for such inspection.
8.4.8 Overdue Royalties.
-----------------
Royalties not paid within the time period set forth in Section 8.4.5 shall
bear interest at a rate per month equal to one-twelfth of the annual prime rate
as published in the Wall Street Journal Eastern Edition on the date the payment
was due from such due date until paid in full.
8.5 MANUFACTURING.
-------------
Each party will have the right to manufacture or have manufactured for
itself and its Affiliates and sublicensees all Products to which it has rights
under this Agreement. WYETH- AYERST will have sole right to manufacture or have
manufactured
<PAGE> 57
Antibacterial Products to which it has rights hereunder for use in the Field.
8.6 LEGAL ACTION.
------------
8.6.1 Actual or Threatened Infringement.
---------------------------------
(a) In the event either party becomes aware of any possible infringement or
unauthorized possession, knowledge or use in the Field of any patent or other
intellectual property which is the subject matter of this Agreement
(collectively, an "Infringement"), that party shall promptly notify the other
party and provide it with full details.
WYETH-AYERST shall be responsible for the prosecution, prevention or
termination of any Infringement at WYETH-AYERST's expense and with the sharing
of recoveries as specified below. If WYETH-AYERST does not commence an action to
prosecute, or otherwise take steps to prevent or terminate an Infringement
within one hundred and twenty (120) days from such notice, then with respect to
CHEMGENICS Owned Technology and Patent Rights and Joint Technology and Joint
Patent Rights, or with respect to any WYETH-AYERST Patent Rights or Technology
licensed to CHEMGENICS hereunder, CHEMGENICS shall have the right and option to
take such reasonable action as CHEMGENICS considers appropriate to prosecute,
prevent or terminate such Infringement. If either party determines that it is
necessary or desirable for the other to join any such suit, action or
proceeding, the second party shall execute all papers and perform such other
acts as may be reasonably required in the circumstances.
<PAGE> 58
Each party shall, unless otherwise mutually agreed, bear the cost of any
proceeding or suit under this Section 8.6.1(a) brought by it. In each case, the
party bringing suit shall have the right first to reimburse itself out of any
sums recovered in such suit or in its settlement for all reasonable costs and
expenses, including reasonable attorney's fees, related to such suit or
settlement. The remainder is next to be used to reimburse the other party for
its costs and expenses so incurred. Any remaining amounts, and including as
appropriate any non-monetary recovery or award, shall be divided on an equitable
basis by the parties, to compensate the non-selling party for lost royalties, if
any, and to compensate the party selling the product affected by the
Infringement for its lost profits and market penetration. Each party shall
always have the right to be represented by counsel of its own selection and at
its own expense in any suit instituted under this Section by the other party for
Infringement. If WYETH-AYERST lacks standing and CHEMGENICS has standing to
bring any such suit, action or proceeding, then CHEMGENICS shall do so at the
request of WYETH-AYERST and at WYETH-AYERST's expense.
(b) In the event either party becomes aware of any possible infringement or
unauthorized possession, knowledge or use outside the Field of any patent right
or other intellectual property of CHEMGENICS which is the subject matter of this
Agreement, that party shall promptly notify the other party and provide it with
full details. CHEMGENICS shall have the right
<PAGE> 59
and option at its own expense to take such action as may be reasonably necessary
to prosecute, prevent or terminate such infringement. If CHEMGENICS reasonably
determines that it is necessary for WYETH-AYERST to join any such action, suit
or proceeding, WYETH-AYERST shall execute all papers and perform such other acts
as may be reasonably required in the circumstances and CHEMGENICS shall
reimburse WYETH-AYERST for any reasonable costs incurred in connection
therewith. CHEMGENICS shall have sole right to all sums recovered in such suit
or its settlement unless the parties hereto have agreed otherwise in writing.
(c) In any action under this Section 8.6, the parties shall fully cooperate
with and assist each other. No suit under Section 8.6.1(a) or Section 8.6.1(b)
regarding CHEMGENICS' patents or intellectual property may be settled by
WYETH-AYERST without CHEMGENICS' consent. No suit under Section 8.6.1(a)
regarding WYETH-AYERST's patents or intellectual property licensed to CHEMGENICS
hereunder may be settled by CHEMGENICS without WYETH-AYERST's consent.
8.6.2 Defense of Claims by WYETH-AYERST.
---------------------------------
Notwithstanding anything to the contrary in this Agreement, in the event
that any action, suit or proceeding is brought against CHEMGENICS or
WYETH-AYERST or any Affiliate, licensee or sublicensee of WYETH-AYERST alleging
the infringement of the intellectual property rights of a third party by reason
of the discovery, development, manufacture, use, sale, importation or offer for
sale of a Antibacterial Product by WYETH-AYERST or its
<PAGE> 60
Affiliates, licensees or sublicensees, WYETH-AYERST will have the obligation to
defend CHEMGENICS in such action, suit or proceeding at WYETH-AYERST's expense.
CHEMGENICS shall have the right to separate counsel at its own expense in any
such action or proceeding. The parties will cooperate with each other in the
defense of any such suit, action or proceeding. The parties will give each other
prompt written notice of the commencement of any such suit, action or proceeding
or claim of infringement and will furnish each other a copy of each
communication relating to the alleged infringement. WYETH-AYERST shall not
compromise, litigate, settle or otherwise dispose of any such suit, action or
proceeding which involves the use of CHEMGENICS Owned Technology, Joint
Technology, CHEMGENICS Patent Rights or Joint Patent Rights without CHEMGENICS'
advice and prior consent, provided that CHEMGENICS shall not unreasonably
withhold its consent to any settlement which does not have a material adverse
effect on CHEMGENICS or CHEMGENICS' business.
8.7 TERMINATION AND DISENGAGEMENT.
-----------------------------
8.7.1 Events of Termination.
---------------------
The events which permit a party to terminate the R & D Program as set forth
in Sections 2.3.3(a) (taking into account the applicable cure periods) and
2.3.3(b) hereof with respect to the R&D Program shall also permit such party to
terminate all of the licenses granted by such party hereunder ("Events of
Termination"). The breach by either party of its obligation to pay any amount
due hereunder with respect to a particular Antibacterial Product or the breach
by either party of any other
<PAGE> 61
material obligation or condition with respect to a particular Antibacterial
Product, including without limitation a breach by WYETH-AYERST of its guarantee
under Section 12.11, shall constitute a "License Termination Event" hereunder
with respect to the breaching party solely with respect to the license hereunder
for such particular Antibacterial Product.
8.7.2 Termination.
-----------
Upon the occurrence of any Event of Termination, the terminating party may,
by written notice to the other party, terminate this Agreement or any or all of
the licenses provided under this Agreement subject to the same periods of cure
and other conditions as detailed in Section 2.3.3(a), (b), (d) and (e), said
Sections incorporated herein mutatis mutandis. Upon the occurrence of any
License Termination Event with respect to a particular Antibacterial Product,
the terminating party may terminate the license with respect to the
Antibacterial Product involved in such License Termination Event, effective
thirty (30) days after giving written notice of such termination in the case of
a payment breach and ninety (90) days after giving written notice of such
termination in case of any other material breach, which notice shall describe
the License Termination Event in reasonable detail. The foregoing
notwithstanding, (i) if the License Termination Event is cured or shown to be
non-existent within the aforesaid thirty (30) day or ninety (90) day period, the
notice of termination shall be deemed automatically withdrawn and of no effect,
and (ii) as to an alleged breach expressly set forth with reasonable detail to
be the subject of a good faith
<PAGE> 62
dispute as to whether or not such payment is due and owing or whether a breach
of another material obligation or condition has occurred within the aforesaid
thirty (30) day or ninety (90) day period, the running of the remainder of the
thirty (30) day or ninety (90) day period shall be tolled until the dispute is
resolved. A License Termination Event which relates solely to any given license
shall not be grounds for terminating this Agreement in its entirety or
terminating any other license for any other Antibacterial Product.
8.7.3 Effect of Termination.
---------------------
(a) EFFECT OF TERMINATION ON LICENSE FROM CHEMGENICS. Upon termination by
CHEMGENICS under Section 2.3.3(a), 2.3.3(b) or Section 8.7.2 hereof of any
licenses granted to WYETH-AYERST hereunder with respect to any Antibacterial
Product, all rights to the Antibacterial Product covered by such terminated
license granted by CHEMGENICS to WYETH-AYERST hereunder under such terminated
licenses shall immediately and automatically revert to CHEMGENICS. Without
limiting the generality of the foregoing, all licenses and sublicenses granted
by CHEMGENICS to WYETH-AYERST hereunder to the Antibacterial Product shall
terminate automatically and WYETH-AYERST shall promptly transfer to CHEMGENICS
all documents, instruments, and records embodying CHEMGENICS Technology and
Joint Technology in its possession with respect to such Antibacterial Product
without retaining any copies thereof. In such case, CHEMGENICS shall have the
option to grant a direct license to any sublicensee of WYETH-AYERST with respect
to such Antibacterial Product.
<PAGE> 63
(b) LICENSE FROM WYETH-AYERST AND TRANSFER OF REGULATORY APPLICATIONS. Upon
termination by CHEMGENICS under Section 2.3.3(a), 2.3.3(b), or 8.7.2 of any
license granted to WYETH-AYERST hereunder with respect to any Antibacterial
Product and in the event that WYETH-AYERST is not developing or commercializing
another Antibacterial Product in the same Activity Profile, WYETH-AYERST shall
(i) grant CHEMGENICS an exclusive license under all of WYETH-AYERST's
rights and interests in all Patent Rights, Joint Patents, Technology, and
Joint Technology, and in all trademarks used uniquely and solely by
WYETH-AYERST with respect to such Antibacterial Product, to develop, make,
have made, use, offer for sale, distribute for sale, sell and import such
Antibacterial Product in the Territory, or, in WYETH AYERST'S sole
discretion and in lieu of such exclusive licenses, assign to CHEMGENICS any
and all of its right, title, and interest in and to all or a portion of
such Patents, Technology, or trademarks. In either event, CHEMGENICS shall
assume all subsequent costs associated with searching, filing, prosecuting
and maintenance of any such Patents, Technology or trademarks.
Further, and provided to do so would not be in conflict with any legal
or regulatory duties of WYETH-AYERST or its Affiliates, WYETH-AYERST shall:
(ii) grant CHEMGENICS the right to use applicable WYETH-AYERST
regulatory submissions, registrations, and approvals, or, where permissible
by law or regulation in the
<PAGE> 64
particular country in question, assign to CHEMGENICS any such regulatory
submission, registration, or approval in lieu of such grant of a right to
use.
(c) DOCUMENTATION. At the request of CHEMGENICS, WYETH-AYERST shall
execute and deliver such bills of sale, assignments and licenses and other
documents as may be necessary to fully vest in CHEMGENICS all right, title and
interest to which it is entitled as aforesaid pursuant to this Section 8.7.3.
8.7.4 Surviving Provisions.
--------------------
Termination of this Agreement for any reason shall be without prejudice to:
(a) the rights and obligations of the parties provided in Sections 2.8,
3.1, 3.3, 3.4, 3.5, 5.1, 5.2, 5.3, 5.4, 6.2, 8.8, 8.9, 10.1, 10.2, 11.1 and
Section 12, all of which shall survive such termination;
(b) CHEMGENICS' right to receive all research goal, milestone, royalty and
other payments earned and/or accrued prior to termination hereunder; and
(c) any other rights or remedies which either party may otherwise have
against the other.
8.8 WARRANTY DISCLAIMER.
-------------------
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY
MAKES ANY WARRANTY WITH RESPECT TO ANY TECHNOLOGY, GOODS, SERVICES, RIGHTS OR
OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT WITH
RESPECT TO ANY AND ALL OF THE FOREGOING.
<PAGE> 65
8.9 LIMITED LIABILITY.
-----------------
NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE, NEITHER
CHEMGENICS NOR WYETH-AYERST WILL BE LIABLE TO THE OTHER WITH RESPECT TO ANY
SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT
LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF
SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES.
9. REPRESENTATIONS AND WARRANTIES
------------------------------
9.1 MUTUAL REPRESENTATIONS.
----------------------
CHEMGENICS and WYETH-AYERST each represents and warrants as follows:
9.1.1 Organization.
------------
It is a corporation duly organized, validly existing and is in good
standing under the laws of the State of Delaware, and it and its Affiliates are
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the performance of its obligations hereunder requires
such qualification and has all requisite power and authority, corporate or
otherwise, to conduct its business as now being conducted, to own, lease and
operate its properties and to execute, deliver and perform this Agreement.
9.1.2 Authorization.
-------------
The execution, delivery and performance by it of this Agreement have been
duly authorized by all necessary corporate action and do not and will not (a)
require any consent or approval of its stockholders or (b) violate any provision
of any
<PAGE> 66
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award presently in effect having applicability to it or any provision of its
charter documents.
9.1.3 Binding Agreement.
-----------------
This Agreement is a legal, valid and binding obligation of it enforceable
against it in accordance with its terms and conditions.
9.1.4 No Inconsistent Obligation.
--------------------------
It is not under any obligation to any person, or entity, contractual or
otherwise, that is conflicting or inconsistent in any respect with the terms of
this Agreement or that would impede the diligent and complete fulfillment of its
obligations.
9.1.5 Governmental Consents.
---------------------
No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority is required on the part of either party in
connection with the valid execution, delivery and performance of this Agreement
and the Stock Purchase Agreement of even date herewith, except for any filings
under any applicable securities laws and except for any filing under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.. The filings
under securities laws, if any, will be affected by CHEMGENICS at its cost within
the applicable stipulated statutory period. Any filings under the Hart-Scott-
Rodino Antitrust Improvements Act, if any, will be effected by the parties
hereto within twenty-one (21) days after the Effective Date. If a
Hart-Scott-Rodino filing is effected by the
<PAGE> 67
parties, the costs attendant thereto shall be borne equally by the parties. If
this Agreement is enjoined under Hart-Scott- Rodino, then this Agreement and the
Stock Purchase Agreement shall be null and void and the initial equity payment
under Section 3.1.1 and the initial research funding under Section 3.2 shall be
returned to WYETH-AYERST and WYETH-AYERST shall return the certificate for the
shares purchased pursuant to the Stock Purchase Agreement to CHEMGENICS.
9.1.6 Intellectual Property.
---------------------
It (a) owns or is the licensee in good standing of all Patent Rights, trade
secrets and other intellectual property to be used by it in connection with this
Agreement; (b) has received no notice of infringement or misappropriation of any
alleged rights asserted by any third party in relation to any technology to be
used by it in connection herewith; (c) is not in default with respect to any
license agreement related hereto; and (d) is not aware of any patent, trade
secret or other right of any third party which could materially adversely affect
its ability to carry out its responsibilities hereunder, or the other party's
ability to exercise or exploit any license granted to it under this Agreement.
Such party agrees to immediately notify the other party in writing in the event
such party hereafter receives a notice of the type referred to in (b) above,
becomes in default under any license agreement referred to in (c) above, or
becomes aware of any patent, trade secret or other right of the nature referred
to in (d) above.
9.1.7. Litigation.
----------
<PAGE> 68
There is no action, suit, proceeding or investigation pending or currently
threatened against it which questions the validity of this Agreement or the
right to enter into such instrument or to consummate the transactions
contemplated hereby.
10. INDEMNIFICATION
---------------
10.1 INDEMNIFICATION OF CHEMGENICS BY WYETH-AYERST.
---------------------------------------------
WYETH-AYERST shall indemnify, defend and hold harmless CHEMGENICS, its
Affiliates and their respective directors, officers, employees, and agents and
their respective successors, heirs and assigns (the "CHEMGENICS Indemnitees"),
against any liability, damage, loss or expense (including reasonable attorneys'
fees and expenses of litigation) incurred by or imposed upon the CHEMGENICS
Indemnitees, or any of them, in connection with any claims, suits, actions,
demands or judgments of third parties, including without limitation personal
injury and product liability matters (except in cases where such claims, suits,
actions, demands or judgments result from a willful material breach of this
Agreement, gross negligence or willful misconduct on the part of CHEMGENICS)
arising directly out of any actions of WYETH-AYERST in the performance of the R
& D Program or arising out of the development, testing, production, manufacture,
promotion, import, sale or use by any person of any Antibacterial Product
manufactured or sold by WYETH-AYERST or by an Affiliate, licensee, sublicensee,
distributor or agent of WYETH-AYERST.
10.2 INDEMNIFICATION OF WYETH-AYERST BY CHEMGENICS.
---------------------------------------------
<PAGE> 69
CHEMGENICS shall indemnify, defend and hold harmless WYETH- AYERST, its
Affiliates and their respective directors, officers, employees, and agents and
their respective successors, heirs and assigns (the "WYETH-AYERST Indemnitees"),
against any liability, damage, loss or expense (including reasonable attorneys'
fees and expenses of litigation) incurred by or imposed upon the WYETH- AYERST
Indemnitees, or any one of them, in connection with any claims, suits, actions,
demands or judgments of third parties, (except in cases where such claims,
suits, actions, demands or judgments result from a willful material breach of
this Agreement, gross negligence or willful misconduct on the part of
WYETH-AYERST), arising directly out of any actions of CHEMGENICS in the
performance of the R & D Program or arising out of the development, testing,
production, manufacture, promotion, import, sale or use by any person of any
Antibacterial Product manufactured or sold by CHEMGENICS or by an Affiliate,
licensee, sublicensee, distributor or agent of CHEMGENICS.
11. DISPUTE RESOLUTION
------------------
11.1 SENIOR OFFICIALS.
----------------
The parties recognize that a bona fide dispute as to certain matters may
from time to time arise during the term of this Agreement which relates to
either party's rights and/or obligations hereunder. In the event of the
occurrence of such a dispute, either party may, by notice to the other party,
have such dispute referred to their respective senior officials designated below
or their successors, for attempted resolution by good faith negotiations within
thirty (30) days after such notice
<PAGE> 70
is received. Said senior officials shall be designated by the parties upon
execution of this Agreement.
12. MISCELLANEOUS
-------------
12.1 PAYMENT METHOD.
--------------
Each payment to CHEMGENICS under this Agreement shall be paid by
WYETH-AYERST in U.S. currency by wire transfer of funds to an account of
CHEMGENICS in accordance with instructions provided by CHEMGENICS.
12.2 NOTICES.
-------
All notices shall be in writing mailed via certified mail, return receipt
requested, courier providing evidence of delivery, or facsimile transmission
with confirmation of receipt requested, addressed as follows, or to such other
address as may be designated by notice so given from time to time:
If to WYETH-AYERST: WYETH-AYERST LABORATORIES
555 East Lancaster Avenue
St. Davids, Pennsylvania 19087
Attention: Senior Vice President
Global Business Development
With a copy to: Associate General Counsel
Patents and Trademarks
AMERICAN HOME PRODUCTS CORPORATION
Five Giralda Farms
Madison, New Jersey 07940
If to CHEMGENICS: CHEMGENICS Pharmaceuticals Inc.
One Kendall Square, Building 300
Cambridge, MA 02139
Attention: Chief Executive Officer
With a copy to: Jeffrey M. Wiesen, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C.
One Financial Center
Boston, MA 02111
<PAGE> 71
If to the JSC: To the Chair and Co-Chair at their
respective addresses furnished in
writing to the parties
If to the Patent
Coordinators: To the two Patent Coordinators at their
respective addresses furnished in
writing to the parties
Notices shall be deemed given as of the date received as evidenced by
confirmation of receipt.
12.3 GOVERNING LAW AND JURISDICTION.
------------------------------
This Agreement shall be governed by and construed in accordance with the
laws of the state of New Jersey, U.S.A., without regard to the application of
principles of conflicts of law, except with regard to issues of patent law,
which shall be determined with reference to the substantive laws of the country
in question.
<PAGE> 72
12.4 BINDING EFFECT.
--------------
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective legal representatives, successors and permitted
assigns.
12.5 HEADINGS.
--------
Section and subsection headings are inserted for convenience of reference
only and do not form a part of this Agreement.
12.6 COUNTERPARTS.
------------
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original.
12.7 AMENDMENT; WAIVER.
-----------------
This Agreement may be amended, modified, superseded or canceled, and any of
the terms may be waived, only by a written instrument executed by each party or,
in the case of waiver, by the party or parties waiving compliance. The delay or
failure of any party at any time or times to require performance of any
provisions shall in no manner affect the rights at a later time to enforce the
same. No waiver by any party of any condition or of the breach of any term
contained in this Agreement, whether by conduct, or otherwise, in any one or
more instances, shall be deemed to be, or considered as, a further or continuing
waiver of any such condition or of the breach of such term or any other term of
this Agreement.
<PAGE> 73
12.8 NO THIRD PARTY BENEFICIARIES.
----------------------------
Except as set forth in Section 10, no third party, including any employee
of any party to this Agreement, shall have or acquire any rights by reason of
this Agreement.
12.9 NO AGENCY OR PARTNERSHIP.
------------------------
Nothing contained in this Agreement shall give either party the right to
bind the other, or be deemed to constitute the parties as agents for the other
or as partners with each other or any third party.
12.10 ASSIGNMENT AND SUCCESSORS.
-------------------------
This Agreement may not be assigned by either party without the consent of
the other, which consent shall not be unreasonably withheld, except that each
party may, without such consent, assign this Agreement and the rights,
obligations and interests of such party, in whole or in part, to any of its
Affiliates, to any purchaser of all or substantially all of its assets to which
the subject matter of the Agreement relates, or to any successor corporation
resulting from any merger or consolidation of such party with or into such
corporation.
12.11 AFFILIATE AGREEMENTS.
--------------------
WYETH-AYERST may, from time to time after Pre-Project Status has been
granted to an Antibacterial Product, request and CHEMGENICS agrees to execute
separate license agreements for such Antibacterial Product under Section 8.1(b)
hereof in mutually satisfactory form ("Affiliate Agreements") separately
granting to American Home Products Corporation, or separately granting directly
to any Affiliate, equivalent rights as granted to WYETH-
<PAGE> 74
AYERST in Section 8.1(b) hereof, in any country or countries other than the
United States within the Territory. Any such Affiliate Agreement entering into
force under this Section shall be prepared by WYETH-AYERST, subject to review
and approval by CHEMGENICS, and shall contain terms and conditions consistent
with those of this Agreement, subject only to such modifications as may be
required by the laws or regulations of the country or countries having
jurisdiction over any such Affiliate Agreement, including, but not limited to,
governmentally required changes in the rate of payment, restrictions against the
remittance thereof and limitations upon the term or duration of any such
Affiliate Agreement. If the terms of any such Affiliate Agreement are varied
from the terms of this Agreement because of local law or regulation,
WYETH-AYERST shall enter into an amendment hereof requiring WYETH-AYERST to
fully compensate CHEMGENICS according to the terms hereof, including, without
limitation, compensation for any additional tax imposed on CHEMGENICS.
WYETH-AYERST hereby fully guarantees performance of each Affiliate under any
such Affiliate Agreement. In those countries in which any such Affiliate
Agreement requires prior government approval or registration, such Affiliate
Agreement shall not be binding or have any force or effect until the required
government approval or registration has been granted. All Affiliate Agreements
shall be deemed to be severable and independent with respect to this Agreement
and to each other except that CHEMGENICS shall have the right to terminate all
Affiliate Agreements upon termination of this Agreement. The parties agree that
it is their mutual
<PAGE> 75
understanding that CHEMGENICS shall not incur any additional cost or economic
detriment as a result of any Affiliate Agreement.
12.12 FORCE MAJEURE.
-------------
Neither WYETH-AYERST nor CHEMGENICS shall be liable for failure of or delay
in performing obligations set forth in this Agreement, and neither shall be
deemed in breach of its obligations, if such failure or delay is due to natural
disasters or any causes beyond the reasonable control of WYETH-AYERST or
CHEMGENICS. In event of such force majeure, the party affected thereby shall use
reasonable efforts to cure or overcome the same and resume performance of its
obligations hereunder. If such force majeure continues for a period longer than
one (1) year, the party not affected thereby may, for purposes of termination of
this Agreement or any license hereunder, treat the failure or delay as if it
were not caused by force majeure but the party affected by the force majeure
shall nonetheless have no other liability for such failure or delay.
12.13 INTERPRETATION.
--------------
The parties hereto acknowledge and agree that: (i) each party and its
counsel reviewed and negotiated the terms and provisions of this Agreement and
have contributed to its revision; (ii) the rule of construction to the effect
that any ambiguities are resolved against the drafting party shall not be
employed in the interpretation of this Agreement; and (iii) the terms and
provisions of this Agreement shall be construed fairly as to all parties hereto
and not in a favor of or against any
<PAGE> 76
party, regardless of which party was generally responsible for the preparation
of this Agreement.
12.14 INTEGRATION; SEVERABILITY.
-------------------------
This Agreement is the sole agreement with respect to the subject matter
hereof and supersedes all other agreements and understandings between the
parties with respect to same, including but not limited to the Confidentiality
Agreement between CHEMGENICS and WYETH-AYERST dated April 24, 1996 (the
"Superseded Confidentiality Agreement"). If any provision of this Agreement is
or becomes invalid or is ruled invalid by any court of competent jurisdiction or
is deemed unenforceable, it is the intention of the parties that the remainder
of this Agreement shall not be affected.
12.15 EXPORT CONTROLS.
---------------
This Agreement is made subject to any restrictions concerning the export of
Antibacterial Products, Confidential Information, or Technology from the United
States which may be imposed upon or related to either party to this Agreement
from time to time by the Government of the United States. Neither party will
export, directly or indirectly, any Confidential Information, Technology or any
Antibacterial Products utilizing such Confidential Information or Technology to
any countries for which the United States Government or any agency thereof at
the time of export requires an export license or other governmental approval,
without first obtaining the written consent to do so from the Department of
Commerce or other agency of the United
<PAGE> 77
States Government when required by applicable statute or regulation.
12.16 SECTION 365(n) OF THE BANKRUPTCY CODE.
-------------------------------------
All rights and licenses granted under or pursuant to any section of this
Agreement are, and shall otherwise be, deemed to be, for purposes of Section
365(n) of the Bankruptcy Code, licenses of rights to "intellectual property" as
defined under Section 101(35A) of the Bankruptcy Code. The Parties shall retain
and may fully exercise all of their respective rights and elections under the
Bankruptcy Code. Upon the bankruptcy of either Party, the non-bankrupt Party
shall further be entitled to a complete duplicate of (or complete access to, as
appropriate) any such intellectual property, and such, if not already in its
possession, shall be promptly delivered to the non-bankrupt Party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives.
AMERICAN HOME PRODUCTS CORPORATION
REPRESENTED BY ITS
WYETH-AYERST LABORATORIES DIVISION
By: /s/ Fred Hasse
-------------------------
Title: EVP, AHP
-------------------------
Date: 11-27-96
-------------------------
CHEMGENICS PHARMACEUTICALS INC.
By: /s/ Barry Berkowitz
-------------------------
Title: Chief Executive Officer
-------------------------
Date: 11/27/96
-------------------------
<PAGE> 78
SCHEDULE I
Antibacterial Products
----------------------
<PAGE> 79
EXHIBIT 1
ACTIVITY PROFILES
-----------------
[
]
<PAGE> 1
EXHIBIT 10.11
CHEMGENICS PHARMACEUTICALS INC. HAS OMITTED FROM THIS PART OF EXHIBIT 10.11
PORTIONS OF THE AGREEMENT FOR WHICH CHEMGENICS PHARMACEUTICALS INC. HAS
REQUESTED CONFIDENTIAL TREATMENT FROM THE SECURITIES AND EXCHANGE COMMISSION.
THE PORTIONS OF THE AGREEMENT FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED ARE MARKED "[ ]" AND SUCH CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
LICENSE AGREEMENT
LICENSE AGREEMENT (this "AGREEMENT"), dated as of June 28, 1996,
between PERSEPTIVE BIOSYSTEMS, INC., a Delaware corporation, and its wholly
owned subsidiaries, PERSEPTIVE TECHNOLOGIES II CORPORATION ("PTC-II"), a
Delaware corporation, and VESTEC CORPORATION, a Texas corporation ("VESTEC"),
(collectively, "PERSEPTIVE"), and CHEMGENICS PHARMACEUTICALS INC., a Delaware
corporation ("CHEMGENICS"). All capitalized terms shall have the respective
meanings set forth in Section 1 hereof and Schedule A hereto.
R E C I T A L S :
A. PerSeptive and ChemGenics are parties to a Master Agreement dated as
of May __, 1996 (the "MASTER AGREEMENT").
B. PerSeptive is the owner or licensee of rights in certain Technology
and certain patent rights relating thereto.
C. PerSeptive is willing to grant to ChemGenics and ChemGenics desires
to acquire from PerSeptive, a non-exclusive worldwide license within the Field,
under such Technology and patent rights for the purpose of allowing ChemGenics
to discover drugs and develop, market, sell, import and/or deliver, certain
Products and Services.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce each other
to enter into the Master Agreement, PerSeptive and ChemGenics hereby agree as
follows:
1. DEFINITIONS.
1.1. DEFINITIONS. As used herein, capitalized terms shall have
the respective meanings set forth below and in Schedule A attached hereto, which
is incorporated by this reference as though fully set forth herein.
1.2. SINGULAR AND PLURAL. Singular and plural forms, as the
case may be, of terms defined herein shall have correlative meanings.
2. GRANT OF LICENSES.
2.1. GRANT OF LICENSE TO CHEMGENICS.
2.1.1. PERSEPTIVE PATENT RIGHTS AND ASSOCIATED
TECHNOLOGY.
(a) Subject to the terms and conditions of this Agreement, PerSeptive hereby
grants to ChemGenics a non-exclusive, irrevocable, worldwide, royalty-free fully
paid right and
<PAGE> 2
- 2 -
license, terminable only as set forth in Sections 9.2, 9.3 or 9.4, solely within
the Field, to (a) develop, make, have made, use, offer to sell, sell and import
any Products and/or to provide any Services the use, manufacture, sale or
provision of which is Covered By one or more claims of the PerSeptive Patent
Rights and (b) develop, make, have made, use, offer to sell, sell and import any
Products and/or provide any Services incorporating, utilizing, manufactured
using, based upon, arising out of, or derived from the Associated Technology. In
addition, to the extent that ChemGenics acquires, or acquires the right to use,
any PerSeptive products (including any prototypes or "beta-test" products)
pursuant to this Agreement, the Master Agreement any other agreement executed in
connection therewith, ChemGenics shall have all rights which ChemGenics would
have under PerSeptive's standard User Licenses to use such products as if
ChemGenics were a customer of PerSeptive or a purchaser in the market of such
PerSeptive products. Notwithstanding the foregoing or any other provision of
this Agreement, neither ChemGenics nor any Partner shall have any right or
license to the Licensed Technology which is PerSeptive Patent Rights or
Confidential Information of PerSeptive to develop, make, have made, offer to
sell, sell or otherwise distribute Products that are Tools which are Covered By
PerSeptive Patent Rights or which are based upon, arise out of, use or are
derived from Licensed Technology which is Confidential Information of
PerSeptive; and ChemGenics shall not have the right to grant sublicenses of the
Licensed Technology except to the extent necessary to permit any Partner of
ChemGenics to conduct research and/or development within the Field on such
Partner's premises pursuant to the terms of such Partner's agreement with
ChemGenics or to manufacture and sell any drugs developed in conjunction with
ChemGenics pursuant to such agreement and subject to the confidentiality and
non-use obligations of Section 5.3 hereof; provided that no such Partner shall
thereby have any right or license to (i) make, have made, offer to sell, sell,
license or otherwise distribute any products or to deliver any services to any
Person the use of which is Covered By the PerSeptive Patent Rights or which
incorporates, utilizes, is manufactured using, is based upon, arises out of, or
is derived from the Associated Technology except for drugs developed in
conjunction with ChemGenics; or (ii) practice the Licensed Technology on or in
connection with the making, use or operation of any Tools unless such right has
been acquired from PerSeptive outside of this Agreement.
(b) Subject to the terms and conditions of this Agreement, PerSeptive
further grants to ChemGenics an exclusive, irrevocable, worldwide, royalty free
fully paid right and license, terminable only as set forth in Section 9.3, to
all PerSeptive Patent Rights and Associated Technology, that (i) arise out of
the research projects listed on Schedule D which were part of the Drug Discovery
Program (as defined in the Master Agreement), and (ii) specifically relate to
the potential drugs, drug candidates and drug targets which were the subject of
those research projects (the foregoing PerSeptive Patent Rights and Associated
Technology being called the "Discovery Program Technology"), to develop, make,
have made, use, offer to sell, sell and import such drugs, drug candidates or
drug targets. PerSeptive expressly reserves all rights (subject to the license
in the Field granted in Section 2.1.1(a)) to the Discovery Program Technology
for all uses other than as drugs, drug candidates, or drug targets; provided,
however, that PerSeptive shall not offer for sale, sell or distribute (or
license any Person to do so) any compound or molecule which is part of the
Discovery Program Technology for any use which would interfere with or adversely
affect (i) ChemGenics' ability to market a compound or molecule which is part of
the Discovery
<PAGE> 3
- 3 -
Program Technology as a drug, drug candidate, or drug target or (ii) ChemGenics'
profitability from such marketing; provided, further, that the restriction in
the preceding clause shall not restrict PerSeptive's rights in the PerSeptive
Field.
(c) For the avoidance of doubt, it is acknowledged and agreed that the
foregoing rights and licenses include the right to (i) develop, make, have made,
use, offer to sell, sell and import Products which are diagnostic analytes or
reagents or targets which are not Covered By PerSeptive Patent Rights or which
are not Licensed Technology which is Confidential Information for specific
diseases or patient conditions and Products for diagnostic use which incorporate
such analytes or reagents or targets, and (ii) grant rights to Partners to do
so.
2.1.2. RESTRICTIONS ON FUTURE LICENSES. PerSeptive
agrees that, without the prior consent of ChemGenics, it shall not (a) utilize
the Licensed Technology in the Field or (b) grant a license or other right to
any third party to do the same, provided, however, that, without ChemGenics'
consent, PerSeptive may grant to purchasers of its products restricted or
unrestricted User Licenses within or outside the Field and may provide and
perform and permit others to perform pre- and post-sale service, consistent with
PerSeptive's current practice, related to such products within or outside the
Field. Except for the licenses and rights granted by Section 2.1.1 hereof and
the restrictions contained in the preceding sentence, PerSeptive reserves the
exclusive (against ChemGenics and all other Persons) worldwide right to develop
and use, and to license to any Person and authorize further sublicenses with
respect to, the Associated Technology and the PerSeptive Patent Rights and to
develop, make, have made, use, offer to sell, sell and import products and/or
provide services utilizing or Covered By the Licensed Technology within or
outside of the Field.
2.1.3. THIRD-PARTY TRANSFERS OF RIGHTS TO PERSEPTIVE.
In the event that PerSeptive has licensed from a third party any of the Licensed
Technology licensed to ChemGenics pursuant to Section 2.1.1 hereof, PerSeptive
hereby grants to ChemGenics a non-exclusive license of such Licensed Technology
to the extent that, and for as long as, PerSeptive can provide such rights and
subject to any royalty obligations as hereinafter provided. With respect to any
patent rights or Technology granted or assigned to PerSeptive in the future
pursuant to an agreement with any Person other than ChemGenics, the license
granted to ChemGenics hereunder shall be no greater in scope than the rights
that PerSeptive has a right to grant under such agreement and shall be otherwise
subject to any obligations assumed by PerSeptive in consideration of the grant
or assignment of such rights to PerSeptive which are to be sublicensed to
ChemGenics. PerSeptive agrees that in negotiating any such agreement with a
Person other than ChemGenics, it will use reasonable efforts to obtain the right
to fully license ChemGenics hereunder for all such patent rights or Technology
in the Field. In the event of any conflict or inconsistency between any
provision of any such sublicense to ChemGenics and any provisions of Sections
5.3, 5.4, 7, 8 or 13 of this Agreement, the said provisions of this Agreement
shall prevail. ChemGenics shall not take any action, or fail to take any action
within its control, that would constitute or give rise to a breach or other
violation by PerSeptive of any such agreement. Without limiting the foregoing,
to the extent that the sale or other action by ChemGenics or its permitted
<PAGE> 4
- 4 -
sublicensees of Products would give rise to a royalty or other payment
obligation under any such agreement, ChemGenics shall pay and require its
sublicensees to pay such amount. In the event that PerSeptive acquires for value
from a Person other than ChemGenics after the date hereof during the period this
Agreement is in effect patent rights or Technology useful in development of
Products or Services in the Field, nothing in this Agreement or any other
agreement between the parties, other than Section 2.1.2 hereof, shall be
construed to prohibit or restrict PerSeptive from continuing to manufacture and
sell any product so acquired or from selling, licensing, or developing the
acquired patent rights or Technology and any successor product or improved
product so developed, and any such patent rights or Technology acquired after
the date of this Agreement shall be licensed non-exclusively to ChemGenics in
the Field subject to the terms of Sections 2.1.1 and 2.1.2 and this Section
2.1.3.
2.2. NO RESTRICTIONS ON PERSEPTIVE'S OTHER BUSINESSES. Nothing
in this Agreement shall be interpreted to preclude PerSeptive or any of its
Affiliates or licensees or sublicensees from engaging in its current business of
designing, manufacturing, marketing, selling and licensing products and
instrumentation systems for the purification, synthesis, sequencing or analysis
of biomolecules and providing tools to the life sciences industry, or from
making, selling or licensing, to any Person and for any purpose within or
outside the Field, instruments, equipment, machinery, apparatus, devices, media,
reagents, compounds, resins, activators, linkers, particles, supports and other
materials and substances (including, without limitation, oligomers, peptides and
other molecules), tools or other products (and systems comprising the foregoing)
or from providing any services outside the Field or any pre- and post-sale
services, consistent with PerSeptive's current practice, related to the sale or
license of the foregoing within the Field for or capable of, biomolecular
purification, diagnosis, synthesis, sequencing or analysis incorporating,
utilizing, manufactured using, based upon, arising out of, or derived from any
Licensed Technology, including without limitation POROS(R) media, chromatography
columns, separation devices, computer workstations, mass spectrometers,
synthesizers, sequencers and other instruments and equipment.
2.3 NO RESTRICTIONS ON CHEMGENICS DRUG COMMERCIALIZATION.
Nothing in this Agreement shall prevent ChemGenics or its Partners from
developing, making, having made, selling, licensing or otherwise commercializing
and distributing (i) any drugs or drug candidates discovered by ChemGenics or
its Partners with or without the use of the Licensed Technology, and (ii) any
Tools which are not Covered By PerSeptive Patent Rights or which do not
incorporate, utilize or arise out of and are not manufactured, using and are not
based upon or derived from Associated Technology which is Confidential
Information. The foregoing shall not relieve ChemGenics from its obligations
under the Non-Competition Agreement (as defined in the Master Agreement).
2.4. RIGHTS TO JOINTLY DEVELOPED INVENTIONS.
2.4.1. JOINT INVENTIONS JOINTLY OWNED. All right,
title and interest to any inventions or improvements within or outside the Field
developed jointly by the Parties shall be the joint property of the Parties.
Joint inventorship shall be determined in
<PAGE> 5
- 5 -
accordance with United States Patent Law; provided however, that for the
avoidance of doubt, it is acknowledged and agreed that the use or incorporation
by ChemGenics of Licensed Technology in the making of an invention or
improvement will not, by itself, make such invention or improvement jointly
owned.
2.4.2. JOINT INVENTIONS IN THE FIELD. If ChemGenics
shall determine that any joint inventions or improvements made within five (5)
years from the date hereof shall be primarily and significantly useful in the
Field, it shall so notify PerSeptive in writing and, PerSeptive shall be
precluded from selling, licensing or otherwise distributing any Tools (i) which
are Covered By patents or patent applications claiming or, (ii) incorporating,
manufactured using, based upon, using, arising out of or derived from, such
invention or improvement to any third party for a period of [ ] following the
date that the invention or improvement was made. If PerSeptive shall object to
such determination in writing within thirty (30) days after such notice, the
Parties shall negotiate in good faith to resolve whether such invention or
improvement is primarily and significantly useful in the Field and if they
cannot, the matter shall be referred to and determined by arbitration in
accordance with Section 15 hereof.
2.4.3. RESTRICTIONS ON LICENSING JOINT INVENTIONS.
Without the prior written consent of PerSeptive, ChemGenics shall not grant a
license or other right to any third party to develop, make, have made, use,
offer to sell, sell, import, license or otherwise distribute any Tools in the
PerSeptive Field Covered By, using, arising out of or derived from any invention
or improvement jointly owned by the Parties. Without the prior written consent
of ChemGenics, PerSeptive shall not grant a license or other right to any third
party to use or practice any invention or improvement jointly owned by the
Parties, or to develop, make, have made, use, offer to sell, sell, import or
otherwise distribute any products or deliver any services, in the Field Covered
By, using, arising out of or derived from any such joint invention or
improvement; provided, however, pursuant to Section 2.4.2 hereof, PerSeptive
shall have the right to grant restricted or unrestricted User Licenses and
provide and perform and permit others to perform pre- and post-sale services,
consistent with PerSeptive's current practice, to purchasers of or related to
Tools that may be Covered By, use, arise out of or be derived from any such
joint invention or improvement.
2.4.4. JOINT INVENTIONS WHICH ARE DRUGS. In the event
that any joint invention is a drug or drug candidate, PerSeptive hereby grants
to ChemGenics an exclusive, irrevocable, worldwide, royalty free, fully paid
right and license, terminable only as set forth in Section 9.3, to the Licensed
Technology to the extent necessary to further develop, and to make, have made,
use, offer to sell, sell and import such drug or drug candidate.
<PAGE> 6
- 6 -
3. PAYMENT.
The consideration delivered to PerSeptive on the Closing Date in
accordance with the Master Agreement, by ChemGenics (excluding the Earnout
Shares, as defined therein) shall constitute the consideration for PerSeptive's
entering into this Agreement. The Parties agree that no future performance is
required by PerSeptive during the term of this Agreement or otherwise in order
to earn the consideration described in this Section 3.
4. REPRESENTATIONS AND WARRANTIES.
4.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PERSEPTIVE.
PerSeptive PTC-II and Vestec represent, warrant and covenant to ChemGenics as
follows:
4.1.1. Each of PerSeptive Biosystems, Inc., PTC-II
and Vestec is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation with corporate powers
adequate for executing and delivering, and performing its obligations under,
this Agreement;
4.1.2. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action on
the part of PerSeptive Biosystems, Inc., PTC-II and Vestec;
4.1.3. This Agreement has been duly executed and
delivered by PerSeptive and PTC-II and is a legal, valid and binding obligation
of each of PerSeptive Biosystems, Inc., PTC-II and Vestec, enforceable against
each of them in accordance with its terms;
4.1.4. The execution, delivery and performance of
this Agreement do not and will not conflict with or contravene any provision of
the charter documents or by-laws of PerSeptive Biosystems, Inc., PTC-II or
Vestec or any agreement, document, instrument, indenture or other obligation of
PerSeptive Biosystems, Inc., PTC-II or Vestec; and
4.1.5. Neither PerSeptive Biosystems, Inc., PTC-II
nor Vestec shall enter into any agreement, make any commitment, take any action
or fail to take any action that would contravene any material provision of, or
materially derogate or restrict any of the rights and licenses granted to
ChemGenics under, this Agreement.
4.1.6. PerSeptive shall grant ChemGenics reasonable
access to any prototype systems, instruments or other equipment (including any
reagents or media relating thereto) relevant to the Field, at such time as
PerSeptive shall reasonably deem access by third parties to such prototype is
appropriate, and subject to reasonable terms and conditions. In the event that
PerSeptive wishes to "beta test" any such system, instrument, equipment,
reagents or media on the premises of one or more of its customers, PerSeptive
shall give ChemGenics the opportunity, if ChemGenics so chooses, to be one of
the first such beta-test sites, subject to reasonable terms and conditions.
<PAGE> 7
- 7 -
4.1.7. Schedule B sets forth a list of all patents
and patent applications currently owned or exclusively licensed by PerSeptive,
including all patents and patent applications used in the Drug Discovery Program
(as defined in the Master Agreement). To the best of PerSeptive's knowledge, all
patents listed in Schedule B are valid and in full force and all applications
listed therein as pending have been prosecuted in good faith as required by law
and are in good standing. To the best of PerSeptive's knowledge, there has been
no infringement by PerSeptive or its Affiliates with respect to any patent
rights of others in the conduct or operation of the Drug Discovery Program.
Except as disclosed in Schedule B, none of the patents or patent applications
listed or described in Schedule B is involved in any interference or opposition
proceeding, and there has been no written notice received by the Seller or any
of its affiliates or any other indication that any such proceeding will
hereafter be commenced. Also, included in Schedule B is a list of all exclusive
licenses and license agreements, and the patents and patent applications covered
thereby, relating to Licensed Technology that have been of significant use by
PerSeptive in the Drug Discovery Program during the two year period ending on
April 30, 1996. To the best of PerSeptive's knowledge, all of the licenses
listed or described in Schedule B are legally valid and binding and in full
force and effect. PerSeptive is not in default under any such license and, to
the best of PerSeptive's knowledge, there are no defaults by any other party to
any such license. None of PerSeptive's rights thereunder will be impaired by the
consummation of the transactions contemplated hereby. Except as described in
Schedule B, PerSeptive has not granted any person or entity any exclusive right
to use any of the patents or patent applications listed therein for any purpose.
4.2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CHEMGENICS.
ChemGenics represents, warrants and covenants to PerSeptive as follows:
4.2.1. ChemGenics is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with corporate powers adequate for executing and delivering, and performing its
obligations under, this Agreement;
4.2.2. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action on
the part of ChemGenics;
4.2.3. This Agreement has been duly executed and
delivered by ChemGenics and is a legal, valid and binding obligation of
ChemGenics, enforceable against ChemGenics in accordance with its terms;
4.2.4. The execution, delivery and performance of
this Agreement do not and will not conflict with or contravene any provision of
the charter documents or by-laws of ChemGenics or any agreement, document,
instrument, indenture or other obligation of ChemGenics; and
4.2.5. ChemGenics shall not enter into any agreement,
make any commitment, take any action or fail to take any action that would
contravene any material provisions of, or materially derogate or restrict any of
the rights and licenses granted to, PerSeptive under this Agreement.
<PAGE> 8
- 8 -
5. DISCLOSURE OF LICENSED TECHNOLOGY.
5.1. DOCUMENTATION AND ACCESS. Upon request by ChemGenics from
time to time, PerSeptive shall, within a reasonable time thereafter, deliver to
ChemGenics copies of reasonable then-existing documentation describing the
Licensed Technology which is reasonably related to the scope of ChemGenics's
activities within the Field. PerSeptive shall give access to and use reasonable
efforts to keep ChemGenics apprised of all ongoing and future Licensed
Technology created by PerSeptive and its Affiliates which is or may be useful in
the Field, and shall reasonably cooperate with and provide advice to ChemGenics
with respect to the implementation of new Technology which is Licensed
Technology in the Field subject to the terms of this Agreement, it being
understood that the level of effort required by this Section is less than the
level of effort required by the Consulting and Interim Services Agreement (as
defined in the Master Agreement). PerSeptive further agrees, at the request of
ChemGenics, to provide reasonable additional consulting services to ChemGenics
in return for commercially reasonable compensation. PerSeptive shall at all
times during the term of this Agreement provide ChemGenics with access to
PerSeptive's patent applications and notify ChemGenics when any patents issue
thereon subject to Sections 9.2, 9.3 and 9.4 hereof. In the event the ChemGenics
shall have reason to believe that PerSeptive has not complied with the
requirements of this Section 5.1, it shall so notify PerSeptive and PerSeptive
shall be given a reasonable opportunity to cure such non-compliance.
5.2. PATENTS.
5.2.1. PATENT PROSECUTION. PerSeptive shall have the
exclusive right, at its expense, to prepare, prosecute and maintain patent
applications, and to maintain and enforce patents comprising the PerSeptive
Patent Rights and, except as expressly otherwise set forth herein, otherwise
deal in and with and enforce rights associated with the Licensed Technology. In
the event that PerSeptive elects not to prepare, prosecute or maintain any
patent application or any patent rights constituting PerSeptive Patent Rights,
PerSeptive shall promptly notify ChemGenics, and ChemGenics shall have the right
to prepare, prosecute and maintain any such application or right at ChemGenics's
expense.
5.2.2. COOPERATION. ChemGenics agrees to cause each
of its employees and agents to take all actions and to execute, acknowledge and
deliver all instruments or agreements reasonably requested by PerSeptive, and
necessary for the perfection, maintenance, enforcement or defense of that
PerSeptive's rights as set forth above.
5.2.3. IDENTIFICATION OF PATENT RIGHTS. ChemGenics
shall include in the packaging or documentation for any Products or Services, as
the case may be, adequate notice of the PerSeptive Patent Rights therein.
5.3. CONFIDENTIAL INFORMATION. Any Party receiving
Confidential Information shall use commercially reasonable efforts to: (i)
maintain the confidential and proprietary status of such Confidential
Information; (ii) keep such Confidential Information and each part thereof
within its possession or under its control sufficient to prevent any
<PAGE> 9
- 9 -
activity with respect to the Confidential Information that is not specifically
authorized by this Agreement; (iii) prevent the disclosure of any Confidential
Information to any other Person; and (iv) ensure that such Confidential
Information is used only for those purposes specifically authorized herein;
provided, however, that such restriction shall not apply to any Confidential
Information which is (a) independently developed by the receiving Party without
reference to Confidential Information, (b) in the public domain at the time of
its receipt or thereafter becomes part of the public domain through no fault of
the receiving Party, (c) received without an obligation of confidentiality from
a third party having the right to disclose such information, (d) released from
the restrictions of this Section 5.3 by the express written consent of the
disclosing Party, (e) disclosed to any actual or prospective permitted Partner,
assignee, sublicensee or subcontractor of either PerSeptive or ChemGenics
hereunder or under the Master Agreement (if such actual or prospective Partner,
assignee, sublicense or subcontractor is subject to the provisions of this
Section 5.3 or comparable provisions of such other documents), or (f) required
by law, statute, rule or court order to be disclosed (the disclosing party
shall, however, use commercially reasonable efforts to obtain confidential
treatment of any such disclosure) and shall notify the other party in writing of
the request or requirement as soon as feasible so that such other party may make
timely effort to protect or limit the conditions of disclosure of its
Confidential Information. Notwithstanding clause (e), ChemGenics shall not have
the right to disclose Confidential Information of PerSeptive to a prospective
Partner, assignee, licensee or subcontractor which is a PerSeptive Competitor
unless and until such Person becomes an actual Partner, assignee, licensee or
subcontractor. Without limiting the generality of the foregoing, PerSeptive and
ChemGenics each shall use its commercially reasonable efforts to obtain
confidentiality agreements from its respective Partners, employees and agents,
similar in scope to this Section 5.3, to protect the Confidential Information,
including in the case of ChemGenics, commercially reasonable efforts to obtain
the agreement of Partners who are PerSeptive Competitors to not give access to
Confidential Information of PerSeptive to persons who are engaged in the
portions of the Partner's business which competes with the business of
PerSeptive in the PerSeptive Field. ChemGenics shall not use PerSeptive's
Confidential Information for any purpose outside the Field.
5.4. PERMITTED DISCLOSURES. Notwithstanding the provisions of
Section 5.3 hereof, PerSeptive and ChemGenics may, to the extent necessary,
disclose and use Confidential Information (other than Confidential Information
furnished to a Party by a third party or which a Party has an obligation to a
third party not to disclose), consistent with the rights of PerSeptive and
ChemGenics otherwise granted hereunder (a) for the purpose of securing
institutional or government approval to clinically test or market any Product,
or (b) for the purpose of securing patent protection for an invention within the
scope of the PerSeptive Patent Rights or any invention jointly owned by the
parties or owned solely by ChemGenics; provided, however, that in each such
instance (i) the other Party hereto shall have been notified of the permitted
disclosure and (ii) except in the case of disclosures to government entities in
which the party makes commercially reasonable efforts to protect the
confidentiality thereof to the extent permitted by applicable law, any such
disclosure shall be made to Persons which either have agreed to be bound by or
are already subject to a duty of confidentiality, for the benefit of a Party
hereto, substantially to the same effect as that set forth in Section 5.3
hereof.
<PAGE> 10
- 10 -
6. INFRINGEMENT.
6.1. NOTIFICATION OF INFRINGEMENT. ChemGenics shall notify
PerSeptive of any infringement or misappropriation known to ChemGenics by any
Person of any Licensed Technology rights and shall provide PerSeptive with the
available evidence, if any, of such infringement. If ChemGenics has actual
notice of infringement by any Person of Licensed Technology rights, the
respective officers of PerSeptive and ChemGenics shall confer to determine in
good faith an appropriate course of action to enforce the Licensed Technology
rights or otherwise abate the infringement thereof. All amounts recovered in any
action to enforce Licensed Technology rights undertaken by PerSeptive and
ChemGenics, whether by judgment or settlement, shall be retained by PerSeptive
and ChemGenics pro rata according to the respective percentages of expenses
borne by them in enforcing such rights.
6.2. ENFORCEMENT OF LICENSED TECHNOLOGY RIGHTS. If PerSeptive
determines that enforcement of the Licensed Technology rights is appropriate,
PerSeptive shall have the right, but not the obligation, at its own expense, to
take appropriate action to enforce such rights; provided, however, that, if
PerSeptive elects to so act, ChemGenics shall have the right to participate in
the enforcement of such rights by agreeing to bear a percentage of the costs of
such enforcement in such amount as the parties shall determine. All amounts
recovered in any action to enforce Licensed Technology rights undertaken by
ChemGenics and PerSeptive, whether by judgment or settlement, shall be retained
by ChemGenics and PerSeptive pro rata according to the respective percentages of
expenses borne by them in enforcing such Licensed Technology rights. If, within
six (6) months after notice of infringement, PerSeptive has not commenced action
to enforce such rights or thereafter ceases to diligently pursue such action,
ChemGenics shall have the right, at its expense, to take appropriate action to
enforce such rights as its sole remedy hereunder. All amounts recovered in any
action to enforce Licensed Technology rights undertaken by ChemGenics solely at
its expense, whether by judgment or settlement, shall be retained by ChemGenics.
PerSeptive and ChemGenics shall fully cooperate with each other in the planning
and execution of any action to enforce rights. Neither PerSeptive nor ChemGenics
shall enter into any settlement that includes the grant of a license under,
agreement not to enforce, or any statement prejudicial to the validity or
enforceability of any Licensed Technology rights without the consent of the
other, which consent shall not be unreasonably withheld or delayed.
6.3. DISCLAIMER OF WARRANTY; CONSEQUENTIAL DAMAGES.
6.3.1. Reference is made to certain representations
made by PerSeptive in Section 4.1 hereof concerning its intellectual property
rights. Nothing in this Agreement shall be construed as a representation made or
warranty given by PerSeptive that any patents will issue based on pending
applications within the PerSeptive Patent Rights, or that any such patents which
do issue will be valid. Except for the express representations and warranties
set forth herein, PERSEPTIVE EXPRESSLY DISCLAIMS AND CHEMGENICS HEREBY WAIVES,
RELEASES AND RENOUNCES ANY WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE
LICENSED TECHNOLOGY, INCLUDING,
<PAGE> 11
- 11 -
WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
6.3.2. NEITHER PARTY TO THIS AGREEMENT SHALL BE
ENTITLED TO RECOVER FROM THE OTHER ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL,
MULTIPLE OR PUNITIVE DAMAGES.
7. CHEMGENICS' RIGHT TO INDEMNIFICATION.
PerSeptive shall indemnify the ChemGenics Indemnitees, pay on demand
and protect, defend, save and hold harmless each ChemGenics Indemnitee from and
against, on an after-tax basis, any and all Claims incurred by or asserted
against any ChemGenics Indemnitee of whatever kind or nature, including, without
limitation, any claim or liability based upon negligence, warranty, strict
liability, violation of government regulation or infringement of patent or other
proprietary rights, arising from or occurring as a result of (a) the use of the
Licensed Technology by PerSeptive or any Affiliate, agent or sublicensee of
PerSeptive (other than ChemGenics) or (b) subject to Section 6.3.2, any breach
of this Agreement by PerSeptive, except to the extent that any Claims shall have
arisen from the negligence or willful misconduct of any ChemGenics Indemnitee.
Such ChemGenics Indemnitee shall promptly notify PerSeptive of any Claim with
respect to which such ChemGenics Indemnitee is seeking indemnification
hereunder, upon becoming aware thereof, and permit PerSeptive at PerSeptive's
cost to defend against such Claim and shall cooperate in the defense thereof.
Neither PerSeptive nor such ChemGenics Indemnitee shall enter into, or permit,
any settlement of any such Claim without the express written consent of the
other Party which consent shall not be unreasonably withheld or delayed. Such
ChemGenics Indemnitee may, at its option and expense, have its own counsel
participate in any proceeding which is under the direction of PerSeptive and
will cooperate with PerSeptive or its insurer in the disposition of any such
matter; provided, however, that if PerSeptive shall not defend such Claim, such
ChemGenics Indemnitee shall have the right to defend such Claim itself and
recover from PerSeptive all reasonable attorneys' fees and expenses incurred by
it during the course of such defense.
8. PERSEPTIVE RIGHT TO INDEMNIFICATION.
ChemGenics shall indemnify the PerSeptive Indemnitees, pay on demand
and protect, defend, save and hold harmless each PerSeptive Indemnitee from and
against, on an after-tax basis, any and all Claims incurred by or asserted
against any PerSeptive Indemnitee of whatever kind or nature, including, without
limitation, any claim or liability based upon negligence, warranty, strict
liability, violation of government regulation or infringement of patent or other
proprietary rights, arising from or occurring as a result of (a) the use of any
Licensed Technology by ChemGenics or any permitted sublicensee of ChemGenics
(other than PerSeptive) or (b) subject to Section 6.3.2, any breach of this
Agreement by ChemGenics, except to the extent that any Claims shall have arisen
from the negligence or willful misconduct of any PerSeptive Indemnitee. Such
PerSeptive Indemnitee shall promptly notify ChemGenics of any Claim with respect
to which such PerSeptive Indemnitee is seeking indemnification hereunder, upon
becoming aware thereof, and permit ChemGenics at
<PAGE> 12
- 12 -
ChemGenics's cost to defend against such Claim and shall cooperate in the
defense thereof, provided, however, that PerSeptive shall have the right, but
not the obligation, to control the defense, at its expense, of any such Claims
involving PerSeptive Patent Rights. Neither such PerSeptive Indemnitee nor
ChemGenics shall enter into, or permit, any settlement of any such Claim without
the express written consent of the other Party, which shall not unreasonably be
withheld or delayed. Such PerSeptive Indemnitee may, at its option and expense,
have its own counsel participate in any proceeding which is under direction of
ChemGenics and will cooperate with ChemGenics and its insurer in the disposition
of any such matter; provided, however, that if ChemGenics shall not defend such
Claim, such PerSeptive Indemnitee shall have the right to defend such Claim
itself and recover from ChemGenics all reasonable attorneys' fees and expenses
incurred by it during the course of such defense.
9. TERM AND TERMINATION.
9.1. TERM. This Agreement shall be effective as of the Closing
Date and shall continue in full force and effect indefinitely, unless terminated
in part as provided in Sections 9.2, 9.3 or 9.4 hereof.
9.2. TERMINATION UPON BANKRUPTCY, ETC.. Either Party shall
have the right to terminate this Agreement (except for the license granted by
Section 2.1.1(b)), effective immediately upon written notice of termination to
the other Party in the event that:
9.2.1. The other Party shall (i) seek the
liquidation, reorganization, dissolution or winding-up of itself or the
composition or readjustment of its debts, (ii) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its assets, (iii)
make a general assignment for the benefit of its creditors, (iv) commence a
voluntary case under the federal Bankruptcy Code, (v) file a petition seeking to
take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or readjustment of debts, or (vi)
adopt any resolution of its Board of Directors or stockholders for the purpose
of effecting any of the foregoing; or
9.2.2. A proceeding or case shall be commenced
without the application or consent of the other Party and such proceeding or
case shall continue undismissed, or an order, judgment or decree approving or
ordering any of the following shall be entered and continue unstayed and in
effect, for a period of forty-five (45) days from and after the date service of
process is effected upon the other Party, seeking (i) the other Party's
liquidation, reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of the other Party or of all or any
substantial part of its assets, or (iii) similar relief in respect of the other
Party under any law relating to bankruptcy, insolvency, reorganization,
winding-up or the composition or readjustment of debts.
<PAGE> 13
- 13 -
9.3 TERMINATION OF MASTER AGREEMENT. If the Master Agreement
shall terminate or the transactions contemplated therein are rescinded or
unwound for any reason, all licenses granted under Section 2.1 hereof and the
obligations of PerSeptive under Sections 4.1.6, 5.1, 6.1, 6.2 and 14 hereof
shall terminate and all other provisions of the Agreement shall survive,
provided, however, that, to the extent that a continuing license shall be
necessary for ChemGenics to practice, exploit or commercialize any invention
made by ChemGenics prior to the rescission of the Master Agreement, then (i) if
the invention is a drug or drug candidate or drug target, PerSeptive shall grant
to ChemGenics a worldwide non-exclusive, perpetual, royalty-free license under
the Licensed Technology to the extent necessary to make, use or sell such drug,
drug candidate or drug target and (ii) if the invention is not a drug, drug
candidate or drug target, (a) if such continuing license is no broader than a
User License that PerSeptive makes generally available to its customers,
PerSeptive will provide such User License by ChemGenics from PerSeptive on terms
no less favorable than those offered to its other customers and (b) if
ChemGenics requires a broader license than is currently available in connection
with the purchase of products under any User License then PerSeptive shall grant
an additional worldwide, non-exclusive, perpetual, royalty-free license under
the Licensed Technology solely to the extent necessary for ChemGenics to
practice, exploit and commercialize such invention in the Field; provided that
ChemGenics shall purchase the PerSeptive products necessary to obtain such User
License. In addition, in the event the Master Agreement shall terminate or the
transactions contemplated therein are rescinded or unwound for any reason,
ChemGenics shall grant to PerSeptive a worldwide, non-exclusive, perpetual,
royalty-free license in the PerSeptive Field to any improvement to the Licensed
Technology made by ChemGenics between the date hereof and the date of such
rescission.
9.4 ACQUISITION OF CHEMGENICS BY PERSEPTIVE COMPETITOR. In the
event that ChemGenics shall consolidate or merge with another Person that is a
PerSeptive Competitor, or convey, sell or lease to a PerSeptive Competitor all
or substantially all of the stock, assets or business of ChemGenics and its
subsidiaries, taken as a whole, or suffer a Change of Control in which a
PerSeptive Competitor shall come to control ChemGenics, then PerSeptive may, in
its sole discretion within twenty (20) days after receipt of the notice required
by Section 14 hereof, give notice that it will terminate all licenses granted
under Section 2.1 (except Section 2.1.1(b)) hereof and the obligations of
PerSeptive under Sections 4.1.6, 5.1, 6.1, 6.2, 13 and 14 hereof effective on
the closing of the relevant transaction, and upon such closing all such licenses
and obligations under Sections 2.1 (except Section 2.1.1(b)), 4.1.6, 5.1, 6.1,
6.2, 13 and 14 hereof shall terminate, provided, however, that all other
provisions of this Agreement shall survive.
9.5 INDEMNIFICATION. Notwithstanding the foregoing, the
indemnification provisions of Section 8 hereof shall survive termination or
expiration of this Agreement, but only with respect to Claims which arose from
acts or circumstances which occurred prior to termination.
<PAGE> 14
- 14 -
10. NO IMPLIED WAIVERS; RIGHTS CUMULATIVE.
No failure on the part of PerSeptive or ChemGenics to exercise and no
delay in exercising any right, power, remedy or privilege under this Agreement,
or provided by statute or at law or in equity or otherwise, including, without
limitation, the right or power to terminate this Agreement, shall impair,
prejudice or constitute a waiver of any such right, power, remedy or privilege
or be construed as a waiver of any breach of this Agreement or as an
acquiescence therein, nor shall any single or partial exercise of any such
right, power, remedy or privilege preclude any other or further exercise thereof
or the exercise of any other right, power, remedy or privilege.
11. FORCE MAJEURE.
PerSeptive and ChemGenics shall each be excused for any failure or
delay in performing any of its respective obligations under this Agreement,
other than the obligations of ChemGenics to make certain payments to PerSeptive
as described in Section 3 hereof, if such failure or delay is caused by Force
Majeure.
12. NOTICES.
All notices, requests and other communications to PerSeptive or
ChemGenics hereunder shall be in writing (including telecopy or similar
electronic transmissions), shall refer specifically to this Agreement and shall
be personally delivered or sent by telecopy or other electronic facsimile
transmission, by registered mail or certified mail, return receipt requested,
postage prepaid or by reliable overnight courier service providing evidence of
receipt, in each case to the respective address specified below (or to such
address as may be specified in writing to the other party hereto):
PerSeptive Biosystems, Inc.
500 Old Connecticut Path
Framingham, MA 01701
Attn: President
Facsimile: (508) 383-7852
With a copy to:
Rufus C. King, Esq.
Testa, Hurwitz & Thibeault, LLP
125 High Street
High Street Tower
Boston, MA 02110
Facsimile: (617) 248-7100
<PAGE> 15
- 15 -
ChemGenics Pharmaceuticals Inc.
One Kendall Square
Building 300
Cambridge, MA 02139
Attn: President
Facsimile: (617) 225-2997
With a copy to:
Jeffrey M. Wiesen, Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Facsimile: (617) 542-2241
Any notice or communication given in conformity with this Section 12 shall be
deemed to be effective: (i) when received by the addressee, if delivered by hand
or electronic facsimile; (ii) three (3) days after mailing, if mailed; and (iii)
one (1) business day after delivery to a reliable overnight courier service
providing evidence of receipt.
13. FURTHER ASSURANCES.
Each of PerSeptive and ChemGenics agrees to duly execute and deliver,
or cause to be duly executed and delivered, such further instruments and to do
and cause to be done such further acts and things, that may be necessary or as
the other Party hereto may at any time and from time to time reasonably request
to carry out more effectively the provisions, or to better assure and confirm
unto such other Party, its rights under this Agreement.
14. SUCCESSORS AND ASSIGNS.
The terms and provisions of this Agreement shall inure to the benefit
of, and be binding upon, PerSeptive, ChemGenics, and their respective successors
and assigns, subject to the terms of Section 9.4 hereof and the remainder of
this Section 14; provided, however, that ChemGenics may not assign or otherwise
transfer this Agreement or any of its rights and interests, nor delegate any of
its obligations, hereunder, except to a direct or indirect 100% parent or direct
or indirect wholly owned subsidiary which becomes a party to the Non-Competition
Agreement (as defined in the Master Agreement) and that agrees in writing to be
bound by this Agreement (and in such case ChemGenics shall remain bound) without
the prior written consent of PerSeptive, except pursuant to a merger or
consolidation, or sale of all or substantially all of the stock, assets or
business of ChemGenics and its subsidiaries taken as a whole as provided below.
In the event that either Party shall consolidate or merge with another Person
(other than an acquisition by such Party of another Person where the
stockholders of such Party (or any subsidiary thereof) after such transaction
directly or indirectly own at least a majority of the voting stock of the
combined or acquired Person); or convey, sell or lease to another Person all or
substantially all of the stock, assets or business
<PAGE> 16
- 16 -
of such Party and its subsidiaries, taken as a whole, or if there shall be a
Change of Control of such Party, then (i) if such transaction is negotiated by
such Party, such Party shall give the other Party written notice identifying the
acquiring Person and the material terms of the transaction at least thirty (30)
days prior to the closing thereof and (ii) the Parties shall negotiate in good
faith to determine whether any changes shall be appropriate in this Agreement
and/or in the consideration due to PerSeptive for the licenses granted herein as
a result of the proposed transaction and the changed relationship of the Parties
resulting therefrom, subject to PerSeptive's right to terminate the licenses
granted herein pursuant to Section 9.4 hereof. If the Parties are unable to
agree that any such changes should be made prior to the closing of the proposed
transaction, then the licenses granted herein shall continue unaffected thereby
upon the consummation of the transaction, subject to PerSeptive's right to
terminate such licenses pursuant to Section 9.4. Any attempt to assign or
delegate any portion of this Agreement in violation of this Section 14 shall be
null and void. Subject to the foregoing, any reference to PerSeptive and
ChemGenics hereunder shall be deemed to include the permitted successors thereto
and assigns thereof.
15. AMENDMENTS.
No amendment, modification, waiver, termination or discharge of any
provision of this Agreement, nor any consent to any departure by PerSeptive or
ChemGenics therefrom, shall in any event be effective unless the same shall be
in writing specifically identifying this Agreement and the provision intended to
be amended, modified, waived, terminated or discharged and signed by PerSeptive
and ChemGenics, and each such amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by PerSeptive and ChemGenics.
16. ARBITRATION
(a) The Parties shall attempt to resolve any dispute or controversy
arising under or relating to the interpretation or meaning of this Agreement by
good faith negotiations. Any matter that cannot be resolved by such good faith
negotiation shall be resolved by final and binding arbitration conducted by
three (3) arbitrators in Boston, Massachusetts, in accordance with the
then-current American Arbitration Association ("AAA") Commercial Arbitration
Rules (the "AAA Rules") as modified by this Section 16.
(b) The arbitrators shall be selected by mutual agreement of the
parties or, failing such agreement, in accordance with the aforesaid AAA Rules.
At least one (1) of the arbitration panel shall be reasonably familiar with the
biotechnology industry. The Parties shall bear the costs of the arbitrators
equally. No arbitrator may be affiliated in any way with either Party.
<PAGE> 17
- 17 -
(c) The Parties shall have the right of limited pre-hearing discovery,
in accordance with the U.S. Federal Rules of Civil Procedure, as then in effect,
for a period not to exceed sixty (60) days.
(d) As soon as the discovery is concluded, but in any event with thirty
(30) days thereafter, the arbitrators shall hold a hearing in accordance with
the AAA Rules. Thereafter, the arbitrators shall promptly render a written
decision, together with a written opinion setting forth in reasonable detail the
grounds for such a decision.
(e) Judgment may be entered in any court of competent jurisdiction to
enforce the award entered by the arbitrators.
(f) The duty of the Parties to arbitrate any dispute hereunder shall
survive expiration or termination of this Agreement for any reason.
17. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
18. SEVERABILITY.
If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may be possible and (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, PerSeptive and ChemGenics hereby waive any
provision of law that would render any provision hereof prohibited or
unenforceable in any respect.
19. HEADINGS.
Headings used herein are for convenience only and shall not in any way
affect the construction of, or be taken into consideration in interpreting, this
Agreement.
20. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an
original, and all of which counterparts, taken together, shall constitute one
and the same instrument.
21. ENTIRE AGREEMENT.
<PAGE> 18
- 18 -
This Agreement, together with any agreements referenced herein,
constitutes, on and as of the date hereof, the entire agreement of PerSeptive
and ChemGenics with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
PerSeptive and ChemGenics with respect to such subject matter are hereby
superseded in their entirety.
IN WITNESS WHEREOF, the parties hereto have caused this License
Agreement to be duly executed under seal and delivered as of the date first
above written.
PERSEPTIVE BIOSYSTEMS, INC.
By:_____________________________________
Title:__________________________________
PERSEPTIVE TECHNOLOGIES II
CORPORATION
By:_____________________________________
Title:__________________________________
VESTEC CORPORATION
By:_____________________________________
Title:__________________________________
CHEMGENICS PHARMACEUTICALS INC.
By:_____________________________________
Title:__________________________________
<PAGE> 19
LICENSE AGREEMENT
SCHEDULE A
DEFINITIONS
"AFFILIATE" of a Person shall mean a Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with such Person. "Control" (and, with correlative
meanings, the terms "controlled by" and "under common control with") shall mean
the possession of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting stock, by
contract or otherwise. In the case of a corporation, "control" shall mean, among
other things, the direct or indirect ownership of more than fifty percent (50%)
of its outstanding voting stock. Notwithstanding the forgoing, ChemGenics and
PerSeptive shall not be deemed to be Affiliates for the purpose of this
Agreement.
"ASSOCIATED TECHNOLOGY" shall mean all Technology (including, without
limitation, Technology licensed to PerSeptive, subject to Section 2.1.3 hereof)
relating to or useful in the Field, other than PerSeptive Patent Rights, (i)
owned or controlled by or licensed to, PerSeptive as of the date hereof, or
acquired by PerSeptive hereafter that relates to and is useful in researching,
developing or manufacturing Products or in the delivery of Services. "Owned or
controlled" shall include Technology which PerSeptive owns, or under which
PerSeptive is licensed and has the right to grant sublicenses and/or grant
immunity from suit.
"CHANGE IN CONTROL" means with respect to either Party any transaction
or any event as a result of which any one or more Persons (other than a
stockholder of the Party on the Closing Date) acquires or for the first time
controls or is able to vote (directly or through nominees or beneficial
ownership) after the Closing Date fifty percent (50%) or more of the capital
stock of the Company outstanding at the time having power ordinarily to vote for
directors of the Company.
"CHEMGENICS" shall mean ChemGenics Pharmaceuticals Inc., a Delaware
corporation.
"CHEMGENICS INDEMNITEE" shall mean ChemGenics, its successors and
assigns, and the directors, officers, employees, agents and counsel thereof.
"CLAIM" shall mean any and all liabilities, damages, losses,
settlements, claims, actions, suits, penalties, fines, costs or expenses
(including, without limitation, reasonable attorneys' fees).
"CLOSING DATE" shall mean _____ __, 1996.
A-1
<PAGE> 20
"CONFIDENTIAL INFORMATION" shall mean all proprietary confidential
Technology owned or controlled by PerSeptive or ChemGenics, respectively, and
disclosed by PerSeptive to ChemGenics or by ChemGenics to PerSeptive during the
term of this Agreement.
"COVERED BY" shall mean, with respect to any act, an act that would, in
the absence of a license provided hereunder, constitute an infringement of a
claim of a pending patent application, if issued as a patent, or a patent which
has not been held invalid or unenforceable by a court of competent jurisdiction
in a decision which is unappealable or the appeal period for which has expired
without an appeal being taken.
"DRUG DISCOVERY PROGRAM" shall have the meaning assigned to that term
in the recitals to the Master Agreement.
"FIELD" shall mean all applications of the Licensed Technology for (i)
drug discovery and (ii) the development, synthesis and manufacture of drugs and
drug candidates discovered by ChemGenics or its Partners.
"FORCE MAJEURE" shall mean any act of God, any accident, explosion,
fire, storm, earthquake, flood, drought, peril of the sea, riot, embargo, war or
foreign, federal, state or municipal order of general application, seizure,
requisition or allocation, any failure or delay of transportation, shortage of
or inability to obtain supplies, equipment, fuel or labor or any other
circumstances or event beyond the reasonable control of the party relying upon
such circumstance or event.
"LICENSED TECHNOLOGY" shall mean, collectively, the PerSeptive Patent
Rights and the Associated Technology.
"PARTIES" means PerSeptive and ChemGenics.
"PARTNER" shall mean any Person with whom ChemGenics shall have a
written research and/or development agreement or other collaborative arrangement
whereby ChemGenics receives either (i) ownership rights or license rights in
products of such research and/or development or (ii) royalty payments based on
the sales of such products.
"PARTY" means PerSeptive or ChemGenics.
"PERSEPTIVE" shall mean, unless the context otherwise requires,
PerSeptive Biosystems, Inc., a Delaware corporation, PTC-II and Vestec,
collectively.
"PERSEPTIVE COMPETITOR" shall mean the Persons listed in Schedule C
hereto. PerSeptive may modify or supplement Schedule C from time to time to add
Persons who materially compete with PerSeptive in the PerSeptive Field and shall
modify Schedule C to delete Persons who do not materially compete with
PerSeptive in the PerSeptive Field, subject to ChemGenics' right to reasonably
object to any such modification or supplement or failure to modify Schedule C.
If ChemGenics does not object in writing to such modification or supplement
within twenty (20) days after receipt in writing of a modified or supplemented
A-2
<PAGE> 21
schedule, or if ChemGenics shall object and the Parties are able to resolve such
objection after good faith negotiation within five days after PerSeptive's
receipt of such written objection, then such modification or supplement shall
become part of this Agreement. If the Parties are unable to resolve such
objection, the matter shall be referred to arbitration in accordance with
Section 16, provided that if the list is modified or supplemented the date of
such modification or supplement shall be the date the original modified or
supplemented list was first delivered to ChemGenics.
"PERSEPTIVE FIELD" shall mean the research, development, design,
manufacture, importation, marketing, sales, licensing and distribution of Tools
and providing Tools to the life science industry.
"PERSEPTIVE INDEMNITEE" shall mean PerSeptive, its successors and
assigns, and the directors, officers, employees, agents and counsel thereof.
"PERSEPTIVE PATENT RIGHTS" shall mean rights (including, without
limitation, rights as licensee) now owned or hereafter acquired, subject to
Section 2.1.3 hereof, by PerSeptive under (i) issued U.S. and foreign patents,
(ii) U.S. or foreign patent applications, including any patent application
constituting an equivalent, counterpart, reissue, extension or continuation of
any of the foregoing applications (including, without limitation, a continuation
in part or division), or (iii) any patent issued or issuing upon any of the
foregoing applications. A list of PerSeptive's issued patents and patent
applications as of the date of this Agreement is attached hereto as Schedule B.
"PERSEPTIVE USER LICENSE" shall mean a license or right to use or
practice the Licensed Technology that is granted or conveyed in connection with
the sale, license or other transfer of PerSeptive's products.
"PERSON" shall mean any individual, partnership, limited liability
company, corporation, firm, association, unincorporated organization, joint
venture, trust or other entity.
"PRODUCTS" shall mean a product or system developed by incorporating,
utilizing, manufactured using, based upon, arising out of, or derived from the
Licensed Technology.
"PTC-II" shall mean PerSeptive Technologies II Corporation, a Delaware
corporation, and a wholly owned subsidiary of PerSeptive Biosystems, Inc.
"SERVICES" shall mean a method, process or procedure incorporating,
utilizing, based upon, arising out of or derived from the Licensed Technology.
"TECHNOLOGY" shall mean public and nonpublic technical or other
information, trade secrets, know-how, processes, formulations, concepts, ideas,
preclinical, clinical, pharmacological or other data and testing results,
experimental methods, or results, assays, descriptions, business or scientific
plans, depictions, customer lists and any other written, printed or
electronically stored materials, any natural or man-made biological materials
and
A-3
<PAGE> 22
any and all other intellectual property, including licenses, patents and patent
applications, of any nature whatsoever.
"TOOLS" shall mean instruments, equipment, machinery, apparatus,
devices, media, reagents, compounds, resins, activators, linkers, particles,
supports and other materials and substances (including, without limitation,
oligomers, peptides and other molecules), tools or other products (and systems
comprising the foregoing) for biomolecular purification, diagnosis, synthesis,
sequencing or analysis.
"VESTEC" shall mean Vestec Corporation, a Texas corporation, and a
wholly owned subsidiary of PerSeptive Biosystems, Inc.
A-4
<PAGE> 23
SCHEDULE B
CONFIDENTIAL
PERSEPTIVE BIOSYSTEMS, INC.
ISSUED U.S. & FOREIGN PATENTS
[
]
B-1
<PAGE> 24
CONFIDENTIAL
ISSUED PATENTS
--------------
TITLE DOCKET NO. PATENT NO. COUNTRY
- ----- ---------- ---------- -------
[
]
B-2
<PAGE> 25
CONFIDENTIAL
TITLE DOCKET NO. PATENT NO. COUNTRY
- ----- ---------- ---------- -------
[
]
B-3
<PAGE> 26
CONFIDENTIAL
TITLE DOCKET NO. PATENT NO. COUNTRY
- ----- ---------- ---------- -------
[
]
B-4
<PAGE> 27
CONFIDENTIAL
TITLE DOCKET NO. PATENT NO. COUNTRY
- ----- ---------- ---------- -------
[
]
B-5
<PAGE> 28
CONFIDENTIAL
TITLE DOCKET NO. PATENT NO. COUNTRY
- ----- ---------- ---------- -------
[
]
B-6
<PAGE> 29
CONFIDENTIAL
B-7
<PAGE> 30
Page 1
CONFIDENTIAL
Attorney-Client
Privileged Information
PERSEPTIVE BIOSYSTEMS, INC.
---------------------------
Pending Patent Applications
[
]
B-1
<PAGE> 31
Page 2
CONFIDENTIAL
Attorney-Client
Privileged Information
[
]
B-2
<PAGE> 32
Page 3
CONFIDENTIAL
Attorney-Client
Privileged Information
[
]
B-3
<PAGE> 33
Page 4
CONFIDENTIAL
Attorney-Client
Privileged Information
[
]
B-4
<PAGE> 34
Page 5
CONFIDENTIAL
Attorney-Client
Privileged Information
[
]
B-5
<PAGE> 35
Page 6
CONFIDENTIAL
Attorney-Client
Privileged Information
[
]
B-6
<PAGE> 36
Page 7
CONFIDENTIAL
Attorney-Client
Privileged Information
[
]
B-7
<PAGE> 37
LICENSE AGREEMENT
SCHEDULE C
PERSEPTIVE COMPETITORS
Perkin Elmer
Hewlett Packard
Waters
Beckman
Bio Rad
E. Merck
Shimadzu
Hitachi
Thermo Electron
Pharmacia & Upjohn
Amersham
Tosoh
Sepracor
W.R. Grace
and all Persons meeting the definition of an Affiliate of
any of the foregoing if the 50% standard therein were changed to 20%.
B-8
<PAGE> 38
Confidential, Proprietary Information
EXHIBIT D
to
License Agreement
between
PerSeptive Biosystems, Inc.
and
ChemGenics Pharmaceuticals, Inc.
--------------------------------
Drug Discovery Program Research Projects.
Identification of patents or patent applications which, in the opinion of
PerSeptive's management, are particularly relevant to the Project (excluding
patents or patent applications relating to instruments and other Tools (as
defined in the License Agreement)
and
Potential Drugs, Drug Targets and Drug Candidate Which are Subjects of Drug
Discovery Program Research Projects
- --------------------------------------------------------------------------------
[Key: "No D.T.C." means No Potential Drugs, Drug Targets or Drug Candidates]
[
]
B-9
<PAGE> 39
Exhibit D
to License Agreement
Page 2
[
]
B-10
<PAGE> 1
EXHIBIT 10.12
SECOND AMENDED AND RESTATED
VOTING AND CO-SALE AGREEMENT
This SECOND AMENDED AND RESTATED VOTING AND CO-SALE AGREEMENT, which
amends and restates that certain Amended and Restated Voting and Co-Sale
Agreement, dated as of January 11, 1994 (the "Original Agreement"), is dated as
of February 9, 1995, among Myco Pharmaceuticals Inc., a Delaware corporation
(the "Company"), Technology Leaders L.P., Technology Leaders Offshore C.V.,
Bessemer Venture Partners II L.P., Morgan Holland Ventures, Comdisco, Inc.,
Pfizer, Inc., Robert Morgan, Gary Takata, J. Robert Scott, Inc. and the
individuals listed on Exhibit A hereto (collectively, the "Investors") and Barry
Berkowitz, Ph.D. and individuals listed on Exhibit B hereto (collectively, the
"Shareholders").
WHEREAS the Company is issuing up to 3,000,000 shares of its Series D
Preferred Stock, $.01 par value ("Series D Preferred Stock") at a price of $5.00
per share to certain of the Investors pursuant to a Series D Preferred Stock
Purchase Agreement of even date herewith (the "Stock Purchase Agreement");
WHEREAS the Original Agreement provides for the election of members to
the Company's Board of Directors (the "Board of Directors") and for restrictions
on the terms of any dispositions by the Shareholders of their capital stock of
the Company; and
WHEREAS one of the conditions to the consummation of the transactions
contemplated by the Stock Purchase Agreement by the Investors is the amendment
and restatement of the Original Agreement, to add Pfizer, Inc. as a party and to
make certain other changes.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and the purchase of the Units by the Investors under the Stock
Purchase Agreement, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
ELECTION OF DIRECTORS AND VOTING
SECTION 1.1. ELECTION OF DIRECTORS. Subject to the Company's Restated
Certificate of Incorporation, at any time at which stockholders of the Company
have the right to or vote for or consent in writing to the election of directors
of the Company, the Investors and the Shareholders hereby agree to vote all
shares of capital stock of the Company presently owned or hereafter acquired by
them in favor of the following actions:
<PAGE> 2
(a) to cause and maintain the election to the Board of
Directors of four (4) designated representatives of the Investors holding Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series
D Preferred Stock or capital stock issued on conversion or exchange thereof
(collectively, the "Investor Directors"), each of who shall be designated
jointly by Technology Leaders L.P. and Technology Leaders Offshore C.V.
(collectively, the "TL-Funds"), Bessemer Venture Partners II L.P. ("Bessemer"),
Morgan Holland Ventures ("Morgan Holland") and Pfizer, Inc. ("Pfizer"); the four
representatives shall be initially Dr. Hubert Schoemaker, Gary Anderson, Ph.D.,
Christopher Gabrieli and Edwin Kania;
(b) to cause and maintain the election of Barry Berkowitz,
Ph.D. to the Board of Directors (the "Founder Director") for so long as he is an
officer, employee or otherwise materially involved with the Company; and
(c) to cause and maintain the election to the Board of
Directors of one person, selected by the then-current Chief Executive Officer of
the Company (the "CEO-Designated Director") and approved by holders of at least
60% of the outstanding shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock, voting together as
a single class.
The Company shall cause the nomination for election to the Board of
Directors of the individuals set forth above.
SECTION 1.2. VACANCIES AND REMOVAL. Each of the directors designated in
Section 1.1 shall be elected at any annual or special meeting of stockholders
(or by written consent in lieu of a meeting of stockholders) and shall serve
until his successor is elected and qualified or until his earlier resignation or
removal. Any Investor Director may be removed during his term of office, without
cause, by and only by the affirmative vote or written consent of a majority of
the Board of Directors, which majority shall include a majority of
representatives designated by the TL-Funds, Bessemer, Morgan Holland and Pfizer.
The Founder Director may be removed during his term of office, without
cause, by and only by the affirmative vote or written consent of the holders of
a majority of the outstanding shares of capital stock of the Company; provided,
that the parties hereto agree that they shall promptly, and shall only, so
remove the Founder Director if and when he shall cease to meet the
qualifications set forth in Section 1.1(b) above as reasonably determined by a
majority of the Board of Directors, which majority shall include a majority of
the representatives designated by the TL-Funds, Bessemer, Morgan Holland and
Pfizer; and
The CEO Designated Director may be removed during his term of
office, without cause, by and only by the affirmative vote or written consent of
the Investors holding at least 60% of the outstanding shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock and the capital stock issued on conversion or exchange thereof,
voting together as a single class.
- 2 -
<PAGE> 3
Any vacancy in the office of: (a) an Investor Director may be
filled by the vote or written consent of the Investors holding at least 60% of
the outstanding shares of the Series A Preferred Stock and Series B Preferred
Stock and capital stock issued on conversion or exchange thereof, voting
together as a single class; (b) the CEO Designated Director may be filled by
such person as may be approved by the vote or written consent of holders of at
least 60% of the outstanding shares of capital stock, and the parties hereto
agree to vote their shares of capital stock to elect such person as the CEO
Designated Director as is appointed by the Board of Directors to serve as the
Chief Executive Officer of the Company; all in accordance with the Restated
Certificate of Incorporation and By-laws of the Company and the Delaware General
Corporation Law. Pending any vote or written consent of holders of capital stock
provided for in this paragraph, any vacancy in the office of an Investor
Director shall be filled by the vote of a majority of the remaining Investor
Directors and any vacancy in the office of CEO Designated Director or Founder
Director shall be filled by the vote of a majority of the remaining directors
(including the Investor Directors).
Anything to the contrary notwithstanding, any director may be removed
for cause in accordance with the Delaware General Corporation Law.
SECTION 1.3. VOTING BY CERTAIN INVESTORS. Notwithstanding the
provisions of Section 1.1 above, Robert Morgan, Gary Takata and J. Robert Scott,
Inc. each hereby agree to vote all shares of each class of capital stock of the
Company presently owned or hereafter acquired by them in the same proportion as
the votes cast by all other holders of the Company's capital stock of such class
with respect to all matters submitted to the Company's stockholders for vote. To
effectuate such intent, each of Robert Morgan, Gary Takata and J. Robert Scott,
Inc. hereby grants to the Chief Executive Officer of the Company an irrevocable
proxy with full power of substitution, which proxy shall be deemed coupled with
an interest, to vote all of his shares of capital stock of the Company in the
manner set forth in this section.
- 3 -
<PAGE> 4
ARTICLE II
CO-SALE AND RIGHT OF FIRST REFUSAL
SECTION 2.1. RIGHT OF FIRST REFUSAL OR FIRST OFFER ON SALES.
(a) SALES TO THIRD PARTIES. If at any time a Shareholder
desires to transfer all or any part of the shares of capital stock of the
Company beneficially owned by him (the "Shares") in a privately-negotiated
transaction pursuant to a bona fide offer from a third party (the "Proposed
Transferee"), or pursuant to any intention of the Shareholder to sell or
otherwise transfer to any third party, whether or not identified (the "Proposed
Offer Sale"), the Shareholder shall first deliver a written offer (the "Offer")
to sell such Shares (the "Offered Shares") to the Company and the Investors on
terms and conditions, including price, not less favorable to the Company and the
Investors than those on which the Shareholder proposes to sell such Offered
Shares to the Proposed Transferee or otherwise pursuant to the Proposed Offer
Sale.
The Offer shall disclose the identity of and information about the
Proposed Transferee (if applicable), and the terms of the Proposed Offer Sale
(if applicable), the number of Offered Shares proposed to be sold, the total
number of Shares owned by the Shareholder, the terms and conditions, including
price, of the proposed sale, and any other material facts relating to the
proposed sale which may be requested by the Company. The Offer shall further
state that the Company and the Investors may acquire, in accordance with the
provisions of this Agreement, all or any portion of the Offered Shares for the
price indicated in the Offer and upon the other terms and conditions, including
deferred or installment payment (if applicable), set forth therein.
(b) COMPANY'S RIGHT OF FIRST REFUSAL. Upon receipt of the
Offer, if the Company desires to purchase all or any of the Offered Shares, the
Company shall deliver a written notice of its election to purchase such shares
to the Shareholder and each Investor, which notice shall state the number of
Offered Shares the Company desires to purchase and shall be delivered in person
or mailed to the Shareholder and each Investor within thirty (30) days of the
date of receipt by the Company of the Offer. Such notice shall, when taken in
conjunction with the Offer, be deemed to constitute a valid, legally binding and
enforceable agreement for the sale and purchase of such Offered Shares to the
Company on the terms of the Offer. The closing of the sale of Offered Shares to
the Company pursuant to this section shall be made at the offices of the Company
on such date as may be agreed by the Company and the Shareholder, but no later
than on or before the 60th day following the date the Offer is received by the
Company (or if such 60th day is not a business day, then on the next succeeding
business day). Such sale shall be effected by the Shareholder's delivery to the
Company of a certificate(s) evidencing the Offered Shares (or any portion
thereof) to be purchased by the Company, duly endorsed for transfer to the
Company, against payment to the Shareholder of the purchase price by the
Company. The exercise or non-exercise by the
- 4 -
<PAGE> 5
Company of its rights pursuant to this section shall be without prejudice to its
rights under this section with respect to any future sales of Offered Shares.
(C) INVESTORS' RIGHT OF SECOND REFUSAL. Subject to the
Company's right of first refusal, each Investor shall have the absolute right to
purchase that number of the Offered Shares which the Company elects not to
purchase as shall be equal to the number of Offered Shares multiplied by a
fraction, the numerator of which shall be the number of shares of capital stock
(on an as-converted basis) then owned by such Investor (the "Investor Shares"),
as the case may be, and the denominator of which shall be the aggregate number
of shares of capital stock (on an as-converted basis) of the Company then owned
by all Investors. For purposes of this Article II, all of the shares of capital
stock which an Investor has the right to acquire from the Company upon the
conversion, exercise or exchange of any of the securities of the Company then
owned by such Investor shall be deemed to be Investor Shares then owned by such
Investor (as adjusted for any adjustments in the applicable conversion or
exchange rate of any such securities). The amount of the Offered Shares that
each Investor is entitled to purchase under this section shall be referred to as
its "Pro Rata Fraction". The Investors shall have a right of oversubscription
such that if any Investor fails to accept the Offer as to its Pro Rata Fraction,
the remaining Investors shall, among them, have the right to purchase up to the
balance of the Offered Shares not so purchased. Such right of oversubscription
may be exercised by an Investor by accepting the Offer as to more than its Pro
Rata Fraction. If, as a result thereof, such oversubscriptions exceed the total
number of the Offered Shares available in respect of such oversubscription
privilege, the oversubscribing Investors shall be cut back with respect to their
oversubscriptions on a pro rata basis in accordance with their respective Pro
Rata Fractions, or as they may otherwise agree among themselves.
(d) CLOSING ON OFFERED SHARES PURCHASED BY INVESTORS. If an
Investor desires to purchase all or any part of the Offered Shares, then the
Investor shall communicate in writing its election to purchase to the
Shareholder, which communication shall state the number of Offered Shares the
Investor desires to purchase and shall be delivered in person or mailed to the
Shareholder at the address set forth in accordance with Section 3.11 below. Such
communication of the Investors shall be delivered within thirty (30) days of the
date the Offer was received. Such communication shall, when taken in conjunction
with the Offer, be deemed to constitute a valid, legally binding and enforceable
agreement for the sale and purchase of such Offered Shares (subject to the
Company's right of first refusal and the aforesaid limitations as to an
Investor's right to purchase more than its Pro Rata Fraction). Sales of the
Offered Shares to be sold to the Investors pursuant to this section shall be
made at the offices of the Company on or before the 60th day following the date
the Offer was received (or if such 60th day is not a business day, then on the
next succeeding business day). Such sales shall be effected by the Shareholder's
delivery to each purchasing Investor of a certificate(s) evidencing the Offered
Shares to be purchased by them, duly endorsed for transfer to each purchasing
Investor, against payment to the Shareholder of the purchase price therefor by
all such purchasing Investors.
- 5 -
<PAGE> 6
(e) SALES TO PROPOSED TRANSFEREE. If the Company and the
Investors do not purchase all of the Offered Shares, the Offered Shares not so
purchased may be sold by the Shareholder at any time within 180 days after the
date the Offer was made pursuant to the Proposed Offer Sale, subject to the
co-sale provisions of Section 3. Any such sale shall be at not less than the
price and upon other terms and conditions, if any, not more favorable to the
transferee than those specified in the Offer. Any Offered Shares not sold within
the permitted 180-day time period shall continue to be subject to the
requirements of a prior offer pursuant to this Section 2.1. If Offered Shares
are sold pursuant to this Section 2.1 to any transferee who is not a party to
this Agreement or who is not otherwise a permitted transferee under Section 2.3
hereof, the Offered Shares so sold shall be subject to the restrictions imposed
by this Agreement except as provided in Section 3.5 of this Agreement. As among
the Company and the Investors, the Company and the Investors shall purchase all
and not less than all of the Offered Shares in order for this Section 2.1 to be
effective and if the Company and the Investors do not purchase all of the
Offered Shares, the Shareholder shall be free to sell such shares.
SECTION 2.2. RIGHT OF PARTICIPATION IN SALES BY SHAREHOLDER.
(a) CO-SALE RIGHT. If at any time a Shareholder desires to
sell all or any part of the Shares owned by him to any person other than to one
or more of the Investors in accordance with Section 2.1 (the "Purchaser")
(including sales pursuant to Section 2.1(e)), each Investor shall have the right
to sell to the Purchaser, as a condition to such sale by the Shareholder, at the
same price per share and on the same terms and conditions as involved in such
sale by the Shareholder, such number of Investor Shares equal to the remaining
Offered Shares (after the exercise of any right of first refusal under Section
2.1) multiplied by a fraction, the numerator of which is the aggregate number of
shares of capital stock of the Company owned by the Investor desiring to sell
Investor Shares and the denominator of which is the sum of all shares of capital
stock of the Company owned by the Shareholder and all Investors desiring to
participate in the sales to the Purchaser under this section (calculated as
provided in Section 2.1(c)).
(b) NOTICE OF INTENT TO PARTICIPATE. Each Investor wishing to
so participate in any sale under this Section 2.2 shall notify the Shareholder
in writing of such intention as soon as practicable after such Investor's
receipt of the Offer made pursuant to Section 2.1, and in any event within the
time period specified in Section 2.1. Such notification shall be delivered in
person or mailed to such Shareholder at the address set forth in accordance with
Section 3.11 below.
(c) SALE TO TRANSFEREE. The Shareholder and each participating
Investor shall sell to the Purchaser all, or at the option of the Purchaser, any
part of the Shares and/or Investor Shares proposed to be sold by them at not
less than the price and upon other terms and conditions, if any, not more
favorable to the Purchaser than those in the Offer provided by the Shareholder
under Section 2.1 above; provided, however, that any purchase of less than all
of such Shares and/or Investor Shares by the Purchaser shall be made from the
- 6 -
<PAGE> 7
Shareholder and each participating Investor pro rata based upon the relative
amount of the Shares and/or Investor Shares that the Shareholder and each
participating Investor is otherwise entitled to sell pursuant to Section 2.2(a).
(d) LAPSE OF RESTRICTIONS. Any Shares sold by the Shareholder
to the Purchaser pursuant to this Section 2.2 shall no longer be subject to the
restrictions or benefits imposed by this Agreement and any Investor Shares sold
by a participating Investor pursuant to this Section 2.2 shall no longer be
entitled to the benefits or restrictions conferred by this Agreement.
SECTION 2.3. PROHIBITED AND PERMITTED TRANSFERS.
(a) A Shareholder shall not sell, assign, transfer, grant an
option to or for, pledge, hypothecate, mortgage, encumber or dispose of all or
any of his Shares except as expressly provided in this Agreement.
(b) Notwithstanding the foregoing, the terms and conditions of
Sections 2.1 and 2.2 hereof shall not apply to any Permitted Transfer by a
Shareholder. For purposes of this Agreement, "Permitted Transfer" means any
transfer by a Shareholder (a) of up to fifty percent (50%) on a cumulative basis
of any shares of capital stock held by the Shareholder to or for the benefit of
any spouse, child or grandchild of the Shareholder, or to a trust for the
benefit of any of the foregoing, or (b) by will or the laws of descent and
distribution to a Permitted Transferee (any person referred to in clause (a)
being defined as a "Permitted Transferee"); provided, that it shall be a
condition of each such transfer that the Permitted Transferee agree to be bound
by the terms and conditions of this Agreement as a Shareholder and executes a
counterpart of this Agreement.
As used herein, the term "Shareholder" is deemed to include any
transferees of the Shareholder, except as expressly provided otherwise.
SECTION 2.4. PUT RIGHT. In the event of any sale, transfer, assignment
or disposition of any Shares by a Shareholder in violation of any provision of
this Article II, each Investor shall have the right to elect to cause such
Shareholder to purchase, and such Shareholder shall be obligated to purchase,
from such Investor and at the same price per share and on the same terms and
conditions as involved in such sale by the Shareholder, such number of Investor
Shares (calculated on a fully-diluted basis) equal to the number of Shares sold
by such Shareholder multiplied by a fraction, the numerator of which is the
aggregate number of Investor Shares owned by any particular Investor desiring to
sell shares to such Shareholder under this section (calculated on a
fully-diluted basis) and the denominator of which is the sum of all shares of
capital stock owned by all Investors desiring to sell shares to such Shareholder
under this section (calculated on a fully-diluted basis).
- 7 -
<PAGE> 8
ARTICLE III
MISCELLANEOUS
SECTION 3.1. DURATION OF AGREEMENT. The rights and obligations of the
Company, each Shareholder and each Investor under this Agreement shall
terminate, on the earlier to occur of the following: (a) immediately prior to
the closing of the first underwritten public offering by the Company under the
Securities Act of 1933 of any of its equity securities pursuant to an offering
registered on Form S-1 or Form S-18 or their then equivalents in which the
aggregate gross proceeds to the Company equal or exceed $9,000,000, or (b)
immediately prior to the consummation of the sale of all, or substantially all,
of the Company's assets or capital stock either through a direct sale, merger,
reorganization, consolidation or other form of business combination.
Notwithstanding the foregoing, the rights and obligations of the Company, each
Shareholder and each Investor under Article I hereof shall terminate on the
earliest to occur of either of the events specified in clauses (a) and (b) above
or December 30, 2005 (or, if the Delaware General Corporation Law so permits,
such later date).
SECTION 3.2. LEGEND. Each certificate representing shares of capital
stock of the Company beneficially owned by the Shareholders and the Investors
shall bear a legend in substantially the following form, until such time as the
shares of capital stock represented thereby are no longer subject to the
provisions hereof:
"The sale, transfer or assignment of the securities
represented by this certificate are subject to the terms and
conditions of a certain Second Amended and Restated Voting and
Co-Sale Agreement dated February __, 1995, as amended from
time to time, among the Company and certain holders of its
outstanding capital stock. Copies of such Agreement may be
obtained at no cost by written request made by the holder of
record of this certificate to the Secretary of the Company."
SECTION 3.3. SIZE OF BOARD. Each of the parties hereto agrees to vote
all shares of capital stock now owned or hereafter acquired by him to fix and
maintain the number of directors on the Board of Directors of the Company at not
more than six (6) members, except as otherwise provided in Article Fourth of the
Company's Restated Certificate of Incorporation.
SECTION 3.4. FAILURE TO DELIVER SHARES. If a Shareholder becomes
obligated to sell any Shares to an Investor under this Agreement and fails to
deliver such Shares in accordance with the terms of this Agreement, such
Investor may, at its option, in addition to all other remedies it may have, send
to the Company for the benefit of the Shareholder the purchase price for such
Shares as is herein specified. Thereupon, the Company upon written
- 8 -
<PAGE> 9
notice to the Shareholder, (a) shall cancel on its books the certificate(s)
representing the Shares to be sold and (b) shall issue, in lieu thereof, in the
name of such Investor, a new certificate(s) representing such Shares, and
thereupon all of the Shareholder's rights in and to such Shares shall terminate.
The Company may exercise a similar remedy in enforcing its rights under Section
2.1.
SECTION 3.5. ADDITIONAL PARTIES AND DEFINITIONS. The Company, the
Investors (in the case of a transfer of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock or Series D Preferred Stock), and the
Shareholders (in the case of a transfer of capital stock by them or issuance of
capital stock by the Company) shall cause the following to occur:
(a) Any person or entity who acquires any series of Preferred
Stock shall become an Investor hereunder, unless at the time of such purchase
such person or entity was a Shareholder or an employee of the Company, in which
case such person or entity still remains or becomes (as the case may be) a
Shareholder hereunder;
(b) Any person or entity who acquires three percent (3%) or
more of the outstanding shares of capital stock of the Company through any
transactions whatsoever (other than as provided in Section 3.5(a)) shall become
a Shareholder hereunder, unless at the time such person or entity was, or was
required pursuant to this Section 3.5 to become, an Investor.
SECTION 3.6. SEVERABILITY; GOVERNING LAW. If any provisions of this
Agreement shall be determined to be illegal or unenforceable by any court of
law, the remaining provisions shall be severable and enforceable to the maximum
extent possible in accordance with their terms. This Agreement shall be governed
by, and construed in accordance with, the laws of the state of organization of
the Company from time to time, initially the State of Delaware.
SECTION 3.7. INJUNCTIVE RELIEF. It is acknowledged that it will be
impossible to measure the damages that would be suffered by the Investors if a
Shareholder fails to comply with the provisions of this Agreement and that in
the event of any such failure, the Investors will not have an adequate remedy at
law. The Investors shall, therefore, be entitled to obtain specific performance
of the Shareholders' obligations hereunder and to obtain immediate injunctive
relief.
SECTION 3.8. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their permitted successors and
assigns, legal representatives and heirs.
SECTION 3.9. MODIFICATION OR AMENDMENT. Neither this Agreement nor any
provision hereof can be modified, amended, changed, discharged or terminated
except by an instrument in writing, signed by (A) the Shareholders who hold at
least a majority of the
- 9 -
<PAGE> 10
shares of capital stock held by the Shareholders then subject to this Agreement,
based upon voting power and calculated on an "as if converted" basis, together
with (B) the consent of the Investors holding at least 60% of the outstanding
shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock and capital stock issued on conversion or
exchange thereof, voting together as a single class; provided, however, that any
amendment, modification, change, discharge or termination of the provisions
relating to (i) any increase of the obligations or decrease of the rights of the
Investors or the election of the Investor Directors shall require the consent of
the holders of 60% in interest of the outstanding shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock, voting together as a single class, and (ii) any increase of the
obligations or decrease of the rights of the Shareholders or the election of
directors other than the Investor Directors shall require the consent of the
holders of a majority in interest of the outstanding shares of capital stock
held by the Shareholders, voting separately.
Execution by such persons or entities and the Company of a counterpart
of this Agreement and an amendment adding their names hereto shall be a
condition of any acquisition of such shares by such person or entity.
SECTION 3.10. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which taken together shall constitute one and the same instrument.
SECTION 3.11. NOTICES. All notices to be given or otherwise made to any
party to this Agreement shall be deemed to be sufficient if contained in a
written instrument, delivered by hand in person, or by express overnight courier
service, or by electronic facsimile transmission addressed to such party at the
address set forth herein or at such other address as may hereafter be designated
in writing by the addressee to the addressor listing all parties, it being
understood that notice is only required to be provided to the individual
investors at the following address, or at such other addresses to which such
party may inform the other parties in writing in compliance with the terms of
this Section:
Mr. Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road, Suite 205
Westbury, New York 11590
with a copy to: Mr. Christopher Gabrieli
Bessemer Venture Partners
83 Walnut Street
Wellesley Hills, MA 02181.
All such notices shall, when delivered or telegraphed, be
effective when received or when attempted delivery is refused.
- 10 -
<PAGE> 11
SECTION 3.12. MERGER PROVISION. This Agreement and the Stock Purchase
Agreement of even date herewith, by and between the Company and the Investors,
along with all exhibits and schedules to the various agreements, constitute the
entire agreement among the parties hereto pertaining to the subject matter
hereof and supersede all prior and contemporaneous agreements and
understandings, whether oral or written, of any of the parties hereto concerning
the subject matter hereof. Any agreement between the Company and any Investor or
the Company and any Shareholder in effect immediately prior to the execution
hereof and concerning any of the subject matter hereof is hereby terminated,
except for that certain Stock Repurchase Agreement between the Company and Dr.
Barry A. Berkowitz and that certain Standstill Agreement, dated the date hereof,
between the Company and Pfizer.
SECTION 3.13. FURTHER ASSURANCES. From and after the date of this
Agreement, upon the request of any Investor, the Company or Shareholders holding
at least ten percent (10%) of the Shares, the Company, the Shareholders and the
Investors shall execute and deliver such instruments, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.
[SIGNATURE PAGES TO FOLLOW]
- 11 -
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Voting and Co-Sale Agreement to be executed as of the date first above
written.
MYCO PHARMACEUTICALS INC.
By: ___________________________
President
PFIZER, INC.
By: ___________________________
Title:______________________________
TECHNOLOGY LEADERS L.P.
By: Technology Leaders
Management, Inc. (General
Partner)
By:_________________________________
Name:_______________________________
Title:______________________________
TECHNOLOGY LEADERS OFFSHORE C.V.
By: Technology Leaders
Management, Inc., its General
Partner
By:_________________________________
Name:_______________________________
Title:______________________________
BESSEMER VENTURE PARTNERS II L.P.
By:_________________________________
General Partner
- 12 -
<PAGE> 13
By:_________________________________
Name:_______________________________
Title:______________________________
MORGAN HOLLAND FUND II, L.P.
By: its general partner,
Morgan Holland Partners II L.P.
By:_________________________________
Name: Edwin M. Kania, Jr.
Title: General Partner
GILDE INVESTMENT FUND B.V.
By:_________________________________
Name: Edwin M. Kania, Jr.,
general partner of Morgan Holland
Partners II L.P.
COMDISCO, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
____________________________________
Barry Berkowitz
____________________________________
Robert Morgan
____________________________________
Gary Takata
____________________________________
William T. Burgin
- 13 -
<PAGE> 14
BRIMSTONE ISLAND CO., L.P.
By:__________________________________
its General Partner
By:__________________________________
Name:________________________________
Title:_______________________________
____________________________________
Neill H. Brownstein
____________________________________
Robert H. Buescher
____________________________________
G. Felda Hardymon
____________________________________
Christopher Gabrieli
____________________________________
Michael I. Barach
____________________________________
Daniel S. Martin
____________________________________
Richard R. Davis
____________________________________
Barbara M. Henegan
____________________________________
Thomas F. Ruhm
____________________________________
Ward W. Woods, Jr.
____________________________________
Geoffrey L. Berger
- 14 -
<PAGE> 15
____________________________________
Robert D. Lindsay
____________________________________
Michael S. Mathews
____________________________________
Robert H. Buescher, signing
as Attorney-in-Fact for each
of the individuals beside whose
name an asterisk appears
J. ROBERT SCOTT, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
____________________________________
Dr. Gerald A. Fink
- 15 -
<PAGE> 16
EXHIBIT A
William T. Burgin
83 Walnut Street
Wellesley, MA 02181
Brimstone Island Co. L.P.
83 Walnut Street
Wellesley, MA 02181
Neill H. Brownstein
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
G. Felda Hardymon
83 Walnut Street
Wellesley, MA 02181
Christopher Gabrieli
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Michael I. Barach
83 Walnut Street
Wellesley, MA 02181
Daniel S. Martin
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
- 16 -
<PAGE> 17
Richard R. Davis
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Thomas F. Ruhm
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Ward W. Woods, Jr.
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Geoffrey L. Berger
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Robert D. Lindsay
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Michael S. Mathews
c/o Robert H. Buescher
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
William T. Burgin
83 Walnut Street
Wellesley, MA 02181
- 17 -
<PAGE> 18
EXHIBIT B
Dr. Gerald A. Fink
40 Aston Road
Chestnut Hill, MA 02167
- 18 -
<PAGE> 1
EXHIBIT 10.13
MYCO PHARMACEUTICALS INC.
STANDSTILL AGREEMENT
THIS AGREEMENT, dated as of February 9, 1995, is between Pfizer, Inc. a
Delaware corporation ("Pfizer"), and Myco Pharmaceuticals Inc., a Delaware
corporation (the "Company").
WITNESSETH:
WHEREAS on the date hereof, Pfizer is acquiring 2,700,000 shares of
Series D Convertible Preferred Stock, par value $0.01 per share, of the Company
(the "Series D Preferred Stock") for investment purposes pursuant to the terms
of a Series D Preferred Stock Purchase Agreement, dated as of the date hereof
(the "Series D Agreement");
WHEREAS in connection with the transactions contemplated by the Series
D Agreement, Pfizer, the Company and certain other stockholders of the Company
are entering into a Second Amended and Restated Voting and Co-Sale Agreement,
dated as of the date hereof (the "Voting and Co-Sale Agreement"); and
WHEREAS the execution and delivery of this Agreement by Pfizer is a
condition precedent to the Company's obligations under the Series D Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration the receipt of which is hereby acknowledged, the parties,
intending to be legally bound hereby, agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
Pfizer hereby represents and warrants to the Company as follows:
(a) Pfizer has full legal right, power and authority to enter
into and perform this Agreement. The execution and delivery of this Agreement by
Pfizer and the consummation by Pfizer of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on behalf of Pfizer.
This Agreement is a valid and binding obligation of Pfizer enforceable against
Pfizer in accordance with its terms, except that such enforcement may be subject
to (i) bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
<PAGE> 2
(b) Neither the execution and delivery of this Agreement by
Pfizer nor the consummation by Pfizer of the transactions contemplated hereby
conflicts with or constitutes a violation of or default under the charter or
by-laws of Pfizer, any statute, law, regulation, order or decree applicable to
Pfizer, or any contract, commitment, agreement, arrangement or restriction of
any kind to which Pfizer is a party or by which Pfizer is bound.
ARTICLE II
LIMITATIONS AND RESTRICTIONS
Section 2.01 Restrictions on Certain Actions by Pfizer. Except pursuant
to the rights of first refusal under the terms of the Series D Agreement or upon
conversion of the Series D Preferred Stock into shares of the common stock,
$0.001 par value per share ("Common Stock"), of the Company, Pfizer agrees that
during the term of this Agreement, Pfizer will not, nor will it permit any of
its affiliates or associates (as such terms are used in Rule 12b-2 of the
Securities Exchange Act of 1934 (the "Exchange Act"), these terms to have such
meaning throughout this Agreement), from and after the date that such person
becomes an affiliate or associate unless in any such case specifically invited
to do so by the Board of Directors of the Company, to:
(a) acquire, announce an intention to acquire, offer or
propose to acquire, solicit an offer to sell or agree to acquire by purchase, by
gift, by joining a partnership, limited partnership, syndicate or other "group"
(as such term is used in Section 13(d)(3) of the Exchange Act, such term to have
such meaning throughout this Agreement) or otherwise, any (i) assets, businesses
or properties of the Company other than in the ordinary course of business
pursuant to the express terms of the Collaborative Research Agreement and the
License Option, License and Royalty Agreement, each dated the date hereof,
between Pfizer and the Company, or (ii) shares of Common Stock, any additional
shares of the Series D Preferred Stock or any other Company securities
convertible into, exchangeable for or exercisable for Common Stock (all such
securities, collectively, "Voting Securities");
(b) participate in the formation or encourage the formation
of, or join or in any way participate with, any "person" (as such term is used
in Section 13(d)(3) of the Exchange Act and Section 2(2) of the Securities Act
of 1933 (the "Securities Act"), such term to have such meaning throughout this
Agreement) which owns or seeks to acquire beneficial ownership of the Voting
Securities;
(c) solicit, or participate in any "solicitation" of "proxies"
or become a "participant" in any "election contest" (as such terms are defined
or used in Regulation 14A under the Exchange Act, these terms to have such
meaning throughout this Agreement) with respect to the Company;
- 2 -
<PAGE> 3
(d) initiate, propose or otherwise solicit stockholders for
the approval of one or more stockholder proposals with respect to the Company or
induce any other person to initiate any stockholder proposal;
(e) seek to place any representative on the Board of Directors
of the Company, except as a holder of Series D Preferred Stock pursuant to the
Voting and Co-Sale Agreement, or seek to have called any meeting of the
stockholders of the Company;
(f) deposit any Voting Securities in a voting trust or, unless
specifically contemplated by this Agreement, the Series D Agreement or the
Voting and Co-sale Agreement, subject them to a voting agreement or other
agreement or arrangement with respect to the voting of such Voting Securities;
(g) otherwise act, alone or in concert with others, to seek to
control the management, Board of Directors, policies or affairs of the Company
or solicit, propose, seek to effect or negotiate with any other person
(including, without limitation, the Company) with respect to any form of
business combination or other extraordinary transaction with the Company or any
of its subsidiaries or any restructuring, recapitalization, similar transaction
or other transaction not in the ordinary course of business with respect to the
Company or any of its subsidiaries, solicit, make or propose or negotiate with
any other person with respect to, or announce an intent to make, any tender
offer or exchange offer for any securities of the Company or any of its
subsidiaries, or publicly disclose an intent, purpose, plan or proposal with
respect to the Company, any of its subsidiaries or any securities or assets of
the Company or any of its subsidiaries, that would violate the provisions of
this Section 2.01, or assist, participate in, facilitate or solicit any effort
or attempt by any person to do so or seek to do any of the foregoing; or
(h) request the Company (or its directors, officers, employees
or agents) to amend or waive any provision of this Agreement (including, without
limitation, this Section 2.01(h)) or otherwise seek any modification to or
waiver of any of the agreements or obligations of Pfizer, its affiliates or its
associates under this Agreement.
Section 2.02 Voting. In connection with all matters subject to
the vote of security holders of the Company during the term of this Agreement,
Pfizer shall, and shall direct its associates and affiliates to, vote all the
Voting Securities owned by them (a) in accordance with the recommendation of the
Company's Board of Directors with respect to such matter, or (b) in the absence
of a recommendation, in the same proportion as the votes cast by all other
holders of the Voting Securities with respect to such matter.
- 3 -
<PAGE> 4
ARTICLE III
MISCELLANEOUS
Section 3.01 Interpretation. For all purposes of this Agreement, the
term Company Common Stock shall include any securities of any issuer entitled to
vote generally for the election of directors of such issuer which securities the
holders of the Company Common Stock shall have received or as a matter of right
be entitled to receive as a result of (i) any capital reorganization or
reclassification of the capital stock of the Company, (ii) any consolidation,
merger or share exchange of the Company with or into another corporation or
(iii) any sale or substantially all the assets of the Company.
Section 3.02 Enforcement. (a) Pfizer acknowledges and agrees that
irreparable damage would occur if any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. Accordingly, the Company will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
its provisions in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which the Company
may be entitled at law or in equity.
(b) No failure or delay on the part of the Company in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.
Section 3.03 Entire Agreement. This Agreement, together with the
applicable provisions of the Series D Agreement and the Voting and Co-Sale
Agreement, constitutes the entire understanding of the parties with respect to
the transactions contemplated by them. This Agreement may be amended only by an
agreement in writing executed by all the parties.
Section 3.04 Severability. If any provision of this Agreement is held
by a court of competent jurisdiction to be unenforceable, the remaining
provisions shall remain in full force and effect. It is declared to be the
intention of the parties that they would have executed the remaining provisions
without including any that may be declared unenforceable.
Section 3.05 Headings. Descriptive headings are for convenience only
and will not control or affect the meaning or construction of any provision of
this Agreement.
Section 3.06 Counterparts. This Agreement may be executed in two or
more counterparts, and each such executed counterpart will be an original
instrument.
Section 3.07 Notices. All notices, consents, requests, instructions,
approvals and other communications provided for in this Agreement and all legal
process in regard to this Agreement
- 4 -
<PAGE> 5
will be validly given, made or served, if in writing and delivered personally,
by telecopy (except for legal process) or sent by registered mail postage paid.
if to the Company: Myco Pharmaceuticals, Inc.
One Kendall Square
Building 300, Third Floor
Cambridge, MA 02139
with a copy to: Peter F. Demuth, Esq.
Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Fax: (617) 542-2241
if to Pfizer: Pfizer, Inc.
235 E. 42nd Street
New York, NY 10017
with copies to: Joshua A. Kalkstein, Esq.
Senior Corporate Counsel - Research
Legal Division
Pfizer Inc.
Eastern Point Road
Groton, CT 06340
or to such other address or telecopy number as any party may, from time to time,
designate in a written notice given in a like manner. Notice by telecopy shall
be deemed delivered on the day telephone confirmation of receipt is given.
Section 3.08 Successors and Assigns. This Agreement shall bind the
successors and assigns of the parties, and inure to the benefit of any successor
or assign of any of the parties; provided, however, that no party may assign
this Agreement without the other party's prior written consent.
Section 3.09 Term. The term of this Agreement shall be the period from
the date first referred to above through and including February 9, 2010.
Section 3.10 Governing Law. This Agreement will be governed by and
construed and enforced in accordance with the law of The Commonwealth of
Massachusetts, without giving effect to the conflict of laws principles thereof.
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first referred to above.
MYCO PHARMACEUTICALS INC.
By:__________________________
PFIZER, INC.
By:__________________________
- 6 -
<PAGE> 1
Exhibit 10.14
CHEMGENICS PHARMACEUTICALS INC.
1992 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN
(as amended through December 16, 1996)
1. DEFINITIONS.
Unless otherwise specified or unless the context otherwise requires,
the following terms, as used in this ChemGenics Pharmaceuticals Inc.
Employee, Director and Consultant Stock Option Plan, have the following
meanings:
Administrator means the Board of Directors, unless it has
delegated power to act on its behalf to a committee. (See
Paragraph 4)
Affiliate means a corporation which, for purposes of Section
424 of the Code, is a parent or subsidiary of the Company,
direct or indirect.
Board of Directors means the Board of Directors of the
Company.
Code means the United States Internal Revenue Code of 1986, as
amended.
Committee means the Committee to which the Board of Directors
has delegated power to act under or pursuant to the provisions
of the Plan.
Common Stock means shares of the Company's common stock,
$0.001 par value.
Company means ChemGenics Pharmaceuticals Inc., a Delaware
corporation.
Disability or Disabled means permanent and total disability as
defined in Section 22(e)(3) of the Code.
Fair Market Value of a Share of Common Stock means:
(1) If the Common Stock is listed on a national securities
exchange or traded in the over-the-counter
<PAGE> 2
<PAGE> 3
market and sales prices are regularly reported for the Common
Stock, the closing or last price of the Common Stock on the
Composite Tape or other comparable reporting system for the
trading day immediately preceding the applicable date;
(2) If the Common Stock is not traded on a national securities
exchange but is traded on the over-the-counter market, if
sales prices are not regularly reported for the Common
Stock for the trading day referred to in clause (1), and
if bid and asked prices for the Common Stock are
regularly reported, the mean between the bid and the asked
price for the Common Stock at the close of trading in the
over-the-counter market for the trading day on which Common
Stock was traded immediately preceding the applicable date;
and
(3) If the Common Stock is neither listed on a national
securities exchange nor traded in the over-the-counter market,
such value as the Administrator, in good faith, shall
determine.
ISO means an option meant to qualify as an incentive stock
option under Code Section 422.
Key Employee means an employee of the Company or of an
Affiliate (including, without limitation, an employee who is
also serving as an officer or director of the Company or of an
Affiliate), designated by the Administrator to be eligible to
be granted one or more Options under the Plan.
Non-Qualified Option means an option which is not intended to
qualify as an ISO.
Option means an ISO or Non-Qualified Option granted under the
Plan.
Option Agreement means an agreement between the Company and a
Participant delivered pursuant to the Plan.
Participant means a Key Employee, director or consultant to
whom one or more Options are granted under the Plan.
- 2 -
<PAGE> 4
As used herein, "Participant" shall include "Participant's
Survivors" where the context requires.
Participant's Survivors means a deceased Participant's legal
representatives and/or any person or persons who acquired the
Participant's rights to an Option by will or by the laws of
descent and distribution.
Plan means this ChemGenics Pharmaceuticals Inc. 1992
Employee, Director and Consultant Stock Option Plan.
Shares means shares of the Common Stock as to which Options
have been or may be granted under the Plan or any shares of
capital stock into which the Shares are changed or for which
they are exchanged within the provisions of Paragraph 3 of the
Plan. The Shares issued upon exercise of Options granted under
the Plan may be authorized and unissued shares or shares held
by the Company in its treasury, or both.
2. PURPOSES OF THE PLAN.
The Plan is intended to encourage ownership of Shares by Key Employees
and directors of and certain consultants to the Company in order to attract such
people, to induce them to work for the benefit of the Company or of an Affiliate
and to provide additional incentive for them to promote the success of the
Company or of an Affiliate. The Plan provides for the granting of ISOs and
Non-Qualified Options.
3. SHARES SUBJECT TO THE PLAN.
The number of Shares subject to this Plan as to which Options may be
granted from time to time shall be 3,975,000 (before giving effect to the
Company's planned 1-for-2.65 reverse stock split, or 1,500,000 Shares after
giving effect to the reverse stock split), or the equivalent of such number of
Shares after the Administrator, in its sole discretion, has interpreted the
effect of any other stock split, stock dividend, combination, recapitalization
or similar transaction in accordance with Paragraph 16 of the Plan.
- 3 -
<PAGE> 5
If an Option ceases to be "outstanding", in whole or in part, the
Shares which were subject to such Option shall be available for the granting of
other Options under the Plan. Any Option shall be treated as "outstanding" until
such Option is exercised in full, or terminates or expires under the provisions
of the Plan, or by agreement of the parties to the pertinent Option Agreement.
4. ADMINISTRATION OF THE PLAN.
The Administrator of the Plan will be the Board of Directors, except to
the extent the Board of Directors delegates its authority to a Committee of the
Board of Directors. Subject to the provisions of the Plan, the Administrator is
authorized to:
a. Interpret the provisions of the Plan or of any Option or
Option Agreement and to make all rules and determinations
which it deems necessary or advisable for the
administration of the Plan;
b. Determine which employees of the Company or of an
Affiliate shall be designated as Key Employees and which
of the Key Employees, directors and consultants shall be
granted Options;
c. Determine the number of Shares for which an Option or
Options shall be granted, provided, however, that in no
event shall Options to purchase more than 500,000 Shares
(on a post-split basis) be granted to any Participant in
any fiscal year; and
d. Specify the terms and conditions upon which an Option or
Options may be granted;
provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the tax
status under Code Section 422 of those Options which are designated as ISOs.
Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Option granted under it
shall be final, unless otherwise determined by the Board of Directors, if the
Administrator is other than the Board of Directors.
- 4 -
<PAGE> 6
5. ELIGIBILITY FOR PARTICIPATION.
The Administrator will, in its sole discretion, name the Participants
in the Plan, provided, however, that each Participant must be a Key Employee,
director or consultant of the Company or of an Affiliate at the time an Option
is granted. Notwithstanding any of the foregoing provisions, the Administrator
may authorize the grant of an Option to a person not then an employee, director
or consultant of the Company or of an Affiliate. The actual grant of such
Option, however, shall be conditioned upon such person becoming eligible to
become a Participant at or prior to the time of the execution of the Option
Agreement evidencing such Option. ISOs may be granted only to Key Employees.
Non-Qualified Options may be granted to any Key Employee, director or consultant
of the Company or an Affiliate. The granting of any Option to any individual
shall neither entitle that individual to, nor disqualify him or her from,
participation in any other grant of Options.
6. TERMS AND CONDITIONS OF OPTIONS.
Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Administrator may provide that Options be
granted subject to such conditions as the Administrator may deem appropriate
including, without limitation, subsequent approval by the shareholders of the
Company of this Plan or any amendments thereto. The Option Agreements shall be
subject to at least the following terms and conditions:
A. Non-Qualified Options: Each Option intended to be a
Non-Qualified Option shall be subject to the terms and
conditions which the Administrator determines to be
appropriate and in the best interest of the Company, subject
to the following minimum standards for any such Non-Qualified
Option:
a. Option Price: The option price (per share) of the
Shares covered by each Option shall be determined
by the Administrator but shall not be less than the
par value per share of Common Stock.
- 5 -
<PAGE> 7
b. Each Option Agreement shall state the number of
Shares to which it pertains;
c. Each Option Agreement shall state the date or dates
on which it first is exercisable and the date after
which it may no longer be exercised, and may
provide that the Option rights accrue or become
exercisable in installments over a period of months
or years, or upon the occurrence of certain
conditions or the attainment of stated goals or
events; and
d. Exercise of any Option may be conditioned upon the
Participant's execution of a Share purchase agreement
in form satisfactory to the Administrator providing
for certain protections for the Company and its other
shareholders, including requirements that:
i. The Participant's or the Participant's
Survivors' right to sell or transfer the
Shares may be restricted; and
ii. The Participant or the Participant's
Survivors may be required to execute letters
of investment intent and must also
acknowledge that the Shares will bear
legends noting any applicable restrictions.
e. Directors' Options:
(i) Initial Grants to Directors: Each
director of the Company who is not an employee of the
Company or any Affiliate, who is first elected or
appointed to the Board of Directors after the date on
which the initial underwritten public offering of the
Company's Common Stock is consummated, upon such
election or appointment shall be granted a
Non-Qualified Option to purchase 10,000 Shares. Each
such Option shall (i) have an exercise price equal to
the Fair Market Value (per share) of the Shares on
the date of grant of the Option, (ii) have a term of
ten (10) years, and
- 6 -
<PAGE> 8
(iii) shall become cumulatively exercisable in five
(5) equal annual installments of twenty percent (20%)
each, upon completion of one full year of service on
the Board of Directors after the date of grant, and
continuing on each of the next four (4) full years of
service thereafter. Any director entitled to receive
an Option grant under this subparagraph may elect to
decline the Option.
(ii) Annual Grants to Directors: On June 1
of each year, each director who is not an employee of
the Company or any Affiliate shall be granted a
Non-Qualified Option to purchase 2,500 Shares. Each
such Option shall (i) have an exercise price equal to
the Fair Market Value (per share) of the Shares on
the date of grant of the Option, (ii) have a term of
ten (10) years, and (iii) be exercisable upon
completion of one full year of service on the Board
of Directors after the date of grant.
Except as otherwise provided in the pertinent Option Agreement, if a
director who received Options pursuant to this subparagraph (e):
(1) ceases to be a member of the Board of
Directors of the Company for any reason
other than death or Disability, any then
unexercised Options granted to such director
may be exercised by the director within a
period of ninety (90) days after the date
the director ceases to be a member of the
Board of Directors, but only to the extent
of the number of shares with respect to
which the Options are exercisable on the
date the director ceases to be a member of
the Board of Directors, and in no event
later than the expiration date of the
Option; or
(2) ceases to be a member of the Board of
Directors of the Company by reason of his or
her death or Disability, any then
unexercised Options granted to such director
may be
- 7 -
<PAGE> 9
exercised by the director (or by the
Participant's personal representative, or
Participant's Survivors in the event of
death) within a period of one hundred eighty
(180) days after the date the director
ceases to be a member of the Board of
Directors, but only to the extent of the
number of Shares with respect to which the
Options are exercisable on the date the
director ceases to be a member of the Board
of Directors, and in no event later than the
expiration date of the Option.
B. ISOs: Each Option intended to be an ISO shall be issued only
to a Key Employee and be subject to at least the following
terms and conditions, with such additional restrictions or
changes as the Administrator determines are appropriate but
not in conflict with Code Section 422 and relevant regulations
and rulings of the Internal Revenue Service:
a. Minimum standards: The ISO shall meet the minimum
standards required of Non-Qualified Options, as
described above, except clause (a) thereunder.
b. Option Price: Immediately before the Option is
granted, if the Participant owns, directly or by
reason of the applicable attribution rules in Code
Section 424(d):
i. Ten percent (10%) or less of the total
combined voting power of all classes of
share capital of the Company or an
Affiliate, the Option price per share of the
Shares covered by each Option shall not be
less than one hundred percent (100%) of the
Fair Market Value per share of the Shares on
the date of the grant of the Option.
ii. More than ten percent (10%) of the total
combined voting power of all classes of
stock of the Company or an Affiliate, the
Option price per share of the Shares covered
by each Option shall not be less than one
hundred ten
- 8 -
<PAGE> 10
percent (110%) of the said Fair Market Value
on the date of grant.
c. Term of Option: For Participants who own
i. Ten percent (10%) or less of the total
combined voting power of all classes of
share capital of the Company or an
Affiliate, each Option shall terminate not
more than ten (10) years from the date of
the grant or at such earlier time as the
Option Agreement may provide.
ii. More than ten percent (10%) of the total
combined voting power of all classes of
stock of the Company or an Affiliate, each
Option shall terminate not more than five
(5) years from the date of the grant or at
such earlier time as the Option Agreement
may provide.
d. Limitation on Yearly Exercise: The Option
Agreements shall restrict the amount of Options
which may be exercisable in any calendar year
(under this or any other ISO plan of the Company or
an Affiliate) so that the aggregate Fair Market
Value (determined at the time each ISO is granted)
of the stock with respect to which ISOs are
exercisable for the first time by the Participant
in any calendar year does not exceed one hundred
thousand dollars ($100,000), provided that this
subparagraph (e) shall have no force or effect if
its inclusion in the Plan is not necessary for
Options issued as ISOs to qualify as ISOs pursuant
to Section 422(d) of the Code.
e. Limitation on Grant of ISOs: No ISOs shall be granted
after ten years after Date of Adoption, the date
which is the earlier of ten (10) years from the date
of the adoption of the Plan by the Company and the
date of the approval of the Plan by the shareholders
of the Company.
- 9 -
<PAGE> 11
7. EXERCISE OF OPTION AND ISSUE OF SHARES.
An Option (or any part or installment thereof) shall be exercised by
giving written notice to the Company at its principal office address, together
with provision for payment of the full purchase price in accordance with this
paragraph for the Shares as to which the Option is being exercised, and upon
compliance with any other condition(s) set forth in the Option Agreement. Such
written notice shall be signed by the person exercising the Option, shall state
the number of Shares with respect to which the Option is being exercised and
shall contain any representation required by the Plan or the Option Agreement.
Payment of the purchase price for the Shares as to which such Option is being
exercised shall be made (a) in United States dollars in cash or by check, or (b)
at the discretion of the Administrator, through delivery of shares of Common
Stock having a fair market value equal as of the date of the exercise to the
cash exercise price of the Option, determined in good faith by the
Administrator, or (c) at the discretion of the Administrator, by delivery of the
grantee's personal recourse note bearing interest payable not less than annually
at no less than 100% of the applicable Federal rate, as defined in Section
1274(d) of the Code, or (d) at the discretion of the Administrator, in
accordance with a cashless exercise program established with a securities
brokerage firm, and approved by the Administrator, or (e) at the discretion of
the Administrator, by any combination of (a), (b), (c) and (d) above.
Notwithstanding the foregoing, the Administrator shall accept only such payment
on exercise of an ISO as is permitted by Section 422 of the Code.
The Company shall then reasonably promptly deliver the Shares as to
which such Option was exercised to the Participant (or to the Participant's
Survivors, as the case may be). In determining what constitutes "reasonably
promptly," it is expressly understood that the delivery of the Shares may be
delayed by the Company in order to comply with any law or regulation (including,
without limitation, state securities or "blue sky" laws) which requires the
Company to take any action with respect to the Shares prior to their issuance.
The Shares shall, upon delivery, be evidenced by an appropriate certificate or
certificates for fully paid, non-assessable Shares.
- 10 -
<PAGE> 12
The Administrator shall have the right to accelerate the date of
exercise of any installment of any Option; provided that the Administrator shall
not accelerate the exercise date of any installment of any Option granted to any
Key Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to Paragraph 19) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in paragraph
6(e).
The Administrator may, in its discretion, amend any term or condition
of an outstanding Option provided (i) such term or condition as amended is
permitted by the Plan, (ii) any such amendment shall be made only with the
consent of the Participant to whom the Option was granted, or in the event of
the death of the Participant, the Participant's Survivors, if the amendment is
adverse to the Participant, and (iii) any such amendment of any ISO shall be
made only after the Administrator, after consulting the counsel for the Company,
determines whether such amendment would constitute a "modification" of any
Option which is an ISO (as that term is defined in Section 424(h) of the Code)
or would cause any adverse tax consequences for the holders of such ISO.
8. RIGHTS AS A SHAREHOLDER.
No Participant to whom an Option has been granted shall have rights as
a shareholder with respect to any Shares covered by such Option, except after
due exercise of the Option and tender of the full purchase price for the Shares
being purchased pursuant to such exercise and registration of the Shares in the
Company's share register in the name of the Participant.
9. ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS.
By its terms, an Option granted to a Participant shall not be
transferable by the Participant other than (i) by will or by the laws of descent
and distribution, or (ii) pursuant to a qualified domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act or
the rules thereunder, or (iii) as otherwise determined by the Administrator and
set forth in the applicable Option Agreement. The designation of a beneficiary
of an Option by a Participant shall not be deemed a transfer
- 11 -
<PAGE> 13
prohibited by this Paragraph. Except as provided in the preceding sentence, an
Option shall be exercisable, during the Participant's lifetime, only by such
Participant (or by his or her legal representative) and shall not be assigned,
pledged or hypothecated in any way (whether by operation of law or otherwise)
and shall not be subject to execution, attachment or similar process. Any
attempted transfer, assignment, pledge, hypothecation or other disposition of
any Option or of any rights granted thereunder contrary to the provisions of
this Plan, or the levy of any attachment or similar process upon an Option,
shall be null and void.
10. EFFECT OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE".
Except as otherwise provided in the pertinent Option Agreement, in the
event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised all Options, the following rules apply:
a. A Participant who ceases to be an employee, director or
consultant of the Company or of an Affiliate (for any
reason other than termination "for cause", Disability, or
death for which events there are special rules in
Paragraphs 11, 12, and 13, respectively), may exercise
any Option granted to him or her to the extent that the
Option is exercisable on the date of such termination of
service, but only within such term as the Administrator
has designated in the pertinent Option Agreement.
b. In no event may an Option Agreement provide, if the Option is
intended to be an ISO, that the time for exercise be later
than three (3) months after the Participant's termination of
employment.
c. The provisions of this Paragraph, and not the provisions of
Paragraph 12 or 13, shall apply to a Participant who
subsequently becomes disabled or dies after the termination of
employment, director status or consultancy, provided, however,
in the case of a Participant's death within three (3) months
after the termination of employment, director status or
consulting,
- 12 -
<PAGE> 14
the Participant's Survivors may exercise the Option within one
(1) year after the date of the Participant's death, but in no
event after the date of expiration of the term of the Option.
d. Notwithstanding anything herein to the contrary, if
subsequent to a Participant's termination of employment,
termination of director status or termination of
consultancy, but prior to the exercise of an Option, the
Board of Directors determines that, either prior or
subsequent to the Participant's termination, the
Participant engaged in conduct which would constitute
"cause", then such Participant shall forthwith cease to
have any right to exercise any Option.
e. A Participant to whom an Option has been granted under
the Plan who is absent from work with the Company or with
an Affiliate because of temporary disability (any
disability other than a permanent and total Disability as
defined in Paragraph 1 hereof), or who is on leave of
absence for any purpose, shall not, during the period of
any such absence, be deemed, by virtue of such absence
alone, to have terminated such Participant's employment,
director status or consultancy with the Company or with
an Affiliate, except as the Administrator may otherwise
expressly provide.
f. Options granted under the Plan shall not be affected by
any change of employment or other service within or among
the Company and any Affiliates, so long as the
Participant continues to be an employee, director or
consultant of the Company or any Affiliate, provided,
however, if a Participant's employment by either the
Company or an Affiliate should cease (other than to
become an employee of an Affiliate or the Company), such
termination shall affect the Participant's rights under
any Option granted to such Participant in accordance with
the terms of the Plan and the pertinent Option Agreement.
11. EFFECT OF TERMINATION OF SERVICE "FOR CAUSE".
- 13 -
<PAGE> 15
Except as otherwise provided in the pertinent Option Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause" prior to the time that all of his or her outstanding Options have been
exercised:
a. All outstanding and unexercised Options as of the date the
Participant is notified his or her service is terminated "for
cause" will immediately be forfeited, unless the Option
Agreement provides otherwise.
b. For purposes of this Paragraph, "cause" shall include (and is
not limited to) dishonesty with respect to the employer,
insubordination, substantial malfeasance or non-feasance of
duty, unauthorized disclosure of confidential information, and
conduct substantially prejudicial to the business of the
Company or any Affiliate. The determination of the
Administrator as to the existence of cause will be conclusive
on the Participant and the Company.
c. "Cause" is not limited to events which have occurred prior to
a Participant's termination of service, nor is it necessary
that the Administrator's finding of "cause" occur prior to
termination. If the Administrator determines, subsequent to a
Participant's termination of service but prior to the exercise
of an Option, that either prior or subsequent to the
Participant's termination the Participant engaged in conduct
which would constitute "cause", then the right to exercise any
Option is forfeited.
d. Any definition in an agreement between the Participant and the
Company or an Affiliate, which contains a conflicting
definition of "cause" for termination and which is in effect
at the time of such termination, shall supersede the
definition in this Plan with respect to such Participant.
- 14 -
<PAGE> 16
12. EFFECT OF TERMINATION OF SERVICE FOR DISABILITY.
Except as otherwise provided in the pertinent Option Agreement, a
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:
a. To the extent exercisable but not exercised on the date of
Disability; and
b. In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any
additional rights as would have accrued had the Participant
not become Disabled prior to the end of the accrual period
which next ends following the date of Disability. The
proration shall be based upon the number of days of such
accrual period prior to the date of Disability.
A Disabled Participant may exercise such rights only within a period of
not more than one (1) year after the date that the Participant became Disabled,
notwithstanding that the Participant might have been able to exercise the Option
as to some or all of the Shares on a later date if he or she had not become
disabled and had continued to be an employee, director or consultant or, if
earlier, within the originally prescribed term of the Option.
The Administrator shall make the determination both of whether
Disability has occurred and the date of its occurrence (unless a procedure for
such determination is set forth in another agreement between the Company and
such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.
13. EFFECT OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
Except as otherwise provided in the pertinent Option Agreement, in the
event of the death of a Participant to whom an Option has been granted while the
Participant is an employee,
- 15 -
<PAGE> 17
director or consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant's Survivors:
a. To the extent exercisable but not exercised on the date of
death; and
b. In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any
additional rights which would have accrued had the Participant
not died prior to the end of the accrual period which next
ends following the date of death. The proration shall be based
upon the number of days of such accrual period prior to the
Participant's death.
If the Participant's Survivors wish to exercise the Option, they must
take all necessary steps to exercise the Option within one (1) year after the
date of death of such Participant, notwithstanding that the decedent might have
been able to exercise the Option as to some or all of the Shares on a later date
if he or she had not died and had continued to be an employee, director or
consultant or, if earlier, within the originally prescribed term of the Option.
14. PURCHASE FOR INVESTMENT.
Unless the offering and sale of the Shares to be issued upon the
particular exercise of an Option shall have been effectively registered under
the Securities Act of 1933, as now in force or
hereafter amended (the "1933 Act"), the Company shall be under no obligation to
issue the Shares covered by such exercise unless and until the following
conditions have been fulfilled:
a. The person(s) who exercise(s) such Option shall warrant
to the Company, prior to the receipt of such Shares, that
such person(s) are acquiring such Shares for their own
respective accounts, for investment, and not with a view
to, or for sale in connection with, the distribution of
any such Shares, in which event the person(s) acquiring
such Shares shall be bound by the provisions of the
following legend which shall be endorsed upon the
certificate(s) evidencing their Shares issued pursuant to
such exercise or such grant:
- 16 -
<PAGE> 18
"The shares represented by this certificate have been
taken for investment and they may not be sold or
otherwise transferred by any person, including a
pledgee, unless (1) either (a) a Registration
Statement with respect to such shares shall be
effective under the Securities Act of 1933, as
amended, or (b) the Company shall have received an
opinion of counsel satisfactory to it that an
exemption from registration under such Act is then
available, and (2) there shall have been compliance
with all applicable state securities laws.
b. At the discretion of the Administrator, the Company shall have
received an opinion of its counsel that the Shares may be
issued upon such particular exercise in compliance with the
1933 Act without registration thereunder.
15. DISSOLUTION OR LIQUIDATION OF THE COMPANY.
Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised will
terminate and become null and void; provided, however, that if the rights of a
Participant or a Participant's Survivors have not otherwise terminated and
expired, the Participant or the Participant's Survivors will have the right
immediately prior to such dissolution or liquidation to exercise any Option to
the extent that the Option is exercisable as of the date immediately prior to
such dissolution or liquidation.
16. ADJUSTMENTS.
Upon the occurrence of any of the following events, a Participant's
rights with respect to any Option granted to him or her hereunder which have not
previously been exercised in full shall be adjusted as hereinafter provided,
unless otherwise specifically provided in the written agreement between the
Participant and the Company relating to such Option:
A. Stock Dividends and Stock Splits. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares
- 17 -
<PAGE> 19
of Common Stock as a stock dividend on its outstanding Common Stock, the number
of shares of Common Stock deliverable upon the exercise of such Option shall be
appropriately increased or decreased proportionately, and appropriate
adjustments shall be made in the purchase price per share to reflect such
subdivision, combination or stock dividend. The number of Shares subject to
options to be granted to directors pursuant to Subparagraph e of Paragraph 6
shall also be proportionately adjusted upon the occurrence of such events.
B. Consolidations or Mergers. If the Company is to be consolidated with
or acquired by another entity in a merger, sale of all or substantially all of
the Company's assets or otherwise (an "Acquisition"), the Administrator or the
board of directors of any entity assuming the obligations of the Company
hereunder (the "Successor Board"), shall, as to outstanding Options, either (i)
make appropriate provision for the continuation of such Options by substituting
on an equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition or securities of any successor or acquiring
entity; or (ii) upon written notice to the Participants, provide that all
Options must be exercised (either to the extent then exercisable or, at the
discretion of the Administrator, all Options being made fully exercisable for
purposes of this subsection), within a specified number of days of the date of
such notice, at the end of which period the Options shall terminate; or (iii)
terminate all Options in exchange for a cash payment equal to the excess of the
Fair Market Value of the shares subject to such Options (either to the extent
then exercisable or, at the discretion of the Administrator, all Options being
made fully exercisable for purposes of this subsection) over the exercise price
thereof.
C. Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph B above) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, a Participant upon exercising an Option shall be entitled to
receive for the purchase price paid upon such exercise the securities he or she
would have received if he or she had exercised such Option prior to such
recapitalization or reorganization.
- 18 -
<PAGE> 20
D. Modification of ISOs. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraph A, B or C with respect to ISOs shall
be made only after the Administrator, after consulting with counsel for the
Company, determines whether such adjustments would constitute a "modification"
of such ISOs (as that term is defined in Section 424(h) of the Code) or would
cause any adverse tax consequences for the holders of such ISOs. If the
Administrator determines that such adjustments made with respect to ISOs would
constitute a modification of such ISOs, it may refrain from making such
adjustments, unless the holder of an ISO specifically requests in writing that
such adjustment be made and such writing indicates that the holder has full
knowledge of the consequences of such "modification" on his or her income tax
treatment with respect to the ISO.
17. ISSUANCES OF SECURITIES.
Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. Except as
expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company.
18. FRACTIONAL SHARES.
No fractional shares shall be issued under the Plan and the person
exercising such right shall receive from the Company cash in lieu of such
fractional shares equal to the Fair Market Value thereof.
19. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS:
TERMINATION OF ISOs.
The Administrator, at the written request of any Participant, may in
its discretion take such actions as may be necessary to convert such
Participant's ISOs (or any portions thereof) that have not been exercised on the
date of conversion into Non-Qualified
- 19 -
<PAGE> 21
Options at any time prior to the expiration of such ISOs, regardless of whether
the Participant is an employee of the Company or an Affiliate at the time of
such conversion. Such actions may include, but not be limited to, extending the
exercise period or reducing the exercise price of the appropriate installments
of such Options. At the time of such conversion, the Administrator (with the
consent of the Participant) may impose such conditions on the exercise of the
resulting Non-Qualified Options as the Administrator in its discretion may
determine, provided that such conditions shall not be inconsistent with this
Plan. Nothing in the Plan shall be deemed to give any Participant the right to
have such Participant's ISOs converted into Non-Qualified Options, and no such
conversion shall occur until and unless the Administrator takes appropriate
action. The Administrator, with the consent of the Participant, may also
terminate any portion of any ISO that has not been exercised at the time of such
conversion.
20. WITHHOLDING.
In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings or other
amounts are required by applicable law or governmental regulation to be withheld
from the Participant's salary, wages or other remuneration in connection with
the exercise of an Option or a Disqualifying Disposition (as defined in
Paragraph 21), the Company may withhold from the Participant's compensation, if
any, or may require that the Participant advance in cash to the Company, or to
any Affiliate of the Company which employs or employed the Option holder, the
amount of such withholdings unless a different withholding arrangement,
including the use of shares of the Company's Common Stock or a promissory note,
is authorized by the Administrator (and permitted by law). For purposes hereof,
the fair market value of the shares withheld for purposes of payroll withholding
shall be determined in the manner provided in Paragraph 1 above, as of the most
recent practicable date prior to the date of exercise. If the fair market value
of the shares withheld is less than the amount of payroll withholdings required,
the Participant may be required to advance the difference in cash to the Company
or the Affiliate employer. The Administrator in its discretion may condition the
exercise of an Option for less than the then Fair Market Value on the
Participant's payment of such additional withholding.
- 20 -
<PAGE> 22
21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
Each Key Employee who receives an ISO must agree to notify the Company
in writing immediately after the Key Employee makes a Disqualifying Disposition
of any shares acquired pursuant to the exercise of an ISO. A Disqualifying
Disposition is any disposition (including any sale) of such shares before the
later of (a) two years after the date the Key Employee was granted the ISO, or
(b) one year after the date the Key Employee acquired Shares by exercising the
ISO. If the Key Employee has died before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter.
22. TERMINATION OF THE PLAN.
The Plan will terminate on February 19, 2002, the date which is ten
(10) years from the earlier of the date of its adoption and the date of its
approval by the shareholders of the Company. The Plan may be terminated at an
earlier date by vote of the shareholders of the Company; provided, however, that
any such earlier termination shall not affect any Option Agreements executed
prior to the effective date of such termination.
23. AMENDMENT OF THE PLAN AND AGREEMENTS.
The Plan may be amended by the shareholders of the Company. The Plan
may also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding Options granted under the
Plan or Options to be granted under the Plan for favorable federal income tax
treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code, and to the extent
necessary to qualify the shares issuable upon exercise of any outstanding
Options granted, or Options to be granted, under the Plan for listing on any
national securities exchange or quotation in any national automated quotation
system of securities dealers. Any amendment approved by the Administrator which
the Administrator determines is of a scope that requires shareholder approval
shall be subject to obtaining such shareholder approval. Any modification or
amendment of the Plan shall not, without the
- 21 -
<PAGE> 23
consent of a Participant, adversely affect his or her rights under an Option
previously granted to him or her. With the consent of the Participant affected,
the Administrator may amend outstanding Option Agreements in a manner which may
be adverse to the Participant but which is not inconsistent with the Plan. In
the discretion of the Administrator, outstanding Option Agreements may be
amended by the Administrator in a manner which is not adverse to the
Participant.
24. EMPLOYMENT OR OTHER RELATIONSHIP.
Nothing in this Plan or any Option Agreement shall be deemed to prevent
the Company or an Affiliate from terminating the employment, consultancy or
director status of a Participant, nor to prevent a Participant from terminating
his or her own employment, consultancy or director status or to give any
Participant a right to be retained in employment or other service by the Company
or any Affiliate for any period of time.
25. GOVERNING LAW.
This Plan shall be construed and enforced in accordance with the law of
the State of Delaware.
- 22 -
<PAGE> 1
EXHIBIT 10.15
MASTER AGREEMENT
between
ChemGenics Pharmaceuticals
a d/b/a of
Myco Pharmaceuticals Inc.
and
PerSeptive Biosystems, Inc.
__________________
May 7, 1996
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I.................................................................... 1
PURCHASE AND SALE OF ASSETS ...................... 1
SECTION 1.01 Transfer of Assets.................................... 1
SECTION 1.02 Assumption of Liabilities............................. 3
SECTION 1.03 Closing............................................... 3
ARTICLE II................................................................... 6
REPRESENTATIONS AND WARRANTIES OF PERSEPTIVE................................. 6
SECTION 2.01 Organization and Qualification........................ 6
SECTION 2.02 Corporate Power and Authority......................... 6
SECTION 2.03 Validity, Etc......................................... 7
SECTION 2.04 No Governmental Consent............................... 7
SECTION 2.05 Financial Statements.................................. 8
SECTION 2.06 Absence of Undisclosed Liabilities.................... 8
SECTION 2.07 Absence of Adverse Change; Conduct of Drug
Discovery Program................................................. 8
SECTION 2.08 Taxes................................................. 8
SECTION 2.09 Litigation............................................ 9
SECTION 2.10 Compliance with Law................................... 9
SECTION 2.11 Labor and Employee Relations.......................... 10
SECTION 2.12 Certain Employees..................................... 10
SECTION 2.13 Employee Benefits..................................... 11
SECTION 2.14 Tangible Properties................................... 11
SECTION 2.15 Acquisition by PerSeptive of Transferred
Assets from PerSeptive Technologies II Corporation
("PTC-II")........................................................ 12
SECTION 2.16 Leased Premises....................................... 12
SECTION 2.17 Environmental Matters................................. 13
SECTION 2.18 Insurance............................................. 16
SECTION 2.19 Outstanding Commitments............................... 16
SECTION 2.20 Intellectual Property................................. 17
SECTION 2.21 Proprietary Information of Third Parties.............. 17
SECTION 2.22 Disclosure............................................ 17
SECTION 2.23 Purchase For Investment............................... 18
ARTICLE III.................................................................. 18
REPRESENTATIONS AND WARRANTIES OF CHEMGENICS................................. 18
SECTION 3.01 Organization.......................................... 18
SECTION 3.02 Corporate Power and Authority......................... 19
SECTION 3.03 Validity, Etc......................................... 19
SECTION 3.04 No Governmental Consent............................... 19
SECTION 3.05 Litigation............................................ 20
SECTION 3.06 Financial Statements.................................. 20
i
<PAGE> 3
SECTION 3.07 Absence of Undisclosed Liabilities.................... 21
SECTION 3.08 Transactions with Affiliates.......................... 21
SECTION 3.09 Investments in Other Persons.......................... 21
SECTION 3.10 Absence of Adverse Change............................. 21
SECTION 3.11 Disclosure............................................ 22
SECTION 3.12 Capitalization; Status of Capital Stock............... 22
SECTION 3.13 Absence of Certain Developments....................... 23
SECTION 3.14 Certain Agreements of Officers and
Employees......................................................... 23
SECTION 3.15 Compliance............................................ 23
SECTION 3.16 Title to Assets, Patents.............................. 24
SECTION 3.17 Environmental and Safety Laws......................... 24
SECTION 3.18 Insurance............................................. 25
SECTION 3.19 Certain Agreements.................................... 25
ARTICLE IV................................................................... 25
COVENANTS OF PERSEPTIVE...................................................... 25
SECTION 4.01 Best Efforts Cooperation.............................. 25
SECTION 4.02 Access................................................ 25
SECTION 4.03 Properties, Business, Insurance....................... 26
SECTION 4.04 Compliance with Laws.................................. 26
SECTION 4.05 Actions Prior to Closing.............................. 26
SECTION 4.06 Litigation............................................ 26
SECTION 4.07 Continued Effectiveness of Representations
and Warranties.................................................... 26
SECTION 4.08 No Negotiations....................................... 27
SECTION 4.09 Confidentiality and Non-Competition................... 27
ARTICLE V.................................................................... 27
COVENANTS OF CHEMGENICS...................................................... 27
SECTION 5.01 Cooperation........................................... 27
SECTION 5.02 Access................................................ 27
SECTION 5.03 Litigation............................................ 28
SECTION 5.04 Continued Effectiveness of Representations
and Warranties.................................................... 28
SECTION 5.05 No Amendments......................................... 28
SECTION 5.06 Right of First Refusal; Percentage
Maintenance....................................................... 28
SECTION 5.07 Confidentiality and Non-Competition................... 31
ARTICLE VI................................................................... 31
CONDITIONS TO CHEMGENICS' OBLIGATIONS........................................ 31
SECTION 6.01 No Material Adverse Economic Event.................... 32
SECTION 6.02 Consents.............................................. 32
SECTION 6.03 Representations and Warranties True................... 32
SECTION 6.04 Performance........................................... 32
SECTION 6.05 No Adverse Change..................................... 32
SECTION 6.06 Opinion of Counsel.................................... 32
SECTION 6.07 No Actions, Suits or Proceedings...................... 33
ii
<PAGE> 4
SECTION 6.08 Investigation Satisfactory. ......................... 33
SECTION 6.09 Closing Documents..................................... 33
SECTION 6.10 Approval of ChemGenics' Stockholders and
Preferred Stockholders............................................ 33
SECTION 6.11 Approval of ChemGenics and Its Counsel................ 33
ARTICLE VII.................................................................. 34
CONDITIONS TO PERSEPTIVE'S OBLIGATIONS....................................... 34
SECTION 7.01 No Material Adverse Economic Event.................... 34
SECTION 7.02 Consents.............................................. 34
SECTION 7.03 Representations and Warranties True................... 34
SECTION 7.04 Performance........................................... 34
SECTION 7.05 No Adverse Change..................................... 34
SECTION 7.06 Opinion of ChemGenics' Counsel........................ 35
SECTION 7.07 No Actions, Suits or Proceedings...................... 35
SECTION 7.08 Investigation Satisfactory............................ 35
SECTION 7.09 Closing Documents..................................... 35
SECTION 7.10 Approval of PerSeptive and Its Counsel................ 35
SECTION 7.11 No Change of Control. ................................ 35
SECTION 7.12 Name Change. ......................................... 36
SECTION 7.13 Chairman of the Board. ............................... 36
ARTICLE VIII................................................................. 36
POST-CLOSING COVENANTS....................................................... 36
SECTION 8.01 Employee Matters...................................... 36
SECTION 8.02 Consulting and Interim Services....................... 37
SECTION 8.03 Sub-Lease............................................. 37
SECTION 8.04 Standstill; Registration Rights....................... 37
SECTION 8.05 Further Assurances.................................... 38
SECTION 8.06 Public Offering....................................... 38
SECTION 8.07 Further Negotiations on Certain
Conditions.......................................................... 38
ARTICLE IX................................................................... 39
TERMINATION.................................................................. 39
SECTION 9.01 Termination........................................... 39
SECTION 9.02 Effect of Termination................................. 41
ARTICLE X.................................................................... 41
MISCELLANEOUS................................................................ 41
SECTION 10.01 Notices.............................................. 41
SECTION 10.02 Entire Agreement..................................... 42
SECTION 10.03 Modifications and Amendments......................... 42
SECTION 10.04 Waivers and Consents................................. 42
SECTION 10.05 Assignment........................................... 43
SECTION 10.06 Parties in Interest.................................. 43
SECTION 10.07 Governing Law........................................ 43
SECTION 10.08 Arbitration.......................................... 43
iii
<PAGE> 5
SECTION 10.09 Jurisdiction and Service of Process.................. 44
SECTION 10.10 Severability......................................... 44
SECTION 10.11 Interpretation....................................... 45
SECTION 10.12 Headings and Captions................................ 45
SECTION 10.13 Enforcement.......................................... 45
SECTION 10.14 Reliance............................................. 45
SECTION 10.15 Survival, Etc........................................ 46
SECTION 10.16 Expenses............................................. 46
SECTION 10.17 No Broker or Finder.................................. 46
SECTION 10.18 Publicity............................................ 46
SECTION 10.19 Counterparts......................................... 46
iv
<PAGE> 6
INDEX TO EXHIBITS
EXHIBIT 1.03(A)(ii) - Form of License Agreement
EXHIBIT 1.03(C)(i) - Terms of Consulting and Interim Services
Agreement
EXHIBIT 1.03(C)(ii) - Terms of Sub-Lease Agreement
EXHIBIT 1.03(C)(iii) - Terms of Confidentiality and
Non-Competition Agreement
EXHIBIT 1.03(C)(iv) - Terms of Standstill and Registration
Rights Agreement
EXHIBIT 1.03(C)(v) - Terms of Voting Agreement
EXHIBIT 4.02 - Confidentiality Agreement (Pre-Closing)
EXHIBIT 6.06 - Form of Opinion of PerSeptive's Counsel
EXHIBIT 7.06 - Form of Opinion of ChemGenics' Counsel
v
<PAGE> 7
INDEX TO SCHEDULES
SCHEDULE 1.01(b) - Drug Discovery Program Assets
SCHEDULE 1.02 - Assumed Liabilities
SCHEDULE 2.06 - Drug Discovery Program Liabilities
SCHEDULE 2.07 - Absence of Adverse Change
SCHEDULE 2.09 - Litigation
SCHEDULE 2.12 - Certain Employees
SCHEDULE 2.13 - Employee Benefits
SCHEDULE 2.17 - Environmental Compliance
SCHEDULE 2.19 - Outstanding Commitments
SCHEDULE 3.06 - Financial Statements
SCHEDULE 3.08 - Transactions with Affiliates
SCHEDULE 3.12 - Capitalization
SCHEDULE 3.17 - Environmental Permits
SCHEDULE 3.19 - Certain Agreements
vi
<PAGE> 8
MASTER AGREEMENT
This Master Agreement (this "Agreement") is entered into this ____ day
of May, 1996 by and among Myco Pharmaceuticals Inc. d/b/a ChemGenics
Pharmaceuticals, a Delaware corporation, ("ChemGenics"), and PerSeptive
Biosystems, Inc., a Delaware corporation ("PerSeptive").
WHEREAS, PerSeptive is engaged in the business of developing technology
and equipment used and useful in the making, measuring, processing and delivery
of biomolecules, including in the area of drug discovery;
WHEREAS, ChemGenics is a drug research and development company engaged
in the business of discovering, developing and commercializing novel treatments
for diseases, primarily through its expertise in drug discovery;
WHEREAS, PerSeptive desires to enter into a license and sell, license
or otherwise transfer to ChemGenics certain assets, projects and activities of
PerSeptive relating to drug discovery activities and efforts (the "Drug
Discovery Program") and to allow certain employees of PerSeptive who have worked
principally in the Drug Discovery Program to dedicate their full business time
to ChemGenics (the "Employees"); and, as set forth herein, to become employed by
ChemGenics under certain circumstances; and
WHEREAS, ChemGenics desires to acquire substantially all of the assets,
projects and activities of PerSeptive relating principally to the Drug Discovery
Program (other than administrative and financial aspects thereof) and to utilize
the services of the Employees, subject to the terms and conditions provided in
this Agreement and the Exhibits hereto.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties, intending to be legally bound, agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
SECTION 1.01 Transfer of Assets. (A) Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing PerSeptive shall sell,
license, assign or transfer, as the case may be, to ChemGenics, and ChemGenics
will purchase and accept from PerSeptive, free and clear of all claims, charges,
liens, contracts, rights, options, security interests, mortgages, encumbrances
and restrictions whatsoever (collectively, "Claims"),
1
<PAGE> 9
except as otherwise expressly set forth herein, all of the following assets,
projects and activities of PerSeptive (hereinafter, the "Transferred Assets"):
(a) a world-wide, royalty-free, irrevocable, non-exclusive license
to PerSeptive's and its affiliates' presently existing and
future patented and unpatented technology, including access to
prototype equipment, in each case for use in drug discovery
only as set forth in the License Agreement (defined below);
(b) the equipment, supplies and other assets of the Drug Discovery
Program set forth on Schedule 1.01(b); the equipment set forth
on Schedule 1.01(b) shall be subject to certain restrictions
contained in the Consulting and Interim Services Agreement
(defined below); and
(c) up to $500,000 of supplies of a type manufactured by
PerSeptive or of which PerSeptive is a distributor during
the three year period following the Closing; such
supplies shall be valued based upon PerSeptive's actual
cost of acquisition or fully burdened cost of manufacture
and shall be delivered to ChemGenics from time to time in
accordance with the Consulting and Interim Services
Agreement (defined below).
PerSeptive shall transfer the Transferred Assets to ChemGenics pursuant
to those documents and instruments set forth in Sections 1.03(A) and 1.03(C)
below, and such other documents and instruments as ChemGenics or its counsel may
reasonably request.
B. Consideration for the Transferred Assets. In consideration
for the License Agreement and the transfer of the Transferred Assets,
upon the terms and subject to the conditions set forth in this
Agreement, on the Closing Date, ChemGenics shall issue to PerSeptive an
aggregate of 9,792,679 shares (the "Shares") of ChemGenics' common
stock, $.001 par value per share (the "Common Stock"). Of such Shares,
979,268 shares shall be issued to PerSeptive as an earnout payment (the
"Earnout Shares") for services, equipment use, supplies and other
PerSeptive assets for a period of three (3) years following the Closing
Date, as more fully set forth in the Consulting and Interim Services
Agreement. If any of the services, equipment, supplies and other
PerSeptive assets are not provided during such three-year period in
accordance with the terms of the Consulting and Interim Services
Agreement, PerSeptive shall forfeit certain of the Earnout Shares in
accordance with the formula set forth in the Consulting and Interim
Services Agreement. PerSeptive shall be deemed to have earned the
Earnout Shares unless ChemGenics provides to PerSeptive a written
notice of failure to provide required services, equipment, supplies or
other assets, and PerSeptive
2
<PAGE> 10
fails to cure such failure within such period of time following the
notice, as more fully set forth in the Consulting and Interim Services
Agreement. The number of Earnout Shares subject to forfeiture shall
decrease by one-third (1/3) on each anniversary of the Closing Date, in
accordance with the following schedule:
PERIOD SHARES SUBJECT TO FORFEITURE
From the Closing Date until
the 1st Anniversary Date 979,268
From 1st Anniversary Date
to 2nd Anniversary Date 652,844
From 2nd Anniversary Date
to 3rd Anniversary Date 326,422
After 3rd Anniversary Date 0
In further consideration for the transfer of the Transferred Assets,
PerSeptive shall receive a warrant (the "Warrant"), to purchase
4,896,335 shares of Common Stock at a price of $5.00 per share. The
Warrant will be for a term of four years from the Closing and will
adjust for stock splits, stock dividends and similar capital
transactions and shall contain other customary terms and conditions
satisfactory to the parties.
PerSeptive may cause the Shares, the Warrant or the Common Stock issued
upon exercise of the Warrant to be transferred to one of its wholly-owned
subsidiaries, provided that PerSeptive shall retain 100% of the ownership and
voting control of such subsidiary as long as such subsidiary holds the Shares,
the Warrant or shares of Common Stock issued upon exercise thereof.
SECTION 1.02 Assumption of Liabilities. The only obligations and
liabilities to be assumed by ChemGenics in connection with its acquisition of
the Transferred Assets (the "Assumed Liabilities") are the obligations and
liabilities specifically listed on Schedule 1.02. Except for the Assumed
Liabilities in the amount and to the extent provided in this Section ,
ChemGenics shall not assume or be responsible for any liabilities or obligations
to the extent they arise from the operation of the Drug Discovery Program or to
the utilization of the Transferred Assets prior to the Closing, and PerSeptive
shall indemnify, defend, and hold ChemGenics harmless from all of such
obligations and liabilities. PerSeptive shall not assume any obligations and
liabilities of ChemGenics whatsoever.
SECTION 1.03 Closing. Subject to the satisfaction or waiver of each of
the conditions set forth in Articles VI and VII of this Agreement, the closing
of the transactions contemplated by this Agreement (the "Closing") shall take
place at the offices of Mintz,
3
<PAGE> 11
Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston,
Massachusetts at 10 o'clock a.m. (Boston, Massachusetts time), three business
days following the termination of the waiting period for the HSR Act (as defined
below), or if later, the date on which all closing conditions are satisfied or
waived, or such other location, date and time as may be agreed upon by the
parties (such date and time being called the "Closing Date"). At the Closing:
A. PerSeptive shall deliver or cause to be delivered to
ChemGenics, at the Closing or at such other location as ChemGenics
shall specify, the following:
(i) The Bill of Sale, transferring certain of
the Transferred Assets to ChemGenics, in the
form reasonably satisfactory to the parties;
(ii) The License Agreement, licensing
PerSeptive's drug discovery technology and
future developments to ChemGenics, in the
form attached hereto as Exhibit 1.03(A)(ii);
(iii) The certificates required by Sections 6.03
and 6.04;
(iv) The opinion of counsel required by Section
6.06;
(v) A copy of the resolutions of PerSeptive
certified by its Secretary, authorizing and
approving the execution, delivery and
performance of this Agreement and the
transactions contemplated hereby and the
acts of the officers and employees of
PerSeptive in carrying out the terms and
provisions hereof;
(vi) All of the books, data, documents,
instruments and other records relating
principally to the Transferred Assets or
Drug Discovery Program (the "Documents") (or
access thereto in the case of financial and
other documents which PerSeptive is required
to retain) including without limitation
copies, if requested by ChemGenics, of the
licenses, patents, patent applications and
permits identified in the Schedules to this
Agreement and the License Agreement and
originals of all laboratory notebooks and
other notes and records relating principally
to PerSeptive's drug discovery- related
intellectual property, provided, that the
Documents shall be delivered to ChemGenics
on the Closing either at ChemGenics' address
4
<PAGE> 12
specified in Section 10.01 or at the
Facility (as defined below); and
(vii) Executed copies of the ancillary documents
listed in Section 1.03(C) below.
B. ChemGenics shall deliver or cause to be delivered to
PerSeptive, at the Closing or at such other location as PerSeptive
shall specify, the following:
(i) The Shares;
(ii) The Warrant;
(iii) The Assumption Agreement, in the form
reasonably satisfactory to the parties;
(iv) The certificates required by Sections 7.03
and 7.04;
(v) The opinion of counsel required by Section
7.06;
(vi) A copy of the resolutions of ChemGenics
certified by its Secretary, authorizing and
approving the execution, delivery and
performance of this Agreement, the exhibits
hereto and the transactions contemplated
hereby and the acts of the officers and
employees of ChemGenics in carrying out the
terms and provisions hereof; and
(vii) Executed copies of the ancillary documents
listed in Section 1.03(C) below.
C. The parties shall deliver or cause to be delivered:
(i) The Consulting and Interim Services
Agreement, certain terms of which are
attached hereto as Exhibit 1.03(C)(i), and
as described in Section 8.02;
(ii) The Sub-Lease Agreement for a portion of
PerSeptive's Framingham facility, certain
terms of which are attached hereto as
Exhibit 1.03(C)(ii), and as described in
Section 8.03, subject to obtaining the
landlord's consent; or, in lieu thereof,
evidence satisfactory to ChemGenics that it
will have satisfactory use of such premises
or equivalent premises on equivalent terms
for up to five employees of ChemGenics
(other than the Employees) through
5
<PAGE> 13
the date of the IPO referred to in Section
8.08 or the earlier termination or
rescission of this Agreement pursuant to the
terms hereof;
(iii) The Confidentiality and Non-Competition
Agreement, certain terms of which are
attached hereto as Exhibit 1.03(C)(iii), and
as described in Section 4.09;
(iv) The Standstill and Registration Rights
Agreement, certain terms of which are
attached hereto as Exhibit 1.03(C)(iv), and
as described in Section 8.04;
(v) The PBIO Voting Agreement, certain terms of
which are attached hereto as Exhibit
1.03(C)(v), pursuant to which nominees of
PerSeptive are to be elected to the Board of
Directors of ChemGenics; and
(vi) Such further documents, resolutions,
certificates and instruments as any party or
its counsel reasonably requests to
facilitate the consummation of the
transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PERSEPTIVE
As an inducement to ChemGenics to enter into this Agreement and to
consummate the transactions contemplated hereby, PerSeptive hereby represents
and warrants to ChemGenics as follows:
SECTION 2.01 Organization and Qualification. PerSeptive is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and is duly qualified to transact
business as a foreign corporation and is in good standing in the Commonwealth of
Massachusetts being the only jurisdiction in which the nature of the Drug
Discovery Program or the character of the properties owned or leased by
PerSeptive and used principally in the Drug Discovery Program requires such
qualification and in which the failure to so qualify would have a material
adverse effect on PerSeptive.
SECTION 2.02 Corporate Power and Authority. PerSeptive has the
corporate power and authority to own and hold its properties and to carry on its
business. PerSeptive has the corporate power and authority to execute, deliver
and perform this Agreement and the other documents and instruments contemplated
hereby. The execution, delivery and performance of this Agreement and the
6
<PAGE> 14
documents contemplated hereby and the consummation of the transactions
contemplated hereby and thereby have been duly authorized and approved by
PerSeptive. This Agreement, and each of the other agreements, documents and
instruments to be executed and delivered by PerSeptive have been duly executed
and delivered by, and constitute the legal, valid and binding obligation of,
PerSeptive enforceable against PerSeptive in accordance with their terms,
subject to bankruptcy and other laws of general application affecting the rights
and remedies of creditors and subject to general principles of equity which may
limit the availability of remedies.
SECTION 2.03 Validity, Etc. Neither the execution and delivery of this
Agreement and the other documents and instruments contemplated hereby, the
consummation of the transactions contemplated hereby or thereby, nor the
performance of this Agreement and such other agreements in compliance with the
terms and conditions hereof and thereof will (i) conflict with PerSeptive's
certificate of incorporation or bylaws, (ii) violate or conflict with any
judgment, decree, order, statute or regulation applicable to PerSeptive, (iii)
violate, conflict with or result in a breach, default or termination or give
rise to any right of termination, cancellation or acceleration of the maturity
of any payment date of any of the obligations of PerSeptive or increase or
otherwise affect the obligations of PerSeptive under any law, rule, regulation
or any judgment, decree, order, governmental permit, license or order or any of
the terms, conditions or provisions of any mortgage, indenture, note, trust
agreement, license agreement or other instrument or obligation related to the
Transferred Assets or to PerSeptive's ability to consummate the transactions
contemplated hereby or thereby, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained in writing and provided to ChemGenics, (iv) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
PerSeptive or (v) result in the creation of any Claim upon the Transferred
Assets.
SECTION 2.04 No Governmental Consent. Except for the filing of any
notice prior or subsequent to the Closing that may be required under applicable
state and/or federal securities laws (which, if required of PerSeptive, shall be
filed on a timely basis by PerSeptive), and except for any consent or approval
which may be required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "HSR Act"), no authorization, consent, approval, license, exemption of
or filing or registration with any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, is or will be
necessary for, or in connection with, the execution and delivery by PerSeptive
of this Agreement, for the delivery of the Transferred Assets, or for the
performance by PerSeptive of its obligations under this Agreement and the other
agreements and instruments contemplated hereby.
7
<PAGE> 15
SECTION 2.05 Financial Statements. PerSeptive has previously furnished
or made available to ChemGenics its (i) Annual Report on Form 10-K for the
fiscal year ended September 30, 1995 (the "Form 10-K"), (ii) all proxy
statements relating to PerSeptive's meetings of stockholders held or to be held
since September 30, 1995 and (iii) all other reports filed by PerSeptive with
the Securities and Exchange Commission ("SEC") under the Securities Exchange Act
of 1934, as amended (the Exchange Act") since September 30, 1995. As of their
respective dates, such reports complied in all material respects with applicable
SEC requirements and did not contain any untrue statement of material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading.
SECTION 2.06 Absence of Undisclosed Liabilities. Except as and to the
extent of the amounts specifically reflected or reserved against in the balance
sheet dated September 30, 1995 (or the notes thereto) included in the Form 10-K
(the "PerSeptive Balance Sheet") and listed on Schedule 2.06 (the "Drug
Discovery Program Liabilities") PerSeptive does not have any material
liabilities or obligations relating to the Drug Discovery Program of any nature
whatsoever, due or to become due, accrued, absolute, contingent or otherwise,
except for liabilities and obligations incurred in the ordinary course of
business and consistent with past practice. PerSeptive does not know of, and has
no reason to know of, any basis for the assertion against PerSeptive of any
material liability or obligation relating to the Drug Discovery Program other
than the Drug Discovery Program Liabilities or incurred in the ordinary course
of business and consistent with past practice since the date of PerSeptive
Balance Sheet.
SECTION 2.07 Absence of Adverse Change; Conduct of Drug Discovery
Program. Since September 30, 1995, there has been no material adverse change in
the Drug Discovery Program, the assets utilized therein, or the personnel
conducting of such Drug Discovery Program, and there is no condition or
development or contingency of any kind existing or in prospect which, so far as
reasonably can be foreseen by PerSeptive, may result in any such material
adverse change. Without limiting the foregoing, except as disclosed on Schedule
2.07, since September 30, 1995 there has not been, occurred or arisen: (i) any
damage, destruction or loss to any Transferred Asset (whether or not covered by
insurance) that, individually or in the aggregate, would have a material adverse
effect on the Drug Discovery Program or prospects of the Drug Discovery Program;
(ii) any general increase in any compensation or benefits payable to the
Employees other than normal merit increases; or (iii) any commitment (contingent
or otherwise) to do any of the foregoing.
SECTION 2.08 Taxes. ChemGenics shall have no liability for
any taxes of any kind or nature related to the ownership or
8
<PAGE> 16
operation of the Transferred Assets or the ownership or operation of the Drug
Discovery Program prior to the Closing Date. PerSeptive has not taken or failed
to take any action which could create any tax lien on any of the Transferred
Assets.
SECTION 2.09 Litigation. Except as set forth on Schedule 2.09, there is
no (a) action, suit, claim, proceeding or investigation pending or, to the best
of PerSeptive's knowledge, threatened against or affecting PerSeptive (whether
or not PerSeptive is a party or prospective party thereto), at law or in equity,
or before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, (b)
arbitration proceeding relating to PerSeptive or (c) governmental inquiry
pending or, to the best of PerSeptive's knowledge, threatened against or
involving PerSeptive, (i) relating to the Transferred Assets, the Drug Discovery
Program or the transactions contemplated hereby or (ii) in which a decision
adverse to PerSeptive would materially adversely affect the value of the
Transferred Assets as contemplated hereby and, to the best of PerSeptive's
knowledge, there is no basis for any of the foregoing. PerSeptive has not
received any opinion or memorandum or legal advice from legal counsel to the
effect that it is exposed, from a legal standpoint, to any liability or
disadvantage which may be material to the Transferred Assets, the Drug Discovery
Program or the transactions contemplated hereby. There are no outstanding
orders, writs, judgments, injunctions or decrees of any court, governmental
agency or arbitration tribunal against, involving or affecting the Transferred
Assets, the Drug Discovery Program or the transactions contemplated hereby, and
there are no facts or circumstances which may result in institution of any
action, suit, claim or legal, administrative or arbitration proceeding or
investigation against, involving or affecting the Transferred Assets, the Drug
Discovery Program or the transactions contemplated hereby. PerSeptive is not in
default with respect to any order, writ, injunction or decree known to or served
upon it from any court or of any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which might relate to the Transferred Assets, the Drug Discovery
Program or the transactions contemplated hereby. There is no action or suit by
PerSeptive or its affiliates pending or threatened against others relating to
the Transferred Assets, the Drug Discovery Program or the transactions
contemplated hereby.
SECTION 2.10 Compliance with Law. PerSeptive is not subject to any
judgment, order, writ, injunction, or decree that materially adversely affects,
individually or in the aggregate, the businesses, operations, properties, assets
or condition (financial or otherwise) of the Drug Discovery Program. PerSeptive
has complied with and is not in material default under, all laws, ordinances,
legal requirements, rules, regulations and orders applicable to the Drug
Discovery Program, or the operations,
9
<PAGE> 17
properties, assets, products and services of the Drug Discovery Program. There
is no existing law, rule, regulation or order, and PerSeptive is not aware of
any proposed law, rule, regulation or order, whether federal or state, which
would prohibit or materially restrict ChemGenics from, or otherwise materially
adversely affect ChemGenics in, conducting the Drug Discovery Program in the
manner previously conducted.
SECTION 2.11 Labor and Employee Relations. PerSeptive is not a party to
or bound by any collective bargaining agreement with any labor organization,
group or association covering the Employees or any other Employee of PerSeptive
located at the Facility, and PerSeptive has no knowledge of any attempt to
organize the Employees or any other Employee of PerSeptive located at the
Facility by any person, unit or group seeking to act as their bargaining agent.
There are no pending or threatened charges (by Employees, their representatives
or governmental authorities) of unfair labor practices or of employment
discrimination or of any other wrongful action with respect to any aspect of
employment of any person employed or formerly employed by PerSeptive in the Drug
Discovery Program. No union representation elections relating to Employees or
any other Employee of PerSeptive located at the Facility have been scheduled by
any governmental agency or authority, no organizational effort is being made
with respect to any of such Employees or any other Employee of PerSeptive
located at the Facility, and there is no investigation of PerSeptive's
employment policies or practices by any governmental agency or authority pending
or, to the best of PerSeptive's knowledge, threatened. PerSeptive is not
currently, and has not within the last three years been, involved in labor
negotiations with any unit or group seeking to become the bargaining unit for
any Employees or any other Employee of PerSeptive located at the Facility.
PerSeptive has not experienced any work stoppages during the last three years
and, to the best of PerSeptive's knowledge, no work stoppage is planned.
SECTION 2.12 Certain Employees. Set forth in Schedule 2.12 is a list of
the names of PerSeptive's employees and consultants principally engaged in the
technical aspects of the Drug Discovery Program which PerSeptive will make
available to ChemGenics pursuant to the Consulting and Interim Services
Agreement and to which ChemGenics will make offers of employment pursuant to
Section 8.01 hereof, together with the title or job classification of each such
person and the base annual and the total compensation paid to each such person
by PerSeptive in fiscal year 1995 and anticipated to be paid in fiscal year
1996. None of such persons has an employment agreement or understanding, whether
oral or written, with PerSeptive which is not terminable on notice by PerSeptive
without cost or other liability to PerSeptive or ChemGenics. No person listed on
Schedule 2.12 has indicated that he or she intends to terminate his or her
employment with PerSeptive or seek a material change in his or her duties or
status.
10
<PAGE> 18
SECTION 2.13 Employee Benefits. Set forth on Schedule 2.13 is a list of
all pension, profit sharing, retirement, deferred compensation, stock purchase,
stock option, incentive, bonus, vacation, severance, disability,
hospitalization, medical insurance, life insurance, fringe benefit, welfare and
other employee benefit plans, programs or arrangements to which Employees may be
entitled. Such benefits are the same benefits afforded other employees of
PerSeptive at similar levels of experience.
PerSeptive will maintain the benefits listed on Schedule 2.13 (as such
benefits may change generally for PerSeptive's employees) in full force and
effect through the Closing Date, and thereafter with respect to events occurring
while the Employees were employed by PerSeptive. ChemGenics shall have no
obligation of any kind or nature for any compensation or benefits of any kind or
nature of the employees or consultants of PerSeptive for service rendered while
such Employees or consultants were employed by PerSeptive, including, without
limitation, vacation or sick time for which PerSeptive will compensate
ChemGenics or the Employees, as appropriate.
Each "Employee Welfare Benefit Plan" (as defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) covering
any present or former employee of PerSeptive who has worked in the Drug
Discovery Program subject to the requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") has complied with all requirements for
continuation coverage under group health benefit plans under COBRA and there are
no claims against PerSeptive for a failure or alleged failure to comply with the
COBRA continuation requirements.
Each employee plan which is subject to ERISA conforms to, and its
operation and administration are in compliance with, all applicable requirements
of ERISA. There are no actions, suits or claims pending (other than routine
claims for benefits) or threatened against any employee plan or against the
assets of any employee plan.
SECTION 2.14 Tangible Properties. Schedule 1.01(b) contains a true and
complete list of all tangible personal property owned by or leased to PerSeptive
and used principally in the Drug Discovery Program (the "Tangible Personal
Property") which is being transferred to ChemGenics pursuant to this Agreement.
Such Tangible Personal Property constitutes all of the instruments and other
assets having an original estimated list value in excess of $10,000, and
substantially all of the other Tangible Personal Property used by PerSeptive
principally in the Drug Discovery Program (including, without limitation, all of
the tangible assets utilized by the Employees in the Drug Discovery Program).
Except as shown on Schedule 1.01(b), PerSeptive has good and marketable title
free and clear of all Claims to the Tangible Personal
11
<PAGE> 19
Property listed as owned by PerSeptive. With respect to Tangible Personal
Property leased by PerSeptive as lessee, all leases, conditional sale contracts,
franchises or licenses pursuant to which PerSeptive may hold or use (or permit
others to hold or use) such Tangible Personal Property are valid and in full
force and effect, and there is not under any of such instruments any existing
default or event of default or event which with notice or lapse of time or both
would constitute such a default, and the transfer of PerSeptive's interest in
any Tangible Personal Property hereunder shall not constitute an event of
default or default or an event which with notice or lapse of time or both would
constitute such a default under such leases, conditional sale contracts,
franchises or licenses, except for the requirement of consents set forth in
Schedule 1.01(b), and except where such an actual or potential default has been
consented to or waived. PerSeptive's possession and use of such property has not
been disturbed and no claim has been asserted against PerSeptive adverse to its
rights in such leasehold interests.
Each item of Tangible Personal Property, whether owned or leased, is in
good operating condition and repair and has been reasonably maintained in
accordance with industry practices. The only liability of PerSeptive for failure
of the representation in the preceding sentence shall be the repair or
replacement of the affected item of Tangible Personal Property.
SECTION 2.15 Acquisition by PerSeptive of Transferred Assets from
PerSeptive Technologies II Corporation ("PTC-II"). PTC-II has no and never had
any material tangible assets. The License Agreement conveys to ChemGenics the
right to use all intellectual property rights utilized by PTC-II in connection
with the Drug Discovery Program. PerSeptive shall indemnify ChemGenics with
respect to any claim, action, judgment, damage, fee or expense arising out of
the formation and operation of PTC-II and the offer and sale of securities of
PTC-II, the acquisitions of the units of PTC-II through the exchange offer set
forth in the Proxy Statement/Prospectus dated February 8, 1996, including,
without limitation, the acquisition of PTC-II Property as a result of such
exchange offer, and the transfer of the PTC-II Property hereunder. This
provision shall be in addition to, and in no way limit, any other representation
or warranty hereunder which might relate to PTC-II.
SECTION 2.16 Leased Premises. The Drug Discovery Program has been
principally conducted at the facility at 500 Old Connecticut Path, Framingham,
Massachusetts (the "Facility"). The lease covering the Facility is in full force
and effect (there existing no default under the lease which, with the lapse of
time or notice or otherwise, would entitle the lessor to terminate the same),
conveys the leased real estate purported to be conveyed thereunder and is
enforceable by PerSeptive. PerSeptive has the right to use the Facility in
accordance with the terms of such lease free and
12
<PAGE> 20
clear of all Claims or other interests or rights of third parties, except those
which do not or would not have a material adverse effect on the Facility as used
in the Drug Discovery Program. To the best of PerSeptive's knowledge, the
Facility is structurally sound, adequately maintained and is in good condition
and repair (except for immaterial matters) consistent with the uses to which it
is presently being put or intended to be put, and the Facility's structure,
improvements, fixtures and uses conform to any and all applicable federal, state
and local laws, building, health and safety and other ordinances, laws, rules
and regulations, except where nonconformance would not materially restrict the
conduct of the Drug Discovery Program as presently conducted. There is no
violation of any material covenant, restriction or other agreement or
understanding, oral or written, affecting or relating to title or use of the
Facility. There are no pending condemnation or similar proceedings or
assessments affecting the Facility, nor to PerSeptive's best knowledge is any
such condemnation or assessment contemplated by any governmental authority. No
real estate owned by PerSeptive is used in the Drug Discovery Program.
SECTION 2.17 Environmental Matters.
(a) Environmental Substance Liability. To the best of
PerSeptive's knowledge, no event has occurred or condition exists or
operating practice is being employed that could give rise to material
liability with respect to the Facility or the Drug Discovery Program,
either at the present time or in the future, for any losses,
liabilities, damages (whether consequential or otherwise), settlements,
penalties, interest and expenses (including any such liability on
account of the right of any governmental or private entity or person,
and including closure expenses, costs of assessment, containment, or
removal (other than transportation or disposal of materials required to
be transported or disposed of in the ordinary course of business,
remedial work, or monitoring) arising under any presently enacted
federal, state, or local statute, or any regulation that has been
promulgated pursuant thereto, or common law, as a result of or in
connection with, or alleged to be as a result of or in connection with,
the following:
(i) the handling, storage, use, transportation
or disposal of any Substances (as
hereinafter defined) in or near or from the
Facility, by PerSeptive or its predecessors;
(ii) the handling, storage, use, transportation
or disposal of any Substances by PerSeptive
or its predecessors which Substances were a
product, by-product or otherwise resulted
from the operation of the Drug Discovery
Program
13
<PAGE> 21
conducted by or on behalf of PerSeptive or
its predecessors;
(iii) any intentional or unintentional emission,
discharge or release of any Substances in or
near or from the Facility into or upon the
air, surface water, ground water or land or
any disposal, handling, manufacturing,
processing, distribution, use, treatment, or
transport of such Substances in or near or
from the Facility by or on behalf of
PerSeptive or its predecessors; or
(iv) the presence of any toxic or hazardous
building materials (including but not
limited to asbestos or similar substances)
in the Facility, including but not limited
to the inclusion of such materials in the
exterior and interior walls, floors,
ceilings, tile, insulation or any other
portion of the Facility.
As used in this Section 2.17, the term "Substances" shall mean any
pollutant, hazardous substance, hazardous material, hazardous waste or toxic
waste, as defined in any presently enacted federal, state or local statute or
any regulation that has been promulgated pursuant thereto.
(b) Environmental Permits. To the best of PerSeptive's
knowledge after due investigation, PerSeptive has obtained and holds
all registrations, permits, licenses, and approvals issued by or on
behalf of any federal, state or local government body or agency
("Environmental Permits"), that are required in connection with the
discharge or emission of Substances (as hereinabove defined) from the
Drug Discovery Program at the Facility or the generation, treatment,
storage, transportation, or disposal of any such Substances. Such
Environmental Permits, which are described in Schedule 2.17 in
connection with the operation of the Drug Discovery Program, are
currently effective and sufficient for the ownership and operation of
the Drug Discovery Program as currently conducted, the failure to have
would have a material adverse effect on the Drug Discovery Program.
PerSeptive represents, covenants and warrants to and agrees with
ChemGenics, as of the date of this Agreement and as of the time of Closing, as
follows:
(i) To the best of PerSeptive's knowledge after
due investigation, PerSeptive and the
operation of the Drug Discovery Program at
the Facility are, and at the time of Closing
shall
14
<PAGE> 22
be, in compliance with all applicable laws,
rules, regulations, orders, ordinances,
judgments and decrees of all governmental
authorities (federal, state, and local).
Except as set forth in Schedule 2.17,
PerSeptive is not aware of, nor has
PerSeptive received notice of, any past,
present or future events, conditions,
circumstances, activities, practices,
incidents, actions or plans of PerSeptive or
PerSeptive's predecessors, either
collectively, individually or severally,
which may interfere with or prevent
continued compliance, or which may give rise
to any common law or legal liability, or
otherwise form the basis of any claim,
action, suit, proceeding, hearing, or
investigation, based on or related to the
disposal, storage, handling, manufacture,
processing, distribution, use, treatment, or
transport, or the emission, discharge,
release or threatened release into the
environment, of any Pollutant.
(ii) The Facility has not been listed or proposed
for listing on the National Priorities List
established by the United States
Environmental Protection Agency, the List of
Confirmed Disposal Sites and Locations To Be
Investigated established by the Commonwealth
of Massachusetts Department of Environmental
Quality Engineering, or any other such list.
(iii) PerSeptive has obtained all material
permits, licenses and other authorizations
which are required with respect to operation
of the Drug Discovery Program at the
Facility under federal, state and local laws
or otherwise relating to pollution or
protection of the environment. Except as set
forth in Schedule 2.17, PerSeptive is in
full compliance with all terms and
conditions of such required permits,
licenses and authorizations, and is also in
full compliance with all other limitations,
restrictions, conditions, standards,
prohibitions, requirements, obligations,
schedules, and timetables contained in those
laws or provisions or contained in any
regulation, code, plan, order, decree,
judgment, notice or demand letter issued,
entered, promulgated or approved thereunder
and applicable to the
15
<PAGE> 23
operation of the Drug Discovery Program at
the Facility.
SECTION 2.18 Insurance. PerSeptive is, and will be through the Closing
and during the Consulting and Interim Services Agreement, adequately insured
with responsible insurers in respect of its properties, assets and businesses
against risks normally insured against by companies in similar lines of business
under similar circumstances.
SECTION 2.19 Outstanding Commitments. Schedule 2.19 sets forth a
description of all existing contracts, agreements, commitments, licenses and
franchises which involve more than $10,000 in consideration over the remaining
term of the contract, agreement, commitment, license or franchise, other than
agreements which relate only incidentally to the Drug Discovery Program and
which are not reasonably required in the ongoing conduct of the Drug Discovery
Program (collectively "Agreements"), whether written or oral, relating to the
Drug Discovery Program. PerSeptive has delivered or made available to ChemGenics
true, correct and complete copies of all of the Agreements specified on Schedule
2.19 which are in writing, and Schedule 2.19 contains an accurate and complete
description of all Agreements which are not in writing. PerSeptive has paid in
full all amounts due as of the date hereof under each Agreement identified in
Schedule 2.19 and as of the Closing Date will have satisfied in full all of its
liabilities and obligations thereunder due in the ordinary course of business
prior to the Closing (it being understood that this representation shall not
prevent PerSeptive from withholding payment in good faith based on a dispute
with respect to its obligation to make payment, provided that the foregoing
shall not be deemed to imply that ChemGenics shall have any liability therefore,
and provided such nonpayment does not materially adversely affect the
Transferred Assets or the Drug Discovery Program). All of the Agreements
described in Schedule 2.19 are in full force and effect. PerSeptive and each
other party thereto have performed all the obligations required to be performed
by them to date, have received no notice of default and are not in default (with
due notice or lapse of time or both) under any Agreement. PerSeptive has no
present expectation or intention of not fully performing all its obligations
under each Agreement, and PerSeptive has no knowledge of any breach or
anticipated breach by the other party to any contract or commitment to which
PerSeptive is a party. None of such Agreements has been terminated, no notice
has been given by any party thereto of any alleged default by any party
thereunder, and PerSeptive is not aware of any intention or right of any party
to default another party to any such Agreement. There exists no actual or, to
the knowledge of PerSeptive, threatened termination, cancellation or limitation
of the business relationship of PerSeptive with any party to any such Agreement.
16
<PAGE> 24
SECTION 2.20 Intellectual Property. The representations of PerSeptive
in Section 4.1.7 of the form of License Agreement attached hereto as Exhibit
1.03(A)(ii) are hereby incorporated by reference as if set forth fully herein.
PerSeptive has the right to utilize the intellectual property rights it has
utilized in the conduct of the Drug Discovery Program, all of which will be duly
and validly transferred or licensed to ChemGenics pursuant to this Agreement or
the License Agreement, as the case may be, without violation of any agreement to
which PerSeptive is a party or is bound, except such rights which are not
material to the Drug Discovery Program and which are licensed to PerSeptive and
which PerSeptive is prohibited from licensing to ChemGenics.
SECTION 2.21 Proprietary Information of Third Parties. No third party
has claimed or, to the best knowledge of PerSeptive, has reason to claim that
PerSeptive or any person employed by or affiliated with PerSeptive has in
connection with the Drug Discovery Program (a) violated or may be violating any
of the terms or conditions of PerSeptive's or such person's employment,
non-competition or non-disclosure agreement with such third party, (b) disclosed
or may be disclosing or utilized or may be utilizing any trade secret or
proprietary information or documentation of such third party, or (c) interfered
or may be interfering in the employment relationship between such third party
and any of its present or former employees. No third party has requested
information from PerSeptive which suggests that such a claim might be
contemplated. To PerSeptive's best knowledge, no person employed by or
affiliated with PerSeptive has employed or proposes to employ any trade secret
or any information or documentation proprietary to any former employer and, no
person employed by or affiliated with PerSeptive has violated any confidential
relationship which such person may have had with any third party, in connection
with the development, manufacture or sale of any product or proposed product or
the development or sale of any service or proposed service of the Drug Discovery
Program, and PerSeptive has no reason to believe there will be any such
employment or violation. To the best of PerSeptive's knowledge, none of the
execution or delivery of this Agreement, or the carrying on of the Drug
Discovery Program as officers, employees or agents by any officer, director,
employee or consultant of the Drug Discovery Program, or the conduct or proposed
conduct of the Drug Discovery Program, will conflict with or result in a breach
of the terms, conditions or provisions of or constitute a default under any
contract, covenant or instrument under which any such person is obligated.
SECTION 2.22 Disclosure. All documents and schedules delivered or to be
delivered by or on behalf of PerSeptive in connection with this Agreement and
the transactions contemplated hereby are true, complete and correct in all
material respects. Neither this Agreement, nor any Schedule or Exhibit to this
Agreement contains any untrue statement of a material fact or omits
17
<PAGE> 25
a material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which made, not misleading.
SECTION 2.23 Purchase For Investment. PerSeptive is acquiring the
Shares, the Warrant and Common Stock issuable upon exercise of the Warrant, and
the Earnout Shares, if any, for investment for its own account and not with a
view to the distribution or public offering thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). PerSeptive
understands that the Shares, the Warrant and Common Stock issuable upon exercise
of the Warrant, have not been registered under the Securities Act or any state
securities or "blue sky" laws and may not be sold or transferred without such
registration or an exemption therefrom. PerSeptive consents to the placement of
a legend on its certificate for the Shares and on the Warrant stating that such
securities have not been registered and setting forth the restrictions on
transfer contemplated hereby and by the Standstill and Registration Rights
Agreement. PerSeptive is sufficiently experienced in financial and business
matters to be capable of evaluating the risk of investment in the Shares and the
Warrant, and to make an informed decision relating thereto. PerSeptive has the
financial capability for making the investment, can afford a complete loss of
the investment, and the investment is a suitable one for PerSeptive. PerSeptive
is an Accredited Investor as defined in Regulation D under the Securities Act.
Prior to the execution and delivery of this Agreement, PerSeptive has been
furnished with all information which it deems necessary to evaluate the merits
and risks of the Shares and the Warrant and has had the opportunity to ask
questions of and receive answers from representatives of ChemGenics regarding
ChemGenics, the Shares and the Warrant.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CHEMGENICS
As an inducement to PerSeptive to enter into this Agreement and to
consummate the transactions contemplated hereby, ChemGenics hereby represents
and warrants to PerSeptive as follows:
SECTION 3.01 Organization. ChemGenics is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and is duly qualified to transact business as a foreign
corporation and is in good standing in the Commonwealth of Massachusetts, such
jurisdiction being the only jurisdiction in which the character of the
properties owned or leased by ChemGenics requires such qualification and in
which the failure to so qualify would have a material adverse effect on
ChemGenics.
18
<PAGE> 26
SECTION 3.02 Corporate Power and Authority. ChemGenics has the
corporate power and authority to own and hold its properties and to carry on its
business. ChemGenics has the corporate power and authority to execute, deliver
and perform this Agreement and the other documents and instruments contemplated
hereby. The execution, delivery and performance of this Agreement and the
documents contemplated hereby and the consummation of the transactions
contemplated hereby and thereby have been duly authorized and approved by
ChemGenics. This Agreement, and each of the other agreements, documents and
instruments to be executed and delivered by ChemGenics have been duly executed
and delivered by, and constitute the legal, valid and binding obligation of,
ChemGenics enforceable against ChemGenics in accordance with their terms,
subject to bankruptcy and other laws of general application affecting the rights
and remedies of creditors and subject to general principles of equity which may
limit the availability of remedies.
SECTION 3.03 Validity, Etc. Neither the execution and delivery of this
Agreement and the other documents and instruments contemplated hereby, the
consummation of the transactions contemplated hereby or thereby, nor the
performance of this Agreement and such other agreements in compliance with the
terms and conditions hereof and thereof will (i) conflict with ChemGenics'
certificate of incorporation or bylaw, (ii) violate or conflict with any
judgment, decree, order, statute or regulation applicable to ChemGenics, (iii)
violate, conflict with or result in a breach, default or termination or give
rise to any right of termination, cancellation or acceleration of the maturity
of any payment date of any of the obligations of ChemGenics or increase or
otherwise affect the obligations of ChemGenics under any law, rule, regulation
or any judgment, decree, order, governmental permit, license or order or any of
the terms, conditions or provisions of any mortgage, indenture, note, trust
agreement, license agreement or other instrument or obligation related to
ChemGenics or to ChemGenics' ability to consummate the transactions contemplated
hereby or thereby, except for such defaults (or rights of termination,
cancellation or acceleration) as to which requisite waivers or consents have
been obtained in writing and provided to PerSeptive or (iv) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to ChemGenics.
SECTION 3.04 No Governmental Consent. Except for the filing of any
notice prior or subsequent to the Closing that may be required under applicable
state and/or federal securities laws (which, if required, shall be filed on a
timely basis), and except for any consent or approval which may be required
under the HSR Act, no authorization, consent, approval, license, exemption of or
filing or registration with any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, is or will be
necessary for, or in connection with, the execution and delivery by ChemGenics
of this Agreement, for the
19
<PAGE> 27
offer, issue, sale, execution or delivery of the Shares, and the Warrant, or for
the performance by ChemGenics of its obligations under this Agreement and the
other agreements and instruments contemplated hereby.
SECTION 3.05 Litigation. There is no (a) action, suit, claim,
proceeding or investigation pending or, to the best of ChemGenics' knowledge,
threatened against or affecting ChemGenics (whether or not ChemGenics is a party
or prospective party thereto), at law or in equity, or before or by any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, (b) arbitration proceeding
relating to ChemGenics or (c) governmental inquiry pending or, to the best of
ChemGenics' knowledge, threatened against or involving ChemGenics in which a
decision adverse to ChemGenics would materially adversely affect ChemGenics and,
to the best of ChemGenics' knowledge, there is no basis for any of the
foregoing. There are no outstanding orders, writs, judgments, injunctions or
decrees of any court, governmental agency or arbitration tribunal, and there are
no facts or circumstances which may result in institution of any action, suit,
claim or legal, administrative or arbitration proceeding or investigation which
might prevent ChemGenics from entering into and performing this Agreement and
the other documents and instruments contemplated hereby. ChemGenics is not in
default with respect to any order, writ, injunction or decree known to or served
upon it from any court or of any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign which might prevent ChemGenics from entering into and performing this
Agreement and the other documents and instruments contemplated hereby.
SECTION 3.06 Financial Statements. ChemGenics has previously furnished
to PerSeptive, and attached hereto as Schedule 3.06 are audited financial
statements of ChemGenics from the years ended December 31, 1994 and 1995. All
such financial statements (the "ChemGenics Financial Statements") have been
prepared in accordance with generally accepted accounting principles
consistently applied and were prepared from the books and records of ChemGenics,
which books and records are complete and correct in all material respects.
ChemGenics Financial Statements fairly present the financial position of
ChemGenics as of the dates thereof and the results of its operations and cash
flows for the periods ended on the dates thereof. ChemGenics Financial
Statements reflect reserves appropriate and adequate for all known material
liabilities and reasonably anticipated losses as required by generally accepted
accounting principles. Since the date of ChemGenics Balance Sheet (defined
below), (a) there has been no change in the assets, liabilities or financial
condition of the assets of ChemGenics from that reflected in ChemGenics Balance
Sheet except for changes in the ordinary course of business consistent with past
practice and which have not been materially
20
<PAGE> 28
adverse and (b) none of the business, prospects, financial condition,
operations, property or affairs of ChemGenics has been materially adversely
affected by any occurrence or development, individually or in the aggregate,
whether or not insured against. ChemGenics has disclosed to PerSeptive all
material facts relating to the preparation of ChemGenics Financial Statements,
including the basis of accounting for affiliated transactions.
SECTION 3.07 Absence of Undisclosed Liabilities. Except as and to the
extent of the amounts specifically reflected or reserved against in the balance
sheet dated December 31, 1995 (or the notes thereto) included in ChemGenics
Financial Statements (the "ChemGenics Balance Sheet") ChemGenics does not have
any material liabilities or obligations of any nature whatsoever, due or to
become due, accrued, absolute, contingent or otherwise, except for material
liabilities and obligations incurred in the ordinary course of business and
consistent with past practice. ChemGenics does not know of any basis for the
assertion against ChemGenics of any material liability or obligation not fully
reflected or reserved against in ChemGenics Balance Sheet or incurred in the
ordinary course of business and consistent with past practice since the date
thereof.
SECTION 3.08 Transactions with Affiliates. Except as set forth in
Schedule 3.08 there are no loans, leases, royalty agreements or other continuing
transactions between (a) ChemGenics or, to ChemGenics' knowledge, any of its
customers or suppliers, and (b) any officer, employee, consultant or director of
ChemGenics or any Person owning five percent (5%) or more of the capital stock
of ChemGenics, or to ChemGenics' knowledge, any member of the immediate family
of such officer, employee, consultant, director or stockholder or any
corporation or other entity controlled by such officer, employee, consultant,
director or stockholder, or a member of the immediate family of such officer,
employee, consultant, director or stockholder.
SECTION 3.09 Investments in Other Persons. ChemGenics has not made any
loans or advances in excess of $100,000 in the aggregate to any Person which is
outstanding on the date of this Agreement, nor is it committed or obligated to
make any such loan or advance, nor does ChemGenics own any capital stock, assets
comprising the business of, obligations of, or any interest in, any Person.
ChemGenics does not have, and has not since its incorporation had, any
Subsidiaries.
SECTION 3.10 Absence of Adverse Change. Since December 31, 1995, there
has been no material adverse change in the business, financial condition,
operations or assets of ChemGenics. Since December 31, 1995 ChemGenics has
conducted its business in the ordinary course.
21
<PAGE> 29
SECTION 3.11 Disclosure. All documents and schedules delivered or to be
delivered by or on behalf of ChemGenics in connection with this Agreement and
the transactions contemplated hereby are true, complete and correct in all
material respects. Neither this Agreement, nor any Schedule or Exhibit to this
Agreement contains any untrue statement of a material fact or omits a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which made, not misleading.
SECTION 3.12 Capitalization; Status of Capital Stock. ChemGenics has a
total authorized capitalization consisting of (i) 16,000,000 shares of Common
Stock, $.001 par value and (ii) 11,275,000 shares of preferred stock, $.01 par
value ("Preferred Stock"), of which 6,400,000 shares are designated as Series A
Convertible Preferred Stock, $.01 par value ("Series A Preferred Stock"),
1,100,000 shares are designated as Series B Convertible Preferred Stock, $.01
par value ("Series B Preferred Stock"), 775,000 shares are designated as Series
C Convertible Preferred Stock, $.01 par value ("Series C Preferred Stock"), and
3,000,000 shares are designated as Series D Preferred Stock, $.01 par value
("Series D Preferred Stock;" the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock are collectively
the "Preferred Stock"). 1,523,700 shares of Common Stock are issued and
outstanding, 6,150,732 shares of Series A Preferred Stock are issued and
outstanding, 1,063,366 shares of Series B Preferred Stock are issued and
outstanding, 767,739 shares of Series C Preferred Stock are issued and
outstanding and 3,000,000 shares of Series D Preferred Stock are issued and
outstanding. Each outstanding share of Preferred Stock is on the date hereof
convertible into one share of Common Stock. All the outstanding shares of
capital stock of ChemGenics have been duly authorized, and are validly issued,
fully paid and non-assessable. The Shares when issued and delivered in
accordance with the terms thereof, are duly authorized, validly issued,
fully-paid and non-assessable. The shares of Common Stock underlying the
Warrant, when issued and delivered in accordance with the terms of the Warrant,
are duly authorized, validly issued, and, assuming payment therefor in
accordance with the terms hereof, fully-paid and non-assessable. Except for
2,006,400 shares of Common Stock that have been reserved for issuance upon
exercise of stock options, 177,083 shares of Series A Preferred Stock that have
been reserved for issuance upon exercise of warrants issued or to be issued to
Comdisco, Inc. (the "Comdisco Leasing Warrants"), the shares of Common Stock
reserved for issuance upon the conversion of the currently outstanding shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and upon the conversion of the shares of Series A
Preferred Stock which may be issued upon exercise of the Comdisco Leasing
Warrants, no options, warrants, subscriptions or purchase rights of any nature
to acquire from ChemGenics, or commitments of ChemGenics to issue, shares of
capital stock or other securities
22
<PAGE> 30
are authorized, issued or outstanding, nor is ChemGenics obligated in any other
manner to issue shares or rights to acquire any of its capital stock or other
securities except as contemplated by this Agreement. None of ChemGenics'
outstanding securities or authorized capital stock are subject to any rights of
redemption, repurchase, rights of first refusal, preemptive rights or other
similar rights, whether contractual, statutory or otherwise, for the benefit of
ChemGenics, or to ChemGenics' knowledge, any stockholder, or any other Person,
except pursuant hereto or as set forth on Schedule 3.12, and to the knowledge of
ChemGenics, except as set forth on Schedule 3.12, there are no voting agreements
regarding its securities. Except as set forth in Schedule 3.12, there are no
restrictions on the transfer of shares of capital stock of ChemGenics other than
those imposed by relevant federal and state securities laws and as otherwise
contemplated by this Agreement.
SECTION 3.13 Absence of Certain Developments. ChemGenics is not a party
to any written or material oral contract or instrument or other corporate
restriction which individually or in the aggregate is reasonably likely to
adversely affect the business, prospects, financial condition, operations,
Intellectual Property Rights, property or affairs of ChemGenics.
SECTION 3.14 Certain Agreements of Officers and Employees. To
ChemGenics' knowledge, no officer, employee or consultant of ChemGenics is, or
is now or will be at the Closing, in violation of any material term of any
employment contract, patent disclosure agreement, proprietary information
agreement, non-competition agreement, non-solicitation agreement,
confidentiality agreement, or any other similar contract or agreement or any
restrictive covenant, relating to the right of any such officer, employee, or
consultant to be employed or engaged by ChemGenics because of the nature of the
business conducted or to be conducted by ChemGenics or relating to the use of
trade secrets or proprietary information of others which is reasonably likely to
have a material adverse effect on ChemGenics.
SECTION 3.15 Compliance. ChemGenics is in compliance in all material
respects with the terms and provisions of its Restated Certificate of
Incorporation and By-laws, each as amended and/or restated to date, and with the
terms and provisions of all mortgages, indentures, leases, agreements and other
instruments by which it is bound or to which it or any of its properties or
assets are subject where noncompliance would have a material adverse affect on
the business, assets, operations, or financial condition of ChemGenics.
ChemGenics is in compliance in all respects with, and has not defaulted under,
all judgments, decrees, governmental orders, laws, statutes, rules or
regulations by which it is bound or to which it or any of its properties or
assets are subject where noncompliance or default would have a material adverse
affect on
23
<PAGE> 31
the business, assets, operations, or financial condition of ChemGenics.
SECTION 3.16 Title to Assets, Patents. ChemGenics has good and
merchantable title to its tangible assets. ChemGenics enjoys peaceful and
undisturbed possession under all leases under which it is operating, and all
said leases are valid and subsisting and in full force and effect in all
material respects.
ChemGenics owns or has a valid right to use the intellectual property
rights being used to conduct its business; and to ChemGenics' knowledge the
conduct of its business does not conflict with or infringe upon the intellectual
property rights of others in any manner which is reasonably anticipated to have
a material adverse effect on ChemGenics. No claim is pending or to ChemGenics'
knowledge threatened against ChemGenics and/or, to ChemGenics' knowledge, its
officers, employees and consultants to the effect that any such right owned or
licensed by ChemGenics is invalid or subject to any claim of infringement.
Within 15 days of the date hereof, ChemGenics will provide PerSeptive with a
list of its patents and patent applications.
ChemGenics has taken reasonable measures to protect and preserve the
security, confidentiality and value of its intellectual property rights. All
employees and consultants of ChemGenics involved in the design, review,
evaluation or development of intellectual property rights have executed
nondisclosure and assignment of inventions agreements. ChemGenics has not
received notice of, and to the best of ChemGenics' knowledge after reasonable
investigation, there are no claims that ChemGenics' intellectual property rights
or the use or ownership thereof by ChemGenics infringes, violates or conflicts
with any such right of any third party.
SECTION 3.17 Environmental and Safety Laws. To the best of ChemGenics'
knowledge after due investigation, it is not in violation of any applicable
statute, law or regulation relating to the environment or occupational safety
and health which would have a material adverse effect on ChemGenics.
To the best of ChemGenics' knowledge after due investigation,
ChemGenics has obtained and holds all registrations, permits, licenses, and
approvals issued by or on behalf of any federal, state or local government body
or agency ("Environmental Permits"), that are required in connection with the
discharge or emission of Substances at its premises or the generation,
treatment, storage, transportation, or disposal of any such Substances or
otherwise for the operation of ChemGenics' business. Such Environmental Permits,
which are described in Schedule 3.17, are currently effective and sufficient for
the ownership and operation of its business as currently conducted, the failure
to have would have a material adverse effect on ChemGenics.
24
<PAGE> 32
SECTION 3.18 Insurance. ChemGenics is insured with responsible insurers
in respect of its properties, assets and businesses against risks normally
insured against by companies in similar lines of business under similar
circumstances.
SECTION 3.19 Certain Agreements. Within fifteen days from the date
hereof Chemgenics will provide PerSeptive with a list of all existing contracts,
agreements, commitments, licenses and franchises which are material to the
operation of ChemGenics business. ChemGenics has previously delivered or made
available to PerSeptive true, correct and complete copies of all such
agreements.
ChemGenics is not a party to any agreement which would prevent its
execution, delivery or performance of this Agreement. Except as set forth in
Schedule 3.19, ChemGenics is not a party to any agreement the terms of which
require ChemGenics to disclose to the other party thereto the proprietary
information transferred to ChemGenics pursuant to this Agreement, or to
sublicense, assign or otherwise grant any license or other rights which
ChemGenics will obtain pursuant to this Agreement.
ARTICLE IV
COVENANTS OF PERSEPTIVE
PerSeptive covenants and agrees with ChemGenics as follows:
SECTION 4.01 Best Efforts Cooperation. PerSeptive shall use its
reasonable best efforts in good faith to perform and fulfill all conditions and
obligations to be fulfilled or performed by it hereunder, to the end that the
transactions contemplated hereby will be fully and timely consummated.
SECTION 4.02 Access. Until the Closing, PerSeptive shall give
ChemGenics, its attorneys, accountants and other authorized representatives
complete access, upon reasonable notice and at reasonable times, to PerSeptive's
offices, properties, employees, products, technology, business and financial
records, contracts, business plans, budgets and projections, agreements and
commitments and other documents and information concerning the Drug Discovery
Program and persons employed by or doing business with PerSeptive in connection
with the Drug Discovery Program. For three (3) years following the Closing,
PerSeptive shall provide ChemGenics with reasonable access to any and all
records relating to the Drug Discovery Program which remain in the possession of
accountants, attorneys and other parties. In order that ChemGenics may have full
opportunity to make such examination and investigation as it may desire of the
business and affairs of PerSeptive in connection with the Drug Discovery
Program, PerSeptive will furnish ChemGenics and its representatives during such
period with all such information as such representatives may reasonably request
and
25
<PAGE> 33
cause the respective officers, employees, consultants, agents, accountants and
attorneys of PerSeptive to cooperate fully with the representatives of
ChemGenics in connection with such review and examination and to make full
disclosure to ChemGenics of all material facts affecting PerSeptive's financial
condition, business operations, properties and prospects as each relate to the
Drug Discovery Program; provided, however, that ChemGenics will hold the
documents and information concerning PerSeptive and the Drug Discovery Program
confidential in accordance with the Confidentiality Agreement, as amended April
23, 1996 in the form of Exhibit 4.02 between PerSeptive and ChemGenics dated
October 25, 1996 (the "Confidentiality Agreement"), as amended as of April 23,
1996.
SECTION 4.03 Properties, Business, Insurance. Until the Closing and
during the term of the Consulting and Interim Services Agreement, PerSeptive
shall maintain with financially sound and reputable insurers, insurance against
such casualties and contingencies and of such types and in such amounts as is
customary for companies similarly situated.
SECTION 4.04 Compliance with Laws. PerSeptive shall conduct the Drug
Discovery Program in all material respects in compliance with all applicable
laws, rules, regulations and orders.
SECTION 4.05 Actions Prior to Closing. PerSeptive shall conduct the
Drug Discovery Program pending the Closing in a manner consistent with past
practice. Without limiting the generality of the foregoing, PerSeptive will not,
except in the ordinary and usual course of business, without the prior written
consent of ChemGenics do any of the following regarding the Transferred Assets
or the Drug Discovery Program: (i) make any acquisition or disposition of
assets, (ii) enter into any contract or release or relinquish any contract or
other right, or (iii) enter into or renew any employment agreement with any
employees or consultants or grant any increases in the compensation or benefits
to, or agree to pay any bonus, severance or termination payment or other special
compensation to any employees or consultants.
SECTION 4.06 Litigation. PerSeptive will promptly notify ChemGenics of
any lawsuits, claims, proceedings or investigations which are threatened or
commenced against or by PerSeptive or its affiliates, or against any employee,
consultant or director of PerSeptive (i) relating to the Transferred Assets, the
Drug Discovery Program or the transactions contemplated hereby or (ii) in which
a decision adverse to PerSeptive would adversely affect the value of the
Transferred Assets or the Drug Discovery Program.
SECTION 4.07 Continued Effectiveness of Representations and Warranties.
From the date hereof up to and including the Closing Date, (i) PerSeptive will
conduct the Drug Discovery Program in a manner such that the representations and
warranties contained
26
<PAGE> 34
herein shall continue to be true and correct on and as of the Closing Date as if
made on and as of the Closing Date, except for changes and the consequences of
events arising in the ordinary and usual course of business after the date
hereof and none of which would have an adverse effect on the properties, assets,
operations or condition (financial or otherwise) or prospects of the Drug
Discovery Program; and (ii) PerSeptive will advise ChemGenics promptly in
writing of any condition or circumstance occurring from the date hereof up to
and including the Closing Date which could cause any representations or warranty
of PerSeptive to become untrue in any material respect.
SECTION 4.08 No Negotiations. Until July 1, 1996, or the earlier
termination of this Agreement in accordance with its terms, neither PerSeptive
nor any of its affiliates, advisors, agents or investment bankers shall,
directly or indirectly, initiate discussions with, engage in negotiations with,
or provide any information to any corporation, partnership, person or other
entity or group involving the possible sale, directly or indirectly, transfer or
joint venture of any part of the Transferred Assets or the Drug Discovery
Program to any person or entity other than ChemGenics.
SECTION 4.09 Confidentiality and Non-Competition. At the Closing
PerSeptive will enter into a Confidentiality and Non- Competition Agreement (the
"Confidentiality and Non-Competition Agreement") containing the terms set forth
in Exhibit 4.09, and such other terms and conditions and otherwise in form and
substance satisfactory to each party.
ARTICLE V
COVENANTS OF CHEMGENICS
SECTION 5.01 Cooperation. ChemGenics shall use its reasonable best
efforts in good faith to perform and fulfill all conditions and obligations to
be fulfilled or performed by it hereunder to the end that the transactions
contemplated hereby will be fully and timely consummated.
SECTION 5.02 Access. Until the Closing, ChemGenics shall give
PerSeptive, its attorneys, accountants and other authorized representatives
complete access, upon reasonable notice and at reasonable times, to ChemGenics'
offices, properties, employees, products, technology, business and financial
records, contracts, business plans, budgets and projections, agreements and
commitments and other documents and information concerning ChemGenics and
persons employed by or doing business with ChemGenics. In order that PerSeptive
may have full opportunity to make such examination and investigation as it may
desire of the business and affairs of ChemGenics, ChemGenics will furnish
PerSeptive and its representatives during such period with all such information
as
27
<PAGE> 35
such representatives may reasonably request and cause the respective officers,
employees, consultants, agents, accountants and attorneys of ChemGenics to
cooperate fully with the representatives of ChemGenics in connection with such
review and examination and to make full disclosure to PerSeptive of all material
facts affecting ChemGenics' financial condition, business operations, properties
and prospects; provided, however, that PerSeptive will hold the documents and
information concerning ChemGenics confidential in accordance with the
Confidentiality Agreement.
SECTION 5.03 Litigation. ChemGenics will promptly notify PerSeptive of
any lawsuits, claims, proceedings or investigations which are threatened or
commenced against or by ChemGenics or its affiliates, or against any employee,
consultant or director of ChemGenics.
SECTION 5.04 Continued Effectiveness of Representations and Warranties.
From the date hereof up to and including the Closing Date, (i) ChemGenics will
conduct its business in the ordinary course and a manner such that the
representations and warranties contained herein shall continue to be true and
correct on and as of the Closing Date as if made on and as of the Closing Date,
except for changes and the consequences of events arising in the ordinary and
usual course of business after the date hereof and none of which would have an
adverse effect on the properties, assets, operations or condition (financial or
otherwise) or prospects of the business of ChemGenics; and (ii) ChemGenics will
advise PerSeptive promptly in writing of any condition or circumstance occurring
from the date hereof up to and including the Closing Date which could cause any
representations or warranty of ChemGenics to become untrue in any material
respect.
SECTION 5.05 No Amendments. Except as contemplated by this Agreement
(including amendments to increase the number of shares of authorized Common
Stock of ChemGenics and to change ChemGenics' corporate name), from the date
hereof up to and including the Closing Date, ChemGenics will not amend its
Restated Certificate of Incorporation or By-laws, effect any recapitalization,
enter into any merger agreement, or sell or enter into any agreement regarding
the sale of, all or substantially all of its assets.
SECTION 5.06 Right of First Refusal; Percentage Maintenance.
(a) Right of First Refusal. From and after the Closing, before
ChemGenics shall issue, sell or exchange, agree or obligate itself to
issue, sell or exchange, or reserve or set aside for issuance, sale or
exchange, any (i) shares of Common Stock, (ii) any other equity
security of ChemGenics, including without limitation, shares of
preferred stock, (iii) any convertible debt security of ChemGenics,
including without limitation, any debt security which by its terms is
28
<PAGE> 36
convertible into or exchangeable for any equity security of ChemGenics,
(iv) any security of ChemGenics that is a combination of debt and
equity, or (v) any option, warrant or other right to subscribe for,
purchase or otherwise acquire any interest relating to such equity or
debt security of ChemGenics, ChemGenics shall, in each case, first
offer to sell such securities (the "Offered Securities") to PerSeptive
that portion of the Offered Securities as the number of shares of
Common Stock then held by PerSeptive bears to the total number of
outstanding shares of capital stock of ChemGenics on a fully diluted
basis, at a price and on such other terms as shall have been specified
by ChemGenics in writing delivered to PerSeptive (the "Offer"), which
Offer by its terms shall remain open and irrevocable for a period of
twenty (20) days from receipt of the Offer.
(b) Notice of Acceptance. Notice of PerSeptive's intention to accept
any Offer made pursuant to Section 5.06(a) shall be evidenced by a
writing signed by PerSeptive and delivered to ChemGenics prior to the
end of the 20-day period of such offer (the "Notice of Acceptance").
(c) Conditions to Acceptance and Purchase.
(i) Permitted Sales of Refused Securities. In the event that a
Notice of Acceptance is not given by PerSeptive in respect of
all of the Offered Securities, ChemGenics shall have ninety
(90) days from the end of said 20-day period to sell any such
Offered Securities as to which a Notice of Acceptance has not
been given by PerSeptive (the "Refused Securities") to the
person or persons specified in the Offer or to any other
person who has a right of first refusal to purchase
ChemGenics' securities, but only upon terms and conditions,
including, without limitation, unit price and interest rates,
which are no more favorable, in the aggregate, to such other
person or persons or less favorable to ChemGenics than those
set forth in the Offer.
(ii) Reduction in Amount of Offered Securities. In the event
ChemGenics shall propose to sell less than all of the Refused
Securities (any such sale to be in the manner and on the terms
specified in Section 5.06(c)(i) above), then PerSeptive shall
reduce the number of shares or other units of the Offered
Securities specified in its Notice of Acceptance to an amount
which shall be not less than the amount of the Offered
Securities which PerSeptive elected to purchase pursuant to
Section 5.06(b) multiplied by a fraction, (I) the numerator of
which shall be the amount of Offered Securities which
ChemGenics actually proposes to sell, and (II) the denominator
of which shall be the amount of
29
<PAGE> 37
all Offered Securities. In the event that PerSeptive so elects
to reduce the number or amount of Offered Securities specified
in its Notice of Acceptance, ChemGenics may not sell or
otherwise dispose of more than the reduced amount of the
Offered Securities until such securities have again been
offered to PerSeptive in accordance with Section 5.06(a).
(iii) Closing. Upon the closing, which shall include full
payment to ChemGenics, of the sale to such other person or
persons of all or less than all the Refused Securities,
PerSeptive shall purchase from ChemGenics, and ChemGenics
shall sell to PerSeptive, the number of Offered Securities
specified in the Notice of Acceptance, as reduced pursuant to
Section 5.06(c)(ii) upon the terms and conditions specified in
the Offer. The purchase by PerSeptive of any Offered
Securities is subject in all cases to the preparation,
execution and delivery by ChemGenics and PerSeptive of a
purchase agreement relating to such Offered Securities
reasonably satisfactory in form and substance to ChemGenics
and PerSeptive.
(d) Further Sale. In each case, any Offered Securities not purchased by
PerSeptive or other person or persons in accordance with Section
5.06(c) may not be sold or otherwise disposed of until they are again
offered to PerSeptive under the procedures specified in Sections
5.06(a)-(c).
(e) Termination of Right of First Refusal. The rights of PerSeptive
under this Section 5.06 shall terminate immediately prior to the
effectiveness of, and shall not apply to shares issued pursuant to, a
registration statement filed by ChemGenics with respect to an offering
of its securities, but expressly conditioned on the consummation of
such offering.
(f) Exceptions. The rights of PerSeptive under this Section
5.06 shall not apply to:
(i) Common Stock issued as a stock dividend to holders of
Common Stock or upon any subdivision or combination of shares
of Common Stock;
(ii) Preferred Stock issued as a dividend to holders of
Preferred Stock upon any subdivision or combination of shares
of Preferred Stock, provided that the number of shares of
Common Stock issuable upon conversion of the preferred stock
as a percentage of the total equity of ChemGenics shall remain
the same;
(iii) the issuance of Common Stock upon exercise of the
Warrant;
30
<PAGE> 38
(iv) the issuance of Common Stock upon conversion of any
Preferred Stock or any other convertible securities of
ChemGenics outstanding as of the date hereof or issued in
accordance with this Section 5.06;
(v) up to 3,000,000 shares of Common Stock, or options or
warrants exercisable therefor (including 2,006,400 options
granted prior to and outstanding on the date hereof pursuant
to ChemGenics' 1992 Stock Option Plan), issued on or after the
date hereof to directors, officers, employees or consultants
of ChemGenics and any subsidiary (including members of
ChemGenics' Scientific Advisory Board) pursuant to any
qualified or non-qualified stock option plan or agreement,
employee stock ownership plan, employee benefit plan, stock
purchase agreement, stock plan, stock restriction agreement,
or consulting agreement or such other options, warrants,
equity arrangements, agreements or plans in each case approved
by two-thirds of the members of the Board of Directors of
ChemGenics;
(v) up to 177,083 shares of Series A Preferred Stock issued
pursuant to the Comdisco Leasing Warrants, and shares of
Common Stock issued upon conversion of such shares;
(vi) shares of capital stock or options or warrants therefor,
to be issued to equipment leasing organizations in connection
with any equipment leasing arrangements to which ChemGenics is
a party and which have been approved by the Board of
Directors; or
(vii) shares of capital stock issued in connection with a
merger or acquisition approved by the Board of Directors.
Each of the foregoing numbers shall be subject to equitable adjustment
in the event of any stock dividend, stock split, combination,
reorganization, recapitalization, reclassification or other similar
event.
SECTION 5.07 Confidentiality and Non-Competition. At the Closing
ChemGenics will enter into the Confidentiality and Non-Competition Agreement.
ARTICLE VI
CONDITIONS TO CHEMGENICS' OBLIGATIONS
The obligation of ChemGenics to issue and transfer the Shares on the
Closing Date and to consummate the other transactions contemplated hereby is
subject to the satisfaction, on or before
31
<PAGE> 39
the Closing Date, of the following conditions each of which may be waived by
ChemGenics in its sole discretion:
SECTION 6.01 No Material Adverse Economic Event. There shall not have
occurred (i) any general suspension of trading in, or limitation on prices for,
or other extraordinary event affecting securities on the New York Stock
Exchange, (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or (iii) any material
limitation (whether or not mandatory) by any governmental authority on, or any
other event which might affect the extension of credit by, lending institutions,
or (iv) in the case of any of the foregoing existing on the Closing Date a
material acceleration or worsening thereof.
SECTION 6.02 Consents. All requisite governmental approvals and
consents of third parties required to be received to prevent any license, permit
or agreement material to the Drug Discovery Program from terminating prior to
its scheduled termination, as a result of the consummation of the transactions
contemplated hereby, shall have been obtained, including, without limitation,
the expiration of any waiting period or the receipt of any consent or approval
which may be required under the HSR Act.
SECTION 6.03 Representations and Warranties True. All of the
representations and warranties of PerSeptive contained in this Agreement or in
any Schedules or other documents attached hereto or referred to herein or
delivered pursuant hereto or in connection with the transactions contemplated
hereby shall be true, correct and complete in all material respects on and as of
the date hereof and on and as of the Closing Date, as if made on and as of the
Closing Date. On the Closing Date, PerSeptive shall have executed and delivered
to ChemGenics a certificate, in form and substance satisfactory to ChemGenics
and its counsel, to such effect.
SECTION 6.04 Performance. PerSeptive shall have performed and complied
with all covenants and agreements contained herein required to be performed or
complied with by it prior to or at the Closing Date. PerSeptive shall have
executed and delivered to ChemGenics a certificate, in form and substance
satisfactory to ChemGenics and its counsel, in writing to such effect and to the
further effect that all of the conditions set forth in this Article VI have been
satisfied.
SECTION 6.05 No Adverse Change. No change shall have occurred or be
threatened in the condition, properties, assets or liabilities of the Drug
Discovery Program, which has or is or is reasonably likely to frustrate the
essential purposes of this transaction.
SECTION 6.06 Opinion of Counsel. ChemGenics shall have received the
opinion of Samuel P. Hunt III, Esq., in substantially the form attached hereto
as Exhibit 6.06.
32
<PAGE> 40
SECTION 6.07 No Actions, Suits or Proceedings. As of the Closing Date,
no action, suit, investigation or proceeding brought by any person, corporation,
governmental agency or other entity shall be pending or, to the knowledge of the
parties to this Agreement, threatened, before any court or governmental body (i)
to restrain, prohibit, restrict or delay, or to obtain damages or a discovery
order in respect of this Agreement or the consummation of the transactions
contemplated hereby, or (ii) which has had or may have a materially adverse
effect on the condition, financial or otherwise, or prospects of the Drug
Discovery Program. No order, decree or judgment of any court or governmental
body shall have been issued restraining, prohibiting, restricting or delaying,
the consummation of the transactions contemplated by this Agreement. No
insolvency proceeding of any character including without limitation, bankruptcy,
receivership, reorganization, dissolution or arrangement with creditors,
voluntary or involuntary, affecting PerSeptive shall be pending, and PerSeptive
shall not have taken any action in contemplation of, or which would constitute
the basis for, the institution of any such proceedings.
SECTION 6.08 Investigation Satisfactory. ChemGenics shall have reviewed
all of the Schedules, and shall be satisfied that (i) none of the information on
any Schedule (as they may be supplemented prior to the Closing) frustrates the
essential business purpose of the transaction contemplated hereby and (ii) that
the representations and warranties of PerSeptive are true and correct in all
material respects.
SECTION 6.09 Closing Documents. PerSeptive shall have delivered all of
the resolutions, certificates, documents, ancillary agreements and instruments
required by this Agreement.
SECTION 6.10 Approval of ChemGenics' Stockholders and Preferred
Stockholders. The stockholders of ChemGenics shall have approved the requisite
amendments to ChemGenics' Certificate of Incorporation and the holders of
ChemGenics' Preferred Stock shall have consented to the transactions
contemplated hereby as required under the terms of the Preferred Stock and
agreements executed in connection with the issuance thereof. ChemGenics will
seek to obtain such approvals and consents promptly following the execution of
this Agreement and will use best efforts to obtain such approval and consent on
or before May 10, 1996.
SECTION 6.11 Approval of ChemGenics and Its Counsel. All actions,
proceedings, consents, instruments and documents required to be delivered by, or
at the behest or direction of, PerSeptive hereunder or incident to its
performance hereunder, and all other related matters, shall be reasonably
satisfactory as to form and substance to ChemGenics and its counsel.
33
<PAGE> 41
ARTICLE VII
CONDITIONS TO PERSEPTIVE'S OBLIGATIONS
The obligation of PerSeptive to transfer the Transferred Assets to
ChemGenics and to consummate the other transactions contemplated hereby is
subject to the satisfaction, on or before the Closing Date, of the following
conditions, each of which may be waived by PerSeptive in its sole discretion:
SECTION 7.01 No Material Adverse Economic Event. There shall not have
occurred (i) any general suspension of trading in, or limitation on prices for,
or other extraordinary event affecting securities on the New York Stock
Exchange, (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or (iii) any material
limitation (whether or not mandatory) by any governmental authority on, or any
other event which might affect the extension of credit by, lending institutions,
or (iv) in the case of any of the foregoing existing on the Closing Date a
material acceleration or worsening thereof.
SECTION 7.02 Consents. All requisite governmental approvals and
consents of third parties required to be received to prevent any license, permit
or agreement material to the Drug Discovery Program from terminating prior to
its scheduled termination, as a result of the consummation of the transactions
contemplated hereby, shall have been obtained, including, without limitation,
the expiration of any waiting period or the receipt of any consent or approval
which may be required under the HSR Act.
SECTION 7.03 Representations and Warranties True. All of the
representations and warranties of ChemGenics contained in this Agreement or in
any Schedules or other documents attached hereto or referred to herein or
delivered pursuant hereto or in connection with the transactions contemplated
hereby shall be true, correct and complete in all material respects on and as of
the date hereof and on and as of the Closing Date, as if made on and as of the
Closing Date. On the Closing Date, ChemGenics shall have executed and delivered
to ChemGenics a certificate, in form and substance satisfactory to ChemGenics
and its counsel, to such effect.
SECTION 7.04 Performance. ChemGenics shall have performed and complied
in all material respects with all agreements contained herein required to be
performed or complied with by it prior to or at the Closing Date, and ChemGenics
shall have delivered a certificate to PerSeptive, in form and substance
satisfactory to PerSeptive and its counsel to such effect and to the further
effect that all of the conditions set forth in this Article VII have been
satisfied.
SECTION 7.05 No Adverse Change. No change shall have occurred or be
threatened in the condition (financial or other) of ChemGenics, the results of
its operations, properties, assets,
34
<PAGE> 42
liabilities or businesses which has been or is or is reasonably likely to be
materially adverse to its operations, properties, prospects, assets or condition
(financial or other).
SECTION 7.06 Opinion of ChemGenics' Counsel. PerSeptive shall have
received from Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., an opinion
dated the Closing Date, in substantially the form attached hereto as Exhibit
7.06.
SECTION 7.07 No Actions, Suits or Proceedings. As of the Closing Date,
no action, suit, investigation or proceeding brought by any person, corporation,
governmental agency or other entity shall be pending or, to the knowledge of the
parties to this Agreement, threatened, before any court or governmental body to
restrain, prohibit, restrict or delay, or to obtain damages or a discovery order
in respect of this Agreement or the consummation of the transactions
contemplated hereby. No order, decree or judgment of any court or governmental
body shall have been issued restraining, prohibiting, restricting or delaying,
the consummation of the transactions contemplated by this Agreement. No
insolvency proceeding of any character including without limitation, bankruptcy,
receivership, reorganization, dissolution or arrangement with creditors,
voluntary or involuntary, affecting ChemGenics shall be pending, and ChemGenics
shall not have taken any action in contemplation of, or which would constitute
the basis for, the institution of any such proceedings.
SECTION 7.08 Investigation Satisfactory. PerSeptive shall have reviewed
all of the Schedules, and shall be satisfied that (i) none of the information on
any Schedule (as they may be supplemented prior to the Closing) frustrates the
essential business purpose of the transaction contemplated hereby and (ii) that
the representations and warranties of ChemGenics are true and correct in all
material respects.
SECTION 7.09 Closing Documents. ChemGenics shall have delivered the
Shares and all of the resolutions, certificates, documents, ancillary agreements
and instruments required by this Agreement.
SECTION 7.10 Approval of PerSeptive and Its Counsel. All actions,
proceedings, consents, instruments and documents required to be delivered by, or
at the behest or direction of, ChemGenics hereunder or incident to its
performance hereunder, and all other related matters, shall be reasonably
satisfactory as to form and substance to PerSeptive and its counsel.
SECTION 7.11 No Change of Control. There shall not have occurred
between the date hereof and the Closing a transfer of all or substantially all
of the outstanding shares of capital stock of ChemGenics to parties other than
ChemGenics' existing stockholders or their affiliates.
35
<PAGE> 43
SECTION 7.12 Name Change. Myco Pharmaceuticals Inc. shall have changed
its name to ChemGenics Pharmaceuticals Inc., or such other name as PerSeptive
shall approve.
SECTION 7.13 Chairman of the Board. Noubar B. Afeyan shall have been
elected to serve as Chairman of the Board of ChemGenics and he or his designee
as a member of its Scientific Advisory Board.
ARTICLE VIII
POST-CLOSING COVENANTS
SECTION 8.01 Employee Matters.
(a) Immediately after the execution of this Agreement, PerSeptive shall
make available to ChemGenics each of the Employees, who will dedicate
his or her full business time to the Drug Discovery Program of
ChemGenics and perform the services reasonably requested by ChemGenics.
The Employees shall remain employees of PerSeptive until and subject to
the Closing and ChemGenics shall have no responsibility or obligation
therefor and nothing contained herein shall give the Employees any
rights to employment by ChemGenics. Upon the Closing ChemGenics shall
reimburse PerSeptive for the salary, costs of benefits and
reimbursements for expenses incurred by such employees between the date
hereof and the Closing.
(b) Upon the Closing, ChemGenics will offer employment to each of the
Employees listed in Schedule 2.12, or any other person employed by
PerSeptive who may have been substituted for one of the Employees after
the date hereof with the consent of ChemGenics (a "Substitute
Employee") at a salary level not less than that in effect on the date
hereof and with benefits comparable to ChemGenics' employees similarly
situated, and PerSeptive shall use its reasonable best efforts to cause
such persons to enter into employment or consulting arrangements or
agreements with ChemGenics (as ChemGenics shall designate), and
ChemGenics agrees to negotiate in good faith such arrangements or
agreements; provided that, anything herein to the contrary
notwithstanding, no provision of this Section 8.01 shall create any
third-party beneficiary rights in any person or organization,
including, without limitation, employees or former employees (including
any beneficiary or dependent thereof) of PerSeptive or any of its
affiliates, trustees, administrators, participants or beneficiaries of
any employee benefit plan, and no provision of this Section 8.01 shall
create such third-party beneficiary rights in any such person or
organization in respect of any benefits that might be provided,
directly or indirectly, under any employee benefit plan or arrangement,
including the currently existing
36
<PAGE> 44
plans of PerSeptive. PerSeptive and ChemGenics each agree to (a) use
its reasonable best efforts to effect the transfer of the designated
Employees so as to prevent the creation of any severance or termination
penalties or benefits in respect of such transfer and (b) cooperate
with the filings, calculations and other actions necessary to effect
the transactions contemplated by this Section 8.01 and in obtaining any
governmental approvals required hereunder.
SECTION 8.02 Consulting and Interim Services. The parties shall perform
their respective obligations under the Consulting and Interim Services
Agreement. In addition to the services of Employees set forth in Section 8.01,
PerSeptive shall provide to ChemGenics (i) from time to time for a period of
three years after the Closing Date up to $500,000 of supplies distributed or
manufactured by PerSeptive valued at fully burdened manufactured or actual
acquired cost, (ii) the use and ownership (subject to Schedule 1.01(b)) of all
equipment transferred pursuant to Section 1.01 or listed on Schedule 1.01(b) and
(iii) senior management consultations, in each case as more fully set forth in
the Consulting and Interim Services Agreement.
SECTION 8.03 Sub-Lease. PerSeptive shall, pursuant to and in accordance
with the terms and conditions of the Sub-Lease, subject to obtaining the
landlord's consent, lease the Premises (as defined in the Sub-Lease) to
ChemGenics. ChemGenics shall, pursuant to and in accordance with the terms and
conditions of the Sub-Lease, not be obligated to pay rent until the completion
of the Public Offering; thereafter, ChemGenics shall pay the monthly rent
provided for in the Sub-Lease to PerSeptive. Notwithstanding the foregoing, in
the event PerSeptive's landlord does not consent to the Sublease on a timely
basis, PerSeptive shall provide ChemGenics with satisfactory use of such
premises or equivalent premises on terms equivalent to those set forth in the
Sub-Lease. If the Public Offering does not occur and the asset purchase and
other agreements and instruments set forth herein are rescinded and unwound (as
described below), ChemGenics and PerSeptive agree to negotiate in good faith
regarding the terms and conditions of continuation or termination of the
Sub-Lease, subject to the other terms and provisions thereof.
SECTION 8.04 Standstill; Registration Rights. Except pursuant to the
Warrant, (i) for a period of ten years after the Closing Date, PerSeptive will
not purchase any Common Stock of ChemGenics (subject to PerSeptive's right to
maintain its pro rata percentage ownership of ChemGenics' capital stock, as more
fully set forth in Section 5.06), (ii) for a period of three (3) years after the
Closing Date, PerSeptive will not sell or agree to sell any capital stock of
ChemGenics, during the fourth year will not sell or agree to sell more than
979,268 shares plus up to 10% of the shares actually acquired by PerSeptive upon
exercise of the Warrant, during the fifth year will not sell or agree to sell
more
37
<PAGE> 45
than 1,958,536 shares plus (a) such number of shares permitted to be sold in the
prior year and not sold and (b) up to an additional 20% of the shares actually
acquired by PerSeptive upon exercise of the Warrant, or in any year thereafter
more than 3,427,438 shares plus up to 35% of the shares actually acquired by
PerSeptive upon exercise of the Warrant, provided, that PerSeptive shall be
allowed to transfer shares to subsidiaries or for accounting purposes as set
forth in Exhibit 1.03(C)(iv), (iii) ChemGenics shall provide PerSeptive with
limited "piggy back" and Form S-3 Registration Rights, and (iv) PerSeptive will
enter into the other agreements regarding the capital stock of ChemGenics, in
each case as set forth in the Standstill and Registration Rights Agreement.
SECTION 8.05 Further Assurances. At any time and from time to time
after the Closing Date, at the request of ChemGenics and without further
consideration, PerSeptive will execute and deliver such other instruments of
sale, transfer, conveyance, assignment and confirmation as may be reasonably
requested in order to more effectively transfer, convey and assign to ChemGenics
and to confirm ChemGenics' title to the Transferred Assets.
SECTION 8.06 Public Offering. Within a period of 180 days after the
Closing, ChemGenics will use commercially reasonable efforts to accomplish an
underwritten initial public offering of its Common Stock, in which offering
ChemGenics will attempt to raise between $20 and $30 million (the "Public
Offering"), net to ChemGenics. ChemGenics will seek PerSeptive's consent with
respect to the choice of lead managing underwriter, which consent shall not be
unreasonably withheld. If the Public Offering is not consummated within such
180-day period, the parties may extend the period by mutual agreement. If at the
end of the initial 180-day period, ChemGenics has a registration statement on
file with the SEC, and in ChemGenics' reasonable judgement, there does not
appear to be any material impediment to the successful completion of the Public
Offering, then the period for completing the Public Offering hereunder shall be
automatically extended for an additional 90 days (such 180-day or 270-day
period, as the case may be, is hereinafter collectively referred to as the
"Public Offering Period"). PerSeptive shall at its own cost assist and cooperate
with ChemGenics as ChemGenics may reasonably request in effecting the Public
Offering in a timely manner.
SECTION 8.07 Further Negotiations on Certain Conditions. If (a) the
Public Offering Period shall lapse without the successful completion of the
Public Offering, and ChemGenics and PerSeptive shall not have extended the
period by mutual agreement, or (b) if Noubar Afeyan ceases to be available to
consult with ChemGenics pursuant to the Consulting and Interim Services
Agreement prior to completion of the Public Offering, then during the thirty
(30) day period following either such event, the parties shall confer and
negotiate in good faith to seek to agree upon alternate financing arrangements,
or additional agreements and/or modified terms to
38
<PAGE> 46
this Agreement and/or the other documents executed in connection herewith, to
accommodate each party's respective interests. In the event that the parties do
not agree to such alternate arrangements or additional or modified terms within
such thirty (30) day period, with respect to (a) ChemGenics or PerSeptive and,
with respect to (b), ChemGenics, shall have the right, each in its sole
discretion, by giving written notice to the other party within ninety (90) days
following the expiration of the foregoing thirty (30) day period, to rescind
this Agreement, the other agreements, documents and instruments entered into in
connection herewith, and to unwind the collaboration established by such
agreements and other documents such that: (i) ChemGenics shall return the
Transferred Assets to PerSeptive in the same condition as the Transferred Assets
were delivered, subject to reasonable wear and tear and consumption of supplies,
(ii) PerSeptive shall return the Shares and the Warrant and any securities
issued to PerSeptive pursuant to Section 5.06 (subject to return of the purchase
price paid therefore) to ChemGenics, (iii) ChemGenics and PerSeptive shall take
such other actions as may be necessary or desirable to restore the respective
rights, obligations and liabilities of ChemGenics and PerSeptive as nearly as
possible to the status quo which existed prior to Closing, subject to the
specific provisions of certain of the Exhibits hereto which provide for the
continuation of certain rights and obligations of the parties after the
rescission in certain circumstances, and (iv) return written manifestations of
confidential information (except for such information as is associated with the
rights granted pursuant to Section 9.3 of the License Agreement).
ARTICLE IX
TERMINATION
SECTION 9.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
A. By mutual written consent duly authorized by the Boards of
Directors of ChemGenics and PerSeptive.
B. By ChemGenics or PerSeptive if:
(i) the Closing has not occurred on or prior to
June 15, 1996 for any reason other than the
breach of any provision of this Agreement by
the party terminating this Agreement;
(ii) the other party materially breaches any of
its representations, warranties or covenants
attached hereto; or
39
<PAGE> 47
(iii) either party is unable in good faith to
agree to any unagreed to material term of
one of the other agreements contemplated
hereby.
C. By ChemGenics if:
(i) Any of the conditions set forth in Article
VI hereof has not been satisfied on or
before June 15, 1996 or shall have become
incapable of fulfillment and shall not have
been waived by ChemGenics for any reason
other than a breach by ChemGenics hereunder;
or
(ii) If in ChemGenics' good faith judgment there
is any material inaccuracy in any
representations or breach of any warranty
contained herein, or any material failure by
PerSeptive to perform any commitment,
covenant or condition contained in this
Agreement, or there exists any error,
misstatement or omission with regard to any
of the Exhibits, Schedules or other
documents referred to herein, or ChemGenics
in its sole judgment believes that the
contents of any of the Exhibits, Schedules,
information or other documents, or the
business and condition (financial or
otherwise) of the Drug Discovery Program,
frustrates the essential business purpose of
the transaction contemplated herein.
D. By PerSeptive if:
(i) any of the conditions set forth in Article
VII hereof has not been satisfied on or
before June 15, 1996 or shall have become
incapable of fulfillment and shall not have
been waived by PerSeptive for any reason
other than a breach by PerSeptive hereunder;
(ii) If in PerSeptive's good faith judgment there
is any material inaccuracy in any
representations or breach of any warranty
contained herein, or any material failure by
ChemGenics to perform any commitment,
covenant or condition contained in this
Agreement, or there exists any error,
misstatement or omission with regard to any
of the Exhibits, Schedules or other
documents referred to herein, or PerSeptive
in its sole judgment believes that the
contents of any of the Exhibits, Schedules,
information or other documents, or the
business and condition
40
<PAGE> 48
(financial or otherwise) of ChemGenics,
frustrates the essential business purpose of
the transaction contemplated herein.
Upon the occurrence of any of the events specified in this Section 9.01 (other
than paragraph A hereof), written notice of such event shall forthwith be given
to the other party to this Agreement, whereupon this Agreement shall terminate.
SECTION 9.02 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 9.01, this Agreement, except
for the provisions of Articles IX and X, shall forthwith become void and be of
no effect, without any liability on the part of any party or its directors,
officers or shareholders. Nothing in this Section 9.02 shall relieve any party
to this Agreement of liability for breach of this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission, (iii) sent by recognized
overnight courier, or (iv) sent by registered or certified mail, return receipt
requested, postage prepaid.
If to ChemGenics:
Myco Pharmaceuticals Inc.
d/b/a ChemGenics Pharmaceuticals
One Kendall Square, Building 300
Cambridge, MA 02139
Attn: Barry A. Berkowitz
With a copy to:
Jeffrey M. Wiesen, Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
41
<PAGE> 49
If to PerSeptive:
PerSeptive Biosystems, Inc.
500 Old Connecticut Path
Framingham, MA 01701
Attn: Noubar B. Afeyan
With a copy to:
Rufus C. King, Esq.
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
All notices, requests, consents and other communications hereunder shall be
deemed to have been delivered (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telex, telecopy or facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service, or (iv) if sent by registered
or certified mail, on the fifth business day following the day such mailing is
made.
SECTION 10.02 Entire Agreement. This Agreement together with the
Exhibits and Schedules hereto and the other documents executed in connection
herewith (together, the "Documents") embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof except for the Confidentiality Agreement,
which shall remain in effect in accordance with its terms. No statement,
representation, warranty, covenant or agreement of any kind not expressly set
forth in the Documents shall affect, or be used to interpret, change or
restrict, the express terms and provisions of this Agreement.
SECTION 10.03 Modifications and Amendments. The terms and provisions of
this Agreement may be modified or amended only by written agreement executed by
all parties hereto.
SECTION 10.04 Waivers and Consents. No failure or delay by a party
hereto in exercising any right, power or remedy under this Agreement, and no
course of dealing between the parties hereto, shall operate as a waiver of any
such right, power or remedy of the party. No single or partial exercise of any
right, power or remedy under this Agreement by a party hereto, nor any
abandonment or discontinuance of steps to enforce any such right, power or
remedy, shall preclude such party from any other or further exercise thereof or
the exercise of any other right, power or remedy
42
<PAGE> 50
hereunder. The election of any remedy by a party hereto shall not constitute a
waiver of the right of such party to pursue other available remedies. No notice
to or demand on a party not expressly required under this Agreement shall
entitle the party receiving such notice or demand to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of the party giving such notice or demand to any other or further action in any
circumstances without such notice or demand. The terms and provisions of this
Agreement may be waived, or consent for the departure therefrom granted, only by
written document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
SECTION 10.05 Assignment. Neither this Agreement, nor any right
hereunder, may be assigned by any of the parties hereto without the prior
written consent of the other parties.
SECTION 10.06 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and their permitted
assigns, and nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. Nothing in this Agreement shall be
construed to create any rights or obligations except among the parties hereto,
and no person or entity shall be regarded as a third-party beneficiary of this
Agreement.
SECTION 10.07 Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
governed by the internal laws of the Commonwealth of Massachusetts, without
giving effect to the conflict of law principles thereof.
SECTION 10.08 Arbitration.
(a) The Parties shall attempt to resolve any dispute or controversy
arising under or relating to the interpretation or meaning of this Agreement by
good faith negotiations. Any matter that cannot be resolved by such good faith
negotiation shall be resolved by final and binding arbitration conducted by
three (3) arbitrators in Boston, Massachusetts, in accordance with the
then-current American Arbitration Association ("AAA") Commercial Arbitration
Rules (the "AAA Rules") as modified by this Section 10.08
(b) The arbitrators shall be selected by mutual agreement of the
parties or, failing such agreement, in accordance with the
43
<PAGE> 51
aforesaid AAA Rules. At least one (1) of the arbitration panel shall be
reasonably familiar with the biotechnology industry. The parties shall bear the
costs of the arbitrators equally. No arbitrator may be affiliated in any way
with either party.
(c) The parties shall have the right of limited pre-hearing discovery,
in accordance with the U.S. Federal Rules of Civil Procedure, as then in effect,
for a period not to exceed sixty (60) days.
(d) As soon as the discovery is concluded, but in any event with thirty
(30) days thereafter, the arbitrators shall hold a hearing in accordance with
the AAA Rules. Thereafter, the arbitrators shall promptly render a written
decision, together with a written opinion setting forth in reasonable detail the
grounds for such a decision.
(e) Judgment may be entered in any court of competent jurisdiction to
enforce the award entered by the arbitrator.
(f) The duty of the parties to arbitrate any dispute hereunder shall
survive expiration or termination of this Agreement for any reason.
SECTION 10.09 Jurisdiction and Service of Process. Subject to the terms
of Section 10.08, any legal action or proceeding with respect to this Agreement
may be brought in the courts of the Commonwealth of Massachusetts or of the
United States of America for the District of Massachusetts. By execution and
delivery of this Agreement, each of the parties hereto accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The parties hereby irrevocably waive any objection or defense
that they may now or hereafter have to the assertion of personal jurisdiction by
any such court in any such action or to the laying of the venue of any such
action in any such court, and hereby waive, to the extent not prohibited by law,
and agree not to assert, by way of motion, as a defense, or otherwise, in any
such proceeding, any claim that it is not subject to the jurisdiction of the
above-named courts for such proceedings. Each of the parties hereto irrevocably
consents to the service of process of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by registered mail,
postage prepaid, to the party at its address set forth in Section 10.01 hereof
and irrevocably waive any objection or defense that it may now or hereafter have
to the sufficiency of any such service of process in any such action. Nothing in
this Section 10.08 shall affect the rights of the parties to commence any such
action in any other forum or to serve process in any such action in any other
manner permitted by law.
SECTION 10.10 Severability. In the event that any court of competent
jurisdiction shall finally determine that any provision,
44
<PAGE> 52
or any portion thereof, contained in this Agreement shall be void or
unenforceable in any respect, then such provision shall be deemed limited to the
extent that such court determines it enforceable, and as so limited shall remain
in full force and effect. In the event that such court shall determine any such
provision, or portion thereof, wholly unenforceable, the remaining provisions of
this Agreement shall nevertheless remain in full force and effect.
SECTION 10.11 Interpretation. The parties hereto acknowledge and agree
that: (i) each party and its counsel reviewed and negotiated the terms and
provisions of this Agreement (except with respect to the disclosure schedules
regarding the Drug Discovery Program which are the sole responsibility of
PerSeptive) and have contributed to its revision; (ii) the rule of construction
to the effect that any ambiguities are resolved against the drafting party shall
not be employed in the interpretation of this Agreement; and (iii) the terms and
provisions of this Agreement shall be construed fairly as to all parties hereto
and not in favor of or against any party, regardless of which party was
generally responsible for the preparation of this Agreement.
SECTION 10.12 Headings and Captions. The headings and captions of the
various subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect, or be considered in construing or
interpreting the meaning or construction of any of the terms or provisions
hereof.
SECTION 10.13 Enforcement. Each of the parties hereto acknowledges and
agrees that the rights acquired by each party hereunder are unique and that
irreparable damage would occur in the event that any of the provisions of this
Agreement to be performed by the other party were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, in addition
to any other remedy to which the parties hereto are entitled at law or in
equity, each party hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement by the other party and to enforce
specifically the terms and provisions hereof in any federal or state court to
which the parties have agreed hereunder to submit to jurisdiction.
SECTION 10.14 Reliance. The parties hereto agree that, notwithstanding
any right of any party to this Agreement to investigate the affairs of any other
party to this Agreement, the party having such right to investigate shall have
the right to rely fully upon the representations and warranties of the other
party expressly contained in this Agreement and on the accuracy of any Schedule,
Exhibit or other document attached hereto or referred to herein or delivered by
such other party or pursuant to this Agreement.
45
<PAGE> 53
SECTION 10.15 Survival, Etc. All of the representations and warranties
set forth in this Agreement shall survive the Closing and shall terminate as of
the earliest of (i) the recision of this Agreement in accordance with Section
8.08, (ii) the effective date of the registration statement with respect to the
Public Offering described in Section 8.07, and (iii) one year after the date
hereof. No claim shall be made based upon such representations and warranties on
or after such date. The sole remedy for breach of any of the representations and
warranties shall be compensation for damages actually and reasonably incurred by
the party harmed by the breach thereof. In no event shall either party be liable
to the other for any consequential damages as a result of the breach of any
representation or warranty set forth in this Agreement.
SECTION 10.16 Expenses. Each of the parties hereto shall pay its own
fees and expenses (including the fees of any attorneys, accountants, appraisers
or others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated.
SECTION 10.17 No Broker or Finder. Each of the parties hereto
represents and warrants to the other that no broker, finder or other financial
consultant has acted on its behalf in connection with this Agreement or the
transactions contemplated hereby in such a way as to create any liability on the
other. Each of the parties hereto agrees to indemnify and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder, financial consultant or similar agent claiming to have been
employed by or on behalf of such party and to bear the cost of legal expenses
incurred in defending against any such claim.
SECTION 10.18 Publicity. No party shall issue any press release or
otherwise make any public statement with respect to the execution of, or the
transactions contemplated by, this Agreement without the prior written consent
of the other party, except as may be required by law. Prior to making any public
disclosure required by the rules and regulations of the Securities and Exchange
Commission, the disclosing party shall give the other parties a copy of the
proposed disclosure and reasonable opportunity to comment on the same.
SECTION 10.19 Counterparts. This Agreement may be executed in one or
more counterparts, and by different parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
[REMAINDER OF PAGE BLANK; SIGNATURE PAGE FOLLOWS]
46
<PAGE> 54
IN WITNESS WHEREOF, ChemGenics and PerSeptive have executed this
Agreement as of the day and year first above written.
ATTEST: MYCO PHARMACEUTICALS INC., d/b/a
CHEMGENICS PHARMACEUTICALS
_____________________________ By: _____________________________
Barry A. Berkowitz
President
ATTEST: PERSEPTIVE BIOSYSTEMS, INC.
_____________________________ By: _____________________________
Noubar B. Afeyan
President
47
<PAGE> 55
SCHEDULE 1.01(b)
PERSEPTIVE BIOSYSTEMS
FIXED ASSET LISTING -- ASSETS TO BE TRANSFERRED TO CHEMGENICS(1)
<TABLE>
<CAPTION>
PER LIMIT EXTENDED
ESTIMATED ESTIMATED
ORIGINAL VALUE/ ORIGINAL VALUE/
INSTRUMENT DESCRIPTION QUANTITY LIST PRICE LIST PRICE(2)
<S> <C> <C> <C>
Spectra Physics Autosampler 3 15,000 45,000
BioCad(3) 9 69,000 621,000
Integrals (3) 8 98,500 788,000
Beckman Centrifuge (Floor Model) 1 20,000 20,000
HP 1047A and HP 1090 system 1 40,000 40,000
PE Sciex Mass Spectrometer(4) 1 420,000 420,000
Symonony Protein Peptide
Synthesizer(4) 1 90,000 90,000
Reichert Microscope 1 10,000 10,000
Spectra System Autosampler 1 15,000 15,000
Voyager RP DE Mass Spectrometer(5) 1 250,000 250,000
Total 2,299,000
</TABLE>
Miscellaneous equipment and supplies, with individual estimated original values
or list prices of less than $10,000, currently principally used by Drug
Development group have not been reflected in above listing. Inventory will be
taken and list provided prior to closing.
(1) Assets identified represent specific assets to be transferred with
initial estimated values in excess of $10,000
(2) Value represents actual list price of PBIO manufactured equipment or
best estimate of original cost for non-manufactured assets.
(3) BioCad and Integrals are currently subject to a capital lease
arrangement. Seller will obtain and transfer title at closing or
provide unrestricted access and use, and title upon expiration of the
lease, as in note 4 below.
(4) Asset is currently held under a capital lease arrangement. Therefore,
title will not be transferred at time of transaction. PerSeptive will
provide Myco with unrestricted free use of the instrument. Title will be
transferred upon expiration of lease.
(5) To be manufactured, subject to manufacturing scheduling. Will provide
prototype instrument to extent available until unit is manufactured.
Page 1
<PAGE> 56
Schedule 1.02
-------------
Assumed Liabilities
-------------------
Final schedule to be provided within fifteen (15) days of the date of
this Agreement. The only liabilities expected to be assumed are future
obligations, if any, on contracts to be specifically described.
<PAGE> 57
EXHIBITS TO MASTER AGREEMENT
EXHIBIT 1.03(A)(ii) - LICENSE AGREEMENT (ATTACHED HERETO)
EXHIBIT 1.03(C)(i) - CERTAIN TERMS OF CONSULTING AND
INTERIM SERVICES AGREEMENT
- - PerSeptive shall make the employees listed on Schedule 2.12 (the
"Employees") available to ChemGenics for the period between the signing
of the Master Agreement and the Closing to perform such services as
ChemGenics shall reasonably request.
- - On the Closing Date, ChemGenics shall offer employment to the Employees
and shall reimburse PerSeptive for the salary, costs of benefits and
reimbursement of expenses of the Employees during the period between
the signing of the Master Agreement and the Closing.
- - In the event the transaction is unwound pursuant to Section 8.08 of the
Master Agreement, ChemGenics will be responsible for severance pay
calculated in accordance with ChemGenics customary severance policies
(but not to exceed two weeks per year of service (including service
with PerSeptive), with a minimum of three weeks and a maximum of ten
weeks) ("Severance Pay") up to an amount equal to the value of the
portion of the premises utilized by ChemGenics employees (other than
the Employees) during the period between the date hereof and the date
of unwinding of the transaction (the "Space Value") calculated by
multiplying (i) a fraction of which (a) the numerator is the number of
such ChemGenics personnel working full-time at the Facility and (b) the
denominator is the total number of personnel in the drug discovery
program (currently anticipated as 5/15) multiplied by (ii) the mutually
agreed to value of such space, provided, PerSeptive will pay or
reimburse ChemGenics for all Severance Pay and other related costs for
one employee identified by ChemGenics, and all other Severance Pay and
other severance related costs for the Employees in excess of the Space
Value.
- - For a period of five years after the Closing, PerSeptive shall provide
reasonable senior management consultation to ChemGenics. "Senior
Management" shall include Noubar Afeyan and Fred Regnier, or such other
person(s) as may be PerSeptive's CEO and Chief Technical Officer,
respectively.
- - PerSeptive shall make Noubar Afeyan (or such other person as may be
PerSeptive's CEO) available to serve as the Chairman of the Board of
and a member of the Scientific Advisory Board of ChemGenics. Two
PerSeptive designees shall be members of the Scientific Advisory Board
if ChemGenics so requests.
<PAGE> 58
- - For a period of three years following the Closing, Perseptive shall
provide up to $500,000 of supplies, manufactured by PerSeptive or of
which PerSeptive is a distributor, valued at fully burdened
manufactured or actual acquired cost.
- - For a period of three years following the Closing, PerSeptive shall
loan to ChemGenics reasonable amounts and kinds of equipment or
instruments manufactured by PerSeptive or of which PerSeptive is a
distributor and which are reasonably available to PerSeptive and
reasonably necessary for ChemGenics to pursue effectively the Drug
Discovery Program as outlined in its initial business plan approved by
ChemGenics' Board of Directors or in the IPO prospectus. Such loans of
equipment shall be for a period of two years from the date of the loan
and shall be free of charge. After the termination of the loan period
of each piece of equipment, the equipment may be returned to PerSeptive
(with reasonable wear and tear) or purchased at the lesser of
depreciated book value or fair market value. To the extent such
equipment can be purchased or leased or compensation otherwise received
therefor as a part of a contract or arrangement with a partner or other
party and charged to the contract or arrangement, then such purchase
would be at fair market value. ChemGenics will use reasonable efforts
to include equipment purchase requirements or, if not feasible, lease
or other compensation mechanisms in its third party contracts and other
arrangements.
- - In the event equipment, supplies or personnel are not provided during
the three-year period following the Closing, ChemGenics shall provide
notice of such failure and if PerSeptive fails to cure such failure
within a reasonable period of time, PerSeptive shall forfeit shares in
accordance with the Schedule contained in Section 1.01B.
- - This Agreement will terminate if and when the License Agreement
terminates.
- - Appropriate insurance provisions.
EXHIBIT 1.03(C)(ii) - CERTAIN TERMS OF SUBLEASE
- - PerSeptive will Sublease an agreed upon portion of the space at the
Facility to ChemGenics for a period to be negotiated, at no charge
through the date of the IPO referred to in Section 8.08 and at the
mutually agreed upon fully burdened cost thereof to PerSeptive
thereafter.
- - Appropriate insurance provisions.
EXHIBIT 1.03(C)(iii) - CERTAIN TERMS OF NON-COMPETITION AGREEMENT
- - As long as the License Agreement remains in effect, ChemGenics will not
offer to sell, sell or distribute, except to Partners (as defined in
the License Agreement) in connection with and pursuant to an agreement
principally for drug discovery between
<PAGE> 59
ChemGenics and the Partner, any instruments, equipment, machinery,
apparatus, devices, media, reagents, compounds, resins, activators,
linkers, particles, supports or other materials or substances
(including without limitation oligomers, peptides and other molecules),
tools or other products or systems comprising the foregoing for the
purification, analysis, sequencing or synthesis of molecules (provided
that the foregoing shall not be construed to override the prohibition
in the License Agreement against utilizing the Licensed Technology (as
defined therein) to offer to sell, sell or distribute Tools (as defined
therein), even to Partners).
- - As long as the License Agreement remains in effect, PerSeptive will not
engage in drug discovery or enter into a written research and/or
development agreement or other collaborative arrangement with a third
party for drug discovery whereby PerSeptive receives either (i)
ownership rights or license rights in products of such research and/or
development or collaborative arrangement, (ii) royalty payments based
on sales of the products of such research and/or development or
collaborative arrangement or (iii) cash or other compensation as fees
or milestone payments based on the conduct or success of research
efforts by PerSeptive, provided that the foregoing shall not be deemed
to prevent PerSeptive from providing and performing and permitting
others to perform pre- and post-sale services consistent with
PerSeptive's current practice, related to products developed, made,
manufactured, offered for sale, sold or distributed by PerSeptive.
- - PerSeptive will maintain in confidence all confidential information
particular to or principally relating to the particular drug discovery
projects in the Drug Discovery Program which have been transferred to
ChemGenics.
- - The parties will agree not to solicit the other's employees.
- - Provisions to allow ChemGenics to have access for drug discovery to
technology created by off balance sheet financing vehicle, including
PerSeptive's agreement to use reasonable efforts to negotiate to permit
ChemGenics to have rights in drug discovery as part of such financings.
- - This Agreement will terminate if and when the License Agreement
terminates.
EXHIBIT 1.03(C)(iv) - CERTAIN TERMS OF STANDSTILL AND
REGISTRATION RIGHTS AGREEMENT
- - PerSeptive will not purchase any ChemGenics Common Stock or any
ChemGenics derivative securities for a period of ten years following
the Closing (except pursuant to the warrant or Section 5.06 of the
Master Agreement).
- - PerSeptive will not sell any ChemGenics Common Stock or any ChemGenics
derivative securities for a period of three years following the Closing
and thereafter as set forth in Section 8.04, provided that (i)
PerSeptive may transfer shares to a wholly
<PAGE> 60
owned subsidiary subject to all of the terms and conditions of the
Standstill Agreement provided that PerSeptive maintains 100% ownership
and voting control of such subsidiary and (ii) following the closing of
ChemGenics first public offering of common stock pursuant to a
registration statement declared effective by the SEC during the three
year period following the Closing. If, notwithstanding the foregoing,
in the written opinion of PerSeptive's independent public accountants
PerSeptive must consolidate or include ChemGenics profits and losses in
its profit and loss statements unless PerSeptive reduces its ownership
to 20% or less of ChemGenics' Common Stock, and the aggregate amount of
losses to be consolidated may reasonably exceed $[100,000] in order to
avoid such consolidation or inclusion, PerSeptive shall be permitted to
dispose of such minimum number of shares as is required to reduce
PerSeptive's ownership to the maximum percentage ownership, currently
19.99%, or such lesser amount as may be required in the opinion of such
accountants, which would avoid such consolidation or inclusion, and
(iii) PerSeptive may sell its shares pursuant to a tender offer for all
outstanding shares of ChemGenics Common Stock approved by ChemGenics'
Board of Directors.
- - For a period of ten years after the Closing, Perseptive will not
directly or indirectly solicit proxies or become a participant in an
election contest; initiate or propose a stockholder proposal; seek to
place any representative on the Board of Directors (except pursuant to
the PBIO Voting Agreement); deposit securities in a voting trust; seek
to control, alone or with others, the management, Board of Directors,
policies or affairs of ChemGenics or seek to effect negotiations with
respect to any business combination or other extraordinary transaction
involving ChemGenics except to the extent of actions by its
representatives on the ChemGenics Board of Directors acting in their
capacity as such; create or join in any "group" with respect to
ChemGenics; or make any tender offer or exchange offer for ChemGenics'
securities.
- - As long as PerSeptive (alone or with its affiliates) owns at least 20%
of the capital stock of ChemGenics, PerSeptive will vote its shares of
ChemGenics on all matters in accordance with the recommendation of
ChemGenics' Board of Directors, or in the absence of such a
recommendation, in the same proportion as the other outstanding shares
of ChemGenics are voted. If PerSeptive (alone or with its affiliates)
holds less than 20% and more than 10% of ChemGenics' voting stock,
PerSeptive will vote in favor of (and take no actions in opposition to)
any merger, sale of assets, consolidation or the like involving
ChemGenics and recommended by ChemGenics' Board of Directors, and shall
sell its shares, vote in favor of and not oppose any proposed merger or
sale of all or substantially all of the outstanding shares of
ChemGenics if recommended by ChemGenics' Board of Directors. If
PerSeptive (alone or with its affiliates) holds less 10% of ChemGenics'
voting stock, PerSeptive will have no voting restrictions.
- - Except as explicitly contemplated by the Voting Agreement, PerSeptive
will not attempt to elect any person to or affect the size or
composition of ChemGenics' Board of Directors.
<PAGE> 61
- - PerSeptive will receive piggyback registration rights subordinate to
the current outstanding piggyback registration rights granted by
ChemGenics, and registration rights for up to four Form S-3
registrations, each registration to cover of up to the lesser of (i)
25% and (ii) the amount permitted to be sold under the Standstill and
Registration Rights Agreement, of the ChemGenics shares currently held
(including Warrant Shares) by PerSeptive (and not less than $1,000,000
in market value of shares), such registrations to be required not
sooner than three years after the Closing, not more than once in any
year, to be effective for up to a ninety day period and to permit
delays in filings and "blackouts" related to premature disclosure and
interruptions in ChemGenics' business, and to terminate when
PerSeptive's shares are permitted to be sold pursuant to Rule 144(k).
- - The registration rights contained in the agreement will include
customary cross-indemnification and lockup provisions. Registration
rights shall not be transferable.
- - ChemGenics will pay the reasonable cost of preparing and filing the
registration statements, and PerSeptive will pay its own costs in
connection with such registration statements.
EXHIBIT 1.03(C)(v) - CERTAIN TERMS OF VOTING AGREEMENT
- - The number of persons constituting the entire Board of Directors of
ChemGenics will be fixed at not less than 6 nor more than 9.
- - As long as PerSeptive owns at least 20% of the capital stock of
ChemGenics, ChemGenics will nominate two persons designated by
PerSeptive and reasonably acceptable to ChemGenics to serve on the
Board of Directors of ChemGenics. As long as Ed Kania remains on
ChemGenics' Board of Directors, he shall be one of such persons. As
long as Noubar Afeyan remains an officer or director of PerSeptive he
shall be the other such person.
- - As long as PerSeptive owns at least 20% of the capital stock of
ChemGenics, if the number of persons comprising ChemGenics' Board of
Directors is increased to eight persons or more, ChemGenics shall cause
a third person designated by PerSeptive and reasonably acceptable to
ChemGenics to be nominated to serve on ChemGenics' Board.
- - As long as PerSeptive owns less than 20% but at least 10% of the
capital stock of ChemGenics, ChemGenics will nominate one person
acceptable to PerSeptive to serve on the Board of Directors of
ChemGenics.
- - If the ChemGenics Board of Directors is classified, PerSeptive's
representatives shall be divided among the classes.
<PAGE> 62
- - As long as PerSeptive has the right to designate nominees to
ChemGenics' Board of Directors, at least one PerSeptive representative
will serve on the Executive Committee (if any).
- - ChemGenics will not limit indemnification available to members of its
Board of Directors and following the registration of its securities
under the 1934 Act will use reasonable efforts to obtain Directors and
Officers Liability Insurance if commercially available at reasonable
cost.
EXHIBITS 6.06 AND 7.06 - FORMS OF LEGAL OPINIONS
Customary opinions in form and substance to be agreed.
<PAGE> 1
Exhibit 10.16
ChemGenics Pharmaceuticals Inc.
One Kendall Square
Building 300
Cambridge, MA 02139
November 22, 1996
PerSeptive Biosystems, Inc.
500 Old Connecticut Path
Framingham, MA 01701
Gentlemen:
Reference is made to the Master Agreement dated May 7, 1996 and to the
Warrant (the "Warrant") for the purchase for 4,896,335 shares of Common Stock of
ChemGenics Pharmaceuticals Inc. ("ChemGenics") issued to PerSeptive Biosystems,
Inc. ("PerSeptive") on June 28, 1996. ChemGenics has described to PerSeptive a
proposed transaction between ChemGenics and American Home Products Corporation,
represented by its Wyeth-Ayerst Laboratories Division ("Wyeth-Ayerst") in which
ChemGenics and Wyeth-Ayerst will enter into a Collaborative Research and License
Agreement, Stock Purchase Agreement and Standstill Agreement (collectively, the
"Wyeth-Ayerst Transaction"). For good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, PerSeptive and ChemGenics have
agreed as follows:
1. Contingent upon the closing of the Wyeth-Ayerst Transaction, ChemGenics
and PerSeptive agree to modify and amend Section 8.07 of the Master
Agreement to terminate PerSeptive's rights under the second sentence
thereof with the effect that PerSeptive shall not, after the closing of
the Wyeth-Ayerst Transaction, have the right to rescind the Master
<PAGE> 2
Agreement and the other agreements, documents and instruments entered
into in connection therewith or to unwind the collaboration established
by such agreements and other documents.
2. PerSeptive agrees that, notwithstanding the terms of the Warrant, or
any other document or agreement entered into in connection therewith,
PerSeptive will at no time exercise the Warrant in a manner which would
cause the shares of Common Stock owned by PerSeptive to be more than
49.9% of all outstanding equity securities of ChemGenics (treating any
convertible securities issued by ChemGenics as having been converted).
ChemGenics agrees that, in the event the foregoing restriction prevents
PerSeptive from exercising any or all of the Warrant at the time of its
expiration on June 28, 2000, the expiration date of the portion of the
Warrant which cannot be exercised shall be extended for a six-month
period through December 28, 2000; and if such restriction prevents the
exercise of all or part of the Warrant at that extended date, the
execution date of the portion which cannot be exercised shall be
continued for an additional six months, which opportunity to extend the
exercise date of the Warrant shall continue in increments of six months
until such time as the foregoing restriction no longer prevents the
full exercise of the Warrant.
- 2 -
<PAGE> 3
If the foregoing accurately sets forth our understanding, please so
signify by signing and returning a duplicate copy of this letter, whereupon it
will take effect as an amendment to both the Master Agreement and the Warrant in
accordance with the terms thereof.
Very truly yours,
CHEMGENICS PHARMACEUTICALS INC.
By: /s/ Barry A. Berkowitz
-----------------------
Chief Executive Officer
ACCEPTED AND AGREED:
PERSEPTIVE BIOSYSTEMS, INC.
By: /s/ Noubar B. Afeyan
-----------------------
Chairman and
Chief Executive Officer
- 3 -
<PAGE> 1
EXHIBIT 10.18
CONSULTING AND INTERIM SERVICES AGREEMENT
This CONSULTING AND INTERIM SERVICES AGREEMENT (this "Agreement"), is
dated this 28th day of June, 1996, by and between ChemGenics Pharmaceuticals
Inc., a Delaware corporation ("ChemGenics"), and PerSeptive Biosystems, Inc., a
Delaware corporation ("PBIO").
WITNESSETH
WHEREAS, ChemGenics and PBIO have entered into a Master Agreement dated
as of May 7, 1996 (the "Master Agreement"), pursuant to which ChemGenics has
acquired from PBIO and its affiliates assets, projects and activities relating
to drug discovery activities and efforts (the "Drug Discovery Program");
WHEREAS, in connection with the execution of the Master Agreement, PBIO
has provided certain consulting services through its employees who have worked
in the Drug Discovery Program and ChemGenics has agreed to compensate PBIO for
such services;
WHEREAS, in connection with the pursuit of drug discovery, ChemGenics
has requested and PBIO is willing to provide on the terms set forth herein,
certain equipment, supplies and other assets following the closing of the
transactions contemplated by the Master Agreement; and
WHEREAS, PBIO has agreed to provide certain consulting services to
ChemGenics as set forth in this Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual
promises set forth herein and in the Master Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Interim Period Compensation. Upon execution of this Agreement,
ChemGenics shall pay PBIO the sum of One Hundred Thirteen Thousand Seven Hundred
Ninety Dollars ($113,790) which amount is equal to the amount paid by PBIO for
salary and benefits for the individuals listed on Exhibit A hereto (the "Drug
Discovery Program Employees") from and including May 8, 1996 through the date
hereof. PBIO shall invoice ChemGenics separately for, and ChemGenics shall
promptly reimburse PBIO for, expenses reimbursed to the Drug Discovery Program
Employees for out-of-pocket expenses incurred during such period in accordance
with PBIO's normal business practices.
<PAGE> 2
2. PBIO Services to be Provided. During the five year period commencing
on the date hereof PBIO shall provide reasonable strategic technical
consultation to ChemGenics as ChemGenics may reasonably request from time to
time, such consultation to include principally the services of Noubar Afeyan and
Fred Regnier, or such other person(s) as may be PBIO's Chief Executive Officer
("CEO") and Chief Technical Officer, respectively during such period, and other
senior PBIO technical staff members as PBIO may deem appropriate. The scope of
such consultation shall be providing strategic technical advice relevant to the
implementation and utilization of (i) technology licensed to ChemGenics pursuant
to the License Agreement (as defined in the Master Agreement), (ii) prototype
systems, instruments and other equipment to which ChemGenics has access pursuant
to the License Agreement and (iii) equipment provided to ChemGenics pursuant to
this Agreement. It is understood and agreed that such consultation (a) shall be
provided at times and under circumstances reasonably convenient to the provider,
giving due regard to the provider's other priorities, and (b) shall not require
Dr. Afeyan, Dr. Regnier or any other person to interfere with or compromise
their primary responsibilities as officers or employees of PBIO.
In addition, during such five year period, PBIO shall make (a) Noubar
Afeyan (or such other person as may be PBIO's CEO) available to serve as the
Chairman of the Board of and a member of the Scientific Advisory Board of
ChemGenics, and (b) Fred Regnier or another Senior PBIO employee reasonably
acceptable to ChemGenics available to serve as a member of ChemGenics Scientific
Advisory Board if ChemGenics so requests.
3. Supplies To Be Provided BY PBIO. During the three year period
commencing on the date hereof, from time to time at ChemGenics' reasonable
request made in advance in accordance with PBIO's customary ordering
requirements and practices, or in accordance with such other procedure as may be
agreed upon by the parties, PBIO shall provide ChemGenics with supplies in
quantities and with specifications reasonably designated by ChemGenics and which
are either manufactured by PBIO or of which PBIO is a distributor ("Supplies"),
provided that PBIO shall not be obligated to provide more than $500,000 of such
Supplies valued at fully burdened manufactured cost for Supplies manufactured by
PBIO and the actual cost of acquisition for Supplies distributed by PBIO.
ChemGenics agrees that it will provide PBIO with as much advance notice of its
requirements for such Supplies as is reasonably practicable. PBIO agrees that it
will utilize its reasonable best efforts to meet ChemGenics requirements for
Supplies and delivery times, and to provide ChemGenics with written notice of
its inability to meet such delivery dates and the date on which delivery is
projected to be actually made. PBIO further agrees that it will treat ChemGenics
with respect to such Supplies on a
- 2 -
<PAGE> 3
reasonable parity with PBIO's other customers, provided that ChemGenics gives
PBIO commercially reasonable advance notice to permit PBIO to accommodate its
customer's requirements and ChemGenics' requests. PBIO will provide ChemGenics
with written reports not less than semi-annually if requested by ChemGenics
detailing the Supplies provided and the cost thereof. The term "fully burdened
manufactured cost" shall mean the direct manufactured cost of an item as shown
on PBIO's books and records plus a fair allocation of all absorbed and
unabsorbed overhead manufacturing costs whether included or excluded from the
overhead pool for inventory valuation purposes, in each case as certified in
writing on an annual basis by PBIO's Chief Financial Officer to fairly represent
the fully burdened manufacturing costs. ChemGenics shall have the right on an
annual basis to inspect, review and/or audit PBIO's books and records, including
work papers, utilized to determine fully burdened manufactured costs. In the
event any such inspection, review or audit results in a determination that PBIO
has overcharged ChemGenics by more than 10%, PBIO shall reimburse ChemGenics'
costs of such inspection, review or audit.
4. Equipment To Be Provided By PBIO. A. During the three year period
commencing on the date hereof, PBIO shall loan to ChemGenics reasonable amounts
and kinds of equipment and instruments ("Equipment") manufactured by PBIO or of
which PBIO is a distributor and which are reasonably available to PBIO and
reasonably necessary for ChemGenics to pursue effectively the Drug Discovery
Program as outlined in its initial business plan (the "Business Plan") approved
by ChemGenics' Board of Directors or in a prospectus contained in a registration
statement filed by ChemGenics with the Securities and Exchange Commission with
respect to ChemGenics' initial public offering of securities. ChemGenics agrees
that it will provide PBIO with as much advance notice of its requirements for
such Equipment as is reasonably practicable. PBIO agrees that it will utilize
its reasonable best efforts to meet ChemGenics requirements for Equipment and
delivery times, and to provide ChemGenics with written notice of its inability
to meet such delivery dates and the date on which delivery is projected to be
actually be made. PBIO further agrees that it will treat ChemGenics with respect
to such Equipment on a reasonable parity with PBIO's other customers, provided
that ChemGenics gives PBIO commercially reasonable advance notice to permit PBIO
to accommodate its customer's requirements and ChemGenics' requests. Each such
Equipment loan shall be for a period of two years from the date the Equipment is
delivered to ChemGenics, and shall be free of rent or other fees, provided that
notwithstanding the foregoing, no period of loan of any Equipment shall extend
beyond the date which is four years from the date hereof, no matter when the
period of the loan begins. After the termination of the loan period of each
piece of Equipment, the Equipment shall be returned
- 3 -
<PAGE> 4
to PBIO in the same condition as received (subject only to reasonable wear and
tear and casualty loss) or purchased by ChemGenics at the lesser of depreciated
book value (based on actual cost and depreciation or amortization schedules
utilized by PBIO in the ordinary course of its business) or fair market value
(as agreed by the parties or in the absence of such agreement by an appraiser
selected by the parties, the cost of which shall be shared equally by the
parties). To the extent such Equipment can be purchased or leased or
compensation otherwise received therefor by ChemGenics as a part of a contract
or arrangement with a partner or other party and charged to the contract or
arrangement, then such Equipment shall not be loaned to ChemGenics by PBIO but
shall be purchased by ChemGenics if reasonable under the circumstances and the
terms of its arrangement with the third party. The payment amount shall be the
greater of (i) if ChemGenics sells the Equipment to the customer, the amount
paid by the customer and (ii) the price PBIO in its reasonable discretion would
charge a favored customer therefor. In case of a dispute the price will be the
average price of the lowest 3 of the last 10 sales (or such fewer number as sold
in the prior year) of comparable items of Equipment sold to PBIO's retail
customers, excluding distributors. ChemGenics will use reasonable efforts to
include Equipment purchase requirements or, if not feasible, lease or other
compensation mechanisms in its third party contracts and other arrangements.
ChemGenics will insure such Equipment with replacement cost insurance pursuant
to an insurance policy reasonably satisfactory to PBIO, and shall include PBIO
as an additional insured, will provide customary maintenance and repair, and, if
destroyed shall pay PBIO the replacement cost thereof.
PBIO shall not be required to loan to ChemGenics any Equipment that is
the same, substantially similar or functionally equivalent to Equipment which
had been the subject of a loan during the six month period prior to the date of
any loan request, unless such Equipment was destroyed by casualty, ChemGenics is
still utilizing such Equipment and can reasonably utilize the additional
Equipment in accordance with the Business Plan or elects to purchase from PBIO
the Equipment which was subject to such prior loan.
ChemGenics will provide PBIO with written reports not less than
semi-annually if requested by PBIO detailing the location, use and status of
each piece of Equipment loaned to ChemGenics pursuant to this Agreement, and
containing such other information as PBIO may reasonably request.
In the event that ChemGenics receives from third parties rental, fees
or other direct payments for the rental or use of Equipment, ChemGenics shall
remit to PBIO 90% of the amount received by ChemGenics which is directly related
to the use of the Equipment (including rent) within 30 days from the date of
receipt
- 4 -
<PAGE> 5
by ChemGenics (but without duplication of amounts referred to above), and such
amount shall be credited toward any amount payable for the purchase of such
Equipment, if ChemGenics elects to purchase rather than return same. In the
event ChemGenics elects to return rather than purchase any such Equipment, PBIO
shall retain any amounts paid or payable to it by ChemGenics with respect to
such Equipment.
Without PBIO's express written consent, no Equipment loaned to
ChemGenics pursuant to this Agreement shall be furnished to any Partner or any
other third party, or otherwise removed from ChemGenics' facility, unless it has
been purchased or leased from ChemGenics for fair consideration as described
above, provided that nothing contained herein shall prevent ChemGenics from
utilizing such Equipment in the ordinary course of its business with any
Partner.
ChemGenics shall be responsible, and PBIO shall have no obligation, for
the maintenance and repair of Equipment loaned or otherwise provided to
ChemGenics pursuant to this Agreement, except for such maintenance and repair as
PBIO agrees in writing to provide. PBIO shall afford ChemGenics the opportunity
to enter into service and maintenance agreements relating to Equipment on terms
and conditions which PBIO makes available to its customers generally.
B. So long as ChemGenics occupies space on the third floor of the
Framingham Facility pursuant to the Sublease, PBIO and ChemGenics agree to
permit the other to use certain instruments as set forth on the last page of the
Inventory List which constitutes a part of Schedule 1.01(b) of the Master
Agreement.
C. During such period as ChemGenics occupies at least 500 square feet
of space used principally for laboratory purposes at PBIO's facility at 500 Old
Connecticut Path, Framingham, Massachusetts, or any replacement facility in
which a substantial part of PBIO's business is also located, in the event that
ChemGenics or PBIO would benefit from and requests the use of an instrument or
item of equipment which is owned or otherwise controlled by the other and as to
which a like instrument is not otherwise available to the requesting party for
the use intended, and such use would not violate any law, rule or regulation, or
any agreement to which either ChemGenics or PBIO is bound, or, in the opinion of
the party owning or controlling the use thereof, disclose any trade secret or
other confidential information which such party does not wish disclosed, and
such instrument or item of equipment is not required at the time requested for
any reason in the sole discretion of the party owning or otherwise controlling
the use of such instrument or equipment and can be made available for use on
terms and conditions acceptable to the party owning or
- 5 -
<PAGE> 6
controlling the use of same in its sole discretion, the other party may use such
instrument or item of equipment upon reasonable advance notice and at such times
and on such terms and conditions as the party owning or controlling the use of
such instrument or equipment may impose, but without the payment of a rental or
other fee, and without liability of any kind or nature by the lending party for
any damage of any kind or nature arising out of the use thereof. It is expressly
understood and agreed that the party owning or otherwise controlling the use of
any such instrument or equipment shall retain absolute priority as to its use
and shall have sole discretion as to the terms and conditions of use. It is
further expressly understood and agreed that the provisions set forth in this
paragraph are in addition to and in no way modify PBIO's obligation to provide
ChemGenics' use of equipment as set forth in Schedule 1.01(b) of the Master
Agreement and Section 4.1.6 of the License Agreement.
D. All consulting, supplies, instruments and other services and goods
provided or supplied to ChemGenics pursuant to this Agreement shall be provided
subject to all limitations and conditions pursuant to which such services or
goods are provided to customers of PBIO. ChemGenics shall use any such services,
supplies, instruments or other products solely at its own risk and without
recourse to PBIO or the provider thereof, except (i) as to Claims of
intellectual property infringement in connection with the use by ChemGenics of
Equipment or Supplies, as otherwise set forth in Exhibit B hereto, subject to
the limitations set forth therein, and (ii) as to Claims arising from PBIO's
negligence, as to which PBIO shall be liable to the extent of its negligence. In
any event, and notwithstanding anything contained in this Agreement or any other
agreement to the contrary, PBIO's sole obligation, and ChemGenics' sole and
exclusive remedy, with respect to any consulting or other services or supplies,
instruments or other goods which do not meet any actual or implied warranty,
representation or standard, or any warranty, representation or standard which
may be agreed to by PBIO or which may be imposed by any statute or law, or as to
which PBIO breached or is claimed to have breached any agreement, covenant or
commitment of any kind, will be to perform such service or repair or replace, at
its discretion, such supplied product, instrument or other good.
NOTWITHSTANDING THE FORGOING, OR ANYTHING CONTAINED HEREIN TO THE CONTRARY, IN
NO EVENT SHALL PBIO BE LIABLE, WHETHER IN CONTRACT, IN TORT, WARRANTY, OR UNDER
ANY STATUTE (INCLUDING WITHOUT LIMITATION ANY TRADE PRACTICE, UNFAIR COMPETITION
OR OTHER STATUTE OF SIMILAR IMPORT) OR ON ANY OTHER BASIS, FOR INDIRECT,
PUNITIVE, MULTIPLE, INCIDENTAL, STATUTORY CONSEQUENTIAL OR SPECIAL DAMAGES
SUSTAINED BY CHEMGENICS OR ANY OTHER PERSON, NO MATTER HOW ARISING WHETHER OR
NOT FORESEEABLE AND WHETHER OR NOT PERSEPTIVE IS ADVISED OF THE POSSIBILITY OF
SUCH DAMAGE, INCLUDING, WITHOUT LIMITATION, DAMAGES
- 6 -
<PAGE> 7
ARISING FROM OR RELATED TO LOSS OF USE, LOSS OF DATA, FAILURE OR INTERRUPTION IN
THE OPERATION OF ANY EQUIPMENT OR SOFTWARE, DELAY IN REPAIR OR REPLACEMENT, OR
FOR LOSS OF REVENUE OR PROFITS, LOSS OF GOODWILL OR LOSS OF BUSINESS.
Indemnification. To the fullest extent permitted by law, ChemGenics
agrees to indemnify and hold PerSeptive harmless from and against any and all
claims, demands, obligations, costs, expenses (including reasonable attorney's
fees and expenses) and liabilities (collectively, "Claims") including, without
limitation, those arising from violations of local, state, or federal food and
drug, environmental, health and safety and other laws, codes and regulations,
arising from or relating to ChemGenics use of Equipment, Supplies and other
products hereunder, except to the extent of Claims resulting from the breach by
PBIO of its obligations hereunder or PBIO's negligence, as to which PBIO shall
indemnify and hold ChemGenics harmless from any such Claims.
5. Certain Consequences of Noncompliance. In the event PBIO does not
provide the Equipment and Supplies required by Sections 3 and 4 of this
Agreement, or the Consulting Services required by Section 2 of this Agreement,
ChemGenics shall provide written notice of such failure to PBIO. If PBIO fails
to cure such failure within thirty (30) days following receipt of the first such
notice, twenty (20) days following receipt of the second such notice or ten (10)
days following receipt of any further notice, or if such failure is not curable
in such period PBIO fails to commence to cure same within such period and
thereafter diligently continue to prosecute such cure and in any event fails to
cure such failure within an additional twenty (20) days, ChemGenics shall have
the option for a period of ninety (90) days following the termination of the
grace period following such notice to purchase from PBIO and PBIO shall be
obligated to sell to ChemGenics at an aggregate price of $1.00, all or any part
of the number of the Earnout Shares (the "Shares") set forth below (the
"Repurchase Option").
<TABLE>
<CAPTION>
Date of Default* Number of Shares
---------------- ----------------
<S> <C>
July 1, 1996 - June 30, 1997 979,268
July 1, 1997 - June 30, 1998 652,844
July 1, 1998 - June 30, 1999 326,422
Thereafter 0
</TABLE>
*The applicable number of shares shall be determined by the period in which the
date of default, set forth in the relevant default notice, occurs.
In the event ChemGenics shall be entitled to and shall elect to
exercise the Repurchase Option, it shall give PBIO written notice specifying the
number of Shares which ChemGenics elects to
- 7 -
<PAGE> 8
purchase and specifying a date for closing hereunder, which date shall be not
more than thirty (30) calendar days after the giving of such notice. The closing
shall take place at ChemGenics' principal offices or such other location in the
greater Boston, Massachusetts area as ChemGenics may reasonably designate in
such notice. At the closing, PBIO shall deliver the Shares being purchased
against the simultaneous delivery of the purchase price by ChemGenics.
If PBIO notifies ChemGenics that it disagrees with ChemGenics assertion
that there is a default, and notifies ChemGenics of the same within fifteen (15)
calendar days after PBIO's receipt of notice thereof, the matter will be
referred to and determined by arbitration pursuant to Section 10.8 of the Master
Agreement.
In the event that PBIO fails to deliver the Shares as required by this
Agreement, ChemGenics may elect (a) to establish a segregated account to receive
the payment of $1.00, such account to be turned over to PBIO upon delivery of
the certificates representing such Shares, and (b) immediately to take such
action as is appropriate to transfer record title of such Shares from PBIO to
ChemGenics and to treat PBIO and such Shares in all respects as if delivery of
the certificates representing such Shares had been made as required by this
Agreement. PBIO hereby irrevocably grants ChemGenics a power of attorney for the
purpose of effectuating the foregoing.
If ChemGenics shall pay a stock dividend or declare a stock split on or
with respect to any of its Common Stock, or otherwise distribute securities of
ChemGenics to the holders of its Common Stock, the number of shares of stock or
other securities of ChemGenics issued with respect to the Shares then subject to
the Repurchase Option shall be added to the Shares then subject to the
Repurchase Option without any change in the aggregate purchase price. If
ChemGenics shall distribute to its stockholders shares of stock of another
corporation, the shares of stock of such other corporation distributed with
respect to the Shares then subject to the Repurchase Option shall be added to
the Shares covered by the Repurchase Option without any change in the aggregate
purchase price.
If the outstanding shares of ChemGenics' Common Stock shall be
subdivided into a greater number of shares or combined into a smaller number of
shares, or in the event of a reclassification of the outstanding shares of
Common Stock of ChemGenics, or if ChemGenics shall be a party to any capital
reorganization, there shall be substituted for the Shares then covered by the
Repurchase Option such amount and kind of securities as are issued in such
subdivision, combination, reclassification, or capital reorganization in respect
of the Shares subject to the Repurchase
- 8 -
<PAGE> 9
Option immediately prior thereto, without any change in the aggregate purchase
price.
6. ChemGenics and PBIO also agree to the terms and conditions set forth
on Exhibit A to this Agreement, relating to services to be provided by PBIO to
ChemGenics during such time as ChemGenics occupies space on the third floor of
Building A of PerSeptive's Framingham Facility.
7. Confidentiality. In connection with the Services to be provided
hereunder, each party may have access to certain confidential information of the
other. Such confidential information shall be maintained in confidence and
access to and use of shall be restricted in accordance with the terms of the
Non-Competition and Confidentiality Agreement of even date herewith.
8. Termination. This Agreement shall continue until June 30, 2001,
provided, however, that this Agreement shall terminate immediately upon a
rescission of the Master Agreement pursuant to Section 8.07 thereof. In the
event of any such termination, ChemGenics shall promptly return to PBIO all
Equipment in as good a condition as received, reasonable wear and tear excepted
(other than any Equipment purchased by ChemGenics in accordance with Section 4)
and unused Supplies.
9. Certain Termination Costs. On the date hereof, ChemGenics shall
offer employment to each of the Drug Discovery Program Employees at a salary no
less than their current salary with PBIO. In the event ChemGenics terminates the
employment of any of the Drug Discovery Program Employees, ChemGenics will
provide severance pay to such individuals, calculated in accordance with
ChemGenics customary severance policies, such calculation (i) not to exceed two
weeks per year of service, (ii) to include the service of such individual with
PBIO as set forth in PBIO's books [for severance certification purposes only],
and (iii) to be not less than three weeks or more than ten weeks for any
individual ("Severance Pay"). PBIO will on demand pay or reimburse ChemGenics
for the payment of all Severance Pay and other severance related costs for the
Drug Discovery Program Employees in excess of the Space Value. PBIO shall remain
responsible for and indemnify ChemGenics against all claims of any Drug
Discovery Program Employee to the extent arising out of any act or omission of
PBIO or violation of any law, rule or regulation by PBIO prior to their being
employees of ChemGenics. Except as set forth above, ChemGenics shall be
responsible for and shall indemnify PBIO against claims of any Drug Discovery
Program Employee to the extent arising out of any act or omission or violation
of any law, rule or regulation by ChemGenics on or after the date such employee
became an employee of ChemGenics. PBIO will also on demand pay or reimburse
ChemGenics for the payment of all Severance Pay and other
- 9 -
<PAGE> 10
out of pocket severance related costs for one Drug Discovery Program Employee
identified by ChemGenics.
Space Value shall mean 45% of the value of the portion of the premises
on the third floor of Building A of PBIO's Framingham facility to be first
occupied by ChemGenics pursuant to the Sublease (the "ChemGenics Space"), during
the period between the date hereof and the date of termination of this Agreement
in accordance with the proviso in Section 8 above, it being understood and
agreed that 45% percent of the ChemGenics Space represents the portion of
ChemGenics Space that was not used by the Drug Discovery Program prior to the
date of execution of the Master Agreement. The value of the ChemGenics Space
shall be $12.50 (Twelve Dollars and Fifty Cents) per square foot per year, or
$0.03427 per square foot per day. The ChemGenics Space occupies 6,278 square
feet. Accordingly, the Space Value shall be calculated by multiplying $0.03427
times 0.45 times 6,278 square feet times the number of days from and including
May 7, 1996 to and including the date the transactions contemplated by the
Master Agreement are rescinded and unwound, or such later date as ChemGenics'
occupancy of the ChemGenics Space without the payment of Fixed Rent (as defined
in the Sublease) terminates (the later of such dates being herein called the
"ChemGenics Space Termination Date"). For example, if the duration of the period
between May 7, 1996 and ChemGenics Space Termination Date was six months, the
Space Value would be $17,415.
10. Miscellaneous.
(a) Entire Agreement. This Agreement, including the Exhibit attached
hereto, sets forth the entire agreement and understanding of the parties hereto
and supersedes all prior oral or written agreements and understandings relating
to the subject matter hereof.
(b) Assignment. Except as set forth in paragraph 10(c) no right,
benefit or interest hereunder shall be subject to assignment, transfer,
anticipation, alienation, sale, encumbrance, charge, pledge, hypothecation or
set-off in respect of any claim, debt or obligation or to execution, attachment,
levy or similar process.
(c) Successors and Assigns. The terms and provisions of this Agreement
shall inure to the benefit of, and be binding upon, PBIO, ChemGenics, and their
respective successors and assigns; provided, however, that ChemGenics and PBIO
may not assign or otherwise transfer this Agreement or any rights and interests,
nor delegate any obligations, hereunder, except to a direct or indirect 100%
parent or direct or indirect wholly-owned subsidiary which becomes a party to
the Non-Competition Agreement (as defined in the Master Agreement) and that
agrees in writing to be bound by this Agreement
- 10 -
<PAGE> 11
(and in such case ChemGenics and PBIO shall remain bound) without the prior
written consent of the other party to this Agreement, except pursuant to a
merger or consolidation, or sale of all or substantially all of the stock,
assets or business of PBIO or ChemGenics and their respective subsidiaries taken
as a whole as provided below, if the new owner or successor becomes a party to
the Noncompetition Agreement, and except that without PBIO's consent ChemGenics
rights under this Agreement may not be so assigned or otherwise transferred in a
transaction that would give PBIO the right to terminate the License Agreement
pursuant to Section 9.4 thereof. In the event that either PBIO or ChemGenics
shall (i) consolidate or merge with another entity (other than an acquisition by
such party of another entity where the stockholders of PBIO or ChemGenics (or
any subsidiary of PBIO or ChemGenics), after such transaction directly or
indirectly own at least a majority of the voting stock of the combined or
acquired entity); or (ii) convey, sell or lease to another entity all or
substantially all of its stock, assets or business and its subsidiaries, taken
as a whole; or (iii) if there shall be a change of control of either PBIO or
ChemGenics, then (A) if such transaction is negotiated by PBIO or ChemGenics,
such party shall give the other party written notice identifying the acquiring
entity and the material terms of the transaction at least thirty (30) days prior
to the closing thereof and (B) the parties shall negotiate in good faith to
determine whether any changes shall be appropriate in this Agreement. Any
attempt to assign or delegate any portion of this Agreement in violation of this
Section 9(c) shall be null and void. Subject to the foregoing, any reference to
PBIO and ChemGenics hereunder shall be deemed to include the permitted
successors thereto and assigns thereof.
(d) Amendment. This Agreement may not be amended, modified or canceled
except by written agreement of the parties hereto.
(e) Severability. In the event that any court of competent jurisdiction
shall determine that any provision contained in this Agreement shall be
unenforceable in any respect, then such provision shall be deemed limited to the
extent that such court deems it enforceable, and as so limited shall remain in
full force and effect. In the event that such court shall deem any provision
wholly unenforceable, the remaining provisions of this Agreement shall
nevertheless remain in full force and effect.
(f) Applicable Law. This Agreement has been made in and shall be
governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts, without giving effect to the conflict of law principles thereof.
- 11 -
<PAGE> 12
(g) Survival. The provisions contained in Section 8 of this Agreement
shall survive the expiration or earlier termination of this Agreement.
(h) Waivers and Consents. The terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted, only by a written
document executed by the party entitled to the benefits of such terms or
provisions. Each such waiver or consent shall be effective only in the specific
instance and for the purpose for which it was given, and shall not constitute a
continuing waiver or consent.
(i) Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the receiving party's
address set forth below or to such other address as a party may designate by
notice hereunder, and shall be either (i) delivered by hand, (ii) made by telex,
telecopy or facsimile transmission, (iii) sent by overnight courier, or (iv)
sent by certified mail, return receipt requested, postage prepaid:
If to ChemGenics: ChemGenics Pharmaceuticals Inc.
One Kendall Square
Building 300
Cambridge, MA 02139
Attn: President
If to PBIO: PerSeptive Biosystems, Inc.
500 Old Connecticut Path
Framingham, MA 01701
Attn: President
CC: General Counsel
All notices, requests, consents and other communications hereunder
shall be deemed to have been given either (i) if by hand, at the time of the
delivery thereof to the receiving party at the address of such party set forth
above, (ii) if made by telex, telecopy or facsimile transmission, at the time
that receipt thereof has been acknowledged by electronic confirmation or
otherwise, (iii) if sent by overnight courier, on the next business day
following the day such mailing is made, or (iv) if sent by certified mail, on
the 5th business day following the day such mailing is made.
(j) Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
- 12 -
<PAGE> 13
IN WITNESS WHEREOF, the undersigned parties have duly executed and
delivered this Agreement under seal as of the day and year first above written.
CHEMGENICS PHARMACEUTICALS INC.
By:
-------------------------------
Barry A. Berkowitz, President
PERSEPTIVE BIOSYSTEMS, INC.
By:
-------------------------------
Noubar B. Afeyan, President
Consulting and Interim
Services Agreement
- 13 -
<PAGE> 1
EXHIBIT 10.19
CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
THIS CONFIDENTIALITY AND NON-COMPETITION AGREEMENT (this "Agreement")
is made and entered into as of the 28th day of June, 1996 by and between
ChemGenics Pharmaceuticals Inc., a Delaware corporation ("ChemGenics"), and
PerSeptive Biosystems, Inc., a Delaware corporation ("PBIO"). Capitalized terms
not defined herein shall have the meaning ascribed to them in the Master
Agreement (as hereinafter defined).
WHEREAS, ChemGenics and PBIO have entered into a Master Agreement dated
as of May 7, 1996 (the "Master Agreement"), which provides for the sale, license
or transfer by PBIO to ChemGenics of certain of PBIO's assets, projects and
activities principally related to drug discovery activities and efforts
(collectively, the "Drug Discovery Program");
WHEREAS, ChemGenics and PBIO have entered into a License Agreement of
even date (the "License Agreement"), which provides for the license by PBIO to
ChemGenics of certain PBIO technology for drug discovery purposes;
WHEREAS, one of the conditions precedent to the consummation by the
parties of the transactions contemplated by the Master Agreement is that the
parties shall have entered into this Agreement.
NOW THEREFORE, in consideration of the preceding recitals, the
covenants, conditions and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties, intending to be legally bound, hereby agree as
follows:
1. PBIO Non-Competition Covenants.
(a) PBIO hereby covenants and agrees that, as long as the
License Agreement remains in effect, and except as otherwise provided in the
License Agreement or in that certain Consulting and Interim Services Agreement
of even date herewith between PBIO and ChemGenics (the "Consulting Agreement"),
neither PBIO nor any of its affiliates (other than ChemGenics) shall:
(i) engage in drug discovery or enter into any research and/or
development agreement or other collaborative arrangement with a third
party anywhere in the world for drug discovery whereby PBIO receives
either (i) ownership rights or license rights in products of such
research and/or development or collaborative arrangement, (ii) royalty
payments based on sales of the products of such research and/or
development or collaborative arrangement or (iii) cash or other
compensation as fees or milestone payments based on the conduct or
success of research efforts under such agreement or
<PAGE> 2
arrangement, provided that the foregoing shall not be deemed to prevent
PBIO from providing and performing, and permitting others to provide
and perform, pre-sale and post-sale services consistent with PBIO's
current practice related to products developed, made, manufactured,
offered for sale, sold or distributed by PBIO; or
(ii) for themselves or on behalf of or through any third
party, directly or indirectly, solicit, entice or persuade or attempt
to solicit, entice or persuade any employees of or consultants to
ChemGenics or its affiliates to terminate his or her employment with,
consultancy to, or otherwise cease his or her relationship with
ChemGenics or its affiliates for any reason.
(b) Reasonableness of Restrictions. PBIO recognizes and agrees
that the specific but broad geographical scope of the foregoing provisions is
reasonable, legitimate and fair in view of ChemGenics' present strategy and its
future needs to market its products in a large geographic area in order to have
a sufficient customer base to make ChemGenics' business profitable, and in view
of the consideration received by PBIO pursuant to the Master Agreement.
2. ChemGenics Non-Competition Covenants.
(a) ChemGenics hereby covenants and agrees that, as long as
the License Agreement remains in effect, and except as otherwise provided in the
License Agreement or Consulting Agreement, neither ChemGenics nor any of its
affiliates (other than PBIO) shall:
(i) offer to sell, sell or distribute anywhere in the world,
except to Partners (as defined in the License Agreement) in connection
with and pursuant to an agreement principally for drug discovery
between ChemGenics and the Partner, any instruments, equipment,
machinery, apparatus, devices, media, reagents, compounds, resins,
activators, linkers, particles, supports or other materials or
substances (including without limitation oligomers, peptides and other
molecules), tools or other products or systems comprising the foregoing
for the purification, analysis, sequencing or synthesis of molecules;
provided that the foregoing shall not be construed to override the
prohibition in Section 2.1.1 of the License Agreement against utilizing
the Licensed Technology (as defined therein) to offer to sell, sell or
distribute Tools (as defined therein), even to Partners; or
(ii) for themselves or on behalf of or through any third
party, directly or indirectly, solicit, entice or persuade or attempt
to solicit, entice or persuade any employees of or consultants to PBIO
or its affiliates to terminate his or her employment with, consultancy
to, or otherwise cease his or her relationship with PBIO or its
affiliates for any reason.
- 2 -
<PAGE> 3
(b) Reasonableness of Restrictions. ChemGenics recognizes and
agrees that the specific but broad geographical scope of the foregoing
provisions is reasonable, legitimate and fair in view of PBIO's present strategy
and its future needs to market its products in a large geographic area in order
to have a sufficient customer base to make PBIO's business profitable.
3. Protected Information. In addition to and without limiting the
confidentiality obligations set forth in the Confidentiality Agreement or the
License Agreement, PBIO shall at all times maintain in confidence and shall not,
without the prior written consent of ChemGenics use, disclose or give to others
any confidential information particular to or relating to the particular drug
discovery projects of the Drug Discovery Program.
PBIO and ChemGenics acknowledge that during the term of this Agreement
each may have access to confidential and proprietary information of the other,
including tangible manifestations of technology (including, without limitation,
organisms (or parts thereof), cell lines, cultures, plasmids, clones, vectors,
reagents and DNA and progeny, reproductions and derivatives of any of them),
information, data, formulae, methods, processes, procedures, patents and ideas
and the like ("Proprietary Information"), provided that Proprietary Information
shall not include any item of tangible property, information, data, formula,
method, process, procedures, patents or ideas which:
(a) is within the public domain prior to the time of disclosure to the
other or thereafter comes within the public domain, other than as a result of
disclosure by the recipient or any of its representatives in violation of this
Agreement;
(b) was, on or before the date of disclosure to the recipient in the
possession of the recipient as evidenced by written records of the recipient; or
(c) is acquired by the Recipient from a third party not under an
obligation of confidentiality to the disclosing party.
The Parties shall use the Proprietary Information only as permitted by
the License Agreement or in connection with the transactions contemplated by the
Master Agreement.
The Parties shall limit access to all Proprietary Information to their
employees, consultants and subcontractors who shall reasonably require access to
the Proprietary Information for the permitted use thereof.
In the event that a party or anyone to whom it transmits the
Proprietary Information pursuant to this Agreement becomes legally required to
disclose any such Proprietary Information, such party shall provide the other
with prompt notice so that it may seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this Agreement. In the
event that such protective order or other remedy is not obtained, or that such
- 3 -
<PAGE> 4
party waives compliance with the provisions of this Agreement, the recipient
shall furnish only that portion of the Proprietary Information which is legally
required in the opinion of recipient's counsel.
4. ChemGenics' Access to Technology of PBIO-Related Entities. As long
as the License Agreement remains in effect, PBIO shall use its reasonable
efforts to negotiate provisions in any entity, partnership, joint venture or
other off-balance-sheet financing vehicle in which PBIO owns or has the right to
acquire more than a de-minimus interest or to which PBIO is a party, either
directly or through any Affiliate (as defined in the License Agreement), to
afford ChemGenics access and rights for drug discovery purposes to technology
developed or acquired by any such entity, partnership, joint venture or other
off-balance-sheet financing vehicle, and PBIO agrees that PBIO's (and such
Affiliate's) rights in and to any such technology shall be included in the
Licensed Technology under the License Agreement to the extent permitted by any
such provisions.
5. Severability Provision. If any term or provision of this Agreement
is held to be invalid or unenforceable under applicable law, such provision
shall be ineffective only to the extent of such invalidity or unenforceability,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement. In furtherance of and not in limitation of the foregoing,
PBIO and ChemGenics expressly agree that if the duration of or geographical
extent of, or any of the business activities covered by, the non-competition
provisions of Sections 1 and 2 hereof are determined to be in excess of that
which is valid or enforceable under applicable law, then such provision shall be
construed to cover only that duration, extent or activities that may validly or
enforceably be covered. PBIO and ChemGenics acknowledge the uncertainty of the
law in this respect and expressly stipulate that this Agreement shall be
construed in a manner that renders its provisions valid and enforceable to the
maximum extent (not exceeding its express terms) possible under applicable law.
6. Remedies. PBIO and ChemGenics acknowledge and agree that any breach
by PBIO, ChemGenics or their respective affiliates of the provisions of Sections
1 through 4 of this Agreement could cause irreparable damage. Accordingly, in
the event of any actual or threatened breach by PBIO, ChemGenics or their
respective affiliates of such provisions, the non-breaching party shall (in
addition to any other remedies that it may have) be entitled to a temporary
and/or permanent injunction or other equitable relief to enforce such
provisions. PBIO, ChemGenics or their respective affiliates hereby waive any
adequacy of remedy at law defense which such party may now or hereafter have in
the event of any breach by such party or its affiliates of the provisions of
Sections 1 through 4 of this Agreement.
7. No Waiver of Rights, Powers and Remedies. No failure or delay by a
party hereto in exercising any right, power or remedy under this Agreement, and
no course of dealing between the parties hereto, shall operate as a waiver of
any such right, power or remedy of the party. No single or partial exercise of
any right, power or remedy under this Agreement by a
- 4 -
<PAGE> 5
party hereto, nor any abandonment or discontinuance of steps to enforce any such
right, power or remedy, shall preclude such party from any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
The election of any remedy by a party hereto shall not constitute a waiver of
the right of such party to pursue other available remedies. No notice to or
demand on a party not expressly required under this Agreement shall entitle the
party receiving such notice or demand to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
party giving such notice or demand to any other or further action in any
circumstances without such notice or demand.
8. Miscellaneous.
(a) Amendment and Waiver. This Agreement may be amended, and any term
or provision of this Agreement may be waived, only by written agreement of the
parties hereto.
(b) Assignment. This Agreement shall be assignable only to any party to
whom the License Agreement is assigned, in accordance with the terms contained
therein.
(c) Termination. This Agreement (other than Section 3) shall terminate
when and if the License Agreement terminates.
(d) Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by the laws
of the Commonwealth of Massachusetts, without giving effect to the conflict of
law principles thereof.
(e) Jurisdiction and Service of Process. Any legal action or proceeding
with respect to this Agreement may be brought in the courts of the Commonwealth
of Massachusetts or of the United States of America for the District of
Massachusetts. By execution and delivery of this Agreement, each of the parties
to this Agreement hereto accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
parties hereby irrevocably waive any objection or defense that they may now or
hereafter have to the assertion of personal jurisdiction by any such court in
any such action or to the laying of the venue of any such action in any such
court, and hereby waive, to the extent not prohibited by law, and agree not to
assert, by way of motion, as a defense, or otherwise, in any such proceeding,
any claim that is not subject to the jurisdiction of the above-named courts for
such proceedings. Each of the parties hereto irrevocably consents to the service
of process of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered mail, postage prepaid, to any
party at its address set forth below and irrevocably waives any objection or
defense that it may now have or hereafter have to the sufficiency of any such
service of process in any such action.
(f) Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the receiving party's
address set forth below or to such other
- 5 -
<PAGE> 6
address as a party may designate by notice hereunder, and shall be either (i)
delivered by hand, (ii) made by telex, telecopy or facsimile transmission, (iii)
sent by recognized overnight courier, or (iv) sent by registered or certified
mail, return receipt requested, postage prepaid.
If to ChemGenics: ChemGenics Pharmaceuticals Inc.
One Kendall Square
Building 300 - Third Floor
Cambridge, MA 02139
Attn: President
With a copy to: Jeffrey M. Wiesen, Esquire
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Fax: (617) 542-2241
If to PBIO: PerSeptive Biosystems, Inc.
500 Old Connecticut Path
Framingham, MA 01701
Attn: President
With a copy to: Rufus C. King, Esquire
Testa, Hurwitz and Thibeault, L.L.P.
125 High Street
Boston, MA 02110
Fax: (617) 248-7100
All notices, requests, consents and other communications hereunder shall be
deemed to have been (i) if by hand, at the time of the delivery thereof to the
receiving party at the address of such party set forth above, (ii) if made by
telex, telecopy or facsimile transmission, at the time that receipt thereof has
been acknowledged by electronic confirmation or otherwise, (iii) if sent by
overnight courier, on the next business day following the day such notice is
delivered to the courier service, or (iv) if sent by registered or certified
mail, on the fifth business day following the day such mailing is made.
(g) Headings. The headings in the Sections and the paragraphs of this
Agreement are inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement.
- 6 -
<PAGE> 7
(h) Counterparts. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK.]
- 7 -
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CHEMGENICS PHARMACEUTICALS INC.
By:
---------------------------------
Barry A. Berkowitz, President
PERSEPTIVE BIOSYSTEMS, INC.
By:
---------------------------------
Noubar B. Afeyan, President
Confidentiality and
Non-Competition Agreement
- 8 -
<PAGE> 1
EXHIBIT 10.20
VOTING AGREEMENT
This VOTING AGREEMENT, which supplements that certain Second Amended
and Restated Voting and Co-Sale Agreement, dated as of February 9, 1995 (the
"Series D Voting Agreement"), is dated as of June 28, 1996, among ChemGenics
Pharmaceuticals Inc., a Delaware corporation (the "Company"), PerSeptive
BioSystems, Inc., a Delaware corporation ("PerSeptive"), and Technology Leaders
L.P., Technology Leaders Offshore C.V., Bessemer Venture Partners III L.P.,
Morgan Holland Fund II, Gilde Investment Fund B.V., Comdisco, Inc., Pfizer,
Inc., and Barry Berkowitz, Ph.D. (collectively, the "Principal Shareholders").
WHEREAS the Company is issuing up to 9,792,679 shares of its Common
Stock, $.001 par value ("Common Stock") to PerSeptive pursuant to a Master
Agreement between the Company and PerSeptive dated as of May 7, 1996 (the
"Master Agreement") in exchange for the Drug Discovery Program (as such term is
defined in the Master Agreement) of PerSeptive and other consideration;
WHEREAS the Series D Voting Agreement provides for, among other things,
the election of members to the Company's Board of Directors (the "Board of
Directors"); and
WHEREAS one of the conditions to the consummation of the transactions
contemplated by the Master Agreement is the execution and delivery of this
Voting Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and the purchase of the Common Stock by PerSeptive under the
Master Agreement, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
THE BOARD OF DIRECTORS
SECTION 1.1. NOMINATION OF DIRECTORS. Subject to the terms of Company's
Restated Certificate of Incorporation, as long as PerSeptive owns at least 20%
of the issued and outstanding voting capital stock of the Company ("capital
stock"), at any time at which stockholders of the Company have the right to or
vote for or consent in writing to the election of directors of the Company, the
Company shall cause the nomination of two (2) persons designated by PerSeptive
and reasonably acceptable to the Company (the "PerSeptive Nominees") to serve on
the Board of Directors and the Principal Shareholders hereby agree to vote all
shares of capital stock of the Company presently owned or hereafter acquired by
them in favor of the election of such persons. As long as Edwin M. Kania, Jr.
remains on the Board of Directors, he shall be one of the PerSeptive Nominees,
and as long as Noubar
<PAGE> 2
B. Afeyan, Ph.D. remains an officer or director of PerSeptive he shall be one of
the PerSeptive Nominees.
As long as PerSeptive owns less than 20% but at least 10% of the
capital stock of the Company, at any time at which stockholders of the Company
have the right to or vote for or consent in writing to the election of directors
of the Company, the Company shall cause the nomination of one (1) person
reasonably acceptable to the Company to serve on the Board of Directors and the
Principal Shareholders hereby agree to vote all shares of capital stock of the
Company presently owned or hereafter acquired by them in favor of the election
of such person.
As long as PerSeptive owns at least 20% of the capital stock of the
Company, if the number of persons comprising the Company's Board of Directors is
increased to eight (8) members or more, the Company shall cause a third
PerSeptive Nominee reasonably acceptable to the Company to be nominated to serve
on the Board of Directors and the Principal Shareholders hereby agree to vote
all shares of capital stock of the Company presently owned or hereafter acquired
by them in favor of the election of such person.
SECTION 1.2. VACANCIES AND REMOVAL. Each of the directors designated in
Section 1.1 shall be elected at any annual or special meeting of stockholders
(or by written consent in lieu of a meeting of stockholders) and shall serve
until his successor is elected and qualified or until his earlier resignation or
removal. As long as such directors are in office, PerSeptive shall have no right
to designate, the Company shall have no obligation to nominate and the Principal
Shareholders shall have no obligation to vote for any additional PerSeptive
Nominees.
SECTION 1.3. EXECUTIVE COMMITTEE. As long as PerSeptive has the right
to designate PerSeptive Nominees to the Board of Directors, the Company will
cause at least one PerSeptive representative to serve on the Executive Committee
of the Board of Directors (if any).
SECTION 1.4. CLASSIFICATION OF THE BOARD OF DIRECTORS. As long as
PerSeptive has the right to designate PerSeptive Nominees, if the Board of
Directors is classified, the Company will cause the PerSeptive Nominees to be
divided among the classes, and upon the initial classification shall designate
the PerSeptive Nominees in the class with the longest term.
SECTION 1.5. INDEMNIFICATION AND INSURANCE. The Company will take no
action to limit indemnification available to members of its Board of Directors.
Following the registration of the Company's securities under the Securities
Exchange Act of 1934, the Company will use reasonable efforts to obtain
Directors and Officers Liability Insurance, if commercially available at
reasonable cost.
- 2 -
<PAGE> 3
SECTION 1.6. SIZE OF THE BOARD OF DIRECTORS. Each of the parties hereto
agrees to vote all shares of capital stock now owned or hereafter acquired by
him, her or it to fix and maintain the number of directors on the Board of
Directors of the Company at not less than six (6) nor more than nine (9)
members, except as otherwise provided in Article Fourth of the Company's
Restated Certificate of Incorporation, as amended.
ARTICLE II
MISCELLANEOUS
SECTION 2.1. DURATION OF AGREEMENT. The rights and obligations of the
Company, PerSeptive and each Principal Shareholder under this Agreement shall
terminate, on the earlier to occur of the following: (a) immediately prior to
the consummation of the sale of all, or substantially all, of the Company's
assets or capital stock either through a direct sale, merger, reorganization,
consolidation or other form of business combination, (b) June 30, 2006, or (c)
the date on which PerSeptive owns less that 10% of the capital stock of the
Company. This Agreement shall cease to apply to any Principal Shareholder
following the sale of all of such Principal Shareholder's shares of capital
stock.
SECTION 2.2. SEVERABILITY; GOVERNING LAW. If any provisions of this
Agreement shall be determined to be illegal or unenforceable by any court of
law, the remaining provisions shall be severable and enforceable to the maximum
extent possible in accordance with their terms. This Agreement shall be governed
by, and construed in accordance with, the laws of the state of organization of
the Company from time to time, initially the State of Delaware.
SECTION 2.3. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their permitted successors and
assigns, legal representatives and heirs, provided that (a) after the
consummation of the initial public offering of the Company's securities (the
"Public Offering"), this Agreement shall not be binding on any person who
acquires shares of capital stock from any Principal Shareholder or from
PerSeptive in accordance with the terms of the Standstill Agreement and (b)
prior to the Public Offering all covenants and agreements of the Principal
Shareholders and PerSeptive shall bind any and all subsequent holders of the
shares of capital stock of the Company presently owned or hereafter acquired by
PerSeptive or such Principal Shareholders, and the Company agrees that prior to
the Public Offering it shall not transfer on its records any such shares unless
(i) the transferor Principal Shareholder (or PerSeptive, if PerSeptive transfers
shares in accordance with the terms of the Standstill Agreement) shall have
first delivered to the Company the written agreement of the transferee to be
bound by this Agreement to the same extent as if such transferee had originally
been a Principal Shareholder and (ii) an appropriate legend referring to this
Agreement is included on the transferee's Stock Certificate.
- 3 -
<PAGE> 4
SECTION 2.4. MODIFICATION OR AMENDMENT. Neither this Agreement nor any
provision hereof can be modified, amended, changed, discharged or terminated
except by an instrument in writing, signed by (A) the Principal Shareholders who
hold at least a majority of the shares of capital stock held by the Principal
Shareholders then subject to this Agreement, based upon voting power and
calculated on an "as if converted" basis, together with (B) the consent of
PerSeptive.
SECTION 2.5. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which taken together shall constitute one and the same instrument.
SECTION 2.6. NOTICES. All notices to be given or otherwise made to any
party to this Agreement shall be deemed to be sufficient if contained in a
written instrument, delivered by hand in person, or by express overnight courier
service, or by electronic facsimile transmission addressed to such party at the
address set forth herein or at such other address as may hereafter be designated
in writing by the addressee to the addressor listing all parties, or at such
other addresses to which such party may inform the other parties in writing in
compliance with the terms of this Section :
If to the Principal Shareholders: at the addresses contained in Exhibit A
hereto.
If to PerSeptive: PerSeptive Biosystems, Inc.
500 Old Connecticut Path
Framingham, MA 01701
Attention: President
with a copy to: Rufus C. King, Esq.
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
If to ChemGenics: ChemGenics Pharmaceuticals Inc.
One Kendall Square
Building 300, Third Floor
Cambridge, MA 02139
Attention: President
with a copy to: Peter F. Demuth, Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
- 4 -
<PAGE> 5
All such notices shall, when delivered or telegraphed, be
effective when received or when attempted delivery is refused.
SECTION 2.9. MERGER PROVISION. This Agreement and the Master Agreement,
along with (i) all schedules to the Master Agreement and (ii) the various
agreements executed in connection with the Master Agreement, constitute the
entire agreement among the parties hereto pertaining to the subject matter
hereof and supersede all prior and contemporaneous agreements and
understandings, whether oral or written, of any of the parties hereto concerning
the subject matter hereof, except the Series D Voting Agreement. Any agreement
between the Company and PerSeptive in effect immediately prior to the execution
hereof and concerning any of the subject matter hereof is hereby terminated,
except for (i) the Master Agreement and all schedules to the Master Agreement
and (ii) the various agreements executed in connection with the Master
Agreement.
[SIGNATURE PAGES TO FOLLOW]
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Voting
Agreement to be executed as of the date first above written.
CHEMGENICS PHARMACEUTICALS INC.
By: _______________________________
Barry A. Berkowitz, President
PERSEPTIVE BIOSYSTEMS, INC.
By: _______________________________
Noubar B. Afeyan, President
PFIZER, INC.
By:_________________________________
Title:______________________________
TECHNOLOGY LEADERS L.P.
By: Technology Leaders
Management, Inc. (General
Partner)
By:_________________________________
Name:_______________________________
Title:______________________________
TECHNOLOGY LEADERS OFFSHORE C.V.
By: Technology Leaders
Management, Inc., its General
Partner
By:_________________________________
Name:_______________________________
Title:______________________________
- 6 -
<PAGE> 7
BESSEMER VENTURE PARTNERS III L.P.
By:______________________________________
General Partner
By:______________________________________
Name:____________________________________
Title:___________________________________
MORGAN HOLLAND FUND II, L.P.
By: its general partner,
Morgan Holland Partners II L.P.
By:______________________________________
Name: Edwin M. Kania, Jr.
Title: General Partner
GILDE INVESTMENT FUND B.V.
By:______________________________________
Name: Edwin M. Kania, Jr.,
general partner of Morgan Holland
Partners II L.P.
COMDISCO, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
____________________________________
Barry A. Berkowitz, Ph.D.
- 7 -
<PAGE> 8
EXHIBIT A
TO
VOTING AGREEMENT
Pfizer, Inc.
Eastern Point Road
Groton, CT 06340
Technology Leaders L.P.
800 Safeguard Building
435 Devon Park Drive
Wayne, PA 19807-1945
Technology Leaders Offshore C.V.
800 Safeguard Building
435 Devon Park Drive
Wayne, PA 19807-1945
Bessemer Venture Partners III L.P.
83 Walnut Street
Wellesley Hills, MA 02181
Morgan Holland Fund II, L.P.
One Liberty Square
Suite 840
Boston, MA 02109
Gilde Investment Fund B.V.
One Liberty Square
Suite 840
Boston, MA 02109
Comdisco, Inc.
One Newton Executive Park
Newton Lower Falls, MA 02160
Barry A. Berkowitz, Ph.D.
One Sage Lane
Framingham, MA 01701
<PAGE> 1
EXHIBIT 10.21
STANDSTILL AND REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT, dated as of June 28, 1996, is between PerSeptive
Biosystems, Inc. a Delaware corporation ("PBIO"), and ChemGenics Pharmaceuticals
Inc., a Delaware corporation (the "Company").
WITNESSETH:
WHEREAS on the date hereof, PBIO is acquiring 9,792,679 shares (the
"Shares") of Common Stock, par value $0.001 per share, of the Company (the
"Common Stock") and a warrant (the "Warrant") to purchase up to 4,896,335
additional shares of Common Stock (the "Warrant Shares") for investment purposes
pursuant to the terms of a Master Agreement, dated as of May 7, 1996 (the
"Master Agreement;" terms capitalized and not defined herein shall have the
meaning ascribed to them in the Master Agreement); and
WHEREAS the execution and delivery of this Agreement by the parties is
a condition precedent to the parties' obligations under the Master Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
parties, intending to be legally bound hereby, agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
Section 1.01 PBIO represents and warrants to the Company as follows:
(a) PBIO has full legal right, power and authority to enter
into and perform this Agreement. The execution and delivery of this Agreement by
PBIO and the consummation by PBIO of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on behalf of PBIO. This
Agreement is a valid and binding obligation of PBIO enforceable against PBIO in
accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
PBIO nor the consummation by PBIO of the transactions contemplated hereby
conflicts with or constitutes a violation of or default under the charter or
by-laws of PBIO, any statute, law, regulation, order or decree applicable to
PBIO, or any contract, commitment, agreement, arrangement or restriction of any
kind to which PBIO is a party or by which PBIO is bound.
<PAGE> 2
Section 1.02 The Company represents and warrants to PBIO as follows:
(a) The Company has full legal right, power and authority to
enter into and perform this Agreement. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on behalf of the Company. This Agreement is a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
the Company nor the consummation by the Company of the transactions contemplated
hereby conflicts with or constitutes a violation of or default under the charter
or by-laws of the Company, any statute, law, regulation, order or decree
applicable to the Company, or any contract, commitment, agreement, arrangement
or restriction of any kind to which the Company is a party or by which the
Company is bound.
ARTICLE II
LIMITATIONS AND RESTRICTIONS
Section 2.01. Restrictions on Certain Actions by PBIO. PBIO agrees that
until the tenth anniversary of this Agreement, PBIO will not, nor will it permit
any of its affiliates or associates (as such terms are used in Rule 12b-2 of the
Securities Exchange Act of 1934 (the "Exchange Act"), these terms to have such
meaning throughout this Agreement), unless in any such case specifically invited
to do so by the Board of Directors of the Company, to:
(a) acquire, announce an intention to acquire, offer or
propose to acquire, by purchase, by gift, by joining a partnership, limited
partnership, syndicate or other entity or "group" (as such term is used in
Section 13(d)(3) of the Exchange Act, such term to have such meaning throughout
this Agreement) or otherwise, any (i) assets, businesses or properties of the
Company other than in the ordinary course of business or pursuant to the express
terms of the Consulting and Interim Services Agreement and/or the License
Agreement between PBIO and the Company, each dated the date hereof, or (ii)
shares of Common Stock or any securities convertible into, exchangeable for or
exercisable for Common Stock, or any put, call, or other derivative security
related to the Common Stock (all such securities, collectively, "Voting
Securities"), provided, however, that this provision shall not prevent PBIO from
exercising either the Warrant or its rights pursuant to Section 5.06 of the
Master Agreement.
(b) participate in the formation or encourage the formation
of, or join or in any way participate with, any "person" (as such term is used
in Section 13(d)(3) of the Exchange
- 2 -
<PAGE> 3
Act and Section 2(2) of the Securities Act of 1933 (the "Securities Act"), such
term to have such meaning throughout this Agreement) which owns or seeks to
acquire beneficial ownership of Voting Securities;
(c) solicit, or participate in any "solicitation" of "proxies"
or become a "participant" in any "election contest" (as such terms are defined
or used in Regulation 14A under the Exchange Act, these terms to have such
meaning throughout this Agreement) with respect to the Company;
(d) initiate, propose or otherwise solicit stockholders for
the approval of one or more stockholder proposals with respect to the Company or
induce any other person to initiate any stockholder proposal;
(e) seek to place any representative on the Board of Directors
of the Company, or to prevent the election of any person to the Board of
Directors nominated and recommended by the Board of Directors, or to affect the
size of or composition of the Company's Board of Directors, or seek to have
called any meeting of the stockholders of the Company or seek any consent of
stockholders in lieu of a meeting, except that PBIO may cause the nomination of
individuals to the Company's Board of Directors pursuant to the PBIO Voting
Agreement of even date herewith;
(f) deposit any Voting Securities in a voting trust or, except
as specifically contemplated by this Agreement, the Master Agreement or the PBIO
Voting Agreement, subject them to a voting agreement or other agreement or
arrangement with respect to the voting of such Voting Securities;
(g) otherwise act, alone or in concert with others, to seek to
control the management, Board of Directors, policies or affairs of the Company
(except through PBIO's representative(s) on the Company's Board of Directors and
Executive Committee, if any, acting in their capacity as such) or solicit,
propose, seek to effect or negotiate with any other person (including, without
limitation, the Company) with respect to any form of business combination or
other extraordinary transaction with the Company or any of its subsidiaries or
any restructuring, recapitalization, similar transaction or other transaction
not in the ordinary course of business with respect to the Company or any of its
subsidiaries, solicit, make or propose or negotiate with any other person with
respect to, or announce an intent to make, any tender offer or exchange offer
for any securities of the Company or any of its subsidiaries, or publicly
disclose an intent, purpose, plan or proposal with respect to the Company, any
of its subsidiaries or any securities or assets of the Company or any of its
subsidiaries, that would violate the provisions of this Section 2.01, or assist,
participate in, facilitate or solicit any effort or attempt by any person to do
so or seek to do any of the foregoing; or
- 3 -
<PAGE> 4
(h) request the Company (or its directors, officers, employees
or agents) to amend or waive any provision of this Agreement (including, without
limitation, this Section 2.01(h)) or otherwise seek any modification to or
waiver of any of the agreements or obligations of PBIO, its affiliates or its
associates under this Agreement.
Section 2.02. Restrictions on Sales by PBIO. PBIO agrees that
until the third anniversary of this Agreement, it will not, nor will it permit
any of its affiliates or associates, to sell, solicit an offer to sell, agree to
sell, offer or propose to sell (collectively "Sell"), any Voting Securities of
the Company or derivative securities relating thereto ("Company Securities");
and thereafter (i) during the period commencing on June 29, 1999 and ending June
28, 2000 will not Sell any Company Securities other than up to 979,268 Shares
plus up to 10% of the Warrant Shares actually acquired by PBIO upon exercise of
the Warrant; (ii) during the period commencing on June 29, 2000 and ending June
28, 2001 will not Sell any Company Securities other than up to 1,958,536 Shares
plus (a) such number of Shares permitted to be sold in the prior year and not
sold and (b) up to an additional 20% of the Warrant Shares actually acquired by
PBIO upon exercise of the Warrant; or (iii) in any year thereafter will not Sell
any Company Securities other than up to 3,427,438 Shares plus up to 35% of the
Warrant Shares actually acquired by PBIO upon exercise of the Warrant; except as
follows:
(a) PBIO may transfer shares of the Company to a wholly-owned
subsidiary subject to all of the terms and conditions of this Agreement,
provided that PBIO maintains 100% ownership and voting control of such
subsidiary, such subsidiary executes a written agreement satisfactory to the
Company to evidence its agreement to be bound hereby, and the certificates for
any securities of such subsidiary are marked with a legend restricting the
transfer of such securities and specifically referring to this Agreement;
(b) Following the closing of the Company's initial public offering (the
"IPO") of common stock pursuant to a registration statement declared effective
by the Securities and Exchange Commission (the "Commission") during the
three-year period following the date hereof, if in the written opinion of PBIO's
independent public accountants PBIO must consolidate or include the Company's
profits and losses in its profit and loss statements unless PBIO reduces its
ownership to twenty percent (20%) or less of the Company's Common Stock, and the
aggregate amount of losses to be consolidated may reasonably exceed $100,000, in
order to avoid such consolidation or inclusion, PBIO shall be permitted to sell
or otherwise dispose of such minimum number of shares as is required to reduce
PBIO's ownership to the maximum percentage ownership, currently 19.99%, or such
lesser amount as may be required in the written opinion of such accountants, in
order to avoid such consolidation or inclusion;
(c) PBIO may sell its shares pursuant to a tender offer for all
outstanding shares of the Company's Common Stock approved by the Company's Board
of Directors; and
- 4 -
<PAGE> 5
(d) Without duplication of any of the shares permitted to be sold
pursuant to any of the other provisions of this Section 2.02, PBIO may sell all
or any part of the Warrant Shares actually acquired by PBIO upon exercise of the
Warrant pursuant to a resale of such shares in a registration contemplated by
Section 3.01, or on a Form S-3 Registration Statement as contemplated by Section
3.02(b) hereof.
Section 2.03. Voting. In connection with all matters subject
to the vote of security holders of the Company during the term of this
Agreement, as long as PBIO (alone or with its affiliates or associates)
beneficially owns (calculated in accordance with Rule 13d-3 promulgated under
the Exchange Act) at least twenty percent (20%) of the capital stock on a fully
diluted basis of the Company, PBIO shall, and shall direct its associates and
affiliates to, vote all the Voting Securities owned by them (a) in accordance
with the recommendation of the Company's Board of Directors with respect to such
matter, provided, however, that PBIO shall not be required to vote in favor of
any proposal that would materially impair its rights under this Agreement, the
Warrant, the Master Agreement or the License Agreement, or (b) in the absence of
a recommendation, in the same proportion as the votes cast by all other holders
of the Voting Securities with respect to such matter. As long as PBIO (alone or
with its affiliates or associates) beneficially owns less than twenty percent
(20%) and more than ten percent (10%) of the Company's voting stock on a fully
diluted basis, PBIO will vote in favor of (and take no actions in opposition to)
any merger, sale of assets, consolidation or the like involving the Company and
recommended by the Company's Board of Directors, and shall vote in favor of and
not oppose any proposed merger or sale of all or substantially all of the
outstanding shares of the Company's stock recommended by the Company's Board of
Directors. PBIO shall be entitled to rely upon the information provided to it in
writing by the Company or, in the absence thereof, filed by the Company with the
Commission, regarding the number of shares of capital stock outstanding and
issuable upon exercise or conversion of options, warrants or the other
securities.
ARTICLE III
REGISTRATION RIGHTS
Section 3.01. "Piggy-Back" Registrations. If at any time after
the IPO, the Company shall determine to register for its own account or the
account of others under the Securities Act (other than a registration demanded
by PBIO pursuant to Section 3.02 hereof) any of its equity securities, other
than on Form S-4 or Form S-8 or their then equivalents or otherwise relating to
shares of Common Stock to be issued in connection with any acquisition of any
entity or business or shares of Common Stock issuable in connection with stock
option or other employee benefit plans, it shall send to PBIO written notice of
such determination and, if within ten (10) business days after receipt of such
notice, PBIO shall so request in writing, the Company shall use its best efforts
to include in such registration statement all or any part
- 5 -
<PAGE> 6
of the Registrable Shares PBIO requests to be registered; provided, however,
that prior to the third anniversary of this Agreement, the Company shall not be
required to include in any such registration statement any shares other than
shares issued or issuable upon exercise of the Warrant ("Warrant Shares"), and
provided further that as a condition to including any Warrant Shares in such a
registration statement PBIO shall have either acquired such shares or
irrevocably agreed to acquire such shares upon the effectiveness of the
registration statement. As used in this Article III, the term "Registrable
Shares" shall include: (i) the Shares; (ii) any additional shares of Common
Stock acquired by PBIO pursuant to Section 5.06 of the Master Agreement and
(iii) any shares of Common Stock acquired by PBIO upon exercise of the Warrant.
If, in connection with any offering involving an underwriting, the
managing underwriter shall impose a limitation on the number of shares of Common
Stock which may be included in the registration statement because, in its
judgment, such limitation is necessary to effect an orderly public distribution,
then the Company shall be obligated to include in such registration statement
only such limited portion (which may be none) of the Registrable Shares with
respect to which PBIO has requested inclusion pursuant hereto as may reasonably
be determined by the managing underwriters; provided, that inclusion of any of
PBIO's Registrable Shares shall be subordinate to the currently existing
"piggyback" registration rights granted by the Company. Any inclusion of
Registrable Shares in an offering, when the managing underwriter has so limited
the number of shares that may be included in such offering, shall be allocated
as follows: first, pro rata among the holders of registration rights granted by
the Company prior to the date hereof seeking to include their shares, in
proportion to the number of shares of Common Stock (whether or not such shares
are sought to be included in such offering) held by such persons; and
thereafter, to PBIO. The Company shall have the right to withdraw any
registration initiated by it pursuant to this Section 3.01.
Section 3.02. Registrations on Form S-3. (a) In addition to
the rights provided PBIO in Section 3.01 above, if the registration of
Registrable Shares under the Securities Act can be effected on Form S-3 (or any
similar form promulgated by the Commission), then, at any time after the third
anniversary of this Agreement, upon the written request of PBIO, the Company
will use its best efforts to effect qualification and registration under the
Securities Act on Form S-3 of such portion of the Registrable Shares as PBIO
shall specify, up to the lesser of (i) twenty-five percent (25%) of the
Registrable Shares then held by PBIO, and (ii) the amount of Registrable Shares
then held by PBIO and permitted to be sold under Section 2.02 of this Agreement;
provided, however, the Company shall not be required to effect a registration
pursuant to this Section 3.02 unless the market value of the Registrable Shares
to be sold in any such registration shall be estimated to be at least $1,000,000
at the time of filing such registration statement, and further provided that the
Company shall not be required to effect more than one (1) registration during
any twelve (12) month period pursuant to this Section 3.02 and four (4)
registrations in the aggregate under this Section 3.02. No request for
registration
- 6 -
<PAGE> 7
under this Section 3.02 may be made within the one hundred and eighty day period
after the effective date of a registration statement filed by the Company or
while the Company is in the process of preparing a registration statement.
(b) In addition to the rights provided PBIO in Sections 3.01 and
3.02(a) above, if the registration of Registrable Shares under the Securities
Act can be effected on Form S-3 (or any similar form promulgated by the
Commission), then, on one occasion at any time upon the exercise of the Warrant
or delivery by PBIO to the Company of its irrevocable agreement to exercise the
Warrant (unless the per share price of the Shares on the date of the
effectiveness of the Registration Statement is 20% or more less than the price
on the date of such notice (a "20% Decline")) upon the effectiveness of the
registration statement contemplated by this Section 3.02(b), upon the written
request of PBIO, the Company will use its best efforts to effect qualification
and registration under the Securities Act on Form S-3 of such portion of the
Registrable Warrant Shares as PBIO shall have so acquired or agreed to acquire
and shall specify in writing to the Company; provided, however, (i) the Company
shall not be required to effect a registration pursuant to this Section 3.02(b)
unless the market value of the Registrable Shares to be sold in any such
registration shall be estimated to be at least $1,000,000 at the time of filing
such registration statement, (ii) the Company shall not be required to effect
more than one (1) registration under this Section 3.02(b) unless the Warrant is
not exercised as a result of a 20% Decline, in which event PBIO shall have the
right to request an additional registration under this Section 3.02(b) no
earlier than twelve months later, (iii) if a registration statement under this
Section 3.02(b) shall be in connection with a firm commitment underwriting, then
the underwriter shall be reasonably acceptable to the Company, (iv)
notwithstanding Section 3.07, PBIO shall pay directly or reimburse the Company
on demand for fifty percent (50%) of all reasonable costs and expenses of such
registration, including, but not limited to, the Company's printing, legal and
accounting fees and expenses, Commission and NASD filing fees and "blue sky"
fees and expenses, (v) no request for registration under this Section 3.02(b)
may be made within the one hundred and eighty day period after the effective
date of a registration statement filed by the Company or while the Company is in
the process of preparing a registration statement, and (vi) the Company shall
have the right to delay the filing or effectiveness of any registration under
this Section 3.02(b) for a period of up to ninety days if in the reasonable
determination of the Board of Directors of the Company the filing or
effectiveness of the registration statement would adversely affect a pending
financing of the Company, an acquisition, merger, recapitalization,
consolidation, reorganization or other similar transaction by or of the Company,
pre-existing and continuing negotiations, discussions or pending proposals with
respect to any of the foregoing transactions, or the financial condition of the
Company in view of the disclosure of any pending or threatened litigation,
claim, assessment or governmental investigation which may be required thereby.
Section 3.03 Effectiveness. The Company will use its best
efforts to maintain the effectiveness for up to 90 days, and up to two years in
the case of a registration pursuant to
- 7 -
<PAGE> 8
Section 3.02(b) pursuant to which PBIO has exercised the Warrant in accordance
with the first sentence thereof, (or in either case such shorter period of time
as the underwriters need to complete the distribution of a registered offering
or until the securities are actually sold) of any registration statement
pursuant to which any of the Registrable Shares are being offered, and from time
to time will amend or supplement such registration statement and the prospectus
contained therein to the extent necessary to comply with the Securities Act and
any applicable state securities statute or regulation. The Company will also
provide PBIO with as many copies of the prospectus contained in any such
registration statement as it may reasonably request. For a period not to exceed
ninety (90) days, the Company shall not be obligated to prepare and file, or be
prevented from delaying or abandoning, a registration statement pursuant to this
Agreement at any time when the Company, in its good faith judgment with advice
of counsel, reasonably believes:
(a) that the filing thereof at the time requested, or the
offering of Registrable Shares pursuant thereto, would materially and
adversely affect (a) a pending or scheduled public offering of the
Company's securities, (b) an acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction by or of the
Company, (c) pre-existing and continuing negotiations, discussions or
pending proposals with respect to any of the foregoing transactions, or
(d) the financial condition of the Company in view of the disclosure of
any pending or threatened litigation, claim, assessment or governmental
investigation which may be required thereby; and
(b) that the failure to disclose any material information with
respect to the foregoing would cause a violation of the Securities Act
or the Exchange Act.
Section 3.04. Indemnification of PBIO. In the event that the
Company registers any of the Registrable Shares under the Securities Act, the
Company will indemnify and hold harmless PBIO and each underwriter of
Registrable Shares (including their officers, directors, affiliates and partners
and including any broker or dealer through whom Registrable Shares may be sold
in such registration) and each person, if any, who controls PBIO or any such
underwriter within the meaning of Section 15 of the Securities Act from and
against any and all losses, claims, damages, expenses or liabilities, joint or
several, to which they or any of them become subject under the Securities Act,
applicable state securities laws or under any other statute or at common law or
otherwise, as incurred, and, except as hereinafter provided, will reimburse
PBIO, each such underwriter and each such controlling person, if any, for any
legal or other expenses reasonably incurred by them or any of them in connection
with investigating or defending any actions whether or not resulting in any
liability, as incurred, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement, in any preliminary or amended preliminary prospectus or in the final
prospectus (or the registration statement or prospectus as from time to time
amended or supplemented by the
- 8 -
<PAGE> 9
Company) or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or any violation by the
Company of any rule or regulation promulgated under the Securities Act or any
state securities laws applicable to the Company and relating to action or
inaction required of the Company in connection with such registration, unless
(i) such untrue statement or alleged untrue statement or omission or alleged
omission was made in such registration statement, preliminary or amended
preliminary prospectus or final prospectus in reliance upon and in conformity
with information furnished in writing to the Company in connection therewith by
PBIO (in the case of indemnification of PBIO), any such underwriter (in the case
of indemnification of such underwriter) or any such controlling person (in the
case of indemnification of such controlling person) expressly for use therein,
or unless (ii) in the case of a sale directly by PBIO (including a sale of
Registrable Shares through any underwriter retained by PBIO to engage in a
distribution solely on behalf of PBIO), such untrue statement or alleged untrue
statement or omission or alleged omission was contained in a preliminary
prospectus and corrected in a final or amended prospectus copies of which were
delivered to PBIO or such underwriter on a timely basis, and PBIO 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.
Promptly after receipt by PBIO, any underwriter or any
controlling person of notice of the commencement of any action in respect of
which indemnity may be sought against the Company, PBIO, or such underwriter or
such controlling person, as the case may be, shall notify the Company in writing
of the commencement thereof (provided, that failure to so notify the Company
shall not relieve the Company from any liability it may have hereunder, except
to the extent prejudiced by such failure) and, subject to the provisions
hereinafter stated, the Company shall be entitled to assume the defense of such
action (including the employment of counsel, who shall be counsel reasonably
satisfactory to PBIO, such underwriter or such controlling person, as the case
may be) and the payment of expenses insofar as such action shall relate to any
alleged liability in respect of which indemnity may be sought against the
Company.
PBIO, any such underwriter or any such controlling person
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof but the fees and expenses of such counsel
subsequent to any assumption of the defense by the Company shall not be at the
expense of the Company unless the employment of such counsel has been
specifically authorized in writing by the Company; provided, however, that, if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests
of the indemnifying party, the indemnified party shall have the right to select
a separate
- 9 -
<PAGE> 10
counsel and to assume such legal defenses and otherwise to participate in the
defense of such action, with the expenses and fees of such separate counsel and
other expenses related to such participation to be reimbursed by the
indemnifying party as incurred. At any time, PBIO may select separate counsel
and assume its own legal defense with the expenses and fees of such separate
counsel and other expenses related to such separate counsel to be borne by PBIO.
The Company shall not be liable to indemnify PBIO, any underwriter or any
controlling person for any settlement of any such action effected without the
Company's written consent (which consent shall not be unreasonably withheld or
delayed). The Company shall not, except with the approval of each party being
indemnified under this Section 3.04, 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 the parties being so indemnified of a
release from all liability in respect to such claim or litigation.
In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which PBIO, or any
controlling person of PBIO, makes a claim for indemnification pursuant to this
Section 3.04 but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that this Section 3.04
provides for indemnification in such case, then, the Company and PBIO will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and of
PBIO on the other in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative fault of the Company on the one hand and
of PBIO on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company on the one hand or by PBIO on the other, and each party's relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission; provided, however, that, in any such case, (A) PBIO
will not be required to contribute any amount in excess of the public offering
price of all Registrable Shares offered by it pursuant to such registration
statement; and (B) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
The indemnities provided in this Section 3.04 shall survive the
transfer of any Registrable Shares by PBIO.
Section 3.05 Indemnification of Company. In the event that the Company
registers any of the Registrable Shares under the Securities Act, PBIO will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed or otherwise participated
- 10 -
<PAGE> 11
in the preparation of the registration statement, each underwriter of the
Registrable Shares so registered (including any broker or dealer through whom
such of the shares may be sold) and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act from and against
any and all losses, claims, damages, expenses or liabilities, joint or several,
to which they or any of them may become subject under the Securities Act,
applicable state securities laws or under any other statute or at common law or
otherwise, and, except as hereinafter provided, will reimburse the Company and
each such director, officer, underwriter or controlling person for any legal or
other expenses reasonably incurred by them or any of them in connection with
investigating or defending any actions whether or not resulting in any
liability, insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, in any
preliminary or amended preliminary prospectus or in the final prospectus (or in
the registration statement or prospectus as from time to time amended or
supplemented) or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, but only insofar as any
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company in connection therewith by PBIO
expressly for use therein; provided, however, that PBIO's obligations hereunder
shall be limited to an amount equal to the proceeds received by PBIO for the
Registrable Shares sold in such registration.
Promptly after receipt of notice of the commencement of any
action in respect of which indemnity may be sought against PBIO, the Company
shall notify PBIO in writing of the commencement thereof (provided, that failure
to so notify PBIO shall not relieve PBIO from any liability it may have
hereunder, except to the extent prejudiced by such failure), and PBIO shall,
subject to the provisions hereinafter stated, be entitled to assume the defense
of such action (including the employment of counsel, who shall be counsel
reasonably satisfactory to the Company) and the payment of expenses insofar as
such action shall relate to the alleged liability in respect of which indemnity
may be sought against PBIO. The Company and each such director, officer,
underwriter or controlling person shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel subsequent to any assumption of the defense by
PBIO shall not be at the expense of PBIO unless employment of such counsel has
been specifically authorized in writing by PBIO. PBIO shall not be liable to
indemnify any person for any settlement of any such action effected without
PBIO's written consent (which consent shall not be unreasonably withheld or
delayed).
In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which the Company, its
officers, directors or controlling persons ("Company Indemnitees") exercising
its rights under this Article III, makes a claim for indemnification pursuant to
this Section 3.05, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal
- 11 -
<PAGE> 12
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding that this Section 3.05 provides for
indemnification, in such case, then, the Company Indemnitee and PBIO will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the Company Indemnitee on the one
hand and of the PBIO on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative fault of the Company
Indemnitee on the one hand and of PBIO on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company Indemnitee on the one hand or by
PBIO on the other, and each party's relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, however, that, in any such case, (A) PBIO will not be required to
contribute any amount in excess of the public offering price of all such
Registrable Shares offered by it pursuant to such registration statement; and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such fraudulent
misrepresentation.
Section 3.06. Further Obligations of the Company. Whenever
under the preceding Sections of this Article III, the Company is required
hereunder to register Registrable Shares, it agrees that it shall also do the
following:
(a) Furnish to PBIO such copies of each preliminary and final
prospectus and such other documents as PBIO may reasonably request to
facilitate the public offering of the Registrable Shares;
(b) Use its best efforts to register or qualify the
Registrable Shares covered by said registration statement under the
applicable securities or "blue sky" laws of such jurisdictions as PBIO
may reasonably request; provided, however, that the Company shall not
be obligated to qualify to do business in any jurisdictions where it is
not then so qualified or to take any action which would subject it to
the service of process in suits other than those arising out of the
offer or sale of the securities covered by the registration statement
in any jurisdiction where it is not then so subject;
(c) Permit PBIO or its counsel or other representatives to
inspect and copy such corporate documents and records as may reasonably
be requested by them, after reasonable advance notice and without undue
interference with the operation of the Company's business;
- 12 -
<PAGE> 13
(d) Furnish to PBIO a copy of all documents filed with and all
correspondence from or to the Commission in connection with any such
offering of securities;
(e) Use its best efforts to insure the obtaining of all
necessary approvals from the National Association of Securities
Dealers, Inc.; and
(f) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earning
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first month after the
effective date of the registration statement covering a Public
Offering, which earning statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder.
Whenever under the preceding Sections of this Article III PBIO
is registering Registrable Shares pursuant to any registration statement, (i)
PBIO agrees to timely provide to the Company, at its request, such information
and materials as it may reasonably request in order to effect the registration
of such Registrable Shares and (ii) if the offering is underwritten, the Company
and PBIO agree to execute an underwriting agreement containing customary
conditions.
Section 3.07. Expenses. Subject to Section 3.02(b) in the case
of each registration effected under Section 3.01 or 3.02, the Company shall bear
its own reasonable costs and expenses of each such registration on behalf of
PBIO, including, but not limited to, the Company's printing, legal and
accounting fees and expenses, Commission and NASD filing fees and "blue sky"
fees and expenses; provided, however, that the Company shall have no obligation
to pay or otherwise bear any portion of the underwriters' commissions or
discounts or transfer taxes attributable to the Registrable Shares being offered
and sold by PBIO, or the fees and expenses of counsel for PBIO in connection
with the registration of the Registrable Shares.
The Company shall pay all expenses in connection with any registration
initiated pursuant to this Article III which is withdrawn, delayed or abandoned
at the request of the Company, unless such registration is withdrawn, delayed or
abandoned solely because of any action of PBIO.
Section 3.08. Non-Transferability. PBIO's rights and
obligations contained in this Article III shall not be transferable to any other
party under any circumstances, whether by operation of law or otherwise.
Section 3.09 Lock-Up Agreement. PBIO agrees, if so requested
by the Company in connection with any public offering of the Company's
securities, not to sell, grant any option
- 13 -
<PAGE> 14
or right to buy or sell, or otherwise transfer or dispose of in any manner,
whether in privately-negotiated or open-market transactions, any Common Stock or
other securities of the Company held by it during the 180-day period following
the effective date of a registration statement filed pursuant to a public
offering, nor will it permit any of its affiliates or associates to do any of
the foregoing. PBIO, its affiliates or associates shall enter into "lock-up"
agreements to such effect. Such "lock-up" agreements shall be in writing and in
form and substance satisfactory to the Company. The Company may impose
stop-transfer instructions with respect to the Shares (or securities) subject to
the foregoing restrictions until the end of said 180-day period.
Section 3.10 Termination of Registration Rights.
Notwithstanding any other term or provision of this Article III, at such time as
PBIO is free to sell the Registrable Shares without registration pursuant to
Rule 144(k) promulgated under the Securities Act, all rights of PBIO as to such
Registrable Shares under Sections 3.01 and 3.02 of this Article III shall
terminate.
ARTICLE IV
MISCELLANEOUS
Section 4.01. Interpretation. For all purposes of this Agreement, the
term Company Common Stock shall include any securities of any issuer entitled to
vote generally for the election of directors of such issuer which securities the
holders of the Company Common Stock shall have received or as a matter of right
be entitled to receive as a result of (i) any capital reorganization or
reclassification of the capital stock of the Company, (ii) any consolidation,
merger or share exchange of the Company with or into another corporation or
(iii) any sale or substantially all the assets of the Company.
Section 4.02. Enforcement. (a) PBIO acknowledges and agrees that
irreparable damage would occur if any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. Accordingly, the Company will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
its provisions in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which the Company
may be entitled at law or in equity.
(b) No failure or delay on the part of the Company in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.
- 14 -
<PAGE> 15
Section 4.03. Entire Agreement. This Agreement, together with the
applicable provisions of the Master Agreement and the PBIO Voting Agreement,
constitutes the entire understanding of the parties with respect to the
transactions contemplated hereby and thereby. This Agreement may be amended only
by an agreement in writing executed by the Company and PBIO.
Section 4.04. Severability. If any provision of this Agreement is held
by a court of competent jurisdiction to be unenforceable, the remaining
provisions shall remain in full force and effect. It is declared to be the
intention of the parties that they would have executed the remaining provisions
without including any that may be declared unenforceable.
Section 4.05. Headings. Descriptive headings are for convenience only
and will not control or affect the meaning or construction of any provision of
this Agreement.
Section 4.06. Counterparts. This Agreement may be executed in two or
more counterparts, and each such executed counterpart will be an original
instrument.
Section 4.07. Notices. All notices, consents, requests, instructions,
approvals and other communications provided for in this Agreement and all legal
process in regard to this Agreement will be validly given, made or served, if in
writing and delivered personally, by telecopy (except for legal process) or sent
by certified mail postage paid.
if to the Company: ChemGenics Pharmaceuticals Inc.
One Kendall Square
Building 300, Third Floor
Cambridge, MA 02139
Attn: Barry A. Berkowitz
with a copy to: Jeffrey M. Wiesen, Esq.
Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Fax: (617) 542-2241
if to PBIO: PerSeptive Biosystems, Inc.
500 Old Connecticut Path
Framingham, MA 01701
Attn: Noubar B. Afeyan
- 15 -
<PAGE> 16
with copies to: Rufus C. King, Esq.
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Fax: (617) 248-7100
or to such other address or telecopy number as any party may, from time to time,
designate in a written notice given in a like manner. Notice by telecopy shall
be deemed delivered on the day telephone confirmation of receipt is given.
Section 4.08. Successors and Assigns. This Agreement shall bind the
successors and assigns of the parties, and inure to the benefit of any successor
or assign of any of the parties; provided, however, that no party may assign
this Agreement without the other party's prior written consent; provided
further, however, that the rights contained in Article III of this Agreement may
not be transferred or assigned under any circumstances.
Section 4.09. Legend. Each certificate representing shares of capital
stock of the Company beneficially owned by PBIO or its affiliates or associates
shall bear a legend in substantially the following form, until such time as the
shares of capital stock represented thereby are no longer subject to the
provisions hereof:
"The sale, transfer or assignment of the securities
represented by this certificate are subject to the terms and
conditions of a certain Standstill and Registration Rights
Agreement dated June 28, 1996, as amended from time to time,
between the Company and PerSeptive Biosystems, Inc. Copies of
such Agreement may be obtained at no cost by written request
made by the holder of record of this certificate to the
Secretary of the Company."
Section 4.10. Term. The term of this Agreement shall be the period from
the date first referred to above through and including June 28, 2006.
Section 4.11. Governing Law. This Agreement will be governed by and
construed and enforced in accordance with the law of The Commonwealth of
Massachusetts, without giving effect to the conflict of laws principles thereof.
- 16 -
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first referred to above.
CHEMGENICS PHARMACEUTICALS INC.
By:_____________________________________
Barry A. Berkowitz, Ph.D.
President and Chief Executive Officer
PERSEPTIVE BIOSYSTEMS, INC.
By:_____________________________________
Noubar B. Afeyan, Ph.D.
President and Chief Executive Officer
- 17 -
<PAGE> 1
EXHIBIT 10.22
DR. BERKOWITZ EMPLOYMENT AND NONCOMPETITION AGREEMENT
MYCO PHARMACEUTICALS INC.
5 PINETREE PLACE
FORT WASHINGTON, PA 19034
As of January 1, 1992
Dr. Barry A. Berkowitz
5 Pinetree Place
Fort Washington, PA 19034
Dear Dr. Berkowitz:
This letter is to confirm our understanding with respect to (i) your
employment by Myco Pharmaceuticals Inc. (the "Company"), (ii) your agreement not
to compete with the Company and (iii) your agreement to protect and preserve
information and property which is confidential and proprietary to the Company
(the terms and conditions agreed to in this letter shall hereinafter be referred
to as the "Agreement"). In consideration of the mutual promises and covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, we have agreed as
follows:
1. Employment. The Company will employ you, and you agree to work for
the Company, as its President and Chief Executive Officer and to perform such
services and discharge such duties and responsibilities consistent with such
positions as may be prescribed by the Board of Directors of the Company. You
shall devote your full business time and best efforts in the performance of the
foregoing services, provided that you may participate in such other activities
not in conflict with your obligations to the Company, including service as a
director of and/or scientific advisor to one or more entities.
2. Term of Employment.
(a) Your employment hereunder shall commence on January 1,
1992 and shall continue thereafter; provided, however, that your employment
hereunder shall be terminated by the first to occur of the following:
(i) Immediately upon your death;
(ii) Upon notice from the Company following your failure, due
to illness, accident or any other physical or mental incapacity, to
perform the services provided for
<PAGE> 2
hereunder for an aggregate of 90 business days within any one year
period during the term hereof;
(iii) By the Company upon notice, for Cause, as defined
herein, and as set forth below;
(iv) By the Company, upon notice subject to Section 3
hereof, without Cause; or
(v) By you, upon notice to the Company, provided, that if you
do not give at least 60 days prior written notice of your intention to
terminate your employment hereunder, you will forfeit all unused
vacation, prepaid benefits, any earned but unpaid incentive
compensation, and any stock options which have not vested as of the
date such notice is given.
The right of the Company to terminate your employment hereunder without
cause to which you hereby agree, shall be exercisable by written notice sent to
you by the Company and shall be effective as of the date of such notice.
The Company may, immediately and unilaterally, terminate your
employment hereunder for Cause at any time upon ten (10) days' advance written
notice to you. Termination of your employment by the Company shall constitute a
termination for Cause if such termination is for one or more of the following
reasons: (i) your continuing failure to render services to the Company in
accordance with your assigned duties consistent with Section 1 of this Agreement
and such failure of performance continues for a period of more than 120 days
after notice thereof has been provided to you by the Board of Directors; (ii)
your willful misconduct or gross negligence; (iii) you are convicted of a
felony, either in connection with the performance of your obligations to the
Company or which conviction materially adversely affects your ability to perform
such obligations, materially adversely affects the business activities,
reputation, goodwill or image of the Company; (iv) willful disloyalty,
deliberate dishonesty, breach of fiduciary duty or breach of the terms of this
Agreement or the other covenants executed by you regarding competition against
the Company or the assignment of inventions to the Company; (v) the commission
by you of an act of fraud, embezzlement or deliberate disregard of the rules or
policies of the Company which results in significant loss, damage or injury to
the Company; (vi) your willful unauthorized disclosure of any trade secret or
confidential information of the Company; or (vii) your willful commission of an
act which constitutes unfair competition with the Company or which induces any
employee or customer of the Company to break a contract with the Company.
- 2 -
<PAGE> 3
In making any determination under this Section, the Board of Directors
shall act fairly and in utmost good faith and shall give you an opportunity to
appear and be heard at a meeting of the Board of Directors or any committee
thereof and present evidence on your behalf. For purposes of this Section, no
act, or failure to act, on your part shall be considered "willful" unless done,
or admitted to be done, by you in bad faith and without reasonable belief that
such action or omission was in the best interest of the Company.
In the event you are terminated for Cause, you shall be entitled to no
severance or other termination benefits, or any other benefits (except for any
health insurance benefits required by applicable law).
3. Salary.
(a) The Company shall pay you as your base compensation for
your services and agreements hereunder during the first year of this Agreement a
base salary at the rate of $195,000 per year, payable at such intervals as may
be agreed upon by the Company and you, less any amounts required to be withheld
under applicable law. Such salary will be reviewed and subject to increase on an
annual basis as agreed by the Board of Directors. Such compensation will be
reduced by any disability payments which you receive, after taking into account
the tax benefits (if any) of such payments.
(b) In addition to your base compensation, the Company will
pay you an annual bonus of up to $28,500 per year as agreed by the Board of
Directors, or such greater amount as agreed by the Board of Directors.
(c) Upon execution of this Agreement the Company will issue to
you 860,000 shares of the Company's Common Stock, $.001 par value, at a purchase
price of $.001 per share, pursuant to a Stock Purchase and Repurchase Agreement
in the form enclosed with this letter. Such shares shall be subject to the terms
of such agreement.
(d) In the event your employment shall be terminated by the
Company without Cause at any time, or in the event that you terminate your
employment hereunder by reason of a material change in your duties imposed by
the Board of Directors of the Company, or by reason of any material breach by
the Company of its obligations to you, the Company shall continue to pay you
your base salary and the cost of your health insurance for a period of one year
following any such termination, less any amounts earned by you during such
period from full time employment with another entity during such period (which
employment you agree to make a good faith effort to locate). All
- 3 -
<PAGE> 4
payments made under this Section 3(d) shall be payable monthly at the rate
specified in Section 3(a) hereof.
(e) In the event your employment shall be terminated by the
Company for Cause, no further compensation or benefits of any kind shall be
payable to you hereunder; provided, however, that you shall continue to be bound
by the terms and conditions of this Agreement, other than Section 1.
4. Reimbursement of Expenses and Benefits.
(a) You shall be entitled to reimbursement for all ordinary
and reasonable out-of-pocket business expenses which are reasonably incurred by
you in furtherance of the Company's business.
(b) The Company shall reimburse you for up to $20,000.00 of
your reasonable out-of-pocket moving expenses for relocation to the greater
Boston, Massachusetts area or other principal place of business of the Company.
(c) The Company shall provide you and maintain during your
employment hereunder, at its cost, with not less than $1,000,000 of life
insurance with the proceeds payable to you or your designee and health insurance
reasonably satisfactory to you.
(d) The Company shall provide you with a monthly automobile
allowance of $400 per month and the Company shall pay or reimburse your for the
payment of all maintenance and insurance costs for an automobile of your choice.
(e) You shall be entitled to such amount of vacation leave as
agreed by the Company and you.
(f) In addition to the foregoing, you shall also be entitled
to participate in any employee benefit plans which the Company provides or may
establish for the benefit of its executive employees generally.
5. Prohibited Competition. We have discussed, and you recognize and
acknowledge the competitive and proprietary nature of the Company's business
operations.
You acknowledge and agree that a business will be deemed competitive
with the Company if it engages in a line of business in which it performs any of
the services or manufactures or sells any of the products provided or offered by
the Company in the Company's Field of Interest (such business to be referred to
as a "competitive business"). The term Company's "Field of Interest" currently
means the development of products or processes as anti-
- 4 -
<PAGE> 5
infective therapeutics or diagnostics with an initial emphasis on anti-fungals
and commercial use of fungi or yeasts in drug screening, production, development
or testing.
You further acknowledge and agree that during the course of performing
services for the Company, the Company will furnish, disclose or make available
to you confidential and proprietary information related to the Company's
business and that the Company may provide you with unique and specialized
training. You also acknowledge that such confidential information and the
training to be provided by the Company have been developed and will be developed
by the Company through the expenditure by the Company of substantial time,
effort and money and that all such confidential information and training could
be used by you to compete with the Company.
Accordingly, you hereby agree in consideration of the Company's
agreement to engage you hereunder and your compensation thereof and in view of
the confidential position to be held by you, the unique and specialized training
which the Company may provide you and the confidential nature and proprietary
value of the information which the Company may share with you, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, as follows:
During the period during which you perform services for or at the
request of the Company (the "Term") and for a period of eighteen months
following the expiration or termination of the Term (the "Restricted Term"),
whether such termination is voluntary or involuntary, you shall not, without the
prior written consent of the Company:
(i) For yourself or on behalf of any other, directly or
indirectly, either as principal, agent, stockholder, employee,
consultant, representative or in any other capacity, own, manage,
operate or control, or be concerned, connected or employed by, or
otherwise associate in any manner with, engage in or have a financial
interest in any business whose primary line of business is in the Field
of Interest, or in any other business in which you have any direct
operating or scientific responsibility in the Field of Interest within
the World (the "Restricted Territory"), except that nothing contained
herein shall preclude you from purchasing or owning stock in any such
competitive business if such stock is publicly traded, and provided
that your holdings do not exceed three (3%) percent of the issued and
outstanding capital stock of such business.
(ii) Either individually or on behalf of or through any third
party, solicit, divert or appropriate or attempt to solicit, divert or
appropriate, for the purpose of competing
- 5 -
<PAGE> 6
in the Field of Interest with the Company or any present or future
parent, subsidiary or other affiliate of the Company which is engaged
in the Field of Interest, any joint venture or collaborative research
partners, customers or patrons of the Company, or any prospective
customers or patrons with respect to which the Company has developed or
made a presentation for the use or exploitation of products or
processes in the Field of Interest (or similar offering of services)
within eighteen months, located within the Restricted Territory.
(iii) Either individually or on behalf of or through any third
party, directly or indirectly, solicit, entice or persuade or attempt
to solicit, entice or persuade any other employees of or consultants to
the Company or any parent or future parent or affiliate of the Company
to leave the services of the Company or any parent or future parent or
affiliate for any reason.
You further recognize and acknowledge that (i) the types of employment
which are prohibited by this paragraph are narrow and reasonable in relation to
the skills which represent your principal salable asset both to the Company and
to your other prospective employers, and (ii) the specific but broad
geographical scope of the provisions of this paragraph is reasonable, legitimate
and fair to you in light of the Company's need to market its services and sell
its products in a large geographic area in order to have a sufficient customer
base to make the Company's business profitable and in light of the limited
restrictions on the type of employment prohibited herein compared to the types
of employment for which you are qualified to earn your livelihood.
If any part of this section should be determined by a court of
competent jurisdiction to be unreasonable in duration, geographic area, or
scope, then this section is intended to and shall extend only for such period of
time, in such area and with respect to such activity as is determined to be
reasonable.
6. Protected Information. Upon execution of this Agreement, you shall
execute and deliver a Confidentiality Agreement in the form attached hereto as
Annex A.
7. Continuing Obligations. Your obligations under this Agreement other
than the provisions of Section 1 of this Agreement shall not be affected by any
termination of your employment arrangement, including termination upon the
Company's initiative, subject to the Company's performance of its obligation to
make payments to you pursuant to Section 3 hereof.
- 6 -
<PAGE> 7
8. Records. Upon termination of your relationship with the Company, you
shall deliver to the Company any property of the Company which may be in your
possession including products, materials, memoranda, notes, records, reports, or
other documents or photocopies of the same.
9. No Conflicting Agreements. You hereby represent and warrant that you
have no commitments or obligations inconsistent with this Agreement and you
hereby agree to indemnify and hold the Company harmless against any claim based
upon circumstances alleged to be inconsistent with such representation and
warranty.
10. Waiver of Provisions. Failure of any party to insist, in one or
more instances, on performance by the other in strict accordance with the terms
and conditions of this Agreement shall not be deemed a waiver or relinquishment
of any right granted hereunder or of the future performance of any such term or
condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by or on behalf of the waiving party.
11. Notices. Any notice or other communication required or permitted
hereunder shall be deemed sufficiently given if sent by facsimile, overnight
courier, certified mail, postage and fees prepaid, addressed to the party to be
notified as follows: if to the Company to its address set forth above, with a
copy to Peter F. Demuth, Esquire, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C., One Financial Center, Boston, MA 02111 and if to you to your address set
forth above, or in each case to such other address as either party may from time
to time designate in writing to the other. Such notice or communication shall be
deemed to have been given four business days after being deposited with the
United States Postal Service.
12. Governing Law. This Agreement together with the Stock Purchase and
Repurchase Agreement and Confidentiality Agreement shall be governed by and
construed and enforced in accordance with the laws of the Commonwealth of
Massachusetts, without application of the conflicts of law provisions thereof.
13. Entire Agreement. This Agreement, together with the Confidentiality
Agreement and Stock Purchase and Repurchase Agreement embodies the entire
agreement and understanding between the parties hereto and supersedes all prior
oral or written agreements and understandings relating to the subject matter
hereof. No statement, representation, warranty, covenant or agreement of any
kind not set forth in this Agreement shall affect, or be used to interpret,
change or restrict, the express terms and provisions of this Agreement.
- 7 -
<PAGE> 8
14. Invalidity. This Agreement, together with the Stock Purchase and
Repurchase Agreement and Confidentiality Agreement of even date, is intended to
be performed in accordance with, and only to the extent permitted by, all
applicable laws, ordinances, rules and regulations. If any provision of this
Agreement, or the application thereof to any person or circumstance, shall, for
any reason and to any extent, be invalid or unenforceable, the remainder of this
Agreement and the application of such provisions to other persons or
circumstances shall not be affected thereby, but rather shall be enforced to the
greatest extent permitted by law.
15. Injunctive Relief. You hereby expressly acknowledge that any breach
or threatened breach of any of the terms and/or conditions set forth in Section
5 of this Agreement will result in substantial, continuing and irreparable
injury to the Company. Therefore, you hereby agree that, in addition to any
other remedy that may be available to the Company, the Company shall be entitled
to injunctive or other equitable relief by a court of appropriate jurisdiction
in the event of any breach or threatened breach of the terms of Section 5 of
this Agreement.
16. Assignment. The Company may assign its rights and obligations
hereunder to any person or entity who succeeds to all or substantially all of
the Company's business or that aspect of the Company's business in which you are
principally involved. Your rights and obligations under this Agreement may not
be assigned without the prior written consent of the Company.
17. Expenses. Should any party breach this Agreement, in addition to
all other remedies available at law or in equity, such party shall pay all of
any other party's costs and expenses resulting therefrom and/or incurred in
successfully enforcing this Agreement, including legal fees and expenses.
18. Modification and Amendment. This Agreement shall not be modified or
amended except by an instrument in writing signed by or on behalf of the parties
hereto.
19. Parties Benefitted. Subject to the foregoing, this Agreement shall
be binding upon and inure to the benefit of the Company and any parent,
subsidiary or other affiliate of the Company, and their respective successors
and assigns, and shall be binding upon and inure to the benefit of you and your
heirs, executors, administrators, successors and permitted assigns.
20. Headings. Section and other headings contained in this Agreement
are for reference purposes only and are in no way intended to define, interpret,
describe or otherwise limit the scope, extent or intent of this Agreement or any
of its
- 8 -
<PAGE> 9
provisions each of which shall be deemed an original, but all of which together
shall constitute one and the same document.
21. Counterparts. This Agreement may be executed in one or more
counterparts each of which will be deemed an original, but all of which together
shall constitute one and the same instrument.
If the foregoing accurately sets forth our agreement, please so
indicate by signing and returning to us the enclosed copy of this letter.
Very truly yours,
MYCO PHARMACEUTICALS INC.
By:________________________________
Gary Anderson, Chairman
Accepted and Approved
______________________
Dr. Barry A. Berkowitz
Dated:________________
- 9 -
<PAGE> 1
EXHIBIT 10.23
CONFIDENTIALITY AGREEMENT
This confidentiality agreement is made as of the 1st day of
January, 1992, by and between Myco Pharmaceuticals Inc., a
Delaware corporation ("Company"), and Dr. Barry A. Berkowitz
("Consultant").
W I T N E S S E T H:
WHEREAS, the Company desires to retain Consultant as an employee of the
Company and Consultant wishes to be retained by the Company as an employee of
the Company pursuant to that certain Employment and Noncompetition Agreement of
even date (the "Employment Agreement");
WHEREAS, the Company has developed, and the Company and/or Consultant
may continue to develop during the period Consultant is so retained by the
Company, certain Proprietary Information, Inventions and Intellectual Property
(as those terms are hereinafter defined), that the Company wishes to protect and
maintain as confidential;
WHEREAS, the Company from time to time has received, and may continue
to receive during the period Consultant is so retained by the Company, the
Proprietary Information of others, and the Company wishes to maintain the
confidentiality of such Proprietary Information; and
WHEREAS, the Company has developed, and will continue to develop during
the period Consultant is so retained by the Company, goodwill by, among other
things, substantial expenditure of money and effort;
NOW, THEREFORE, in consideration of the premises set forth below and
the mutual covenants and undertakings contained in this agreement, and for other
good and valuable consideration, receipt and sufficiency of which are hereby
mutually acknowledged, IT IS AGREED:
1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
(a) Agreement means this confidentiality agreement, including
all exhibits, schedules and annexations, as all may be amended from time to time
in the manner provided in this Agreement.
(b) Consultancy means the current or anticipated or subsequent
retention of Consultant by the Company as a part-time consultant or otherwise,
or any other period during which
<PAGE> 2
Consultant receives compensation from the Company in any capacity.
(c) Intellectual Property means any Invention, 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.
(d) Inventions includes ideas, discoveries, inventions,
developments and improvements, whether or not reduced to practice and whether or
not patentable or otherwise within the definition of Intellectual Property.
(e) Proprietary Information includes any scientific,
technical, trade or business secrets of the Company and any scientific,
technical, trade or business materials that are treated by the Company as
confidential or proprietary, including, but not limited to, Inventions belonging
to the Company and confidential information obtained by or given to the Company
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 Consultant prior to its
disclosure by the Company; (ii) is publicly known through publication or
otherwise through no wrongful act of Consultant; (iii) is received from a third
party who rightfully discloses it to 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. Consultant Acknowledgements. The Company has developed and will
develop its Proprietary Information and Intellectual Property over a substantial
period of time and at a substantial expense, and its Proprietary Information and
Intellectual Property are integral to the goodwill of the Company. During the
course of consultancy to the Company, Consultant may develop or become aware of
Proprietary Information and/or Intellectual Property. Protection of the
Proprietary Information and Intellectual Property is necessary to conduct the
Company's business, and the Company is and shall at all times remain the sole
owner of the Company's Proprietary Information and Intellectual Property.
3. Confidentiality. Consultant shall at all times, both during and
after any termination of Consultant's consultancy to the Company by either the
Company or Consultant, maintain in confidence and not utilize the Proprietary
Information or the
- 2 -
<PAGE> 3
Intellectual Property of the Company, and/or technology or proprietary
information of others under confidential evaluation by the Company except in
performing services for the Company under the Employment Agreement. Maintaining
such Proprietary Information and Intellectual Property in confidence shall
include refraining from disclosing such Proprietary Information or Intellectual
Property to any third party (except when duly and specifically authorized in
writing to do so for purpose of furthering the business of the Company), and
refraining from using such Proprietary Information or Intellectual Property for
the account of Consultant or for any other person or business entity. Consultant
will not file patents based on the Company's technology or confidential
information, nor seek to make improvements thereon, without the Company's
written approval. Consultant agrees not to make any copies of the Proprietary
Information or Intellectual Property of the Company (except when appropriate for
the furtherance of the business of the Company or duly and specifically
authorized to do so) and promptly upon request, whether during or after the
period of consultancy to the Company, to return to the Company any and all
documentary, machine-readable or other elements or evidence of such Proprietary
Information, Intellectual Property, and any copies of either that may be in
Consultant's possession or under Consultant's control.
4. Rights to Inventions and Intellectual Property. In connection with
Consultant's consultancy to the Company, or by use of the resources of the
Company, whether or not Consultant is then retained by the Company, Consultant
may produce, develop, create, invent, conceive or reduce to practice Inventions
and Intellectual Property related to the business of the Company. Consultant
shall maintain and furnish to the Company complete and current records of all
such Inventions and Intellectual Property and disclose to the Company in writing
any such Inventions and Intellectual Property. Consultant agrees that all such
Inventions and Intellectual Property are and shall be the exclusive property of
the Company, and that the Company may use or pursue them without restriction or
additional compensation. Consultant: (i) hereby assigns, sets over and transfers
to the Company all of his right, title and interest in and to such Inventions
and Intellectual Property; (ii) agrees that Consultant and his agents shall,
during and after the period Consultant is retained by the Company, cooperate
fully in obtaining patent, trademark, service mark, copyright or other
proprietary protection for such Inventions and Intellectual Property, all in the
name of the Company (but only at Company 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 the Company of such Inventions and Intellectual Property; and (iii)
shall, upon leaving the Company, provide to the Company in writing a full,
signed statement of all Inventions and
- 3 -
<PAGE> 4
Intellectual Property in which Consultant participated prior to termination of
the consultancy to the Company. Consultant hereby designates the Company as its
agent, and grants to the Company a power of attorney with full substitution,
which power of attorney shall be deemed coupled with an interest, for the
purposes of effecting the foregoing assignments from the Consultant to the
Company.
5. Non-Solicitation. Consultant shall not during the term of the
Employment Agreement or at any time during the five (5) years following
termination of the Employment Agreement solicit any person who is employed by or
a consultant to the Company or any affiliate or subsidiary of the Company either
during Consultant's period of consultancy or during such five (5) year period,
to terminate such person's employment by or consultancy to the Company, 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 the Company, affiliate or subsidiary.
6. Continued Obligations. Consultant's obligations under this Agreement
shall not be affected: (i) by any termination of Consultant's consultancy,
including termination upon the Company's initiative; nor (ii) by any change in
Consultant's position, title or function with the Company; nor (iii) by any
interruption in consultancy during which Consultant leaves and then rejoins the
Company for any period within a period of one year and for any reason. Nothing
herein shall be construed as constituting an employment agreement or an
undertaking by the Company to retain Consultant's services for any stated period
of time.
7. No Conflicting Agreements. Consultant represents and warrants that
execution and performance of this Agreement does not and will not violate,
conflict with, or constitute a default under any contract, commitment,
agreement, understanding, arrangement, or restriction, or any adjudication,
order, injunction or finding of any kind by any court or agency to which
Consultant may be a party or by which Consultant may be bound.
8. Remedies. In the event of any breach by Consultant of any of the
provisions of this Agreement, the Company shall be entitled, in addition to
monetary damages and to any other remedies available to the Company under this
Agreement and at law, to equitable relief, including injunctive relief, and to
payment by Consultant of all costs incurred by the Company in enforcement
against Consultant of the provisions of this Agreement, including reasonable
attorneys' fees.
9. General Provisions.
- 4 -
<PAGE> 5
(a) 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.
(b) Notice. 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:
If to Consultant, to: Dr. Barry A. Berkowitz
5 Pinetree Place
Fort Washington, PA 19034
If to the Company, to: Dr. Barry A. Berkowitz
Myco Pharmaceuticals Inc.
5 Pinetree Place
Fort Washington, PA 19034
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.
(c) Severability. If any provision of this Agreement shall be
found to be invalid, inoperative or unenforceable in law or equity, such finding
shall not affect the validity of any other provisions of this Agreement, which
shall be construed, reformed and enforced to effect the purposes of this
Agreement to the fullest extent permitted by law.
(d) Miscellaneous. This Agreement: (i) may be executed in any
number of counterparts, each of which, when executed by both parties to this
Agreement shall be deemed to be an original, and all of which counterparts
together shall constitute one and the same instrument; (ii) shall be governed by
and construed under the law of the Commonwealth of Massachusetts, without
application of principles of conflicts of laws; (iii) along with the Employment
Agreement, constitute the entire agreement of the parties with respect to the
subject matter hereof, superseding all prior oral and written communications,
proposals, negotiations, representations, understandings, courses of dealing,
agreements, contracts, and the like between the parties in such respect; (iv)
may be amended, modified, or terminated, and any right under this Agreement may
be waived in
- 5 -
<PAGE> 6
whole or in part, only by a writing signed by both parties; (v) contains
headings only for convenience, which headings do not form part, and shall not be
used in construction, of this Agreement; (vi) shall bind and inure to the
benefit of the parties and their respective legal representatives, successors
and assigns, except that no party may delegate any of its or his obligations
under this Agreement, or assign this Agreement, without the prior written
consent of the other party, except the Company may assign this Agreement in
connection with the merger, consolidation, or sale of all or substantially all
assets of the Company; and (vii) be enforced only in courts located within the
Commonwealth of Massachusetts and the parties hereby agree that such courts
shall have venue and exclusive subject matter and personal jurisdiction, and
consent to service of process by registered mail, return receipt requested, or
by any other manner provided by law.
Executed under seal as of the date first above written.
MYCO PHARMACEUTICALS, INC.
By:________________________
Title
___________________________
Dr. Barry A. Berkowitz
- 6 -
<PAGE> 1
EXHIBIT 10.24
MYCO PHARMACEUTICALS INC.
5 Pinetree Place
Fort Washington, PA 19034
February 19, 1992
Dr. Barry A. Berkowitz
5 Pinetree Place
Fort Washington, PA 19034
Re: Stock Purchase and Repurchase Agreement
Dear Dr. Barry A. Berkowitz:
We are pleased that you have decided to become a founder of Myco
Pharmaceuticals Inc., a Delaware corporation (the "Company") and desire to
purchase shares of the Company's Common Stock, $.001 par value ("Shares"). The
terms on which the Company is willing to issue Shares to you, and our agreements
regarding such Shares are as follows:
1. Purchase of Shares. For the aggregate sum of Eight Hundred and Sixty
Dollars ($860.00) ($0.001 per Share), which the Company acknowledges receiving,
the Company hereby sells and issues to you, and you hereby purchase from the
Company Eight Hundred and Sixty Thousand (860,000) Shares. Upon execution of
this Agreement the Company will deliver to you a certificate registered in your
name representing the Shares.
2. Your Representations and Warranties. To induce the Company to issue
the Shares to you, you hereby represent, warrant and agree as follows:
2.1 Experience, Financial Capability and Suitability. You are
sufficiently experienced in financial and business matters to be capable of
evaluating the risk of this investment and to make an informed decision relating
thereto. You have the financial capability for making the investment, can afford
a complete loss of the investment, and the investment is a suitable one for you.
2.2 Access To Information. Prior to the execution of this
Agreement you have had the opportunity to ask questions of and receive answers
from representatives of the Company concerning the finances, operations,
business and prospects of the Company.
2.3 Investment Intent. You are acquiring the Shares for your
own account for the purpose of investment and not with a view to, or for sale in
connection with, the distribution thereof, nor with any present intention of
distributing or
<PAGE> 2
selling the Shares. The Shares are not being registered under the Securities Act
of 1933, as amended (the "Securities Act") and are not being registered under
any state "blue sky" laws, and the Shares may not be transferred except in
compliance with such laws.
3. The Company's Right To Repurchase Your Shares.
Lapsing Repurchase Right. In the event your employment with
the Company is terminated prior to four years from the date hereof, (a) either
voluntarily by you (except because of a material breach of the Company's
obligations under the employment agreement between you and the Company of even
date) or (b) by the Company for "cause" as defined in the employment agreement
of even date between you and the Company, for a period of ninety (90) days
following such termination, the Company shall have the option to purchase from
you and you shall be obligated to sell to the Company, at a price of $.001 per
Share, all or any part of the number of Shares set forth below:
<TABLE>
<CAPTION>
Period Number of Shares
------ ----------------
<S> <C>
Prior to February 19, 1993 860,000
February 19, 1993 - February 18, 1994 645,000
February 19, 1994 - February 18, 1995 430,000
February 19, 1995 - February 18, 1996 215,000
After February 18, 1996 0
</TABLE>
In the event your employment with the Company is terminated prior to four
years from the date hereof by you because of a material breach of the Company's
obligations under the employment agreement between you and the Company of even
date, the Repurchase Option (as defined below in this Section 3) shall lapse as
of the date of such termination, and the Company's rights under this Section 3
shall thereupon terminate.
In the event of your death or in the event of the termination of your
employment either by the Company without cause or by reason of your disability
prior to the dates set forth below, the Company shall have the option to
purchase from you, and you shall be obligated to sell to the Company, at a price
of $.001 per Share, all or any part of the number of Shares set forth below:
<TABLE>
<CAPTION>
Period Number of Shares
------ ----------------
<S> <C>
Prior to February 19, 1993 430,000
February 19, 1993 - February 18, 1994 322,500
February 19, 1994 - February 18, 1995 215,000
February 19, 1995 - February 18, 1996 107,500
After February 18, 1996 0
</TABLE>
- 2 -
<PAGE> 3
(The rights of the Company pursuant to this Section 3 being referred to as
the "Repurchase Option").
4. Restrictions on Transfer.
4.1 General Restriction. You hereby agree not to sell, transfer,
assign, hypothecate or otherwise dispose of any of the Shares subject to the
Repurchase Option, whether voluntarily or by operation of law (other than to the
Company), prior to the termination of the Repurchase Option, except that you may
transfer all or any part of the Shares not then subject to the Repurchase Option
to your spouse, children or other member of your immediate family, or to a trust
for the benefit of such persons, if the transferee first delivers his or her
written agreement to be bound by the terms of this Agreement. After such date,
subject to compliance with Section 4.2, you may only sell, transfer, assign,
hypothecate or otherwise dispose of any of the Shares which are not then subject
to the Repurchase Option, voluntarily or by operation of law (other than to the
Company), and then only following compliance with the terms of a Voting and
Co-Sale Agreement which the Company may enter into with certain potential
stockholders to which agreement you agree to become a party if and when the
Company enters into such an agreement. The Company shall not be required to
transfer any Shares on its books which shall have been sold, assigned or
otherwise transferred in violation of this Agreement, or to treat as the owner
of such Shares, or to accord the right to vote as such owner or to pay dividends
to, any person or organization to which any such Shares shall have been so sold,
assigned or otherwise transferred in violation of this Agreement.
4.2. Securities Law Restrictions. You agree with the Company that the
Shares shall not be pledged, hypothecated, sold or transferred, unless prior to
the proposed pledge, hypothecation, sale or transfer of all or part of such
Shares (a) a Registration Statement on the appropriate form under the Securities
Act and applicable state securities laws with respect to the Shares proposed to
be transferred shall then be effective; or (b) the Company shall have received
an opinion of counsel in form and substance satisfactory to it that such
registration is not required because such transaction complies with rules
promulgated by the Securities and Exchange Commission under the Securities Act
and with applicable state securities laws.
You understand that the Shares are "restricted securities" as that term
is defined in Rule 144 under the Securities Act and that the Shares must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available; and that in the case of sales
in which Rule 144 is not available, compliance with Regulation A under the
Securities Act or some other exemption
- 3 -
<PAGE> 4
under the Securities Act will be required. You further understand that there is
not now available and there may not be available at the time you wish to sell
your Shares the adequate current public information with respect to the Company
which would permit offers or sales of the Shares under Rule 144. The Company is
under no obligation to register the Shares under the Securities Act or any state
securities law, nor to make Rule 144 available.
4.3 Legending of Shares: All certificates representing the Shares to be
issued to you pursuant to this Agreement shall have endorsed thereon legends
substantially as follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act") or any state securities law and may not be sold,
pledged, hypothecated or transferred in the absence of an
effective Registration Statement covering these securities
under the Act and any applicable state securities laws or an
opinion of counsel in form and substance satisfactory to the
Company that registration is not required under the Act or
under applicable state securities laws."
"The shares represented by this certificate are subject
to a Stock Purchase and Repurchase Agreement dated
, 1992 with this Company, a copy of which Stock Purchase
and Repurchase Agreement is available for inspection at the
offices of the Company or may be made available upon request."
5. Procedures For Exercising Rights To Purchase. In the event the
Company shall be entitled to and shall elect to exercise the Repurchase Option,
it shall give you (or your heirs or Representative) a written notice specifying
the number of Shares which the Company elects to purchase and specifying a date
for closing hereunder, which date shall be not more than thirty (30) calendar
days after the giving of such notice. The closing shall take place at the
Company's principal offices or such other location in the greater Boston,
Massachusetts area as the Company may reasonably designate in such notice. At
the closing, you shall deliver the Shares being purchased against the
simultaneous delivery of the purchase price by the Company.
In the event that you fail to deliver the Shares as required by this
Agreement, the Company may elect (a) to establish a segregated account to
receive the payments, such account to be turned over to you upon delivery of the
certificates representing such Shares, and (b) immediately to take such action
as is appropriate to transfer record title of such Shares from you to the
Company and to treat you and such Shares in all respects as
- 4 -
<PAGE> 5
if delivery of the certificates representing such Shares had been made as
required by this Agreement. You hereby irrevocably grant the Company a power of
attorney for the purpose of effectuating the foregoing.
6. Adjustment Provisions. If the Company shall pay a stock dividend or
declare a stock split on or with respect to any of its Common Stock, or
otherwise distribute securities of the Company to the holders of its Common
Stock, the number of shares of stock or other securities of the Company issued
with respect to the Shares then subject to the Repurchase Option shall be added
to the Shares then subject to the Repurchase Option without any change in the
aggregate purchase price. If the Company shall distribute to its stockholders
shares of stock of another corporation, the shares of stock of such other
corporation distributed with respect to the Shares then subject to the
Repurchase Option shall be added to the Shares covered by the Repurchase Option
without any change in the aggregate purchase price.
If the outstanding shares of Common Stock of the Company shall be
subdivided into a greater number of shares or combined into a smaller number of
shares, or in the event of a reclassification of the outstanding shares of
Common Stock of the Company, or if the Company shall be a party to any capital
reorganization, there shall be substituted for the Shares then covered by the
Repurchase Option such amount and kind of securities as are issued in such
subdivision, combination, reclassification, or capital reorganization in respect
of the Shares subject to the Repurchase Option immediately prior thereto,
without any change in the aggregate purchase price.
7. Tax Matters. You acknowledge and agree that the Company has the
right to deduct from payments of any kind otherwise due to you any federal,
state or local taxes of any kind required by law to be withheld with respect to
the purchase of the Shares. If you elect, in accordance with Section 83(b) of
the Internal Revenue Code of 1986, as amended (the "Code"), to recognize
ordinary income in the year of acquisition of the Shares, the Company will
require from you at the time of such election an additional payment for
withholding tax purposes based on the difference, if any, between the purchase
price for such Shares and the fair market value of such Shares as of the day
immediately preceding the date of the purchase of such Shares.
Upon execution of this Agreement you will file an election under
Section 83 of the Internal Revenue Code of 1986, as amended, in substantially
the form attached. You acknowledge that if you do not file such an election, as
the Shares are released from the Repurchase Option in accordance with Section 3,
you will have income for tax purposes equal to the fair market
- 5 -
<PAGE> 6
value of the Shares at such date, less the price you paid for the Shares.
8. Termination. If the Company shall be completely liquidated or shall
be a party to a merger or consolidation in which the Company is not the
surviving corporation or in which the Company is the surviving corporation but
becomes a wholly-owned subsidiary of another corporation, then the Repurchase
Option shall cease and terminate as at the date of such liquidation, merger or
consolidation, and you shall hold the Shares free of this Agreement. In
addition, the Repurchase Option shall terminate one hundred and eighty (180)
days following the consummation of the public offering of any of the Company's
securities pursuant to a registration statement filed with the Securities and
Exchange Commission pursuant to the Securities Act, in which offering the
aggregate gross proceeds to the Company exceed $9,000,000 and in which the price
per share of such securities exceeds $4.50 (such price subject to equitable
adjustment in the event of any stock split, stock dividend, combination,
reorganization, reclassification or similar event).
9. Registration Rights.
9.01. "Piggy Back" Registration. If at any time the Company shall
determine to register under the Securities Act, any of its Common Stock, other
than on Form S-8 or S-4 or its then equivalent, it shall send to you written
notice of such determination and, if within ten (10) days after receipt of such
notice, you shall so request in writing, the Company shall use its best efforts
to include in such registration statement all or any part of your Shares except
that if, in connection with any offering involving an underwriting of Common
Stock to be issued by the Company, the managing underwriter shall impose a
limitation on the number of shares of such Common Stock which may be included in
any such registration statement because, in its judgment, such limitation is
necessary to effect an orderly public distribution, and such limitation is
imposed pro rata among the holders of such Common Stock having an incidental
("piggy back") right to include such Common Stock in the registration statement
according to the amount of such Common Stock which each holder had requested to
be included pursuant to such right, then the Company shall be obligated to
include in such registration statement only such limited portion of your Shares
with respect to which you have requested inclusion hereunder and provided
further that, if in connection with any such offering, the holders of Series A
Preferred Stock are unable to register all of their registrable shares, you
shall not be entitled to register any of your Shares in such offering. In the
case of each registration under this Section 9.01, the Company shall bear all
reasonable costs and expenses of each such
- 6 -
<PAGE> 7
registration of your Shares; provided, however, that the Company shall have no
obligation to pay any portion of the underwriters' commissions or discounts
attributable to the offer or sale your Shares pursuant to this Section 9.01.
9.02. Indemnification of Holder. In the event that the Company
registers any of your Shares under the Securities Act pursuant to section 9.01,
the Company will indemnify and hold you harmless from and against any and all
losses, claims, damages, expenses or liabilities, to which you become subject
under the Securities Act or under any other statute or at common law or
otherwise, and, except as hereinafter provided, will reimburse you for any legal
or other expenses reasonably incurred by you in connection with investigating or
defending any actions whether or not resulting in any liability, insofar as such
losses, claims, damages, expenses, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the registration statement, in any preliminary or amended
preliminary prospectus or in the prospectus (or the registration statement or
prospectus as from time to time amended or supplemented by the Company) or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading or any violation by the Company of any rule or
regulation promulgated under the Securities Act applicable to the Company and
relating to action or inaction required of the Company in connection with such
registration, unless such untrue statement or omission was made in such
registration statement, preliminary or amended, preliminary prospectus or
prospectus in reliance upon and in conformity with information furnished in
writing to the Company in connection therewith by you in your capacity as a
selling shareholder and not otherwise expressly for use therein in such
capacity. Promptly after receipt by you of notice of the commencement of any
action in respect of which indemnity may be sought against the Company, you will
notify the Company in writing of the commencement thereof, and, subject to the
provisions hereinafter stated, the Company shall assume the defense of such
action (including the employment of counsel, who shall be counsel reasonably
satisfactory to you), and the payment of expenses insofar as such action shall
relate to any alleged liability in respect of which indemnity may be sought
against the Company. You shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall not be at the expense of the Company unless the employment
of such counsel has been specifically authorized by the Company. The Company
shall not be liable to indemnify you for any settlement of any such action
effected without the Company's consent which shall not be unreasonably withheld
or delayed.
- 7 -
<PAGE> 8
9.03. Indemnification of Company. In the event that the Company
registers any of your Shares under the Securities Act, you will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the registration statement, each underwriter of the shares so registered
(including any broker or dealer through whom such of the shares may be sold) and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act from and against any and all losses, claims, damages,
expenses or liabilities, joint or several, to which they or any of them may
become subject under the Securities Act or under any other statute or at common
law or otherwise, and, except as hereinafter provided, will reimburse the
Company and each such director, officer, underwriter or controlling person for
any legal or other expenses reasonably incurred by them or any of them in
connection with investigating or defending any actions whether or not resulting
in any liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, in any
preliminary or amended preliminary prospectus or in the prospectus (or in the
registration statement or prospectus as from time to time amended or
supplemented) or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, but only insofar as any
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company in connection therewith by you
in your capacity as a selling stockholder and not otherwise, expressly for use
therein provided in such capacity, provided however, that your maximum liability
hereunder shall be equal to the amount received by you from the sale of your
Shares pursuant to the registration statement. Promptly after receipt of notice
of the commencement of any action in respect of which indemnity may be sought
against you, the Company will notify you in writing of the commencement thereof,
and you shall, subject to the provisions hereinafter stated, assume the defense
of such action (including the employment of counsel, who shall be counsel
reasonably satisfactory to the Company) and the payment of expenses insofar as
such action shall relate to the alleged liability in respect of which indemnity
may be sought against you. The Company and each such director, officer,
underwriter or controlling person shall have the right to employ separate
counsel in any such action and to participate in the defense thereof but the
fees and expenses of such counsel shall not be at your expense unless employment
of such counsel has been specifically authorized by you. You shall not be liable
to indemnify any person for any settlement of any such action effected without
your consent.
- 8 -
<PAGE> 9
In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which you or the Company may
be entitled to indemnification under this Section 9, but it is judicially
determined (by the entry of a final judgement or decree by a court of competent
jurisdiction from there is no further right of appeal) that such indemnification
may not be enforced notwithstanding the provisions of this Section 9, in such
case, then you and the Company will contribute to the aggregate losses, claims,
damages or liabilities to which you and it may be subject (after contribution
from others) in such proportion as is appropriate to reflect the relative fault
of you and the Company in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations, provided, however, that in no case shall you
be required to contribute any amount in excess of the amount received by you
from your sale of Shares pursuant to such registration statement, and further
provided that no person or entity guilty of fraudulent misrepresentation (within
the meaning of Section 11 of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
10. Other Agreements.
10.1 Further Assurances. You 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.
10.2 No Obligation as to Employment. The Company is not by reason of
this Agreement obligated to employ or to continue to employ you in any capacity.
10.3 Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the receiving party's
address set forth above or to such other address as a party may designate by
notice hereunder, and shall be either (i) delivered by hand, (ii) made by telex,
telecopy or facsimile transmission, (iii) sent by overnight courier, or (iv)
sent by registered mail, return receipt requested, postage prepaid. All notices,
requests, consents and other communications hereunder shall be deemed to have
been given either (i) if by hand, at the time of the delivery thereof to the
receiving party at the address of such party set forth above, (ii) if made by
telex, telecopy or facsimile transmission, at the time that receipt thereof has
been acknowledged by electronic confirmation or otherwise, (iii) if sent by
overnight courier, on the next business day following the day such notice is
delivered to the courier service, or (iv) if sent by registered mail, on the 5th
business day following the day such mailing is made.
- 9 -
<PAGE> 10
10.4 Entire Agreement. This Agreement embodies the entire agreement and
understanding between you and the Company with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement of any kind not expressly set forth in this Agreement
shall affect, or be used to interpret, change or restrict, the express terms and
provisions of this Agreement.
10.5 Modifications and Amendments. The terms and provisions of this
Agreement may be modified or amended only by written agreement executed by all
parties hereto.
10.6 Waivers and Consents. The terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
10.7 Assignment. The rights and obligations under this Agreement may
not be assigned by either party hereto without the prior written consent of the
other party, provided, however, that the Company may assign its rights to
purchase any or all of the Shares pursuant to the Repurchase Option to any
person designated by the Board of Directors of the Company.
10.8 Benefit. All statements, representations, warranties, covenants
and agreements in this Agreement shall be binding on the parties hereto and
shall inure to the benefit of the respective successors and permitted assigns of
each party hereto. Nothing in this Agreement shall be construed to create any
rights or obligations except among the parties hereto, and no person or entity
shall be regarded as a third-party beneficiary of this Agreement.
10.9 Governing Law. This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and governed by the
law of The Commonwealth of Massachusetts, without giving effect to the conflict
of law principles thereof.
10.10 Severability. In the event that any court of competent
jurisdiction shall determine that any provision, or any portion thereof,
contained in this Agreement shall be unreasonable or unenforceable in any
respect, then such provision shall be deemed limited to the extent that such
court deems it
- 10 -
<PAGE> 11
reasonable and enforceable, and as so limited shall remain in full force and
effect. In the event that such court shall deem any such provision, or portion
thereof, wholly unenforceable, the remaining provisions of this Agreement shall
nevertheless remain in full force and effect.
10.11 Headings and Captions. The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and shall
in no way modify, or affect the meaning or construction of any of the terms or
provisions hereof.
10.12 No Waiver of Rights, Powers and Remedies. No failure or delay by
a party hereto in exercising any right, power or remedy under this Agreement,
and no course of dealing between the parties hereto, shall operate as a waiver
of any such right, power or remedy of the party. No single or partial exercise
of any right, power or remedy under this Agreement by a party hereto, nor any
abandonment or discontinuance of steps to enforce any such right, power or
remedy, shall preclude such party from any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The election of any
remedy by a party hereto shall not constitute a waiver of the right of such
party to pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving such
notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.
10.13 Survival of Representations and Warranties. All representations
and warranties made by the parties hereto in this Agreement or in any other
agreement, certificate or instrument provided for or contemplated hereby, shall
survive the execution and delivery hereof and any investigations made by or on
behalf of the parties.
10.14 No Broker or Finder. Each of the parties hereto represents and
warrants to the other that no broker, finder or other financial consultant has
acted on its behalf in connection with this Agreement or the transactions
contemplated hereby in such a way as to create any liability on the other. Each
of the parties hereto agrees to indemnify and save the other harmless from any
claim or demand for commission or other compensation by any broker, finder,
financial consultant or similar agent claiming to have been employed by or on
behalf of such party and to bear the cost of legal expenses incurred in
defending against any such claim.
10.15 Counterparts. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate
- 11 -
<PAGE> 12
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing accurately sets forth your understanding and
agreement, please sign the enclosed copy of this agreement and return it to us.
Very truly yours
MYCO PHARMACEUTICALS INC.
By:_________________________
Gary Anderson,
Chairman
Accepted and agreed this
____ day of __________, 1992
_________________________
Dr. Barry A. Berkowitz
- 12 -
<PAGE> 13
Election to Include Gross Income in Year
of Transfer Pursuant to Section 83(b)
of the Internal Revenue Code
The undersigned hereby elects pursuant to Section 83(b) of the Internal
Revenue Code with respect to the property described below and supplies the
following information in accordance with the regulations promulgated thereunder:
1. The name, address and social security number of the undersigned are:
Name: ___________________________________________
Address: ___________________________________________
Social Security No.: ___________________________________________
2. Description of property with respect to which the election is being
made:
___________________________________ (_________) shares (the "Shares")
of Common Stock, $.001 par value per share, of Myco Pharmaceuticals
Inc. a Delaware corporation, (the "Company").
3. Date of transfer of shares: February 19, 1992
4. Taxable year of transfer: 1992
5. Nature of restrictions to which property is subject:
If the service of taxpayer as an employee or consultant of the Company
terminates for any reason during the periods set forth below, the Company may
repurchase all or any portion of the Shares set forth below at the acquisition
price paid by the taxpayer:
<TABLE>
<CAPTION>
Period Number of Shares
------ ----------------
<S> <C>
Prior to February 19, 1993 860,000
February 19, 1993 - February 18, 1994 645,000
February 19, 1994 - February 18, 1995 430,000
February 19, 1995 - February 18, 1996 215,000
After February 18, 1996 0
</TABLE>
6. The fair market value at time of transfer (determined without regard to
any restrictions other than restrictions which by their terms will
never lapse) of the property with respect to which this election is
being made is $.001 per Share.
- 13 -
<PAGE> 14
7. The amount paid by taxpayer for said property is $.001 per share.
8. A copy of this statement has been furnished to the Company.
Dated:__________________________________ ___________________________________
Signature of Taxpayer
- 14 -
<PAGE> 1
EXHIBIT 10.25
MYCO PHARMACEUTICALS INC.
MAIN OFFICE Barry A. Berkowitz Ph.D
Suite 2200 President and
One Kendall Square Chief Executive Officer
Cambridge, MA 02139
617-621-7073
Fax: 617-621-7103
PENNSYLVANIA OFFICE December 23, 1992
5 Pinetree Place
Fort Washington, PA 19034
215-646-2984
Fax: 215-654-1334
Dr. William E. Timberlake
University of Georgia
Athens, Georgia
Dear Bill:
I am very pleased that we have orally agreed upon the terms for your joining
Myco Pharmaceuticals Inc. as follows:
You will become Vice President of Research of Myco Pharmaceuticals Inc. We are
very positive about the excellent match of your background, career goals and
vision with the mission of our company.
RESPONSIBILITIES: Molecular Biology, Fermentation Biology, Drug Discovery,
Chemistry and/or other senior executive responsibilities.
STARTING DATE: First Quarter 1993
SALARY: $170,000/year ($14,166.67/month). Your consulting fee will cease and
salary shall begin upon the first day of your employment.
BONUS: $60,000 first year signing bonus payable upon initiation of
responsibilities. Should you voluntarily leave the company in less than eighteen
months this bonus will be returned pro-rata for months not served.
EQUITY: Stock options for an additional 240,000 shares which will vest over 5
years at an exercise cost of $0.20 per share. The stock option grant will be for
10 years. These shares
<PAGE> 2
Dr. William E. Timberlake
December 23, 1992
Page 2
are in addition to your existing grant of 60,000 shares which you may retain
under the previously agreed terms.
Options for an additional 200,000 shares of stock will be made
available to you also at a price of $0.20 share. These shares will vest at a
rate of 100,000/event for 1) the approval of an IND and the launch of clinical
trials in humans for a Myco compound, and/or 2) demonstration of safety and
efficacy of a Myco compound in Phase two clinical trials. This option will
expire 12/31/95. Once vested this grant will be for 5 years.
All stock options will also have terms that the company customarily
provides its employees. You will also be eligible for additional options for
shares of stock in the future, the award of which will be based upon your
performance and that of the company.
RELOCATION ALLOWANCE: Up to $20,000 for reasonable relocation expenses.
Allowable expenses can include cost of selling your existing home and moving
expenses.
SEVERANCE: If the company terminates your employment without cause, you will be
entitled to the lesser of a continuation of your base salary for up to a year or
until you accept full time employment. Cause is defined as 1) the commission of
a felony or 2) willful neglect or unacceptable performance of duties not
corrected following written notice.
OTHER BENEFITS: You will be eligible to the extent you qualify for life
insurance, disability insurance, medical benefits as well as vacation as
established by the company for its Senior Executives. In addition, the company
will provide up to $2500/year for your choice of senior executive benefits for
example additional life insurance or additional disability insurance.
Myco will advance you $100,000 as loan for use as down payment for a
residence in Massachusetts. Interest will be at the prime rate. This loan will
be paid back to the company over 4 years. You may use any bonus awarded to repay
this loan. While employed by the company, for any year you are not awarded a
bonus no principal payment will be due.
We are very supportive of your continued career development. We will
approve your recruiting a post-doctoral fellow to work with you within the
company and will also support your obtaining an adjunct faculty appointment.
<PAGE> 3
Dr. William E. Timberlake
December 23, 1992
Page 3
This offer is subject to your successfully passing a medical physical exam as
required of all senior staff and is subject to final Board of Director approval.
All senior staff also sign a confidentiality and non-competition agreement.
Bill, your efforts and results as a leader of Myco Pharmaceuticals will not only
be extremely important to the Scientific Community but will also contribute
directly to building a great company with products of exceptional value and
therapeutic importance.
I am delighted with your oral positive response. Please sign this letter below
to confirm your acceptance of the terms of employment and return it to me by
return mail. Bill, we are excited about your leadership in Myco Pharmaceuticals.
Sincerely,
/s/ Barry Berkowitz
Barry Berkowitz
I have read and agree with the terms as set forth above.
/s/ William Timberlake 12/29/92
__________________________________ _____________________________________
Dr. Bill Timberlake Date
<PAGE> 1
EXHIBIT 10.26
Annex A
CONFIDENTIALITY AGREEMENT
Myco Pharmaceuticals Inc.
This CONFIDENTIALITY AGREEMENT is made this 1st day of March 1993,
between Myco Pharmaceuticals Inc., a Delaware corporation (the "Company") and
William E. Timberlake ("Employee").
WITNESSETH:
WHEREAS, the Company desires to retain Employee as an employee of the
Company and Employee wishes to be retained by the Company as an employee of the
Company pursuant to that Offer Letter of December 23, 1992, (the "Offer
Letter");
WHEREAS, the Company has developed, and the Company and/or the
Employee may continue to develop during the period Employee is so retained by
the Company, certain Proprietary Information, Inventions and Intellectual
Property (as those terms are hereinafter defined), that the Company wishes to
protect and maintain as confidential;
WHEREAS, the Company from time to time has received, and may continue
to receive during the period Employee is so retained by the Company, the
Proprietary Information of others and the Company wishes to maintain the
confidentiality of such Proprietary Information; and
WHEREAS, the Company has developed, and will continue to develop during
the period Employee is so retained by the Company, goodwill by, among other
things, substantial expenditure of money and effort;
NOW, THEREFORE, in consideration of the premises set forth below and
the mutual covenants and other undertakings contained in this agreement, and for
other good and valuable consideration, receipt and sufficiency of which are
hereby mutually acknowledged, IT IS AGREED:
1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(a) Agreement means this confidentiality agreement, including all
exhibits, schedules and annexations, as all may be amended from time to time in
the manner provided in this agreement.
(b) Employment means the current or anticipated or subsequent
retention of Employee by the Company as a full or part-time employee, consultant
or otherwise, or any other period during which Employee receives compensation
from the Company in any capacity.
<PAGE> 2
(c) Intellectual Property means any Invention, 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.
(d) Inventions includes ideas, discoveries, inventions, developments
and improvements, whether or not reduced to practice and whether or not
patentable or otherwise within the definition of Intellectual Property.
(e) Proprietary Information includes any scientific, technical,
trade or business secrets of the Company and any scientific, technical, trade or
business materials that are treated by the Company as confidential or
proprietary, including, but not limited to, Inventions belonging to the Company
and confidential information obtained by or given to the Company 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 Employee prior to its disclosure
by the Company; (ii) is publicly known through publication or otherwise through
no wrongful act of Employee; (iii) is received from a third party who rightfully
discloses it to Employee 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. Employee Acknowledgments. The Company has developed and will develop
its Proprietary Information and Intellectual Property over a substantial period
of time and at a substantial expense, and its Proprietary Information and
Intellectual Property are integral to the goodwill of the Company. During the
course of employment to the Company, Employee may develop or become aware of
Proprietary Information and/or Intellectual Property. Protection of the
Proprietary Information and Intellectual Property is necessary to conduct the
Company's business, and the Company is and shall at all times remain the sole
owner of the Company's business, and the Company is and shall at all times
remain the sole owner of the Company's Proprietary Information and Intellectual
Property.
3. Confidentiality. Employee shall at all times, both during and after
any termination of Employee's employment to the Company by either the Company or
Employee, maintain in confidence and not utilize the Proprietary Information or
the Intellectual Property of the Company, and/or technology or proprietary
information of others under confidential evaluation by the Company except in
performing services for the Company under the Offer Letter. Maintaining such
Proprietary Information and Intellectual Property in confidence shall include
refraining from disclosing such Proprietary Information or Intellectual Property
to any third party (except when duly and specifically authorized in writing to
do so for
- 2 -
<PAGE> 3
purpose of furthering the business of the Company), and refraining from using
such Proprietary Information or Intellectual Property for the account of
Employee or for any other person or business entity. Employee will not file
patents based on the Company's technology or confidential information, nor seek
to make improvements thereon, without the Company's written approval.
Employee agrees not to make any copies of the Proprietary Information
or Intellectual Property of the Company (except when appropriate for the
furtherance of the business of the Company or duly and specifically authorized
to do so) and promptly upon request, whether during or after the period of
employment to the Company, to return to the Company any and all documentary,
machine-readable or other elements or evidence of such Proprietary Information,
Intellectual Property, and any copies of either that may be in Employee's
possession or under Employee's control.
4. Rights to Inventions and Intellectual Property. In connection with
Employee's employment to the Company, or by use of the resources of the Company,
whether or not Employee is then retained by the Company, Employee may produce,
develop, create, invent, conceive or reduce to practice inventions and
Intellectual Property related to the business of the Company. Employee shall
maintain and furnish to the Company complete and current records of all such
Inventions and Intellectual Property and disclose to the Company in writing any
such Inventions and Intellectual Property. Employee agrees that all such
Inventions and Intellectual Property are and shall be the exclusive property of
the Company, and that the Company may use or pursue them without restriction or
additional compensation.
Employee: (i) hereby assigns, set over and transfers to the Company all
of his right, title and interest in and to such Inventions and Intellectual
Property; (ii) agrees that Employee and his agents shall, during and after the
period Employee is retained by the Company, cooperate fully in obtaining patent,
trademark, service mark, copyright or other proprietary protection for such
Inventions and Intellectual Property, all in the name of the Company (but only
at Company 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 the Company of such
Inventions and Intellectual Property; and (iii) shall, upon leaving the Company,
provide to the Company in writing a full, signed statement of all Inventions and
Intellectual Property in which Employee participated prior to termination of the
employment to the Company. Employee hereby designates the Company as its agent,
and grants to the Company a power of attorney with full substitution, which
power of attorney shall be deemed coupled with an interest, for the purposes of
effecting the foregoing assignments from the Employee to the Company.
5. Non-Solicitation. Employee shall not during the term of the
employment or at any time during the two (2) years following termination of
employment solicit any person
- 3 -
<PAGE> 4
who is employed by or a consultant to the Company or any affiliate or subsidiary
of the Company either during Employee's period of employment or during such two
(2) year period, to terminate such person's employment by or employment to the
Company, 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 employment to the Company, affiliate or subsidiary.
6. Continued Obligations. Employee's obligations under this Agreement
shall not be affected: (i) by any termination of Employee's employment,
including termination upon the Company's initiative; nor (ii) by any change in
Employee's position, title or function with the Company; nor (iii) by any
interruption in employment during which Employee leaves and then rejoins the
Company for any period within a period of one year and for any reason. Nothing
herein shall be construed as constituting an employment agreement or an
undertaking by the Company to retain Employee's services for any stated period
of time.
7. No Conflicting Agreements. Employee represents and warrants that
execution and performance of this Agreement does not and will not violate,
conflict with, or constitute a default under any contract, commitment,
agreement, understanding, arrangement, or restriction, or any adjudication,
order, injunction or finding of any kind by any court or agency to which
Employee may be a party or by which Employee may be bound.
8. Remedies. In the event of any breach by Employee of any of the
provisions of this Agreement, the Company shall be entitled, in addition to
monetary damages and to any other remedies available to the Company under this
Agreement and at law, to equitable relief, including injunctive relief, and to
payment by Employee of all costs incurred by the Company in enforcement against
Employee of the provisions of this Agreement, including reasonable attorneys'
fees.
9. General Provisions.
(a) 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.
(b) Notice. 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 therefore or when mailed by United States registered or
certified mail, return receipt requested, addressed as follows:
- 4 -
<PAGE> 5
If to Employee, to: Dr. William E. Timberlake
Rt 1, Box 235
Comer, GA 30629
If to the Company, to: Barry A. Berkowitz, President
Myco Pharmaceuticals Inc.
5 Pinetree Place
Fort Washington, PA 19034
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 in address shall be
effective upon receipt.
(c) Severability. If any provision of this Agreement shall be found
to be invalid, inoperative or unenforceable in law or equity, such finding shall
not affect the validity of any other provisions of this Agreement, which shall
be construed, reformed and enforced to effect the purposes of this Agreement to
the fullest extent permitted by law.
(d) Miscellaneous. This Agreement (i) may be executed in any number
of counterparts, each of which, when executed by both parties to this Agreement
shall be deemed to be an original, and all of which counterparts together shall
constitute one and the same instrument; (ii) shall be governed by and construed
under the law of the Commonwealth of Massachusetts, without application of
principles of conflicts of laws; (iii) along with the Offer Letter, constitute
the entire agreement of the parties with respect to the subject matter hereof,
superseding all prior oral and written communications, proposals, negotiations,
representations, understanding, courses of dealing, agreements, contracts, and
the like between the parties in such respect; (iv) may be amended, modified, or
terminated, and any right under this Agreement may be waived in whole or in
part, only by a writing signed by both parties; (v) contains headings only for
convenience, which headings do not form part, and shall not be used in
construction, of this Agreement; (vi) shall bind and inure to the benefit of
the parties and their respective legal representatives, successors and assigns,
except that no party may delegate any of its or his obligations under this
Agreement, or assign this Agreement, without the prior written consent of the
other party, except the Company may assign this Agreement in connection with the
merger, consolidation, or sale of all or substantially all assets of the
Company; and (vii) be enforced only in courts located within the Commonwealth of
Massachusetts and the parties hereby agree that such courts shall have venue and
exclusive subject matter and personal jurisdiction, and consent to service of
process by registered mail, return receipt requested, or by any other manner
provided by law.
- 5 -
<PAGE> 6
Executed under seal as of the date first above written.
Myco Pharmaceuticals Inc.
By: ____________________________________
Title
____________________________________
Employee
- 6 -
<PAGE> 1
EXHIBIT 10.27
MYCO PHARMACEUTICALS INC.
5 Pinetree Place
Fort Washington, PA 19034
January 22, 1993
Dr. William E. Timberlake
Rt. 1, Box 235
Comer, GA 30629
Dear Bill,
This letter is to confirm our understanding with respect to (i) your
agreement not to compete with the Company and (ii) your agreement to protect and
preserve information and property which is confidential and proprietary to the
Company or other third parties with whom the Company does business (the terms
and conditions agreed to in this letter shall hereinafter be referred to as the
"Agreement"). In consideration of the mutual promises and covenants contained in
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, we have agreed as follows:
1. Prohibited Competition. We have discussed, and you recognize and
acknowledge the competitive and proprietary nature of the Company's business
operations.
You acknowledge and agree that a business will be deemed competitive
with the Company if it performs any of the services, manufactures or sells any
of the products provided or offered by the company or is involved in the
research, or development of processes, products or techniques in the Company's
Field of Interest (such business to be referred to as "competitive business").
The term Company's "Field of Interest" currently means the development of
products or processes as anti-infective therapeutics or diagnostics with an
initial emphasis on anti-fungus and commercial use of fungis or yeasts in drug
screening, production, development or testing. The Company may modify the
definition of its Field of Interest by written notice to you based on the
activities in which the Company is then engaged or in which the Company then
proposes to be engaged.
You further acknowledge and agree that during the course of performing
services for the Company as an employee, the Company will furnish, disclose or
make available to you confidential and proprietary information related to the
Company's business and that the Company may provide you with unique and
specialized training. You also acknowledge that such confidential information
and the training to be provided by the Company have been developed and will be
developed by the Company and others with whom the Company has a relationship
through the expenditure by the Company and others of substantial time, effort
<PAGE> 2
and money and that all such confidential information and training could be used
by you to compete with the Company.
Accordingly, you hereby agree in consideration of the Company's
agreement to engage you as an employee and your compensation thereof and in view
of the confidential position to be held by you, the unique and specialized
training which the Company may provide you and the confidential nature and
proprietary value of the information which the Company may share with you, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, as follows:
During the period during which you perform services for or at the
request of the Company (the "Term") and for a period of one year following the
expiration or termination of the Term (the "Restricted Term"), whether such
termination is voluntary or involuntary, you shall not, without the prior
written consent of the Company:
(i) For yourself or on behalf of any other, directly or
indirectly, either as principal, agent, stockholder, employee,
consultant, representative or in any other capacity, own, manage,
operate or control, or be concerned, connected or employed by, or
otherwise associate in any manner with, engage in or have a financial
interest in any business which is directly or indirectly competitive
with the business of the Company within the World (the "Restricted
Territory"), except that nothing contained herein shall preclude you
from purchasing or owning stock in any such business if such stock is
publicly traded, and provided that your holdings do not exceed three
(3%) percent of the issued and outstanding capital stock of such
business.
(ii) Either individually or on behalf of or through any third
party, solicit, divert or appropriate or attempt to solicit, divert or
appropriate, for the purpose of competing with the Company or any
present or future parent, subsidiary or other affiliate of the Company
which is engaged in a similar business as the Company, any customers or
patrons of the Company, or any prospective customers or patrons with
respect to which the Company has developed or made a sales presentation
(or similar offering of services), located within the Restricted
Territory.
(iii) Either individually or on behalf of or through any third
party, directly or indirectly, solicit, entice or persuade or attempt
to solicit, entice or persuade any other employees of or consultants to
the Company or any parent or future parent or affiliate of the Company
to leave the services of the Company or any parent or future parent or
affiliate for any reason.
You further recognize and acknowledge that (i) the types of employment
which are prohibited by this paragraph are narrow and reasonable in relation to
the skills which represent your principal salable asset both to the Company and
to your other prospective employees, and (ii) the specific but broad
geographical scope of the provisions of this paragraph is reasonable, legitimate
and fair to you in light of the Company's need to market its services and sell
its products in a large geographic area in order to have a sufficient customer
base to make the Company's business profitable and in light of the limited
<PAGE> 3
restrictions on the type of employment prohibited herein compared to the types
of employment for which you are qualified to earn your livelihood.
If any part of this section should be determined by a court of
competent jurisdiction to be unreasonable in duration, geographic area, or
scope, then this section is intended to and shall extend only for such period of
time, in such area and with respect to such activity as is determined to be
reasonable.
2. Protected Information. Upon execution of this Agreement, you shall
execute and deliver a Confidentiality Agreement in the form attached hereto as
Annex A.
3. Continuing Obligations. Your obligations under this Agreement other
than the provisions of this Agreement shall not be affected: (i) by any
termination of your consulting or employment arrangement, including termination
upon the Company's initiative; nor (ii) by any change in your position, title or
function with the Company; nor (iii) by any interruption in the consulting or
employment arrangement during which you leave and rejoin the Company.
4. Records. Upon termination of your relationship with the Company, you
shall deliver to the Company any property of the Company which may be in your
possession including products, materials, memoranda, notes, records, reports, or
other documents or photocopies of the same.
5. No Conflicting Agreements. You hereby represent and warrant that you
have no commitments or obligations inconsistent with this Agreement and you
hereby agree to indemnify and hold the Company harmless against any claim based
upon circumstances alleged to be inconsistent with such representation and
warranty.
6. No Employment Created. This Agreement does not constitute, and shall
not be construed as constituting, an undertaking by the Company to hire you as
an employee or consultant of the Company.
7. Waiver of Provisions. Failure of any party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted hereunder or of the future performance of any such term or
condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by or on behalf of the waiving party.
8. Notices. Any notice or other communication required or permitted
hereunder shall be deemed sufficiently given if sent by registered or certified
mail, postage and fees prepaid, addressed to the party to be notified as
follows: if to the Company to its address set forth above, with a copy to Peter
F. Demuth, Esquire, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One
Financial Center, Boston, MA 02111 and if to you to your address set forth
above, or in each case to such other address as either party may from time to
time
<PAGE> 4
designate in writing to the other. Such notice or communication shall be deemed
to have been given as of the date deposited with the United States Postal
Service.
9. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Massachusetts,
without application of the conflicts of law provisions thereof.
10. Entire Agreement. This Agreement, together with Annex A hereto,
embodies the entire agreement and understanding between the parties hereto and
supersedes all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, warranty, covenant or
agreement of any kind not set forth in this Agreement shall affect, or be used
to interpret, change or restrict, the express terms and provisions of this
Agreement.
11. Invalidity. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations. If any provision of this Agreement, or the
application thereof to any person or circumstance, shall, for any reason and to
any extent, be invalid or unenforceable, the remainder of this Agreement and the
application of such provisions to other persons or circumstances shall not be
affected thereby, but rather shall be construed, reformed and enforced to the
greatest extent permitted by law.
12. Injunctive Relief. You hereby expressly acknowledge that any breach
or threatened breach of any of the terms and/or conditions set forth in this
Agreement will result in substantial, continuing and irreparable injury to the
Company. Therefore, you hereby agree that, in addition to any other remedy that
may be available to the Company, the Company shall be entitled to injunctive or
other equitable relief by a court of appropriate jurisdiction in the event of
any breach or threatened breach of the terms of this Agreement.
13. Assignment. The Company may assign its rights and obligations
hereunder to any person or entity who succeeds to all or substantially all of
the Company's business or that aspect of the Company's business in which you are
principally involved. Your rights and obligations under this Agreement may not
be assigned without the prior written consent of the Company.
14. Expenses. Should any party breach this Agreement, in addition to
all other remedies available at law or in equity, such party shall pay all of
any other party's costs and expenses resulting therefrom and/or incurred in
enforcing this Agreement, including legal fees and expenses.
15. Modification and Amendment. This Agreement shall not be modified or
amended except by an instrument in writing signed by or on behalf of the parties
hereto.
16. Parties Benefitted. Subject to the foregoing, this Agreement shall
be binding upon and inure to the benefit of the Company and any parent,
subsidiary or other affiliate of
<PAGE> 5
the Company, and their respective successors and assigns, and shall be binding
upon and inure to the benefit of you and your heirs, executors and
administrators.
17. Headings. Section and other headings contained in this Agreement
are for reference purposes only and are in no way intended to define, interpret,
describe or otherwise limit the scope, extent or intent of this Agreement or any
of its provisions each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
18. Counterparts. This Agreement may be executed in one or more
counterparts each of which will be deemed an original, but all of which together
shall constitute one and the same instrument.
If the foregoing accurately sets forth our agreement, please so
indicate by signing and returning to us the enclosed copy of this letter.
Very truly yours,
MYCO Pharmaceuticals Inc.
/s/ Barry Berkowitz
--------------------------
Accepted and Approved
/s/ William E. Timberlake
- --------------------------------------
William E. Timberlake
Dated: 2/16/93
<PAGE> 1
EXHIBIT 10.28
November 11, 1995
Reimar C. Bruening, Ph.D.
3328-12 Brittan Avenue
San Carlos, CA 94070
Dear Reimar:
We are pleased with the prospect of your joining Myco Pharmaceuticals as an
employee and to offer you the position of Vice President of Chemical Sciences.
We believe you will find your position challenging and professionally rewarding.
Terms of the offer are as follows:
Responsibilities: You will have executive responsibility for all chemistry
related programs as well as interact with other members of the scientific team
to move drugs through development. You will participate actively in corporate
strategic planning and involvement in collaboration with research and
development relationships. Your specific responsibilities will be determined by
the Executive Vice President - Research.
You will initially report to the Executive Vice President Research.
Your services are to be on a full-time basis with your best effort.
Salary: You will be paid at the rate of $12,500/month
($150,000/year).
Equity: Options of 62,500 shares of Common Stock will be recommended to the
Board of Directors to be made available to you at a price of $0.50 per share.
These shares will vest over a period of five years subject to the conditions set
forth in the Company's Standard Stock Option Agreement. Options for an
additional 62,500 shares of Common Stock at $0.50 per share will be recommended
to the Board of Directors based on performance of certain milestone objectives.
Based on conversations with you, these milestones and performance dates will be
set within the first ninety (90) days of employment by the CEO, Executive Vice
President Research and you.
<PAGE> 2
Other Benefits: You will receive life insurance, disability insurance, family
medical benefits and vacation to the extent you qualify for those benefits as
established by the Company as described in the Employee Handbook.
Timing: We would like you to begin not later than December 1, 1995.
Relocation Allowance: A lump sum of $20,000 for reasonable
relocation expenses will be provided to you.
Loan: Myco will advance you $10,00 as loan to further assist in your transition.
Interest will be charged at the minimum rate as established by the Internal
Revenue Service. The company has the right to offset any bonuses earned by you
as repayment of the loan.
This offer is subject to final Board of Director's approval and execution of our
standard Confidentiality and Non-Competition Agreement.
The values and goals you have expressed to me during our conversations convince
me that we can accomplish terrific results together. I think this is an
opportunity for you to see your creative abilities and knowledge put to great
use in the development of new drugs. I am genuinely excited by the possibility
of having you as an employee of the Company. Reimar, we look forward to your
positive response to this offer and to working with you in the near future.
Please sign one copy of this letter to indicate your acceptance of the terms of
employment and return it to me by November 15, 1995.
Sincerely,
/S/ William Timberlake
William Timberlake, Ph.D.
Executive Vice President, Research
I have read and agree with the terms as set forth above.
/s/ Reimar Bruening 11-14-95
______________________________ ____________________________
Reimar Bruening Date
<PAGE> 1
Exhibit 10.29
MYCO PHARMACEUTICALS INC.
EMPLOYEE CONFIDENTIALITY AGREEMENT
This confidentiality agreement is made this 15th day of November 1995,
between Myco Pharmaceuticals Inc., a Delaware corporation (the "Company"), and
Reimar C. Bruening ("Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to retain Employee as an employee of the
Company and Employee wishes to be retained by the Company as an employee of the
Company pursuant to the Offer Letter dated November 10, 1995 (the "Offer
Letter");
WHEREAS, the Company has developed, and the Company and/or the Employee
may continue to develop during the period Employee is so retained by the
Company, certain Proprietary Information, Inventions and Intellectual Property
(as those terms are hereinafter defined), that the Company wishes to protect
and maintain as confidential;
WHEREAS, the Company from time to time has received, and may continue
to receive during the period Employee is so retained by the Company, the
Proprietary Information of others, and the Company wishes to maintain the
confidentiality of such Proprietary Information; and
<PAGE> 2
WHEREAS, the Company has developed, and will continue to develop during
the period Employee is so retained by the Company, goodwill by, among other
things, substantial expenditure of money and effort;
NOW, THEREFORE, in consideration of the premises set forth below and
the mutual covenants and other undertakings contained in this Agreement, and
for other good and valuable consideration, receipt and sufficiency of which are
hereby mutually acknowledged, IT IS AGREED:
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the following meanings:
(a) Agreement means this confidentiality agreement, including all
exhibits, schedules and annexations, as all may be amended from time to time in
the manner provided in this Agreement.
(b) Employment means the current or anticipated or subsequent
retention of Employee by the Company as a full or part-time employee,
consultant or otherwise, or any other period during which Employee receives
compensation from the Company in any capacity.
(c) Intellectual Property means any Invention, 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.
<PAGE> 3
(d) Inventions includes ideas, discoveries, inventions, developments
and improvements, whether or not reduced to practice and whether or not
patentable or otherwise within the definition of Intellectual Property.
(e) Proprietary Information includes any scientific, technical, trade
or business secrets of the Company and any scientific, technical, trade or
business materials that are treated by the Company as confidential or
proprietary, including, but not limited to, Inventions belonging to the Company
and confidential information obtained by or given to the Company 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 Employee prior to its disclosure
by the Company; (ii) is publicly known through publication or otherwise through
no wrongful act of Employee; (iii) is received from a third party who
rightfully discloses it to Employee without restriction on its subsequent
disclosure; or (iv) is disclosed pursuant to the lawful requirement of a
governmental agency or by order of court to competent jurisdiction, provided
that such disclosure is subject to all applicable governmental or judicial
protection available for like material.
2. EMPLOYEE ACKNOWLEDGEMENTS. The Company has developed and will develop
its Proprietary Information and Intellectual Property over a substantial period
of time and at a substantial expense, and its Proprietary Information and
Intellectual Property are integral to the goodwill of the Company. During the
course of employment with the Company, Employee may develop or become aware of
Proprietary Information and/or Intellectual Property. Protection of
<PAGE> 4
the Proprietary Information and Intellectual Property is necessary to conduct
the Company's business, and the Company is and shall at all times remain the
sole owner of the Company's Proprietary Information and Intellectual Property.
3. CONFIDENTIALITY. Employee shall at all times, both during and after
any termination of Employee's employment with the Company by either the Company
or Employee, maintain in confidence and not utilize the Proprietary Information
or the Intellectual Property of the Company, and/or technology or proprietary
information of others under confidential evaluation by the Company except in
performing services for the Company. Maintaining such Proprietary Information
and Intellectual Property in confidence shall include refraining from
disclosing such Proprietary Information or Intellectual Property to any third
party (except when duly and specifically authorized in writing to do so for
purpose of furthering the business of the Company), including refraining from
utilizing or transferring any of the Company's materials other than with the
Company's prior written consent, and refraining from using such Proprietary
Information or Intellectual Property for the account of Employee or for any
other person or entity. Employee will not file patents based on the Company's
technology or confidential information, nor seek to make improvements thereon,
without the Company's written approval. Employee agrees not to make any copies
of the Proprietary Information or Intellectual Property of the Company (except
when appropriate for the furtherance of the business of the Company or duly and
specifically authorized to do so) and promptly upon request, whether during or
after the period of employment to the Company, to return to the Company any and
all documentary, machine-readable or other elements or evidence of such
Proprietary Information, Intellectual Property, and any
<PAGE> 5
copies of either that may be in Employee's possession or under Employee's
control.
4. Rights to Inventions and Intellectual Property. In connection with
Employee's employment with the Company, or by use of the resources of the
Company, whether or not Employee is then retained by the Company, Employee may
produce, develop, create, invent, conceive or reduce to practice Inventions and
Intellectual Property related to the business of the Company. Employee shall
maintain and furnish to the Company complete and current records of all such
Inventions and Intellectual Property and disclose to the Company in writing any
such Inventions and Intellectual Property. Employee agrees that all such
Inventions and Intellectual Property are and shall be the exclusive property of
the Company, and that the Company may use or pursue them without restriction or
additional compensation.
Employee: (i) hereby assigns, sets over and transfers to the Company
all of his right, title and interest in and to such Inventions and Intellectual
Property; (ii) agrees that Employee and his agents shall, during and after the
period Employee is retained by the Company, cooperate fully in obtaining
patent, trademark, service mark, copyright or other proprietary protection for
such Inventions and Intellectual Property, all in the name of the Company (but
only at Company 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 the Company of such
Inventions and Intellectual Property; and (ii) shall, upon leaving the Company,
provide to the Company in writing a full, signed statement of all Inventions
and Intellectual Property in which Employee participated prior to termination
of the employment with the Company.
<PAGE> 6
Employee hereby designates the Company as its agent, and grants to the Company
a power of attorney with full substitution, which power of attorney shall be
deemed coupled with an interest, for the purposes of effecting the foregoing
assignments from the Employee to the Company.
5. Non-Solicitation. Employee shall not during the term of the employment
or at any time during the two (2) years following termination of employment
solicit any person who is employed by or a consultant to the Company or any
affiliate or subsidiary of the Company either during Employee's period of
employment or during such two (2) year period, to terminate such person's
employment with the Company, 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 the Company, affiliate or subsidiary.
6. Continued Obligations. Employee's obligations under this Agreement
shall not be affected: (i) by any termination of Employee's employment,
including termination upon the Company's initiative; nor (ii) by any change in
Employee's position, title or function with the Company; nor (iii) by any
interruption in employment during which Employee leaves and then rejoins the
company for any period within a period of one year and for any reason. Nothing
herein shall be construed as constituting an employment agreement or an
undertaking by the Company to retain Employee's services for any stated period
of time.
You agree that you will provide, and that the Company may similarly
provide in its discretion, a copy of the covenants contained in this Agreement
to any business or enterprise which you may directly, or indirectly, own,
<PAGE> 7
manage, operate, finance, join, control or participate in the ownership,
management, operation, financing, control or control of, or with which you may
be connected as an officer, director, employee, partner, principal, agent,
representative, consultant or otherwise.
7. No Conflicting Agreements. Employee represents and warrants that
execution and performance of this Agreement does not and will not violate,
conflict with, or constitute a default under any contract, commitment,
agreement, understanding, arrangement, or restriction, or any adjudication,
order, injunction or finding of any kind by any court or agency to which
Employee may be a party or by which Employee may be bound.
8. Remedies. In the event of any breach by Employee of any of the
provisions of this Agreement, the Company shall be entitled, in addition to
monetary damages and to any other remedies available to the Company under this
Agreement and at law, to equitable relief, including injunctive relief, and to
payment by Employee of all costs incurred by the Company in enforcement against
Employee of the provisions of this Agreement, including reasonable attorneys'
fees.
9. General Provisions
(a) 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
<PAGE> 8
another instance, but each provision shall continue in full force and effect
with respect to any other then-existing or subsequent breach.
(b) Notice. 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 therefore or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to Employee, to: Reimar C. Bruening
3328-12 Brittan Avenue
San Carlos, CA 94070
If to the Company, to: Barry A. Berkowitz, President
Myco Pharmaceuticals Inc.
One Kendall Square
Building 300
Cambridge, MA 02139
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.
<PAGE> 1
EXHIBIT 10.30
MYCO PHARMACEUTICALS INC.
NONCOMPETITION AGREEMENT
This Noncompetition Agreement is made this 15th day of November, 1995, between
Myco Pharmaceuticals Inc., a Delaware corporation (the "Company"), and Reimar C.
Bruening ("Employee").
W I T N E S S E T H
WHEREAS, the Company desires to retain Reimar C. Bruening as an
employee of the Company and Employee wishes to be retained by the Company as an
Employee of the Company pursuant to the Offer letter of November 10, 1995 (the
"Offer Letter");
WHEREAS, the Company has developed, and the Company and/or the Employee
may continue to develop during the period Employee is so retained by the
Company, certain Proprietary Information, Inventions and Intellectual Property
(as those terms are hereinafter defined), that the Company wishes to protect and
maintain as confidential;
WHEREAS, the Company from time to time has received, and may continue
to receive during the period Employee is so retained by the Company, the
Proprietary
<PAGE> 2
Information of others, and the Company wishes to maintain the confidentiality of
such Proprietary Information; and
WHEREAS, the Company has developed, and will continue to develop during
the period Employee is so retained by the Company, goodwill by, among other
things, substantial expenditure of money and effort;
NOW, THEREFORE, in consideration of the premises set forth below and
the mutual covenants and other undertakings contained in this Agreement, and for
other good and valuable consideration, receipt and sufficiency of which are
hereby mutually acknowledged, IT IS AGREED:
1. PROHIBITED COMPETITION. Employee recognize and acknowledge the competitive
and proprietary nature of the Company's business operations. Employee
acknowledges and agrees that a business will be deemed competitive with the
Company if it performs any of the services, manufactures or sells any of the
products provided or offered by the Company or is involved in the research, or
development of processes, products or techniques in the Company's Field of
Interest (such business to be referred to as a "competitive business"). The term
Company's "Field of Interest" currently means the development of products or
processes as anti-infective therapeutics or diagnostics and commercial use of
fungi, yeast, and bacteria in drug screening, production, development or
- 2 -
<PAGE> 3
testing. The Company may modify the definition of its Field of Interest by
written notice to Employee based on the activities in which the Company is then
engaged or in which the Company then proposes to be engaged.
Employee further acknowledges and agrees that during the course of performing
services for the Company as an employee, the Company will furnish, disclose or
make available to Employee confidential and proprietary information related to
the Company's business and that the Company may provide Employee with unique and
specialized training. Employee also acknowledges that such confidential
information and the training to be provided by the Company have been developed
and will be developed by the Company and others with whom the Company has a
relationship through expenditure by the Company and others of substantial time,
effort and money and that all such confidential information and training could
be used by Employee to compete with the Company.
Accordingly, Employee hereby agrees in consideration of the Company's agreement
to engage Employee as an employee and Employee's compensation thereof, and in
view of the confidential position to be held by Employee, the unique and
specialized training which the Company may provide Employee and the confidential
nature and proprietary value of the information which the Company may share with
Employee, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, as follows:
- 3 -
<PAGE> 4
During the period during which Employee performs services for or at the request
of the Company (the "Term") and for a period of one year following the
expiration or termination of the term (the "Restricted Term"), if Employee is
terminated without cause, Employee shall not, without the prior written consent
of the Company:
(i) Either individually or on behalf of or through any third party,
directly or indirectly, solicit, entice or persuade or attempt to solicit,
entice or persuade any other employees of or consultants to the Company or any
parent or future parent or affiliate of the Company to leave the services of the
Company or any parent or future parent or affiliate for any reason.
(ii) Either individually or on behalf of or through any third party
solicit, divert or appropriate or attempt to solicit, divert or appropriate, for
the purpose of competing with the Company or any present or future parent,
subsidiary or other affiliate of the Company which is engaged in a similar
business as the Company, any suppliers, customers or patrons of the Company, or
any prospective customers or patrons with respect to which the Company has
developed or made a sales presentation (or similar offering of services),
located within the Restricted Territory.
During the period during which Employee performs services for or at the request
of the Company and for a period of one year following the expiration or
termination of the term,
- 4 -
<PAGE> 5
if Employee voluntarily leaves the Company or Employee is terminated with cause,
Employee shall not, without the prior written consent of the Company:
(i) Either individually or on behalf of any other, directly or
indirectly, either as principal, agent, stockholder, employee, consultant,
representative or in any other capacity, own, manage, operate or control, or be
concerned, connected or employed by, or otherwise associate in any manner with,
engage in or have a financial interest in any business which is directly or
indirectly competitive with the business of the Company within the World (the
"Restricted Territory"), except that nothing contained herein shall preclude
Employee from purchasing or owning stock in any such business if such stock is
publicly traded, and provided that Employee's holdings do not exceed three (3%)
percent of the issued and outstanding capital stock of such business.
(ii) Either individually or on behalf of or through any third party,
solicit, divert or appropriate or attempt to solicit, divert or appropriate, for
the purpose of competing with the Company or any present ore future parent,
subsidiary or other affiliate of the Company which is engaged in a similar
business as the Company, any customers or patrons of the Company, or any
prospective customers or patrons with respect to which the Company has developed
or made a sales presentation (or similar offering of services), located within
the Restricted Territory.
- 5 -
<PAGE> 6
(iii) Either individually or on behalf of or through any third party,
directly or indirectly, solicit, entice or persuade or attempt to solicit,
entice or persuade any other employees of or consultants to the Company or any
parent or future parent or affiliate of the Company to leave the services of the
Company or any parent of future parent of affiliate for any reason.
Employee further recognizes and acknowledges that (i) the types of employment
which are prohibited by this paragraph are narrow and reasonable in relation to
the skills which represent Employee's principal salable asset both to the
Company and to Employee's other prospective employers, and (ii) the specific but
broad geographical scope of the provisions of this paragraph is reasonable,
legitimate and fair to Employee in the light of the Company's need to market its
services and sell its products in a large geographic area in order to have a
sufficient customer base to make the Company's business profitable and in light
of the limited restrictions on the type of employment prohibited herein compared
to the types of employment for which Employee is qualified to earn Employee's
livelihood. If any part of this section should be determined by a court of
competent jurisdiction to be unreasonable in duration, geographic area, or
scope, then this section is intended to and shall extend only for such period of
time, in such area and with respect to such activity as is determined to be
reasonable.
- 6 -
<PAGE> 7
2. PROTECTED INFORMATION. Upon execution of this Agreement, Employee shall
execute and deliver a Confidentiality Agreement in the form attached hereto as
Annex A.
3. CONTINUING OBLIGATIONS. Employee's obligations under this Agreement shall not
be affected: (i) by any termination of Employee's employment arrangement,
including termination upon the Company's initiative; nor (ii) by any change in
Employee's position, title or function with the Company; nor (iii) by any
interruption in the employment arrangement during which Employee leaves and
rejoins the Company.
4. RECORDS. Upon termination of Employee's relationship with the Company,
Employee shall deliver to the Company any property of the Company which may be
in Employee's possession including products, materials, memoranda, notes,
records, reports, or other documents or photocopies of the same.
5. NO CONFLICTING AGREEMENTS. Employee hereby represents and warrants that
Employee has no commitments or obligations inconsistent with this Agreement and
Employee hereby agrees to indemnify and hold the Company harmless against any
claim based upon circumstances alleged to be inconsistent with such
representation and warranty. Employee agrees to provide, and that the Company
may similarly provide in its discretion, a copy of the covenants contained in
this Agreement to any business or enterprise which Employee may directly, or
indirectly, own, manage, operate, finance, join, control or participate in the
- 7 -
<PAGE> 8
ownership, management, operation, financing, control or control of, or with
which Employee may be connected as an officer, director, employee, partner,
principal, agent, representative, consultant or otherwise.
6. NO EMPLOYMENT CREATED. This Agreement does not constitute, and shall not be
construed as constituting, an undertaking by the Company to hire Employee as an
employee or consultant of the Company.
7. WAIVER OF PROVISIONS. Failure of any party to insist, in one or more
instances, or performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted hereunder or of the future performance of any such term or
condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by or on behalf of the waiving party.
8. NOTICES. Any notice or other communication required or permitted hereunder
shall be deemed sufficiently given if sent by registered or certified mail,
postage and fees prepaid, addressed to the party to be notified as follows: if
to the Company to Myco Pharmaceuticals, Inc., One Kendall Square, Building 300,
Cambridge, MA 02139, with a copy to Peter F. Demuth, Esquire, Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, MA 02111,
and if to Employee to Employee to Myco
- 8 -
<PAGE> 9
Pharmaceuticals, Inc., One Kendall Square, Building 300, Cambridge, MA 02139, or
in each case to such other address as either party may from time to time
designate in writing to the other. Such notice or communication shall be deemed
to have been given as of the date deposited with the United States Postal
Service.
9. GOVERNING LAW. This Agreement shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Massachusetts, without
application of the conflicts of law provisions thereof.
10. ENTIRE AGREEMENT. This Agreement, together with Annex A hereto, embodies the
entire agreement and understanding between the parties hereto and supersedes all
prior oral or written agreements and understandings relating to the subject
matter hereof. No statement, representation, warranty, covenant or agreement of
any kind not set forth in this Agreement shall affect, or be used to interpret,
change or restrict, the express terms and provisions of the Agreement.
11. INVALIDITY. This Agreement is intended to be performed in accordance with,
and only to the extent permitted by, all applicable laws, ordinances, rules and
regulations. If any provision of the Agreement, or the application thereof to
any person or circumstance, shall, for any reason and to any extend, be invalid
or unenforceable, the remainder of this Agreement and the application of such
provisions to other persons or circumstances shall not
- 9 -
<PAGE> 10
be affected thereby, but rather shall be construed, reformed and enforced to the
greatest extent permitted by law.
12. INJUNCTIVE RELIEF. Employee hereby expressly acknowledges that any breach or
threatened breach of any of the terms and/or conditions set forth in this
Agreement will result in substantial, continuing and irreparable injury to the
Company. Therefore, Employee hereby agrees that, in addition to any other remedy
that may be available to the Company, the Company shall be entitled to
injunctive or other equitable relief by a court of appropriate jurisdiction in
the event of any breach or threatened breach of the terms of this Agreement.
13. ASSIGNMENT. The Company may assign its rights and obligations hereunder to
any person or entity who succeeds to all or substantially all of the Company's
business or that aspect of the Company's business in which Employee is
principally involved. Employee's rights and obligations under this Agreement may
not be assigned without the prior written consent of the Company.
14. EXPENSES. Should any party breach this Agreement, in addition to all other
remedies available at law or in equity, such party shall pay all of any other
party's costs and expenses resulting therefrom and/or incurred in enforcing this
Agreement, including legal fees and expenses.
- 10 -
<PAGE> 11
15. MODIFICATION AND AMENDMENT. This Agreement shall not be modified or amended
except by an instrument in writing signed by or on behalf of the parties hereto.
16. PARTIES BENEFITED. Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of the Company and any parent, subsidiary or other
affiliate of the Company, and their respective successors and assigns, and shall
be binding upon and inure to the benefit of the Employee and the Employee's
heirs, executors and administrators.
17. HEADINGS. Section and other headings contained in this Agreement are for
reference purposes only and are in no way intended to define, interpret,
describe or otherwise limit the scope, extent or intent of this Agreement or any
of its provisions each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
18. COUNTERPARTS. This Agreement may be executed in one or more counterparts
each of which will be deemed an original, but all of which together shall
constitute one and the same instrument.
- 11 -
<PAGE> 12
In Witness Whereof, the parties have executed this Agreement under seal
as of the date first forth above.
Myco Pharmaceuticals Inc.
/s/ William Timberlake 12/1/95
____________________________________
William Timberlake, Ph.D
Executive Director, Research
Accepted and Approved
/s/ Reimar C. Bruening
____________________________________
Reimar C. Bruening
12-01-95
Date: ______________________________
- 12 -
<PAGE> 1
Exhibit 10.31
August 26, 1992
Dr. Sean O'Connor
88 High Hill Rd.
Wallingford, CT 06492
Dear Sean,
We are excited about the possibilities of your becoming a founding scientist of
Myco Pharmaceuticals. On the basis of our conversations, I particularly am very
positive about the excellent match of your background, career goals and vision
with the mission of our company. We are pleased to offer you the position of
Director, Drug Discovery of Myco Pharmaceuticals Inc. Terms are as follows:
Responsibilities: drug screening and related chemistry; recruitment and
leadership of staff to effectively design, execute, interpret and communicate
scientific experiments related to high capacity drug discovery and the
identification and selection of lead compounds.
You will need to recommend goals and strategies for your group to achieve the
objectives and mission of the company. We will count on you to develop the
people in your group. You will ensure effective and cooperative interaction of
your group with other units of the company.
Salary: $102,000/year ($8,500 per month.).
Bonus: An annual bonus will be paid as determined by your performance and that
of the company. Compensation may be in the form of stock or cash for any Bonus
awarded.
Equity: Stock options of 50,000 shares vested over 5 years at a cost
<PAGE> 2
of $0.20 per share with the same terms that the company customarily provides
its employees.
Relocation Allowance: Up to $15,000 for relocation expense.
Other Benefits: You will be eligible for life insurance, disability insurance,
medical benefits and vacation as established by the company for its executives
to the extent you qualify for such benefits.
Timing: You indicated you could begin work within a month of accepting this
position.
This offer is subject to your successfully passing a medical physical exam
which is requested of all staff at the level of Director and above. The offer
is also subject to final Board of Director approval.
The values and goals you have expressed over the past few months of
interactions convinces me that we can accomplish terrific results together. We
look forward to a positive response to this offer. Please sign this letter to
indicate your acceptance of the terms of employment and return it to me within
the next two weeks. Sean, we look forward to your leadership in Myco
Pharmaceuticals.
Sincerely,
Barry Berkowitz Ph.D.
I have read and agree with the terms as set forth above.
_________________________________ _______________________
Dr. Sean O'Connor Date
<PAGE> 1
Exhibit 10.32
Annex A
CONFIDENTIALITY AGREEMENT
Myco Pharmaceuticals Inc.
This CONFIDENTIALITY AGREEMENT is made this 16th day of December 1992,
between Myco Pharmaceuticals Inc., a Delaware corporation (the "Company") and
Sean O'Connor ("Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to retain Employee as an employee of the
Company and Employee wishes to be retained by the Company as an employee of the
Company pursuant to that Offer Letter of August 26, 1992, (the "Offer Letter");
WHEREAS, the Company has developed, and the Company and/or the Employee may
continue to develop during the period Employee is so retained by the Company,
certain Proprietary Information, Inventions and Intellectual Property (as those
terms are hereinafter defined), that the Company wishes to protect and maintain
as confidential;
WHEREAS, the Company from time to time has received, and may continue to
receive during the period Employee is so retained by the Company, the
Proprietary Information of others, and the Company wishes to maintain the
confidentiality of such Proprietary Information; and
WHEREAS, the Company has developed, and will continue to develop during the
period Employee is so retained by the Company, goodwill by, among other
things, substantial expenditure of money and effort;
NOW, THEREFORE, in consideration of the premises set forth below and the
mutual covenants and other undertakings contained in this agreement, and for
other good and valuable consideration, receipt and sufficiency of which are
hereby mutually acknowledged, IT IS AGREED:
1. Definitions. As used in this Agreement, the following terms shall have
the following meanings:
(a) Agreement means this confidentiality agreement, including all
exhibits, schedules and annexations, as all may be amended from time to time in
the manner provided in this agreement.
(b) Employment means the current or anticipated or subsequent
retention of Employee by the Company as a full or part-time employee, consultant
or otherwise, or any other period during which Employee receives compensation
from the Company in any capacity.
<PAGE> 2
(e) Intellectual Property means any Invention, 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.
(d) Inventions includes ideas, discoveries, inventions,
developments and improvements, whether or not reduced to practice and whether
or not patentable or otherwise within the definition of Intellectual Property.
(e) Proprietary Information includes any scientific, technical,
trade or business secrets of the Company and any scientific, technical, trade or
business materials that are treated by the Company as confidential or
proprietary, including, by not limited to, inventions belonging to the Company
and confidential information obtained by or given to the Company 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 Employee prior to its disclosure
by the Company; (ii) is publicly known through publication or otherwise through
no wrongful act of Employee; (iii) is received from a third party who
rightfully discloses it to Employee 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. Employee Acknowledgements. The Company has developed and will
develop its Proprietary Information and Intellectual Property over a
substantial period of time and at a substantial expense, and its Proprietary
Information and Intellectual Property are integral to the goodwill of the
Company. During the course of employment to the Company, Employee may develop
or become aware of Proprietary Information and/or Intellectual Property.
Protection of the Proprietary Information and Intellectual Property is
necessary to conduct the Company's business, and the Company is and shall at
all times remain the sole owner of the Company's Proprietary Information and
Intellectual Property.
3. Confidentiality. Employee shall at all times, both during and
after any termination of Employee's employment to the Company by either the
Company or Employee, maintain in confidence and not utilize the Proprietary
Information or the Intellectual Property of the Company, and/or technology or
proprietary information of others under confidential evaluation by the Company
except in performing services for the Company under the Offer Letter.
Maintaining such Proprietary Information and Intellectual Property in
confidence shall include refraining from disclosing such Proprietary
Information or Intellectual Property to any third party (except when duly and
specifically authorized in writing to do so for purpose of furthering the
business of the Company), and refraining from using such Proprietary
Information or Intellectual Property for the account of Employee or for any
other person or business entity. Employee will not file patents based on the
Company's technology or confidential
<PAGE> 3
information, nor seek to make improvements thereon, without the Company's
written approval.
Employee agrees not to make any copies of the Proprietary Information
or Intellectual Property of the Company (except when appropriate for the
furtherance of the business of the Company or duly and specifically authorized
to do so) and promptly upon request, whether during or after the period of
employment to the Company, to return to the Company any and all documentary,
machine-readable or other elements or evidence of such Proprietary Information,
Intellectual Property, and any copies of either that may be in Employee's
possession or under Employee's control.
4. Rights to Inventions and Intellectual Property. In connection with
Employee's employment to the Company, or by use of the resources of the Company,
whether or not Employee is then retained by the Company, Employee may produce,
develop, create, invent, conceive or reduce to practice Inventions and
Intellectual Property related to the business of the Company. Employee shall
maintain and furnish to the Company complete and current records of all such
Inventions and Intellectual Property and disclose to the Company in writing any
such Inventions and Intellectual Property. Employee agrees that all such
Inventions and Intellectual Property are and shall be the exclusive property of
the Company, and that the Company may use or pursue them without restriction or
additional compensation.
Employee: (i) hereby assigns, sets over and transfers to the Company
all of his right, title and interest in and to such Inventions and Intellectual
Property; (ii) agrees that Employee and his agents shall, during and after the
period Employee is retained by the Company, cooperate fully in obtaining
patent, trademark, service mark, copyright or other proprietary protection for
such Inventions and Intellectual Property, all in the name of the Company (but
only at Company 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 the Company of such
Inventions and Intellectual Property; and (iii) shall, upon leaving the
Company, provide to the Company in writing a full, signed statement of all
Inventions and Intellectual Property in which Employee participated prior
to termination of the employment to the Company. Employee hereby designates
the Company as its agent, and grants to the Company a power of attorney with
full substitution, which power of attorney shall be deemed coupled with an
interest, for the purposes of effecting the foregoing assignments from the
Employee to the Company.
5. Non-Solicitation. Employee shall not during the term of the
employment or at any time during the two (2) years following termination of
employment solicit any person who is employed by or a consultant to the Company
or any affiliate or subsidiary of the Company either during Employee's period
of employment or during such two (2) year period, to terminate such person's
employment by or employment to the Company, 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 employment to the
Company, affiliate or subsidiary.
<PAGE> 4
6. Continued Obligations. Employee's obligations under this Agreement
shall not be affected: (i) by any termination of Employee's employment,
including termination upon the Company's initiative; nor (ii) by any change in
Employee's position, title or function with the Company; nor (iii) by any
interruption in employment during which Employee leaves and then rejoins the
Company for any period within a period of one year and for any reason. Nothing
herein shall be construed as constituting an employment agreement or an
undertaking by the Company to retain Employee's services for any stated period
of time.
7. No Conflicting Agreements. Employee represents and warrants that
execution and performance of this Agreement does not and will not violate,
conflict with, or constitute a default under any contract, commitment,
agreement, understanding, arrangement, or restriction, or any adjudication,
order, injunction or finding of any kind by any court or agency to which
Employee may be a party or by which Employee may be bound.
8. Remedies. In the event of any breach by Employee of any of the
provisions of this Agreement, the Company shall be entitled, in addition to the
monetary damages and to any other remedies available to the Company under this
Agreement and at law, to equitable relief, including injunctive relief, and to
payment by Employee of all costs incurred by the Company in enforcement against
Employee of the provisions of this Agreement, including reasonable attorneys'
fees.
9. General Provisions.
(a) 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.
(b) Notice. 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 therefore or when mailed by United States
registered or certified mail, return receipt requested, addressed as follows:
If to Employee, to: Sean O'Connor
367 Somerville Avenue
Apartment J
Somerville, MA 02143
If to the Company, to: Barry A. Berkowitz, President
Myco Pharmaceuticals Inc.
5 Pinetree Place
Fort Washington, PA 19034
<PAGE> 5
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 in address shall
be effective upon receipt.
(c) Severability. If any provision of this Agreement shall be found to
be invalid, inoperative or unenforceable in law or equity, such finding shall
not affect the validity of any other provisions of this Agreement, which shall
be construed, reformed and enforced to effect the purposes of this Agreement to
the fullest extent permitted by law.
(d) Miscellaneous. This Agreement: (i) may be executed in any number of
counterparts, each of which, when executed by both parties to this Agreement
shall be deemed to be an original, and all of which counterparts together shall
constitute one and the same instrument; (ii) shall be governed by and construed
under the law of the Commonwealth of Massachusetts, without application of
principles of conflicts of laws; (iii) along with the Offer Letter, constitute
the entire agreement of the parties with respect to the subject matter hereof,
superseding all prior oral and written communications, proposals, negotiations,
representations, understanding, courses of dealing, agreements, contracts, and
the like between the parties in such respect; (iv) may be amended, modified, or
terminated, and any right under this Agreement may be waived in whole of in
part, only by a writing signed by both parties; (v) contains headings only for
convenience, which headings do not form part, and shall not be used in
construction, of this Agreement; (vi) shall bind and inure to the benefit of
the parties and their respective legal representatives, successors and assigns,
except that no party may delegate any of its or his obligations under this
Agreement, or assign this Agreement, without the prior written consent of the
other party, except the Company may assign this Agreement in connection with
the merger, consolidation, or sale of all or substantially all assets of the
Company; and (vii) be enforced only in courts located within the Commonwealth
of Massachusetts and the parties hereby agree that such courts shall have venue
and exclusive subject matter and personal jurisdiction, and consent to service
of process by registered mail, return receipt requested, or by any other manner
provided by law.
Executed under seal as of the date first above written.
Myco Pharmaceuticals Inc.
By: /s/ Barry Berkowitz
--------------------------
Title
/s/ Sean O'Connor
--------------------------
Employee
<PAGE> 1
Exhibit 10.33
Myco Pharmaceuticals Inc.
5 Pinetree Place
Fort Washington, PA 19034
December 16, 1992
Dr. Sean O'Connor
367 Somerville Avenue
Apartment J
Somerville, MA 02143
Dear Sean,
This letter is to confirm our understanding with respect to (i) your
agreement not to compete with the Company and (ii) your agreement to protect and
preserve information and property which is confidential and proprietary to the
Company or other third parties with whom the Company does business (the terms
and conditions agreed to in this letter shall hereinafter be referred to as the
"Agreement"). In consideration of the mutual promises and covenants contained in
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, we have agreed as follows:
1. Prohibited Competition. We have discussed, and you recognize and
acknowledge the competitive and proprietary nature of the Company's business
operations.
You acknowledge and agree that a business will be deemed competitive
with the Company if it performs any of the services, manufactures or sells any
of the products provided or offered by the Company or is involved in the
research, or development of processes, products or techniques in the Company's
Field of Interest (such business to be referred to as a "competitive
business"). The term Company's "Field of Interest" currently means the
development of products or processes as anti-infective therapeutics or
diagnostics with an initial emphasis on anti-fungals and commercial use of
fungis or yeasts in drug screening, production, development or testing. The
Company may modify the definition of its Field of Interest by written notice to
you based on the activities in which the Company is then engaged or in which
the Company then proposes to be engaged.
You further acknowledge and agree that during the course of performing
services for the Company as an employee, the Company will furnish, disclose or
make available to you confidential and proprietary information related to the
Company's business and that the Company may provide you with unique and
specialized training. You also acknowledge that such confidential information
and the training to be provided by the Company have been developed and will be
developed by the Company and others with whom the Company has a relationship
through the expenditure by the Company and
<PAGE> 2
others of substantial time, effort and money and that all such confidential
information and training could be used by you to compete with the Company.
Accordingly, you hereby agree in consideration of the Company's
agreement to engage you as an employee and your compensation thereof and in
view of the confidential position to be held by you, the unique and specialized
training which the Company may provide you and the confidential nature and
proprietary value of the information which the Company may share with you, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, as follows:
During the period during which you perform services for or at the
request of the Company (the "Term") and for a period of one year following the
expiration or termination of the Term (the "Restricted Term"), whether such
termination is voluntary or involuntary, you shall not, without the prior
written consent of the Company:
(i) For yourself or on behalf of any other, directly or
indirectly, either as principal, agent, stockholder, employee,
consultant, representative or in any other capacity, own, manage,
operate or control, or be concerned, connected or employed by, or
otherwise associate in any manner with, engage in or have a financial
interest in any business which is directly or indirectly competitive
with the business of the Company within the World (the "Restricted
Territory"), except that nothing contained herein shall preclude you
from purchasing or owning stock in any such business if such stock is
publicly traded, and provided that your holdings do not exceed three
(3%) percent of the issued and outstanding capital stock of such
business.
(ii) Either individually or on behalf of or through any third
party, solicit, divert or appropriate or attempt to solicit, divert or
appropriate, for the purpose of competing with the Company or any
present or future parent, subsidiary or other affiliate of the Company
which is engaged in a similar business as the Company, any customers or
patrons of the Company, or any prospective customers or patrons with
respect to which the Company has developed or made a sales presentation
(or similar offering of services), located within the Restricted
Territory.
(iii) Either individually or on behalf of or through any third
party, directly or indirectly, solicit, entice or persuade or attempt to
solicit, entice or persuade any other employees of or consultants to the
Company or any parent or future parent or affiliate of the Company to
leave the services of the Company or any parent or future parent or
affiliate for any reason.
You further recognize and acknowledge that (i) the types of employment
which are prohibited by this paragraph are narrow and reasonable in relation to
the skills which represent your principal salable asset both to the Company and
to your other prospective employers, and (ii) the specific but broad
geographical scope of the provisions of this paragraph is reasonable,
legitimate and fair to you in light of the
-2-
<PAGE> 3
Company's need to market its services and sell its products in a large
geographic area in order to have a sufficient customer base to make the
Company's business profitable and in light of the limited restrictions on the
type of employment prohibited herein compared to the types of employment for
which you are qualified to earn your livelihood.
If any part of this section should be determined by a court of
competent jurisdiction to be unreasonable in duration, geographic area, or
scope, then this section is intended to and shall extend only for such period
of time, in such area and with respect to such activity as is determined to be
reasonable.
2. Protected Information. Upon execution of this Agreement, you shall
execute and deliver a Confidentiality Agreement in the form attached hereon as
Annex A.
3. Continuing Obligations. Your obligations under this Agreement
other than the provisions of this Agreement shall not be affected: (i) by any
termination of your consulting or employment arrangement, including termination
upon the Company's initiative; nor (ii) by any change in your position, title
or function with the Company; nor (iii) by any interruption in the consulting
or employment arrangement during which you leave and rejoin the Company.
4. Records. Upon termination of your relationship with the Company,
you shall deliver to the Company any property of the Company which may be in
your possession including products, materials, memoranda, notes, records,
reports, or other documents or photocopies of the same.
5. No Conflicting Agreements. You hereby represent and warrant that
you have no commitments or obligations inconsistent with this Agreement and you
hereby agree to indemnify and hold the Company harmless against any claim
based upon circumstances alleged to be inconsistent with such representation
and warranty.
6. No Employment Created. This Agreement does not constitute, and
shall not be construed as constituting, an undertaking by the Company to hire
you as an employee or consultant of the Company.
7. Waiver of Provisions. Failure of any party to insist, in one or
more instances, on performance by the other in strict accordance with the terms
and conditions of this Agreement shall not be deemed a waiver or relinquishment
of any right granted hereunder or of the future performance of any such term or
condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by or on behalf of the waiving party.
8. Notices. Any notice or other communication required or permitted
hereunder shall be deemed sufficiently given if sent by registered or certified
mail, postage and fees prepaid, addressed to the party to be notified as
follows: if to the Company to its address set forth above, with a copy to
Peter F. Demuth, Esquire, Mintz, Levin, Cohn,
-3-
<PAGE> 4
Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, MA 02111 and if
to you to your address set forth above, or in each case to such other address
as either party may from time to time designate in writing to the other. Such
notice or communication shall be deemed to have been given as of the date
deposited with the United States Postal Service.
9. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Massachusetts,
without application of the conflicts of law provisions thereof.
10. Entire Agreement. This Agreement, together with Annex A hereto,
embodies the entire agreement and understanding between the parties hereto and
supersedes all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, warranty, covenant or
agreement of any kind not set forth in this Agreement shall affect, or be used
to interpret, change or restrict, the express terms and provisions of this
Agreement.
11. Invalidity. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations. If any provision of this Agreement, or the
application thereof to any person or circumstance, shall, for any reason and to
any extent, be invalid or unenforceable, the remainder of this Agreement and
the application of such provisions to other persons or circumstances shall not
be affected thereby, but rather shall be construed, reformed and enforced to
the greatest extent permitted by law.
12. Injunctive Relief. You hereby expressly acknowledge that any breach
or threatened breach of any of the terms and/or conditions set forth in this
Agreement will result in substantial, continuing and irreparable injury to the
Company. Therefore, you hereby agree that, in addition to any other remedy that
may be available to the Company, the Company shall be entitled to injunctive or
other equitable relief by a court of appropriate jurisdiction in the event of
any breach or threatened breach of the terms of this Agreement.
13. Assignment. The Company may assign its rights and obligations
hereunder to any person or entity who succeeds to all or substantially all of
the Company's business or that aspect of the Company's business in which you
are principally involved. Your rights and obligations under this Agreement may
not be assigned without the prior written consent of the Company.
14. Expenses. Should any party breach this Agreement, in addition to
all other remedies available at law or in equity, such party shall pay all of
any other party's costs and expenses resulting therefrom and/or incurred in
enforcing this Agreement, including legal fees and expenses.
-4-
<PAGE> 5
15. Modification and Amendment. This Agreement shall not be modified or
amended except by an instrument in writing signed by or on behalf of the
parties hereto.
16. Parties Benefitted. Subject to the foregoing, this Agreement shall
be binding upon and inure to the benefit of the Company and any parent,
subsidiary or other affiliate of the Company, and their respective successors
and assigns, and shall be binding upon and inure to the benefit of you and your
heirs, executors and administrators.
17. Headings. Section and other headings contained in this Agreement
are for reference purposes only and are in no way intended to define,
interpret, describe or otherwise limit the scope, extent or intent of this
Agreement or any of its provisions each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
18. Counterparts. This Agreement may be executed in one or more
counterparts each of which will be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing accurately sets forth our agreement, please so
indicate by signing and returning to us the enclosed copy of this letter.
Very truly yours,
MYCO Pharmaceuticals Inc.
/s/ Barry Berkowitz
____________________
Accepted and Approved
/s/ Sean O'Connor
_________________
Sean O'Connor
Dated: 12/28/92
-5-
<PAGE> 1
Exhibit 10.34
[MYCO PHARMACEUTICALS INC. LETTERHEAD]
William E. Timberlake, Ph.D.
Vice President for Research
March 12, 1993
Dr. Yigal Koltin
16 B Hasha-alom Street
Hod Hasharon
45204, ISRAEL
Dear Yigal:
We are excited about the possibility of your joining us as a scientist and a
leader of Myco Pharmaceuticals. On the basis of our discussions and those you
have had with Barry and members of the Board of Directors, I am particularly
positive about the excellent match of your background, career goals and vision
with the mission of our company. You have been a key to the development of the
company since its inception and now have the opportunity to play an even
greater and more direct role in its success. We are pleased to offer you the
position of Director, Molecular Biology for Myco Pharmaceuticals Inc. Terms of
the offer are as follows:
Responsibilities: Implementation of a comprehensive molecular biology program
aimed at exploiting basic knowledge of fungal biology and genetics for the
development of novel and proprietary anti-infective agents; identification and
testing of novel drug targets in fungi and other organisms; development and
initial characterization of proprietary fungal strains and screening
strategies; recruitment and leadership of staff to design, execute, effectively
interpret and communicate scientific experiments related to your specific
responsibilities; development and oversight of specific, Myco-supported,
academic projects related to your areas of responsibility. You will also be
considered for leadership of key projects. In the future you will be considered
for other executive responsibilities.
<PAGE> 2
You will need to recommend goals and strategies for your division to achieve
the objectives and mission of the company. We will count on you to develop the
people in your group. You will ensure effective and cooperative interaction
between your group and other units of the company.
Salary: $125,000/year ($10,417/month). You may receive merit increases based
on your and the Company's performance. Your consulting fee as a member of the
Science Advisory Board will terminate at the time of your employment.
Bonus: An annual bonus may be paid as determined by your performance and that
of the company. Compensation may be in the form of stock or cash for any bonus
awarded.
Equity: Options for 30,000 shares of stock will be made available to you at a
price of $0.20 per share. These shares will vest over a period of five years
based on attainment of yearly milestone objectives for your division, agreed
upon by you and me prior to the beginning of each year. This is in addition to
the 180,000 shares and options under existing terms presently available as a
founding member of the Scientific Advisory Board.
Relocation Allowance: Up to $30,000 for relocation expenses.
Other Benefits: You will receive life insurance, disability insurance, family
medical benefits and vacation to the extent you qualify for these benefits and
as established by the company for its executives.
Timing: We would like you to begin no later than June 1, 1993. We recognize
that you will likely seek a leave of absence from your university to allow for
completion of the activities of students who you currently supervise and to
shut down the operations of your laboratory there. You and Myco will make all
reasonable efforts to facilitate and complete this transition within a year.
Research funds provided to you by the Company will be phased out beginning at
the time of your employment according to a schedule agreed upon by you and me.
This offer is subject to your successfully passing a medical physical exam
which is requested of all staff at the level of Director and above. The offer
is also subject to final Board of Director approval and execution of our
standard confidentiality and non-competition agreement.
The values and goals you have expressed to me during our conversations and over
the past year of interactions with others in Myco convince me that we
<PAGE> 3
can accomplish terrific results together. I think this is an opportunity for
you to see your creative abilities and knowledge put to great use in the
development of new drugs. I am genuinely excited by the possibility of having
you as a colleague within the company. We look forward to a positive response
to this offer. Please sign one copy of this letter to indicate your acceptance
of the terms of employment and return it to me within the next two weeks.
Yigal, we look forward to your leadership in Myco Pharmaceuticals and to
working with you in the near future.
Sincerely,
/s/ William E. Timberlake
----------------------------
William E. Timberlake, Ph.D.
I have read and agree with the terms as set forth above.
/s/ Y. Koltin March 18, 1993
- ---------------------------- -----------------------------
Yigal Koltin, Ph.D. Date
<PAGE> 1
Exhibit 10.35
Annex A
CONFIDENTIALITY AGREEMENT
Myco Pharmaceuticals Inc.
This CONFIDENTIALITY AGREEMENT is made this 1st day of June 1993,
between Myco Pharmaceuticals Inc., a Delaware corporation (the "Company") and
Yigal Koltin ("Employee").
WITNESSETH:
WHEREAS, the Company desires to retain Employee as an employee of the
Company and Employee wishes to be retained by the Company as an employee of the
Company pursuant to that Offer Letter of March 12, 1993, (the "Offer Letter");
WHEREAS, the Company has developed, and the Company and/or the Employee
may continue to develop during the period Employee is so retained by the
Company, certain Proprietary Information, Inventions and Intellectual Property
(as those terms are hereinafter defined), that the Company wishes to protect
and maintain as confidential;
WHEREAS, the Company from time to time has received, and may continue
to receive during the period Employee is so retained by the Company, the
Proprietary Information of others, and the Company wishes to maintain the
confidentiality of such Proprietary Information; and
WHEREAS, the Company has developed, and will continue to develop during
the period Employee is so retained by the Company, goodwill by, among other
things, substantial expenditure of money and effort;
NOW THEREFORE, in consideration of the premises set forth below and the
mutual covenants and other undertakings contained in this agreement, and for
other good and valuable consideration, receipt and sufficiency of which are
hereby mutually acknowledged, IT IS AGREED:
1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(a) Agreement means this confidentiality agreement, including
all exhibits, schedules and annexations, as all may be amended from time to
time in the manner provided in this agreement.
(b) Employment means the current or anticipated or subsequent
retention of Employee by the Company as a full or part-time employee,
consultant or otherwise, or any other period during which Employee receives
compensation from the Company in any capacity.
<PAGE> 2
(c) Intellectual Property means any Invention, 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.
(d) Inventions includes ideas, discoveries, inventions,
developments and improvements, whether or not reduced to practice and whether
or not patentable or otherwise within the definition of Intellectual Property.
(e) Proprietary Information includes any scientific,
technical, trade or business secrets of the Company and any scientific,
technical, trade or business materials that are treated by the Company as
confidential or proprietary, including, by not limited to, Inventions
belonging to the Company and confidential information obtained by or given to
the Company 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 Employee prior to its disclosure
by the Company; (ii) is publicly known through publication or otherwise through
no wrongful act of Employee; (iii) is received from a third party who
rightfully discloses it to Employee 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. Employee Acknowledgements. The Company has developed and will
develop its Proprietary Information and Intellectual Property over a
substantial period of time and at a substantial expense, and its Proprietary
Information and Intellectual Property are integral to the goodwill of the
Company. During the course of employment to the Company, Employee may develop
or become aware of Proprietary Information and/or Intellectual Property.
Protection of the Proprietary Information and Intellectual Property is
necessary to conduct the Company's business, and the Company is and shall at
all times remain the sole owner of the Company's Proprietary Information and
Intellectual Property.
3. Confidentiality. Employee shall at all times, both during and
after any termination of Employee's employment to the Company by either the
Company or Employee, maintain in confidence and not utilize the Proprietary
Information or the Intellectual Property of the Company, and/or technology or
proprietary information of others under confidential evaluation by the Company
except in performing services for the Company under the Offer Letter.
Maintaining such Proprietary Information and Intellectual Property in
confidence shall include refraining from disclosing such Proprietary
Information or Intellectual Property to any third party (except when duly and
specifically authorized in writing to do so for purpose of furthering the
business of the Company), and refraining from using such Proprietary
Information or Intellectual Property for the account of Employee or for any
other person or business entity. Employee will not file patents based on the
Company's technology or confidential
<PAGE> 3
information, nor seek to make improvements thereon, without the Company's
written approval.
Employee agrees not to make any copies of the Proprietary Information
or Intellectual Property of the Company (except when appropriate for the
furtherance of the business of the Company or duly and specifically authorized
to do so) and promptly upon request, whether during or after the period of
employment to the Company, to return to the Company any and all documentary,
machine-readable or other elements or evidence of such Proprietary Information,
Intellectual Property, and any copies of either that may be in Employee's
possession or under Employee's control.
4. Rights to Inventions and Intellectual Property. In connection with
Employee's employment to the Company, or by use of the resources of the Company,
whether or not Employee is then retained by the Company, Employee may produce,
develop, create, invent, conceive or reduce to practice Inventions and
Intellectual Property related to the business of the Company. Employee shall
maintain and furnish to the Company complete and current records of all such
Inventions and Intellectual Property and disclose to the Company in writing any
such Inventions and Intellectual Property. Employee agrees that all such
Inventions and Intellectual Property are and shall be the exclusive property of
the Company, and that the Company may use or pursue them without restriction or
additional compensation.
Employee: (i) hereby assigns, sets over and transfers to the Company
all of his right, title and interest in and to such Inventions and Intellectual
Property; (ii) agrees that Employee and his agents shall, during and after the
period Employee is retained by the Company, cooperate fully in obtaining patent,
trademark, service mark, copyright or other proprietary protection for such
Inventions and Intellectual Property, all in the name of the Company (but only
at Company 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 the Company of such
Inventions and Intellectual Property; and (iii) shall, upon leaving the Company,
provide to the Company in writing a full, signed statement of all Inventions and
Intellectual Property in which Employee participated prior to termination of the
employment to the Company. Employee hereby designates the Company as its agent,
and grants to the Company a power of attorney with full substitution, which
power of attorney shall be deemed coupled with an interest, for the purposes of
effecting the foregoing assignments from the Employee to the Company.
5. Non-Solicitation. Employee shall not during the term of the
employment or at any time during the two (2) years following termination of
employment solicit any person who is employed by or a consultant to the Company
or any affiliate or subsidiary of the Company either during Employee's period
of employment or during such two (2) year period, to terminate such person's
employment by or employment to the Company, 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 employment to the
Company, affiliate or subsidiary.
<PAGE> 4
6. Continued Obligations. Employee's obligations under this Agreement
shall not be affected: (i) by any termination of Employee's employment,
including termination upon the Company's initiative; nor (ii) by any change in
Employee's position, title or function with the Company; nor (iii) by any
interruption in employment during which Employee leaves and then rejoins the
Company for any period within a period of one year and for any reason. Nothing
herein shall be construed as constituting an employment agreement or an
undertaking by the Company to retain Employee's services for any stated period
of time.
7. No Conflicting Agreements. Employee represents and warrants that
execution and performance of this Agreement does not and will not violate,
conflict with, or constitute a default under any contract, commitment,
agreement, understanding, arrangement, or restriction, or any adjudication,
order, injunction or finding of any kind by any court or agency to which
Employee may be a party or by which Employee may be bound.
8. Remedies. In the event of any breach by Employee of any of the
provisions of this Agreement, the Company shall be entitled, in addition to
monetary damages and to any other remedies available to the Company under this
Agreement and at law, to equitable relief, including injunctive relief, and to
payment by Employee of all costs incurred by the Company in enforcement against
Employee of the provisions of this Agreement, including reasonable attorneys'
fees.
9. General Provisions.
(a) 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.
(b) Notice. 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 therefore or when mailed by United States
registered or certified mail, return receipt requested, addressed as follows:
If to Employee, to: Dr. Yigal Koltin
16 B Hasha-alom Street
Hod Hasharon
45204, ISRAEL
If to the Company, to: Barry A. Berkowitz, President
Myco Pharmaceuticals Inc.
One Kendall Square
Suite 2200
Cambridge, MA 02139
<PAGE> 5
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 in address shall
be effective upon receipt.
(c) Severability. If any provision of this Agreement shall be found to
be invalid, inoperative or unenforceable in law or equity, such finding shall
not affect the validity of any other provisions of this Agreement, which shall
be construed, reformed and enforced to effect the purposes of this Agreement to
the fullest extent permitted by law.
(d) Miscellaneous. This Agreement: (i) may be executed in any number of
counterparts, each of which, when executed by both parties to this Agreement
shall be deemed to be an original, and all of which counterparts together shall
constitute one and the same instrument; (ii) shall be governed by and construed
under the law of the Commonwealth of Massachusetts, without application of
principles of conflicts of laws; (iii) along with the Offer Letter, constitute
the entire agreement of the parties with respect to the subject matter hereof,
superseding all prior oral and written communications, proposals,
negotiations, representations, understanding, courses of dealing, agreements,
contracts, and the like between the parties in such respect; (iv) may be
amended, modified, or terminated, and any right under this Agreement may be
waived in whole of in part, only by a writing signed by both parties; (v)
contains headings only for convenience, which headings do not form part, and
shall not be used in construction, of this Agreement; (vi) shall bind and inure
to the benefit of the parties and their respective legal representatives,
successors and assigns, except that no party may delegate any of its or his
obligations under this Agreement, or assign this Agreement, without the prior
written consent of the other party, except the Company may assign this
Agreement in connection with the merger, consolidation, or sale of all or
substantially all assets of the Company; and (vii) be enforced only in courts
located within the Commonwealth of Massachusetts and the parties hereby agree
that such courts shall have venue and exclusive subject matter and personal
jurisdiction, and consent to service of process by registered mail, return
receipt requested, or by any other manner provided by law.
Executed under seal as of the date first above written.
Myco Pharmaceuticals Inc.
By: /s/ Barry Berkowitz
---------------------------
Title President
/s/ Y. Koltin
------------------------------
Employee
<PAGE> 1
Exhibit 10.36
MYCO PHARMACEUTICALS INC.
ONE KENDALL SQUARE
SUITE 2200
CAMBRIDGE, MA 19034
May 11, 1993
Dr. Yigal Koltin
16 B Hasha-alom Street
Hod Hasharon
45204, ISRAEL
Dear Yigal,
This letter is to confirm our understanding with respect to (i) your
agreement not to compete with the Company and (ii) your agreement to protect and
preserve information and property which is confidential and proprietary to the
Company or other third parties with whom the Company does business (the terms
and conditions agreed to in this letter shall hereinafter be referred to as the
"Agreement"). In consideration of the mutual promises and covenants contained in
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, we have agreed as follows:
1. Prohibited Competition. We have discussed, and you recognize and
acknowledge the competitive and proprietary nature of the Company's business
operations.
You acknowledge and agree that a business will be deemed competitive
with the Company if it performs any of the services, manufactures or sells any
of the products provided or offered by the Company or is involved in the
research, or development of processes, products or techniques in the Company's
Field of Interest (such business to be referred to as a "competitive business").
The term Company's "Field of Interest" currently means the development of
products or processes as anti-infective therapeutics or diagnostics with an
initial emphasis on anti-fungals and commercial use of fungi or yeasts in drug
screening, production, development or testing. The Company may modify the
definition of its Field of Interest by written notice to you based on the
activities in which the Company is then engaged or in which the Company then
proposes to be engaged.
You further acknowledge and agree that during the course of performing
services for the Company as an employee, the Company will furnish, disclose or
make available to you confidential and proprietary information related to the
Company's business and that the Company may provide you with unique and
specialized training. You also acknowledge that such confidential information
and the training to be provided by the Company have been developed and will be
developed by the Company and others with
<PAGE> 2
whom the Company has a relationship through the expenditure by the Company and
others of substantial time, effort and money and that all such confidential
information and training could be used by you to compete with the Company.
Accordingly, you hereby agree in consideration of the Company's agreement
to engage you as an employee and your compensation thereof and in view of the
confidential position to be held by you, the unique and specialized training
which the Company may provide you and the confidential nature and proprietary
value of the information which the Company may share with you, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, as follows:
During the period during which you perform services for or at the request
of the Company (the "Term") and for a period of one year following the
expiration or termination of the Term (the "Restricted Term"), whether such
termination is voluntary or involuntary, you shall not, without the prior
written consent of the Company:
(i) For yourself or on behalf of any other, directly or indirectly,
either as principal, agent, stockholder, employee, consultant,
representative or in any other capacity, own, manage, operate or control,
or be concerned, connected or employed by, or otherwise associate in any
manner with, engage in or have a financial interest in any business which
is directly or indirectly competitive with the business of the Company
within the World (the "Restricted Territory"), except that nothing
contained herein shall preclude you from purchasing or owning stock in any
such business if such stock is publicly traded, and provided that your
holdings do not exceed three (3%) percent of the issued and outstanding
capital stock of such business.
(ii) Either individually or on behalf of or through any third party,
solicit, divert or appropriate or attempt to solicit, divert or
appropriate, for the purpose of competing with the Company or any present
or future parent, subsidiary or other affiliate of the Company which is
engaged in a similar business as the Company, any customers or patrons of
the Company, or any prospective customers or patrons with respect to which
the Company has developed or made a sales presentation (or similar offering
of services), located within the Restricted Territory.
(iii) Either individually or on behalf of or through any third party,
directly or indirectly, solicit, entice or persuade or attempt to solicit,
entice or persuade any other employees of or consultants to the Company or
any parent or future parent or affiliate of the Company to leave the
services of the Company or any parent or future parent or affiliate for
any reason.
You further recognize and acknowledge that (i) the types of employment
which are prohibited by this paragraph are narrow and reasonable in relation to
the skills which represent your principal salable asset both to the Company and
to your other prospective employers, and (ii) the specific but broad
geographical scope of the
-2-
<PAGE> 3
provisions of this paragraph is reasonable, legitimate and fair to you in light
of the Company's need to market its services and sell its products in a large
geographic area in order to have a sufficient customer base to make the
Company's business profitable and in light of the limited restrictions on the
type of employment prohibited herein compared to the types of employment for
which you are qualified to earn your livelihood.
If any part of this section should be determined by a court of competent
jurisdiction to be unreasonable in duration, geographic area, or scope, then
this section is intended to and shall extend only for such period of time, in
such area and with respect to such activity as is determined to be reasonable.
2. Protected Information. Upon execution of this Agreement, you shall
execute and deliver a Confidentiality Agreement in the form attached hereto as
Annex A.
3. Continuing Obligations. Your obligations under this Agreement shall
not be affected: (i) by any termination of your consulting or employment
arrangement, including termination upon the Company's initiative; nor (ii) by
any change in your position, title or function with the Company; nor (iii) by
any interruption in the consulting or employment arrangement during which you
leave and rejoin the Company.
4. Records. Upon termination of your relationship with the Company, you
shall deliver to the Company any property of the Company which may be in your
possession including products, materials, memoranda, notes, records, reports, or
other documents or photocopies of the same.
5. No Conflicting Agreements. You hereby represent and warrant that you
have no commitments or obligations inconsistent with this Agreement and you
hereby agree to indemnify and hold the Company harmless against any claim based
upon circumstances alleged to be inconsistent with such representation and
warranty.
6. No Employment Created. This Agreement does not constitute, and shall
not be construed as constituting, an undertaking by the Company to hire you as
an employee or consultant of the Company.
7. Waiver of Provisions. Failure of any party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted hereunder or of the future performance of any such term or
condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by or on behalf of the waiving party.
8. Notices. Any notice or other communication required or permitted
hereunder shall be deemed sufficiently given if sent by registered or certified
mail, postage and fees prepaid, addressed to the party to be notified as
follows: if to the Company to its
-3-
<PAGE> 4
address set forth above, with a copy to Peter F. Demuth, Esquire, Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, MA 02111
and if to you to your address set forth above, or in each case to such other
address as either party may from time to time designate in writing to the
other. Such notice or communication shall be deemed to have been given as of
the date deposited with the United States Postal Service.
9. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Massachusetts,
without application of the conflicts of law provisions thereof.
10. Entire Agreement. This Agreement, together with Annex A hereto,
embodies the entire agreement and understanding between the parties hereto and
supersedes all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, warranty, covenant or
agreement of any kind not set forth in this Agreement shall affect, or be used
to interpret, change or restrict, the express terms and provisions of this
Agreement.
11. Invalidity. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations. If any provision of this Agreement, or the
application thereof to any person or circumstance, shall, for any reason and to
any extent, be invalid or unenforceable, the remainder of this Agreement and
the application of such provisions to other persons or circumstances shall not
be affected thereby, but rather shall be construed, reformed and enforced to
the greatest extent permitted by law.
12. Injunctive Relief. You hereby expressly acknowledge that any breach
or threatened breach of any of the terms and/or conditions set forth in this
Agreement will result in substantial, continuing and irreparable injury to the
Company. Therefore, you hereby agree that, in addition to any other remedy that
may be available to the Company, the Company shall be entitled to injunctive or
other equitable relief by a court of appropriate jurisdiction in the event of
any breach or threatened breach of the terms of this Agreement.
13. Assignment. The Company may assign its rights and obligations
hereunder to any person or entity who succeeds to all or substantially all of
the Company's business or that aspect of the Company's business in which you
are principally involved. Your rights and obligations under this Agreement may
not be assigned without the prior written consent of the Company.
14. Expenses. Should any party breach this Agreement, in addition to
all other remedies available at law or in equity, such party shall pay all of
any other party's costs and expenses resulting therefrom and/or incurred in
enforcing this Agreement, including legal fees and expenses.
-4-
<PAGE> 5
15. Modification and Amendment. This Agreement shall not be modified or
amended except by an instrument in writing signed by or on behalf of the
parties hereto.
16. Parties Benefitted. Subject to the foregoing, this Agreement shall
be binding upon and inure to the benefit of the Company and any parent,
subsidiary or other affiliate of the Company, and their respective successors
and assigns, and shall be binding upon and inure to the benefit of you and your
heirs, executors and administrators.
17. Headings. Section and other headings contained in this Agreement
are for reference purposes only and are in no way intended to define,
interpret, describe or otherwise limit the scope, extent or intent of this
Agreement or any of its provisions each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
18. Counterparts. This Agreement may be executed in one or more
counterparts each of which will be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing accurately sets forth our agreement, please so
indicate by signing and returning to us the enclosed copy of this letter.
Very truly yours,
MYCO Pharmaceuticals Inc.
/s/ Barry Berkowitz
------------------------------
Barry A. Berkowitz, Ph.D.
President
Accepted and Approved
/s/ Y. Koltin
- -------------------------
Yigal Koltin
Dated: May 24, 1993
-------------------
-5-
<PAGE> 1
Exhibit 10.37
[MYCO PHARMACEUTICALS INC. LETTERHEAD]
CONFIDENTIAL
June 21, 1995
Mr. Alan Crane
217 Varick Road
Waban, MA 02168
Dear Alan:
We are pleased with the prospect of your joining Myco Pharmaceuticals as an
employee and to offer you the position of Executive Director-Business
Development. We believe you will find your position challenging and
professionally rewarding. Terms of the offer are as follows:
Responsibilities: You will be responsible for analyzing, planning and as noted
below implementing business development at Myco. Your responsibilities will
involve both strategic and operational tasks including the following: seek and
work to ensure the success of present and future strategic alliances; enhance
Myco's development as a business and research, analyze and recommend pathways
to optimize Myco's value and revenue stream; identify, analyze, prioritize,
recommend and, as appropriate, negotiate product and technology opportunities
and research agreements; prepare and update Myco's business strategy and
business plan; meet with investment bankers, stock analysts, venture
capitalists, and senior business development executives from other
organizations to discuss strategic alliances, business deals, licensing, fund
raising and valuation issues so as to optimize Myco's development as an
effective and profitable business; work with high diligence and commitment to
achieve the goals of the Company and ensure effective communication and
cooperation with your colleagues in the Company; in conjunction with the senior
scientific and financial staff, participate in the planning, strategy and
evaluation of internal Myco projects and technology opportunities by performing
market and risk analysis, portfolio analysis and financial modeling; oversee
selected programs and prepare summary documents relating to corporate
in-licensing and out-licensing opportunities; facilitate and participate
effectively in selected Myco senior staff meetings.
You will be an employee at will and your services are to be on a full-time
basis with your best efforts. Your duties and responsibilities may be modified
by your supervisor from time to time. You will report to the CEO or other
senior Myco executives as determined by the CEO.
<PAGE> 2
CONFIDENTIAL
Salary: You will be paid at the rate of $10,000/month ($120,000/year). In
addition, a first year bonus of $5,000 will be paid to you upon completion of
one year of employment.
Equity: Options for 40,000 shares of Common Stock will be recommended to the
Board of Directors to be made available to you at a price of $0.50 per share.
These shares will vest over a period of five years subject to the conditions
set forth in the Company's Standard Stock Option Agreement. Options for an
additional 60,000 shares of Common Stock will be recommended to the Board of
Directors based on performance of certain milestone objectives. Based on
conversations with you, these milestones and performance dates will be set
within the first (90) days of employment by the CEO.
Other Benefits: You will receive life insurance, disability insurance, family
medical benefits and vacation to the extent you qualify for these benefits and
as established by the Company for senior executives and as described in the
Employee Handbook.
Timing: We would like you to begin no later than July 10, 1995.
This offer is subject to final Board of Director's approval and execution of
our Standard Confidentiality and Non-Competition Agreement.
The values and goals you have expressed to me during our conversations convince
me that we can accomplish terrific results together. I think this is an
opportunity for you to see your creative abilities and strong business
knowledge put to great use in the development of new drugs. I am genuinely
excited by the possibility of having you as an employee of the Company. Alan,
we look forward to your positive response to this offer and to working with you
in the near future. Please sign a copy of this letter to indicate your
acceptance of the terms of employment and return it to me by June 26th.
Sincerely,
/s/ Barry Berkowitz
---------------------------
Barry Berkowitz, Ph.D.
President and CEO
I have read and agree with the terms as set forth above.
/s/ Alan Crane 6/21/95
- ----------------------- ---------------------------
Alan Crane Date
<PAGE> 1
Exhibit 10.38
ANNEX A
CONFIDENTIALITY AGREEMENT
-------------------------
Myco Pharmaceuticals Inc.
This confidentiality agreement is made this 21st day of June 1995,
between Myco Pharmaceuticals Inc., a Delaware corporation (the "Company"),
and Alan Crane ("Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to retain Employee as an employee of the
Company and Employee wishes to be retained by the Company as an employee of
the Company pursuant to the Offer Letter of June 21, 1995 (the "Offer Letter");
WHEREAS, the Company has developed, and the Company and/or the
Employee may continue to develop during the period Employee is so retained by
the Company, certain Proprietary Information, Inventions and Intellectual
Property (as those terms are hereinafter defined), that the Company wishes to
protect and maintain as confidential;
WHEREAS, the Company from time to time has received, and may continue
to receive during the period Employee is so retained by the Company, the
Proprietary Information of others, and the Company wishes to maintain the
confidentiality of such Proprietary Information; and
WHEREAS, the Company has developed, and will continue to develop during
the period Employee is so retained by the Company, goodwill by, among other
things, substantial expenditure of money and effort;
NOW, THEREFORE, in consideration of the premises set forth below and
the mutual covenants and other undertakings contained in this agreement, and
for other good and valuable consideration, receipt and sufficiency of which
are hereby mutually acknowledged, IT IS AGREED:
1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
(a) Agreement means this confidentiality agreement,
including all exhibits, schedules and annexations, as all may be amended from
time to time in the manner provided in this Agreement.
<PAGE> 2
(b) Employment means the current or anticipated or subsequent
retention of Employee by the Company as a full or part-time employee,
consultant or otherwise, or any other period during which Employee receives
compensation from the Company in any capacity.
(c) Intellectual Property means any Invention, 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.
(d) Inventions includes ideas, discoveries, inventions, developments
and improvements, whether or not reduced to practice and whether or not
patentable or otherwise within the definition of Intellectual Property.
(e) Proprietary Information includes any scientific, technical,
trade or business secrets of the Company and any scientific, technical, trade
or business materials that are treated by the Company as confidential or
proprietary, including, but not limited to, Inventions belonging to the
Company and confidential information obtained by or given to the Company 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 Employee prior to its disclosure
by the Company; (ii) is publicly known through publication or otherwise through
no wrongful act of Employee; (iii) is received from a third party who
rightfully discloses it to Employee 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. Employee Acknowledgements. The Company has developed and will
develop its Proprietary Information and Intellectual Property over a
substantial period of time and at a substantial expense, and its Proprietary
Information and Intellectual Property are integral to the goodwill of the
Company. During the course of employment to the Company, Employee may develop
or become aware of Proprietary Information and/or Intellectual Property.
Protection of the Proprietary Information and Intellectual Property is
necessary to conduct the Company's business, and the Company is and shall at
all times remain the sole owner of the Company's Proprietary Information and
Intellectual Property.
3. Confidentiality. Employee shall at all times, both during and after
any termination of Employee's employment to the Company by either the Company
or Employee, maintain in confidence and not utilize the Proprietary Information
or
-2-
<PAGE> 3
the Intellectual Property of the Company, and/or technology or proprietary
information of others under confidential evaluation by the Company except in
performing services for the Company under the Offer Letter. Maintaining such
Proprietary Information and Intellectual Property in confidence shall include
refraining from disclosing such Proprietary Information or Intellectual
Property to any third party (except when duly and specifically authorized in
writing to do so for purpose of furthering the business of the Company), and
refraining from using such Proprietary Information or Intellectual Property for
the account of Employee or for any other person or business entity. Employee
will not file patents based on the Company's technology or confidential
information, nor seek to make improvements thereon, without the Company's
written approval.
Employee agrees not to make any copies of the Proprietary Information
or Intellectual Property of the Company (except when appropriate for the
furtherance of the business of the Company or duly and specifically authorized
to do so) and promptly upon request, whether during or after the period of
employment to the Company, to return to the Company any and all documentary,
machine-readable or other elements or evidence of such Proprietary Information,
Intellectual Property, and any copies of either that may be in Employee's
possession or under Employee's control.
4. Rights to Inventions and Intellectual Property. In connection with
Employee's employment to the Company, or by use of the resources of the
Company, whether or not Employee is then retained by the Company, Employee may
produce, develop, create, invent, conceive or reduce to practice Inventions and
Intellectual Property related to the business of the Company. Employee shall
maintain and furnish to the Company complete and current records of all such
Inventions and Intellectual Property and disclose to the Company in writing any
such Inventions and Intellectual Property. Employee agrees that all such
Inventions and Intellectual Property are and shall be the exclusive property of
the Company, and that the Company may use or pursue them without restriction or
additional compensation.
Employee: (i) hereby assigns, sets over and transfers to the Company all
of his right, title and interest in and to such Inventions and Intellectual
Property; (ii) agrees that Employee and his agents shall, during and after
the period Employee is retained by the Company, cooperate fully in obtaining
patent, trademark, service mark, copyright or other proprietary protection for
such Inventions and Intellectual Property, all in the name of the Company (but
only at Company 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 the Company of such
Inventions and Intellectual Property; and (iii) shall, upon leaving the
Company, provide to the Company in writing a full, signed statement of all
Inventions and Intellectual Property in which
-3-
<PAGE> 4
Employee participated prior to termination of the employment to the Company.
Employee hereby designates the Company as its agent, and grants to the Company
a power of attorney with full substitution, which power of attorney shall be
deemed coupled with an interest, for the purposes of effecting the foregoing
assignments from the Employee to the Company.
5. Non-Solicitation. Employee shall not during the term of the
employment or at any time during the two (2) years following termination of
employment, solicit any person who is employed by or a Consultant to the Company
or any affiliate or subsidiary of the Company either during Employee's period
of employment or during such two (2) year period, to terminate such person's
employment by or employment to the Company, 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 employment to the
Company, affiliate or subsidiary.
6. Continued Obligations. Employee's obligations under this Agreement
shall not be affected: (i) by any termination of Employee's employment,
including termination upon the Company's initiative; nor (ii) by any change in
Employee's position, title or function with the Company; nor (iii) by any
interruption in employment during which Employee leaves and then rejoins the
Company for any period within a period of one year and for any reason. Nothing
herein shall be construed as constituting an employment agreement or an
undertaking by the Company to retain Employee's services for any stated period
of time.
7. No Conflicting Agreements. Employee represents and warrants that
execution and performance of this Agreement does not and will not violate,
conflict with, or constitute a default under any contract, commitment,
agreement, understanding, arrangement, or restriction, or any adjudication,
order, injunction or finding of any kind by any court or agency to which
Employee may be a party or by which Employee may be bound.
8. Remedies. In the event of any breach by employee of any of the
provisions of this Agreement, the Company shall be entitled, in addition to
monetary damages and to any other remedies available to the Company under this
Agreement and at law, to equitable, relief, including injunctive relief, and to
payment by Employee of all costs incurred by the Company in enforcement against
Employee of the provisions of this Agreement, including reasonable attorneys'
fees.
9. General Provisions.
(a) 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
-4-
<PAGE> 5
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.
(b) Notice. 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 therefore or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to Employee, to: Alan Crane
217 Varick Road
Waban, MA 02168
If to the Company, to: Barry A. Berkowitz, President
Myco Pharmaceuticals Inc.
One Kendall Square
Building 300
Cambridge, MA 02139
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 addresses shall
be effective upon receipt.
(c) Severability. If any provision of this Agreement shall be found to
be invalid, inoperative or unenforceable in law or equity, such finding shall
not affect the validity of any other provisions of this Agreement, which shall
be construed, reformed and enforced to effect the purposes of this Agreement to
the fullest extent permitted by law.
(d) Miscellaneous. This Agreement: (i) may be executed in any number of
counterparts, each of which, when executed by both parties to this Agreement
shall be deemed to be an original, and all of which counterparts together shall
constitute one and the same instrument; (ii) shall be governed by and construed
under the law of the Commonwealth of Massachusetts, without application of
principles of conflicts of laws; (iii) along with the Offer Letter, constitute
the entire agreement of the parties with respect to the subject matter hereof,
superseding all prior oral and written communications, proposals, negotiations,
representations, understandings, courses of dealing, agreements, contracts, and
the like between the parties in such respect; (iv) may be amended, modified, or
terminated, and any right under this Agreement may be waived in whole or in
part, only by a writing signed by both parties; (v) contains headings only for
convenience, which headings do not form part, and shall not be used in
construction, of this Agreement; (vi) shall bind and inure to the benefit of
the
-5-
<PAGE> 6
parties and their respective legal representatives, successors and assigns,
except that no party may delegate any of its or his obligations under this
Agreement, or assign this Agreement, without the prior written consent of the
other party, except the Company may assign this Agreement in connection with
the merger, consolidation, or sale of all or substantially all assets of the
Company; and (vii) be enforced only in courts located within the Commonwealth
of Massachusetts and the parties hereby agree that such courts shall have venue
and exclusive subject matter and personal jurisdiction, and consent to service
of process by registered mail, return receipt requested, or by any other manner
provided by law.
Executed under seal as of the date first above written.
Myco Pharmaceuticals Inc.:
/s/ Barry Berkowitz
-----------------------------------
Barry A. Berkowitz, Ph.D.
President
/s/ Alan Crane
-----------------------------------
Alan Crane
-6-
<PAGE> 1
Exhibit 10.39
MYCO PHARMACEUTICALS INC.
ONE KENDALL SQUARE
BUILDING 300
CAMBRIDGE, MA 02139
June 21, 1995
Alan Crane
217 Varick Road
Waban, MA 02168
Dear Alan:
This letter is to confirm our understanding with respect to (i) your
agreement not to compete with the Company and (ii) your agreement to protect
and preserve information and property which is confidential and proprietary to
the Company or other third parties with whom the Company does business (the
terms and conditions agreed to in this letter shall hereinafter be referred to
as the "Agreement"). In consideration of the mutual promises and covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, we have agreed as
follows:
1. Prohibited Competition. We have discussed, and you recognize and
acknowledge the competitive and proprietary nature of the Company's business
operations.
You acknowledge and agree that a business will be deemed competitive
with the Company if it performs any of the services, manufactures or sells any
of the products provided or offered by the Company or is involved in the
research, or development of processes, products or techniques in the Company's
Field of Interest (such business to be referred to as a "competitive
business"). The term Company's "Field of Interest" currently means the
development of products or processes as anti-infective therapeutics or
diagnostics with an initial emphasis on antifungals and commercial use of fungi
or yeasts in drug screening, production, development or testing. The Company
may modify the definition of its Field of Interest by written notice to you
based on the activities in which the Company is then engaged or in which the
Company then proposes to be engaged.
You further acknowledge and agree that during the course of performing
services for the Company as an employee, the Company will furnish, disclose or
make available to you confidential and proprietary information related to the
Company's business and that the Company may provide you with unique and
specialized training. You also acknowledge that such confidential information
and the training to be provided by the Company have been developed and will be
developed by the Company and others with whom the Company has a relationship
through the expenditure by the Company and others of substantial time, effort
and money and that all such confidential information and training could be used
by you to compete with the Company.
<PAGE> 2
Accordingly, you hereby agree in consideration of the Company's
agreement to engage you as an employee and your compensation thereof and in
view of the confidential position to be held by you, the unique and specialized
training which the Company may provide you and the confidential nature and
proprietary value of the information which the Company may share with you, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, as follows:
During the period during which you perform services for or at the
request of the Company (the "Term") and for a period of one year following the
expiration or termination of the Term (the "Restricted Term"), whether such
termination is voluntary or involuntary, you shall not, without the prior
written consent of the Company:
(i) For yourself or on behalf of any other, directly or indirectly,
either as principal, agent, stockholder, employee, consultant,
representative or in any other capacity, own, manage, operate or
control, or be concerned, connected or employed by, or otherwise
associate in any manner with, engage in or have a financial interest
in any business which is directly or indirectly competitive with the
business of the Company within the World (the "Restricted Territory"),
except that nothing contained herein shall preclude you from purchasing
or owning stock in any such business if such stock is publicly traded,
and provided that your holdings do not exceed three (3%) percent of the
issued and outstanding capital stock of such business.
(ii) Either individually or on behalf of or through any third party,
solicit, divert or appropriate or attempt to solicit, divert or
appropriate, for the purpose of competing with the Company or any
present or future parent, subsidiary or other affiliate of the Company
which is engaged in a similar business as the Company, any customers
or patrons of the Company, or any prospective customers or patrons with
respect to which the Company has developed or made a sales
presentation (or similar offering of services), located within the
Restricted Territory.
(iii) Either individually or on behalf of or through any third party,
directly or indirectly, solicit, entice or persuade or attempt to
solicit, entice or persuade any other employees of or consultants to
the Company or any parent or future parent or affiliate of the Company
to leave the services of the Company or any parent of future parent of
affiliate for any reason.
You further recognize and acknowledge that (i) the types of employment
which are prohibited by this paragraph are narrow and reasonable in relation to
the skills which represent your principal salable asset both to the Company and
to your other prospective employers, and (ii) the specific but broad
geographical scope of the provisions of this paragraph is reasonable,
legitimate and fair to you in the light of the Company's need to market its
services and sell its products in a large geographic area in
<PAGE> 3
order to have a sufficient customer base to make the Company's business
profitable and in light of the limited restrictions on the type of employment
prohibited herein compared to the types of employment for which you are
qualified to earn your livelihood.
If any part of this section should be determined by a court of
competent jurisdiction to be unreasonable in duration, geographic area, or
scope, then this section is intended to and shall extend only for such period
of time, in such area and with respect to such activity as is determined to be
reasonable.
2. Protected Information. Upon execution of this Agreement, you shall
execute and deliver a Confidentiality Agreement in the form attached hereto as
Annex A.
3. Continuing Obligations. Your obligations under this Agreement shall
not be affected: (i) by any termination of your consulting or employment
arrangement, including termination upon the Company's initiative; nor (ii) by
any change in your position, title or function with the Company; nor (iii) by
any interruption in the consulting or employment arrangement during which you
leave and rejoin the Company.
4. Records. Upon termination of your relationship with the Company, you
shall deliver to the Company any property of the Company which may be in your
possession including products, materials, memoranda, notes, records, reports,
or other documents or photocopies of the same.
5. No Conflicting Agreements. You hereby represent and warrant that you
have no commitments or obligations inconsistent with this Agreement and you
hereby agree to indemnify and hold the Company harmless against any claim based
upon circumstances alleged to be inconsistent with such representation and
warranty.
6. No Employment Created. This Agreement does not constitute, and shall
not be construed as constituting, and undertaking by the Company to hire you as
an employee or consultant of the Company.
7. Waiver of Provisions. Failure of any party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted hereunder or of the future performance of any such term or
condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by or on behalf of the waiving party.
8. Notices. Any notice or other communication required or permitted
hereunder shall be deemed sufficiently given if sent by registered or certified
mail, postage and fees prepaid, addressed to the party to be notified as
follows: if to the Company to its address set forth above, with a copy to Peter
F. Demuth, Esquire, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One
Financial Center, Boston, MA 02111, and if to you
<PAGE> 4
to your address set forth above, or in each case to such other address as
either party may from time to time designate in writing to the other. Such
notice or communication shall be deemed to have been given as of the date
deposited with the United States Postal Service.
9. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the Commonwealth of Massachusetts,
without application of the conflicts of law provisions thereof.
10. Entire Agreement. This Agreement, together with Annex A hereto,
embodies the entire agreement and understanding between the parties hereto and
supersedes all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, warranty, covenant or
agreement of any kind not set forth in this Agreement shall affect, or be used
to interpret, change or restrict, the express terms and provisions of the
Agreement.
11. Invalidity. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations. If any provision of the Agreement, or the
application thereof to any person or circumstance, shall, for any reason and to
any extent, be invalid or unenforceable, the remainder of this Agreement and
the application of such provisions to other persons or circumstances shall not
be affected thereby, but rather shall be construed, reformed and enforced to
the greatest extent permitted by law.
12. Injunctive Relief. You hereby expressly acknowledge that any breach
or threatened breach of any of the terms and/or conditions set forth in this
Agreement will result in substantial, continuing and irreparable injury to the
Company. Therefore, you hereby agree that, in addition to any other remedy that
may be available to the Company, the Company shall be entitled to injunctive or
other equitable relief by a court of appropriate jurisdiction in the event of
any breach or threatened breach of the terms of this Agreement.
13. Assignment. The Company may assign its rights and obligations
hereunder to any person or entity who succeeds to all or substantially all of
the Company's business or that aspect of the Company's business in which you are
principally involved. Your rights and obligations under this Agreement may not
be assigned without the prior written consent of the Company.
14. Expenses. Should any party breach this Agreement, in addition to
all other remedies available at law or in equity, such party shall pay all of
any other party's costs and expenses resulting therefrom and/or incurred in
enforcing this Agreement, including legal fees and expenses.
15. Modification and Amendment. This Agreement shall not be modified or
amended except by an instrument in writing signed by or on behalf of the
parties hereto.
<PAGE> 5
16. Parties Benefited. Subject to the foregoing, this Agreement shall
be binding upon and inure to the benefit of the Company and any parent,
subsidiary or other affiliate of the Company, and their respective successors
and assigns, and shall be binding upon and inure to the benefit of you and your
heirs, executors and administrators.
17. Headings. Section and other headings contained in this Agreement
are for reference purposes only and are in no way intended to define,
interpret, describe or otherwise limit the scope, extent or intent of this
Agreement or any of its provisions each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
18. Counterparts. This Agreement may be executed in one or more
counterparts each of which will be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing accurately sets forth our agreement, please so
indicate by signing and returning to us the enclosed copy of this letter.
Very truly yours,
Myco Pharmaceuticals Inc.
/s/ Barry Berkowitz
----------------------------
Barry A. Berkowitz, Ph.D.
President and CEO
Accepted and Approved
/s/ Alan Crane
- --------------------------
Alan Crane
Dated: 7/05/95
- --------------------------
104368
<PAGE> 1
EXHIBIT 10.40
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE LAW. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933 OR APPLICABLE STATE LAW.
WARRANT AGREEMENT
To Purchase Shares of the Series A Preferred Stock of
MYCO PHARMACEUTICALS INC.
Dated as of June 17, 1993 (the "Effective Date")
WHEREAS, Myco Pharmaceuticals Inc., a Delaware corporation (the
"Company") has entered into a Master Lease Agreement dated as of June 17, 1993,
Equipment Schedule No. VL-1, and related Schedules (the "Leases") with Comdisco,
Inc., a Delaware corporation (the "Warrantholder"); and
WHEREAS, the Company desires to grant to Warrantholder, in
consideration for such Leases, the right to purchase shares of its Series A
($.01 par value) Preferred Stock;
NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Leases and in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder agree as follows:
1. GRANT OF THE RIGHT TO PURCHASE SERIES A PREFERRED STOCK.
The Company hereby grants to the Warrantholder, and the Warrantholder
is entitled, upon the terms and subject to the conditions hereinafter set
forth, to subscribe to and purchase, from the Company, 106,250 fully paid and
non-assessable shares of the Company's Series A Preferred Stock ($.01 par
value) ("Preferred Stock") which is equal to 8.5% of the Maximum Cost of
Equipment allowable under Phase I of the Lease (which percent is equal to
$127,500.00), at a purchase price per share of $1.20 (collectively, the
"Exercise Price"). In the event the Company completes an equity round on or
before December 31, 1993, the number of shares of Preferred Stock and purchase
price per share hereunder shall be adjusted according to the following formula,
and at such time the Company may issue and Warrantholder shall accept in
complete replacement of this Warrant a substitute warrant agreement with the
same effective date and terms as this Warrant Agreement to reflect such
adjustment:
Phase I: X = $127,500
--------
Y
X = the number of shares of Preferred Stock to
be issued to the Warrantholder
Y = the Exercise Price: the higher of $1.20 or
the price per share of the most recent
equity round closed on or before December
31, 1993.
1
<PAGE> 2
The number and purchase price of such shares are subject to adjustment as
provided in Section 8 hereof.
2. TERM OF THE WARRANT AGREEMENT.
Except as otherwise provided for herein, the term of this Warrant
Agreement and the right to purchase Preferred Stock as granted herein shall
commence on the Effective Date and shall be exercisable for a period of (i) ten
(10) years or (ii) five (5) years from the effective date of the Company's
initial public offering, whichever is shorter.
3. EXERCISE OF THE PURCHASE RIGHTS.
The purchase rights set forth in this Warrant Agreement are exercisable
by the Warrantholder, in whole or in part, at any time, or from time to time,
prior to the expiration of the term set forth in Section 2 above, by tendering
to the Company at its principal office a notice of exercise in the form
attached hereto as Exhibit I (the "Notice of Exercise"), duly completed and
executed. Promptly upon receipt of the Notice of Exercise and the payment of
the purchase price in accordance with the terms set forth below, and in no
event later than twenty-one (21) days thereafter, the Company shall issue to
the Warrantholder a certificate for the number of shares of Preferred Stock
purchased and shall execute the Notice of Exercise indicating the number of
shares which remain subject to future purchases, if any.
The Exercise Price may be paid at the Warrantholder's election either
(i) by cash or check, or (ii) by surrender of Warrants ("Net Issuance") as
determined below. If the Warrantholder elects the Net Issuance method, the
Company will issue Preferred Stock in accordance with the following formula:
X = Y(A-B)
------
A
Where: X = the number of shares of Preferred Stock to be issued to the
Warrantholder.
Y = the number of shares of Preferred Stock requested to be
exercised under this Warrant Agreement.
A = the fair market value of one (1) share of Preferred Stock.
B = the Exercise Price.
As used herein, current fair market value of Preferred Stock shall mean
with respect to each share of Preferred Stock:
(i) if the exercise is in connection with an initial public offering,
and if the Company's Registration Statement relating to such public
offering has been declared effective by the SEC, then the initial "Price
to Public" specified in the final prospectus with respect to the
offering;
(ii) if this Warrant is exercised after, and not in connection with the
Company's initial public offering, and;
(a) if traded on a securities exchange, the fair market value
shall be deemed to be the average of the closing prices over a
twenty-one (21) day period ending three days before the day the
current fair market value of the securities is being determined;
or
(b) if actively traded over-the-counter, the fair market value
shall be deemed to be the average of the closing bid and asked
prices
2
<PAGE> 3
quoted on the NASDAQ system (or similar system) over the
twenty-one (21) day period ending three days before the day the
current fair market value of the securities is being determined;
(iii) if at any time the Preferred Stock is not listed on any
securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the current fair market value of Preferred
Stock shall be the highest price per share which the Company could
obtain from a willing buyer (not a current employee or director) for
shares of Preferred Stock sold by the Company, from authorized but
unissued shares, as determined in good faith by its Board of Directors,
unless the Company is then subject to a merger, acquisition or other
consolidation pursuant to which the Company is not the surviving party,
in which case the fair market value of Preferred Stock shall be deemed
to be the value received by the holders of the Company's Series A
Preferred Stock on a common equivalent basis pursuant to such merger or
acquisition.
Upon partial exercise by either cash or Net Issuance, the Company shall
promptly issue an amended Warrant Agreement representing the remaining number
of shares purchasable hereunder. All other terms and conditions of such
amended Warrant Agreement shall be identical to those contained herein,
including, but not limited to the Effective Date hereof. Upon exercise of the
Warrant, at the request of the Company, Warrantholder shall become subject to
the Voting and Co-Sale Agreement dated February 25, 1992.
4. RESERVATION OF SHARES.
(a) Authorization and Reservation of Shares. During the term of this
Warrant Agreement, the Company will at all times have authorized and reserved a
sufficient number of shares of its Preferred Stock to provide for the exercise
of the rights to purchase Preferred Stock as provided for herein.
(b) Registration or Listing. If any shares of Preferred Stock
required to be reserved hereunder require registration with or approval of any
governmental authority under any Federal or State law (other than any
registration under the 1933 Act, as then in effect, or any similar Federal
statute then enforced, or any state securities law, required by reason of any
transfer involved in such conversion), or listing on any domestic securities
exchange, before such shares may be issued upon conversion, the Company will,
at its expense and as expeditiously as possible, use its best efforts to cause
such shares to be duly registered, listed or approved for listing on such
domestic securities exchange, as the case may be.
5. NO FRACTIONAL SHARES OR SCRIP.
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.
6. NO RIGHTS AS SHAREHOLDER.
This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise of
the Warrant.
7. WARRANTHOLDER REGISTRY.
The Company shall maintain a registry showing the name and address of
the registered holder of this Warrant Agreement.
3
<PAGE> 4
8. ADJUSTMENT RIGHTS.
The purchase price per share and the number of shares of Preferred
Stock purchasable hereunder are subject to adjustment, as follows:
(a) Merger and Sale of Assets. If at any time there shall be a
capital reorganization of the shares of the Company's stock (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), or a merger or consolidation of the Company with or into
another corporation when the Company is not the surviving corporation, or the
sale of all or substantially all of the Company's properties and assets to any
other person (hereinafter referred to as a "Merger Event"), then, as a part of
such Merger Event, lawful provision shall be made so that the Warrantholder
shall thereafter be entitled to receive, upon exercise of the Warrant, the
number of shares of preferred stock or other securities of the successor
corporation resulting from such Merger Event, equivalent in value to that which
would have been issuable if Warrantholder had exercised this Warrant
immediately prior to the Merger Event. In any such case, appropriate
adjustment (as determined in good faith by the Company's Board of Directors)
shall be made in the application of the provisions of this Warrant Agreement
with respect to the rights and interest of the Warrantholder after the Merger
Event to the end that the provisions of this Warrant Agreement (including
adjustments of the Exercise Price and number of shares of Preferred Stock
purchasable) shall be applicable to the greatest extent possible.
(b) Reclassification of Shares. If the Company at any time shall, by
combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of
any other class or classes, this Warrant Agreement shall thereafter represent
the right to acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the securities which were
subject to the purchase rights under this Warrant Agreement immediately prior
to such combination, reclassification, exchange, subdivision or other change.
(c) Subdivision or Combination of Shares. If the Company at any time
shall combine or subdivide its Preferred Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.
(d) Stock Dividends. If the Company at any time shall pay a dividend
payable in, or make any other distribution (except any distribution
specifically provided for in the foregoing subsections (a) or (b)) of the
Company's Series A Preferred Stock, then the Exercise Price shall be adjusted,
from and after the record date of such dividend or distribution, to that price
determined by multiplying the Exercise Price in effect immediately prior to
such record date by a fraction (i) the numerator of which shall be the total
number of all shares of the Company's Series A Preferred Stock outstanding
immediately prior to such dividend or distribution, and (ii) the denominator of
which shall be the total number of all shares of the Company's Series A
Preferred Stock outstanding immediately after such dividend or distribution.
The Warrantholder shall thereafter be entitled to purchase, at the Exercise
Price resulting from such adjustment, the number of shares of Preferred Stock
(calculated to the nearest whole share) obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Preferred Stock issuable upon the exercise hereof immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting
from such adjustment.
(e) Antidilution Rights. Additional antidilution rights applicable to
the Preferred Stock purchaseable hereunder are as set forth in the Company's
Certificate of Incorporation, as amended through the Effective Date, a true and
complete copy of which is attached hereto as Exhibit __ (the "Charter"). The
4
<PAGE> 5
Company shall promptly provide the Warrantholder with any restatement,
amendment, modification or waiver of the Charter. The Company shall provide
Warrantholder with prior written notice of any issuance of its stock or other
equity security to occur after the Effective Date of this Warrant, which notice
shall include (a) the price at which such stock or security is to be sold, (b)
the number of shares to be issued, and (c) such other information as necessary
for Warrantholder to determine if a dilutive event has occurred.
(f) Notice of Adjustments. If: (i) the Company shall declare any
dividend or distribution upon its stock, whether in cash, property, stock or
other securities; (ii) the Company shall offer for subscription prorata to the
holders of any class of its Preferred or other convertible stock any additional
shares of stock of any class or other rights; (iii) there shall be any Merger
Event; or (iv) there shall be any voluntary or involuntary dissolution,
liquidation or winding up of the Company; then, in connection with each such
event, the Company shall send to the Warrantholder: (A) at least ten (10) days'
prior written notice of the date on which the books of the Company shall close
or a record shall be taken for such dividend, distribution, subscription rights
(specifying the date on which the holders of Preferred Stock shall be entitled
thereto) or for determining rights to vote in respect of such Merger Event,
dissolution, liquidation or winding up; and (B) in the case of any such Merger
Event, dissolution, liquidation or winding up, at least ten (10) days' prior
written notice of the date when the same shall take place (and specifying the
date on which the holders of Preferred Stock shall be entitled to exchange their
Preferred Stock for securities or other property deliverable upon such Merger
Event, dissolution, liquidation or winding up). In the case of a public
offering, the Company shall give Warrantholder at least ten (10) days written
notice prior to the effective date thereof.
Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Exercise Price, and
(v) the number of shares subject to purchase hereunder after giving effect to
such adjustment, and shall be given by first class mail, postage prepaid,
addressed to the Warrantholder, at the address as shown on the books of the
Company.
(g) Timely Notice. Failure to timely provide such notice required
by subsection (g) above shall not affect the validity of any action taken by
the Company, and entitle Warrantholder to retain the benefit of the applicable
notice period notwithstanding anything to the contrary contained in any
insufficient notice received by Warrantholder. The notice period shall begin
on the date Warrantholder actually receives a written notice containing all the
information specified above.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
(a) Reservation of Preferred Stock. The Preferred Stock issuable
upon exercise of the Warrantholder's rights has been duly and validly reserved
and, when issued in accordance with the provisions of this Warrant Agreement,
will be validly issued, fully paid and non-assessable, and will be free of any
taxes, liens, charges or encumbrances or any nature whatsoever; provided,
however, that the Preferred Stock issuable pursuant to this Warrant Agreement
may be subject to restrictions on transfer under state and/or Federal securities
laws. The Company has made available to the Warrantholder true, correct and
complete copies of its Charter and Bylaws, as amended, and minutes of all Board
of Directors (including all committees of the Board of Directors, if any) and
Shareholder meetings from * , 19 through * , 19 . The issuance of
certificates for share of Preferred Stock upon exercise of the Warrant Agreement
shall be made without charge to the Warrantholder for any issuance tax in
respect thereof, or other cost incurred by the Company in connection with such
exercise and the related issuance of shares of Preferred Stock. The Company
shall not be required to pay any tax which may be payable in respect of any
transfer involved and the
* no minutes were requested or provided.
5
<PAGE> 6
issuance and delivery of any certificate in a name other than that of the
Warrantholder.
(b) Due Authority. The execution and delivery by the Company of
this Warrant Agreement and the performance of all obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire the
shares of Preferred Stock, have been duly authorized by all necessary corporate
action on the part of the Company, and the Leases and this Warrant Agreement are
not inconsistent with the Company's Charter or Bylaws, do not contravene any
law or governmental rule, regulation or order applicable to it, do not and will
not contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it is
bound, and the Leases and this Warrant Agreement constitute legal, valid and
binding agreements of the Company, enforceable in accordance with their
respective terms.
(c) Consents and Approvals. No consent or approval of, giving of
notice to, registration with, or taking of any other action in respect of any
state, Federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its
obligations under this Warrant Agreement, except for the filing of notices
pursuant to Regulation D under the 1933 Act and Section 4 c of the Illinois
Corporate Securities Law, which filings will be effective by the time required
thereby.
(d) Issued Securities. All issued and outstanding shares of Common
Stock, Preferred Stock or any other securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. All
outstanding shares of Common Stock, Preferred Stock and any other securities
were issued in full compliance with all Federal and state securities laws. In
addition:
(i) The authorized capital of the Company consists of (A)
11,000,000 shares of Common Stock, of which 1,506,000 shares are issued
and outstanding, and (B) 6,200,000 shares of preferred stock, of which
4,024,000 shares are issued and outstanding and are convertible into
4,024,000 shares of Common Stock.
(ii) The Company has reserved (A) 2,112,000 shares of Common
Stock for issuance under its 1992 Employee, Director and Consultant
Stock Option Plan, under which 1,217,750 options are outstanding at an
average price of $.20 per share. There are no other options, warrants,
conversion privileges or other rights presently outstanding to purchase
or otherwise acquire any authorized but unissued shares of the Company's
capital stock or other securities of the Company.
(iii) In accordance with the Company's Articles of
Incorporation, no shareholder of the Company has preemptive rights to
purchase new issuances of the Company's capital stock.
(e) Insurance. The Company has in full force and effect insurance
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.
(f) Other Commitments to Register Securities. Except as set forth
in this Warrant Agreement, the Series A Preferred Stock Purchase Agreement, the
Stock Purchase and Repurchase Agreement with Dr. Barry Berkowitz and the Stock
Purchase Agreement with Robert Morgan and Gary Takata, the Company is not,
pursuant to the terms of any other agreement currently in existence, under any
obligation to register under the 1933 Act any of its presently outstanding
securities or any of its securities which may hereafter be issued.
6
<PAGE> 7
(g) Exempt Transaction. Subject to the accuracy of the
Warrantholder's representations in Section 10 hereof, the issuance of the
Preferred Stock upon exercise of this Warrant will constitute a transaction
exempt from (i) the registration requirements of Section 5 of the 1933 Act, in
reliance upon Section 4(2) thereof, and (ii) the qualification requirements of
the Illinois Corporate Securities Law, in reliance upon Section 4 c thereof.
(h) Compliance with Rule 144. At the written request of the
Warrantholder, who proposes to sell Preferred Stock issuable upon the exercise
of the Warrant in compliance with Rule 144 promulgated by the Securities and
Exchange Commission, the Company shall furnish to the Warrantholder, within ten
days after receipt of such request, a written statement confirming the Company's
compliance with the filing requirements of the Securities and Exchange
Commission as set forth in such Rule, as such Rule may be amended from time to
time.
10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:
(a) Investment Purpose. The right to acquire Preferred Stock or
the Preferred Stock issuable upon exercise of the Warrantholder's rights
contained herein will be acquired for investment and not with a view to the
sale or distribution of any part thereof, and the Warrantholder has no present
intention of selling or engaging in any public distribution of the same except
pursuant to a registration or exemption.
(b) Private Issue. The Warrantholder understands (i) that the
Preferred Stock issuable upon exercise of this Warrant is not registered under
the 1933 Act or qualified under applicable state securities laws on the ground
that the issuance contemplated by this Warrant Agreement will be exempt from the
registration and qualifications requirements thereof, and (ii) that the
Company's reliance on such exemption is predicated on the representations set
forth in this Section 10.
(c) Disposition of Warrantholder's Rights. In no event will the
Warrantholder make a disposition of any of its rights to acquire Preferred Stock
or Preferred Stock issuable upon exercise of such rights unless and until (i) it
shall have notified the Company of the proposed disposition, and (ii) if
requested by the Company, it shall have furnished the Company with an opinion of
counsel (which counsel may either be inside or outside counsel to the
Warrantholder) satisfactory to the Company and its counsel to the effect that
(A) approximate action necessary for compliance with the 1933 Act and applicable
state law has been taken, or (B) an exemption from the registration requirements
of the 1933 Act and applicable state law is available. Notwithstanding the
foregoing, the restrictions imposed upon the transferability of any of its
rights to acquire Preferred Stock or Preferred Stock issuable on the exercise of
such rights do not apply to transfers from the beneficial owner of any of the
aforementioned securities to its nominee or from such nominee to its beneficial
owner, and shall terminate as to any particular share of Preferred Stock when
(1) such security shall have been effectively registered under the 1933 Act and
applicable state law and sold by the holder thereof in accordance with such
registration or (2) such security shall have been sold without registration in
compliance with Rule 144 under the 1933 Act and applicable state law, or (3) a
letter shall have been issued to the Warrantholder at its request by the staff
of the Securities and Exchange Commission or a ruling shall have been issued to
the Warrantholder at its request by such Commission stating that no action shall
be recommended by such staff or taken by such Commission, as the case may be, if
such security is transferred without registration under the 1933 Act and
applicable state law in accordance with the conditions set forth in such letter
or ruling and such letter or ruling specifies that no subsequent restrictions on
transfer are required. Whenever the restrictions imposed hereunder shall
7
<PAGE> 8
terminate, as hereinabove provided, the Warrantholder or holder of a share of
Preferred Stock then outstanding as to which such restrictions have terminated
shall be entitled to receive from the Company, without expense to such holder,
one or more new certificates for the Warrant or for such shares of Preferred
Stock not bearing any restrictive legend.
(d) Financial Risk. The Warrantholder has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment, and has the ability to bear the economic
risks of its investment.
(e) Risk of No Registration. The Warrantholder understands that if
the Company does not register with the Securities and Exchange Commission
pursuant to Section 12 of the 1933 Act, or file reports pursuant to Section
15(d), of the Securities Exchange Act of 1934 (the "1934 Act"), or if a
registration statement covering the securities under the 1933 Act is not in
effect when it desires to sell (i) the rights to purchase Preferred Stock
pursuant to this Warrant Agreement, or (ii) the Preferred Stock issuable upon
exercise of the right to purchase, it may be required to hold such securities
for an indefinite period. The Warrantholder also understands that any sale of
its rights of the Warrantholder to purchase Preferred Stock or Preferred Stock
which might be made by it in reliance upon Rule 144 under the 1933 Act may be
made only in accordance with the terms and conditions of that Rule.
(f) Registration Rights. Company agrees that Warrantholder shall have
the same registration rights as other investors pursuant to the Preferred Stock
Purchase Agreement dated as of February 25, 1992 and Warrantholder agrees to
cooperate with the requirements of an underwriter to the same extent as other
investors, as set forth in the Preferred Stock Purchase Agreement dated as of
February 25, 1992, as amended from time to time.
11. TRANSFERS.
Subject to the terms and conditions contained in Section 10 hereof,
this Warrant Agreement and all rights hereunder are transferable with the prior
consent of the Company, which consent shall not be unreasonably withheld in
whole or in part by the Warrantholder and any successor transferee, provided,
however, in no event shall the number of transfers of the rights and interests
in all of the Warrants exceed three (3) transfers. The transfer shall be
recorded on the books of the Company upon receipt by the Company of a notice of
transfer in the form attached hereto as Exhibit II (the "Transfer Notice"), at
its principal offices and the payment to the Company of all transfer taxes and
other governmental charges imposed on such transfer.
12. MISCELLANEOUS.
(a) Effective Date. The provisions of this Warrant Agreement shall be
construed and shall be given effect in all respects as if it had been executed
and delivered by the Company on the date hereof. This Warrant Agreement shall
be binding upon any successors or assigns of the Company.
(b) Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the Warrantholder relating hereto, the
prevailing party shall be entitled to attorneys' fees and expenses and all
costs of proceedings incurred in enforcing this Warrant Agreement.
(c) Governing Law. This Warrant Agreement shall be governed by and
construed for all purposes under and in accordance with the laws of the State
of Delaware.
(d) Counterparts. This Warrant Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
8
<PAGE> 9
together shall constitute one and the same instrument.
(e) Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery,
facsimile transmission (provided that the original is sent by personal delivery
or mail as hereinafter set forth) or seven (7) days after deposit in the United
States mail, by registered or certified mail, addressed (i) to the
Warrantholder at 6111 North River Road, Rosemont, Illinois 60018, attention:
James Labe, President, Comdisco Venture Lease Division, cc: Legal Department,
(and/or, if by facsimile, (708) 518-5465) and (ii) to the Company at One
Kendall Square, Bldg. 300, Cambridge, Massachusetts 02139, (and/or if by
facsimile, (617) 621-7103) or at such other address as any such party may
subsequently designate by written notice to the other party.
(f) Remedies. In the event of any default hereunder, the
non-defaulting party may proceed to protect and enforce its rights either by
suit in equity and/or by action at law, including but not limited to an action
for damages as a result of any such default, and/or an action for specific
performance for any default where Warrantholder will not have an adequate
remedy at law and where damages will not be readily ascertainable. The Company
expressly agrees that it shall not oppose an application by the Warrantholder or
any other person entitled to the benefit of this Agreement requiring specific
performance of any or all provisions hereof or enjoining the Company from
continuing to commit any such breach of this Agreement.
(g) No Impairment of Rights. The Company will not, by amendment of
its Charter or through any other means, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate in order to protect the rights
of the Warrantholder against impairment.
(h) Survival. The representations, warranties, covenants and
conditions of the respective parties contained herein or made pursuant to this
Warrant Agreement shall survive the execution and delivery of this Warrant
Agreement.
(i) Severability. In the event any one or more of the provisions of
this Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision, which
comes closest to the intention of the parties underlying the invalid, illegal
or unenforceable provision.
(j) Amendments. Any provision of this Warrant Agreement may be
amended by a written instrument signed by the Company and by the Warrantholder.
(k) Additional Documents. The Company, upon execution of this Warrant
Agreement, shall provide the Warrantholder with certified resolutions with
respect to the representations, warranties and covenants set forth in
subparagraphs (a) through (d), (f) and (g) of Section 9 above. If the purchase
price for the Leases referenced in the preamble of this Warrant Agreement
exceeds $1,000,000, the Company will also provide Warrantholder with an opinion
from the Company's counsel with respect to those same representations,
warranties and covenants. The Company shall also supply such other documents
as the Warrantholder may from time to time reasonably request.
9
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be executed by its officers thereunto duly authorized as of the
Effective Date.
Company: MYCO PHARMACEUTICALS INC.
By: /s/ BARRY BERKOWITZ
------------------------------
Title: President
---------------------------
Warrantholder: COMDISCO, INC.
By: [Sig]
------------------------------
Title:
----------------------------
8/3/93
10
<PAGE> 11
EXHIBIT I
NOTICE OF EXERCISE
To:
(1) The undersigned Warrantholder hereby elects to purchase shares of
the Preferred Stock of , pursuant to the terms of the
Warrant Agreement dated the day of , 19 (the "Warrant
Agreement") between and the
Warrantholder, and tenders herewith payment of the purchase price for
such shares in full, together with all applicable transfer taxes, if
any.
(2) In exercising its rights to purchase the Preferred Stock of
, the undersigned
hereby confirms and acknowledges the investment representations and
warranties made in Section 10 of the Warrant Agreement.
(3) Please issue a certificate or certificates representing said shares of
Preferred Stock in the name of the undersigned or in such other name as
is specified below.
- --------------------------------------
(Name)
- --------------------------------------
(Address)
Warrantholder: COMDISCO, INC.
By: __________________________________
Title: _______________________________
Date: ________________________________
11
<PAGE> 12
ACKNOWLEDGEMENT OF EXERCISE
The undersigned , hereby
acknowledge receipt of the "Notice of Exercise" from Comdisco, Inc., to
purchase shares of the Preferred Stock of , pursuant
to the terms of the Warrant Agreement, and further acknowledges that
shares remain subject to purchase under the terms of the Warrant Agreement.
Company:
By: __________________________________
Title: _______________________________
Date: ________________________________
12
<PAGE> 13
EXHIBIT II
TRANSFER NOTICE
(To transfer or assign the foregoing Warrant Agreement
execute this form and supply required information. Do
not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to
________________________________________________________________________________
(Please Print)
whose address is________________________________________________________________
________________________________________________________________________________
Dated___________________________________________________________
Holder's Signature______________________________________________
Holder's Address________________________________________________
________________________________________________________________
Signature Guaranteed:___________________________________________________________
NOTE: The signature to this Transfer Notice
must correspond with the name as it
appears on the face of the Warrant
Agreement, without alteration or
enlargement or any change whatever.
Officers of corporations and those acting
in a fiduciary or other representative
capacity should file proper evidence of
authority to assign the foregoing Warrant
Agreement.
13
<PAGE> 1
EXHIBIT 10.41
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE LAW. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL)
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE LAW.
WARRANT AGREEMENT
To Purchase Shares of the Series A Preferred Stock of
MYCO PHARMACEUTICALS INC.
Dated as of May 24, 1994 (the "Effective Date")
WHEREAS, Myco Pharmaceuticals Inc., a Delaware corporation (the
"Company" has entered into a Master Lease Agreement dated as of June 17, 1993,
Equipment "Schedule No. VL-1, and related Schedules (the "Leases") with
Comdisco, Inc., a Delaware corporation (the "Warrantholder"); and
WHEREAS, the Company desires to grant to Warrantholder, in
consideration for such Leases, the right to purchase shares of its Series A
($.01 par value) Preferred Stock;
NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Leases and in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder agree as follows:
1. GRANT OF THE RIGHT TO PURCHASE SERIES A PREFERRED STOCK.
The Company hereby grants to the Warrantholder, and the Warrantholder
is entitled, upon the terms and subject to the conditions hereinafter set forth,
to subscribe to and purchase, from the Company, 70,833 fully paid and
non-assessable shares of the Company's Series A Preferred Stock ($.01 par value)
("Preferred Stock") which is equal to 8.5% of the Maximum Cost of Equipment
allowable under Phase II of the Lease (which percent is equal to $85,000.00), as
a purchase price per share of $1.20 (collectively, the "Exercise Price").
The number and purchase price of such shares are subject to adjustment
as provided in Section 8 hereof.
2. TERM OF THE WARRANT AGREEMENT.
Except as otherwise provided for herein, the term of this Warrant
Agreement and the right to purchase Preferred Stock as granted herein shall
commence on the Effective Date and shall be
<PAGE> 2
exercisable for a period of (i) ten (10) years or (ii) five (5) years from the
effective date of the Company's initial public offering, whichever is shorter.
3. EXERCISE OF THE PURCHASE RIGHTS.
The purchase rights set forth in this Warrant Agreement are exercisable
by the Warrantholder, in whole or in part, at any time, or from time to time,
prior to the expiration of the term set forth in Section 2 above, by tendering
to the Company at its principal office a notice of exercise in the form attached
hereto as Exhibit I (the "Notice of Exercise"), duly completed and executed.
Promptly upon receipt of the Notice of Exercise and the payment of the purchase
price in accordance with the terms set forth below, and in no event later than
twenty-one (21) days thereafter, the Company shall issue to the Warrantholder a
certificate for the number of shares of Preferred Stock purchased and shall
execute the Notice Exercise indicating the number of shares which remain subject
to future purchases, if any.
The Exercise Price may be paid at the Warrantholder's election either
(i) by cash or check, or (ii) by surrender of Warrants ("Net Issuance") as
determined below. If the Warrantholder elects the Net Issuance method, the
Company will issue Preferred Stock in accordance with the following formula:
X = Y(A-B)
------
A
Where: X = the number of shares of Preferred Stock to be
issued to the Warrantholder.
Y = the number of shares of Preferred Stock requested
to be exercised under this Warrant Agreement.
A = the fair market value of one (1) share of Preferred
Stock.
B = the Exercise Price.
As used herein, current fair market value of Preferred Stock shall mean
with respect to each share of Preferred Stock:
(i) if the exercise is in connection with an initial public offering,
and if the Company's Registration Statement relating to such public
offering has been declared effective by the SEC, then the initial
"Price to Public" specified in the final prospectus with respect to the
offering;
(ii) if this Warrant is exercised after, and not in
connection with the Company's initial public offering, and:
- 2 -
<PAGE> 3
(a) if traded on a securities exchange, the fair market value
shall be deemed to be the average of the closing prices over a
twenty-one (21) day period ending three days before the day
the current fair market value of the securities is being
determined; or
(b) if actively traded over-the-counter, the fair market value
shall be deemed to be the average of the closing bid and asked
prices quoted on the NASDAQ system (or similar system) over
the twenty-one (21) day period ending three days before the
day the current fair market value of the securities is being
determined;
(iii) if at any time the Preferred Stock is not listed on any
securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the current fair market value of Preferred
Stock shall be the highest price per share which the Company could
obtain from a willing buyer (not a current employee or director) for
shares of Preferred Stock sold by the Company, from authorized but
unissued shares, as determined in good faith by its Board of Directors,
unless the Company is then subject to a merger, acquisition or other
consolidation pursuant to which the Company is not the surviving party,
in which case the fair market value of Preferred Stock shall be deemed
to be the value received by the holders of the Company's Series A
Preferred Stock on a common equivalent basis pursuant to such merger or
acquisition.
Upon partial exercise by either cash or Net Issuance, the Company shall
promptly issue an amended Warrant Agreement representing the remaining number of
shares purchasable hereunder. All other terms and conditions of such amended
Warrant Agreement shall be identical to those contained herein, including, but
not limited to the Effective Date hereof. Upon exercise of the Warrant, at the
request of the Company, Warrantholder shall become subject to the Amended and
Restated Voting and Co-Sale Agreement dated January 11, 1994.
4. RESERVATION OF SHARES.
(a) Authorization and Reservation of Shares. During the term of this
Warrant Agreement, the Company will at all time shave authorized and reserved a
sufficient number of shares of its Preferred Stock to provide for the exercise
of the rights to purchase Preferred Stock as provided for herein.
(b) Registration or Listing. If any shares of Preferred Stock
required to be reserved hereunder require registration with or approval of
any governmental authority under any Federal or State law (other than any
registration under the 1933 Act, as
- 3 -
<PAGE> 4
then in effect, or any similar Federal statute then enforced, or any state
securities law, required by reason of any transfer involved in such conversion),
or listing on any domestic securities exchange, before such shares may be issued
upon conversion, the Company will, at its expense and as expeditiously as
possible, use its best efforts to cause such shares to be duly registered,
listed or approved for listing on such domestic securities exchange, as the case
may be.
5. NO FRACTIONAL SHARES OR SCRIP.
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.
6. NO RIGHTS AS SHAREHOLDER.
This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise of
the Warrant.
7. WARRANTHOLDER REGISTRY.
The Company shall maintain a registry showing the name and address of
the registered holder of this Warrant Agreement.
8. ADJUSTMENT RIGHTS.
The purchase price per share and the number of shares of Preferred
Stock purchasable hereunder are subject to adjustment, as follows:
(a) Merger and Sale of Assets. If at any time there shall be a capital
reorganization of the shares of the Company's stock (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), or a merger or consolidation of the Company with or into another
corporation when the Company is not the surviving corporation, or the sale of
all or substantially all of the Company's properties and assets to any other
person (hereinafter referred to as a "Merger Event"), then, as a part of such
Merger Event, lawful provision shall be made so that the Warrantholder shall
thereafter be entitled to receive, upon exercise of the Warrant, the number of
shares of preferred stock or other securities of the successor corporation
resulting from such Merger Event, equivalent in value to that which would have
been issuable if Warrantholder had exercised this Warrant immediately prior to
the Merger Event. In any such case, appropriate adjustment (as determined in
good faith by the Company's Board of Directors) shall be made in the application
of the provisions of this Warrant Agreement with respect to the rights and
interest of the Warrantholder after the
- 4 -
<PAGE> 5
Merger Event to the end that the provisions of this Warrant Agreement (including
adjustments of the Exercise Price and number of shares of Preferred Stock
purchasable) shall be applicable to the greatest extent possible.
(b) Reclassification of Shares. If the Company at any time shall, by
combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of any
other class or classes, this Warrant Agreement shall thereafter represent the
right to acquire such number and kind of securities as would have been issuable
as the result of such change with respect to the securities which were subject
to the purchase rights under this Warrant Agreement immediately prior to such
combination, reclassification, exchange, subdivision or other change.
(c) Subdivision or Combination of Shares. If the Company at any time
shall combine or subdivide its Preferred Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision, or proportionately
increased in the case of a combination.
(d) Stock Dividends. If the Company at any time shall pay a dividend
payable in, or make any other distribution (except any distribution specifically
provided for in the foregoing subsections (a) or (b)) of the Company's Series A
Preferred Stock, then the Exercise Price shall be adjusted, from and after the
record date of such dividend or distribution, to that price determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction (i) the numerator of which shall be the total number of all shares
of the Company's Series A Preferred Stock outstanding immediately prior to such
dividend or distribution, and (ii) the denominator of which shall be the total
number of all shares of the Company's Series A Preferred Stock outstanding
immediately after such dividend or distribution. The Warrantholder shall
thereafter be entitled to purchase, at the Exercise Price resulting from such
adjustment, the number of shares of Preferred Stock (calculated to the nearest
whole share) obtained by multiplying the Exercise Price in effect immediately
prior to such adjustment by the number of shares of Preferred Stock issuable
upon the exercise hereof immediately prior to such adjustment and dividing the
product thereof by the Exercise Price resulting from such adjustment.
(e) Antidilution Rights. Additional antidilution rights applicable to
the Preferred Stock purchasable hereunder are as set forth in the Company's
Certificate of Incorporation, as amended through the Effective Date, a true and
complete copy of which is attached hereto as Exhibit ___ (the "Charter"). The
Company shall promptly provide the Warrantholder with any restatement,
amendment, modification or waiver of the Charter. The Company shall provide
Warrantholder with prior written notice
- 5 -
<PAGE> 6
of any issuance of its stock or other equity security to occur after the
Effective Date of this Warrant, which notice shall include (a) the price at
which such stock or security is to be sold, (b) the number of shares to be
issued, and (c) such other information as necessary for Warrantholder to
determine if a dilutive event has occurred.
(f) Notice of Adjustments. If: (i) the Company shall declare any
dividend or distribution upon its stock, whether in cash, property, stock or
other securities; (ii) the Company shall offer for subscription prorata to the
holders of any class of its Preferred or other convertible stock any additional
shares of stock of any class or other rights; (iii) there shall be any Merger
Event; or (iv) there shall be any voluntary or involuntary dissolution,
liquidation or winding up of the Company; then, in connection with each such
event, the Company shall send to the Warrantholder: (A) at least ten (10) days'
prior written notice of the date on which the books of the Company shall close
or a record shall be taken for such dividend, distribution, subscription rights
(specifying the date on which the holders of Preferred Stock shall be entitled
thereto) or for determining rights to vote in respect of such Merger Event,
dissolution, liquidation or winding up; and (B) in the case of any such Merger
Event, dissolution, liquidation or winding up, at least ten (10) days' prior
written notice of the date when the same shall take place (and specifying the
date on which the holders of Preferred Stock shall be entitled to exchange their
Preferred Stock for securities or other property deliverable upon such Merger
Event, dissolution, liquidation or winding up). In the case of a public
offering, the Company shall give Warrantholder at least ten (10) days written
notice prior to the effective date thereof.
Each such written notice shall set forth, in reasonable detail, (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Exercise Price, and (v)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, addressed
to the Warrantholder, at the address as shown on the books of the Company.
(g) Timely Notice. Failure to timely provide such notice required by
subsection (g) above shall not affect the validity of any action taken by the
Company, and entitle Warrantholder to retain the benefit of the applicable
notice period notwithstanding anything to the contrary contained in any
insufficient notice received by Warrantholder. The notice period shall begin on
the date Warrantholder actually receives a written notice containing all the
information specified above.
- 6 -
<PAGE> 7
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
(a) Reservation of Preferred Stock. The Preferred Stock issuable upon
exercise of the Warrantholder's rights has been duly and validly reserved and,
when issued in accordance with the provisions of this Warrant Agreement, will be
validly issued, fully paid and non-assessable, and will be free of any taxes,
liens, charges or encumbrances of any nature whatsoever; provided, however, that
the Preferred Stock issuable pursuant to this Warrant Agreement may be subject
to restrictions on transfer under state and/or Federal securities laws. The
Company has made available to the Warrantholder true, correct and complete
copies of its Charter and Bylaws, as amended, and minutes of all Board of
Directors (including all committees of the Board of Directors, if any) and
Shareholder meetings from ___________, 19___ through ___________, 19___. The
issuance of certificates for shares of Preferred Stock upon exercise of the
Warrant Agreement shall be made without charge to the Warrantholder for any
issuance tax in respect thereof, or other cost incurred by the Company in
connection with such exercise and the related issuance of shares of Preferred
Stock. The Company shall not be required to pay any tax which may be payable in
respect to any transfer involved and the issuance and delivery of any
certificate in a name other than that of the Warrantholder.
(b) Due Authority. The execution and delivery by the Company of this
Warrant Agreement and the performance of all obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire the
shares of Preferred Stock, have been duly authorized by all necessary corporate
action on the part of the Company, and the Leases and this Warrant Agreement are
not inconsistent with the Company's charter or Bylaws, do not contravene any law
or governmental rule, regulation or order applicable to it, do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it is
bound, and the Leases and this Warrant Agreement constitute legal, valid and
binding agreements of the Company, enforceable in accordance with their
respective terms.
(c) Consents and Approvals. No consent or approval of, giving of notice
to, registration with, or taking of any other action in respect of any state,
Federal or other governmental authority or agency is required with respect to
the execution, delivery and performance by the Company of its obligations under
this Warrant Agreement, except for the filing of notices pursuant to Regulation
D under the 1933 Act and Section 4 c of the Illinois Corporate Securities Law,
which filings will be effective by the time required thereby.
(d) Issued Securities. All issued and outstanding shares of Common
Stock, Preferred Stock or any other securities of the
- 7 -
<PAGE> 8
Company Have been duly authorized and validly issued and are fully paid and
nonassessable. All outstanding shares of Common Stock, Preferred Stock and any
other securities were issued in full compliance with all Federal and state
securities laws. In addition:
(i) The authorized capital of the Company consists of (A)
12,000,000 shares of Common Stock, of which 1,506,000 shares are issued
and outstanding, and (B) 7,200,000 shares of preferred stock, of which
6,200,000 are designated as Series A, of which 5,976,568 are issued and
outstanding, and of which 1,000,000 are designated as Series B, of
which 976,284 are issued and outstanding.
(ii) The company has reserved (A) 2,112,000 shares of Common
Stock for issuance under its 1992 Employee, Director and Consultant
Stock Option Plan, under which, as of December 31, 1993, 1,239,250
options are outstanding at an average price of $.20 per share. There
are no other options, warrants, other than the Comdisco Warrant,
conversion privileges or other rights presently outstanding to purchase
or otherwise acquire any authorized but unissued shares of the
Company's capital stock or other securities of the Company.
(iii) In accordance with the Company's Articles of
Incorporation, no shareholder of the Company has preemptive rights to
purchase new issuances of the Company's capital stock.
(e) Insurance. The Company has in full force and effect insurance
policies, with extended coverage, insuring the Company and its property and
business against such losses and risks, and in such amounts, as are customary
for corporations engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.
(f) Other Commitments to Register Securities. Except as set forth in
this Warrant Agreement, the Series A and B Preferred Stock Purchase Agreement
and the Stock Purchase and Repurchase Agreement with Dr. Barry Berkowitz, the
Company is not, pursuant to the terms of any other agreement currently in
existence, under any obligation to register under the 1933 Act any of its
presently outstanding securities or any of its securities which may hereafter be
issued.
(g) Exempt Transaction. Subject to the accuracy of the Warrantholder's
representations in Section 10 hereof, the issuance of the Preferred Stock upon
exercise of this Warrant will constitute a transaction exempt from (i) the
registration requirements of Section 5 of the 1933 Act, in reliance upon
- 8 -
<PAGE> 9
Section 4(2) thereof, and (ii) the qualification requirements of the Illinois
Corporate Securities Law, in reliance upon Section 4 c thereof.
(h) Compliance with Rule 144. At the written request of the
Warrantholder, who proposes to sell Preferred Stock issuable upon the exercise
of the Warrant in compliance with Rule 144 promulgated by the Securities and
Exchange Commission, the Company shall furnish to the Warrantholder, within ten
days after receipt of such request, a written statement confirming the Company's
compliance with the filing requirements of the Securities and Exchange
Commission as set forth in such Rule, as such Rule may be amended from time to
time.
10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
This Warrant Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:
(a) Investment Purpose. The right to acquire Preferred Stock or the
Preferred Stock issuable upon exercise of the Warrantholder's rights contained
herein will be acquired for investment and not with a view to the sale or
distribution of any part thereof, and the Warrantholder has no present intention
of selling or engaging in any public distribution of the same except pursuant to
a registration or exemption.
(b) Private Issue. The Warrantholder understands (i) that the Preferred
Stock issuable upon exercise of this Warrant is not registered under the 1933
Act or qualified under applicable state securities laws on the ground that the
issuance contemplated by this Warrant Agreement will be exempt from the
registration and qualifications requirements thereof, and (ii) that the
Company's reliance on such exemption is predicated on the representations
set forth in this Section 10.
(c) Disposition of Warrantholder's Rights. In no event will the
Warrantholder make a disposition of any of its rights to acquire Preferred Stock
or Preferred Stock issuable upon exercise of such rights unless and until (i) it
shall nave notified the Company of the proposed disposition, and (ii) if
requested by the Company, it shall have furnished the Company with an opinion of
counsel (which counsel may either be inside or outside counsel to the
Warrantholder) satisfactory to the Company and its counsel to the effect that
(A) appropriate action necessary for compliance with the 1933 Act and applicable
state law has been taken, or (B) an exemption from the registration requirements
of the 1933 Act and applicable state law is available. Notwithstanding the
foregoing, the restrictions imposed upon the transferability of any of its
rights to acquire Preferred Stock or Preferred Stock issuable on the exercise of
such rights do not apply to transfers from the beneficial owner of any of the
aforementioned securities
- 9 -
<PAGE> 10
to its nominee or from such nominee to its beneficial aforementioned securities
to its nominee or from such nominee to its beneficial owner, and shall terminate
as to any particular share of Preferred Stock when (1) such security shall have
been effectively registered under the 1933 Act and applicable state law and sold
by the holder thereof in accordance with such registration or (2) such security
shall have been sold without registration in compliance with Rule 144 under the
1933 Act and applicable state law, or (3) a letter shall have been issued to the
Warrantholder at its request by the staff of the Securities and Exchange
Commission or a ruling shall have been issued to the Warrantholder at its
request by such Commission stating that no action shall be recommended by such
staff or taken by such Commission, as the case may be, if such security is
transferred without registration under the 1933 Act and applicable state law in
accordance with the conditions set forth in such letter or ruling and such
letter or ruling specifies that no subsequent restrictions on transfer are
required. Whenever the restrictions imposed hereunder shall terminate, as
hereinabove provided, the Warrantholder or holder of a share of Preferred Stock
then outstanding as to which such restrictions have terminated shall be entitled
to receive from the Company, without expense to such holder, one or more new
certificates for the Warrant or for such shares of Preferred Stock not bearing
any restrictive legend.
(d) Financial Risk. The Warrantholder has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.
(e) Risk of No Registration. The Warrantholder understands that if the
Company does not register with the Securities and Exchange Commission pursuant
to Section 12 of the 1933 Act, or file reports pursuant to Section 15(d), of the
Securities Exchange Act of 1934 (the "1934 Act"), or if a registration statement
covering the securities under the 1933 Act is not in effect when it desires to
sell (i) the rights to purchase Preferred Stock pursuant to this Warrant
Agreement, or (ii) the Preferred Stock issuable upon exercise of the right to
purchase, it may be required to hold such securities for an indefinite period.
The Warrantholder also understands that any sale of its rights of the
Warrantholder to purchase Preferred Stock or Preferred Stock which might be made
by it in reliance upon Rule 144 under the 1933 Act may be made only in
accordance with the terms and conditions of that Rule.
(f) Registration Rights. Company agrees that Warrantholder shall have
the same registration rights as other investors pursuant to the Preferred Stock
Purchase Agreement dated as of January 11, 1994 and Warrantholder agrees to
cooperate with the requirements of an underwriter to the same extent as other
- 10 -
<PAGE> 11
investors, as set forth in the Preferred Stock Purchase Agreement dated as of
January 11, 1994, as amended from time to time.
11. TRANSFERS.
Subject to the terms and conditions contained in Section 10 hereof,
this Warrant Agreement and all rights hereunder are transferrable with the prior
consent of the Company, which consent shall not be unreasonably withheld in
whole or in part by the Warrantholder and any successor transferee, provided,
however, in no event shall the number of transfers of the rights and interests
in all of the Warrants exceed three (3) transfers. The transfer shall be
recorded on the books of the Company upon receipt by the Company of a notice of
transfer in the form attached hereto as Exhibit II (the "Transfer of Notice"),
at its principal offices and the payment to the Company of all transfer taxes
and other governmental charges imposed on such transfer.
12. MISCELLANEOUS.
(a) Effective Date. The provisions of this Warrant Agreement shall be
construed and shall be given effect in all respects as if it had been executed
and delivered by the Company on the date hereof. This Warrant Agreement shall be
binding upon any successors or assigns of the Company.
(b) Attorney's Fees. In any litigation, arbitration or court proceeding
between the Company and the Warrantholder relating thereto, the prevailing party
shall be entitled to attorneys' fees and expenses and all costs of proceedings
incurred in enforcing this Warrant Agreement.
(c) Governing Law. This Warrant Agreement shall be governed by and
construed for all purposes under and in accordance with the laws of the State of
Delaware.
(d) Counterparts. This Warrant 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.
(e) Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery,
facsimile transmission (provided that the original is sent by personal delivery
or mail as hereinafter set forth) or seven (7) days after deposit in the United
States mail, by registered or certified mail, addressed (i) to the Warrantholder
at 6111 North River Road, Rosemont, Illinois 60018, attention: James Labe,
President, Comdisco Venture Lease Division, cc: Legal Department, (and/or, if by
facsimile, (708) 518-5465) and (ii) to the Company at One Kendall Square, Bldg.
300, Cambridge, Massachusetts 02139, (and/or if by facsimile,
- 11 -
<PAGE> 12
(617) 621-7103) or at such other address as any such party may subsequently
designate by written notice to the other party.
(f) Remedies. In the event of any default hereunder, the non-defaulting
party may proceed to protect and enforce its rights either by suit in equity
and/or by action at law, including but not limited to an action for damages as a
result of any such default, and/or an action for specific performance for any
default where Warrantholder will not have an adequate remedy at law and where
damages will not be readily ascertainable. The Company expressly agrees that it
shall not oppose an application by the Warrantholder or any other person
entitled to the benefit of this Agreement requiring specific performance of any
or all provisions hereof or enjoining the Company from continuing to commit any
such breach of this Agreement.
(g) No Impairment of Rights. The Company will not, by amendment of its
Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Warrantholder against impairment.
(h) Survival. The representations, warranties, covenants and conditions
of the respective parties contained herein or made pursuant to this Warrant
Agreement shall survive the execution and delivery of this Warrant Agreement.
(i) Severability. In the event any one or more of the provisions of
this Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision, which
comes closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.
(j) Amendments. Any provision of this Warrant Agreement may be amended
by a written instrument signed by the Company and by the Warrantholder.
(k) Additional Documents. The Company, upon execution of this Warrant
Agreement, shall provide the Warrantholder with certified resolutions with
respect to the representations, warranties and covenants set forth in
subparagraphs (a) through (d), (f) and (g) of Section 9 above. If the purchase
price for the Leases referenced in the preamble of this Warrant Agreement
exceeds $1,000,000, the Company will also provide Warrantholder with an opinion
from the Company's counsel with respect to those same representations,
warranties and covenants. The Company
- 12 -
<PAGE> 13
shall also supply such other documents as the Warrantholder may from time to
time reasonably request.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be executed by its officers thereunto duly authorized as of the
Effective Date.
Company: MYCO PHARMACEUTICALS INC.
By: /s/ Barry Berkowitz
-----------------------------
Title: President
Warrantholder: COMDISCO, INC.
By: [sig]
-----------------------------
Title:
---------------------------
- 13 -
<PAGE> 14
EXHIBIT I
NOTICE OF EXERCISE
To: ______________________________
(1) The undersigned Warrantholder hereby elects to purchase _________
shares of the Preferred Stock of ____________, pursuant to the terms of
the Warrant Agreement dated the _____ day of ________________, 19___
(the "Warrant Agreement") between ________________________________ and
the Warrantholder, and tenders herewith payment of the purchase price
for such shares in full, together with all applicable transfer taxes,
if any.
(2) In exercising its rights to purchase the Preferred Stock of
__________________________________, the undersigned hereby confirms and
acknowledges the investment representations and warranties made in
Section 10 of the Warrant Agreement.
(3) Please issue a certificate or certificates representing said shares of
Preferred Stock in the name of the undersigned or in such other name as
is specified below.
_________________________________
(Name)
_________________________________
(Address)
Warrantholder: COMDISCO, INC.
By:______________________________
Title:___________________________
Date:____________________________
- 14 -
<PAGE> 15
ACKNOWLEDGEMENT OF EXERCISE
The undersigned ______________________________, hereby acknowledge
receipt of the "Notice of Exercise" from Comdisco, Inc., to purchase _______
shares of the Preferred Stock of _________________, pursuant to the terms of the
Warrant Agreement, and further acknowledges that _______ shares remain subject
to purchase under the terms of the Warrant Agreement.
Company:
By:______________________________
Title:___________________________
Date:____________________________
- 15 -
<PAGE> 16
EXHIBIT II
TRANSFER NOTICE
(To transfer or assign the foregoing Warrant Agreement execute this
form and supply required information. Do not use this form to purchase
shares).
FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to
_______________________________________________________________________________
(Please Print)
whose address is_______________________________________________________________
_______________________________________________________________________________
Dated ______________________________________
Holder's Signature _________________________
Holder's Address ___________________________
____________________________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Transfer Notice must
correspond with the name as it appears on the face
of the Warrant Agreement, without alteration or
enlargement or any change whatever. Officers of
corporations and those acting in a fiduciary or
other representative capacity should file proper
evidence of authority to assign the foregoing
Warrant Agreement.
- 16 -
<PAGE> 1
Exhibit 10.43
EXHIBIT B2
FORM OF NONCOMPETITION AGREEMENT
MYCO PHARMACEUTICALS INC.
5 Pinetree Place
Fort Washington, PA 19034
[Date], 1992
[NAME OF CONSULTANT OR EMPLOYEE]
__________________________
__________________________
Dear [NAME OF CONSULTANT OR EMPLOYEE]
This letter is to confirm our understanding with respect to (i) your
agreement not to compete with the Company and (i) your agreement to protect and
preserve information and property which is confidential and proprietary to the
company or other third parties with whom the Company does business (the terms
and conditions agreed to in this letter shall hereinafter be referred to as the
"Agreement"). In consideration of the mutual promises and covenants contained in
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, we have agreed as follows:
1. Prohibited Competition. We have discussed, and you recognize and
acknowledge the competitive and proprietary nature of the Company's business
operations.
You acknowledge and agree that a business will be deemed competitive
with the Company if it performs any of the services, manufactures or sells any
of the products provided or offered by the Company or is involved in the
research, or development of processes, products or techniques in the Company's
Field of Interest (such business to be referred to as a "competitive business"),
The term Company's "Field of Interest" currently means the development of
products or processes as anti-infective therapeutics or diagnostics with an
initial emphasis on antifungals arid commercial use of fungis or yeasts in drug
screening, production, development or testing. The Company may modify the
definition of its Field of Interest by written notice to you based on the
activities in which the Company is then engaged or in which the Company then
proposes to be engaged.
<PAGE> 2
You further acknowledge and agree that during the course of performing
services for the Company as a [CONSULTANT/EMPLOYEE], the Company will furnish,
disclose or make available to you confidential and proprietary information
related to the Company's business and that the Company may provide you with
unique and specialized training. You also acknowledge that such confidential
information and the training to be provided by the Company have been developed
and will be developed by the Company. and others with whom the Company has a
relationship through the expenditure by the company and others of substantial
time, effort and money and that all such confidential information and training
could be used by you to compete with the Company.
Accordingly, you hereby agree in consideration of the Company's
agreement to engage you as a [CONSULTANT/EMPLOYEE] and your compensation thereof
and in view of the confidential position to be held by you, the unique and
specialized training which the Company may provide you and the confidential
nature and proprietary value of the information which the Company may share with
you, and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, as follows:
During the period during which you perform services for or at the
request of the Company (the "Term") and for a period of one year following the
expiration or termination of the Term (the "Restricted Term"), whether such
termination is voluntary or involuntary, you shall not, without the prior
written consent of the Company:
(i) For yourself or on behalf of any other, directly or
indirectly, either as principal, agent, stockholder, employee,
consultant, representative or in any other capacity, own, manage,
operate or control, or be concerned, connected or employed by, or
otherwise associate in any manner with, engage in or have a financial
interest in any business which is directly or indirectly competitive
with the business of the Company within the World (the "Restricted
Territory"), except that nothing contained herein shall preclude you
from purchasing or owning stock in any such business if such stock is
publicly traded, and provided that your holdings do not exceed three
(3%) percent of the issued and outstanding capital stock of such
business.
(ii) Either individually or on behalf of or through any
third party, solicit, divert or appropriate or attempt to solicit,
divert or appropriate, for the purpose of competing with the Company
or any present or future parent, subsidiary or other affiliate of the
Company which is engaged in a similar business as the Company, any
customers or patrons of the Company, or any prospective customers or
patrons with
- 2 -
<PAGE> 3
respect to which the Company has developed or made a sales presentation
(or similar offering of services), located within the Restricted
Territory.
(iii) Either individually or on behalf of or through any third
party, directly or indirectly, solicit, entice or persuade or attempt
to solicit, entice or persuade any other employees of or consultants to
the Company or any parent or future parent or affiliate of the Company
to leave the services of the Company or any parent or future parent or
affiliate for any reason.
[IF APPLICABLE - NOTWITHSTANDING THE ABOVE, WE ACKNOWLEDGE AND AGREE
THAT THIS AGREEMENT SHALL NOT PROHIBIT YOU FROM _______________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________.]
You further recognize and acknowledge that (i) the types of employment
which are prohibited by this paragraph are narrow and reasonable in relation to
the skills which represent your principal salable asset both to the Company and
to your other prospective employers, and (ii) the specific but broad
geographical scope of the provisions of this paragraph is reasonable, legitimate
and fair to you in light of the Company's need to market its services and sell
its products in a large geographic area in order to have a sufficient customer
base to make the Company's business profitable and in light of the limited
restrictions on the type of employment prohibited herein compared to the types
of employment for which you are qualified to earn your livelihood.
If any part of this section should be determined by a court of
competent jurisdiction to be unreasonable in duration, geographic area, or
scope, then this section is intended to and shall extend only for such period of
time, in such area and with respect to such activity as is determined to be
reasonable.
2. Protected Information. Upon execution of this Agreement, you shall
execute and deliver a Confidentiality Agreement in the form attached hereto as
Annex A.
3. Continuing Obligations. Your obligations under this Agreement other
than the provisions of this Agreement shall not be affected: (i) by any
termination of your consulting or employment arrangement, including termination
upon the Company's initiative; nor (ii) by any change in your position, title or
function with the Company; nor (iii) by any interruption in the consulting or
employment arrangement during which you leave and rejoin the Company.
- 3 -
<PAGE> 4
4. Records. Upon termination of your relationship with the Company, you
shall deliver to the Company any property of the Company which may be in your
possession including products, materials, memoranda, notes, records, reports, or
other documents or photocopies of the same.
5. No Conflicting Agreements. You hereby represent and warrant that you
have no commitments or obligations inconsistent with this Agreement and you
hereby agree to indemnify and hold the Company harmless against any claim based
upon circumstances alleged to be inconsistent with such representation and
warranty.
6. No Employment Created. This Agreement does not constitute, and shall
not be construed as constituting, an undertaking by the Company to hire you as
an employee or consultant of the Company.
7. Waiver of Provisions. Failure of any party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted hereunder or of the future performance of any such term or
condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by or on behalf of the waiving party.
8. Notices. Any notice or other communication required or permitted
hereunder shall be deemed sufficiently given if sent by registered or certified
mail, postage and fees prepaid, addressed to the party to be notified as
follows: if to the Company to its address set forth above, with a copy to Peter
F. Demuth, Esquire, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One
Financial Center, Boston, MA 02111 and if to you to your address set forth
above, or in each case to such other address as either party may from time to
time designate in writing to the other. Such notice or communication shall be
deemed to have been given as of the date deposited with the United States Postal
Service.
9. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Massachusetts,
without application of the conflicts of law provisions thereof.
10. Entire Agreement. This Agreement, together with Annex A hereto,
embodies the entire agreement and understanding between the parties hereto and
supersedes all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, warranty, covenant or
agreement of any kind not set forth in this Agreement shall affect, or be used
to interpret, change or restrict, the express terms and provisions of this
Agreement.
- 4 -
<PAGE> 5
11. Invalidity. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations. If any provision of this Agreement, or the
application thereof to any person or circumstance, shall, for any reason and to
any extent, be invalid or unenforceable, the remainder of this Agreement and the
application of such provisions to other persons or circumstances shall not be
affected thereby, but rather shall be construed, reformed and enforced to the
greatest extent permitted by law.
12. Injunctive Relief. You hereby expressly acknowledge that any breach
or threatened breach of any of the terms and/or conditions set forth in this
Agreement will result in substantial, continuing and irreparable injury to the
Company. Therefore, you hereby agree that, in addition to any other remedy that
may be available to the Company, the Company shall be entitled to injunctive or
other equitable relief by a court of appropriate jurisdiction in the event of
any breach or threatened breach of the terms of this Agreement.
13. Assignment. The Company may assign its rights and obligations
hereunder to any person or entity who succeeds to all or substantially all of
the Company's business or that aspect of the Company's business in which you are
principally involved. Your rights and obligations under this Agreement may not
be assigned without the prior written consent of the Company.
14. Expenses. Should any party breach this Agreement, in addition to
all other remedies available at law or in equity, such party shall pay all of
any other party's costs and expenses resulting therefrom and/or incurred in
enforcing this Agreement, including legal fees and expenses.
15. Modification and Amendment. This Agreement shall not be modified or
amended except by an instrument in writing signed by or on behalf of the parties
hereto.
16. Parties Benefitted. Subject to the foregoing, this Agreement shall
be binding upon and inure to the benefit of the Company and any parent,
subsidiary or other affiliate of the Company, and their respective successors
and assigns, and shall be binding upon and inure to the benefit of you and your
heirs, executors and administrators.
17. Headings. Section and other headings contained in this Agreement
are for reference purposes only and are in no way intended to define, interpret,
describe or otherwise limit the scope, extent or intent of this Agreement or any
of its provisions each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
- 5 -
<PAGE> 6
18. Counterparts. This Agreement may be executed in one or more
counterparts each of which will be deemed an original, but all of which together
shall constitute one and the same instrument.
If the foregoing accurately sets forth our agreement, please so
indicate by signing and returning to us the enclosed copy of this letter.
Very truly yours,
MYCO PHARMACEUTICALS INC.
_________________________________
Accepted and Approved
_____________________________
[NAME OF CONSULTANT/EMPLOYEE]
Dated: ______________________
- 6 -
<PAGE> 1
Exhibit 10.44
STANDARD FORM COMMERCIAL LEASE
215 FIRST STREET
CAMBRIDGE, MA 02142
1. PARTIES OLD CAMBRIDGE REALTY TRUST
(fill in) LESSOR, which expression shall include its heirs,
successors, and assigns where the context so admits,
does hereby lease to CHEMGENICS PHARMACEUTICALS, INC.
LESSEE, which expression shall include its
successors, executors, administrators, and assigns
where the context so admits, and the LESSEE hereby
leases the following described premises:
2. PREMISES approximately one thousand and thirty-four (1,034)
(fill in and include, rentable square feet of office space on the second
if applicable, suite floor of Building 300 in the complex known as One
number, floor Kendall Square in Cambridge, Massachusetts and
number, and square further described on the attached Exhibit A: "the
feet) Leased Premises" together with the right to use in
common with others entitled thereto, the hallways,
stairways, and elevators, necessary for access to
said leased premises, and lavatories nearest thereto.
3. TERM The term of this lease shall be for SIX (6) Months
(fill in) commencing on July 1, 1996 and ending on December 31,
1996.
4. RENT The LESSEE shall pay to the LESSOR fixed rent at the
(fill in) rate of $20,680.00 dollars per year, payable in
advance in monthly installments of 1723.33 subject to
proration in the case of any partial calendar month.
All rent shall be payable without offset or
deduction.
<PAGE> 2
7. UTILITIES The LESSEE shall pay, as they become due, all
bills for electricity and other utilities (whether
they are used for furnishing heat or other
*delete "air conditioning" purposes) that are furnished to the leased
if not applicable premises and presently separately metered and all
bills for fuel furnished to a separate tank
servicing the leased premises exclusively. The
LESSOR agrees to provide all other utility service
and to furnish reasonably hot and cold water and
reasonable heat and air conditioning* (except to
the extent that the same are furnished through
separately metered utilities or separate fuel
tanks as set forth above) to the leased premises,
the hallways, stairways, elevators, and lavatories
during normal business hours on regular business
days of the heating and air conditioning* seasons
of each year, to furnish elevator service and to
light passageways and stairways during business
hours, and to furnish each cleaning service as is
customary in similar buildings in said city or
town, all subject to interruption due to any
accident, to the making of repairs, alterations,
or improvements, to labor difficulties, to trouble
in obtaining fuel, electricity, service, or
supplies from the sources from which they are
usually obtained for said building, or to any
cause beyond the LESSOR's control.
*or billed on a pro-rata basis by Lessor.
LESSOR shall have no obligation to provide
utilities or equipment other than the utilities
and equipment within the premises as of the
commencement date of this lease. In the event
LESSEE requires additional utilities or equipment,
the installation and maintenance thereof shall be
the LESSEE's sole obligation, provided that such
installation shall be subject to the written
consent of the LESSOR.
8. USE OF LEASED The LESSEE shall use the leased premises only for
PREMISES the purpose of office use in connection with its
(fill in) biotechnology and research operations.
9. COMPLIANCE The LESSEE acknowledges that no trade or
WITH LAWS occupation shall be conducted in the leased
premises or use made thereof which will be
unlawful, improper, noisy or offensive, or
contrary to any law or any municipal by-law or
ordinance in force in the city or town in which
the premises are situated. Without limiting the
generality of the foregoing (a) the LESSEE shall
not bring or permit to be brought or kept in or on
the leased premises or elsewhere on the LESSOR's
property any hazardous, toxic, inflammable,
combustible or explosive fluid, material, chemical
or substance, including without limitation any
item defined as hazardous pursuant to Chapter 21E
of the Massachusetts General Laws; and (b) the
LESSEE shall be responsible for compliance with
requirements imposed by the Americans with
Disabilities Act relative to the layout of the
leased premises and any work performed by the
LESSEE therein.
10. FIRE INSURANCE The LESSEE shall not permit any use of the leased
premises which will make voidable any insurance on
the property of which the leased premises are a
part, or on the contents of said property or which
shall be contrary to any law or regulation from
time to time established by the New England Fire
Insurance Rating Association, or any similar body
succeeding to its powers. The LESSEE shall on
demand reimburse the LESSOR, and all other
tenants, all extra insurance premiums caused by
the LESSEE's use of the premises.
11. MAINTENANCE The LESSEE agrees to maintain the leased premises
in good condition, damage by fire and other
A. LESSEE'S casualty only excepted, and whenever necessary,
OBLIGATIONS to replace plate glass and other glass therein,
acknowledging that the leased premises are now in
good order and the glass whole. The LESSEE shall
not permit the leased premises to be overloaded,
damaged, stripped, or defaced, nor suffer any
waste. LESSEE shall obtain written consent of
LESSOR before erecting any sign on the premises.
B. LESSOR'S The LESSOR agrees to maintain the structure of the
OBLIGATIONS building of which the leased premises are a part
in the same condition as it is at the commencement
of the term or as it may be put in during the term
of this lease, reasonable wear and tear, damage by
fire and other casualty only excepted, unless such
maintenance is required because of the LESSEE or
those for whose conduct the LESSEE is legally
responsible.
12. ALTERATIONS -- The LESSEE shall not make structural alterations
ADDITIONS or additions to the leased premises, but may make
non-structural alterations provided the LESSOR
consents thereto in writing, which consent shall
not be unreasonably withheld or delayed. All such
allowed alterations shall be at LESSEE's expense
and shall be in quality at least equal to the
present construction. LESSEE shall not permit any
mechanics' liens, or similar liens, to remain upon
the leased premises for labor and material
furnished to LESSEE or claimed to have been
furnished to LESSEE in connection with work of
any character performed or claimed to have been
performed at the direction of LESSEE and shall
cause any such lien to be released of record
forthwith without cost to LESSOR. Any alterations
or improvements made by the LESSEE shall become
the property of the LESSOR at the termination of
the occupancy as provided herein.
13. ASSIGNMENT -- The LESSEE shall not assign or sublet the whole or
SUBLEASING any part of the leased premises without LESSOR's
prior written consent. Notwithstanding such
consent, LESSEE shall remain liable to LESSOR for
the payment of all rent and for the full
performance of the covenants and conditions of
this lease.
<PAGE> 3
14. SUBORDINATION This lease shall be subject and subordinate to any and
all mortgages, deeds of trust and other instruments in
the nature of a mortgage, now or at any time hereafter,
a lien or liens on the property of which the leased
premises are a part and the LESSEE shall, when
requested, promptly execute and deliver such written
instruments as shall be necessary to show the
subordination of this lease to said mortgages, deeds of
trust or other such instruments in the nature of a
mortgage.
15. LESSOR'S The LESSOR or agents of the LESSOR may, at reasonable
ACCESS times, enter to view the leased premises and may remove
placards and signs not approved and affixed as herein
provided, and make repairs and alterations as LESSOR
should elect to do and may show the leased premises to
others, and at any time within three (3) months before
the expiration of the term, may affix to any suitable
part of the leased premises a notice for letting or
selling the leased premises or property of which the
leased premises are a part and keep the same so affixed
without hindrance or molestation.
16. INDEMNIFICATION The LESSEE shall save the LESSOR harmless from all loss
AND LIABILITY and damage occasioned by anything occurring on the
(fill in) leased premises unless caused by the negligence or
misconduct of the LESSOR, and from all loss and damage
wherever occurring occasioned by any omission, fault,
neglect or other misconduct of the LESSEE. The removal
of snow and ice from the sidewalks bordering upon the
leased premises shall be LESSOR's responsibility.
17. LESSEE'S The LESSEE shall maintain with respect to the leased
LIABILITY premises and the property of which the leased premises
INSURANCE are a part comprehensive public liability insurance in
(fill in) the amount of $1,000,000 with property damage insurance
in limits of $500,000 in responsible companies qualified
to do business in Massachusetts and in good standing
therein insuring the LESSOR as well as LESSEE against
injury to persons or damage to property as provided. The
LESSEE shall deposit with the LESSOR certificates for
such insurance at or prior to the commencement of the
term, and thereafter within thirty (30) days prior to
the expiration of any such policies. All such insurance
certificates shall provide that such policies shall not
be cancelled without at least ten (10) days prior
written notice to each assured named therein.
18. FIRE, Should a substantial portion of the leased premises, or
CASUALTY -- of the property of which they are a part, be
EMINENT substantially damaged by fire or other casualty, or be
DOMAIN taken by eminent domain, the LESSOR may elect to
terminate this lease. When such fire, casualty, or
taking renders the leased premises substantially
unsuitable for their intended use, a just and
proportionate abatement of rent shall be made, and the
LESSEE may elect to terminate this lease if:
(a) The LESSOR fails to give written notice
within thirty (30) days of intention to
restore leased premises, or
(b) The LESSOR fails to restore the leased
premises to a condition substantially
suitable for their intended use within
ninety (90) days of said fire, casualty or
taking.
The LESSOR reserves, and the LESSEE grants to the
LESSOR, all rights which the LESSEE may have for damages
or injury to the leased premises for any taking by
eminent domain, except for damage to the LESSEE's
fixtures, property, or equipment.
19. DEFAULT In the event that:
AND
BANKRUPTCY (a) The LESSEE shall default in the payment of
(fill in) any installment of rent or other sum herein
specified and such default shall continue
for ten (10) days after written notice
thereof; or
(b) The LESSEE shall default in the observance
or performance of any other of the LESSEE's
covenants, agreements, or obligations
hereunder and such default shall not be
corrected within thirty (30) days after
written notice thereof; or
(c) The LESSEE shall be declared bankrupt or
insolvent according to law, or, if any
assignment shall be made of LESSEE's
property for the benefit of creditors,
then the LESSOR shall have the right thereafter, while
such default continues, to re-enter and take complete
possession of the leased premises, to declare the term
of this lease ended, and remove the LESSEE's effects,
without prejudice to any remedies which might be
otherwise used for arrears of rent or other default. The
LESSEE shall indemnify the LESSOR against all loss of
rent and other payments which the LESSOR may incur by
reason of such termination during the residue of the
term. If the LESSEE shall default, after reasonable
notice thereof, in the observance or performance of any
conditions or covenants on LESSEE's part to be observed
or performed under or by virtue of any of the provisions
in any article of this lease, the LESSOR, without being
under any obligation to do so and without thereby
waiving such default, may remedy such default for the
account and at the expense of the LESSEE. If the LESSOR
makes any expenditures or incurs any obligations for the
payment of money in connection therewith, including but
not limited to, reasonable attorney's fees in
instituting, prosecuting or defending any action or
proceeding, such sums paid or obligations insured, with
interest at the rate of 12 percent per annum and costs,
shall be paid to the LESSOR by the LESSEE as additional
rent.
20. NOTICE Any notice from the LESSOR to the LESSEE relating to the
(fill in) leased premises or to the occupancy thereof, shall be
deemed duly served, if left at the leased premises
addressed to the LESSEE, or if mailed to the leased
premises, registered or certified mail, return receipt
requested, postage prepaid, addressed to the LESSEE. Any
notice from the LESSEE to the LESSOR relating to the
leased premises or to the occupancy thereof, shall be
deemed duly served, if mailed to the LESSOR by
registered or certified mail, return receipt requested,
postage prepaid, addressed to the LESSOR at such address
as the LESSOR may from time to time advise in writing.
All rent notices shall be paid and sent to the LESSOR at
Old Cambridge Realty Trust c/o The Athenaeum Group, 215
First St., Camb. MA 02142.
21. SURRENDER The LESSEE shall at the expiration or other termination
of this lease remove all LESSEE's goods and effects from
the leased premises, (including, without hereby limiting
the generality of the foregoing, all signs and lettering
affixed or painted by the LESSEE, either inside or
outside the leased premises). LESSEE shall deliver to
the LESSOR the leased premises and all keys, locks
thereto, and other fixtures connected therewith and all
alterations and additions made to or upon the leased
premises, in good conditions, damage by fire or other
casualty only excepted. In the event of the LESSEE's
failure to remove any of LESSEE's property from the
premises, LESSOR is hereby authorized, without liability
to LESSEE for loss or damage thereto, and at the sole
risk of LESSEE to remove and store any of the property
at LESSEE's expense, or to retain same
<PAGE> 4
to apply the net proceeds of such sale to the payment of
any sum due hereunder, or to destroy such property.
22. BROKERAGE
(fill in or delete)
23. CONDITION OF Except as may be otherwise expressly set forth herein,
PREMISES the LESSEE shall accept the leased premises "as is" in
their condition as of the commencement of the term of
this lease, and the LESSOR shall be obligated to perform
no work whatsoever in order to prepare the leased
premises for occupancy by the LESSEE.
24. FORCE In the event that the LESSOR is prevented or delayed
MAJEURE from making any repairs or performing any other covenant
hereunder by reason of any cause reasonably beyond the
control of the LESSOR, the LESSOR shall not be liable to
the LESSEE therefor nor, except as expressly otherwise
provided in case of casualty or taking, shall the LESSEE
be entitled to any abatement or reduction of rent by
reason thereof, nor shall the same give rise to a claim
by the LESSEE that such failure constitutes actual or
constructive eviction from the leased premises or any
part thereof.
25. LATE If rent or any other sum payable hereunder remains
CHARGE outstanding for a period of ten (10) days, the LESSEE
shall pay to the LESSOR a late charge equal to one and
one-half percent (1.5%) of the amount due for each month
or portion thereof during which the arrearage continues.
26. LIABILITY No owner of the property of which the leased premises
OF OWNER are a part shall be liable hereunder except for breaches
of the LESSOR's obligations occurring during the period
of such ownership. The obligations of the LESSOR shall
be binding upon the LESSOR's interest in said property,
but not upon other assets of the LESSOR, and no
individual partner, agent, trustee, stockholder,
officer, director, employee or beneficiary of the LESSOR
shall be personally liable for performance of the
LESSOR's obligations hereunder.
27. OTHER It is also understood and agreed that
PROVISIONS
1. Lessee will have two (2) six (6) month options to
renew this lease with two (2) month written notice
to Landlord. The Base Rent for the first six-month
option will be $21,714.00 per annum. The Base Rent
for the second six (6) month option will be
$22,748.00 per annum.
IN WITNESS WHEREOF, the said parties hereunto set their hands and seals this
__________________ day of JUNE 1996.
CHEMGENICS PHARMACEUTICALS, INC. OLD CAMBRIDGE REALTY TRUST
[SIG]
- ----------------------------------- -------------------------------------
LESSEE (DULY AUTHORIZED) ROBERT A. JONES, TRUSTEE
LESSOR
/s/ KIM LARSON
- ----------------------------------- -------------------------------------
WITNESS WITNESS
--------------------------------
BROKER(S)
<PAGE> 5
EXHIBIT A
"LEASED PREMISES"
<TABLE>
<CAPTION>
Suite # Use Area
<S> <C> <C>
201 OF 5889
202 OF 1810
203 OF 654
204 OF 432
205 SIG 195
206 SIG 84
207 OF 1034
208 OF 940
</TABLE>
[FLOORPLAN ILLUSTRATION]
Rev.
[LOGO] ONE KENDALL SQUARE BUILDING 300 SECOND FLOOR March 16, 1994
<PAGE> 6
STANDARD FORM COMMERCIAL LEASE
1. PARTIES OLD CAMBRIDGE REALTY TRUST
(fill in) LESSOR, which expression shall include its heirs,
successors, and assigns where the context so admits,
does hereby lease to MYCO PHARMACEUTICALS, INC.
LESSEE, which expression shall include its
successors, executors, administrators, and assigns
where the context so admits, and the LESSEE hereby
leases the following described premises:
2. PREMISES approximately nine hundred and fourteen (914)
(fill in and include, rentable square feet of office space on the ground
if applicable, suite (basement) floor of Building 300 in the office
number, floor complex known as One Kendall Square in Cambridge,
number, and square Massachusetts and further described on the attached
feet) Exhibit A: "LEASED PREMISES" together with the right
to use in common, with others entitled thereto, the
hallways, stairways, and elevators, necessary for
access to said leased premises, and lavatories
nearest thereto.
3. TERM The term of this lease shall be for One (1) Year
(fill in) commencing on August 1, 1995* and ending on July 31,
1996.**
4. RENT The LESSEE shall pay to the LESSOR rent at the rate
(fill in) of $8,226.00 dollars per year, payable in advance
in monthly installments of $685.50.
* or upon occupancy, whichever is earlier. If early
occupancy occurs, rent will be due on a pro-rata,
daily basis.
** and continuing thereafter until either party gives
the other three (3) months notice.
<PAGE> 7
7. UTILITIES The LESSEE shall pay, as they become due, all
bills for electricity and other utilities (whether
they are used for furnishing heat or other
*delete "air conditioning" purposes) that are furnished to the leased
if not applicable premises and presently separately metered,* and
all bills for fuel furnished to a separate tank
servicing the leased premises exclusively. The
LESSOR agrees to provide all other utility service
and to furnish reasonably hot and cold water and
reasonable heat and air conditioning* (except to
the extent that the same are furnished through
separately metered utilities or separate fuel
tanks as set forth above) to the leased premises,
the hallways, stairways, elevators, and lavatories
during normal business hours on regular business
days of the heating and air conditioning* seasons
of each year, to furnish elevator service and to
light passageways and stairways during business
hours, and to furnish such cleaning service as is
customary in similar buildings in said city or
town, all subject to interruption due to any
accident, to the making of repairs, alterations,
or improvements, to labor difficulties, to trouble
in obtaining fuel, electricity, service, or
supplies from the sources from which they are
usually obtained for said building, or to any
cause beyond the LESSOR's control.
*or, if not separately metered, as billed by
Lessor on a pro-rata basis.
LESSOR shall have no obligation to provide
utilities or equipment other than the utilities
and equipment within the premises as of the
commencement date of this lease. In the event
LESSEE requires additional utilities or equipment,
the installation and maintenance thereof shall be
the LESSEE's sole obligation, provided that such
installation shall be subject to the written
consent of the LESSOR.
8. USE OF LEASED The LESSEE shall use the leased premises only for
PREMISES the purpose of general offices and storage.
(fill in)
9. COMPLIANCE The LESSEE acknowledges that no trade or
WITH LAWS occupation shall be conducted in the leased
premises or use made thereof which will be
unlawful, improper, noisy or offensive, or
contrary to any law or any municipal by-law or
ordinance in force in the city or town in which
the premises are situated.
10. FIRE INSURANCE The LESSEE shall not permit any use of the leased
premises which will make voidable any insurance on
the property of which the leased premises are a
part, or on the contents of said property or which
shall be contrary to any law or regulation from
time to time established by the New England Fire
Insurance Rating Association, or any similar body
succeeding to its powers. The LESSEE shall on
demand reimburse the LESSOR, and all other
tenants, all extra insurance premiums caused by
the LESSEE's use of the premises.
11. MAINTENANCE The LESSEE agrees to maintain the leased premises
in good condition, damage by fire and other
A. LESSEE'S casualty only excepted, and whenever necessary,
OBLIGATIONS to replace plate glass and other glass therein,
acknowledging that the leased premises are now in
good order and the glass whole. The LESSEE shall
not permit the leased premises to be overloaded,
damaged, stripped, or defaced, nor suffer any
waste. LESSEE shall obtain written consent of
LESSOR before erecting any sign on the premises.
B. LESSOR'S The LESSOR agrees to maintain the structure of the
OBLIGATIONS building of which the leased premises are a part
in the same condition as it is at the commencement
of the term or as it may be put in during the term
of this lease, reasonable wear and tear, damage by
fire and other casualty only excepted, unless such
maintenance is required because of the LESSEE or
those for whose conduct the LESSEE is legally
responsible.
12. ALTERATIONS -- The LESSEE shall not make structural alterations
ADDITIONS or additions to the leased premises, but may make
non-structural alterations provided the LESSOR
consents thereto in writing, which consent shall
not be unreasonably withheld or delayed. All such
allowed alterations shall be at LESSEE's expense
and shall be in quality at least equal to the
present construction. LESSEE shall not permit any
mechanics' liens, or similar liens, to remain upon
the leased premises for labor and material
furnished to LESSEE or claimed to have been
furnished to LESSEE in connection with work of
any character performed or claimed to have been
performed at the direction of LESSEE and shall
cause any such lien to be released of record
forthwith without cost to LESSOR. Any alterations
or improvements made by the LESSEE shall become
the property of the LESSOR at the termination of
the occupancy as provided herein.
13. ASSIGNMENT -- The LESSEE shall not assign or sublet the whole or
SUBLEASING any part of the leased premises without LESSOR's
prior written consent. Notwithstanding such
consent, LESSEE shall remain liable to LESSOR for
the payment of all rent and for the full
performance of the covenants and conditions of
this lease.
<PAGE> 8
14. SUBORDINATION This lease shall be subject and subordinate to any and
all mortgages, deeds of trust and other instruments in
the nature of a mortgage, now or at any time hereafter,
a lien or liens on the property of which the leased
premises are a part and the LESSEE shall, when
requested, promptly execute and deliver such written
instruments as shall be necessary to show the
subordination of this lease to said mortgages, deeds of
trust or other such instruments in the nature of a
mortgage.
15. LESSOR'S The LESSOR or agents of the LESSOR may, at reasonable
ACCESS times, enter to view the leased premises and may remove
placards and signs not approved and affixed as herein
provided, and make repairs and alterations as LESSOR
should elect to do and may show the leased premises to
others, and at any time within three (3) months before
the expiration of the term, may affix to any suitable
part of the leased premises a notice for letting or
selling the leased premises or property of which the
leased premises are a part and keep the same so affixed
without hindrance or molestation.
16. INDEMNIFICATION The LESSEE shall save the LESSOR harmless from all loss
AND LIABILITY and damage occasioned by the use or escape of water or
by the bursting of pipes, as well as from any claim or
damage resulting from neglect in not removing snow and
ice from the roof of the building or from the sidewalks
bordering upon the premises so leased, or by any
nuisance made or suffered on the leased premises, unless
such loss is caused by the neglect of the LESSOR. The
removal of snow and ice from the sidewalks bordering
upon the leased premises shall be LESSOR's
responsibility.
17. LESSEE'S The LESSEE shall maintain with respect to the leased
LIABILITY premises and the property of which the leased premises
INSURANCE are a part comprehensive public liability insurance in
(fill in) the amount of $1,000,000 with property damage insurance
in limits of $100,000 in responsible companies qualified
to do business in Massachusetts and in good standing
therein insuring the LESSOR as well as LESSEE against
injury to persons or damage to property as provided. The
LESSEE shall deposit with the LESSOR certificates for
such insurance at or prior to the commencement of the
term, and thereafter within thirty (30) days prior to
the expiration of any such policies. All such insurance
certificates shall provide that such policies shall not
be cancelled without at least ten (10) days prior
written notice to each assured named therein.
18. FIRE, Should a substantial portion of the leased premises, or
CASUALTY -- of the property of which they are a part, be
EMINENT substantially damaged by fire or other casualty, or be
DOMAIN taken by eminent domain, the LESSOR may elect to
terminate this lease. When such fire, casualty, or
taking renders the leased premises substantially
unsuitable for their intended use, a just and
proportionate abatement of rent shall be made, and the
LESSEE may elect to terminate this lease if:
(a) The LESSOR fails to give written notice
within thirty (30) days of intention to
restore leased premises, or
(b) The LESSOR fails to restore the leased
premises to a condition substantially
suitable for their intended use within
ninety (90) days of said fire, casualty or
taking.
The LESSOR reserves, and the LESSEE grants to the
LESSOR, all rights which the LESSEE may have for damages
or injury to the leased premises for any taking by
eminent domain, except for damage to the LESSEE's
fixtures, property, or equipment.
19. DEFAULT In the event that:
AND
BANKRUPTCY (a) The LESSEE shall default in the payment of
(fill in) any installment of rent or other sum herein
specified and such default shall continue
for ten (10) days after written notice
thereof; or
(b) The LESSEE shall default in the observance
or performance of any other of the LESSEE's
covenants, agreements, or obligations
hereunder and such default shall not be
corrected within thirty (30) days after
written notice thereof; or
(c) The LESSEE shall be declared bankrupt or
insolvent according to law, or, if any
assignment shall be made of LESSEE's
property for the benefit of creditors,
then the LESSOR shall have the right thereafter, while
such default continues, to re-enter and take complete
possession of the leased premises, to declare the term
of this lease ended, and remove the LESSEE's effects,
without prejudice to any remedies which might be
otherwise used for arrears of rent or other default. The
LESSEE shall indemnify the LESSOR against all loss of
rent and other payments which the LESSOR may incur by
reason of such termination during the residue of the
term. If the LESSEE shall default, after reasonable
notice thereof, in the observance or performance of any
conditions or covenants on LESSEE's part to be observed
or performed under or by virtue of any of the provisions
in any article of this lease, the LESSOR, without being
under any obligation to do so and without thereby
waiving such default, may remedy such default for the
account and at the expense of the LESSEE. If the LESSOR
makes any expenditures or incurs any obligations for the
payment of money in connection therewith, including but
not limited to, reasonable attorney's fees in
instituting, prosecuting or defending any action or
proceeding, such sums paid or obligations insured, with
interest at the rate of 12 percent per annum and costs,
shall be paid to the LESSOR by the LESSEE as additional
rent.
20. NOTICE Any notice from the LESSOR to the LESSEE relating to the
(fill in) leased premises or to the occupancy thereof, shall be
deemed duly served, if left at the leased premises
addressed to the LESSEE, or if mailed to the leased
premises, registered or certified mail, return receipt
requested, postage prepaid, addressed to the LESSEE. Any
notice from the LESSEE to the LESSOR relating to the
leased premises or to the occupancy thereof, shall be
deemed duly served, if mailed to the LESSOR by
registered or certified mail, return receipt requested,
postage prepaid, addressed to the LESSOR at such address
as the LESSOR may from time to time advise in writing.
All rent notices shall be paid and sent to the LESSOR at
Old Cambridge Realty Trust c/o The Athenaeum Group, 215
First St., Camb. MA 02142.
<PAGE> 9
21. SURRENDER The LESSEE shall at the expiration or other termination
of this lease remove all LESSEE's goods and effects from
the leased premises, (including, without hereby limiting
the generality of the foregoing, all signs and lettering
affixed or painted by the LESSEE, either inside or
outside the leased premises), LESSEE shall deliver to
the LESSOR the leased premises and all keys, locks
thereto, and other fixtures connected therewith and all
alterations and additions made to or upon the leased
premises, in good condition, damage by fire or other
casualty only excepted. In the event of the LESSEE's
failure to remove any of LESSEE's property from the
premises, LESSOR is hereby authorized, without liability
to LESSEE for loss or damage thereto, and at the sole
risk of LESSEE, to remove and store any of the property
at LESSEE's expense, or to retain same under LESSOR's
control or to sell at public or private sale, without
notice any or all of the property not so removed and to
apply the net proceeds of such sale to the payment of
any sum due hereunder, or to destroy such property.
22. BROKERAGE [Deleted]
(fill in or delete)
23. OTHER It is also understood and agreed that
PROVISIONS
1. THE LEASED PREMISES WILL BE ACCEPTED AND DELIVERED
IN THEIR CURRENT "AS IS" CONFIGURATION AND
CONDITION, WITH THE LESSOR RESPONSIBLE FOR A GENERAL
CLEANING AND CHANGING OF THE LOCK AND KEY.
2. LESSEE SHALL BE RESPONSIBLE FOR ITS PRO-RATA SHARE
OF REAL ESTATE TAXES AND COMMON AREA MAINTENANCE
(CAM) CHARGES, AS BILLED BY THE LESSOR ON A PRO-RATA
BASIS. UPON WRITTEN REQUEST, LESSEE MAY REVIEW
LESSOR'S ACCOUNTING AND BILLING FOR REASONABLENESS.
3. LESSEE SHALL HAVE THE RIGHT TO LEASE TWO (2)
ADDITIONAL PARKING SPACES IN THE OKS GARAGE AT THE
RATE OF $115. PER VEHICLE MONTHLY FOR THE TERM OF
THE LEASE.
IN WITNESS WHEREOF, the said parties hereunto set their hands and seals this
__________________ day of __________________ , 1995.
MYCO PHARMACEUTICALS, INC. OLD CAMBRIDGE REALTY TRUST
/s/ BARRY BERKOWITZ
- ----------------------------------- -------------------------------------
LESSEE (DULY AUTHORIZED) ROBERT A. JONES, TRUSTEE
LESSOR
[SIG]
- ----------------------------------- -------------------------------------
WITNESS WITNESS
<PAGE> 10
EXHIBIT A
"LEASED PREMISES"
<TABLE>
<CAPTION>
Suite # Use Area Suite # Use Area
<S> <C> <C> <C> <C> <C>
001 RE 914 010 SIG 638
002 LAB 2349 011 SIG 515
003 RE 3154
005 SIG 365
006 SIG 208
007 SIG 120
008 SIG 215
009 SIG 215
</TABLE>
[FLOORPLAN ILLUSTRATION]
Rev.
[LOGO] ONE KENDALL SQUARE BUILDING 300 LOWER LEVEL July 29, 1993
<PAGE> 1
EXHIBIT 10.45
SUBLEASE
SUBLEASE made as of the 28th day of June, 1996 ("the Sublease") between
PERSEPTIVE BIOSYSTEMS, INC., a Delaware corporation, as sublessor ("Landlord"),
having an address at 500 Old Connecticut Path, Framingham, MA 01701 and
CHEMGENICS PHARMACEUTICALS INC., a Delaware corporation, as sublessee
("Tenant"), having an address at One Kendall Square, Building 300, Cambridge,
Massachusetts 02139.
Pursuant to a Lease dated as of May 24, 1994 (the "Overlease") between 500
Old Connecticut Path Limited Partnership, a Delaware Limited Partnership (the
"Overlandlord") and Landlord, the Overlandlord leased to Landlord certain
premises (the "Premises") more fully described in the Overlease as Buildings A
and B (the "Buildings") known as and located at 500 Old Connecticut Path,
Framingham, Massachusetts (the "Property"). The Overlease is attached hereto as
Exhibit A.
Landlord desires to sublease a certain part of the Premises located in
Building A to Tenant, and Tenant desires to sublease the same from Landlord, for
the term and upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, for One Dollar and other good and valuable consideration,
and in consideration of the mutual covenants set forth herein, the parties
hereby agree as follows:
ARTICLE 1. DEFINITIONS:
Section 1.1. "Commencement Date" shall mean the later of June 28, 1996 or
the Overlandlord Consent Date.
Section 1.2. "Demised Premises" shall mean (a) during the Initial Term,
that portion of the Premises, which the parties hereto agree contains
approximately 4870 square feet of Rentable Floor Area (as defined in the
Overlease) on the third floor of Building A, shown cross-hatched on Exhibit B
attached hereto (the "Third Floor Premises") and (b) in substitution therefor
during the Extended Term, that portion of the Premises which the parties hereto
agree contains approximately 20,000 square feet of Rentable Floor Area on the
second floor of Building A, shown as "expansion", and consisting of two such
areas on Exhibit B and such additional offices in between or adjoining such
areas, comprising up to approximately 10,000 square feet, as the parties may
agree to include ("Second Floor Premises"), such Second Floor Premises to be
definitively determined as provided in Section 5.2 hereinbelow.
Section 1.3. "Extended Term" shall mean the period from the Rent
Commencement Date--Third Floor through the Termination Date.
<PAGE> 2
Section 1.4. "Initial Term" shall mean the period from the Commencement
Date to the Rent Commencement Date--Third Floor.
Section 1.5. "Landlord" and all pronouns referring thereto shall mean the
Landlord named herein and the successors, legal representatives and assigns of
such Landlord collectively.
Section 1.6. "Rent Commencement Date--Third Floor" shall mean the date of
closing of the IPO as hereafter defined. "Rent Commencement Date--Second
Floor" shall mean three months after the date of the closing on the initial
Public Offering ("IPO") of the stock of the Tenant, as the IPO is defined in
Section 8.06 of the Master Agreement.
Section 1.7. "Sublease" shall mean this instrument and any provisions of
the Overlease incorporated herein by reference.
Section 1.8. "Tenant" and all pronouns referring thereto shall mean the
Tenant named herein and the successors, legal representatives and assigns of
such Tenant collectively.
Section 1.9. "Tenant's pro rata share of common areas" shall mean during
the Initial Term 1408 square feet and during the Extended Term the Rentable
Square Feet of the Demised Premises divided by 186,060 Rentable Square Feet
times 21,000 [the common areas Tenant has access to during the Extended Term]
square feet.
Section 1.10. "Termination Date" shall mean the earlier of June 27, 2001
or the Early Termination Date as described in Section 3.2, unless sooner
terminated, as provided herein or such other date as to which Landlord and
Tenant may agree as set forth in Section 5.2.
Section 1.11. "Permitted Use" shall be use in connection with Tenant's
drug discovery business as a laboratory, research and development facilities and
office uses and other lawful uses included within the definition of "Permitted
Uses" in Exhibit A of the Overlease which are necessary or incidental to
Tenant's drug discovery business in compliance with all laws, regulations,
permits and the like, and, except to the extent otherwise agreed to in writing
by Landlord, such use shall be substantially similar to Landlord's drug
discovery business previously conducted in the Buildings.
Section 1.12. "Overlandlord Consent Date" shall mean the date when the
consent of the Overlandlord to this Sublease has been obtained, pursuant to
Section 17.3 hereof.
ARTICLE 2. DEMISE:
- 2 -
<PAGE> 3
Section 2.1. Landlord hereby subleases the Demised Premises to Tenant, and
Tenant hereby subleases the Demised Premises from Landlord, for the Permitted
Use upon the terms, provisions and conditions in this Sublease contained, and
except as otherwise expressly provided in this Sublease, subject to the terms,
provisions and conditions of the Overlease.
During the Initial Term Tenant shall have, as appurtenant to the Demised
Premises, the non-exclusive right to use in common with Landlord and others
entitled thereto, subject to Landlord's reasonable rules relating thereto, the
areas marked with an "X" or an arrow on Exhibit B. During the Extended Term,
Tenant shall have such rights to all such areas except those on the third floor
and the stairwell and elevator to the third floor.
Section 2.2. The Tenant covenants and agrees that it will not enter any
other portion of the Premises at the Buildings at any time for any purpose
without Landlord's express consent, that it will not in any way interfere with
Landlord's business operations or Landlord's use and occupancy of the Premises,
nor will it permit any such interference, and that it will comply with all of
Landlord's security and/or confidentiality measures and procedures, health and
safety procedures and any other reasonable rules and regulations of Landlord
regarding the use and occupancy of the Demised Premises, the Premises and the
Property Common Areas described in the Overlease. The foregoing shall not be
deemed to impose a duty upon Landlord with respect to such matters, it being
understood that Tenant shall remain solely responsible for its own security,
confidentiality, health and safety and that of its property, employees and
invitees. Tenant will install locks on the laboratories contained within the
Demised Premises and shall be solely responsible for its personal property and
security as to the Demised Premises and its contents, including personal and
other property, but not the balance of the Premises or the contents thereof.
ARTICLE 3. TERM OF SUBLEASE:
Section 3.1. The term of this Sublease (the "Term") shall begin on the
Commencement Date and shall expire at midnight on the Termination Date, unless
such Term shall sooner cease and expire as hereinafter provided. As of the date
of execution of this Sublease, Landlord agrees to allow Tenant access to the
Demised Premises prior to the Commencement Date to begin (in accordance with the
provisions of Section 5.1 of this Sublease) preparing the Demised Premises for
Tenant's occupancy. Tenant shall have no obligation hereunder to pay rent or
other charges at any time prior to the Commencement Date, except as otherwise
agreed in writing by Tenant.
Section 3.2. Landlord shall be entitled to terminate this Sublease upon 30
days written notice in the event of the
- 3 -
<PAGE> 4
rescission pursuant to Section 8.07 of the Master Agreement between Landlord and
Tenant dated May 7, 1996. The effective date of termination, which shall be set
out in Landlord's notice, shall be referred to as the "Early Termination Date".
ARTICLE 4. FIXED RENT AND ADDITIONAL RENT:
Section 4.1. Tenant covenants and agrees to pay to Landlord, as Fixed Rent
for the Demised Premises as follows:
A. From the Commencement Date until the Rent Commencement
Date--Third Floor, the sum of $1.00,
B. From the Rent Commencement Date--Third Floor through 5/23/99, the sum
of $5.75 per Rentable Square Foot of Demised Premises plus $5.75 times
Tenant's pro rata share of common areas per year, payable in equal monthly
installments of 1/12 of said sum in advance on the first day of each and
every calendar month during the Term, and pro rata for any fraction of a
month,
C. From 5/24/99 through the Termination Date, the sum of $7.00 per
Rentable Square Foot of Demised Premises plus $7.00 times Tenant's pro
rata share of common areas per year, payable in equal monthly installments
of 1/12 of said sum in advance on the first day of each and every calendar
month during the Term, and pro rata for any fraction of a month.
D. Fixed Rent is intended to equal the total of (1) a pro rata share of
Landlord's Fixed Rent under the Overlease, i.e., (the Fixed Rent per Rentable
Square Foot ("RSF") x (the RSF of the Second Floor Premises (approx. 20,000 -
30,000 sq. ft.)) plus (2) Tenant's pro rata share of the Fixed Rent attributable
to the Tenant's use of the common areas, i.e., (20,000 - 30,000 RSF/186,060 RSF)
x [COMMON AREAS TO WHICH TENANT HAS ACCESS] x (Fixed Rent per RSF).
For example: Assume that the second floor space is 20,000 RSF, the total
common areas shared by Landlord and Tenant is 21,000 RSF, the Fixed Rent
per RSF is $5.75, and the Buildings are 186,060 RSF. Thus, Tenant is
subleasing 10.7% of the total Landlord's Rentable Square Feet. The Fixed
Rent starting with the Rent Commencement Date--Second Floor would be a
total of (a) $5.75 x 20,000 = $115,000 plus (b) 10.7% x $5.75 x 21,000 =
$12,920 or $127,920.
Notwithstanding anything to the contrary herein contained, the Fixed Rent listed
in subsections B, C and D of the preceding sentence is to be exactly equal to
the Fixed Rent per square foot of Rentable Floor Area paid by Landlord under the
Overlease, as
- 4 -
<PAGE> 5
reduced by any abatements in the Overlease or otherwise, if applicable to the
Demised Premises.
Section 4.2. Commencing on the Rent Commencement Date--Third Floor Tenant
shall also pay directly to Landlord, on the first day of each and every month
during the Term, or, at Landlord's option, within 10 business days of demand, as
Additional Rent, its pro rata share ("Tenant's Share") of all Real Estate Taxes
which Landlord is obligated to pay under Section 3.2 of the Overlease. "Tenant's
Share" shall be computed from time to time on the basis of a fraction whose
numerator is the number of square feet of Rentable Floor Area in the Demised
Premises plus Tenant's pro rata share of common areas and whose denominator is
the total number of square feet of Rentable Floor Area leased by Landlord under
the Overlease.
Section 4.3. Commencing on the Rent Commencement Date--Third Floor,
Tenant shall also pay directly to Landlord, on the first day of each and every
month during the Term, or, at Landlord's option, within 10 business days of
demand, as Additional Rent, Tenant's Share of all Operating Expenses and other
charges which Landlord is obligated to pay under Sections 3.3 through 3.6 of the
Overlease.
Section 4.4. Commencing on the Rent Commencement Date--Third Floor,
Tenant shall also pay directly to Landlord, on the first day of each and every
month during the Term, or, at Landlord's option, within ten (10) business days
of demand, and as Additional Rent, Tenant's Share of all other charges payable
now or in the future under the Overlease (as it may be amended, so long as such
amendment as it affects Tenant's obligations hereunder directly benefits the
Demised Premises or the common areas shared by Tenant) by Landlord, as tenant
under the Overlease, excluding any late fees or penalties and any amounts owing
as a result of a default by Landlord as tenant under the Overlease unless
resulting from a default by Tenant hereunder plus Tenant's Share of third party
costs paid by Landlord which in Landlord's reasonable determination, directly
benefit the Demised Premises or the common areas shared by Tenant.
Section 4.5. Tenant shall have the right to use Tenant's Share of the
parking spaces leased by Landlord under the Overlease.
Section 4.6. Tenant covenants and agrees that the Fixed Rent and all
Additional Rents, charges and adjustments hereunder shall be paid to Landlord in
legal tender of the United States of America, at Landlord's address set forth
above, Attention: Accounting Manager or at such other place or to such other
person's attention as Landlord may from time to time designate by notice in
writing.
- 5 -
<PAGE> 6
Section 4.7. It is intended by the Landlord and Tenant that Tenant pay
Tenant's Share of the Fixed Rent and Additional Rent and other sums due the
Overlandlord pursuant to Sections 3.3 - 3.6 of the Overlease but that there be
no profit to Landlord in connection with any payments hereunder.
ARTICLE 5. ACCEPTANCE OF DEMISED PREMISES; TENANT'S IMPROVEMENTS:
Section 5.1. Tenant agrees to accept and does accept possession of the
Demised Premises on the Commencement Date "as is" in the same condition as they
are on the date hereof, free of any other tenants. The Tenant has had the
opportunity to conduct its own investigations with respect to the Demised
Premises and the Buildings to otherwise satisfy itself that the Demised
Premises, the Buildings and the Property (as defined in the Overlease) are
suitable for the conduct of Tenant's business. The Tenant acknowledges that
except as set forth expressly in this Sublease, there have been and are no
representations or warranties made by or on behalf of the Landlord with respect
to the Demised Premises, the Building or the Property, or with respect to the
suitability of any of them for the conduct of the Tenant's business. Landlord
shall have no obligation to perform any work or construction with respect to the
Demised Premises as a condition to or subsequent to the commencement of this
Sublease, including any telephone and computer cabling, which shall be Tenant's
responsibility. Tenant shall not in any way make any alterations, additions or
changes to the Demised Premises without having first secured the written
permission of Landlord and, if required by the Overlease, by Overlandlord in
accordance with the Overlease. Any work shall be done in accordance with the
plans and specifications submitted to and approved by Landlord and if required
by the Overlease, Overlandlord and in all other respects in accordance with
Article 4 of the Overlease.
Any alterations made by or for Tenant shall be done at Tenant's sole cost
and expense in a good and workmanlike manner using new materials of first-class
quality consistent with the style and finish of the Demised Premises. Tenant
shall secure all necessary permits in advance of commencement of any work and
shall keep the Demised Premises free of any mechanics' or other liens and shall
hold Landlord and Overlandlord harmless from any loss, cost or damage arising
out of any work done by or for Tenant or by its agents or contractors. Landlord
shall have the right to remove unpermitted alterations at Tenant's cost. All
contractors working for Tenant in the Demised Premises shall be properly
insured, with such insurance as is required under Article 4 of the Overlease and
shall provide certificates of insurance naming Landlord and Overlandlord as
additional named insureds prior to commencement of any work. Tenant, at the
expiration of the Term or earlier termination of this Sublease,
- 6 -
<PAGE> 7
shall deliver the Demised Premises to Landlord in the same condition as they
were on the Commencement Date, reasonable wear and tear and damage by fire or
other casualty only excepted and Tenant shall remove all personal goods and
effects of Tenant leaving the Demised Premises neat, clean and in first-class
rentable condition and shall remove any alterations if and as required under the
Overlease and as requested by Landlord prior to the time of their installation
and repairing damage arising therefrom.
Section 5.2. On or before the day which is 1 month after the date of the
closing of the IPO, Tenant shall notify Landlord in writing whether it elects to
proceed with occupancy and buildout of the Second Floor Premises or to terminate
this Sublease. If Tenant elects to proceed, Landlord and Tenant shall negotiate
in good faith the exact areas, length of term, time of access for buildout,
recognition of Tenant by Overlandlord and any mortgagee(s) of Overlandlord and
other matters affecting the Second Floor Premises. Further, if such election to
proceed is made, Tenant agrees to prepare drawings, plans and specifications for
improvements to the Second Floor Premises for Tenant's use and occupancy thereof
for the Permitted Use either prior to or promptly after the closing of the IPO
and to use reasonable efforts to obtain any necessary licenses, permits and
approvals and the approval of the Overlandlord and Landlord thereto, Landlord's
consent not to be unreasonably withheld or delayed. Thereafter, Tenant shall
proceed diligently to construct its improvements and relocate its operations
from the Third Floor Premises to the Second Floor Premises. In the event that
all such matters have not been agreed to and this Sublease modified to
accommodate such matters and as modified, executed and delivered by both parties
on or before three months after the date of the closing of the IPO, either party
shall have the right to terminate this Sublease upon 120 days written notice to
the other.
In the event that, despite Tenant's efforts, it has not obtained
Overlandlord's consent to such plans and, to the extent required, any
modification to this Sublease arising out of the good faith negotiations
pursuant to this Section 5.2, within 4 months of the date of the closing of the
IPO, then Tenant or Landlord may terminate this Sublease by written notice to
the other setting forth an effective date of termination not less than 90 days
following the date of such notice. This right of termination shall terminate in
the event such Overlandlord's consent is obtained prior to the date any such
notification is given.
If Tenant has notified Landlord that it elects to proceed as set forth in
the first paragraph of this Section 5.2, Tenant shall have six months after
closing of the IPO to obtain all permits and complete its buildout plus an
additional six months
- 7 -
<PAGE> 8
so long as construction is in process six months after the date of the closing
of the IPO, plus such further time as Tenant is delayed, day for day, due to
force majeure, up to a maximum of a further six months. If Tenant has not
completed its buildout by such time, Landlord shall have the right to terminate
this Sublease. If Tenant determines it cannot obtain all necessary permits and
approvals, including without limitation, a wastewater discharge permit, within
six months from closing of the IPO it shall so notify Landlord, whereupon either
Landlord or Tenant may within 30 days terminate this Sublease effective 90 days
from the date of the termination notice.
If Tenant has elected to proceed under this section, Fixed Rent and
Additional Rent for the Second Floor Premises shall be payable commencing on the
Rent Commencement Date--Second Floor and no Fixed Rent or Additional Rent
hereunder shall be due for the Third Floor Premises. Tenant shall vacate the
Third Floor Premises upon occupancy by Tenant of the Second Floor Premises.
If Tenant elects not to proceed with occupancy and buildout of the Second
Floor Premises, each party shall have the right by 90 days written notice to
terminate this Sublease effective no earlier than 210 days after the date of
closing of the IPO.
Within a period of 180 days after the execution of this Sublease, Tenant
will use commercially reasonable efforts to accomplish an underwritten initial
public offering of its Common Stock, in which offering Tenant will attempt to
raise between $20 and $30 million (the "IPO"), net to Tenant. Landlord or Tenant
shall be entitled to terminate this Sublease upon 180 days written notice to the
other if the IPO is not consummated on or before January 1, 1997, or, if on
December 31, 1996 Tenant has a registration statement on file with the SEC, and
in Tenant's reasonable judgment, there does not appear to be any material
impediment to the successful completion of the IPO, on or before March 31, 1997.
ARTICLE 6. OVERLEASE:
Section 6.1. This Sublease is subject and subordinate to the terms and
conditions of the Overlease. Except as otherwise specifically provided in this
Sublease, Landlord shall be deemed to be landlord under the Overlease, Tenant
shall be deemed to be tenant under the Overlease, and all of the provisions of
the Overlease contained in Exhibit A hereto are incorporated herein by reference
with the same force and effect as if they were fully set forth herein, except
that Tenant shall not have any Expansion Options or Right of First Offer,
Extension Options or right of self-help, and except, further, that the
provisions regarding general and environmental indemnity and the provisions of
Sections 2.6 - 2.12, Section 5.3 (relating to a rent abatement),
- 8 -
<PAGE> 9
Section 6.8, Section 11.11, Section 11.8 and Exhibit C shall not apply. Landlord
represents and warrants that the attached document is a true, accurate and
complete copy of the Overlease and any amendments or instruments or documents
materially adversely affecting Tenant's occupancy of the Demised Premises
related thereto. Except as otherwise specifically provided in this Sublease,
Tenant agrees from and after the date hereof fully to comply with all of the
terms, conditions and obligations of Landlord as tenant under the Overlease
applicable to the Demised Premises as if Tenant were the tenant thereunder. The
Tenant shall comply with all federal, state and local (including zoning) laws,
regulations, ordinances, executive orders, federal guidelines and similar
requirements in effect from time to time with respect to Tenant's use and
occupancy of the Demised Premises. Tenant shall comply with all conditions of
any and all permits, licenses and other governmental or regulatory approvals
(collectively, "Permits") required for Tenant's use of the Demised Premises,
including, without limitation, the discharge or emission of regulated materials
or wastes. Prior to occupancy of the Second Floor Premises Tenant shall obtain,
and provide a copy to Landlord of, all Permits required for Tenant's business
operations and its use of the Demised Premises and shall consult with Landlord
concerning, and obtain its prior written approval (not to be unreasonably
withheld or delayed) of, any Permits. The Tenant may use the Demised Premises,
and any portion of the Building only for the Permitted use. During the Initial
Term, Tenant shall not conduct any activities nor take any actions, nor permit
any actions to be taken which would require any license, permit or approval not
obtained by Tenant. Without limiting the generality of the foregoing, during the
Initial Term Tenant, unless it obtains all necessary licenses, permits and
approvals, shall not store any flammable or other hazardous materials (which
shall not preclude Tenant from having small quantities of such materials for
normal use in compliance with applicable legal requirements), nor store or
dispose of hazardous waste.
Tenant shall not cause, nor permit, a default under the Overlease. If the
Overlease terminates before the end of its Term for any reason whatsoever,
including Landlord's default, this Sublease shall also terminate and Landlord
shall have no liability to Tenant arising out of or in connection with such
termination, including without limitation, any damages.
Landlord represents that as of the date hereof, no material default has
occurred under the Overlease outstanding past applicable cure periods. Landlord
agrees promptly to provide Tenant with a copy of any default notice received by
Landlord from Overlandlord. Landlord, as landlord under this Sublease, shall
have the benefit of all rights, remedies and limitations of liability enjoyed by
Overlandlord as the landlord under the Overlease, but (i) Landlord shall have no
obligations under this Sublease to perform any obligations of Overlandlord, as
landlord,
- 9 -
<PAGE> 10
under the Overlease (including without limitation any obligations to provide
services, maintain insurance or to perform the Overlandlord's obligations under
Sections 5.1, 5.3, 5.5, 6.2, 10.1 (relating to non-disturbance agreements), 12.1
or 12.5 of the Overlease, (ii) Landlord shall not be bound by any
representations or warranties of Overlandlord as landlord under the Overlease;
(iii) in any case where the consent of Overlandlord is required under the terms
of the Overlease, the consent of Landlord and Overlandlord shall be required and
(iv) Landlord shall not be liable to Tenant for any failure or delay in
Overlandlord's performance of its obligations as landlord under the Overlease.
Section 6.2. Notwithstanding any contrary provision of this Sublease, (i)
in any instances where Overlandlord, as landlord under the Overlease, has a
certain period of time in which to notify Landlord, as tenant under the
Overlease, whether Overlandlord will or will not take some action, Landlord, as
landlord under this Sublease, shall have an additional ten-day period after
receiving such notice in which to notify Tenant, (ii) in any instance where
Landlord, as tenant under the Overlease, has a certain period of time in which
to notify Overlandlord, as landlord under the Overlease, whether Landlord will
or will not take some action, Tenant, as tenant under this Sublease, must notify
Landlord, as landlord under this Sublease, at least five business days before
the end of such period, but in no event shall Tenant have a period of less than
five days in which so to notify Landlord unless the period under the Overlease
is five days or less, in which case the period under this Sublease shall be two
days less than the period provided to Landlord as Tenant under the Overlease,
and (iii) in any instance where a specific grace or cure period is granted to
Landlord, as tenant under the Overlease, Tenant, as tenant under this Sublease,
shall be deemed to have a grace or cure period, as applicable, which is ten days
less than Landlord, but in no event shall any grace or cure period be reduced to
less than five days unless the period under the Overlease is five days or less,
in which case the period under this Sublease shall be two days less than the
period provided to landlord under the Overlease.
ARTICLE 7. TENANT'S COVENANTS AND INDEMNITY:
Section 7.1. Tenant covenants and agrees that Tenant will not do or permit
anything which would constitute or could cause a default under the provisions of
the Overlease or omit to do or permit the omission of anything which Tenant is
obligated to do under the terms of this Sublease which would constitute or could
cause a default under the Overlease. Tenant's use of the Common Areas shall be
at its own risk.
Section 7.2. To the maximum extent this agreement may be made effective
according to law, the Tenant agrees to indemnify
- 10 -
<PAGE> 11
and save harmless the Landlord from and against all claims, loss, or damage of
whatever nature to the extent arising from any breach by the Tenant of any
obligation of the Tenant under this Sublease or any negligence or willful
misconduct of the Tenant, or the Tenant's contractors, licensees, invitees,
agents, servants or employees, or arising from any accident, injury or damage
whatsoever caused to any person or property, occurring after the date that
possession of the Demised Premises is first delivered to the Tenant and until
the end of the Term and thereafter, so long as the Tenant is in occupancy of any
part of the Demised Premises, in or about the Demised Premises or arising from
any accident, injury or damage occurring outside the Demised Premises but in or
on the Property, or any other areas within the Buildings or, on the Land (as
defined in the Overlease), to the extent such accident, injury or damage
results, or is claimed to have resulted, from the negligent act or omission or
wilful misconduct on the part of the Tenant or the Tenant's agents or
contractors, licensees, invitees, servants or employees, provided that the
foregoing indemnity shall not include any cost or damage to the extent arising
from any negligent or willful act or omission of the Landlord, or the Landlord's
contractors, licensees, invitees, agents, servants or employees. This indemnity
and hold harmless agreement shall include indemnity against reasonable
attorneys' fees and all other costs, expenses and liabilities incurred or in
connection with any such claim or proceeding brought thereon, and the defense
thereof and shall survive termination or expiration of this Sublease.
In the event of a default by Tenant in the full and timely payment and
performance of its obligations and covenants under this Sublease, Landlord shall
have all of the rights and remedies in the Overlease with respect to defaults by
the tenant under the Overlease, including without limitation the rights and
remedies set forth in Article 9 of the Overlease. Neither Landlord nor Tenant
shall be responsible for indirect or consequential damages suffered by the
other, regardless of the cause. Tenant shall perform all of its obligations and
agreements under the Master Agreement and a rescission pursuant to Section 8.07
of the Master Agreement shall be deemed to be an Event of Default hereunder.
ARTICLE 8. LANDLORD'S COVENANTS AND INDEMNITY:
Section 8.1. Landlord covenants and agrees that Landlord shall not enter
into any modification or other agreement with respect to the Overlease which
would prevent the use by Tenant of the Demised Premises in accordance with the
terms of this Sublease, or which would increase the obligations of Tenant or
increase the Fixed Rent or Additional Rent required to be paid by Tenant under
the terms of this Sublease unless in either case in Landlord's reasonable
opinion, such an amendment to the Overlease will benefit Tenant as well as
Landlord.
- 11 -
<PAGE> 12
Section 8.2. To the maximum extent this agreement may be made effective
according to law, the Landlord agrees to indemnify and save harmless the Tenant
from and against all claims, loss, or damage of whatever nature to the extent
arising from any breach by the Landlord or any obligation of the Landlord under
this Sublease or any negligence or willful misconduct of the Landlord, or the
Landlord's contractors, licensees, invitees, agents, servants or employees, or
arising from any accident, injury or damage occurring after the date that
possession of the Demised premises is first delivered to the Tenant and until
the end of the Term and thereafter, so long as the Tenant is in occupancy of any
part of the Demised Premises, in or about the Demised Premises or arising from
any accident, injury or damage occurring outside the Demised Premises but in or
on the Property, or any other areas within the Buildings or, on the Land (as
defined in the Overlease), to the extent such accident, injury or damage
results, or is claimed to have resulted, from the negligent act or omission or
wilful misconduct on the part of the Landlord or the Landlord's agents or
contractors, licensees, invitees, servants or employees, provided that the
foregoing indemnity shall not include any cost or damage to the extent arising
from any negligent or willful act or omission of the Tenant, or the Tenant's
contractors, licensees, invitees, agents, servants or employees. This indemnity
and hold harmless agreement shall include indemnity against reasonable
attorneys' fees and all other costs, expenses and liabilities incurred or in
connection with any such claim or proceeding brought thereon, and the defense
thereof and shall survive termination or expiration of this Sublease.
ARTICLE 9. PERFORMANCE BY OVERLANDLORD:
Section 9.1. It is understood and agreed that Landlord shall at all times
use reasonable efforts to seek to obtain compliance by Overlandlord with all of
its Obligations under the Overlease that affect Tenant.
ARTICLE 10. BROKERAGE REPRESENTATIONS:
Section 10.1. Landlord represents to Tenant that it has engaged no broker
in consummating the transaction contemplated by this Sublease. Tenant represents
to Landlord that it has engaged no broker in consummating the transaction
contemplated by this Sublease. Landlord and Tenant each agree to indemnify and
hold the other harmless from and against any and all loss, cost, damage or
expense (including without limitation reasonable attorneys' fees) arising out of
or incurred in connection with any breach or claimed breach of its
representation contained in the two preceding sentences.
- 12 -
<PAGE> 13
ARTICLE 11. NOTICES:
Section 11.1. Any bill or notice by Landlord to Tenant shall be deemed
sufficiently given if such bill or notice is in writing and is delivered to
Tenant's authorized agent Attn: President at the Demised Premises with copies to
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center,
Boston, Massachusetts 02111, Attention: Joel R. Bloom or deemed given when first
refused or when delivered by registered or certified United States mail, return
receipt requested, addressed to Tenant at the Demised Premises, or at such other
address as Tenant shall specify to Landlord.
Section 11.2. Any notice by Tenant to Landlord shall be deemed sufficient
given if such notice is in writing and is delivered to Landlord at the Building
Attention: General Counsel, with copies to: Testa, Hurwitz & Thibeault, 125 High
Street, Boston, Massachusetts, 02100, Attention: Margaret W. Brill or deemed
given when first refused or when delivered by registered or certified United
States mail, return receipt requested, addressed to Landlord at the Buildings,
or in each case at such other address as Landlord shall specify to Tenant.
ARTICLE 12. FURTHER SUBLEASE OR ASSIGNMENT:
Section 12.1. Tenant covenants and agrees that neither this Lease nor the
term and estate hereby granted, nor any interest herein or therein, will be
assigned, sublet, mortgaged, pledged, encumbered or otherwise transferred,
voluntarily or by operation of law or otherwise, without the prior written
consent of Landlord which may be withheld, granted or conditioned in its sole
discretion, and, if required under the Overlease, Overlandlord. An acquisition
of Tenant by a PerSeptive Competitor, or a Change of Control in which a
PerSeptive Competitor shall come to control Tenant, as such terms are defined in
and as further described in Section 9.4 of the License Agreement, shall be
deemed to be an assignment of this Sublease requiring Landlord's consent in its
sole discretion as described in the preceding sentence. A merger or
consolidation, or a sale of all or substantially all of the stock, assets or
business of Tenant and its subsidiaries taken as a whole, shall also be deemed
to be an assignment of this Sublease but Landlord's consent in such case shall
not be unreasonably withheld or delayed. Reasonable consent shall be determined
consistent with the provisions of Section 6.8 of the Overlease, but excluding
its provisions concerning recapture and sharing of profits.
ARTICLE 13. ACCESS:
Section 13.1. Landlord and Overlandlord shall have the right to enter and
examine the Demised Premises in accordance with and for the purposes set out in
Section 6.5 of the Overlease
- 13 -
<PAGE> 14
and also, to remove, at Tenant's expense, any changes and additions installed by
Tenant and not consented to by Landlord and, if required, Overlandlord, in
writing. Landlord shall also have the right to enter the Demised Premises for
purposes contemplated by the Consulting and Services Agreement between Landlord
and Tenant, and any other Related Agreement, and, in any event, if Tenant has
given its consent thereto. In addition, during the last six (6) months prior to
the end of the then Term and at any time Tenant is in default under the terms of
this Sublease beyond applicable notice and cure periods, Landlord and Landlord's
representatives may enter the Premises to show the Premises to prospective
subtenants, provided that Landlord shall use reasonable efforts to minimize
disruption to Tenant's business operations. Landlord agrees to give Tenant a
list of the names of all persons authorized by Landlord to show the Premises to
prospective subtenants, and, subject to the Overlandlord's rights under the
Overlease, shall comply with all of Tenant's reasonable security and/or
confidentiality measures and procedures.
ARTICLE 14. SIGNAGE:
Section 14.1. Tenant shall be entitled, at Tenant's cost and in compliance
with all codes, ordinances and regulations, to install signs in and on the
Premises and Building with Landlord's consent, not to be unreasonably withheld
or delayed, subject to Overlandlord's consent.
ARTICLE 15. DEFAULT:
Section 15.1. Without limiting the generality of Section 6.1, Article 9 of
the Overlease is incorporated as though set forth herein, subject to
modification by the terms of Section 6.2 hereof.
- 14 -
<PAGE> 15
ARTICLE 16. ESTOPPEL CERTIFICATE:
Section 16.1. Provided that the following conditions and facts are
determined by the Tenant to be true, Tenant agrees from time to time hereafter,
upon not less than ten (10) days' prior written request by Landlord or
Overlandlord, to execute, acknowledge and deliver to Landlord or Overlandlord a
statement in writing certifying that this Sublease is unmodified and in full
force and effect; that Tenant has no defenses, offsets or counterclaims against
its obligations to pay the Fixed Rent, Additional Rent and other amounts due
hereunder and to perform its other covenants under this Sublease; that there are
no uncured defaults of Landlord or Tenant under this Sublease (or, if there are
any modifications, defenses, offsets, counterclaims, or defaults, setting them
forth in reasonable detail); and the dates to which the Fixed Rent, Additional
Rent and other charges have been paid. Any such statements delivered pursuant to
this Section may be relied upon by Landlord and any other party to whom the
statement, at Landlord's or Overlandlord's request, is addressed.
ARTICLE 17. MISCELLANEOUS PROVISIONS:
Section 17.1. During the Sublease term, Tenant shall maintain insurance of
such types, in such policies, with such endorsements and coverages, and in such
amounts as are set forth in Article 7 of the Overlease, and such additional
insurance as may be required by Landlord, in Landlord's reasonable discretion.
All insurance policies shall name Overlandlord and Landlord as additional
insureds and loss payees and shall contain an endorsement that such policies may
not be modified or canceled without 30 days prior written notice to Overlandlord
and Landlord. Tenant shall promptly pay all insurance premiums and shall provide
Overlandlord and Landlord with policies or certificates evidencing such
insurance.
Section 17.2. This Sublease may be amended or modified only by written
instruments executed by both Landlord and Tenant.
Section 17.3. This Sublease, and the rights and obligations of Landlord
and Tenant under this Sublease, are subject to the condition that Overlandlord
consent to this Sublease, and this Sublease shall be effective only upon the
receipt by Landlord and Tenant of such consent (the "Overlandlord Consent
Date"). In the event the Overlandlord Consent Date shall not have occurred on or
before August 15, 1996, then, Landlord and Tenant shall each have the option to
terminate this Sublease by 30 days written notice thereof to the other.
Section 17.4. Except to the extent caused by the negligence, wilful
misconduct or failure of Landlord to comply with its obligations and covenants
set forth in this Sublease or
- 15 -
<PAGE> 16
in any other agreement between Landlord and Tenant, the Tenant shall indemnify
and hold the Landlord, and its agents, servants, employees, officers, directors,
partners, beneficiaries and trustees, harmless from and against any and all
actions, petitions, orders, claims or demands made, brought or instituted by any
and all private parties and/or any and all public agencies or authorities,
together with any and all reasonable expenses, including reasonable attorney's
fees, costs, losses, demands, liabilities, fines or penalties assessed against
or incurred by any of them, including, without limitation, any of the foregoing
arising under CERCLA, similar state laws, other statutes or common law cause of
action imposing liability without regard to fault arising out of or in any way
connected with any loss or damage to persons or property resulting from the
introduction, generation, storage, disposal, seepage, leakage or release of
Hazardous Material (as defined in the Overlease) into the Demised Premises by
the Tenant, its agents, servants, employees or contractors, or from the improper
release of Hazardous Materials anywhere on the Property by, for or on behalf of
the Tenant.
Section 17.5. Except to the extent caused by the negligence, wilful
misconduct or failure of Tenant to comply with its obligations and covenants set
forth in this Sublease or in any other agreement between Landlord and Tenant the
Landlord shall indemnify and hold the Tenant, and its agents, servants,
employees, officers, directors, partners, beneficiaries and trustees, harmless
from and against any and all actions, petitions, orders, claims or demands made,
brought or instituted by any and all private parties and/or any and all public
agencies or authorities, together with any and all reasonable expenses,
including reasonable attorney's fees, costs, losses, demands, liabilities, fines
or penalties assessed against or incurred by any of them, including, without
limitation, any of the foregoing arising under CERCLA, similar state laws, other
statutes or common law cause of action imposing liability without regard to
fault arising out of or in any way connected with any loss or damage to persons
or property resulting from the introduction, generation, storage, disposal,
seepage, leakage or release of Hazardous Material (as defined in the Overlease)
into the Demised Premises by the Landlord, its agents, servants, employees or
contractors, or from the improper release of Hazardous Materials anywhere on the
Property by, for or on behalf of the Landlord.
- 16 -
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be
duly executed under seal as of the day and year first above written.
PERSEPTIVE BIOSYSTEMS, INC.
BY:___________________________________
CHEMGENICS PHARMACEUTICALS INC.
BY:___________________________________
- 17 -
<PAGE> 18
EXHIBIT A
The Lease dated May 24, 1994 between 500 Old Connecticut Path Limited
Partnership as Landlord and PerSeptive Biosystems, Inc. as Tenant is attached
hereto and incorporated herein by reference.
- 18 -
<PAGE> 19
EXHIBIT B
PLANS OF DEMISED PREMISES
AND DESCRIPTION OF COMMON AREAS
(ATTACHED)
- 19 -
<PAGE> 1
EXHIBIT 10.46
M A S T E R L E A S E A G R E E M E N T
COMDISCO, INC. - LESSOR
MASTER LEASE AGREEMENT dated June 17, 1993 by and between COMDISCO, INC.
("Lessor") and MYCO PHARMACEUTICALS INC. ("Lessee").
IN CONSIDERATION of the mutual agreements described below, the parties agree as
follows (all capitalized terms are defined in Section 14.19):
1. Property Leased.
Lessor leases to lessee all of the Equipment described on each Schedule.
In the event of a conflict, the terms of a Schedule prevail over this Master
Lease.
2. Term.
On the Commencement Date, Lessee will be deemed to accept the Equipment,
will be bound to its rental obligations for each item of Equipment and the term
of a Schedule will begin and continue through the Initial Term and
thereafter until terminated by either party upon prior written notice received
during the Notice Period. No termination may be effective prior to the
expiration of the Initial Term.
3. Rent and Payment.
Rent is due and payable in advance, in immediately available funds, in the
first day of each Rent Interval to the payee and at the location specified in
Lessor's invoice. Interim Rent is due and payable when invoiced. If any payment
is not made when due, Lessee will pay interest at the Overdue Rate. Upon
Lessee's execution of each Schedule, Lessee will pay Lessor the Advance
specified on the Schedule. The Advance will be credited towards the final Rent
payment if Lessee is not then in default. No interest will be paid on the
Advance.
4. Selection; Warranty and Disclaimer of Warranties.
4.1 Selection. Lessee acknowledges that it has selected the Equipment and
disclaims any reliance upon statements made by the Lessor.
4.2 Warranty and Disclaimer of Warranties. Lessor warrants to Lessee
that, so long as Lessee is not in default, Lessor will not disturb Lessee's
quiet and peaceful possession, and unrestricted use of the Equipment. To the
extend permitted by the manufacturer, Lessor assigns to Lessee during the term
of the Schedule any manufacturer's warranties for the Equipment. LESSOR MAKES
NO OTHER WARRANTY, EXPRESS OR IMPLIED AS TO ANY MATTER WHATSOEVER, INCLUDING,
WITHOUT LIMITATION, THE MERCHANTABILITY OF THE EQUIPMENT OR ITS FITNESS FOR A
PARTICULAR PURPOSE. Lessor is not responsible for any liability, claim, loss,
damage or expense of any kind (including strict liability in tort) caused by
the Equipment except for any loss or damage caused by the negligent acts of
Lessor. In no event is Lessor responsible for special, incidental or
consequential damages.
5. Title; Relocation or Sublease; and Assignment.
5.1 Title. Lessee holds the Equipment subject and subordinate to the
rights of the Owner, Lessor, any Assignee and any Secured Party. Lessee
authorizes Lessor, as Lessee's agent, to prepare, execute and file in Lessee's
name precautionary Uniform Commercial Code financing statements showing the
interest of the Owner, Lessor, and any Assignee or Secured Party in the
Equipment and to insert serial numbers in Schedules as appropriate. Lessee will,
at its expense, keep the Equipment free and clear from any liens or encumbrances
of any kind (except any caused by Lessor) and will indemnify and hold Lessor,
Owner, any Assignee and Secured Party harmless from and against any loss caused
by Lessee's failure to do so.
5.2 Relocation or Sublease. Upon prior written consent, Lessee may
relocate Equipment to any location within the continental United States provided
(i) the Equipment will not be used by an entity except from federal income tax,
(ii) all additional costs (including any administrative fees, additional taxes
and insurance coverage) are reconciled and promptly paid by Lessee.
Lessee may sublease the Equipment upon the reasonable consent of the Lessor
and the Secured Party. Such consent to sublease will be granted if: (i) Lessee
meets the relocation requirements set out above, (ii) the sublease is expressly
subject and subordinate to the terms of the Schedule, (iii) Lessee assigns its
rights in the sublease to Lessor and the Secured Party as additional collateral
and security, (iv) Lessee's obligation to maintain and insure the Equipment is
not altered, (v) all financing statements required to continue the Secured
Party's prior perfected security interest are filed, and (vi) the sublease is
not to a leasing entity affiliated with the manufacturer of the Equipment
described on the Schedule. Lessor acknowledges Lessee's right to sublease for a
term which extends beyond the expiration of the Initial Term. If Lessee
subleases the Equipment for a term extending beyond the expiration of such
Initial Term of the applicable Schedule, Lessee will remain obligated upon the
expiration of the Initial Term to return such Equipment, or, at Lessor's sole
<PAGE> 2
discretion to (i) return Like Equipment or (ii) negotiate a mutually acceptable
lease extension or purchase. If the parties cannot mutually agree upon the
terms of the extension or purchase, the term of the Schedule will extend upon
the original terms and conditions until terminated pursuant to Section 2.
No relocation or sublease will relieve Lessee from any of its obligations
under the Master Lease and the relevant Schedule.
5.3 Assignment by Lessor. The terms and conditions of each Schedule have
been fixed by Lessor in order to permit Lessor to sell and/or assign or
transfer its interest or grant a security interest in each Schedule and/or the
Equipment to a Secured Party or Assignee. In that event, the term Lessor will
mean the Assignee and any Secured Party. However, any assignment, sale, or
other transfer by Lessor will not relieve Lessor of its obligations to Lessee
and will not materially change Lessee's duties or materially increase the
burdens or risks imposed on Lessee. The Lessee consents to and will acknowledge
such assignments in a written notice given to Lessee. Lessee also agrees that:
(a) The Secured Party will be entitled to exercise all of Lessor's rights,
but will not be obligated to perform any of the obligations of Lessor.
The Secured Party will not disturb Lessee's quiet and peaceful
possession and unrestricted use of the Equipment so long as Lessee is
not in default and the Secured Party continues to receive all Rent
payable under the Schedule; and
(b) Lessee will pay all Rent and all other amounts payable to the Secured
Party, despite any defense or claim which it has against Lessor. Lessee
reserves its right to have directly against Lessor for any defense or
claim;
(c) Subject to and without impairment of Lessee's leasehold rights in the
Equipment, Lessee holds the Equipment for the Secured Party to the
extent of the Secured Party's rights in that Equipment.
6. Net Lease; Taxes and Fees.
6.1 Net Lease. Each Schedule constitutes a net lease. Lessee's obligation
to pay Rent and all other amounts is absolute and unconditional and is not
subject to any abatement, reduction, set-off, defense, counterclaim,
interruption, deferment or recoupment for any reason whatsoever.
6.2 Taxes and Fees. Lease will pay when due or reimburse Lessor for all
taxes, fees or any other charges (together with any related interest or
penalties not arising from the negligence of Lessor) accrued for or arising
during the term of each Schedule against Lessor, Lessee or the Equipment by any
governmental authority (except only Federal, state and local taxes on the
capital or the net income of Lessor). Lessor will file all personal property
tax returns for the Equipment and pay all property taxes due. Lessee will
reimburse Lessor for property taxes within thirty (30) days or receipt of an
invoice.
7. Care, Use and Maintenance; Attachments and Reconfigurations; and Inspection
by Lessor.
7.1 Care, Use and Maintenance. Lessee will maintain the Equipment in good
operating order and appearance, protect the Equipment from deterioration, other
than normal wear and tear, and will not use the Equipment for any purpose other
than that for which it was designed. If commercially available, Lessee will
maintain in force a standard maintenance contract with the manufacturer of the
Equipment, or another party acceptable to Lessor, and will provide Lessor with
a complete copy of that contract. If Lessee has the Equipment maintained by a
party other than the manufacturer, Lessee agrees to pay any costs necessary for
the manufacturer to bring the Equipment to then current release, revision and
engineering change levels, and to re-certify the Equipment as eligible for
manufactuer's maintenance at the expiration of the lease term. The lease term
will continue upon the same terms and conditions until recertification has
been obtained.
7.2 Attachments and Reconfiguration. Upon receiving the prior written
consent of Lessor, Lessee may reconfigure and install Attachments on the
Equipment. In the event of such a Reconfiguration or Attachment, Lessee will,
upon return of the Equipment, at its expense, restore the Equipment to the
original configuration specified on the Schedule in accordance with the
manufacturer's specifications and in the same operating order, repair and
appearance as when installed (normal wear and tear excluded). If any parts of
the Equipment are removed during a Reconfiguration or Attachment, Lessor may
require Lessee to provide additional security, satisfactory to the Lessor, in
order to ensure performance of Lessee's obligations set forth in this
subsection. Neither Attachments nor parts installed on Equipment in the course
of Reconfiguration will be accessions to the Equipment.
7.3 Inspection by Lessor. Upon request, Lessee, during reasonable
business hours and subject to lessee's security requirements, will make the
Equipment and its related log and maintenance records available to Lessor for
inspection.
8. Representations and Warranties of Lessee. Lessee hereby represents, warrants
and covenants that with respect to the Master Lease and each Schedule executed
hereunder:
2
<PAGE> 3
(a) The Lessee is a corporation duly organized and validly existing in good
standing under the laws of the jurisdiction of its incorporation, is
duly qualified to do business in each jurisdiction (including the
jurisdiction where the Equipment is, or is to be, located) where its
ownership or lease of property of the conduct of its business requires
such qualification; and has full corporate power and authority to hold
property under the Master Lease and each Schedule and to enter into and
perform its obligations under such Lease.
(b) The execution and delivery by the Lessee of the Master Lease and each
Schedule and its performance thereunder have been duly authorized by
all necessary corporate action on the part of the Lessee, and the
Master Lease and each Schedule are not inconsistent with the Lessee's
Certificate of Incorporation or Bylaws, do not contravene any law or
governmental rule, regulation or order applicable to it, do not and
will not contravene any provision of, or constitute a default under,
any indenture, mortgage, contract or other instrument to which it is a
party or by which it is bound, and the Master Lease and each Schedule
constitute legal, valid and binding agreements of the Lessee,
enforceable in accordance with their terms.
(c) There are no actions, suits, proceedings or patent claims pending or,
to the knowledge of the Lessee, threatened against or affecting the
Lessee in any court or before any governmental commission, board or
authority which, if adversely determined, will have a material adverse
effect on the ability of the Lessee to perform its obligations under
the Master Lease and each Schedule.
(d) The Equipment is personal property and when subjected to use by the
Lessee will not be or become fixtures under applicable law.
(e) The Lessee has no material liabilities or obligations, absolute or
contingent (individually or in the aggregate), except the liabilities
and obligations of the Lessee as set forth in the Financial Statements
and liabilities and obligations which have occurred in the ordinary
course of business, and which have not been, in any case or in the
aggregate, materially adverse to Lessee's ongoing business.
(f) To the best of the Lessee's knowledge, the Lessee owns, possesses, has
access to, or can become licensed on reasonable terms under all
patents, patent applications, trademarks, trade names, inventions,
franchises, licenses, permits, computer software and copyrights
necessary for the operations of its business as now conducted, with no
known infringement of, or conflict with, the rights of others.
(g) All material contracts, agreements and instruments to which the Lessee
is a party are in full force and effect in all material respects, and
are valid, binding and enforceable by the Lessee in accordance with
their respective terms, subject to the effect of applicable bankruptcy
and other similar laws affecting the rights of creditors generally, and
rules of law concerning equitable remedies.
9. Delivery and Return of Equipment.
Lessee hereby assumes the full expense of transportation and in-transit
insurance to Lessee's premises and installation thereat of the Equipment. Upon
termination (by expiration or otherwise) of each Schedule, Lessee shall,
pursuant to Lessor's instructions and at Lessee's full expense (including,
without limitation, expenses of transportation and in-transit insurance),
return the Equipment to Lessor in the same operating order, repair, condition
and appearance as when received, less normal depreciation and wear and tear.
Lessee shall return the Equipment to Lessor at its address set forth herein or
at such other address within the continental United States as directed by
Lessor, provided, however, that Lessee's expense shall be limited to the cost
of returning the equipment to Lessor's address as set forth herein. During the
period subsequent receipt of the notice under Section 2, Lessor may demonstrate
the Equipment's operation in place and Lessee will supply any of its personnel
as may reasonably be required to assist in the demonstrations.
10. Labeling.
Upon request, Lessee will mark the Equipment indicating Lessor's interest.
Lessee will keep all Equipment free from any other marking or labelling which
might be interpreted as a claim of ownership.
11. Indemnity.
Lessee will indemnify and hold Lessor, any Assignee and any Secured Party
harmless from and against any and all claims, costs, expenses, damages and
liabilities, including reasonable Attorneys' fees, arising out of the ownership
(for strict liability in tort only), selection, possession, leasing, operation,
control, use, maintenance, delivery, return or other disposition of the
Equipment. However, Lessee is not responsible to a party indemnified hereunder
for any claims, costs expenses, damages and liabilities occasioned by the
negligent acts of such indemnified party. Lessee agrees to carry bodily injury
and property damage liability insurance during the term of the Master Lease in
amounts and against risks customarily insured against by the Lessee on equipment
owned by it. Any amounts received by Lessor under that insurance will be
credited against Lessee's obligations under this Section.
3
<PAGE> 4
12. Risk of Loss.
Effective upon delivery and until the Equipment is returned, Lessee
relieves Lessor of responsibility for all risks of physical damage to or loss
or destruction of the Equipment. Lessee will carry casualty insurance for each
item of Equipment in an amount not less than the Casualty Value. All policies
for such insurance will name the Lessor and any Secured Party as additional
insured and as loss payee, and will provide for at least thirty (30) days prior
written notice to the Lessor of cancellation or expiration, and will insure
Lessor's interests regardless of any breach or violation by Lessee of any
representation, warranty or condition contained in such policies and will be
primary without right of contribution from any insurance effected by Lessor.
Upon the execution of any Schedule, the Lessee will furnish appropriate
evidence of such insurance acceptable to Lessor.
Lessee will promptly repair any damaged item of Equipment unless such
Equipment has suffered a Casualty Loss. Within fifteen (15) days of a Casualty
Loss, Lessee will provide written notice of that loss to Lessor and Lessee
will, at Lessor's option, either (a) replace the item of Equipment with Like
Equipment and marketable title to the Like Equipment will automatically vest in
Lessor or (b) pay the Casualty Value and after that payment and the payment of
all other amounts due and owing, Lessee's obligation to pay further Rent for
the item of Equipment will cease.
13. Default, Remedies and Mitigation.
13.1 Default. The occurrence of any one of more of the following Events
of Default constitutes a default under a Schedule:
(a) Lessee's failure to pay Rent or other amounts payable by Lessee when
due if that failure continues for five (5) days after written notice;
or
(b) Lessee's failure to perform any other term or condition of the Schedule
or the material inaccuracy of any representation or warranty made by
the Lessee in the Schedule or in any document or certificate furnished
to the Lessor hereunder if that failure or inaccuracy continues for ten
(10) days after written notice; or
(c) An assignment by Lessee for the benefit of its creditors, the failure
by Lessee to pay its debts when due, the insolvency of Lessee, the
filing by Lessee or the filing against Lessee of any petition under
any bankruptcy or insolvency law or for the appointment of a trustee
or other officer with similar powers, the adjudication of lessee as
insolvent, the liquidation of Lessee, or the taking of any action for
the purpose of the foregoing; or
(d) The occurrence of an Event of Default under any Schedule or other
agreement between Lessee and Lessor or its Assignee or Secured Party.
13.2 Remedies. Upon the occurrence of any of the above Events of Default,
Lessor, at its option, may:
(a) enforce Lessee's performance of the provisions of the applicable
Schedule by appropriate court action in law or in equity;
(b) recover from Lessee any damages and or expenses, including Default
Costs;
(c) with notice and demand, recover all sums due and accelerate and recover
the present value of the remaining payment stream of all Rent due under
the defaulted Schedule (discounted at the same rate of interest at
which such defaulted Schedule was discounted with a Secured Party plus
any prepayment fees charged to Lessor by the Secured Party or, if there
is no Secured Party, then discounted at 6%) together with all Rent and
other amounts currently due as liquidated damages and not as a penalty;
(d) with notice and process of law and in compliance with Lessee's security
requirements, Lessor may enter on Lessee's premises to remove and
repossess the Equipment without being liable to Lessee for damages due
to the repossession, except those resulting from Lessor's, its
assignees', agents' or representatives' negligence; and
(e) pursue any other remedy permitted by law or equity.
The above remedies, in Lessor's discretion and to the extent permitted by
law, are cumulative and may be exercised successively or concurrently.
13.3 Mitigation. Upon return of the Equipment pursuant to the terms of
Section 13.2 Lessor will use its best efforts in accordance with its normal
business procedures (and without obligation to give any priority to such
Equipment) to mitigate Lessor's damages as described below. EXCEPT AS SET FORTH
IN THIS SECTION, LESSEE HEREBY WAIVES ANY RIGHTS NOW OR HEREAFTER CONFERRED BY
STATUTE OR OTHERWISE WHICH MAY REQUIRE LESSOR TO MITIGATE
4
<PAGE> 5
ITS DAMAGES OR MODIFY ANY OF LESSOR'S RIGHTS OR REMEDIES STATED HEREIN. Lessor
may sell, lease or otherwise dispose of all or any part of the Equipment at a
public or private sale for cash or credit with the privilege of purchasing the
Equipment. The proceeds from any sale, lease or other disposition of the
Equipment are defined as either:
(a) if sold or otherwise disposed of, the cash proceeds less the Fair
Market Value of the Equipment at the expiration of the Initial Term
less the Default Costs; or
(b) if leased, the present value (discounted at three points over the prime
rate as referenced in the Wall Street Journal at the time of the
mitigation) of the rentals for the term not to exceed the Initial Term,
less the Default Costs.
Any proceeds will be applied against liquidated damages and any other sums
due to Lessor from Lessee. However, Lessee is liable to Lessor for, and Lessor
may recover, the amount by which the proceeds are less than the liquidated
damages and other sums due to Lessor from Lessee.
14.1 Additional Provisions.
14.1 Board Attendance. Lessor or its duly appointed representative will
have the right to attend Lessee's corporate Board of Directors meetings and
Lessee will give Lessor reasonable notice in advance of any special Board of
Directors meeting, which notice will provide an agenda of the subject matter to
be discussed at such board meeting. Lessee will provide Lessor with a certified
copy of the minutes of each Board of Directors meeting within thirty (30) days
following the date of such meeting held during the term of this Lease.
14.2 Financial Statements. Lessee will provide to Lessor the financial
statements specified in this Section, prepared in accordance with generally
accepted accounting principles, consistently applied (the "Financial
Statements"); provided, however, after the effective date of the initial
registration statement covering a public offering of Lessee's securities, the
term "Financial Statements" will be deemed to refer to only those statements
required by the Securities and Exchange Commission, to be provided no less
frequently than quarterly. Lessee will provide to Lessor (i) as soon as
practicable (within thirty (30) days) after the end of each month, the same
information which Lessee provides to its Board of Directors, but which will
include not less than a monthly income statement, balance sheet and statement
of cash flows, certified by Lessee's Chief Executive or Financial Officer to be
true and correct; and (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 and changes in the financial
position 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 selected by Lessee. Lessee will promptly furnish to Lessor any
additional information (including but not limited to tax returns, income
statements, balance sheets, and names of principal creditors) as Lessor
reasonably believes necessary to evaluate Lessee's continuing ability to meet
financial obligations.
14.3 Obligation to Lease Additional Equipment. Upon Notice to Lessee,
Lessor will not be obligated to lease any Equipment which would have a
Commencement Date after said notice if: (i) Lessee is in default under this
Master Lease or any Schedule; (ii) Lessee is in default under any loan
agreement, the result of which would allow the lender or any secured party to
demand immediate payment of the indebtedness; (iii) there is a material adverse
change in Lessee's credit standing; or (iv) Lessor determines (in reasonable
good faith) that Lessee will be unable to perform its obligations under this
Master Lease.
14.4 Merger and Sale Provisions. Lessee will notify Lessor of any
proposed Merger at least sixty (60) days prior to the closing date. Lessor may,
in its discretion, either (i) consent to the assignment of the Master Lease and
all relevant Schedules to the successor entity, or (ii) terminate the Master
Lease and all relevant Schedules. If Lessor elects to consent to the assignment,
Lessee and its successor will sign the assignment documentation provided by
Lessor. If Lessor elects to terminate the Master Lease and all relevant
Schedules, then Lessee will pay Lessor all amounts then due and owing and a
termination fee equal to the present value (discounted at 6%) of the remaining
Rent for the balance of the Initial Term(s) of all Schedules, and will return
the Equipment in accordance with Section 9.
14.5 Entire Agreement. This Master Lease and associated Schedules
supersede all other oral or written agreements or understandings between the
parties concerning the Equipment including, for example, purchase orders. ANY
AMENDMENT OF THIS MASTER LEASE OR A SCHEDULE, MAY ONLY BE ACCOMPLISHED BY A
WRITING SIGNED BY THE PARTY AGAINST WHOM THE AMENDMENT IS SOUGHT TO BE
ENFORCED.
14.6 No Waiver. No action taken by Lessor or Lessee will be deemed to
constitute a waiver of compliance with any representation, warranty or covenant
contained in this Master Lease or a Schedule. The waiver by Lessor or Lessee of
a breach of any provision of this Master Lease or a Schedule will not operate
or be construed as a waiver of any subsequent breach.
5
<PAGE> 6
14.7 Binding Nature. Each Schedule is binding upon, and inures to the
benefit of Lessor and its assigns. LESSEE MAY NOT ASSIGN ITS RIGHTS OR
OBLIGATIONS.
14.8 Survival of Obligations. All agreements, obligations including, but
not limited to those arising under Section 6.2, representations and warranties
contained in this Master Lease, any Schedule or in any document delivered in
connection with those agreements are for the benefit of Lessor and any Assignee
or Secured Party and survive the execution, delivery, expiration or termination
of this Master Lease.
14.9 Notices. Any notice, request or other communication to either party
by the other will be given in writing and deemed received upon the earlier of
actual receipt or three days after mailing if mailed postage prepaid by regular
or airmail to Lessor (to the attention of "Lease Administrator") or Lessee, at
the address set out in the Schedule or, one day after it is sent by courier or
on the same day as sent via facsimile transmission, provided that the original
is sent by personal delivery or mail by the receiving party.
14.10 Applicable Law. THIS MASTER LEASE HAS BEEN, AND EACH SCHEDULE WILL
HAVE BEEN MADE, EXECUTED AND DELIVERED IN THE STATE OF ILLINOIS AND WILL BE
GOVERNED AND CONSTRUED FOR ALL PURPOSES IN ACCORDANCE WITH THE LAWS OF THE STATE
OF ILLINOIS WITHOUT GIVING EFFECT TO CONFLICT OF LAW PROVISIONS. NO RIGHTS OR
REMEDIES REFERRED TO IN ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE WILL BE
CONFERRED ON LESSEE UNLESS EXPRESSLY GRANTED IN THIS MASTER LEASE OR A
SCHEDULE.
14.11 Severability. If any one or more of the provisions of this Master
Lease or any Schedule is for any reason held invalid, illegal or unenforceable,
the remaining provisions of this Master Lease and any such Schedule will be
unimpaired, and the invalid, illegal or unenforceable provision replaced by a
mutually acceptable valid, legal and enforceable provision that is closest to
the original intention of the parties.
14.12 Counterparts. This Master Lease and any Schedule may be executed
in any number of counterparts, each of which will be deemed an original, but
all such counterparts together constitute one and the same instrument. If
Lessor grants a security interest in all or any part of a Schedule, the
Equipment or sums payable thereunder, only that counterpart Schedule marked
"Secured Party's Original" can transfer Lessor's rights and all other
counterparts will be marked "Duplicate".
14.13 Nonspecified Features and Licensed Products. If the Equipment is
supplied from Lessor's inventory and contains any features not specified in the
Schedule, Lessee grants Lessor the right to remove any such features. Any
removal will be performed by the manufacturer or another party acceptable to
Lessee, upon the request of Lessor, at a time convenient to Lessee, provided
that Lessee will not unreasonably delay the removal of such features.
Lessee will obtain no title to Licensed Products which will at all times
remain the property of the owner of the Licensed Products. A license from the
owner may be required and it is Lessee's responsibility to obtain any required
License before the use of the Licensed Products. Lessee agrees to treat the
Licensed Products as confidential information of the owner, to observe all
copyright restrictions, and not to reproduce or sell the Licensed Products.
14.14 Additional Documents. Lessee will, upon execution of this Master
Lease and as may be requested thereafter, provide Lessor with a secretary's
certificate of incumbency and authority and any other documents reasonably
requested by Lessor. Upon the execution of each Schedule with a purchase price
in excess of $1,000,000, Lessee will provide Lessor with an opinion from
Lessee's counsel in a form acceptable to Lessor regarding the representations
and warranties in Section 8.
14.15 Electronic Communications. Each of the parties may communicate
with the other by electronic means under mutually agreeable terms.
14.16 Lessor's Right to Match. Lessee's rights under Section 5.2 and 7.2
are subject to Lessor's right to match any sublease or upgrade proposed by a
third party. Lessee will provide Lessor with the terms of the third party offer
and Lessor will have three (3) business days to match the offer. Lessee will
obtain such upgrade from or sublease the Equipment to Lessor if Lessor has
timely matched the third party offer.
14.17 Landlord/Mortgagee Waiver. Lessee agrees to provide Lessor with a
Landlord/Mortgagee Waiver with respect to Equipment. Such waiver shall be in a
form satisfactory to Lessor.
14.18 Equipment Procurement Charges/Progress Payments. Lessee hereby
agrees that Lessor shall not, by virtue of its entering into this Lease, be
required to remit any payments to any manufacturer or other third party until
Lessee accepts the Equipment subject to this Lease.
14.19 Definitions.
ADVANCE -- means the amount due to Lessor by Lessee upon Lessee's execution of
each Schedule.
ASSIGNEE -- means an entity to whom Lessor has sold or assigned its rights as
owner and Lessor of Equipment.
6
<PAGE> 7
ATTACHMENT - means any accessory, equipment or device and the installation
thereof that does no impair the original function or use of the Equipment and
is capable of being removed without causing material damage to the Equipment
and its not an accession to the Equipment.
CASUALTY LOSS - means the irreparable loss or destruction of Equipment.
CASUALTY VALUE - means the greater of the aggregate Rent remaining to be paid
for the balance of the lease term or the Fair Market Value of the Equipment
immediately prior to the Casualty Loss. However, if a Casualty Value Table is
attached to the relevant Schedule its term will control.
COMMENCEMENT CERTIFICATE - means the Lessor provided certificate which must be
signed by Lessee within ten (10) days of the Commencement Date as requested by
Lessor.
COMMENCEMENT DATE -is defined in each Schedule.
DEFAULT COSTS - means reasonable attorney's fees and remarketing costs
resulting from a Lessee default or Lessor's enforcement of its remedies.
EQUIPMENT - means the property described on a Schedule and any replacement for
that property required or permitted by this Master Lease or a Schedule but not
including any Attachment.
EVENT OF DEFAULT - means the events described in Subsection 13.1.
FAIR MARKET VALUE - means the aggregate amount which would be obtainable in an
arm's-length transaction between an informed and willing buyer/user and an
informed and willing seller under no compulsion to sell.
INITIAL TERM - means the period of time beginning on the first day of the first
full Rent Interval following the Commencement Date for all items of Equipment
and continuing for the number of Rent Intervals indicated on a Schedule.
INSTALLATION DATE - means the day on which Equipment is installed and qualified
for a commercially available manufacturer's standard maintenance contract or
warranty coverage, if available.
INTERIM RENT - means the pro-rata portion of Rent due for the period from the
Commencement Date through but not including the first day of the first full
Rent Interval included in the Initial Term.
LICENSED PRODUCTS - means any software or other licensed products attached to
the Equipment.
LIKE EQUIPMENT - means replacement Equipment which is lien free and of the same
model, type, configuration and manufacture as Equipment.
LIKE PART - means a substituted part which is lien free and of the same
manufacturer and part number as the removed part, and which when installed on
the Equipment will be eligible for maintenance coverage with the manufacturer
of the Equipment.
MERGER - means any consolidation or merger of the Lessee with or into any other
corporation or entity, and sale or conveyance of all or substantially all of
the assets of the Lessee to any other person or entity or any stock acquisition
of the Lessee by any other person or entity.
NOTICE PERIOD - means the time period described in a Schedule during which
lessee may give Lessor notice of the termination of the term of that Schedule.
OVERDUE RATE - means the lesser of five percent (5%) of the payment due or the
maximum rate permitted by the law of the state where the Equipment is located.
OWNER - means the owner of Equipment.
RECONFIGURATION - means any change to Equipment that would update or downgrade
the performance capabilities of the Equipment in any way.
RENT - means the rent, including Interim Rent, Lessee will pay for each item of
Equipment expressed in a Schedule either as a specific amount or an amount
equal to the amount which Lessor pays for an item of Equipment multiplied by a
lease rate factor plus all other amounts due to Lessor under this Master Lease
or a Schedule.
RENT INTERVAL - means a full calendar month or quarter as indicated on a
Schedule.
SCHEDULE - means an Equipment Schedule which incorporates all of the terms and
conditions of this Master and, for purposes of Section 14.12, its associated
Commencement Certificate(s).
7
<PAGE> 8
SECURED PARTY - means an entity to whom Lessor has granted a security interest
in a Schedule and related Equipment for the purpose of securing a loan.
IN WITNESS WHEREOF, the parties hereto have executed this Master Lease on
or as of the day and year first above written.
MYCO PHARMACEUTICALS INC. COMDISCO, INC.
as Lessee as Lessor
By: /s/ Barry Berkowitz By: [Sig]
------------------------------- --------------------------------
Title: President Title:
---------------------------- -----------------------------
8/3/93
8
<PAGE> 1
EXHIBIT 11.1
CHEMGENICS PHARMACEUTICALS, INC.
STATEMENT OF PRO FORMA NET LOSS PER SHARE
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER
YEAR ENDED 30,
DECEMBER 31, 1996
1995 -----------
------------ (UNAUDITED)
<S> <C> <C>
Net (loss)........................................................ (2,395,282) (10,439,856)
---------- -----------
Weighted average common shares outstanding........................ 571,024 575,214
Common stock options and shares issued after November 30, 1996
pursuant to the treasury stock method........................... 2,716,691 2,716,691
Common stock issuable upon conversion of series A, B, C, D and E
preferred stock................................................. 4,458,528 4,458,528
---------- -----------
Shares used in computing pro forma net loss per common share...... 7,746,243 7,750,433
---------- -----------
Pro forma net loss per common share............................... (0.31) (1.35)
========== ===========
</TABLE>
II-8
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of this
Registration Statement.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
December 18, 1996
<PAGE> 1
Exhibit 23.3
Consent of
Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein, P.A.
Patent Counsel
We consent to the reference of our firm under the caption "Experts" and
to the use of the statements under the caption "Risk Factors -- Patents and
Proprietary Rights; Third-Party Rights" and Business -- Patents" which we have
reviewed and approved in this Registration Statement on Form S-1 and related
Prospectus of ChemGenics Pharmaceuticals, Inc. and any and all amendments
thereto (or any other Registration Statement for the same offering that is to
be effective upon filing pursuant to Rule 462(b) under the Securities Act of
1993).
Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein, P.A.
/s/ Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein, P.A.
Roseland, N.J.
December 17, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1995 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND
FOOTNOTES THERETO.
</LEGEND>
<CIK> 0001029047
<NAME> CHEMGENICS PHARMACEUTICALS INC
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 8,050,821
<SECURITIES> 0
<RECEIVABLES> 159,090
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,528,055
<PP&E> 2,773,257
<DEPRECIATION> 1,183,716
<TOTAL-ASSETS> 15,550,255
<CURRENT-LIABILITIES> 931,324
<BONDS> 0
0
109,818
<COMMON> 574
<OTHER-SE> 24,841,185
<TOTAL-LIABILITY-AND-EQUITY> 15,550,255
<SALES> 0
<TOTAL-REVENUES> 2,903,179<F1>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,961,430
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 174,781
<INCOME-PRETAX> (2,395,282)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,395,282)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Total revenue excludes $837,750 interest income.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30,1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND
FOOTNOTES THERETO.
</LEGEND>
<CIK> 0001029047
<NAME> CHEMGENICS PHARMACEUTICALS INC
<MULTIPLIER> 1
<CURRENCY> US 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> 4,260,961
<SECURITIES> 5,091,590
<RECEIVABLES> 77,991
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,665,256
<PP&E> 4,168,315
<DEPRECIATION> 1,768,929
<TOTAL-ASSETS> 12,757,535
<CURRENT-LIABILITIES> 1,176,328
<BONDS> 3,000,000
0
109,818
<COMMON> 3,141
<OTHER-SE> 29,145,504
<TOTAL-LIABILITY-AND-EQUITY> 12,757,535
<SALES> 0
<TOTAL-REVENUES> 2,171,015<F1>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 13,009,122
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 147,444
<INCOME-PRETAX> (10,439,856)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,439,856)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Total revenue excludes $545,695 interest income
</FN>
</TABLE>
