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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 19, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE MEDICINES COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 2834 04-3324394
(STATE OF INCORPORATION) (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
CLASSIFICATION CODE) IDENTIFICATION NUMBER)
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ONE CAMBRIDGE CENTER
CAMBRIDGE, MASSACHUSETTS 02142
(617) 225-9099
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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CLIVE A. MEANWELL
CHIEF EXECUTIVE OFFICER
THE MEDICINES COMPANY
ONE CAMBRIDGE CENTER
CAMBRIDGE, MASSACHUSETTS 02142
(617) 225-9099
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OR AGENT FOR SERVICE)
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COPIES TO:
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STEVEN D. SINGER, ESQ. GERALD S. TANENBAUM, ESQ.
STUART M. FALBER, ESQ. MICHAEL E. WEISS, ESQ.
HALE AND DORR LLP CAHILL GORDON & REINDEL
60 STATE STREET 80 PINE STREET
BOSTON, MASSACHUSETTS 02109 NEW YORK, NEW YORK 10005-1702
(617) 526-6000 (212) 701-3000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, 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. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE(1)
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Common Stock, par value $0.001 per share............. $75,000,000 $19,800
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(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(o).
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THE REGISTRATION 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 SEC, ACTING PURSUANT TO SUCH SECTION 8(a), MAY
DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS
NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER
TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS
NOT PERMITTED.
Subject to Completion
PROSPECTUS
Dated May 19, 2000
Shares
The Medicines Company LOGO
Common Stock
The Medicines Company is selling all of the shares of common stock in this
offering. This is our initial public offering. We estimate that the initial
public offering price will be between $ and $ .
We have applied to have our common stock listed on the Nasdaq National Market
under the symbol "MDCO".
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. PLEASE READ "RISK FACTORS"
BEGINNING ON PAGE 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT THE MEDICINES COMPANY
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Per Share $ $ $
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Total $ $ $
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We will grant the underwriters the right to purchase up to an additional
shares of common stock to cover over-allotments.
J.P. MORGAN & CO. ROBERTSON STEPHENS
CIBC WORLD MARKETS
, 2000
<PAGE> 3
You should rely on the information contained in this prospectus. We have not
authorized anyone to provide you with information different from that contained
in this prospectus. We are offering to sell, and seeking offers to buy, shares
of common stock only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of its delivery or of any sale of our common
stock.
TABLE OF CONTENTS
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PAGE
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Prospectus Summary.......................... 1
Risk Factors................................ 5
Special Note Regarding Forward-Looking
Statements................................ 13
Use of Proceeds............................. 14
Dividend Policy............................. 14
Capitalization.............................. 15
Dilution.................................... 16
Selected Consolidated Financial Data........ 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 18
Business.................................... 21
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PAGE
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Management.................................. 38
Transactions With Executive Officers,
Directors and Five Percent Stockholders... 47
Principal Stockholders...................... 51
Description of Capital Stock................ 53
Shares Eligible for Future Sale............. 56
Underwriting................................ 57
Legal Matters............................... 58
Experts..................................... 58
Where You Can Find More Information......... 59
Index to Financial Statements............... F-1
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Until , 2000, all dealers that effect transactions in our common
stock, whether or not participating in this offering, may be required to deliver
a prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
<PAGE> 4
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus. This
summary does not contain all of the information you should consider before
buying shares of our common stock. You should read the entire prospectus
carefully.
THE MEDICINES COMPANY
We acquire, develop and commercialize biopharmaceutical products in late stages
of development. In May 2000, we received an approvable letter from the U.S. Food
and Drug Administration, or FDA, for our first product, Angiomax, for use in the
treatment of patients with unstable angina undergoing coronary balloon
angioplasty. Coronary angioplasty is a procedure used to restore normal blood
flow in an obstructed artery in the heart. If approved by the FDA, we plan to
begin selling Angiomax in the United States within the next 12 months for use in
angioplasty.
We are also developing Angiomax for additional potential applications for use in
the treatment of ischemic heart disease. To date, Angiomax has been administered
to over 7,400 patients in clinical trials for the treatment and prevention of
blood clots in a wide range of hospital applications. We believe that Angiomax
will become the leading replacement for heparin in hospital care. In the United
States, heparin is the most widely-used acute anticoagulant and is used to treat
approximately five million hospitalized patients per year.
Under the terms of the Angiomax approvable letter, before the FDA will approve
our new drug application, or NDA, for Angiomax, the manufacturing facilities for
Angiomax must pass an FDA inspection and we must comply with other conditions.
These conditions include adopting FDA-recommended modifications to the proposed
labeling for Angiomax, making changes in documents describing our manufacturing
and packaging and recruiting and treating up to 10 additional patients in an
ongoing study in which 26 patients with reduced kidney function have been
enrolled to date.
ANGIOMAX
Angiomax directly blocks or inhibits the actions of thrombin, a key component in
the formation and growth of blood clots. By blocking thrombin directly, rather
than indirectly like heparin, Angiomax inhibits thrombin both in the clot and in
the blood. Angiomax's inhibition of thrombin is reversible, which means that its
thrombin blocking wears off over time, allowing thrombin to again work in the
clotting process. This reversibility is associated with a reduced risk of
bleeding.
In the clinical trials in angioplasty, Angiomax has:
- - reduced the frequency of life-threatening coronary events including heart
attack and the need for emergency coronary procedures;
- - reduced the likelihood of major bleeding and the need for blood transfusion;
and
- - demonstrated a predictable anticoagulant response to a specific Angiomax dose,
which enables simplified dosing.
Our development programs are designed to expand the applications of Angiomax for
the treatment of ischemic heart disease. Ischemia is a condition which occurs
when organs receive an inadequate supply of oxygen as a result of decreased
blood flow. We have:
- - a 17,000 patient Phase 3 trial underway studying the use of Angiomax for the
treatment of patients who have suffered a heart attack;
- - a Phase 3 trial program in progress to study the use of Angiomax for the
treatment of patients undergoing angioplasty who experience reduced platelet
count and clotting due to an immunological reaction to heparin; and
- - plans to commence a Phase 3 trial program to evaluate the use of Angiomax in
patients with unstable angina, a coronary condition in which patients
experience the new onset of severe chest pain, increasingly frequent chest
pain or chest pain that occurs while they are at rest.
STRATEGY
Our strategy is to build a commercial biopharmaceutical operation by acquiring,
developing and commercializing late-stage product candidates. We will actively
manage the development and commercialization of these product candidates. We
expect our first product, Angiomax, if approved by the FDA, to become the
cornerstone product of a critical care franchise that we plan to build. We are
also focused on specialty anti-infectives and are developing a second product
candidate, CTV-05, a proprietary biotherapeutic agent with a potentially broad
range of applications in gynecological and reproductive infections. We
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intend to market our products in the United States by contracting with external
organizations and by using an internal sales force, or by collaborating with
other biopharmaceutical companies.
Our principal objectives include:
- - launching Angiomax for use in patients with unstable angina undergoing
angioplasty;
- - developing and commercializing Angiomax as the leading replacement for heparin
in ischemic heart disease;
- - acquiring products with (1) existing clinical data which provides reasonable
evidence of safety and efficacy, (2) an anticipated time to market of four
years or less and (3) potential cost savings to payors or improved efficiency
of patient care; and
- - leveraging our resources through our relationships with contract development,
manufacturing and sales companies.
CORPORATE INFORMATION
The Medicines Company was incorporated in Delaware in July 1996. Our corporate
website is located at www.themedicinescompany.com. We do not intend for
information found on our website to be part of this prospectus. We own or have
rights to various trademarks and trade names used in our business, including The
Medicines Company name and logo and Angiomax(TM).
Our executive offices are located at One Cambridge Center, Cambridge,
Massachusetts 02142, and our telephone number is (617) 225-9099.
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THE OFFERING
The following information reflects 1,186,599 shares of common stock outstanding
as of May 17, 2000 and the conversion of all our outstanding convertible
preferred stock and accrued dividends as of May 17, 2000 into 30,190,120 shares
of common stock upon the closing of this offering. The number of outstanding
shares of common stock does not include:
- - 2,417,591 shares of common stock issuable upon the exercise of stock options
outstanding as of May 17, 2000 at a weighted average exercise price of $1.82
per share;
- - 4,478,883 shares of common stock issuable upon the exercise of common stock
purchase warrants outstanding as of May 17, 2000 at an exercise price of $4.32
per share; and
- - an additional 4,088,163 shares of common stock that we could issue under our
stock plans.
Unless otherwise indicated, information in this prospectus gives effect to the
following:
- - no exercise of the underwriters' over-allotment option; and
- - an assumed initial public offering price of $ per share.
COMMON STOCK OFFERED..................... shares
COMMON STOCK TO BE OUTSTANDING AFTER THIS
OFFERING................................. shares
USE OF PROCEEDS..........................We expect to use the net proceeds to:
- fund the commercial launch of
Angiomax for use in patients with
unstable angina undergoing
angioplasty and product development
activities, including additional
clinical trials of Angiomax;
- fund working capital, capital
expenditures and other general
corporate purposes; and
- fund the acquisition of additional
products.
Please read "Use of Proceeds".
PROPOSED NASDAQ NATIONAL MARKET SYMBOL..."MDCO"
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SUMMARY CONSOLIDATED FINANCIAL DATA
In the table below, we provide you with our summary consolidated financial data.
We have prepared this information using our audited consolidated financial
statements for the period July 31, 1996 (date of inception) to December 31, 1996
and for the years ended December 31, 1997, 1998 and 1999 and our unaudited
consolidated financial statements for the three months ended March 31, 1999 and
2000. The pro forma net loss per share data and the pro forma balance sheet data
reflect the conversion of the outstanding principal amount and accrued interest
on convertible notes outstanding as of March 31, 2000 in the aggregate amount of
$19.7 million into an aggregate of 4,549,433 shares of series IV convertible
preferred stock and the conversion of all our outstanding convertible preferred
stock and accrued dividends as of March 31, 2000 into an aggregate of 24,033,926
shares of common stock upon the closing of this offering. The pro forma as
adjusted consolidated balance sheet data reflect these transactions and also
reflect the sale of shares of common stock in this offering at an
assumed initial public offering price of $
per share after deducting underwriting discounts and estimated offering
expenses. The pro forma net loss per share data and the pro forma balance sheet
data does not include the conversion of 1,411,000 shares of series IV
convertible preferred stock sold on May 17, 2000 or the effect of any options or
warrants outstanding as of such date. The following data should be read in
conjunction with our consolidated financial statements, including the
accompanying notes, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this prospectus.
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PERIOD FROM
INCEPTION
(JULY 31, 1996) THREE MONTHS ENDED
THROUGH YEAR ENDED DECEMBER 31, MARCH 31,
DECEMBER 31, ---------------------------------- ---------------------
1996 1997 1998 1999 1999 2000
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In thousands, except share and per share data
STATEMENTS OF OPERATIONS DATA
Operating expenses
Research and development....................... $ 827 $ 16,044 $ 24,005 $ 30,345 $ 7,207 $ 10,539
General and administrative..................... 701 2,421 6,248 5,008 1,276 1,151
---------- ------- ------- ------- ------- -------
Total operating expenses..................... 1,528 18,465 30,253 35,353 8,483 11,690
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Loss from operations............................. (1,528) (18,465) (30,253) (35,353) (8,483) (11,690)
Interest income (expense), net................... 62 659 1,302 640 346 (403)
---------- ------- ------- ------- ------- -------
Net loss......................................... (1,466) (17,806) (28,951) (34,713) (8,137) (12,093)
Dividends and accretion to redemption value of
redeemable convertible preferred stock......... (118) (2,018) (3,959) (5,893) (1,436) (1,530)
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Net loss attributable to common stockholders..... $(1,584) $(19,824) $(32,910) $(40,606) $(9,573) $(13,623)
---------- ------- ------- ------- ------- -------
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Net loss attributable to common stockholders per
common share, basic and diluted................ $ (2.16) $ (2.96) $ (4.40) $ (58.46) $(15.40) $ (15.75)
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Shares used in computing net loss attributable to
common stockholders per common share, basic and
diluted........................................ 763,258 6,694,836 7,472,128 694,610 621,734 864,762
Unaudited pro forma net loss attributable to
common stockholders per common share, basic and
diluted........................................ $ (1.42) $ (0.39)
Shares used in computing unaudited pro forma net
loss attributable to common stockholders per
common share, basic and diluted................ 24,383,393 29,325,550
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AS OF MARCH 31, 2000
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PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
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In thousands
BALANCE SHEET DATA
Cash, cash equivalents and marketable securities............ $ 12,295 $ 12,295
Working capital (deficit)................................... (2,495) (2,495)
Total assets................................................ 13,125 13,125
Convertible notes........................................... 18,652 --
Redeemable convertible preferred stock...................... 86,807 --
Deficit accumulated during the development stage............ (108,548) (108,548)
Total stockholders' equity (deficit)........................ (107,398) (1,939)
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RISK FACTORS
You should carefully consider the following risk factors and all other
information contained in this prospectus before purchasing our common stock.
Investing in our common stock involves a high degree of risk. If any of the
following risks actually occurs, we may not be able to conduct our business as
currently planned and our financial condition and operating results could be
seriously harmed. In addition, the trading price of our common stock could
decline due to the occurrence of any of these risks, and you may lose all or
part of your investment. Please read "Special Note Regarding Forward-Looking
Statements."
RISKS RELATED TO OUR BUSINESS
OUR BUSINESS WILL BE VERY DEPENDENT ON THE COMMERCIAL SUCCESS OF ANGIOMAX
Other than Angiomax, our products are in clinical phases of development and are
a number of years away from entering the market. As a result, if we obtain
regulatory approval to market Angiomax, it will account for almost all of our
revenues for the foreseeable future. If Angiomax is not commercially successful,
we will have to find additional sources of revenues or be forced to curtail or
cease operations.
IF WE FAIL TO OBTAIN FDA APPROVAL, WE CANNOT MARKET ANGIOMAX IN THE UNITED
STATES
We will not be able to market Angiomax in the United States until we receive the
approval of the FDA. The process of obtaining FDA approval is lengthy and
uncertain. In February 1998, the FDA accepted our filing of a new drug
application, or NDA, seeking marketing approval for Angiomax. In May 2000, we
received an approvable letter for the use of Angiomax in the treatment of
patients with unstable angina undergoing coronary balloon angioplasty. Under the
terms of the approvable letter, before the FDA will approve our NDA for
Angiomax, the manufacturing facilities for Angiomax must pass an FDA inspection,
and we must comply with other conditions. These conditions include adopting
FDA-recommended modifications to the proposed labeling for Angiomax, making
changes in documents describing our manufacturing and packaging and recruiting
and treating up to 10 additional patients in an ongoing study in which 26
patients with reduced kidney function have been enrolled to date. If the
inspection results are unsatisfactory or if we are unable to comply with the
FDA's other conditions, we will not be able to obtain approval for Angiomax in a
timely fashion, or at all.
ANGIOMAX MAY NOT BE ACCEPTED BY PHYSICIANS, PATIENTS OR THIRD-PARTY PAYORS
The commercial success of Angiomax will depend upon its acceptance by
physicians, patients and third-party payors. Among the factors that we believe
will materially affect the acceptance of Angiomax are:
- - the acceptance by physicians, patients and other key decision-makers of
Angiomax as a therapeutic and cost-effective alternative to other products in
current practice, including heparin;
- - the availability of additional data on the use of Angiomax in current clinical
practice;
- - the availability and price of competing products;
- - the availability of government and third-party payor reimbursement for
Angiomax; and
- - the timing of receipt of marketing approvals and the countries in which those
approvals are obtained.
WE CANNOT EXPAND THE INDICATIONS FOR ANGIOMAX UNLESS WE RECEIVE FDA APPROVAL FOR
EACH ADDITIONAL INDICATION
We are developing Angiomax for use in the acute treatment of ischemic heart
disease. The approvable letter we received in May 2000 covered the use of
Angiomax for the treatment of patients with unstable angina undergoing coronary
balloon angioplasty. One of our key objectives is to expand the indications for
which Angiomax is approved. In order to do this, we will need to conduct
additional clinical trials and obtain FDA approval for each proposed indication.
If we are unsuccessful in expanding the approved indications for the use of
Angiomax, the size of the commercial market for Angiomax will be limited, and
our business, financial condition and results of operations will be adversely
affected.
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BEFORE WE CAN MARKET AND SELL ADDITIONAL INDICATIONS FOR ANGIOMAX, OUR OTHER
PRODUCT CANDIDATES AND ANY OTHER PRODUCT CANDIDATES THAT WE MAY ACQUIRE OR
DEVELOP, WE MUST SUCCESSFULLY COMPLETE CLINICAL TRIALS
In order to obtain regulatory approvals for the commercial sale of Angiomax for
indications other than coronary balloon angioplasty, we will be required to
complete pre-clinical studies and extensive clinical trials in humans to
demonstrate the safety and efficacy of Angiomax. We must satisfy the same
requirements for our other product candidates and any other product candidates
that we may acquire or develop. There are numerous factors which could delay our
clinical trials or prevent us from completing these trials successfully. We or
the FDA may suspend a clinical trial at any time on various grounds, including a
finding that patients are being exposed to unacceptable health risks. Delays may
occur that prevent clinical trials from being completed within any specified
time period.
The rate of completion of clinical trials depends in part upon the rate of
enrollment of patients. Patient enrollment is a function of many factors,
including the size of the patient population, the proximity of patients to
clinical sites, the eligibility criteria for the trial, the existence of
competing clinical trials and the availability of alternative or new treatments.
In particular, the patient population targeted by some of our clinical trials
may be small. Delays in planned patient enrollment may result in increased costs
and program delays.
In addition, clinical trials, if completed, may not show any potential product
to be safe or effective. Results obtained in pre
- -clinical studies or early clinical trials are not always indicative of results
that will be obtained in later clinical trials. Moreover, data obtained from
pre-clinical studies and clinical trials may be subject to varying
interpretations. As a result, the FDA or other applicable regulatory authorities
may not approve Angiomax for any additional indications, or any of our other
product candidates or any other product candidates we may acquire or develop, in
a timely fashion, or at all.
FAILURE TO OBTAIN REGULATORY APPROVAL IN FOREIGN JURISDICTIONS WILL PREVENT US
FROM MARKETING ANGIOMAX ABROAD
We intend to market our products in international markets, including Europe. In
order to market our products in the European Union and many other foreign
jurisdictions, we must obtain separate regulatory approvals. In February 1998 we
submitted a Marketing Authorization Application or MAA to the European Agency
for the Evaluation of Medicinal Products or EMEA for use in unstable angina
patients undergoing angioplasty. Following extended interaction with European
regulatory authorities, the Committee of Proprietary Medicinal Products, or
CPMP, of the EMEA voted in October 1999 not to recommend Angiomax for approval
in angioplasty. The United Kingdom and Ireland dissented from this decision. We
have withdrawn our application to the EMEA and are in active dialog with
European regulators to determine our course of action including seeking approval
of Angiomax in Europe on a country-by-country basis. We may not be able to
obtain approval from any or all of the jurisdictions in which we seek approval
to market Angiomax. Obtaining foreign approvals may require additional trials
and additional expense.
WE RELY ON THIRD PARTIES TO MANUFACTURE AND SUPPORT THE DEVELOPMENT AND
COMMERCIALIZATION OF OUR PRODUCTS
Our development and commercialization strategy entails entering into
arrangements with corporate and academic collaborators, contract research
organizations, contract sales organizations, distributors, third-party
manufacturers, licensors, licensees and others. We may not be able to maintain
our existing arrangements with respect to the commercialization of Angiomax or
establish and maintain arrangements to develop and commercialize any additional
products on terms that are acceptable to us. Any current or future arrangements
for the development and commercialization of our products may not be successful.
If we are not able to establish or maintain our agreements relating to Angiomax
or any additional products on terms which we deem favorable, our business,
financial condition and results of operations would be materially adversely
effected.
Third parties may not perform their obligations as expected. The amount and
timing of resources that third parties devote to developing, manufacturing and
commercializing our products may not be within our control. Furthermore, our
interests may not coincide with those of third-parties that manufacture or
commercialize. Disagreements that may arise with these third parties could delay
or lead to the termination of the development or commercialization of our
product candidates, or result in litigation or arbitration, which would be time
consuming and expensive. If any third party that manufactures or supports the
development or commercialization of our products breaches or terminates its
agreement with us, or fails to conduct its activities in a timely manner could:
- - delay the development or commercialization of Angiomax, our other product
candidates or any additional product candidates that we may acquire or
develop;
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- - require us to undertake unforeseen additional responsibilities or devote
unforeseen additional resources to the development or commercialization of our
products; or
- - result in the termination of the development or commercialization of our
products.
If any of these events were to occur, our business, financial condition and
results of operations could be materially adversely affected.
WE ARE CURRENTLY DEPENDENT ON ONE THIRD-PARTY MANUFACTURER FOR THE PRODUCTION OF
ANGIOMAX BULK DRUG SUBSTANCE AND ANOTHER THIRD-PARTY MANUFACTURER TO CARRY OUT
ALL FILL-FINISH ACTIVITIES
Currently, we obtain all of our Angiomax bulk drug substance from one
manufacturer, UCB Bioproducts S.A., and rely on another manufacturer, Ben Venue
Laboratories, Inc. to carry out all fill-finish activities for Angiomax. The FDA
requires that all manufacturers of pharmaceuticals for sale in or from the
United States achieve and maintain compliance with the FDA's current Good
Manufacturing Practice, or cGMP, regulations and guidelines. There are a limited
number of manufacturers that operate under cGMP regulations capable of
manufacturing Angiomax. We do not currently have alternative sources for
production of Angiomax bulk drug substance or to carry out fill-finish
activities. In the event that either of our current manufacturers is unable to
carryout its respective manufacturing obligations to our satisfaction, we may be
unable to obtain alternative manufacturing, or obtain such manufacturing on
commercially reasonable terms.
If either of our third-party manufacturers fails to perform its respective
obligations:
- - we may not be able to meet commercial demands for Angiomax on a timely basis;
- - we may not be able to initiate or continue clinical trials of Angiomax; and
- - we may be delayed in submitting applications for regulatory approvals for
additional indications.
These or other consequences of these manufacturers' failure to perform could
result in a material adverse effect on our business.
The manufacture of Angiomax and any of our future products is subject to
regulation by the FDA and comparable agencies in foreign countries. Any delay in
complying, or failure to comply, with such manufacturing requirements could
materially adversely affect the marketing of our products, and our business,
financial condition and results of operations would be materially adversely
affected.
We are currently developing with UCB a second generation process for the
production of bulk Angiomax drug substance to improve the economics of Angiomax
manufacturing. If we cannot develop the process successfully or regulatory
approval of the process is not obtained or is delayed, then our ability to
improve the economics of Angiomax may be limited.
WE HAVE A HISTORY OF NET LOSSES, AND WE EXPECT TO CONTINUE TO INCUR NET LOSSES
AND MAY NOT ACHIEVE OR MAINTAIN PROFITABILITY
We are a development stage company with no revenues to date. We have incurred
net losses since our inception, including net losses of approximately $34.7
million for the year ended December 31, 1999 and approximately $12.1 million for
the three months ended March 31, 2000. As of March 31, 2000, we had an
accumulated deficit of approximately $108.6 million. We expect to make
substantial expenditures to further develop and commercialize our products and
expect that our rate of spending will accelerate as the result of costs and
expenses associated with increased clinical trials, regulatory approval and
commercialization of products. As a result, we are unsure when we will become
profitable, if at all.
FAILURE TO RAISE ADDITIONAL FUNDS IN THE FUTURE MAY AFFECT THE DEVELOPMENT,
MANUFACTURE AND SALE OF OUR PRODUCTS
Our operations to date have generated substantial and increasing needs for cash.
Our negative cash flow from operations is expected to continue into the
foreseeable future. The clinical development of Angiomax for additional
indications, the development of our other product candidates and the acquisition
and development of additional product candidates by us will require a commitment
of substantial funds. Our future capital requirements will depend upon many
factors, including:
- - the timing of regulatory approval and commercial launch, as well as the
commercial success, of Angiomax;
- - the timing, extent and progress of clinical trials conducted with Angiomax and
our other product candidates in development;
- - the timing and cost of the acquisition of any additional products candidates;
7
<PAGE> 11
- - the extent and progress of any clinical testing of any additional product
candidates acquired by us;
- - our ability to establish and maintain collaborative arrangements and the costs
of such arrangements;
- - the costs of establishing or contracting with third parties to provide
manufacturing, sales and marketing support;
- - the costs involved in preparing, filing, prosecuting, maintaining and
enforcing patent claims or trade secrets; and
- - other product commercialization activities.
We anticipate that our existing capital resources, together with the net
proceeds from this offering, and interest earned thereon, will enable us to
maintain our current operations for at least the next 12 months. If our existing
resources and the proceeds of this offering are insufficient to satisfy our
liquidity requirements, if this offering is not completed or if we acquire any
additional product candidates, we may be required to seek additional financing
prior to that time. We intend to seek additional funding through collaborative
arrangements and private or public financings, including equity financings. Such
additional funding may not be available on acceptable terms, if at all. If
additional funds are not available to us, we may need to delay or significantly
curtail our acquisition, development or commercialization activities.
WE INTEND TO ACQUIRE AND DEVELOP ADDITIONAL PRODUCT CANDIDATES, WHICH IS A TIME
CONSUMING AND COSTLY PROCESS
As part of our growth strategy, we intend to acquire and develop additional
pharmaceutical product candidates. The success of this strategy depends upon our
ability to identify, select and acquire pharmaceutical products in late-stage
development that meet the criteria we have established. Because we do not have,
nor intend to establish, internal scientific research capabilities, we are
dependent upon pharmaceutical and biotechnology companies and other researchers
to sell or license product candidates to us.
Identifying suitable product candidates and proposing, negotiating and
implementing an economically viable acquisition is a lengthy and complex
process. In addition, other companies, including those with substantially
greater financial, marketing and sales resources, may compete with us for the
acquisition of product candidates. We may not be able to acquire the rights to
additional product candidates on terms that we find acceptable, or at all. If we
fail to acquire additional product candidates, our business, financial condition
and results of operations would be materially adversely affected.
The development of product candidates that we acquire may not be successful, may
be delayed or may be more expensive than we anticipate. As a result, we may
suspend development activities, seek to outlicense products or fail to achieve
commercial success.
IF WE BREACH ANY OF THE AGREEMENTS UNDER WHICH WE LICENSE COMMERCIALIZATION
RIGHTS TO PRODUCT CANDIDATES OR TECHNOLOGY FROM OTHERS, WE COULD LOSE LICENSE
RIGHTS THAT ARE IMPORTANT TO OUR BUSINESS
We license commercialization rights to products and technology that are
important to our business, and we expect to enter into additional licenses in
the future. These licenses for Angiomax and other products may impose
commercialization, sublicensing, royalty, insurance and other obligations on us.
If we fail to comply with these requirements, or otherwise breach these
agreements, the licensor will have the right to terminate the license.
OUR GROWTH COULD BE LIMITED IF WE ARE UNABLE TO ATTRACT AND RETAIN KEY PERSONNEL
AND CONSULTANTS
Our success depends substantially on our ability to attract and retain qualified
personnel for the acquisition, development and commercialization activities we
conduct or sponsor. If we lose one or more of the members of our senior
management, including our chief executive officer, Dr. Clive A. Meanwell, or
other key employees or consultants, our business and operating results could be
seriously harmed.
Our anticipated growth and expansion into areas and activities requiring
additional expertise will require the addition of new management personnel. The
pool of personnel with the skills that we require is limited. Competition to
hire from this limited pool is intense, and we may be unable to hire, train,
retain or motivate such additional personnel.
WE FACE SUBSTANTIAL COMPETITION, WHICH MAY RESULT IN OTHERS DISCOVERING,
DEVELOPING OR COMMERCIALIZING COMPETING PRODUCTS BEFORE OR MORE SUCCESSFULLY
THAN WE DO
The biopharmaceutical industry is highly competitive. Our success will depend on
our ability to develop products and apply technology and our ability to
establish and maintain a market for our products. Potential competitors in the
United States and other countries include major pharmaceutical and chemical
companies, specialized biotechnology firms, universities and other
8
<PAGE> 12
research institutions. Many of our competitors have substantially greater
research and development capabilities and experience, and greater manufacturing,
marketing and financial resources than we do. Accordingly, our competitors may
develop products or other novel technologies that are more effective, safer or
less costly than any that have been competing or are being developed by us or
may obtain FDA approval for products more rapidly than we are able.
Due to the incidence and severity of cardiovascular diseases, the market for
therapeutic cardiovascular products is large and competition is intense and
growing. We are commercializing and developing Angiomax as an anticoagulant
therapy for the acute treatment of cardiovascular disease. There are a number of
anticoagulant therapies currently on the market, awaiting regulatory approval
and in development, including orally administered agents. In general,
anticoagulant drugs may be classified in three groups: drugs that directly or
indirectly target and inhibit thrombin, drugs that target and inhibit platelets
and drugs that break down fibrin.
Because each group of anticoagulants acts on different components of the
clotting process, we believe that there will be continued clinical work to
determine the best combination of drugs for clinical use. We plan to position
Angiomax as a replacement to heparin, which is widely-used and inexpensive, for
use in patients with ischemic heart disease. We expect Angiomax to be used with
aspirin alone or in conjunction with other therapies. We do not plan to position
Angiomax as a direct competitor to platelet inhibitors or fibrinolytic drugs.
Platelet inhibitors or fibrinolytic drugs may, however, compete with Angiomax
for the use of hospital financial resources. Many U.S. hospitals receive a fixed
reimbursement amount per procedure for the angioplasties and other treatment
therapies they perform. Because this amount is not based on the actual expenses
the hospital incurs, U.S. hospitals may be forced to choose among Angiomax,
platelet inhibitors and fibrinolytic drugs.
Technological development by others may render our products or product
candidates noncompetitive. We may not be successful in establishing or
maintaining technological competitiveness.
FLUCTUATIONS IN OUR OPERATING RESULTS COULD AFFECT THE PRICE OF OUR COMMON STOCK
Our operating results may vary from period to period for several reasons
including, but not limited to:
- - the amount and timing of sales of Angiomax to customers in the United States;
- - new information regarding the effectiveness and safety of Angiomax;
- - the availability and timely delivery to us of a sufficient supply of Angiomax;
- - the timing and expenses of clinical trials;
- - the approval and pricing of competing products;
- - the availability and timing of third-party reimbursement; and
- - the timing of approval for our product candidates.
If our operating results do not match the expectations of securities analysts
and investors as a result of these and other factors, the trading price of our
common stock may fluctuate.
RISKS RELATED TO OUR INDUSTRY
FAILURE TO OBTAIN FDA APPROVALS FOR OUR PRODUCTS OR TO COMPLY WITH GOVERNMENT
REGULATION COULD ADVERSELY AFFECT OUR BUSINESS
We do not have a product candidate approved for sale in the United States or any
foreign market except New Zealand. We must obtain approval from the FDA in order
to sell our product candidates in the United States and from foreign regulatory
authorities in order to sell our product candidates in other countries. We must
successfully complete our clinical trials and demonstrate manufacturing
capability before we can file with the FDA for approval to sell our products.
The FDA could require us to repeat clinical trials as part of the regulatory
review process. Delays in obtaining or failure to obtain regulatory approvals
may:
- - delay or prevent the successful commercialization of any of our product
candidates;
- - diminish our competitive advantage; and
- - defer or decrease our receipt of revenues or royalties.
9
<PAGE> 13
The regulatory review and approval process is lengthy, expensive and uncertain.
Extensive pre-clinical data, clinical data and supporting information must be
submitted to the FDA for each additional indication to obtain such approvals,
and we cannot be certain when we will receive these regulatory approvals, if
ever.
In addition to initial regulatory approval, our product candidates will be
subject to extensive and rigorous ongoing domestic and foreign government
regulation, as we discuss in more detail in "Business--Government Regulation."
Any approvals, once obtained, may be withdrawn if compliance with regulatory
requirements is not maintained or safety problems are identified. Failure to
comply with these requirements may also subject us to stringent penalties.
WE MAY NOT BE ABLE TO OBTAIN OR MAINTAIN PATENT PROTECTION FOR OUR PRODUCTS, AND
WE MAY INFRINGE THE PATENT RIGHTS OF OTHERS
The patent positions of pharmaceutical and biotechnology companies like us are
generally uncertain and involve complex legal, scientific and factual issues.
Our success depends significantly on our ability to:
- - obtain patents;
- - protect trade secrets;
- - operate without infringing the proprietary rights of others; and
- - prevent others from infringing our proprietary rights.
Patents may not issue from any patent applications that we own or license. If
patents do issue, the claims allowed may not be sufficiently broad to protect
our technology. In addition, issued patents that we own or license may be
challenged, invalidated or circumvented. Our patents also may not afford us
protection against competitors with similar technology. Because patent
applications in the United States are maintained in secrecy until patents issue,
others may have filed or maintained patent applications for technology used by
us or covered by our pending patent applications without our being aware of
these applications.
We may not hold proprietary rights to some patents related to our product
candidates. In some cases, others may own or control these patents. As a result,
we may be required to obtain licenses under third-party patents to market some
of our product candidates. If licenses are not available to us on acceptable
terms, we will not be able to market these products.
IF WE ARE NOT ABLE TO KEEP OUR TRADE SECRETS CONFIDENTIAL, OUR TECHNOLOGY AND
INFORMATION MAY BE USED BY OTHERS TO COMPETE AGAINST US
We rely significantly upon unpatented proprietary technology, information,
processes and know how. We seek to protect this information by confidentiality
agreements with our employees, consultants and other third-party contractors, as
well as through other security measures. These confidentiality agreements may be
breached, and we may not have adequate remedies for any breach that occurs. In
addition, our trade secrets may otherwise become known or be independently
developed by competitors.
WE MAY BECOME INVOLVED IN EXPENSIVE PATENT LITIGATION OR OTHER INTELLECTUAL
PROPERTY PROCEEDINGS WHICH COULD HALT OUR DEVELOPMENT AND COMMERCIALIZATION
EFFORTS OR RESULT IN LIABILITY FOR DAMAGES
There has been substantial litigation and other proceedings regarding the
complex patent and other intellectual property rights in the pharmaceutical and
biotechnology industries. We may become a party to patent litigation or other
proceedings regarding intellectual property rights. We may:
- - initiate litigation or other proceedings against third parties to enforce our
patent rights;
- - initiate litigation or other proceedings against third-parties to seek to
invalidate the patents held by these third-parties or to obtain a judgment
that our products or services do not infringe the third-parties' patents;
- - participate in interference or opposition proceedings to determine the
priority of invention if our competitors file patent applications that claim
technology also claimed by us; or
- - defend against claims by third parties that our processes or products infringe
their patent or other intellectual property rights.
The cost to us of any patent litigation or other proceeding, even if resolved in
our favor, could be substantial. Some of our competitors may be better able than
us to sustain the cost of litigation or other proceedings because of their
substantially greater financial resources. If a patent litigation or other
intellectual property proceeding is resolved unfavorably to us, we may
10
<PAGE> 14
be enjoined from manufacturing or selling our products and services without a
license from the other party, and we may be held liable for significant damages.
We may not be able to obtain any required license on commercially acceptable
terms, or at all.
Uncertainties resulting from the initiation and continuation of patent
litigation or other proceedings could have a material adverse effect on our
ability to compete in the marketplace. Patent litigation and other proceedings
may also absorb significant management time.
IF WE FAIL TO OBTAIN AN ADEQUATE LEVEL OF REIMBURSEMENT FOR OUR PRODUCTS BY
THIRD-PARTY PAYORS, THERE MAY NOT BE COMMERCIALLY VIABLE MARKETS FOR OUR
PRODUCTS
The availability of reimbursement by governmental and other third-party payors
affects the market for any pharmaceutical product. These third-party payors
continually attempt to contain or reduce the costs of healthcare by challenging
the prices charged for medical products. In some foreign countries, particularly
in the countries of the European Union, the pricing of prescription
pharmaceuticals is subject to governmental control. We may not be able to sell
our products profitably if reimbursement is unavailable or limited in scope and
amount.
In both the United States and some foreign jurisdictions, there have been a
number of legislative and regulatory proposals to change the healthcare system.
Further proposals are likely. The potential for adoption of these proposals may
affect our ability to raise capital, obtain collaborative partners and market
our products.
If we obtain market approval for our products, we expect to experience pricing
pressure due to the trend toward managed healthcare, the increasing influence of
health maintenance organizations and additional legislative proposals.
WE COULD BE EXPOSED TO SIGNIFICANT LIABILITY CLAIMS IF WE ARE UNABLE TO OBTAIN
INSURANCE AT ACCEPTABLE COSTS AND ADEQUATE LEVELS OR OTHERWISE PROTECT OURSELVES
AGAINST POTENTIAL PRODUCT LIABILITY CLAIMS
We may be subject to product liability claims that are inherent in the testing,
manufacturing, marketing and sale of human healthcare products. These claims
could expose us to significant liabilities that could prevent or interfere with
the development or commercialization of our products. Product liability claims
could require us to spend significant time and money in litigation or pay
significant damages. Product liability insurance is generally expensive for
biopharmaceutical companies such as ours. Although we maintain limited product
liability insurance coverage for the clinical trials of our products, it is
possible that we will not be able to obtain further product liability insurance
on acceptable terms, if at all, and that our present insurance levels and
insurance subsequently obtained will not provide adequate coverage against all
potential claims.
RISKS RELATING TO THE OFFERING
OUR STOCK PRICE COULD BE VOLATILE, WHICH COULD CAUSE YOU TO LOSE PART OR ALL OF
YOUR INVESTMENT
The market price of our common stock, like that of the common stock of many
other biotechnology companies, may be highly volatile. Factors that may have a
significant effect on the market price of our common stock include:
- - announcements of technological innovations or new commercial products by us or
our competitors;
- - disclosure of results of clinical testing or regulatory proceedings;
- - governmental regulation and approvals;
- - developments in patent or other proprietary rights, including as a result of
any public policy concerns;
- - public concern as to the safety of products developed by us;
- - our financial results; and
- - general market conditions.
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, or disproportionate, to the operating performance of the
specific companies. These broad market fluctuations may adversely affect the
market price of our common stock.
11
<PAGE> 15
OUR OFFICERS AND DIRECTORS, AND ENTITIES WITH WHICH THEY ARE AFFILIATED, MAY BE
ABLE TO CONTROL THE OUTCOME OF MOST CORPORATE ACTIONS REQUIRING STOCKHOLDER
APPROVAL
After this offering, our directors and officers, and entities with which they
are affiliated, will beneficially own, in the aggregate, approximately % of
our outstanding common stock. Due to this concentration of ownership, these
stockholders as a group will be able to elect the directors and officers of our
company, control the management and affairs of our company and control most
matters requiring a stockholder vote, including:
- - the amendment of our organizational documents; or
- - the approval of any merger, consolidation, sale or assets or other major
corporate transaction.
WE HAVE ANTI-TAKEOVER DEFENSES THAT COULD DELAY OR PREVENT AN ACQUISITION AND
COULD ADVERSELY AFFECT THE PRICE OF OUR COMMON STOCK
Provisions of our certificate of incorporation and bylaws and of Delaware law
could have the effect of delaying, deferring or preventing an acquisition of our
company. For example, we have divided our board of directors into three classes
that serve staggered three-year terms, we may authorize the issuance of up to
5,000,000 shares of "blank check" preferred stock, our stockholders may not take
actions by written consent and may not call special meetings of stockholders,
and our stockholders are limited in their ability to introduce proposals at
stockholder meetings.
THERE IS A LARGE NUMBER OF SHARES THAT MAY BE SOLD IN THE MARKET FOLLOWING THIS
OFFERING. THIS MAY DEPRESS THE MARKET PRICE OF OUR COMMON STOCK
Sales of a substantial number of shares of our common stock in the public market
following this offering could cause the market price of our common stock to
decline. Upon completion of this offering, we will have outstanding an aggregate
of shares of our common stock, assuming no exercise of outstanding
options or warrants. Of these shares, all of the shares sold in this offering
will be freely tradable without restriction or further registration under the
Securities Act of 1933, unless these shares are purchased by affiliates. The
remaining 31,376,719 shares of our common stock, assuming that the offering
closed on May 17, 2000, held by existing stockholders are restricted securities.
Restricted securities may be sold in the public market only if registered or if
they qualify for an exemption from registration under the Securities Act.
Our executive officers, directors and stockholders have agreed pursuant to
"lock-up" agreements that, with limited exceptions, for a period of 180 days
from the date of this prospectus, they will not sell any shares of our common
stock without the prior written consent of J.P. Morgan Securities Inc.
As a result of these "lock-up" agreements and the rules under the Securities
Act, the restricted shares will be available for sale in the public market,
subject to certain volume and other restrictions, as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
DAYS AFTER THE NUMBER OF SHARES
EFFECTIVE DATE ELIGIBLE FOR SALE COMMENT
- ------------------ ----------------- -------
<S> <C> <C>
Upon effectiveness 206,896 Shares not locked-up and eligible for sale under Rule 144
90 days Shares not locked-up and eligible for sale under Rules 144
228,896 and 701
180 days Lock-up released; shares eligible for sale under Rules 144
31,376,719 and 701
</TABLE>
Additionally, of the 2,417,591 shares that may be issued upon the exercise of
options outstanding as of May 17, 2000, approximately 523,314 shares are subject
to options which will be vested and exercisable 180 days after the date of this
prospectus.
On the date 180 days after the closing date of this offering, assuming that the
offering closed on May 17, 2000, the holders of 30,190,120 shares of our common
stock and warrants exercisable for 4,478,883 additional shares of common stock
will have rights to require us to register their shares under the Securities
Act. Upon the effectiveness of a registration statement covering these shares,
these shares would become freely tradable.
Immediately after this offering, we intend to file a registration statement
under the Securities Act covering approximately 6,583,917 shares of our common
stock reserved for issuance under our stock plans. We expect the registration
statement to be filed and become effective as soon as practicable after the
closing of this offering. Accordingly, shares registered under such registration
statement will be available for sale in the open market upon the effectiveness
of the registration statement unless they are held by persons that have signed a
"lock-up" agreement.
12
<PAGE> 16
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These statements relate to
future events or our future financial performance. We have attempted to identify
forward-looking statements by terminology including "anticipate," "believe,"
"can," "continue," "could," "estimate," "expect," "intend," "may," "plan,"
"potential," "predict," "should" or "will" or the negative of these terms or
other comparable terminology. These statements are only predictions and involve
known and unknown risks, uncertainties and other factors, including the risks
and uncertainties outlined under "Risk Factors," that may cause our or our
industry's actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. We are not under any duty to update any
of the forward-looking statements after the date of this prospectus to conform
these statements to actual results, unless required by law.
13
<PAGE> 17
USE OF PROCEEDS
Our net proceeds from the sale of the shares of common stock we are
offering, at an assumed initial public offering price of $ per share, are
estimated to be approximately $ million after deducting underwriting
discounts and estimated offering expenses payable by us. We expect to use the
net proceeds to:
- - fund the commercial launch of Angiomax for use in patients with unstable
angina undergoing angioplasty and product development activities, including
additional clinical trials of Angiomax;
- - fund working capital, capital expenditures and other general corporate
purposes; and
- - fund the acquisition of additional products.
The amounts and timing of our actual expenditures will depend upon numerous
factors, including the status of our product development and commercialization
efforts, the amount of proceeds actually raised in this offering, the amount of
cash generated by our operations, competition and sales and marketing
activities. We may also use a portion of the proceeds for the acquisition of, or
investment in, companies, technologies or assets that complement our business.
However, we have no present understandings, commitments or agreements to enter
into any potential acquisitions or investments. Further, we have not determined
the amounts we plan to spend on any of the areas listed above or the timing of
these expenditures. As a result, our management will have broad discretion to
allocate the net proceeds from this offering. Pending application of the net
proceeds as described above, we intend to invest the net proceeds of the
offering in short-term investment grade and U.S. government securities.
DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock. We anticipate
that we will retain all of our future earnings, if any, for use in the expansion
and operation of our business and do not anticipate paying cash dividends in the
foreseeable future. Payment of future dividends, if any, will be at the
discretion of our board of directors.
14
<PAGE> 18
CAPITALIZATION
The following table summarizes as of March 31, 2000 our cash, cash equivalents
and marketable securities and our capitalization:
- - on an actual basis;
- - on a pro forma basis to reflect the conversion of the outstanding principal
amount and accrued interest on convertible notes outstanding as of March 31,
2000 in the aggregate amount of $19.7 million into an aggregate of 4,549,433
shares of series IV convertible preferred stock and the conversion of all our
outstanding convertible preferred stock and accrued dividends as of March 31,
2000 into an aggregate of 24,033,926 shares of common stock upon the closing
of this offering; and
- - on a pro forma as adjusted basis to reflect the transactions described above
and the sale of shares of common stock in this offering at an
assumed initial public offering price of $ per share, less estimated
underwriting discounts and estimated offering expenses.
This table does not include:
- - 209,850 shares of common stock issuable upon conversion of accrued dividends
on our series I convertible preferred stock, series II convertible preferred
stock and series III convertible preferred stock during the period from April
1, 2000 through May 17, 2000;
- - 1,467,488 shares of common stock issuable upon conversion of the shares of
series IV convertible preferred stock (1) sold on May 17, 2000 and (2) issued
on such date upon conversion of the additional interest accrued after March
31, 2000 on the convertible notes;
- - 1,588,758 shares of common stock issuable upon the exercise of stock options
outstanding as of March 31, 2000 at a weighted average exercise price of $0.94
per share or any stock options issued subsequent to March 31, 2000;
- - 4,478,883 shares of common stock issuable upon exercise of common stock
purchase warrants outstanding as of March 31, 2000 at an exercise price of
$4.32 per share; or
- - 392,368 additional shares of common stock that we could issue under our stock
plans as of March 31, 2000 or any additional shares available for grants
subsequent to March 31, 2000 under our stock plans.
This table should be read with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our consolidated financial
statements and accompanying notes appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
--------------------------------------
MARCH 31, 2000
--------------------------------------
PRO PRO FORMA
ACTUAL FORMA AS ADJUSTED
In thousands, except share data -------- ----------- -----------
<S> <C> <C> <C>
Cash, cash equivalents and marketable securities............ $ 12,295 $ 12,295
======== ========
Convertible notes........................................... $ 18,652 $ --
Redeemable convertible preferred stock, $1.00 par value,
31,550,000 shares authorized and 22,962,350 shares issued
and outstanding, actual; no shares issued and outstanding,
pro forma and pro forma as adjusted....................... 86,807 --
Stockholders' deficit:
Common Stock, $0.001 par value, 36,000,000 shares
authorized; 1,121,664 shares issued and outstanding,
actual; 29,705,003 shares issued and outstanding, pro
forma; and shares issued and outstanding
pro forma as adjusted..................................... 1 30
Additional paid-in capital.................................. 1,132 106,562
Deficit accumulated during the development stage............ (108,548) (108,548)
Accumulated other comprehensive income, principally foreign
currency translation...................................... 17 17
-------- --------
Total stockholders' deficit............................ (107,398) (1,939)
-------- --------
Total capitalization................................... $ (1,939) $ (1,939)
======== ========
</TABLE>
15
<PAGE> 19
DILUTION
The pro forma net tangible book value of our common stock on March 31, 2000
reflects the conversion of the outstanding principal amount and accrued interest
on convertible notes outstanding as of March 31, 2000 in the aggregate amount of
$19.7 million into an aggregate of 4,549,433 shares of series IV convertible
preferred stock and the conversion of all our outstanding convertible preferred
stock and accrued dividends as of March 31, 2000 into an aggregate of 24,033,926
shares of common stock upon the closing of this offering. Pro forma net tangible
book value per share represents the amount of our total tangible assets less
total liabilities divided by the number of pro forma shares of common stock
outstanding. Dilution in pro forma net tangible book value per share represents
the difference between the amount per share paid by purchasers of shares of
common stock in this offering and the net tangible book value per share of our
common stock immediately afterwards. Assuming the sale of shares
of our common stock offered by this prospectus at an assumed initial public
offering price of $ per share, and after deducting estimated underwriting
discounts and estimated offering expenses, our adjusted pro forma net tangible
book value at March 31, 2000 would have been approximately $ million, or
approximately $ per share. This represents an immediate decrease in pro
forma net tangible book value of $ per share to new investors purchasing
shares of common stock in this offering. The following table illustrates this
dilution on a per share basis.
<TABLE>
<CAPTION>
----------------
<S> <C> <C>
Assumed initial public offering price per share............. $
Pro forma net tangible book value per share as of March
31, 2000............................................... $
Increase per share attributable to new investors..........
Adjusted pro forma net tangible book value per share after
the offering..............................................
------
Dilution per share to new investors......................... $
======
</TABLE>
The foregoing discussion and table assume no exercise of any outstanding stock
options or warrants. The exercise of all options and warrants outstanding as of
the date of this prospectus having an exercise price less than the initial
public offering price would increase the dilutive effect to new investors to
$ per share.
The following table summarizes, on a pro forma basis, as of March 31, 2000, the
differences between the number of shares of common stock purchased from us, the
total consideration paid and the average price per share paid by existing
stockholders and by the new investors purchasing shares in this offering. We
have assumed an initial public offering price of $ per share, and we have
not deducted estimated underwriting discounts and estimated offering expenses in
our calculations.
<TABLE>
<CAPTION>
-------------------------------------------------------------
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ----------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders.......................... % $ % $
New investors..................................
---------- --- ------------ ---
Total.......................................... % $ %
========== === ============ ===
</TABLE>
16
<PAGE> 20
SELECTED CONSOLIDATED FINANCIAL DATA
In the table below, we provide you with selected consolidated financial data of
The Medicines Company. We have prepared this information using our audited
consolidated financial statements for the period July 31, 1996 (date of
inception) to December 31, 1996 and for the years ended December 31, 1997, 1998
and 1999 and our unaudited consolidated financial statements for the three
months ended March 31, 1999 and 2000. The consolidated financial statements for
each of the three years in the period ended December 31, 1999 which are included
in this prospectus have been audited by Ernst & Young LLP, independent auditors.
The consolidated financial statements for the period July 31, 1996 (date of
inception) to December 31, 1996 which are not included in this prospectus have
been audited by Ernst & Young LLP, independent auditors. The consolidated
statements of operations data for the three months ended March 31, 1999 and 2000
and the consolidated balance sheet data as of March 31, 2000 have been derived
from our unaudited consolidated financial statements that appear elsewhere in
this prospectus. The unaudited consolidated financial statements include all
adjustments, consisting of normal recurring accruals, which we consider
necessary for a fair presentation of the financial position and the results of
operations for these periods. Operating results for the three months ended March
31, 2000 are not necessarily indicative of the results that may be expected for
the full year.
The pro forma net loss per share data and the pro forma balance sheet data
reflect the conversion of our convertible notes and accrued interest as of March
31, 2000 and the conversion of our outstanding convertible preferred stock and
accrued dividends as of March 31, 2000. The pro forma as adjusted consolidated
balance sheet data reflect these transactions and also reflect the sale of
shares of common stock in this offering at an assumed initial
public offering price of $ per share after deducting underwriting discounts
and estimated offering expenses. The pro forma net loss per share data and the
pro forma balance sheet data does not include the conversion of 1,411,000 shares
of series IV convertible preferred stock sold on May 17, 2000 or the effect of
any options or warrants outstanding. The following data should be read in
conjunction with our consolidated financial statements, including the
accompanying notes, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this prospectus.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
PERIOD FROM
INCEPTION
(JULY 31, 1996) THREE MONTHS ENDED
THROUGH YEAR ENDED DECEMBER 31, MARCH 31,
DECEMBER 31, -------------------------------- --------------------
1996 1997 1998 1999 1999 2000
--------------- --------- --------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
In thousands, except share and per share data
STATEMENTS OF OPERATIONS DATA
Operating expenses
Research and development..................... $ 827 $ 16,044 $24,005 $ 30,345 $ 7,207 $ 10,539
General and administrative................... 701 2,421 6,248 5,008 1,276 1,151
----------- -------- -------- -------- ------- --------
Total operating expenses.............. 1,528 18,465 30,253 35,353 8,483 11,690
----------- -------- -------- -------- ------- --------
Loss from operations........................... (1,528) (18,465) (30,253) (35,353) (8,483) (11,690)
Interest income (expense), net................. 62 659 1,302 640 346 (403)
----------- -------- -------- -------- ------- --------
Net loss....................................... (1,466) (17,806) (28,951) (34,713) (8,137) (12,093)
Dividends and accretion to redemption value of
redeemable convertible preferred stock....... (118) (2,018) (3,959) (5,893) (1,436) (1,530)
----------- -------- -------- -------- ------- --------
Net loss attributable to common stockholders... $(1,584) $(19,824) $(32,910) $(40,606) $(9,573) $(13,623)
----------- -------- -------- -------- ------- --------
----------- -------- -------- -------- ------- --------
Net loss attributable to common stockholders
per common share, basic and diluted.......... $ (2.16) $ (2.96) $ (4.40) $ (58.46) $(15.40) $ (15.75)
----------- -------- -------- -------- ------- --------
----------- -------- -------- -------- ------- --------
Shares used in computing net loss attributable
to common stockholders per common share,
basic and diluted............................ 763,258 6,694,836 7,472,128 694,610 621,734 864,762
Unaudited pro forma net loss attributable to
common stockholders per common share, basic
and diluted.................................. $ (1.42) $ (0.39)
Shares used in computing unaudited pro forma
net loss attributable to common stockholders
per common share, basic and diluted.......... 24,383,393 29,325,550
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------
AS OF DECEMBER 31, MARCH 31, 2000
------------------------------------------- --------------
1996 1997 1998 1999
------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
In thousands
BALANCE SHEET DATA
Cash, cash equivalents and marketable securities..... $ 3,421 $ 25,376 $ 28,341 $ 7,183 $ 12,295
Working capital (deficit)............................ 3,174 18,779 24,570 (4,103) (2,495)
Total assets......................................... 3,473 25,595 29,831 7,991 13,125
Convertible notes.................................... -- -- -- 5,776 18,652
Redeemable convertible preferred stock............... 4,793 40,306 79,384 85,277 86,807
Deficit accumulated during the development stage..... (1,585) (21,409) (54,319) (94,925) (108,548)
Total stockholders' (deficit)........................ (1,582) (21,387) (54,266) (94,558) (107,398)
</TABLE>
17
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read with "Selected Consolidated
Financial Data" and our consolidated financial statements and notes included
elsewhere in this prospectus.
OVERVIEW
We acquire, develop and commercialize biopharmaceutical products in late stages
of development. We plan to begin selling our first product, Angiomax, in the
United States within the next 12 months, if approved by the FDA, for use as an
anticoagulant in patients with unstable angina undergoing coronary angioplasty.
We plan to build a commercial biopharmaceutical operation by acquiring,
developing and commercializing late-stage product candidates. We expect
Angiomax, if approved by the FDA, to become the cornerstone product of a
critical care franchise.
Since our inception, we have incurred significant losses and, as of March 31,
2000, had a deficit accumulated during the development stage of $108.6 million.
Substantially all of our expenditures to date have been for research and
development activities and general and administrative expenses. Research and
development expenses represent costs incurred for product acquisition, clinical
trials, activities relating to regulatory filings and manufacturing development
efforts. We outsource our clinical and manufacturing development activities to
independent organizations to maximize efficiency and minimize our internal
overhead. We expense our research and development costs as they are incurred.
General and administrative expenses consist primarily of salaries and related
expenses, general corporate activities and costs associated with initial product
marketing activities.
We expect to continue to incur operating losses during fiscal 2000 and for the
foreseeable future due to research and development activities attributable to
new and existing products, and costs associated with the commercialization and
launch of our products. We will need to generate significant revenues to achieve
and maintain profitability. To date, we have had no revenues from any product
sales and we have not achieved profitability on a quarterly or annual basis.
In March 1997, we acquired exclusive worldwide commercial rights from Biogen,
Inc. to the technology, patents, trademarks, inventories, know-how and all
regulatory and clinical information related to Angiomax. Under the Biogen
license, we paid $2.0 million upon execution of the license agreement and are
obligated to pay up to an additional $8.0 million upon reaching certain Angiomax
sales milestones, including the first sale of Angiomax for certain indications.
In addition, we will pay royalties on future sales of Angiomax and on any
sublicense royalties earned.
In August 1999, we acquired exclusive worldwide rights from GyneLogix, Inc. to
the patents and know-how related to the biotherapeutic agent CTV-05. Under the
GyneLogix license, we have paid $200,000 and are obligated to pay an additional
$300,000 upon reaching certain milestones and to fund certain operational costs
of GyneLogix subject to a monthly limit related to the development of CTV-05. In
addition, we will pay royalties on future sales of CTV-05 and on any sublicense
royalties earned.
In July 1998, we acquired exclusive worldwide rights from Immunotech, S.A., a
wholly-owned subsidiary of Beckman Coulter, to the patents and know-how related
to IS-159, a product for the treatment of acute migraine headache. Under the
Immunotech license, we paid $1.0 million upon execution of the license agreement
and are obligated to pay up to an additional $4.5 million upon reaching certain
development and regulatory milestones. In addition, we will pay royalties on
future sales of IS-159 and on any sublicense royalties earned. Following our
initial development efforts, we are seeking a collaborator before proceeding
with the further development of IS-159.
We have not generated taxable income to date. At December 31, 1999, net
operating losses available to offset future taxable income for federal income
tax purposes were approximately $77.9 million. Our federal net operating losses
carryforwards expire at various dates beginning in 2011 through 2019 if not
utilized. We have not recognized the potential tax benefit of our net operating
losses in our statements of operations. The future utilization of our net
operating losses carryforwards may be limited pursuant to Internal Revenue Code
regulations.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2000 and 1999
Research and Development Expenses. Research and development expenses increased
46% from $7.2 million in the first three months of fiscal 1999 to $10.5 million
in the first three months of fiscal 2000. The increase in research and
development of $3.3 million was due to the completion of UCB's manufacture of
$6.5 million of Angiomax bulk drug substance and the increased enrollment rate
of our Angiomax HERO-2 Phase 3 clinical trial in acute myocardial infarction or
AMI, which was
18
<PAGE> 22
offset by a reduction in development expenses resulting from our termination of
the semilog manufacturing development program with Lonza AG.
General and Administrative Expenses. General and administrative expenses
decreased 10% from $1.3 million in the first three months of fiscal 1999 to $1.2
million in the first three months of fiscal 2000. The decrease was primarily due
to a decrease in marketing expenses.
Interest Income and Interest Expense. Interest income decreased from $346,178 in
the first three months of fiscal 1999 to $103,835 in the first three months of
fiscal 2000 due to a lower level of cash and marketable securities available for
investment during the first three months of fiscal 2000 as compared to the same
period in the prior year. Interest expense was $507,025 in the first three
months of fiscal 2000 and related to interest expense and amortization of the
discount on our convertible promissory notes issued in October 1999 and March
2000 in the aggregate principal amount of $19.3 million.
Years Ended December 31, 1999 and 1998
Research and Development Expenses. Research and development expenses increased
26% from $24.0 million in 1998 to $30.3 million in 1999. The increase of $6.3
million was due to the expansion in 1999 of our clinical development programs,
primarily those relating to our Angiomax HERO-2 Phase 3 clinical trial in AMI
which commenced in late 1998, our IS-159 development program and our Angiomax
trials in angioplasty.
General and Administrative Expenses. General and administrative expenses
decreased 20% from $6.2 million in 1998 to $5.0 million in 1999. The decrease of
$1.2 million was primarily due to a decrease in Angiomax-related marketing
expenses.
Interest Income and Interest Expense. Interest income decreased 36% from $1.3
million in 1998 to $837,839 in 1999 due to a lower level of cash and marketable
securities available for investment during 1999 as compared to 1998. Interest
expense was $197,455 in 1999 and related to interest expense and amortization of
the discount on our convertible notes issued in the aggregate principal amount
of $6.0 million in October 1999.
Years Ended December 31, 1998 and 1997
Research and Development Expenses. Research and development expenses increased
50% from $16.0 million in 1997 to $24.0 million in 1998. The increase of $8.0
million was due to increased activity under our Angiomax manufacturing
development programs, the expansion of our clinical programs, primarily
resulting from the establishment and initiation of our Angiomax HERO-2 Phase 3
clinical trial in AMI which commenced in late 1998, and initiation of our IS-159
development program.
General and Administrative Expenses. General and administrative expenses
increased 158% from $2.4 million in 1997 to $6.2 million in 1998. The increase
of $3.8 million was due to the commencement of Angiomax-related marketing
activities.
Interest Income. Interest income increased 89% from $688,049 in 1997 to $1.3
million in 1998 due to a higher level of cash and marketable securities
available for investment during 1998 as compared to 1997.
LIQUIDITY AND CAPITAL RESOURCES
We have financed our operations from inception primarily through private
placement of equity, convertible debt securities and warrants. As of March 31,
2000, we have received net proceeds of $73.3 million from the issuance of equity
securities, primarily redeemable convertible preferred stock, and $19.3 million
from the issuance of convertible notes and warrants to purchase common stock. In
May 2000, we received an additional $6.1 million from the sale of series IV
convertible preferred stock. In May 2000, certain of our stockholders also
provided letters stating they are committed to invest up to $15.2 million to
assist us in meeting our cash flow requirements over the next 12 months if
required. The commitments under these letters will terminate upon the closing of
this offering.
As of March 31, 2000, we had $12.3 million in cash, cash equivalents and
marketable securities, as compared to $28.3 million and $7.2 million as of
December 31, 1998 and 1999, respectively.
For the three months ended March 31, 2000, we used net cash of $8.2 million in
operating activities. This consisted of a net loss for the period of $12.1
million, offset by an increase in accounts payable and accrued expenses of $3.6
million. We received $518,200 from investing activities for the three months
ended March 31, 2000, which consisted principally of net proceeds from the
maturity of marketable securities. We received $13.3 million from financing
activities relating to the issuance of convertible notes and warrants to
purchase common stock during the three months ended March 31, 2000.
During 1999, we placed an order with UCB for the manufacture of Angiomax bulk
drug substance. Under the terms of this purchase order, we are scheduled to
receive material and make payments totaling $13.0 million in fiscal 2000.
Manufacture of $6.5 million of this material was completed in March 2000. All
costs associated with the manufacture of Angiomax bulk drug substance and
finished products will be expensed until FDA approval of Angiomax.
19
<PAGE> 23
We expect to devote substantial resources to continue our research and
development efforts and to expand our sales, marketing and manufacturing
programs associated with the commercialization and launch of our products. Our
funding requirements will depend on numerous factors, including the progress,
level and timing of our research and development activities, the cost, timing
and outcomes of regulatory reviews, the establishment, continuation or
termination of third party manufacturing or sales and marketing arrangements,
the cost and effectiveness of our sales and marketing programs, the status of
competitive products, our ability to defend and enforce our intellectual
property rights and the establishment of additional strategic or licensing
arrangements with other companies or acquisitions.
We believe that our current cash, cash equivalents and marketable securities,
together with the net proceeds of this offering, will be sufficient to fund our
operations for at least 12 months. If our existing resources and the proceeds of
this offering are insufficient to satisfy our liquidity requirements, if this
offering is not completed or if we acquire additional product candidates, we may
need to sell additional equity or debt securities. The sale of additional equity
and debt securities may result in additional dilution to our stockholders, and
we can not be certain that additional financing will be available in amounts or
on terms acceptable to us, if at all. If we are unable to obtain this additional
financing, we may be required to reduce the scope of our planned research,
development and commercialization activities, which could harm our financial
condition and operating results.
DISCLOSURE ABOUT MARKET RISK
Our exposure to market risk is confined to our cash, cash equivalents and
marketable securities. We place our investments in high-quality financial
instruments, primarily money market funds and corporate debt securities with
maturities or auction dates of less than one year, which we believe are subject
to limited credit risk. We currently do not hedge interest rate exposure. Due to
the short term nature of our investments, we do not believe that we have any
material exposure to interest rate risk arising from our investments.
Most of our transactions are conducted in U.S. dollars. We do have certain
development and commercialization agreements with vendors located outside the
United States. Transactions under certain of these agreements are conducted in
U.S. dollars, subject to adjustment based on significant fluctuations in
currency exchange rates. Transactions under certain other of these agreements
are conducted in the local foreign currency. If the exchange rate undergoes a
change of 10%, we do not believe that it would have a material impact on our
results of operations or cash flows.
20
<PAGE> 24
BUSINESS
OVERVIEW
We acquire, develop and commercialize biopharmaceutical products in late stages
of development. In May 2000, we received an approvable letter from the FDA for
our first product, Angiomax, for use in the treatment of patients with unstable
angina undergoing coronary balloon angioplasty. Coronary angioplasty is a
procedure used to restore normal blood flow in an obstructed artery in the
heart. If approved by the FDA, we plan to begin selling Angiomax in the United
States within the next 12 months for use in angioplasty.
We are also developing Angiomax for additional potential applications for use in
the treatment of ischemic heart disease. To date, Angiomax has been administered
to over 7,400 patients in clinical trials in the treatment and prevention of
blood clots in a wide range of hospital applications. We believe that Angiomax
will become the leading replacement for heparin in hospital care. In the United
States, heparin is the most widely-used acute anticoagulant and is used to treat
approximately five million hospitalized patients per year.
Under the terms of the Angiomax approvable letter, before the FDA will approve
our NDA for Angiomax, the manufacturing facilities for Angiomax must pass an FDA
inspection, and we must comply with other conditions. These conditions include
adopting FDA-recommended modifications to the proposed labeling for Angiomax,
making changes in documents describing our manufacturing and packaging and
recruiting and treating up to 10 additional patients in an ongoing study in
which 26 patients with reduced kidney function have been enrolled to date.
Angiomax directly blocks or inhibits the actions of thrombin, a key component in
the formation and growth of blood clots. By blocking thrombin directly, rather
than indirectly like heparin, Angiomax inhibits thrombin both in the clot and in
the blood. Angiomax's inhibition of thrombin is reversible, which means that its
thrombin blocking wears off over time, allowing thrombin to again work in the
clotting process. This reversibility is associated with a reduced risk of
bleeding.
In the clinical trials in angioplasty, Angiomax has:
- - reduced the frequency of life-threatening coronary events including heart
attack and the need for emergency coronary procedures;
- - reduced the likelihood of major bleeding and the need for blood transfusion;
and
- - demonstrated a predictable anticoagulant response to a specific Angiomax dose,
which enables simplified dosing.
Our strategy is to build a commercial biopharmaceutical operation by acquiring,
developing and commercializing late-stage product candidates. We will actively
manage the development and commercialization of these product candidates. Our
principal objectives include:
- - launching Angiomax for use in patients with unstable angina undergoing
angioplasty;
- - developing and commercializing Angiomax as the leading replacement for heparin
in ischemic heart disease;
- - acquiring products with (1) existing clinical data which provides reasonable
evidence of safety and efficacy, (2) an anticipated time to market of four
years or less and (3) potential cost savings to payors or improved efficiency
of patient care; and
- - leveraging our resources through our relationships with contract development,
manufacturing and sales companies.
We intend to market our products in the United States by contracting with
external organizations and by using an internal sales force, or by collaborating
with other biopharmaceutical companies.
ANGIOMAX
In May 2000, we received an approvable letter from the FDA for the use of
Angiomax for the treatment of patients with unstable angina undergoing coronary
balloon angioplasty. Angiomax was approved in New Zealand for this use in
September 1999, and if we satisfy the conditions of the approvable letter and
receive final approval from the FDA on a timely basis, we expect to begin
selling Angiomax in the United States and New Zealand within the next 12 months.
We believe Angiomax will be a valuable replacement to heparin, an anticoagulant
used in almost all angioplasty procedures performed in the United States and
administered to a majority of patients treated in hospitals in the United States
for acute coronary syndromes, including heart attack. To date, Angiomax has been
administered to over 7,400 patients in clinical trials for the treatment and
prevention of blood clots in a wide range of hospital applications. In clinical
trials in angioplasty, use of Angiomax has resulted in fewer life-threatening
coronary events and fewer bleeding events, including the need for blood
transfusion. The therapeutic effect of Angiomax is more predictable than
heparin, which enables simplified dosing. Angiomax's therapeutic benefit is
strongest in high-risk patients who have previously experienced a heart attack
or unstable angina.
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<PAGE> 25
We believe that Angiomax has additional potential applications for the treatment
of ischemic heart disease. We currently:
- - have a 17,000 patient Phase 3 trial underway studying the use of Angiomax for
the treatment of patients who have suffered a heart attack, otherwise known as
AMI;
- - have a Phase 3 trial program in progress to study the use of Angiomax in the
treatment of patients undergoing angioplasty who experience reduced platelet
count and clotting due to an immunological reaction to heparin, known as
heparin-induced thrombocytopenia and heparin-induced thrombocytopenia and
thrombosis syndrome, or HIT/HITTS; and
- - plan to commence a Phase 3 trial program to study the use of Angiomax in
patients with unstable angina, a condition in which patients experience the
new onset of severe chest pain, increasingly frequent chest pain or chest pain
that occurs while they are at rest.
Background
Clotting. Normally, blood loss at the site of an injury is limited by the
formation of blood clots. In general, clotting serves a life-saving function by
reducing bleeding, but sometimes unwanted clots in arteries can lead to heart
attack, stroke or organ failure. A blood clot is a collection of cross-linked
strands of a protein called fibrin that forms a mesh around activated platelets
and red blood cells. Blood clots are formed through precisely regulated
interactions among the blood vessel wall, plasma clotting factors, including
thrombin and fibrinogen, and platelets.
The trigger for the clotting process in an artery is typically a tearing or
spontaneous rupture which exposes cholesterol and fat deposited on a blood
vessel wall to the bloodstream. This may happen without an apparent cause or may
be caused as a direct result of, for example, an angioplasty procedure. In
parallel, the clotting factor, thrombin, is activated, and a thin protective
layer of platelets is deposited at the rupture site. Thrombin and platelets
interact, and thrombin formation, fibrin formation and platelet clumping take
place. A full-blown clot may form rapidly as clot blocks the blood vessel and
may then cut off blood supply to the heart muscle. If this occurs, the muscle
stops working either in part, which is a heart attack or myocardial infarction,
or completely, which may lead to cardiac arrest as the heart stops beating. This
may result in irreversible damage to the heart or death.
During medical procedures such as coronary angioplasty, the blood clotting
process must be slowed to avoid unwanted clotting in the coronary artery, and
the potential growth or movement of a clot along blood vessels to new sites.
The trigger for clotting in veins is usually slower than that in arteries. In
general, venous clots are caused by slow blood flow, which typically occurs when
patients are immobilized, such as after surgery and during pregnancy, or when
patients experience changes in the blood as a result of diseases such as cancer.
When a clot develops in large, deep veins returning blood to the heart by way of
the lungs, this condition is referred to as deep vein thrombosis. In some cases,
part of the clot may break off and move to the lungs with potentially fatal
results.
Anticoagulation Therapy. Anticoagulation therapy attempts to modify actions of
the components in the blood system that cause clot-forming factors leading to
blood clots. The most important approach to the prevention and management of
arterial and venous clots is diet and exercise. When the risks of clot formation
cannot be avoided, or when medical procedures such as angioplasty almost
guarantee some degree of increased risk of clots, anticoagulation therapy is
indicated. Anticoagulation therapy involves the use of drugs to inhibit one or
more components of the clotting process, thereby reducing the risk of clots.
Anticoagulation therapy is usually started immediately after a diagnosis or
after risk factors for clotting are identified. Because anticoagulation therapy
reduces clotting, it also may cause excessive bleeding.
22
<PAGE> 26
THE CLOTTING PROCESS AND TARGETS FOR ANTICOAGULATION THERAPY
[CHART]
[Chart showing blood clotting mechanism]
To date, three principal components of the clotting process, thrombin, fibrin
and platelets, have been targeted for anticoagulation therapy:
- - The actions of thrombin in the clotting process may be inhibited by indirect
thrombin inhibitors, such as heparin, which act to turn off coagulation
factors and turn on natural anti-clotting factors such as antithrombin-III, or
AT-III. The actions of thrombin in the clotting process also may be inhibited
by direct thrombin inhibitors, which act directly on thrombin.
- - Fibrin may be dissolved after clotting has occurred by products called
fibrinolytics.
- - The aggregation of platelets in the clotting process may be inhibited by
products called platelet inhibitors, which act on different pathways,
including specific enzyme pathways like the cyclo-oxygenase and the adenosine
diphosphate, or ADP, pathways and surface sites like the glycoprotein
IIb/IIIa, or GP IIb/IIIa, receptor.
Drugs are currently used alone or in combination with other anticoagulant drugs
to target one or more components of the clotting process. These drugs have
anticoagulant effects but also increase the patient's risk of bleeding. Excess
bleeding is often a risk due to the high doses needed to produce anticoagulant
effects. In order to reduce this risk, physicians increasingly use combinations
of drugs targeted at different components of the clotting process at lower doses
to reduce the risk of thrombosis while minimizing the risk of bleeding.
Indirect Thrombin Inhibitors. In the hospital environment, most patients
undergoing anticoagulation therapy for the prevention and treatment of arterial
and venous thrombosis receive heparin or low molecular weight heparin. In the
United States, approximately five million patients annually receive heparin.
Heparin is a standard component of acute anticoagulation therapy because of the
central role of thrombin in clotting and heparin's rapid anticoagulant effect.
Heparin's properties as an anticoagulant were discovered in 1916. It is prepared
from the intestines of pigs or cows. Heparin is a complex mixture of
animal-derived sugars with variable anticoagulant potencies. The anticoagulant
effects of heparin on any given patient are difficult to predict because heparin
binds non-specifically to human cells and circulating substances in the
23
<PAGE> 27
blood. For these and other reasons, heparin, as a non-specific, indirect
thrombin inhibitor, presents a variety of clinical challenges including:
- - Weak effect in clots. Because it is an indirect thrombin inhibitor, heparin
is ineffective on thrombin when clots are already formed.
- - Risk of bleeding. Patients who receive heparin have a high incidence of
bleeding. This is particularly the case with patients who are elderly, female
or low-weight. Recent clinical trials have shown that bleeding risk may also
be increased when heparin is used in combination with intravenous platelet
inhibitors.
- - Unpredictability. The anticoagulant effect of a given dose of heparin is
unpredictable and therefore requires close monitoring.
- - Adverse reaction risk. Heparin can cause HIT/HITTS, a dangerous immunological
reaction.
- - Diminished effect in sick patients. Heparin's effect may be reduced in the
presence of blood factors found in patients stressed by disease, such as heart
attack patients.
- - Requires other factors for effect. Heparin can only bind to thrombin by first
binding to a blood factor called antithrombin-III, which may be absent or
present in insufficient amounts in some patients.
Physicians are increasingly using low molecular weight heparins as an
alternative to heparin, especially as chronic therapy. In contrast to heparin,
low molecular weight heparins tend to be more specific in their effect and may
be administered once or twice daily by subcutaneous injection on an outpatient
basis. Despite these advantages, low molecular weight heparins exhibit similar
clinical challenges to those of heparin, including a weak effect in clot that
has already formed and a comparable risk of bleeding. In addition, clinicians
are currently unable to monitor the anticoagulant effects of low molecular
weight heparins, making their use in angioplasty problematic.
Angiomax Potential Advantages
Angiomax is a peptide of 20 amino acids that is a quick-acting, direct and
specific inhibitor of thrombin and is administered by intravenous injection.
Angiomax is specific in that it only binds to thrombin and does not bind to any
other blood factors or cells.
Angiomax was engineered based on the biochemical structure of hirudin, a natural
65-amino acid protein anticoagulant. However, Angiomax is reversible while
hirudin is not. This reversibility is associated with a reduced risk of
bleeding.
Angiomax has numerous clinical advantages over heparin including:
- - Effective in clots. Angiomax, as a direct thrombin inhibitor, is equally
effective on thrombin in the clot as well as thrombin in the blood;
- - Reduced bleeding risk. As a reversible thrombin inhibitor, Angiomax has
consistently shown clinically meaningful reductions in bleeding as compared to
heparin;
- - Predictability. A specified dose of Angiomax results in a predictable level
of anticoagulation;
- - Diminished adverse reaction risk. To date, Angiomax has not caused dangerous
immunological reactions in clinical trials;
- - Effective in sick patients. Angiomax is effective even in the presence of
blood factors found in patients stressed by disease, for example heart attack
patients; and
- - Independent of other factors for effect. Unlike heparin, Angiomax's effect
does not require the presence of antithrombin-III or any other factors to act
on thrombin.
Angiomax Potential Applications
We believe that Angiomax will become the leading replacement for heparin in
acute cardiovascular care. We plan to commercialize Angiomax first for use in
patients undergoing coronary angioplasty. In addition, we are developing
Angiomax for use as an alternative to heparin for the treatment of acute
coronary syndromes, with a Phase 3 trial underway in AMI, a Phase 3 trial
program underway in HIT/HITTS and a Phase 3 trial planned in patients with
unstable angina. Our development plan is designed to highlight the clinical
benefits of Angiomax initially in broad patient populations treated with heparin
at high risk of clots or bleeding. We are also investigating other applications
of Angiomax as an acute care product.
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<PAGE> 28
ANGIOMAX DEVELOPMENT PROGRAMS
[GRAPH]
[Graph depicting clinical status of our products and potential indications]
Use of Angiomax in Angioplasty
Angioplasty. Angioplasty is a procedure involving the inflation of a balloon or
deployment of a stent or other device inside an obstructed artery to restore
normal blood flow. The coronary angioplasty procedure itself increases the risk
of coronary clotting potentially leading to myocardial infarction, or MI, urgent
revascularization through repeat angioplasty or coronary artery bypass graft
surgery, or CABG, or death.
Based on the most recently available hospital discharge data, in the United
States, there were approximately 686,000 inpatient angioplasty procedures
performed in 1997 and approximately 55,000 outpatient angioplasty procedures
performed in 1996. In Europe, there were approximately 240,000 angioplasty
procedures performed in 1996. We believe approximately one half of patients
undergoing angioplasty in an inpatient hospital setting were admitted through
the emergency room and may be categorized as high risk. Many of these high-risk
patients have previously experienced a heart attack or have unstable angina.
To prevent clotting, anticoagulation therapy is routinely administered to
patients undergoing angioplasty. Heparin is currently used as an anticoagulant
in virtually all patients undergoing angioplasty. In addition, platelet
inhibitors such as aspirin, an ADP inhibitor or a GP IIb/IIIa inhibitor are
often administered.
A segment of patients undergoing angioplasty and receiving anticoagulation
therapy are at risk of significant bleeding. For example, the risk is greater
for patients who are elderly, female or low-weight.
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<PAGE> 29
Angiomax Clinical Experience in Angioplasty. To date, we and the licensor of
Angiomax, Biogen, have conducted clinical trials of Angiomax in over 5,000
patients undergoing angioplasty. These trials have shown that Angiomax is a
predictable anticoagulant, which can be used in combination with other therapies
and which results in fewer adverse clinical events when compared to heparin.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
ANGIOPLASTY TRIALS OF ANGIOMAX
- ---------------------------------------------------------------------------------------------------------
LEAD INVESTIGATORS COMPLETED PATIENTS PHASE TRIAL/STUDY DESCRIPTION
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
E. Topol 1992 291 2 Angiomax dose-ranging trial
- ---------------------------------------------------------------------------------------------------------
J. Bittl 1994 4,312 3 Pivotal angioplasty trials comparing
Angiomax with high dose heparin in
unstable angina patients
- ---------------------------------------------------------------------------------------------------------
M. Abernathy, 1999 30 3 Interaction study of Angiomax with
P. Aylward Ticlid
- ---------------------------------------------------------------------------------------------------------
L. Wallentin 1999 40 3 Trial comparing Angiomax with heparin
in patients switched from low molecular
weight heparin
- ---------------------------------------------------------------------------------------------------------
H. White, P. Aylward Ongoing 26 3 Trial of Angiomax dosing in patients
with impaired kidney function
- ---------------------------------------------------------------------------------------------------------
E. Topol, N. Kleiman, 1999 60 3 CACHET-A trial comparing Angiomax with
A.M. Lincoff, heparin in full-dose ReoPro patients
R. Harrington
- ---------------------------------------------------------------------------------------------------------
E. Topol, N. Kleiman, 2000 210 3 CACHET-B/C trial comparing Angiomax
A. M. Lincoff, with ReoPro plus heparin in broad
R. Harrington patient group
- ---------------------------------------------------------------------------------------------------------
R. Califf, K. Mahaffey Ongoing 12 3 Study of Angiomax in HIT/HITTS patients
- ---------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 30
Phase 3 Pivotal Trials in Angioplasty. Two similar, randomized double blind
clinical trials compared the use of Angiomax to heparin in a total of 4,312
patients with unstable angina undergoing coronary balloon angioplasty. High
doses of heparin were used in the trials. When measured seven days after
treatment in the hospital, in comparison to heparin-treated patients in the
trials, Angiomax-treated patients experienced:
- - 43% fewer clinical events as measured by death, life-threatening MI, known as
Q-wave MI, revascularization procedures or major bleeding;
- - 20% fewer ischemic events as measured by death, revascularization or MI,
including Q-wave MI and less serious MI, also known as non Q-wave MI; and
- - 62% or 65% less bleeding, as measured by a protocol-defined end point of major
bleeding or the transfusion of two or more units of blood, respectively.
The following table summarizes the combined clinical results for all unstable
angina patients in the pivotal Phase 3 angioplasty trials.
<TABLE>
<CAPTION>
--------------------------------------------------
PERCENTAGE
REDUCTION
IN ADVERSE
ANGIOMAX HEPARIN CLINICAL EVENTS P-VALUE*
-------- ------- --------------- --------
<S> <C> <C> <C> <C>
Number of Patients.......................................... 2,161 2,151
In hospital up to 7 days
Death, MI (Q-wave), revascularization or major bleeding... 8.3% 14.5% 43% <0.001
Death, MI (Q-wave) or revascularization................... 5.4% 6.6% 19% 0.077
Death, MI (Q-wave or non Q-wave) or revascularization..... 6.2% 7.9% 20% 0.039
Major bleeding............................................ 3.5% 9.3% 62% <0.001
Transfusion............................................... 2.0% 5.7% 65% <0.001
At 90 days
Death, MI or revascularization............................ 15.2% 17.4% 13% 0.043
</TABLE>
- ---------------
* The statistical significance of clinical results is determined by a
widely-used statistical method that establishes the p-value of clinical
results. For example, a p-value of less than 0.01 (p<0.01) means that the
chance of the clinical results occurring by accident is less than 1 in 100.
The trials included a prospectively defined and separately stratified group of
741 patients, who had experienced an MI during the two weeks prior to
angioplasty. The benefits of Angiomax as a direct thrombin inhibitor, compared
to heparin as an indirect thrombin inhibitor, were more pronounced for this
group of 741 patients who had experienced an MI during the two weeks prior to
angioplasty. When measured seven days after treatment in the hospital, the
Angiomax-treated patients experienced the following benefits:
- - 64% fewer clinical events as measured by death, Q-wave MI, revascularization
procedures or major bleeding;
- - 51% fewer ischemic events as measured by death, revascularization, Q-wave MI
or non Q-wave MI; and
- - 76% or 80% less bleeding, as measured by a protocol-defined major bleeding or
as measured by a transfusion of two or more units of blood.
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<PAGE> 31
The following table summarizes the combined clinical results of the group of
patients who had experienced a heart attack or MI during the two weeks prior to
angioplasty in the pivotal Phase 3 angioplasty trials.
<TABLE>
<CAPTION>
--------------------------------------------------
PERCENTAGE
REDUCTION
IN ADVERSE
ANGIOMAX HEPARIN CLINICAL EVENTS P-VALUE
-------- ------- --------------- --------
<S> <C> <C> <C> <C>
Number of Patients.......................................... 369 372
In hospital up to 7 days
Death, MI (Q-wave), revascularization or major bleeding... 6.5% 18.3% 64% <0.001
Death, MI (Q-wave) or revascularization................... 3.3% 9.1% 64% <0.001
Death, MI (Q-wave or non Q-wave) or revascularization..... 4.9% 9.9% 51% 0.009
Major bleeding............................................ 2.4% 11.8% 80% <0.001
Transfusion............................................... 1.6% 6.7% 76% <0.001
At 90 days
Death, MI or revascularization............................ 10.3% 19.1% 46% <0.001
</TABLE>
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<PAGE> 32
Recent trends in interventional cardiology have resulted in heparin doses lower
than those used in the Angiomax pivotal Phase 3 trials in angioplasty. We
believe that this trend has been encouraged by the increasing combined use of
platelet inhibitors and heparin in angioplasty. In most recent major angioplasty
trials with GP IIb/IIIa inhibitors, lower heparin doses were used than in the
Angiomax pivotal Phase 3 trials.
Heparin Dosing in Pivotal Phase 3 Angioplasty Trial. Analyses of data from a
wide array of recent angioplasty trials show that the bleeding rates for the
heparin patients in our trials were not higher than the bleeding rates for other
trials where lower doses of heparin were used. Ischemic event rates for patients
in the Angiomax pivotal Phase 3 trials were lower than for patients receiving
lower doses of heparin without a GP IIb/IIIa inhibitor in other clinical
studies.
CACHET-B/C Trials in Angioplasty. In February 2000, we completed the CACHET-B/C
study, a 210 patient randomized, multicenter study, in angioplasty. The trial
analyzed the use of Angiomax versus low-dose heparin. All heparin patients
received ReoPro. Although Angiomax patients could receive ReoPro under certain
circumstances, physicians in the trial opted not to use ReoPro in 76% of the
Angiomax patients.
The CACHET-B/C patient study population was broader than in earlier Angiomax
trials, targeting lower risk patients undergoing angioplasty with expected
stenting. Heparin and Angiomax doses were designed to achieve similar levels of
anticoagulation. Aspirin with Ticlid or Plavix was used in most patients. As in
previous trials, Angiomax provided predictable levels of dose response
anticoagulation.
The combined incidence of death, MI, revascularization or major bleeding
reported within seven days was 3.5% in Angiomax patients and 14.1% in heparin
and ReoPro patients with a p-value of 0.013.
Low platelet count, or thrombocytopenia, was significantly less frequent among
Angiomax patients than among heparin/Reopro patients with a p-value of 0.012.
Other adverse events occurred with similar frequency in both groups. Angiomax
showed no apparent pharmacological interaction with ReoPro.
The results of the CACHET-B/C study provides more support for the use of
Angiomax as a foundation anticoagulant for angioplasty. In this study, Angiomax
demonstrated predictable reversible anticoagulation and improved net clinical
benefit over heparin. In addition, by decreasing major bleeds and reducing the
need for revascularization and drug costs, we believe substantial cost savings
are possible for hospitals on average for patients treated with Angiomax.
Angiomax Commercialization Plans for Angioplasty. If approved for angioplasty,
we plan to launch Angiomax in the United States by contracting with external
sales organizations and by using an internal sales force or by collaborating
with another company to sell Angiomax. We plan to focus our Angiomax marketing
efforts on interventional cardiologists and other key clinical decision-makers
for Angiomax. Because most of the angioplasty procedures in the United States
are performed in a relatively small number of cardiac catheterization
laboratories, we believe that our marketing strategy in angioplasty can be
implemented effectively and efficiently by a relatively small sales force.
We expect Angiomax to provide cost savings to medical decision-makers using
Angiomax as part of a safe and effective anticoagulant therapy. Many United
States hospitals receive a fixed reimbursement amount for the angioplasties they
perform. Because this amount is not based on the actual expenses the hospital
incurs, the use of Angiomax has the potential to reduce a hospital's cost of
treating an angioplasty patient by reducing bleeding and ischemic events and
reducing the need for other treatment therapies. From 1995 to 1997, the
incremental costs to a hospital averaged the following: approximately $12,000
for an angioplasty patient receiving a 2-unit transfusion; approximately $4,000
for revascularization in the form of a repeat angioplasty; and approximately
$17,000 for an angioplasty patient revascularized by means of coronary artery
bypass graft surgery. We plan to price Angiomax at a level that provides
hospitals with cost savings based on reductions in clinical events and
reductions in drug costs.
If Angiomax is approved for use in other indications, such as AMI or unstable
angina, we intend to market Angiomax for these indications in the United States
by contracting with external sales organizations, by using an internal sales
force or by collaborating with other biopharmaceutical companies.
Acute Myocardial Infarction
Acute myocardial infarction is a leading cause of death. AMI occurs when
coronary arteries, which supply blood to the heart, become completely blocked
with clot. AMI patients are routinely treated with heparin, with and without
fibrinolytics. Heart attack patients are increasingly undergoing angioplasty as
a primary treatment to unblock clotted arteries.
Based on the most recently available hospital discharge data, in 1997, there
were approximately 756,000 AMI patients in the United States who were treated in
a hospital.
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<PAGE> 33
Angiomax Clinical Experience in AMI. To date, we and Biogen have conducted
clinical trials comparing Angiomax and heparin in over 7,500 AMI patients.
<TABLE>
<CAPTION>
LEAD INVESTIGATORS COMPLETED PATIENTS PHASE TRIAL DESCRIPTION
------------------ --------- -------- ----- -------------------------------------
<S> <C> <C> <C> <C>
P. Theroux........................... 1992 45 2 Dose-ranging trial comparing Angiomax
with heparin administered prior to a
fibrinolytic
P. Theroux........................... 1993 68 2 Dose-ranging trial comparing Angiomax
with heparin administered prior to a
fibrinolytic
H. White............................. 1996 412 2 HERO-1: Dose-ranging trial comparing
Angiomax with heparin administered
following a fibrinolytic
H. White, R. Califf.................. Ongoing 7,800 3 HERO-2: Mortality trial comparing
Angiomax
F. Van de Werf with heparin administered prior to a
P. Aylward fibrinolytic in up to 17,000 patients
</TABLE>
- ---------------
The first two trials compared two doses of Angiomax with heparin as therapy
administered in advance of streptokinase, a fibrinolytic, in heart attack
patients. The trials were designed to compare the difference in rates of blood
flow following therapy. The third trial, the Hirulog Early
Reperfusion/Occlusion-1 trial, or the HERO-1 trial, was a multi-center,
randomized, double blind comparison involving 412 patients. In this trial,
patients with AMI were administered heparin or one of two doses of Angiomax as
therapy following the administration of streptokinase and aspirin. Blood flow
rates after therapy were evaluated using a standard measure of coronary artery
blood flow.
The three Phase 2 trials demonstrated that use of Angiomax:
- - resulted in normal blood flow in at least 34% more patients than heparin; and
- - resulted in substantially less bleeding and the need for fewer transfusions
than heparin.
The following table summarizes the clinical results for AMI patients in the
Phase 2 clinical trials comparing Angiomax to heparin as combined with a
fibrinolytic:
<TABLE>
<CAPTION>
----------------------------------------------
ANGIOMAX HEPARIN PERCENTAGE
PATIENTS PATIENTS IMPROVEMENT P-VALUE
-------- -------- ----------- -------
<S> <C> <C> <C> <C>
Theroux Montreal Heart Institute Study 1 (45 patients)
Full blood flow at 90 minutes............................. 67% 40% 67% 0.08
Theroux Montreal Heart Institute Study 2 (68 patients)
Full blood flow at 90 minutes............................. 71% 31% 129% 0.006
Transfusion............................................... 5% 31% 84% <0.02
HERO-1 Trial (412 patients)
Full blood flow at 90 minutes............................. 47% 35% 34% 0.024
Major bleeding............................................ 17% 28% 39% <0.01
</TABLE>
- ---------------
Based on the results of these Phase 2 trials, we have initiated a worldwide
17,000 patient Phase 3 clinical trial in AMI. In this HERO-2 Phase 3 trial, AMI
patients receive Angiomax or heparin prior to treatment with a fibrinolytic. All
patients receive aspirin and Streptase, a fibrinolytic. This trial is designed
to demonstrate statistically significant improvement in 30-day cumulative
mortality among patients receiving Angiomax, thus establishing Angiomax as the
only direct thrombin inhibitor with mortality benefit compared to heparin in the
management of AMI.
We are coordinating the HERO-2 trial with the Virtual Coordinating Center for
Global Collaborative Cardiovascular Research Organization, commonly referred to
as VIGOUR, an academic consortium of leading cardiologists and their affiliated
institutions established to coordinate the efforts of large global clinical
trials in cardiology. The trial has been approved in 43 countries, has over 500
active sites and is enrolling approximately 700 patients per month. To date,
approximately 7,800 patients have been enrolled in the trial. We expect the
trial to complete enrollment by the first half of 2001.
Following enrollment of approximately 2,000 and 5,000 patients, an independent
panel, the Drug Safety Monitoring Board, reviewed safety data from the trial to
determine whether there were safety issues that would warrant modification or
early termination of the trial. The Board completed the second planned review in
March 2000, and the trial is proceeding without
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<PAGE> 34
modification. In contrast, two previous trials using high doses of hirudin in
patients including heart attack patients were stopped early because of excessive
bleeding in the hirudin patients.
Acute Coronary Syndromes/Unstable Angina
Unstable angina is a condition in which patients experience the new onset of
severe chest pain, increasingly frequent chest pain or chest pain that occurs
while they are resting. Unstable angina is caused most often by a rupture of
plaque on an arterial wall that ultimately decreases coronary blood flow but
does not cause complete blockage of the artery. There are approximately 948,000
cases of unstable angina in the United States reported each year. Unstable
angina is often treated in hospitals with anticoagulation therapy that may
include aspirin, indirect thrombin inhibitors such as heparin or low molecular
weight heparin and GP IIb/IIIa inhibitors. Many unstable angina patients
undergoing angioplasty or CABG.
Angiomax Clinical Experience in Unstable Angina. To date, we and Biogen have
completed five Phase 2 trials of Angiomax in patients with unstable angina or
who had experienced non Q-wave MI. These trials enrolled a total of 630
patients, of whom 553 received various doses of Angiomax. These studies have
demonstrated that Angiomax is an anticoagulant which can be administered safely
in patients with unstable angina.
The largest of these Phase 2 trials was a multicenter, double blind,
placebo-controlled and randomized study in 410 patients with unstable angina or
who had experienced an MI resulting in only temporary damage to the heart. The
trial compared the effect of three active dose levels and one placebo dose level
of Angiomax with respect to death, MI, recurrent angina and major bleeding.
Angiomax demonstrated a significant correlation between dose and anticoagulant
effect.
In comparison to 160 patients treated with placebo doses in the trial, 250
patients treated with active doses of Angiomax experienced:
- - a 68% reduction in death or MI in hospital with a p-value equal to 0.009; and
- - a 59% reduction in death or MI after six weeks with a p-value equal to 0.014.
Other Indications
We and Biogen have conducted a number of additional clinical trials of Angiomax
for other indications.
HIT/HITTS. Approximately one to three percent of patients who have received
heparin for seven to 14 days experience a condition known as HIT/HITTS. The
underlying mechanism for the condition appears to be an immunological response
to a complex formed by heparin and another factor, resulting in the lowering of
platelet counts, commonly referred to as thrombocytopenia, and in some cases in
arterial or venous clotting, which may result in the need for limb amputation,
or death. Because further administration of heparin is not possible, an
alternative anticoagulant is necessary.
Prior to 1997, Angiomax was administered to a total of 39 HIT/HITTS patients
undergoing angioplasty requiring anticoagulation for invasive coronary
procedures or treatment of thrombosis. For those patients undergoing angioplasty
and other procedures, Angiomax provided adequate anticoagulation, was
well-tolerated and rarely resulted in bleeding complications.
Based upon the encouraging data in 39 patients, we are currently enrolling
patients in a trial designed to evaluate the use of Angiomax for treatment of
HIT/HITTS patients undergoing angioplasty. The trial has enrolled 12 patients to
date and plans to enroll 50 patients in total.
Deep Venous Thrombosis. Thirty-one patients with clots in the veins in their
legs and 222 patients undergoing orthopedic surgical procedures were treated
with Angiomax in two open-label, dose-ranging Phase 2 trials in 1990. Both
studies established that Angiomax was an active and well-tolerated anticoagulant
and that the anticoagulant effects correlated with the dose of Angiomax.
We are actively considering further development plans to expand the uses of
Angiomax in venous thrombosis and other indications.
Regulatory Status. In May 2000, we received an approvable letter from the FDA
for the use of Angiomax in the treatment of patients undergoing coronary balloon
angioplasty. Under the terms of the approvable letter, before the FDA will
approve our NDA for Angiomax, the manufacturing facilities for Angiomax must
pass an FDA inspection, and we must comply with other conditions. These
conditions include adopting FDA-recommended changes to the proposed labeling for
Angiomax, making changes in documents describing our manufacturing and packaging
and recruiting and treating up to 10 additional patients in
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<PAGE> 35
an ongoing study in which 26 patients with reduced kidney function have been
enrolled. We are seeking to obtain FDA approval in time to launch Angiomax in
the United States within the next 12 months.
In February 1998 we submitted a Marketing Authorization Application or MAA to
the European Agency for the Evaluation of Medicinal Products or EMEA for use in
unstable angina patients undergoing angioplasty. Following extended interaction
with European regulatory authorities, the Committee of Proprietary Medicinal
Products, or CPMP, of the EMEA voted in October 1999 not to recommend Angiomax
for approval in angioplasty. The United Kingdom and Ireland dissented from this
decision. We have withdrawn our application to the EMEA and are in active dialog
with European regulators to determine our alternative courses of action.
Angiomax was approved in New Zealand in September 1999 for use as an
anticoagulant in patients undergoing angioplasty. We have submitted an
application in Canada to market Angiomax for use in unstable angina patients
undergoing angioplasty and are in active dialogue with Canadian regulators.
CTV-05
In 1999, we acquired from GyneLogix, Inc. exclusive worldwide rights to CTV-05,
a strain of bacteria under clinical investigation for a broad range of
applications in the areas of gynecological and reproductive health. CTV-05, a
proprietary biotherapeutic agent, is being studied in a Phase 2 trial for the
treatment of bacterial vaginosis which is an imbalance of the naturally
occurring organisms of the vagina. Bacterial vaginosis, or BV, is the most
common gynecological infection in women of childbearing age.
Bacterial Vaginosis
BV develops when certain bacteria normally present in the vagina in low levels
multiply to infectious levels. BV is associated with serious health risks such
as pelvic inflammatory disease, pre-term birth, post-surgical infection and an
increased susceptibility to sexually transmitted diseases, including AIDS. In
the United States, approximately 4.5 million prescriptions are written for women
seeking treatment for BV annually. The standard treatments currently prescribed
for BV are oral or topical antibiotics including metronidazole and clindamycin.
These treatments are not optimal, having significant recurrence rates. Moreover,
antibiotic use depletes a beneficial bacteria called lactobacilli.
CTV-05: Rationale, Product Profile and Clinical Studies
A healthy vagina is principally populated by lactobacilli. The presence of
lactobacilli in the vagina, particularly those that produce hydrogen peroxide,
has been linked to decreased incidence of BV and other urinary tract and
gynecological infections. However, many women lack sufficient populations of
hydrogen peroxide-producing lactobacilli to maintain vaginal health, making them
more susceptible to infection.
Studies have shown that the CTV-05 strain of lactobacillus is able to restore
the natural balance of the bacteria in the vagina and produce both hydrogen
peroxide and lactic acid, substances which are active against disease-causing
bacteria and serve a protective role. Because of this, CTV-05 has the potential
to improve cure rates when used in conjunction with approved antibiotics, to
prevent BV recurrence and thus to reduce serious health risks.
We have entered into an agreement with the National Institute of Health,
commonly referred to as NIH, to jointly conduct a Phase 2 safety and efficacy
trial of CTV-05 administered topically to BV patients. The study, funded by NIH,
is primarily designed to show whether CTV-05 improves cure rates of BV at 30
days. The study will be the first large trial to look at recurrence rates of BV
at 90 days. We plan to enroll 350 patients in the trial at three sites, and
expect to conclude the trial by early 2001.
Other Indications
Recently completed studies by GyneLogix under a Center for Disease Control and
Prevention grant, have shown that CTV-05 is active against the organisms which
cause urinary tract infections, yeast infections and gonorrhea. We plan to
conduct pilot clinical studies in these indications.
PRODUCT ACQUISITION STRATEGY
We plan to continue to acquire, develop and commercialize late-stage product
candidates that make a clinical difference to patients managed by focused groups
of medical decision makers. Our strategy is to acquire late-stage development
product candidates with an anticipated time to market of four years or less and
existing clinical data which provides reasonable
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<PAGE> 36
evidence of safety and efficacy. In making our acquisition decisions we attempt
to select products that meet these criteria and achieve high investment returns
by:
- - understanding the market opportunity for initially-targeted uses of the drug;
- - assessing the investment and development programs that will be necessary to
achieve a marketable product profile in these initial uses; and
- - attempting to structure the design of our development programs to obtain
critical information early relating to the clinical and economic performance
of the product, so that we can make key development decisions.
To date, we have implemented this strategy with Angiomax, CTV-05 and IS-159.
We intend to acquire product candidates with possible uses and markets beyond
those on which our initial investment program will be focused. We plan to
acquire other product candidates that will enhance the critical care franchise
we are building around Angiomax. We are also seeking other specialty
anti-infective product candidates that will fit into the franchise we expect to
build around CTV-05.
We have assembled a management team with significant experience in drug
development and in drug product launches and commercialization.
MANUFACTURING
We do not intend to build or operate manufacturing facilities but instead intend
to enter into contracts for manufacturing development and/or commercial supply.
Angiomax
We have successfully transferred the Angiomax pharmaceutical development package
from Biogen to appropriate contract development laboratories. Working with these
laboratories, we have successfully generated data, assays and analyses to make
appropriate regulatory filings and to respond to regulatory agency questions.
All Angiomax bulk drug substance used in non-clinical and clinical work
performed to date has been produced by UCB by means of a chemical synthesis
process. We have ordered, and for the foreseeable future will order, Angiomax
bulk drug substance from UCB under the validated manufacturing process. Using
this process, UCB has successfully completed the manufacture of bulk drug
substance and is in the process of manufacturing additional bulk drug substance
for delivery in the third quarter of 2000.
Together with UCB, we have developed a second generation chemical synthesis
process to improve the economics of the manufacturing of Angiomax bulk drug
substance. This process, which must be approved by the FDA before it can be
used, is known as the Chemilog process and involves limited changes to the early
manufacturing steps of our current process in order to improve process
economics. The Chemilog process produces material that is chemically equivalent
to that produced using the current process. UCB has completed initial
development of the process and is currently completing the manufacture of a
pilot batch.
We have entered into a commercial development and supply agreement with UCB for
production of Angiomax bulk drug substance utilizing the Chemilog process. Under
terms of the agreement, UCB will prepare and file the necessary drug master file
for regulatory approval of the Chemilog process. If the Chemilog process is
successfully developed and regulatory approval is obtained, we expect this
process will result in a reduced cost of manufacturing.
We have developed reproducible analytical methods and processes for the
manufacture of Angiomax drug product by Ben Venue Laboratories. Ben Venue
Laboratories has carried out all of our Angiomax fill-finish activities and has
released product for clinical trials.
CTV-05
To date GyneLogix has manufactured all CTV-05 clinical trial material. Working
with GyneLogix, we have initiated process development activities to enable
scale-up and transfer of the manufacturing technology to a commercial contract
manufacturer. We are reviewing several potential commercial suppliers for bulk
substance and final dosage form.
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<PAGE> 37
STRATEGIC RELATIONSHIPS
In order to develop and commercialize our products, we leverage our resources by
utilizing contract product development, manufacturing and sales companies.
UCB
In December 1999, we entered into a commercial development and supply agreement
with UCB for the development and supply of Angiomax bulk drug substance. Under
the terms of the agreement, UCB is also responsible for developing the Chemilog
process in coordination with us and obtaining regulatory approval for use of the
process. We will partially fund UCB's development activities. In addition,
following successful development and regulatory approval of the Chemilog
process, we have agreed to purchase Angiomax bulk drug substance exclusively
from UCB at agreed upon prices for a period of seven years from the date of the
first commercial sale of Angiomax produced under the Chemilog process.
PharmaBio/Quintiles
In August 1996, we entered into a strategic alliance with PharmaBio, a wholly
owned subsidiary of Quintiles Transnational Corp. Under the terms of the
strategic alliance agreement, PharmaBio and any of its affiliates who work on
our projects will, at no cost to us, review and evaluate, jointly with us,
development programs we design related to potential or actual product
acquisitions. The purpose of this collaboration is to optimize the duration,
cost, specifications and quality aspects of such programs. PharmaBio and its
affiliates have also agreed to perform certain other services with respect to
our products, including clinical and non-clinical development services, project
management, project implementation, pharmacoeconomic services, regulatory
affairs and post-marketing surveillance services and statistical, statistical
programming, data processing and data management services. We have agreed to pay
PharmaBio its standard fee for these other services, with certain exceptions for
exceptional performance by PharmaBio. For more information regarding this
alliance, please see "Transactions with Executive Officers, Directors and Five
Percent Stockholders."
Innovex
In January 1997, we entered into a consulting agreement with Innovex, Inc., a
subsidiary of Quintiles. Pursuant to the terms of the agreement, Innovex
provides us with consulting services with respect to commercial clinical trials
and pharmaceutical marketing and sales.
COMPETITION
The development and commercialization of new drugs is competitive and we will
face competition from major pharmaceutical companies, specialty pharmaceutical
companies and biotechnology companies worldwide. Our competitors may develop
products or other novel technologies that are more effective, safer or less
costly than any that have been or are being developed by us, or may obtain FDA
approval for their products more rapidly than we may obtain approval for ours.
Due to the incidence and severity of cardiovascular diseases, the market for
therapeutic cardiovascular products is large and competition is intense and
growing. We are developing Angiomax as an anticoagulant therapy for the acute
treatment of ischemic heart disease. There are a number of anticoagulant
therapies currently on the market, awaiting regulatory approval or in
development.
In general, anticoagulant drugs may be classified in three groups: drugs that
directly or indirectly target and inhibit thrombin or its formation, drugs that
target and inhibit platelets activation and aggregation and drugs that break
down fibrin. Indirect thrombin inhibitors include heparin and low molecular
weight heparins such as Lovenox and Fragmin. Direct thrombin inhibitors include
Angiomax, Novastan and hirudins such as Refludan. Platelet inhibitors include
aspirin, Ticlid, Plavix, ReoPro, Integrilin and Aggrastat. Fibrinolytics include
Streptase, Activase, Retevase and TNKase.
Because each group of anticoagulants acts on different clotting factors, we
believe that there will be continued clinical work to determine the best
combination of drugs for clinical use. We plan to position Angiomax as an
alternative to heparin as baseline anticoagulation therapy for use in patients
with ischemic heart disease to be used with aspirin alone or in conjunction with
other fibrinolytic drugs or platelet inhibitors. We will compete with indirect
and direct thrombin inhibitors on the basis of efficacy and safety, ease of
administration and economic value. Heparin's widespread use and low cost to
hospitals will provide a selling challenge.
We do not plan to position Angiomax as a direct competitor to platelet
inhibitors such as ReoPro from Centocor, Inc., Johnson and Johnson and Eli Lilly
and Company, Aggrastat from Merck, Inc. or Integrilin from Cor Therapeutics,
Inc. and Schering-
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<PAGE> 38
Plough Corporation. Similarly, we do not plan to position Angiomax as a
competitor to fibrinolytic drugs such as Streptase from Aventis, Retevase from
Centocor, Inc., Johnson and Johnson, Activase, and TNKase from Genentech Inc.
Platelet inhibitors and fibrinolytic drugs may, however, compete with Angiomax
for the use of hospital financial resources. Many U.S. hospitals receive a fixed
reimbursement amount per procedure for the angioplasties and other treatment
therapies they perform. Because this amount is not based on the actual expenses
the hospital incurs, U.S. hospitals may be forced to use either Angiomax or a
platelet inhibitor or fibrinolytic drugs but not both.
The acquisition or licensing of pharmaceutical products is a competitive area,
and a number of more established companies, which have acknowledged strategies
to license or acquire products, may have competitive advantages as may other
emerging companies taking similar or different approaches to product
acquisition. In addition, a number of established research-based pharmaceutical
and biotechnology companies may have acquired products in late stages of
development to augment their internal product lines. These established companies
may have a competitive advantage over us due to their size, cash flows and
institutional experience.
Many of our competitors will have substantially greater financial, technical and
human resources than we have. Additional mergers and acquisitions in the
pharmaceutical industry may result in even more resources being concentrated
with our competitors. Competition may increase further as a result of advances
made in the commercial applicability of technologies and greater availability of
capital for investment in these fields. Our success will be based in part on our
ability to build and actively manage a portfolio of drugs that address unmet
medical needs and create value in patient therapy.
PATENTS, PROPRIETARY RIGHTS AND LICENSES
Our success will depend in part on our ability to protect the products we
acquire or license by obtaining and maintaining patent protection both in the
United States and in other countries. We also rely upon trade secrets, know-how,
continuing technological innovations and licensing opportunities to develop and
maintain our competitive position. We plan to prosecute and defend any patents
or patent applications we acquire or license, as well as any proprietary
technology.
We have exclusively licensed from Biogen patents and applications for patents
covering Angiomax and Angiomax analogs and other novel anticoagulants as
compositions of matter, and processes for using Angiomax and Angiomax analogs
and other novel anticoagulants. We are responsible for prosecuting and
maintaining such patents and patent applications. In all, we exclusively license
10 issued United States patents and a broadly filed portfolio of corresponding
foreign patents and patent applications. We have not yet filed any independent
patent applications.
The patent positions of pharmaceutical and biotechnology firms like ours in
general, are uncertain and involve complex legal and factual questions. In
addition, the coverage claimed in a patent application can be significantly
reduced before the patent is issued. Consequently, we do not know whether any of
the applications we acquire or license will result in the issuance of patents
or, if any patents are issued, whether they will provide significant proprietary
protection or will be circumvented or invalidated. Since patent applications in
the United States are maintained in secrecy until patents issue, and since
publication of discoveries in the scientific or patent literature often lags
behind actual discoveries, we cannot be certain of the priority of inventions
covered by pending patent applications. Moreover, we may have to participate in
interference proceedings declared by the United States Patent and Trademark
Office to determine priority of invention, or in opposition proceedings in a
foreign patent office, either of which could result in substantial cost to us,
even if the eventual outcome is favorable to us. There can be no assurance that
the patents, if issued, would be held valid by a court of competent
jurisdiction. An adverse outcome could subject us to significant liabilities to
third parties, require disputed rights to be licensed from third parties or
require us to cease using such technology.
The development of anticoagulants is intensely competitive. A number of
pharmaceutical companies, biotechnology companies, universities and research
institutions have filed patent applications or received patents in this field.
Some of these applications are competitive with applications we have acquired or
licensed, or conflict in certain respects with claims made under such
applications. Such conflict could result in a significant reduction of the
coverage of the patents we have acquired or licensed, if issued, which would
have a material adverse effect on our business, financial condition and results
of operations. In addition, if patents are issued to other companies that
contain competitive or conflicting claims and such claims are ultimately
determined to be valid, no assurance can be given that we would be able to
obtain licenses to these patents at a reasonable cost, or develop or obtain
alternative technology.
We also rely on trade secret protection for our confidential and proprietary
information. No assurance can be given that others will not independently
develop substantially equivalent proprietary information and techniques or
otherwise gain access to our trade secrets or disclose such technology, or that
we can meaningfully protect our trade secrets.
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It is our policy to require our employees, consultants, outside scientific
collaborators, sponsored researchers and other advisors to execute
confidentiality agreements upon the commencement of employment or consulting
relationships with us. These agreements provide that all confidential
information developed or made known to the individual during the course of the
individual's relationship with us is to be kept confidential and not disclosed
to third parties except in specific circumstances. In the case of employees, the
agreements provide that all inventions conceived by the individual shall be our
exclusive property. There can be no assurance, however, that these agreements
will provide meaningful protection or adequate remedies for the our trade
secrets in the event of unauthorized use or disclosure of such information.
GOVERNMENT REGULATION
Government authorities in the United States and other countries extensively
regulate, among other things, the research, development, testing, manufacture,
labeling, promotion, advertising, distribution, and marketing of our products.
In the United States, the FDA regulates drugs under the Federal Food, Drug, and
Cosmetic Act, and, in the case of biologics, also under the Public Health
Service Act, and implementing regulations. Failure to comply with the applicable
U.S. requirements may subject us to administrative or judicial sanctions, such
as the FDA refusal to approve pending applications, warning letters, product
recalls, product seizures, total or partial suspension of production or
distribution, injunctions, and/or criminal prosecution.
The steps required before a drug may be marketed in the United States include:
- - pre-clinical laboratory tests, animal studies and formulation studies;
- - submission to the FDA of an investigational new drug exemption, or IND, for
human clinical testing, which must become effective before human clinical
trials may begin;
- - adequate and well-controlled clinical trials to establish the safety and
efficacy of the drug for each indication;
- - submission to the FDA of an NDA or biologics license application, or BLA;
- - satisfactory completion of an FDA inspection of the manufacturing facility or
facilities at which the drug is produced to assess compliance with current
good manufacturing practices, or cGMP; and
- - FDA review and approval of the NDA or BLA.
Preclinical tests include laboratory evaluations of product chemistry, toxicity,
and formulation, as well as animal studies. The results of the preclinical
tests, together with manufacturing information and analytical data, are
submitted to the FDA as part of an IND, which must become effective before human
clinical trials may begin. An IND will automatically become effective 30 days
after receipt by the FDA, unless before that time the FDA raises concerns or
questions about issues such as the conduct of the trials as outlined in the IND.
In such a case, the IND sponsor and the FDA must resolve any outstanding FDA
concerns or questions before clinical trials can proceed. Submission of an IND
may not result in the FDA allowing clinical trials to commence.
Clinical trials involve the administration of the investigational drug to human
subjects under the supervision of qualified investigators. Clinical trials are
conducted under protocols detailing the objectives of the study, the parameters
to be used in monitoring safety, and the effectiveness criteria to be evaluated.
Each protocol must be submitted to the FDA as part of the investigational new
drug exemption.
Clinical trials typically are conducted in three sequential Phases, but the
phases may overlap or be combined. Each trial must be reviewed and approved by
an independent Institutional Review Board before it can begin. Phase 1 usually
involves the initial introduction of the investigational drug into people to
evaluate its safety, dosage tolerance, phamacodynamics, and, if possible, to
gain an early indication of its effectiveness. Phase 2 usually involves trials
in a limited patient population to:
- - evaluate dosage tolerance and appropriate dosage;
- - identify possible adverse effects and safety risks; and
- - evaluate preliminarily the efficacy of the drug for specific indications.
Phase 3 trials usually further evaluate clinical efficacy and test further for
safety by using the drug in its final form in an expanded patient population. We
cannot guarantee that Phase 1, Phase 2 or Phase 3 testing will be completed
successfully within any specified period of time, if at all. Furthermore, we or
the FDA may suspend clinical trials at any time on various grounds, including a
finding that the subjects or patients are being exposed to an unacceptable
health risk.
Assuming successful completion of the required clinical testing, the results of
the preclinical studies and of the clinical studies, together with other
detailed information, including information on the manufacture and composition
of the drug, are
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submitted to the FDA in the form of an NDA or BLA requesting approval to market
the product for one or more indications. Before approving an application, the
FDA usually will inspect the facility or the facilities at which the drug is
manufactured, and will not approve the product unless cGMP compliance is
satisfactory. If the FDA determines the application and the manufacturing
facilities are acceptable, the FDA will issue an approval letter. If the FDA
determines the application or manufacturing facilities are not acceptable, the
FDA will outline the deficiencies in the submission and often will request
additional testing or information. Notwithstanding the submission of any
requested additional information, the FDA ultimately may decide that the
application does not satisfy the regulatory criteria for approval. The testing
and approval process requires substantial time, effort, and financial resources,
and we cannot be sure that any approval will be granted on a timely basis, if at
all. After approval, certain changes to the approved product, such as adding new
indications, manufacturing changes, or additional labeling claims are subject to
further FDA review and approval.
In May 2000, we received an approvable letter from the FDA for the use of
Angiomax for the treatment of patients with unstable angina undergoing coronary
balloon angioplasty. Under the terms of the letter, before the FDA will approve
our NDA for Angiomax, the FDA must inspect the manufacturing facilities for
Angiomax, and we must comply with certain other conditions, including adopting
FDA-recommended changes to the proposed labeling for Angiomax. The FDA has also
asked for changes in documents describing our manufacturing and packaging, and
has asked us to recruit and treat up to 10 additional patients in an ongoing
study in which 26 patients with reduced kidney function have been enrolled to
date.
If regulatory approval is obtained, we will be required to comply with a number
of post-approval requirements. For example, as a condition of approval of an
application, the FDA may require postmarketing testing and surveillance to
monitor the drug's safety or efficacy. In addition, holders of an approved NDA
or BLA are required to report certain adverse reactions and production problems,
if any, to the FDA, and to comply with certain requirements concerning
advertising and promotional labeling for their products. Also, quality control
and manufacturing procedures must continue to conform to cGMP after approval,
and the FDA periodically inspects manufacturing facilities to assess compliance
with cGMP. Accordingly, manufacturers must continue to expend time, money, and
effort in the area of production and quality control to maintain compliance with
current good manufacturing practices and other aspects of regulatory compliance.
We use and will continue to use third-party manufacturers to produce our
products in clinical and commercial quantities, and we cannot be sure that
future FDA inspections will not identify compliance issues at our facilities or
at the facilities of our contract manufacturers that may disrupt production or
distribution, or require substantial resources to correct. In addition,
discovery of problems with a product may result in restrictions on a product,
manufacturer, or holder of an approved NDA or BLA, including withdrawal of the
product from the market. Also, new government requirements may be established
that could delay or prevent regulatory approval of our products under
development.
FACILITIES
We currently lease approximately 9,000 square feet of office space in Cambridge,
Massachusetts. We believe our current facilities will be sufficient to meet our
needs through 2000 and that additional space will be available on commercially
reasonable terms to meet our space requirements thereafter. We also have offices
in Parsippany, New Jersey, Princeton, New Jersey, Oxford, United Kingdom, Basel,
Switzerland and Parnell, Auckland, New Zealand.
LEGAL PROCEEDINGS
From time to time we have been and expect to continue to be subject to legal
proceedings and claims in the ordinary course of business. We currently are not
a party to any material legal proceeding.
EMPLOYEES AND CONSULTANTS
We believe that our success will depend greatly on our ability to identify,
attract and retain capable employees. We have assembled a management team with
significant experience in drug development and commercialization.
As of May 17, 2000, we employed 39 persons, of whom seven hold M.D. and/or Ph.D.
degrees, and eight of whom hold other advanced degrees. Our employees are not
represented by any collective bargaining unit, and we believe our relations with
our employees are good.
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MANAGEMENT
EXECUTIVE OFFICERS, KEY EMPLOYEES AND DIRECTORS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
NAME AGE POSITION
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Clive A. Meanwell, M.D., Ph.D.*................. 43 Chief Executive Officer, President and Director
Peyton J. Marshall, Ph.D.*...................... 45 Senior Vice President and Chief Financial
Officer
David M. Stack*................................. 49 Senior Vice President
John Nystrom, Ph.D.*............................ 55 Vice President and Chief Technical Officer
Gary Cupit, Pharm. D............................ 54 Vice President
Dermot Liddy, M.B.A.*........................... 40 Vice President
Frederick Paster, M.Sc., M.B.A.................. 35 Vice President
Tom Quinn....................................... 42 Vice President
John Richards, D.Phil*.......................... 44 Vice President
Fred Ryan, M.B.A................................ 48 Vice President
John Villiger, Ph.D.*........................... 45 Vice President
Leonard Bell, M.D............................... 42 Director
Dennis B. Gillings, Ph.D........................ 56 Director
Anders D. Hove, M.D., M.Sc., M.B.A(1)........... 35 Director
M. Fazle Husain(2).............................. 36 Director
T. Scott Johnson, M.D........................... 53 Director
Armin M. Kessler, Dh.c.......................... 62 Director
James E. Thomas, M.Sc.(2)....................... 40 Director
Robert A. Yedid, M.Sc.(1)....................... 43 Director
</TABLE>
- ---------------
* Executive Officer
(1) Member of Audit Committee
(2) Member of the Compensation Committee
Set forth below is certain information regarding the business experience during
the past five years for each of the above-named persons.
Clive A. Meanwell, M.D., Ph.D. has been our Chief Executive Officer and
President and a director since the inception of our company in July 1996. From
1995 to 1996, Dr. Meanwell was a Partner and Managing Director at MPM Capital
L.P., a venture capital firm. From 1986 to 1995, Dr. Meanwell held various
positions at Hoffmann-La Roche, including Senior Vice President, from 1992 to
1995, Vice President from 1991 to 1992 and Director of Product Development from
1986 to 1991. Dr. Meanwell was also a member of Hoffmann-La Roche's
pharmaceutical division operating board, its research and development board and
its portfolio management committee. During his tenure as Director of Product
Development, Dr. Meanwell had responsibility at Hoffmann-La Roche for the
development and launch of Neupogen. During his tenure as Vice President,
Worldwide Drug Regulatory Affairs, he had management responsibility for the
regulatory approval of eight new products and nine significant line extensions
of products. Dr. Meanwell also led an initiative at Hoffmann-La Roche to
reengineer the drug development process with the goal of cutting the time and
cost of drug development. Dr. Meanwell received his M.D. and Ph.D. from the
University of Birmingham, United Kingdom.
Peyton J. Marshall, Ph.D. has been a Senior Vice President since January 2000
and our Chief Financial Officer since joining us in October 1997. From 1995 to
October 1997, Dr. Marshall was based in London as a Managing Director and head
of European Corporate Financing and Risk Management Origination at Union Bank of
Switzerland, an investment banking firm. From 1986 to 1995, Dr. Marshall held
various investment banking positions at Goldman Sachs and Company, including
head of European product development from 1987 to 1993 and Executive Director,
Derivatives Origination from 1993 to 1995. From 1981 to 1986, Dr. Marshall held
numerous product development positions at The First Boston Corporation and was
an Assistant Professor of Economics at Vanderbilt University. Dr. Marshall
received his Ph.D. in economics from the Massachusetts Institute of Technology.
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David M. Stack has been a Senior Vice President since April 2000. Since January
2000, Mr. Stack has served as President and General Partner of Stack
Pharmaceuticals, Inc., a commercialization, marketing and strategy consulting
firm serving pharmaceutical companies, and as a Senior Advisor to the Chief
Executive Officer of Innovex Americas, a contractual pharmaceutical
organization. Mr. Stack served as President and General Manager of Innovex
Americas from May 1995 to December 1999. From April 1993 to May 1995, Mr. Stack
served as Vice President, Business Development and Marketing at Immunomedics,
Inc., a biotechnology company specializing in monoclonal antibodies in
diagnostics and therapeutics. From September 1981 to March 1993, Mr. Stack
served as Director, Business Development and Planning, Infectious Disease,
Oncology and Virology at Roche Laboratories, a division of Hoffmann-La Roche,
where he was the Rocephin Product Director from June 1989 to December 1992. Mr.
Stack currently serves as director of Bio Imaging Laboratories, Inc. Mr. Stack
received his B.S. in biology from Siena College and his B.S. in pharmacy from
Albany College of Pharmacy.
John Nystrom, Ph.D. has been Vice President since October 1998 and our Chief
Technical Officer since December 1999. From July 1979 to October 1998, Dr.
Nystrom was employed by the Arthur D. Little, an international technology and
management consulting firm. During his 19 years with the firm he held numerous
positions consulting to the fine chemical, biotechnology and pharmaceutical
industries. In 1994 he was elected a Vice President of the firm. His last
position with the firm was that of Vice President and Director. Dr. Nystrom
currently serves as a director of Cangene Corp. Dr. Nystrom received his B.S.
and Ph.D. in chemical engineering from the University of Rhode Island.
Gary Cupit, Pharm.D. has been a Vice President since 1999, with a focus on the
marketing strategy and launch plan for Angiomax. From 1987 to 1998, Dr. Cupit
was employed by SmithKline Beecham Pharmaceuticals in various positions in
sales, marketing and new product development. Before joining SmithKline Beecham,
Dr. Cupit was on the faculty of New York Hospital-Cornell Medical Center, the
University of California at San Francisco, the University of Pennsylvania and
the University of Tennessee. Dr. Cupit received his B.S. in pharmacy from the
Medical College of Virginia and his Pharm.D. from the Philadelphia College of
Pharmacy and Science.
Dermot Liddy, M.B.A. joined us October 1997 and has been a Vice President since
September 1998, with a focus on new therapeutic areas and businesses. Since
August 1999, Mr. Liddy has served as project leader of the development program
for CTV-05. From September 1996 to October 1997, Mr. Liddy was an associate at
MPM Capital, a venture capital firm. In August 1994, Mr. Liddy cofounded the
Limerick Company, an agro-biotech start-up in Israel. From 1990 to 1993, Mr.
Liddy was employed by a Liechtenstein-based investment syndicate. Mr. Liddy
received his B.A. in psychology and M.B.A. from Trinity College in Dublin,
Ireland.
Frederick Paster, M.Sc., M.B.A. has been a Vice President since September 1999,
with a focus on worldwide product partnering, product development strategy and
market/pricing analysis. Mr. Paster is also involved in new product acquisitions
and corporate partnerships. From 1994 until he joined us in September 1998, Mr.
Paster was a Manager with The Boston Consulting Group, a management consulting
firm. From 1990 to 1992, Mr. Paster was located in Germany and Belgium as
European Programs Manager for ESI, a computer software and services firm. Mr.
Paster received his B.S. and M.Sc. degrees in engineering from the Massachusetts
Institute of Technology and received his M.B.A. from the Harvard Business
School.
Tom Quinn has been a Vice President since April 2000, with a focus on the launch
of Angiomax, business development and product in-licensing. Mr. Quinn has also
served as a Partner and the Vice President of Marketing of Stack
Pharmaceuticals, Inc. since January 2000. From July 1997 to January 2000, Mr.
Quinn was Vice President, Business Development at Innovex, a contract
pharmaceutical organization. From January 1996 to July 1997, Mr. Quinn was
employed by the Bristol-Myers Squibb Strategic Planning/New Business Development
Department where his responsibilities included domestic and global portfolio
management and franchise development. From April 1992 to December 1995, Mr.
Quinn was involved in the commercial start-up of Boehringer Mannheim's launch of
the U.S. Therapeutics Division.
John Richards, D.Phil. joined us in October 1997 and has been a Vice President
since 1999, with a focus on product manufacturing and quality. From 1993 until
he joined us in October 1997, Dr. Richards was Director of Process Development
at Immulogic Pharmaceutical Corporation, a pharmaceutical company. From 1989 to
1993, Dr. Richards was a Technical Manager at Zeneca PLC, a pharmaceutical
company, where he developed and implemented processes for the manufacture of
peptides as pharmaceutical active intermediates. In 1986, Dr. Richards helped
establish Cambridge Research Biochemicals, a manufacturer of peptide-based
products for pharmaceutical and academic customers. Dr. Richards received his
M.A. and D.Phil in organic chemistry from the University of Oxford, United
Kingdom, and has carried out post-doctoral research work at the Medical Research
Councils Laboratory of Molecular Biology in Cambridge, United Kingdom.
Fred Ryan, M.B.A. has been a Vice President since April 2000, with a focus on
corporate strategic development, Angiomax launch planning and new product
acquisitions. Since April 2000 Mr. Ryan has also served as a Partner and the
Vice President of Business Development of Stack Pharmaceuticals, Inc. From 1985
to 2000, he held senior management positions with
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Novartis Pharmaceuticals in Finance and Business Development, most recently as
Executive Director/Business Unit Head responsible for sales and marketing of a
portfolio products in excess of $500 million in sales annually. He received his
B.S. and B.A. degrees from Bryant College and his M.B.A. from Fairleigh
Dickinson University.
John Villiger, Ph.D. has been a Vice President since March 1997, with a focus on
cardiovascular product development. From December 1986 until he joined us in
March 1997, Dr. Villiger held various positions in product development at
Hoffmann-La Roche, including Head of Global Project Management from 1995 to 1996
and International Project Director from 1991 to 1995. As Head of Global Project
Management, Dr. Villiger was responsible for overseeing the development of
Hoffmann-LaRoche's pharmaceutical portfolio, with management responsibility for
over 50 development programs. As International Project Director, Dr. Villiger
was responsible for the global development of Tolcapone also known as tasmar.
Dr. Villiger received his Ph.D. in neuropharmacology from the University of
Otago.
Leonard Bell, M.D. has been a director since May 2000. Dr. Bell currently serves
as the President and Chief Executive Officer, Secretary and Treasurer of Alexion
Pharmaceuticals, Inc., a pharmaceutical company, which positions he has held
since January 1992. From 1991 to 1992, Dr. Bell was an Assistant Professor of
Medicine and Pathology and co-Director of the Program in Vascular Biology at the
Yale University School of Medicine. From 1990 to 1992, Dr. Bell was an attending
physician at the Yale-New Haven Hospital and an Assistant Professor in the
Department of Internal Medicine at the Yale University School of Medicine. Dr.
Bell was the recipient of the Physician Scientist Award from the National
Institutes of Health and Grant-in-Aid from the American Heart Association as
well as various honors and awards from academic and professional organizations.
His work has resulted in more than 20 scientific publications and three patent
applications. Dr. Bell is a director of the Connecticut Technology Council and
Connecticut United For Research Excellence, Inc. He also served as a director of
the Biotechnology Research and Development Corporation from 1993 to 1997. Dr.
Bell received his A.B. from Brown University and M.D. from the Yale University
School of Medicine. Dr. Bell is currently an Adjunct Assistant Professor of
Medicine and Pathology at the Yale University School of Medicine. Dr. Bell also
serves as a director of Alexion Pharmaceuticals, Inc.
Dennis B. Gillings, Ph.D. has been a director since September 1996. Dr. Gillings
has served as Chairman and Chief Executive Officer of Quintiles Transnational
Corp., since its founding by him in 1982. Quintiles provides integrated product
development, commercial development and other services to the pharmaceutical,
biotechnology, medical device and healthcare industries. From 1972 to 1988, Dr.
Gillings was a Professor of Biostatistics at the University of North Carolina at
Chapel Hill. Dr. Gillings serves as a director of ICAgen, Inc. and Triangle
Pharmaceuticals, Inc. Dr. Gillings received his diploma in mathematical
statistics from Cambridge University and his Ph.D. in mathematics from the
University of Exeter, United Kingdom.
Anders Hove, M.D., M.Sc., M.B.A. has been a director since December 1998. Dr.
Hove has been a member of the Bellevue Group since 1996, which focuses on
investing in public and private biotechnology companies in the United States and
in Europe. From 1991 to 1996, Dr. Hove held various positions at Ciba-Geigy
Pharmaceuticals Division in clinical development, international marketing and
business development. Dr. Hove currently serves as a director of Virologic,
Inc., a biotechnology company. Dr. Hove received his M.B.A. from INSEAD and his
M.D. from the University of Copenhagen.
M. Fazle Husain has been a director since September 1998. Since 1991, Mr. Husain
has been a General Partner of Morgan Stanley Venture Partners, L.P., a private
partnership affiliated with Morgan Stanley Dean Witter. Mr. Husain focuses
primarily on investments in the health care industry, including health care
services, medical technology and health care information technology. He
currently serves on the board of directors of IntegraMed America, Inc.,
Allscripts, Inc., Healthstream, Inc. and Cardiac Pathways Corporation. Mr.
Husain received his Sc.B degree in chemical engineering from Brown University
and his M.B.A. from the Harvard Graduate School of Business Administration.
T. Scott Johnson, M.D. has been a director since September 1996. In July 1999,
Dr. Johnson founded JSB Partners, L.P., an investment bank focusing on mergers
and acquisitions, private financings and corporate alliances within the health
care sector. From July 1991 to June 1999, Dr. Johnson served as a founder and
managing director of MPM Capital, L.P. Dr. Johnson held academic positions at
the Harvard Medical School from 1978 to 1996 and was actively involved in both
basic science and clinical research at the Beth Israel Hospital and the Brigham
and Women's Hospital. Dr. Johnson received both his B.A. and M.D. from the
University of Alabama.
Armin M. Kessler has been a director since October 1998. Mr. Kessler joined us
after a 35-year career in the pharmaceutical industry, which included senior
management positions at Sandoz Pharma Ltd., Basel, United States and Japan (now
Novartis Pharma A.G.) and, most recently, at Hoffmann-La Roche, Basel where he
was Chief Operating Officer and Head of the Pharmaceutical Division until 1995.
Mr. Kessler has served as a director of Hoffmann-La Roche, Syntex Corporation
and Genentech, Inc. Mr. Kessler received his degrees in physics and chemistry
from the University of Pretoria, his degree in
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<PAGE> 44
chemical engineering from the University of Cape Town, his law degree from Seton
Hall and his honorary doctorate in business administration from the University
of Pretoria.
James E. Thomas, M.Sc., has been a director since September 1996. From 1989 to
May 2000, Mr. Thomas served as Managing Director of E.M. Warburg, Pincus & Co.,
LLC. From 1984 to 1989, Mr. Thomas was a Vice President at Goldman Sachs
International in London. Mr. Thomas currently serves as a director of Celtrix
Pharmaceuticals, Inc., Scientific Learning Corporation, Inc. and Transkaryotic
Therapies, Inc. Mr. Thomas received his B.Sc. in finance and economics from the
Wharton School at the University of Pennsylvania and his M.Sc. in economics from
the London School of Economics.
Robert Yedid, M.Sc., has been a director since September 1999. Mr. Yedid has
been a Vice President of E.M. Warburg, Pincus & Co., LLC since January 1999. He
is responsible for the firm's investment efforts in specialty pharmaceuticals
and outsourced services to the pharmaceutical industry. From 1992 to 1999, Mr.
Yedid was a Managing Director in the Health Care Group at Bear Stearns
responsible for numerous merger and acquisition transactions and public equity
offerings. From 1983 to 1992, Mr. Yedid was a director at Salomon Brothers Inc.,
an investment banking firm. Mr. Yedid currently serves as a director of Eurand
Pharmaceuticals and is also a member of the Board of Trustees of Temple Beth
Israel. Mr. Yedid received his B.A. from Yale University and his M.B.A. from
Stanford University Graduate School of Business.
BOARD COMPOSITION
We currently have nine directors. Pursuant to the terms of a stockholders'
voting agreement that we entered with certain of our stockholders in connection
with the sale of our shares of preferred stock, Messrs. Gillings, Hove, Husain,
Johnson, Thomas and Yedid were elected to our board of directors. This agreement
will terminate by its terms upon the completion of this offering. However, so
long as any of the investors who were party to that agreement, excluding Biotech
Growth, S.A., owns 20% percent of our outstanding common stock they will be
entitled to nominate two individuals to serve as directors, and so long as they
own 10% of the outstanding common stock, they will be able to nominate one
individual to serve as a director. Accordingly, following this offering,
Warburg, Pincus will be entitled to nominate two individuals to serve as
directors. Mr. Yedid will continue to serve on our board of directors as
representatives of Warburg, Pincus and Warburg, Pincus shall have the right to
nominate a second director. By our request all directors elected to the board of
directors pursuant to the stockholders' voting agreement have agreed to remain
on the board following this offering.
Upon the closing of this offering the terms of office of the board of directors
will be divided into three classes. As a result, a portion of our board of
directors will be elected each year. The division of the three classes, the
initial directors and their respective election dates are as follows:
- - the class 1 directors will be Drs. Gillings, Hove and Johnson and their term
will expire at the annual meeting of stockholders to be held in 2001;
- - the class 2 directors will be Dr. Meanwell and Messrs. Yedid and Husain and
their term will expire at the annual meeting of stockholders to be held in
2002; and
- - the class 3 directors will be Drs. Kessler and Bell and Mr. Thomas and their
term will expire at the annual meeting of stockholders to be held in 2003.
At each annual meeting of stockholders after the initial classification, the
successors to directors whose terms are to expire will be elected to serve from
the time of election and qualification until the third annual meeting following
election. The authorized number of directors may be changed only by resolution
of the board of directors. Any additional directorships resulting from an
increase in the number of directors will be distributed among the three classes
so that, as nearly as possible, each class will consist of one-third of the
directors. This classification of the board of directors may have the effect of
delaying or preventing changes in control or management of our company.
BOARD COMMITTEES
Audit Committee. Our audit committee reviews our internal accounting procedures
and consults with, and reviews the services provided by, our independent public
accountants. Current members of our audit committee are Dr. Hove and Mr. Yedid.
Compensation Committee. Our compensation committee reviews and recommends to
the board the compensation and benefits of all of our officers and reviews
general policies relating to the compensation and benefits of our employees. The
compensation committee also administers the issuance of stock options and other
awards under our stock plans. Current members of the compensation committee are
Messrs. Husain and Thomas.
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DIRECTOR COMPENSATION
Generally, our non-employee directors receive $2,500 from us for each meeting of
the board of directors which they attend in person and $500 for each meeting
which they participate in by telephone. The chairmen of our audit and
compensation committees receive $1,000 from us for each committee meeting he or
she attends in person and $500 for each committee meeting he or she participates
in by telephone. Directors are reimbursed for expenses in connection with
attendance at board meetings.
During the last year, Dr. Kessler received $8,523 for his service on the board.
Dr. Kessler also serves as a consultant to us, for which we pay him $2,500 per
day.
In addition, we may, in our discretion, grant stock options and other equity
awards to our non-employee directors under our 1998 Stock Incentive Plan. In
1998, Dr. Kessler was granted an option to purchase 20,000 shares of common
stock at an exercise price of $0.90 per share. In May 2000, Mr. Thomas and Dr.
Bell were each granted an option to purchase 20,000 shares of common stock at an
exercise price of $3.50 per share. These options vest in 48 equal monthly
installments commencing one month after the date of grant.
2000 DIRECTOR STOCK OPTION PLAN
Our 2000 Director Stock Option Plan was adopted by our board of directors on May
15, 2000, subject to the approval of our stockholders. Under the plan, directors
who are not our employees will be eligible to receive non-statutory options to
purchase shares of our common stock. A total of 250,000 shares of our common
stock may be issued upon the exercise of options granted under the director
stock option plan.
Under the terms of the director stock option plan, each non-employee director
will be granted an option to purchase 20,000 shares of our common stock on the
date of his or her initial election to the board of directors. In addition, each
non-employee director will receive an option to purchase 7,500 shares of our
common stock on the date of each annual meeting of our stockholders commencing
with the 2001 annual meeting of stockholders, other than a director who was
initially elected to the board of directors at any such annual meeting. All
options granted under the plan vest in 48 equal monthly installments commencing
one month after the date of grant. The exercise price per share of all options
will equal the fair market value per share of our common stock on the option
grant date. Each grant under the director stock option plan will have a maximum
term of ten years, subject to earlier termination following the optionee's
cessation of service.
CARDIOLOGY ADVISORY BOARD
We have established a cardiology advisory board to guide and counsel us on all
aspects of interventional cardiology practice. The entire cardiology advisory
board meets twice a year, and we contact individual members as needed. Members
of this board provide input on product research and development strategy,
education and publication plans. We do not employ any of the members of the
cardiology advisory board, and members may have other consulting or advisory
contracts. Accordingly, members devote only a small portion of their time to us.
In addition to the cardiology advisory board, we have consulting
42
<PAGE> 46
relationships with a number of scientific and medical experts who advise us on a
project-specific basis. The members of the cardiology advisory board are:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
NAME AFFILIATION TITLE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Eric J. Topol, M.D., Chair....... The Cleveland Clinic Foundation Chairman and Professor,
Department of Cardiology
Eric R. Bates, M.D............... University of Michigan Medical Professor, Internal Medicine
Center
John A. Bittl, M.D............... Ocala Heart Institute Interventional Cardiologist
Robert M. Califf, M.D............ Duke University Clinical Research Associate Vice Chancellor,
Institute Clinical Research, Professor of
Medicine, CEO
Frederick Feit, M.D.............. New York University Medical Director, Cardiac Catheterization
Center/ Tisch Hospital Laboratory
Bernard J. Gersh, M.B., Ch.B., Mayo Clinic Professor of Medicine
D.Phil.........................
Neal S. Kleiman, M.D............. The Methodist Hospital Assistant Director, Cardiac
Catheterization Laboratories
A. Michael Lincoff, M.D.......... The Cleveland Clinic Foundation Director, Experimental
Interventional Laboratory
Jeffrey J. Popma, M.D............ Cardiology Research Foundation Executive Director
Jeffrey I. Weitz, M.D............ McMaster University, Canada Professor of Medicine and
Director, Experimental Thrombosis
and Atherosclerosis Group
Harvey White, D.Sc............... Green Lane Hospital, New Zealand Director of Cardiovascular
Research and Coronary Care
</TABLE>
EXECUTIVE COMPENSATION
The following table presents summary information for the year ended December 31,
1999, regarding the compensation of each of our most highly compensated
executive officers.
Summary Compensation Table
<TABLE>
<CAPTION>
----------------------------------------
ANNUAL
COMPENSATION
------------ ALL OTHER
NAME AND POSITION YEAR SALARY COMPENSATION
- ----------------- ---- ------------ ------------
<S> <C> <C> <C>
Clive A. Meanwell, M.D., Ph.D............................... 1999 $200,000 --
President, Chief Executive Officer and Director
John Villiger, Ph.D......................................... 1999 $195,000 --
Vice President
Richard Malcolm (1)......................................... 1999 $157,250 $53,675(2)
Former Senior Vice President and Chief Operating Officer
John Nystrom, Ph.D.......................................... 1999 $165,000 --
Vice President and Chief Technical Officer
Dermot Liddy................................................ 1999 $155,000 --
Vice President
Peyton Marshall, Ph.D....................................... 1999 $150,000 --
Senior Vice President and Chief Financial Officer
</TABLE>
- ---------------
(1) Mr. Malcolm resigned from The Medicines Company effective December 31, 1999.
(2) This figure represents moving and travel expenses.
Option Grants in 1999
No options were granted to our named executive officers during 1999. To date in
2000, we have granted options to purchase 499,700, 46,700, 83,075, 36,900, and
310,200 shares of common stock to Clive Meanwell, John Villiger, John Nystrom,
Dermot Liddy and Peyton Marshall, respectively, at a weighted average exercise
price of $2.69 per share.
43
<PAGE> 47
Option Values at December 31, 1999
The following table presents the number and value of securities underlying
unexercised options that are held by each of the individuals listed in the
summary compensation table as of December 31, 1999. No shares were acquired upon
the exercise of stock options by these individuals during the year ended
December 31, 1999.
Amounts shown under the column "Value of Unexercised In-the-Money Options at
December 31, 1999" are based on the assumed initial public offering price of
$ per share, without taking into account any taxes that may be payable in
connection with the transaction, multiplied by the number of shares underlying
the option, less the exercise price payable for these shares.
<TABLE>
<CAPTION>
------------------------------------------------------------------
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1999 DECEMBER 31, 1999
------------------------------ ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Clive Meanwell, M.D., Ph.D..................... 20,250 35,750
John Villiger, Ph.D............................ 12,562 25,188
Richard Malcolm................................ 49,583 --
John Nystrom, Ph.D............................. 30,625 74,375
Dermot Liddy................................... 24,416 26,584
Peyton Marshall, Ph.D.......................... 6,500 19,500
</TABLE>
EMPLOYMENT AGREEMENTS
Dr. Meanwell serves as our president and chief executive officer pursuant to the
terms of an employment agreement dated May 5, 1996. This agreement renews
automatically on a yearly basis unless either party provides written notice of
non-renewal. Pursuant to the terms of the agreement, Dr. Meanwell's annual
compensation is determined by the board of directors. If Dr. Meanwell is
terminated without cause, as defined in the agreement, Dr. Meanwell will be
entitled to three months salary and shall be entitled to continue to receive the
same health, disability and other benefits as were provided doing his employment
for a period of three months after the date of his termination. Dr. Meanwell has
agreed not to compete with us during the term of his employment and for a period
of one year after his termination.
Dr. Villiger serves as one of our vice presidents pursuant to the terms of an
employment agreement dated March 10, 1997. This agreement renews automatically
on a yearly basis unless either party provides written notice of non-renewal.
Pursuant to the terms of the agreement, Dr. Villiger's annual compensation is
determined by the Board of Directors. If Dr. Villiger is terminated without
cause, as defined in the agreement, Dr. Villiger will be entitled to three
months salary and shall be entitled to continue to receive the same health,
disability and other benefits as were provided doing his employment for a period
of three months after the date of his termination. Dr. Villiger has agreed not
to compete with us during the term of his employment and for a period of one
year after his termination.
Dr. Nystrom serves as our Chief Technical Officer pursuant to the terms of an
employment agreement dated September 29, 1998. This agreement renews
automatically on a yearly basis unless either party provides written notice of
non-renewal. Pursuant to the terms of the agreement, Dr. Nystrom's annual
compensation is determined by the Board of Directors. If Dr. Nystrom is
terminated without cause, as defined in the agreement, Dr. Nystrom will be
entitled to up to six months salary and shall be entitled to continue to receive
the same health, disability and other benefits as were provided doing his
employment for a period of three months after the date of his termination. Dr.
Nystrom has agreed not to compete with us during the term of his employment and
for a period of one year after his termination.
Mr. Liddy serves as one of our vice presidents pursuant to the terms of an
employment agreement dated October 27, 1997. This agreement renews automatically
on a yearly basis unless either party provides written notice of non-renewal.
Pursuant to the terms of the agreement, Mr. Liddy's annual compensation is
determined by the Board of Directors. If Mr. Liddy is terminated without cause,
as defined in the agreement, Mr. Liddy will be entitled to three months salary
and shall be entitled to continue to receive the same health, disability and
other benefits as were provided doing his employment for a period of three
months after the date of his termination. Mr. Liddy has agreed not to compete
with us during the term of his employment and for a period of one year after his
termination.
Dr. Marshall serves as our Chief Financial Officer pursuant to the terms of an
employment agreement dated October 20, 1997. This agreement renews automatically
on a yearly basis unless either party provides written notice of non-renewal.
Pursuant to
44
<PAGE> 48
the terms of the agreement, Dr. Marshall's annual compensation is determined by
the Board of Directors. If Dr. Marshall is terminated without cause, as defined
in the agreement, Dr. Marshall will be entitled to three months salary and shall
be entitled to continue to receive the same health, disability and other
benefits as were provided doing his employment for a period of three months
after the date of his termination. Dr. Marshall has agreed not to compete with
us during the term of his employment and for a period of one year after his
termination.
EMPLOYEE BENEFIT PLANS
1998 Stock Incentive Plan
We adopted our 1998 stock incentive plan in April 1998 and have reserved
5,983,917 shares of our common stock for issuance under the 1998 plan. As of May
17, 2000 options to purchase 2,417,591 shares of our common stock were
outstanding and 78,163 shares of common stock have been issued upon the exercise
of stock options.
Our 1998 plan provides for the grant of incentive stock options, nonstatutory
stock options, restricted stock and other stock-based awards. Our officers,
employees, directors, consultants and advisors and those of our subsidiaries are
eligible to receive awards under the 1998 plan, however, incentive stock options
may only be granted to our employees. Incentive stock options will have an
exercise price of 100% or more of the fair market value of our common stock on
the date of grant. Nonstatutory stock options may have an exercise price as low
as 85% of the fair market value on the date of grant.
Our board of directors administers the 1998 plan, although it may delegate its
authority to one or more of its committees and, in limited circumstances, to one
or more of our executive officers. Our board of directors has authorized the
compensation committee to administer the plan, including the granting of options
to our executive officers. In accordance with the provisions of the 1998 plan,
our compensation committee selects the recipients of awards and determines the:
- - number of shares of common stock covered by options and the dates upon which
such options become exercisable;
- - exercise price of options;
- - duration of options; and
- - number of shares of common stock subject to any restricted stock or other
stock-based awards and the terms and conditions of such awards, including the
conditions for repurchase, issue price and repurchase price.
In the event of a merger or other acquisition event, our board of directors must
provide for all outstanding awards under the 1998 plan to be assumed or
substituted for by the acquiror. If the acquiror does not assume or substitute
for outstanding awards, our board of directors may provide that all unexercised
options will become exercisable in full prior to the completion of the event and
that these options will terminate upon completion of the event if not previously
exercised. If our stockholders will receive cash in the acquisition event, any
options that would become exercisable will be converted into cash. If any of
these events constitutes a change in control, the assumed or substituted options
will be immediately exercisable in full if the holder of the options is
terminated by the acquiror within one year of the change in control.
No award may be granted under the 1998 plan after April 13, 2008 but the vesting
and effectiveness of awards granted before April 13, 2008 may extend beyond
those dates. Our board of directors may at any time amend, suspend or terminate
the 1998 plan except that no award granted after an amendment of the plan and
designated as subject to Section 162(m) of the Internal Revenue Code by our
board of directors shall become exercisable, realizable or vested, to the extent
such amendment was required to grant such award, unless and until such amendment
is approved by our stockholders.
2000 Employee Stock Purchase Plan
Our 2000 Employee Stock Purchase Plan was adopted by our board of directors on
May 15, 2000 subject to the approval of our stockholders. The purchase plan will
become effective upon the completion of this offering and authorizes the
issuance of up to a total of 350,000 shares of our common stock to participating
employees.
All of our employees, including our directors who are employees and all
employees of any participating subsidiaries, whose customary employment is more
than 20 hours per week for more than five months in any calendar year, are
eligible to participate in the purchase plan. Employees who would, immediately
after an option grant, own 5% or more of the total combined voting power or
value of our stock or the stock of any of our subsidiaries are not eligible to
participate in the purchase plan.
We will make one or more offerings to our employees to purchase stock under the
purchase plan. Offerings will begin on dates established by our board of
directors, provided that our first offering commencement date will follow
shortly after the date on
45
<PAGE> 49
which trading of our common stock commences on the Nasdaq National Market in
connection with this offering. Each offering commencement date will begin a
six-month period during which payroll deductions will be made and held for the
purchase of our common stock at the end of the purchase plan period.
On the first day of a designated payroll deduction period, or offering period,
we will grant to each eligible employee who has elected to participate in the
purchase plan an option to purchase shares of our common stock as follows: the
employee may authorize between 1% to 10% of his or her base pay to be deducted
by us during the offering period. On the last day of the offering period, the
employee is deemed to have exercised the option, at the option exercise price,
to the extent of accumulated payroll deductions. Under the terms of the purchase
plan, the option price is an amount equal to 85% of the closing price (as
defined) per share of our common stock on either the first day or the last day
of the offering period, whichever is lower. In no event may an employee purchase
in any one offering period a number of shares which exceeds the number of shares
determined by dividing (a) the product of $2,083 and the number or fraction of
months in the offering period by (b) the closing price of a share of our common
stock on the commencement date of the offering period. Our board of directors
may, in its discretion, choose an offering period of 12 months or less for each
offering and may choose a different offering period for each offering.
An employee who is not a participant on the last day of the offering period is
not entitled to exercise any option, and the employee's accumulated payroll
deductions will be refunded. An employee's rights under the purchase plan
terminate upon voluntary withdrawal from the purchase plan at any time, or when
the employee ceases employment for any reason, except that upon termination of
employment because of death, the employee's beneficiary has certain rights to
elect to exercise the option to purchase the shares that the accumulated payroll
deductions in the employee's account would purchase at the date of death.
Because participation in the purchase plan is voluntary, we cannot now determine
the number of shares of our common stock to be purchased by any particular
current executive officer, by all current executive officers as a group or by
non-executive employees as a group.
401(k) Plan
Our employee savings and retirement plan is qualified under Section 401 of the
Internal Revenue Code. Our employees may elect to reduce their current
compensation by up to the statutorily prescribed annual limit and have the
amount of such reduction contributed to the 401(k) plan. We may make matching or
additional contributions to the 401(k) plan in amounts to be determined annually
by our board of directors.
CHANGE IN CONTROL ARRANGEMENTS
The terms of restricted stock agreements between us and certain of our
employees, as well as the option agreements evidencing the grant of options
under the 1998 plan, provide that in the event that we consummate an
acquisition, as defined in the agreements, and the employee or optionholder,
within a period of one year after the acquisition:
(1) is terminated without cause;
(2) is terminated as the result of death, severe physical or mental disability;
or
(3) terminates his or her employment for good reason in accordance with the
terms of the agreements.
The shares covered by such agreement shall vest in full.
46
<PAGE> 50
TRANSACTIONS WITH EXECUTIVE OFFICERS, DIRECTORS AND
FIVE PERCENT STOCKHOLDERS
Since our incorporation in July 1996, we have engaged in the following
transactions with our directors, officers and holders of more than five percent
of our voting securities and affiliates of our directors, officers and five
percent stockholders:
ISSUANCE OF SERIES A PREFERRED STOCK
In September 1996, we issued 4,675 units, each unit consisting of one share of
our series A preferred stock and 500 shares of our common stock, at price per
unit of $1,000 for a total purchase price of $4.7 million. Of the 4,675 units
sold, 4,509 units were sold to the following directors, officers and five
percent stockholders and their affiliates.
<TABLE>
<CAPTION>
-------------------------------------------------
SERIES A
NAME PREFERRED STOCK COMMON STOCK PURCHASE PRICE
- ---- --------------- ------------ --------------
<S> <C> <C> <C>
Warburg, Pincus..................................... 2,000 1,000,000 $2,000,000
PharmaBio........................................... 1,425 712,500 1,425,000
Hanseatic........................................... 500 250,000 500,000
MPM................................................. 250 125,000 250,000
Clive Meanwell...................................... 167 83,500 167,000
T. Scott Johnson.................................... 167 83,500 167,000
</TABLE>
In June and December 1997, we issued an aggregate of 34,456 units, each unit
consisted of one share of our series A preferred stock and 285.714 shares of
common stock, at price per unit of $1,000 for a total purchase price of $34.6
million. Of the 34,456 units sold, 34,170 units were sold to the following
directors, officers and five percent stockholders and their affiliates.
<TABLE>
<CAPTION>
-------------------------------------------------
SERIES A
NAME PREFERRED STOCK COMMON STOCK PURCHASE PRICE
- ---- --------------- ------------ --------------
<S> <C> <C> <C>
Biotech Growth S.A.................................. 15,000 4,285,714 $15,000,000
Warburg, Pincus..................................... 14,000 4,000,000 14,000,000
PharmaBio........................................... 2,670 762,857 2,670,000
Hanseatic........................................... 1,500 428,571 1,500,000
Clive Meanwell...................................... 550 157,143 550,000
Peyton Marshall..................................... 350 100,000 350,000
John Villiger....................................... 100 28,571 100,000
</TABLE>
In April, 1997, we issued three promissory notes in the principal amounts of
$1.2 million, $214,000 and $610,000 to Warburg, Pincus, Hanseatic and Biotech
Target, respectively. The outstanding principal amount of these notes was
converted into units in the June 1997 financing.
EXCHANGE
In August 1998, the holders of the units issued in 1996 and 1997, exchanged
these units, as well as shares of our series A preferred stock issued as stock
dividends in December 1997 and August 1998, into shares of our series I and II
convertible preferred stock. Stockholders who purchased units in 1996 received
shares of our series I convertible preferred stock and those who purchased units
in 1997 received shares of series II convertible preferred stock. The following
directors, officers and five percent stockholders and their affiliates received
shares in the exchange.
47
<PAGE> 51
<TABLE>
<CAPTION>
------------------------------------
SERIES I SERIES II
NAME PREFERRED STOCK PREFERRED STOCK
- ---- ----------------- ---------------
<S> <C> <C>
Biotech Growth S.A.......................................... -- 4,621,143
Warburg, Pincus............................................. 1,071,000 4,283,143
PharmaBio................................................... 764,500 818,286
Hanseatic................................................... 268,500 459,714
Clive Meanwell.............................................. 87,500 165,143
MPM......................................................... 135,000 --
Peyton Marshall............................................. -- 104,000
T. Scott Johnson............................................ 90,000 --
John Villiger............................................... -- 29,714
</TABLE>
All shares of series I and series II convertible preferred stock, and accrued
dividends on such stock, will convert into shares of common stock upon
the consummation of this offering.
ISSUANCE OF SERIES III CONVERTIBLE PREFERRED STOCK
In August 1998, we issued an aggregate of 8,399,593 shares of series III
preferred stock at a price per share of $4.32 for a total purchase price of
$36.3 million. Of the 8,399,593 shares, 7,037,038 shares were sold to the
following directors, officers and five percent stockholders and their
affiliates.
<TABLE>
<CAPTION>
------------------------------
SERIES III
CONVERTIBLE PURCHASE
NAME PREFERRED STOCK PRICE
- ---- --------------- -----------
<S> <C> <C>
Warburg, Pincus............................................. 2,546,296 $10,999,999
Morgan Stanley.............................................. 1,851,852 8,000,001
Alta Partners............................................... 1,736,112 7,500,004
Biotech Growth S.A.......................................... 462,963 2,000,000
Hanseatic................................................... 393,519 1,700,002
Clive Meanwell.............................................. 23,148 99,999
Peyton Marshall............................................. 23,148 99,999
</TABLE>
All shares of our series III convertible preferred stock will be automatically
converted into an aggregate of shares of our common stock upon
the consummation of this offering.
NOTE FINANCINGS
In October 1999, we issued convertible notes in the aggregate principal amount
of $6.0 million. The notes bear interest at a rate of 8% per year. We must
redeem the notes on January 15, 2001. In connection with the issuance of the
notes, we issued common stock purchase warrants to purchase an aggregate of
1,388,889 shares of common stock with an exercise price of $4.32 per share. The
warrants must be exercised by October 19, 2004. The following directors,
officers and five percent stockholders and their affiliates purchased notes and
warrants.
<TABLE>
<CAPTION>
------------------------
WARRANTS TO
PURCHASE
NAME NOTES COMMON STOCK
- ---- ---------- ------------
<S> <C> <C>
Warburg Pincus.............................................. $2,750,000 636,574
Morgan Stanley.............................................. 643,959 149,148
Alta Partners............................................... 604,048 139,826
PharmaBio................................................... 551,103 127,570
Biotech Growth S.A.......................................... 500,000 115,741
Hanseatic................................................... 390,471 90,387
Clive Meanwell.............................................. 150,000 34,722
Peyton Marshall............................................. 60,175 13,929
T. Scott Johnson............................................ 31,357 7,254
John Nystrom................................................ 20,000 4,630
John Villiger............................................... 10,000 2,315
</TABLE>
48
<PAGE> 52
In March 2000, we issued convertible notes in the aggregate principal amount of
$13.3 million. The notes bear interest at a rate of 8% per year. We must redeem
the notes on January 15, 2001. In connection with the issuance of the notes, we
issued common stock purchase warrants to purchase an aggregate of 3,089,994
shares of common stock with an exercise price of $4.32. The warrants must be
exercised by March 2, 2005. The following directors, officers and five percent
stockholders and their affiliates purchased notes and warrants.
<TABLE>
<CAPTION>
---------------------------------
WARRANTS TO
PURCHASE
NAME NOTES COMMON STOCK
- ---- ---------- ---------------------
<S> <C> <C>
Warburg, Pincus............................................. $4,800,000 1,111,111
Biotech Growth S.A.......................................... 3,500,000 810,185
PharmaBio................................................... 1,120,000 259,259
Morgan Stanley.............................................. 1,132,279 262,102
Alta Partners............................................... 1,100,000 254,630
Armin Kessler............................................... 200,000 46,296
T. Scott Johnson............................................ 50,000 11,574
Clive Meanwell.............................................. 200,000 46,296
Peyton Marshall............................................. 50,000 11,574
John Villiger............................................... 10,000 2,315
John Nystrom................................................ 10,000 2,315
</TABLE>
On May 17, 2000, the outstanding aggregate principal amount of the notes issued
in October 1999 and March 2000, and accrued interest thereon, were converted
into an aggregate of 4,535,366 shares of our series IV convertible preferred
stock. The following directors, executive officers and five percent stockholders
and their affiliates received 4,351,491 shares of our series IV preferred stock
in the conversion.
<TABLE>
<CAPTION>
------------------------------
SERIES IV
NAME NOTES PREFERRED STOCK
- ---- ---------- ----------------
<S> <C> <C>
Warburg, Pincus............................................. $7,639,901 1,768,495
Biotech Growth S.A.......................................... 4,060,110 939,840
Morgan Stanley.............................................. 1,797,789 416,153
Alta Partners............................................... 1,724,556 399,201
PharmaBio................................................... 1,691,752 391,609
Hanseatic................................................... 1,083,210 250,743
Clive Meanwell.............................................. 353,874 81,915
T. Scott Johnson............................................ 82,283 19,047
Armin Kessler............................................... 203,332 47,067
Peyton Marshall............................................. 111,225 25,746
John Nystrom................................................ 30,239 6,999
John Villiger............................................... 20,203 4,676
</TABLE>
ISSUANCE OF SERIES IV CONVERTIBLE PREFERRED STOCK
In May 2000, we issued an aggregate of 1,411,000 shares of our Series IV
convertible preferred stock at a price per share of $4.32 for a total purchase
price of $6.1 million. Of the 1,411,000 shares, 1,355,000 shares were sold to
the following directors, officers and five percent stockholders and their
affiliates.
<TABLE>
<CAPTION>
---------------------------------
SERIES IV
PREFERRED
NAME STOCK PURCHASE PRICE
- ---- --------------- --------------
<S> <C> <C>
Warburg, Pincus............................................. 555,000 $2,397,600
Biotech Growth S.A.......................................... 345,000 1,490,400
Morgan Stanley.............................................. 130,000 561,600
Alta Partners............................................... 130,000 561,600
PharmaBio................................................... 115,000 496,800
Hanseatic................................................... 80,000 345,600
</TABLE>
49
<PAGE> 53
All shares of our series IV preferred stock, including the shares issued upon
the conversion of the notes, will be automatically converted into an aggregate
of shares of common stock upon the consummation of this offering.
STRATEGIC ALLIANCES
PharmaBio/Quintiles
In August 1996, we entered into a strategic alliance with PharmaBio, a wholly
owned subsidiary of Quintiles Transnational Corp. Under the terms of the
strategic alliance agreement, PharmaBio and any of its affiliates who work on
our projects will, at no cost to us, review and evaluate, jointly with us,
development programs we design related to potential or actual product
acquisitions. The purpose of this collaboration is to optimize the duration,
cost, specifications and quality aspects of such programs. PharmaBio and its
affiliates have also agreed to perform other services with respect to our
products, including clinical and non-clinical development services, project
management, project implementation, pharmacoeconomic services, regulatory
affairs and post-marketing surveillance services and statistical, statistical
programming, data processing and data management services pursuant to work
orders agreed to by us and PharmaBio from time to time. As of May 17, 2000, we
have entered into 36 work orders with PharmaBio and have paid PharmaBio a total
of $9.6 million. We have outstanding obligations to PharmaBio of an additional
$381,344 under outstanding work orders.
In addition, under the strategic alliance agreement, if PharmaBio and its
affiliates exceed performance milestones agreed upon prior to the initiation of
services under any work order, we will pay certain bonuses (not to exceed 10% of
the net revenues PharmaBio and its affiliates received for such services) which,
at the option of PharmaBio, may be paid in shares of our common stock. To date,
performance milestones have been requested and agreed upon for one work order
out of the work orders completed or outstanding, and no such agreed upon
milestones remain outstanding. Please see "certain transactions".
Innovex
In January 1997, we entered into a consulting agreement with Innovex, Inc., a
subsidiary of Quintiles. Since December 1997, we have also entered into various
clinical services agreements with Innovex pursuant to which Innovex has provided
project management, clinical monitoring, site management, medical monitoring,
regulatory affairs, data management and quality assurance services with respect
to clinical trials of Angiomax. None of these agreements is currently
outstanding. As of May 17, 2000, we have paid Innovex $1.6 million under these
agreements.
Stack Pharmaceuticals
In April 2000, we entered into an agreement with Stack Pharmaceuticals, Inc.,
which is an entity controlled by David Stack, one of our Senior Vice Presidents.
Pursuant to the terms of this agreement, we have agreed to pay Stack
Pharmaceuticals specified amounts related to our infrastructure and for services
to be agreed upon by the parties. As of May 17, 2000, we have paid Stack
Pharmaceuticals, Inc. $47,200 under this agreement.
50
<PAGE> 54
PRINCIPAL STOCKHOLDERS
The following table presents information regarding the beneficial ownership of
our common stock as of May 17, 2000, and as adjusted to reflect the sale of our
common stock offered by this prospectus, by:
- - each of the individuals listed in the "Summary Compensation Table" above;
- - each of our directors;
- - each person, or group of affiliated persons, who is known by us to
beneficially own five percent or more of our common stock; and
- - all current directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the SEC and
generally includes shares of common stock under options held by that person that
are currently exercisable or exercisable within 60 days of May 17, 2000. These
shares, however, are not considered outstanding when computing the percentage
ownership of each other person.
Except as indicated in the footnotes to this table and pursuant to state
community property laws, each stockholder named in the table has sole voting and
investment power for the shares shown as beneficially owned by them. Percentage
of ownership is based on 31,376,719 shares of common stock on an as-converted
basis outstanding on May 17, 2000 and shares of common stock on an
as-converted basis outstanding after completion of this offering. Unless
otherwise indicated in the footnotes, the address of each of the individuals
named below is: c/o The Medicines Company, One Cambridge Center, Cambridge,
Massachusetts 02142.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
BENEFICIAL OWNERSHIP
PRIOR TO OFFERING
----------------------------------------
SHARES ISSUABLE PERCENTAGE
PURSUANT TO OPTIONS BENEFICIALLY
NUMBER OF AND WARRANTS OWNED
SHARES EXERCISABLE --------------------------------
BENEFICIALLY WITHIN 60 DAYS BEFORE AFTER
OWNED OF MAY 17, 2000 OFFERING OFFERING
------------------ ------------------- --------------- --------------
<S> <C> <C> <C> <C>
5% STOCKHOLDERS:
Warburg, Pincus Ventures, L.P.(1)........ 11,235,269 1,747,685 39.2%
Biotech Growth S.A.(2)................... 7,020,728 925,926 24.6%
PharmaBio Development, Inc.(3)........... 2,292,425 386,829 8.4%
Morgan Stanley Venture Partners(4)....... 2,654,027 411,250 9.6%
Alta Partners(5)......................... 2,486,583 394,456 9.1%
Hanseatic Americas LDC(6)................ 1,596,040 247,794 5.8%
DIRECTORS AND EXECUTIVE OFFICERS:
Clive A. Meanwell........................ 693,061 135,750 2.6%
Peyton J. Marshall(7).................... 369,183 51,327 1.3%
David Stack.............................. -- 11,250 *
John Villiger............................ 188,200 22,417 *
John Nystrom............................. 49,608 59,994 *
Dermot Liddy............................. 70,000 34,070 *
Richard Malcolm.......................... 22,548 -- *
Leonard Bell............................. -- 833 *
Anders D. Hove(8)........................ 7,020,728 925,926 24.6%
M. Fazle Husain(9)....................... 2,634,027 411,250 9.6%
T. Scott Johnson(10)..................... 120,589 18,828 *
Armin M. Kessler......................... 47,067 55,046 *
James E. Thomas.......................... -- 833 *
Robert Yedid(11)......................... 11,235,269 1,747,685 39.2%
Dennis Gillings(12)...................... 2,292,425 925,926 8.4%
All directors and executive officers as a
group (16 persons)..................... 24,742,705 4,434,425 81.5%
</TABLE>
- ---------------
* Represents beneficial ownership of less than 1 percent.
(1) The address of Warburg, Pincus Ventures, L.P. is 466 Lexington Avenue, New
York, New York 10017-3147.
(2) The address of Biotech Growth S.A. is Swiss Bank Towers Obarie Street
Panama 1, Republic of Panama.
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<PAGE> 55
(3) The address for PharmaBio Development, Inc. is c/o Quintiles Transnational
Corp. is 4709 Creekstone Drive, Riverbirch Building, Durham, North Carolina
27703-8411.
(4) Includes 2,311,034 shares of common stock and warrants to purchase 360,821
shares of common stock held by Morgan Stanley Venture Partners III, L.P.,
221,889 shares of common stock and warrants to purchase 34,643 shares of
common stock held by Morgan Stanley Venture Investors III, L.P. and 101,104
shares of common stock and warrants to purchase 15,786 shares of common
stock held by The Morgan Stanley Venture Partners Entrepreneur Fund, L.P.
The address for Morgan Stanley Venture Partners is 1221 Avenue of the
Americas, 33rd Floor, New York, New York 10020.
(5) Includes 1,545,626 shares of common stock and warrants to purchase 245,188
shares of common stock held by Alta BioPharma Partners, L.P., 58,256 shares
of common stock and warrants to purchase 9,242 shares of common stock held
by Alta Embarcadero BioPharm, LLC and 882,701 shares of common stock and
warrants to purchase 140,026 shares of common stock held by The Medicines
Company Chase Partners (Alta Bio), LCC. The address for Alta Partners is
One Embarcadero Center, Suite 4050, San Francisco, California 94111.
(6) The address for Hanseatic Americas LDC is 450 Park Avenue, Suite 2302, New
York, New York 10022.
(7) Includes 80,000 shares of common stock held in custody for the benefit of
his minor children.
(8) Consists solely of shares of common stock and warrants to purchase common
stock held by Biotech Growth S.A. Mr. Hove is a member of the Bellevue
Group with responsibility for managing Biotech Growth S.A. Mr. Hove
disclaims beneficial ownership of these shares.
(9) Consists solely of shares of common stock and warrants to purchase common
stock held by Morgan Stanley Venture Partners III, L.P., Morgan Stanley
Venture Investors III, L.P. and The Morgan Stanley Venture Partners
Enterpreneur Fund, L.P. Mr. Husain is a general partner of Morgan Stanley
Venture Partners, L.P., which is a general partner of each of Morgan
Stanley Venture Partners III, L.P., Morgan Stanley Venture Investors III,
L.P. and The Morgan Stanley Venture Partners Entrepreneur Fund, L.P. Mr.
Husain disclaims beneficial ownership of these shares.
(10) Includes 22,560 shares of common stock held in trust for the benefit of his
minor children.
(11) Consists solely of shares of common stock and warrants to purchase common
stock held by Warburg, Pincus Ventures, L.P. Mr. Yedid is a Vice President
of E.M. Warburg, Pincus & Co. LLC, which is a general partner of Warburg
Pincus Ventures, L.P. Mr. Yedid disclaims beneficial ownership of these
shares.
(12) Consists solely of shares of common stock and warrants to purchase common
stock held by PharmaBio Development Inc., a wholly owned subsidiary of
Quintiles Transnational Corp. Mr. Gillings is the Chairman and Chief
Executive Officer of Quintiles Transnational Corp. Mr. Gillings disclaims
beneficial ownership of these shares.
52
<PAGE> 56
DESCRIPTION OF CAPITAL STOCK
After this offering, our authorized capital stock will consist of 75,000,000
shares of common stock, $0.001 par value per share, and 5,000,000 shares of
undesignated preferred stock, $0.01 par value per share.
The following summary of our capital stock and some of the provisions of our
certificate of incorporation and other agreements to which we and our
stockholders are parties is not intended to be complete and is qualified by
reference to our certificate of incorporation and any other agreements included
as exhibits to the registration statement of which this prospectus is a part.
See "Where You Can Find More Information."
COMMON STOCK
As of May 17, 2000 there were 1,186,599 shares of our common stock outstanding
held by 58 stockholders of record.
The holders of our common stock are entitled to one vote fore each share held on
all matters submitted to a vote of the stockholders and do not have any
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 our common stock are entitled to
receive proportionally any dividends declared by our board of directors, subject
to any preferential dividend rights of outstanding preferred stock.
In the event of our liquidation, dissolution or winding up, holders of our
common stock are entitled to share ratably in all assets remaining after payment
of all debts and other liabilities, subject to the prior rights of any
outstanding preferred stock. Holders of our common stock have no preemptive,
subscription, redemption or conversion rights. All outstanding shares of our
common stock are validly issued, fully paid and nonassessable. The shares to be
issued by us in this offering will be, when issued and paid for, validly issued,
fully paid and nonassessable. The rights, preferences and privileges of holders
of our common stock are subject to, and may be adversely affected by, the rights
of holders of shares of any series of preferred stock that we may designate and
issue in the future.
PREFERRED STOCK
Upon the closing of this offering, all outstanding shares of our convertible
preferred stock and accrued dividends on such stock will automatically convert
into shares of common stock. Thereafter, under the terms of our
amended and restated certificate of incorporation, our board of directors will
be authorized to issue shares of preferred stock in one or more series without
further stockholder approval. The board has discretion to determine the rights,
preferences, privileges and restrictions, including voting rights, dividend
rights, conversion rights, redemption privileges and liquidation preferences of
each series of preferred stock.
The purpose of authorizing our board of directors to issue preferred stock and
determine its rights and preferences is to eliminate delays associated with a
stockholder vote on specific issuances. The issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could make it more difficult for a third-party to
acquire, or could discourage a third-party from acquiring, a majority of our
outstanding voting stock.
WARRANTS
As of May 17, 2000, we had outstanding common stock purchase warrants entitling
their holders to purchase an aggregate of 4,478,883 shares of common stock at an
exercise price of $4.32 per share. In October 1999, we issued warrants
exercisable at any time prior to October 19, 2004 for 1,388,889 shares of our
common stock in connection with the sale of 8% convertible promissory notes in
the aggregate principal amount of $6.0 million. In March 2000, we issued
warrants exercisable at any time prior to March 2, 2005 for 3,089,994 shares of
our common stock in connection with the sale of 8% convertible promissory notes
in the aggregate principal amount of $13.3 million.
REGISTRATION RIGHTS
After this offering, the holders of the shares of common stock issued upon
conversion of our convertible preferred stock and warrants exercisable for
4,478,883 additional shares of common stock will be entitled to require us to
register their shares under the Securities Act as provided in a registration
rights agreement between us and such holders. Under this agreement, if we
propose to register any of our securities under the Securities Act, either for
our account or for the account of other security holders exercising registration
rights, the holders are entitled to notice of the registration and to include
their shares of common stock in the registration. Additionally, such holders
may, on up to two occasions, require us to register their shares of common stock
under the Securities Act. In addition, we are required to use our best efforts
to effect any such registration. We
53
<PAGE> 57
are responsible for paying the expense of any such registration. Further, such
holders may require us to file six additional registration statements on form
S-3 at our expense. These registration rights are subject to conditions and
limitations, including the right of the underwriters of an offering to limit the
number of shares included in such registration and our right not to effect a
requested within 180 days following an offer of our securities pursuant to a
Form S-1, including this offering.
ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW AND CHARTER AND BY-LAW PROVISIONS
Delaware Law
We are subject to the provisions of Section 203 of the Delaware General
Corporate Law. In general, the statute prohibits a publicly held Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date that the stockholder
became an interested stockholder unless:
- - prior to the date, the board of directors of the corporation approved either
the business combination or the transaction that resulted in the stockholder
becoming an interested stockholder;
- - upon consummation of the transaction that resulted in the stockholder's
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding those shares owned by persons who are
directors and also officers, and employee stock plans in which employee
participants do not have the right to determine confidentially whether shares
held under the plan will be tendered in a tender or exchange offer; or
- - on or subsequent to the date, the business combination is approved by the
board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at least
two-thirds of the outstanding voting stock that is not owned by the interested
stockholder.
Section 203 defines "business combination" to include:
- - any merger or consolidation involving the corporation and the interested
stockholder;
- - any sale, transfer, pledge or other disposition involving the interested
stockholder of 10% or more of the assets of the corporation;
- - in general, any transaction that results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder; or
- - the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.
In general, Section 203 defines an interested stockholder as an entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by the entity or person.
Charter and By-law Provisions
Our charter and our amended and restated by-laws that will be effective upon the
closing of this offering provide for the division of our board of directors into
three classes as nearly equal in size as possible with staggered three-year
terms. See "Management." Under our charter and by-laws, any vacancy on the board
of directors, including a vacancy resulting from an enlargement of the board of
directors, may only be filled by vote of a majority of the directors then in
office. The classification of the board of directors and the limitation on and
filling of vacancies could make it more difficult for a third-party to acquire,
or discourage a third-party from acquiring, control of our company.
Our charter and by-laws also provide that after this offering, any action
required or permitted to be taken by our stockholders at an annual or special
meeting of stockholders may only be taken if it is properly brought before such
meeting and may not be taken by written action in lieu of a meeting. Our by-laws
will further provide that special meetings of the stockholders may only be
called by our chairman of the board, the president or our board of directors. In
order for any matter to be considered "properly brought" before a meeting, a
stockholder must comply with certain requirements regarding advance notice and
provide us with certain information. These provisions could have the effect of
delaying until the next stockholders meeting stockholder actions which are
favored by the holders of a majority of our outstanding voting securities.
The General Corporation Law of Delaware 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 a
corporation's certificate of incorporation or by-laws, as the case may be,
requires a greater percentage. Our charter and our by-laws will require the
54
<PAGE> 58
affirmative vote of holders of at least 50% of the votes which all the
stockholders would be entitled to cast in any annual election of directors or
class of directors to amend or repeal any of the provisions described in the
prior two paragraphs.
Our amended and restated certificate of incorporation will contain certain
provisions permitted under the General Corporation Law of Delaware relating to
the liability of directors. These provisions eliminate a director's liability
for monetary damages for a breach of fiduciary duty, except in certain
circumstances involving wrongful acts, such as the breach of a director's duty
of loyalty or acts or omissions which involve intentional misconduct or a
knowing violation of law. Further, our amended and restated certificate of
incorporation will contain provisions to indemnify our directors and officers to
the fullest extent permitted by the General Corporation Law of Delaware. We
believe that these provisions will assist us in attracting and retaining
qualified individuals to serve as directors.
TRANSFER AGENT AND REGISTRAR
Chase Mellon Shareholder Services, LLC has been appointed as the transfer agent
and registrar for our common stock.
NASDAQ NATIONAL MARKET LISTING
We have applied to have our shares of common stock listed on the Nasdaq National
Market under the symbol "MDCO".
55
<PAGE> 59
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common stock.
Future sales of substantial amounts of our common stock in the public market
could adversely affect prevailing market prices. Upon completion of this
offering, we will have outstanding an aggregate of shares of common
stock. Of these shares, all of the shares sold in this offering will be freely
tradable without restriction or further registration under the Securities Act,
unless these shares are purchased by affiliates. The remaining 31,376,719 shares
of common stock, assuming that the offering closed on May 17, 2000, held by
existing stockholders are restricted securities. Restricted securities may be
sold in the public market only if registered or if they qualify for an exemption
from registration under the Securities Act.
Our executive officers, directors and stockholders have agreed pursuant to
"lock-up" agreements that, with limited exceptions, for a period of 180 days
from the date of this prospectus, they will not sell any shares of common stock
without the prior written consent of J.P. Morgan Securities Inc.
As a result of these "lock-up" agreements and the rules under the Securities
Act, the restricted shares will be available for sale in the public market,
subject, to certain volume and other restrictions, as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
DAYS AFTER THE NUMBER OF SHARES
EFFECTIVE DATE ELIGIBLE FOR SALE COMMENT
- ---------------- ----------------- ------------------------------------------------------------
<S> <C> <C>
On Effectiveness 208,896 Shares not locked-up and eligible for sale under Rule 144
90 days 228,896 Shares not locked up and eligible for sale under Rules 144
and 701
180 days 31,376,719 Lock-up released; shares eligible for sale under Rules 144
and 701
</TABLE>
Additionally, of the 2,417,591 shares that may be issued upon the exercise of
options outstanding as of May 17, 2000, approximately 523,314 shares are subject
to options which will be vested and exercisable 180 days after the date of this
prospectus.
Registration Rights
On the date 180 days after the completion of this offering, assuming the closing
of the offering occurred on May 17, 2000, the holders of 30,190,120 shares of
our common stock and warrants exercisable for 4,478,883 additional shares of
common stock, will have rights to require us to register their shares under the
Securities Act. Upon the effectiveness of a registration statement covering
these shares, the shares would become freely tradable.
Stock Options
Immediately after this offering, we intend to file a registration statement
under the Securities Act covering approximately 6,583,917 shares of common stock
reserved for issuance under our stock plans. We expect the registration
statement to be filed and become effective as soon as practicable after the
closing of this offering. Accordingly, shares registered under such registration
statement will be available for sale in the open market after the effectiveness
of the registration statement, unless they are held by persons that have signed
a "lock-up" agreement.
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<PAGE> 60
UNDERWRITING
J.P. Morgan Securities Inc. is acting as sole book running manager for this
offering. We and the underwriters named below have entered into an underwriting
agreement covering the common stock to be offered in this offering. J.P. Morgan
Securities Inc., FleetBoston Robertson Stephens Inc. and CIBC World Markets
Corp. are acting as representatives of the underwriters. Each underwriter has
agreed to purchase the number of shares of common stock set forth opposite its
name in the following table.
<TABLE>
<CAPTION>
----------------
NUMBER OF SHARES
----------------
<S> <C>
UNDERWRITERS
J.P. Morgan Securities Inc................................
FleetBoston Robertson Stephens Inc........................
CIBC World Markets Corp...................................
--------
Total..................................................
========
</TABLE>
The underwriting agreement provides that if the underwriters take any of the
shares presented in the table above, then they must take all of these shares. No
underwriter is obligated to take any shares allocated to a defaulting
underwriter except under limited circumstances.
The underwriters are offering the shares of common stock, subject to the prior
sale of shares, and when, as and if such shares are delivered to and accepted by
them. The underwriters will initially offer to sell shares to the public at the
initial public offering price shown on the cover page of this prospectus. The
underwriters may sell shares to securities dealers at a discount of up to
$ per share from the initial public offering price. Any such securities
dealers may resell shares to certain other brokers or dealers at a discount of
up to $ per share from the initial public offering price. After the
initial public offering, the underwriters may vary the public offering price and
other selling terms.
If the underwriters sell more shares than the total number shown in the table
above, the underwriters have the option to buy up to an additional
shares of common stock from us to cover such sales. They may exercise this
option during the 30-day period from the date of this prospectus. If any shares
are purchased with this option, the underwriters will purchase shares in
approximately the same proportion as shown in the table above.
The following table shows the per share and total underwriting discounts and
commissions that we will pay to the underwriters. These amounts are shown
assuming both no exercise and full exercise of the underwriters' option to
purchase additional shares.
<TABLE>
<CAPTION>
----------------------------
NO EXERCISE FULL EXERCISE
----------- -------------
<S> <C> <C>
Per share................................................... $ $
Total..................................................... $ $
</TABLE>
The underwriters may purchase and sell shares of common stock in the open market
in connection with this offering. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
shares than they are required to purchase in this offering. Stabilizing
transactions consist of bids or purchases made for the purpose of preventing or
slowing a decline in the market price of the common stock while this offering is
in progress. The underwriters may also impose a penalty bid, which means that an
underwriter must repay to the other underwriters a portion of the underwriting
discount received by it. an underwriter may be subject to a penalty bid if the
representatives of the underwriters, while engaging in stabilizing or short
covering transactions, repurchase shares sold by or for the account of that
underwriter. These activities may stabilize, maintain or otherwise affect the
market price of the common stock. As a result, the price of the common stock may
be higher than the price that otherwise might exist in the open market. If the
underwriters commence these activities, they may discontinue them at any time.
The underwriters may carry out these transactions on the Nasdaq National Market,
in the over-the-counter market or otherwise.
A prospectus in electronic format will be made available on an Internet site
maintained by one or more of the underwriters participating it his offering.
We estimate that the total expenses of this offering, excluding underwriting
discounts, will be $ .
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.
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<PAGE> 61
We, our executive officers, directors and stockholders have agreed that during
the period beginning from the date of this prospectus and continuing to and
including the date 180 days after the date of this prospectus, none of us will,
directly or indirectly, offer, sell, offer to sell, contract to sell or
otherwise dispose of any shares of common stock or any of our securities which
are substantially similar to the common stock, including but not limited to any
securities that are convertible into or exchangeable for, or that represent the
right to receive, common stock or any substantially similar securities or enter
into any swap, option, future, forward or other agreement that transfers, in
whole or in part, the economic consequence of ownership of common stock or any
securities substantially similar to the common stock, other than pursuant to
employee stock option plans existing on the date of this prospectus, without the
prior written consent of J.P. Morgan Securities, Inc.
At our request, the underwriters have reserved shares of common stock for sale
to our directors, officers employees, consultants, third-party contractors and
family members of the foregoing who express an interest in participating in this
offering. We expect these persons to purchase no more than five percent, or
shares, of the common stock offered in this offering. The number of
shares available for sale to the general public will be reduced to the extent
such persons purchase such reserved shares.
We have applied to have our shares of common stock listed on the Nasdaq National
Market under the symbol "MDCO".
It is expected that delivery of the shares will be made to investors on or about
, 2000.
There has been no public market for the common stock prior to this offering. We
and the underwriters will negotiate the initial offering price. In determining
the price, we and the underwriters expect to consider a number of factors in
addition to prevailing market conditions, including:
- - the history of and prospects for our industry and for biotechnology companies
generally;
- - an assessment of our management;
- - our present operations;
- - our historical results of operations;
- - the trend of our revenues and earnings; and
- - our earnings prospects.
We and the underwriters will consider these and other relevant factors in
relation to the price of similar securities of generally comparable companies.
Neither we nor the underwriters can assure investors that an active trading
market will develop for the common stock, or that the common stock will trade in
the public market at or above the initial offering price.
From time to time in the ordinary course of their respective businesses, certain
of the underwriters and their affiliates have engaged in and may in the future
engage in commercial banking and/or investment banking transactions with us and
our affiliates. In addition, FleetBoston Robertson Stephens Inc. and its
affiliates own shares of our convertible preferred stock that will convert into
shares of common stock upon completion of this offering, which will
represent less than 1% of our outstanding common stock assuming completion of
this offering.
LEGAL MATTERS
Certain legal matters with respect to the validity of the shares of common stock
offered hereby will be passed upon us by Hale and Dorr LLP, Boston,
Massachusetts. Legal matters in connection with the offering will be passed upon
for the underwriters by Cahill Gordon & Reindel, New York, New York. Partners of
Hale and Dorr LLP beneficially own an aggregate of shares of our common
stock.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated financial
statements as of December 31, 1998 and 1999 and for each of the three years in
the period ended December 31, 1999, as set forth in their report. We have
included our financial statements in the prospectus and elsewhere in the
registration statement in reliance on Ernst & Young LLP's report, given on their
authority as experts in accounting and auditing.
58
<PAGE> 62
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the
Securities Act of 1933 regarding the shares of common stock offered by us. This
prospectus, which constitutes a part of the registration statement, does not
contain all of the information contained in the registration statement, some
items of which are contained in exhibits to the registration statement as
permitted by the rules and regulations of the SEC. For further information on us
and the common stock we are offering, please see the registration statement,
including the exhibits, and the financial statements and notes filed as a part
of the registration statement. A copy of the registration statement, including
the exhibits and the financial statements and notes filed as a part of it, may
be inspected without charge at the public reference facilities maintained by the
SEC in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of
all or any part of the registration statement may be obtained from the SEC upon
the payment of fees prescribed by it. The SEC also maintains a Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding companies that file electronically with it.
As a result of this offering, we will become subject to the information and
reporting requirements of the Securities Exchange Act of 1934 and will file
periodic reports, proxy statements and other information with the SEC. You may
inspect any of these document as described in the preceding paragraph. Upon
approval of our common stock for quotation on the Nasdaq National Market, these
reports, proxy statements and other information may also be inspected at the
offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.
59
<PAGE> 63
INDEX TO THE
CONSOLIDATED FINANCIAL STATEMENTS OF
THE MEDICINES COMPANY
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors.............................. F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations....................... F-4
Consolidated Statements of Redeemable Preferred Stock and
Stockholders' Deficit..................................... F-5
Consolidated Statements of Cash Flows....................... F-7
Notes to Consolidated Financial Statements.................. F-8
</TABLE>
F-1
<PAGE> 64
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
The Medicines Company
We have audited the accompanying consolidated balance sheets of The Medicines
Company (a company in the development stage) as of December 31, 1998 and 1999,
and the related consolidated statements of operations, redeemable preferred
stock and stockholders' deficit, and cash flows, for each of the three years in
the period ended December 31, 1999, and the statement of redeemable preferred
stock and stockholders' deficit for the period July 31, 1996 (date of inception)
to December 31, 1999. 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 auditing standards generally accepted
in the United States. 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of The
Medicines Company at December 31, 1998 and 1999, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States.
/s/ Ernst & Young LLP
Boston, Massachusetts
April 17, 2000, except for Note 14,
as to which the date is May 17, 2000
F-2
<PAGE> 65
THE MEDICINES COMPANY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
---------------------------------------------
AS OF DECEMBER 31,
---------------------------- MARCH 31,
1998 1999 2000
------------ ------------ -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 8,997,522 $ 6,643,266 $ 12,295,203
Marketable securities..................................... 19,343,183 539,274 --
Accrued interest receivable............................... 745,515 55,225 26,679
Prepaid expenses and other current assets................. 195,475 154,967 246,593
------------ ------------ -------------
Total current assets.............................. 29,281,695 7,392,732 12,568,475
Fixed assets, net........................................... 382,692 430,061 386,963
Other assets................................................ 166,479 168,605 169,660
------------ ------------ -------------
Total assets...................................... $ 29,830,866 $ 7,991,398 $ 13,125,098
============ ============ =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable.......................................... $ 2,287,048 $ 7,815,028 $ 9,972,997
Accrued expenses.......................................... 2,425,107 3,680,293 5,090,413
------------ ------------ -------------
Total current liabilities......................... 4,712,155 11,495,321 15,063,410
Convertible notes........................................... -- 5,776,319 18,652,324
Commitments and contingencies
Redeemable Convertible Preferred Stock, $1 par value;
31,550,000 shares authorized; shares issued and
outstanding: 21,493,621 at December 31, 1998 and
22,962,350 at December 31, 1999 and March 31, 2000, at
redemption value (Liquidation value of $86,167,821 at
December 31, 1999 and $87,633,023 at March 31, 2000)...... 79,384,470 85,277,413 86,807,169
Stockholders' deficit:
Common stock, $.001 par value, 36,000,000 shares
authorized; shares issued and outstanding: 1,218,874
and 1,141,644 at December 31, 1998 and 1999,
respectively, and 1,121,644 at March 31, 2000.......... 1,219 1,142 1,122
Additional paid-in capital................................ 13,481 338,836 1,131,877
Deficit accumulated during the development stage.......... (54,319,117) (94,925,028) (108,547,811)
Accumulated other comprehensive income, principally
foreign currency translation........................... 38,658 27,395 17,007
------------ ------------ -------------
Total stockholders' deficit....................... (54,265,759) (94,557,655) (107,397,805)
------------ ------------ -------------
Total liabilities and stockholders' deficit................. $ 29,830,866 $ 7,991,398 $ 13,125,098
============ ============ =============
</TABLE>
See accompanying notes.
F-3
<PAGE> 66
THE MEDICINES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31, PERIOD JULY 31, 1996
------------------------------------------ -------------------------- (DATE OF INCEPTION)
1997 1998 1999 1999 2000 TO MARCH 31, 2000
------------ ------------ ------------ ----------- ------------ --------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Operating expenses:
Research and
development......... $ 16,044,367 $ 24,004,606 $ 30,344,892 $ 7,207,200 $ 10,538,866 $ 81,759,966
General and
administrative...... 2,420,373 6,248,265 5,008,387 1,276,042 1,150,971 15,529,303
------------ ------------ ------------ ----------- ------------ -------------
Total operating
expenses..... 18,464,740 30,252,871 35,353,279 8,483,242 11,689,837 97,289,269
------------ ------------ ------------ ----------- ------------ -------------
Loss from operations..... (18,464,740) (30,252,871) (35,353,279) (8,483,242) (11,689,837) (97,289,269)
Other income (expense):
Interest income........ 688,049 1,302,073 837,839 346,178 103,835 2,993,461
Interest expense....... (29,235) -- (197,455) -- (507,025) (733,715)
------------ ------------ ------------ ----------- ------------ -------------
Net loss................. (17,805,926) (28,950,798) (34,712,895) (8,137,064) (12,093,027) (95,029,523)
Dividends and accretion
to redemption value of
redeemable preferred
stock.................. (2,018,265) (3,958,903) (5,893,016) (1,436,114) (1,529,756) (13,518,288)
------------ ------------ ------------ ----------- ------------ -------------
Net loss attributable to
common stockholders.... $(19,824,191) $(32,909,701) $(40,605,911) $(9,573,178) $(13,622,783) $(108,547,811)
============ ============ ============ =========== ============ =============
Basic and diluted net
loss attributable to
common stockholders per
common share........... $ (2.96) $ (4.40) $ (58.46) $ (15.40) $ (15.75)
Unaudited pro forma basic
and diluted net loss
attributable to common
stockholders per common
share.................. $ -- $ -- $ (1.42) $ (0.35) $ (0.39)
Shares used in computing
net loss attributable
to common stockholders
per common share:
Basic and diluted...... 6,694,836 7,472,128 694,610 621,734 864,762
Unaudited pro forma
basic and diluted... 24,383,393 23,094,507 29,325,550
</TABLE>
See accompanying notes.
F-4
<PAGE> 67
THE MEDICINES COMPANY
CONSOLIDATED STATEMENTS OF REDEEMABLE
PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
FOR THE PERIOD JULY 31, 1996 (DATE OF INCEPTION) TO MARCH 31, 2000
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
REDEEMABLE REDEEMABLE CONVERTIBLE
PREFERRED STOCK PREFERRED STOCK COMMON STOCK ADDITIONAL
---------------------- ------------------------ ---------------------- PAID-IN
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL
------- ------------ ---------- ----------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock......... 2,797,500 $ 2,797
Issuance of redeemable preferred
stock.......................... 4,675 $ 4,675,000
Accretion of preferred stock to
redemption value............... 118,348
Net loss.........................
------- ------------ ---------- ----------- ----------- -------- ----------
Balance at December 31, 1996... 4,675 4,793,348 -- $ -- 2,797,500 2,797 $ --
Employee stock purchases......... 859,000 859
Issuance of common stock......... 9,844,571 9,845
Issuance of redeemable preferred
stock.......................... 34,456 33,498,408
Dividends on preferred stock..... 1,175 1,056,652
Accretion of preferred stock to
redemption value............... 957,592
Net loss.........................
Currency translation
adjustment.....................
Unrealized gain on marketable
securities.....................
Comprehensive loss...............
------- ------------ ---------- ----------- ----------- -------- ----------
Balance at December 31, 1997... 40,306 40,306,000 -- -- 13,501,071 13,501 --
Employee stock purchases......... 47,791 48 1,299
Repurchase of common stock....... (147,917) (148)
Exchange of redeemable preferred
stock for redeemable
convertible preferred stock.... (41,992) (41,992,000) 13,071,714 41,992,000 (12,182,071) (12,182) 12,182
Issuance of redeemable
convertible preferred stock.... 8,421,907 35,126,419
Dividends on preferred stock..... 1,686 1,686,000
Accretion of preferred stock to
redemption value............... 2,266,051
Net loss.........................
Currency translation
adjustment.....................
Unrealized loss on marketable
securities.....................
Comprehensive loss...............
------- ------------ ---------- ----------- ----------- -------- ----------
Balance at December 31, 1998... -- -- 21,493,621 79,384,470 1,218,874 1,219 13,481
<CAPTION>
---------------------------------------------
DEFICIT
ACCUMULATED
DURING THE COMPREHENSIVE TOTAL
DEVELOPMENT INCOME STOCKHOLDERS'
STAGE (LOSS) DEFICIT
------------- ------------- -------------
<S> <C> <C> <C>
Issuance of common stock......... $ 2,797
Issuance of redeemable preferred
stock..........................
Accretion of preferred stock to
redemption value............... $ (118,348) (118,348)
Net loss......................... (1,466,877) (1,466,877)
------------- -------- -------------
Balance at December 31, 1996... (1,585,225) $ -- (1,582,428)
Employee stock purchases......... 859
Issuance of common stock......... 9,845
Issuance of redeemable preferred
stock..........................
Dividends on preferred stock..... (1,060,673) (1,060,673)
Accretion of preferred stock to
redemption value............... (957,592) (957,592)
Net loss......................... (17,805,926) (17,805,926)
Currency translation
adjustment..................... 1,806 1,806
Unrealized gain on marketable
securities..................... 7,274 7,274
-------------
Comprehensive loss............... (17,796,846)
------------- -------- -------------
Balance at December 31, 1997... (21,409,416) 9,080 (21,386,835)
Employee stock purchases......... 1,347
Repurchase of common stock....... (148)
Exchange of redeemable preferred
stock for redeemable
convertible preferred stock.... --
Issuance of redeemable
convertible preferred stock....
Dividends on preferred stock..... (1,692,852) (1,692,852)
Accretion of preferred stock to
redemption value............... (2,266,051) (2,266,051)
Net loss......................... (28,950,798) (28,950,798)
Currency translation
adjustment..................... 31,562 31,562
Unrealized loss on marketable
securities..................... (1,984) (1,984)
-------------
Comprehensive loss............... (28,921,220)
------------- -------- -------------
Balance at December 31, 1998... (54,319,117) 38,658 (54,265,759)
</TABLE>
See accompanying notes.
F-5
<PAGE> 68
THE MEDICINES COMPANY
CONSOLIDATED STATEMENTS OF REDEEMABLE
PREFERRED STOCK AND STOCKHOLDERS' DEFICIT--(CONTINUED)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
REDEEMABLE REDEEMABLE CONVERTIBLE
PREFERRED STOCK PREFERRED STOCK COMMON STOCK ADDITIONAL
---------------------- ------------------------ ---------------------- PAID-IN
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL
------- ------------ ---------- ----------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Repurchase of common stock....... (77,230) (77)
Dividends on preferred stock..... 1,468,729 5,351,178
Accretion of preferred stock to
redemption value............... 541,765
Issuance of warrants associated
with convertible notes......... 325,355
Net loss.........................
Currency translation
adjustment.....................
Unrealized loss on marketable
securities.....................
Comprehensive loss...............
------- ------------ ---------- ----------- ----------- -------- ----------
Balance at December 31, 1999... -- $ -- 22,962,350 $85,277,413 1,141,644 $ 1,142 $ 338,836
Repurchase of common stock
(unaudited).................... (20,000) (20)
Accretion of preferred stock to
redemption value (unaudited)... 1,529,756
Issuance of warrants associated
with convertible notes
(unaudited).................... 793,041
Net loss (unaudited).............
Currency translation adjustment
(unaudited)....................
Unrealized gain on marketable
securities (unaudited).........
Comprehensive loss (unaudited)...
------- ------------ ---------- ----------- ----------- -------- ----------
Balance at March 31, 2000
(unaudited)................ -- $ -- 22,962,350 $86,807,169 1,121,644 $ 1,122 $1,131,877
======= ============ ========== =========== =========== ======== ==========
<CAPTION>
---------------------------------------------
DEFICIT
ACCUMULATED
DURING THE COMPREHENSIVE TOTAL
DEVELOPMENT INCOME STOCKHOLDERS'
STAGE (LOSS) DEFICIT
------------- ------------- -------------
<S> <C> <C> <C>
Repurchase of common stock....... (77)
Dividends on preferred stock..... (5,351,251) (5,351,251)
Accretion of preferred stock to
redemption value............... (541,765) (541,765)
Issuance of warrants associated
with convertible notes......... 325,355
Net loss......................... (34,712,895) (34,712,895)
Currency translation
adjustment..................... (3,847) (3,847)
Unrealized loss on marketable
securities..................... (7,416) (7,416)
-------------
Comprehensive loss............... (34,724,158)
------------- -------- -------------
Balance at December 31, 1999... $ (94,925,028) $ 27,395 $ (94,557,655)
Repurchase of common stock
(unaudited).................... (20)
Accretion of preferred stock to
redemption value (unaudited)... (1,529,756) (1,529,756)
Issuance of warrants associated
with convertible notes
(unaudited).................... 793,041
Net loss (unaudited)............. (12,093,027) (12,093,027)
Currency translation adjustment
(unaudited).................... (12,514) (12,514)
Unrealized gain on marketable
securities (unaudited)......... 2,126 2,126
-------------
Comprehensive loss (unaudited)... (12,103,415)
------------- -------- -------------
Balance at March 31, 2000
(unaudited)................ $(108,547,811) $ 17,007 $(107,397,805)
============= ======== =============
</TABLE>
See accompanying notes.
F-6
<PAGE> 69
THE MEDICINES COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31, PERIOD JULY 31, 1996
------------------------------------------ -------------------------- (DATE OF INCEPTION)
1997 1998 1999 1999 2000 TO MARCH 31, 2000
------------ ------------ ------------ ----------- ------------ --------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net loss.................... $(17,805,926) $(28,950,798) $(34,712,895) $(8,137,064) $(12,093,027) $(95,029,523)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and
amortization............ 26,411 98,413 207,663 41,618 62,994 404,516
Amortization of discount
on convertible notes.... -- -- 101,674 -- 320,267 421,941
Changes in operating assets
and liabilities:
Accrued interest
receivable................ (40,000) (705,515) 690,290 15,273 28,547 (26,679)
Prepaid expenses and other
current assets............ (24,958) (156,812) 39,141 16,852 (92,073) (246,593)
Other assets................ (14,356) (152,165) (3,349) -- (1,422) (169,660)
Accounts payable............ 2,226,904 (31,864) 5,528,544 560,379 2,159,075 9,972,997
Accrued expenses............ 4,187,395 (1,928,001) 1,258,366 1,425,109 1,412,312 5,090,413
------------ ------------ ------------ ----------- ------------ ------------
Net cash used in operating
activities.................. (11,444,530) (31,826,742) (26,890,566) (6,077,833) (8,203,327) (79,582,588)
------------ ------------ ------------ ----------- ------------ ------------
Cash flows from investing
activities:
Purchases of marketable
securities................ (30,184,125) (29,861,162) -- -- -- (60,045,287)
Maturities and sales of
marketable securities..... 11,984,911 28,722,483 18,796,493 3,899,932 541,400 60,045,287
Purchase of fixed assets.... (114,534) (357,103) (258,788) (51,291) (23,200) (793,266)
------------ ------------ ------------ ----------- ------------ ------------
Net cash provided by (used in)
investing activities........ (18,313,748) (1,495,782) 18,537,705 3,848,641 518,200 (793,266)
------------ ------------ ------------ ----------- ------------ ------------
Cash flows from financing
activities:
Proceeds from issuance of
convertible notes and
warrants.................. -- -- 6,000,000 -- 13,348,779 19,348,779
Proceeds from issuances of
preferred stock, net...... 33,498,408 35,126,419 -- -- -- 73,299,827
Proceeds from issuances of
common stock.............. 10,704 1,347 -- -- -- 14,848
Repurchases of common
stock..................... -- (148) (77) -- (20) (245)
Dividends paid in cash...... (4,021) (6,852) (73) -- -- (10,946)
------------ ------------ ------------ ----------- ------------ ------------
Net cash provided by financing
activities.................. 33,505,091 35,120,766 5,999,850 -- 13,348,759 92,652,263
Effect of exchange rate
changes on cash............. 1,806 29,928 (1,245) 5,432 (11,695) 18,794
------------ ------------ ------------ ----------- ------------ ------------
Increase (decrease) in cash
and cash equivalents........ 3,748,619 1,828,170 (2,354,256) (2,223,760) 5,651,937 12,295,203
Cash and cash equivalents at
beginning of period......... 3,420,733 7,169,352 8,997,522 8,997,522 6,643,266 --
------------ ------------ ------------ ----------- ------------ ------------
Cash and cash equivalents at
end of period............... $ 7,169,352 $ 8,997,522 $ 6,643,266 $ 6,773,762 $ 12,295,203 $ 12,295,203
============ ============ ============ =========== ============ ============
Non-cash transactions:
Dividends on preferred
stock..................... $ 1,175,000 $ 1,686,000 $ 5,351,178 $ -- $ -- $ 8,212,178
============ ============ ============ =========== ============ ============
Supplemental disclosure of
cash flow information:
Interest paid............... $ 29,235 $ -- $ -- $ -- $ -- $ 29,235
============ ============ ============ =========== ============ ============
</TABLE>
See accompanying notes.
F-7
<PAGE> 70
THE MEDICINES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. NATURE OF BUSINESS
The Medicines Company (the Company) was incorporated in Delaware on July 31,
1996. The Company is a pharmaceutical company engaged in the acquisition,
development and commercialization of late-stage development drugs. The Company
is a development-stage enterprise, as defined in Statement of Financial
Accounting Standards No. 7, and has, since inception, been developing business
plans, acquiring product rights, conducting initial commercialization
activities, obtaining financing, performing research and development, conducting
regulatory activities and recruiting and training personnel.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of expenses during the reporting period. Actual results could differ from those
estimates.
Risks and Uncertainties
The Company is subject to risks common to companies in the pharmaceutical
industry including, but not limited to, uncertainties related to regulatory
approvals, dependence on key products, and protection of proprietary rights.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentration of
credit risk include cash, cash equivalents and marketable securities. The
Company believes it minimizes its exposure to potential concentrations of credit
risk by placing investments in high-quality financial instruments.
Cash, Cash Equivalents and Marketable Securities
The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents. Cash equivalents
consist of investments in money market funds, corporate bonds and taxable
auction securities. These investments are carried at cost, which approximates
fair value.
Marketable securities consist of securities with original maturities of greater
than three months, but less than one year. The Company considers its marketable
securities as available-for-sale. Securities under this classification are
recorded at fair market value and unrealized gains and losses are recorded as a
separate component of stockholders' equity.
At December 31, 1998 and 1999, marketable securities consisted of investments in
corporate bonds with maturities of less than one year and are summarized as
follows:
<TABLE>
<CAPTION>
--------------------------------------------
UNREALIZED
AMORTIZED COST GAIN (LOSS) FAIR VALUE
-------------- ----------- -----------
<S> <C> <C> <C>
December 31, 1998........................................ $19,337,893 $ 5,290 $19,343,183
December 31, 1999........................................ $ 541,400 $(2,126) $ 539,274
</TABLE>
There were no sales of available-for-sale securities during the years ended
December 31, 1998 and 1999, although there were maturities of such securities as
disclosed in the accompanying consolidated statements of cash flows. Proceeds
from sales of available-for-sale securities during the year ended December 31,
1997 were approximately $4,000,000. Gross gains or losses on these sales were
immaterial.
F-8
<PAGE> 71
THE MEDICINES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Advertising Costs
The Company expenses advertising costs as incurred. Advertising costs were
approximately $583,000, $1,491,000 and $484,000 for the years ended December 31,
1997, 1998 and 1999, respectively.
Fixed Assets
Fixed assets are stated at cost. Depreciation is provided using the
straight-line method based on estimated useful lives or, in the case of
leasehold improvements, over the lesser of the useful lives or the lease terms.
Stock-Based Compensation
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123") encourages, but does not require, companies to record
compensation cost for stock-based employee compensation plans at fair value. The
Company has elected to account for stock-based compensation using the intrinsic
value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25").
Translation of Foreign Currencies
The functional currencies of the Company's foreign subsidiaries are the local
currencies, British pound sterling, Swiss franc and New Zealand dollar.
Adjustments resulting from the translation of the financial statements of the
Company's foreign subsidiaries into U.S. dollars are excluded from the
determination of net loss and are accumulated in a separate component of
stockholders' deficit. Foreign exchange transaction gains and losses are
included in the results of operations and are not material to the Company's
consolidated financial statements.
Income Taxes
Deferred tax assets and liabilities are determined based on differences between
financial reporting and income tax bases of assets and liabilities, as well as
net operating loss carryforwards, and are measured using the enacted tax rates
and laws that will be in effect when the differences reverse. Deferred tax
assets are reduced by a valuation allowance to reflect the uncertainty
associated with ultimate realization.
Recent Accounting Pronouncements
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin 101, "Revenue Recognition in Financial Statements" (SAB
101), which provides guidance related to revenue recognition based on
interpretations and practices followed by the SEC. SAB 101, as amended, is
effective beginning the second quarter of calendar years beginning after
December 15, 1999 and requires companies to report any changes in revenue
recognition as a cumulative change in accounting principle at the time of
implementation. Adoption of SAB 101 is not expected to have a material impact on
the Company's financial position or results of operations, since the Company has
no revenues to date.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." The effective
date of this statement was deferred to fiscal years beginning after June 15,
2000 by SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities--Deferral of the Effective Date of SFAS No. 133." The adoption of
this new standard is not expected to have a material impact on the Company's
financial condition or results of operations.
Net Loss Per Share
Basic net loss per share is computed using the weighted average number of shares
of common stock outstanding during the period reduced, where applicable, for
outstanding, yet unvested, shares. Diluted net loss per share includes the
effect of stock options, warrants and redeemable convertible preferred stock and
convertible notes outstanding during the period, if dilutive. Since the Company
has a net loss for all periods presented, the effect of all potentially dilutive
securities is antidilutive. Accordingly, basic and diluted net loss per share is
the same.
F-9
<PAGE> 72
THE MEDICINES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Unaudited Pro Forma Net Loss Per Share
Unaudited pro forma net loss per share is computed using the weighted average
number of common shares outstanding, including the pro forma effects of
automatic conversion of all outstanding redeemable convertible preferred stock
and the convertible notes and accrued interest into shares of the Company's
common stock effective upon the assumed closing of the Company's proposed
initial public offering, as if such conversion had occurred at the date of
original issuance.
Segments
The Company is a development stage company focused on the acquisition,
development and commercialization of late-stage development drugs. The Company
has license rights to three potential products, Angiomax, CTV-05 and IS-159. The
Company manages its business and operations as one segment. There are no
revenues to date for any potential products and the Company's assets are not
identifiable to its three potential products.
Unaudited Interim Financial Statements
The consolidated financial statements as of March 31, 2000 and for the three
months ended March 31, 1999 and 2000 and the period July 31, 1996 (date of
inception) to March 31, 2000 have been prepared in accordance with generally
accepted accounting principles for interim financial information and with
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments, consisting only of normal recurring accruals, considered necessary
for a fair presentation of the results of these interim periods have been
included. The results of operations for the three months ended March 31, 2000
are not necessarily indicative of the results that may be expected for the full
year.
3. MANAGEMENT'S PLANS AND FINANCING
The Company is a development stage company and has incurred substantial losses
since inception. To date, the Company has funded its operations through the
issuance of debt and equity. The Company expects to continue to expend
substantial amounts for continued product research, development and initial
commercialization activities for the foreseeable future and management's plans
with respect to funding this development are to secure additional equity, if
possible, and to secure collaborative partnering arrangements that will provide
available cash funding for operations.
Should additional equity financing or collaborative partnering arrangements be
unavailable to the Company, management will restrict certain of the Company's
planned activities and operations, as necessary, to sustain operations and
conserve cash resources.
4. FIXED ASSETS
Fixed assets consist of the following:
<TABLE>
<CAPTION>
--------------------------------------
DECEMBER 31,
ESTIMATED ----------------------
LIFE (YEARS) 1998 1999
------------ --------- ---------
<S> <C> <C> <C>
Furniture, fixtures and equipment........................... 3 $ 278,550 $ 323,685
Computer hardware and software.............................. 3 177,433 213,376
Leasehold improvements...................................... 5 49,945 216,064
--------- ---------
505,928 753,125
Less: Accumulated depreciation.............................. (123,236) (323,064)
--------- ---------
$ 382,692 $ 430,061
========= =========
</TABLE>
F-10
<PAGE> 73
THE MEDICINES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. ACCRUED EXPENSES
Accrued expenses consist of the following at:
<TABLE>
<CAPTION>
---------------------------------------
DECEMBER 31,
------------------------ MARCH 31,
1998 1999 2000
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Development services....................................... $2,002,625 $3,283,767 $4,450,751
Other...................................................... 422,482 396,526 639,662
---------- ---------- ----------
$2,425,107 $3,680,293 $5,090,413
========== ========== ==========
</TABLE>
6. CONVERTIBLE NOTES
In October 1999, the Company issued $6,000,000 of 8% Convertible Notes ("the
Notes") and 1,388,889 Common Stock Purchase Warrants ("the Warrants") to
existing investors, raising proceeds of $6,000,000. The Notes are redeemable on
January 15, 2001 and accrue interest semi-annually at a rate of 8% per annum.
The Notes are convertible into shares of stock of the Company upon a subsequent
sale of stock of the Company provided that such sale results in aggregate gross
proceeds of at least $6,000,000. The Notes are convertible into a number of
shares of stock determined by dividing the outstanding principal and interest on
the date of the subsequent sale by the price per share of such sale. Each
Warrant provides the holder with the right to purchase one share of common stock
of the Company at a price of $4.32 per share at any time prior to October 19,
2004. The exercise price and the number of shares underlying the Warrants could
be adjusted in certain circumstances related to future issuances of capital
stock. The Company has recorded $325,355 as the fair value of the Warrants using
the Black-Scholes method and $5,674,645 as the value of the Notes on the
issuance date. The discount on the Notes is being amortized to interest expense
over the expected term of the Notes, which the Company anticipates to be to June
2000. Since the Notes were issued in October 1999, the carrying amount
approximates fair value at December 31, 1999.
In March 2000, the Company issued $13,348,779 of 8% Convertible Notes ("the
Notes") and 3,089,994 Common Stock Purchase Warrants ("the Warrants") to current
stockholders, raising proceeds of $13,348,779. The Notes are redeemable on
January 15, 2001 and accrue interest semi-annually at a rate of 8% per annum.
The Notes are convertible into shares of stock of the Company upon a subsequent
private sale of stock of the Company provided that such sale results in
aggregate gross proceeds of at least $6,000,000. The Notes are convertible into
a number of shares of stock determined by dividing the outstanding principal and
interest on the date of the subsequent sale by the price per share of such sale.
Each Warrant provides the holder with the right to purchase one share of Common
Stock of the Company at a price of $4.32 per share at any time prior to March
2005. The exercise price and the number of shares underlying the Warrants could
be adjusted in certain circumstances related to future issuances of common
stock. The Company has recorded $793,041 as the value of the Warrants and
$12,555,738 as the value of the Notes on the issuance date. The discount on the
Notes is being amortized over the expected term of the Notes, which the Company
anticipates to be to June 2000.
F-11
<PAGE> 74
THE MEDICINES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
Series I, Series II and Series III Redeemable Convertible Preferred Stock
The Company has designated three series of redeemable convertible preferred
stock as of December 31, 1998 and 1999 and March 31, 2000. A summary of the
Series I, Series II and Series III Redeemable Convertible Preferred Stock is as
follows.
<TABLE>
<CAPTION>
-----------------------------------------
DECEMBER 31,
-------------------------- MARCH 31,
1998 1999 2000
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Series I, $1 par value, 3,550,000 shares authorized,
2,506,000 and 2,678,005 shares issued and outstanding
at December 31, 1998 and 1999, respectively
(Liquidation value of $5,512,225 at December 31, 1999
and $5,605,955 at March 31, 2000)..................... $ 5,153,297 $ 5,512,225 $ 5,605,955
Series II, $1 par value, 15,850,000 shares authorized,
10,565,714 and 11,290,928 shares issued and
outstanding at December 31, 1998 and 1999,
respectively (Liquidation value of $40,670,864 at
December 31, 1999 and $41,362,433 at March 31,
2000)................................................. 38,022,532 40,670,864 41,362,433
Series III, $1 par value, 12,150,000 shares authorized,
8,421,907 and 8,993,417 shares issued and outstanding
at December 31, 1998 and 1999, respectively
(Liquidation value of $39,984,732 at December 31, 1999
and $40,664,634 at March 31, 2000).................... 36,208,641 39,094,324 39,838,781
----------- ----------- -----------
Total......................................... $79,384,470 $85,277,413 $86,807,169
=========== =========== ===========
</TABLE>
In August 1998, the Company executed an agreement (the "Exchange Agreement")
under which 12,182,071 shares of common stock and 41,992 shares of Series A
Redeemable Preferred Stock were exchanged for 2,506,000 shares of Series I
Redeemable Convertible Preferred Stock and 10,565,714 shares of Series II
Redeemable Convertible Preferred Stock. Holders of Series A Redeemable Preferred
Stock were entitled to receive preferential cumulative annual dividends payable
in additional shares of Series A Redeemable Preferred Stock at the rate of 7%
per annum of the stated value. Prior to the Exchange Agreement, dividends earned
from January 1, 1998 through the date of the Exchange Agreement were paid to the
holders of Series A Redeemable Preferred Stock. During 1997, certain preferred
shareholders waived their right to a portion of earned dividends and the Company
paid agreed-upon amounts through December 31, 1997. To the extent that all or
any part of the Stock would have resulted in the issuance of a fractional share
of the Series A Preferred stock, the amount of such fraction, multiplied by the
stated value, was paid in cash.
A summary of the rights, preferences and privileges of the Series I, Series II
and Series III Redeemable Convertible Preferred Stock ("Series Preferred Stock")
is as follows:
Dividends. The holders of each series of Series Preferred Stock are entitled to
receive, prior to any distribution to the holders of Common Stock, preferential
cumulative dividends payable in additional shares of such series of Series
Preferred Stock at a rate of 7% per share per annum of the liquidation value of
such series of Series Preferred Stock. Such dividends are paid annually
commencing on July 31, 1999 in additional preferred stock.
Liquidation. In the event of any liquidation, dissolution or winding up of the
Company (either voluntary or involuntary), the holders of Series Preferred Stock
are entitled to receive, out of the assets of the Company available for
distribution to its stockholders, a per share amount equal to $2.00 per share in
the case of the Series I Preferred Stock, $3.50 per share in the case of the
Series II Preferred Stock and $4.32 in the case of the Series III Preferred
Stock, plus any accrued but unpaid dividends (the liquidation value). These
distributions will be made prior to any distributions to other stockholders. Any
amounts remaining after making such distributions will be distributed to the
holders of Common Stock and Series Preferred Stock on parity with each other. If
the remaining assets of the Company available for distribution to its
stockholders are insufficient to pay all of the holders of Series Preferred
Stock, distributions will be made first to the Series III Preferred Stockholders
and then to the Series I and II Preferred Stockholders on a pro-rata basis.
Conversion. Holders of shares of Series Preferred Stock have the right to
convert their shares at any time into shares of Common Stock. The conversion
rate for each series of Series Preferred Stock is 1-for-1. The conversion rate
for each series of Series Preferred Stock is subject (i) to proportional
adjustments for splits, reverse splits, recapitalizations, etc., and (ii) to
F-12
<PAGE> 75
THE MEDICINES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
formula-weighted average adjustments in the event that the Company issues
additional shares of Common Stock or securities convertible into or exercisable
for Common Stock at a purchase price less than the applicable conversion price
then in effect, other than the issuance of shares to directors, officers,
employees and consultants pursuant to stock plans approved by the Board of
Directors and certain other exceptions. Each share of Series Preferred Stock
will be automatically converted into shares of Common Stock upon the closing of
the sale of shares of Common Stock at a price of at least $6.50 per share
(subject to appropriate adjustment for stock dividends, stock splits,
combinations and other similar recapitalizations affecting such shares) in an
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, resulting in at least $15,000,000 of gross
proceeds to the Company. In addition, all shares of Series Preferred Stock will
be automatically converted into shares of Common Stock upon conversion of at
least two-thirds of the aggregate shares of Series I and II Preferred Stock or
conversion of at least 80% of the shares of Series III Preferred Stock then
outstanding.
Redemption. The Company will redeem the outstanding shares of Series Preferred
Stock in three equal annual installments commencing July 31, 2002 at a price
equal to the liquidation value of such shares. The redemption of Series
Preferred Stock outstanding at December 31, 1999 will require payments of
$28,722,607 in 2002, 2003 and 2004, respectively, based on the redemption value
at December 31, 1999.
Voting. Generally, holders of shares of Series Preferred Stock vote on all
matters, including the election of directors, with the holders of shares of
Common Stock on an as-converted basis, except where a class vote is required by
law.
Accretion. Series Preferred Stock is accreted to its redemption value to
recognize issuance costs over the period from issuance to redemption using the
interest method and to reflect accrued but unpaid dividends.
Common Stock
Common Stockholders are entitled to one vote per share and dividends when
declared by the Board of Directors, subject to the preferential rights of
preferred stockholders.
During 1996, 1997 and 1998, certain employees of the Company purchased 460,000,
859,000 and 45,000 shares of common stock, respectively, for $0.001 per share.
These shares are subject to restriction and vesting agreements that limit
transferability and allow the Company to repurchase unvested shares at the
original purchase price. The shares vest ratably over a four-year period that
generally begins on each employee's hire date. During 1998 and 1999, the Company
repurchased 147,917 and 77,230 shares, respectively, of unvested common stock
for $0.001 per share. There were 313,520 shares of common stock unvested at
December 31, 1999.
1998 Stock Incentive Plan
In April 1998, the Company adopted the 1998 Stock Incentive Plan (the "Plan")
which provides for the grant of stock options, restricted stock and other
stock-based awards to employees, directors and consultants. The plan allows for
the issuance of up to 1,483,917 shares of common stock through April 2008. The
Board of Directors determines the term of each option, the option price, the
number of shares for which each option is granted and the rate at which each
option is exercisable. During 1999, the Board of Directors amended all
outstanding grants to allow holders the opportunity to exercise options prior to
vesting. Exercised options that are unvested are subject to repurchase by the
Company at the original exercise price. Options granted under the plan generally
vest in increments over four years.
In January 2000, the Board of Directors approved an amendment to the Plan to
increase the number of shares available under the Plan to 1,983,917.
The Board of Directors of the Company has determined the fair value of the
Company's common stock in its good faith judgment at each option grant date for
grants under the Plan considering a number of factors including the financial
and operating performance of the Company, recent transactions in the Company's
common and preferred stock, if any, the values of similarly situated companies
and the lack of marketability of the Company's common stock.
F-13
<PAGE> 76
THE MEDICINES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company has elected to follow APB 25 in accounting for its stock options
granted to employees because the alternative fair value accounting provided for
under SFAS 123, requires the use of option valuation models that were not
developed for use in valuing employee stock options. Because the exercise price
of the Company's stock options generally equals the market price of the
underlying stock on the date of grant, no compensation is recognized under APB
25. Had compensation costs for the Plan been determined based on the fair value
at the grant dates as calculated in accordance with SFAS 123, the Company's net
loss for the years ended December 31, 1998 and 1999 would have been increased to
the pro forma amounts indicated below. The Company had no options outstanding
during the year ended December 31, 1997 and, accordingly, no pro forma net loss
per share has been calculated.
<TABLE>
<CAPTION>
--------------------------
YEAR ENDED DECEMBER 31,
--------------------------
1998 1999
----------- -----------
<S> <C> <C>
Net loss attributable to common stockholders--As reported... $32,909,701 $40,605,911
Net loss attributable to common stockholders--Pro forma..... $32,965,764 $40,771,828
Net loss per share attributable to common stockholders--As
reported.................................................. $ (4.40) $ (58.46)
Net loss per share attributable to common stockholders--Pro
forma..................................................... $ (4.41) $ (58.70)
</TABLE>
The fair value of each option grant was estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions:
<TABLE>
<CAPTION>
------------------------
YEAR ENDED DECEMBER 31,
------------------------
1998 1999
---------- ----------
<S> <C> <C>
Expected dividend yield..................................... 0% 0%
Expected stock price volatility............................. 70% 70%
Risk-free interest rate..................................... 4.70% 5.45%
Expected option term........................................ 3.38 years 3.30 years
</TABLE>
A summary of stock option activity under the Plan is as follows:
<TABLE>
<CAPTION>
-----------------------------
NUMBER OF WEIGHTED AVERAGE
SHARES EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Outstanding, December 31, 1997.............................. -- $ --
Granted..................................................... 1,006,500 0.81
Exercised................................................... (2,791) 0.47
Canceled.................................................... (37,584) 0.64
--------- ----------------
Outstanding, December 31, 1998.............................. 966,125 0.82
Granted..................................................... 327,500 0.90
Canceled.................................................... (240,247) 0.77
--------- ----------------
Outstanding, December 31, 1999.............................. 1,053,378 0.85
Granted (Unaudited)......................................... 806,000 1.01
Canceled (Unaudited)........................................ (270,620) 0.81
--------- ----------------
Outstanding, March 31, 2000 (Unaudited)..................... 1,588,758 $ 0.94
========= ================
Available for future grant at March 31, 2000 (Unaudited).... 392,368
=========
</TABLE>
The weighted average fair value of options granted during 1998 and 1999 was
$0.40 and $0.45, respectively.
F-14
<PAGE> 77
THE MEDICINES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following table summarizes information about stock options outstanding at
December 31, 1999:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
OPTIONS VESTED
OPTIONS OUTSTANDING -------------------------
WEIGHTED WEIGHTED WEIGHTED
NUMBER AVERAGE AVERAGE NUMBER AVERAGE
EXERCISE OUTSTANDING REMAINING EXERCISE OUTSTANDING EXERCISE
PRICES AT 12/31/99 CONTRACTUAL LIFE PRICE AT 12/31/99 PRICE
- -------- -------------- ---------------- -------- -------------- --------
<S> <C> <C> <C> <C> <C>
$ 0.50 125,291 8.18 years $ 0.50 86,738 $ 0.50
$ 0.90 928,087 9.01 years $ 0.90 283,063 $ 0.90
-------------- ---------------- -------- -------------- --------
1,053,378 8.91 years $ 0.85 369,801 $ 0.81
============== ================ ======== ============== ========
</TABLE>
Common Stock Reserved for Future Issuance
At December 31, 1999, there were 27,913,159 shares of common stock reserved for
future issuance for conversion of the Series Preferred Stock, Convertible Notes,
Common Stock Warrants and for grants made under the 1998 Stock Incentive Plan.
8. NET LOSS AND UNAUDITED PRO FORMA NET LOSS PER SHARE
The following table sets forth the computation of basic and diluted, and
unaudited pro forma basic and diluted, net loss per share for the respective
periods. The unaudited pro forma basic and diluted net loss per share gives
effect to the conversion of the redeemable convertible preferred stock and the
convertible notes and accrued interest as if converted at the date of original
issuance.
<TABLE>
<CAPTION>
--------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Basic and Diluted
Net loss.................................................... $(17,805,926) $(28,950,798) $(34,712,895)
Dividends and accretion on redeemable convertible preferred
stock..................................................... (2,018,265) (3,958,903) (5,893,016)
------------ ------------ ------------
Net loss attributable to common stockholders................ $(19,824,191) $(32,909,701) $(40,605,911)
============ ============ ============
Weighted average common shares outstanding.................. 7,336,718 8,323,217 1,164,710
Less: unvested restricted common shares outstanding......... (641,882) (851,089) (470,100)
------------ ------------ ------------
Weighted average common shares used to compute net loss per
share..................................................... 6,694,836 7,472,128 694,610
============ ============ ============
Basic and diluted net loss per share........................ $ (2.96) $ (4.40) $ (58.46)
============ ============ ============
Unaudited pro forma basic and diluted
Net loss.................................................... $(34,712,895)
Interest expense on convertible notes....................... 197,455
------------
Net loss used to compute pro forma net loss per share....... $(34,515,440)
============
Weighted average common shares used to compute net loss per
share..................................................... 694,610
Weighted average number of common shares assuming the
conversion of all redeemable convertible preferred stock
and convertible notes and accrued interest at the date of
original issuance......................................... 23,688,783
------------
Weighted average common shares used to compute pro forma net
loss per share............................................ 24,383,393
============
Unaudited pro forma basic and diluted net loss per share.... $ (1.42)
============
</TABLE>
F-15
<PAGE> 78
THE MEDICINES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
-----------------------------
THREE MONTHS ENDED MARCH 31,
-----------------------------
1999 2000
------------ -------------
(UNAUDITED)
<S> <C> <C>
Basic and Diluted
Net loss.................................................... $(8,137,064) $(12,093,027)
Dividends and accretion on redeemable convertible preferred
stock..................................................... (1,436,114) (1,529,756)
----------- ------------
Net loss attributable to common stockholders................ $(9,573,178) $(13,622,783)
=========== ============
Weighted average common shares outstanding.................. 1,218,874 1,140,106
Less: unvested restricted common shares outstanding......... (597,140) (275,344)
----------- ------------
Weighted average common shares used to compute net loss per
share..................................................... 621,734 864,762
=========== ============
Basic and diluted net loss per share........................ $ (15.40) $ (15.75)
=========== ============
</TABLE>
<TABLE>
<CAPTION>
-----------------------------
THREE MONTHS ENDED MARCH 31,
-----------------------------
1999 2000
------------ -------------
<S> <C> <C>
Unaudited pro forma basic and diluted
Net loss.................................................... $(8,137,064) $(12,093,027)
Interest expense on convertible notes -- 529,259
----------- ------------
Net loss used to compute pro forma net loss per share....... $(8,137,064) $(11,563,768)
=========== ============
Weighted average common shares used to compute net loss per
share..................................................... 621,734 864,762
Weighted average number of common shares assuming the
conversion of all redeemable convertible preferred stock
and convertible notes and accrued interest at the date of
original issuance......................................... 22,472,773 28,460,788
----------- ------------
Weighted average common shares used to compute pro forma net
loss per share............................................ 23,094,507 29,325,550
=========== ============
Unaudited pro forma basic and diluted net loss per share.... $ (0.35) $ (0.39)
=========== ============
</TABLE>
Options to purchase 966,125 and 1,053,378 shares of common stock for the years
ended December 31, 1998 and 1999, respectively, and 966,125 and 1,588,758 shares
of common stock for the three months ended March 31, 1999 and 2000,
respectively, have not been included in the computation of diluted net loss per
share as their effects would have been antidilutive. Warrants to purchase
1,388,889 and 4,478,883 shares of common stock for the year ended December 31,
1999 and for the three months ended March 31, 2000, respectively, were excluded
from the computation of diluted net loss per share as their effect would have
been antidilutive.
9. INCOME TAXES
The significant components of the Company's deferred tax assets are as follows:
<TABLE>
<CAPTION>
----------------------------
DECEMBER 31,
----------------------------
1998 1999
------------ ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.......................... $ 17,626,000 $ 30,864,000
Research and development credit........................... 983,000 2,074,000
Intangible assets......................................... 1,188,000 1,139,000
Accrued expenses.......................................... 22,000 36,000
------------ ------------
19,819,000 34,113,000
Valuation allowance......................................... (19,819,000) (34,113,000)
------------ ------------
Net deferred tax assets..................................... $ -- $ --
============ ============
</TABLE>
F-16
<PAGE> 79
THE MEDICINES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company has increased its valuation allowance by $14,294,000 in 1999 to
provide a full valuation allowance for deferred tax assets since the realization
of these future benefits is not considered more likely than not. The amount of
the deferred tax asset considered realizable is subject to change based on
estimates of future taxable income during the carryforward period. If the
Company achieves profitability, these deferred tax assets would be available to
offset future income taxes. The future utilization of net operating losses and
credits may be subject to limitation based upon changes in company ownership,
under the rules of the Internal Revenue Code. The Company will assess the need
for the valuation allowance at each balance sheet date based on all available
evidence.
At December 31, 1999, the Company had federal net operating loss carryforwards
available to reduce taxable income, and federal research and development tax
credit carryforwards available to reduce future tax liabilities, which expire as
follows:
<TABLE>
<CAPTION>
----------------------------------
FEDERAL RESEARCH
FEDERAL NET AND DEVELOPMENT
YEAR OF OPERATING LOSS TAX CREDIT
EXPIRATION CARRYFORWARDS CARRYFORWARDS
- ---------- -------------- ----------------
<S> <C> <C>
2011........................................................ $ 930,000 $ 22,000
2012........................................................ 15,260,000 526,000
2018........................................................ 27,876,000 425,000
2019........................................................ 33,813,000 1,002,000
----------- ----------
$77,879,000 $1,975,000
=========== ==========
</TABLE>
For state purposes, net operating loss carryforwards of approximately
$73,086,000 expire in the years 2001 through 2004. State research and
development tax credit carryforwards of approximately $99,000 expire in the year
2004.
10. LICENSE AGREEMENTS
Angiomax
In March 1997, the Company entered into an agreement with Biogen, Inc. for the
license of the anticoagulant pharmaceutical, bivalirudin (now known as
Angiomax). Under the terms of the agreement, the Company acquired exclusive
worldwide rights to the technology, patents, trademarks, inventories and
know-how related to Angiomax. In exchange for the license, the Company paid $2
million on the closing date and is obligated to pay up to an additional $8
million upon reaching certain Angiomax sales milestones. In addition, the
Company shall pay royalties on future sales of Angiomax and on any sublicense
royalties earned. The agreement also stipulates that the Company must use
commercially reasonable efforts to meet certain milestones related to the
development and commercialization of Angiomax, including expending at least $20
million for certain development and commercialization activities. During 1998,
the Company met the $20 million obligation.
CTV-05
In August 1999, the Company entered into an agreement with GyneLogix, Inc. for
the license of the biotherapeutic agent CTV-05, a strain of human Lactobacillus
currently under clinical investigation for applications in the areas of
urogenital and reproductive health. Under the terms of the agreement, the
Company acquired exclusive worldwide rights to the patents and know-how related
to CTV-05. In exchange for the license, the Company has paid $100,000 and is
obligated to pay up to $500,000 upon reaching certain milestones and to fund
certain operational costs of GyneLogix, Inc. subject to a monthly limit related
to the development of CTV-05. In addition, the Company shall pay royalties on
future sales of CTV-05 and on any sublicense royalties earned. The agreement
also stipulates that the Company must use commercially reasonable efforts in
pursuing the development, commercialization and marketing of CTV-05 to maintain
the license. All amounts related to CTV-05 have been expensed as incurred in the
accompanying financial statements.
IS-159
In July 1998, the Company entered into an agreement with Immunotech, SA, a
wholly-owned subsidiary of Beckman Coulter, Inc. for the license of the
pharmaceutical IS-159, a 5-hydroxytriptamine receptor agonist, for the treatment
of acute migraine headache. Under the terms of the agreement, the Company
acquired exclusive worldwide rights to the patents and know-how
F-17
<PAGE> 80
THE MEDICINES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
related to IS-159. In exchange for the license, the Company paid $1 million on
the closing date and is obligated to pay up to an additional $4.5 million upon
reaching certain development and regulatory milestones. In addition, the Company
shall pay royalties on future sales of IS-159 and on any sublicense royalties
earned. The agreement also stipulates that the Company must use commercially
reasonable efforts in pursuing the development, commercialization and marketing
of IS-159 and meet certain development and regulatory milestones to maintain the
license. All amounts related to IS-159 have been expensed as incurred in the
accompanying financial statements.
11. STRATEGIC ALLIANCES
UCB
In December 1999, the Company entered into a commercial supply agreement with
UCB-Bioproducts S.A. ("UCB") to develop and commercialize an improved process
(the Chemilog process) for the manufacture of Angiomax bulk drug substance.
Under the terms of the agreement, the Company is responsible for funding certain
development and manufacturing activities performed by UCB. At December 31, 1999,
the Company has obligations which could total up to $8,240,000 pursuant to the
agreement for future development services of UCB. The agreement also specifies
terms for future purchases of Angiomax bulk drug substance manufactured using
the Chemilog process.
During 1999, the Company placed an order with UCB for the manufacture of
Angiomax bulk drug substance under the existing manufacturing process and
methods. Under the terms of this order, the Company is scheduled to receive
material and make payments of approximately $13.0 million in fiscal 2000.
Manufacture of approximately $6.5 million of this material was completed in
March 2000.
Lonza
In September 1997, the Company entered into an agreement with Lonza AG ("Lonza")
for the development of a new commercial manufacturing process for an advanced
intermediate compound used in the manufacturing of Angiomax ("Angiomax
intermediate"). At December 31, 1999, the services to be performed under the
agreement were complete and the Company recorded a liability of $1,026,000 for
remaining amounts due under the contract.
In November 1998, the Company entered into an additional agreement with Lonza
for the engineering, procurement and installation of equipment for the initial
manufacturing of the Angiomax intermediate using the new process. The agreement
also contemplated the purchase of the Angiomax intermediate from Lonza at
specified prices for an anticipated two-year period following initial production
and stipulated the basic principles of a long-term commercial supply contract.
In January 2000, the Company notified Lonza of its intention to terminate the
agreement and in March 2000, the Company and Lonza reached termination
arrangements. As a result of the termination, the Company retains certain
ownership rights to intellectual property and is responsible for reimbursement
of all costs incurred under the terms of the agreement through the date of
notice. The estimated remaining obligation to Lonza of $1,572,000 is recorded as
a liability at December 31, 1999.
PharmaBio
In August 1996, the Company entered into a strategic alliance with one of its
stockholders, PharmaBio Development Inc. ("PharmaBio"), a wholly-owned
subsidiary of Quintiles Transnational Corp. ("Quintiles"). Under the terms of
the strategic alliance agreement, PharmaBio, or where appropriate, one or more
of PharmaBio's affiliates, which are also direct or indirect subsidiaries of
Quintiles (collectively, the "PharmaBio Affiliates") will, at no cost to the
Company, review and evaluate jointly with the Company, development programs
designed by the Company related to potential or actual product acquisitions. The
purpose of this collaboration is to optimize the duration, cost, specifications
and quality aspects of such programs. The alliance agreement provides that with
respect to Angiomax, IS-159 and CTV-05, the PharmaBio Affiliates will be offered
the opportunity to perform all services which fall within the customary scope of
their business, including without limitation, clinical and non-clinical
development services, project management, project implementation,
pharmacoeconomic services, regulatory affairs, post marketing surveillance
services, statistical, statistical programming, data processing and data
management services. The PharmaBio Affiliates will not be required to provide
services if such services cause a conflict of interest with other clients of the
PharmaBio Affiliates or to the extent services are beyond the capacity of the
PharmaBio Affiliates. In exchange for such services, the Company will pay the
PharmaBio Affiliates their then standard rates for services rendered. In
addition, if the PharmaBio Affiliates exceed certain performance milestones, the
Company has agreed to pay
F-18
<PAGE> 81
THE MEDICINES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
certain bonuses (not to exceed 10% of the net revenues that the PharmaBio
Affiliates receive for such services) which, at the PharmaBio Affiliates'
option, may be paid in shares of common stock of the Company. To date, of the 35
work orders agreed, performance milestones have been requested and agreed on one
work order. No bonuses earned under that work order were paid in shares of
common stock. No agreed performance milestones remain outstanding. There are no
arrangements outstanding at December 31, 1999 for such bonuses. This agreement
will terminate when the PharmaBio Affiliates complete services with respect to
Angiomax, IS-159 and CTV-05. During 1997, 1998 and 1999, expenses incurred for
such services were approximately $3.7 million, $1.7 million and $3.7 million,
respectively, of which approximately $0.8 million and $1.2 million was recorded
in accounts payable and accrued expenses at December 31, 1998 and 1999,
respectively. At December 31, 1999, the Company had open orders with PharmaBio
for such services that specify estimated aggregate future payments of
approximately $3.1 million.
Innovex
In January 1997, the Company entered into a consulting agreement with Innovex,
Inc. ("Innovex"), a subsidiary of Quintiles. Pursuant to the terms of the
agreement, Innovex provides the Company with consulting services with respect to
commercial clinical trials and pharmaceutical marketing and sales. The Company
has agreed to pay Innovex its standard consulting rates for such services.
The Company has also entered into various Clinical Services Agreements with
Innovex pursuant to which Innovex provides project management, clinical
monitoring, site management, medical monitoring, regulatory affairs, data
management and quality assurance services with respect to the development of
Angiomax. Such fees and expenses will be paid in installments upon completion of
identified project goals. These agreements can be terminated with 30 days
written notice. Upon any such termination, the Company would be responsible to
pay Innovex for all services performed under the terms of the respective
agreement through the date of notice.
During 1997, 1998 and 1999, expenses incurred for services provided by Innovex
were approximately $234,000, $943,000 and $616,000 respectively, of which
approximately $102,000 and $280,000 were recorded in accounts payable and
accrued expenses at December 31, 1998 and 1999, respectively.
12. RELATED PARTY TRANSACTIONS
In 1996, the Company entered into a letter agreement with MPM Capital L.P.
("MPM"), a stockholder of the Company, and in 1998, amended the terms. Pursuant
to the terms of the amended letter agreement, MPM provided the Company with
services in support of locating and acquiring the rights to Angiomax and IS-159.
The Company recorded fees for these and other services totaling approximately
$730,000, $769,000 and $445,000 in 1996, 1997 and 1998, respectively. Under the
terms of the amended letter agreement, MPM shall also receive a fee of $125,000
upon the first sale of Angiomax in Europe or the United States and a fee of
$50,000 if the Company enters into an agreement with certain specified
companies.
Additionally, in 1998, the Company paid $52,000 to MPM for rental of office
space and in June 1997, the Company paid $890,000 to MPM for services provided
in connection with the preferred stock offering.
13. COMMITMENTS AND CONTINGENCIES
The Company leases its facilities and certain office furniture and equipment
under operating leases. The Company's main facilities lease expires in August
2003. Future annual minimum payments under all non-cancelable operating leases
are $489,000, $379,000, $315,000 and $184,000 in 2000, 2001, 2002 and 2003,
respectively. Rent expense was approximately $142,000, $326,000 and $442,000 for
the years ended December 31, 1997, 1998 and 1999, respectively.
The Company has entered into various agreements with a number of companies to
provide services related to clinical trials and other activities. Generally,
these agreements are cancelable with 30 days notice. Assuming all of these
agreements are carried out to completion, they would require aggregate future
payments of approximately $15.7 million.
F-19
<PAGE> 82
THE MEDICINES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14. SUBSEQUENT EVENTS
On May 17, 2000, the Company issued 1,411,000 shares of Series IV Redeemable
Convertible Preferred Stock for net proceeds of $6,095,520. In addition, on May
17, 2000, the convertible notes and accrued interest were converted into
4,535,366 shares of Series IV Redeemable Convertible Preferred Stock. The Series
IV preferred stock carries terms and conditions similar to the Series I, II, III
preferred stock. The Series IV preferred stock is convertible into common stock
at a 1-for-1 conversion rate and automatically converts upon the closing of the
sale of shares of common stock in an underwritten public offering. In addition,
in conjunction with the sale of the Series IV preferred stock, the Company
received commitments of continued financial support totaling $15,238,800 from
substantially all of its existing investors. Such commitments terminate in the
event of a financing or collaboration agreement or combination thereof of
$15,238,800 or more.
In May 2000, the Board of Directors approved an amendment to the 1998 Stock
Incentive Plan to increase the number of shares available under the Plan to
5,983,917. In addition, the Board of Directors also approved the 2000 Employee
Stock Purchase Plan which provides for the issuance of up to 350,000 shares of
common stock to participating employees and the 2000 Director Stock Option Plan
which provides for the issuance of up to 250,000 shares of common stock to the
Company's directors. Both the 2000 Employee Stock Purchase Plan and the 2000
Director Stock Option Plan are subject to stockholders' approval.
F-20
<PAGE> 83
LOGO
<PAGE> 84
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than the
underwriting discount, payable by the Registrant in connection with the sale of
Common Stock being registered. All amounts are estimated except the SEC
registration fee, the NASD filing fees and the Nasdaq National Marketing listing
fee.
<TABLE>
<CAPTION>
---------
AMOUNT TO
BE PAID
---------
<S> <C>
SEC registration fee $19,800
NASD filing fee 9,125
Nasdaq National Marketing listing fee *
Printing and engraving *
Legal fees and expenses *
Accounting fees and expenses *
Blue sky fees and expenses (including legal fees) *
Transfer agent fees *
Miscellaneous *
-------
Total *
=======
</TABLE>
- ---------------
* To be amended.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Certificate of Incorporation (the "Charter") provides that,
except to the extent prohibited by the Delaware General Corporation Law (the
"DGCL"), the Registrant's directors shall not be personally liable to the
Registrant or its stockholders for monetary damages for any breach of fiduciary
duty as directors of the Registrant. Under the DGCL, the directors have a
fiduciary duty to the Registrant which is not eliminated by this provision of
the Certificate and, in appropriate circumstances, equitable remedies such as
injunctive or other forms of nonmonetary relief will remain available. In
addition, each director will continue to be subject to liability under the DGCL
for breach of the director's duty of loyalty to the Registrant, for acts or
omissions which are found by a court of competent jurisdiction to be not in good
faith or involving intentional misconduct, for knowing violations of law, for
actions leading to improper personal benefit to the director, and for payment of
dividends or approval of stock repurchases or redemptions that are prohibited by
DGCL. This provision also does not affect the directors' responsibilities under
any other laws, such as the Federal securities laws or state or Federal
environmental laws. The Registrant has obtained liability insurance for its
officers and directors.
Section 145 of the DGCL empowers and corporation to indemnify its directors and
officers and to purchase insurance with respect to liability arising out of
their capacity or status as directors and officers, provided that this provision
shall not eliminate or limit the liability of a director: (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) arising under Section 174 of the DGCL, or (iv)
for any transaction from which the director derived an improper personal
benefit. The DGCL provides further that the indemnification permitted thereunder
shall not be deemed exclusive of any other rights to which the directors and
officers may be entitled under the corporation's bylaws, nay agreement, a vote
of stockholders or otherwise. The Certificate eliminates the personal liability
of directors to the fullest extent permitted by Section 102(b)(7) of the DGCL
and provides that the Registrant shall fully 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) by reason of the fact that such person is or was a director or
officer of the Registrant, or is or was serving at the request of the Registrant
as a director or officer of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding.
At present, there is no pending litigation or proceeding involving any director,
officer, employee or agent as to which indemnification will be required or
permitted under the Certificate. The Registrant is not aware of any threatened
litigation or proceeding that may result in a claim for such indemnification.
II-1
<PAGE> 85
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below in chronological order is a description of the Registrant's
sales of unregistered securities since July 31, 1996. The sales made to
investors were made in accordance with Section 4(2) or Regulation D of the
Securities Act. Sales to all of our employees, directors and officers were
deemed to be exempt from registration under the Securities Act in reliance on
Rule 701 promulgated under Section 3(b) of the Securities Act as transactions
under compensatory benefit plans and contracts relating to compensation provided
under Rule 701.
In September 1996, we issued an aggregate of 4,675 units, each unit consisting
of one share of series A preferred stock and 500 shares of common stock, for an
aggregate price of $4,677,377 to Warburg Pincus, MPM, Hanseatic, Clive Meanwell,
Ansbert Gadicke, a principal of MPM, T. Scott Johnson and PharmaBio.
In April 1997, we issued to each of Warburg Pincus, Hanseatic and PharmaBio
convertible promissory notes in the aggregate original principal amount of
$2,000,000. The principal amount and interest accrued on these notes were
converted to into units in the transaction which closed in June 1997.
In June 1997, we issued an aggregate of 24,600 units, each unit consisting of
one share of series A preferred stock and 285.714 shares of common stock, for an
aggregate price of $24,607,029 to Warburg Pincus, Hanseatic, PharmaBio and
Biotech Target. Each June 1997 unit consisted of o.
In December 1997, we issued an aggregate of 9,856 units, each unit consisting of
one share of series A preferred stock and 285.714 shares of common stock, for an
aggregate price of $9,748,786 to investors, including Warburg Pincus, Hanseatic,
PharmaBio, Biotech Target, Clive Meanwell, Peyton Marshall and John Villiger.
In December 1997, we declared a stock dividend on all outstanding shares of
series A preferred stock and issued an additional 1,175 shares of series A
preferred stock. The dividend covered the period from June 1997 through December
31, 1997.
In August 1998, we declared a stock dividend on the series A preferred stock and
issued an additional 1,175 shares of series A preferred stock. The dividend
covered the period from June 1, 1998 through August 31, 1998.
In August 1998, the holders of our series A preferred stock exchanged the shares
of series A preferred stock and common stock issued to them as part of the
transaction which occurred in 1996 and 1997 and the shares of series A preferred
stock issued to them in connection with the dividends declared in 1997 and 1998
for shares of series I convertible preferred stock and series II convertible
preferred stock. In connection with the exchanges, we issued an aggregate of
2,506,000 shares of series I preferred stock and 10,565,714 shares of series II
preferred stock.
In August 1998, we issued an aggregate of 8,399,593 shares of series III
convertible preferred stock for an aggregate purchase price of $50,214,162, or
$4.32 per share, to investors, including Warburg, Pincus, Hanseatic, Biotech
Growth S.A., Clive Meanwell and Peyton Marshall.
In October 1999, we issued 8% convertible promissory notes in the aggregate
original principal amount of $6,000,000 to existing investors. In connection
with the issuance of these notes, we also issued common stock purchase warrants
to purchase 1,388,889 shares of common stock at a price of $4.32 per share at
any time prior to October 19, 2004.
In March 2000, we issued 8% convertible promissory notes in the aggregate
original principal amount of $13,348,779 to existing investors. In connection
with the issuance of these notes, we also issued common stock purchase warrants
to purchase 3,089,994 shares of common stock at a price of $4.32 per share at
any time prior to March 2, 2005.
In May 2000, the outstanding principal amount of the notes issued in October
1999 and March 2000 and the accrued interest thereon were converted into an
aggregate of 4,535,366 shares of our series IV convertible preferred stock.
In May 2000, we issued an aggregate of 1,411,000 shares of series IV convertible
preferred stock for an aggregate purchase price of $6,095,520 to Warburg,
Pincus, Biotech Growth S.A., Morgan Stanley and Alta Partners.
As of May 17, 2000, we had issued 1,108,436 shares of common stock to employees.
The shares were purchased for $0.001 per share. We have issued 78,163 shares of
common stock upon the exercise of stock options at a weighted average exercise
price of $0.88. In addition, options to purchase 2,417,591 shares of common
stock were outstanding under our 1998 stock incentive plan.
II-2
<PAGE> 86
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
1.1* Form of Underwriting Agreement
3.1 Second Amended and Restated Certificate of Incorporation of
the registrant
3.2* Certificate of Amendment to Second Amended and Restated
Certificate of Incorporation of the registrant, to be filed
prior to effectiveness of this registration statement
3.3* Form of Third Amended and Restated Certificate of
Incorporation of the registrant, to be filed upon the
closing of this offering
3.4 By-laws of the registrant
3.5 Amended and Restated By-laws of the registrant
4.3* Specimen certificate representing the Common Stock
5.1* Opinion of Hale and Dorr LLP
10.1 1998 Stock Incentive Plan
10.2 Form of 2000 Employee Stock Purchase Plan
10.3 Amended and Restated Registration Rights Agreement, dated as
of August 12, 1998, as amended to date, by and among the
registrant and the other parties set forth on the signature
pages thereto
10.4 Third Amended and Restated Stockholders' Agreement, dated as
of August 12, 1998, as amended to date, by and among the
registrant and the other parties set forth on the signature
pages thereto
10.5+ Chemilog Development and Supply Agreement, dated as of
December 20, 1999, by and between the registrant and UCB
Bioproducts S.A.
10.6+ License Agreement, dated as of June 6, 1990, by and between
Biogen, Inc. and Health Research, Inc., as assigned to the
registrant
10.7+ License Agreement dated March 21, 1997, by and between the
registrant and Biogen, Inc.
10.8+ Development and Commercialization Agreement, dated August
16, 1999, by and between the registrant and GyneLogix, Inc.
10.9+ Consulting Agreement, dated December 1, 1998, by and between
Innovex Inc. and the registrant
10.10+ Alliance Agreement, dated August 1996, by and between the
registrant and PharmaBio Development Inc., as amended
10.11 Services Agreement dated April 1, 2000 by and between the
registrant and Stack Pharmaceuticals, Inc.
10.12 Employment agreement dated September 5, 1996 by and between
the registrant and Clive Meanwell
10.13 Employment agreement dated March 10, 1997 by and between the
registrant and John Villiger
10.14 Employment agreement dated September 29, 1998 by and between
the registrant and John Nystrom
10.15 Employment agreement dated October 27, 1997 by and between
the registrant and Dermot Liddy
10.16 Employment agreement dated October 20, 1997 by and between
the registrant and Peyton Marshall
10.17 Employment agreement dated March 30, 2000 by and between the
registrant and David Stack
10.18 Lease for One Cambridge Center dated March 15, 1997 by and
between Boston Properties, Inc. and the registrant, as
amended
10.19 Form of Common Stock Purchase Warrant dated October 19, 1999
10.20 Form of Common Stock Purchase Warrant dated March 2, 2000
10.21 Form of 2000 Outside Director Stock Option Plan
21.1 Subsidiaries of the registrant
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2* Consent of Hale and Dorr LLP (included in Exhibit 5.1)
24.1 Powers of Attorney (see page II-5)
27.1 Financial Data Schedule
27.2 Financial Data Schedule
</TABLE>
- ---------------
+ Confidential treatment to be requested for certain portions of this Exhibit
pursuant to Rule 406 promulgated under the Securities Act.
* To be filed by amendment
(b) Financial Statement Schedules.
None.
II-3
<PAGE> 87
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriter at
the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.
Insofar as indemnification to liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Delaware General Corporation Law, the Certificate of
Incorporation of the Registrant, the Underwriting Agreement, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, the Registrant will,
unless in the opinion of counsel the matter has been settled by the controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the 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 Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the 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-4
<PAGE> 88
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Cambridge, Commonwealth of
Massachusetts, on this 18th day of May, 2000.
THE MEDICINES COMPANY
By: /s/ CLIVE A. MEANWELL
------------------------------------------
Clive A. Meanwell
Chief Executive Officer and President
POWER OF ATTORNEY
We, the undersigned directors and/or officers of The Medicines Company (the
"Company"), hereby severally constitute and appoint Clive A. Meanwell, Chief
Executive Officer, and Peyton S. Marshall, Chief Financial Officer, and each of
them individually, with full powers of substitution and resubstitution, our true
and lawful attorneys, with full powers to them and each of them to sign for us,
in our names and in the capacities indicated below, the Registration Statement
on Form S-1 filed with the Securities and Exchange Commission, and any and all
amendments to said Registration Statement (including post-effective amendments),
and any registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, in connection with the registration under
the Securities Act of 1933, as amended, of equity securities of the Company, and
to file or cause to be filed the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as each of them might
or could do in person, and hereby ratifying and confirming all that said
attorneys, and each of them, or their substitute or substitutes, shall do or
cause to be done by virtue of this Power of Attorney.
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 indicated on May 18, 2000:
<TABLE>
<CAPTION>
SIGNATURE TITLE(S)
--------- --------
<S> <C>
/s/ CLIVE A. MEANWELL Chief Executive Officer and President (Principal Executive
- ----------------------------------------------------- Officer)
Clive A. Meanwell
/s/ PEYTON J. MARSHALL Chief Financial Officer (Principal Financial and
- ----------------------------------------------------- Accounting Officer)
Peyton J. Marshall
/s/ DENNIS B. GILLINGS Director
- -----------------------------------------------------
Dennis B. Gillings
/s/ ANDERS D. HOVE Director
- -----------------------------------------------------
Anders D. Hove
/s/ M. FAZLE HUSAIN Director
- -----------------------------------------------------
M. Fazle Husain
/s/ T. SCOTT JOHNSON Director
- -----------------------------------------------------
T. Scott Johnson
</TABLE>
II-5
<PAGE> 89
<TABLE>
<CAPTION>
SIGNATURE TITLE(S)
--------- --------
<S> <C>
/s/ ARMIN M. KESSLER Director
- -----------------------------------------------------
Armin M. Kessler
/s/ JAMES E. THOMAS Director
- -----------------------------------------------------
James E. Thomas
Director
- -----------------------------------------------------
Robert Yedid
Director
- -----------------------------------------------------
Leonard Bell
</TABLE>
II-6
<PAGE> 90
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
1.1* Form of Underwriting Agreement
3.1 Second Amended and Restated Certificate of Incorporation of
the registrant
3.2* Certificate of Amendment to Second Amended and Restated
Certificate of Incorporation of the registrant, to be filed
prior to effectiveness of this registration statement
3.3* Form of Third Amended and Restated Certificate of
Incorporation of the registrant, to be filed upon the
closing of this offering
3.4 By-laws of the registrant
3.5 Amended and Restated By-laws of the registrant
4.3* Specimen certificate representing the Common Stock
5.1* Opinion of Hale and Dorr LLP
10.1 1998 Stock Incentive Plan
10.2 Form of 2000 Employee Stock Purchase Plan
10.3 Amended and Restated Registration Rights Agreement, dated as
of August 12, 1998, as amended to date, by and among the
registrant and the other parties set forth on the signature
pages thereto
10.4 Third Amended and Restated Stockholders' Agreement, dated as
of August 12, 1998, as amended to date, by and among the
registrant and the other parties set forth on the signature
pages thereto
10.5+ Chemilog Development and Supply Agreement, dated as of
December 20, 1999, by and between the registrant and UCB
Bioproducts S.A.
10.6+ License Agreement, dated as of June 6, 1990, by and between
Biogen, Inc. and Health Research, Inc., as assigned to the
registrant
10.7+ License Agreement dated March 21, 1997, by and between the
registrant and Biogen, Inc.
10.8+ Development and Commercialization Agreement, dated August
16, 1999, by and between the registrant and GyneLogix, Inc.
10.9+ Consulting Agreement, dated December 1, 1998, by and between
Innovex Inc. and the registrant
10.10+ Alliance Agreement, dated August 1996, by and between the
registrant and PharmaBio Development Inc., as amended
10.11 Services Agreement dated April 1, 2000 by and between the
registrant and the Stack Pharmaceuticals
10.12 Employment agreement dated September 5, 1996 by and between
the registrant and Clive Meanwell
10.13 Employment agreement dated March 10, 1997 by and between the
registrant and John Villiger
10.14 Employment agreement dated September 29, 1998 by and between
the registrant and John Nystrom
10.15 Employment agreement dated October 27, 1997 by and between
the registrant and Dermot Liddy
10.16 Employment agreement dated October 20, 1997 by and between
the registrant and Peyton Marshall
10.17 Employment agreement dated March 30, 2000 by and between the
registrant and David Stack
10.18 Lease for One Cambridge Center dated March 15, 1997 by and
between Boston Properties, Inc. and the registrant, as
amended
10.19 Form of Common Stock Purchase Warrant dated October 19, 1999
10.20 Form of Common Stock Purchase Warrant dated March 2, 2000
10.21 Form of 2000 Outside Director Stock Option Plan
21.1 Subsidiaries of the registrant
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2* Consent of Hale and Dorr LLP (included in Exhibit 5.1)
24.1 Powers of Attorney (see page II-5)
27.1 Financial Data Schedule
27.2 Financial Data Schedule
</TABLE>
- ---------------
+ Confidential treatment to be requested for certain portions of this Exhibit
pursuant to Rule 406 promulgated under the Securities Act.
* To be filed by amendment
<PAGE> 1
Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denot omissions.
Exhibit 3.1
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THE MEDICINES COMPANY
The Medicines Company, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify as follow:
1. That the Corporation filed its original Certificate of Incorporation
with the Secretary of State of the State of Delaware on July 31, 1996 under the
name Medicines Development Company, that the Certificate of Incorporation was
amended by Certificates of Amendment of Certificate of Incorporation filed on
September 4, 1996, November 20, 1996, June 4, 1997 and December 17, 1997 and
that the Certificate of Incorporation, as amended, was amended and restated by
the Amended and Restated Certificate of Incorporation filed on August 12, 1998.
2. By action of the Board of Directors of the Corporation at a meeting,
a resolution was duly adopted pursuant to Sections 242 and 245 of the General
Corporation Law of the State of Delaware, setting forth an Amended and Restated
Certificate of Incorporation of the Corporation and declaring said Amended and
Restated Certificate of Incorporation advisable. The stockholders of the
Corporation duly approved said proposed Amended and Restated Certificate of
Incorporation by written consent in accordance with Sections 228(a), 242 and 245
of the General Corporation Law of the State of Delaware, and written notice of
such consent has been or will be given to all stockholders who have not
consented in writing to said restatement. The resolution setting forth the
Amended and Restated Certificate of Incorporation is as follows:
RESOLVED: That the Board of Directors hereby deems it advisable
and in the best interest of the Corporation that the
Certificate of Incorporation of the Corporation, as
amended, be hereby amended and restated in its
entirety so that the same shall read as follows:
-1-
<PAGE> 2
FIRST. The name of the Corporation is:
The Medicines Company
SECOND. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The nature of the business or purposes to be conducted or promoted by
the Corporation is as follows:
(i) the development and marketing of pharmaceuticals; and
(ii) to carry on any business or other activity which may be
lawfully carried on by a corporation organized under the
General Corporation Laws of Delaware, whether or not related
to those referred to in the preceding paragraph.
FOURTH: The total authorized capital stock of the Corporation shall be
Eighty-Three Million Five Hundred Fifty Thousand (83,550,000) shares consisting
of Forty-Six Million (46,000,000) shares of Common Stock, par value of $0.001
per share (the "Common Stock"), and Thirty-Seven Million Five Hundred Fifty
Thousand (37,550,000) shares of Preferred Stock, par value of $1.00 per share
(the "Preferred Stock").
The relative powers, preferences and rights together with the qualifications and
limitations and restrictions thereof in respect of each class of capital stock
of the Corporation are as follows:
A. COMMON STOCK.
1. GENERAL. The voting, dividend and liquidation rights of the holders of
the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock as may be designated by the Board of Directors upon any
issuance of the Preferred Stock.
2. VOTING. The holders of the Common Stock are entitled to one vote for
each share held at all meetings of stockholders (and written actions in lieu of
meetings). There shall be no cumulative voting.
The number of authorized shares of Common Stock may be
increased or decreased (but not below the number of shares there of then
outstanding) by the affirmative vote
-2-
<PAGE> 3
of the holders of a majority of the stock of the Corporation entitled to
vote, irrespective of the provisions of Section 242(b)(2) of the General
Corporation Law of Delaware.
3. DIVIDENDS. Dividends may be declared and paid on the Common Stock from
funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.
4. LIQUIDATION. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders, subject to any preferential rights of any then outstanding
Preferred Stock.
B. SERIES I CONVERTIBLE PREFERRED STOCK, SERIES II CONVERTIBLE PREFERRED
STOCK , SERIES III CONVERTIBLE PREFERRED STOCK AND SERIES IV CONVERTIBLE
PREFERRED STOCK.
Three Million Five Hundred Fifty Thousand (3,550,000) shares of the authorized
and unissued Preferred Stock of the Corporation are hereby designated "Series I
Convertible Preferred Stock" (the "Series I Preferred Stock"), Fifteen Million
Eight Hundred Fifty Thousand (15,850,000) shares of the authorized and unissued
Preferred Stock of the Corporation are hereby designated "Series II Convertible
Preferred Stock" (the "Series II Preferred Stock"), Twelve Million One Hundred
Fifty Thousand (12,150,000) shares of the authorized and unissued Preferred
Stock of the Corporation are hereby designated "Series III Convertible Preferred
Stock" (the "Series III Preferred Stock") and Six Million (6,000,000) shares
of the authorized and unissued Preferred Stock of the Corporation are hereby
designated "Series IV Convertible Preferred Stock" (the "Series IV Preferred
Stock"). The Series I Preferred Stock, the Series II Preferred Stock, the Series
III Preferred Stock and the Series IV Preferred Stock shall be collectively
referred to herein as the "Series Preferred Stock". The Series Preferred Stock
has the following rights, preferences, powers, privileges and restrictions,
qualifications and limitations.
1. RANK.
(a) The Series IV Preferred Stock shall, with respect to
dividend rights and rights on redemption, liquidation, dissolution and winding
up rank prior to the Series I Preferred Stock, Series II Preferred Stock, Series
III Preferred Stock and all Common Stock of the Corporation. The Series III
Preferred Stock shall, with respect to dividend rights and rights on redemption,
liquidation, dissolution and winding up, (i) rank junior to the Series IV
Preferred
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Stock and (ii) rank prior to the Series I Preferred Stock, Series II
Preferred Stock and all Common Stock of the Corporation. The Series I Preferred
Stock and the Series II Preferred Stock shall, with respect to dividend rights
and rights on redemption, liquidation, dissolution and winding up, rank (i) on a
parity with one another, (ii) junior to the Series III Preferred Stock and (iii)
prior to all of the Common Stock of the Corporation. All equity securities of
the Corporation with which any series of Series Preferred Stock ranks on a
parity (whether with respect to dividends or upon redemption, liquidation,
dissolution or winding up, as may be applicable) are collectively referred to
herein as "Parity Securities" with respect to such series of Series Preferred
Stock. As used herein, "Junior Stock" means, with respect to any series of
Series Preferred Stock, Common Stock or any other class or series of equity
securities of the Corporation ranking junior (whether with respect to dividends
or upon redemption, liquidation, dissolution or winding up, as may be
applicable) to such series of Series Preferred Stock.
2. DIVIDENDS.
(a) The holders of shares of a series of Series Preferred
Stock (including any such shares issued as a dividend pursuant to this Section
2) shall be entitled to receive, when and as declared by the Board of Directors,
cumulative dividends legally available for such purposes payable in additional
shares of such series of Series Preferred Stock at the rate of seven percent
(7%) per share per annum of the applicable Liquidation Value (as hereinafter
defined) for such series, and not more. Dividends payable as described above
shall be paid on the Series IV Preferred Stock prior to the payment of dividends
on the Series I Preferred Stock, Series II Preferred Stock and Series III
Preferred Stock. Dividends payable as described above shall be paid on the
Series III Preferred Stock prior to the payment of dividends on the Series I
Preferred Stock and Series II Preferred Stock. The number of shares of a series
of Series Preferred Stock to be issued in payment of the dividend with respect
to any outstanding share of such series of Series Preferred Stock shall be
determined by dividing the amount of the dividend by the applicable Liquidation
Value for such series. To the extent that all or any part of the dividends
consisting of additional shares of a series of Preferred Stock would result in
the issuance of a fractional share of such series of Series Preferred Stock
(which shall be determined with respect to the aggregate number of shares of
Series Preferred Stock held of record by each holder), then the amount of such
fraction multiplied by the Liquidation Value for such series shall be paid in
cash (unless there are not legally available funds with which to make such cash
payment, in which event such cash payment shall be made as soon as possible).
Such dividends shall be paid annually on July 31, (or, if such day is not a
business day, on the next succeeding business day) beginning July 31, 2000, and
shall accumulate from August 1, 1999 in the case of the Series I
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Preferred Stock, Series II Preferred Stock and Series III Preferred Stock
and from May __, 2000 in the case of the Series IV Preferred Stock, whether or
not earned or declared and whether or not in any fiscal year there shall be net
profits or surplus available for the payment of dividends in such fiscal year.
The amount of dividends payable on the Series Preferred Stock for any period
shorter or longer than a full year shall be computed on the basis of a 360-day
year. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series Preferred Stock that
may be in arrears; provided that if dividends are not paid in full on any
dividend payment date, dividends will cumulate as if dividends had been paid in
additional shares of the relevant series of Series Preferred Stock and such
additional shares were outstanding.
(b) So long as any shares of a series of Series Preferred
Stock remain outstanding, in no event shall any dividend whatsoever, whether in
cash or other property (other than shares of Junior Stock with respect to such
series of Series Preferred Stock), be paid or declared or any distribution be
made on the Junior Stock with respect to such series of Series Preferred Stock,
nor shall any shares of the Junior Stock with respect to such series of Series
Preferred Stock be purchased, retired or otherwise acquired for a consideration
by the Corporation (i) unless the full dividends of such series of Series
Preferred Stock for all past dividend periods from the date on which they became
cumulative shall have been paid and sufficient funds and/or securities shall
have been paid or set apart for the payment of the dividends for the current
dividend period with respect to such series of Series Preferred Stock; and (ii)
unless, if at any time the Corporation is obligated to retire shares of such
series of Series Preferred Stock pursuant to any mandatory redemption
requirement, sinking fund or a fund of a similar nature, all arrears, if any, in
respect of the retirement of such series of Series Preferred Stock shall have
been made good. Notwithstanding the provisions of Section 2(a) without declaring
or paying dividends on such series of Series Preferred Stock, the Corporation
may, subject to applicable law, repurchase or redeem shares of Junior Stock with
respect to such series of Series Preferred Stock from current or former officers
or employees of the Corporation pursuant to the terms of restricted stock
agreements in effect on the date hereof (or restricted stock agreements entered
into after the date hereof containing substantially similar repurchase or
redemption terms as the restricted stock agreements in effect on the date
hereof, provided such restricted stock agreements have been approved by the
Board of Directors of the Corporation). Subject to the foregoing provisions and
not otherwise, such dividends (payable in cash, stock or otherwise) as may be
determined by the Board of Directors may be declared and paid on the Junior
Stock with respect to such series of Series Preferred Stock from time to time
out of the remaining funds of the Corporation legally available therefor, and
such series of Series Preferred
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Stock shall not be entitled to participate in any such dividend, whether
payable in cash, stock or otherwise.
(c) So long as any shares of a series of Series Preferred
Stock remains outstanding, no dividends, except as described in the next
succeeding sentence, shall be declared or paid or set apart for payment on
Parity Securities of such series for any period unless full cumulative dividends
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on such series of
Series Preferred Stock for all dividend periods terminating on or prior to the
date of payment of the dividend on such Parity Securities. When dividends are
not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon such Parity Securities shall be declared
ratably in proportion to the respective amounts of dividends accumulated and
unpaid on such series of Series Preferred Stock and accumulated and unpaid on
such Parity Securities.
3. LIQUIDATION, DISSOLUTION OR WINDING UP; CERTAIN MERGERS,
CONSOLIDATIONS AND ASSET SALES.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of each
series of Series Preferred Stock then outstanding shall be entitled to be paid
out of the assets of the Corporation available for distribution to its
stockholders, after and subject to the payment in full of all amounts required
to be distributed to the holders of any class or series of stock of the
Corporation ranking on liquidation prior and in preference to such series of
Series Preferred Stock but before any payment shall be made to the holders of
Junior Stock with respect to such series of Series Preferred Stock by reason of
their ownership thereof, an amount (the "Liquidation Value") equal to (i) Two
Dollars ($2.00) for each share of Series I Preferred Stock, (ii) Three Dollars
and Fifty Cents ($3.50) for each share of Series II Preferred Stock, (iii) Four
Dollars and Thirty-Two Cents ($4.32) for each share of Series III Preferred
Stock and (iv) Four Dollars and Thirty-Two Cents ($4.32) for each share of
Series IV Preferred Stock (all subject to appropriate adjustment in the event of
any stock dividend, stock split, combination or other similar recapitalization
affecting such shares), plus any dividends (whether or not earned or declared)
accrued but unpaid on such shares. If upon any such liquidation, dissolution or
winding up of the Corporation the remaining assets of the Corporation available
for distribution to its stockholders shall be insufficient to pay the holders of
shares of such series of Series Preferred Stock the full amount to which they
shall be entitled, the holders of shares of such series of Series Preferred
Stock and any Parity
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Securities of such series of Series Preferred Stock shall share ratably in
any distribution of the remaining assets and funds of the Corporation in
proportion to the respective amounts which would otherwise be payable in respect
of the shares held by them upon such distribution if all amounts payable on or
with respect to such shares were paid in full.
(b) In addition, after the payment of all preferential amounts
required to be paid to the holders of any class or series of stock of the
Corporation ranking on liquidation prior and in preference to the Series IV
Preferred Stock, the Series Preferred Stock and any Parity Securities of the
Series Preferred Stock, the remaining assets and funds of the Corporation
available for distribution to its stockholders shall be distributed, without
preference, among the holders of shares of Series Preferred Stock and the Junior
Stock with respect to the Series I Preferred Stock, pro rata based on the number
of shares of Common Stock held by each (assuming conversion into Common Stock of
all such shares of Series Preferred Stock and Junior Stock).
(c) The acquisition of the Corporation by another entity by
means of any transaction or series of related transactions involving a merger,
consolidation or other corporate reorganization of the Corporation into or with
another entity (except one in which the holders of capital stock of the
Corporation immediately prior to such transaction or transactions continue to
hold at least a majority by voting power of the capital stock of the surviving
entity), or sale of all or substantially all the assets of the Corporation,
shall be deemed to be a liquidation of the Corporation for purposes of this
Section 3, and the definitive documentation with respect to such transaction or
transactions shall provide that the consideration payable to the stockholders of
the Corporation (in the case of a merger or consolidation or similar
transaction), or consideration payable to the Corporation, together with all
other available assets of the Corporation (in the case of an asset sale), shall
be distributed to the holders of capital stock of the Corporation in accordance
with Subsections 3(a) and 3(b) above. The amount deemed distributed to the
holders of Series Preferred Stock upon any such acquisition transaction or sale
shall be the cash or the value of the property, rights or securities distributed
to such holders by the Corporation or the acquiring person, firm or other
entity. The value of such property, rights or other securities shall be
determined in good faith by the Board of Directors of the Corporation.
4. VOTING.
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(a) Each holder of outstanding shares of Series Preferred
Stock shall be entitled to the number of votes per share of Series Preferred
Stock equal to the number of whole shares of Common Stock into which each such
share of Series Preferred Stock held by such holder is then convertible (as
adjusted from time to time pursuant to Section 5 hereof), at each meeting of
stockholders of the Corporation (and written actions of stockholders in lieu of
meetings) with respect to any and all matters presented to the stockholders of
the Corporation for their action or consideration. Except as provided by law or
by the provisions of Subsection 4(b) or 4(c) below, holders of Series Preferred
Stock shall vote together with the holders of Common Stock as a single class.
(b) CONSENTS. In addition to any vote required by
applicable law, so long as any shares of Series Preferred Stock are outstanding,
the Corporation shall not,
(i) without the affirmative vote or written consent of
the holders of record of a majority of the shares of Series Preferred Stock then
outstanding, voting or consenting, as the case may be, together as a single
class:
(A) authorize, create or issue any other class
or series of capital stock ranking prior to or on parity with any series of
Series Preferred Stock as to dividends or redemption or upon liquidation,
dissolution or winding up; increase the authorized number of shares of any such
class or series; reclassify any authorized stock of the Company into shares of
any such class or series; or create, authorize or issue any obligation or
security convertible into or evidencing the right to purchase any shares of any
such class or series (whether any such increase, creation, reclassification or
authorization shall be by means of amendment to this Certificate of
Incorporation or by merger, consolidation or otherwise); provided that this
provision shall not apply to the issuance of shares of Series Preferred Stock;
(B) alter or change any of the provisions
(including the adoption of a new provision) of the Certificate of Incorporation
of the Corporation or Bylaws of the Corporation so as to adversely affect the
preferences, privileges, voting rights or powers of Series Preferred Stock
(other than amendments to the dividend, liquidation or redemption provisions of
the Series Preferred Stock, as to which subsection (ii) below shall apply);
(C) enter into, or permit any subsidiary of the
Corporation to enter into, any agreement, indenture or other instrument which
contains any provision (I) restricting the payment of dividends by the
Corporation on such series of Series Preferred Stock
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when due to the full extent required by Section 2 hereof, or (ii) restricting
the redemption of such series of Series Preferred Stock to the full extent
required by Section 7 hereof; or
(D) increase the size of the Board of Directors to
more than nine members;
(ii) without the affirmative vote or written consent of
the holder of record of 66 2/3% of the shares of Series Preferred Stock then
outstanding, voting or consenting, as the case may be, together as a single
class:
(A) merge or consolidate the Corporation with or into
another entity, or otherwise sell the Company by means of a corporate
reorganization;
(B) sell, lease or dispose of all or substantially
all of the assets of the Corporation;
(C) acquire the assets of any other entity in any
transaction outside of the ordinary course of business;
(D) alter or change in any way the dividends payable
with respect to the shares of Series Preferred Stock; or
(E) alter or change in any way the rights with
respect to redemption or liquidation of shares of Series Preferred Stock.
(c) SERIES III CONSENTS. In addition to any vote required
by applicable law, so long as any shares of Series III Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote or written
consent of the holders of record of at least 60% of the shares of Series III
Preferred Stock then outstanding, voting or consenting, as the case may be,
separately as a single class:
(i) authorize, create or issue any other class or
series of capital stock ranking prior to or on parity with the Series III
Preferred Stock as to dividends or redemption or upon liquidation, dissolution
or winding up; increase the authorized number of shares of any such class or
series, or reclassify any authorized stock of the Company into shares of any
such class or series; create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any shares of any such
class or series (whether any such increase, creation,
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reclassification or authorization shall be by means of amendment to this
Certificate of Incorporation or by merger, consolidation or otherwise); or issue
any shares of Series III Preferred Stock after the Series Original Issue Date
(as defined below) with respect to the Series III Preferred Stock other than
pursuant to Section 2 of this Section B of Article Fourth;
(ii) alter or change any of the provisions
(including the adoption of a new provision) of the Certificate of Incorporation
of the Corporation or Bylaws of the Corporation so as to adversely affect the
preferences, privileges, voting rights or other powers of Series III Preferred
Stock;
(iii) merge or consolidate the Corporation with or
into another entity, or otherwise sell the Corporation by means of a corporate
reorganization;
(iv) sell, lease or dispose of all or substantially
all of the assets of the Corporation; or
(v) acquire the assets of any other entity in any
transaction outside of the ordinary course of business; and
(vi) enter into, or permit any subsidiary of the
Corporation to enter into, any agreement, indenture or other instrument which
contains any provision (i) restricting the payment of dividends by the
Corporation on the Series III Preferred Stock when due to the full extent
required by Section 2 hereof, or (ii) restricting the redemption of the Series
III Preferred Stock to the full extent required by Section 7 hereof;
(d) SERIES IV CONSENTS. In addition to any vote required by
applicable law, so long as any shares of Series IV Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote or written
consent of the holders of record of at least 60% of the shares of Series IV
Preferred Stock then outstanding, voting or consenting, as the case may be,
separately as a single class:
(i) authorize, create or issue any other class or
series of capital stock ranking prior to or on parity with the Series IV
Preferred Stock as to dividends or redemption or upon liquidation, dissolution
or winding up; increase the authorized number of shares of any such class or
series, or reclassify any authorized stock of the Company into shares of any
such class or series; create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any shares of any such
class or series (whether any such increase, creation,
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reclassification or authorization shall be by means of amendment to this
Certificate of Incorporation or by merger, consolidation or otherwise); or issue
any shares of Series IV Preferred Stock after the Series Original Issue Date (as
defined below) with respect to the Series IV Preferred Stock other than pursuant
to Section 2 of this Section B of Article Fourth;
(ii) alter or change any of the provisions
(including the adoption of a new provision) of the Certificate of Incorporation
of the Corporation or Bylaws of the Corporation so as to adversely affect the
preferences, privileges, voting rights or other powers of Series IV Preferred
Stock;
5. OPTIONAL CONVERSION. The holders of the Series Preferred
Stock shall have conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Series Preferred Stock
shall be convertible, at the option of the holder thereof, at any time and from
time to time, and without the payment of additional consideration by the holder
thereof, into such number of fully paid and nonassessable shares of Common Stock
as is determined (i) in the case of the Series I Preferred Stock, by dividing
Two Dollars ($2.00) by the Series I Conversion Price (as defined below) in
effect at the time of conversion, (ii) in the case of the Series II Preferred
Stock, by dividing Three Dollars and Fifty Cents ($3.50) by the Series II
Conversion Price (as defined below) in effect at the time of conversion, (iii)
in the case of the Series III Preferred Stock, by dividing Four Dollars and
Thirty-Two Cents ($4.32) by the Series III Conversion Price (as defined below)
in effect at the time of conversion, or (iv) in the case of the Series IV
Preferred Stock, by dividing Four Dollars and Thirty-Two Cents ($4.32) by the
Series IV Conversion Price (as hereinafter defined) in effect at the time of
conversion. The conversion price at which shares of Common Stock shall be
deliverable upon conversion of Series I Preferred Stock without the payment of
additional consideration by the holder thereof (the "Series I Conversion Price")
shall initially be Two Dollars ($2.00). The conversion price at which shares of
Common Stock shall be deliverable upon conversion of Series II Preferred Stock
without the payment of additional consideration by the holder thereof (the
"Series II Conversion Price") shall initially be Three Dollars and Fifty Cents
($3.50). The conversion price at which shares of Common Stock shall be
deliverable upon conversion of Series III Preferred Stock without the payment of
additional consideration by the holder thereof (the "Series III Conversion
Price") shall initially be Four Dollars and Thirty-Two Cents ($4.32). The
conversion price at which shares of Common Stock shall be deliverable upon
conversion of Series IV Preferred Stock without the payment of additional
consideration by the holder thereof (the "Series IV Conversion Price") shall
initially be Four Dollars and Thirty-Two
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Cents ($4.32). Such initial series conversion prices, and the respective rates
at which shares of Series Preferred Stock may be converted into shares of Common
Stock, shall be subject to adjustment as provided below.
In the event of a notice of redemption of any shares of Preferred Stock pursuant
to Section 7 hereof, the Conversion Rights of the shares designated for
redemption shall terminate at the close of business on the fifth full day
preceding the date fixed for redemption, unless the redemption price is not paid
when due, in which case the Conversion Rights for such shares shall continue
until such price is paid in full; provided that upon delivery to the Corporation
by a holder of shares of Series Preferred Stock of a notice of election to
convert prior to the fifth full day preceding the date fixed for redemption, the
right of the Corporation to redeem the shares of Series Preferred Stock to be
converted by such holder shall terminate, regardless of whether a notice of
redemption has been mailed as aforesaid. In the event of a liquidation of the
Corporation, the Conversion Rights shall terminate at the close of business on
the first full day preceding the date fixed for the payment of any amounts
distributable on liquidation to the holders of Series Preferred Stock.
(b) Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of the Series Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective applicable series Conversion Price.
(c) MECHANICS OF CONVERSION.
(i) In order for a holder of Series Preferred
Stock to convert shares of Preferred Stock into shares of Common Stock pursuant
to this Section 5, such holder shall surrender the certificate or certificates
for such shares of Series Preferred Stock, at the office of the transfer agent
for the Series Preferred Stock (or at the principal office of the Corporation if
the Corporation serves as its own transfer agent), together with written notice
that such holder elects to convert all or any number of the shares of the Series
Preferred Stock represented by such certificate or certificates. Such notice
shall state such holder's name or the names of the nominees in which such holder
wishes the certificate or certificates for shares of Common Stock to be issued.
If required by the Corporation, certificates surrendered for conversion shall be
endorsed or accompanied by a written instrument or instruments of transfer, in
form satisfactory to the Corporation, duly executed by the registered holder or
his or its attorney duly authorized in writing. The date of receipt of such
certificates and notice by the transfer agent (or by the Corporation if the
Corporation serves as its own transfer agent) shall be the conversion date
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("Conversion Date"). Each conversion shall be deemed to have been effected
immediately prior to the close of business on the Conversion Date, and the
person in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become the holder of record of the shares of Common Stock represented thereby at
such time on such date. The Corporation shall, as soon as practicable after the
Conversion Date, issue and deliver at such office to such holder of Series
Preferred Stock, or to his, her or its nominees, a certificate or certificates
for the number of shares of Common Stock to which such holder shall be entitled,
together with cash in lieu of any fraction of a share. All shares of Common
Stock delivered upon conversion of the Series Preferred Stock will upon delivery
be duly and validly issued and fully paid and non-assessable, free of all liens
and charges and not subject to any preemptive rights.
(ii) The Corporation shall at all times when the
Series Preferred Stock shall be outstanding, reserve and keep available out of
its authorized but unissued stock, for the purpose of effecting the conversion
of the Series Preferred Stock, such number of its duly authorized shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding Series Preferred Stock. Before taking any action which would
cause an adjustment reducing the series conversion price for a series of Series
Preferred Stock below the then par value of the shares of Common Stock issuable
upon conversion of such series of Series Preferred Stock, the Corporation will
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Corporation may validly and legally issue fully paid and
nonassessable shares of Common Stock at such adjusted series conversion price.
(iii) From the date of delivery by a holder of
shares of Series Preferred Stock of such notice of election to convert, in lieu
of dividends on such shares of Series Preferred Stock pursuant to Section 2,
such shares of Series Preferred Stock shall participate equally and ratably with
the holders of shares of Common Stock in all dividends paid on the Common Stock
as if such shares of Series Preferred Stock (including dividends on such shares
payable in additional shares pursuant to Section 2) had been converted to shares
of Common Stock at the time of such delivery.
(iv) Upon any such conversion, no adjustment to
the series conversion price shall be made for any declared and/or accrued but
unpaid dividends on the Series Preferred Stock surrendered for conversion or on
the Common Stock delivered upon conversion.
(v) All shares of Series Preferred Stock which
shall have been surrendered for conversion as herein provided shall no longer be
deemed to be outstanding and
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all rights with respect to such shares, including the rights, if any, to receive
notices and to vote, shall immediately cease and terminate on the Conversion
Date, except only the right of the holders thereof to receive shares of Common
Stock in exchange therefor and payment of any dividends declared and/or accrued
but unpaid dividends thereon. Any shares of Series Preferred Stock so converted
shall be retired and cancelled and shall not be reissued, and the Corporation
(without the need for stockholder action) may from time to time take such
appropriate action as may be necessary to reduce the authorized number of shares
of Series Preferred Stock accordingly.
(vi) The Corporation shall pay any and all issue
and other taxes that may be payable in respect of any issuance or delivery of
shares of Common Stock upon conversion of shares of Series Preferred Stock
pursuant to this Section 5. The Corporation shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of shares of Common Stock in a name other than that in
which the shares of Series Preferred Stock so converted were registered, and no
such issuance or delivery shall be made unless and until the person or entity
requesting such issuance has paid to the Corporation the amount of any such tax
or has established, to the satisfaction of the Corporation, that such tax has
been paid.
(d) ADJUSTMENTS TO SERIES CONVERSION PRICE FOR DILUTING
ISSUES:
(i) Special Definitions. For purposes of this
Subsection 5(d), the following definitions shall apply:
(A) "Option" shall mean rights, options
or warrants to subscribe for, purchase or otherwise acquire Common Stock or
Convertible Securities.
(B) "Series Original Issue Date" shall
mean the date on which a share of Series Preferred Stock was first issued.
(C) "Convertible Securities" shall mean
any evidences of indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
(D) "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued (or, pursuant to Subsection
5(d)(iii) below, deemed to be issued) by the Corporation after the Series
Original Issue Date, other than:
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(I) shares of Common Stock issued or
issuable upon conversion of any
Convertible Securities or
exercise of any Options
outstanding on the Series
Original Issue Date, including
any shares of Common Stock
issuable to PharmaBio Development
Inc. ("PharmaBio"), pursuant to
the terms of the Alliance
Agreement dated September 5, 1996
between the Corporation and
PharmaBio;
(II) shares of Common Stock issued or
issuable as a dividend or
distribution on all shares of
Preferred Stock or any Series
Preferred Stock;
(III) shares of Common Stock issued or
issuable by reason of a dividend,
stock split, split-up or other
distribution, reclassification,
exchange or substitution provided
for in Subsections 5(e) or 5(f)
below; or
(IV) shares of Common Stock issued
from time to time, or shares of
Common Stock issued or issuable
upon exercise of rights, options
or warrants granted or issued
from time to time, to employees
or directors of, or consultants
or advisors to, the Corporation,
pursuant to stock plans approved
by the board of directors.
(ii) NO ADJUSTMENT OF SERIES CONVERSION PRICE.
No adjustment in the number of shares of Common Stock into which a share of any
series of Series Preferred Stock is convertible shall be made, by adjustment in
the applicable series conversion price thereof: (a) unless the consideration per
share (determined pursuant to Subsection 5(d)(v)) for an Additional Share of
Common Stock issued or deemed to be issued by the Corporation is less than the
applicable series conversion price in effect immediately prior to the issue of
such Additional Shares, or (b) if prior to such issuance, the Corporation
receives written notice from the holders of at least 60% of the then outstanding
shares of such series of Series Preferred Stock agreeing that no such adjustment
shall be made as the result of the issuance of Additional Shares of Common
Stock.
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(iii) Issue of Securities Deemed Issue of
Additional Shares of Common Stock.
If the Corporation at any time or from time to time after the Series Original
Issue Date shall issue any Options (excluding Options covered by Subsection
5(d)(i)(D)(iv) above) or Convertible Securities or shall fix a record date for
the determination of holders of any class of securities entitled to receive any
such Options or Convertible Securities, then the maximum number of shares of
Common Stock (as set forth in the instrument relating thereto without regard to
any provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue of Options or Convertible Securities or, in case such a
record date shall have been fixed, as of the close of business on such record
date, provided that Additional Shares of Common Stock shall not be deemed to
have been issued with respect to a series of Series Preferred Stock unless the
consideration per share (determined pursuant to Subsection 5(d)(v) hereof) of
such Additional Shares of Common Stock would be less than the applicable series
conversion price for such series of Series Preferred Stock in effect on the date
of and immediately prior to such issue of Options or Convertible Securities, or
such record date, as the case may be, and provided further that in any such case
in which Additional Shares of Common Stock are deemed to be issued:
(A) No further adjustment in the series
conversion price for such series of Series Preferred Stock shall be made upon
the subsequent issue of Convertible Securities or shares of Common Stock upon
the exercise of such Options or conversion or exchange of such Convertible
Securities;
(B) If such Options or Convertible
Securities by their terms provide, with the passage of time or otherwise, for
any increase or decrease in the consideration payable to the Corporation, upon
the exercise, conversion or exchange thereof, the series conversion price for
such series of Series Preferred Stock computed upon the original issue thereof
(or upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such increase or decrease
becoming effective, be recomputed to reflect such increase or decrease insofar
as it affects such Options or the rights of conversion or exchange under such
Convertible Securities;
(C) Upon the expiration or termination of
any such unexercised Option, the series conversion price for such series of
Series Preferred Stock shall not be
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<PAGE> 17
readjusted, but the Additional Shares of Common Stock deemed issued as the
result of the original issue of such Option shall not be deemed issued for the
purposes of any subsequent adjustment of such series conversion price;
(D) In the event of any change in the
number of shares of Common Stock issuable upon the exercise, conversion or
exchange of any such Option or Convertible Security, including, but not limited
to, a change resulting from the anti-dilution provisions thereof, the series
conversion price then in effect for such series of Series Preferred Stock shall
forthwith be readjusted to such series conversion price as would have obtained
had the adjustment which was made upon the issuance of such Option or
Convertible Security not exercised or converted prior to such change been made
upon the basis of such change but no further adjustment shall be made for the
actual issuance of Common Stock upon the exercise or conversion of any such
Option or Convertible Security; and
(E) No readjustment pursuant to clause
(B) or (D) above shall have the effect of increasing the series conversion price
for such series of Series Preferred Stock to an amount which exceeds the lower
of (i) such series conversion price on the original adjustment date, or (ii) the
series conversion price that would have resulted from any issuances of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date.
In the event the Corporation, after the Series Original Issue Date, amends the
terms of any such Options or Convertible Securities (whether such Options or
Convertible Securities were outstanding on the Series Original Issue Date or
were issued after the Series Original Issue Date), then such Options or
Convertible Securities, as so amended, shall be deemed to have been issued after
the Series Original Issue Date and the provisions of this Subsection 5(d)(iii)
shall apply.
(iv) ADJUSTMENT OF SERIES CONVERSION PRICE UPON
ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In the event the Corporation
shall at any time after the Series Original Issue Date issue Additional Shares
of Common Stock with respect to a series of Series Preferred Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Subsection
5(d)(iii), but excluding shares issued as a stock split or combination as
provided in Subsection 5(e) or upon a dividend or distribution as provided in
Subsection 5(f)), without consideration or for a consideration per share less
than the applicable series conversion price for such series of Series Preferred
Stock in effect immediately prior to such issuance, then and in such event, such
series conversion price shall be reduced, concurrently with such issue, to a
price (calculated to the nearest cent) determined by multiplying such series
conversion price by
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<PAGE> 18
a fraction, (A) the numerator of which shall be (1) the number of shares of
Common Stock outstanding immediately prior to such issue plus (2) the number of
shares of Common Stock which the aggregate consideration received or to be
received by the Corporation for the total number of Additional Shares of Common
Stock so issued would purchase at the series conversion price in effect
immediately prior to such issuance; and (B) the denominator of which shall be
the number of shares of Common Stock outstanding immediately prior to such issue
plus the number of such Additional Shares of Common Stock so issued; provided
that, (i) for the purpose of this Subsection 5(d)(iv), all shares of Common
Stock issuable upon exercise or conversion of Options or Convertible Securities
outstanding immediately prior to such issue shall be deemed to be outstanding,
and (ii) the number of shares of Common Stock deemed issuable upon exercise or
conversion of such outstanding Options and Convertible Securities shall not give
effect to any adjustments to the exercise price or conversion rate of such
Options or Convertible Securities resulting from the issuance of Additional
Shares of Common Stock that is the subject of this calculation.
Notwithstanding the foregoing, the applicable series conversion price shall not
be so reduced at such time if the amount of such reduction would be an amount
less than $0.01, but any such amount shall be carried forward and reduction with
respect thereto made at the time of and together with any subsequent reduction
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate $0.01 or more.
(v) DETERMINATION OF CONSIDERATION. For purposes
of this Subsection 5(d), the consideration received by the Corporation for the
issue of any Additional Shares of Common Stock with respect to a series of
Series Preferred Stock shall be computed as follows:
(A) CASH AND PROPERTY: Such consideration
shall:
(I) insofar as it consists of cash,
be computed at the aggregate of
cash received by the
Corporation, excluding amounts
paid or payable for accrued
interest;
(II) insofar as it consists of
property other than cash, be
computed at the fair market
value thereof at the time of
such issue, as determined in
good faith by the Board of
Directors; provided that if the
holders
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<PAGE> 19
of 40% of the then outstanding
shares of such series of Series
Preferred Stock shall object to
any such determination, the
Board of Directors shall retain
an independent appraiser
reasonably satisfactory to such
holders to determine such fair
market value. The holders shall
be notified promptly of any
consideration other than cash
to be received by the
Corporation and furnished with
a description of the
consideration and the fair
market value thereof, as
determined by the Board of
Directors; and
(III) in the event Additional Shares
of Common Stock are issued
together with other shares or
securities or other assets of
the Corporation for
consideration which covers
both, be the proportion of such
consideration so received,
computed as provided in clauses
(I) and (II) above as
determined in good faith by the
Board of Directors; provided
that if the holders of 40% of
the then outstanding shares of
such series of Series Preferred
Stock shall object to any such
determination, the Board of
Directors shall retain an
independent appraiser
reasonably satisfactory to such
holders to determine such fair
market value.
(B) OPTIONS AND CONVERTIBLE SECURITIES.
The consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued with respect to a series of Series
Preferred Stock pursuant to Subsection 4(d)(iii), relating to Options and
Convertible Securities, shall be determined by dividing
(x) the total amount, if any,
received or receivable by the Corporation as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment of
such consideration) payable to the Corporation upon the exercise of such Options
or the conversion or
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<PAGE> 20
exchange of such Convertible Securities, or in the case of Options for
Convertible Securities, the exercise of such Options for Convertible Securities
and the conversion or exchange of such Convertible Securities, by
(y) the maximum number of shares of
Common Stock (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(e) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the
Corporation shall at any time or from time to time after the Series Original
Issue Date effect a subdivision of the outstanding Common Stock, the series
conversion prices then in effect immediately before that subdivision shall be
proportionately decreased. If the Corporation shall at any time or from time to
time after the Series Original Issue Date combine the outstanding shares of
Common Stock, the series conversion prices then in effect immediately before the
combination shall be proportionately increased. Any adjustment under this
paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(f) ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the
event the Corporation at any time, or from time to time after the Series
Original Issue Date shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock, then and in
each such event the series conversion prices then in effect immediately before
such event shall be decreased as of the time of such issuance or, in the event
such a record date shall have been fixed, as of the close of business on such
record date, by multiplying the series conversion prices for the Series
Preferred Stock then in effect by a fraction:
(1) the numerator of which shall be the total number
of shares of Common Stock issued and outstanding immediately
prior to the time of such issuance or the close of business on
such record date; and
(2) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of
Common Stock issuable in payment of such dividend or
distribution;
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<PAGE> 21
provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the series conversion prices shall be recomputed accordingly as of the
close of business on such record date and thereafter the series conversion
prices shall be adjusted pursuant to this paragraph as of the time of actual
payment of such dividends or distributions; and provided further, however, that
no such adjustment shall be made if the holders of Series Preferred Stock
simultaneously receive (i) a dividend or other distribution of shares of Common
Stock in a number equal to the number of shares of Common Stock as they would
have received if all outstanding shares of Preferred Stock had been converted
into Common Stock immediately prior to such event or (ii) a dividend or other
distribution of shares of Series Preferred Stock which are convertible,
immediately prior to such event, into such number of shares of Common Stock as
is equal to the number of additional shares of Common Stock being issued with
respect to each share of Common Stock in such dividend or distribution.
(g) Adjustments for Other Dividends and Distributions. In the
event the Corporation at any time or from time to time after the Series Original
Issue Date shall make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Corporation other than shares of Common Stock, then
and in each such event provision shall be made so that the holders of the Series
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had the Series Preferred Stock been
converted into Common Stock immediately prior to such event and had they
thereafter, during the period from the date of such event to and including the
conversion date, retained such securities receivable by them as aforesaid during
such period, giving application to all adjustments called for during such period
under this paragraph with respect to the rights of the holders of the Series
Preferred Stock; and provided further, however, that no such adjustment shall be
made if the holders of Preferred Stock simultaneously receive a dividend or
other distribution of such securities in an amount equal to the amount of such
securities as they would have received if all outstanding shares of Preferred
Stock had been converted into Common Stock immediately prior to such event.
(h) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE, OR
SUBSTITUTION. If the Common Stock issuable upon the conversion of the Series
Preferred Stock shall be changed into the same or a different number of shares
of any class or classes of stock, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or combination of
shares or stock dividend provided for above, or a reorganization, merger,
consolidation, or sale of assets
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<PAGE> 22
provided for below), then and in each such event the holder of each such share
of Series Preferred Stock shall have the right thereafter to convert such share
into the kind and amount of shares of stock and other securities and property
receivable, upon such reorganization, reclassification, or other change, by
holders of the number of shares of Common Stock into which such shares of
Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further adjustment
as provided herein.
(i) ADJUSTMENT FOR MERGER OR REORGANIZATION, ETC. In case of
any consolidation or merger of the Corporation with or into another corporation
or other entity or the sale of all or substantially all of the assets of the
Corporation to another corporation or other entity (other than a consolidation,
merger or sale which is covered by Section 3(c)), each share of Series Preferred
Stock shall thereafter be convertible (or shall be converted into a security
which shall be convertible) into the kind and amount of shares of stock or other
securities or property to which a holder of the number of shares of Common Stock
of the Corporation deliverable upon conversion of such Series Preferred Stock
would have been entitled upon such consolidation, merger or sale, assuming such
holder of Common Stock of the Corporation (x) is not an entity with which the
Corporation consolidated or into which the Corporation merged or which merged
into the Corporation or to which such recapitalization, sale or transfer was
made as the case may be ("constituent person"), or an affiliate of a constituent
person and (y) failed to exercise any rights of election as to the kind or
amount of securities, cash and other property receivable upon such
reclassification, change, consolidation, merger, recapitalization, sale or
transfer (provided, that if the kind or amount of securities, cash and other
property receivable upon such reclassification, change, consolidation, merger,
recapitalization, sale or transfer is not the same for each share of Common
Stock of the Corporation held immediately prior to such reclassification,
change, consolidation, merger, recapitalization, sale or transfer by other than
a constituent person or an affiliate thereof and in respect of which such rights
of election shall not have been exercised ("non-electing share"), then for the
purpose of this Section 5(i) the kind and amount of securities, cash and other
property receivable upon such reclassification, change, consolidation, merger,
recapitalization, sale or transfer by each non-electing share shall be deemed to
be the kind and amount so receivable per share by a plurality of the
non-electing shares). In such case, appropriate adjustment (as determined in
good faith by the Board of Directors) shall be made in the application of the
provisions in this Section 5 set forth with respect to the rights and interest
thereafter of the holders of the Series Preferred Stock, to the end that the
provisions set forth in this Section 5 (including provisions with respect to
changes in and other adjustments of the series conversion prices) shall
thereafter be applicable, as nearly as
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<PAGE> 23
reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of the Series Preferred Stock.
(j) NO IMPAIRMENT. The Corporation will not, by amendment of
its Certificate of Incorporation or Bylaws through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Corporation,
but will at all times in good faith assist in the carrying out of all the
provisions of Section 5 and Section 6 and in the taking of all such action as
may be necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series Preferred Stock against impairment.
(k) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the series conversion price with respect to a
series of Series Preferred Stock pursuant to this Section 5, the Corporation at
its expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each holder of such series of Series
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder of
Series Preferred Stock, furnish or cause to be furnished to such holder a
similar certificate setting forth (1) such adjustments and readjustments, (2)
the series conversion price then in effect with respect to the series of Series
Preferred Stock held by such holder, and (3) the number of shares of Common
Stock and the amount, if any, of other property which then would be received
upon the conversion of such series of Series Preferred Stock.
(l) SUCCESSIVE ADJUSTMENTS. The adjustments described
in Sections 5(d), (e), (f), (g), (h) and (i) shall be made successively whenever
any event listed in such Sections shall occur.
(m) NOTICE OF RECORD DATE. In the event:
(i) that the Corporation declares a dividend
(or any other distribution) on its Common Stock;
(ii) that the Corporation subdivides or combines
its outstanding shares of Common Stock;
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<PAGE> 24
(iii) of any reclassification of the Common Stock
of the Corporation (other than a subdivision or combination of its outstanding
shares of Common Stock or a stock dividend or stock distribution thereon), or of
any consolidation or merger of the Corporation for which approval of any
stockholders of the Corporation is required, or of the sale of all or
substantially all of the assets of the Corporation;
(iv) of the involuntary or voluntary dissolution,
liquidation or winding up of the Corporation; or
(v) that the Corporation authorizes the granting
to the holders of Common Stock generally of rights or warrants to subscribe for
or purchase any shares of any class or series of capital stock or any rights or
warrants to purchase any class or series of capital stock.
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series Preferred Stock, and shall cause to
be mailed to the holders of the Series Preferred Stock at their last addresses
as shown on the records of the Corporation or such transfer agent, at least ten
days prior to the date specified in (A) below or twenty days before the date
specified in (B) below, a notice stating
(A) the record date of such dividend,
distribution, subdivision or
combination or granting of rights or
warrants, or, if a record is not to
be taken, the date as of which the
holders of Common Stock of record to
be entitled to such dividend,
distribution, grant, subdivision or
combination are to be determined, or
(B) the date on which such
reclassification, consolidation,
merger, sale, dissolution,
liquidation or winding up is
expected to become effective, and
the date as of which it is expected
that holders of Common Stock of
record shall be entitled to exchange
their shares of Common Stock for
securities or other property
deliverable upon such
reclassification, consolidation,
merger, sale, dissolution or winding
up.
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<PAGE> 25
6. MANDATORY CONVERSION.
(a) Upon (i) the closing of the sale of shares of Common
Stock, at a price to the public of at least $6.50 per share (subject to
appropriate adjustment for stock splits, stock dividends, combinations and other
similar recapitalizations affecting such shares), in a public offering pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, resulting in at least $15,000,000 of gross proceeds to the Corporation,
or (ii) upon notice to the Corporation given by the holders of not less than 66
2/3% of the aggregate shares of Series I Preferred Stock, Series II Preferred
Stock and Series IV Preferred Stock then outstanding and not less than 80% of
the shares of Series III Preferred Stock then outstanding, (A) all outstanding
shares of Series Preferred Stock shall automatically be converted into shares of
Common Stock, at the then effective conversion rate for each series of Series
Preferred Stock as determined in accordance with Section 5 and (B) the number of
authorized shares of Preferred Stock shall be automatically reduced by the
number of shares of Preferred Stock that had been designated as Series Preferred
Stock, and all provisions included under the caption "Series I Convertible
Preferred Stock, Series II Convertible Preferred Stock, Series III Convertible
Preferred Stock and Series IV Convertible Preferred Stock", and all references
to the Series Preferred Stock, shall be deleted and shall be of no further force
or effect. The earlier of the events set forth under Section 6(a)(i) and Section
6(a)(ii) are referred to hereafter as the "Mandatory Conversion Date".
(b) All holders of record of shares of Series Preferred Stock
shall be given prompt written notice of the Mandatory Conversion Date and the
place designated for mandatory conversion of all such shares of Series Preferred
Stock pursuant to this Section 6. Such notice need not be given in advance of
the occurrence of the Mandatory Conversion Date. Such notice shall be sent by
first class or registered mail, postage prepaid, to each record holder of Series
Preferred Stock at such holder's address last shown on the records of the
transfer agent for the Series Preferred Stock (or the records of the
Corporation, if it serves as its own transfer agent). Upon receipt of such
notice, each holder of shares of Series Preferred Stock shall surrender his or
its certificate or certificates for all such shares to the Corporation at the
place designated in such notice, and shall thereafter receive certificates for
the number of shares of Common Stock to which such holder is entitled pursuant
to this Section 6. On the Mandatory Conversion Date, all rights with respect to
the Series Preferred Stock so converted, including the rights, if any, to
receive notices and vote (other than as a holder of Common Stock) will
terminate, except only the rights of the holders thereof, upon surrender of
their certificate or certificates therefor, to receive certificates for the
number of shares of Common Stock into which such Series Preferred
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<PAGE> 26
Stock has been converted, and payment of any declared [and/or accrued] but
unpaid dividends thereon. If so required by the Corporation, certificates
surrendered for conversion shall be endorsed or accompanied by written
instrument or instruments of transfer, in form satisfactory to the Corporation,
duly executed by the registered holder or by his or its attorney duly authorized
in writing. As soon as practicable after the Mandatory Conversion Date and the
surrender of the certificate or certificates for Series Preferred Stock, the
Corporation shall cause to be issued and delivered to such holder, or on his or
its written order, a certificate or certificates for the number of full shares
of Common Stock issuable on such conversion in accordance with the provisions
hereof and cash as provided in Section 5(b) in respect of any fraction of a
share of Common Stock otherwise issuable upon such conversion. Each conversion
shall be deemed to have been effected immediately prior to the close of business
on the Conversion Date, and the person in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder of record of the shares of Common
Stock represented thereby at such time on such date. All shares of Common Stock
delivered upon conversion of the Series Preferred Stock will upon delivery be
duly and validly issued and fully paid and non-assessable, free of all liens and
charges and not subject to any preemptive rights.
(c) All certificates evidencing shares of Series Preferred
Stock which are required to be surrendered for conversion in accordance with the
provisions hereof shall, from and after the Mandatory Conversion Date, be deemed
to have been retired and cancelled and the shares of Series Preferred Stock
represented thereby converted into Common Stock for all purposes,
notwithstanding the failure of the holder or holders thereof to surrender such
certificates on or prior to such date. Such converted Series Preferred Stock may
not be reissued, and the Corporation may thereafter take such appropriate action
(without the need for stockholder action) as may be necessary to reduce the
authorized number of shares of Series Preferred Stock accordingly.
7. REDEMPTION.
(a) The Corporation will (to the extent that such redemption
shall not violate any applicable provisions of the laws of the State of
Delaware), on the 31st day of July 2002, and on each of the first and second
anniversaries thereof (each such date being referred to hereinafter as a
"Mandatory Redemption Date"), redeem from each holder of shares of Series
Preferred Stock, at a price equal to the applicable Liquidation Value per share,
plus an amount equal to any dividends (whether earned or declared) accrued but
unpaid thereon, but without interest, subject
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to appropriate adjustment in the event of any stock dividend, stock split,
combination or other similar recapitalization affecting such shares (the
"Mandatory Redemption Price"), the following respective portions of the number
of shares of Series Preferred Stock held by such holder on the applicable
Mandatory Redemption Date:
Portion of Shares of
Mandatory the Outstanding
Redemption Date Series Preferred Stock to be Redeemed
--------------- -------------------------------------
July 31, 2002 33 1/3%
July 31, 2003 50%
July 31, 2004 All remaining outstanding shares of Series
Preferred Stock
The Corporation shall provide notice specifying the time, manner and place of
redemption and the Mandatory Redemption Price, by first class or registered
mail, postage prepaid, to each holder of record of Series Preferred Stock at the
address for such holder last shown on the records of the transfer agent therefor
(or the records of the Corporation, if it serves as its own transfer agent), not
less than 30 days prior to the applicable Mandatory Redemption Date.
If the Corporation is unable on any Mandatory Redemption Date to redeem any
shares of Series Preferred Stock then to be redeemed because such redemption
would violate the applicable laws of the State of Delaware, then the Corporation
shall redeem such shares as soon thereafter, according to the priorities
described in Section 7(b) below, as the restrictions precluding such redemption
shall no longer be applicable.
(b) If the funds of the Corporation legally available for
redemption of Series Preferred Stock on any Mandatory Redemption Date are
insufficient to redeem the number of shares of Series Preferred Stock required
under this Section 7 to be redeemed on such date, those funds which are legally
available will be used to redeem, according to the priorities described in
Section 1, the maximum possible number of such shares of Series Preferred Stock
ratably among such series of Series Preferred Stock on the basis of the number
of shares of Series Preferred Stock which would be redeemed on such date if the
funds of the Corporation legally available therefor had been sufficient to
redeem all shares of Series Preferred Stock required to be redeemed on such
date. At any time thereafter when additional funds of the Corporation become
legally available for the redemption of Series Preferred Stock, such funds will
be used, at the end
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of the next succeeding fiscal quarter, to redeem at such time the balance of the
shares which the Corporation was theretofore obligated to redeem, in the
priorities and on the basis set forth in the preceding sentence.
(c) Unless there shall have been a default in payment in full
of the Mandatory Redemption Price, on the Mandatory Redemption Date all rights
of the holder of each share redeemed on such date as a stockholder of the
Corporation by reason of the ownership of such share will cease, except the
right to receive the Mandatory Redemption Price of such share, without interest,
upon presentation and surrender of the certificate representing such share, and
such share will not from and after such Mandatory Redemption Date be deemed to
be outstanding.
(d) If there shall have been a default in the payment in full
of the Mandatory Redemption Price with respect to any series of Series Preferred
Stock and such default is continuing, the Corporation shall not (i) directly or
indirectly, redeem, purchase, or otherwise acquire any Parity Securities of such
series of Series Preferred Stock or discharge any mandatory or optional
redemption, sinking fund or other similar obligation in respect of any Parity
Securities of such series of Series Preferred Stock (except in connection with a
redemption, sinking fund or other similar obligation to be satisfied pro rata
with such series of Series Preferred Stock) or (ii) in accordance with Section
2, declare or make any dividend, distribution, redemption or purchase of Junior
Stock with respect to such series of Series Preferred Stock described in Section
2, or, directly or indirectly, discharge any mandatory or optional redemption,
sinking fund or other similar obligation in respect of the Junior Stock with
respect to such series of Series Preferred Stock.
(e) Any Series Preferred Stock redeemed pursuant to this
Section 7 will be cancelled and will not under any circumstances be reissued,
sold or transferred and the Corporation may from time to time take such
appropriate action as may be necessary to reduce the authorized Preferred Stock
accordingly.
In furtherance of and not in limitation of powers conferred by statute,
it is further provided:
1. Election of directors need not be by written ballot.
2. The Board of Directors is expressly authorized to
adopt, amend or repeal the By-Laws of the Corporation.
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SEVENTH. 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 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 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.
EIGHTH. Except to the extent that the General Corporation Law of Delaware, as
amended from time to time, prohibits the elimination or limitation of liability
of directors for breaches of fiduciary duty, no director of the Corporation
shall be personally liable to the Corporation or its stockholders for monetary
damages for any breach of fiduciary duty as a director, notwithstanding any
provision of law imposing such liability. No amendment to or repeal of this
provision shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment.
NINTH. The Corporation shall, to the fullest extent permitted by Section 145 of
the General Corporation Law of Delaware, as amended from time to time, indemnify
each person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was, or has agreed to become, a director or officer of the Corporation, or is or
was serving, or has agreed to serve, at the request of the Corporation, as a
director, officer or trustee of, or in a similar capacity with, another
corporation, partnership, joint venture, trust or other enterprise (including
any employee benefit plan) (all such persons being referred to hereafter as
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<PAGE> 30
an "Indemnitee"), or by reason of any action alleged to have been taken or
omitted in such capacity, against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by or on behalf of an Indemnitee in connection with such action, suit or
proceeding and any appeal therefrom.
As a condition precedent to his right to be indemnified, the Indemnitee must
notify the Corporation in writing as soon as practicable of any action, suit,
proceeding or investigation involving him for which indemnity will or could be
sought. With respect to any action, suit, proceeding or investigation of which
the Corporation is so notified, the Corporation will be entitled to participate
therein at its own expense and/or to assume the defense thereof at its own
expense, with legal counsel reasonably acceptable to the Indemnitee.
In the event that the Corporation does not assume the defense of any action,
suit, proceeding or investigation of which the Corporation receives notice under
this Article, the Corporation shall pay in advance of the final disposition of
such matter any expenses (including attorneys' fees) incurred by an Indemnitee
in defending a civil or criminal action, suit, proceeding or investigation or
any appeal therefrom; PROVIDED, HOWEVER, that the payment of such expenses
incurred by an Indemnitee in advance of the final disposition of such matter
shall be made only upon receipt of an undertaking by or on behalf of the
Indemnitee to repay all amounts so advanced in the event that it shall
ultimately be determined that the Indemnitee is not entitled to be indemnified
by the Corporation as authorized in this Article, which undertaking shall be
accepted without reference to the financial ability of the Indemnitee to make
such repayment; and FURTHER PROVIDED that no such advancement of expenses shall
be made if it is determined that the Indemnitee did not act in good faith and in
a manner he reasonably believed to be in, or not opposed to, the best interests
of the Corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful.
The Corporation shall not indemnify an Indemnitee seeking indemnification in
connection with a proceeding (or part thereof) initiated by such Indemnitee
unless the initiation thereof was approved by the Board of Directors of the
Corporation. In addition, the Corporation shall not indemnify an Indemnitee to
the extent such Indemnitee is reimbursed from the proceeds of insurance, and in
the event the Corporation makes any indemnification payments to an Indemnitee
and such Indemnitee is subsequently reimbursed from the proceeds of insurance,
such Indemnitee shall promptly refund such indemnification payments to the
Corporation to the extent of such insurance reimbursement.
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All determinations hereunder as to the entitlement of an Indemnitee to
indemnification or advancement of expenses shall be made in each instance by (a)
a majority vote of the directors of the Corporation consisting of persons who
are not at that time parties to the action, suit or proceeding in question
("disinterested directors"), whether or not a quorum, (b) a majority vote of a
quorum of the outstanding shares of stock of all classes entitled to vote for
directors, voting as a single class, which quorum shall consist of stockholders
who are not at that time parties to the action, suit or proceeding in question,
(c) independent legal counsel (who may, to the extent permitted by law, be
regular legal counsel to the Corporation), or (d) a court of competent
jurisdiction.
The indemnification rights provided in this Article (i) shall not be deemed
exclusive of any other rights to which an Indemnitee may be entitled under any
law, agreement or vote of stockholders or disinterested directors or otherwise
and, (ii) shall inure to the benefit of the heirs, executors and administrators
of the Indemnitees. The Corporation may, to the extent authorized from time to
time by its Board of Directors, grant indemnification rights to other employees
or agents of the Corporation or other persons serving the Corporation and such
rights may be equivalent to, or greater or less than, those set forth in this
Article.
TENTH. The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute and this Certificate of Incorporation, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
ELEVENTH. The Holders of shares of capital stock of the Corporation shall have
preemptive or preferential rights of subscription to any shares of capital stock
or other securities of the Corporation only to the extent set forth in the Third
Amended and Restated Stockholders' Agreement among the Corporation and the other
parties thereto, as amended from time to time.
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IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed by
its President this 17th day of May, 2000.
THE MEDICINES COMPANY
/s/ Clive A. Meanwell
By: ______________________________
Name: Clive A. Meanwell
Title: President
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<PAGE> 1
Exhibit 3.4
BY-LAWS
OF
MEDICINES DEVELOPMENT COMPANY
<PAGE> 2
BY-LAWS
TABLE OF CONTENTS
PAGE
ARTICLE 1 - Stockholders.......................................................1
1.1 Place of Meetings...................................................1
1.2 Annual Meeting......................................................1
1.3 Special Meetings....................................................1
1.4 Notice of Meetings..................................................1
1.5 Voting List.........................................................1
1.6 Quorum..............................................................2
1.7 Adjournments........................................................2
1.8 Voting and Proxies..................................................2
1.9 Action at Meeting...................................................2
1.10 Action without Meeting..............................................2
ARTICLE 2 - Directors..........................................................2
2.1 General Powers......................................................2
2.2 Number; Election and Qualification..................................3
2.3 Enlargement of the Board............................................3
2.4 Tenure..............................................................3
2.5 Vacancies...........................................................3
2.6 Resignation.........................................................3
2.7 Regular Meetings....................................................3
2.8 Special Meetings....................................................3
2.9 Notice of Special Meetings..........................................3
2.10 Meetings by Telephone Conference Calls..............................4
2.11 Quorum..............................................................4
2.12 Action at Meeting...................................................4
2.13 Action by Consent...................................................4
2.14 Removal.............................................................4
2.15 Committees..........................................................4
2.16 Compensation of Directors...........................................5
ARTICLE 3 - Officers...........................................................5
3.1 Enumeration.........................................................5
3.2 Election............................................................5
3.3 Qualification.......................................................5
3.4 Tenure..............................................................5
3.5 Resignation and Removal.............................................5
3.6 Vacancies...........................................................6
3.7 Chairman of the Board and Vice-Chairman of the Board................6
<PAGE> 3
3.8 President...........................................................6
3.9 Vice Presidents.....................................................6
3.10 Secretary and Assistant Secretaries.................................6
3.11 Treasurer and Assistant Treasurers..................................7
3.12 Salaries............................................................7
ARTICLE 4 - Capital Stock......................................................7
4.1 Issuance of Stock...................................................7
4.2 Certificates of Stock...............................................7
4.3 Transfers...........................................................8
4.4 Lost, Stolen or Destroyed Certificates..............................8
4.5 Record Date.........................................................8
ARTICLE 5 - General Provisions.................................................9
5.1 Fiscal Year.........................................................9
5.2 Corporate Seal......................................................9
5.3 Waiver of Notice....................................................9
5.4 Votincr of Securities...............................................9
5.5 Evidence of Authority...............................................9
5.6 Certificate of Incorporation........................................9
5.7 Transactions with Interested Parties................................9
5.8 Severability.......................................................10
5.9 Pronouns...........................................................10
ARTICLE 6 - Amendments........................................................10
6.1 By the Board of Directors..........................................10
6.2 ` By the Stockholders..............................................10
ii
<PAGE> 4
BY-LAWS
OF
MEDICINES DEVELOPMENT COMPANY
ARTICLE 1 - STOCKHOLDERS
1.1 PLACE OF MEETINGS. All meetings of stockholders shall be held at
such place within or without the State of Delaware as may be designated from
time to time by the Board of Directors or the President or, if not so
designated, at the registered office of the corporation.
1.2 ANNUAL MEETING. The annual meeting of stockholders for the election
of directors and for the transaction of such other business as may properly be
brought before the meeting shall be held on a date to be fixed by the Board of
Directors or the President (which date shall not be a legal holiday in the place
where the meeting is to be held) at the time and place to be fixed by the Board
of Directors or the President and stated in the notice of the meeting. If no
annual meeting is held in accordance with the foregoing provisions, the Board of
Directors shall cause the meeting to be held as soon thereafter as convenient.
If no annual meeting is held in accordance with the foregoing provisions, a
special meeting may be held in lieu of the annual meeting, and any action taken
at that special meeting shall have the same effect as if it had been taken at
the annual meeting, and in such case all references in these By-laws to the
annual meeting of the stockholders shall be deemed to refer to such special
meeting.
1.3 SPECIAL MEETINGS. Special meetings of stockholders may be called at
any time by the President, the Board of Directors or by stockholders holding at
least 10% of the outstanding capital stock of the Company. Business transacted
at any special meeting of stockholders shall be limited to matters relating to
the purpose or purposes stated in the notice of meeting.
1.4 NOTICE OF MEETINGS. Except as otherwise provided by law, written
notice of each meeting of stockholders, whether annual or special, shall be
given not less than 10 nor more than 60 days before the date of the meeting to
each stockholder entitled to vote at such meeting. The notices of all meetings
shall state the place, date and hour of the meeting. The notice of a special
meeting shall state, in addition, the purpose or purposes for which the meeting
is called. If mailed, notice is given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the corporation.
1.5 VOTING LIST. The officer who has charge of the stock ledger of the
corporation shall prepare, at least 10 days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, at a place within the city where the meeting is to
be held. The list shall also be produced and kept at the time and place of the
meeting during the whole time of the meeting, and may be inspected by any
stockholder who is present.
<PAGE> 5
1.6 QUORUM. Except as otherwise provided by law, the Certificate of
Incorporation or these By-laws, the holders of a majority of the shares of the
capital stock of the corporation issued and outstanding and entitled to vote at
the meeting, present in person or represented by proxy, shall constitute a
quorum for the transaction of business.
1.7 ADJOURNMENTS. Any meeting of stockholders may be adjourned to any
other time and to any other place at which a meeting of stockholders may be held
under these By-laws by the stockholders present or represented at the meeting
and entitled to vote, although less than a quorum, or, if no stockholder is
present, by any officer entitled to preside at or to act as Secretary of such
meeting. It shall not be necessary to notify any stockholder of any adjournment
of less than 30 days if the time and place of the adjourned meeting are
announced at the meeting at which adjournment is taken, unless after the
adjournment a new record date is fixed for the adjourned meeting. At the
adjourned meeting, the corporation may transact any business which might have
been transacted at the original meeting.
1.8 VOTING AND PROXIES. Each stockholder shall have one vote for each
share of stock entitled to vote held of record by such stockholder and a
proportionate vote for each fractional share so held, unless otherwise provided
in the Certificate of Incorporation. Each stockholder of record entitled to vote
at a meeting of stockholders, or to express consent or dissent to corporate
action in writing without a meeting, may vote or express such consent or dissent
in person or may authorize another person or persons to vote or act for him by
written proxy executed by the stockholder or his authorized agent and delivered
to the Secretary of the corporation. No such proxy shall be voted or acted upon
after three years from the date of its execution, unless the proxy expressly
provides for a longer period.
1.9 ACTION AT MEETING. When a quorum is present at any meeting, the
holders of shares of stock representing a majority of the votes cast on a matter
(or if there are two or more classes of stock entitled to vote as separate
classes, then in the case of each such class, the holders of shares of stock of
that class representing a majority of the votes cast on a matter) shall decide
any matter to be voted upon by the stockholders at such meeting, except when a
different vote is required by express provision of law, the Certificate of
Incorporation or these By-Laws. When a quorum is present at any meeting, any
election by stockholders shall be determined by a plurality of the votes cast on
the election.
1.10 ACTION WITHOUT MEETING. Any action required or permitted to be
taken at any annual or special meeting of stockholders of the corporation may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, is signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote on such action were present and voted. Prompt notice of the
taking of corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
ARTICLE 2 - DIRECTORS
2.1 GENERAL POWERS. The business and affairs of the corporation shall
be managed by or under the direction of a Board of Directors, who may exercise
all of the powers of the
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corporation except as otherwise provided by law or the Certificate of
Incorporation. In the event of a vacancy in the Board of Directors, the
remaining directors, except as otherwise provided by law, may exercise the
powers of the full Board until the vacancy is filled.
2.2 NUMBER; ELECTION AND QUALIFICATION. The number of directors which
shall constitute the whole Board of Directors shall be determined by resolution
of the stockholders or the Board of Directors, but in no event shall be less
than one. The number of directors may be decreased at any time and from time to
time either by the stockholders or by a majority of the directors then in
office, but only to eliminate vacancies existing by reason of the death,
resignation, removal or expiration of the term of one or more directors. The
directors shall be elected at the annual meeting of stockholders by such
stockholders as have the right to vote on such election. Directors need not be
stockholders of the corporation.
2.3 ENLARGEMENT OF THE BOARD. The number of directors may be increased
at any time and from time to time by the stockholders or by a majority of the
directors then in office.
2.4 TENURE. Each director shall hold office until the next annual
meeting and until his successor is elected and qualified, or until his earlier
death, resignation or removal.
2.5 VACANCIES. Unless and until filled by the stockholders, any vacancy
in the Board of Directors, however occurring, including a vacancy resulting from
an enlargement of the Board, may be filled by vote of a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office, and a director chosen to fill a
position resulting from an increase in the number of directors shall hold office
until the next annual meeting of stockholders and until his successor is elected
and qualified, or until his earlier death, resignation or removal.
2.6 RESIGNATION. Any director may resign by delivering his written
resignation to the corporation at its principal office or to the 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.
2.7 REGULAR MEETINGS. Regular meetings of the Board of Directors may be
held without notice at such time and place, either within or without the State
of Delaware, as shall be determined from time to time by the Board of Directors;
provided that any director who is absent when such a determination is made shall
be given notice of the determination. A regular meeting of the Board of
Directors may be held without notice immediately after and at the same place as
the annual meeting of stockholders.
2.8 SPECIAL MEETINGS. Special meetings of the Board of Directors may be
held at any time and place, within or without the State of Delaware, designated
in a call by the Chairman of the Board, President, two or more directors, or by
one director in the event that there is only a single director in office.
2.9 NOTICE OF SPECIAL MEETINGS. Notice of any special meeting of
directors shall be given to each director by the Secretary or by the officer or
one of the directors calling the meeting. Notice shall be duly given to each
director (i) by giving notice to such director in
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<PAGE> 7
person or by telephone at least 48 hours in advance of the meeting, (ii) by
sending a telegram or telex, or delivering written notice by hand, to his last
known business or home address at least 48 hours in advance of the meeting, or
(iii) by mailing written notice to his last known business or home address at
least 72 hours in advance of the meeting. A notice or waiver of notice of a
meeting of the Board of Directors need not specify the purposes of the meeting.
2.10 MEETINGS BY TELEPHONE CONFERENCE CALLS. Directors or any members
of any committee designated by the directors may participate in a meeting of the
Board of Directors or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation by such means shall constitute
presence in person at such meeting.
2.11 QUORUM. A majority of the total number of the whole Board of
Directors shall constitute a quorum at all meetings of the Board of Directors.
In the event one or more of the directors shall be disqualified to vote at any
meeting, then the required quorum shall be reduced by one for each such director
so disqualified; provided, however, that in no case shall less than one-third
(1/3) of the number so fixed constitute a quorum. In the absence of a quorum at
any such meeting, a majority of the directors present may adjourn the meeting
from time to time without further notice other than announcement at the meeting,
until a quorum shall be present.
2.12 ACTION AT MEETING. At any meeting of the Board of Directors at
which a quorum is present, the vote of a majority of those present shall be
sufficient to take any action, unless a different vote is specified by law, the
Certificate of Incorporation or these By-Laws.
2.13 ACTION BY CONSENT. Any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee of the Board of
Directors may be taken without a meeting, if all members of the Board or
committee, as the case may be, consent to the action in writing, and the written
consents are filed with the minutes of proceedings of the Board or committee.
2.14 REMOVAL. Except as otherwise provided by the General Corporation
Law of Delaware, any one or more or all of the 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 the directors elected by the holders of
a particular class or series of stock may be removed without cause only by vote
of the holders of a majority of the outstanding shares of such class or series.
2.15 COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member of a committee, the member or
members of the committee present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the Board of Directors and subject to the
provisions of the General Corporation Law of the State of Delaware, shall have
and may exercise all the powers and authority of the Board of Directors in the
management of the business and
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<PAGE> 8
affairs of the corporation and may authorize the seal of the corporation to be
affixed to all papers which may require it. Each such committee shall keep
minutes and make such reports as the Board of Directors may from time to time
request. Except as the Board of Directors may otherwise determine, any committee
may make rules for the conduct of its business, but unless otherwise provided by
the directors or in such rules, its business shall be conducted as nearly as
possible in the same manner as is provided in these By-laws for the Board of
Directors.
2.16 COMPENSATION OF DIRECTORS. Directors may be paid such compensation
for their services and such reimbursement for expenses of attendance at meetings
as the Board of Directors may from time to time determine. No such payment shall
preclude any director from serving the corporation or any of its parent or
subsidiary corporations in any other capacity and receiving compensation for
such service.
ARTICLE 3 - OFFICERS
3.1 ENUMERATION. The officers of the corporation shall consist of a
President, a Secretary, a Treasurer and such other officers with such other
titles as the Board of Directors shall determine, including a Chairman of the
Board, a Vice-Chairman of the Board, and one or more Vice Presidents, Assistant
Treasurers, and Assistant Secretaries. The Board of Directors may appoint such
other officers as it may deem appropriate.
3.2 ELECTION. The President, Treasurer and Secretary shall be elected
annually by the Board of Directors at its first meeting following the annual
meeting of stockholders. Other officers may be appointed by the Board of
Directors at such meeting or at any other meeting.
3.3 QUALIFICATION. No officer need be a stockholder. Any two or more
offices may be held by the same person.
3.4 TENURE. Except as otherwise provided by law, by the Certificate of
Incorporation or by these By-laws, each officer shall hold office until his
successor is elected and qualified, unless a different term is specified in the
vote choosing or appointing him, or until his earlier death, resignation or
removal.
3.5 RESIGNATION AND REMOVAL. Any officer may resign by delivering his
written resignation to the corporation at its principal office or to the
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.
Any officer may be removed at any time, with or without cause, by vote
of a majority of the entire number of directors then in office.
Except as the Board of Directors may otherwise determine, no officer
who resigns or is removed shall have any right to any compensation as an officer
for any period following his resignation or removal, or any right to damages on
account of such removal, whether his compensation be by the month or by the year
or otherwise, unless such compensation is expressly provided in a duly
authorized written agreement with the corporation.
5
<PAGE> 9
3.6 VACANCIES. The Board of Directors may fill any vacancy occurring in
any office for any reason and may, in its discretion, leave unfilled for such
period as it may determine any offices other than those of President, Treasurer
and Secretary. Each such successor shall hold office for the unexpired term of
his predecessor and until his successor is elected and qualified, or until his
earlier death, resignation or removal.
3.7 CHAIRMAN OF THE BOARD AND VICE-CHAIRMAN OF THE BOARD. The Board of
Directors may appoint a Chairman of the Board. If the Board of Directors
appoints a Chairman of the Board, he shall perform such duties and possess such
powers as are assigned to him by the Board of Directors. If the Board of
Directors appoints a Vice-Chairman of the Board, he shall, in the absence or
disability of the Chairman of the Board, perform the duties and exercise the
powers of the Chairman of the Board and shall perform such other duties and
possess such other powers as may from time to time be vested in him by the Board
of Directors.
3.8 PRESIDENT. The President shall, subject to the direction of the
Board of Directors, have general charge and supervision of the business of the
corporation. Unless otherwise provided by the Board of Directors, he shall
preside at all meetings of the stockholders and, if he is a director, at all
meetings of the Board of Directors. Unless the Board of Directors has designated
the Chairman of the Board or another officer as Chief Executive Officer, the
President shall be the Chief . Executive officer of the corporation. The
President shall perform such other duties and shall have such other powers as
the Board of Directors may from time to time prescribe.
3.9 VICE PRESIDENTS. Any Vice President shall perform such duties and
possess such powers as the Board of Directors or the President may from time to
time prescribe. In the event of the absence, inability or refusal to act of the
President, the Vice President (or if there shall be more than one, the Vice
Presidents in the order determined by the Board of Directors) shall perform the
duties of the President and when so performing shall have all the powers of and
be subject to all the restrictions upon the President. The Board of Directors
may assign to any vice President the title of Executive Vice President, Senior
Vice President or any other title selected by the Board of Directors.
3.10 SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall perform
such duties and shall have such powers as the Board of Directors or the
President may from time to time prescribe. In addition, the Secretary shall
perform such duties and have such powers as are incident to the office of the
secretary, including without limitation the duty and power to give notices of
all meetings of stockholders and special meetings of the Board of Directors, to
attend all meetings of stockholders and the Board of Directors and keep a record
of the proceedings, to maintain a stock ledger and prepare lists of stockholders
and their addresses as required, to be custodian of corporate records and the
corporate seal and to affix and attest to the same on documents.
Any Assistant Secretary shall perform such duties and possess such
powers as the Board of Directors, the President or the Secretary may from time
to time prescribe. In the event of the absence, inability or refusal to act of
the Secretary, the Assistant Secretary, (or if there shall be more than one, the
Assistant Secretaries in the order determined by the Board of Directors) shall
perform the duties and exercise the powers of the Secretary.
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<PAGE> 10
In the absence of the Secretary or any Assistant Secretary at any
meeting of stockholders or directors, the person presiding at the meeting shall
designate a temporary secretary to keep a record of the meeting.
3.11 TREASURER AND ASSISTANT TREASURERS. The Treasurer shall perform
such duties and shall have such powers as may from time to time be assigned to
him by the Board of Directors or the President. In addition, the Treasurer shall
perform such duties and have such powers as are incident to the office of
treasurer, including without limitation the duty and power to keep and be
responsible for all funds and securities of the corporation, to deposit funds of
the corporation in depositories selected in accordance with these By-laws, to
disburse such funds as ordered by the Board of Directors, to make proper
accounts of such funds, and to render as required by the Board of Directors
statements of all such transactions and of the financial condition of the
corporation.
The Assistant Treasurers shall perform such duties and possess such
powers as the Board of Directors, the President or the Treasurer may from time
to time prescribe. In the event of the absence, inability or refusal to act of
the Treasurer, the Assistant Treasurer, (or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board of Directors) shall
perform the duties and exercise the powers of the Treasurer.
3.12 SALARIES. Officers of the corporation shall be entitled to such
salaries, compensation or reimbursement as shall be fixed or allowed from time
to time by the Board of Directors.
ARTICLE 4 - CAPITAL STOCK
4.1 ISSUANCE OF STOCK. Unless otherwise voted by the stockholders and
subject to the provisions of the Certificate of Incorporation, the whole or any
part of any unissued balance of the authorized capital stock of the corporation
or the whole or any part of any unissued balance of the authorized capital stock
of the corporation held in its treasury may be issued, sold, transferred or
otherwise disposed of by vote of the Board of Directors in such manner, for such
consideration and on such terms as the Board of Directors may determine.
4.2 CERTIFICATES OF STOCK. Every holder of stock of the corporation
shall be entitled to have a certificate, in such form as may be prescribed by
law and by the Board of Directors, certifying the number and class of shares
owned by him in the corporation. Each such certificate shall be signed by, or in
the name of the corporation by, the Chairman or Vice-Chairman, if any, of the
Board of Directors, or the President or a Vice President, and the Treasurer or
an Assistant Treasurer, or the Secretary or an Assistant Secretary of the
corporation. Any or all of the signatures on the certificate may be a facsimile.
Each certificate for shares of stock which are subject to any
restriction on transfer pursuant to the Certificate of Incorporation, the
By-laws, applicable securities laws or any agreement among any number of
shareholders or among such holders and the corporation shall have conspicuously
noted on the face or back of the certificate either the full text of the
restriction or a statement of the existence of such restriction.
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If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, 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 shall be set forth in full or
summarized on the face or back of each certificate representing shares of such
class or series of stock, provided that in lieu of the foregoing requirements
there may be set forth on the face or back of each certificate representing
shares of such class or series of stock a statement that the corporation will
furnish without charge to each stockholder who so requests a copy of the full
text of 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.
4.3 TRANSFERS. Except as otherwise established by rules and regulations
adopted by the Board of Directors, and subject to applicable law, shares of
stock may be transferred on the books of the corporation by the surrender to the
corporation or its transfer agent of the certificate representing such shares
properly endorsed or accompanied by a written assignment or power of attorney
properly executed, and with such proof of authority or the authenticity of
signature as the corporation or its transfer agent may reasonably require.
Except as may be otherwise required by law, by the Certificate of Incorporation
or by these By-laws, the corporation shall be entitled to treat the record
holder of stock as shown on its books as the owner of such stock for all
purposes, including the payment of dividends and the right to vote with respect
to such stock, regardless of any transfer, pledge or other disposition of such
stock until the shares have been transferred on the books of the corporation in
accordance with the requirements of these By-laws.
4.4 LOST, STOLEN OR DESTROYED CERTIFICATES. The corporation may issue a
new certificate of stock in place of any previously issued certificate alleged
to have been lost, stolen, or destroyed, upon such terms and conditions as the
Board of Directors may prescribe, including the presentation of reasonable
evidence of such loss, theft or destruction and the giving of such indemnity as
the Board of Directors may require for the protection of the corporation or any
transfer agent or registrar.
4.5 RECORD DATE. The Board of Directors may fix in advance a date as a
record date for the determination of the stockholders entitled to notice of or
to vote at any meeting of stockholders or to express consent (or dissent) to
corporate action in writing without a meeting, or entitled to receive payment of
any dividend or other distribution or allotment of any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action. Such record date shall not be more than 60 nor less than 10 days before
the date of such meeting, nor more than 10 days after the date of adoption of a
record date for a written consent without a meeting, nor more than 60 days prior
to' any other action to which such record date relates.
If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day before the day on which notice is given,
or, if notice is waived, at the close of business on the day before the day on
which the meeting is held. The record date for determining stockholders entitled
to express consent to corporate action in writing without a meeting, when no
prior action by the
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Board of Directors is necessary, shall be the day on which the first written
consent is properly delivered to the corporation. The record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating to
such purpose.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
ARTICLE 5 - GENERAL PROVISIONS
5.1 FISCAL YEAR. Except as from time to time otherwise designated by
the Board of Directors, the fiscal year of the corporation shall begin on the
first day of January in each year and end on the last day of December in each
year.
5.2 CORPORATE SEAL. The corporate seal shall be in such form as shall
be approved by the Board of Directors.
5.3 WAIVER OF NOTICE. Whenever any notice whatsoever is required to be
given by law, by the Certificate of Incorporation or by these By-laws, a waiver
of such notice either in writing signed by the person entitled to such notice or
such person's duly authorized attorney, or by telegraph, cable or any other
available method, whether before, at or after the time stated in such waiver, or
the appearance of such person or persons at such meeting in person or by proxy,
shall be deemed equivalent to such notice.
5.4 VOTING OF SECURITIES. Except as the directors may otherwise
designate, the President or Treasurer may waive notice of, and act as, or
appoint any person or persons to act as, proxy or attorney-in-fact for this
corporation (with or without power of substitution) at, any meeting of
stockholders or shareholders of any other corporation or organization, the
securities of which may be held by this corporation.
5.5 EVIDENCE OF AUTHORITY. A certificate by the Secretary, or an
Assistant Secretary, or a temporary Secretary, as to any action taken by the
stockholders, directors, a committee or any officer or representative of the
corporation shall as to all persons who rely on the certificate in good faith be
conclusive evidence of such action.
5.6 CERTIFICATE OF INCORPORATION. All references in these By-laws to
the Certificate of Incorporation shall be deemed to refer to the Certificate of
Incorporation of the corporation, as amended and in effect from time to time.
5.7 TRANSACTIONS WITH INTERESTED PARTIES. No contract or transaction
between the corporation and one or more of the directors or officers, or between
the corporation and any other corporation, partnership, association, or other
organization in which one or more of the directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or a committee of the
Board of Directors which authorizes the contract or transaction or solely
because his or their votes are counted for such purpose, if:
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(1) The material facts as to his 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;
(2) The material facts as to his relationship or interest and
as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee of the Board of Directors, or the stockholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
5.8 SEVERABILITY. Any determination that any provision of these By-laws
is for any reason inapplicable, illegal or ineffective shall not affect or
invalidate any other provision of these By-laws. 5.9 PRONOUNS. All pronouns used
in these By-laws shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as the identity of the person or persons may require.
ARTICLE 6 - AMENDMENTS
6.1 BY THE BOARD OF DIRECTORS. These By-laws may be altered, amended or
repealed or new by-laws may be adopted by the affirmative vote of a majority of
the directors present at any regular or special meeting of the Board of
Directors at which a quorum is present.
6.2 ` BY THE STOCKHOLDERS. These By-laws may be altered, amended or
repealed or new by-laws may be adopted by the affirmative vote of the holders of
a majority of the shares of the capital stock of the corporation issued and
outstanding and entitled to vote at any regular meeting of stockholders, or at
any special meeting of stockholders, provided notice of such alteration,
amendment, repeal or adoption of new by-laws shall have been stated in the
notice of such special meeting.
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EXHIBIT 3.5
AMENDED AND RESTATED BY-LAWS
OF
THE MEDICINES COMPANY
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I STOCKHOLDERS...................................................... 1
1.1 Place of Meetings................................................. 1
1.2 Annual Meeting.................................................... 1
1.3 Special Meetings.................................................. 1
1.4 Notice of Meetings................................................ 1
1.5 Voting List....................................................... 1
1.6 Quorum............................................................ 2
1.7 Adjournments...................................................... 2
1.8 Voting and Proxies................................................ 2
1.9 Action at Meeting................................................. 2
1.10 Nomination of Directors........................................... 3
1.11 Notice of Business at Annual Meetings............................. 4
1.12 Conduct of Meetings............................................... 6
1.13 No Action by Written Consent in Lieu of a Meeting................. 7
ARTICLE II DIRECTORS......................................................... 7
2.1 General Powers.................................................... 7
2.2 Number, Election and Qualification................................ 7
2.3 Classes of Directors.............................................. 7
2.4 Terms of Office................................................... 8
2.5 Allocation of Directors Among Classes in the Event
of Increases or Decreases in the Authorized Number
of Directors...................................................... 8
2.6 Quorum............................................................ 8
2.7 Action at Meeting................................................. 8
2.8 Removal........................................................... 9
2.9 Vacancies......................................................... 9
2.10 Resignation....................................................... 9
2.11 Regular Meetings.................................................. 9
2.12 Special Meetings.................................................. 9
2.13 Notice of Special Meetings........................................ 9
2.14 Meetings by Telephone Conference Calls............................ 10
2.15 Action by Written Consent......................................... 10
2.16 Committees........................................................ 10
2.17 Compensation of Directors......................................... 10
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ARTICLE III OFFICERS........................................................ 11
3.1 Titles.......................................................... 11
3.2 Election........................................................ 11
3.3 Qualification................................................... 11
3.4 Tenure.......................................................... 11
3.5 Resignation and Removal......................................... 11
3.6 Vacancies....................................................... 11
3.7 Chairman of the Board........................................... 12
3.8 President....................................................... 12
3.9 Vice Presidents................................................. 12
3.10 Secretary and Assistant Secretaries............................. 12
3.11 Treasurer and Assistant Treasurers.............................. 13
3.12 Salaries........................................................ 13
ARTICLE IV CAPITAL STOCK................................................... 13
4.1 Issuance of Stock............................................... 13
4.2 Certificates of Stock........................................... 14
4.3 Transfers....................................................... 14
4.4 Lost, Stolen or Destroyed Certificates.......................... 14
4.5 Record Date..................................................... 15
ARTICLE V GENERAL PROVISIONS.............................................. 15
5.1 Fiscal Year..................................................... 15
5.2 Corporate Seal.................................................. 15
5.3 Execution of Instruments........................................ 15
5.4 Waiver of Notice................................................ 16
5.5 Voting of Securities............................................ 16
5.6 Evidence of Authority........................................... 16
5.7 Certificate of Incorporation.................................... 16
5.8 Transactions with Interested Parties............................ 16
5.9 Severability.................................................... 17
5.10 Pronouns........................................................ 17
ARTICLE VI AMENDMENTS...................................................... 17
ii
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ARTICLE I
STOCKHOLDERS
1.1 PLACE OF MEETINGS. All meetings of stockholders shall be held
at such place within or without the State of Delaware as may be designated from
time to time by the Board of Directors, the Chairman of the Board or the
President or, if not so designated, at the registered office of the corporation.
1.2 ANNUAL MEETING. The annual meeting of stockholders for the
election of directors and for the transaction of such other business as may
properly be brought before the meeting shall be held on a date to be fixed by
the Board of Directors, the Chairman of the Board or the President (which date
shall not be a legal holiday in the place where the meeting is to be held) at
the time and place to be fixed by the Board of Directors, the Chairman of the
Board or the President and stated in the notice of the meeting. If no annual
meeting is held in accordance with the foregoing provisions, the Board of
Directors shall cause the meeting to be held as soon thereafter as is
convenient. If no annual meeting is held in accordance with the foregoing
provisions, a special meeting may be held in lieu of the annual meeting, and any
action taken at that special meeting shall have the same effect as if it had
been taken at the annual meeting, and in such case all references in these
By-laws to the annual meeting of the stockholders shall be deemed to refer to
such special meeting.
1.3 SPECIAL MEETINGS. Special meetings of stockholders for any
purpose or purposes may be called at any time by the Board of Directors, the
Chairman of the Board or the President, but such special meetings may not be
called by any other person or persons. Business transacted at any special
meeting of stockholders shall be limited to matters relating to the purpose or
purposes stated in the notice of meeting.
1.4 NOTICE OF MEETINGS. Except as otherwise provided by law,
written notice of each meeting of stockholders, whether annual or special, shall
be given not less than 10 nor more than 60 days before the date of the meeting
to each stockholder entitled to vote at such meeting. The notices of all
meetings shall state the place, date and hour of the meeting. The notice of a
special meeting shall state, in addition, the purpose or purposes for which the
meeting is called. If mailed, notice shall be deemed given when deposited in the
United States mail, postage prepaid, directed to the stockholder at such
stockholder's address as it appears on the records of the corporation.
1.5 VOTING LIST. The Secretary shall prepare, at least 10 days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in
<PAGE> 5
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 days prior to the
meeting, 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 list shall also be produced and kept
at the time and place of the meeting during the whole time of the meeting, and
may be inspected by any stockholder who is present.
1.6 QUORUM. Except as otherwise provided by law, the Certificate
of Incorporation or these By-laws, the holders of a majority of the shares of
the capital stock of the corporation issued and outstanding and entitled to vote
at the meeting, present in person or represented by proxy, shall constitute a
quorum for the transaction of business. A quorum, once established at a meeting,
shall not be broken by the withdrawal of enough votes to leave less than a
quorum.
1.7 ADJOURNMENTS. Any meeting of stockholders may be adjourned
from time to time to any other time and to any other place at which a meeting of
stockholders may be held under these By-laws by the stockholders present or
represented at the meeting and entitled to vote, although less than a quorum,
or, if no stockholder is present, by any officer entitled to preside at or to
act as secretary of such meeting. It shall not be necessary to notify any
stockholder of any adjournment of less than 30 days if the time and place of the
adjourned meeting are announced at the meeting at which adjournment is taken,
unless after the adjournment a new record date is fixed for the adjourned
meeting. At the adjourned meeting, the corporation may transact any business
which might have been transacted at the original meeting.
1.8 VOTING AND PROXIES. Each stockholder shall have one vote for
each share of stock entitled to vote held of record by such stockholder and a
proportionate vote for each fractional share so held, unless otherwise provided
by law or the Certificate of Incorporation. Each stockholder of record entitled
to vote at a meeting of stockholders may vote in person or may authorize another
person or persons to vote for him by a proxy executed in writing (or in such
other manner permitted by the General Corporation Law of Delaware) by the
stockholder or his authorized agent and delivered (including by electronic
transmission) to the Secretary of the corporation. No such proxy shall be voted
upon after three years from the date of its execution, unless the proxy
expressly provides for a longer period.
1.9 ACTION AT MEETING. When a quorum is present at any meeting,
any matter to be voted upon by the stockholders at such meeting shall be decided
by the affirmative vote of the holders of a majority of the stock present or
represented and voting on such matter (or if there are two or more classes of
stock entitled to vote as separate classes, then in the case of each such
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<PAGE> 6
class, the holders of a majority of the stock of that class present or
represented and voting on such matter), except when a different vote is required
by law, the Certificate of Incorporation or these By-laws. When a quorum is
present at any meeting, any election by stockholders shall be determined by a
plurality of the votes cast by the stockholders entitled to vote on the
election.
1.10 NOMINATION OF DIRECTORS.
(a) Except for (i) any directors entitled to be elected
by the holders of preferred stock or any other securities of the corporation
(other than common stock) and (ii) any directors elected in accordance with
Section 2.9 hereof by the Board of Directors to fill a vacancy, only persons who
are nominated in accordance with the procedures in this Section 1.10 shall be
eligible for election as directors. Nomination for election to the Board of
Directors of the corporation at a meeting of stockholders may be made (i) by or
at the direction of the Board of Directors or (ii) by any stockholder of the
corporation who (x) complies with the notice procedures set forth in Section
1.10(b) and (y) is a stockholder of record on the date of the giving of such
notice and on the record date for the determination of stockholders entitled to
vote at such meeting.
(b) To be timely, a stockholder's notice must be received
by the Secretary at the principal executive offices of the corporation as
follows: (x) in the case of an election of directors at an annual meeting of
stockholders, not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; PROVIDED, HOWEVER, that(i)
in the case of the annual meeting of stockholders of the corporation to be held
in 2001 or (ii) in the event that the date of the annual meeting in any other
year is advanced by more than 20 days, or delayed by more than 60 days, from the
first anniversary of the preceding year's annual meeting, a stockholder's notice
must be so received not earlier than the ninetieth day prior to such annual
meeting and not later than the close of business on the later of (A) the
sixtieth day prior to such annual meeting and (B) the tenth day following the
day on which notice of the date of such annual meeting was mailed or public
disclosure of the date of such annual meeting was made, whichever first occurs;
or (y) in the case of an election of directors at a special meeting of
stockholders, not earlier than the ninetieth day prior to such special meeting
and not later than the close of business on the later of (i) the sixtieth day
prior to such special meeting and (ii) the tenth day following the day on which
notice of the date of such special meeting was mailed or public disclosure of
the date of such special meeting was made, whichever first occurs.
The stockholder's notice to the Secretary shall set forth: (a) as to
each proposed nominee (i) such person's name, age, business address and, if
known, residence address, (ii) such person's principal occupation or employment,
(iii) the class and number of shares of stock of the corporation which are
beneficially owned by such person, and (iv) any other information
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concerning such person that must be disclosed as to nominees in proxy
solicitations pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended; (b) as to the stockholder giving the notice (i) such
stockholder's name and address, as they appear on the corporation's books, (ii)
the class and number of shares of stock of the corporation which are owned,
beneficially and of record, by such stockholder, (iii) a description of all
arrangements or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder and (iv) a
representation that such stockholder intends to appear in person or by proxy at
the meeting to nominate the person(s) named in its notice; and (c) as to the
beneficial owner, if any, on whose behalf the nomination is being made (i) such
beneficial owner's name and address, (ii) the class and number of shares of
stock of the corporation which are beneficially owned by such beneficial owner,
and (iii) a description of all arrangements or understandings between such
beneficial owner and each proposed nominee and any other person or persons
(including their names) pursuant to which the nomination(s) are to be made. In
addition, to be effective, the stockholder's notice must be accompanied by the
written consent of the proposed nominee to serve as a director if elected. The
corporation may require any proposed nominee to furnish such other information
as may reasonably be required to determine the eligibility of such proposed
nominee to serve as a director of the corporation.
(c) The chairman of any meeting shall, if the facts
warrant, determine that a nomination was not made in accordance with the
provisions of this Section 1.10, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.
(d) Except as otherwise required by law, nothing in this
Section 1.10 shall obligate the corporation or the Board of Directors to include
in any proxy statement or other stockholder communication distributed on behalf
of the corporation or the Board of Directors information with respect to any
nominee for director submitted by a stockholder.
1.11 NOTICE OF BUSINESS AT ANNUAL MEETINGS.
(a) At any annual meeting of the stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual meeting, business must be (i)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (ii) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or (iii) properly
brought before the meeting by a stockholder. For business to be properly brought
before an annual meeting by a stockholder, (i) if such business relates to the
election of directors of the corporation, the procedures in Section 1.10 must be
complied with and (ii) if such business
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relates to any other matter, the stockholder must (x) have given timely notice
thereof in writing to the Secretary in accordance with the procedures set forth
in Section 1.11(b) and (y) be a stockholder of record on the date of the giving
of such notice and on the record date for the determination of stockholders
entitled to vote at such annual meeting.
(b) To be timely, a stockholder's notice must be received
by the Secretary at the principal executive offices of the corporation not less
than 60 days nor more than 90 days prior to the first anniversary of the
preceding year's annual meeting; PROVIDED, HOWEVER, that (i) in the case of the
annual meeting of stockholders of the corporation to be held in 2001 or (ii)] in
the event that the date of the annual meeting in any other year is advanced by
more than 20 days, or delayed by more than 60 days, from the first anniversary
of the preceding year's annual meeting, a stockholder's notice must be so
received not earlier than the ninetieth day prior to such annual meeting and not
later than the close of business on the later of (A) the sixtieth day prior to
such annual meeting and (B) the tenth day following the day on which notice of
the date of such annual meeting was mailed or public disclosure of the date of
such annual meeting was made, whichever first occurs.
The stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and address, as they appear on the corporation's books, of the stockholder
proposing such business, and the name and address of the beneficial owner, if
any, on whose behalf the proposal is made, (iii) the class and number of shares
of stock of the corporation which are owned, of record and beneficially, by the
stockholder and beneficial owner, if any, (iv) a description of all arrangements
or understandings between such stockholder or such beneficial owner, if any, and
any other person or persons (including their names) in connection with the
proposal of such business by such stockholder and any material interest of the
stockholder or such beneficial owner, if any, in such business, and (v) a
representation that such stockholder intends to appear in person or by proxy at
the annual meeting to bring such business before the meeting. Notwithstanding
anything in these By-laws to the contrary, no business shall be conducted at any
annual meeting of stockholders except in accordance with the procedures set
forth in this Section 1.11; provided that any stockholder proposal which
complies with Rule 14a-8 of the proxy rules (or any successor provision)
promulgated under the Securities Exchange Act of 1934, as amended, and is to be
included in the corporation's proxy statement for an annual meeting of
stockholders shall be deemed to comply with the requirements of this Section
1.11.
(c) The chairman of any meeting shall, if the facts
warrant, determine that business was not properly brought before the meeting in
accordance with the provisions of this
5
<PAGE> 9
Section 1.11, and if he should so determine, he shall so declare to the meeting
and such business shall not be brought before the meeting.
1.12 CONDUCT OF MEETINGS.
(a) CHAIRMAN OF MEETING. Meetings of stockholders shall
be presided over by the Chairman of the Board, if any, or in his absence by the
Vice Chairman of the Board, if any, or in his absence by the President, or in
his absence by a Vice President, or in the absence of all of the foregoing
persons by a chairman designated by the Board of Directors, or in the absence of
such designation by a chairman chosen by vote of the stockholders at the
meeting. The Secretary shall act as secretary of the meeting, but in his absence
the chairman of the meeting may appoint any person to act as secretary of the
meeting.
(b) RULES, REGULATIONS AND PROCEDURES. The Board of
Directors of the corporation may adopt by resolution such rules, regulations and
procedures for the conduct of any meeting of stockholders of the corporation as
it shall deem appropriate. Except to the extent inconsistent with such rules,
regulations and procedures as adopted by the Board of Directors, the chairman of
any meeting of stockholders shall have the right and authority to prescribe such
rules, regulations and procedures and to do all such acts as, in the judgment of
such chairman, are appropriate for the proper conduct of the meeting. Such
rules, regulations or procedures, whether adopted by the Board of Directors or
prescribed by the chairman of the meeting, may include, without limitation, the
following: (i) the establishment of an agenda or order of business for the
meeting; (ii) rules and procedures for maintaining order at the meeting and the
safety of those present; (iii) limitations on attendance at or participation in
the meeting to stockholders of record of the corporation, their duly authorized
and constituted proxies or such other persons as shall be determined; (iv)
restrictions on entry to the meeting after the time fixed for the commencement
thereof; and (v) limitations on the time allotted to questions or comments by
participants. Unless and to the extent determined by the Board of Directors or
the chairman of the meeting, meetings of stockholders shall not be required to
be held in accordance with the rules of parliamentary procedure.
(c) CLOSING OF POLLS. The chairman of the meeting shall
announce at the meeting when the polls for each matter to be voted upon at the
meeting will be opened and closed. If no announcement is made, the polls shall
be deemed to have opened when the meeting is convened and closed upon the final
adjournment of the meeting. After the polls close, no ballots, proxies or votes
or any revocations or changes thereto may be accepted.
(d) INSPECTORS OF ELECTION. In advance of any meeting of
stockholders, the Board of Directors, the Chairman of the Board or the President
shall appoint one or more
6
<PAGE> 10
inspectors or election to act at the meeting and make a written report thereof.
One or more other persons may be designated as alternate inspectors to replace
any inspector who fails to act. If no inspector or alternate is present, ready
and willing to act at a meeting of stockholders, the chairman of the meeting
shall appoint one or more inspectors to act at the meeting. Unless otherwise
required by law, inspectors may be officers, employees or agents of the
corporation. 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. The inspector
shall have the duties prescribed by law and shall take charge of the polls and,
when the vote in completed, shall make a certificate of the result of the vote
taken and of such other facts as may be required by law.
1.13 NO ACTION BY WRITTEN CONSENT IN LIEU OF A MEETING.
Stockholders of the corporation may not take any action by written consent in
lieu of a meeting.
ARTICLE II
DIRECTORS
2.1 GENERAL POWERS. The business and affairs of the corporation
shall be managed by or under the direction of a Board of Directors, who may
exercise all of the powers of the corporation except as otherwise provided by
law, the Certificate of Incorporation or these By-laws. In the event of a
vacancy in the Board of Directors, the remaining directors, except as otherwise
provided by law, may exercise the powers of the full Board until the vacancy is
filled.
2.2 NUMBER, ELECTION AND QUALIFICATION. The number of directors
which shall constitute the whole Board of Directors shall be determined from
time to time by resolution of the Board of Directors, but in no event shall be
less than three. The directors shall be elected at the annual meeting of
stockholders by such stockholders as have the right to vote on such election.
Directors need not be stockholders of the corporation.
2.3 CLASSES OF DIRECTORS. The Board of Directors shall be and is
divided into three classes: Class I, Class II and Class III. No one class shall
have more than one director more than any other class. If a fraction is
contained in the quotient arrived at by dividing the authorized number of
directors by three, then, if such fraction is one-third, the extra director
shall be a member of Class I, and if such fraction is two-thirds, one of the
extra directors shall be a member of Class I and one of the extra directors
shall be a member of Class II, unless otherwise provided by resolution of the
Board of Directors.
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2.4 TERMS OF OFFICE. Each director shall serve for a term ending
on the date of the third annual meeting following the annual meeting at which
such director was elected; PROVIDED, that each initial director in Class I shall
serve for a term expiring at the corporation's annual meeting of stockholders
held in 2001; each initial director in Class II shall serve for a term expiring
at the corporation's annual meeting of stockholders held in 2002; and each
initial director in Class III shall serve for a term expiring at the
corporation's annual meeting of stockholders held in 2003 PROVIDED FURTHER, that
the term of each director shall continue until the election and qualification of
his successor and be subject to his earlier death, resignation or removal.
2.5 ALLOCATION OF DIRECTORS AMONG CLASSES IN THE EVENT OF
INCREASES OR DECREASES IN THE AUTHORIZED NUMBER OF DIRECTORS. 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, subject
to his earlier death, resignation or removal and (ii) the newly created or
eliminated directorships resulting from such increase or decrease shall be
apportioned by the Board of Directors among the three classes of directors in
accordance with the provisions of Section 2.3. To the extent possible,
consistent with the provisions of Section 2.3, 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 any newly eliminated directorships
shall be subtracted from those classes whose terms of offices are to expire at
the earliest dates following such allocation, unless otherwise provided from
time to time by resolution of the Board of Directors.
2.6 QUORUM. A majority of the directors at any time in office
shall constitute a quorum for the transaction of business. In the event one or
more of the directors shall be disqualified to vote at any meeting, then the
required quorum shall be reduced by one for each director so disqualified,
provided that in no case shall less than one-third of the number of directors
fixed pursuant to Section 2.2 constitute a quorum. If at any meeting of the
Board of Directors there shall be less than such a quorum, a majority of the
directors present may adjourn the meeting from time to time without further
notice other than announcement at the meeting, until a quorum shall be present.
2.7 ACTION AT MEETING. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Directors unless a greater
number is required by law, by the Certificate of Incorporation or by these
By-laws.
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2.8 REMOVAL. Directors of the corporation may be removed only for
cause by the affirmative vote of the holders of at least seventy-five percent
(75%) of the votes which all the stockholders would be entitled to cast in any
annual election of directors.
2.9 VACANCIES. Any vacancy in the Board of Directors, however
occurring, including a vacancy resulting from an enlargement of the Board, shall
be filled only by vote of a majority of the directors then in office, although
less than a quorum, or by a sole remaining director. A director elected to fill
a vacancy shall be elected to hold office until the next election of the class
for which such director shall have been chosen, subject to the election and
qualification of his successor and to his earlier death, resignation or removal.
2.10 RESIGNATION. Any director may resign by delivering his written
resignation to the corporation at its principal office or to the Chairman of the
Board, the President or the Secretary. Such resignation shall be effective upon
receipt unless it is specified to be effective at some later time or upon the
happening of some later event.
2.11 REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without notice at such time and place, either within or without the
State of Delaware, as shall be determined from time to time by the Board of
Directors; provided that any director who is absent when such a determination is
made shall be given notice of the determination. A regular meeting of the Board
of Directors may be held without notice immediately after and at the same place
as the annual meeting of stockholders.
2.12 SPECIAL MEETINGS. Special meetings of the Board of Directors
may be held at any time and place, within or without the State of Delaware,
designated in a call by the Chairman of the Board, the President, two or more
directors, or by one director in the event that there is only a single director
in office.
2.13 NOTICE OF SPECIAL MEETINGS. Notice of any special meeting of
directors shall be given to each director by the Secretary or by the officer or
one of the directors calling the meeting. Notice shall be duly given to each
director (i) by giving notice to such director in person or by telephone at
least 24 hours in advance of the meeting, (ii) by sending a telegram, telecopy,
telex or electronic mail, or delivering written notice by hand, to his last
known business, home or electronic mail address at least 48 hours in advance of
the meeting, or (iii) by sending written notice, via first-class mail or
reputable overnight courier, to his last known business or home address at least
72 hours in advance of the meeting. A notice or waiver of notice of a meeting of
the Board of Directors need not specify the purposes of the meeting.
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2.14 MEETINGS BY TELEPHONE CONFERENCE CALLS. Directors may
participate in meetings of the Board of Directors or any committee thereof by
means of conference telephone or other communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation by such means shall constitute presence in person at such meeting.
2.15 ACTION BY WRITTEN CONSENT. 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 to the action in writing, and the written consents are
filed with the minutes of proceedings of the Board or committee.
2.16 COMMITTEES. The Board of Directors may designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of a
committee, the member or members of the committee present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors
and subject to the provisions of law, 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. Each such committee shall keep
minutes and make such reports as the Board of Directors may from time to time
request. Except as the Board of Directors may otherwise determine, any committee
may make rules for the conduct of its business, but unless otherwise provided by
the directors or in such rules, its business shall be conducted as nearly as
possible in the same manner as is provided in these By-laws for the Board of
Directors.
2.17 COMPENSATION OF DIRECTORS. Directors may be paid such
compensation for their services and such reimbursement for expenses of
attendance at meetings as the Board of Directors may from time to time
determine. No such payment shall preclude any director from serving the
corporation or any of its parent or subsidiary corporations in any other
capacity and receiving compensation for such service.
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ARTICLE III
OFFICERS
3.1 TITLES. The officers of the corporation shall consist of a
President, a Secretary, a Treasurer and such other officers with such other
titles as the Board of Directors shall determine, including a Chairman of the
Board, a Vice Chairman of the Board, and one or more Vice Presidents, Assistant
Treasurers, and Assistant Secretaries. The Board of Directors may appoint such
other officers as it may deem appropriate.
3.2 ELECTION. The President, Treasurer and Secretary shall be
elected annually by the Board of Directors at its first meeting following the
annual meeting of stockholders. Other officers may be appointed by the Board of
Directors at such meeting or at any other meeting.
3.3 QUALIFICATION. No officer need be a stockholder. Any two or
more offices may be held by the same person.
3.4 TENURE. Except as otherwise provided by law, by the
Certificate of Incorporation or by these By-laws, each officer shall hold office
until his successor is elected and qualified, unless a different term is
specified in the resolution electing or appointing him, or until his earlier
death, resignation or removal.
3.5 RESIGNATION AND REMOVAL. Any officer may resign by delivering
his written resignation to the corporation at its principal office or to the
Chief Executive Officer or the Secretary. Such resignation shall be effective
upon receipt unless it is specified to be effective at some later time or upon
the happening of some later event.
Any officer may be removed at any time, with or without cause, by vote
of a majority of the entire number of directors then in office.
Except as the Board of Directors may otherwise determine, no officer
who resigns or is removed shall have any right to any compensation as an officer
for any period following his resignation or removal, or any right to damages on
account of such removal, whether his compensation be by the month or by the year
or otherwise, unless such compensation is expressly provided in a duly
authorized written agreement with the corporation.
3.6 VACANCIES. The Board of Directors may fill any vacancy
occurring in any office for any reason and may, in its discretion, leave
unfilled for such period as it may determine any offices other than those of
President, Treasurer and Secretary. Each such successor shall hold
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office for the unexpired term of his predecessor and until his successor is
elected and qualified, or until his earlier death, resignation or removal.
3.7 CHAIRMAN OF THE BOARD. The Board of Directors may appoint from
its members a Chairman of the Board. If the Board of Directors appoints a
Chairman of the Board, he shall perform such duties and possess such powers as
are assigned to him by the Board of Directors and, if the Chairman of the Board
is also designated as the corporation's Chief Executive Officer, he shall have
the powers and duties of the Chief Executive Officer prescribed in Section 3.8
of these By-laws. Unless otherwise provided by the Board of Directors, the
Chairman of the Board shall preside at all meetings of the Board of Directors
and stockholders.
3.8 PRESIDENT. Unless the Board of Directors has designated the
Chairman of the Board as the corporation's Chief Executive Officer, the
President shall be the Chief Executive Officer of the corporation and, as such,
shall have general charge and supervision of the business of the Corporation
subject to the direction of the Board of Directors. The President shall perform
such other duties and shall have such other powers as the Board of Directors and
the Chief Executive Officer (if the Chairman of the Board is serving in such
position) may from time to time prescribe.
3.9 VICE PRESIDENTS. Any Vice President shall perform such duties
and possess such powers as the Board of Directors or the Chief Executive Officer
may from time to time prescribe. In the event of the absence, inability or
refusal to act of the Chief Executive Officer, the President (if he is not the
Chief Executive Officer), and then the Vice President (or if there shall be more
than one, the Vice Presidents in the order determined by the Board of
Directors), shall perform the duties of the Chief Executive Officer and when so
performing shall have all the powers of and be subject to all the restrictions
upon the Chief Executive Officer. The Board of Directors may assign to any Vice
President the title of Executive Vice President, Senior Vice President or any
other title selected by the Board of Directors.
3.10 SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall
perform such duties and shall have such powers as the Board of Directors or the
Chief Executive Officer may from time to time prescribe. In addition, the
Secretary shall perform such duties and have such powers as are incident to the
office of the secretary, including without limitation the duty and power to give
notices of all meetings of stockholders and special meetings of the Board of
Directors, to attend all meetings of stockholders and the Board of Directors and
keep a record of the proceedings, to maintain a stock ledger and prepare lists
of stockholders and their addresses as required, to be custodian of corporate
records and the corporate seal and to affix and attest to the same on documents.
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Any Assistant Secretary shall perform such duties and possess such
powers as the Board of Directors, the Chief Executive Officer or the Secretary
may from time to time prescribe. In the event of the absence, inability or
refusal to act of the Secretary, the Assistant Secretary (or if there shall be
more than one, the Assistant Secretaries in the order determined by the Board of
Directors) shall perform the duties and exercise the powers of the Secretary.
In the absence of the Secretary or any Assistant Secretary at any
meeting of stockholders or directors, the chairman of the meeting shall
designate a temporary secretary to keep a record of the meeting.
3.11 TREASURER AND ASSISTANT TREASURERS. The Treasurer shall
perform such duties and shall have such powers as may from time to time be
assigned to him by the Board of Directors or the Chief Executive Officer. In
addition, the Treasurer shall perform such duties and have such powers as are
incident to the office of treasurer, including without limitation the duty and
power to keep and be responsible for all funds and securities of the
corporation, to deposit funds of the corporation in depositories selected in
accordance with these By-laws, to disburse such funds as ordered by the Board of
Directors, to make proper accounts of such funds, and to render as required by
the Board of Directors statements of all such transactions and of the financial
condition of the corporation.
The Assistant Treasurers shall perform such duties and possess such
powers as the Board of Directors, the Chief Executive Officer or the Treasurer
may from time to time prescribe. In the event of the absence, inability or
refusal to act of the Treasurer, the Assistant Treasurer (or if there shall be
more than one, the Assistant Treasurers in the order determined by the Board of
Directors) shall perform the duties and exercise the powers of the Treasurer.
3.12 SALARIES. Officers of the corporation shall be entitled to
such salaries, compensation or reimbursement as shall be fixed or allowed from
time to time by the Board of Directors.
ARTICLE IV
CAPITAL STOCK
4.1 ISSUANCE OF STOCK. Unless otherwise voted by the stockholders
and subject to the provisions of the Certificate of Incorporation, the whole or
any part of any unissued balance of the authorized capital stock of the
corporation or the whole or any part of any unissued balance of the authorized
capital stock of the corporation held in its treasury may be issued, sold,
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transferred or otherwise disposed of by vote of the Board of Directors in such
manner, for such consideration and on such terms as the Board of Directors may
determine.
4.2 CERTIFICATES OF STOCK. Every holder of stock of the
corporation shall be entitled to have a certificate, in such form as may be
prescribed by law and by the Board of Directors, certifying the number and class
of shares owned by him in the corporation. Each such certificate shall be signed
by, or in the name of the corporation by, the Chairman or Vice Chairman, if any,
of the Board of Directors, or the President or a Vice President, and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary
of the corporation. Any or all of the signatures on the certificate may be a
facsimile.
Each certificate for shares of stock which are subject to any
restriction on transfer pursuant to the Certificate of Incorporation, these
By-laws, applicable securities laws or any agreement among any number of
stockholders or among such holders and the corporation shall have conspicuously
noted on the face or back of the certificate either the full text of the
restriction or a statement of the existence of such restriction.
There shall be set forth on the face or back of each certificate
representing shares of such class or series of stock of the corporation a
statement that the corporation will furnish without charge to each stockholder
who so requests a copy of the full text of 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.
4.3 TRANSFERS. Except as otherwise established by rules and
regulations adopted by the Board of Directors, and subject to applicable law,
shares of stock may be transferred on the books of the corporation by the
surrender to the corporation or its transfer agent of the certificate
representing such shares properly endorsed or accompanied by a written
assignment or power of attorney properly executed, and with such proof of
authority or the authenticity of signature as the corporation or its transfer
agent may reasonably require. Except as may be otherwise required by law, by the
Certificate of Incorporation or by these By-laws, the corporation shall be
entitled to treat the record holder of stock as shown on its books as the owner
of such stock for all purposes, including the payment of dividends and the right
to vote with respect to such stock, regardless of any transfer, pledge or other
disposition of such stock until the shares have been transferred on the books of
the corporation in accordance with the requirements of these By-laws.
4.4 LOST, STOLEN OR DESTROYED CERTIFICATES. The corporation may
issue a new certificate of stock in place of any previously issued certificate
alleged to have been lost, stolen, or destroyed, upon such terms and conditions
as the Board of Directors may prescribe, including
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the presentation of reasonable evidence of such loss, theft or destruction and
the giving of such indemnity as the Board of Directors may require for the
protection of the corporation or any transfer agent or registrar.
4.5 RECORD DATE. The Board of Directors may fix in advance a date
as a record date for the determination of the stockholders entitled to notice of
or to vote at any meeting of stockholders, or entitled to receive payment of any
dividend or other distribution or allotment of any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action. Such record date shall not be more than 60 nor less than 10 days before
the date of such meeting, nor more than 60 days prior to any other action to
which such record date relates.
If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day before the day on which notice is given,
or, if notice is waived, at the close of business on the day before the day on
which the meeting is held. If no record date is fixed, the record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating to
such purpose.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
ARTICLE V
GENERAL PROVISIONS
5.1 FISCAL YEAR. Except as from time to time otherwise designated
by the Board of Directors, the fiscal year of the corporation shall begin on the
first day of January of each year and end on the last day of December in each
year.
5.2 CORPORATE SEAL. The corporate seal shall be in such form as
shall be approved by the Board of Directors.
5.3 EXECUTION OF INSTRUMENTS. The Chief Executive Officer and the
President shall each, acting singly, have power and authority to execute and
deliver on behalf and in the name of the corporation any instrument requiring
the signature of an officer of the corporation which may be authorized by the
Board of Directors, except where the execution and delivery of such an
instrument shall be expressly delegated by the Board of Directors to some other
officer or agent of the corporation. The other officers of the corporation may
execute and deliver on behalf and
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in the name of the corporation any instrument requiring the signature of an
officer of the corporation when so authorized by the Board of Directors.
5.4 WAIVER OF NOTICE. Whenever any notice whatsoever is required
to be given by law, by the Certificate of Incorporation or by these By-laws, a
waiver of such notice either in writing signed by the person entitled to such
notice or such person's duly authorized attorney, or by telecopy or any other
available method, whether before, at or after the time stated in such waiver, or
the appearance of such person or persons at such meeting in person or by proxy,
shall be deemed equivalent to such notice.
5.5 VOTING OF SECURITIES. Except as the Board of Directors may
otherwise designate, the President or the Treasurer may waive notice of, and act
as, or appoint any person or persons to act as, proxy or attorney-in-fact for
this corporation (with or without power of substitution) at any meeting of
stockholders or shareholders of any other corporation or organization, the
securities of which may be held by this corporation.
5.6 EVIDENCE OF AUTHORITY. A certificate by the Secretary, or an
Assistant Secretary, or a temporary Secretary, as to any action taken by the
stockholders, directors, a committee or any officer or representative of the
corporation shall as to all persons who rely on the certificate in good faith be
conclusive evidence of such action.
5.7 CERTIFICATE OF INCORPORATION. All references in these By-laws
to the Certificate of Incorporation shall be deemed to refer to the Certificate
of Incorporation of the corporation, as amended and in effect from time to time.
5.8 TRANSACTIONS WITH INTERESTED PARTIES. No contract or
transaction between the corporation and one or more of the directors or
officers, or between the corporation and any other corporation, partnership,
association, or other organization in which one or more of the directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or a
committee of the Board of Directors at which the contract or transaction is
authorized or solely because his or their votes are counted for such purpose,
if:
(a) The material facts as to his 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;
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(b) The material facts as to his 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 of the Board of Directors, or the stockholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
5.9 SEVERABILITY. Any determination that any provision of these
By-laws is for any reason inapplicable, illegal or ineffective shall not affect
or invalidate any other provision of these By-laws.
5.10 PRONOUNS. All pronouns used in these By-laws shall be deemed
to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person or persons may require.
ARTICLE VI
AMENDMENTS
These By-laws may be altered, amended or repealed, in whole or in part,
or new By-laws may be adopted by the Board of Directors or by the stockholders
as provided in the Certificate of Incorporation.
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EXHIBIT 10.1
THE MEDICINES COMPANY
1998 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of this 1998 Stock Incentive Plan (the "Plan") of The Medicines
Company, a Delaware corporation (the "Company"), is to advance the interests of
the Company's stockholders by enhancing the Company's ability to attract, retain
and motivate persons who make (or are expected to make) important contributions
to the Company by providing such persons with equity ownership opportunities and
performance-based incentives and thereby better aligning the interests of such
persons with those of the Company's stockholders. Except where the context
otherwise requires, the term "Company" shall include any present or future
subsidiary corporations of The Medicines Company as defined in Section 424(f) of
the Internal Revenue Code of 1986, as amended, and any regulations promulgated
thereunder (the "Code").
2. ELIGIBILITY
All of the Company's employees, officers, directors, consultants and advisors
and any individuals who have accepted an offer for employment, are eligible to
be granted options, restricted stock awards, or other stock-based awards (each,
an "Award") under the Plan. Each person who has been granted an Award under the
Plan shall be deemed a "Participant".
3. ADMINISTRATION, DELEGATION
(a) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered by
the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable.
The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.
(b) DELEGATION TO EXECUTIVE OFFICERS. To the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company the power to make Awards and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum number
of shares subject to Awards and the maximum number of shares for any one
Participant to be made by such executive officers.
(c) APPOINTMENT OF COMMITTEES. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). If and when the common
stock, $0.001 par value
<PAGE> 2
per share, of the Company (the "Common Stock") is registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Board
shall appoint one such Committee of not less than two members, each member of
which shall be an "outside director" within the meaning of Section 162(m) of the
Code and a "non-employee director" as defined in Rule 16b-3 promulgated under
the Exchange Act. All references in the Plan to the "Board" shall mean the Board
or a Committee of the Board or the executive officer referred to in Section 3(b)
of this Plan, to the extent that the Board's powers or authority under the Plan
have been delegated to such Committee or executive officer.
4. STOCK AVAILABLE FOR AWARDS
(a) NUMBER OF SHARES. Subject to adjustment under Section 8, Awards may be
made under the Plan for up to 725,500 shares of Common Stock. If any Award
expires or is terminated, surrendered or canceled without having been fully
exercised or is forfeited in whole or in part or results in any Common Stock not
being issued, the unused Common Stock covered by such Award shall again be
available for the grant of Awards under the Plan, subject, however, in the case
of Incentive Stock Options (as hereinafter defined), to any limitation required
under the Code. Shares issued under the Plan may consist, in whole or in part,
of authorized but unissued shares or treasury shares.
(b) PER-PARTICIPANT LIMIT. Subject to adjustment under Section 4(c), for
Awards granted after the Common Stock is registered under the Exchange Act, the
maximum number of shares of Common Stock with respect to which an Award may be
granted to any Participant under the Plan shall be 500,000 per calendar year.
The per-Participant limit described in this Section 4(b) shall be construed and
applied consistently with Section 162(m) of the Code.
(c) ADJUSTMENT TO COMMON STOCK. In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, (i) the number and class of securities available
under this Plan, (ii) the number and class of security and exercise price per
share subject to each outstanding Option, (iii) the repurchase price per
security subject to each outstanding Restricted Stock Award, and (iv) the terms
of each other outstanding stock-based Award shall be appropriately adjusted by
the Company (or substituted Awards may be made, if applicable) to the extent the
Board shall determine, in good faith, that such an adjustment (or substitution)
is necessary and appropriate. If this Section 4(c) applies and Section 8(c) also
applies to any event, Section 8(c) shall be applicable to such event, and this
Section 4(c) shall not be applicable.
5. STOCK OPTIONS
(a) GENERAL. The Board may grant options to purchase Common Stock (each,
an "Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
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(b) INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.
(c) EXERCISE PRICE. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement.
(d) DURATION OF OPTIONS. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Board may specify in the
applicable option agreement.
(e) EXERCISE OF OPTION. Options may be exercised by delivery to the
Company of a written notice of exercise signed by the proper person or by any
other form of notice (including electronic notice) approved by the Board
together with payment in full as specified in Section 5(f) for the number of
shares for which the Option is exercised.
(f) PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:
(1) in cash or by check payable to the order of the Company;
(2) except as the Board may, in its sole discretion, otherwise
provide in an option agreement, delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price, or delivery by the Participant to
the Company of a copy of irrevocable and unconditional instructions to a
creditworthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price;
(3) at such times as the Common Stock is registered under the
Exchange Act, delivery of shares of Common Stock owned by the Participant valued
at their fair market value as determined by (or in a manner approved by) the
Board in good faith ("Fair Market Value"), which Common Stock was owned by the
Participant at least six months prior to such delivery;
(4) to the extent permitted by the Board, in its sole discretion, (A)
by delivery of a promissory note of the Participant to the Company on terms
determined by the Board or (B) by payment of such other lawful consideration as
the Board may determine; or
(5) any combination of the above permitted forms of payment.
6. RESTRICTED STOCK
(a) GRANTS. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable
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Award are not satisfied prior to the end of the applicable restriction period or
periods established by the Board for such Award (each, "Restricted Stock
Award").
(b) TERMS AND CONDITIONS. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
7. OTHER STOCK-BASED AWARDS
The Board shall have the right to grant other Awards based upon the Common Stock
having such terms and conditions as the Board may determine, including the grant
of shares based upon certain conditions, the grant of securities convertible
into Common Stock and the grant of stock appreciation rights.
8. ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS
(a) CHANGES IN CAPITALIZATION. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the per-participant limit set forth in Section 4(b), (iii) the number and
class of securities and exercise price per share subject to each outstanding
Option, (iv) the repurchase price per share subject to each outstanding
Restricted Stock Award, and (v) the terms of each other outstanding Award shall
be appropriately adjusted by the Company (or substituted Awards may be made, if
applicable) to the extent the Board shall determine, in good faith, that such an
adjustment (or substitution) is necessary and appropriate. If this Section 8(a)
applies and Section 8(c) also applies to any event, Section 8(c) shall be
applicable to such event, and this Section 8(a) shall not be applicable.
(b) LIQUIDATION OR DISSOLUTION. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Stock Award or other Award granted under the Plan
at the time of the grant of such Award.
(c) ACQUISITION AND CHANGE IN CONTROL EVENTS
(1) DEFINITIONS
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(a) An "Acquisition Event" shall mean:
(i) any merger or consolidation of the Company with or into
another entity as a result of which the Common Stock is
converted into or exchanged for the right to receive
cash, securities or other property; or
(ii) any exchange of shares of the Company for cash,
securities or other property pursuant to a statutory
share exchange transaction.
(b) A "Change in Control Event" shall mean:
(i) any sale or transfer of all or substantially all of the
assets of the Company to another corporation or entity,
any merger, consolidation or reorganization of the
Company into or with another corporation or entity,
with the result that, upon conclusion of the
transaction, the voting securities of the Company
immediately prior thereto do not represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of
the combined voting power of the voting securities of
the continuing or surviving entity of such
consolidation, merger or reorganization; or
(ii) following the date on which the Company becomes subject
to the periodic reporting requirements under Section 13
of the Exchange Act, a disclosure that any person (as
the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act), other than (A)
any shareholder who, prior to the Company becoming
subject to such reporting requirements of Section 13 of
the Exchange Act, previously held at least 30% of the
combined voting power of outstanding voting securities
of the Company, (B) the Company or (C) any corporation
owned directly or indirectly by the stockholders of the
Company in substantially the same proportion as their
ownership of stock of the Company, becomes the
beneficial owner as the term "beneficial owner" is
defined under Rule 13d-3 or any successor rule or
regulation thereto under the Exchange Act) of
securities representing 30% or more of the combined
voting power of the then outstanding voting securities
of the Company; or
(iii) such time as individuals who as of the date of the
initial adoption of this Plan constitute the Board of
Directors of the Company, and any new director (other
than a director
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designated by a person who has entered into an agreement
with the Company to effect any transaction described in
clause (i) or (ii) of this section) whose election by
the Board or nomination for election by the Company's
stockholders was approved by a vote of at least
two-thirds of the directors then still in office who
were either directors at the beginning of the period or
whose election or whose nomination for election was
previously so approved, cease for any reason to
constitute a majority of the Board of Directors.
(c) "Cause" shall mean (i) conviction of any felony or any crime
involving moral turpitude or dishonesty; (ii) participation
in a fraud or act of dishonesty against the Company (or, if
applicable, a successor corporation to the Company); (iii)
willful and material breach of the Company's policies (or,
if applicable, a successor corporation to the Company); (iv)
intentional and material damage to the Company's property
(or, if applicable, a successor corporation to the company);
or (v) material breach of the Participant's confidentiality
obligations or duties under the Participant's
non-disclosure, non-competition or other similar agreement
with the Company (or, if applicable, a successor corporation
to the Company).
(d) "Termination Event" shall mean the termination of the
Participant's employment (i) by the Company or the acquiring
or succeeding corporation without Cause; (ii) as a result of
his death or disability (within the meaning of Section
22(4)(3) of the Code); or (iii) by the Participant upon
written notice given promptly after the Company's or the
acquiring or succeeding corporation's taking any of the
following actions, which actions shall not have been cured
within a 30-day period following such notice: (A) the
principal place of the performance of the Participant's
responsibilities (the "Principal Location") is changed to a
location outside of a 30 mile radius from the Principal
Location immediately prior to the Change in Control Event;
(B) there is a material reduction in the Participant's
responsibilities without Cause; (C) there is a material
reduction in the Participant's salary; or (D) there is a
significant diminution in the scope of the Participant's
responsibilities without the Participant's agreement
(excluding increases in responsibility and sideways moves to
jobs with similar descriptions).
(2) EFFECT ON OPTIONS
(a) ACQUISITION EVENT. Upon the occurrence of an Acquisition
Event (regardless of whether such event also constitutes a
Change in Control Event), or the execution by the Company of
any agreement
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<PAGE> 7
with respect to an Acquisition Event (regardless of whether
such event will result in a Change in Control Event), the
Board shall provide that all outstanding Options shall be
assumed, or equivalent options shall be substituted, by the
acquiring or succeeding corporation (or an affiliate
thereof); PROVIDED THAT (i) any options substituted for
Incentive Stock Options shall satisfy, in the determination
of the Board, the requirements of Section 424(a) of the Code
and (ii) if such Acquisition Event also constitutes a Change
in Control Event, except to the extent specifically provided
to the contrary in the instrument evidencing any Option or
any other agreement between a Participant and the Company,
such assumed or substituted options shall become immediately
exercisable in full if, on or prior to the first anniversary
of the date of the consummation of the Change in Control
Event, a Termination Event occurs.
Notwithstanding the foregoing, if the acquiring or
succeeding corporation (or an affiliate thereof) does not
agree to assume, or substitute for, such Options, then the
Board shall (x) upon written notice to the Participants,
provide that all then unexercised Options will become
exercisable in full as of a specified time (the
"Acceleration Time") prior to the Acquisition Event and will
terminate immediately prior to the consummation of such
Acquisition Event, except to the extent exercised by the
Participants before the consummation of such Acquisition
Event, and/or (y) in the event of an Acquisition Event under
the terms of which holders of Common Stock will receive upon
consummation thereof a cash payment for each share of Common
Stock surrendered pursuant to such Acquisition Event (the
"Acquisition Price"), provide that all outstanding Options
shall terminate upon consummation of such Acquisition Event
and each Participant shall receive, in exchange therefor, a
cash payment equal to the amount (if any) by which (A) the
Acquisition Price multiplied by the number of shares of
Common Stock subject to such outstanding Options (whether or
not then exercisable), exceeds (B) the aggregate exercise
price of such Options.
(b) CHANGE IN CONTROL EVENT THAT IS NOT AN ACQUISITION EVENT.
Following the occurrence of a Change in Control Event that
does not also constitute an Acquisition Event, except to the
extent specifically provided to the contrary in the
instrument evidencing any Option or any other agreement
between a Participant and the Company, each such Option
shall become immediately exercisable in full if, on or prior
to the first anniversary of the date of the consummation of
the Change in Control Event, a Termination Event occurs.
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<PAGE> 8
(3) EFFECT ON RESTRICTED STOCK AWARDS
(a) ACQUISITION EVENT THAT IS NOT A CHANGE IN CONTROL EVENT.
Upon the occurrence of an Acquisition Event that is not a
Change in Control Event, the repurchase and other rights of
the Company under each outstanding Restricted Stock Award
shall inure to the benefit of the Company's successor and
shall apply to the cash, securities or other property which
the Common Stock was converted into or exchanged for
pursuant to such Acquisition Event in the same manner and to
the same extent as they applied to the Common Stock subject
to such Restricted Stock Award.
(b) CHANGE IN CONTROL EVENT. Upon the occurrence of a Change in
Control Event (regardless of whether such event also
constitutes an Acquisition Event), except to the extent
specifically provided to the contrary in the instrument
evidencing any Restricted Stock Award or any other agreement
between a Participant and the Company, each such Restricted
Stock Award shall immediately become free from all
conditions or restrictions if, on or prior to the first
anniversary of the date of the consummation of the Change in
Control Event, a Termination Event occurs.
(4) EFFECT ON OTHER AWARDS
(a) ACQUISITION EVENT THAT IS NOT A CHANGE IN CONTROL EVENT. The
Board shall specify the effect of an Acquisition Event that
is not a Change in Control Event on any other Award granted
under the Plan at the time of the grant of such Award.
(b) CHANGE IN CONTROL EVENT. Upon the occurrence of a Change in
Control Event (regardless of whether such event also
constitutes an Acquisition Event), except to the extent
specifically provided to the contrary in the instrument
evidencing any Award or any other agreement between a
Participant and the Company, each such Award shall
immediately become fully exercisable, realizable, vested or
free from conditions or restrictions if, on or prior to the
first anniversary of the date of the consummation of the
Change in Control Event, a Termination Event occurs
9. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) TRANSFERABILITY OF AWARDS. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.
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<PAGE> 9
(b) DOCUMENTATION. Each Award under the Plan shall be evidenced by a
written instrument in such form as the Board shall determine. Each Award may
contain terms and conditions in addition to those set forth in the Plan.
(c) BOARD DISCRETION. Except as otherwise provided by the Plan, each Award
may be made alone or in addition or in relation to any other Award. The terms of
each Award need not be identical, and the Board need not treat Participants
uniformly.
(d) TERMINATION OF STATUS. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
(e) WITHHOLDING. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, Participants may satisfy such tax obligations in whole or
in part by delivery of shares of Common Stock, including shares retained from
the Award creating the tax obligation, valued at their Fair Market Value. The
Company may, to the extent permitted by law, deduct any such tax obligations
from any payment of any kind otherwise due to a Participant.
(f) AMENDMENT OF AWARD. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
(g) CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
(h) ACCELERATION. The Board may at any time provide that any Options shall
become immediately exercisable in full or in part, that any Restricted Stock
Awards shall be free of restrictions in full or in part or that any other Awards
may become exercisable in full or in part or free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the case may be.
10. MISCELLANEOUS
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<PAGE> 10
(a) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
(b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
(c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on
the date on which it is adopted by the Board. No Awards shall be granted under
the Plan after the completion of ten years from the earlier of (i) the date on
which the Plan was adopted by the Board or (ii) the date the Plan was approved
by the Company's stockholders, but Awards previously granted may extend beyond
that date.
(d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time.
(e) GOVERNING LAW. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.
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<PAGE> 11
THE MEDICINES COMPANY
AMENDMENT TO 1998 STOCK INCENTIVE PLAN
Adopted by the Board of Directors on December 15, 1998
SECTION 4 AS AMENDED AND RESTATED. Section 4(a) of the 1998 Stock Incentive Plan
of The Medicines Company shall be deleted in its entirety and the following
shall be substituted in its place:
4. STOCK AVAILABLE FOR AWARDS
a. NUMBER OF SHARES. Subject to adjustment under Section 8, Awards may
be made under the Plan for up to 1,483,917 shares of Common Stock. If any Award
expires or is terminated, surrendered or canceled without having been fully
exercised or is forfeited in whole or in part or results in any Common Stock not
being issued, the unused Common Stock covered by such Award shall again be
available for the grant of Awards under the Plan, subject, however, in the case
of Incentive Stock Options (as hereinafter defined), to any limitation required
under the Code. Shares issued under the Plan may consist, in whole or in part,
of authorized but unissued shares or treasury shares.
<PAGE> 12
THE MEDICINES COMPANY
1998 STOCK INCENTIVE PLAN AMENDMENT
As of February 7, 2000
SECTION 4 AS AMENDED AND RESTATED. Section 4(a) of the 1998 Stock Incentive Plan
of The Medicines Company shall be deleted in its entirety and the following
shall be substituted in its place:
"a. NUMBER OF SHARES. Subject to adjustment under Section 8, Awards may
be made under the Plan for up to 1,983,917 shares of Common Stock.
If any Award expires or is terminated, surrendered or canceled
without having been fully exercised or is forfeited in whole or in
part or results in any Common Stock not being issued, the unused
Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan, subject, however, in the case of
Incentive Stock Options (as hereinafter defined), to any limitation
required under the Code. Shares issued under the Plan may consist,
in whole or in part, of authorized but unissued shares or treasury
shares."
<PAGE> 1
EXHIBIT 10.2
THE MEDICINES COMPANY
2000 EMPLOYEE STOCK PURCHASE PLAN
May 15, 2000
The purpose of this Plan is to provide eligible employees of The Medicines
Company (the "Company") and certain of its subsidiaries with opportunities to
purchase shares of the Company's common stock, $0.001 par value (the "Common
Stock"), commencing on [_____],2000. Three Hundred Fifty Thousand (350,000)
shares of Common Stock in the aggregate have been approved for this purpose.
This Plan is intended to qualify as an "employee stock purchase plan" as defined
in Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations promulgated thereunder, and shall be interpreted consistent
therewith.
1. ADMINISTRATION. The Plan will be administered by the Company's
Board of Directors (the "Board") or by a Committee appointed by the Board (the
"Committee"). The Board or the Committee has authority to make rules and
regulations for the administration of the Plan and its interpretation and
decisions with regard thereto shall be final and conclusive.
2. ELIGIBILITY. All employees of the Company, including Directors
who are employees, and all employees of any subsidiary of the Company (as
defined in Section 424(f) of the Code) designated by the Board or the Committee
from time to time (a "Designated Subsidiary"), are eligible to participate in
any one or more of the offerings of Options (as defined in Section 9) to
purchase Common Stock under the Plan provided that:
(a) they are customarily employed by the Company or a
Designated Subsidiary for more than 20 hours a week and for more than
five months in a calendar year; and
(b) they have been employed by the Company or a
Designated Subsidiary for at least [insert number of months not greater
than 24] months prior to enrolling in the Plan; and
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<PAGE> 2
(c) they are employees of the Company or a Designated
Subsidiary on the first day of the applicable Plan Period (as defined
below).
No employee may be granted an option hereunder if such employee,
immediately after the option is granted, owns 5% or more of the total combined
voting power or value of the stock of the Company or any subsidiary. For
purposes of the preceding sentence, the attribution rules of Section 424(d) of
the Code shall apply in determining the stock ownership of an employee, and all
stock which the employee has a contractual right to purchase shall be treated as
stock owned by the employee.
3. OFFERINGS. The Company will make one or more offerings
("Offerings") to employees to purchase stock under this Plan. Offerings will
begin each [_____] and [_____], or the first business day thereafter (the
"Offering Commencement Dates"). Each Offering Commencement Date will begin a
[_____] month period (a "Plan Period") during which payroll deductions will be
made and held for the purchase of Common Stock at the end of the Plan Period.
The Board or the Committee may, at its discretion, choose a different Plan
Period of twelve (12) months or less for subsequent Offerings. Notwithstanding
anything to the contrary, the first Plan Period shall begin on the first date
that the Common Stock is publicly traded following the Company's initial public
offering ("IPO") and shall end on [_____].
4. PARTICIPATION. An employee eligible on the Offering
Commencement Date of any Offering may participate in such Offering by completing
and forwarding a payroll deduction authorization form to the employee's
appropriate payroll office at least ___ days prior to the applicable Offering
Commencement Date. The form will authorize a regular payroll deduction from the
Compensation received by the employee during the Plan Period. Unless an employee
files a new form or withdraws from the Plan, his deductions and purchases will
continue at the same rate for future Offerings under the Plan as long as the
Plan remains in effect. The term "Compensation" means the amount of money
reportable on the employee's Federal Income Tax Withholding Statement, excluding
overtime, shift premium, incentive or bonus awards, allowances and
reimbursements for expenses such as relocation allowances for travel expenses,
income or gains on the exercise of Company stock options or stock appreciation
rights, and similar items, whether or not shown on the employee's Federal Income
Tax Withholding Statement, but including, in the case of salespersons, sales
commissions to the extent determined by the Board or the Committee.
5. DEDUCTIONS. The Company will maintain payroll deduction
accounts for all participating employees. With respect to any Offering made
under this Plan, an employee may
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<PAGE> 3
authorize a payroll deduction in any dollar amount up to a maximum of ____% of
the Compensation he or she receives during the Plan Period or such shorter
period during which deductions from payroll are made. Payroll deductions may be
at the rate of [_____]%, [_____]%, [_____]% or [_____]% of Compensation with any
change in compensation during the Plan Period to result in an automatic
corresponding change in the dollar amount withheld.] [The minimum payroll
deduction is such percentage of compensation as may be established from time to
time by the Board or the Committee.
No employee may be granted an Option (as defined in Section 9) which
permits his rights to purchase Common Stock under this Plan and any other
employee stock purchase plan (as defined in Section 423(b) of the Code) of the
Company and its subsidiaries, to accrue at a rate which exceeds $25,000 of the
fair market value of such Common Stock (determined at the Offering Commencement
Date of the Plan Period) for each calendar year in which the Option is
outstanding at any time.
6. DEDUCTION CHANGES. An employee may decrease or discontinue his
payroll deduction once during any Plan Period, by filing a new payroll deduction
authorization form. However, an employee may not increase his payroll deduction
during a Plan Period. If an employee elects to discontinue his payroll
deductions during a Plan Period, but does not elect to withdraw his funds
pursuant to Section 8 hereof, funds deducted prior to his election to
discontinue will be applied to the purchase of Common Stock on the Exercise Date
(as defined below).
7. INTEREST. Interest will not be paid on any employee accounts,
except to the extent that the Board or the Committee, in its sole discretion,
elects to credit employee accounts with interest at such per annum rate as it
may from time to time determine.
8. WITHDRAWAL OF FUNDS. An employee may at any time prior to the
close of business on the last business day in a Plan Period and for any reason
permanently draw out the balance accumulated in the employee's account and
thereby withdraw from participation in an Offering. Partial withdrawals are not
permitted. The employee may not begin participation again during the remainder
of the Plan Period. The employee may participate in any subsequent Offering in
accordance with terms and conditions established by the Board or the Committee.
9. PURCHASE OF SHARES. On the Offering Commencement Date of each
Plan Period, the Company will grant to each eligible employee who is then a
participant in the Plan an option ("Option") to purchase on the last business
day of such Plan Period (the "Exercise Date"), at the
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<PAGE> 4
Option Price hereinafter provided for, the largest number of whole shares of
Common Stock of the Company as does not exceed the number of shares determined
by multiplying $2,083 by the number of full months in the Offering Period and
dividing the result by the closing price (as defined below) on the Offering
Commencement Date of such Plan Period.
The purchase price for each share purchased will be 85% of the closing
price of the Common Stock on (i) the first business day of such Plan Period or
(ii) the Exercise Date, whichever closing price shall be less. Such closing
price shall be (a) the closing price on any national securities exchange on
which the Common Stock is listed, (b) the closing price of the Common Stock on
the Nasdaq National Market or (c) the average of the closing bid and asked
prices in the over-the-counter-market, whichever is applicable, as published in
THE WALL STREET JOURNAL; provided that, with respect to the first Plan Period,
the closing price on the Offering Commencement Date shall be the initial public
offering price provided for in the underwriting agreement entered into by the
Company in connection with the IPO. If no sales of Common Stock were made on
such a day, the price of the Common Stock for purposes of clauses (a) and (b)
above shall be the reported price for the next preceding day on which sales were
made.
Each employee who continues to be a participant in the Plan on the
Exercise Date shall be deemed to have exercised his Option at the Option Price
on such date and shall be deemed to have purchased from the Company the number
of full shares of Common Stock reserved for the purpose of the Plan that his
accumulated payroll deductions on such date will pay for, but not in excess of
the maximum number determined in the manner set forth above.
Any balance remaining in an employee's payroll deduction account at the
end of a Plan Period will be automatically refunded to the employee, except that
any balance which is less than the purchase price of one share of Common Stock
will be carried forward into the employee's payroll deduction account for the
following Offering, unless the employee elects not to participate in the
following Offering under the Plan, in which case the balance in the employee's
account shall be refunded.
10. ISSUANCE OF CERTIFICATES. Certificates representing shares of
Common Stock purchased under the Plan may be issued only in the name of the
employee, in the name of the employee and another person of legal age as joint
tenants with rights of survivorship, or (in the Company's sole discretion) in
the name of a brokerage firm, bank or other nominee holder designated by the
employee. The Company may, in its sole discretion and in compliance with
applicable laws, authorize the use of book entry registration of shares in lieu
of issuing stock certificates.
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11. RIGHTS ON RETIREMENT, DEATH OR TERMINATION OF EMPLOYMENT. In
the event of a participating employee's termination of employment prior to the
last business day of a Plan Period, no payroll deduction shall be taken from any
pay due and owing to an employee and the balance in the employee's account shall
be paid to the employee or, in the event of the employee's death, (a) to a
beneficiary previously designated in a revocable notice signed by the employee
(with any spousal consent required under state law) or (b) in the absence of
such a designated beneficiary, to the executor or administrator of the
employee's estate or (c) if no such executor or administrator has been appointed
to the knowledge of the Company, to such other person(s) as the Company may, in
its discretion, designate. If, prior to the last business day of the Plan
Period, the Designated Subsidiary by which an employee is employed shall cease
to be a subsidiary of the Company, or if the employee is transferred to a
subsidiary of the Company that is not a Designated Subsidiary, the employee
shall be deemed to have terminated employment for the purposes of this Plan.
12. OPTIONEES NOT STOCKHOLDERS. Neither the granting of an Option
to an employee nor the deductions from his pay shall constitute such employee a
stockholder of the shares of Common Stock covered by an Option under this Plan
until such shares have been purchased by and issued to him.
13. RIGHTS NOT TRANSFERABLE. Rights under this Plan are not
transferable by a participating employee other than by will or the laws of
descent and distribution, and are exercisable during the employee's lifetime
only by the employee.
14. APPLICATION OF FUNDS. All funds received or held by the
Company under this Plan may be combined with other corporate funds and may be
used for any corporate purpose.
15. ADJUSTMENT IN CASE OF CHANGES AFFECTING COMMON STOCK. In the
event of a subdivision of outstanding shares of Common Stock, or the payment of
a dividend in Common Stock, the number of shares approved for this Plan, and the
share limitation set forth in Section 9, shall be increased proportionately, and
such other adjustment shall be made as may be deemed equitable by the Board or
the Committee. In the event of any other change affecting the Common Stock, such
adjustment shall be made as may be deemed equitable by the Board or the
Committee to give proper effect to such event.
16. MERGER. If the Company shall at any time merge or consolidate
with another corporation and the holders of the capital stock of the Company
immediately prior to such merger or consolidation continue to hold at least 80%
by voting power of the capital stock of the
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surviving corporation ("Continuity of Control"), the holder of each Option then
outstanding will thereafter be entitled to receive at the next Exercise Date
upon the exercise of such Option for each share as to which such Option shall be
exercised the securities or property which a holder of one share of the Common
Stock was entitled to upon and at the time of such merger or consolidation, and
the Board or the Committee shall take such steps in connection with such merger
or consolidation as the Board or the Committee shall deem necessary to assure
that the provisions of Section 15 shall thereafter be applicable, as nearly as
reasonably may be, in relation to the said securities or property as to which
such holder of such Option might thereafter be entitled to receive thereunder.
In the event of a merger or consolidation of the Company with or into
another corporation which does not involve Continuity of Control, or of a sale
of all or substantially all of the assets of the Company while unexercised
Options remain outstanding under the Plan, (a) subject to the provisions of
clauses (b) and (c), after the effective date of such transaction, each holder
of an outstanding Option shall be entitled, upon exercise of such Option, to
receive in lieu of shares of Common Stock, shares of such stock or other
securities as the holders of shares of Common Stock received pursuant to the
terms of such transaction; or (b) all outstanding Options may be cancelled by
the Board or the Committee as of a date prior to the effective date of any such
transaction and all payroll deductions shall be paid out to the participating
employees; or (c) all outstanding Options may be cancelled by the Board or the
Committee as of the effective date of any such transaction, provided that notice
of such cancellation shall be given to each holder of an Option, and each holder
of an Option shall have the right to exercise such Option in full based on
payroll deductions then credited to his account as of a date determined by the
Board or the Committee, which date shall not be less than ten (10) days
preceding the effective date of such transaction.
17. AMENDMENT OF THE PLAN. The Board may at any time, and from
time to time, amend this Plan in any respect, except that (a) if the approval of
any such amendment by the shareholders of the Company is required by Section 423
of the Code, such amendment shall not be effected without such approval, and (b)
in no event may any amendment be made which would cause the Plan to fail to
comply with Section 423 of the Code.
18. INSUFFICIENT SHARES. In the event that the total number of
shares of Common Stock specified in elections to be purchased under any Offering
plus the number of shares purchased under previous Offerings under this Plan
exceeds the maximum number of shares issuable under this Plan, the Board or the
Committee will allot the shares then available on a pro rata basis.
-11-
<PAGE> 7
19. TERMINATION OF THE PLAN. This Plan may be terminated at any
time by the Board. Upon termination of this Plan all amounts in the accounts of
participating employees shall be promptly refunded.
20. GOVERNMENTAL REGULATIONS. The Company's obligation to sell and
deliver Common Stock under this Plan is subject to listing on a national stock
exchange or quotation on the Nasdaq National Market (to the extent the Common
Stock is then so listed or quoted) and the approval of all governmental
authorities required in connection with the authorization, issuance or sale of
such stock.
21. GOVERNING LAW. The Plan shall be governed by
[Delaware/Massachusetts] law except to the extent that such law is preempted by
federal law.
22. ISSUANCE OF SHARES. Shares may be issued upon exercise of an
Option from authorized but unissued Common Stock, from shares held in the
treasury of the Company, or from any other proper source.
23. NOTIFICATION UPON SALE OF SHARES. Each employee agrees, by
entering the Plan, to promptly give the Company notice of any disposition of
shares purchased under the Plan where such disposition occurs within two years
after the date of grant of the Option pursuant to which such shares were
purchased.
24. EFFECTIVE DATE AND APPROVAL OF SHAREHOLDERS. The Plan shall
take effect on [_____], 2000 subject to approval by the shareholders of the
Company as required by Section 423 of the Code, which approval must occur within
twelve months of the adoption of the Plan by the Board.
Adopted by the Board of Directors
on May 15, 2000
Approved by the stockholders on
[_____], 2000
-12-
<PAGE> 1
Exhibit 10.3
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This Agreement is made and entered into as of this 12th day of August,
1998, by and among The Medicines Company, a Delaware corporation (the
"Company"), the individuals and entities listed on SCHEDULE I hereto (the "Old
Investors") and the individuals and entities listed on SCHEDULE II hereto (the
"New Investors"). The Old Investors and the New Investors are collectively
referred to herein as the "Investors".
WHEREAS, the Company has previously entered into Stock Purchase
Agreements dated September 5, 1996, June 4, 1997 and December 17, 1997,
respectively (the "Old Stock Purchase Agreements") with the Old Investors; and
WHEREAS, the Company and the Old Investors in connection with the Old
Stock Purchase Agreements, previously entered into a Registration Rights
Agreement dated June 4, 1997, as amended on December 17, 1997 (the "Registration
Rights Agreement"); and
WHEREAS, the Company and the New Investors have entered into a Stock
Purchase Agreement dated as of August 12, 1998 (the "Purchase Agreement"), and
WHEREAS, the Company and the Old Investors believe it to be in their
mutual best interests to amend and restate the Registration Rights Agreement;
and
WHEREAS, the Company and the Investors desire to provide for certain
arrangements with respect to the registration of shares of capital stock of the
Company under the Securities Act of 1933, as amended; and
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree to amend and restate the
Registration Rights Agreement as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
(a) the term "Common Stock" means the common stock, $0.001 par value
per share, of the Company;
(b) the term "Exchange Act" means the Securities Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
SEC Issued under such Act, as they each may, from time to time, be in effect;
(c) the term "Holder" shall mean any holder of Registrable Securities;
(d) the term "Initial Public Offering" means the initial underwritten
public offering of equity securities of the Company pursuant to an effective
Registration Statement;
(e) the term "Initiating Holder" shall mean (i) any Holder or Holders
who in the aggregate are holders of more than 50% of the then outstanding
Registrable Securities, PROVIDED, that as to one (1) of the three (3) requested
registrations covered by Section 2 of this Agreement, Holders requesting
registration shall be deemed to constitute "Initiating Holders" only if such
Holders include Warburg, Pincus Ventures, L.P. ("Warburg"), and as to one (1) of
the three (3) requested registrations covered by Section 2 of this Agreement,
<PAGE> 2
Holders requesting such registration shall be deemed to constitute "Initiating
Holders" only if such Holders include Biotech Target, S.A. ("Biotech Target"),
and (ii) additionally, commencing three (3) years after the date hereof, New
Investors who in the aggregate are Holders of more than 20% of the shares of
Common Stock issued or issuable upon conversion of the Series III Convertible
Preferred Stock of the Company, par value $1.00 per share (the "Series III
Preferred Stock");
(f) the terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a Registration Statement (and any
post-effective amendments filed or required to be filed) in compliance with the
Securities Act and the declaration or ordering of effectiveness of such
Registration Statement;
(g) the term "Registrable Securities" means (1) any shares of Common
Stock issued or issuable on conversion of the Series III Preferred Stock and the
Series I Convertible Preferred Stock and Series II Convertible Preferred Stock,
each $1.00 par value per share (collectively, the "Preferred Stock"), (ii) any
additional shares of Common Stock acquired by the Investors, excluding shares
acquired by each of Clive A. Meanwell, Peyton Marshall, Wendy Gordon, John
Villiger, Thomas Lategan and Helmut Glersiefen pursuant to the Restricted Stock
Purchase Agreements, and (iii) any capital stock of the Company issued as a
dividend or other distribution with respect to, or in exchange for or in
replacement of, the shares of Common Stock referred to in clause (i), (ii) or
(iii);
(h) "Registration Expenses" shall mean, with respect to any
registration, all expenses incurred by the Company in compliance with Sections 2
and 3 hereof, including, without limitation, all registration, qualification and
filing fees, printing expenses, fees and disbursements of counsel for the
Company, fees and expenses of one counsel for all the Holders in an amount not
to exceed $25,000 for each such registration (which counsel shall be selected by
Holders owning a majority of the Registrable Securities proposed to be included
in such registration), blue sky fees and expenses (including reasonable fees and
disbursements of a qualified independent underwriter, if any, counsel in
connection therewith and the reasonable fees and disbursements in connection
with blue sky qualifications) and the expense of any regular or special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company, which shall be paid in any event by the
Company), expenses of any comfort letters or costs associated with the delivery
by independent certified public accountants of a comfort letter or comfort
letters, fees and expenses of any special experts retained by the Company in
connection with such registration and fees and expenses of listing the
Registrable Securities on a securities exchange (including reasonable fees and
expenses of underwriter's counsel in connection therewith);
(i) the term "Registration Statement" means a registration statement
filed by the Company with the SEC for a public offering and sale of Common Stock
(other than a registration statement on Form S-8 or Form S-4, or any other form
for a similar limited purpose, or any registration statement covering only
securities proposed to be issued in exchange for securities or assets of another
corporation);
(j) "Restricted Stock Purchase Agreements" shall mean the respective
Stock Restriction Agreements between the Company and each of the following: (i)
Clive A. Meanwell dated as of September 5, 1996, (ii) Peyton Marshall dated as
of October 20, 1997, (iii) Wendy Gordon dated as of November 1, 1997, (iv) John
Villiger dated as of March 10, 1997, (v) Thomas Lategan dated as of February 24,
1997, and (vi) Helmut Giersiefen dated as of November 1, 1996 and as amended and
restated on April 4, 1997;
<PAGE> 3
(k) the term "SEC" means the Securities and Exchange Commission, or any
other Federal Agency at the time administering the Securities Act;
(l) the term "Securities Act" means the Securities Act of 1933, as
amended, or any similar federal statute, under the rules and regulations of the
SEC issued under such Act, as they each may, from time to time, be in effect;
(m) "Selling Expenses" shall mean, with respect to any registration,
all underwriting discounts and selling commissions and stock transfer taxes
applicable to the sale of Registrable Securities and all fees and disbursements
of counsel for each of the Holders other than fees and expenses of one counsel
for all the Holders in an amount not to exceed $25,000 for such registration;
and
(n) "Stockholders' Agreement" means the Third Amended and Restated
Stockholders' Agreement among the Investors, the Company and certain other
stockholders dated as of the date of this Agreement.
2. REQUESTED REGISTRATION.
(a) REQUEST FOR REGISTRATION. If the Company shall receive from an
Initiating Holder at any time or times a written request that the Company effect
any registration with respect to all or a part of the Registrable Securities,
the Company will:
(i) promptly give written notice of the proposed registration to all
other Holders of Registrable Securities; and
(ii) as soon as practicable, use its diligent best efforts to effect
such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws
and appropriate compliance with applicable regulations issued under the
Securities Act) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request
received by the Company within ten (10) business days after written
notice from the Company is given under Section 2(a)(1) above; provided
that the Company shall not be obligated to effect, or take any action
to effect, any such registration pursuant to this Section 2:
A. In any particular jurisdiction in which the Company would
be required to execute a general consent to service of process
in effecting such registration, qualification or compliance,
unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities
Act or applicable rules or regulations thereunder;
B. After the Company has effected three (3) such registrations
pursuant to this Section 2 requested by Initiating Holders
described in clause (i) of the definition thereof and two (2)
such registrations requested by Initiating Holders described
in clause (ii) of the definition thereof, and such
registrations have been declared or ordered effective and the
sales of such Registrable Securities shall have closed;
<PAGE> 4
C. (i) In the case of any registration requested by Initiating
Holders described in clause (i) of the definition thereof, if
the Registrable Securities requested by all Holders to be
registered pursuant to such request do not have, in the good
faith judgment of the Board of Directors of the Company, an
anticipated aggregate public offering price (before any
underwriting discounts and commissions) of at least $5,000,000
(or $10,000,000 if such requested registration is the Initial
Public Offering) and, as to the Initial Public Offering, if
the request is not made by Holders who in the aggregate hold
at least sixty-five percent (65%) of the Registrable
Securities;
(ii) In the case of any registration requested by
Initiating Holders described in clause (ii) of the
definition thereof, the Registrable Securities
requested by such Initiating Holders to be registered
do not constitute at least 15% of the Common Stock
issued or issuable upon conversion of the Series III
Preferred Stock or do not have, in the good faith
judgment of the Board of Directors of the Company, an
anticipated aggregate public offering price (before
any underwriting discounts and commissions) of at
least $5,000,000 (or $10,000,000 if such requested
registration is in the Initial Public Offering); or
D. If at the time of any request to register Registrable
Securities pursuant to this Section 2, the Company is engaged
or has fixed plans to engage within thirty (30) days of the
time of the request in a registered public offering as to
which the Holders may include Registrable Securities pursuant
to Section 3 or is engaged in any financing, acquisition or
other material transaction which, in the good faith
determination of the Board of Directors of the Company, would
be adversely affected by the requested registration to the
material detriment of the Company, then the Company may,, at
its option, direct that such request be delayed for the
shortest reasonable period of time not in excess of 120 days
from the date of such request, such right to delay a request
to be exercised by the Company not more than once in any
one-year period. In any such event, the Company shall promptly
give the Holders written notice of such determination,
containing a general statement of the reasons for such
postponement and an approximation of the anticipated delay. If
the Company shall so postpone the filing of the Registration
Statement, the Holders who made the request for registration
shall have the right to withdraw the request for registration
by giving written notice to the Company within thirty (30)
days after receipt of the notice of postponement.
The Registration Statement filed pursuant to the request of any of the
Initiating Holders may, subject to the provisions of Section 2(b) below, include
other securities of the Company or which are held by Persons who, by virtue of
agreements with the Company, are entitled to include their securities in any
such registration, provided that such Persons shall be subject to the provisions
of Section 2(b) below.
The Initiating Holders that made the registration request may, at any
time prior to the effective date of the Registration Statement relating to such
registration revoke such request, without liability to any other party, by
providing a written notice to the Company revoking such request.
<PAGE> 5
(b) UNDERWRITING. If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
Section 2.
If holders of securities of the Company other than Registrable
Securities who are entitled, by contract with the Company or otherwise, to have
securities included in such a registration (the "Other Stockholders") request
such inclusion, the Holders shall offer to include the securities of such Other
Stockholders in the underwriting and may condition such offer on their
acceptance of the further applicable provisions of this Agreement. The Holders
whose shares are to be included in such registration and the Company shall
(together with all Other Stockholders proposing to distribute their securities
through such underwriting) enter into an underwriting agreement in customary
form with the representative of the underwriter or underwriters selected for
such underwriting by the Initiating Holders holding a majority of Registrable
Securities held by the Initiating Holders and reasonably acceptable to the
Company and the price, terms and provisions of the underwriting and the offering
shall be subject to the approval of the Company and such Initiating Holders. Any
affiliate of a Holder may be selected to serve, on an arm's-length basis, as
underwriter for an underwritten offering effected pursuant to this Section 2(b).
Notwithstanding any other provision of this Section 2, if the representative
advises the Holders in writing that marketing factors require a limitation on
the number of shares to be underwritten, the securities of the Company held by
Other Stockholders shall be excluded from such registration to the extent so
required by such limitation. If, after the exclusion of such shares, further
reductions are still required, the number of shares included in the registration
by each Holder shall be reduced on a pro rata basis (based on the number of
shares requested to be included by such Holder), by such minimum number of
shares as is necessary to comply with such request. No Registrable Securities or
any other securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration. If at
least 50% of the Registrable Securities requested to be included in such
registration by the Initiating Holders are excluded by reason of the
underwriter's marketing limitation, the registration shall not be counted for
purposes of paragraph (B) of Section 2(a)(ii). If any of the Holders or any
Other Stockholder who has requested inclusion in such registration as provided
above disapproves of the terms of the underwriting, such person may elect to
withdraw therefrom without liability to any party by written notice to the
Company, the underwriter and the Initiating Holders. The securities so withdrawn
shall also be withdrawn from registration. If the underwriter has not limited
the number of Registrable Securities to be underwritten, the Company may include
its securities for its own account in such registration if the representative so
agrees and if the number of Registrable Securities which would otherwise have
been included in such registration and underwriting will not thereby be limited.
3. COMPANY REGISTRATION.
(a) INCLUSION IN REGISTRATION. If the Company shall determine to
register any of its equity securities either for its own account or for the
account of a security holder or holders exercising their respective demand
registration rights (including any such registration pursuant to Section 4, but
excluding any such registration pursuant to Section 2), other than a
registration relating solely to employee benefit plans, or a registration
relating solely to a SEC Rule 145 transaction, or a registration on any
registration form which does not permit secondary sales, the Company will:
(i) promptly (but in any event at least 15 days prior to the
anticipated filing date) give to each of the Holders a written notice
thereof (which shall include a list of the
<PAGE> 6
jurisdictions in which the Company intends to attempt to qualify such
securities under the applicable blue sky or other state securities
laws); and
(ii) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request
or requests, made by any Holder within fifteen (15) days after receipt
of the written notice from the Company described in clause (1) above,
except as set forth in Section 3(b) below. Such written request may
specify all or a part of a Holder's Registrable Securities.
(b) UNDERWRITING. If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so advise each of the Holders as a part of the written notice given pursuant to
Section 3(a)(i). In such event, the right of each of the Holders to registration
pursuant to this Section 3 shall be conditioned upon such Holder's participation
in such underwriting and the inclusion of such Holder's Registrable Securities
in the underwriting to the extent provided herein. The Holders whose shares are
to be included in such registration shall (together with the Company and the
Other Stockholders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the representative
of the underwriter or underwriters selected for underwriting by the Company.
Notwithstanding any other provision of this Section 3, if the representative
determines that marketing factors require a limitation on the number of shares
to be underwritten, and (x) if such registration is the Initial Public Offering,
the representative may, subject to the allocation priority set forth below,
exclude from such registration and underwriting all of the Registrable
Securities which would otherwise be underwritten pursuant hereto, and (y) if
such registration is other than the Initial Public Offering, the representative
may (subject to the allocation priority set forth below) limit the number of
Registrable Securities to be included in the registration and underwriting to
not less than twenty-five percent (25%) of the securities included therein. The
Company shall so advise all holders of securities requesting registration, and
the number of shares of securities that are entitled to be included in the
registration and underwriting shall be allocated in the following manner: The
securities of the Company held by Other Stockholders of the Company (other than
Registrable Securities, if any are held by such Other Stockholders, and other
than securities held by holders (other than Holders) who by contractual right
demanded such registration ("Demanding Holders")) shall be excluded from such
registration and underwriting to the extent required by such limitation, and, if
a limitation on the number of shares is still required, the number of shares
that may be included in the registration and underwriting by each of the Holders
and the Demanding Holders shall be reduced, on a pro rata basis (based on the
number of shares requested to be included by such Holder), by such minimum
number of shares as is necessary to comply with such limitation. If any of the
Holders or any Other Stockholder disapproves of the terms of any such
underwriting, such person may elect to withdraw therefrom without liability to
any party by written notice to the Company and the underwriter. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration.
(c) No registration effected under this Section 3 shall relieve the
Company of its obligation to effect any registration upon request under Section
2 or Section 4, except as otherwise provided herein.
4. FORM S-3.
<PAGE> 7
Following the Initial Public Offering the Company shall use its best
efforts to qualify for registration on Form S-3 (or any equivalent successor
form) for secondary sales. After the Company has qualified for the use of Form
S-3, Holders of Registrable Securities shall have the right to request up to
nine (9) registrations on Form S-3 (one of which may be exercised by War6urg,
one of which may be exercised by Biotech Target, one of which may be exercised
by PharmaBio Development, Inc. ("PharmaBio"), one of which may be exercised by
the MPM Group (as defined in the Stockholders' Agreement)) and five (5) of which
may be exercised by New Investors holding a majority of Registrable Securities
held by all of the New Investors (such requests shall be `in writing and shall
state the number of shares of Registrable Securities to be disposed of and the
intended method of disposition of shares by such Holders), subject only to the
following:
(i) The Company shall not be required to effect a registration pursuant
to this Section 4 unless the Holder or Holders of Registrable
Securities requesting registration propose to dispose of shares of
Registrable Securities that are expected to have an aggregate price to
the public (before deduction of underwriting discounts and expenses of
sale) of more than $3,000,000.
(ii) The Company shall not be required to effect a registration
pursuant to this Section 4 within 180 days of the effective date of the
most recent registration pursuant to this Section 4 in which securities
held by the requesting Holder could have been included for sale or
distribution.
(iii) The Company shall not be required to effect a registration
pursuant to this Section 4 in any particular jurisdiction in which the
Company would be required to execute a general consent to service of
process in effecting such registration, qualification or compliance,
unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act or applicable rules
or regulations thereunder.
(iv) If at the time of any request to register Registrable Securities
pursuant to this Section 2, the Company is engaged or has fixed plans
to engage within thirty (30) days of the time of the request in a
registered public offering as to which the Holders may include
Registrable Securities pursuant to Section 3 or is engaged in any
financing, acquisition or other material transaction which, in the good
faith determination of the Board of Directors of the Company, would be
adversely affected by the requested registration to the material
detriment of the Company, then the Company may, at its option, direct
that such request be delayed for the shortest reasonable period of time
not in excess of 120 days from the date of such request, such right to
delay a request to be exercised by the Company not more than once in
any one-year period. In any such event, the Company shall promptly give
the Holders written notice of such determination, containing a general
statement of the reasons for such postponement and an approximation of
the anticipated delay.
The Company shall give prompt written notice to all Holders of
Registrable Securities of the receipt of a request for registration pursuant to
this Section 4 and as soon as practicable, use its diligent best efforts to
effect such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of
<PAGE> 8
such Registrable Securities as are specified in such request, together with all
or such portion of the Registrable Securities of any Holder or Holders joining
in such request as are specified in a written request received by the Company
within ten (10) business days after written notice from the Company is given;
provided that if the registration is for an underwritten offering, the terms of
Section 2(b) shall apply to all participants in such offering. Subject to the
foregoing, the Company will use its best efforts to effect promptly the
registration of all shares of Registrable Securities on Form S-3 to the extent
requested by the Holder or Holders thereof for purposes of disposition.
5. EXPENSES OF REGISTRATION.
All Registration Expenses incurred in connection with any registration,
qualification or compliance that is proposed or effected pursuant to this
Agreement shall be borne by the Company, and all Selling Expenses shall be borne
by the Holders of the securities so registered pro rata on the basis of the
number of their shares so registered; provided, however, that the Company shall
not be required to pay any Registration Expenses in the event the Registration
Statement is withdrawn at the request of the Initiating Holders (other than as a
result of information concerning the business or financial condition of the
Company which is made known to the Initiating Holders after the date on which
such registration was requested if such withdrawal occurs within 10 days of the
Initiating Holders becoming aware of such information) and each of the
Initiating Holders agrees to bear such Registration Expenses pro rata on the
basis of the number of their shares so included in the registration request (or
on some other basis as they may agree), in which case such registration shall
not be counted as a registration pursuant to Section 2(a)(ii)(B) or 4. In the
event that the Registration Statement is withdrawn and the Initiating Holders
requesting registration fail to pay the expenses as provided in the immediately
preceding sentence, such registration shall be counted as a registration
pursuant to Section 2(a)(ii)(B) or 4.
6. REGISTRATION PROCEDURES.
In the case of each registration effected by the Company pursuant to
this Agreement, the Company will keep the Holders, as applicable, advised in
writing of the effectiveness thereof and of any stop order issued or, to the
Company's knowledge, threatened by the SEC and take all reasonable actions
required to prevent the entry of such stop order or to remove it if entered and
promptly notify such Holder of such lifting or withdrawal of such order. At its
expense, the Company will:
(i) prepare and file with the SEC such amendments and supplements to
such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement
effective for the period specified in Section 6(vi) and to comply with
the provisions of the Securities Act with respect to the disposition of
all securities covered by such Registration Statement during such
period; provided that the Company will, to the extent practicable, at
least three days prior to filing a Registration Statement or prospectus
or any amendment or supplement thereto, furnish to each Holder copies
of such Registration Statement or prospectus (or amendment or
supplement) as proposed to be filed (including, upon the request of
such Holder, documents to be incorporated by reference therein) which
documents will be subject to the reasonable review and comments of such
Holder and counsel for the Holders, which review will be completed as
expeditiously as possible; and the Company will not include any
statement in any Registration Statement or prospectus (or amendment or
supplement) with respect to such Holder to which such
<PAGE> 9
Holder shall reasonably object in writing except as may be required to
comply with securities laws and disclosure obligations thereunder;
(ii) furnish to each Holder and to each underwriter, if any, a signed
counterpart of: (x) an opinion of counsel for the Company addressed to
such Holder and underwriter on which opinion such Holder and
underwriter is entitled to rely, and (y) a "comfort" letter signed by
the independent public accountants who have certified the Company's
financial statements included in such Registration Statement, each in
customary form and covering such matters of the type customarily
covered by opinions or comfort letters, as the case may be, as the
managing underwriter therefor reasonably request;
(iii) immediately notify each Holder at any time when a prospectus
relating thereto is required to be delivered under the Securities Act,
upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such Registration Statement, as then
in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances under which they were made, and promptly prepare and
furnish to such Holder a reasonable number of copies of any supplement
to or amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make statements therein not misleading in the light of the
circumstances under which they were made;
(iv) make available for inspection by any Holder, any underwriter
participating in any disposition pursuant to such Registration
Statement and any attorney, accountant or other professional retained
by any such Holder or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility;
(v) otherwise use its reasonable best efforts to list all Registrable
Securities covered by such Registration Statement on any securities
exchange or I quotation system on which any of the Registrable
Securities is then listed or traded; to cause all Registrable
Securities covered by such Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may
be necessary to enable the Holders to consummate the disposition of
such Registrable Securities; to comply with all applicable rules and
regulations of the SEC, and make available to its securityholders, as
soon as reasonably practicable, an earnings statement covering the
period of at least twelve (12) months beginning with the first full
calendar month of the Company first fiscal quarter commencing after the
effective date of such Registration Statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder;
(vi) keep such registration effective for a period of 120 days or until
the Holders, as applicable, have completed the distribution described
in the Registration Statement relating thereto, whichever first occurs;
provided, however, that (A) in the event such Holders are required to
refrain from selling securities pursuant to a separate registration
during such 120-day period pursuant to Section 10 hereof, such 120-day
period shall be extended for a period of time equal to the period
during which the Holders refrain from selling any securities in
accordance with provisions in Section 10 hereof; and in the case of any
registration of Registrable Securities on Form S-3
<PAGE> 10
which are intended to be offered on a continuous or delayed basis, such
120-day period shall be extended until all such Registrable Securities
are sold, provided that Rule 415, or any successor rule under the
Securities Act, permits an offering on a continuous or delayed basis,
and provided further that applicable rules under the Securities Act
governing the obligation to file a post-effective amendment permit, in
lieu of filing a post-effective amendment which (y) includes any
prospectus required by Section 10(a) of the Securities Act or (z)
reflects facts or events representing a material or fundamental change
in the information set forth in the Registration Statement, the
incorporation by reference of information required to be included in
(y) and (z) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the Exchange Act in the Registration Statement;
and
(vii) furnish such number of Registration Statements, prospectuses,
amendments or supplements thereto and other documents incident thereto
as each of the Holders, as applicable, from time to time may reasonably
request.
7. INDEMNIFICATION.
(a) The Company will indemnify each of the Holders, as applicable, each
of its officers, directors, partners and agents, and each person controlling
each of the Holders within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, with respect to each registration which has been
effected pursuant to this Agreement, and each underwriter, if any, and each
person who controls any underwriter, against all expenses, claims, losses,
damages and liabilities (or actions, proceedings or settlements in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular or
other document (including any related Registration Statement, notification or
the like), as amended or supplemented, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of the
Securities Act, Exchange Act, state securities laws or any rule or regulation
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification or
compliance, and will reimburse each of the Holders, each of its officers,
directors, partners and agents, and each person controlling each of the Holders,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability or
action, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission based upon written information
furnished to the Company by the Holders or underwriter and stated to be
specifically for use therein, PROVIDED that the obligations of the Company
hereunder shall not apply to amounts paid in settlement of any such claim, loss,
damage, liability or action if such settlement is effected without the consent
of the Company.
(b) Each of the Holders will, severally (in the proportion that the
proceeds of the offering received by such Holder bears to the total proceeds of
the offering received by all the Holders) and not jointly, if Registrable
Securities held by it are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify the
Company, each of its directors and officers and each underwriter, if any, of the
Company's securities covered by such a Registration Statement, each person who
controls the Company or such underwriter against all claims, losses, damages and
liabilities (or actions in respect
<PAGE> 11
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such Registration Statement,
prospectus, offering circular or other document made by such Holder, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements by such Holder therein not
misleading, and will reimburse the Company and such directors, officers,
partners, persons, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such Registration Statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically
<PAGE> 12
for use therein; provided, however, that (i) the obligations of each of the
Holders hereunder shall be limited to an amount equal to the net proceeds to
such Holder of securities sold as contemplated herein., and (ii) the obligations
of each of the Holders hereunder shall not apply to amounts paid in settlement
of any such claim, loss, damage, liability or action if such settlement is
effected without the consent of such Holder.
(c) Each party entitled to indemnification under this Section 7 (the
"Indemnified Party") shall give written notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld) and the Indemnified Party may participate in such
defense at such party's expense (unless the Indemnified Party shall have
reasonably concluded that there may be a conflict of interest between the
Indemnifying Party and the Indemnified Party in such action, in which case the
fees and expenses of counsel shall be at the expense of the Indemnifying Party),
and provided further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Agreement unless the Indemnifying Party is materially prejudiced
thereby. No Indemnifying Party, in the defense of any such claim or litigation
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such claim and litigation resulting therefrom. Any counsel representing the
Holders (as Indemnifying Party or Indemnified Party) shall be selected by the
holders holding a maj9rity of the Registrable Securities included in such
registration.
(d) In order to provide for just and equitable contribution to joint
liability in any case in which either (i) any Indemnified Party exercising
rights under this Agreement makes a claim for indemnification pursuant to this
Section 7 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 7 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of any such Indemnified Party in circumstances for which
indemnification Is provided under tills Section 71- then, and in each such case,
each Indemnifying Party and Indemnified Party will contribute to the aggregate
losses, claims, damages or liabilities to which they may be subject (after
contribution from others) in proportion-to the relative fault of the
Indemnifying Party, on the one hand, and each Indemnified Party, on the other
hand; PROVIDED HOWEVER that, in any such case, 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 and no such Indemnifying
Party will be required to contribute any amount in excess of the public offering
price of all shares sold by it pursuant to such registration statement. The
relative fault of each Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue
<PAGE> 13
statement of a material fact or the omission to state a material fact relates to
information supplied by the Indemnifying Party or by the Indemnified Party and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission. The Company and the Investors
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with any underwritten public offering contemplated by this
Agreement are in conflict with the foregoing provisions, the provisions in such
underwriting agreement shall be controlling.
(f) The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages or liabilities referred to in this Section 7 shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such Indemnified Party In connection with
investigating or defending any such action or claim in accordance with the
provisions hereof.
(g) The foregoing indemnity agreement of the Company and the Holders is
subject to the condition that, insofar as they relate to any loss, claim,
liability or damage made in a preliminary prospectus but eliminated or remedied
in the amended prospectus on file with the SEC at the time the Registration
Statement in question becomes effective or the amended prospectus filed with the
SEC pursuant to SEC Rule 424(b) (the "Final Prospectus"), such indemnity
agreement shall not inure to the benefit of any Indemnified Party if a copy of
the Final Prospectus was furnished to the Indemnified Party, the Indemnified
Party was required by the Securities Act to furnish the Final Prospectus to the
person asserting the loss, liability, claim or damage and the Indemnified Party
did not so furnish the final Prospectus at or prior to the time such action is
required by the Securities Act.
8. INFORMATION BY THE HOLDERS.
Each of the Holders holding securities included in any registration
shall furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may reasonably request in
writing and as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Agreement.
9. RULE 144 Reporting.
(a) With a view to making available the benefits of certain rules and
regulations of the SEC which may permit the safe of restricted securities to the
public without registration, the Company agrees to:
(i) make and keep public information available as those terms are
understood and defined in Rule 144 of the Securities Act, at all times
from and after ninety (90) days following the effective date of the
first registration under the Securities Act filed by the Company for an
offering of its securities to the general public;
<PAGE> 14
(ii) use its best efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the
Securities Act and the Exchange Act at any time after it has become
subject to such reporting requirements; and
(iii) so long as the Holder owns any Registrable Securities, furnish to
the Holder upon request, a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 (at any time
from and after ninety (90) days following the effective date of the
first Registration Statement filed by the Company for an offering of
its securities to the general public), and of the Securities Act and
the Exchange Act (at any time after it has become subject to such
reporting requirements), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed as
the Holder may reasonably request in availing itself of any rule or
regulation of the SEC allowing the Holder to sell any such securities
without registration.
10. "MARKET STAND-OFF" AGREEMENT.
Each of the Holders agrees, if requested by the Company and an
underwriter of Common Stock (or other securities) of the Company at least five
(5) business days prior to the anticipated beginning of the period referred to
below, not to sell or otherwise transfer or dispose of any Common Stock (or
other securities) of the Company held by such Holder (1) for a period of 180
days in the case of the "Initial Public Offering (except as part of such
offering), and (ii) for a period of 120 days in the case of any offering of
shares of Common Stock other than the Initial Public Offering (except as part of
such offering), in each case following the effective date of a Registration
Statement of the Company filed under the Securities Act, provided that:
(a) the provisions of this Section-10 shall apply to the Initial Public
Offering and to any Registration Statement filed within two (2) years of the
Company's Initial Public Offering; and
(b) all officers and directors of the Company and any entities with
which an officer or director is an affiliate which holds securities of the
Company enter into and are bound by similar agreements.
If requested by the underwriters, the Holders shall execute a separate
agreement to the foregoing effect. The Company may impose stop-transfer
instructions with respect to the shares (o securities) subject to the foregoing
restriction until the end of said 180- t 120-day period, as the case may be. The
provisions of this Section 10 shall be binding upon any transferee who acquires
Registrable Securities, whether or not such transferee is entitled to the
registration rights provided hereunder.
The Company agrees, if requested, by an underwriter of Common Stock (or
other securities) of the Company in connection with an underwriting hereby, that
(1) it will not effect any sale or distribution of any of its equity securities
or of any security convertible into or exchangeable or exercisable for any
equity security of the Company during the period of 120 days (or 180 days, "in
the case of the Initial Public Offering) beginning on the effective date of a
Registration Statement of the Company filed under the Securities Act without the
written consent of such managing underwriter, other than Common Stock (or other
securities) of the Company being sold, transferred or disposed of (A) pursuant
to such Registration Statement or any other registration requested hereby, (B)
pursuant to any of the Company's
<PAGE> 15
stock plans, (C) in connection with the conversion or exercise of any liens
outstanding securities of the Company, (D) in connection with any collaborative
or licensing arrangement, distribution arrangement or loan facility and (E) in
connection with the acquisition of another entity or assets of another entity by
the Company, and (1i) any agreement entered into after the date of this
Agreement pursuant to which the Company issues or agrees to issue any privately
placed securities shall contain a provision under which holders of such
securities agree not to effect any sale or distribution of any such securities
during the periods described in (1) above (except as part of any such
registration, if permitted).
11. TERMINATION.
The registration rights set forth in this Agreement shall not be
available to any Holder IF, IN THE WRITTEN OPINION OF REGULAR, OUTSIDE COUNSEL
TO THE Company, all of the Registrable Securities then owned by such Holder
could be sold in any ninety (90) day period pursuant to Rule 144 under the
Securities Act (without giving effect to the provisions of Rule 144 (k)).
12. CHANGES IN COMMON STOCK OR PREFERRED STOCK.
If, and as often as, there is any change in, exchange for or
substitution of the Common Stock or the Preferred Stock by reason of any
reorganization, recapitalization, reclassification, merger, consolidation,
spin-off, partial or complete liquidation, stock dividend, split-up, sale of
assets, distribution to stockholders or combination of the Company's securities
or other similar change in the capital structure of the Company, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereunder shall continue with respect to the Registrable
Securities as so changed.
13. NOTICES.
(a) Alt communications under this Agreement shall be in writing and
shall be delivered by hand or mailed by overnight courier or by registered mail
or certified mail, postage prepaid:
(i) if to an Investor listed on SCHEDULE I hereto, at his, her or its
address set forth in SCHEDULE I, or at such other address as may have
been furnished to the Company in writing; or
(ii) if to an Investor listed on SCHEDULE II hereto, at his, her or its
address set forth on SCHEDULE II, or at such other address as may have
been furnished to the Company in writing; or
(iii) if to the Company, at One Cambridge Center, Cambridge,
Massachusetts 02142, marked for the attention of Clive A. Meanwell, or
at such other address as the Company may have furnished in writing to
the Investors, with a copy (which shall not constitute notice) to Hale
and Dorr LLP, 60 State Street, Boston, Massachusetts 02109,1 marked for
the attention of Steven D. Singer, Esq.
(b) Any notice so addressed shall be deemed to be given: if delivered
by hand, on the date of such delivery; if mailed by courier, on the first
business day following the date of such malting; and if mailed by registered or
certified mail, on the third business day after the date of such mailing.
<PAGE> 16
14. SUCCESSORS AND ASSIGNS.
The registration rights set forth in this Agreement shall be assignable
by any Investor, in whole or in part, to any transferee of Registrable
Securities who (i) beneficially owns at least 1% of the outstanding Common Stock
(calculated on an as-converted basis)(within the meaning of Rule 13d-3 under the
Exchange Act) or (ii) acquires 100% of the Registrable Securities owned by the
transferring Investor on the date of such assignment; provided that any such
transferee shall agree in writing to be bound by the obligations of the
Investors under this Agreement. The provisions of this Agreement shall be
binding upon and accrue to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and permitted assigns;
provided that the Company may not transfer or assign any of its rights or
obligations under this Agreement. Nothing in this Agreement, express or implied,
is intended to confer on any Person other than the parties hereto, and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
15. TERMINATION OF THE REGISTRATION RIGHTS AGREEMENT.
Upon the effectiveness of this Agreement, the Registration Rights
Agreement is terminated and shall be superseded by the provisions of this
Agreement.
16. ENTIRE AGREEMENT; AMENDMENT AND WAIVER.
This Agreement constitutes the entire understandings of the parties
hereto and supersedes all prior agreements or understandings with respect to the
subject matter hereof among such parties. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with (and only with) the
written consent of the Holders of at least seventy-five percent (75%) of the
Registrable Securities.
17. LIMITATION ON ENFORCEMENT OF REMEDIES.
The Company hereby agrees that it will not assert against the limited
partners of any of the Investors any claim it may have under this Agreement by
reason of any failure or alleged failure by such Investor to meet its
obligations hereunder.
18. GOVERNING LAW.
This Agreement shall be construed in accordance with and governed by
the laws of the State of Delaware, without regard to the conflicts of law
principles thereof. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall be considered
one and the same agreement.
19. REMEDIES.
The parties hereto acknowledge and agree that in the event of any
breach of this Agreement, the parties could be irreparably harmed and could not
be made whole by monetary damages. Each party hereto accordingly agrees (i) not
to assert by way of defense or otherwise that a remedy at law would be adequate,
and (ii) that the parties agree, in addition to any other remedy to which they
may be entitled, that the parties may seek the remedy of specific performance of
this Agreement, if appropriate, in any action in court.
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
THE MEDICINES COMPANY
By: /s/ Peyton J. Marshall
----------------------------------------
Name: Peyton J. Marshall
Title: Chief Financial Officer
OLD INVESTORS:
Holders of at least 75% of the Registrable
Securities
By: /s/ Peyton J. Marshall
----------------------------------------
Under Power of Attorney of Holders
attached hereto
NEW INVESTORS:
Counterpart signature pages attached hereto
<PAGE> 18
SCHEDULE I
Warburg, Pincus Ventures, L.P.
466 Lexington Avenue
New York, New York 10017
MPM Medicines L.P.
One Cambridge Center
Cambridge, Massachusetts 02142
Hanseatic Americas LDC
450 Park Avenue
Suite 2302
New York, New York 10022
PharmaBio Development Inc.
Post Office Box 13979
Research Triangle Park, North Carolina 27709-3979
Biotech Target, S.A
c/o Bellevue Asset Management AG
Grafenauweg 4 P. 0. Box CH-6301 Zug, Switzerland
Helmut Giersiefen
The Medicines Company
One Cambridge Center
Cambridge, Massachusetts 02142
John Villiger
The Medicines Company Limited
150 Long Drive, St. Helters
Auckland, New Zealand
Thomas Lategan
The Medicines Company
One Cambridge Center
Cambridge, Massachusetts 02142
Wendy Gordon
The Medicines Company
One Cambridge Center
Cambridge, Massachusetts 02142
Peyton Marshall
The Medicines Company
One Cambridge Center
Cambridge, Massachusetts 02142
Frederick Oleson
5 Partridge Lane
Concord, Massachusetts 07142
<PAGE> 19
John Maraganore
49 Constellation Wharf
Charlestown, Massachusetts 02129
H & D Investments 97
60 State Street
Boston, Massachusetts 02109
Attention: Paul P. Brountas, Esq.
Frederick Oleson
5 Partridge Lane
Concord, Massachusetts 07142
John Maraganore
49 Constellation Wharf
Charlestown, Massachusetts 02129
H & D Investments 97
60 State Street
Boston, Massachusetts 02109
Attention: Paul P. Brountas, Esq.
<PAGE> 20
SCHEDULE II
NAME AND ADDRESS OF PURCHASER
E. M. Warburg, Pincus Ventures, L. P.
466 Lexington Avenue
New York, NY 10017
Biotech Growth S.A.
Grafenauweg 4
CH-6301
Zug Switzerland
Hanseatic Americas LDC
450 Park Avenue, Suite 2302
New York, NY 10022
Clive Meanwell
The Medicines Company
One Cambridge Center
Cambridge, MA 02142
Peyton Marshall
The Medicines Company
One Cambridge Center
Cambridge, MA 02142
Jane J. Avinger
207 Avinger Lane
Davidson, NC 28036
H&D Investments 97
Hale and Dorr LLP
60 State Street
Boston, MA 02109
David Ackert
100 Nyala Farm
Westport, CT 06880
Gary S. Roubin Revocable Trust utd
145 East 81st Street
Penthouse B
New York, NY 10028
<PAGE> 21
NAME AND ADDRESS OF PURCHASER
Richard Davis
Tucker Anthony
One Beacon Street
Boston, MA 02108
Charles Schwab and Co., Inc.
FBO: Robert L. Avinger, Jr.
UTA Charles Schwab - 1251-7331
101 South Tyron Street
Charlotte, NC 28280
Bayview Investors, Ltd.
555 California Street, Suite 2600
San Francisco, CA 94104
Morgan Stanley Venture Partners L.P.
1221 Avenue of the Americas, 33rd Fl.
New York, NY 10020
Alta Partners
One Embarcadero Center, Suite 4050
San Francisco, CA 94111
Moore Global Investments, Ltd.
1251 Avenue of the Americas, 53rd Fl.
New York, NY 10020
Remington Investment Strategies, L.P
1251 Avenue of the Americas, 53rd Fl.
New York, NY 10020
Credit Suisse Asset Management
AMPE 3 Utlibergstrasse 231
Postfach 800
Zurich, CH-8070
Switzerland
BancAmerica Robertson Stephens
590 Madison Avenue
New York, NY 10022
<PAGE> 22
AMENDMENT NO. 2 TO THE
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
--------------------------------------------------
This Amendment No. 2 to the Amended and Restated Registration Rights Agreement
dated as of this 19th day of October, 1999 (the "Agreement"), among The
Medicines Company, a Delaware corporation (the "Company"), and the Investors (as
hereinafter defined).
WHEREAS, the Company and the individuals and entities who were signatories
thereto (the "Investors") are parties to the Amended and Restated Registration
Rights Agreement dated as of August 13, 1998, as amended to date (the "Amended
and Restated Registration Rights Agreement"); and
WHEREAS, the Company and certain of the Investors have entered into a Securities
Purchase Agreement of even date herewith with respect to the sale of the Notes
and the Warrants, each as defined therein (the "Securities Purchase Agreement");
and
WHEREAS, the Company and the Investors believe it to be in their mutual best
interests to amend the Amended and Restated Registration Rights Agreement to
provide such Investors with certain rights with respect to the registration
under the Securities Act of 1933, as amended, of the shares of capital stock
issuable upon the conversion of the Notes and/or the exercise of the Warrants;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
in this Amendment, the parties hereto agree as follows:
1. AMENDMENT TO SECTION 1. Section 1 of the Amended and Restated Registration
Rights Agreement is hereby amended by deleting paragraph (g) of Section 1 in its
entirety and substituting in lieu thereof the following:
"(g) the term "Registrable Securities" means (i) any shares of
Common Stock issued or issuable on conversion of the Company's
Series I Convertible Preferred Stock, Series II Convertible
Preferred Stock, Series III Convertible Preferred Stock and
Series III-a Convertible Preferred Stock, each $1.00 par value
per share (collectively, the "Preferred Stock"), (ii) any
additional shares of Common Stock acquired by the Investors,
excluding shares acquired by each of Clive A. Meanwell, Peyton
Marshall, Wendy Gordon, John Villiger, Thomas Lategan, Helmut
Giersiefen, Richard Malcolm and John Nystrom pursuant to the
Restricted Stock Purchase Agreements, (iii) any shares of
Common Stock issued or issuable upon the exercise of the
Common Stock Purchase Warrants issued under the Securities
Purchase Agreement dated October 19, 1999 between the Company
and the entities and individuals who are signatories thereto,
(iv) any shares of Common Stock issued or issuable upon the
conversion of the capital stock issued or issuable upon the
conversion of the 8% Convertible Notes issued under the
Securities Purchase Agreement dated October 19, 1999 between
<PAGE> 23
the Company and the entities and individuals who are
signatories thereto, and (v) any capital stock of the Company
issued as a dividend or other distribution with respect to, or
in exchange for or in replacement of, the shares of Common
Stock referred to in clause (i), (ii) ,(iii) or (iv);" and
2. RATIFICATION. In all other respects, the Amended and Restated Registration
Rights Agreement is hereby ratified and confirmed.
3. COUNTERPARTS. This Amendment may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall be
considered one and the same agreement.
4. EFFECTIVE DATE. This Amendment shall become effective upon approval by the
Company and the holders of at least 75% of the Registrable Shares (as defined in
the Amended and Restated Registration Rights Agreement).
-2-
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
2 to the Amended and Restated Registration Rights Agreement as of the date first
above written.
The Medicines Company
By: /s/ Peyton J. Marshall
---------------------------------------
Name: Peyton J. Marshall
Title: Chief Financial Officer
Holders of at least 75% of the Registrable
Securities
By: /s/ Peyton J. Marshall
-------------------------------
Under Power of Attorney
of Holders attached hereto
-3-
<PAGE> 25
AMENDMENT NO. 3 TO THE
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
--------------------------------------------------
This Amendment No. 3 to the Amended and Restated Registration Rights
Agreement dated as of this 2nd day of March, 2000 (the "Amendment"), among The
Medicines Company, a Delaware corporation (the "Company"), and the Investors (as
hereinafter defined).
WHEREAS, the Company and the individuals and entities who were
signatories thereto (the "Investors") are parties to the Amended and Restated
Registration Rights Agreement dated as of August 13, 1998, as amended to date
(the "Amended and Restated Registration Rights Agreement"); and
WHEREAS, the Company and certain of the Investors have entered into a
Securities Purchase Agreement of even date herewith with respect to the sale of
the Notes and the Warrants, each as defined therein (the "Securities Purchase
Agreement"); and
WHEREAS, the Company and the Investors believe it to be in their mutual
best interests to amend the Amended and Restated Registration Rights Agreement
to provide such Investors with certain rights with respect to the registration
under the Securities Act of 1933, as amended, of the shares of capital stock
issuable upon the conversion of the Notes and/or the exercise of the Warrants;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Amendment, the parties hereto agree as follows:
1. AMENDMENT TO SECTION 1. Section 1 of the Amended and Restated Registration
Rights Agreement is hereby amended by deleting paragraph (g) of Section 1 in its
entirety and substituting in lieu thereof the following:
"(g) the term "Registrable Securities" means (i) any shares of
Common Stock issued or issuable on conversion of the Company's
Series I Convertible Preferred Stock, Series II Convertible
Preferred Stock, Series III Convertible Preferred Stock and
Series III-a Convertible Preferred Stock, each $1.00 par value
per share (collectively, the "Preferred Stock"), (ii) any
additional shares of Common Stock acquired by the Investors,
excluding shares acquired by each of Clive A. Meanwell, Peyton
Marshall, Wendy Gordon, John Villiger, Thomas Lategan, Helmut
Giersiefen, Richard Malcolm and John Nystrom pursuant to the
Restricted Stock Purchase Agreements, (iii) any shares of
Common Stock issued or issuable upon the exercise of the
Common Stock Purchase Warrants issued under the Securities
Purchase Agreement dated October 19, 1999 between the Company
and the entities and individuals who are signatories thereto,
(iv) any shares of Common Stock issued or issuable upon the
conversion of the capital stock issued or issuable upon the
conversion of the 8% Convertible Notes issued under the
Securities Purchase Agreement
<PAGE> 26
dated October 19, 1999 between the Company and the entities
and individuals who are signatories thereto, (v) any shares of
Common Stock issued or issuable upon the exercise of the
Common Stock Purchase Warrants issued under the Securities
Purchase Agreement dated March 2, 2000 between the Company and
the entities and individuals who are signatories thereto, (vi)
any shares of Common Stock issued or issuable upon the
conversion of the capital stock issued or issuable upon the
conversion of the 8% Convertible Notes issued under the
Securities Purchase Agreement dated March 2, 2000 between the
Company and the entities and individuals who are signatories
thereto, and (vii) any capital stock of the Company issued as
a dividend or other distribution with respect to, or in
exchange for or in replacement of, the shares of Common Stock
referred to in clause (i), (ii) ,(iii), (iv), (v) or (vi);"
and
2. RATIFICATION. In all other respects, the Amended and Restated Registration
Rights Agreement is hereby ratified and confirmed.
3. COUNTERPARTS. This Amendment may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall be
considered one and the same agreement.
4. EFFECTIVE DATE. This Amendment shall become effective upon approval by the
Company and the holders of at least 75% of the Registrable Shares (as defined in
the Amended and Restated Registration Rights Agreement).
[Remainder of page intentionally left blank]
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<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
3 to the Amended and Restated Registration Rights Agreement as of the date first
above written.
The Medicines Company
By: /s/ Peyton J. Marshall
---------------------------------------
Name: Peyton J. Marshall
Title: Chief Financial Officer
Holders of at least 75% of the Registrable
Securities
By: /s/ Peyton J. Marshall
---------------------------------------
Under Power of Attorney
of Holders attached hereto
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<PAGE> 28
AMENDMENT NO. 4 TO THE
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
--------------------------------------------------
This Amendment No. 4 to the Amended and Restated Registration Rights
Agreement dated as of this 17 day of May, 2000 (the "Amendment"), among The
Medicines Company, a Delaware corporation (the "Company"), and the Investors (as
hereinafter defined).
WHEREAS, the Company and the individuals and entities who were
signatories thereto (the "Investors") are parties to the Amended and Restated
Registration Rights Agreement dated as of August 12, 1998, as amended to date
(the "Amended and Restated Registration Rights Agreement"); and
WHEREAS, the Company and certain of the Investors have entered into a
Series IV Convertible Preferred Stock Purchase Agreement of even date herewith
with respect to the sale of the Preferred Shares, each as defined therein (the
"Purchase Agreement"); and
WHEREAS, the Company and the Investors believe it to be in their mutual
best interests to amend the Amended and Restated Registration Rights Agreement
to provide such Investors with certain rights with respect to the registration
under the Securities Act of 1933, as amended, of the shares of capital stock
issuable upon the conversion of the Preferred Shares;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Amendment, the parties hereto agree as follows:
1. AMENDMENT TO SECTION 1. Section 1 of the Amended and Restated Registration
Rights Agreement is hereby amended by deleting paragraph (g) of Section 1 in its
entirety and substituting in lieu thereof the following:
"(g) the term "Registrable Securities" means (i) any shares of Common
Stock issued or issuable on conversion of the Company's Series I
Convertible Preferred Stock, Series II Convertible Preferred Stock,
Series III Convertible Preferred Stock and Series IV Convertible
Preferred Stock, each $1.00 par value per share (collectively, the
"Preferred Stock"), (ii) any additional shares of Common Stock acquired
by the Investors [prior to the Initial Public Offering], excluding
shares acquired by each of Clive A. Meanwell, Peyton Marshall, Wendy
Gordon, John Villiger, Thomas Lategan, Helmut Giersiefen, Richard
Malcolm and John Nystrom pursuant to the Restricted Stock Purchase
Agreements[, and any other shares acquired by an Investor pursuant to
the Company's 1998 Stock Incentive Plan], (iii) any shares of Common
Stock issued or issuable upon the exercise of the Common Stock Purchase
Warrants issued under the Securities Purchase Agreement dated October
19, 1999 between the Company and the entities and individuals who are
signatories thereto, (iv) any shares of Common Stock issued or issuable
upon the exercise of the Common Stock Purchase Warrants issued under
the Securities Purchase Agreement dated March 2, 2000 between the
Company and the entities and individuals who are signatories thereto,
and (v) any capital stock of the Company issued as a
<PAGE> 29
dividend or other distribution with respect to, or in exchange for or
in replacement of, the shares of Common Stock referred to in clause
(i), (ii), (iii) or (iv);" and
2. RATIFICATION. In all other respects, the Amended and Restated Registration
Rights Agreement is hereby ratified and confirmed.
3. COUNTERPARTS. This Amendment may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall be
considered one and the same agreement.
4. EFFECTIVE DATE. This Amendment shall become effective upon approval by the
Company and the holders of at least 75% of the Registrable Shares (as defined in
the Amended and Restated Registration Rights Agreement).
[Remainder of page intentionally left blank]
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<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
4 to the Amended and Restated Registration Rights Agreement as of the date first
above written.
The Medicines Company
By: /s/ Peyton J. Marshall
---------------------------------------
Name: Peyton J. Marshall
Title: Chief Financial Officer
Holders of at least 75% of the Registrable
Securities
By: /s/ Peyton J. Marshall
---------------------------------------
Under Power of Attorney
of Holders attached hereto
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<PAGE> 1
Exhibit 10.4
THIRD AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
Third Amended and Restated Stockholders' Agreement, dated as of this
12th day of August, 1998 (the "Agreement"), among The Medicines Company, a
Delaware corporation (the "Company"), the individuals and entities listed on
SCHEDULE I hereto (the "Old Investors") and the individuals and entities listed
on Schedule 11 hereto (the "New Investors"). The Old Investors and the New
Investors are collectively referred to herein as the "Investors".
R E C I T A L S
WHEREAS, pursuant to the terms of a Stock Purchase Agreement, dated as
of August 12,1998, with the Company (the "Purchase Agreement"'), the New
Investors have agreed to purchase, shares of Series III Convertible Preferred
Stock, par value $1.00 par value per share, of the Company (the "Series III
Preferred Stock"); and
WHEREAS, in connection with the purchase and sale of shares of Series A
Redeemable Preferred Stock, $1.00 par value per share (the "Series A Stock"),
and shares of Common Stock, $0.001 par value per share (the "Common Stock"), of
the Company pursuant to Stock Purchase Agreements dated as of September 5, 1996,
June 4, 1997 and December 17, 1997 (the "Old Purchase Agreements"), the Company
previously entered into Second Amended and Restated Stockholders' Agreement
dated December 17, 1997 (the "Second Amended and Restated Stockholders'
Agreement") with the Old Investors; and
WHEREAS, the Company has previously exchanged the shares of Series A
Stock and Common Stock sold pursuant to the Old Purchase Agreements for shares
of Series I Convertible Preferred Stock, $1.00 par value per share (the "Series
I Preferred Stock") and Series 11 Convertible Preferred Stock, $1.00 par value
per share (the "Series 11 Preferred Stock" and, collectively with the Series I
Preferred Stock and Series III Preferred Stock, the "Preferred Stock"); and
WHEREAS, the Company and the Old Investors believe if -to be in their
mutual best interests to amend and restate the Second Amended and Restated
Stockholders' Agreement; and
WHEREAS, the Investors and the Company desire to promote their mutual
interests by agreeing to certain matters relating to the operations of the
Company and the disposition and voting of the Shares (as hereinafter defined);
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and in consideration of the foregoing and of the respective
covenants and undertakings of the Company and the Investors, the parties hereto
hereby agree to amend and restate the Second Amended and Restated Stockholders'
Agreement as follows:
1. COVENANTS OF THE PARTIES
(a) LEGENDS. The certificates evidencing the Shares acquired by the
Investors pursuant to the Old Purchase Agreements and the Purchase Agreement
will bear a legend reflecting the restrictions on the transfer of such
securities contained in this Agreement in substantially the following form:
<PAGE> 2
"The securities evidenced hereby are subject to the terms of
that certain Third Amended and Restated Stockholders'
Agreement, dated as of August - 12, 1998, by and among the
Company and certain investors identified therein, as amended
from time to time, including certain restrictions on transfer.
A copy of this Agreement has been filed with the secretary of
the Company and is available upon request."
If any Shares shall cease to be subject to the provisions of this
Agreement, the Company shall, upon the written request of the holder thereof,
issue to such holder a new certificate evidencing such Shares without the legend
required by Section 1(a) hereof endorsed thereon.
(b) ADDITIONAL INVESTORS. The parties hereto acknowledge that certain
employees of the Company may become stockholders of the Company after the date
hereof. As a condition to the issuance of shares of Common Stock to such
employees, the Company shall require such employees to execute an agreement
containing restrictions substantially similar to those set forth in Sections
3(a), (b), (c), (d) and (e) hereof.
2. BOARD OF DIRECTORS
(a) ELECTION OF DIRECTORS.
(i) As of the date hereof, the Board of Directors of the Company
(the "Board") consists of Clive A. Meanwell, James E.Thomas, Nicholas J.
Lowcock, T. Scott Johnson, Victor Bischoff, Jacques Rejeange, Dennis Gillings
and Faizl Husain. From and after the date hereof, the Investors and the Company
shall take all action within their respective power, including but not limited
to, the voting of all Shares owned by them, required to cause the Board to
consist of at least eight (8) members or such other number as the Board may from
time to time establish, and at all times throughout the term of this Agreement
to include (A) the Chief Executive Officer of the Company, (B) as long as
Warburg, Pincus Ventures, L.P. ("Warburg") and its Permitted Transferees own at
least seven and one-half percent (7.5%) of the Common Stock of the Company,
calculated on an as converted basis, but less than twenty percent (20%,) of the
Common Stock of the Company, calculated on an as converted basis, one
representative designated by Warburg; as long as Warburg and its Permitted
Transferees own at least twenty percent (20'%) of the Common Stock of the
Company, calculated on an as converted basis, two representatives designated by
Warburg (each, a "Warburg Director"), (C) as long as T. Scott Johnson, Ansbert
Gadicke, Hanseatic and MPM Medicines L.P. (collectively, the -MPM Group") and
their Permitted Transferees as a group own at least seven and one-half percent
(7.5%) of the Common Stock of the Company, calculated on an as converted basis,
one representative designated by MPM Medicines L.P. ("MPM") (an "MPM Director");
(D) as long as PharmaBio Development Inc. ("PharmaBio") and its Permitted
Transferees own at least seven and one-half percent (7.5'%) of the Common Stock
of the Company, calculated on an as converted basis, one representative
designated by PharmaBio (a "PharmaBio Director"); (E) as long as Biotech Target,
S.A. ("Biotech Target") and its Permitted Transferees own at least seven and
one-half percent (7.5%) of the Common Stock of the Company, calculated on an as
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<PAGE> 3
converted basis, one representative designated by Biotech Target; as long as
Biotech Target and its Permitted Transferees own at least twenty percent (20%.)
of the Common Stock of the Company, calculated on an as converted basis, two
representatives designated by Biotech Target (each, a "Biotech Target
Director"); and (F) as long as Morgan Stanley Venture Partners 111, L.P., Morgan
Stanley Venture Investors III, L.P. and The Morgan Stanley Venture Partners
Entrepreneur Fund, L.P. (collectively, the "MSVP Investors") and their Permitted
Transferees as a group own at least three and one-half percent (3.5%.) of the
Common Stock of the Company, calculated on an as converted basis, one
representative designated by the MSVP Investors (a "MSVP Director"). From and
after the date hereof (until the death, disability, resignation or removal of
such director in accordance with the terms hereof), James E. Thomas and Nicholas
J. Lowcock shall constitute the Warburg Directors.- T. Scott Johnson shall
constitute the MPM Director; Dennis Gillings shall constitute the PharmaBlo
Director; Victor Bischoff and Jacques Rejeange shall constitute the Biotech
Target Directors; and Fazte Husain shall constitute the MSVP Director.
(ii) From the date on which the Company completes an underwritten
public offering for shares of Common Stock (the "Initial Public Offering")
pursuant to a registration under the Securities Act, and for as long as any
Investor and its Permitted Transferees own at least twenty percent (20%) of the
Common Stock of the Company, calculated on an as converted basis, other than
Biotech Target, whose rights to designate representatives to the Board shall
terminate upon the completion of an Initial Public Offering, the Company will
nominate and use its best efforts to have two individuals designated by such
Investor elected to the Board. From the date on which the Company completes its
Initial Public Offering and for as long as any Investor and its Permitted
Transferees own at -least ten percent (10%.) of the Common Stock of the Company,
calculated on an as converted basis, other than Biotech Target as provided
above, the Company will nominate and use its best efforts to have one
`individual designated by such Investor elected to the Board.
(b) REPLACEMENT DIRECTORS. In the event that any Warburg Director, MPM
Director, PharmaBlo Director, Biotech Target Director or MSVP Director (a
"Withdrawing Director") designated in the manner set forth in Section 2(a)
hereof is unable to serve, or once having commenced to serve, is removed or
withdraws from the Board, such Withdrawing Director's replacement (the
"Substitute Director") will be designated by Warburg, MPM, PharmaBio, Biotech
Target or the MSVP Investors, as the case may be. Such Investor (or group of
Investors) shall have the right at any time, by written notice to the other
Investors, to request the removal of any director designated by such Investor
and such Investor shall thereafter have the right to nominate a replacement for
such director. The Investors and the Company agree to take all action within
their respective power, including but not limited to, the voting of capital
stock of the Company owned by them or the execution of a shareholder consent to
cause the removal or election of any director designated by an Investor or group
of Investors pursuant to Section 2(a) promptly following the request for removal
or nomination, as the case may be, by such Investor or group of Investors
pursuant to this Section 2(b).
-3-
<PAGE> 4
(c) REMOVAL. Each Investor agrees that if, at any time, it is then
entitled to vote for the removal of directors of the Company, it will not vote
any of its Shares in favor of the removal of any director who shall have been
nominated pursuant to Section 2(a) or 2(b), except for bad faith or willful
misconduct, unless the Investor(s) entitled to nominate such director shall have
consented to such removal in writing.
(d) QUARTERLY MEETINGS. The Board of Directors of the Company will meet
no less frequently than quarterly.
3. TRANSFER OF STOCK
(a) RESALE OF SECURITIES. No Investor shall Transfer any Shares other
than in accordance with the provisions of this Section 3 and in compliance with
applicable federal, state and foreign securities laws. Any Transfer or purported
Transfer made in violation of this Section 3 shall be null and void and of no
effect. Notwithstanding anything herein to the contrary, the rights of the
Company and Investors under this Section 3 shall not apply to any pledge of
Shares by an Investor which creates a mere security interest, provided that the
pledgee agrees in writing to be bound by this Agreement as if it were an
Investor.
(b) AGREEMENT TO BE BOUND. No Transfer of Shares may be made to any
Permitted Transferee unless (1) the certificates representing such Shares
delivered to such Permitted Transferee shall bear the legend set forth in
Section 1, if required by such Section, and (1i) except as otherwise
specifically permitted by the provisions of this Agreement, prior to such
Transfer, such Permitted Transferee (if not already a party to this Agreement)
shall have executed and delivered to the Company an instrument in form and
substance satisfactory to the Company confirming that such transferee has agreed
to be bound as an "Investor" by the terms of this Agreement; provided that the
provisions of clause (ii) above shall not be applied to any Transfer following
the termination of this Agreement pursuant to Section 5 (notwithstanding any
survival of the provisions of Section 2(a)(ii)).
(c) THE OFFER.
(i) No Investor shall Transfer any of the Shares owned by him, her
or it to any Person (other than the Company) that is not a Permitted Transferee
of such Investor (a "Proposed Transferee") unless tile Investor desiring to make
the Transfer (hereinafter referred to as the "Transferor") shall have first
delivered a written notice (the "Offer") to the other Investors and the Company
and complied with the provisions of Sections 3(d) and (e). The Offer shall set
forth the number and class or series of Shares proposed to be Transferred to the
Proposed Transferee (the "Subject Shares"), the total number and class or series
of Shares owned by the Transferor, the terms and conditions (including price) of
the proposed sale to such Proposed Transferee, the identity of such Proposed
Transferee and any other material facts relating to the proposed sale to such
Proposed Transferee. In the case of a proposed transaction in which the
consideration consists in part or in whole of consideration other than cash, the
Transferor shall furnish such information relating to such consideration as the
Company and/or the Investors may reasonably request as being necessary for the
Company and/or the Investors to evaluate such
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<PAGE> 5
non-cash consideration, it being understood that such request shall not obligate
such Transferor to deliver any in-formation to the Company and/or the Investors
not provided to such Transferor by the Proposed Transferee.
(d) RIGHT OF FIRST REFUSAL.
(i) ACCEPTANCE OF OFFER. Within twenty (20) days after the receipt
of an Offer, the Company may, at its option, elect to purchase all, but not less
than all, of the Subject Shares in accordance with the provisions of this
Agreement and for the price and upon the other terms and conditions set forth in
such Offer. The Company shall exercise such option by giving notice thereof to
the Transferor and to each Investor within such twenty (20) day period.
In the event that the Company does not exercise its option to purchase
all of the Subject Shares within such twenty (20) day period, it shall provide
notice (the "Company Non-Exercise Notice") of such determination to the
Investors and each Investor shall be entitled to purchase all, but not less than
all, of such Investor's Pro Rata Portion of the Subject Shares in accordance
with the provisions of this Agreement and for the price and upon the other terms
and conditions set forth in such Offer. The Investors may exercise such option
by giving notice thereof to the Transferor and to the Company, within twenty
(20) days after receipt of the Company Non-Exercise Notice from the Company,
setting forth the number of Subject Shares it wishes to purchase. Alternatively,
each Investor may within the same twenty (20) day period notify the Transferor
and the Company of its desire to participate in the sale of the Subject Shares
in accordance with the provisions of Section 3(e) and for the price and upon the
other terms and conditions set forth in such Offer, and the number of Subject
Shares it wishes to sell (such Investor being referred to as a "Selling
Investor").
If each Investor does not elect during such twenty (20) day period to
purchase the number of Subject Shares permitted to be purchased by such Investor
during such twenty (20) day period (and notwithstanding any election made by
such Investor pursuant to the immediately preceding paragraph to be a Selling
Investor), the Company shall, within five (5) days after the expiration of such
twenty (20) day period, provide written notice to all Investors that elected to
purchase Subject Shares during such twenty (20) day period, informing them that
they have the right to increase the number of Subject Shares that they may elect
to purchase on the same terms as the Subject Shares each such Investor has
previously elected to purchase. Each such accepting Investor will then have a
five-day period from the receipt of such notice from the Company in which to
elect to purchase the number and type of the Subject Shares that Investors have
not previously elected to purchase during the initial period, allocated among
such accepting Investors on the basis of the relative number of Shares that each
such Investor indicated that it wished to purchase during the initial period
(which number of shares shall in no event exceed such Investor's Pro Rata
Portion of the Subject Shares) by delivery of written notice of acceptance to
the Seller prior to the expiration of such five-day period.
In either event, the notice required to be given by the purchasing
party (the "Purchaser") shall specify a date for the closing of the purchase
which shall not be more than thirty (30) days
-5-
<PAGE> 6
after the date of the giving of such notice or as soon as practicable thereafter
following receipt of all required regulatory approvals.
(ii) PURCHASE PRICE. The purchase price per share for the Subject
Shares shall be the price per share offered to be paid by the Proposed
Transferee, which price shall be paid in cash or, if so provided la ` the offer
of the Proposed Transferee, cash plus deferred payments of cash in the same
proportions, and with the same terms of deferred payment as therein set forth.
(iii) CONSIDERATION OTHER THAN CASH. If the Proposed Transferee
has offered to purchase the Subject Shares for consideration other than cash or
cash plus deferred payments of cash, the Purchaser shall pay the cash equivalent
of such other consideration. If the Transferor and the Purchaser cannot agree on
the amount of such cash equivalent within ten (10) days after the beginning of
the twenty (20) day period referred to in the first sentence under Section
3(d)(1), any of such parties may, by three (3) days' written notice to the
other, initiate appraisal proceedings under Section 3(d)(iii)] for determination
of the cash equivalent. The Purchaser may give written notice to the Transferor
revoking an election to purchase the Subject Shares within ten (10) days after
determination of the appraised value, if it chooses not to purchase the Subject
Shares.
(iv) APPRAISAL PROCEDURE. If any party shall initiate an appraisal
procedure to determine the amount of the cash equivalent of any consideration
for Subject Shares under Section 3(d)(iii), then the Transferor, on the one
hand, and the Purchaser, on the other hand, shall each promptly appoint as an
appraiser an individual who shall be knowledgeable in the industry and mutually
agreeable to the parties, or failing mutual agreement, a member of a nationally
recognized investment banking firm. Each appraiser shall, within thirty (30)
days of appointment, separately investigate the value of the consideration for
the Subject Shares (without regard to the income tax consequences to the
Transferor as a result of receiving cash rather than other consideration) as of
the proposed transfer date and shall submit a notice of an appraisal of that
value to each party. If the appraised values of such consideration (the "Earlier
Appraisals") vary by less than ten percent (10%), the average of the two
appraisals on a per share basis shall be controlling as the amount of the cash
equivalent. If the appraised values vary by more than ten percent (10%), the
appraisers, within ten (10) days of the submission of the last appraisal, shall
appoint a third appraiser who shall be an individual knowledgeable in the
industry and mutually agreeable to the parties, or failing mutual agreement, a
member of a nationally recognized investment banking firm. The third appraiser
shall, within thirty (30) days of his appointment, appraise the value of the
consideration for the Subject Shares (without regard to the income tax
consequences to the Transferor as a result of receiving cash rather than other
consideration) as of the proposed transfer date and submit notice of his
appraisal to each party. The value determined by the third appraiser shall be
controlling as the amount of the cash equivalent unless the value is greater
than the two Earlier Appraisals, in which case the higher of the two Earlier
Appraisals will control, and unless that value is lower than the two Earlier
Appraisals, in which case the lower of the two Earlier Appraisals will control.
If any party falls to appoint an appraiser or if one of the two initial
appraisers fails after appointment to submit his appraisal within the
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<PAGE> 7
required period, the appraisal submitted by the remaining appraiser shall be
controlling. The Transferor and the Purchaser shall each bear the cost of its
respective appointed appraiser. The cost of the third appraisal shall be shared
one-half by the Transferor and one-half by the Purchaser.
(v) CLOSING OF PURCHASE. The closing of the purchase shall take
place at the office of the Company or such other location as shall be mutually
agreeable and the purchase price, to the extent comprised of cash, shall be paid
at the closing, and cash equivalents and documents evidencing any deferred
payments of cash permitted pursuant to Section 3(d)(1i) above shall be delivered
at the closing. At the closing, the Transferor shall deliver to the Purchaser
the certificates evidencing the Subject Shares to be conveyed, free and clear of
all liens and encumbrances, duly endorsed and in negotiable form with all the
requisite documentary stamps affixed there
(e) CO-SALE RIGHT.
(f) GENERAL. In the event that the Company and the Investors do not
exercise their options to purchase all of the Subject Shares within the periods
described in Section 3(d) (the "Option Period") and the Transferor desires to
proceed with the direct or indirect sale of the Subject Shares (the "Take-Along
Shares") to a Proposed Transferee, the Selling Investors shall have the right to
sell to the Proposed Transferee, at the same price per share (calculated on an
as-converted basis) and on the same terms and conditions as are proposed to be
sold by the Transferor and set forth in the applicable Offer, up to a number of
Shares (whether or not the same class or series as the Take-Along Shares)
determined pursuant to Section 3(e)(ii). Any sale by a Selling Investor pursuant
to this Section 3(e) shall not be subject to the provisions of Sections 3(c) or
(d).
(i) AMOUNT TRANSFERRED BY SELLING INVESTOR. Each Selling Investor
shall have the right to Transfer, pursuant to the Offer, a number of shares of
Common Stock up to the product of (x) the total number of Subject Shares
(calculated on an as-converted basis) offered to be Transferred by the
Transferor or offered to be purchased by the Prospective Transferee as set forth
in the applicable Offer and (y) the Pro Rata Portion of such Investor.
(ii) AMOUNT TRANSFERRED BY TRANSFEROR. The Transferor shall use
his best efforts to interest the Proposed Transferee in purchasing, in addition
to the Take-Along Shares, the Shares the Selling Investors wish to sell. If the
Proposed Transferee does not wish to purchase all of the Shares made available
by the Transferor and the Selling Investors, then the Take-Along Shares that the
Transferor is entitled to Transfer shall be reduced by the Shares to be
transferred by the Selling Investors.
(iii) SALE OF SHARES. If the Transferor wishes to Transfer any
Shares to a Proposed Transferee at a price per Share which is less than from
that set forth in the Offer, upon terms different from those previously offered
to the Company and the Investors, or more than ninety (90) days after the
expiration of the Option Period, then, as a condition precedent to such
transaction, such Shares must first be offered to the Company and the Investors
on the same
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<PAGE> 8
terms and conditions as given the Proposed Transferee, and in accordance with
the procedures and time periods set forth in Sections 3(c), (d) and (e). If
Subject Shares are transferred to any Proposed Transferee who is not a party to
this Agreement, the Subject Shares so transferred shall no longer be subject to
any of the restrictions imposed by Sections 3(c), (d) and (e)-
(g) SUBSCRIPTION RIGHT.
(i) If at any time after the date hereof, the Company proposes to
issue equity securities of any kind (the term "equity securities" shall include
for these purposes any warrants, options or other rights to acquire equity
securities and debt securities convertible into equity securities) of the
Company (other than the issuance of securities (A) upon the conversion of
outstanding shares of Preferred Stock in accordance with the charter of the
Company, (B) to the public in a firm commitment underwriting pursuant to a
registration statement filed under the Securities Act, (C) pursuant to the
acquisition of another corporation by the Company by merger, purchase of
substantially all of the assets or other form of reorganization, (D) pursuant to
an employee stock option plan, stock bonus plan, stock purchase plan or other
management equity program approved by the Board or (E) in connection with
equipment lease transactions approved by the Board), then, as to each Investor
who then holds in excess of one percent (1%) of the then outstanding Common
Stock of the Company, calculated on an as converted basis, the Company shall:
(1) give written notice setting forth in reasonable detail
(a) the designation and all of the terms and provisions of the securities
proposed to be issued (the "Proposed Securities"), including, where applicable,
the voting powers, preferences and relative, participating, optional or other
special rights, and the qualifications, limitations or restrictions thereof and
interest rate and maturity; (b) the cash price and other terms of the proposed
sale of such securities; (c) the amount of such securities proposed to be
issued; and (d) such other information as the Investors may reasonably request
in order to evaluate the proposed issuance; and
(2) offer to issue to each such Investor such Investor's
Pro Rata Portion of the Proposed Securities.
(ii) Each SUCH Investor MUST EXERCISE hereunder within ten (10)
DAYS after RECEIPT OF SUCH notice FROM THE COMPANY. If all of the proposed
securities offered to such Investor are not fully subscribed by such Investor,
the remaining Proposed Securities will be reoffered to any of the Investors
purchasing their full allotment (pro rata among them on the basis of the
relative number of Proposed Securities each such Investor has previously
indicated that it wishes to purchase) upon the terms set forth in this Section
3(f), until all such Proposed Securities are fully subscribed for or until all
such Investors have subscribed for all such Proposed Securities which they
desire to purchase, except that such Investors must exercise their purchase
rights within five (5) days after receipt of all such reoffers. To the extent
that the Company offers two or more securities in units, the Investors must
purchase such units as a whole and will not be given the opportunity to purchase
only one of the securities making up such unit.
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<PAGE> 9
(iii)
(iv) Upon the expiration of the offering periods described above,
the Company will be free to sell such Proposed Securities that the Investors
have not elected to purchase during the ninety (90) days following such
expiration on terms and conditions no more favorable to the purchasers of such
Proposed Securities than those offered to such Investors. Any Proposed
Securities offered or sold by the Company after such ninety (90) day period must
be reoffered to the Investors pursuant to this Section 3(c).
(v) The closing of purchases of Proposed Securities by Investors
exercising their preemptive rights under this Section 3(0 shall take place on
the closing date of such issuance; PROVIDED that, in the event that the Holders
have exercised their preemptive rights as to all of such Proposed Securities,
the issuance of such Proposed Securities to the Investors shall be consummated
within thirty (30) days following the expiration of the last order period
described above. At such closing, the Company shall issue certificates
representing the Proposed Securities to be purchased by each Investor exercising
preemptive rights pursuant to this Section 3(f), free and clear of all liens and
registered in the name of such Investor, against payment by such Investor of the
purchase price for such Proposed Securities.
(vi) The election by an Investor not to exercise its subscription
rights under this Section 3(f) in any one instance shall not affect its right
(other than in respect of a reduction in its percentage holdings) as to any
subsequent proposed issuance,
4. NOTICE TO STOCKHOLDERS
In the event any Investors propose to take action by written consent
pursuant to Section 228 of the Delaware General Corporation Law, the Company (or
the Investor proposing the action) shall provide written notice to all Investors
of the proposed action not less than 24 hours prior to the time at which such
action is to be effective. Such written notice shall describe the material terms
and conditions of the proposed action. If any material change in the facts set
forth in such notice shall occur, the Company (or the Investor proposing the
action) shall promptly give written notice to each Investor. The execution by
any Investor of any written con-sent shall be deemed to be a waiver of the
notice and information rights provided herein with respect to the matters
covered by such written consent.
5. TERMINATION The Agreement shall terminate upon the earlier of:
(a) the closing of an Initial Public Offering, except for the
provisions of Section 2(a)(10 which shall remain in full force and effect
following the closing of the Initial Public Offering;
(b) the date on which the parties to this Agreement who hold sixty-five
percent (65%) of the shares of Common Stock, calculated on an as converted
basis, then covered by this Agreement shall have agreed in writing to terminate
this Agreement; or
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<PAGE> 10
(c) ten (10) years from the date of this Agreement;
provided that no such termination shall relieve any party to this Agreement of
liability for a breach prior to termination of any of its covenants or
agreements contained in this Agreement.
6. COVENANTS
(a) FINANCIAL AND BUSINESS INFORMATION.
(i) The Company will deliver to each Investor:
(1) QUARTERLY STATEMENTS Within 45 days after the close of
each of the first three fiscal quarters of each fiscal year of the Company, a
consolidated balance sheet, statements of income, stockholders equity and cash
flows of the Company and its subsidiaries, if any, as at the close of such
quarter and covering operations for such quarter and the portion of the
Company's fiscal year ending on the last day of such quarter, all in reasonable
detail and prepared in accordance with GAAP, subject to normal year-end audit
adjustments, setting forth in each case in comparative form the figures for the
comparable period of the previous fiscal year.
(2) ANNUAL STATEMENTS as soon as practicable after the end
of each fiscal year of the Company, and in any event within ninety (90) days
thereafter, duplicate copies of :
(A) a consolidated balance sheet of the Company and its
subsidiaries, if any, at the end of such year; and
(B) consolidated statements of income, stockholders'
equity and cash flows of the Company and its subsidiaries, if any, for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and accompanied by an opinion
thereon of independent certified public accountants of recognized national
standing selected by the Company, which opinion shall state that such financial
statements fairly present the consolidated financial position of the Company and
its subsidiaries, if any, and have been prepared in accordance with GAAP (except
for changes in application In which such accountants concur) and that the
examination of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards, and
accordingly included such tests of the accounting records and such other
auditing procedures as were considered necessary in the circumstances.
(ii) The Company will deliver to each Investor for so long as such
Investor owns at least two percent (2%) of the outstanding shares of Common
Stock, calculated on as converted basis:
(1) MONTHLY STATEMENTS - as soon as practicable, and in any
event within thirty (30) days after the close of each month of each fiscal year
of the Company,
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<PAGE> 11
(A) a statement of expenses accrued for such month, compared to the budget for
such month, (B) (other than with respect to the last month in each fiscal year)
a consolidated balance sheet as at the end of such month and consolidated
statements of income for such month and (C) a narrative describing any material
events that may have occurred during such month.
(2) AUDIT REPORTS - promptly upon receipt thereof, one copy
of each other financial report, audit response letter and internal control
letter submitted to the Company by independent accountants in connection with
any annual, interim or special audit made by them of the books of the Company.
(3) OTHER REPORTS - promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement sent by
the Company to stockholders generally, of each financial statement, report,
notice or proxy statement sent by the Company to the SEC or any successor
agency, if applicable, of each regular or periodic report and any registration
statement, prospectus or written communication (other than transmittal letters)
in respect thereof filed by the Company with, or received by such Person in
connection therewith from, any domestic or foreign securities exchange, the SEC
or any successor agency or any foreign regulatory authority performing functions
similar. to the SEC, of any press release issued by the Company, and of any
material of any nature whatsoever prepared by the SEC or any successor agency
thereto or any state blue sky or securities law commission which relates to or
affects in any way the Company.
(4) REQUESTED INFORMATION - with reasonable promptness, the
Company shall furnish to each of such Investors such other data and information
as from time to time may be reasonably requested.
(5) ANNUAL BUDGETS - prior to the start of each fiscal year,
consolidated capital and operating expense budgets, cash flow projections and
income and loss projections for the Company and its subsidiaries `in respect of
such fiscal year, all itemized in reasonable detail and prepared on a monthly
basis, and, promptly after preparation, any revisions to any of the foregoing.
(6) LITIGATION - promptly after the commencement thereof,
notice of aft actions, suits, claims, proceedings, investigations and inquiries
of the type described in Section 2.07 of the Purchase Agreement, which, if
determined adversely, could have a Material Adverse Effect (as defined in the
Purchase Agreement).
(b) INSPECTION. In addition to any rights of the Investor under
applicable law, as long as an Investor owns at least two (2%) percent of the
outstanding shares of Common Stock calculated on an as converted basis, the
Company shall permit such Investor or its nominees, assignees, and
representatives to visit and inspect any of the properties of the Company, to
examine all its books of account, records, reports and other papers not
contractually required of the Company to be confidential or secret, to make
copies and extracts therefrom , and to discuss its affairs, finances and
accounts with its officers, directors, key employees and independent public
accountants or any of them (and by this provision the Company authorizes
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<PAGE> 12
said accountants to discuss with such Investor, its nominees, assignees and
representatives the finances and affairs of the Company), all at such reasonable
times and as often as may be reasonably requested.
(c) CONFIDENTIALITY. As to the portion of the information and other
material furnished under or in connection with this Agreement (whether furnished
before, on or after the date hereof, including without limitation information
furnished pursuant to Section 6(a) and 6(b) hereof) as constitutes or contains
confidential business, financial or other information of the Company or any
subsidiary, each of the Investors covenants for itself and its directors,
officers and partners that it will use due care to prevent its officers,
directors, partners, employees, counsel, accountants and other representatives
form disclosing such information to Persons other than their respective
authorized employees, counsel, accountants, stockholders, partners, limited
partners and other authorized representatives; provided, however, that each
Investor may disclose or deliver any information or other material disclosed to
or received by it (1) should such Investor be advised by its counsel that such
disclosure or delivery is required by law, regulation or judicial or
administrative order or (ii) to any Person to whom such Investor is
contemplating a Transfer of its Shares, so long as (A) such Transfer would not
be in violation of the provisions of this Agreement, and (B) such potential
transferee is advised of the confidential nature of such information and agrees
to be bound by a confidential agreement in form and substance satisfactory to
the Company and consistent with the provisions hereof. In the event of any
termination of this Agreement, each Investor shall return to the Company all
confidential material previously furnished to such Investor or its officers,
directors, partners, employees, counsel, accountants and other representatives,
which is still held by such Investor; provided that such Investor may retain a
copy of such material for archival purposes only if such material relates to its
investment in the Company and not the business of the Company- For purposes of
this Section 6(c), "due care" means at least the same level of care that such
Investor would use to protect the confidentiality of its own sensitive or
proprietary information, and this obligation shall survive termination of this
Agreement.
(d) CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The Company will
continue to engage in business of the same general type as now conducted by it,
and preserve, renew and keep in full force and effect its corporate existence
and take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business. The Company shall
require all of its employees or consultants to enter into appropriate
confidentiality agreements to protect confidential information relating to the
Company and its business, including trade secrets.
(e) COMPLIANCE WITH LAWS. The Company will comply in all material
respects with all applicable laws, rules, regulations and orders except where
the failure to comply would not have a material adverse effect on the business,
properties, prospects, profits or condition (financial or otherwise) of the
Company.
(f) INSURANCE. The Company shall maintain with financially sound and
reputable insurance companies insurance on the business and properties of the
Company (including, without limitation, directors and officers liability
insurance and, at least from and
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<PAGE> 13
after the date of the first commercial sale of the first product by the Company,
product liability coverage), in at least such amounts and against at least such
risks as are usually insured against by companies engaged in similar businesses
and as shall be reasonably acceptable to the Investors. The Company shall be the
loss payee on all such insurance, unless otherwise determined by the Board of
Directors.
(g) KEEPING OF BOOKS. The Company will keep proper books of record and
account, in which full and correct entries shall be made of all financial
transactions and the assets and business of the Company in accordance with GAAP.
(h) LOST, ETC. CERTIFICATES EVIDENCING SHARES OF COMMON STOCK OR
PREFERRED STOCK; EXCHANGE. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any
certificate evidencing any shares of Common Stock or Preferred Stock owned by
one of the Investors, and (in the case of loss, theft or destruction) of an
unsecured indemnity satisfactory to it, and upon reimbursement to the Company of
all reasonable expenses incidental thereto, and upon surrender and cancellation
of such certificate, if mutilated, the Company will make and deliver in lieu of
such certificate a new certificate of like tenor and for the number of shares
evidenced by such certificate which remain outstanding. Such Investor's
agreement of indemnity shall constitute(~, indemnity satisfactory to the Company
for purposes of this Section 6(h). Upon surrender of any certificate
representing any shares of Common Stock or Preferred Stock for exchange at the
office of the Company, the Company at its expense will cause to be issued in
exchange therefor new certificates in such denomination or denominations as may
be requested for the same aggregate number of shares of Common Stock or
Preferred Stock, as the case may be, represented by the certificate so
surrendered and registered at such holder may request. The Company will also pay
the cost of all deliveries of certificates for such shares to the office of such
Investor (including the cost of insurance against loss or theft in an amount
satisfactory to the holders) upon any exchange provided in this Section 6(h).
(i) REPORT DIVIDENDS AND DISTRIBUTIONS. If required by the Internal
Revenue Code of 1986, as amended, the Company shall provide a copy of Internal
Revenue Service Form 1099-DIV to each of the Investors on an annual basis.
7. INTERPRETATION OF THIS AGREEMENT
(a) TERMS DEFINED. As used in this Agreement, the following terms have
the respective meaning set forth below:
AFFILIATE: any person directly or indirectly controlling, controlled by
or under common control with a specified Person.
AMENDED REGISTRATION RIGHTS AGREEMENT: the Amended and Restated
Registration Rights Agreement among the Company and certain of the Investors
dated as of the date hereof.
EXCHANGE ACT: the Securities Exchange Act of 1934, as amended.
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<PAGE> 14
GAAP: United States generally accepted accounting principles,
consistently applied.
INITIAL PUBLIC OFFERING : as defined in Section 2(a)(10 herein.
PERMITTED TRANSFEREE: with respect to any Person, means, if such person
is not an individual, any Affiliate of such Person or, in the case of any
individual, any members of such Investor's family, heirs, executors or legal
representatives or trusts for the benefit of such Investor or such Investor's
family or a partnership, corporation or limited liability company wholly owned
by such Investor;
PERSON: an individual, partnership, limited liability company,
joint-stock company, corporation, trust or unincorporated organization, and a
government or agency or political subdivision thereof.
PRO RATA PORTION: means, with respect to any Investor at any time, (i)
the number of shares of Common Stock, calculated on an as-converted basis, that
such Investor owns at such time, divided by (ii) the number of shares of Common
Stock, calculated on an as-converted basis, owned by all Investors (other than
in the case of Section 3(d), the shares owned by the Transferor, and in the case
of Section 3(e), the Proposed Transferee (if such Proposed Transferee is an
Investor) at such time.
SECURITY, SECURITIES: as defined in Section 2(l) of the Securities Act.
SECURITIES ACT: the Securities Act of 1933, as amended.
SHARES: all shares of Common Stock, Series I Preferred Stock, Series 11
Preferred Stock and Series III Preferred Stock currently owned (either
beneficially or of record) or subsequently acquired by any of the Investors,
including any shares which an Investor does not own (either beneficially or of
record) but as to which such Investor exercises voting control, and including
without limitation, shares of Common Stock acquired upon conversion of shares of
Preferred Stock.
TRANSFER: (i) when used as a noun, any sale, assignment,, or other
disposition or encumbrance (other than as contemplated by the Pledge Agreements
between Warburg and certain of the Individual Investors, dated September 5,
1996) or any agreement to do any of the foregoing and (ii) when used as a verb,
to sell assets or otherwise dispose of or agree to do any of the foregoing.
(b) ACCOUNTING PRINCIPLES. Where the character or amount of any asset
or amount of any asset or liability or item of income or expense is required to
be determined or any consolidation or other accounting computation is required
to be made for the purposes of this Agreement, this shall be done in accordance
with GAAP at the time in effect, to the extent applicable.
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<PAGE> 15
(c) DIRECTLY OR INDIRECTLY. Where any provision in this Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
(d) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed entirely within such State.
(e) SECTION HEADINGS. The headings of the sections and subsections of
this Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
8. MISCELLANEOUS
(a) NOTICES.
(i) All communications under this Agreement shall be in writing
and shall be delivered by hand or mailed by overnight courier or by registered
mail or certified mail, postage prepaid:
(1) If to an Investor listed on SCHEDULE I hereto, at his,
hers or its address set forth on SCHEDULE 1, or at such other address as may
have been furnished to the Company in writing;
(2) If to an Investor listed on SCHEDULE 11 hereto, at his,
hers or its address set forth on SCHEDULE 11, or at such other address as may
have been furnished to the Company in writing; or
(3) if to the Company, at One Cambridge Center, Suite 407,
Cambridge, Massachusetts 02142, marked for the attention of Clive Meanwell, or
at such other address as the Company may have furnished in writing to the
Investors, with a copy (which shall not constitute notice) to Hale and Dorr LLP,
60 State Street, Boston, Massachusetts 02109, marked for the attention of Steven
D. Singer, Esq.
(ii) Any notice so addressed shall be deemed to be given: if
delivered by hand, on the date of such delivery; if mailed by courier, on the
first business day following the date of such mailing; and if mailed by
registered or certified mail, on the third business day after the date of such
mailing.
(b) REPRODUCTION OF DOCUMENTS. This Agreement and all documents
relating thereto, including, without limitation, (1) consents, waivers and
modifications which may hereafter be executed, (11) documents received by each
Investor pursuant hereto and (111) financial statements, certificates and other
information previously or hereafter furnished to each Investor, may be
reproduced by each Investor by a photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and each Investor may
destroy any original document so reproduced. All parties hereto agree and
stipulate that any such
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<PAGE> 16
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by each Investor in the
regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
(c) SUCCESSORS AND ASSIGNS. This Agreement shaft inure to the benefit
of and be binding upon the heirs, executors, administrators, successors and
permitted assigns of each of the parties. Notwithstanding the foregoing, neither
this Agreement nor any right, remedy, obligation or liability arising hereunder
or by reason hereof shall be assignable by the Company or any Investor, except
(1) as specifically provided pursuant to the terms hereof, and (11) in
connection with a Transfer of securities of the Company pursuant to the terms
hereof, in which case any Person acquiring Shares who is required by the terms
of this Agreement to become a party hereto shall thenceforth be an "Investor".
Nothing in this Agreement, expressed or implied, is intended to confer on any
Person other than the parties hereto, and their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
(d) TERMINATION OF THE SECOND AMENDED AND RESTATED STOCKHOLDERS'
AGREEMENT. Upon the effectiveness of this Agreement, the Second Amended and
Restated Stockholders' Agreement is terminated and shall be superseded by the
provisions of this Agreement.
(e) ENTIRE AGREEMENT; AMENDMENT AND WAIVER. This Agreement, the
Purchase Agreement and the Amended Registration Rights Agreement constitute the
entire understanding of the parties hereto relating to the subject matter hereof
and thereof and supersede all prior understandings among such parties. This
Agreement may be amended, and the observance of any term of this Agreement may
be waived, with (and only with) the written consent of the parties to this
Agreement who hold sixty-five percent (65%) of the shares of Common Stock,
calculated on an as converted basis, then covered by this Agreement; provided
that no amendment which would in any material respect uniquely adversely affect
any particular Investor shall become effective without the prior consent of such
Investor.
(f) RECAPITALIZATION, ETC. In the event that any capital stock or other
securities are issued in respect of, in exchange for, or in substitution of, any
Shares by reason of any reason of any reorganization, recapitalization,
reclassification, merger, consolidation, spin-off, partial or complete
liquidation, stock dividend, spit-up, sale of assets, distribution to
stockholders or combination of the Shares or any other change in capital
structure of the Company, appropriate adjustments shall be made with respect to
the relevant provisions of this Agreement so as to fairly and equitably
preserve, as far as practicable, the original rights and obligations of the
parties under this Agreement.
(g) SEVERABILITY. The invalidity or unenforceability of any provisions
of this Agreement in any jurisdiction shall not affect the validity, legality or
enforceability of the remainder of this Agreement in such Jurisdiction or the
validity, legality or enforceability of this Agreement, including any such
provision, in any other jurisdiction, it being Intended that all
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<PAGE> 17
rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
(h) NO INCONSISTENT AGREEMENT; CONFLICTING CHARTER OR BYLAW PROVISION. The
Issuer will not hereafter enter into any agreement which is inconsistent with or
grant rights superior to the rights granted to the Investors in this Agreement.
Each Investor shall vote its Shares or execute written consents, as the case may
be, and take all other actions necessary, to ensure that the Certificate of
Incorporation, By-laws, and other constituent documents of the Company (i)
facilitate and do not at any time conflict with any provision of this Agreement
and (ii) permit each Investor to receive the benefits to which each such
Investor is entitled under this Agreement. No Investor shall (i) enter into any
agreement or arrangement of any kind with any Person with respect to its Shares
inconsistent with the provisions of this Agreement or for the purpose or with
the effect of denying or reducing the rights of any other Investor under this
Agreement or (ii) act as a member of a group or in concert with any other Person
in connection with the Transfer or voting of its Shares in any manner which is
inconsistent with the provisions of this Agreement.
(i) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
(j) INJUNCTIVE RELIEF. The Company and each of the Investors hereby declare
that it is impossible to measure in money the damages which wilt accrue to the
parties hereto by reason of the failure of the Company or of any of the
Investors to perform any of its obligations set forth in this Agreement.
Therefore, the Company and the Investors shall have the right to specific
performance of such obligations, and if any party hereto shall institute any
action or proceeding to enforce the provisions hereof, each of the Company and
the Investors hereby waives the claim or defense that the party instituting such
action or proceeding has an adequate remedy at law.
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<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have executed this Third Amended
and Restated Stockholders' Agreement as of the date first above written.
THE MEDICINES COMPANY
By: /s/ Peyton J. Marshall
--------------------------------------
Name: Peyton J. Marshall
Title: Chief Financial Officer
OLD INVESTORS:
Holders of at least 75% of the
Shares held by Old Investors
By: /s/ Peyton J. Marshall
--------------------------------------
Under Power of Attorney
of Holders attached hereto
NEW INVESTORS:
Counterpart signature pages attached
hereto
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<PAGE> 19
SCHEDULE I
Warburg, Pincus Ventures, L.P.
466 Lexington Avenue
New York, New York 10017
MPM Medicines L.P.
One Cambridge Center
Cambridge, Massachusetts 02142
Hanseatic Americas LDC
450 Park Avenue
Suite 2302
New York, New York 10022
PharmaBio Development Inc.
Post Office Box 13979
Research Triangle Park, North Carolina 27709-3979
Biotech Target
c/o Bellevue Asset Management AG
Grafenauweg 4 P. 0. Box CH-6301
Zug, Switzerland
Clive A. Meanwell
The Medicines Company
One Cambridge Center
Cambridge, Massachusetts 02142
Helmut Giersiefen
[The Medicines Company
One Cambridge Center
Cambridge, Massachusetts 021421
John Villiger
The Medicines Company Limited
150 Long Drive, St. Heliers
Auckland, New Zealand
Thomas Lategan
The Medicines Company
One Cambridge Center
Cambridge, Massachusetts 02142
Wendy Gordon
The Medicines Company
One Cambridge Center
Cambridge, Massachusetts 02142
<PAGE> 20
Peyton Marshall
The Medicines Company
One Cambridge Center
Cambridge, Massachusetts 02142
Frederick Oleson
5 Partridge Lane
Concord, Massachusetts 07142
John Maraganore
49 Constellation Wharf
Charlestown, Massachusetts 02129
H & D Investments 97
60 State Street
Boston, Massachusetts 02109
Attention: Paul Brountas, Esq.
<PAGE> 21
SCHEDULE II
Name and Address of Purchaser
E. M. Warburg, Pincus Ventures, L. P.
466 Lexington Avenue
New York, NY 10017
Biotech Growth S.A.
Grafenauweg 4
CH-6301
Zug Switzerland
Hanseatic Americas LDC
450 Park Avenue, Suite 2302
New York, NY 10022
Clive Meanwell
The Medicines Company
One Cambridge Center
Cambridge, MA 02142
Peyton Marshall
The Medicines Company
One Cambridge Center
Cambridge, MA 02142
Jane J. Avinger
207 Avinger Lane
Davidson, NC 28036
H&D Investments 97
Hale and Dorr LLP
60 State Street.
Boston, MA 02109
David Ackert
100 Nyala Farm
Westport, CT 06880
Gary S. Roubin Revocable Trust utd
145 East 81st Street
Penthouse B
New York, NY 10028
Richard Davis
Tucker Anthony
One Beacon Street
Boston, MA 02108
<PAGE> 22
Charles Schwab and Co., Inc.
FBO: Robert L. Avinger, Jr.
UTA Charles Schwab - 1251-7331
101 South Tyron Street
Charlotte, NC 28280
Bayview Investors, Ltd.
555 California Street, Suite 2600
San Francisco, CA 94104
Morgan Stanley Venture Partners L.P.
1221 Avenue of the Americas, 33rd Fl.
New York, NY 10020
Alta Partners
One Embarcadero Center, Suite 4050
San Francisco, CA 94111
Moore Global Investments, Ltd.
1251 Avenue of the Americas, 53rd Fl.
New York, NY 10020
Remington Investment Strategies, L.P.
1251 Avenue of the Americas, 53rd Fl.
New York, NY 10020
Credit Suisse Asset Management
AMPE 3 Utlibergstrasse 231
Postfach 800
Zurich, CH-8070
Switzerland
BancAmerica Robertson Stephens
590 Madison Avenue
New York, NY 10022
<PAGE> 23
AMENDMENT NO. 2 TO THE
THIRD AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
--------------------------------------------------
This Amendment No. 2 to the Third Amended and Restated Stockholders' Agreement
dated as of this 19 day of October, 1999 (the "Agreement"), among The Medicines
Company, a Delaware corporation (the "Company"), and the Investors (as
hereinafter defined).
WHEREAS, the Company and the individuals and entities who were signatories
thereto (the "Investors") are parties to the Third Amended and Restated
Stockholders' Agreement dated as of August 12, 1998, as amended to date (the
"Third Amended and Restated Stockholders' Agreement"); and
WHEREAS, the Company and certain of the Investors have entered into a Securities
Purchase Agreement of even date herewith with respect to the sale of the Notes
and the Warrants, each as defined therein (the "Securities Purchase Agreement");
and
WHEREAS, the Company and the Investors believe it to be in their mutual best
interests to amend the Third Amended and Restated Stockholders' Agreement to
exclude the Notes and the Warrants and the shares of capital stock issuable upon
conversion or exercise thereof from the Investors' subscription rights set forth
therein;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
in this Amendment, the parties hereto agree as follows:
1. AMENDMENT TO SECTION 3(G). Section 3(g) of the Third Amended and Restated
Stockholders' Agreement is hereby amended by inserting immediately following
clause (E) of Section 3(g)(i) the following:
"(F) the Common Stock Purchase Warrants issuable under the
Securities Purchase Agreement dated October 19, 1999 among the
Company and the entities and individuals who are signatories
thereto (the "Purchase Agreement") and the shares of Common
Stock issuable upon exercise of such Warrants and (G) the 8%
Convertible Notes issuable under the Purchase Agreement and
the shares of capital stock issued or issuable upon the
conversion of such Notes,"
2. RATIFICATION. In all other respects, the Third Amended and Restated
Stockholders' Agreement is hereby ratified and confirmed.
3. COUNTERPARTS. This Amendment may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall be
considered one and the same agreement.
4. EFFECTIVE DATE. This Amendment shall become effective upon approval by the
Company and the holders of at least 65% of the Common Stock, calculated on an as
converted basis, then covered by the Third Amended and Restated Stockholders'
Agreement.
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 2 to the
Third Amended and Restated Stockholders' Agreement as of the date first written
above.
The Medicines Company
By: /s/ Peyton J. Marshall
---------------------------------------
Name: Peyton J. Marshall
Title: Chief Financial Officer
Holders of at least 65% of the
Common Stock, calculated on an as
converted basis, then covered by the
Third Amended and Restated
Stockholders' Agreement
By: /s/ Peyton J. Marshall
-------------------------------
Under Power of Attorney
of Holders attached hereto
-2-
<PAGE> 25
AMENDMENT NO. 3 TO THE
THIRD AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
--------------------------------------------------
This Amendment No. 3 to the Third Amended and Restated Stockholders'
Agreement dated as of this 2nd day of March, 2000 (the "Amendment"), among The
Medicines Company, a Delaware corporation (the "Company"), and the Investors (as
hereinafter defined).
WHEREAS, the Company and the individuals and entities who were
signatories thereto (the "Investors") are parties to the Third Amended and
Restated Stockholders' Agreement dated as of August 12, 1998, as amended to date
(the "Third Amended and Restated Stockholders' Agreement"); and
WHEREAS, the Company and certain of the Investors have entered into a
Securities Purchase Agreement of even date herewith with respect to the sale of
the Notes and the Warrants, each as defined therein (the "Securities Purchase
Agreement"); and
WHEREAS, the Company and the Investors believe it to be in their mutual
best interests to amend the Third Amended and Restated Stockholders' Agreement
to exclude the Notes and the Warrants and the shares of capital stock issuable
upon conversion or exercise thereof from the Investors' subscription rights set
forth therein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Amendment, the parties hereto agree as follows:
1. AMENDMENT TO SECTION 3(G). Section 3(g) of the Third Amended and
Restated Stockholders' Agreement is hereby amended by inserting immediately
following clause (F) of Section 3(g)(i) the following:
"(G) the Common Stock Purchase Warrants issuable under the
Securities Purchase Agreement dated March 2, 2000 among the
Company and the entities and individuals who are signatories
thereto (the "Purchase Agreement") and the shares of Common
Stock issuable upon exercise of such Warrants and (H) the 8%
Convertible Notes issuable under the Purchase Agreement and
the shares of capital stock issued or issuable upon the
conversion of such Notes,"
2. RATIFICATION. In all other respects, the Third Amended and Restated
Stockholders' Agreement is hereby ratified and confirmed.
3. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
<PAGE> 26
4. EFFECTIVE DATE. This Amendment shall become effective upon approval
by the Company and the holders of at least 65% of the Common Stock, calculated
on an as converted basis, then covered by the Third Amended and Restated
Stockholders' Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
3 to the Third Amended and Restated Stockholders' Agreement as of the date first
written above.
The Medicines Company
By: /s/ Peyton J. Marshall
--------------------------------
Name: Peyton J. Marshall
Title: Chief Financial Officer
Holders of at least 65% of the Common
Stock, calculated on an as converted basis,
then covered by the Third Amended and
Restated Stockholders' Agreement
By: /s/ Peyton J. Marshall
---------------------------------
Under Power of Attorney
of Holders attached hereto
-2-
<PAGE> 27
AMENDMENT NO. 4 TO THE
THIRD AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
--------------------------------------------------
This Amendment No. 4 to the Third Amended and Restated Stockholders'
Agreement dated as of this 17 day of May, 2000 (the "Amendment"), among The
Medicines Company, a Delaware corporation (the "Company"), and the Investors (as
hereinafter defined).
WHEREAS, the Company and the individuals and entities who were
signatories thereto (the "Investors") are parties to the Third Amended and
Restated Stockholders' Agreement dated as of August 12, 1998, as amended to date
(the "Third Amended and Restated Stockholders' Agreement"); and
WHEREAS, the Company and certain of the Investors have entered into a
Series IV Convertible Preferred Stock Purchase Agreement of even date herewith
with respect to the sale of the Preferred Shares, each as defined therein (the
"Purchase Agreement"); and
WHEREAS, the Company and the Investors believe it to be in their mutual
best interests to amend the Third Amended and Restated Stockholders' Agreement
to exclude the Preferred Shares and the shares of capital stock issuable upon
conversion thereof from the Investors' subscription rights set forth therein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Amendment, the parties hereto agree as follows:
1. AMENDMENT TO SECTION 3(G). Section 3(g) of the Third Amended and
Restated Stockholders' Agreement is hereby amended by inserting immediately
following clause (G) of Section 3(g)(i) the following:
"upon the conversion of outstanding shares of Series IV
Convertible Preferred Stock, $1.00 par value per share
("Series IV Preferred Stock"),"
2. AMENDMENT TO SECTION 7. Section 7 of the Third Amended and Restated
Stockholders' Agreement is hereby amended by deleting the definition of "Shares"
contained therein and inserting in lieu thereof the following:
"SHARES: all shares of Common Stock, Series I Preferred Stock,
Series II Preferred Stock, Series III Preferred Stock and
Series IV Preferred Stock currently owned (either beneficially
or of record) or subsequently acquired by any of the
Investors, including any shares which an Investor does not own
(either beneficially or of record) but as to which such
Investor exercises voting control, and including without
limitation, shares of Common Stock acquired upon conversion of
shares of Preferred Stock or Series IV Preferred Stock."
<PAGE> 28
3. RATIFICATION. In all other respects, the Third Amended and Restated
Stockholders' Agreement is hereby ratified and confirmed.
4. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
5. EFFECTIVE DATE. This Amendment shall become effective upon approval
by the Company and the holders of at least 65% of the Common Stock, calculated
on an as converted basis, then covered by the Third Amended and Restated
Stockholders' Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
4 to the Third Amended and Restated Stockholders' Agreement as of the date first
written above.
The Medicines Company
By: /s/ Peyton J. Marshall
---------------------------------
Name: Peyton J. Marshall
Title: Chief Financial Officer
Holders of at least 65% of the Common
Stock, calculated on an as converted basis,
then covered by the Third Amended and
Restated Stockholders' Agreement
By: /s/ Peyton J. Marshall
---------------------------------
Under Power of Attorney
of Holders attached hereto
-2-
<PAGE> 1
EXHIBIT 10.5
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
1
CHEMILOG DEVELOPMENT AND SUPPLY AGREEMENT
BETWEEN UCB-BIOPRODUCTS S.A., with registered office at Allee de la Recherche
60, B-1070 Brussels, Belgium ("UCB")
on the one hand,
AND THE MEDICINES COMPANY INC., a Delaware corporation with offices at One
Cambridge Center, Suite 408, Cambridge, Massachusetts 02142, USA,
("TMC")
on the other hand,
WHEREAS, TMC has acquired certain rights to the synthetic drug substance
Bivalirudin (Angiomax(R)) and is interested in developing and marketing
pharmaceutical compositions containing Bivalirudin for the treatment of PTCA and
other diseases; and
WHEREAS, UCB has suitable premises, equipment and expertise in the development
and production of pharmaceutical grade bulk peptides; and
WHEREAS, with a view to entering into a supply commitment TMC wishes UCB to
develop a new manufacturing process (the CHEMILOG PROCESS) of the active
pharmaceutical ingredient Bivalirudin, on the terms and conditions of this
Agreement;
IN CONSIDERATION OF THE MUTUAL COVENANTS CONTAINED HEREIN, TMC AND UCB (THE
"PARTIES") AGREE AS FOLLOWS:
ARTICLE 1 - DEFINITIONS
When used herein, the following terms, used with initial capital letters, shall
have the following respective meanings and the singular shall include the plural
and vice-versa:
<PAGE> 2
2
1.1 "AFFILIATE" shall mean with respect to a party (i) any company at least
fifty percent (50%) of whose issued and voting capital is owned or
controlled, directly or indirectly, by said party, or (ii) any company
which owns or controls, directly or indirectly, at least fifty percent
(50%) of the issued and voting capital of said party, or (iii) any
company owned or controlled, directly or indirectly, to the extent of
at least fifty percent (50%) of the issued and voting capital, by any
of the foregoing.
1.2 "API" shall mean Active Pharmaceutical Ingredient.
1.3 "BIVALIRUDIN" shall mean the 20 amino acid polypeptide corresponding
to UCB Code Name SF071 and/or SF220.
1.4 "CHEMILOG" shall mean the process by which Bivalirudin API is
manufactured in accordance with the process as described in ANNEX 1
hereto.
1.5 "CONFIDENTIAL INFORMATION" shall mean any UCB or TMC trade secret or
other information of a confidential and/or proprietary nature which is
disclosed by one party ("DISCLOSING PARTY") to the other party
("RECEIVING PARTY") and which is marked as "confidential" or
"proprietary", excluding such trade secret or other information which
(i) is published or otherwise becomes a matter of public knowledge by
any means other than through the breach of this Agreement by the
Receiving Party, (ii) was known by the Receiving Party at the time of
such disclosure, as evidenced by the Receiving Party's written records
predating such disclosure and maintained in the ordinary course of
business, (iii) was disclosed to the Receiving Party by any Third Party
(as defined below) who has the right to disclose the same; (iv) was
independently developed by the Receiving Party, without using the
Disclosing Party's Confidential Information; or (v) is disclosed
pursuant to court order or as otherwise required by law, after giving
the Disclosing Party prior written notice of such required disclosure
and after assisting the Disclosing Party in its reasonable efforts to
prevent or limit such disclosure.
1.6 "DRUG PRODUCT" shall mean any pharmaceutical composition containing the
Bivalirudin API.
<PAGE> 3
3
1.7 "FIRST SALE DATE" shall mean the first date on which TMC sells Drug
Product to a Third Party which contains Product supplied by UCB
hereunder and manufactured through the Chemilog Process.
1.8 "PRODUCT" shall mean the fully chemically synthetized Bivalirudin API
either through UCB's existing process or the Chemilog Process.
1.9 "SPECIFICATIONS" shall mean the characteristics of the Product,
attached hereto as ANNEX 2 to this Agreement.
1.10 "THIRD PARTY" shall mean any natural person, corporation, firm, trust,
joint venture, company, partnership or other business organization,
which is not a party hereto or an Affiliate of any party hereto.
1.11 "UCB TECHNICAL INFORMATION" shall mean:
a) unpatented proprietary and confidential technical information,
specifications, compositions, manufacturing methods, application
methods, testing methods, computer programs, technical data and
drawing as well as any improvements thereto, whether written or oral,
which relates to the Chemilog Process or to the Product manufactured
through other processes, and which is useful or necessary for the
implementation of this Agreement, as shall have been developed or
acquired by UCB prior to the termination or expiration of this
Agreement (excluding information supplied by TMC);
b) patents and patent applications on any of the foregoing, including
divisions, continuations, continuations in part, extensions,
amendments and reissues thereof, filed or owned by, or licensed or
assigned to UCB, and based on inventions which are either (i) actually
reduced to practice or (ii) constructively reduced to practice by
filing a patent application on such invention prior to the termination
of this Agreement;
provided that the UCB Technical Information shall not include
information acquired by UCB from third parties subject to
confidentiality restrictions preventing disclosure or use hereunder.
<PAGE> 4
4
ARTICLE 2 - SUBJECT-MATTER OF THE AGREEMENT
2.1 In order to establish UCB as a preferred supplier of the Product on a
commercial basis, UCB shall perform the development and manufacture of
the Product in its premises in Braine-l'Alleud, Belgium according to
the terms hereunder. The Product shall not be manufactured at any other
facilities unless the Parties mutually agree otherwise. This
development will cover all necessary steps, including development,
qualification and validation steps, up to and including the filing of a
Drug Master File with the FDA related to Chemilog as far as it concerns
the activities performed at and by UCB. UCB shall also file or provide
TMC the equivalent documentation of the local equivalent of a Drug
Master File in any countries TMC or its Affiliates chooses to register
the Product. However, UCB shall not be obliged to file in any country
in which UCB has no previous experience of filing the local equivalent
of a Drug Master File. Alternatively, parties may agree on a specific
remuneration for UCB for filing in countries in which UCB has no
previous experience of filing.
2.2 During the term of this Agreement, TMC shall purchase at least eighty
percent (80%) of its annual requirements of Product from UCB, subject
to Article 21 below. In the event that TMC instructs UCB to transfer
UCB Technical Information to a Third Party, in order for such Third
Party to act as a second supplier of Product for TMC, TMC shall pay to
UCB both during and after the term of this Agreement (but in no event
after the date when Product becomes generic in the U.S.A.) an annual
royalty payment equal to ten percent (10%) of the amount paid by TMC
for its purchases of the Product manufactured by such Third Party.
ARTICLE 3 - SCOPE OF WORK
The Parties agree that the Scope of Work (hereinafter referred to as "SOW")
attached in Annex 3 constitutes an integral part of the Agreement. UCB shall use
best efforts to follow the SOW in reaching the requested degree of experience
for commercial manufacturing purposes, as well as the associated controls,
related to the Product.
<PAGE> 5
5
ARTICLE 4 - MILESTONES REPORTS.
At each milestone described in the SOW UCB will address a written interim
milestone report to TMC. Upon successful completion of the SOW UCB shall address
a final written report to TMC.
ARTICLE 5 - TIMELINES
The general timelines for the development of the Product as described hereabove
are described in ANNEX 4. UCB shall use its reasonable efforts to comply with
such timelines, taking into account, however, the uncertainty of any
development. Should unexpected results arise during the development, the Parties
shall review the timelines within ten (10) business days, to reflect any
decision taken jointly to best resolve the issues.
ARTICLE 6 - DEVELOPMENT PROGRAM REVIEW.
A steering committee with an equal number of representative(s) of TMC and UCB
will be set up upon signature of this Agreement. It will meet according to a
regular and appropriate schedule (until the Parties agree otherwise, at least on
a quarterly basis), at rotating sites, to review the overall progress of the
development, to resolve any unexpected issues that may arise, including but not
limited to, adapting timelines, reviewing quantities, and setting
Specifications. The steering committee shall also conduct phone updates twice
monthly. The steering committee may also decide (on terms to be agreed) to
provide mutual assistance in respect of the development as provided in Article 2
hereof, such as staff swapping or patent filing.
ARTICLE 7 - PRELIMINARY WORK
UCB has already initiated some preliminary work for the development of the
Product, the results of which are described in ANNEX 5; these results are a part
of this Agreement and are subject to the same terms and conditions.
<PAGE> 6
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
6
ARTICLE 8 - FORECASTS AND ORDERS FOR THE PRODUCT
8.1 TMC shall submit to UCB a bi-annual rolling Product forecast, updated
at the beginning of each calendar quarter. The first two quarters of
said forecast shall be binding upon TMC to the extent of one hundred
percent (100%) of such forecasted volume. The third quarter of said
forecast shall be binding upon TMC to the extent of fifty percent (50%)
of the forecasted volumes; PROVIDED, HOWEVER, that for the first
forecast containing a quarter in which TMC's forecast is greater than
zero (exceeding purchases of validation batches), the forecast for the
third quarter shall be binding upon TMC to the extent of one hundred
percent (100%) of such forecasted volume. Binding forecasts shall be
considered as firm purchase orders.
For the purposes of this Agreement, an Annual Production Forecast shall
mean: (i) the first quarter in which TMC's forecast is greater than
zero (exceeding purchases of validation batches) and the following
three quarters; and (ii) each four quarter period thereafter.
8.2 Any and all purchase orders for Product shall be issued at least
sixty (60) days in advance of the required delivery date.
8.3 UCB agrees to reserve manufacturing capacity in its production
facilities in Braine-l'Alleud, Belgium, so as to ensure that it is able
to manufacture TMC 's annual requirements of Product. For that purpose,
UCB shall provide TMC with a capacity plan based upon TMC's bi-annual
forecasts for Product. Such capacity plan shall outline UCB's capital
investments. UCB shall at each moment in time guarantee a capacity
equal to [ ** ] of TMC's forecast for Product for the next two
(2) quarters.
The forecast will commence for the first calendar quarter following
execution of this Agreement. This forecasting procedure shall not apply
to TMC's order of Chemilog validation batches.
<PAGE> 7
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
7
ARTICLE 9 - CONSIDERATIONS FOR THE DEVELOPMENT.
9.1 In consideration of the development of the Product described in Article
2 hereof (including the preliminary work and the SOW), TMC shall pay to
UCB an amount of (exclusive of any taxes, other than taxes measure on
the gross or net income of UCB) in accordance with the payment schedule
set out in Annex 8 hereto.
9.2 Target price for Product.
9.2.1
Subject to the adjustments described in Section 9.2.2 below,
each order of Product purchased by TMC shall be priced as
follows, based on the Annual Production Forecast which
includes the calendar quarter during which such order was
purchased by TMC:
Total Volume of Annual Production Forecast Target Price
[ ** ] kg or more, but less than [ ** ]kg US$ [ ** ]/gram
[ ** ] kg or more, but less than [ ** ]kg US$ [ ** ]/gram
[ ** ] kg or more US$ [ ** ]/gram
provided, however, that for any twelve (12) month period covered by an
Annual Production Forecast of [ ** ] kg or more, if during the
immediately prior twelve (12) month period TMC purchased [ ** ] kg or
more of Product, then TMC shall pay a target price for the current
twelve (12) month period equal to the target price paid for such prior
twelve (12) month period, after it is adjusted pursuant to Section
9.2.2. below.
9.2.2 Within thirty (30) days after the end of the twelve-month
period covered by an Annual Production Forecast, the Parties
shall meet to determine what adjustments need to be made to
the amounts paid by TMC during the just-completed twelve (12)
month period, based on the factors and procedures described in
Scorecard
<PAGE> 8
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
8
Procedure, attached as Annex 6 hereto; provided, however,
that (i) for those twelve (12) month periods where TMC paid
a target price of US$[ ** ]/gram, in no event shall such
adjustments result in TMC paying less than US$[ ** ]/gram or
more than US$[ ** ]/gram; and (ii) for those twelve (12)
month periods where TMC paid a target price of
US$[ ** ]/gram, in no event shall such adjustments result in
TMC paying less than US$[ ** ]/gram or more than
US$[ ** ]/gram.
9.2.3 If TMC forecasts less than [ ** ] kg for any twelve (12) month
period covered by an Annual Production Forecast, the target
price described in Section 9.2.1 will not be applicable and
TMC and UCB will discuss in good faith the price to be paid by
TMC for such period. If TMC forecasts more than [ ** ] kg for
any twelve (12) month period covered by an Annual Production
Forecast, TMC must purchase at least [ ** ] kg during such
twelve (12) month period.
ARTICLE 10 - PAYMENT TERMS FOR DELIVERIES OF PRODUCT.
Each payment hereunder will be due thirty (30) days from the date of invoice.
The invoices will be issued and dated upon delivery of the Product to TMC. Any
deferred payment will automatically bear an interest rate according to EURIBOR Q
months) plus five percent (5%).
The price shall be adjusted as follows to reflect exchange rate fluctuations. At
any time during the first fifteen (15) days of a calendar quarter, either Party
may request an adjustment to be made. On the date of such request, if the
average of the exchange rate of US$ into Euro (L), as reported in the Wall
Street Journal (Eastern Edition), for the ten (10) business day period
immediately preceding that date, as compared to the rate of exchange between
those currencies as applicable at the day of signature of this Agreement or the
date of the last price adjustment, (i) varies by less than [ ** ],
then there shall be no purchase price adjustment at that time; (ii) varies by
[ ** ] or more (but less than [ ** ]), then the purchase price shall be adjusted
to reflect [ ** ] of such change; and (iii) varies by [ ** ] or more, then the
Parties shall meet to find a solution protecting the interests of both Parties.
<PAGE> 9
9
ARTICLE 11 - SHIPMENT AND PACKAGING.
Each shipment of Product will be made according to the relevant SOP's applicable
at UCB in Braine-l'Alleud (Belgium) and any particular requirement TMC might
have and previously approved by UCB. Delivery shall occur EX WORKS
Braine-l'Alleud (ICC Incoterms 1990).
ARTICLE 12 - SPECIFICATIONS.
12.1 The draft Specifications of the Product are attached hereto as ANNEX 2.
The final Specifications will be attached hereto as ANNEX 2 upon
achievement of the development work as set out in the SOW, and such
final Specifications shall be mutually agreed upon by the Parties. In
addition, such final Specifications shall be at least as stringent as
those specifications in place for the Product manufactured by the
registered process at the time of registration.
12.2 UCB agrees that TMC may change the Specifications only for regulatory
requirements, provided that TMC informs UCB immediately of the
requirements that the regulatory authorities will impose. Any changes
to the Specifications for other reasons must be agreed upon between the
parties.
12.3 UCB warrants that the Product supplied to TMC hereunder shall be
manufactured under conditions complying with current Good Manufacturing
Practices as applicable in the European Union and USA and shall conform
to the Specifications. UCB will send to TMC with each shipment of
Product a corresponding certificate of analysis.
THE WARRANTY MADE BY UCB UNDER TFHS ARTICLE 12.3 IS EXCLUSIVE AND IS
MADE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING,
BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE AND ANY IMPLIED WARRANTY ARISING OUT OF A COURSE OF DEALING,
CUSTOM OR USAGE OR TRADE.
<PAGE> 10
10
ARTICLE 13 - MODIFICATIONS TO PROCESS
During the initial phase of the development period, prior to validation, UCB
will use its reasonable efforts to develop the process to make it feasible and
economic at large scale for the anticipated commercial production levels.
Thereafter, UCB will not make any modification to the process requiring prior
notice to (or approval of) regulatory authorities without the prior written
acceptance of TMC, such acceptance not being unreasonably withheld or delayed.
UCB will not make any other material modification to the process without the
prior written acceptance of TMC, such acceptance not being unreasonably withheld
or delayed.
UCB will document any modification to the process to enable TMC to notify the
FDA or any other regulatory authority deemed necessary of such modifications.
TMC and UCB agree to the Change Control Procedure provided in Annex 7.
ARTICLE 14 - ACCEPTANCE
Promptly after receipt of any shipment of Product, TMC shall control the
quantity and visually inspect the quality of the Product and analyze it to
establish its conformity to the Specifications.
No claim for visible defective quality or shortage in quantity of any individual
shipment of Product or other visible non-conformity of the Product shall be
valid unless made by written notice given within ten (10) working days from the
date of delivery. No claims for incorrect materials shall be valid unless made
by written notice given within sixty working (60) days from the date of
delivery. Such notice shall substantiate the reason of non-conformity.
UCB shall make up any shortfall and/or replace and/or rework (in accordance with
a qualified procedure) any non-conforming Product, at no additional cost to TMC.
Subject to Article 24 of this Agreement, UCB's liability to TMC for
non-conforming Product shall be limited to the replacement of such Product free
of charge. Upon UCB's instructions, TMC shall destroy or return at UCB's cost
(including import duties) the non-conforming Product.
<PAGE> 11
11
If there is any dispute as to whether any shipment fails, in whole or in part,
to meet the requirements hereof, such dispute shall be resolved by an
independent testing organization of recognized repute within the pharmaceutical
industry in the United States of America. The expenses of such organization
shall be borne by the party against whom the decision is rendered.
ARTICLE 15 - COMPLIANCE WITH LAWS AND REGULATIONS.
TMC and UCB shall comply with applicable laws and regulations of government
agencies of the United States of America and the European Union. UCB shall
maintain all necessary permits for the conduct of activities related to the
Product that UCB undertakes pursuant to this Agreement.
ARTICLE 16 - REGULATORY COMPLIANCE AND APPROVALS.
Unless otherwise agreed, UCB shall at its expense make any and all filings and
take any other actions with respect to the regulatory authorities for the
development and production of the Product in compliance with cGMP and maintain
any and all documentation in accordance with the terms of this Agreement. At
TMC's request, UCB shall provide access to Batch Production Records and any
other documentation as requested by TMC to support regulatory approvals or
compliance.
ARTICLE 17 - AUDITS.
To ensure compliance with applicable laws and regulations of regulatory bodies,
TMC or its designee is entitled, with a reasonable notice and during working
hours, to conduct an appropriate audit or inspection in UCB's facilities in
Braine and review the corresponding documentation. Moreover, UCB will inform TMC
immediately of any inspection by the regulatory authorities that might take
place in relation with the development and production of the Product, if any. In
order to confirm that all royalties were paid in accordance with this Agreement,
on thirty (30) days' prior written notice to TMC, UCB and its certified public
accountants and other auditors shall have full access to the books and records
of TMC relevant to confirm such royalty payments, and shall have the right to
make copies therefrom at UCB's expense. UCB, its certified public accountants
and other auditors shall have such access at all reasonable times and from time
to time during normal business hours (but no more than once
<PAGE> 12
12
during any calendar year). Prompt adjustment shall be made by the proper Party
to compensate for any errors or omissions disclosed by such audit. UCB shall
bear the costs of such audit, unless such audit reveals that the royalties paid
by TMC for the audited period was less than ninety-five percent (95%) of the
royalties actually due hereunder for such period, in which case TMC shall
reimburse UCB in full for its reasonable costs incurred in connection with such
audit. Any royalty payment not challenged within two (2) years after it is paid
shall be deemed to be correct, and shall no longer be subject to challenge.
ARTICLE 18 - TERM AND TERMINATION.
18.1 Expiration. Unless otherwise terminated in accordance with the terms
herein, this Agreement shall be effective as from the date of signature
of this Agreement by both Parties and shall terminate on the seventh
(7th) anniversary of the First Sale Date, as notified by TMC in
writing. Thereafter, it shall be automatically renewed for consecutive
periods of three (3) years, unless a Party hereto serves the other
Party a written notice of at least one (l) year prior the expiration of
the initial term or of any renewal term, as the case may be.
18.2 Termination for Cause. In the event of a material breach of this
Agreement by either Party and such Party's failure to remedy such
breach within thirty (30) days after receiving notice thereof from the
non-breaching Party which specifies the circumstances that constitute
the breach, then the non-breaching Party may terminate this Agreement
with immediate effect upon written notice to the breaching Party.
18.3 TERMINATION UPON BANKRUPTCY. This Agreement may be terminated by either
Party with immediate effect upon the filing of a petition in
bankruptcy, insolvency or reorganization against or by the other Party,
or such other Party becoming subject to a composition for creditors,
whether by law or agreement, or such other Party going into
receivership or otherwise becoming.
ARTICLE 19 - EFFECT OF TERMINATION
19.1 EFFECTS OF TERMINATION
<PAGE> 13
13
In the event of expiration or termination of the Agreement for whatever
reason (other than breach of this Agreement by UCB),
19.1.1 the fees for the development program incurred through such
date of expiration or termination will be due in full within
thirty (30) days following such expiration or termination.
19.1.2 In addition, (i) TMC shall purchase from UCB all inventories
of Product meeting the Specifications, manufactured by UCB
based on the forecasted quantities of Product for the
current calendar quarter and the two calendar quarters
thereafter, based on TMC's then-current forecast (the
"Forecasted Quantities") and/or Purchase Orders delivered by
TMC to UCB prior to such expiration or termination, to the
extent that such Purchase Orders exceed the Forecasted
Quantities, at the then current price; (ii) all inventories
of quality control released process intermediates
manufactured by UCB based on the Forecasted Quantities of
Product at a price equal to their proportionate price of
Product; and (iii) all raw materials previously purchased by
UCB to meet the Forecasted Quantities of Product, at UCB's
purchase cost. TMC shall have the right to request from UCB
that it complete all work in progress at the time, and the
resulting Product shall then be purchased by TMC in
accordance with this Agreement.
In the event of expiration or termination of the Agreement for breach
of this Agreement by UCB, the fees for the development program incurred
through such date of expiration or termination will be due in full
within thirty (30) days following such expiration or termination. In
addition, if TMC exercises its option to buy UCB's inventories and work
in process, then TMC shall purchase such items in accordance with
Section 19.1.2 above.
19.2 SURVIVALS
Upon expiration or termination of this Agreement, all fights and
obligations of the Parties hereunder shall immediately cease, except as
to Articles 15, 16, 17, 19, 21 (royalty obligation only), 22, 23, 24,
27 and 30 which shall survive in accordance with their terms.
<PAGE> 14
14
Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
19.3 RETURN OF CONFIDENTIAL INFORMATION UPON TERMINATION
Upon expiration or termination of this Agreement, each Party shall
promptly return to the other Party, at the other's request, any and all
Confidential Information of the other Party then in its possession or
under its control, except if such information is covered under
surviving license rights granted by TMC to Third Parties.
19.4 ROYALTY PAYMENTS
In the event this Agreement expires or is terminated by TMC prior to the ten
(10th) anniversary of the First Sale Date (other than based on a breach of this
Agreement by UCB), UCB shall transfer the UCB Technical Information to a Third
Party(ies) designated by TMC, in order for such Third Party(ies) to act as
suppliers of Product for TMC. In consideration for such transfer of UCB
Technical Information, TMC shall pay to UCB royalties on an annual basis on
Product from the date of such termination until the tenth (10th) anniversary of
the First Sale Date. Such royalties shall be [**] of the amount paid by TMC for
its purchases of the Product manufactured by such Third Party during such
period; PROVIDED, HOWEVER, that if this Agreement is terminated by TMC based on
a breach of this Agreement by UCB, such royalties shall be waived and such
transfer of UCB Technical Information shall be royalty-free.
ARTICLE 20 - S-NDA.
After UCB has submitted its final milestone report, the Parties will negotiate
in good faith a timeline and a table of contents of a Drug Master File
supporting the filing of a S-NDA at the FDA for the Product. It is understood
that such filing shall require full co-operation between the Parties and that
the Parties will use their best efforts in acting so.
ARTICLE 21 - EXCLUSIVITY OF SUPPLY
Pursuant to article 2.2, the exclusivity of supply is [**] during the entire
period of the Agreement. If TMC, one of its Affiliates or a Third Party (other
than the second supplier established pursuant to Section 2.2 above) is able to
supply Product to TMC with equivalent quality to the UCB Product (where such
Product is not manufactured by the second supplier
<PAGE> 15
15
Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
established pursuant to Section 2.2 above), at a price at least [**]
below UCB's price, and UCB does not wish to meet the price decrease, TMC shall
no longer be obligated to purchase [**] of its supply at UCB. If UCB meets such
price decrease, such new price shall replace the prices and price adjustments
under Section 9.2 above, subject to whatever further adjustments may be mutually
agreed to in writing between the Parties.
In addition, TMC shall no longer be obligated to purchase [**] of its supply at
UCB if (A) either: (i) UCB does not accept a firm order placed by TMC for
Product with requested delivery dates at least sixty (60) days after the date on
which TMC placed such order; or (ii) Product previously delivered by UCB was
repeatedly found not to conform to the Specifications for such Product, or UCB
repeatedly and materially fails to deliver the Products by the agreed-upon
dates; and (B) UCB has not cured such situation described in (A)(i) or (ii)
above within six (6) months after receiving written notice thereof from TMC.
ARTICLE 22 - PROPRIETARY RIGHTS
All data, information and results, including reports, files and other materials
made available by UCB to TMC or generated or derived by UCB as a result of the
development performed hereunder (excluding information and results concerning
the Product) shall remain the exclusive property of UCB. All information and
results concerning the Product shall remain the exclusive property of TMC.
ARTICLE 23 - CONFIDENTIAL INFORMATION
23.1 MUTUAL CONFIDENTIALITY UNDERTAKING.
From time to time during the ten-n of this Agreement, the Parties will
disclose or make available to each other Confidential Information in
connection with the activities contemplated hereunder.
Each Party hereby agrees that it will use Confidential Information
belonging to the other Party solely for the purpose(s) for which it was
disclosed hereunder; and that it will not disclose Confidential
Information belonging to the other Party to any Third Party (other
<PAGE> 16
16
than its employees and/or consultants reasonably requiting such
Confidential Information for purposes of this Agreement who are bound
by written obligations of non disclosure and limited use at least as
stringent as those contained herein) without the express prior written
consent of the other party, except to regulatory authorities to the
extent required by law or by applicable regulations.
Any Confidential Information reasonably classifiable as a trade secret
shall, as between the parties and their employees, remain a trade
secret and be fully protected as such in spite of any failure by the
Disclosing Party to constantly admonish the Receiving Party of the
trade secret nature of the information disclosed or because of any
failure of the Disclosing Party to pursue an active course of conduct
designed to inform the Receiving Party or its employees that the
secrets and information are to remain confidential.
23.2 PUBLICITY.
The Parties further agree that except as otherwise expressly required
by law, they will not publicly announce or otherwise disclose any of
the terms and conditions of this Agreement without the express prior
written consent of the other Party; provided that the foregoing shall
not prohibit or restrict in any manner, and no consent shall be
required, for any such public announcement or disclosure by a party in
connection with any financing, strategic transaction or relationship,
acquisition or disposition involving such party or as otherwise
required by law. Neither Party will use the names of the other Party or
any of its employees in any advertising, promotional or sales materials
relating to Product or otherwise, except as required by law or
regulatory authorities, without the express prior written consent of
the other Party.
ARTICLE 24 - INDEMNIFICATION
24.1 INDEMNITIES IN FAVOR OF TMC
UCB shall defend, indemnify and hold TMC, its Affiliates and the
officers, directors and employees of each harmless from and against any
and all claims, demands, loss, damage, liabilities, settlement amounts,
costs or expenses whatsoever (including reasonable
<PAGE> 17
17
attorneys' fees and costs) arising from any claim, action or
proceeding made or brought against such party by a Third Party as a
result of (a) a defect occurring in the manufacture or processing,
prior to the delivery of the Product to TMC; (b) provided the claim is
made within the time periods set out in Article 14, non conformity of
the Product to the Specifications; or (c) any claim that the process
used by UCB to manufacture the Product infringes on the intellectual
property rights of a Third Party.
24.2 INDEMNITIES IN FAVOR OF UCB
TMC shall defend, indemnify and hold UCB, its Affiliates and the
officers, directors and employees of each harmless from and against any
and all claims, demands, loss, damage, liabilities, settlement amounts,
costs or expenses whatsoever (including reasonable attorneys' fees and
costs) arising from any claim, action or proceeding made or brought
against such party by a Third Party as a result of (a) a defect
occurring in the handling, processing, storage or transportation or any
other matter whatsoever, after delivery of the Product to TMC, or (b)
the sale or use the Product or the Product, including intellectual
property rights relating thereto, except as a result of a defect of the
Product or infringement claim for which UCB is liable pursuant to
Article 24.1
24.3 LIMITATIONS
The indemnification obligations provided for in this article shall be
contingent upon the following additional terms and conditions:
(i) the Party claiming indemnification shall have promptly given the
indemnifying Party timely notice of the facts giving rise to such claim
and reasonable co-operation, information and assistance in connection
therewith;
(ii) the indemnifying Party shall have sole control and authority with
respect to the defense, settlement or compromise of the claim against
the indemnified Party; provide , however, that the indemnifying Party
may not enter into any settlement which imposes liability or
restrictions on the indemnified Party without the prior written consent
of the indemnified Party, such consent not to be unreasonably withheld
or delayed.
<PAGE> 18
18
24.4 CONSEQUENTIAL LOSSES.
EXCEPT FOR THIRD PARTY CLAIMS FOR PERSONAL INJURY RESULTING FROM THE
PRODUCTS, NOTWITHSTANDING ANY OTHER PROVISION HEREOF TO THE CONTRARY,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL,
INCIDENTAL, INDIRECT, CONSEQUENTIAL OR EXEMPLARY DAMAGES, SUCH AS LOSS
OF REPUTATION OR LOSS OF REVENUE OR PROFIT, EVEN IF SUCH PARTY WAS
AWARE OF SUCH DAMAGES OR LOSSES.
24.5 INSURANCE
During the term of this Agreement, both Parties will, each for their
respective liability, secure and maintain a comprehensive general
liability insurance policy providing sufficient coverage for personal
injury (including as a result of product liability) and property
damage, at the level as is usual and customary in the pharmaceutical
industry to procure. A certificate with regard to said policies will be
delivered to the other Party, at request
ARTICLE 25 - ASSIGNMENT AND DELEGATION
Neither this Agreement nor any rights hereunder may be assigned or licensed by
either Party, without the prior written consent of the other party, except for
assignments or sublicenses to: (i) Affiliates of the assigning or sublicensing
Party; or (ii) an acquiror of all or substantially all of the stock or assets of
the assigning or sublicensing Party which are related to the Product, whether
through purchase, merger, consolidation or otherwise,. Assignments and
sublicenses under (i) and (ii) shall occur freely by simple notice to the other
Party.
ARTICLE 26 - FORCE MAJEURE
Neither Party hereto shall be liable for damages, nor shall this Agreement be
terminable or cancelable by reason of any delay or default in such party's
performance hereunder if such default or delay is caused by events beyond such
Party's reasonable control ("force majeure")
<PAGE> 19
19
including, but not limited to, acts of God, regulation or law or other action of
any government or agency thereof, war or insurrection, civil commotion,
destruction of production facilities or materials by earthquake, fire, flood or
storm, labor disturbances, epidemics, or failure of suppliers, public utilities
or common carriers.
Each Party shall endeavor to resume its performance hereunder as soon as
reasonably possible if such performance is delayed or interrupted by reason of
force majeure.
ARTICLE 27 - APPLICABLE LAW - JURISDICTION
This Agreement shall be governed by and interpreted in accordance with the laws
of France, excluding the Vienna Convention on the International Sales of Goods
(dated 11 April 1980).
All disputes arising out of or relating to this Agreement shall be finally
resolved by arbitration conducted in the English language in Paris, France under
the commercial arbitration rules of the United Nations Commission on
International Trade Law. Each Party shall appoint an arbitrator and the two
arbitrators so appointed shall jointly appoint a third arbitrator; provided,
however, that if they cannot agree (or if one Party refuses to appoint an
arbitrator), then this third arbitrator shall be appointed by the President of
the International Chamber of Commerce, Paris. Both Parties shall bear equally
the cost of the arbitration (exclusive of legal fees and expenses, all of which
shall be allocated to the Party which does not prevail, as determined by the
arbitrators). All decisions of the arbitrator(s) shall be final and binding on
both Parties and enforceable in any court of competent jurisdiction.
Notwithstanding anything contained in this Section to the contrary, each Party
shall have the right to institute judicial proceedings against the other Party
or anyone acting by, through or under such other Party, in order to enforce the
instituting Party's rights hereunder through reformation of contract, specific
performance, injunction or similar equitable relief.
ARTICLE 28 - SEVERABILITY
Should any part of this Agreement be held unenforceable or in conflict with the
applicable laws or regulations of any jurisdiction, the invalid or unenforceable
part or provision shall be replaced with a provision which accomplishes, to the
extent possible, the original business purpose of
<PAGE> 20
20
such part or provision in a valid and enforceable manner, and the remainder of
this Agreement shall remain binding upon the Parties hereto.
ARTICLE 29 - ENTIRE AGREEMENT
This Agreement (including the Annexes hereto) constitutes the entire
understanding between the Parties with respect to the subject matter hereof and
supersedes all prior agreements, negotiations, understandings, representations,
statements and writings relating to it or any part thereof.
No modification, alteration, waiver or change in any of the terms of this
Agreement shall be valid or binding upon the Parties hereto unless made in
writing and signed by both Parties.
ARTICLE 30 - NOTICES
Any notice required or permitted to be given under the terms of this Agreement
shall be in writing, to the attention of Vice President, Manufacturing and
Product Quality on behalf of TMC and to the attention of General Manager on
behalf of UCB, and shall be sufficiently given if mailed by registered mail
postage prepaid or given by telefax or delivery to the Party for whom it is
intended at the address indicated in the preamble or to such other address as
either Party hereto may from time to time advise the other Party by notice in
writing to the addresses first above given.
Any notice given as aforesaid shall be deemed to have been given on the day on
which it was delivered, if delivered, or on the tenth business day excluding
Saturday, Sunday and statutory holidays, following the date on which it was
mailed, if mailed, provided that if there is a postal interruption due to
strike, slow down or other causes, notice shall be given by delivery only. Any
Party hereto may change its address or contact person for service from time to
time by notice given in writing.
<PAGE> 21
21
ARTICLE 31 - REPRESENTATIONS AND WARRANTIES
Each Party represents and warrants to the other that (i) the execution, delivery
and performance by such Party of this Agreement has been duly authorized by all
requisite corporate action on the part of such Party, and (ii) this Agreement
has been duly executed and delivered by such Party and constitutes the valid and
binding agreement of such Party, enforceable against such Party in accordance
with its terms.
ARTICLE 32 - MISCELLANEOUS
No waiver of any default hereunder by either Party or any failure to enforce any
rights hereunder shall be deemed to constitute a waiver of any subsequent
default with respect to the same or any other provision.
Headings are inserted for convenience and shall not affect the meaning or
interpretation of this Agreement or any clause thereof
Executed in two (2) original copies, each party acknowledging receipt of a
signed copy.
THE MEDICINES COMPANY INC. UCB-BIOPRODUCTS S.A.
/s/ John M. Nystrom /s/ Werwer De Prycker
- -------------------------------- ----------------------------------
By: John M. Nystrom By: Werwer De Prycker
Title: Vice President, Technical Title: Director
Ops.
/s/ John D. Richards /s/ Alain Scarso
- -------------------------------- ----------------------------------
By: John D. Richards By: Alain Scarso
Title: Vice President, Title: Director
Manufacturing and Product
Quality
Date: December 20, 1999 Date: December 16, 1999
Place: Cambridge, MA Place: Braine L' Alleund
USA Belguim
<PAGE> 1
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT 10.6
LICENSE AGREEMENT
-----------------
This Agreement, made and entered into this 6th day of June 1990, by and
between Biogen, Inc. a Massachusetts corporation, of 14 Cambridge Center,
Cambridge, MA 02142 ("BIOGEN") and Health Research, Inc., a not-for-profit
corporation of 1683 Empire State Plaza, Albany, New York 12237 ("HRI").
WHEREAS, HRI is a co-owner with BIOGEN of the Licensed Patent Rights (as
herein defined); and
WHEREAS, BIOGEN desires to become exclusively licensed to HRI's rights in
the Licensed Patent Rights.
NOW, THEREFORE, for good and valuable consideration and upon the mutual
covenants and promises hereinafter set forth, the parties agree as follows:
1. DEFINITIONS
-----------
1.1 "Affiliates" shall mean any corporation, partnership, or other business
organization which directly or indirectly controls, is controlled by, or is
under common control with BIOGEN. For purposes of this Agreement, "control"
shall mean the holding directly or indirectly of fifty percent (50%) or more of
the voting stock or other ownership interest of the corporation or business
entity involved.
1.2 "Licensed Patent Rights" shall mean the co-owned BIOGEN and HRI patent
application listed in Exhibit A, attached hereto, and any foreign counterpart
patent applications and any patents which issue therefrom, together with any
extensions, reissues, renewals, divisions, continuations or
continuations-in-part thereof, and any other co-owned BIOGEN and HRI patent
applications or patents describing or arising out of the inventions covered by
the patent application listed in Exhibit A.
1.3 "Licensed Product(s)" shall mean any product which falls within the
scope of a claim of the Licensed Patent Rights or is made in whole or in part in
accordance with a process which falls within the scope of a claim of the
Licensed Patent Rights.
1.4 "Net Sales" shall mean the gross invoice price of Licensed Product(s)
sold in any country by BIOGEN or its Affiliates to any party other than
sublicensees, less deductions for (i) any sales taxes, excise taxes and duties,
(ii) packaging, shipping, handling and insurance charges, (iii) allowances and
adjustments for spoiled, damages, outdated or returned Licensed Product(s), and
(iv) trade discounts, to the extent such deductions are actually billed or
credited to the customer. Sales or transfers of Licensed Product(s) between
BIOGEN and its Affiliates shall not be deemed Net Sales unless BIOGEN or its
Affiliates are the end users of the Licensed Product(s).
1.5 "Sublicense Income" shall mean the royalty income actually received by
BIOGEN or its Affiliates from the sale of Licensed Product(s) by BIOGEN's
sublicensees, less deductions for any withholding or other taxes. It is agreed
that royalty income shall not include payments BIOGEN or its Affiliates receive
from the supply of material, equipment, know-how,
<PAGE> 2
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
technical information and the like to BIOGEN's sublicensees, and shall not
include the sales or transfers of Licensed Product(s) between BIOGEN or its
Affiliates and the sublicensees unless the sublicensees are the end users of the
Licensed Product(s).
2. LICENSE GRANT
-------------
2.1 Subject to the terms and conditions hereinafter set forth, HRI hereby
grants to BIOGEN and its Affiliates a worldwide license, with the right to grant
sublicenses, under the Licensed Patent Rights to make, have made, use, sell, and
have sold Licensed Product(s). Such license shall be exclusive except that HRI
reserves the right to use the Licensed Patent Rights for noncommercial research
and educational purposes.
3. PAYMENTS
--------
3.1 In consideration for the contribution to the scientific and technical
developments relating to Licensed Products by the HRI, BIOGEN shall pay the
following non-refundable fees to HRI:
(a) [**] U.S. Dollars [**] within thirty (30) days of execution of this
Agreement.
(b) [**] U.S. dollars [**] within thirty (30) days of BIOGEN's submission
of the first Investigational New Drug application to the United States
Food and Drug Administration ("FDA") for a Licensed Product.
(c) [**] U.S. dollars [**] within thirty (30) days of Biogen's submission
of the first New Drug Application to the FDA for a Licensed Product.
(d) [**] U.S. dollars [**] within thirty (30) days of the FDA's approval of
Biogen's first New Drug Application for a Licensed Product.
3.2 In consideration for the rights granted by HRI to BIOGEN hereunder,
BIOGEN shall pay to HRI:
(a) A minimum annual royalty of [**] U.S. dollars [**] beginning with the
calendar year following the first sale of Licensed Product.
(b) A royalty on the cumulative annual Net Sales of Licensed Product
according to the following schedule:
Cumulative Annual Net Sales Royalty Percentage
--------------------------- ------------------
[**] Million U.S. Dollars [**]
[**] Million U.S. Dollars [**]
[**] Million U.S. Dollars [**]
[**] Million U.S. Dollars & Greater [**]
2
<PAGE> 3
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
(c) A royalty of [**] of the Sublicense Income received by BIOGEN and its
Affiliates.
3.3 BIOGEN shall be entitled to credit any minimum annual royalty paid to
HRI in a calendar year pursuant to Section 3.2(a) against any royalties earned
in that same calendar year and due to HRI pursuant to Section 3.2(b).
3.4 Unless this Agreement is terminated pursuant to Article 9, BIOGEN
shall, within sixty (60) days after the last days of June and December in each
year during the term of this Agreement, provide HRI with an accounting of Net
Sales and/or Sublicense Income for the immediately preceding six (6) month
period (the Royalty Period). Further, BIOGEN shall provide HRI with an
accounting of the royalties due with respect to the preceding six (6) month
period and shall, at the time when it delivers such account, make payment of the
amount of royalty payment due under this Article 3.
3.5 BIOGEN shall keep (or cause to be kept) and maintain complete and
accurate records of its Net Sales and Sublicense Income in accordance with
generally accepted accounting procedures. Such records shall be accessible for
review by HRI or by an independent certified public accountant selected and paid
for by HRI and acceptable to BIOGEN (which acceptance shall not be unreasonably
withheld), not more than once a year at any reasonable time during business
hours within one (1) year after the end of the royalty period to which such
records relate, for the purpose of verifying any royalty due thereon. The
individual conducting such review shall disclose to HRI only information
relating to the accuracy of the records kept and the payments made, shall be
under a duty to keep confidential any other information gleaned from such
records.
3.6 All monies to be paid to HRI shall be made and computed in United
States Dollars, and BIOGEN shall use its reasonable efforts to convert royalty
payments payable on Net Sales and Sublicense income in any country foreign to
United States Dollars; provided, however, that if conversion to and transfer of
Dollars cannot be made by BIOGEN in any country for any reason, BIOGEN may pay
such sums in the currency of the country in which such sales are made, deposited
in HRI's name in a bank designated by HRI in any such country. The rate of
exchange of local currencies to United States Dollars shall be at the rate of
exchange in force on the last business day of the Royalty Period as reported by
The Wall Street Journal.
3.7 If BIOGEN or its Affiliates or their sublicensees, in order to operate
under or exploit the licenses granted under Article 2 of this Agreement in any
country, is required to make any payment (including, but not limited to,
royalties, up-front payments, option fees or license fees) to one or more third
parties to obtain a license or similar right in the absence of which the
Licensed Products could not be used, manufactured or sold in such country
without violating the property, patent or other right of a third party, BIOGEN
may deduct from royalties otherwise payable to HRI an amount equal to such
payments made during the same Royalty Period to such third party, provided that
(a) the royalties paid to HRI for such Royalty Period shall not be reduced on
any payment date by more than [**] and (b) BIOGEN provides HRI with evidence,
reasonably satisfactory to HRI, of such third-party payments.
3
<PAGE> 4
4. COMMERCIALIZATION
-----------------
4.1 BIOGEN agrees to use reasonable commercial efforts to research and
develop, obtain regulatory approval and commercialize Licensed Product(s) in the
United States and agrees to provide HRI with written annual reports on such
efforts.
4.2 BIOGEN shall not use the name of HRI, the New York State Department of
Health or New York State in any advertising or promotional sales literature
without the prior written consent of HRI, except that BIOGEN may state that it
is licensed by HRI under the Licensed Patents Rights.
5. WARRANTIES
----------
5.1 Each party represents and warrants that it has the full power and
authority to enter into this Agreement and that entering into this Agreement
does not breach any existing agreements already signed by that party.
5.2 Nothing herein contained shall be construed by either party hereto as a
representation or warranty that the exercise of the licensed rights will not
constitute an infringement of the intellectual property rights of third parties.
5.3 BIOGEN agrees that HRI shall have no responsibility, or liability with
respect to any Licensed Product and agrees to hold HRI, the New York State
Department of Health and New York State harmless from any and all damages,
losses, costs and expenses which they incur as a result of any action, claim or
demand as a result of activities by BIOGEN, its Affiliates and sublicensees
arising out of or relating to Licensed Product.
5.4 BIOGEN, its Affiliates and its sublicensee(s) agree to comply with all
regulations and safety standards of government agencies such as the Consumer
Product Safety Act and the Food and Drug Act.
6. PATENTS
-------
6.1 BIOGEN shall be responsible for, and bear the costs of, the filing,
prosecution, issuance, enforcement, defense and maintenance of the Licensed
Patent Rights, except as provided for in Section 6.2 below.
6.2 BIOGEN and HRI shall promptly notify the other in writing of any actual
or threatened infringement of any Licensed Patent Rights, and shall at the same
time provide the other with any available evidence of infringement. The parties
shall then discuss what action, if any, each parties believes should be taken in
the matter.
(a) In the event BIOGEN, alone or with an Affiliate or sublicensee, wishes
to take action in a suit to enforce or defend any Licensed Patent
Rights, BIOGEN may take action and, at its option, join HRI as a
plaintiff. BIOGEN, alone or with its Affiliates and sublicensees,
shall exercise control over such action and shall bear all costs
thereof, including, but not limited to attorney's fees; provided that
HRI may, if it so desires, be represented by counsel of its own
selection, the fees for which counsel shall be paid by HRI. Any
recovery from such action shall be retained by BIOGEN or shared by
BIOGEN, its Affiliates or sublicensees.
4
<PAGE> 5
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
(b) In the event BIOGEN does not take action in a suit to enforce or defend
any Licensed Patent Rights and HRI wishes to take action, HRI may take
action and, at its option, join BIOGEN as a plaintiff. HRI shall
exercise control over such action and shall bear all costs thereof,
including, but not limited to attorney's fees; provided that BIOGEN
may, if it so desires, be represented by counsel of its own selection,
the fees for which counsel shall be paid by BIOGEN. Any recovery from
such action shall be retained by HRI.
6.3 In any suit as either party may institute or control to enforce or
defend the Licensed Patent Rights pursuant to this Agreement, the other party
hereto agrees, at the request and expense of the party initiating or controlling
the suit, to cooperate in all respects, to have its employees testify when
requested and to make available relevant records, papers, information, samples,
specimens, and the like.
6.4 Neither party may enter into a settlement or consent judgment or other
voluntary and final disposition of any suit effecting the Licensed Patent Rights
without the consent of the other party, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing, the party instituting or controlling
(as the case may be) any suit referred to in this Article 6 shall have the right
to settle any claims for infringement upon such terms and conditions as it, in
its sole discretion, shall determine (including through the granting of a
sublicense by BIOGEN).
6.5 In the event an infringement or infringements by third parties of the
Licensed Patent Rights significantly affects BIOGEN's sales of Licensed
Product(s) by capturing [**] of BIOGEN's market share, and neither HRI nor
BIOGEN elect to bring an infringement suit against such infringer, the royalties
hereunder payable by BIOGEN pursuant to Article 2 shall be reduced by [**] of
the sums otherwise payable; provided, however, that BIOGEN presents information
to HRI showing the loss of market share and that such infringer has refused to
enter into a royalty bearing, sublicensing agreement with BIOGEN on terms
reasonably acceptable to BIOGEN.
6.6 In the event that one or more patents, or particular claims therein
(which read on the Licensed Product) within the Licensed Patent Rights expire,
or are abandoned, or are declared invalid or by a court of last resort, or by
lower court from whose decree no appeal is taken, or certiorari is not granted
within the period allowed therefor, then such patents or particular claims
shall, as of the date of expiration or abandonment or final decree of invalidity
as the case may be, cease to be included within the License Patent Rights for
the purpose of this Agreement. HRI agrees to renegotiate in good faith with
BIOGEN a reasonable royalty rate under the remaining Licensed Patent Rights
which are unexpired and in effect, and under which BIOGEN desires to retain a
license if BIOGEN can demonstrate that subsequent to such expiration, invalidity
or abandonment of patents or particular claims (but not all of the Licensed
Patent Rights) BIOGEN's market share of Licensed Products has been reduced by
more than [**].
5
<PAGE> 6
7. DURATION AND TERMINATION
------------------------
7.1 The license granted hereunder shall continue until expiration of the
last remaining patent granted from the Licensed Patent Rights, unless earlier
terminated in accordance with this Article.
7.2 The royalty obligations in each country shall end on a
country-by-country basis upon expiration of the patent granted from the Licensed
Patent Rights in such country.
7.3 BIOGEN shall have the right to terminate this Agreement upon ninety
(90) days prior written notice to HRI and upon payment of a termination fee
equal to the minimum annual royalty set forth in Section 3.2(a) of this
Agreement.
7.4 HRI shall have the right to terminate this Agreement: (a) in the event
BIOGEN materially breaches this Agreement or fails to account for or pay
royalties or minimum royalties as herein provided, provided, however, that if
BIOGEN cures the said breach or default within ninety (90) days of notice, this
license shall continue in full force and effect; and (b) immediately upon
written notice to BIOGEN in the event of bankruptcy, liquidation or insolvency
of BIOGEN.
7.5 Upon any termination of this Agreement nothing herein shall be
construed to release either party of any obligation matured prior to the
effective date of such termination, and BIOGEN may after the effective date of
such termination sell all Licensed Product(s) that it may have on hand at the
date of termination provided that it pays the royalties as provided in this
Agreement.
8. NOTICES
-------
8.1 Any notice required or permitted to be given hereunder shall be sent in
writing by registered or certified airmail, postage prepaid, return receipt
requested, or by telecopier, air courier or hand delivery, addressed to the
party to whom it is to be given as follows:
If to BIOGEN: BIOGEN, INC.
14 Cambridge Center
Cambridge, MA 02142
Telecopier: 617 491 1228
Attention: Vice President -
Marketing and Business
With a copy to: BIOGEN, INC.
14 Cambridge Center
Cambridge, MA 02142
Telecopier: 617 491 1228
Attention: Vice President -
General Counsel
If to HRI: HEALTH RESEARCH INC.
1683 Empire State Plaza
Albany, NY 12237
6
<PAGE> 7
Telecopier: (518) 474-4434
Attention: Director of Operations
or to such other address or addresses as may from time to time be given in
writing by either party to the other pursuant to the terms hereof.
8.2 Any notice sent pursuant to this Article shall be deemed delivered
within 5 days if sent by airmail and within 24 hours if sent by air courier or
hand delivery.
9. ARBITRATION
-----------
9.1 The parties desire to avoid and settle without litigation future
disputes which may arise between them relative to this Agreement. Accordingly,
the parties agree to engage in good faith negotiations to resolve any such
disputes. In the event they are unable to resolve any such dispute through
negotiation, then such dispute shall be submitted to arbitration in accordance
with the Rules of the American Arbitration Association (hereinafter "Rules")
then in effect and the award rendered by the arbitrators shall be binding as
between the parties and judgment on such award may be entered in any court
having jurisdiction thereof, provided, however, that with respect to any matter
in dispute concerning royalties due and payable by one party, such party shall
have previously exercised its rights to have an auditor examine the records of
the other party pursuant to Article 3 herein before proceeding, and further
provided that a dispute relating to the payments set forth in Paragraphs 3.1 and
3.2 of this Agreement which arises out of a contention regarding the
interpretation or validity of the Licensed Patent Rights shall not be submitted
to arbitration.
9.2 Three neutral arbitrators shall be appointed by the American
Arbitration Association in accordance with such Rules, and at least one of such
arbitrators shall be an attorney-at-law, and all decisions and awards shall be
made by majority of them except for decisions relating to discovery and
disclosures as set forth in Paragraph 9.3 hereof.
9.3 Notice of a demand for arbitration of any dispute subject to
arbitration by one party shall be filed in writing with the other party and with
the American Arbitration Association. The parties agree that after any such
notice has been filed, they shall, before the hearing thereof, make discovery
and disclosure of all matters relevant to such dispute. Discovery and disclosure
shall be completed no later than ninety (90) days after filing of such notice of
arbitration unless extended upon a showing of good cause by either party to the
arbitration. The arbitrators may consider any material which is relevant to the
subject matter of such dispute even if such material might also be relevant to
an issue or issues not subject to arbitration hearing.
9.4 In the event a patent which is the subject matter of an award rendered
by the arbitrators is subsequently determined to be invalid or unenforceable in
a judgment rendered by a court of competent jurisdiction from which no appeal
can or has been taken, such award may be modified by a court of competent
jurisdiction upon application by any party to the arbitration. Any such
modification shall govern the rights and obligations between the parties from
the date of such modification.
7
<PAGE> 8
10. MISCELLANEOUS PROVISIONS
------------------------
10.1 Neither party shall assign this Agreement without the written consent
of the other party which consent shall not be unreasonably withheld; provided,
however, that either party, without such consent, may assign or sell the same to
an affiliate or in connection with the transfer or sale of all or substantially
all of its business or in the event of its merger, consolidation, or joint
venture with another company. Each assignee shall assume all obligations of its
assignor under this Agreement. No assignment shall relieve either party of
responsibility for the performance of any accrued obligations which such party
then has hereunder.
10.2 This Agreement constitutes the entire understanding between the
parties and may not be varied except by a written document signed by both
parties.
10.3 This Agreement shall be construed, governed, interpreted, and applied
in accordance with the laws of the Commonwealth of Massachusetts, except that
questions affecting the validity, construction, and effect of any foreign patent
shall be determined by the laws of the country in which the patents were
granted.
10.4 The provisions of this Agreement are severable, and in the event that
any of the provisions of this Agreement are determined to be invalid or
unenforceable under any controlling body of law, such invalidity or
unenforceability shall not in any way affect the validity or enforceability of
the remaining provisions hereof.
IN WITNESS WHEREOF, the parties hereto have hereunder set their hands and
seals and duly executed this License Agreement the day and year first written
above.
BIOGEN, INC. HEALTH RESEARCH INC.
By: /s/ Alan Tuck By: /s/ Lee J. VanDeCarr
----------------------------- -------------------------------
Name: Alan Tuck Name: Lee J. VanDeCarr
Title: Vice President-Marketing & Title: Sec/Treasurer
Business
Date: 28 May 1990 Date: June 4, 1990
8
<PAGE> 9
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT A
---------
LICENSED PATENT RIGHTS
1. United States patent application Serial No. [**] filed [**], entitled [**].
9
<PAGE> 10
AMENDMENT NO. 1 TO LICENSE AGREEMENT
This Amendment No. 1 to License Agreement is made as of this 1st day of
April, 1996 by and between Biogen, Inc., a Massachusetts corporation with its
principal offices located at 14 Cambridge Center, Cambridge, Massachusetts,
02142 ("Biogen") and Health Research, Inc., a not-for-profit corporation with
offices located at 66 Hackett Boulevard, Albany, New York 12209 ("HRI").
Biogen and HRI are parties to a certain License Agreement dated as of June
4, 1990 ("License Agreement") under which HRI has granted to Biogen a license to
HRI's rights in certain jointly-owned patents. Biogen and HRI would like to
amend Section 10.1 of the License Agreement regarding assignment and
sublicensing. Therefore, they agree as follows:
SECTION 1. Section 10.1 of the License Agreement shall be amended to read
in its entirety as follows:
10.1 Neither party shall assign this Agreement without the written consent
of the other party, which consent shall not be unreasonably withheld;
provided, however, that either party without such consent, may assign or
sell the same to an affiliate or in connection with the transfer or sale of
all or substantially all of its business or in the event of its merger,
consolidation or joint venture with another company. Except as provided
below, each assignee shall assume all obligations of its assignor.
Each party shall give the other party prior written notice of any
assignment for which consent is required hereunder. If a party providing
notice of a proposed assignment has not received written objection to the
assignment from the other party within ten (10) days after receipt of the
notice, the other party shall be deemed to have consented to the assignment
for purposes of this Section.
Biogen is co-owner of the Licensed Patent Rights, and Biogen may decide to
retain its rights and obligations under Sections 6.1 through 6.4 of this
Agreement notwithstanding the assignment of its other rights and
obligations to a third party. However, whether or not Biogen decides to
retain such rights and obligations, Biogen's assignee, as a condition to
such assignment, shall be obligated to pay (1) the applicable
non-refundable fees set forth in Section 3.1 (if they have not previously
been paid by Biogen), and (2) the royalties set forth in Section 3.2 of
this Agreement.
If, in connection with an assignment, Biogen is a sublicensee of its
assignee, HRI shall be entitled to receive (i) royalties on its assignee's
Net Sales pursuant to Sections 3.2(a) and (b), and (ii) pursuant to Section
3.2(c), royalties on the Sublicense Income received by the assignee from
sales by Biogen.
Each party shall properly notify the other party in writing of any
completed assignment. Except as expressly provided above, upon assumption
by assignee of all or part of this Agreement in accordance with this
Section 10.1, the obligations assumed by the assignee shall cease in their
entirety to be obligations of the assignor, except that no assignment shall
relieve either party of its responsibility to the other party for the
performance of any obligations accrued prior to the date of the assignment.
<PAGE> 11
SECTION 2. The reference in the sixth line of Section 6.5 of the License
Agreement to "Article 2" shall be changed to "Article 3."
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
and year first above written.
BIOGEN, INC. HEALTH RESEARCH INC.
By: /s/ Kenneth M. Bate By: /s/ Lee J. VanDeCarr
-------------------------------- -----------------------------
Name: Kenneth M. Bate Name: Lee J. VanDeCarr
Title: VP Marketing & Sales Title: Sec/Treasurer
2
<PAGE> 12
ASSIGNMENT OF LICENSE
Agreement dated as of March 21, 1997 by and between BIOGEN, INC., a
corporation organized under the laws of the Commonwealth of Massachusetts with
its principal executive offices located at Fourteen Cambridge Center,
Cambridge, MA 02142 ("Biogen"), and THE MEDICINES COMPANY, a corporation
organized under the laws of the State of Delaware with its principal executive
offices located at Suite 408, One Cambridge Center, Cambridge, MA 02142 (the
"TMC").
WHEREAS, Biogen has rights under a License Agreement dated as of June 6,
1990 by and between Biogen and Health Research, Inc., as amended by an
Amendment No. 1 to License Agreement dated as of April 1, 1996 (the "License");
and
WHEREAS, TMC wishes to have assigned to it, and Biogen is willing to
assign to TMC, all of Biogen's rights and obligations under the License;
NOW THEREFORE, for one dollar and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Biogen and TMC
hereby agree as follows:
1. TRANSFER OF LICENSE. Biogen assigns, transfers and conveys to TMC the
License and all of Biogen's rights and obligations under the License and TMC
accepts the same. TMC shall be responsible for, and shall pay or discharge,
any and all liabilities and obligations of Biogen under the License.
IN WITNESS WHEREOF, Biogen and TMC have caused this Agreement to be
executed as a sealed instrument as of the date first written above.
BIOGEN, INC. THE MEDICINES COMPANY
By: /s/ James R. Tobin By: /s/ Clive A. Meanwell
------------------------------- ------------------------------
James R. Tobin Clive A. Meanwell
President and Chief Executive President and Chief Executive
Officer Officer
<PAGE> 1
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT 10.7
LICENSE AGREEMENT
This LICENSE AGREEMENT is made and entered into this 21st day of March,
1997 by and between Biogen, Inc. ("Biogen"), a Massachusetts corporation, with
principal offices located at 14 Cambridge Center, Cambridge, Massachusetts
02142, and The Medicines Company, a Delaware corporation, with principal offices
located at One Cambridge Center, Cambridge, Massachusetts 02142 ("TMC").
INTRODUCTION
1. Biogen is the owner of certain patents and other proprietary rights
related to HIRULOG(R) bivalirudin and related hirudin-based peptide analogs, and
has conducted clinical trials using HIRULOG(R) bivalirudin for the treatment of
percutaneous transluminal coronary angioplasty, acute myocardial infarction and
other diseases.
2. TMC is a biopharmaceutical company which is committed to the
development and commercialization of prescription pharmaceutical products.
3. TMC desires to obtain an exclusive right and license in and to
Biogen's technology, patent rights and proprietary know-how related to
HIRULOG(R) bivalirudin and other hirudin-based peptides to develop and
commercialize products based on such technology, patent rights and know-how
worldwide.
4. Biogen is willing to grant a license to TMC on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
<PAGE> 2
SECTION 1 - DEFINITIONS
As used in this Agreement, the following terms, whether used in the
singular or plural, shall have the following meanings:
1.1 "AFFILIATE", as applied to either party, shall mean any corporation,
partnership, joint venture or other legal entity which controls, is controlled
by or is under common control with such party. For purposes of this definition,
the term "control" shall mean (a) in the case of corporate entities, direct or
indirect ownership or control of at least fifty percent (50%) of the outstanding
equity entitled to vote for directors, and (b) in the case of non-corporate
entities, direct or indirect ownership of at least fifty percent (50%) of the
equity interest with the ability to otherwise control the management of the
entity.
1.2 "AMI" shall mean acute myocardial infarction.
1.3 "AMI TRIAL" shall have the meaning set forth in Section 4.2.
1.4 "BIOGEN PATENT RIGHTS" shall mean all patents and patent applications
throughout the Territory, covering or relating to Biogen Technology, including
any substitutions, extensions, reissues, reexaminations, renewals,
continuations, continuations-in-part, divisionals and supplemental protection
certificates, which Biogen owns or Controls. Biogen Patent Rights existing as of
the Effective Date are set forth in APPENDIX A to this Agreement.
1.5 "BIOGEN TECHNOLOGY" shall mean all Technology which Biogen owns or
Controls as of the Effective Date and which is reasonably useful in order to
research, develop, make, use, sell or seek approval to market Product.
1.6 "CARDIOLOGY INDICATIONS" shall mean all therapeutic, prophylactic and
diagnostic applications in humans related to the management of coronary vessel
disease, including INTER ALIA, PTCA, AMI and unstable angina. Cardiology
Indications shall not include INTER ALIA,
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<PAGE> 3
arrhythmia, not of ischemic etiology, embolic or hemorraghic stroke or any
medical condition resulting from an abnormality of venous circulation.
1.7 "COMMERCIAL DEVELOPMENT ACTIVITIES" shall mean pre and post
Product-launch clinical studies that are not required for regulatory approval of
Product in the Major Markets, pharmacoeconomic studies and sponsored educational
programs for health care professionals at which clinical and/or pharmacoeconomic
data related to Product are presented.
1.8 "CONFIDENTIAL INFORMATION" shall mean all information and materials,
including without limitation, trade secrets and other proprietary information
and materials (whether or not patentable) regarding a Party's Technology,
products, business plans or objectives.
1.9 "CONTROL" shall mean possession of the ability to grant a license or
sublicense, as provided herein, without violating the terms of any agreement or
other arrangement with any third party.
1.10 "CSL" shall mean CSL Limited (formerly Commonwealth Serum Laboratories
Limited) or any successor in interest to the rights of CSL Limited under the CSL
Agreement.
1.11 "CSL AGREEMENT" shall mean a certain License and Supply Agreement
between Biogen and CSL, dated as of September 30, 1991.
1.12 "DISTRIBUTOR" shall mean a person or entity in a country who (i)
purchases Product or bulk Peptide from TMC or one of its Affiliates, and (ii)
assumes responsibility for a portion of the promotion, marketing, sales and
customer service effort related to Product in that country, and (iii) under an
implied or express sublicense, sells Product in that country. The term
Distributor shall not include a person or entity who provides a contract sales
force to serve, in whole or in part, as TMCs sales force with respect to sales
by TMC. For purposes of this Agreement, CSL shall be considered a Distributor of
TMC based on the current CSL Agreement,
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<PAGE> 4
and, to the extent that the CSL Agreement is modified, shall be considered a
Distributor if it meets the criteria set forth in this definition. Without
limiting the generality of the foregoing, Biogen acknowledges that TMC currently
intends to contract with Innovex for sales support, and agrees that Innovex
shall not be considered to constitute a Distributor by virtue of such sales
support.
1.13 "EFFECTIVE DATE" shall mean the date of this Agreement.
1.14 "EXISTING NON-CARDIOLOGY INDICATIONS" shall mean those indications,
set forth in Appendix E, that (a) are not Cardiology Indications and (b) as to
which Biogen had data from human clinical trials as of the Effective Date.
1.15 "FDA" shall mean the United States Food and Drug Administration.
1.16 "FTE" shall mean a full-time equivalent person year consisting of a
total of one thousand eight hundred eighty (1,880) hours per year of work
carried out by a Biogen employee.
1.17 "FIELD" shall mean all therapeutic, prophylactic and diagnostic
applications in humans.
1.18 "FIRST COMMERCIAL SALE" shall mean in each country of the Territory
with respect to each Product, (i) the first sale of the Product by TMC or any of
its Affiliates, Sublicensees or Distributors to a third party in such country in
connection with the nationwide introduction of the Product by TMC, its
Affiliates, Sublicensees or Distributors following marketing and/or pricing
approval by the appropriate governmental agency for the country in which the
sale is made, or (ii) when governmental approval is not required, the first sale
in such country in connection with the nationwide introduction of the Product in
that country.
1.19 "HRI" shall mean Health Research, Inc. or any successor in interest to
the rights of Health Research Inc.'s under the HRI Agreement.
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<PAGE> 5
1.20 "HRI AGREEMENT" shall mean a certain License Agreement between Biogen
and HRI, dated as of June 6, 1990, as amended.
1.21 "IND" shall mean an Investigational New Drug application, as defined
under the United States Federal Food, Drug and Cosmetic Act, as amended.
1.22 "MAA" shall mean an application for regulatory approval to sell
Product in the European Union and similar in purpose to an NDA in the United
States.
1.23 "MAJOR MARKETS" shall mean the United States, the United Kingdom,
Germany, France, Italy, Spain and the Benelux region.
1.24 "NDA" shall mean a New Drug Application or Product License Application
or equivalent filing filed for Product with the FDA.
1.25 "NET SALES" shall mean the gross amount invoiced (not dependent on
whether such invoices have been actually paid) on sales of Product by TMC and
its Affiliates and Distributors to third parties, less the following items, as
determined from the books and records of TMC or its Affiliates or Distributors,
provided that such items do not exceed reasonable and customary amounts in the
country in which such sale or other disposition occurred: (i) freight, insurance
and other transportation charges, if billed separately; (ii) amounts repaid or
credited by reason of returns, rejections, defects, recalls or because of
retroactive price reductions; (iii) sales taxes, excise taxes, value-added taxes
and other taxes (other than income taxes) levied on the invoiced amount, (iv)
import and export duties; (v) cash, trade and quantity discounts actually given
or made; and (vi) rebates paid pursuant to government regulations. A sale of
Product by TMC to an Affiliate or Distributor for resale of the Product by such
Affiliate or Distributor shall not be considered a sale for the purpose of this
provision, but the resale of such Product by the Affiliate
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<PAGE> 6
or Distributor to a third party who is not an Affiliate or Distributor of TMC
shall be a sale for purposes of this Agreement.
For purposes of this Agreement, "sale" shall mean any transfer or other
distribution or disposition, but shall not include transfers or other
distributions or dispositions of Product, at no charge, for pre-clinical,
clinical or regulatory purposes or to physicians or hospitals for promotional
purposes, provided such transfer, distribution or disposition is not made in
exchange for lower prices on other TMC products or for other noncash
consideration. In the event that consideration in addition to or in lieu of
money is received for the sale of Product in an arms-length transaction, the
fair market value of such consideration shall be included in the determination
of Net Sales for such sale. To the extent that Product is sold in other than an
arms-length transaction, Net Sales for such sale shall be the average sales
price of Product if sold in an arms-length transaction during the applicable
royalty reporting period in the country in which the non-arms-length transaction
occurred.
In the event that Product is sold in the form of a combination Product
containing one or more active ingredients or components in addition to Product,
Net Sales for the combination Product shall be determined by multiplying actual
Net Sales of the combination Product (determined by reference to the definition
of Net Sales set forth above) during the royalty payment period by the fraction
A/A+B where A is the average sale price of Product when sold separately in
finished form and B is the average sale price of the other active ingredients or
components when sold separately in finished form in each case during the
applicable royalty reporting period in the country in which the sale of the
combination Product was made, or if sales of both the Product and the other
active ingredients or components did not occur in such period, then in the most
recent royalty reporting period in which sales of both occurred. In the
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<PAGE> 7
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
event that such average sale price cannot be determined for both Product and all
other active ingredients or components included in the combination Product, Net
Sales for purposes of determining payments under this Agreement shall be
calculated by multiplying the Net Sales of the combination Product by the
fraction C/C+D where C is the standard fully-absorbed cost of the Product
portion of the combination and D is the sum of the standard fully-absorbed costs
of all other active components or ingredients included in the combination
Product, in each case, as determined by TMC using its standard accounting
procedures consistently applied. In no event shall Net Sales of a combination
Product be reduced to less than [**] of actual Net Sales of such combination
Product (determined by reference to the definition of Net Sales set forth above)
by reason of any adjustment provision set forth in this paragraph.
1.26 "NEW NON-CARDIOLOGY INDICATIONS" shall mean those indications that are
neither Existing Non-Cardiology Indications nor Cardiology Indications.
1.27 "PEPTID" shall mean one or more of the hirudin-based peptide analogs
described in APPENDIX B to this Agreement.
1.28 "PRODUCT" shall mean the finished form of a product that comprises,
contains or is Peptide and which or the manufacture, use or sale of which (i) is
covered by a Valid Claim of any Biogen Patent Rights in the country where such
Product is manufactured, used or sold and/or (ii) embodies any of the Biogen
Technology.
1.29 "PTCA" shall mean percutaneous transluminal coronary angioplasty.
1.30 "SEMILOG PROCESS" shall mean the joint biological /synthetic process
for producing Peptide.
1.31 "SUBLICENSEE" shall mean any third party expressly licensed by TMC to
make, use and sell Product, but not including any Affiliate or Distributor of
TMC.
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<PAGE> 8
1.32 "TECHNOLOGY" shall mean all information, data, concepts, formulas,
methods, procedures, designs, compositions, plans, applications, specifications,
techniques, processes, technical data, know-how, samples, biological materials,
inventions, discoveries and the like which a party owns (in whole or in part) or
Controls.
1.33 "TECHNOLOGY TRANSFER" shall mean the transfer of Biogen Technology to
TMC, in accordance with Section 3.
1.34 "TECHNOLOGY TRANSFER PLAN" shall have the meaning set forth in
Section 3.1
1.35 "TERRITORY" shall mean all countries of the world.
1.36 "TMC PATENT RIGHTS" shall mean all patents and patent applications
throughout the Territory, covering or relating to TMC Technology, including any
substitutions, extensions, reissues, reexaminations, renewals, continuations,
continuations-in-part, divisionals and supplemental protection certificates,
which TMC owns or Controls at any time.
1.37 "TMC TECHNOLOGY" shall mean all Technology which TMC owns or Controls
as of the date of termination of this Agreement and which is reasonably useful
in order to discover, research, develop, make, use, sell or seek approval to
market Product.
1.38 "UCB INFORMATION" shall mean information related to the manufacturing
of Peptide contained in the Chemistry, Manufacturing and Control (CMC) sections
of Biogen's existing INDs for Peptide, and stability data generated by UCB on
Peptide.
1.39 "VALID CLAIM" shall mean (i) a claim of a pending patent application
which claim shall not have been canceled, withdrawn, abandoned or rejected by an
administrative agency from which no appeal can be taken or which shall not have
failed to issue as a patent within seven (7) years of the earliest claimed
priority date or (ii) a claim of an issued and unexpired patent which has not
lapsed or become abandoned or been declared invalid or unenforceable by a
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<PAGE> 9
court of competent jurisdiction or an administrative agency from which no appeal
can be or is taken.
SECTION 2 - GRANT AND ASSIGNMENTS.
2.1 LICENSE GRANT. Biogen hereby grants to TMC, and TMC hereby accepts
from Biogen, a royalty-bearing right and license under Biogen Technology and
Biogen Patent Rights to make, have made, import, use, offer to sell and sell
Product in the Territory in the Field. The license granted to TMC under this
Section 2.1 shall be exclusive subject only to the rights granted to CSL under
the CSL Agreement and any rights retained by HRI under the HRI Agreement.
2.2 SUBLICENSE RIGHTS.
(a) TMC shall be entitled to extend the license granted to it under
Section 2.1 to any of its Affiliates and to grant sublicenses to its rights for
all indications in each country of the Territory other than the United States
and the countries of the European Union, provided that TMC shall obtain Biogen's
consent prior to granting any sublicense in Canada or Japan which such consent
Biogen agrees not to unreasonably withhold. TMC shall also be entitled to grant
sublicenses to the rights granted to it under Section 2.1 in the United States
and the countries of the European Union for New Non-Cardiology Indications,
provided that TMC shall obtain Biogen's consent prior to granting any such
sublicense which such consent Biogen agrees not to unreasonably withhold. All
Affiliates and Sublicensees, to whom TMC has extended or sublicensed its rights
under Section 2.1 shall agree to be bound by all of the applicable terms and
conditions of this Agreement. TMC shall advise Biogen of any extension of TMC's
rights to its Affiliates and shall provide copies to Biogen of each sublicense
promptly after such extension or sublicense becomes effective. TMC shall not
have the right to grant sublicenses to its rights
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<PAGE> 10
under Section 2.1 in the United States or any of the countries of the European
Union with respect to Cardiology Indications or Existing Non-Cardiology
Indications.
(b) TMC shall use commercially reasonable efforts to ensure that its
Affiliates and Sublicensees to whom TMC has extended or sublicensed its rights
under Section 2.1 shall comply with all applicable terms of this Agreement and
shall make all payments of compensation due and make all reports due under this
Agreement by reason of sales of Product by such Affiliates and/or Sublicensees.
(c) TMC shall use commercially reasonable efforts to ensure that all
Sublicensees to whom TMC grants rights to make, use and sell Product in New
Non-Cardiology Indications in the United States and the countries of the
European Union market Product solely for use in New Non-Cardiology Indications.
2.3 ASSIGNMENT OF AGREEMENTS. Concurrently with execution of this
Agreement, the parties shall execute (i) an Assignment of License in the form
set forth in APPENDIX C hereto under which Biogen assigns to TMC, and TMC
accepts assignment of, all of Biogen's rights and obligations under the HRI
Agreement, and (ii) an Assignment of License and Supply Agreement in the form
set forth as APPENDIX D hereto under which Biogen assigns to TMC, and TMC
accepts assignment of, all of Biogen's rights and obligations under the CSL
Agreement.
SECTION 3 - TECHNOLOGY TRANSFER AND SUPPLY OF MATERIAL
3.1 TECHNOLOGY TRANSFER PLAN. As soon as reasonably practical after the
Effective Date, the parties shall meet to agree on a plan for Technology
Transfer (the "Technology Transfer Plan"). The Technology Transfer Plan shall
specify the Technology Transfer activities to be performed and the amount of
time to be devoted to such activities. The parties shall review and update the
Technology Transfer Plan, on a monthly basis, until the earlier to occur of (i)
completion of Technology Transfer or (ii) the end of the Technology Transfer
period, as set forth
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<PAGE> 11
in Section 3.2. Biogen shall not be required to devote time or perform
activities in connection with Technology Transfer beyond the time and activities
shown on the Technology Transfer Plan unless both parties agree on an update to
the Technology Transfer Plan.
3.2 LIMITATION ON TECHNOLOGY TRANSFER. Notwithstanding anything in this
Agreement to the contrary, Biogen shall not be obligated to devote more than the
equivalent of 2.8 FTEs, in the aggregate, to Technology Transfer or, in the
event that Biogen has devoted an equivalent of 2.8 FTEs to Technology Transfer,
to perform Technology Transfer after the date which is four (4) months from the
Effective Date. The parties shall use their best efforts to complete Technology
Transfer within four (4) months from the Effective Date. If Biogen has devoted
an equivalent of 2.8 FTEs to Technology Transfer and Technology Transfer has not
been completed by the end of such four (4) month period, the parties may extend
the Technology Transfer period by mutual agreement.
3.3 COSTS OF TECHNOLOGY TRANSFER. TMC shall pay Biogen's fully-burdened
costs associated with Technology Transfer, provided that the activities and the
time spent performing the activities for which the costs are to be paid are
reflected in the Technology Transfer Plan, as updated from time to time, or TMC
has specifically requested the additional time or activities. Biogen shall bill
TMC for Biogen's fully-burdened costs related to Technology Transfer on a
monthly basis. TMC shall pay all Biogen invoices within thirty (30) days of
receipt.
3.4 ASSIGNMENT OF REGULATORY FILINGS AND OTHER PRODUCT-RELATED
INFORMATION.
Biogen hereby assigns to TMC all of Biogen's right, title and interest in
(a) its existing INDs and equivalent regulatory filings in the Territory related
to Product and (b) subject to Section 5, any and all regulatory and clinical
information related to Product that Biogen owns or Controls as of the Effective
Date. Biogen and TMC shall jointly manage the transition of
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<PAGE> 12
Biogen's INDs or equivalent regulatory filings to TMC under this Section in such
a way as not to harm the existing relationship of either party with the relevant
regulatory authorities. Biogen may elect, or TMC may request, to have one or
more of Biogen's employees participate in meetings between TMC and regulatory
authorities regarding assignment of Biogen's INDs or equivalent regulatory
filings to TMC, PROVIDED that Biogen's right to elect to participate in any such
meeting shall terminate on December 31, 1997. TMC shall pay all of Biogen's
costs associated with the assignment of INDs or equivalent regulatory filings to
TMC, including the costs incurred by Biogen in sending Biogen representatives to
meetings with regulatory authorities at the request of TMC.
3.5 SUPPLY OF MATERIAL.
(a) As soon as reasonably practical after the Effective Date but in
any event within ninety (90) days after the Effective Date, Biogen shall deliver
to TMC Biogen's existing inventory of Peptide as described in APPENDIX F (the
"Biogen Inventory"). In addition, Biogen shall, at TMC's request, provided such
request is made prior to September 18, 1997 (the "Completion Option Period"),
initiate completion of processing by UCB Bioproducts S.A. (collectively "UCB")
of approximately 30kg of Peptide intermediates (expressed in equivalent bulk
drug substance quantities) stored at UCB as of the Effective Date under the
terms of a Supply Agreement between Biogen and UCB, dated as of March 21,1997
(the "Supply Agreement") (a copy of which has been provided to TMC, and shall
deliver to TMC the resulting material (the "UCB Material"). TMC understands and
agrees that "processing", as the term is used in this Section, of the 30kg of
Peptide intermediates by UCB shall mean completion of the manufacturing of such
portion of the 30kg of Peptide intermediates as UCB, in consultation with Biogen
and TMC, determines is viable for further production (the "Unfinished Peptide")
using
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the manufacturing process specified in Biogen's most recent IND for Peptide on
file with the FDA as of the Effective Date. In the event that UCB reports to
Biogen that any portion of the 30kg of Peptide intermediates is not viable,
Biogen shall use reasonable efforts to confirm UCB's determination. "Processing"
shall also include delivery by UCB with each batch of Peptide of a release
certificate and access for Biogen and/or TMC to review the relevant batch
records. "Processing" shall specifically not include (i) any analytical
process-related or other validation work, (ii) qualification of plant, equipment
or utilities, (iii) work towards a supplemental IND, NDA or any other regulatory
filing, (iv) any other work requested by regulatory authorities in connection
with a regulatory filing, (v) any work associated with filing or inspection of
the documentation or facilities by TMC or the regulatory authorities, or (vi)
any supporting activities including further development work (process-related
and analytical-related), stability standard or reference standard establishment
or requalification (collectively "Ancillary Services"). At or prior to
initiation of the completion of processing of the Unfinished Peptide under the
terms of this Agreement, TMC shall meet with UCB to negotiate the terms, if any,
under which UCB would be willing to provide, and TMC would be willing to accept,
Ancillary Services in connection with the Peptide manufactured by UCB. Biogen
represents that UCB is obligated to complete processing of the Unfinished
Peptide if the request is made during the Completion Option Period whether or
not TMC accepts Ancillary Services from UCB at the end of the negotiation
described in the preceding sentence. Upon delivery to Biogen by TMC during the
Completion Option Period of a request to have UCB complete processing of the
Unfinished Peptide, TMC, UCB and Biogen shall meet to agree upon a delivery
schedule for the resulting Peptide. Biogen represents that UCB has agreed to
deliver the Peptide resulting from processing of the Unfinished Peptide within
at least eighteen (18) months of receipt of the processing
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
request. Biogen shall use commercially reasonable efforts to enforce the Supply
Agreement after consultation with TMC.
(b) As part of Technology Transfer, Biogen shall provide to TMC
copies of quality control release test results existing as of the Effective Date
related to the Biogen inventory. Biogen shall perform additional HPLC tests on
the Biogen Inventory only at TMC's request and expense in accordance with the
Technology Transfer Plan.
(c) Biogen represents that Peptide delivered to TMC as part of the
Biogen Inventory was stored under the conditions set forth in APPENDIX F.
(d) TMC shall reimburse Biogen for the amount due to UCB for delivery
of the UCB Material, up to BEF [**]. TMC shall also reimburse Biogen for
any storage costs for the Biogen Inventory and the UCB Material incurred by
Biogen after the Effective Date. In addition, TMC shall reimburse Biogen for all
freight, storage, duties, taxes and insurance costs incurred in connection with
delivery of the Biogen Inventory and the UCB Material to TMC, including but not
limited to those costs incurred in shipping the Biogen Inventory to and from
Europe and storing the Biogen Inventory in Europe. All payments to be made by
TMC to Biogen under this paragraph shall be made within thirty (30) days of
receipt of each invoice therefor from Biogen.
SECTION 4 - DUE DILIGENCE.
4.1 INVESTMENT. TMC shall use commercially reasonable efforts to expend at
least $20 million (not including amounts spent on or as part of the AMI Trial)
in connection with pre-launch and post-launch commercialization activities
related to Product for the PTCA and AMI indications within [**] years of the
later of the date of approval of a NDA for Product in the PTCA indication and
the date of approval of a NDA for Product in the AMI indication.
Commercialization activities may include Commercial Development Activities.
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<PAGE> 15
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
4.2 DILIGENCE. TMC shall use commercially reasonable efforts (defined, for
purposes of this Agreement, as those efforts consistent with the efforts that
would be exerted by a mid-size biopharmaceutical company in the development and
sale of its own products) to develop and commercialize Product in each of the
Major Markets. TMC shall develop Product for use in the treatment of PTCA and
AMI. Without limiting the generality of the foregoing, TMC shall use
commercially reasonable efforts to meet the following diligence milestones:
(a) Commence a phase III clinical trial of Product in the AMI
indication (the "AMI Trial") by December 31,1998.
(b) File an NDA for Product in the PTCA indication by December 31,
1998.
(c) File an NDA for Product in AMI indication by [**].
(d) File an MAA for Product in AMI indication by [**].
(e) Commence marketing and sales of Product in the United States in
each indication (i) within six (6) months of receipt of a license
from the FDA to market and sell Product in such indication, if no
approvable letter is issued with respect to such indication or
(ii) within four (4) months of receipt of the applicable FDA
license, if an approvable letter is issued with respect to such
indication.
4.3 AMI TRIAL. TMC shall use a lead investigator for the AMI Trial who is
a nationally recognized expert in cardiology. TMC shall provide to Biogen a
draft of the protocol for the ANH Trial, and Biogen shall have the right to
review and comment on such protocol. The parties acknowledge and agree that the
phase III study design for the AMI Trial will be a mortality trial substantially
based on Biogen's phase II results with Peptide and streptokinase. TMC shall be
the sponsor of the AMI Trial for purposes of 21 C.F.R. section 312 et. seq. TMC
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<PAGE> 16
shall review the protocol for the AMI Trial with the FDA, and shall use
reasonable efforts to obtain the FDA's advice that the protocol is reasonable
for obtaining marketing approval of Product in the AMI indication.
4.4 CONSEQUENCES OF FAILURE TO SATISFY DILIGENCE OBLIGATION
(a) If at any time Biogen believes that TMC has not satisfied its
diligence obligations under Section 4.1 and 4.2, then Biogen shall so notify
TMC. Within fifteen (15) days of the date of such notice, the parties shall meet
to discuss TMC's performance. If TMC is able to demonstrate to Biogen's
satisfaction that TMC used commercially reasonable efforts to meet its diligence
obligations, the parties shall negotiate in good faith to set new milestones
which are reasonable in light of any difficulties or any unforeseen events which
TMC may have encountered. If TMC is unable to demonstrate to Biogen's
satisfaction that TMC used commercially reasonable efforts to meet its diligence
obligations and if TMC does not agree with Biogen's assessment, the parties
shall enter into binding arbitration, under the terms of Section 14.7, within
ten (10) days of the meeting between the parties held under this Section,
PROVIDED, that the arbitrators selected by the parties pursuant to Section 14.7
to arbitrate any issue that arises under this Section 4.4(a) shall each be an
expert in the field of drug development in the United States.
(b) In the event that TMC agrees with Biogen's determination that TMC
failed to satisfy its diligence obligations under Section 4.1 or 4.2 or an
arbitration panel convened under paragraph (a) of this Section 4.4 determines
that TMC failed to satisfy its diligence obligations under Section 4.1 or 4.2,
Biogen shall have the right and option to terminate this Agreement for material
breach by TMC under Section 10.2.
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<PAGE> 17
4.5 JAPAN DILIGENCE. In the event that TMC informs Biogen in writing that
it does not intend to develop, register, manufacture, market or sell, or
sublicense a third party to develop, register, manufacture or sell, Product in
Japan, and TMC's reasons for choosing not to enter Japan are not related to
potential parallel import or pricing issues or regulatory or patent obstacles
outside of TMC's control, Biogen shall have the right and option to (i)
terminate the license set forth in Section 2.1 as to Japan only on sixty (60)
days prior written notice to TMC and (ii) to exercise its rights under Section
10.5.
4.6 TRANSDERMAL PRODUCT. No later than December 31, 1998, TMC shall submit
to Biogen a development plan for the transdermal application of Product (the
"Transdermal Plan"). The Transdermal Plan shall include commercially reasonable
milestones for development and commercialization of a transdermal Product. In
the event TMC does not use commercially reasonable efforts to meet the
milestones set forth in the Transdermal Plan, Biogen shall have the right to
terminate this Agreement as to the transdermal application of Product.
4.7 STATUS REPORTS. Within forty-five (45) days of the end of each
calendar quarter, TMC shall provide to Biogen a written report describing in
reasonable detail the status of development and commercialization activities
related to Product, including the nature of the development and
commercialization activities undertaken by TMC and its Sublicensees and
Distributors, if any, during the preceding quarter, the results obtained and the
goals and plans for the next quarter. After Product launch, the status report
provided to Biogen under this Section shall include rolling four-quarter sales
forecasts for Product. TMC shall furnish to Biogen copies of final study reports
from clinical trials related to Product as soon as such reports are available.
At Biogen's request from time to time, TMC shall provide to Biogen verbal
updates on the status of development and commercialization efforts.
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<PAGE> 18
SECTION 5 - CONFIDENTIALITY
5.1 TREATMENT OF CONFIDENTIAL INFORMATION. Each party agrees that it shall
maintain the Confidential Information of the other party in strict confidence
and shall not disclose any such Confidential Information to a third party or use
such Confidential Information for any purpose other than as contemplated under
this Agreement. Each party agrees to exercise reasonable precautions to prevent
and restrain the unauthorized disclosure or use of the Confidential Information
of the other party by any of the receiving party's directors, officers, agents
or employees. TMC acknowledges and agrees that all regulatory and clinical
information assigned to TMC under Section 3.4 (b) shall, except as provided in
Section 5.2, continue to be Confidential Information of Biogen for purposes of
this Section 5.
5.2 EXCEPTIONS.
The provisions of Section 5.1 shall not apply to Confidential
Information which:
(i) was known to the receiving party prior to its disclosure by the
disclosing party;
(ii) either before or after the date of disclosure to the receiving
party becomes generally known to the public by some means other than a breach of
this Agreement;
(iii) is subsequently disclosed to the receiving party by a third
party having a lawful right to make such disclosure and who is not under an
obligation of confidentiality to the disclosing party;
(iv) is independently developed by or for the receiving party without
reference to or reliance upon the Confidential Information received from the
disclosing party;
(v) is required by law, rule, regulation or bona fide legal process
to be disclosed, provided that the receiving party takes all reasonable steps to
restrict and maintain the confidentiality of such disclosure and provides
reasonable notice to the disclosing party; or
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<PAGE> 19
(vi) is approved for release by the parties.
The non-disclosure and non-use obligations under Section 5.1 shall
terminate as to any Confidential Information twelve (12) years after receipt of
such Confidential Information by the receiving party.
5.3 PERMITTED DISCLOSURES. Notwithstanding anything to the contrary
contained in Section 5.1, TMC may disclose the Confidential Information of
Biogen licensed to TMC under Section 2.1 or assigned to TMC under Section 3.4,
other than the UCB Information, to third parties who (i) need to know the same
in order for TMC to secure regulatory approval for the sale of Product or (ii)
need to know the same in order to work towards the commercial development of
Product or to manufacture Product or (iii) need to know the same in order to
determine whether to enter into a sublicense agreement with TMC with respect to
the manufacture, use and/or sale of Product PROVIDED that such parties, other
than regulatory authorities, are bound by obligations of confidentiality and
non-use at least as stringent as those set forth in this Section 5. In addition,
TMC may disclose Confidential Information of Biogen (other than UCB Information
or any other Confidential Information of Biogen as to which Biogen would be
required to obtain the consent of a third party with respect to further
disclosure) to potential investors who have a need to know the same in order to
assess the status of their investment in TMC or to determine whether to invest
in TMC, provided that (i) the information to be disclosed is of a type
customarily disclosed to investors and (ii) the investors to whom the
information is disclosed are bound by obligations of confidentiality and non-use
with respect to such information at least as stringent as those set forth in
this Section 5.
5.4 UCB INFORMATION. Notwithstanding anything herein to the contrary, TMC
shall not use the UCB Information for any purpose other than supporting the
regulatory filings for
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<PAGE> 20
Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
Peptide assigned to TMC by Biogen under Section 3.4 ("Existing Regulatory
Filings"), and shall not disclose the UCB Information to any third party other
than regulatory authorities. TMC shall return to UCB all documents containing
UCB Information in TMC's possession in the event that maintaining UCB
Information is no longer required for purposes of supporting the Existing
Regulatory Filings, and shall take all reasonable steps to return promptly to
UCB any UCB Information in the possession of the FDA which might be returned to
TMC (except as otherwise required by the FDA) and to inform the FDA that
communication of such UCB Information to any third party requires UCB's express
written consent.
SECTION 6 - PAYMENT OBLIGATIONS.
6.1 LICENSE FEE. In consideration of the rights granted by Biogen, TMC
shall pay to Biogen a nonrefundable, noncreditable license fee of $[**] on
the Effective Date.
6.2 MILESTONE PAYMENTS. TMC shall make each of the following
nonrefundable, noncreditable payments to Biogen within thirty (30) days of the
first achievement of each of the following milestones:
Event Payment
----- -------
(a) First Commercial Sale of Product $[**]
in the United States for treatment
in AMI
(b) First Commercial Sale of Product $[**]
in Europe for treatment in AMI
6.3 ROYALTIES.
(a) TMC shall pay to Biogen earned royalties on Net Sales of Product
sold by TMC and/or its Affiliates and/or its Distributors at the following
rates:
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Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
Annualized Net Sales Royalty Rate
in a Calendar Year in Territory On Net Sales of Product
------------------------------- -----------------------
Less than or equal to $[**] [**]
Greater than $[**] but less [**]
than or equal to $[**]
Greater than $[**] but less [**]
than or equal to $[**]
Greater than $[**] but less [**]
than or equal to $[**]
Greater than $[**] [**]
(b) Notwithstanding anything in this Agreement to the contrary, sales
by Sublicensees shall be included as TMC sales solely for purposes of
determining the royalty rate applicable to sales by TMC and/or its Affiliates
and/or its Distributors.
(c) The applicable royalty rate for a given calendar year shall be
based on the rate determined by reference to total Net Sales during the year,
and shall be applied retroactively to the first dollar of such Net Sales in such
calendar year. Adjustment payments shall be made as necessary in accordance with
Section 6.7.
(d) The obligation to pay royalties and a percentage of Sublicense
Royalty Income (as defined in Section 6.5) shall continue, on a
country-by-country basis, from the date of the First Commercial Sale of Product
in a country until the later of (i) [**] years after the date of the
First Commercial Sale of such Product in such country or (ii) the date on which
the Product or its manufacture, use or sale is no longer covered by a Valid
Claim of any Biogen Patent Rights in such country.
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Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
6.4 ROYALTY OFFSET.
(a) Subject to paragraph (d) of this Section 6.4, the royalty rates
set forth in Section 6.3 shall be reduced, on a country-by-country basis, by
[**]with respect to Net Sales of any Product in any calendar year if (i) neither
such Product nor its use or sale is covered during any part of such year by a
Valid Claim of a Biogen Patent Right in such country and (ii) third parties
selling Comparable Products, as defined below, have, in the aggregate, during
such year [**] or more of the volume-based market share in such country. For
purposes of this Section, "Comparable Product" shall mean a product which, if
sold on the Effective Date by a third party in the United States without a
license from Biogen, would infringe a Valid Claim of Biogen Patent Rights
related to Product existing as of the Effective Date.
(b) Subject to paragraph (c) and (d) of this Section 6.4, in the
event that TMC, in order to manufacture, use or sell Product in a country in the
Territory, reasonably determines that it must make a royalty payment to one or
more third parties (a "TMC Third Party Payment") to obtain a license or similar
right to manufacture, use or sell Product in such country, TMC may reduce the
royalty payment due Biogen under Section 6.3 on sales of Product, on a
country-by-country basis, by the amount of such TMC Third Party Payments paid on
such sales up to a [**] reduction in the applicable royalty rate set forth in
Section 6.3. The offset available under this paragraph (b) shall not apply to
royalty payments made or due under the HRI Agreement.
(c) Subject to paragraph (d) of this Section 6.4, with respect to any
sales as to which TMC is paying royalties at the [**] royalty rates under
Section 6.3, TMC may, in addition to other offsets available under paragraphs
(a) and (b) above, reduce the royalty payment due Biogen under Section 6.3 by
the amount of any payments made by TMC to HRI
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Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
under the HRI Agreement on such sales, but not more than the amounts that would
be payable to HRI at the rates in effect under the HRI Agreement on the
Effective Date.
(d) Until the later of (i) the date of receipt of marketing approval
for Product from the FDA for the AMI indication or (ii) the [**] anniversary of
the date of the First Commercial Sale of Product in any country in the PTCA
indication, TMC may offset against the royalty payment due to Biogen (A) any
costs incurred by TMC after the First Commercial Sale of Product for PTCA in
development or commercialization of Product for the AMI indication, provided
that the costs are incurred as part of [**] approved by Biogen, which approval
shall not be unreasonably withheld, and (B) any costs incurred by TMC in
connection with [**] which agreement shall not be unreasonably withheld, and
provided further that in no event (1) shall the amount offset under this
paragraph exceed [**] in the aggregate or (2) shall the amount of royalties
actually paid to Biogen under Section 6.3 for any royalty payment period be less
than [**] of Net Sales. Notwithstanding anything in this Agreement to the
contrary, TMC shall not be entitled to any offset under this paragraph (d) in
any calendar year in which Net Sales calculated in the manner set forth in
Section 6.3 are greater than [**]. TMC shall offset its costs under this
paragraph against royalties due for the calendar year in which the costs are
incurred and shall not carry over such costs to offset royalties for any other
calendar year. Notwithstanding anything herein to the contrary, TMC shall not be
entitled to apply the offsets available under any other paragraph of this
Section 6.4 (and shall not carry-over any such offsets) in any period in which
TMC is applying its offset for development costs as set forth in this paragraph
(d).
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Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
6.5 SUBLICENSE ROYALTY INCOME. TMC shall pay to Biogen [**] of all royalty
income ("Sublicense Royalty Income") received by TMC from its Sublicensees with
respect to sales of Products.
6.6 OFF-LABEL SALES BY SUBLICENSEES. In the event that Biogen can
reasonably demonstrate a loss in earned royalties from TMC as a result of
off-label sales by any of TMC's Sublicensees, TMC shall reimburse Biogen for
Biogen's loss of earned royalties up to the amount actually received by TMC from
such Sublicensee for such off-label sales.
6.7 QUARTERLY PAYMENTS AND EFFORTS. Royalty payments and payments on
Sublicense Royalty Income shall be made quarterly (i) within ninety (90) days
following the end of the first calendar quarter of Product sales with respect to
Sublicense Royalty Income received and Net Sales on sales made during such
quarter, (ii) within sixty (60) days following the end of each of the second,
third and fourth calendar quarters of Product sales with respect to Sublicense
Royalty Income received and Net Sales on sales made during such quarter, and
(iii) within forty-five (45) days following the end of each calendar quarter
thereafter with respect to Sublicense Royalty Income received and Net Sales on
sales made during such quarter. Every payment shall be accompanied by a report
setting forth for the relevant quarter the following information:
(a) Net Sales by TMC and its Affiliates and Distributors, by country;
(b) Sales by Sublicensees by country (for purposes of calculating the
royalty rate);
(c) Quantity of Product sold, by country, by TMC, its Affiliates,
Distributors and Sublicensees;
(d) Sublicense Royalty Income received by TMC; and
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(e) Total amount payable to Biogen.
Since Net Sales in each calendar year to be used to finally determine
the applicable royalty rate for such year will not be known until the end of
such year, in order to make the quarterly payments specified under this Section
6.7, TMC shall use a royalty rate which is determined by annualizing the
year-to-date Net Sales. As changes in the royalty rate determined using
annualized Net Sales occur from one calendar quarter to the next calendar
quarter within the same calendar year, in addition to the payment for the
calendar quarter, TMC shall make the necessary adjustment in such calendar
quarter reflecting the change in the royalty rate applied to Net Sales in the
preceding calendar quarter or quarters. Within thirty (30) days of the end of
each calendar year, TMC shall calculate the actual royalty rate to which Biogen
is entitled based on the actual Net Sales for the year. In the event Biogen has
not received its full royalty amount for the year, TMC shall promptly make a
balancing payment to Biogen in the amount of the deficit. In the event TMC has
paid Biogen more than its full royalty amount for the year, Biogen shall
promptly reimburse TMC in the amount of the excess.
6.8 FORM OF PAYMENT. All payments to be made under this Agreement
shall be made in United States dollars by check or wire transfer, at Biogen's
option.
6.9 FOREIGN EXCHANGE. For purposes of computing Net Sales for Product
sold in currency other than United States Dollars, such currency shall be
converted into United States Dollars using the spot purchase rate published in
the Wall Street journal (New York Edition) for the last day of the calendar
quarter for which Net Sales are being calculated.
6.10 TAXES. Any taxes required to be withheld by TMC under the laws of
any foreign country for the account of Biogen shall be promptly paid by TMC for
and on behalf of Biogen to the appropriate governmental authority, and TMC shall
furnish Biogen with proof of payment of
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<PAGE> 26
such tax within thirty (30) days following payment. Any such tax actually paid
on Biogen's behalf shall be deducted from royalty payments due Biogen. TMC
agrees to make all lawful and reasonable efforts to minimize such taxes to
Biogen.
6.11 INTEREST ON PAYMENTS PAST DUE. Any amounts due under this
Agreement that are not paid when due shall bear interest at the lesser of (i) an
annualized rate of two percent over the prime rate then in effect at BankBoston,
or (ii) the highest rate permitted by applicable law.
6.12 BOOKS AND RECORDS. For a period of three (3) years next following
each calendar year, TMC shall keep, and shall use commercially reasonable
efforts (which shall include obtaining and enforcing a contractual commitment)
to cause each of its Affiliates, Distributors and Sublicensees to keep, full,
true and accurate books and records containing all particulars relevant to its
sales of Products during such year in sufficient detail to enable Biogen to
verify the amounts payable to Biogen under this Agreement. Biogen shall have the
right, not more than once during any calendar year, to have the books and
records of TMC or any of its Distributors or Sublicensees related to the sales
of Products audited by a qualified nationally-recognized, independent accounting
firm of Biogen's choosing, during normal business hours upon reasonable notice,
for the sole purpose of verifying the accuracy of the amounts paid to Biogen
under this Agreement, PROVIDED, HOWEVER, that Sublicensees or Distributors who
refuse to submit to an audit on behalf of Biogen despite TMC's commercially
reasonable efforts (which shall include enforcing a contractual commitment) to
obtain their consent to such audit shall not be bound by the audit obligation
set forth in this sentence. In the event that an audit shows that TMC has
underpaid Biogen by five percent (5%) or more, then TMC shall pay for all costs
of such audit, otherwise the costs of such audit shall be borne by Biogen. In
all cases, TMC shall pay to Biogen any underpaid compensation promptly and with
interest at an annualized rate of
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the prime rate then in effect at BankBoston, plus two percent (2%), and Biogen
shall promptly pay to TMC any overpaid compensation. All information and data
reviewed in any audit conducted under this Section shall be used only for the
purpose of verifying amounts due to Biogen under this Agreement and shall be
treated as Confidential Information of TMC subject to the terms of this
Agreement.
SECTION 7 - PATENTS.
7.1 PROSECUTION AND MAINTENANCE. During the term of this Agreement, TMC
shall have responsibility for prosecuting, maintaining and defending the Biogen
Patent Rights, and in doing so shall use a level of effort and professional
representation consistent with the level of effort and professional
representation a mid-size biotechnology company would use to prosecute, maintain
and defend its own patent rights. Notwithstanding anything herein to the
contrary, TMC shall obtain Biogen's written consent prior to (i) instituting any
reissue or reexamination proceedings with respect to any Biogen Patent Rights
that are issued patents as of the Effective Date, or (ii) making any strategic
decision in any opposition, nullity, reissue or reexamination proceedings
involving any Biogen Patent Rights that are issued patents as of the Effective
Date, which Biogen consent shall not be unreasonably withheld. TMC shall bear
all of the costs of prosecution, maintenance and defense of the Biogen Patent
Rights incurred after the Effective Date. TMC shall keep Biogen regularly
informed of the status of the Biogen Patent Rights. TMC shall provide copies to
Biogen of all filings and correspondence with the patent offices, administrative
boards or courts which TMC sends or receives in connection with prosecution,
maintenance and defense of the Biogen Patent Rights. As soon as practical after
the Effective Date, Biogen shall provide to TMC a copy of Biogen's existing
files on the Biogen Patent Rights. Biogen undertakes to promptly and fully
cooperate in, and to provide all information and data and sign any documents
reasonably necessary and requested by TMC for the prosecution,
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maintenance and defense of the Biogen Patents Rights. If TMC decides to abandon
or to allow to lapse any Biogen Patent Right, TMC shall inform Biogen at least
ninety (90) days prior to the effective date of such decision and Biogen shall
be given the opportunity to prosecute such Biogen Patent Right which such Biogen
Patent Right shall no longer be subject to this Agreement. Upon termination of
TMC's responsibility for prosecuting and maintaining any Biogen Patent Rights,
TMC shall promptly deliver to Biogen all files related to the Biogen Patent
Rights, and shall take all action and execute all documents reasonably necessary
for Biogen to resume prosection.
7.2 INFRINGEMENT.
(a) TMC and Biogen shall each promptly inform the other in writing of
any infringement of the Biogen Patent Rights of which such party has notice and
provide the other with any available evidence of infringement.
(b) In the event TMC, alone or with an Affiliate or Sublicensee,
wishes to take action in a suit to enforce any Biogen Patent Rights against
infringement, TMC may take action and, at its option and expense, join Biogen as
a plaintiff. In determining whether to bring an action to enforce any Biogen
Patent Rights, TMC shall act in a commercially reasonable manner, giving due
consideration to the threat represented by the infringement and the potential
risk to the Biogen Patent Rights involved. If within six (6) months after having
been notified by Biogen of any alleged infringement or providing notice to
Biogen of an alleged infringement, TMC has been unsuccessful in persuading the
alleged infringer to desist and has not brought, and/or is not diligently
prosecuting an infringement action, or if TMC notifies Biogen at any time prior
thereto of its intention not to bring suit against any alleged infringer, Biogen
may take action and, at its option, join TMC as a plaintiff in any suit.
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(c) The party which institutes any suit to protect or enforce a
Biogen Patent Right shall have sole control of that suit and shall bear the
reasonable expenses of the other party, not including legal fees incurred by the
other party, in providing any assistance and cooperation as is requested
pursuant to this Section. The party initiating or carrying on such legal
proceedings shall keep the other party informed of the progress of such
proceedings and such other party shall be entitled to counsel in such
proceedings but at its own expense.
(d) Any award paid by third parties (whether by way of settlement or
otherwise) as the result of any proceedings initiated by TMC under this Section
7 shall first be applied to reimbursement of the unreimbursed legal fees and
expenses incurred by either party and then the remainder shall be divided
between the parties as follows:
(i) If the amount is based on lost profits, (x) TMC shall receive an
amount equal to the damages the court determines it has suffered as a
result of the infringement, less the amount of any royalties (and/or
payments on Sublicense Royalty Income) that would have been due to
Biogen on sales of Product lost by TMC and/or its Affiliates,
Distributors and Sublicensees as a result of the infringement had they
made such sales; and (y) Biogen shall receive an amount equal to the
royalties (and/or payments on Sublicense Royalty Income) that it would
have received if such sales had been made by TMC and/or its
Affiliates, Distributors and Sublicensees; and
(ii) As to awards other than those based on lost profits, 3/4 to TMC
and 1/4 to Biogen.
(e) Any award paid by third parties (whether by way of settlement or
otherwise) as the result of any proceedings initiated by Biogen under this
Section 7 shall first be
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applied to reimbursement of the unreimbursed legal fees and expenses incurred by
either party and then shall be divided between the parties, 1/4 to TMC and 3/4
to Biogen.
7.3 COOPERATION. In any suit as either party may institute or control to
enforce the Biogen Patent Rights pursuant to this Agreement, the other party
agrees, at the request and expense of the party initiating or controlling the
suit, to cooperate in all respects, to have its employees testify when requested
and to make available relevant records, papers, information, samples, specimens,
and the like.
7.4 THIRD PARTY CLAIM. In the event that a third party at any time
provides written notice of a claim to, or brings an action, suit or proceeding
against a party or such party's Affiliates, Distributors or Sublicensees,
claiming infringement of its patent rights or unauthorized use or
misappropriation of its Technology based upon an assertion or claim arising out
of the development, manufacture, use or sale of Products, such party shall
promptly notify the other party of the claim or the commencement of such action,
suit or proceeding, enclosing a copy of the claim and/or all papers served.
SECTION 8 - REPRESENTATIONS, WARRANTIES AND COVENANTS.
8.1 CORPORATE ACTION. Each party represents and warrants to the other
party that: (i) it is free to enter into this Agreement; (ii) in so doing, it
will not violate any other agreement to which it is a party; and (iii) it has
taken all corporate action necessary to authorize the execution and delivery of
this Agreement and the performance of its obligations under this Agreement.
8.2 COMPLIANCE WITH LAW. Each party covenants and agrees that in
conducting activities contemplated under this Agreement, it shall comply with
all applicable laws and regulations.. Without limiting the generality of the
foregoing, TMC covenants and agrees that in conducting activities in connection
with the manufacture, use or sale of Product, TMC shall comply with all
applicable laws and regulations.
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8.3 RIGHT TO LICENSE. Biogen represents and warrants to TMC that Biogen is
the owner or licensee of the Biogen Technology and Biogen Patent Rights and has
the right and ability to grant the licenses granted under this Agreement. In
addition, Biogen covenants and agrees that it will not enter into any agreement
or other arrangement with any third party following the Effective Date that
would limit TMC's right and ability to exploit the rights granted by Biogen to
TMC under this Agreement.
8.4 DISCLAIMERS. THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS
SECTION AND IN SECTION 3.5 ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND
WARRANTIES NOT EXPRESSLY SET FORTH HEREIN. WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING STATEMENT, BIOGEN DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS OR
IMPLIED, WITH RESPECT TO BIOGEN TECHNOLOGY, BIOGEN PATENT RIGHTS, THE BIOGEN
INVENTORY AND THE UCB MATERIAL, INCLUDING, WITHOUT LIMITATION, ANY
REPRESENTATIONS OR WARRANTIES AS TO WHETHER PRODUCT CAN BE SUCCESSFULLY
DEVELOPED OR MARKETED, REGARDING THE ACCURACY, PERFORMANCE, UTILITY,
RELIABILITY, TECHNOLOGICAL OR COMMERCIAL VALUE, COMPREHENSIVENESS,
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WHATSOEVER OF THE BIOGEN
TECHNOLOGY, BIOGEN PATENT RIGHTS, BIOGEN INVENTORY OR UCB MATERIAL OR AS TO THE
VALIDITY OF THE BIOGEN PATENT RIGHTS OR THAT THE MANUFACTURE, USE, MARKETING OR
SALE OF PRODUCTS BY TMC OR ANY OF ITS AFFILIATES, DISTRIBUTORS OR SUBLICENSEES
WILL NOT CONSTITUTE AN INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF ANY
THIRD PARTY. NEITHER BIOGEN
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NOR TMC SHALL BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES ARISING OUT OF THIS AGREEMENT WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER LEGAL THEORY.
SECTION 9 - INDEMNIFICATION.
9.1 INDEMNIFICATION BY TMC. TMC shall defend, indemnify and hold harmless
Biogen and its Affiliates and their respective employees, agents, officers,
shareholders and directors and each of them (the "Biogen Indemnified Parties")
from and against any and all liability, damage, loss, cost or expense of any
nature (including reasonable attorneys fees and expenses of litigation) incurred
or imposed upon the Biogen Indemnified Parties or any one of them in connection
with any claims, suits, actions, demands, proceedings, causes of action or
judgments resulting from or arising out of (i) the development, design, testing,
production, manufacture, sale, use or promotion of Product by TMC or any of its
Affiliates, Sublicensees, or Distributors or any of their respective agents or
employees; (ii) any other activities carried out by TMC or any of its
Affiliates, Sublicensees or Distributors or any of their respective agents or
employees, including any failure to comply in any material respect with
applicable laws or regulations, or (iii) breach by TMC of any term of this
Agreement, except to the extent any such claim results or arises from breach of
this Agreement by Biogen or the negligence or willful misconduct of Biogen or
any its Affiliates or any of their respective employees, agents, officers or
directors.
9.2 INDEMNIFICATION BY BIOGEN. Biogen shall defend, indemnify and hold
harmless TMC and its Affiliates and their respective employees, agents,
officers, shareholders and directors and each of them (the "TMC Indemnified
Parties") from and against any and all liability, damage, loss, cost or expense
of any nature (including reasonable attorneys fees and expenses of litigation)
incurred or imposed upon the TMC Indemnified Parties or any one of
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them in connection with any claims, suits, actions, demands, proceedings, causes
of action or judgments resulting from or arising out of the breach of this
Agreement by Biogen or the negligence or willful misconduct of Biogen or any its
Affiliates or any of their respective employees, agents, officers or directors.
9.3 CONDITIONS TO INDEMNIFICATION. An indemnified party shall give prompt
notice to the indemnifying party (either TMC or Biogen, as the case may be) of
any claim for which the indemnified party may seek indemnification under Section
9.1 or 9.2 and, provided that the indemnifying party is not contesting the
indemnity obligation, shall permit the indemnifying party to control any
litigation relating to such claim and disposition of any such claim, provided
that the indemnifying party shall act reasonably and in good faith with respect
to all matters relating to the settlement or disposition of any claim as the
settlement or disposition relates to the indemnified party, and the indemnifying
party shall not settle or otherwise resolve any claim without prior notice to
the indemnified party. The indemnified party shall cooperate with the
indemnifying party in its defense of any claim for which indemnification is
sought under this Section.
9.4 INSURANCE. At such time as Product is being marketed, TMC shall obtain
and shall thereafter maintain, at TMC's sole cost and expense, product liability
insurance for Product naming Biogen as an additional insured. The amount of the
insurance coverage obtained under this Section shall be at least $10 million,
combined single limit, for each single occurrence of bodily injury and/or
property damage and the like. TMC shall provide to Biogen copies of each
insurance policy obtained under this Section and all renewals of such policies.
SECTION 10 - TERMINATION.
10.1 TERM. Except as otherwise specifically provided herein and unless
sooner terminated pursuant to Sections 10.2 or 10.3, this Agreement and the
licenses and rights granted
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hereunder shall remain in full force and effect until TMC's obligations to pay
compensation hereunder terminates in accordance with Sections 6.3 and 6.5. Upon
expiration of TMC's obligation to pay royalties and/or a percentage of
Sublicense Royalty Income under Sections 6.3 and 6.5 with respect to a specific
country as to which TMC's license is then in effect, the license shall be deemed
to be fully paid and TMC shall thereafter have a royalty-free right to use the
Biogen Patent Rights and Biogen Technology to make, have made, use, import,
offer to sell and sell Product in such country.
10.2 TERMINATION FOR BREACH. In addition to any other available remedies,
either party shall have the right to terminate this Agreement in the event of a
material breach of this Agreement by the other party, provided that the breach
is not cured within ninety (90) days after written notice thereof is received
from the non-breaching party.
10.3 TERMINATION FOR CONVENIENCE. TMC shall have the right to terminate
this Agreement for any reason upon ninety (90) days prior written notice to
Biogen.
10.4 SURVIVAL OF RIGHTS AND OBLIGATIONS. Termination or expiration of the
Agreement for any reason shall be without prejudice to any rights which shall
have accrued to the benefit of either party prior to such termination or
expiration, including damages arising from any breach hereunder. In addition,
Sections 5, 6.12, 9, 10.6, 13, 14 and the last sentence of Section 7.1 shall
survive any such termination or expiration.
10.5 CONSEQUENCE OF TERMINATION AS TO JAPAN. Upon termination under Section
4.5 of the rights and licenses granted to TMC in Japan but not the entire
Agreement, (i) TMC shall have no further right or license under this Agreement
in Japan, and (ii) TMC shall grant to Biogen and its Affiliates and sublicensees
a permanent and irrevocable right of access and reference to all regulatory
submissions, including regulatory approvals, applicable to Product in Japan, and
shall
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notify the applicable regulatory authorities of such right no later than thirty
(30) days thereafter. If any right of access and reference granted under the
preceding sentence is not sufficient to permit Biogen or its sublicensees to
file an application for regulatory approval and receive regulatory approval for
the sale of Product in Japan, TMC shall within sixty (60) days of receipt of
notice from Biogen to that effect, provide Biogen with the complete data package
that TMC used in such regulatory submissions, or if none, in regulatory
submissions in United States in order to allow Biogen or its Affiliates or
sublicensees to conduct clinical trials or file for regulatory approval for the
sale of Product in Japan, provided that such data package shall be considered
Confidential Information of TMC and shall be subject to Section 5. At the time
of any termination of the license granted to TMC in Japan under Section 4.5, TMC
and Biogen shall negotiate in good faith a commercially reasonable royalty to be
paid to TMC for use of TMC-generated data and access to TMC's regulatory filings
related to Product.
10.6 CONSEQUENCES OF TERMINATION OF AGREEMENT. If TMC terminates this
Agreement under Section 10.3 or if Biogen terminates this Agreement under
Section 10.2, TMC shall, at TMC's expense, return to Biogen all Biogen
Technology furnished to TMC by Biogen, including any unused Biogen Inventory and
UCB Material, and shall transfer to Biogen all TMC Technology generated in
connection with the Product development and commercialization program. In the
event Biogen terminates this Agreement under Section 10.2, TMC shall grant to
Biogen an exclusive, royalty-free license, with the right to grant sublicenses,
to all TMC Patent Rights and TMC Technology related to Product. If TMC
terminates this Agreement under Section 10.3, TMC shall grant to Biogen an
exclusive license, with the right to grant sublicenses, to TMC Technology and
TMC Patent Rights in consideration for which Biogen shall, as its sole
obligation to TMC, pay royalties to TMC on sales of Product (i) in indications
other than
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Cardiology Indications if the manufacture, use or sale of the Product in such
indication is covered by a claim of a TMC Patent Right other than a claim to an
improvement to Peptide or the Semilog Process or (ii) in any indication if
marketing approval for Product in such indication was based on phase III
clinical data generated by TMC, at a royalty rate to be negotiated in good faith
by the parties at the time of termination based on the parties' relative levels
of investment in the Product and taking into consideration any damage or delay
to the development and commercialization of Product caused by TMC's termination
of this Agreement. Upon termination of this Agreement other than by TMC under
Section 10.2, TMC shall, at TMC's expense, grant to Biogen an irrevocable right
of reference or assign to Biogen, as requested by Biogen, TMC's rights in any
regulatory filings related to Product and shall assign to Biogen any trademarks,
together with all goodwill associated therewith, used in connection with
Product. Upon termination of this Agreement for any reason, TMC shall assign to
Biogen, at no cost to Biogen, (i) any regulatory filings and data and
information originally assigned by Biogen to TMC, (ii) all of TMC's rights in
the CSL Agreement and the HRI Agreement, and (iii) all of TMC's rights to the
HIRULOG trademark, together with all goodwill associated therewith, provided
that if this Agreement has been terminated by TMC under Section 10.2, Biogen
shall reimburse TMC for its out-of-pocket costs of assigning the trademark,
together with all goodwill associated therewith, and regulatory filings to
Biogen. Upon termination of this Agreement for any reason, the licenses granted
to TMC under Section 2.1 of this Agreement shall terminate and the parties shall
have no further rights or obligations under this Agreement except as set forth
in Section 10.4. Any matter related to termination with respect to which the
parties cannot agree will be referred to binding arbitration pursuant to Section
14.7. Notwithstanding anything in this
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Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
Section 10.6 to the contrary, neither party shall be prevented from initiating a
claim for damages due to a breach of this Agreement by the other party.
SECTION 11 - NO HIRE.
TMC shall not knowingly hire as an employee or employ directly as a
consultant any person who is an employee of Biogen at the time of the employment
offer from TMC or who has been an employee of Biogen within four (4) years of
the date of the employment offer from TMC. Breach of this Section 11 by TMC
shall be considered a material breach by TMC of this Agreement. In the event of
any breach by TMC of this Section 11, Biogen shall have the right to terminate
this Agreement for material breach under Section 10.2, or, in lieu of
terminating this Agreement, may elect the following remedy as payment of
liquidated damages: (i) immediate payment to Biogen by TMC of [**] and (ii) an
increase of [**] in the royalty rates applicable to Net Sales of Product under
Section 6.3 and the rate applicable to Sublicense Royalty Income under Section
6.5 of this Agreement. Election of the liquidated damages remedy by Biogen shall
not be deemed a waiver and shall not in any way limit Biogen's right to
terminate this Agreement for any subsequent breach of this Section or any
material breach of any other provision of this Agreement.
SECTION 12 - TRADEMARKS, PATENT MARKING AND LITERATURE.
12.1 HIRULOG TRADEMARK.
(a) Biogen hereby assigns to TMC all of Biogen' s rights, title and
interest in and to the HIRULOG trademark in the Territory, together with all
goodwill associated therewith. Biogen shall execute all documents reasonably
requested by TMC to effect the foregoing assignment. TMC shall promptly
reimburse Biogen for all costs and expenses incurred by Biogen in connection
with assignment of the HIRULOG trademark, together with all goodwill associated
therewith, to TMC.
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(b) TMC shall maintain and prosecute the HIRULOG trademark in the
Territory using efforts and professional representation consistent with the
level of effort and professional representation as would be applied by a
mid-size biopharmaceutical company in prosecuting and maintaining its own
trademarks. TMC shall bear all of the costs of prosecution and maintenance of
the HIRULOG trademark after the Effective Date. TMC shall provide copies to
Biogen of all filings of trademark applications and all notices of grants which
TMC sends or receives related to the HIRULOG trademark. If TMC decides to
abandon the HIRULOG trademark or allow the HIRULOG trademark to lapse in any
country, TMC shall inform Biogen at least ninety (90) days prior to the
effective date of such decision and, at Biogen's request, shall take all
reasonable action, at Biogen's expense, to assign the HIRULOG trademark,
together with all goodwill associated therewith, back to Biogen in such country.
12.2 PATENT MARKING. At Biogen's request, TMC shall mark, and shall require
its Affiliates or Sublicensees to mark, any and all forms of Product and Product
packaging with an appropriate patent marking identifying the issued patents of
the Biogen Patent Rights which cover the Product.
12.3 PROMOTIONAL LITERATURE. At Biogen's request, TMC shall describe its
relationship with Biogen in TMC's promotional literature and advertising related
to Product. Biogen shall have the right to review any such description prior to
use.
SECTION 13 - PUBLICITY
The parties agree that the public announcement of the execution of this
Agreement shall be in the form of a press release mutually agreeable to the
parties. Each party shall be entitled to make or publish any public statement
concerning this Agreement consistent with the press release or as otherwise
mutually agreed by the parties. The terms of this Agreement which are not
divulged in the approved press release may not be disclosed except to a
government agency
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as required by law. In any disclosure made to a government agency under the
preceding sentence, the disclosing party shall request confidential treatment of
the sensitive terms and conditions such as financial terms of this Agreement,
and shall provide such confidential treatment request to the other party for
review and comment.
SECTION 14 - GENERAL PROVISIONS.
14.1 ASSIGNMENT. Neither party shall have the right to assign this
Agreement without the prior written consent of the other party, except that
either party without the consent of the other party may assign this Agreement to
an Affiliate or to a successor in interest or transferee of all or substantially
all of the assets of such party. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors in interest
and permitted assignees. Any such successor or permitted assignee of a party's
interest shall in writing expressly assume and agree to be bound by all of the
terms and conditions of this Agreement. No assignment shall relieve the assignor
of any of its obligations under this Agreement.
14.2 FORCE MAJEURE. Neither party shall be liable to the other party for
any failure or delay in performance of any obligation under this Agreement if
the failure is caused by fire, explosion, flood, earthquake, strike or lockout,
embargo, civil commotions, riots, wars, or any similar cause beyond such party's
reasonable control, provided that the party claiming this exception has exerted
all reasonable efforts to avoid or remedy such event and provided such event
does not extend for more than six (6) months.
14.3 INDEPENDENT PARTIES. The relationship between Biogen and TMC is that
of independent contractors. Biogen and TMC are not and shall not be deemed to be
joint venturers, partners, principal and agent, master and servant, employer or
employee, and have no relationship other than as independent contracting
parties. Neither party shall have the authority
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to bind or obligate the other party in any manner except as may be expressly
provided herein or authorized in writing.
14.4 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter hereof and all prior
agreements negotiations, representations and understandings, including a certain
letter of intent dated February 7,1997, are superseded hereby. No amendments,
modifications or supplements to this Agreement may be made, except by means of a
written document which is signed by authorized representatives of both parties.
14.5 SEVERABILITY. If any provision of this Agreement is found by a court
to be void, invalid or unenforceable, the same shall either be reformed to
comply with applicable law or stricken if not so conformable, so as not to
affect the validity or enforceability of this Agreement, except if the principal
intent of this Agreement is frustrated by such reformation or deletion in which
case this Agreement shall terminate.
14.6 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts without reference
to its choice-of-law principles.
14.7 DISPUTE RESOLUTION. Any dispute arising out of or relating to this
Agreement or to a breach thereof, including its interpretation, performance or
termination, may be submitted by a party for resolution by binding arbitration.
The arbitration shall be conducted by three (3) arbitrators. Each party shall
select one arbitrator to serve on an arbitration panel to decide the issue. The
arbitrator selected by a party shall not be a past or present employee of or
consultant to such party or of any Affiliate or Sublicensee of such party. The
arbitrators selected by the parties shall, within ten (10) days of their
selection, select a third member to serve on the panel.
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If the arbitrators selected by the parties cannot, within ten (10) days of their
selection, agree on a third member, the parties shall request that the American
Arbitration Association ("AAA") select the third member who shall not be a past
or present employee of or consultant to either party or of any Affiliate or
Sublicensee of either party. Each party shall then have thirty (30) days from
the date the panel is complete to submit to the panel and to the other party a
written statement presenting such party's position on the issue. The panel
shall, within thirty (30) days after receipt of both parties statements, hold a
joint meeting on the issue at which each party will have an opportunity to make
a presentation and to respond to the other party's presentation. Within fifteen
(15) days of the conclusion of the meeting, the panel shall render its decision
in writing. The decision of the panel shall be final and binding on the parties.
Each party shall bear its own costs in connection with the arbitration
proceedings, including the costs of the arbitrator selected by it. The costs of
the third arbitrator will be shared equally. The arbitration shall be held in
the Commonwealth of Massachusetts and conducted under the rules of the AAA,
except as otherwise expressly provided in this Section.
14.8 HEADINGS. The headings in this Agreement have been included for
convenience only, and shall not be used to construe the meaning of this
Agreement.
14.9 WAIVER. Failure of a party to enforce its rights under this Agreement
shall not constitute a waiver of that right or the ability to later assert that
right relative to the particular situation involved or to terminate this
Agreement as a result of any subsequent default or breach.
14.10 NOTICES. Any notices given pursuant to this Agreement shall be in
writing and shall be deemed delivered upon the earlier of (i) when received at
the address set forth below, or (ii) three (3) business days after mailed by
certified or registered mail postage prepaid and properly addressed, with return
receipt requested, (iii) one (1) business day after being sent by a
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reputable nationwide overnight courier service, or (iv) when sent, if sent, by
facsimile, as confirmed by certified or registered mail or by overnight courier.
Notices shall be delivered to the respective parties as indicated:
If to Biogen:
Biogen, Inc.
14 Cambridge Center
Cambridge, MA 02142
Telephone: (617) 679-2000
Fax: (617) 679-2617
with a copy to Vice President - General Counsel
if to TMC:
The Medicines Company
One Cambridge Center
Cambridge, MA 02142
Telephone: (617) 225-9099
Fax: (617) 225-2397
with a copy to President
14.11 COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which shall be deemed to be an original, but
which together shall constitute one and the same instrument.
IN WITNESS, WHEREOF, the parties have executed this Agreement as of the
date set forth above.
BIOGEN, INC. THE MEDICINES COMPANY
By: /s/ James R. Tobin By: /s/ Clive A. Meanwell
----------------------------- -------------------------------
James R. Tobin Clive A. Meanwell
President and President and
Chief Executive Officer Chief Executive Officer
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EXHIBIT 10.8
Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
This Development and Commercialization Agreement (the "Agreement"),
effective the 16th day of August, 1999 (the "Effective Date"), is between
GyneLogix, Inc. ("Licensor"), with principal offices at 280 South Taylor Ave.,
Suite 100, Louisville, Colorado, and The Medicines Company (the "Licensee"),
with principal offices at One Cambridge Center, Cambridge, Massachusetts 02142.
BACKGROUND
1. Licensor owns certain Proprietary Property, including certain Patent
Rights and Know-How, relating to a novel Lactobacillus crispatus strain known as
CTV-05 and all technology related to its fermentation, stabilization and
manufacture, details of which are more fully described in APPENDIX A to this
Agreement.
2. Licensee desires to license the Proprietary Property in order to
develop, obtain regulatory approval, manufacture, use and sell products falling
within the scope of the Proprietary Property.
3. Licensor is willing to grant Licensee a license to the Proprietary
Property subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, Licensor and Licensee, intending to be legally bound,
hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have the
meanings set forth below:
1.1 "AFFILIATE" means any person, corporation, firm, partnership or entity,
which directly or indirectly owns, is owned by, or is under the common ownership
of a party to this Agreement to the extent of greater than fifty percent (50%)
of the equity of the owned entity, having the power to vote on or direct the
affairs of the owned entity, or any person, corporation, firm, partnership, or
other entity actually controlled by, controlling or under common control with a
party to this Agreement.
1.2 "COMBINATION PRODUCT" means any pharmaceutical product that is
comprised of a Royalty-Bearing Product and at least one other active ingredient.
1.3 "CONFIDENTIAL INFORMATION" means all Know-How or other information,
including, without limitation, proprietary information and materials (whether or
not patentable) regarding a party's technology, products, business information
or objectives, which is designated as confidential in writing by the disclosing
party, whether by letter or by the use of an appropriate stamp or legend, prior
to or at the time any such material, trade secret or other information is
disclosed by the disclosing party to the other party. Notwithstanding the
foregoing to the contrary, materials, know-how or other information which is
orally, electronically or visually disclosed by a party, or is disclosed in
writing without an appropriate letter, stamp or legend, shall constitute
Confidential Information of a party (a) if the disclosing party, within thirty
(30) days after such disclosure, delivers to the other party a written document
or documents
<PAGE> 2
describing the materials, know-how or other information and referencing the
place and date of such oral, visual, electronic or written disclosure and the
names of the persons to whom such disclosure was made, or (b) such information
is of the type that is customarily considered to be confidential information by
persons engaged in activities that are substantially similar to the activities
being engaged in by the parties pursuant to this Agreement. Confidential
Information shall not include information encompassed by the exceptions as set
forth in Section 7.1.
1.4 "CTV-05" means (a) a novel Lactobacillus crispatus strain having ATCC
Deposit No. 202225, and (b) the underlying stabilization and preservation
technologies applying specifically to such novel Lactobacillus crispatus strain
and generally to Lactobacilli, all as more fully described in Appendix A to this
Agreement.
1.5 "CTV-05 PRODUCTS" means products or processes that are based upon or
derived from CTV-05 or any Improvements thereto.
1.6 "FIELD" shall mean the ex vivo and in vivo diagnosis, monitoring,
prevention and treatment of all diseases, conditions and disorders which affect
human females.
1.7 "IMPROVEMENTS" shall mean any product or process enhancement owned or
controlled, in whole or in part, by Licensor, or to which Licensor has any right
of use or right of exploitation, relating to CTV-05, including enhancements
relating to the manufacture, formulation, ingredients, preparation, means of
delivery, dosage or packaging thereof.
1.8 "KNOW-HOW" means any technical information related to the preparation
or development of CTV-05 Products owned or controlled in whole or in part, by
Licensor, or to which Licensor has any right of use or right of exploitation.
1.9 "ROYALTY-BEARING PRODUCT" shall mean any CTV-05 Product whose
manufacture, use or sale is covered by a Valid Claim of any of the Patent
Rights.
1.10 "NET SALES" means, with respect to a Royalty-Bearing Product, the
gross amount received by Licensee and/or its Affiliates on sales of
Royalty-Bearing Products to unrelated third parties, less the following
deductions:
(a) Trade, cash and quantity discounts actually allowed and taken directly
with respect to such sales;
(b) Tariffs, duties, excises, sales taxes or other taxes imposed upon and
paid directly with respect to the production, sale, delivery or use of the
Royalty-Bearing Product (excluding national, state or local taxes based on
income);
(c) Amounts repaid or credited by reason of rejections, defects, recalls or
returns or because of chargebacks, refunds, rebates or retroactive price
reductions; and
(d) Freight, insurance and other transportation charges incurred in
shipping a Royalty-Bearing Product to third parties (to the extent such charges
are invoiced to such third parties).
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In the event the Royalty-Bearing Product is sold as part of a Combination
Product (as defined below), the Net Sales from the Combination Product, for the
purposes of determining royalty payments, shall be determined by multiplying the
Net Sales of the Combination Product (as defined in the standard Net Sales
definition), during the applicable royalty reporting period, by the fraction,
A/A+B, where A is the average sale price of the Royalty-Bearing Product when
sold separately in finished form and B is the average sale price of the other
active ingredient included in the Combination Product when sold separately in
finished form, in each case during the applicable royalty reporting period or,
if sales of both the Royalty-Bearing Product and the other active ingredient did
not occur in such period, then in the most recent royalty reporting period in
which sales of both occurred. In the event that such average sale price cannot
be determined for both the Royalty-Bearing Product and all other active
ingredient included in the Combination Product, Net Sales for the purpose of
determining royalty payments shall be calculated by multiplying the Net Sales of
the Combination Product by the fraction of C/C+D where C is the fair market
value of the Royalty-Bearing Product and D is the fair market value of all other
pharmaceutical active ingredient included in the Combination Product. In such
event, the Joint Steering Committee (as defined below), in accordance with
Section 3.4.2, shall in good faith make a determination of the respective fair
market values of the Royalty-Bearing Product and all other pharmaceutical active
ingredient included in the Combination Product, and provide Licensor with data
to support such determination. Licensor shall have the right to review such
determination and supporting data, and to notify Licensee if it disagrees with
such determination. If Licensor does not agree with such determination and if
the parties are unable to agree in good faith as to such respective fair market
values, then such matter shall be referred to the chief executive officers of
the parties.
1.11 "PATENT RIGHTS" means those patents or patent applications listed on
Appendix B to this Agreement; and any patents or patent applications which cover
CTV-05 Products which are owned or controlled, in whole or in part, by Licensor
or to which Licensor has any right of use or right of exploitation. Included
within the definition of Patent Rights are any continuations,
continuations-in-part, divisions, patents of addition, foreign counterparts,
reissues, renewals or extensions thereof.
1.12 "PROPRIETARY PROPERTY" shall mean all Patent Rights, Know-How and
other intellectual property rights, including trademarks, owned by Licensor
covering and relating to CTV-05 Products.
1.13 "SUBLICENSEE PROCEEDS" means payments received by Licensee or its
Affiliates with respect to sales of Royalty Bearing Products by sublicensees.
Sublicensee Proceeds shall not include license fees, milestone payments,
research and development funding and equity investments received from
sublicensees.
1.14 "VALID CLAIM" means a claim of any unexpired United States or foreign
patent which shall not have been donated to the public, disclaimed, nor held
invalid or unenforceable by a court of competent jurisdiction in an unappealed
or unappealable decision.
2. LICENSE GRANT, ASSIGNMENT AND TECHNOLOGY TRANSFER.
-------------------------------------------------
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2.1 GRANT OF LICENSE. Licensor grants Licensee an exclusive worldwide
license under the Proprietary Property, including Improvements, to develop,
make, market, use, import and sell CTV-05 Products in the Field, subject to the
terms and conditions of this Agreement, including the right to grant
sublicenses. Licensee shall notify Licensor in writing of any sublicense it
grants within thirty (30) days of the execution of a sublicense agreement and
shall obtain the written commitment of such sublicensee to abide by all
applicable terms and conditions of this Agreement. Additionally, Licensee will
make reasonable efforts to notify Licensor in advance of the execution of
sublicensee agreement provided that the failure to provide such advanced notice
will not be deemed a breach of this Development and Commercialization agreement.
2.2 KNOW-HOW TRANSFER. Upon execution of this Agreement, but in no event
later than thirty (30) days following the Effective Date of this Agreement,
Licensor shall disclose and transfer as requested by Licensee all Know-How that
is necessary or useful to the development, regulatory approval and
commercialization of CTV-05 Products for use in the Field. Without limiting the
generality of the foregoing, Licensor shall provide to Licensee full copies of
all data and documentation related to the CTV-05 Products and their manufacture,
and shall deliver and/or make available to Licensee all finished product,
together with quality control data, in the possession of Licensor or its
Affiliates as of the Effective Date. Thereafter, Licensor will promptly disclose
and transfer to Licensee Know-How as requested by Licensee from time to time
during the term of this Agreement.
2.3 ACCESS TO PERSONNEL. Licensor shall provide Licensee with cooperation
and reasonable access to its technical and scientific staff in order to permit
the timely, orderly and complete transfer of the Know-How and to permit the
Licensee to exploit the rights granted hereunder. Such staff shall include, but
not be limited to, Dr. Gerald Chrisope. Licensor and Licensee agree that Dr.
Chrisope is an invaluable resource with considerable expertise in the
Proprietary Property. Licensor agrees to continue to employ Dr. Chrisope
(together with his scientific and administrative support infrastructure
(including laboratory personnel) in place as of the Effective Date) for 24
months and agrees to ensure that Dr. Chrisope and such personnel will be
available to work on the projects contemplated by the Development Plan on a full
time basis for 24 months. Notwithstanding the foregoing, Dr. Chrisope, with the
agreement of the Joint Steering Committee, may adjust personnel in a manner
deemed appropriate and to accommodate contemplated scale up and manufacturing
activities.
2.4 REGULATORY SUBMISSIONS. Licensor shall transfer or cause the transfer
of all regulatory submissions and approvals relating to the CTV-05 Products and
its manufacture to Licensee. Licensor agrees to take all steps reasonably
necessary to effect such transfer as of the Effective Date, including taking
such actions as may be necessary to cause the National Institutes of Health
("NIH") to transfer the IND relating to CTV-05 Products to Licensee or to permit
Licensee to have exclusive reference rights to such IND and full and continuing
access to all related data within 30 days of the Effective Date.
3. DUTIES OF LICENSEE.
------------------
3.1 GENERAL. Licensee shall use its commercially reasonable efforts,
which for the purposes of this Agreement shall mean efforts consistent with the
usual practice followed by a medium-sized biopharmaceutical company in pursuing
the development, commercialization and
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marketing of pharmaceutical products of similar market potential, at its own
expense, to develop and commercialize CTV-05 Products in accordance with a
development plan to be provided by the Licensee and approved by the Joint
Steering Committee and thereafter updated on an annual basis (the "Development
Plan").
3.2 SPECIFIC LICENSEE RESPONSIBILITIES. Without limiting the generality
of Section 3.1, Licensee shall assume the following responsibilities relating to
the development and commercialization of the CTV-05 Products:
3.2.1 PRE-CLINICAL AND CLINICAL DEVELOPMENT. Licensee shall be
solely responsible for the pre-clinical and clinical development of CTV-05
Products. Following review by the Joint Steering Committee, the continuation of
any preclinical or clinical trial shall be at the sole discretion of the
Licensee, including any trials currently under discussion with NIH. Licensee
shall bear the financial responsibilities for the funding of all pre-clinical
and clinical trials, either directly or through strategic partnerships.
3.2.2 MANUFACTURING. The Licensee shall be solely responsible for
the manufacture of CTV-05 Products, including, without limitation, the selection
of the manufacturer and the development of manufacturing processes and
commercial scale-up. Licensee shall bear the financial responsibility (including
all capital investments required) associated with the manufacturing of CTV-05
Products. Funding of these activities will be either directly or through
strategic partnerships.
It is the current expectation and desire of the parties that the CTV-05 Products
be manufactured at the Boulder, CO facility of the Licensor. A manufacturing
agreement shall be duly negotiated by both parties not later than completion of
proof of concept trial. Both parties also recognize that technical, regulatory,
legal, environmental and/or commercial issues may necessitate, or that Licensee
may find it more advantageous, that all or a portion of the manufacturing of
these products be carried out at an alternate site(s) and could potentially
involve the services of third parties. Final decisions regarding the choice of
manufacturer(s) and manufacturing site(s) will be the sole responsibility of the
Licensee. In the event that Licensee determines not to manufacture CTV-05
Products at the Licensor's Boulder facility, Licensor and Licensee recognize
that further process development work on CTV-05 Products, or other products of
mutual interest agreed by Licensor and Licensee, if needed, may continue at the
Boulder facility. The decision to continue funding the Boulder facility under
such circumstances, in part or in whole, shall be decided by the Joint Steering
Committee in accordance with Section 3.4.2.
3.2.3 REGULATORY MATTERS. Following review by the Joint Steering
Committee, the Licensee shall be solely responsible for all determinations
relating to regulatory issues and all filings and interactions with regulatory
authorities. Licensee shall bear the financial responsibilities for all
regulatory matters, either directly or through strategic partnerships.
3.2.4 SALES AND MARKETING. Licensee shall be solely responsible for
all sales and marketing activities relating to CTV-05 Products, including
advertising, sales training, exhibitions, seminars and other promotional
activities. Licensee shall bear the financial responsibilities for all sales and
marketing activities, either directly or through strategic partnerships.
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Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
3.3 REPORTS. Licensee shall report to Licensor on the status and progress
of Licensee's efforts to develop and commercialize CTV-05 Products at such times
as Licensor may reasonably request (not to exceed three per calendar year).
3.3.1 COMPOSITION; RESPONSIBILITIES. The parties shall establish a
joint steering committee (the "Joint Steering Committee"), comprised of two (2)
representatives of Licensor and two (2) representatives of Licensee. Each party
shall make its designation of its representatives prior to the Effective Date.
The Joint Steering Committee shall meet within forty-five (45) days after the
Effective Date and, thereafter, on a quarterly basis during the period in which
CTV-05 Products are in clinical development (or on a more frequent basis if
reasonably requested by Licensee) for purposes including, but not limited to (i)
reviewing the Development Plan for CTV-05 Products, (ii) reviewing and approving
amendments to the Development Plan, and (iii) reviewing and approving annual
budgets for operating expenses of the Boulder Facility for the development of
CTV-05 Products. The location of such meetings of the Joint Steering Committee
shall alternate between Licensor's principal place of business and Licensee's
principal place of business, or as otherwise agreed by the parties. All travel
and related expenses of Licensor's representatives in connection with such
meetings shall be paid by Licensee. The Joint Steering Committee may also meet
by means of a telephone conference call. Each party may change any one or more
of its representatives to the Joint Steering Committee at any time upon notice
to the other party. Each party shall use reasonable efforts to cause its
representatives to attend the meetings of the Joint Steering Committee. If a
representative of a party is unable to attend a meeting, such party may
designate an alternate to attend such meeting in place of the absent
representative. In addition, each party may, with the consent of the other
party, invite non-voting employees, consultants or scientific advisors, to
attend the meetings of the Joint Steering Committee to, among other things,
review and discuss the Development Plan and its results.
3.3.2 DECISION MAKING. The goal of all decision making shall be to
achieve consensus. Decisions of the Joint Steering Committee shall be made by
the majority vote of all of the members of the Joint Steering Committee. If the
Joint Steering Committee is unable to reach agreement on any matter within
fifteen (15) days after the matter is first referred to it, such matter shall be
referred for resolution to the chief executive officers of the parties. If such
officers are unable to resolve a matter referred to them under this Section
within three (3) days thereafter, the final determination shall be made by
Licensee acting in its sole discretion.
4. FINANCIAL PROVISIONS.
--------------------
4.1 MILESTONE PAYMENTS. In partial consideration of the exclusive license
granted by Licensor pursuant to this Agreement, Licensee shall pay to Licensor,
the following milestone payments:
(a) [**] within thirty (30) days of the execution of this Agreement,
(without any credit for any prior payments made to Licensor) or if later, upon
the receipt of the written contractual agreement of the NIH to co-manage and
co-fund (in equal parts) the proof of concept trial by TMC.
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Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
(b) [**] upon successful completion of a Phase II/Proof of Concept Trial of any
CTV-05 Product and the decision by Licensee or its sublicensee to proceed with
Phase III clinical trials of such CTV-05 Product; and
(c) [**] upon the issuance by the U.S. Patent and Trademark office of the
first patent covering substantially all of the claims included in the patent
application described in Appendix B to this Agreement, the test of which shall
be all claims included in Appendix B relating to strain and use of strain in the
Field and the decision by TMC to go forward with the development of product.
Each of the foregoing milestones shall be payable only once upon the first
achievement of the applicable event, and shall be non-refundable and
non-creditable. Milestone payments for 4.3(a), (b) and (c) shall be paid within
thirty (30) days of the achievement thereof.
For purposes of this Section 4.3(b), "Phase II/Proof of Concept Trial"
shall mean a test or study using an extensive patient base which is required to
provide definitive evidence of efficacy and safety to proceed with a Phase II
dose ranging trial and/or Phase III trial for a CTV-05 Product including, but
not limited to tests and studies which are required by the regulatory
authorities pursuant to regulations, guidelines or otherwise necessary for the
filing of a New Drug Application with the U.S. Food and Drug Administration.
4.2 PAYMENT OF CERTAIN EXPENSES. Commencing on the Effective Date,
Licensee shall assume financial responsibility for the continued operation of
the Boulder Facility for the development of CTV-05 Products in accordance with
the Development Plan. Licensee's financial responsibility hereunder shall
terminate at such time as no further development under the Development Plan is
ongoing at the Boulder facility. Licensor represents that the current average
monthly operating expenses for the Boulder Facility is not more than [**], as
set forth more fully on APPENDIX C to this Agreement. Any actions or decisions
that would materially alter the current operating expenses for activities as
described in Section 3.2.2, including expenses, such as additions to personnel,
acquisition of equipment and changes in operations, shall be subject to the
Joint Steering Committee's prior written approval. If Licensee does not approve
of any such action or decision, Licensor may implement such action or decision
at its own expense, and Licensee shall not be responsible for reimbursing
Licensor for such incremental expenses unless such actions or decisions are
later determined by the Joint Steering Committee to be warranted. Licensee
acknowledges that additional costs will be required during prototyping and later
scale-up and manufacturing. Prior to the beginning of each calendar year,
Licensor shall provide a budget for such calendar year relating to the operation
of the Boulder Facility to the Joint Steering Committee at least ten (10) days
prior to next meeting of the Joint Steering Committee. Licensor shall invoice
Licensee monthly for the operating expenses of the Boulder Facility for the
development of CTV-05 Products, setting forth in reasonable detail the amounts
expended in various operating expense categories, PROVIDE THAT no monthly
invoice may exceed $[**] unless the Joint Steering Committee has previously
agreed in writing upon such excess expense. Licensee shall pay such invoices
within thirty (30) days after receipt, PROVIDED THAT Licensee may dispute
particular expenses by providing written notice to Licensor within such 30-day
period. In such event, Licensee may withhold the disputed portion of the invoice
and remit the balance to Licensor. Any such dispute shall be submitted to the
Joint Steering Committee for discussion and resolution. Licensor shall keep
complete and accurate records of
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Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
the latest three (3) years of operating expenses of the Boulder Facility.
Licensee shall have the right at its expense, through its own personnel, a
certified public accountant or like person reasonably acceptable to Licensor, to
examine such records during the term of this Agreement and for six (6) months
after its termination. If the review reflects an overpayment of expenses to
Licensor, such overpayment shall be promptly remitted to Licensee. If the
overpayment is equal to or greater than [**] of the amount that was otherwise
due, Licensor shall pay Licensee for the expense of such audit. Licensee shall
have no further obligation to assume financial responsibility for the Boulder
Facility upon termination of this Agreement or as otherwise provided for in this
Section 4.2.
4.3 ROYALTIES; SUBLICENSE PAYMENTS. As additional consideration for the
exclusive license granted by Licensor pursuant to this Agreement, Licensee
shall:
(a) pay to Licensor royalties on Net Sales of Royalty-Bearing Products by
Licensee and its Affiliates in an amount equal to:
[**] of Net Sales of Royalty-Bearing Products on calendar-year annual Net
Sales of up to US$[**] million;
[**] of Net Sales of Royalty-Bearing Products on calendar-year annual Net
Sales in excess of US$[**] million and up to US$[**] million; and
[**] of Net Sales of Royalty-Bearing Products on calendar-year annual Net
Sales in excess of US $[**] million; and
(b) pay to Licensor [**] of Sublicensee Proceeds received by Licensee from
its sublicensees, with respect to sales of Royalty-Bearing Products.
For the sake of clarity, assuming Licensee has Net Sales of Royalty-Bearing
Products of $[**] million in a calendar year and receives $[**] million from a
sublicensee based on sales of Royalty-Bearing Products by such sublicensee in a
calendar year, Licensee shall pay to Licensor royalties totaling $[**] million
([**] of the first $[**] million in Net Sales, [**] of the next $[**] million
in Net Sales and [**] of the remaining $[**] million in Net Sales) and
sublicense fees totaling $[**] million ([**] of the $[**] million received by
Licensee from its sublicensee).
4.4 EXPIRATION AND NON GRANT OF PATENT. Royalty and sublicense payment
obligations due under this Agreement shall expire on a country-by-country basis
in each country effective at such time as there no longer exists in such country
a Valid Claim of any Patent Right covering the Royalty-Bearing Products in such
country. Upon expiration of such royalty and sublicense payment obligations in
any country, Licensee shall have a perpetual, fully paid up, exclusive right and
license under the Know-How in such country. However, in acknowledgement of
GyneLogix's proprietary know-how it is envisioned that TMC shall upon expiration
of said patents, on a country-by-country basis pay to GyneLogix [**] markup over
direct costs on CTV-05 products manufactured by GyneLogix, the details of which
will be specified in a manufacturing agreement to be signed by both parties. In
the event that Patent Rights, as outlined in Appendix B, are not granted to
GyneLogix and TMC outsources manufacture of a Royalty-Bearing Product to a third
party, TMC will in consideration of GyneLogix proprietary expertise transferred
by GyneLogix to third party, pay to GyneLogix not more than [**]
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of net profit margin enjoyed by said third party contract manufacturer to be
negotiated on a country by country basis as necessary. Said net profit margin in
the absence of third party cost basis will be established by mutual agreement
between TMC and GyneLogix. In the event of a disagreement with regard to said
net profit margin, TMC and GyneLogix will abide by the opinion of an expert
industry consultant to be chosen by the CEO's of both companies.
4.5 THIRD PARTY PATENT PAYMENTS. In the event that Licensee is obligated
to make payments to non-affiliated third parties ("Third Party Patent Payments")
to obtain licenses to patented technology which, in the reasonable judgment of
the Steering Committee, are required in connection with the development and
commercialization of Royalty-Bearing Products, then Licensee may deduct said
third party payments from payments otherwise due under Sections 4.3(a) and
4.3(b), it being understood that if such third party patent payments exceed
payments under 4.3(a) and 4.3(b) Licensee may not seek payment from Licensor for
such excess.
4.6 ROYALTIES PAYABLE ONLY ONCE. The obligation to pay royalties is
imposed only once with respect to the same unit of a Royalty-Bearing Product.
Except as specifically provided in this Agreement, it is understood and agreed
that there shall be no deductions from the royalties payable under this
Agreement.
4.7 SALES TO AFFILIATES AND SUBLICENSEES. Sales of Royalty-Bearing
Products between Licensee and its Affiliates or permitted sublicensees, or among
such Affiliates and permitted sublicensees, shall not be subject to royalties
under Section 4.3, but in such cases the royalties shall be calculated on the
Net Sales by such Affiliates to a third party or Sublicensee Proceeds received
by Licensee, as the case may be.
4.8 ROYALTY REPORTS AND PAYMENTS. Within fifty (50) days after the close
of each calendar quarter, Licensee shall deliver to Licensor a true accounting
of all Royalty-Bearing Products sold by Licensee and its Affiliates and
sublicensees during such quarter and shall at the same time pay all royalties
and sublicensee payments due. Such accounting shall show sales on a
country-by-country and Royalty-Bearing Product-by-Royalty-Bearing Product basis.
4.9 RECORDS; AUDITS. Licensee shall keep and require its Affiliates and
sublicensees to keep complete and accurate records of all sales of
Royalty-Bearing Products under the licenses granted herein. Licensor shall have
the right at its expense, through a certified public accountant or like person
reasonably acceptable to Licensee, to examine such records during regular
business hours during the term of this Agreement and for six (6) months after
its termination; provided, however, that such examination shall not take place
more often than once a year, and shall not cover such records for more than the
preceding three (3) years and provided further that such accountant shall report
to Licensee only as to the accuracy of the royalty statements and payments. In
the event that any such audit reveals that Licensee has paid less than the
royalty payments then due, Licensee shall promptly remit the shortfall to
Licensor and shall pay the Licensor for the expense of such audit in the event
that such shortfall is greater than ten percent (10%) of the royalty payments
then due. In the event that any such audit reveals that Licensee has paid more
than the royalty payments then due, Licensor shall promptly remit the
overpayment amount to Licensee.
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4.10 TAX WITHHOLDINGS. Any tax paid or required to be withheld by
Licensee by the Internal Revenue service or other taxing authorities on account
of royalties or other amounts payable to Licensor under this Agreement shall be
deducted from the payments otherwise due. Licensee shall secure and send to
Licensor written proof of any such taxes withheld and paid by Licensee or its
sublicensees for the benefit of Licensor.
4.11 PAYMENT CURRENCY; BLOCKED PAYMENTS. All royalties due under this
Agreement shall be payable in U.S. Dollars. In the event that, by reason of
applicable laws or regulations in any country, it becomes impossible or illegal
for Licensee or its Affiliates or sublicensees, to transfer, or have transferred
on its behalf, royalties or other payments to Licensor, such royalties or other
payments shall be deposited in local currency in the relevant country to the
credit of Licensor in a recognized banking institution designated by Licensor
or, if none is designated by Licensor within a period of thirty (30) days, in a
recognized banking institution selected by Licensee or its Affiliates or
sublicensees, as the case may be, and identified in a notice in writing given to
Licensor.
4.12 CURRENCY CONVERSIONS. Monetary conversions from the currency of a
country in which Royalty-Bearing Products are sold, into U.S. Dollars shall be
made at the exchange rate at which the applicable currency can be sold for U.S.
Dollars, as reported in THE WALL STREET JOURNAL at closing on the last business
day of the calendar quarter for which the royalties are being paid. Under all
circumstances Licensor shall bear the currency exchange risk for the conversion
of royalties being paid hereunder.
5. REPRESENTATIONS AND WARRANTS
----------------------------
5.1 REPRESENTATIONS OF AUTHORITY. Licensor and Licensee each represents
and warrants to the other that it has full right, power and authority to enter
into this Agreement and to perform its respective obligations under this
Agreement. Licensor represents and warrants to Licensee that it has the right to
grant to Licensee the license granted pursuant to this Agreement.
5.2 CONSENTS. Licensor and Licensee each represents and warrants that all
necessary consents, approvals and authorizations of all government authorities
and other persons required to be obtained by such party in connection with
execution, delivery and performance of this Agreement have been and shall be
obtained.
5.3 NO CONFLICT. Licensor and Licensee each represents and warrants that
notwithstanding anything to the contrary in this Agreement, the execution and
delivery of this Agreement and the performance of such party's obligations
hereunder (a) do not conflict with or violate any requirement of applicable laws
or regulations and (b) do not and will not conflict with, violate or breach or
constitute a default or require any consent under, any contractual obligations
of such party, except such consents as shall have been obtained prior to the
Effective Date.
5.4 EMPLOYEE OBLIGATIONS. Licensor and Licensee each represents and
warrants that all of its employees, officers, and consultants have executed (and
any future employees, officers and consultants will execute) agreements or have
existing obligations under law requiring, in the case of employees and officers,
assignment to such party of all inventions made during the
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course of and as the result of their association with such party and obligating
the individual to maintain as confidential such party's Confidential Information
as well as confidential information of a third party which such party may
receive, to the extent required to support such party's obligations under this
Agreement.
5.5 INTELLECTUAL PROPERTY. Licensor represents and warrants that, to its
knowledge, except as disclosed in writing by Licensor to Licensee, (a) the
development and commercialization of CTV-05 Products does not and will not
infringe or conflict with the rights of any third party in respect of Know-How
or issued patents or published patent applications owned by such third party,
and (b) Proprietary Property that is expected to be utilized by Licensee in the
development and commercialization of CTV-05 Products is not being infringed by
any third party. Licensor represents and warrants that there is no claim or
demand of any person pertaining to, or any proceeding which is pending or, to
the knowledge of Licensor, threatened, that challenges the rights of Licensor in
respect of Proprietary Property Licensor represents and warrants that it is the
record owner of the Proprietary Property, which is free and clear of all liens,
claims and encumbrances.
5.6 NO WARRANTIES. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, THE
PARTIES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND EITHER
EXPRESS OR IMPLIED, INCLUDING WHETHER ROYALTY-BEARING PRODUCTS WILL BE
SUCCESSFULLY DEVELOPED HEREUNDER, AND IF DEVELOPED, WILL HAVE COMMERCIAL UTILITY
OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
6. PATENTS, KNOW-HOW, INVESTIONS AND INFRINGEMENT
----------------------------------------------
6.1 OWNERSHIP. Licensor shall retain sole title to the Know-How and the
Patent Rights as presently existing and as developed or invented by Licensor or
on its behalf during the term of this Agreement. Licensee shall have sole title
to any Improvements developed or invented solely by Licensee or on its behalf
during the term of this Agreement. Licensor and Licensee shall jointly own any
Improvements developed or invented by both parties or on their behalf during the
term of this Agreement. The determination of inventorship shall be made in
accordance with relevant patent laws; in the event of a dispute regarding
inventorship or ownership that the parties are unable to resolve, mutually
acceptable outside patent counsel not regularly employed by either party shall
be retained to resolve such dispute.
6.2 PATENT RESPONSIBILITIES. Licensee shall, at its own cost and expense,
assume the responsibilities for preparing, filing, prosecuting and maintaining
patent applications and patents included within the Patent Rights or
Improvements licensed hereunder with patent counsel of its choosing. Within 30
days after the Effective Date, Licensor shall forward to Licensee or its
designee, at Licensee's expense, all documentation, including copies of file
histories and cited prior art, required for Licensee to assume such
responsibility. Licensor agrees to execute such documents and take such actions
as may be reasonably necessary to enable Licensee to undertake such
responsibilities. If Licensee shall decide not to file, prosecute or maintain
any of the Patent Rights in any country, Licensee shall so inform Licensor in a
prompt fashion (i.e., at least thirty (30) days prior to any filing deadline)
and Licensor shall have the right to assume the filing, prosecution and/or
maintenance thereof in such country at its own expense.
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6.3 THIRD PARTY INFRINGEMENT.
------------------------
6.3.1 NOTIFICATION. Each party shall promptly inform the other party
of any suspected infringement or misappropriation by any third party of any
Proprietary Property. Licensee shall, within 120 days of the first notice under
this Section 6.3.1, inform Licensor whether or not Licensee intends to institute
suit against such third party. Licensor need not take any steps toward
instituting suit against any such third party until Licensee has informed
Licensor of its intention pursuant to the previous sentence.
6.3.2 JOINT SUIT. If Licensee notifies Licensor that it desires to
institute suit against such third party with respect to infringement, and
Licensor notifies Licensee within 30 days after receipt of such notice that
Licensor desires to institute suit jointly, the suit shall be brought jointly in
the names of both parties. In consultation with the Joint Steering Committee,
the Licensee shall control the prosecution of such suit, and all costs thereof
shall be shared between the parties as the interests of the parties were
affected by the infringement, including reference to the relative monetary
injury suffered by each party. Recoveries, if any, whether by judgment, award,
decree or settlement, shall, after the reimbursement of each of the parties for
their shares of the joint costs in such action, be shared between the parties as
the interests of the parties were affected by the infringement, including
reference to the relative monetary injury suffered by each party.
6.3.3 LICENSEE SUIT. If Licensee notifies Licensor that it intends
to institute suit against such third party with respect to infringement, and
Licensor decides not to join in such suit, as provided in Section 6.3.2,
Licensee may bring such suit on its own and shall in such event bear all costs
of, and shall exercise all control over, such suit. Licensee may, at its
expense, bring such action in the name of Licensor and/or cause Licensor to be
joined in the suit as a plaintiff. Recoveries, if any, whether by judgment,
award, decree or settlement, shall belong solely to Licensee. Any expenses
incurred by Licensor as a result of being added to such suit by Licensee shall
be paid for and/or reimbursed promptly by Licensee.
6.3.4 LICENSOR SUIT. If Licensee notifies Licensor that it does not
intend to institute suit against such third party, Licensor may institute suit
on its own. Licensor shall bear all costs of, and shall exercise all control
over, such suit. Licensor may, at its expense, bring such action in the name of
Licensee and/or cause Licensee to be joined in the suit as a plaintiff.
Recoveries, if any, whether by judgment, award, decree or settlement, shall
belong solely to Licensor. Any expenses incurred by Licensee as a result of
being added to such suit by Licensor shall be paid for and/or reimbursed
promptly by Licensor.
6.3.5 ABANDONMENT OF SUIT. Should any party commence a suit under
the provisions of this Section 6.3 and thereafter elect to abandon the same, it
shall give timely notice to the other party, which may, if it so desires, be
joined as a plaintiff in the suit (or continue as such if it is already one) and
continue prosecution of such suit, provided, however, that the sharing of
expenses and any recovery of such suit shall be as agreed upon between the
parties.
6.4 CLAIMED INFRINGEMENT. In the event that a third party at any time
provides written notice of a claim to, or brings any action, suit or proceeding
against a party or such party's Affiliates or sublicensees claiming infringement
of its patent rights or unauthorized use or
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misappropriation of its technology based upon an assertion or claim arising out
of the practice of the Proprietary Property in the development, manufacture, use
or sale of Royalty-Bearing Product(s), such party shall promptly notify the
other party of the claim or commencement of such action, suit or proceeding,
enclosing a copy of the claim and/or all papers served relating thereto. In such
instance, Licensee (or a sublicensee, if so provided in the applicable
sublicense agreement) shall have the right to defend such claim, action, suit or
proceeding, at Licensee's (or such sublicensees) sole cost and expense, and
shall keep Licensor informed of the status and progress of the resolution of
such matter. Licensee may, after notification to Licensor, withhold up to 50% of
the payments otherwise due Licensor hereunder and may apply such withheld
amounts to reimbursement of the expenses incurred in defending any such action,
claim or proceeding, provided that any damages recovered by Licensee in any such
action, claim or proceeding shall first be applied to the reimbursement of any
such withheld amounts. The parties hereto shall negotiate in good faith any
adjustment to the provisions of this Agreement in the event that the final
result of such claim, action, suit or proceeding has any negative effect on the
development, manufacture, use or sale of Royalty-Bearing Product(s) hereunder.
6.5 PATENT INVALIDITY CLAIM. If a third party at any time asserts a claim
that any Patent Right is invalid or otherwise unenforceable (an "Invalidity
Claim"), whether as a defense in an infringement action brought by Licensee or
Licensor pursuant to Section 6.3 or in an action brought against Licensee or
Licensor under Section 6.4, the parties shall cooperate with each other in
preparing and formulating a response to such Invalidity Claim. Neither party
shall settle or compromise any Invalidity Claim without the consent of the other
party, which consent shall not be unreasonably withheld.
6.6 PATENT TERM EXTENSIONS. The parties shall cooperate, if necessary and
appropriate, with each other in gaining patent term extension wherever
applicable to Patent Rights covering Royalty-Bearing Products. The Parties
shall, if necessary and appropriate, use reasonable efforts to agree upon a
joint strategy relating to patent extensions. All filings for such extension
shall be made by the party which is the assignee of the patent, PROVIDED,
HOWEVER, that in the event that such party elects not to file for an extension,
such party shall (i) inform the other party of its intention not to file and
(ii) grant the other party the right to file for such extension.
7. CONFIDENTIALITY
---------------
7.1 CONFIDENTIAL INFORMATION. All Confidential Information disclosed by a
party to the other party during the term of this Agreement shall not be used by
the receiving party except in connection with the activities contemplated by
this Agreement, shall be maintained in confidence by the receiving Party (except
to the extent reasonably necessary for the conduct of clinical trials of CTV-05
Products, regulatory approval of CTV-05 Products or for the filing, prosecution
and maintenance of Patent Rights), and shall not otherwise be disclosed by the
receiving party to any other person, firm, or agency, governmental or private,
without the prior written consent of the disclosing party, provided that such
information shall not be deemed Confidential Information to the extent that the
Confidential Information (as determined by competent documentation):
(a) was known or used by the receiving party prior to its date of
disclosure to the receiving party; or
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<PAGE> 14
(b) either before or after the date of the disclosure to the receiving
party is lawfully disclosed to the receiving party by sources other than the
disclosing party rightfully in possession of the Confidential Information; or
(c) either before or after the date of the disclosure to the receiving
party becomes published or generally known to the public (including information
known to the public through the sale of products in the ordinary course of
business) through no fault or omission on the part of the receiving party or its
sublicensees; or
(d) is independently developed by or for the receiving party without
reference to or reliance upon the particular Confidential Information; or
(e) is required to be disclosed by the receiving Party to comply with
applicable laws, to defend or prosecute litigation or to comply with
governmental regulations, provided that the receiving Party provides prior
written notice of such disclosure to the disclosing Party and takes reasonable
and lawful actions to avoid and/or minimize the degree of such disclosure.
7.2 EMPLOYEE AND ADVISOR OBLIGATIONS. Licensor and Licensee each agree
that they shall provide Confidential Information received from the other party
only to their respective employees, consultants and advisors, and to the
employees, consultants and advisors of such party's affiliates, who have a need
to know and have an obligation to treat such information and materials as
confidential.
7.3 TERM. All obligations of confidentiality imposed under this Article 7
shall expire five (5) years following termination or expiration of this
Agreement.
7.4 PUBLICATIONS. The parties acknowledge that scientific lead time is a
key element of the value of the development program for the CTV-05 Products and
further agree that scientific publications must be strictly monitored to prevent
any adverse effect of the premature publication of results of the development
program for the CTV-05 Products. The parties shall establish a procedure for
publication review and approval and each party shall first submit to the other
party an early draft of all such publications, whether they are to be presented
orally or in written form, at least sixty (60) days prior to submission for
publication. Each party shall review each such proposed publication in order to
avoid the unauthorized disclosure of a party's Confidential Information and to
preserve the patentability of inventions. If, as soon as reasonably possible but
no longer than sixty (60) days following receipt of an advance copy of a party's
proposed publication, the other party informs such party that its proposed
publication contains Confidential Information of the other party, then such
party shall delete such Confidential Information from its proposed publication.
If as soon as reasonably possible but no longer than sixty (60) days following
receipt of an advance copy of a party's proposed publication, the other party
informs such party that its proposed publication could be expected to have a
material adverse effect on any Patent Rights or Know-How of such other party,
then such party shall delay such proposed publication sufficiently long to
permit the timely preparation and first filing of patent application(s) on the
information involved.
7.5 PUBLIC ANNOUNCEMENTS.
--------------------
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<PAGE> 15
7.5.1 GENERAL. Any announcements or similar publicity with respect to
the execution of this Agreement (including the timing and the contents of such
announcements or similar publicity) shall be determined by the Licensee, acting
in its sole discretion. The parties agree that any such announcement will not
contain confidential business or technical information and, if disclosure of
confidential business or technical information is required by law or regulation,
will make reasonable efforts to minimize such disclosure and obtain confidential
treatment for any such information which is disclosed to a governmental agency
or group. Each party agrees to provide to the other party with a copy of any
public announcement as soon as reasonably practicable under the circumstances
prior to its scheduled release. Except under extraordinary circumstances, each
party shall provide the other with an advance copy of any press release at least
five (5) business days prior to the scheduled disclosure. Each party shall have
the right to expeditiously review and recommend changes to any announcement
regarding this Agreement or the subject matter of this Agreement, provided that
such right of review and recommendation shall only apply for the first time that
specific information is to be disclosed, and shall not apply to the subsequent
disclosure of substantially similar information that has previously been
disclosed. Except as otherwise required by law, the party whose press release
has been reviewed shall remove any information the reviewing party reasonably
deems to be inappropriate for disclosure.
7.5.2 LICENSEE DISCLOSURE RIGHTS. Notwithstanding the provisions of
Section 7.5.1, (a) Licensee shall have the right to disclose the existence and
financial and other terms of this Agreement to potential investors, lenders and
corporate partners and (b) Licensee shall have the right to issue a press
release and related public relations materials relating to the execution of this
Agreement and the CTV-05 Product, PROVIDED THAT Licensee shall provide a copy of
such release and materials to Licensor in advance of such issuance, for
Licensor's review.
8. INDEMNIFICATION
---------------
8.1 LICENSEE INDEMNIFICATION. Licensee shall indemnify, defend and hold
harmless Licensor and its officers, directors, Affiliates, employees and agents
from and against all third party costs, claims, suits, expenses (including
reasonable attorneys' fees) and damages arising out of or resulting from any
willful misconduct or negligent act or omission by Licensee related to the
subject matter of this Agreement or the distribution, sale, use by or
administration to any person of any CTV-05 Products, or that arises out of any
defect in the manufacture or the labeling, advertising, or sales of CTV-05
Products by Licensee or its sublicensees (except where such cost, claim, suit,
expense or damage arose or resulted from (a) the infringement of the CTV-05
Product(s) on the rights and/or patents of third parties, or (b) any willful
misconduct or negligent act or omission by Licensor), provided that Licensor
gives reasonable notice (no later than thirty (30) days after its receipt of
such claim) to Licensee of any such claim or action, tenders the defense of such
claim or action to Licensee and reasonably assists Licensee at Licensee's
expense in defending such claim or action and does not compromise or settle such
claim or action without Licensee's prior written approval (which approval shall
not be unreasonably withheld).
8.2 LICENSOR INDEMNIFICATION. Licensor shall indemnify, defend and hold
harmless Licensee and its officers, directors, Affiliates, employees, agents and
sublicensees from and against all third party costs, claims, suits, expenses
(including reasonable attorney's fees) and
15
<PAGE> 16
damages arising out of or resulting from any willful misconduct or negligent act
or omission by Licensor relating to the subject matter of this Agreement (except
where such cost, claim, suit, expense or damage arose or resulted from (a) the
infringement of the CTV-05 Products on the rights and/or patents of third
parties, or (b) any willful misconduct or negligent act or omission by Licensee
or its sublicensees), provided that Licensee gives reasonable notice (no later
than thirty (30) days after its receipt of such claim) to Licensor of any such
claims or action, tenders the defense of such claim or action to Licensor and
assists Licensor at Licensor's expense in defending such claim or action and
does not compromise or settle such claim or action without Licensor's prior
written approval (which approval shall not be unreasonably withheld).
8.3 SEPARATE LEGAL COUNSEL. In any action subject to the indemnification
provisions hereof, if the defendants in any such action include both Licensor
and Licensee and any party concludes that there may be legal defenses available
to it which are different from, additional to, or inconsistent with, those
available to the other(s), that party shall have the right to select separate
counsel to participate in the defense of such action on its behalf and such
party shall thereafter bear the cost and expense of such separate defense.
8.4 INSURANCE.
---------
8.4.1 LICENSEE INSURANCE. Licensee shall maintain and will continue to
maintain product liability insurance coverage appropriate to the risks involved
in the development and marketing of CTV-05 Products, as reviewed by the Joint
Steering Committee, but not less than US$2 million, and will no more than
annually present evidence to Licensor that such coverage is being maintained if
so requested in writing by Licensor. Licensee shall have the option of
self-insuring for such coverage, on the condition that it provide Licensor upon
request with an audited financial statement that evidences its ability to
self-insure for an amount reasonably satisfactory to Licensee.
8.4.2 LICENSOR INSURANCE. Licensor shall maintain and will continue
to maintain workers' compensation, general liability and other insurance with
respect to the Boulder Facility, including insurance against loss, damage, fire,
theft, public liability, environmental liability and other risks, in an amount
of at least US$2 million, and will no more than annually present evidence to
Licensee that such coverage is being maintained if so requested in writing by
Licensee.
9. EARLY TERMINATION
-----------------
9.1 TERMINATION FOR BREACH. Upon any material breach of this Agreement by
either party (in such capacity, the "Breaching Party"), the other party (in such
capacity, the "Non-Breaching Party"), may terminate this Agreement by providing
sixty (60) days' written notice to the Breaching Party, specifying the material
breach. The termination shall become effective at the end of the sixty (60) day
period unless (a) the Breaching Party cures such breach during such sixty (60)
day period or (b) if such breach is not susceptible to cure within sixty (60)
days of the receipt of written notice of the breach, the Breaching Party is
diligently pursuing a cure (unless such breach, by its nature, is incurable, in
which case the Agreement may be terminated immediately) and effects such cure
within an additional sixty (60) days after the end of the initial sixty (60) day
cure period.
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9.2 LICENSEE TERMINATION RIGHT. Licensee shall have the right to
terminate this Agreement for convenience at any time upon sixty (60) days prior
written notice to Licensor. Following such termination, neither Licensee nor its
sublicensees shall have any rights to distribute, manufacture, sell or otherwise
distribute any CTV-05 Products in the Field.
9.3 EFFECT OF TERMINATION.
---------------------
9.3.1 PAYMENT. Upon the early termination of this Agreement by
Licensor pursuant to Section 9.1, or termination of this Agreement by Licensee
pursuant to Section 9.2, Licensor shall have the right to retain any sums
already paid by Licensee, and Licensee shall pay all sums accrued hereunder
which are then due.
9.3.2 TERMINATION BY LICENSEE FOR BREACH. Upon the early termination
of this Agreement by Licensee pursuant to Section 9.1, the rights and licenses
granted to Licensee under this Agreement shall not be affected, provided
Licensee continues to comply with its obligations hereunder for the term
thereof.
9.3.3 TRANSFER OF DATA AND FILINGS. Upon termination of this
Agreement by Licensor pursuant to Section 9.1, or termination of this Agreement
by Licensee pursuant to Section 9.2, Licensee will transfer to Licensor all
clinical data, patent and regulatory filings and government market approvals and
all other data developed by Licensee relating to the CTV-05 Products.
9.4 SURVIVAL OF PROVISIONS. In addition to the other provisions
concerning the survivability of terms and conditions hereof, under all
circumstances, the provisions of Sections 6, 7, 8, 9, and 12 hereof shall
survive the expiration or early termination of this Agreement.
10. EFFECT OF BANKRUPTCY ON LICENSES
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 any party, the non-bankrupt parties
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 or
their possession, shall be promptly delivered to the nonbankrupt parties, unless
the bankrupt parties elect to continue, and continues, to perform all of its or
their obligations under this Agreement. All technology and know-how that may be
developed by Licensee during the term of this Agreement that relates in any way
to CTV-05 Products shall be and remain the property of Licensor.
11. OTHER AGREEMENTS
----------------
11.1 FINANCIAL STATEMENTS. Licensor warrants that it will provide annual
financial statements to Licensee in accordance with US GAAP within 90 days of
the end of each fiscal year.
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11.2 NON-COMPETE. During the term of this Agreement, neither Licensor nor
Dr. Chrisope shall, without the prior written consent of Licensee, engage in any
research, development or commercialization activities in the Field involving
lactobacilli or any products or processes that are based upon or derived from
lactobacilli, except in accordance with the Development Plan.
12. MISCELLANEOUS PROVISIONS
------------------------
12.1 DISPUTE RESOLUTION. With the specific exception of those matters
permitted or required to be decided by the joint Steering Committee, by the CEO
of the Licensee, or by the Licensee as outlined in section 3 and elsewhere in
this Agreement ("Excluded Matters"), if one of the parties hereto declares that
a dispute between the parties has arisen related to or arising from this
Agreement, such dispute shall, in the first instance, be the subject of good
faith negotiations between the parties to resolve such dispute. Should the
negotiations not lead to a settlement of the dispute within thirty (30) days
after a party declares that the dispute has arisen, either party may submit the
issue to binding arbitration. Such arbitration shall take place in Boston,
Massachusetts if submitted by Licensor and in Denver, Colorado if submitted by
Licensee and shall be conducted by a single arbitrator appointed by the Boston
or Denver office, as the case may be, of the American Arbitration Association
and in accordance with the commercial arbitration rules of the American
Arbitration Association. The arbitrator shall be a person who has had experience
in pharmaceutical licensing and shall be given full power to hear and finally
determine and dispose of all disputes (other than Excluded Matters) between the
parties that may arise from or that are related to this Agreement. The
arbitrator will use his best efforts to deliver a ruling in writing no later
than thirty (30) days after the hearing (which will be held within 30 days of
the appointment of the arbitrator hearing) and the decision will be binding on
the parties. Judgment upon the decision rendered may be entered in any court
having jurisdiction or application may be made to such court of a judicial
acceptance of the award and an order of enforcement, as the case may be. Each
party shall pay its own attorney's fees. All other fees and expenses payable
with respect to the arbitration proceedings shall be paid in the manner
determined by the arbitrator. Notwithstanding the foregoing, nothing in this
Section 12.1 shall be construed as limiting in any way the right of a party to
seek injunctive relief with respect to any actual or threatened breach of this
Agreement, which breach would cause irreparable harm to the party seeking such
relief, from a court of competent jurisdiction.
12.2 GOVERNING LAW. This Agreement shall be construed and the respective
rights of the parties hereto determined according to the substantive laws of the
Commonwealth of Massachusetts notwithstanding the provisions governing conflict
of laws to the contrary, except matters of intellectual property law which shall
be determined in accordance with the national intellectual property laws
relevant to the intellectual property in question.
12.3 ASSIGNMENT. Neither party may assign this Agreement in whole or in
part without the consent of the other, except if such assignment occurs in
connection with the sale or transfer of all or substantially all of the business
and assets of such party to which the subject matter of this Agreement pertains.
Notwithstanding the foregoing, any party may assign its rights (but not its
obligations) pursuant to this Agreement in whole or in part to an Affiliate of
such party.
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12.4 AMENDMENTS. This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof, and supersedes all
previous arrangements with respect to the subject matter hereof, whether written
or oral. Any amendment or modification to this Agreement shall be made in
writing signed by both parties.
12.5 NOTICES.
-------
Notices to Licensor shall be addressed to:
GyneLogix, Inc.
280 South Taylor Avenue
Suite 100
Louisville, CO ________
Attention: ___________________________
Facsimile No: (____) _________________
With a copy to:
Joseph E. Kovarik, Esq.
Sheridan Ross P.C.
1700 Lincoln Street, Suite 3500
Denver, CO 80203
Telephone No. (303) 863-2977
Facsimile No. (303) 863-0223
Notices to Licensee shall be addressed to:
The Medicines Company
One Cambridge Center
Cambridge, MA 02142
Attention: President
Facsimile No.: (___) __________________
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention: Steven D. Singer, Esq.
Facsimile No.: (617) 526-5000
Any party may change its address by giving notice to the other party in the
manner herein provided. Any notice required or provided for by the terms of this
Agreement shall be in writing and shall be (a) sent by registered or certified
mail, return receipt requested, postage prepaid, (b)
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sent via a reputable overnight courier service, or (c) sent by facsimile
transmission, in each case properly addressed in accordance with the paragraph
above. The effective date of notice shall be the actual date of receipt by the
party receiving the same.
12.6 FORCE MAJEURE. No failure or omission by the parties hereto in the
performance of any obligation of this Agreement shall be deemed a breach of this
Agreement or create any liability if the same shall arise from any cause or
causes beyond the control of the parties, including, but not limited to, the
following: acts of God; acts or omissions of any government; any rules,
regulations or orders issued by any governmental authority or by any officer,
department, agency or instrumentality thereof; fire; storm; flood; earthquake;
accident; war; rebellion; insurrection; riot; and invasion and provided that
such failure or omission resulting from one of the above causes is cured as soon
as is practicable after the occurrence of one or more of the above-mentioned
causes.
12.7 INDEPENDENT CONTRACTORS. It is understood and agreed that the
relationship between the parties hereunder is that of independent contractors
and that nothing in this Agreement shall be construed as authorization for
either Licensor or Licensee to act as agent for the other.
12.8 NO STRICT CONSTRUCTION. This Agreement has been prepared jointly and
shall not be strictly construed against any party.
12.9 HEADINGS. The captions or headings of the sections or other
subdivisions hereof are inserted only as a matter of convenience or for
reference and shall have no effect on the meanings of the provisions hereof.
12.10 NO IMPLIED WAIVERS; RIGHTS CUMULATIVE. No failure on the part of
Licensor or Licensee 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, 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.
12.11 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 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, Licensor and Licensee
hereby waive any provision of law that would render any provision hereof
prohibited or unenforceable in any respect.
12.12 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
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.
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<PAGE> 21
IN WITNESS WHEREOF, the parties have executed this Agreement, individually
or by their duly authorized officers, as appropriate, on the date first written
above.
GYNELOGIX, INC. THE MEDICINES COMPANY
By: /s/ Gerald L. Chrisope By: /s/ Clive A. Meanwell
----------------------------------- ----------------------------------
Name: Gerald L. Chrisope Name: Clive A. Meanwell
--------------------------------- --------------------------------
Title: President and CEO Title: President and CEO
-------------------------------- -------------------------------
For purposes of Section 11.2 hereof,
/s/ Gerald L. Chrisope
- --------------------------------------
Gerald Chrisope
21
<PAGE> 22
Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
APPENDIX A
CTV-05
- ------
a. LACTOBACILLUS CRISPATUS strain CTV-05, as deposited in American Type Culture
Collection, Accession No. 202225;
b. any additional LACTOBACILLUS species and/or strains possessed, owned or
controlled by Licensor as of the Effective Date which has similar beneficial
attributes or utility within the Field and that is described in U.S. patent
application Serial No. [**], and any Know-How and any Improvements thereof as
of the Effective Date, including without limitation all information contained
in any SOP or FDA document owned, submitted or controlled by Licensor which
relates to the Field.
<PAGE> 23
Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
APPENDIX B
PATENT RIGHTS
1. PATENT RIGHTS
-------------
U.S. Patent Application No. [**]
PCT Patent Application No. [**]
<PAGE> 24
APPENDIX C
BOULDER FACILITY BUDGET
(To Be Supplied)
<PAGE> 1
Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT 10.9
CONSULTING AGREEMENT
INNOVEX INC. AND THE MEDICINES COMPANY
(PROJECT #8138)
This Consulting Agreement ("Agreement"), dated December 1, 1998 is by and
between Innovex Inc. ("Innovex"), whose principal office is at Waterview
Corporate Center, 10 Waterview Boulevard, Parsippany, New Jersey 07054, and The
Medicines Company ("The Medicines Company"), whose principal office is located
at One Cambridge Center, Cambridge, Massachusetts 02142.
In consideration of the following covenants, promises and obligations, The
Medicines Company and Innovex agree as follows:
1. SERVICES
In accordance with the terms and conditions of this Agreement, The
Medicines Company retains Innovex for the purpose of providing consulting,
marketing and sales services set forth in Schedule A attached to this Agreement
(the "Services").
2. AUTHORIZATION FOR PROCUREMENT SERVICES
The Medicines Company shall be the beneficiary of all services performed by
outside service providers and all agreements for such services shall be subject
to the authorization requirements set forth in Schedule B to this Agreement.
3. COMPENSATION AND EXPENSES
The Medicines Company shall pay Innovex for services performed at the
following rates:
Director of Marketing $ [**] Per Hour
Product Manager $ [**] Per Hour
All expenses billed by outside service providers shall be passed through to
The Medicines Company. Innovex shall receive a [**] administrative fee for all
expenses passed through to The Medicines Company.
The Medicines Company will reimburse Innovex for reasonable out of pocket
costs and expenses that are necessary and actually incurred by Innovex pursuant
to the implementation of this Agreement. Request for reimbursement of expenses
and costs will be submitted at the end of each month. Each invoice shall be
supported by appropriate documentation of expenses. Notwithstanding the
foregoing, Innovex shall not incur total costs and expenses in excess of $[**]
per month without the prior written approval of the Medicines Company.
All invoices are strictly net of any taxes, and payment in full must be
made within thirty (30) days of the date of the invoice, after which time
interest shall be due and payable on all unpaid balances at the rate of 1.5% per
month.
Payment by check should be mailed to the following address:
Innovex lnc.
Waterview Corporate Center
10 Waterview Boulevard
Parsippany, New Jersey 07054
Innovex's Federal Employment ID Number is 06-1076709.
<PAGE> 2
4. TERM & TERMINATION
The period of performance of this Agreement will begin on December 1, 1998,
and will continue until terminated by the parties, in the manner provided by
this Agreement.
A party may terminate this Agreement if the other party is in material
breach of the Agreement and has not cured the breach within fifteen (15) days of
written notice specifying the breach. Consent to extend the cure period shall
not be unreasonably withheld, so long as the breaching party has commenced cure
during the fifteen (15) day notice period and pursues cure of the breach in good
faith.
Either party may terminate this Agreement without cause with thirty days
written notice. Upon termination without cause by The Medicines Company, The
Medicines Company will pay Innovex all fees earned as of the date of
termination, all reasonable costs and expenses incurred prior to termination,
and all reasonable documented non-cancelable costs and expenses.
Termination of this Agreement for whatever reason shall not affect the
accrued rights of either Innovex, or The Medicines Company arising under or out
of this Agreement and all provisions which expressly or by the implication
survive this Agreement shall remain in full force and effect.
5. RELATIONSHIP OF THE PARTIES.
Innovex is an independent contractor and shall have no authority to act as
an agent of The Medicines Company or to create or assume any binding obligation
in The Medicines Company's name, except as expressly provided herein. Each party
will be solely responsible for payment of all compensation owed to its employees
as well as employment related taxes, worker's compensation, and general
liability insurance.
Under no circumstances shall Innovex be liable to an outside service
provider for any direct or indirect, special or consequential damages caused by
the fault or negligence of The Medicines Company, its employees or agents and
Innovex shall under no circumstances be a guarantor of commitments made by The
Medicines Company.
6. CONFIDENTIAL INFORMATION.
Innovex and The Medicines Company agree that all information whether or not
in writing relating to the research, products, business affairs or finances of
the other, or of any suppliers, agents, distributors, licensees or customers of
the other which comes into possession of Innovex or The Medicines Company under
this Agreement shall be Confidential Information ("Confidential Information").
The Confidential Information shall be marked as confidential or otherwise
represented by the disclosing party as confidential either before or within a
reasonable time of the disclosure. Innovex and The Medicines Company agree to
hold Confidential Information in strict confidence, use such Confidential
Information only for the purposes of performing their respective obligations
under the Agreement and disclose it only on a need-to-know basis to
subcontractors and employees who are under a written obligation to maintain the
confidentiality of the information. By way of illustration, but not limitation.
Confidential Information may include inventions, products, processes, methods,
techniques, formulas, compositions,
<PAGE> 3
compounds, projects, developments, plans, research data, clinical data,
financial data, personnel data, computer programs, customer and supplier lists
and contacts at or knowledge of customers or prospective customers of the
Medicines Company.
The obligations of the parties in this Section 6 shall not extend to any
Confidential Information: (i) which can be shown by written documentation to
have been known by the recipient prior to its receipt from the other; (ii) which
is generally known to the public at the time of the disclosure or becomes
generally known through no wrongful act on the part of the receiving party;
(iii) becomes known to the receiving party through disclosure by sources other
than the disclosing party having the legal right to disclose such Confidential
Information; (iv) which by mutual written agreement is released from a
confidential status; or (v) which is required to be disclosed under any
statutory, regulatory or judicial requirement, and in that event,
confidentiality will be preserved and protected to the extent possible;
additionally, notice will be provided to the other party prior to any such
disclosure.
The obligations of Innovex and The Medicines Company under this Section 6
shall survive the termination or expiration of this Agreement for a period of
five (5) years.
7. LIABILITY
The liability of Innovex for any loss or damage suffered by The Medicines
Company as a result of any breach of the Agreement or of any other liability of
Innovex in connection with the performance of the Services shall be limited to
an amount which shall not exceed the total amount of any payments made to the
Innovex under this Agreement by The Medicines Company to the date the liability
arose.
Innovex shall not be liable for the following losses or damages howsoever
incurred (even if foreseeable or in the contemplation of Innovex or The
Medicines Company): (i) loss of profits, business or revenue, whether suffered
by The Medicines Company or any other person; or (ii) special, indirect, or
consequential loss, whether suffered by The Medicines Company or any other
person.
The Medicines Company agrees to defend, indemnify and hold Innovex harmless
from and against any and all claims, damages, costs, expenses or other
liabilities, including reasonable attorneys fees, arising out of the use or
publication of any data or work product generated or produced by Innovex as a
result of this Agreement, or as a result of any breach by The Medicines Company
of any of the terms ~f this Agreement, provided this indemnity shall not extend
to any claim, demand or legal action arising as a result of any breach of this
Agreement by Innovex or resulting form the gross negligence or intentional
misconduct of Innovex.
8. DOCUMENTS AND RECORDS
Upon the written request of The Medicines Company, Innovex will destroy or
return at the expense of The Medicines Company all materials belonging to The
Medicines Company.
9. ASSIGNMENT
Neither party may assign this Agreement without the prior written consent
of the other party.
<PAGE> 4
10. NOTICES
All notices under this Agreement shall be in writing and shall be deemed
duly given (i) when received if personally delivered or sent by facsimile
transmission, or (ii) three (3) business days (Saturdays, Sundays, Bank and
public holidays excluded) after the date mailed, if sent by registered or
certified mail return receipt requested and postage prepaid, and addressed to
the parties at the following addresses:
If to The Medicines Company to:
Clive Meanwell, CEO
One Cambridge Center
Cambridge, MA 02142
Phone: (617) 225-9099
Fax: (617) 225-2397 -
If to Innovex to:
David Stack, President
Waterview Corporate Center
10 Waterview Boulevard
Parsippany, NJ 07054
Phone: (973) 257-4570
Fax: (973) 257-4581
or to such other destination as either party may hereafter notify the other
party in accordance with this section.
11. REPRESENTATIONS & WARRANTIES
Each party warrants and represents to the other that it has the full right
and authority to enter into this Agreement, and that it is not aware of any
impediment that would inhibit its ability to perform its obligations under this
Agreement.
Innovex and The Medicines Company agree to undertake all of their
respective obligations under this Agreement in conformance with generally
accepted business standards, and in material conformance with all applicable
local, state and federal laws and regulations.
12. NON-EXCLUSIVE ARRANGEMENT
This Agreement is not to be interpreted as an exclusive consulting
agreement. Nothing stated herein shall prevent Innovex or any affiliate of the
Innovex from accepting other assignments during the term of this Agreement.
Notwithstanding the foregoing, it is specifically understood and agreed that
Innovex and affiliates of the Innovex, from time to time, may enter into
consulting and other agreements with competitors of The Medicines Company
without incurring any liability for breach of this Agreement.
13. GENERAL PROVISIONS
This Agreement shall be governed by and construed in accordance with the
laws of the State of New Jersey, without giving effect to the principles of
conflict laws.
Neither party's waiver of the other's breach of any term, covenant or
condition contained in this Agreement shall be deemed to be a waiver of any
subsequent breach of the same or any other term, covenant or condition in this
Agreement.
If any part or parts of this Agreement are held to be invalid, the
remaining parts of the Agreement will continue to be valid and enforceable.
The covenants contained in this Agreement which by their terms, require
their performance after the expiration or termination of this Agreement shall be
<PAGE> 5
enforceable notwithstanding the expiration or termination of this Agreement.
This Agreement, and the materials incorporated herein by reference,
constitute the entire agreement of the parties and supersedes all prior
contracts, agreements and understandings relating to the same subject matter
between the parties. The parties intend this Agreement to be a complete
statement of the terms of their agreement, and no change or modification of any
of the provisions of this Agreement shall be effective unless it is in writing
and signed by a duly authorized representative of the party against which it is
to be enforced.
This Agreement may be executed in several counterparts, each of which shall
be deemed an original but all of which shall constitute one and the same
instrument.
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INNOVEX INC. THE MEDICINES COMPANY
By: /s/ Dave Stack By: /s/ Richard Malcolm
------------------------------- ---------------------------------------
Name: Dave Stack Name: Richard Malcolm
Title: President Title: Chief Operating Officer
February 17, 1999
<PAGE> 7
SCHEDULE A
SERVICES
A. MARKETING AND STRATEGIC SERVICES
Innovex shall develop and implement marketing and sales strategies for The
Medicines Company. Such marketing and strategic services will include, but are
not limited to, assisting The Medicines Company in developing and implementing
marketing and sales strategies for Hirulog pursuant to The Medicines Company's
Business Plan (the "Business Plan"); participating as a member of marketing
teams established by The Medicines Company pursuant to the Business Plan;
coordinating communication with service providers in implementing marketing and
sales strategies; and other marketing and strategic services as mutually agreed
from time to time.
B. PROCUREMENT SERVICES
Innovex shall identify service providers to execute marketing and sales
strategies on behalf of The Medicines Company. Innovex shall, upon authorization
from The Medicines Company as set forth in Schedule B, have the authority on
behalf of The Medicines Company to procure and negotiate agreements with service
providers for all reasonable or necessary outside services in connection with
implementing the marketing and sales strategies. Innovex shall monitor and
manage the performance of such service providers under these agreements.
<PAGE> 8
SCHEDULE B
AUTHORIZATION FOR PROCUREMENT SERVICES
Prior to entering into any agreements with service providers or entering
into any legal commitments on behalf of The Medicines Company, Innovex shall (A)
comply with provisions (i) and (ii) below and with any written policy of The
Medicines Company concerning the procurement of bids or proposals and (B) make a
good faith determination that The Medicines Company has not elected to provide
or procure such goods or services itself.
(i) Prior to agreeing to any specific purchase of goods or services which
exceed $1,000, Innovex shall obtain bids from one or more suppliers and
recommend to The Medicines Company the supplier from which the procurement of
goods or services would be most appropriate. The Medicines Company shall then
notify Innovex as to which supplier to use.
(ii) Innovex shall maintain and on request, in a timely and reasonable
manner, provide The Medicines Company with complete documentation for all
procurement of goods and services. Innovex will negotiate terms of a written
agreement with the service providers, including, without limitation, provisions
addressing the specific duties and standards for performance, deliverables,
payment schedule, confidentiality, ownership of intellectual property, insurance
and indemnification. Innovex will engage legal counsel, as needed, to draft
service provider agreements. The final terms of such written agreements shall be
subject to the consent of the Medicines Company, such consent shall not be
unreasonably withheld.
(iii) The Medicines Company shall be responsible for executing written
agreements with service providers and for payment of all fees in connection with
agreements with service providers.
<PAGE> 1
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT 10.10
ALLIANCE AGREEMENT
This Alliance Agreement (this "Agreement") is made and entered into as
of the ____ day of August 1996, by and between Medicines Development Company, a
Delaware corporation (the "Company"), and PharmaBio Development Inc., a North
Carolina corporation and a wholly owned subsidiary of Quintiles Transnational
Corp. ("PharmaBio").
WHEREAS, the Company, PharmaBio, Warburg, Pincus, Ventures L.P., MPM
Medicines L.P., Hanseatic Americas LDC, Clive Meanwell, Scott Johnson, and
Ansbert Gadicke are parties to a stock purchase agreement dated as of the even
date herewith (the "Purchase Agreement"); and
WHEREAS, a condition to closing pursuant to Section 4.5 of the Purchase
Agreement is the execution and delivery of this Agreement by the Company and
PharmaBio;
NOW, THEREFORE, in consideration of the terms and conditions herein
contained and contained in the Purchase Agreement, the Company and PharmaBio
agree as follows:
1.0 SCOPE OF SERVICES
-----------------
1.1 SERVICES RELATING TO COMPANY'S DEVELOPMENT PROGRAMS
As reasonably requested by the Company from time to time, PharmaBio
shall provide services to the Company to review and evaluate, jointly with the
Company, development programs created by the Company relating to potential or
actual product acquisitions. Such services shall be provided at no charge to the
Company by PharmaBio. The parties acknowledge that the purpose of this
collaboration is to optimize the duration, cost, specifications and quality
aspects of each of the Company's product development programs, and that the
parties anticipate that this collaborative planning process will lead to
substantial improvements in product development and performance compared with
the performance considered normal for the biopharmaceutical industry. The
parties further acknowledge that plans relating to product development involve a
dynamic process, and that such plans may require modification from time to time
in order to achieve optimal duration, cost and quality performances. The parties
agree to endeavor to create a collaborative relationship in which planning and
product development can be pursued effectively and efficiently. Unless otherwise
agreed by the Company, PharmaBio shall provide such services reasonably
requested by the Company, subject to Section 1.5.
1.2 PROJECT SERVICES
With respect to each of the Company's products, the Company shall
consult with PharmaBio regarding all services which the Company desires to
outsource relating to such products. All such services within the scope of
PharmaBio's (and its affiliates') then customary services shall be offered to
PharmaBio and PharmaBio shall agree to perform
<PAGE> 2
such services reasonably requested by the Company, subject to Section 1.5.
Services provided by PharmaBio shall include, but not be limited to, clinical
development services, non-clinical development services, project management
services, expert consultation regarding project implementation, pharmaeconomic
services, regulatory affairs services, post-marketing clinical, regulatory and
pharmacosurveillance services, and statistical, statistical programming, data
processing, data management, and clerical services.
1.3 SERVICE AGREEMENTS
All services provided by PharmaBio to the Company shall be subject to
the terms and conditions of this Agreement. Additionally, as a condition to
acceptance of project services pursuant to Section 1.2 hereof, the Company and
PharmaBio shall enter into a project services agreement, which shall be
substantially in the form of PharmaBio's then standard form of services
agreement and in any event which shall contain provisions covering scope of
work, project specifications, quality standards, and fees and costs (consistent
with Section 2.0 hereof). All material services agreements shall be reviewed by
Dennis Gillings or Rachel Selisker.
1.4 PERFORMANCE OF SERVICES
In performing services referred to in Section 1.2, PharmaBio agrees to
assure that these services are conducted in substantial compliance with, when
appropriate, any applicable protocol and specifications and with all applicable
laws, rules and regulations of the subject jurisdictions. PharmaBio also agrees
to cause the services it is to perform pursuant to Section 1.0 hereof to be
rendered by one or more of its affiliates which also are direct or indirect
subsidiaries of Quintiles Transnational Corp. The Company acknowledges and
agrees that such services will be performed by affiliates of PharmaBio.
1.5 LIMITATION OF SERVICES
PharmaBio shall not be required to perform any services which, as
determined by PharmaBio in good faith, either: (i) are beyond PharmaBio's
customary scope of services; (ii) compromise PharmaBio's conflict of interest,
professional or ethical policies; or (iii) are beyond PharmaBio's reasonable
capacity. In the event that PharmaBio determines that it will decline to provide
the proposed services due to a conflict of interest relating thereto, PharmaBio
shall notify the Company as soon as practicable of any such conflict of
interest. As to any services declined by PharmaBio, at the Company's request
PharmaBio shall use its best efforts in locating and evaluating, jointly with
the Company, an alternative provider for the contemplated services. PharmaBio
may assist the Company in planning and managing projects performed by
alternative service providers.
-2-
<PAGE> 3
2.0 FEES FOR SERVICES
-----------------
2.1 AMOUNT OF FEES
The Company shall pay to PharmaBio its then standard fees for services
rendered pursuant to Section 1.0 hereof. PharmaBio shall provide the Company a
schedule of such standard fees from time to time upon request of the Company.
The parties agree that the standard fees of PharmaBio shall be the fees which
PharmaBio normally charges for the types of services proposed to be provided to
multinational pharmaceutical companies at the time such services are provided,
PharmaBio agrees to consult with the Company regarding PharmaBio's fees for each
project and to establish such fees in good faith, taking into consideration
constraints imposed by short duration development time and international
standards of quality. From time to time, upon request by the Company, PharmaBio
shall provide information to the Company which reasonably establishes that the
fees paid by Company to PharmaBio are Quintiles' then standard fees; provided,
however, that PharmaBio shall not be required to provide any information to the
Company which PharmaBio believes in good faith will compromise any
confidentiality arrangements between PharmaBio and its other clients. The
Company will pay PharmaBio on a use basis at cost for network/mainframe computer
time, online disk storage and for printing and supplies.
2.2 BONUS
2.2.1 BONUS FOR EXCEPTIONAL PERFORMANCE
At the time the parties enter into the service agreement with respect
to any project, the parties shall use their best efforts to agree in writing to
certain performance standards for such project (the "Bonus Standards") which
must be achieved by PharmaBio in order for it to be entitled to a payment in
excess of the fees provided by Section 2.1 (the "Bonus Fee") and to agree to the
overall fees and costs of the project under Section 2.0 (the "Planned Cost").
The parties acknowledge that a Bonus Standard shall be based on exceptional,
industry leading performance and such other levels of performance as may be
agreed to by the parties. The parties anticipate that the Bonus Fee shall be up
to ten percent (10%) of "net revenue" PharmaBio receives for a project under
this Section 2.0. "Net revenue" shall be determined in the same manner as it is
determined by Quintiles. Transnational Corp. for purposes of its audited
financial statements. Should the parties be unable to agree to the establishment
of the Bonus Standard, the Bonus Fee and the Planned Cost or as to whether
PharmaBio is entitled to the Bonus Fee, the dispute resolution procedures set
forth in Section 3.0 shall be followed. During the course of any project, the
parties may mutually agree in writing to modify the Bonus Standard, Bonus Fee or
Planned Cost.
2.2.2 PAYMENT OF BONUS FEE
If PharmaBio shall achieve any Bonus Standard for a project and the
actual fees and costs of such project shall be equal to or less than the Planned
Cost plus any fees and costs arising out of any change orders for such project,
PharmaBio shall be entitled to the
-3-
<PAGE> 4
Bonus Fee for such project, which shall be paid promptly by the Company upon
achievement of such Bonus Standard. The Bonus fee shall be paid, at PharmaBio's
option, as follows: (i) in cash or (ii) in a number of shares of common stock of
the Company equal to the Bonus Fee multiplied by one hundred ten percent (110%)
and divided by the Share Value (as defined below).
2.2.3 DETERMINATION OF SHARE VALUE
The "Share Value" shall be determined pursuant to this Section 2.2.3.
Upon PharmaBio's election to be paid a Bonus Fee in common stock of the Company,
by notice thereof to the Company, the Company promptly shall propose the Share
Value and deliver to PharmaBio a description in reasonable detail of the manner
by which the Company determined the proposed Share Value, which shall be
determined as of the time the Bonus Standard is achieved. Thereafter, the
parties shall use their best efforts and negotiate in good faith to agree to the
Share Value within thirty (30) days of PharmaBio's election. If the parties
cannot agree to the Share Value within such period, then the determination of
the Share Value shall be postponed until the next round of equity financing of
the Company following the achievement of the Bonus Standard. Promptly following
such next round, the Share Value shall be determined and shall be equal to the
average of the per share purchase price of the Company's common stock (or common
stock equivalent) issued in such round and the per share purchase price of the
Company's common stock (or common stock equivalent) in the immediately preceding
round of equity financing. Should the parties be unable to agree to the Share
Value, the dispute resolution procedure set forth in Section 3.0 shall be
followed. Nothing in this Section 2.2.3 shall be construed to preclude an
agreement in writing by the parties to determine or settle the Share Value in a
manner otherwise than as provided in this Section or to provide for the payment
of the Bonus Fee in cash rather than in common stock.
2.3 PAYMENT TERMS
PharmaBio will invoice the Company monthly or as separately agreed for
services rendered hereunder and payment shall be made by the Company within
thirty (30) days of receipt of itemized invoices for work completed. Overdue
payments shall accrue interest at the rate of thirteen percent (13%) per annum,
and payments overdue for more than ninety (90) days shall accrue interest at the
rate of eighteen percent (18%) per annum, plus reasonable attorneys' fees and
costs incurred by PharmaBio in connection with the collection thereof.
2.4 EXPENSES
PharmaBio shall be reimbursed by the Company for all reasonable and
necessary travel and lodging expenses incurred in the performance of services
provided herein which have been requested or approved by the Company. Payment
for such services shall be made to PharmaBio within thirty (30) days of receipt
by the Company of invoices or other evidence of such expenditures.
-4-
<PAGE> 5
3.0 DISPUTE RESOLUTION PROCEDURES
-----------------------------
The parties hereto recognize that a BONA FIDE dispute as to certain
matters may from time to time arise during the term of this; Agreement which
relate to a party's rights or obligations hereunder. In the event of the
occurrence of such a dispute, the parties shall through good faith negotiations
at the managerial level at which such matter arises endeavor to resolve the
dispute promptly. In the event that such dispute is not resolved promptly,
either party may, by written notice to the other party, have such dispute
referred to the review committee designated below, or their successors, and such
committee shall through good faith negotiation endeavor to resolve the dispute
by unanimous agreement of its members. The review committee shall be comprised
of five individuals, two each appointed by the Company and PharmaBio from such
party's executive officers or directors and one appointed by Warburg, Pincus,
Ventures L.P. The review committee initially shall be comprised of Clive
Meanwell, Scott Johnson, Dennis Gillings, Rachel Selisker, and Nicholas Lowcock.
In the event the review committee is not able to resolve such dispute promptly
by unanimous action, each party shall have the right to pursue any and all
remedies available at law or in equity. Neither party shall take any action
under contract or otherwise with respect to the dispute, and the Company shall
not proceed to refer any project work elsewhere for failure to obtain agreement
to perform services, without first having undertaken the foregoing procedure
with respect to the dispute and having notified the other party in writing that
it considers the dispute resolution procedures to have failed.
4.0 TERM
----
This Agreement shall remain in full force and effect for a period
beginning on the date hereof and ending when PharmaBio shall have ceased
performing services under this Agreement, or any project services agreement
entered into pursuant to this Agreement, with respect to the first three
products of the Company for which PharmaBio provides services. This Agreement
may be renewed or extended by the mutual written agreement of the parties.
Upon the termination of this Agreement, PharmaBio shall deliver to
Company all data and materials provided by Company to PharmaBio for the conduct
of services under this Agreement, except as otherwise required by applicable law
or regulation. All statistical data, all statistical reports, all data entries
and any other documentation produced as the result of services performed by
PharmaBio under the terms of this Agreement shall be delivered to Company at
such time as payment has been made to PharmaBio for all services performed.
PharmaBio reserves the right to retain one copy of all materials provided to
Company as the result of services performed by PharmaBio under this Agreement
for a period of five (5) years which will remain sealed unless a dispute arises
regarding the services performed by PharmaBio hereunder.
5.0 CONFIDENTIALITY
---------------
It is understood that during the course of this Agreement, PharmaBio
and its employees may be exposed to data and information which is confidential
and proprietary
-5-
<PAGE> 6
to the Company. All such data and information (hereinafter "Company Confidential
Information") written or verbal, tangible or intangible, made available,
disclosed, or otherwise made known to PharmaBio and its employees as a result of
services under this Agreement shall be considered confidential and shall be
considered the sole property of Company. All information regarding clinical
trials or clinical trial management and all information regarding PharmaBio's
operations, including but not limited to PharmaBio Property (as defined in
Section 6.0 below), disclosed by PharmaBio to the Company in connection with
this Agreement is proprietary, confidential information belonging to PharmaBio
(the "PharmaBio Confidential Information", and together with the Company
Confidential Information, the "Confidential Information"). The Confidential
Information shall be marked as confidential or otherwise represented by the
disclosing party as confidential either before or within a reasonable time after
its disclosure. The Confidential Information shall be used by the receiving
party and its employees only for purposes of performing the receiving party's
obligations hereunder. Each party agrees that it will not reveal, publish or
otherwise disclose the Confidential Information of the other party to any third
party without the prior written consent of the disclosing party, provided that
the foregoing obligations shall not apply to Confidential Information which:
(a) is or becomes generally available to the public other than
as a result of a disclosure by the receiving party;
(b) becomes available to the receiving party on a
non-confidential basis from a source which is not prohibited from
disclosing such information by a legal, contractual or fiduciary
obligation to the disclosing party;
(c) the receiving party develops independently of any
disclosure by the disclosing party;
(d) was in the receiving party's possession or known to the
receiving party prior to its receipt from the disclosing party; or
(e) is required by law to be disclosed.
This obligation of confidentiality and non-disclosure shall remain in
effect for a period of five years after the termination of this
Agreement.
6.0 OWNERSHIP
---------
All data and information necessary for PharmaBio to conduct project
assignments will be forwarded by the Company to PharmaBio. All data and
information generated or derived by PharmaBio as the result of services
performed by PharmaBio under this Agreement shall be and remain the exclusive
property of the Company. Any inventions that may evolve from the data and
information described above as the result of services performed by PharmaBio
under this Agreement shall belong to the Company and PharmaBio agrees to assign
all such inventions and/or patents to the Company. Notwithstanding the
foregoing, Company acknowledges that PharmaBio possesses certain inventions,
processes, know-how, trade secrets, improvements, other intellectual
-6-
<PAGE> 7
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
properties and other assets, including but not limited to laboratory analyses,
analytical methods, procedures and techniques, computer technical expertise and
software, which have been independently developed by PharmaBio (collectively
"PharmaBio Property"). The Company and PharmaBio agree that any PharmaBio
Property or improvements thereto which are used, improved, modified or developed
by PharmaBio under or during the term of this Agreement are the product of
PharmaBio's technical expertise possessed and developed by PharmaBio prior to or
during the performance of this Agreement and are the sole and exclusive property
of PharmaBio. The Company further acknowledges that PharmaBio's professional
staff possesses certain technical expertise and conceptual expertise in area of
drug development which have been independently developed by PharmaBio. The
Company and PharmaBio agree that such technical expertise, processes, methods,
approach or analyses used, improved, modified or developed by PharmaBio under or
during the term of the Agreement or are the product of PharmaBio's technical
expertise possessed and developed by PharmaBio prior to the date of this
Agreement and are the sole and exclusive property of PharmaBio.
7.0 LIMITATION OF LIABILITY; INDEMNIFICATION
----------------------------------------
7.1 LIMITATION OF LIABILITY
Neither PharmaBio nor its affiliates nor any of its or their respective
directors, officers, employees or agents shall have any liability whatsoever
under this Agreement or otherwise except with respect to damages directly
attributable solely to PharmaBio's negligence, gross negligence or intentional
misconduct. In addition, the collective, aggregate liability of PharmaBio and
its affiliates and its and their respective directors, officers, employees and
agents under this Agreement or otherwise shall not exceed the greater of (i) the
amount of compensation actually received by PharmaBio from the Company pursuant
to this Agreement for the assignment or task from which such liability arose or
(ii) [**], except with respect to damages directly attributable solely to
PharmaBio's gross negligence or intentional misconduct. Notwithstanding the
foregoing, neither PharmaBio, nor its affiliates, nor any of its or their
respective directors, officers, employees or agents shall have any liability for
any special, incidental, or consequential damages, including, but not limited to
the loss of opportunity, loss of the use of any data or information supplied
hereunder, loss of revenue or profit, in connection with or arising out of this
Agreement, the services performed by PharmaBio hereunder or the existence,
furnishing, functioning, or the Company's use of any information, documentation
or services provided pursuant to this Agreement, even if PharmaBio shall have
been advised of the possibility of such damages.
7.2 INDEMNIFICATION
7.2.1 COMPANY
The Company shall indemnify, defend and hold harmless PharmaBio, its
affiliates and its and their respective directors, officers, employees and
agents (each, an "Indemnitee") from and against any and all losses, claims,
actions, damages, liabilities,
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<PAGE> 8
costs and expenses, (including reasonable attorneys' fees and court costs)
(collectively, "Losses"), relating to or arising from or in connection with this
Agreement (including, without limitation, any Losses arising from or in
connection with any study, test, product or potential product to which this
Agreement relates) or any litigation, investigation or other proceeding relating
to any of the foregoing, except to the extent such Losses are determined to have
resulted solely from gross negligence or intentional misconduct of the
Indemnitee seeking indemnity hereunder.
7.2.2 PHARMABIO
PharmaBio shall indemnify, defend and hold harmless the Company, its
affiliates and its and their respective directors, officers, employees and
agents (each, an "Indemnitee") from and against any and all losses, claims,
actions, damages, liabilities, costs and expenses, (including reasonable
attorneys' fees and court costs) (collectively, "Losses"), to the extent caused
by PharmaBio, except to the extent (i) PharmaBio is indemnified pursuant to
Section 7.2.1 hereof OR (ii) PharmaBio's liability is excluded or limited by
Section 7.1 hereof.
7.2.3 INDEMNITOR
For purposes of Section 7.3, the party providing indemnification
pursuant to Section 7.2 shall be referred to as the Indemnitor.
7.3 INDEMNIFICATION PROCEDURE
The Indemnitee shall: (a) give the Indemnitor notice of any such claim
or law suit (including a copy thereof served upon it); and (b) Indemnitee and
its employees shall fully cooperate with the Indemnitor and its legal
representatives in the investigation of any matter the subject of
indemnification; and (c) Indemnitee shall not unreasonably withhold its approval
of the settlement of any such claim, liability, or action by the Indemnitor the
subject of this Indemnification provision and the Indemnitor may unilaterally
settle any such claim so long as the Indemnitee obtains a full and complete
enforceable release from any and all liability whatsoever from all parties
making or threatening to make the claim being settled. Provided, however, that
Indemnitee's failure to comply with its obligations pursuant to this Section 7.3
shall not constitute a breach of this Agreement nor relieve the Indemnitor of
its indemnification obligations pursuant to Section 7.2, except to the extent,
if any, that the Indemnitor's defense of the affected claim, action or
proceeding actually was materially impaired thereby.
8.0 FORCE MAJEURE
-------------
In the event PharmaBio shall be delayed or hindered in or prevented
from the performance of any act required hereunder by reasons of strike,
lockouts, labor troubles, inability to procure materials, failure of power or
restrictive government or judicial orders, or decrees, riots, insurrection, war,
Acts of God, inclement weather or any other reason or cause beyond PharmaBio's
control, then performance of such act shall be excused for the period of such
delay. If as a result of a condition or event referred to in this Section 8.0,
PharmaBio shall be unable to perform its obligations hereunder for a
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<PAGE> 9
period of thirty (30) consecutive days, the Company may engage other persons to
perform services of the type contemplated by this Agreement in lieu of
PharmaBio, until such condition or event shall have ceased and PharmaBio shall
have resumed performance hereunder.
9.0 MISCELLANEOUS
-------------
9.1 INDEPENDENT CONTRACTOR RELATIONSHIP
For the purposes of this Agreement, the parties hereto are independent
contractors and nothing contained in this Agreement shall be construed to place
them in the relationship of partners, principal and agent, employer/employee or
joint venturers. PharmaBio agrees that it shall have no power or right to bind
or obligate the Company, nor shall PharmaBio hold itself out as having such
authority.
9.2 PUBLICATION
From time to time it may be to the mutual interest of PharmaBio and the
Company to publish articles relating to services performed as a part of this
Agreement. Publication of project assignment results in whole or in part, shall
be within the sole and absolute discretion of the Company. Results may not be
published or referred to, in whole or in part, without the prior expressed
written consent of the Company. The Company reserves the unqualified right to
reject any article utilizing any data generated from PharmaBio's services under
this Agreement before such article is presented or submitted for publication.
9.3 REVIEW OF WORK
During the term of this Agreement, PharmaBio will permit the Company's
representative(s) to examine the work performed hereunder and the facilities at
which the work is conducted at reasonable times and in a reasonable manner to
determine that the project assignment is being conducted in accordance with the
agreed task and that the facilities are adequate.
9.4 NOTICES
Any notice required or permitted to be given hereunder by either party
hereunder shall be in writing and shall be deemed given on the date received if
delivered personally or three days after the date postmarked if sent by
registered or certified U.S. mail, return receipt requested, postage prepaid or
by nationally recognized overnight delivery service to the following addresses:
If to PharmaBio: Gregory D. Porter, Esq.
PharmaBio Development Inc.
P.O. Box 13979
Research Triangle Park, North Carolina 27709-3979
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<PAGE> 10
with a copy to: Gerald F. Roach, Esq.
Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P.
2500 First Union Capitol Center
Raleigh, North Carolina 27601
If to Company:
9.5 BINDING AGREEMENT; ASSIGNMENT; PARTIES IN INTEREST
This Agreement shall be binding upon and inure to the benefit of
Company and PharmaBio and their respective successors and permitted assigns.
Neither this Agreement nor any of either party's rights hereunder may be
assigned or otherwise transferred by either party without the prior written
consent of the other; provided, however, PharmaBio may in its sole discretion
assign at any time any or all of its rights and obligations under this Agreement
to any of its corporate affiliates or may utilize any such affiliates to carry
out its obligations under this Agreement. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the Company or PharmaBio.
9.6 GOVERNING LAW; SEVERABILITY
This Agreement shall be construed, governed, interpreted, and applied
in accordance with the laws of the State of North Carolina. If any one or More
provisions of this Agreement shall be found to be illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
9.7 SURVIVAL
The obligations of the parties contained in Sections 5.0, 6.0, 7.0 and
9.2 hereof, shall survive the termination of this Agreement.
9.8 ENTIRE AGREEMENT
This Agreement contains the entire understandings of the parties with
respect to the subject matter herein, and supersedes all previous Agreements
(oral and written), negotiations and discussions.
9.9 AMENDMENT AND WAIVER
Neither this Agreement nor any of the terms or provisions hereof may be
(a) amended, modified or supplemented except by a written instrument signed by
both parties; or (b) waived except by written instrument signed by the party
against whom such waiver is sought to be enforced.
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<PAGE> 11
9.10 GUARANTY
This Agreement shall be executed by Quintiles, Inc., a North Carolina
corporation and a wholly owned subsidiary of Quintiles Transnational Corp.
solely for the purpose of guaranteeing by such execution the payment obligations
of PharmaBio under Section 7 of this Agreement.
-11-
<PAGE> 12
IN WITNESS WHEREOF, the Company, PharmaBio and Quintiles, Inc. (solely
to the extent indicated), by authority duly given, have executed this Agreement
as of the day and year first above written.
MEDICINES DEVELOPMENT COMPANY
By: /s/ Clive A. Meanwell
---------------------------------
Name: Clive A. Meanwell
-------------------------------
Title: President
------------------------------
PHARMABIO DEVELOPMENT INC.
By: /s/ Rachel R. Selisker
---------------------------------
Name: Rachel R. Selisker
-------------------------------
Title: VP Finance
------------------------------
QUINTILES, INC., SOLELY FOR THE PURPOSE OF
SECTION 9.10
By: /s/ Rachel R. Selisker
---------------------------------
Name: Rachel R. Selisker
-------------------------------
Title: Treasurer
------------------------------
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<PAGE> 13
For the purposes of agreeing and consenting to the issuance of stock by
the Company to PharmaBio as contemplated by this Agreement, the undersigned
parties hereby agree and consent to the stock issuances contemplated hereby,
with authority duly given. Without limiting the foregoing, the undersigned agree
that any such issuance of stock shall not be subject to any subscription or
participation rights provisions of the Stockholders' Agreement referred to in
the Purchase Agreement.
MEDICINES DEVELOPMENT COMPANY
By: /s/ Clive A. Meanwell
---------------------------------
Name: Clive A. Meanwell
-------------------------------
Title: President
------------------------------
PHARMABIO DEVELOPMENT INC.
By: /s/ Rachel R. Selisker
---------------------------------
Name: Rachel R. Selisker
-------------------------------
Title: VP Finance
------------------------------
WARBURG, PINCUS, VENTURES L.P.
By: /s/ James E. Thomas
---------------------------------
Name: James E. Thomas
-------------------------------
Title: Partner
------------------------------
MPM MEDICINES L.P.
By: /s/ Ansbert Gadicke
---------------------------------
Name: Ansbert Gadicke
-------------------------------
Title:
------------------------------
HANSEATIC AMERICAS LDC
By: Hansabel Partners, LLC
Managing Member
By: /s/ Paul Biddleman
---------------------------------
Name: Paul Biddleman
-------------------------------
Title: Treasurer, Hanseatic
Corporation
------------------------------
/s/ Clive A. Meanwell
------------------------------------
Clive Meanwell
/s/ T. Scott Johnson
------------------------------------
Scott Johnson
/s/ Ansbert Gadicke
------------------------------------
Ansbert Gadicke
-14-
<PAGE> 14
AMENDMENT TO ALLIANCE AGREEMENT
This Amendment to Alliance Agreement ("this Amendment"), dated this 15th
day of December, 1997, is by and between The Medicines company (formerly known
as Medicines Development Company, (the "Company")) and PharmaBio Development
Inc. ("PharmaBio").
Recitals:
The Company and PharmaBio entered into that certain Alliance Agreement,
effective August, 1996 (the "Agreement"), pursuant to which the parties agreed
to certain matters relating to PharmaBio's provision of pharmaceutical support
services. Section 1.3 of the Agreement contemplates the execution of separate
agreements to evidence project-specific engagements; however, the parties desire
to amend the Agreement to serve as a vehicle for the Company's engagement of and
contracting for one or more project with PharmaBio, as more fully set forth
herein.
Agreement:
In consideration of the mutual agreements set forth herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, PharmaBio and the Company hereby agree as follows:
1. AMENDMENT TO SECTION 1.3. Section 1.3 of the Agreement is hereby
amended by deleting existing Section 1.3 in its entirety and by substituting the
following in its place:
1.3 WORK ORDERS FOR PROJECT SERVICES. The following provisions shall apply
with respect to project services rendered pursuant to Section 1.2:
(a) This Agreement is intended to constitute a "master" form of contract
which allows PharmaBio and the Company to contract for multiple
projects under Section 1.2 through the issuance of multiple Work
Orders (as defined below). The specific details of each project under
Section 1.2 of this Agreement (each, a "Project") shall be separately
negotiated and specified in writing on terms and in a form acceptable
to the parties (each such writing, a "Work Order"). Each Work Order
will include, as appropriate, the Project protocol, scope of work,
timeline, budget, and payment schedule, Each Work Order shall be
subject to all of the terms and conditions of this Agreement, in
addition to the specific details set forth in the Work Order.
(b) The Company will pay PharmaBio for fees, expenses and pass-through
costs in accordance with the specific provisions of each Work Order.
Unless otherwise agreed in a particular Work Order, the following
shall apply; (a) the total fees for a particular Project will not
exceed the budget applicable to such Project and attached to the Work
Order; (b) PharmaBio shall be reimbursed by the Company for all
reasonable and necessary expenses and pass-through costs incurred in
the performance of the Services; and (c) PharmaBio will invoice the
Company monthly for the
<PAGE> 15
fees, expenses and pass-through costs relating to the Project and
payment shall be made by the Company within thirty (30) days of
receipt of each monthly itemized invoice.
(c) Any change in the details of a Work Order (including, but not limited
to, changes in the Project's scope and/or any one or number of the
duties, responsibilities and tasks undertaken by PharmaBio) shall
require a written Change Order (herein so called) in a form acceptable
to both parties. Either party may request or initiate a Change Order.
Both parties agree to act in good faith and promptly when considering
a Change Order requested by the other party and will not unreasonably
withhold approval of a requested change order.
(d) If a particular Work Order obligates PharmaBio to contract with
investigators of investigative sites (collectively, "Investigators")
or facilitate the Company's contracting with Investigators (or other
independent contractors such as central laboratories), then any such
contact shall be on a form mutually acceptable to PharmaBio and the
Company. The Company acknowledges that an Investigator engaged for a
particular Project shall be solely responsible for his or her (or its)
own independent medical judgment and his or her (or its) acts and
omissions in performing the clinical investigation and related
services.
(e) An individual Work Order under this Agreement may be terminated
without cause by the Company or by PharmaBio at any time during the
term of the Work Order on forty-five (45) days prior written notice to
PharmaBio or the Company as appropriate. An individual Work Order may
also be terminated immediately by a non-breaching party upon a
material breach of the Work Order or this Agreement by the other
party; provided, however, such termination right shall not be allowed
unless the non-breaching party provides thirty (30) days prior written
notice indicating the specific breach and the breaching party does not
cure within the thirty day notice period or initiate a cure in good
faith within the thirty day notice period and effect such cure within
sixty days after expiration of the thirty day notice period. In the
event a Work Order is terminated other than a result of breach by
PharmaBio, the Company's sole obligation to PharmaBio with respect to
the impacted Project(s) shall be (a) to pay PharmaBio any fees for
Services rendered through the termination date, and (b) to pay all
actual costs to complete activities associated with the termination
and close out of Projects.
(f) The Company agrees that PharmaBio may utilize the Services of its
corporate affiliates to fulfill PharmaBio's obligations under this
Agreement and any Work Order. Any affiliate so utilized shall be (i)
subject to all of the terms and conditions applicable to PharmaBio
under this Agreement and the Work Order applicable to such Project(s),
including, but not limited to, provisions establishing the standards
for performance, and (ii) entitled to all rights and protections
afforded PharmaBio under this Agreement and the Work Order applicable
to such
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<PAGE> 16
Project(s), including, but not limited to, the indemnity and
limitation of liability protections set forth herein. Any such
affiliate of PharmaBio may execute a Work Order directly and, with
respect to the corresponding Project, the rights and obligations of
the parties shall be governed by all of the terms and conditions of
this Agreement, to the same extent as if such affiliate was a party to
this Agreement.
(g) The standards, rights and obligations of the parties set forth in
Sections 1.4, 2, 3, 4, 5, 6, 7, 8, and 9 of this Agreement shall be
applicable to every Work Order performed under this Agreement, unless
the Work Order expressly and specifically states an intent to
supersede this Agreement on a specific matter (but the only with
respect to such matter and the specific Work Order).
2. CORRESPONDING AMENDMENTS. Any provisions in the Agreement in conflict
with this Amendment with respect to the ability to issue Work Orders for
Projects under the Agreement shall be deemed superseded by this Amendment.
3. EFFECT ON THE AGREEMENT. The Company and PharmaBio acknowledge that
the Agreement (as amended hereby) (i) is in full force and effect and shall
control PharmaBio's provision of services and the related rights and obligations
of PharmaBio and the Company with respect to Projects, and (ii) shall continue
to control the rights and obligations of the Company and PharmaBio with respect
to the original matters addressed therein.
4. COUNTERPARTS. This Amendment may be executed in multiple counterparts,
all of which taken together shall constitute on agreement.
The parties have executed this Amendment effective as of the date first
written above.
THE MEDICINES COMPANY PHARMABIO DEVELOPMENT INC.
By: /s/ Clive A. Meanwell By: illegible
--------------------------------- ----------------------------------
Name: Clive A. Meanwell Name:
------------------------------- -------------------------------
Title: President Title:
------------------------------ -------------------------------
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<PAGE> 1
EXHIBIT 10.11
SERVICES AGREEMENT
This services agreement (the "Agreement") made this 1st day of April 2000, is
entered into by The Medicines Company, a Delaware corporation with its principal
place of business at One Cambridge Center, Cambridge, Massachusetts 02142 (the
"Company"), and Stack Pharmaceuticals, Inc., a Delaware corporation ("Stack"),
with a place of business at 5 Sylvan Way, Parsippany, New Jersey.
INTRODUCTION
The Company desires to retain the services of Stack and Stack desires to perform
certain services for the Company. In consideration of the mutual covenants and
promises contained herein and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged by the parties hereto, the
parties agree as follows:
1. SERVICES
Stack agrees to perform during the Services Period (as defined below) such
infrastructure, consulting, advisory and related services to and for the Company
as may be reasonably requested from time to time by the Company, including, but
not limited to the support of the Company's employees based in New Jersey and
such other services as the parties deem to be appropriate. In the event that the
Company requests that additional services be provided, the Company and Stack
shall agree on a description of the services to be provided and the fees to be
paid by the Company for such services (which fees will be based on the per diem
rates set forth on EXHIBIT A hereto which may be amended from time to time).
2. TERM
This Agreement shall commence on the date hereof and shall continue until April
1, 2001 unless terminated by either party upon receipt of ninety (90) days'
prior written notice (the "Services Period"). In the event of such termination,
Stack shall be entitled to payment for services performed and expenses paid or
incurred prior to the effective date of termination, subject to the limitation
on reimbursement of expenses set forth in Section 3.2. Notwithstanding the
foregoing, either party may terminate the Services Period (i) effective
immediately upon receipt of written notice, if the other party breaches or
threatens to breach any provision of Sections 3, 5 or 7 of this Agreement or
(ii) upon at least 30 days prior written notice to the other party, at any time
after September 1, 2000, if the Company has not received written notice of FDA
approval of, or an approvable letter from the FDA (which does not require
additional clinical trials on the part of the Company) with respect to, the
Company's Angiomax product currently being reviewed by the FDA.
3. COMPENSATION
3.1 Service Fees
During the Services Period, the Company shall pay to Stack service fees of
$23,600 per month, payable in advance on the first day of each month. Payment
for any partial month shall be prorated and Stack will reimburse the Company for
any excess fees advanced to Stack. In the event that any additional fees are
payable to Stack in connection with the additional services
<PAGE> 2
contemplated by the last sentence of Section 1, the Company shall pay to Stack
the fees due for such services on a monthly basis in arrears within thirty (30)
days of receipt by the Company of a monthly invoice from Stack in a form
reasonably satisfactory to the Company setting forth the fees owed to Stack for
the additional services performed in the prior month.
3.2 Reimbursement of Expenses
The Company shall reimburse Stack for all reasonable expenses incurred or paid
by Stack in connection with, or related to, the performance of its services
under this Agreement. Such reasonable expenses shall include but not be limited
to travel and entertainment expenses. Stack shall submit to the Company itemized
monthly statements, in a form satisfactory to the Company, of such expenses
incurred in the previous month. The Company shall pay to Stack amounts shown on
each such statement within thirty (30) days after receipt thereof with all
expenses to be reimbursed hereunder to be due as of the end of the Services
Period. Notwithstanding the foregoing, Stack shall not incur total expenses in
excess of $5,000 per month without prior written approval of the Company.
4. COOPERATION
Stack shall use its best efforts in the performance of its obligations under
this Agreement. The Company shall provide such access to its information and
property as may be reasonably required in order to permit Stack to perform its
obligations hereunder. Stack shall cooperate with the Company's personnel, shall
not interfere with the conduct of the Company's business and shall observe all
rules, regulations and security requirements of the Company concerning the
safety of persons and property.
5. INVENTIONS AND PROPRIETARY INFORMATION
5.1 Inventions
(a) Stack will make full and prompt disclosure to the Company of all
inventions, improvements, discoveries, methods, developments, software and works
of authorship, whether patentable or not, which are created, made, conceived or
reduced to practice by it or under its direction or jointly with others, for the
benefit of the Company (all of which are collectively referred to in this
Agreement as "Developments") during the Services Period which Developments are
directly related to the services performed by Stack hereunder.
(b) Stack agrees to assign and does hereby assign to the Company (or any
person or entity designated by the Company) all its right, title and interest in
and to all Developments and all related patents, patent applications, copyrights
and copyright applications. Stack understands that, to the extent this Agreement
shall be construed in accordance with the laws of any state which precludes a
requirement in a consulting agreement to assign certain classes of inventions
made by a consultant, this Section 5.1 shall be interpreted not to apply to any
invention which a court rules and/or the Company agrees falls within such
classes.
(c) Notwithstanding the foregoing, this Agreement shall not require
assignment or disclosure of any Developments that: (i) Stack develops outside of
this Agreement without using the Company's equipment, supplies, facilities, or
Proprietary Information (as defined below); (ii) do not directly result from the
specific services that Stack performs for the Company during the
2
<PAGE> 3
Services Period; or (iii) do not relate to the present business or research of
the Company, as disclosed to Stack as of the date of this Agreement.
(d) Stack agrees to cooperate fully with the Company, both during and
after the term of this Agreement, with respect to the procurement, maintenance
and enforcement of copyrights, patents and other intellectual property rights
(both in the United States and foreign countries) relating to Developments,
except as provided above. Stack shall sign all papers, including, without
limitation, copyright applications, patent applications, declarations, oaths,
formal assignments, assignments of priority rights and powers of attorney, which
the Company may deem necessary or desirable in order to protect its rights and
interests in any Developments.
5.2 Proprietary Information
(a) Stack agrees that all information, whether or not in writing, of a
private, secret or confidential nature concerning the Company's business,
business relationships or financial affairs (collectively, "the Company's
Proprietary Information") which is disclosed to Stack is and shall be the
exclusive property of the Company. By way of illustration, but not limitation,
the Company's Proprietary Information may include inventions, products,
developments, plans, research data, clinical data, financial data, personnel
data, computer programs, customer and supplier lists and contacts at or
knowledge of customers or prospective customers of the Company. Stack will not
disclose any of the Company's Proprietary Information to any person or entity
other than employees of the Company or employees of Stack on a need-to-know
basis under this Agreement or use the same for any purposes (other than in the
performance of its duties) without written approval by an officer of the
Company, either during or after the term of this Agreement unless and until such
of the Company's Proprietary Information has become public knowledge without
fault by Stack.
(b) Stack agrees that all files letters, memoranda, reports, records,
data, sketches, drawings, laboratory notebooks, program listings or other
written, photographic or other tangible material containing the Company's
Proprietary Information relating to the services performed hereunder, whether
created by Stack or others during the Services Period, shall be and are the
exclusive property of the Company. All such materials or copies thereof and all
tangible property of the Company in the custody or possession of Stack shall be
delivered to the Company upon the earlier of (i) a request by the Company; or
(ii) termination of this Agreement. After such delivery, Stack shall not retain
any such materials or copies thereof or any such tangible property, except one
copy for archival purposes.
(c) The Company agrees that all information, whether or not in writing, of
a private, secret or confidential nature concerning Stack's business, business
relationships or business contacts (collectively, "Stack's Proprietary
Information") which is disclosed to the Company is and shall be the exclusive
property of Stack. By way of illustration, but not limitation, Stack's
Proprietary Information may include inventions, products, developments, plans,
research data, clinical data, financial data, personnel data, computer programs,
customer and supplier lists and contacts at or knowledge of customers or
prospective customers of the Company which Stack possessed prior to commencement
of the Services Period and which is developed by Stack during the Services
Period outside the scope of services being performed by Stack for Company
hereunder. The Company will not disclose any of Stack's Proprietary Information
to any person or entity (other than employees of the Company) or use the same
for any purposes (other than as
3
<PAGE> 4
Stack directs during the performance of its duties under this Agreement) without
written approval by Stack, either during or after the term of this Agreement
unless and until such of Stack's Proprietary Information has become public
knowledge without fault by the Company.
(d) The Company agrees that all files letters, memoranda, reports,
records, data, sketches, drawings, laboratory notebooks, program listings or
other written, photographic or other tangible material containing Stack's
Proprietary Information, shall be and are the exclusive property of Stack. All
such materials or copies thereof and all tangible property of Stack in the
custody or possession of the Company shall be delivered to Stack upon the
earlier of (i) a request by Stack; or (ii) termination of this Agreement. After
such delivery, the Company shall not retain any such materials or copies thereof
or any such tangible property, except one copy for archival purposes.
(e) The parties agree that their obligation not to disclose or to use
information and materials of the types set forth in paragraphs (a), (b), (c),
and (d) above, and their obligation to return materials and tangible property,
set forth in paragraphs (b) and (d) above, also extends to such types of
information, materials and tangible property of customers or suppliers of Stack
or the Company, or other third parties who may have disclosed or entrusted the
same to the Company or to Stack.
(f) The parties' obligations under this Section 5.2 shall not apply to any
information that (i) is or becomes known to the general public under
circumstances involving no breach by the parties of the terms of this Section
5.2; (ii) is generally disclosed to third parties by the Company or Stack
without restriction on such third parties; (iii) was known to Company or Stack
as of the date of this Agreement as evidenced by documents in possession of
Company or Stack; or (iv) is approved for release by written authorization of
the Company or Stack.
(g) Stack represents that its retention by the Company and its performance
under this Agreement does not, and shall not breach any agreement that obligates
it to keep in confidence any trade secrets or confidential or proprietary
information of it or of any other party or to refrain from competing, directly
or indirectly, with the business of any other party. Stack shall not disclose to
the Company any trade secrets or confidential or proprietary information of any
other party.
(h) Stack acknowledges that as of the date hereof the Company has
agreements with other persons or with the United States Government, or agencies
thereof, that impose obligations or restrictions on the Company regarding
inventions made during the course of work under such agreements or regarding the
confidential nature of such work. Stack agrees to be bound by all such
obligations and restrictions that are known to it and to take all action
necessary to discharge the obligations of the Company under such agreements.
5.3 Remedies
The parties acknowledge that any breach of the provisions of this Section 5
shall result in serious and irreparable injury to the non-breaching party for
which the parties cannot be adequately compensated by monetary damages alone.
The parties agree, therefore, that, in addition to any other remedy they may
have, the Company shall be entitled to enforce the specific performance of this
Agreement against Stack and to seek both temporary and permanent injunctive
relief (to
4
<PAGE> 5
the extent permitted by law) without the necessity of proving actual damages in
any federal or state court within New Jersey and Stack shall be entitled to
enforce the specific performance of the Agreement against the Company and to
seek both temporary and permanent injunctive relief (to the extent permitted by
law) without the necessity of proving actual damages in any federal or state
court within Massachusetts.
6. NON-EXCLUSIVE RELATIONSHIP
It is understood that during the Services Period, Stack's services are available
to the general public and not to the Company exclusively. During the Services
Period, Stack may represent, perform services for, or be employed by such
additional clients, persons, or companies as Stack in Stack's sole discretion
sees fit, provided, however, that such additional clients, persons, or companies
do not require services that will have a material adverse affect on the Company.
The parties acknowledge that Stack is currently a party to a Commercial
Agreement (and other ancillary agreements) with Innovex (North America) Inc.,
dated October 5, 1999, and those other agreements set forth on Schedule B hereto
and agree that such agreements do not violate the terms set forth in this
Agreement.
7. NON-SOLICITATION
7.1 Non-Solicitation Restrictions
During the Services Period and for a period of one (1) year after the
termination or cessation of the Services Period for any reason, neither party
will directly or indirectly recruit, solicit or hire any employee of the other
party, or induce or attempt to induce any employee of the other party to
terminate his/her employment with, or otherwise cease his/her relationship with
the other party. If either party violates the provisions of this Section 7.1,
the violating party shall continue to be bound by the restrictions set forth in
this Section 7.1 until a period of one (1) year has expired without any
violation of such provisions.
7.2 Cutback Clause
If any restriction set forth in Section 7.1 is found by any court of competent
jurisdiction to be unenforceable because it extends for too long a period of
time or over too great a range of activities or in too broad a geographic area,
it shall be interpreted to extend only over the maximum period of time or range
of activities as to which it may be enforceable.
7.3 Equitable Remedies
The restrictions contained in Section 7.1 are necessary for the protection of
the business and goodwill of the parties and are considered by the parties to be
reasonable for such purpose. The parties agree that any breach of Section 7 is
likely to cause the parties substantial and irrevocable damage and therefore, in
the event of any such breach, the parties agree that the parties, in addition to
such other remedies which may be available, shall be entitled to specific
performance and other injunctive relief.
5
<PAGE> 6
8. INDEPENDENT CONTRACTOR STATUS
Stack shall perform all services under this Agreement as an "independent
contractor" of and not as an employee or agent of the Company. Stack is not
authorized to assume or create any obligation or responsibility, express or
implied, on behalf of, or in the name of, the Company or to bind the Company in
any manner.
9. NOTICES
All notices required or permitted under this Agreement shall be in writing and
shall be deemed effective upon personal delivery or upon deposit in the United
States Post Office, by registered or certified mail, postage prepaid, addressed
to the other party at the address shown above, or at such other address or
addresses as either party shall designate to the other in accordance with this
Section 9.
10. PRONOUNS
Whenever the context may require, any pronouns used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
forms of nouns and pronouns shall include the plural, and vice versa.
11. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties and
supersedes all prior agreements and understandings, whether written or oral,
relating to the subject matter of this Agreement, including the Consulting
Agreement dated January 4, 2000 between the parties which shall have expired on
March 31, 2000 (except for the provisions of Section 5 which shall survive the
expiration of such agreement).
12. AMENDMENT
This Agreement may be amended or modified only by a written instrument executed
by both the Company and Stack.
13. GOVERNING LAW
This Agreement shall be construed, interpreted and enforced in accordance with
the law of the Commonwealth of Massachusetts.
14. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon, and inure to the benefit of, both parties
and their respective successors and assigns, including any corporation with
which, or into which, the Company may be merged or which may succeed to its
assets or business, provided, however, that the obligations of Stack are
personal and shall not be assigned by him.
6
<PAGE> 7
15. MISCELLANEOUS
15.1 No Waiver
No delay or omission by any party in exercising any right under this Agreement
shall operate as a waiver of that or any other right. A waiver or consent given
by any party on any one occasion shall be effective only in that instance and
shall not be construed as a bar or waiver of any right on any other occasion.
15.2 Captions
The captions of the sections of this Agreement are for convenience of reference
only and in no way define, limit or affect the scope or substance of any section
of this Agreement.
15.3 Enforceability
In the event that any provisions of this Agreement shall be invalid, illegal or
otherwise unenforceable, the validity, legality and enforceability of the
remaining provisions shall in no way be affected or impaired thereby.
15.4 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 shall be one and the same
document.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year set forth above.
THE MEDICINES COMPANY
/s/ Clive A. Meanwell
By:--------------------------------------
President
Title:-----------------------------------
STACK PHARMACEUTICALS, INC.
/s/ David M. Stack
By:--------------------------------------
David M. Stack
Title: President
7
<PAGE> 8
SCHEDULE A
Lois Gibson $1,500/day
8
<PAGE> 9
SCHEDULE B
Stack is currently a party to agreements with the following parties:
- ----------------------------------------
PARTY TO AGREEMENT
- ----------------------------------------
Quintiles/Innovex
- ----------------------------------------
Cubist Pharmaceuticals Inc.
- ----------------------------------------
Nitro Systems Inc.
- ----------------------------------------
Ozell Therapeutics
- ----------------------------------------
Ozell Pharmaceuticals, Inc.
- ----------------------------------------
9
<PAGE> 1
EXHIBIT 10.12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 5th day of
September, 1996, is entered into by Medicines Development Company, a Delaware
corporation with its principal place of business at One Cambridge Center,
Cambridge, Massachusetts 02142 (the "Company"), and CLIVE MEANWELL, residing at
124 Heath Street, Chestnut Hill, Massachusetts 02167 (the "Employee").
The Company desires to employ the Employee, and the Employee desires to be
employed by the Company. In consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. TERM OF EMPLOYMENT. The Company hereby agrees to employ the Employee,
and the Employee hereby accepts employment with the Company, upon the terms set
forth in this Agreement, for the period commencing on September 5, 1996 (the
"Commencement Date") and ending on July 31, 1997 (such period, as it may be
renewed as provided in the following sentence, the "Employment Period"), unless
sooner terminated in accordance with the provisions of Section 4. The Employment
Period shall automatically be renewed for successive one (1) year periods unless
either the Employee or the company provide written notice of non-renewal to the
other party at least ninety (90) days prior to the expiration of the then
current term.
2. TITLE; CAPACITY. The Employee shall serve as Chief Executive Officer
or in such other position as the Company or its Board of Directors (the "Board")
may
<PAGE> 2
determine from time to time. The Employee shall be based at the Company's
headquarters in Cambridge, Massachusetts, unless otherwise agreed. The Employee
shall be subject to the supervision of, and shall have such authority as is
delegated to him by, the Board or such officer of the Company as may be
designated by the Board.
The Employee hereby accepts such employment and agrees to undertake the
duties and responsibilities inherent in such position and/or such other duties
and responsibilities as the Board or its designee shall from time to time
reasonably assign to him. The Employee agrees to devote his entire business
time, attention and energies to the business and interests of the Company during
the Employment Period. The Employee agrees to abide by the rules, regulations,
instructions, personnel practices and policies of the Company and any changes
therein which may be adopted from time to time by the Company. The Employee
acknowledges receipt of copies of all such rules and policies committed to
writing as of the date of this Agreement.
3. COMPENSATION AND BENEFITS.
3.1 SALARY. The Company shall pay the Employee, in monthly
installments, an annual base salary of or the one-year period commencing
on the Commencement Date. Such salary shall be subject to adjustment thereafter
as determined by the Board, but shall not be reduced below the amount set forth
above without the Employee's consent.
3.2 BONUS. The Employee shall be eligible to receive a bonus equal to
up to of his base salary upon the achievement of annual objectives to be
-2-
<PAGE> 3
approved by the CEO of the Company after discussion with the Employee. The Board
shall review the Employee's performance and determine the amount of the bonus,
if any, to be paid to the Employee.
3.3 FRINGE BENEFITS. The Employee shall be entitled to participate in
all other bonus and benefit programs that the Company establishes and makes
available to its employees, if any, to the extent that Employee's position,
tenure, salary, age, health and other qualifications make him eligible to
participate. The Employee shall be entitled to four (4) weeks paid vacation per
year, to be taken at such times as may be approved by the Board or its designee.
3.4 REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Employee for all reasonable travel, entertainment and other expenses incurred or
paid by the Employee in connection with, or related to, the performance of his
duties, responsibilities or services under this Agreement, upon presentation by
the Employee of documentation, expense statements, vouchers and/or such other
supporting information as the Company may request.
4. EMPLOYMENT TERMINATION. The employment of the Employee by the Company
pursuant to this Agreement shall terminate upon the occurrence of any of the
following:
4.1 EXPIRATION OF EMPLOYMENT PERIOD. Expiration of the Employment
Period in accordance with Section 1.
-3-
<PAGE> 4
4.2 TERMINATION FOR CAUSE. At the election of the Company,
immediately upon written notice by the Company to the Employee, for "cause" as
determined by the Board. For purposes of this Section 4.2, "cause" for
termination shall be deemed to exist only if any of the following shall have
occurred:
(a) the Employee's conviction of any crime (whether or not
involving the Company) which constitutes a felony in the jurisdiction involved
(other than unintentional motor vehicle felonies);
(b) any act of theft, fraud, misappropriation of funds or
embezzlement by the Employee, in connection with his work with the Company, or
any other act or acts of dishonesty on the part of the Employee resulting or
intended to result directly or indirectly in personal gain or enrichment of the
Employee at the expense of the Company;
(c) the Employee's failure to perform in all material respects
the services required to be performed pursuant to Section 2 of this Agreement,
PROVIDED THAT if such failure is capable of being corrected, such failure
continues uncorrected for a period of thirty (30) days after the Employee shall
have received written notice from the Company stating with reasonably
specificity the nature of such failure;
(d) the Employee's breach of Sections 6 or 7 of this Agreement
or any material breach of the Invention and Nondisclosure Agreement dated of
even date herewith between the Employee and the Company (the "Nondisclosure
Agreement");
-4-
<PAGE> 5
(e) the Employee's excessive use of alcohol and/or drugs which
is judged by the CEO and the Board to materially interfere with the performance
of his duties; or
(f) any misconduct by the Employee which in the reasonable
judgment of the CEO and the Board would jeopardize the success of the Company.
4.3 DEATH OR DISABILITY. Thirty (30) days after the death or disability of
the Employee. As used in this Agreement, the term "disability" shall mean the
inability of the Employee, due to a physical or mental disability, for a period
of ninety (90) days, whether or not consecutive, during any 360-day period to
perform the services contemplated under this Agreement. A determination of
disability shall be made by a physician satisfactory to both the Employee and
the Company, PROVIDED THAT if the Employee and the Company do not agree on a
physician, the Employee and the Company shall each select a physician and these
two together shall select a third physician, whose determination as to
disability shall be binding on all parties.
4.4 VOLUNTARY TERMINATION. At the election of either party, upon written
notice of termination given at least ninety (90) days prior to the end of the
then current Employment Period.
4.5 VOLUNTARY TERMINATION FOR "GOOD REASON." At the election of the
Employee, for "Good Reason," which shall be deemed to exist only if the Company
fails to comply in any material respect with the provisions of Section 3, other
than an isolated,
-5-
<PAGE> 6
insubstantial and inadvertent failure which is remedied by the Company promptly
after receipt of notice thereof given by the employee.
5. EFFECT OF TERMINATION.
5.1 TERMINATION FOR CAUSE OR AT ELECTION OF EMPLOYEE. In the event
the Employee's employment is terminated for cause pursuant to Section 4.2, or at
the election of the Employee, pursuant to Section 4.4, the Company shall pay to
the Employee all sums otherwise payable to him under Section 3 through the last
day of his actual employment by the Company.
5.2 TERMINATION FOR DEATH OR DISABILITY. If the Employee's employment
is terminated by death or because of disability pursuant to Section 4.3, the
Company shall pay to the estate of the Employee or to the Employee, as the case
may be, all sums which would otherwise be payable to the Employee under Section
3 up to the end of the month in which the termination of his employment because
of death or disability occurs.
5.3 TERMINATION FOR GOOD REASON OR AT ELECTION OF COMPANY. In the
event that Employee's employment is terminated by the Employee for "Good Reason"
pursuant to Section 4.5, or at the election of the Company pursuant to Section
4.4, the Company shall continue to pay to the Employee the salary set forth in
Section 3.1, and shall continue to make available to the Employee the benefits
set forth in Section 3.3, excluding vacation days and bonus sums under said
Section 3.3 accrued during this period, until the later of (a) the first
anniversary of the Commencement Date of this
-6-
<PAGE> 7
Agreement, or (b) three (3) months after the date of termination, but in no
event later than such date as the Employee shall have commenced full-time
employment with a new employer.
5.4 SURVIVAL. The provisions of Sections 6 and 7 shall survive the
termination of this Agreement.
6. NON-COMPETE.
6.1 NON-COMPETE RESTRICTIONS. During the Employment Period and for a
period of one (1) year after the termination or expiration thereof (such one (1)
year period being inapplicable in the event of a termination pursuant to Section
4.4 at the election of the Company or by the Employee pursuant to Section 4.5),
the Employee will not directly or indirectly as an individual proprietor,
partner, stockholder, officer, employee, director, joint venturer, investor,
lender, or in any other capacity whatsoever (other than as the holder of not
more than an one percent (1%) equity interest in any publicly held company),
engage in the business of developing, producing, marketing or selling products
with chemical or commercial characteristics of the kind or type developed or
being developed, produced, marketed or sold by the Company while the Employee
was employed by the Company.
6.2 LIMITATIONS. Notwithstanding the provisions of Section 6.1, it is
recognized that the Employee's primary experience is in the pharmaceutical
industry, and that his ability to earn a livelihood is likely to be dependent on
future employment in such industry. Accordingly, the Company agrees that: (a)
the employment of the Employee by
-7-
<PAGE> 8
a pharmaceutical company in a position in which he assumes responsibility for
multiple products, most of which are not competitive with the Company's
products, shall not be considered a violation of Section 6.1, so long as (i) the
Employee's responsibilities in such Position are not directed principally to
products that are competitive with the Company's products, (ii) the portfolio of
the pharmaceutical company which hires the Employee must contain the specific
product or products which are competitive with Company's products prior to the
hiring of the Employee, and (iii) the pharmaceutical company which hires the
Employee has been in existence for at least five (5) years prior to hiring the
Employee; and (b) in the event that the Company ceases to conduct business, the
provisions of Section 6.1 shall terminate.
6.3 CUTBACK CLAUSE. If any restriction set forth in this Section 6 is
found by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of activities or
in too broad a geographic area, it shall be interpreted to extend only over the
maximum period of time, range of activities or geographic area as to which it
may be enforceable.
6.4 EQUITABLE REMEDIES. The restrictions contained in this Section 6
are necessary for the protection of the business and goodwill of the Company and
are considered by the Employee to be reasonable for such purpose. The Employee
agrees that any breach of Section 6.1 is likely to cause the Company substantial
and irrevocable damage and therefore, in the event of any such breach, the
Employee agrees that the
-8-
<PAGE> 9
Company, in addition to such other remedies which may be available, shall be
entitled to specific performance and other injunctive relief.
7. NON-SOLICITATION.
7.1 NON-SOLICITATION RESTRICTIONS. While the Employee is employed by
the Company and for a period of one (1) year after the termination or cessation
of such employment for any reason, the Employee will not directly or indirectly
recruit, solicit or hire any employee of the Company, or induce or attempt to
induce any employee of the Company to terminate his/her employment with, or
otherwise cease his/her relationship with, the Company. If the Employee violates
the provisions of this Section 7.1, the Employee shall continue to be bound by
the restrictions set forth in this Section 7.1 until a period of one (1) year
has expired without any violation of such provisions.
7.2 CUTBACK CLAUSE. If any restriction set forth in Section 7.1 is
found by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of activities or
in too broad a geographic area, it shall be interpreted to extend only over the
maximum period of time or range of activities as to which it may be enforceable.
7.3 EQUITABLE REMEDIES. The restrictions contained in Section 7.1 are
necessary for the protection of the business and goodwill of the Company and are
considered by the Employee to be reasonable for such purpose. The Employee
agrees that any breach of Section 7 is likely to cause the Company substantial
and irrevocable damage and therefore, in the event of any such breach, the
Employee agrees that the
-9-
<PAGE> 10
Company, in addition to such other remedies which may be available, shall be
entitled to specific performance and other injunctive relief.
8. OTHER AGREEMENTS. Employee hereby represents that he is not bound by
the terms of any agreement with any previous employer or other party to refrain
from using or disclosing any trade secret or confidential or proprietary
information in the course of his employment with the Company or to refrain from
competing, directly or indirectly, with the business of such previous employer
or any other party. Employee further represents that his performance of all the
terms of this Agreement and as an employee of the Company does not and will not
breach any agreement to keep in confidence proprietary information, knowledge or
data acquired by him in confidence or in trust prior to his employment with the
Company.
9. NOTICES. All notices required or permitted under this Agreement shall
be in writing and shall be deemed effective upon Personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 9.
10. PRONOUNS. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether
-10-
<PAGE> 11
written or oral, relating to the subject matter of this Agreement. Reference is
made to the following separate agreements between the Employee and the Company
dated of even date herewith which cover additional agreements between the
parties: the Stock Restriction Agreement and the Invention and Nondisclosure
Agreement.
12. AMENDMENT. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee.
13. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of both parties and their respective successors and assigns,
including any entity with which or into which the Company may be merged or which
may succeed to its assets or business, provided, however, that the obligations
of the Employee are personal and shall not be assigned by him.
15. MISCELLANEOUS.
15.1 NO WAIVER. No delay or omission by the Company in exercising any
right under this Agreement shall operate as a waiver of that or any other right.
A waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
-11-
<PAGE> 12
15.2 CAPTIONS. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
15.3 ENFORCEABILITY. In case any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
MEDICINES DEVELOPMENT COMPANY
By: /s/ Clive Meanwell
------------------------------
Title:____________________________
CLIVE MEANWELL
/s/ Clive Meanwell
----------------------------------
-12-
<PAGE> 1
EXHIBIT 10.13
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 10th day of March,
1997, is entered into by The Medicines Company, a Delaware corporation with its
principal place of business at One Cambridge Center, Cambridge, Massachusetts
02142 (the "Company"), and JOHN VILLIGER, residing at 150 Long Drive, Saint
Heliers, Auckland, New Zealand (the "Employee").
The Company desires to employ the Employee, and the Employee desires to be
employed by the Company. In consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. TERM OF EMPLOYMENT. The Company hereby agrees to employ the Employee,
and the Employee hereby accepts employment with the Company, upon the terms set
forth in this Agreement, for the period commencing on March 10, 1997 (the
"Commencement Date") and ending on March 9, 1998 (such period, as it may be
renewed as provided in the following sentence, the "Employment Period"), unless
sooner terminated in accordance with the provisions of Section 4. The Employment
Period shall automatically be renewed for successive one (1) year periods unless
either the Employee or the Company provide written notice of non-renewal to the
other party at least ninety (90) days prior to the expiration of the then
current term.
2. TITLE; CAPACITY. The Employee shall serve as Vice President or in such
other position as the Company or its Board of Directors (the "Board") may
determine from time to time. The Employee shall be based at such location as
agreed upon by the Employee and the Company or its Board of Directors. The
Employee shall be subject to the supervision of, and shall have such authority
as is delegated to him by, the Board or such officer of the Company as may be
designated by the Board.
The Employee hereby accepts such employment and agrees to undertake the
duties and responsibilities inherent in such position and/or such other duties
and responsibilities as the Board or its designee shall from time to time
reasonably assign to him. The Employee agrees to devote his entire business
time, attention and energies to the business and interests of the Company during
the Employment Period. The Employee agrees to abide by the rules, regulations,
instructions, personnel practices and policies of the Company and any changes
therein which may be adopted from time to time by the Company. The Employee
acknowledges receipt of copies of all such rules and policies committed to
writing as of the date of this Agreement.
3. COMPENSATION AND BENEFITS.
3.1 SALARY. The Company shall pay the Employee, in monthly
installments, an annual base salary of $180,000 for the one-year period
commencing on the Commencement Date. Such salary shall be subject to adjustment
thereafter as determined by the Board, but shall not be reduced below the amount
set forth above without the Employee's consent.
<PAGE> 2
3.2 BONUS. The Employee shall be eligible to receive a bonus equal to
up to Thirty-five percent (35%) of his base salary upon the achievement of
annual objectives to be approved by the CEO of the Company after discussion with
the Employee. The Board shall review the Employee's performance and determine
the amount of the bonus, if any, to be paid to the Employee.
3.3 FRINGE BENEFITS. The Employee shall be entitled to participate in
all other bonus and benefit programs that the Company establishes and makes
available to its employees, if any, to the extent that Employee's position,
tenure, salary, age, health and other qualifications make him eligible to
participate. The Employee shall be entitled to four (4) weeks paid vacation per
year, to be taken at such times as may be approved by the Board or its designee.
3.4 REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Employee for all reasonable travel, entertainment and other expenses incurred or
paid by the Employee in connection with, or related to, the performance of his
duties, responsibilities or services under this Agreement, upon presentation by
the Employee of documentation, expense statements, vouchers and/or such other
supporting information as the Company may request.
4. EMPLOYMENT TERMINATION. The employment of the Employee by the Company
pursuant to this Agreement shall terminate upon the occurrence of any of the
following:
4.1 EXPIRATION OF EMPLOYMENT PERIOD. Expiration of the Employment
Period in accordance with Section 1.
4.2 TERMINATION FOR CAUSE. At the election of the Company,
immediately upon written notice by the Company to the Employee, for "cause" as
determined by the Board. For purposes of this Section 4.2, "cause" for
termination shall be deemed to exist only if any of the following shall have
occurred:
(a) the Employee's conviction of any crime (whether or not
involving the Company) which constitutes a felony in the jurisdiction involved
(other than unintentional motor vehicle felonies);
(b) any act of theft, fraud, misappropriation of funds or
embezzlement by the Employee, in connection with his work with the Company, or
any other act or acts of dishonesty on the part of the Employee resulting or
intended to result directly or indirectly in personal gain or enrichment of the
Employee at the expense of the Company;
(c) the Employee's failure to perform in all material respects
the services required to be performed pursuant to Section 2 of this Agreement,
PROVIDED THAT if such failure is capable of being corrected, such failure
continues uncorrected for a period of thirty (30) days after the Employee shall
have received written notice from the Company stating with reasonably
specificity the nature of such failure;
(d) the Employee's breach of Sections 6 or 7 of this Agreement
or any material breach of the Invention and Non-Disclosure Agreement and the
Non-Competition and Non-Solicitation Agreement dated of even date herewith
between the Employee and the
-2-
<PAGE> 3
Company (the "Non-Disclosure Agreement" and the "Non-Competition Agreement,"
respectively);
(e) the Employee's excessive use of alcohol and/or drugs which
is judged by the CEO and the Board to materially interfere with the performance
of his duties; or
(f) any misconduct by the Employee which in the reasonable
judgment of the CEO and the Board would jeopardize the success of the Company.
4.3 DEATH OR DISABILITY. Thirty (30) days after the death or
disability of the Employee. As used in this Agreement, the term "disability"
shall mean the inability of the Employee, due to a physical or mental
disability, for a period of ninety (90) days, whether or not consecutive, during
any 360-day period to perform the services contemplated under this Agreement. A
determination of disability shall be made by a physician satisfactory to both
the Employee and the Company, PROVIDED THAT if the Employee and the Company do
not agree on a physician, the Employee and the Company shall each select a
physician and these two together shall select a third physician, whose
determination as to disability shall be binding on all parties.
4.4 VOLUNTARY TERMINATION. At the election of either party, upon
written notice of termination given at least ninety (90) days prior to the end
of the then current Employment Period.
4.5 VOLUNTARY TERMINATION FOR "GOOD REASON." At the election of the
Employee, for "Good Reason," which shall be deemed to exist only if the Company
fails to comply in any material respect with the provisions of Section 3, other
than an isolated, insubstantial and inadvertent failure which is remedied by the
Company promptly after receipt of notice thereof given by the Employee.
5. EFFECT OF TERMINATION.
5.1 TERMINATION FOR CAUSE OR AT ELECTION OF EMPLOYEE. In the event
the Employee's employment is terminated for cause pursuant to Section 4.2, or at
the election of the Employee pursuant to Section 4.4, the Company shall pay to
the Employee all sums otherwise payable to him under Section 3 through the last
day of his actual employment by the Company.
5.2 TERMINATION FOR DEATH OR DISABILITY. If the Employee's employment
is terminated by death or because of disability pursuant to Section 4.3, the
Company shall pay to the estate of the Employee or to the Employee, as the case
may be, all sums which would otherwise be payable to the Employee under Section
3 up to the end of the month in which the termination of his employment because
of death or disability occurs.
5.3 TERMINATION FOR GOOD REASON OR AT ELECTION OF COMPANY. In the
event that Employee's employment is terminated by the Employee for "Good Reason"
pursuant to Section 4.5, or at the election of the Company pursuant to Section
4.4, the Company shall continue to pay to the Employee the salary set forth in
Section 3.1, and shall continue to make available to the Employee the benefits
set forth in Section 3.3, excluding vacation days and bonus sums under said
Section 3.3 accrued during this period, until the later of (a) the first
anniversary of the Commencement Date of this Agreement, or (b) three (3) months
after the date
-3-
<PAGE> 4
of termination, but in no event later than such date as the Employee shall have
commenced full-time employment with a new employer.
5.4 SURVIVAL. The provisions of Sections 6 and 7 shall survive the
termination of this Agreement.
6. NON-COMPETE.
6.1 NON-COMPETE RESTRICTIONS. During the Employment Period and for a
period of one (1) year after the termination or expiration thereof (such one (1)
year period being inapplicable in the event of a termination pursuant to Section
4.4 at the election of the Company or by the Employee pursuant to Section 4.5),
the Employee will not directly or indirectly as an individual proprietor,
partner, stockholder, officer, employee, director, joint venturer, investor,
lender, or in any other capacity whatsoever (other than as the holder of not
more than an one percent (1%) equity interest in any publicly held company),
engage in the business of developing, producing, marketing or selling products
with chemical or commercial characteristics of the kind or type developed or
being developed, produced, marketed or sold by the Company while the Employee
was employed by the Company.
6.2 LIMITATIONS. Notwithstanding the provisions of Section 6.1, it is
recognized that the Employee's primary experience is in the pharmaceutical
industry, and that his ability to earn a livelihood is likely to be dependent on
future employment in such industry. Accordingly, the Company agrees that: (a)
the employment of the Employee by a pharmaceutical company in a position in
which he assumes responsibility for multiple products, most of which are not
competitive with the Company's products, shall not be considered a violation of
Section 6.1, so long as (i) the Employee's responsibilities in such position are
not directed principally to products that are competitive with the Company's
products, (ii) the portfolio of the pharmaceutical company which hires the
Employee must contain the specific product or products which are competitive
with Company's products prior to the hiring of the Employee, and (iii) the
pharmaceutical company which hires the Employee has been in existence for at
least five (5) years prior to hiring the Employee; and (b) in the event that the
Company ceases to conduct business, the provisions of Section 6.1 shall
terminate.
6.3 CUTBACK CLAUSE. If any restriction set forth in this Section 6 is
found by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of activities or
in too broad a geographic area, it shall be interpreted to extend only over the
maximum period of time, range of activities or geographic area as to which it
may be enforceable.
6.4 EQUITABLE REMEDIES. The restrictions contained in this Section 6
are necessary for the protection of the business and goodwill of the Company and
are considered by the Employee to be reasonable for such purpose. The Employee
agrees that any breach of Section 6.1 is likely to cause the Company substantial
and irrevocable damage and therefore, in the event of any such breach, the
Employee agrees that the Company, in addition to such other remedies which may
be available, shall be entitled to specific performance and other injunctive
relief.
-4-
<PAGE> 5
7. NON-SOLICITATION.
7.1 NON-SOLICITATION RESTRICTIONS. While the Employee is employed by
the Company and for a period of one (1) year after the termination or cessation
of such employment for any reason, the Employee will not directly or indirectly
recruit, solicit or hire any employee of the Company, or induce or attempt to
induce any employee of the Company to terminate his/her employment with, or
otherwise cease his/her relationship with, the Company. If the Employee violates
the provisions of this Section 7.1, the Employee shall continue to be bound by
the restrictions set forth in this Section 7.1 until a period of one (1) year
has expired without any violation of such provisions.
7.2 CUTBACK CLAUSE. If any restriction set forth in Section 7.1 is
found by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of activities or
in too broad a geographic area, it shall be interpreted to extend only over the
maximum period of time or range of activities as to which it may be enforceable.
7.3 EQUITABLE REMEDIES. The restrictions contained in Section 7.1 are
necessary for the protection of the business and goodwill of the Company and are
considered by the Employee to be reasonable for such purpose. The Employee
agrees that any breach of Section 7 is likely to cause the Company substantial
and irrevocable damage and therefore, in the event of any such breach, the
Employee agrees that the Company, in addition to such other remedies which may
be available, shall be entitled to specific performance and other injunctive
relief.
8. OTHER AGREEMENTS. Employee hereby represents that he is not bound by
the terms of any agreement with any previous employer or other party to refrain
from using or disclosing any trade secret or confidential or proprietary
information in the course of his employment with the Company or to refrain from
competing, directly or indirectly, with the business of such previous employer
or any other party. Employee further represents that his performance of all the
terms of this Agreement and as an employee of the Company does not and will not
breach any agreement to keep in confidence proprietary information, knowledge or
data acquired by him in confidence or in trust prior to his employment with the
Company.
9. NOTICES. All notices required or permitted under this Agreement shall
be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 9.
10. PRONOUNS. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.
Reference is made to the following separate agreements
-5-
<PAGE> 6
between the Employee and the Company dated of even date herewith which cover
additional agreements between the parties: the Stock Restriction Agreement, the
Invention and Non-Disclosure Agreement and the Non-Competition and
Non-Solicitation Agreement.
12. AMENDMENT. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee.
13. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of both parties and their respective successors and assigns,
including any entity with which or into which the Company may be merged or which
may succeed to its assets or business, provided, however, that the obligations
of the Employee are personal and shall not be assigned by him.
15. MISCELLANEOUS.
15.1 NO WAIVER. No delay or omission by the Company in exercising any
right under this Agreement shall operate as a waiver of that or any other right.
A waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
15.2 CAPTIONS. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
15.3 ENFORCEABILITY. In case any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
THE MEDICINES COMPANY
/s/ Clive A. Meanwell
By:-----------------------------------
President
Title:--------------------------------
JOHN VILLIGER
/s/ John Villiger
--------------------------------------
-6-
<PAGE> 1
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 29th day of
September, 1998 is entered into by The Medicines Company, a Delaware corporation
with its principal place of business at One Cambridge Center, Cambridge,
Massachusetts 02142 (the "Company"), and John M. Nystrom residing at 425 Belknap
Road, Framingham, MA 01701 (the "Employee").
The Company desires to employ the Employee, and the Employee desires to be
employed by the Company. In consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. TERM OF EMPLOYMENT. The Company hereby agrees to employ the Employee,
and the Employee hereby accepts employment with the Company, upon the terms set
forth in this Agreement, for the period commencing on October 1, 1998 (the
"Commencement Date") and ending on September 30, 1999 (such period, as it may be
renewed as provided in the following sentence, the "Employment Period"), unless
sooner terminated in accordance with the provisions of Section 4. The Employment
Period shall automatically be renewed for successive one (1) year periods unless
either the Employee or the Company provide written notice of non-renewal to the
other party at least ninety (90) days prior to the expiration of the then
current term.
2. TITLE; CAPACITY. The Employee shall serve as Vice President of
Technical Operations. The Employee shall be based at the Company's headquarters
in Cambridge, Massachusetts, unless otherwise agreed. The Employee shall be
subject to the supervision of, and shall have such authority as is delegated to
him by, the Board of Directors ("the Board"), the Chief Executive Officer or the
Chief Operating Officer. .
1
<PAGE> 2
The Employee hereby accepts such employment and agrees to undertake the duties
and responsibilities inherent in such position and/or such other duties and
responsibilities as the Board or the Chief Executive Officer or the Chief
Operating Officer of the Company or their respective designees shall from time
to time reasonably assign to him. The Employee agrees to devote his entire
business time, attention and energies to the business and interests of the
Company during the Employment Period provided, however, that the Employee may
continue to serve as a director of Cangene, Inc., so long as such service does
not materially interfere with the provision of service by the Employee to the
Company and shall retain all fees, options and other consideration received in
connection with such service as a director . The Employee agrees to abide by the
rules, regulations, instructions, personnel practices and policies of the
Company and any changes therein which may be adopted from time to time by the
Company. The Employee acknowledges receipt of copies of all such rules and
policies committed to writing as of the date of this Agreement.
3. COMPENSATION AND BENEFITS.
3.1 SALARY. The Company shall pay the Employee, in semi-monthly
installments, an annual base salary of $165,000 for the one-year period
commencing on the Commencement Date. Such salary shall be subject to adjustment
thereafter as determined by the Board, but shall not be reduced below the amount
set forth above without the Employee's consent.
3.2 BONUS. The Employee shall be eligible to receive a bonus equal to
up to thirty-five percent (35%) of his base salary upon the achievement of
annual objectives to be approved by the CEO of the Company after discussion with
the Employee. The Board shall review the Employee's performance and determine
the amount of the bonus, if any, to be paid to the Employee.
2
<PAGE> 3
3.3 FRINGE BENEFITS. The Employee shall be entitled to participate in
all other bonus and benefit programs that the Company establishes and makes
available to its employees, if any, to the extent that Employee's position,
tenure, salary, age, health and other qualifications make him eligible to
participate. The Employee shall be entitled to four (4) weeks paid vacation per
year, to be taken at such times as may be approved by the Board or its designee.
The number of vacation days to which you are entitled in each year shall accrue
at the rate of 1.67 days per month that you are employed during the year.
3.4 REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Employee for all reasonable travel, entertainment and other expenses incurred or
paid by the Employee in connection with, or related to, the performance of his
duties, responsibilities or services under this Agreement, upon presentation by
the Employee of documentation, expense statements, vouchers and/or such other
supporting information as the Company may request.
4. EMPLOYMENT TERMINATION. The employment of the Employee by the Company
pursuant to this Agreement shall terminate upon the occurrence of any of the
following:
4.1 EXPIRATION OF EMPLOYMENT PERIOD. Expiration of the Employment
Period in accordance with Section 1.
4.2 TERMINATION FOR CAUSE. At the election of the Company,
immediately upon written notice by the Company to the Employee, for "cause" as
determined by the Board. For purposes of this Section 4.2, "cause" for
termination shall be deemed to exist only if any of the following shall have
occurred:
(a) the Employee's conviction of any crime (whether or not involving the
Company) which constitutes a felony in the jurisdiction involved (other than
unintentional motor vehicle felonies);
3
<PAGE> 4
(b) any act of theft, fraud, misappropriation of funds or embezzlement by the
Employee, in connection with his work with the Company, or any other act or acts
of dishonesty on the part of the Employee resulting or intended to result
directly or indirectly in personal gain or enrichment of the Employee at the
expense of the Company;
(c) the Employee's failure to perform in all material respects the services
required to be performed pursuant to Section 2 of this Agreement, provided that
such failure continues uncorrected for a period of thirty (30) days after the
Employee shall have received written notice from the Company stating with
reasonably specificity the nature of such failure;
(d) any material breach of the Invention and Nondisclosure Agreement dated of
even date herewith between the Employee and the Company (the "Nondisclosure
Agreement") or the Non-Competition and Non-Solicitation Agreement dated of even
date herewith between the Employee and Company (the "Non-Competition
Agreement");
(e) the Employee's excessive use of alcohol and/or drugs which is judged by the
CEO and the Board to materially interfere with the performance of his duties; or
(f) any misconduct by the Employee which in the reasonable judgment of the CEO
and the Board would jeopardize the success of the Company.
4.3 DEATH OR DISABILITY. Thirty (30) days after the death or disability of
the Employee. As used in this Agreement, the term "disability" shall mean the
inability of the Employee, due to a physical or mental disability, for a period
of ninety (90) days, whether or not consecutive, during any 360-day period to
perform the services contemplated under this Agreement. A determination of
disability shall be made by a physician satisfactory to both the Employee and
the Company, provided that if the Employee and the Company do not agree on a
physician, the Employee and the Company shall each select a physician and these
two together shall select a third physician, whose determination as to
disability shall be binding on all parties.
4
<PAGE> 5
4.4 VOLUNTARY TERMINATION. At the election of either party, without
cause, upon 90 days prior written notice. In the event the Company gives notice
of termination pursuant to this Section 4.4, the Employee shall, during such 90
day period, be entitled to seek alternative employment without being deemed to
be in violation of this Agreement, so long as he continues to provide to the
Company reasonable transitional assistance.
4.5 VOLUNTARY TERMINATION FOR "GOOD REASON." At the election of the
Employee, immediatley upon notice to the Company, for "Good Reason," which shall
be deemed to exist only if (i) the Company fails to comply in any material
respect with the provisions of Section 3, other than an isolated, insubstantial
and inadvertent failure which is remedied by the Company promptly after receipt
of notice thereof given by the Employee; (ii) the principal place of the
performance of the Employee's responsibilities is changed to a location outside
of a 30 mile radius from the boundaries of Cambridge, Massachusetts; or (iii)
there is a material diminution in the responsibilities or authority of the
Employee from those set forth in Section 2.
5. EFFECT OF TERMINATION.
5.1 TERMINATION FOR CAUSE OR AT ELECTION OF EMPLOYEE. In the event
the Employee's employment is terminated for cause pursuant to Section 4.2, or at
the election of the Employee pursuant to Section 4.4, the Company shall pay to
the Employee all sums otherwise payable to him under Section 3 through the last
day of his actual employment by the Company.
5.2 TERMINATION FOR DEATH OR DISABILITY. If the Employee's employment
is terminated by death or because of disability pursuant to Section 4.3, the
Company shall pay to the estate of the Employee or to the Employee, as the case
may be, all sums which would otherwise be payable to the Employee under Section
3, including a
5
<PAGE> 6
pro rata portion of any bonus payable under Section 3.2, up to the end of the
month in which the termination of his employment because of death or disability
occurs.
5.3 TERMINATION FOR GOOD REASON OR AT ELECTION OF COMPANY. In the
event that Employee's employment is terminated by the Employee for "Good Reason"
pursuant to Section 4.5, or at the election of the Company pursuant to Section
4.4, the Company shall pay all base salary and accrued bonus (if any) through
the date of termination, and shall continue to pay to the Employee the salary
set forth in Section 3.1, and shall continue to make available to the Employee
the benefits set forth in Section 3.3, excluding vacation days and bonus sums
under said Section 3.3 accrued during this period, until the later of (a) the
first anniversary of the Commencement Date of this Agreement, or (b) three (3)
months after the date of termination in the case of termination pursuant to
Section 4.4 and six (6) months in the case of termination pusuant to Section
4.5, but in no event later than such date as the Employee shall have commenced
full-time employment with a new employer.
5.4 SURVIVAL. The provisions of this Section 5 shall survive the
termination of this Agreement.
6. NOTICES. All notices required or permitted under this Agreement shall
be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 6.
7. PRONOUNS. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.
8. Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether
6
<PAGE> 7
written or oral, relating to the subject matter of this Agreement. Reference is
made to the following separate agreements between the Employee and the Company
dated of even date herewith which cover additional agreements between the
parties: the Nonstatutory Stock Option Agreement,the Noncompetition Agreement
and the Nondisclosure Agreement. The Employee hereby affirms and ratifies his
obligations under each of such agreements.
9. AMENDMENT. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee.
10. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of both parties and their respective successors and assigns,
including any entity with which or into which the Company may be merged or which
may succeed to its assets or business, provided, however, that the obligations
of the Employee are personal and shall not be assigned by him.
12. MISCELLANEOUS.
12.1 NO WAIVER. No delay or omission by the Company in exercising any
right under this Agreement shall operate as a waiver of that or any other right.
A waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
12.2 CAPTIONS. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
7
<PAGE> 8
12.3 ENFORCEABILITY. In case any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year set forth above.
THE MEDICINES COMPANY
/s/ Clive A. Meanwell
By:-----------------------------------
President
Title:--------------------------------
/s/ John M. Nystrom
--------------------------------------
John M. Nystrom
9
<PAGE> 1
EXHIBIT 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 27th day of October,
1997, is entered into by The Medicines Company, a Delaware corporation with its
principal place of business at One Cambridge Center, Cambridge, Massachusetts
02142 (the "Company"), and Dermot Liddy residing at 69 Harvey Street, #8,
Cambridge, MA, 02140 (the "Employee").
The Company desires to employ the Employee, and the Employee desires to be
employed by the Company. In consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. TERM OF EMPLOYMENT. The Company hereby agrees to employ the Employee,
and the Employee hereby accepts employment with the Company, upon the terms set
forth in this Agreement, for the period commencing on October 27, 1997 (the
"Commencement Date") and ending on October 26, 1998 (such period, as it may be
renewed as provided in the following sentence, the "Employment Period"), unless
sooner terminated in accordance with the provisions of Section 4. The Employment
Period shall automatically be renewed for successive one (1) year periods unless
either the Employee or the Company provide written notice of non-renewal to the
other party at least ninety (90) days prior to the expiration of the then
current term.
2. TITLE; CAPACITY. The Employee shall serve as Senior Business Director
or in such other position as the Company AND THE EMPLOYEE MAY AGREE or its Board
of Directors (the "Board") may determine from time to time. The Employee shall
be based at the Company's headquarters in Cambridge, Massachusetts, unless
otherwise agreed. The Employee shall be subject to the supervision of, and shall
have such authority as is
<PAGE> 2
delegated to him by, the BOARD OR THE CEO OR THE VICE-PRESIDENT OF MERGERS AND
ACQUISITIONS.
The Employee hereby accepts such employment and agrees to undertake the
duties and responsibilities inherent in such position and/or such other duties
and responsibilities CONSISTENT WITH THAT POSITION (TAKE OUT THE FOLLOWING
UNDERLINED PHRASE:) AS THE BOARD OR ITS DESIGNEE SHALL FROM TIME TO TIME
REASONABLY ASSIGN TO HIM. The Employee agrees to devote his entire business
time, attention and energies to the business and interests of the Company during
the Employment Period. The Employee agrees to abide by the rules, regulations,
instructions, personnel practices and policies of the Company and any changes
therein which may be adopted from time to time by the Company. The Employee
acknowledges receipt of copies of all such rules and policies committed to
writing as of the date of this Agreement.
3. COMPENSATION AND BENEFITS.
3.1 SALARY. The Company shall pay the Employee, in bi-weekly
installments, an annual base salary of $120,000 for the one-year period
commencing on the Commencement Date. Such salary shall be subject to adjustment
thereafter as determined by the Board, but shall not be reduced below the amount
set forth above without the Employee's consent.
3.2 BONUS. The Employee shall receive a one-time payment of $10,000
on the date of execution of this Agreement. In addition, the Employee sbe
eligible to receive a bonus equal to up to thirty-five percent (35%) of his base
salary upon the achievement of annual objectives to be approved by the CEO of
the Company after discussion with the Employee. The Board shall review the
Employee's performance and determine the amount of the bonus, if any, to be paid
to the Employee.
3.3 FRINGE BENEFITS. The Employee shall be entitled to participate in
all other bonus and benefit programs AND LIFE AND DISABILITY INSURANCE, MEDICAL
HEALTH CARE INSURANCE, STOCK OPTIONS AND STOCK GRANTS that the Company
establishes and
<PAGE> 3
makes available to its employees and SENIOR MANAGEMENT, if any, to the extent
that Employee's position, tenure, salary, age, health and other qualifications
make him eligible to participate. The Employee shall be entitled to four (4)
weeks paid vacation per year, to be taken at such times as may be approved by
the Board or THE CEO. THE EMPLOYEE SHALL BE ENTITLED TO ANY OTHER RIGHTS OR
ANTI-DILUTION PROTECTION WITH REGARD TO STOCK OWNERSHIP AS MAY BE GRANTED TO ALL
OTHER SENIOR MANAGEMENT IN THE COMPANY.
3.4 REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Employee for all reasonable travel, entertainment and other expenses incurred or
paid by the Employee in connection with, or related to, the performance of his
duties, responsibilities or services under this Agreement, upon presentation by
the Employee of documentation, expense statements, vouchers and/or such other
supporting information as the Company may request.
4. EMPLOYMENT TERMINATION. The employment of the Employee by the Company
pursuant to this Agreement shall terminate upon the occurrence of any of the
following:
4.1 EXPIRATION OF EMPLOYMENT PERIOD. Expiration of the Employment
Period in accordance with Section 1.
4.2 TERMINATION FOR CAUSE. At the election of the Company,
immediately upon written notice by the Company to the Employee, for "cause" as
determined by the Board. For purposes of this Section 4.2, "cause" for
termination shall be deemed to exist only if any of the following shall have
occurred:
(a) the Employee's conviction of any crime (whether or not involving the
Company) which constitutes a felony in the jurisdiction involved (other than
unintentional motor vehicle felonies);
(b) any act of theft, fraud, misappropriation of funds or embezzlement by
the Employee, in connection with his work with the Company, or any other act or
acts
<PAGE> 4
of dishonesty on the part of the Employee resulting or intended to result
directly or indirectly in personal gain or enrichment of the Employee at the
expense of the Company;
<PAGE> 5
(c) the Employee's failure to perform in all material respects the services
required to be performed pursuant to Section 2 of this Agreement, provided that
if such failure is capable of being corrected, such failure continues
uncorrected for a period of thirty (30) days after the Employee shall have
received written notice from the Company stating with reasonably specificity the
nature of such failure;
(d) the Employee's MATERIAL breach of Sections 6 or 7 of this Agreement or
any material breach of the Invention and Nondisclosure Agreement dated of even
date herewith between the Employee and the Company (the "Nondisclosure
Agreement");
(e) the Employee's excessive use of alcohol and/or drugs which is judged by
the CEO and the Board to materially interfere with the performance of his
duties; or
(f) DERMOT WOULD LIKE THE FOLLOWING TAKEN OUT OR HAVE MISCONDUCT DEFINED
EXACTLY: any misconduct by the Employee which in the reasonable judgment of the
CEO and the Board would jeopardize the success of the Company.
4.3 DEATH OR DISABILITY. Thirty (30) days after the death or disability of
the Employee. As used in this Agreement, the term "disability" shall mean the
inability of the Employee, due to a physical or mental disability, for a period
of ninety (90) days, whether or not consecutive, during any 360-day period to
perform the services contemplated under this Agreement. A determination of
disability shall be made by a physician satisfactory to both the Employee and
the Company, PROVIDED THAT if the Employee and the Company do not agree on a
physician, the Employee and the Company shall each select a physician and these
two together shall select a third physician, whose determination as to
disability shall be binding on all parties.
<PAGE> 6
4.4 VOLUNTARY TERMINATION. At the election of either party, upon
written notice of termination given at least ninety (90) days prior to the end
of the then current Employment Period.
4.5 VOLUNTARY TERMINATION FOR "GOOD REASON." At the election of the
Employee, for "Good Reason," which shall be deemed to exist only if the Company
fails to comply in any material respect with the provisions of Section 3, other
than an isolated, insubstantial and inadvertent failure which is remedied by the
Company promptly after receipt of notice thereof given by the Employee.
5. EFFECT OF TERMINATION.
5.1 TERMINATION FOR CAUSE OR AT ELECTION OF EMPLOYEE. In the event
the Employee's employment is terminated for cause pursuant to Section 4.2, or at
the election of the Employee pursuant to Section 4.4, the Company shall pay to
the Employee all sums (INCLUDING SALARY AND A PRO-RATA SHARE OF ANY BONUS FOR
THE YEAR AND, UNLESS TERMINATED FOR CAUSE, STOCK AND STOCK OPTIONS
GRANTED (otherwise payable to him under Section 3 through the last day of his
actual employment by the Company.
5.2 TERMINATION FOR DEATH OR DISABILITY. If the Employee's employment
is terminated by death or because of disability pursuant to Section 4.3, the
Company shall pay to the estate of the Employee or to the Employee, as the case
may be, all sums which would otherwise be payable to the Employee under Section
3 up to the end of the month in which the termination of his employment because
of death or disability occurs.
5.3 TERMINATION FOR GOOD REASON OR AT ELECTION OF COMPANY. In the
event that Employee's employment is terminated by the Employee for "Good Reason"
pursuant to Section 4.5, or at the election of the Company pursuant to Section
4.4, the Company shall continue to pay to the Employee the salary set forth in
Section 3.1, and shall continue to make available to the Employee the benefits
set forth in Section 3.3,
<PAGE> 7
excluding vacation days and bonus sums under said Section 3.3 accrued during
this period (BUT INCLUDING A PRO-RATA SHARE OF ANY BONUS FOR THE YEAR IN WHICH
TERMINATION OCCURS), until the later of (a) the first anniversary of the
Commencement Date of this Agreement, or (b) three (3) months after the date of
termination, but in no event later than such date as the Employee shall have
commenced full-time employment with a new employer.
5.4 SURVIVAL. The provisions of Sections 6 and 7 shall survive the
termination of this Agreement.
6. NON-COMPETE.
6.1 NON-COMPETE RESTRICTIONS During the Employment Period and for a
period of one (1) year after the termination or expiration thereof (such one (1)
year period being inapplicable in the event of a termination pursuant to Section
4.4 at the election of the Company or by the Employee pursuant to Section 4.5),
EXCEPT THOSE CHEMICALS AND PRODUCTS SUCH AS THE EMPLOYEE HAD INTERESTS IN PRIOR
TO EMPLOYMENT WITH THE COMPANY AND AS COVERED BY THE FOLLOWING DESCRIPTION: ALL
AGRO-BIOTECH PRODUCTS RELATING TO SEASONAL VIRUSES IN CROPS, ALL MEDICAL WASTE
DEVICES, ALL FERMENTATION PROCESSES RELATING TO THE DEVELOPMENT OF CITRIC ACID,
GLUCONIC ACID, LYSIAL AND OTHER PROTEINS NOT PRESENTLY COVERED BY BUSINESS
ACTIVITIES OF THE COMPANY, the Employee will not directly or indirectly as an
individual proprietor, partner, stockholder, officer, employee, director, joint
venturer, investor, lender, or in any other capacity whatsoever (other than as
the holder of not more than an one percent (1%) equity interest in any publicly
held company), engage in the business of developing, producing, marketing or
selling products with chemical or commercial characteristics of the kind or type
developed or being developed, produced, marketed or sold by the Company while
the Employee was employed by the Company.
6.2 LIMITATIONS. Notwithstanding the provisions of Section 6.1, it is
recognized that the Employee's primary experience is in the pharmaceutical
industry, and
<PAGE> 8
that his ability to earn a livelihood is likely to be dependent on future
employment in such industry. Accordingly, the Company agrees that: (a) the
employment of the Employee by a pharmaceutical company in a position in which he
assumes responsibility for multiple products, most of which are not competitive
with the Company's products, shall not be considered a violation of Section 6.1,
so long as (i) the Employee's responsibilities in such position are not directed
principally to products that are competitive with the Company's products, (ii)
the portfolio of the pharmaceutical company which hires the Employee must
contain the specific product or products which are competitive with Company's
products prior to the hiring of the Employee, and (iii) the pharmaceutical
company which hires the Employee has been in existence for at least five (5)
years prior to hiring the Employee; and (b) in the event that the Company ceases
to conduct business, the provisions of Section 6.1 shall terminate.
6.3 CUTBACK CLAUSE. If any restriction set forth in this Section 6 is
found by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of activities or
in too broad a geographic area, it shall be interpreted to extend only over the
maximum period of time, range of activities or geographic area as to which it
may be enforceable.
6.4 EQUITABLE REMEDIES. The restrictions contained in this Section 6
are necessary for the protection of the business and goodwill of the Company and
are considered by the Employee to be reasonable for such purpose. The Employee
agrees that any breach of Section 6.1 is likely to cause the Company substantial
and irrevocable damage and therefore, in the event of any such breach, the
Employee agrees that the Company, in addition to such other remedies which may
be available, shall be entitled to specific performance and other injunctive
relief.
7. NON-SOLICITATION.
7.1 NON-SOLICITATION RESTRICTIONS. While the Employee is employed by
the Company and for a period of one (1) year after the termination or cessation
of such
<PAGE> 9
employment for any reason, the Employee will not directly or indirectly recruit,
solicit or hire any employee of the Company, or induce or attempt to induce any
employee of the Company to terminate his/her employment with, or otherwise cease
his/her relationship with, the Company. If the Employee violates the provisions
of this Section 7.1, the Employee shall continue to be bound by the restrictions
set forth in this Section 7.1 until a period of one (1) year has expired without
any violation of such provisions.
7.2 CUTBACK CLAUSE. If any restriction set forth in Section 7.1 is
found by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of activities or
in too broad a geographic area, it shall be interpreted to extend only over the
maximum period of time or range of activities as to which it may be enforceable.
7.3 EQUITABLE REMEDIES. The restrictions contained in Section 7.1 are
necessary for the protection of the business and goodwill of the Company and are
considered by the Employee to be reasonable for such purpose. The Employee
agrees that any breach of Section 7 is likely to cause the Company substantial
and irrevocable damage and therefore, in the event of any such breach, the
Employee agrees that the Company, in addition to such other remedies which may
be available, shall be entitled to specific performance and other injunctive
relief.
8. OTHER AGREEMENTS. Employee hereby represents that he is not bound by
the terms of any agreement with any previous employer or other party to refrain
from using or disclosing any trade secret or confidential or proprietary
information in the course of his employment with the Company or to refrain from
competing, directly or indirectly, with the business of such previous employer
or any other party. Employee further represents that his performance of all the
terms of this Agreement and as an employee of the Company does not and will not
breach any agreement to keep in confidence proprietary information, knowledge or
data acquired by him in confidence or in trust prior to his employment with the
Company.
<PAGE> 10
9. NOTICES. All notices required or permitted under this Agreement shall
be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 9.
10. PRONOUNS. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.
Reference is made to the following separate agreements between the Employee and
the Company dated of even date herewith which cover additional agreements
between the parties: the Stock Restriction Agreement, the Noncompetition and
Nonsolicitation Agreement and the Invention and Nondisclosure Agreement.
12. AMENDMENT. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee.
13. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of both parties and their respective successors and assigns,
including any entity with which or into which the Company may be merged or which
may succeed to its assets or business, provided, however, that the obligations
of the Employee are personal and shall not be assigned by him.
15. MISCELLANEOUS.
15.1 NO WAIVER. No delay or omission by the Company in exercising any
right under this Agreement shall operate as a waiver of that or any other right.
A
<PAGE> 11
waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
15.2 CAPTIONS. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
15.3 ENFORCEABILITY. In case any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
THE MEDICINES COMPANY
/s/ Clive A. Meanwell
By:--------------------------------
President
Title:-----------------------------
/s/ Dermot Liddy
-----------------------------------
Dermot Liddy
<PAGE> 1
EXHIBIT 10.16
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 20th day of October,
1997, is entered into by The Medicines Company, a Delaware corporation with its
principal place of business at One Cambridge Center, Cambridge, Massachusetts
02142 (the "Company"), and Peyton Marshall residing at 8 Montague Road,
Richmond, Surrey TW 10 6QW, United Kingdom (the "Employee").
The Company desires to employ the Employee, and the Employee desires to be
employed by the Company. In consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. TERM OF EMPLOYMENT. The Company hereby agrees to employ the Employee,
and the Employee hereby accepts employment with the Company, upon the terms set
forth in this Agreement, for the period commencing on October 20, 1997 (the
"Commencement Date") and ending on October 20, 1998 (such period, as it may be
renewed as provided in the following sentence, the "Employment Period"), unless
sooner terminated in accordance with the provisions of Section 4. The Employment
Period shall automatically be renewed for successive one (1) year periods unless
either the Employee or the Company provide written notice of non-renewal to the
other party at least ninety (90) days prior to the expiration of the then
current term.
2. TITLE; CAPACITY. The Employee shall serve as Vice President and Chief
Financial Officer or in such other position as the Company or its Board of
Directors (the "Board") may determine from time to time. The Employee shall be
based at the Company's headquarters in Cambridge, Massachusetts, unless
otherwise agreed. The Employee shall be subject to the supervision of, and shall
have such authority as is delegated to him by, the Board or such officer of the
Company as may be designated by the Board.
<PAGE> 2
The Employee hereby accepts such employment and agrees to undertake the duties
and responsibilities inherent in such position and/or such other duties and
responsibilities as the Board or its designee shall from time to time reasonably
assign to him. The Employee agrees to devote his entire business time, attention
and energies to the business and interests of the Company during the Employment
Period. The Employee agrees to abide by the rules, regulations, instructions,
personnel practices and policies of the Company and any changes therein which
may be adopted from time to time by the Company. The Employee acknowledges
receipt of copies of all such rules and policies committed to writing as of the
date of this Agreement.
3. COMPENSATION AND BENEFITS.
3.1 SALARY. The Company shall pay the Employee, in semi-monthly
installments, an annual base salary of $150,000 for the one-year period
commencing on the Commencement Date. Such salary shall be subject to adjustment
thereafter as determined by the Board, but shall not be reduced below the amount
set forth above without the Employee's consent.
3.2 BONUS. The Employee shall be eligible to receive a bonus equal to
up to forty percent (40%) of his base salary upon the achievement of annual
objectives to be approved by the CEO of the Company after discussion with the
Employee. The Board shall review the Employee's performance and determine the
amount of the bonus, if any, to be paid to the Employee.
3.3 FRINGE BENEFITS. The Employee shall be entitled to participate in
all other bonus and benefit programs that the Company establishes and makes
available to its employees, if any, to the extent that Employee's position,
tenure, salary, age, health and other qualifications make him eligible to
participate. The Employee shall be entitled to four (4) weeks paid vacation per
year, to be taken at such times as may be approved by the Board or its designee.
<PAGE> 3
3.4 REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Employee for all reasonable travel, entertainment and other expenses incurred or
paid by the Employee in connection with, or related to, the performance of his
duties, responsibilities or services under this Agreement, upon presentation by
the Employee of documentation, expense statements, vouchers and/or such other
supporting information as the Company may request.
4. EMPLOYMENT TERMINATION. The employment of the Employee by the Company
pursuant to this Agreement shall terminate upon the occurrence of any of the
following:
4.1 EXPIRATION OF EMPLOYMENT PERIOD. Expiration of the Employment
Period in accordance with Section 1.
4.2 TERMINATION FOR CAUSE. At the election of the Company,
immediately upon written notice by the Company to the Employee, for "cause" as
determined by the Board. For purposes of this Section 4.2, "cause" for
termination shall be deemed to exist only if any of the following shall have
occurred:
(a) the Employee's conviction of any crime (whether or not involving
the Company) which constitutes a felony in the jurisdiction involved (other than
unintentional motor vehicle felonies);
(b) any act of theft, fraud, misappropriation of funds or embezzlement by
the Employee, in connection with his work with the Company, or any other act or
acts of dishonesty on the part of the Employee resulting or intended to result
directly or indirectly in personal gain or enrichment of the Employee at the
expense of the Company;
(c) the Employee's failure to perform in all material respects the services
required to be performed pursuant to Section 2 of this Agreement, PROVIDED THAT
if such failure is capable of being corrected, such failure continues
uncorrected for a
<PAGE> 4
period of thirty (30) days after the Employee shall have received written notice
from the Company stating with reasonably specificity the nature of such failure;
(d) the Employee's breach of Sections 6 or 7 of this Agreement or any
material breach of the Invention and Nondisclosure Agreement dated of even date
herewith between the Employee and the Company (the "Nondisclosure Agreement");
(e) the Employee's excessive use of alcohol and/or drugs which is judged by
the CEO and the Board to materially interfere with the performance of his
duties; or
(f) any misconduct by the Employee which in the reasonable judgment of the
CEO and the Board would jeopardize the success of the Company.
4.3 DEATH OR DISABILITY. Thirty (30) days after the death or
disability of the Employee. As used in this Agreement, the term "disability"
shall mean the inability of the Employee, due to a physical or mental
disability, for a period of ninety (90) days, whether or not consecutive, during
any 360-day period to perform the services contemplated under this Agreement. A
determination of disability shall be made by a physician satisfactory to both
the Employee and the Company, PROVIDED THAT if the Employee and the Company do
not agree on a physician, the Employee and the Company shall each select a
physician and these two together shall select a third physician, whose
determination as to disability shall be binding on all parties.
4.4 VOLUNTARY TERMINATION. At the election of either party, upon
written notice of termination given at least ninety (90) days prior to the end
of the then current Employment Period.
4.5 VOLUNTARY TERMINATION FOR "GOOD REASON." At the election of the
Employee, for "Good Reason," which shall be deemed to exist only if the Company
fails to comply in any material respect with the provisions of Section 3, other
than an isolated, insubstantial and inadvertent failure which is remedied by the
Company promptly after receipt of notice thereof given by the Employee.
<PAGE> 5
5. EFFECT OF TERMINATION.
5.1 TERMINATION FOR CAUSE OR AT ELECTION OF EMPLOYEE. In the event
the Employee's employment is terminated for cause pursuant to Section 4.2, or at
the election of the Employee pursuant to Section 4.4, the Company shall pay to
the Employee all sums otherwise payable to him under Section 3 through the last
day of his actual employment by the Company.
5.2 TERMINATION FOR DEATH OR DISABILITY. If the Employee's employment
is terminated by death or because of disability pursuant to Section 4.3, the
Company shall pay to the estate of the Employee or to the Employee, as the case
may be, all sums which would otherwise be payable to the Employee under Section
3 up to the end of the month in which the termination of his employment because
of death or disability occurs.
5.3 TERMINATION FOR GOOD REASON OR AT ELECTION OF COMPANY. In the
event that Employee's employment is terminated by the Employee for "Good Reason"
pursuant to Section 4.5, or at the election of the Company pursuant to Section
4.4, the Company shall continue to pay to the Employee the salary set forth in
Section 3.1, and shall continue to make available to the Employee the benefits
set forth in Section 3.3, excluding vacation days and bonus sums under said
Section 3.3 accrued during this period, until the later of (a) the first
anniversary of the Commencement Date of this Agreement, or (b) three (3) months
after the date of termination, but in no event later than such date as the
Employee shall have commenced full-time employment with a new employer.
5.4 SURVIVAL. The provisions of Sections 6 and 7 shall survive the
termination of this Agreement.
6. NON-COMPETE.
6.1 NON-COMPETE RESTRICTIONS During the Employment Period and for a
period of one (1) year after the termination or expiration thereof (such one (1)
year
<PAGE> 6
period being inapplicable in the event of a termination pursuant to Section 4.4
at the election of the Company or by the Employee pursuant to Section 4.5), the
Employee will not directly or indirectly as an individual proprietor, partner,
stockholder, officer, employee, director, joint venturer, investor, lender, or
in any other capacity whatsoever (other than as the holder of not more than an
one percent (1%) equity interest in any publicly held company), engage in the
business of developing, producing, marketing or selling products with chemical
or commercial characteristics of the kind or type developed or being developed,
produced, marketed or sold by the Company while the Employee was employed by the
Company.
6.2 LIMITATIONS. Notwithstanding the provisions of Section 6.1, it is
recognized that the Employee's primary experience is in the pharmaceutical
industry, and that his ability to earn a livelihood is likely to be dependent on
future employment in such industry. Accordingly, the Company agrees that: (a)
the employment of the Employee by a pharmaceutical company in a position in
which he assumes responsibility for multiple products, most of which are not
competitive with the Company's products, shall not be considered a violation of
Section 6.1, so long as (i) the Employee's responsibilities in such position are
not directed principally to products that are competitive with the Company's
products, (ii) the portfolio of the pharmaceutical company which hires the
Employee must contain the specific product or products which are competitive
with Company's products prior to the hiring of the Employee, and (iii) the
pharmaceutical company which hires the Employee has been in existence for at
least five (5) years prior to hiring the Employee; and (b) in the event that the
Company ceases to conduct business, the provisions of Section 6.1 shall
terminate.
6.3 CUTBACK CLAUSE. If any restriction set forth in this Section 6 is
found by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of activities or
in too broad a
<PAGE> 7
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.
6.4 EQUITABLE REMEDIES. The restrictions contained in this Section 6
are necessary for the protection of the business and goodwill of the Company and
are considered by the Employee to be reasonable for such purpose. The Employee
agrees that any breach of Section 6.1 is likely to cause the Company substantial
and irrevocable damage and therefore, in the event of any such breach, the
Employee agrees that the Company, in addition to such other remedies which may
be available, shall be entitled to specific performance and other injunctive
relief.
7. NON-SOLICITATION.
7.1 NON-SOLICITATION RESTRICTIONS. While the Employee is employed by
the Company and for a period of one (1) year after the termination or cessation
of such employment for any reason, the Employee will not directly or indirectly
recruit, solicit or hire any employee of the Company, or induce or attempt to
induce any employee of the Company to terminate his/her employment with, or
otherwise cease his/her relationship with, the Company. If the Employee violates
the provisions of this Section 7.1, the Employee shall continue to be bound by
the restrictions set forth in this Section 7.1 until a period of one (1) year
has expired without any violation of such provisions.
7.2 CUTBACK CLAUSE. If any restriction set forth in Section 7.1 is
found by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of activities or
in too broad a geographic area, it shall be interpreted to extend only over the
maximum period of time or range of activities as to which it may be enforceable.
7.3 EQUITABLE REMEDIES. The restrictions contained in Section 7.1 are
necessary for the protection of the business and goodwill of the Company and are
considered by the Employee to be reasonable for such purpose. The Employee
agrees that any breach of Section 7 is likely to cause the Company substantial
and irrevocable
<PAGE> 8
damage and therefore, in the event of any such breach, the Employee agrees that
the Company, in addition to such other remedies which may be available, shall be
entitled to specific performance and other injunctive relief.
8. OTHER AGREEMENTS. Employee hereby represents that he is not bound by
the terms of any agreement with any previous employer or other party to refrain
from using or disclosing any trade secret or confidential or proprietary
information in the course of his employment with the Company or to refrain from
competing, directly or indirectly, with the business of such previous employer
or any other party. Employee further represents that his performance of all the
terms of this Agreement and as an employee of the Company does not and will not
breach any agreement to keep in confidence proprietary information, knowledge or
data acquired by him in confidence or in trust prior to his employment with the
Company.
9. NOTICES. All notices required or permitted under this Agreement shall
be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 9.
10. PRONOUNS. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.
<PAGE> 9
11. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.
Reference is made to the following separate agreements between the Employee and
the Company dated of even date herewith which cover additional agreements
between the parties: the Stock Restriction Agreement, the Noncompetition and
Nonsolicitation Agreement and the Invention and Nondisclosure Agreement.
12. AMENDMENT. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee.
13. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of both parties and their respective successors and assigns,
including any entity with which or into which the Company may be merged or which
may succeed to its assets or business, provided, however, that the obligations
of the Employee are personal and shall not be assigned by him.
15. MISCELLANEOUS.
15.1 NO WAIVER. No delay or omission by the Company in exercising any
right under this Agreement shall operate as a waiver of that or any other right.
A waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
15.2 CAPTIONS. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
<PAGE> 10
15.3 ENFORCEABILITY. In case any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
THE MEDICINES COMPANY
/s/ Clive A. Meanwell
By:--------------------------------
President
Title:-----------------------------
/s/ Peyton Marshall
-----------------------------------
Peyton Marshall
<PAGE> 1
Exhibit 10.17
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 30th day of
March, is entered into by The Medicines Company, a Delaware corporation with its
principal place of business at One Cambridge Center, Cambridge, Massachusetts
02142 (the "Company"), and David Stack, residing at One Robin Drive, Oak Ridge,
New Jersey 07438 (the "Employee").
The Company desires to employ the Employee, and the Employee desires to
be employed by the Company. In consideration of the mutual covenants and
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
the parties agree as follows:
1. TERM OF EMPLOYMENT. The Company hereby agrees to employ the
Employee, and the Employee hereby accepts employment with the Company, upon the
terms set forth in this Agreement, for the period commencing on April 1, 2000
(the "Commencement Date") and ending on April 1, 2001 (such period, as it may be
renewed as provided in the following sentence, the "Employment Period"), unless
sooner terminated in accordance with the provisions of Section 4. The Employment
Period shall automatically be renewed for successive one (1) year periods unless
either the Employee or the Company provide written notice of non-renewal to the
other party at least ninety (90) days prior to the expiration of the then
current term.
2. TITLE; CAPACITY. The Employee shall serve as Senior Vice President
or in such other position as the Company or its Board of Directors (the "Board")
may determine from time to time. The Employee shall be based at 5 Sylvan Way,
Parsippany, New Jersey. The Employee shall be subject to the supervision of, and
shall have such
1
<PAGE> 2
authority as is delegated to him by, the Board or such officer of the Company as
may be designated by the Board.
The Employee hereby accepts such employment and agrees to undertake the duties
and responsibilities inherent in such position and/or such other duties and
responsibilities as the Board or its designee shall from time to time reasonably
assign to him. The Employee agrees to devote twelve (12) working days per month
to the business and interests of the Company during the Employment Period. The
Employee agrees to abide by the rules, regulations, instructions, personnel
practices and policies of the Company and any changes therein which may be
adopted from time to time by the Company. The Employee acknowledges receipt of
copies of all such rules and policies committed to writing as of the date of
this Agreement.
3. COMPENSATION AND BENEFITS.
3.1 SALARY. The Company shall pay the Employee, in
semi-monthly installments, an annual base salary of $150,000 for the one-year
period commencing on the Commencement Date. Such salary shall be subject to
adjustment thereafter as determined by the Board, but shall not be reduced below
the amount set forth above without the Employee's consent.
3.2 BONUS. The Employee shall be eligible to receive a bonus
of up to 40% of his base salary upon the achievement of annual objectives to be
approved by the CEO of the Company after discussion with the Employee. The Board
shall review the Employee's performance and determine the amount of the bonus,
if any, to be paid to the Employee.
3.3 REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Employee for all reasonable travel, entertainment and other expenses incurred or
paid by the Employee in connection with, or related to, the performance of his
duties,
2
<PAGE> 3
responsibilities or services under this Agreement, upon presentation by
the Employee of documentation, expense statements, vouchers and/or such other
supporting information as the Company may request.
4. EMPLOYMENT TERMINATION. The employment of the Employee by the
Company pursuant to this Agreement shall terminate upon the occurrence of any of
the following:
4.1 EXPIRATION OF EMPLOYMENT PERIOD. Expiration of the
Employment Period in accordance with Section 1.
4.2 TERMINATION FOR CAUSE. At the election of the Company,
immediately upon written notice by the Company to the Employee, for "cause" as
determined by the Board. For purposes of this Section 4.2, "cause" for
termination shall be deemed to exist only if any of the following shall have
occurred:
(a) the Employee's conviction of any crime (whether or not involving
the Company) which constitutes a felony in the jurisdiction involved (other than
unintentional motor vehicle felonies);
(b) any act of theft, fraud, misappropriation of funds or embezzlement by the
Employee, in connection with his work with the Company, or any other act or acts
of dishonesty on the part of the Employee resulting or intended to result
directly or indirectly in personal gain or enrichment of the Employee at the
expense of the Company;
(c) the Employee's failure to perform in all material respects the services
required to be performed pursuant to Section 2 of this Agreement, PROVIDED THAT
if such failure is capable of being corrected, such failure continues
uncorrected for a period of thirty (30) days after the Employee shall have
received written notice from the Company stating with reasonably specificity the
nature of such failure;
3
<PAGE> 4
(d) the Employee's breach of Sections 6 or 7 of this Agreement or any material
breach of the Invention and Nondisclosure Agreement dated of even date herewith
between the Employee and the Company (the "Nondisclosure Agreement"); (e) the
Employee's excessive use of alcohol and/or drugs which is judged by the CEO and
the Board to materially interfere with the performance of his duties; or (f) any
misconduct by the Employee which in the reasonable judgment of the CEO and the
Board would jeopardize the success of the Company.
4.3 DEATH OR DISABILITY. Thirty (30) days after the death or
disability of the Employee. As used in this Agreement, the term "disability"
shall mean the inability of the Employee, due to a physical or mental
disability, for a period of ninety (90) days, whether or not consecutive, during
any 360-day period to perform the services contemplated under this Agreement. A
determination of disability shall be made by a physician satisfactory to both
the Employee and the Company, PROVIDED THAT if the Employee and the Company do
not agree on a physician, the Employee and the Company shall each select a
physician and these two together shall select a third physician, whose
determination as to disability shall be binding on all parties.
4.4 VOLUNTARY TERMINATION. At the election of either party,
upon written notice of termination given at least ninety (90) days prior to the
end of the then current Employment Period.
4.5 VOLUNTARY TERMINATION FOR "GOOD REASON." At the election
of the Employee, for "Good Reason," which shall be deemed to exist only if the
Company fails to comply in any material respect with the provisions of Section
3, other than an isolated, insubstantial and inadvertent failure which is
remedied by the Company promptly after receipt of notice thereof given by the
Employee.
5. EFFECT OF TERMINATION.
4
<PAGE> 5
5.1 TERMINATION FOR CAUSE OR AT ELECTION OF EMPLOYEE. In the
event the Employee's employment is terminated for cause pursuant to Section 4.2,
or at the election of the Employee pursuant to Section 4.4, the Company shall
pay to the Employee all sums otherwise payable to him under Section 3 through
the last day of his actual employment by the Company.
5.2 TERMINATION FOR DEATH OR DISABILITY. If the Employee's
employment is terminated by death or because of disability pursuant to Section
4.3, the Company shall pay to the estate of the Employee or to the Employee, as
the case may be, all sums which would otherwise be payable to the Employee under
Section 3 up to the end of the month in which the termination of his employment
because of death or disability occurs.
5.3 TERMINATION FOR GOOD REASON OR AT ELECTION OF COMPANY. In
the event that Employee's employment is terminated by the Employee for "Good
Reason" pursuant to Section 4.5, or at the election of the Company pursuant to
Section 4.4, the Company shall continue to pay to the Employee the salary set
forth in Section 3.1, and shall continue to make available to the Employee the
benefits set forth in Section 3.3, excluding vacation days and bonus sums under
said Section 3.3 accrued during this period, until the later of (a) the first
anniversary of the Commencement Date of this Agreement, or (b) three (3) months
after the date of termination, but in no event later than such date as the
Employee shall have commenced full-time employment with a new employer.
5.4 SURVIVAL. The provisions of Sections 6 and 7 shall survive
the termination of this Agreement.
6. NON-COMPETE.
5
<PAGE> 6
6.1 NON-COMPETE RESTRICTIONS During the Employment Period and
for a period of one (1) year after the termination or expiration thereof for any
reason, the Employee will not directly or indirectly:
(a) as an individual proprietor, partner, stockholder, officer, employee,
director, joint venturer, investor, lender, or in any other capacity
whatsoever (other than as the holder of not more than an one percent (1%)
equity interest in any publicly held company), engage in the business of
developing, producing, marketing or selling (or assist any other person
engaging in the business of developing, producing, marketing or selling)
any Competitive Products. For this purpose, "Competitive Products" shall
mean any drugs or devices used to diagnose, prevent or treat arterial or
venous thrombosis [To Be Discussed]; or
(b) solicit, divert or take away, or attempt to divert or to take away, the
business or patronage of any of the clients, customers or accounts, or
prospective clients, customers or accounts, of the Company.
6.2 LIMITATIONS. Notwithstanding the provisions of Section
6.1, it is recognized that the Employee's primary experience is in the
pharmaceutical industry, and that his ability to earn a livelihood is likely to
be dependent on future employment in such industry. Accordingly, the Company
agrees that the employment of the Employee by a pharmaceutical company in a
position in which he assumes responsibility for multiple products, most of which
are not Competitive Products, shall not be considered a violation of Section
6.1, so long as (i) the Employee's responsibilities in such position are not
directed principally to Competitive Products, (ii) the portfolio of the
pharmaceutical company which hires the Employee must contain the Competitive
Products prior to the hiring of the Employee, and (iii) the pharmaceutical
company which hires the Employee has been in existence for at least five (5)
years prior to hiring the Employee.
6
<PAGE> 7
6.3 EXTENSION. If the Employee violates the provisions of
Section 6.1, the Employee shall continue to be bound by the restrictions set
forth in this Section 6 until a period of one year has expired without any
violation of such provision.
6.4 CUTBACK CLAUSE. If any restriction set forth in this
Section 6 is found by any court of competent jurisdiction to be unenforceable
because it extends for too long a period of time or over too great a range of
activities or in too broad a geographic area, it shall be interpreted to extend
only over the maximum period of time, range of activities or geographic area as
to which it may be enforceable.
6.5 EQUITABLE REMEDIES. The restrictions contained in this
Section 6 are necessary for the protection of the business and goodwill of the
Company and are considered by the Employee to be reasonable for such purpose.
The Employee agrees that any breach of Section 6.1 is likely to cause the
Company substantial and irrevocable damage and therefore, in the event of any
such breach, the Employee agrees that the Company, in addition to such other
remedies which may be available, shall be entitled to specific performance and
other injunctive relief.
7. NON-SOLICITATION.
7.1 NON-SOLICITATION RESTRICTIONS. While the Employee is
employed by the Company and for a period of one (1) year after the termination
or cessation of such employment for any reason, the Employee will not directly
or indirectly recruit, solicit or hire any employee of the Company, or induce or
attempt to induce any employee of the Company to terminate his/her employment
with, or otherwise cease his/her relationship with, the Company (other than
Thomas Quinn, Fred Ryan, or Melinda Popolla). If the Employee violates the
provisions of this Section 7.1, the Employee shall continue to be
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bound by the restrictions set forth in this Section 7.1 until a period of one
(1) year has expired without any violation of such provisions.
7.2 CUTBACK CLAUSE. If any restriction set forth in Section
7.1 is found by any court of competent jurisdiction to be unenforceable because
it extends for too long a period of time or over too great a range of activities
or in too broad a geographic area, it shall be interpreted to extend only over
the maximum period of time or range of activities as to which it may be
enforceable.
7.3 EQUITABLE REMEDIES. The restrictions contained in Section
7.1 are necessary for the protection of the business and goodwill of the Company
and are considered by the Employee to be reasonable for such purpose. The
Employee agrees that any breach of Section 7 is likely to cause the Company
substantial and irrevocable damage and therefore, in the event of any such
breach, the Employee agrees that the Company, in addition to such other remedies
which may be available, shall be entitled to specific performance and other
injunctive relief.
8. OTHER AGREEMENTS. Employee hereby represents that he is not bound by
the terms of any agreement with any previous employer or other party to refrain
from using or disclosing any trade secret or confidential or proprietary
information in the course of his employment with the Company or to refrain from
competing, directly or indirectly, with the business of such previous employer
or any other party. Employee further represents that his performance of all the
terms of this Agreement and as an employee of the Company does not and will not
breach any agreement to keep in confidence proprietary information, knowledge or
data acquired by him in confidence or in trust prior to his employment with the
Company.
9. NOTICES. All notices required or permitted under this Agreement
shall be in writing and shall be deemed effective upon personal delivery or upon
deposit in the
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United States Post Office, by registered or certified mail, postage prepaid,
addressed to the other party at the address shown above, or at such other
address or addresses as either party shall designate to the other in accordance
with this Section 9.
10. PRONOUNS. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the plural,
and vice versa.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.
Reference is made to the following separate agreements between the Employee and
the Company dated of even date herewith which cover additional agreements
between the parties: the Nonstatutory Stock Option Agreement, the Noncompetition
and Nonsolicitation Agreement and the Invention and Nondisclosure Agreement.
12. AMENDMENT. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Employee.
13. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of both parties and their respective successors and
assigns, including any entity with which or into which the Company may be merged
or which may succeed to its assets or business, provided, however, that the
obligations of the Employee are personal and shall not be assigned by him.
15. MISCELLANEOUS.
15.1 NO WAIVER. No delay or omission by the Company in
exercising any right under this Agreement shall operate as a waiver of that or
any other right. A
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waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
15.2 CAPTIONS. The captions of the sections of this Agreement
are for convenience of reference only and in no way define, limit or affect the
scope or substance of any section of this Agreement.
15.3 ENFORCEABILITY. In case any provision of this Agreement
shall be invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year set forth above.
THE MEDICINES COMPANY
By: /s/ Clive A. Meanwell
---------------------------------
Title: CEO
------------------------------
/s/ David M. Stack
------------------------------------
Name
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Exhibit 10.18
I N D E X T O L E A S E
FROM
TRUSTEES OF ONE CAMBRIDGE CENTER TRUST
TO
THE MEDICINES COMPANY
- --------------------------------------------------------------------------------
ARTICLE
NUMBER CAPTION PAGE
- ------- ------- ----
ARTICLE I BASIC LEASE PROVISIONS AND
ENUMERATIONS OF EXHIBITS 1
ARTICLE II PREMISES 4
ARTICLE III LEASE TERM 4
ARTICLE IV DELIVERY 5
ARTICLE V ANNUAL FIXED RENT AND ELECTRICITY 5
ARTICLE VI TAXES 6
ARTICLE VII LANDLORD'S REPAIRS AND SERVICES AND TENANT'S
ESCALATION PAYMENTS 8
ARTICLE VIII TENANT'S REPAIRS 13
ARTICLE IX ALTERATIONS 14
ARTICLE X PARKING 16
ARTICLE XI CERTAW TENANT COVENANTS 18
ARTICLE XII ASSIGNMENT AND SUBLETTING 20
ARTICLE XIII INDEMNITY AND COMMERCIAL GENERAL LIABILITY
INSURANCE 22
ARTICLE XIV FIRE, CASUALTY AND TAKING 23
ARTICLE XV DEFAULT 26
<PAGE> 2
ARTICLE XVI BANKRUPTCY OR INSOLVENCY 29
ARTICLE XVII MISCELLANEOUS PROVISIONS 31
Section 17.1 Waiver
Section 17.2 Cumulative Remedies
Section 17.3 Quiet Enjoyment
Section 17.4 Surrender
Section 17.5 Brokerage
Section 17.6 Invalidity of Particular Provisions
Section 17.7 Provisions Binding, Etc.
Section 17.8 Recording
Section 17.9 Notices and Time for Action
Section 17.10 When Lease Becomes Binding
Section 17.11 Paragraph Headings
Section 17.12 Rights of Mortgagee
Section 17.13 Rights of Ground Lessor
Section 17.14 Notice to Mortgagee and Ground Lessor
Section 17.15 Assignment of Rents
Section 17.16 Status Report and Financial Statements
Section 17.17 Self-Help
Section 17.18 Holding Over
Section 17.19 Entry by Landlord
Section 17.20 Tenant's Payments
Section 17.21 Late Payment
Section 17.22 Counterparts
Section 17.23 Entire Agreement
Section 17.24 Landlord Liability
Section 17.25 No Partnership
Section 17.26 Security Deposit
Section 17.27 Governing Law
EXHIBIT A-1 -- Description Of Site
EXHIBIT A-2 -- Loading Dock Plan
EXHIBIT B -- Intentionally Omitted
EXHIBIT C -- Intentionally Omitted
EXHIBIT D -- Landlord's Services
EXHIBIT E -- Floor Plan
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EXHIBIT F -- Development Area Map
EXHIBIT G -- Intentionally Omitted
EXHIBIT H -- Memorandum Re: Procedure For Adjustment Of Electricity Costs
3
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THIS INSTRUMENT IS AN INDENTURE OF LEASE in which the Landlord and the
Tenant are the parties hereinafter named, and which relates to space in the
building (the "Building") known as, and having an address at, One Cambridge
Center, Cambridge, Massachusetts.
The parties to this instrument hereby agree with each other as follows:
ARTICLE I
BASIC LEASE PROVISIONS AND ENUMERATIONS OF EXHIBITS
1.1 INTRODUCTION. The following sets forth the basic data and identifying
Exhibits elsewhere hereinafter referred to in this Lease, and, where
appropriate, constitute definitions of the terms hereinafter listed.
1.2 BASIC DATA.
<TABLE>
<S> <C>
Date: March 15, 1997
Landlord: MORTIMER B. ZUCKERMAN, EDWARD H.
LINDE AND DAVID BARRETT, AS
TRUSTEES OF ONE CAMBRIDGE CENTER
TRUST under Declaration of Trust
dated May 14, 1985, recorded with
the Middlesex South District
Registry of Deeds in Book 16221,
Page 413, as amended by instrument
dated July 31, 1986 and recorded
with said Registry of Deeds in Book
17438, Page 23, but not
individually.
Present Mailing Address of Landlord: c/o Boston Properties, Inc.
8 Arlington Street
Boston, Massachusetts 02116
Landlord's Construction Representative: Michael A. Cantalupa
Tenant: The Medicines Company, a Delaware corporation
Present Mailing Address: One Cambridge Center
Cambridge, Massachusetts 02142
Tenant's Construction Representative: Clive Meanwell
Lease Term: (sometimes called the Fifteen (15) calendar months commencing on
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
"Original Lease Term") April 1, 1997 and expiring June 30, 1998,
unless sooner terminated as hereinafter
provided.
Lease Year: A period of twelve (12) consecutive calendar
months, commencing on the first day of
January in each year, except that the first Lease
Year of the Lease Term hereof shall be the
period commencing on the Commencement Date and
ending on the succeeding December 3 1, and the
last Lease Year of the Lease Term hereof shall
be the period commencing on January I of the
calendar year in which the Lease Term ends, and
ending with the date on which the Lease Term ends.
Commencement Date: April 1, 1997, subject to the terms of Section
3.1 hereof.
Premises: A portion of the fourth floor of the Building,
in accordance with the floor plan annexed
hereto as Exhibit E and incorporated herein by
reference, as further defined and limited in
Section 2.1 hereof.
Rentable Floor Area of the Premises: 4,063 square feet, including a proportionate
share of common areas of the Building outside
of the Premises'.
Annual Fixed Rent: During the Original Lease Term at the annual
rate of $113,764.00, being the product of (i)
$28.00 and (ii) the "Rentable Floor Area of
the Premises" (hereinabove defined in this
Section 1.2).
Tenant Electricity: Initially as provided in Section 5.1 hereof,
subject to adjustment as provided in Section
5.2 and Section 7.5 hereof.
Additional Rent: All charges and other sums payable to Tenant
as set forth in this Lease, in addition to
Annual Fixed Rent.
Initial Minimum Limits of Tenant's Commercial $5,000,000 combined single limit per
General Liability Insurance: occurrence on a per location basis.
Total Rentable Floor Area of the Building: 215,686 square feet.
</TABLE>
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<TABLE>
<S> <C>
Lot or Site: All, and also any part of, the property
described in Exhibit A-1, plus any
additions or reductions thereto resulting
from the change of any abutting street line.
The terms Lot and Site are used interchangeably
in this instrument.
Property: The Building and Lot or Site.
Loading Dock: The service dock and related driveway providing
vehicular service access for the Building as
shown on Exhibit A-2.
Development Area: The area of the Cambridge Center development, as
shown on Exhibit F.
Permitted Use: General Office use.
Broker: Whittier Partners Group Company
155 Federal Street
Boston, Massachusetts 02110
Security Deposit: $9,480.34
</TABLE>
1.3 ENUMERATION OF EXHIBITS.****PARAGRAPH ON ORIGINAL DOCUMENT IS
ILLEGIBLE ****
Exhibit A-1 Description of the Site.
Exhibit A-2 Loading Dock Plan.
Exhibit B Intentionally Omitted.
Exhibit C Intentionally Omitted.
Exhibit D Landlord's Services.
Exhibit E Floor Plan.
Exhibit F Development Area Map.
Exhibit G Intentionally Omitted.
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Exhibit H Memorandum Re: Procedure for Adjustment of
Electricity Costs.
ARTICLE II
PREMISES
2.1 DEMISE AND LEASE OF PREMISES. Landlord hereby demises and leases to
Tenant, and Tenant hereby hires and accepts from Landlord, the Premises
in the Building, excluding exterior faces of exterior walls, the common
stairways and stairwells, elevators and elevator walls, mechanical
rooms, electric and telephone closets, janitor closets, and pipes,
ducts, shafts, conduits, wires and appurtenant fixtures serving
exclusively or in common other parts of the Building, and if the
Premises includes less than the entire rentable area of any floor,
excluding the common corridors, elevator lobbies and toilets located on
such floor.
2.2 APPURTENANT RIGHTS AND RESERVATIONS. Tenant shall have, as appurtenant
to the Premises, the non-exclusive right to use in common with others,
but not in a manner or extent that would interfere with the normal
operation and use of the Building as a multi-tenant office building and
subject to reasonable rules of general applicability to tenants of the
Building from time to time made by Landlord of which Tenant is given
notice: (a) the common lobbies, corridors, stairways, and elevators of
the Building, and the pipes, ducts, shafts, conduits, wires and
appurtenant meters and equipment serving the Premises in common with
others, (b) the Loading Dock and the common walkways and driveways
necessary for access to the Building, (c) if the Premises include less
than the entire rentable floor area of any floor, the common toilets,
corridors and elevator lobby of such floor and (d) common areas within
Parcel 4 of the Development Area. Landlord reserves the right from time
to time, without unreasonable interference with Tenant's use: (a) to
install, use, maintain, repair, replace and relocate for service to the
Premises and other parts of the Building, or either, pipes, ducts,
conduits, wires and appurtenant fixtures, wherever located in the
Premises or the Building, and (b) to alter or relocate any other common
facility, provided that substitutions are substantially equivalent or
better. Installations, replacements and relocations referred to in
clause (a) above shall be located so far as practicable in the central
core area of the Building, above ceiling surfaces, below floor surfaces
or within perimeter walls of the Premises. Except in the case of
emergencies, Landlord agrees to use its best efforts to give Tenant
reasonable advance notice of any of the foregoing activities which
require work in the Premises and to use reasonable efforts not cause
unreasonable interference with Tenant's use of and access to the
Premises.
ARTICLE III
LEASE TERM
3.1 TERM. The Term of this Lease shall be the period specified in Section
1.2 hereof as the "Lease Term", unless sooner terminated as herein
provided. The Commencement Date of the Lease Term shall be the date set
forth in Section 1.2 hereof as the "Commencement Date", unless Landlord
is unable to deliver the Premises to Tenant in accordance with the
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provisions of Section 4.1 hereinbelow as of such date, in which event
the Commencement Date shall be the date the Premises are so delivered.
ARTICLE IV
DELIVERY
4.1 DELIVER . Landlord shall deliver the Premises to Tenant broom-clean and
free from all occupants but otherwise in "as is" condition and Landlord
shall have no obligation to perform any additions, alterations or
demolition in the Premises nor shall Landlord be responsible for the
installation or connection of Tenant's telephone or other
communications systems or equipment. If the occupant of the Premises as
of the Date of this Lease (the "Existing Tenant") fails to deliver
possession of the Premises at the time when its tenancy is scheduled to
expire (being March 31, 1997), Landlord shall use reasonable efforts
and due diligence (which shall be limited to the commencement and
prosecution thereafter of eviction proceedings but shall not require
the taking of any appeal) to evict such occupant from such space and to
deliver possession of the Premises to Tenant. If Landlord is unable to
deliver possession of the Premises to Tenant by May 15, 1997, Tenant
may terminate this Lease without recourse to either party by written
notice given by Tenant to Landlord prior to the first to occur of (i)
the date Landlord delivers the Premises to Tenant or (ii) June 1,
1997.. Commencement of the term of Tenant's occupancy and lease of the
Premises shall, in the event of such holding over by such occupant, be
deferred until possession of the Premises is delivered to Tenant.
Tenant's right of termination contained in this paragraph shall be
Tenant's sole and exclusive remedy for the failure of the Existing
Tenant to so vacate the Premises.
ARTICLE V
ANNUAL FIXED RENT AND ELECTRICITY
5.1 FIXED RENT AND ELECTRICITY CHARGES. Tenant agrees to pay to Landlord,
or as directed by Landlord, at Landlord's Present Mailing Address
specified in Section 1.2 hereof, or at such other place as Landlord
shall from time to time designate by notice, (a) on the Commencement
Date, and thereafter monthly, in advance, on the first day of each and
every calendar month during the Original Lease Term, a sum equal to
one-twelfth (1/12) of the Annual Fixed Rent specified in Section 1.2
hereof and (b) on the Commencement Date and thereafter monthly, in
advance, on the first day of each and every calendar month during the
Original Lease Term, a sum equal to one-twelfth (1/12) of $1.00 per
annum for each square foot of Rentable Floor Area of the Premises for
Tenant Electricity subject to adjustment as provided in Section 5.2 and
Section 7.5 hereof. Until notice of some other designation is given,
Annual Fixed Rent and all other charges for which provision is herein
made shall be paid by remittance to or to the order of BOSTON
PROPERTIES, INC., Agents at 8 Arlington Street, Boston, Massachusetts
02116, and all remittances received by BOSTON PROPERTIES, INC., as
Agents as aforesaid, or by any subsequently designated recipient, shall
be treated as a payment to Landlord.
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Annual Fixed Rent for any partial month shall be paid by Tenant to Landlord at
such rate on a pro rata basis, and, if the Commencement Date shall be other than
the first day of a calendar month, the first payment which Tenant shall make to
Landlord shall be a payment equal to a proportionate part of such monthly Annual
Fixed Rent for the partial month from the Commencement Date to the first day of
the succeeding calendar month.
Other charges payable by Tenant on a monthly basis, as elsewhere provided in
this Lease, likewise shall be prorated, and the first payment on account thereof
shall be determined in similar fashion and shall commence on the Commencement
Date and other provisions of this Lease calling for monthly payments shall be
read as incorporating this undertaking by Tenant.
The Annual Fixed Rent and all other charges for which provision is made in this
Lease shall be paid by Tenant to Landlord without setoff, deduction or
abatement.
5.2 REALLOCATION OF ELECTRICITY CHARGES. Notwithstanding the provisions of
Section 5.1 relating to the payment by Tenant for the cost of
electricity, if and to the extent that Landlord is permitted from time
to time by then applicable law, ordinance, rule, regulation and utility
company policy, Landlord may reallocate the cost of electricity to
tenants of the Building (including, but not limited to, Tenant herein)
in accordance with the procedure contained in Exhibit H, and Tenant
shall pay for electricity as provided in said Exhibit H. If Landlord
does not so reallocate the cost of electricity as aforesaid, Tenant
shall pay the charge for electricity as specified in Section 5.1 hereof
and additional adjustment payments shall be made in the manner
specified in Section 7.5 hereof.
ARTICLE VI
TAXES
6.1 DEFINITIONS. With reference to the real estate taxes referred to in
this Article VI, it is agreed that terms used herein are defined as
follows:
(a) "Tax Year" means the 12-month period beginning July I each
year during the Lease Term or if the appropriate Governmental
tax fiscal period shall begin on any date other than July 1,
such other date.
(b) "Landlord's Tax Expenses Allocable to the Premises" means the
same proportion of Landlord's Tax Expenses as Rentable Floor
Area of Tenant's Premises bears to 95% of the Total Rentable
Floor Area of the Building.
(c) "Landlord's Tax Expenses" with respect to any Tax Year means
the aggregate "real estate taxes" (hereinafter defined) with
respect to that Tax Year, reduced by any net abatement
receipts with respect to that Tax Year; provided, however,
that if in any Tax Year an abatement has been obtained on
account of vacancies in the Building, or if the real estate
taxes had initially been assessed in an amount to reflect such
vacancies then Landlord's Tax Expenses shall be determined to
be an amount equal to the taxes which would
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normally be expected to have been assessed had occupancy been
ninety-five percent (95%) as of the reference date or period
on which or in relation to which such assessment was made. For
this purpose, taxes on properties comparable to the Property
may be used as a reference (specifically including the
buildings known as Four and Five Cambridge Center) if such
properties were occupied at ninety-five percent (95%) more or
less during the relevant period.
(d) "Real estate taxes" means all taxes and special assessments of
every kind and nature assessed by any Governmental authority
on the Site or the Building or the Property which the Landlord
shall be obligated to pay because of or in connection with the
ownership, leasing and operation of the Site and the Building
and reasonable expenses of any proceedings for abatement of
taxes. The amount of special taxes or special assessments to
be included shall be limited to the amount of the installment
(plus any interest other than penalty interest payable
thereon) of such special tax or special assessment required to
be paid during the year in respect of which such taxes are
being determined. There shall be excluded from such taxes all
income, estate, succession, inheritance and transfer taxes;
provided, however, that if at any time during the Lease Term
the present system of ad valorem taxation of real property
shall be changed so that in lieu of, or in addition to, the
whole or any part of the ad valorem tax on real property,
there shall be assessed on Landlord a capital levy or other
tax on the gross rents received with respect to the Site or
Building, or a Federal, State, County, Municipal, or other
local income, franchise, excise or similar tax, assessment,
levy or charge (distinct from any now in effect in the
jurisdiction in which the Property is located) measured by or
based, in whole or in part, upon any such gross rents, then
any and all of such taxes, assessments, levies or charges, to
the extent so measured or based, shall be deemed to be
included within the term "real estate taxes" but only to the
extent that the same would be payable if the Site or Building
were the only property of Landlord.
(e) "Base Taxes" means Landlord's Tax Expenses (hereinbefore
defined) for fiscal tax year 1997 (that is the period
beginning July 1, 1996 and ending June 30, 1997).
(f) "Base Taxes Allocable to the Premises" means the same
proportion of Base Taxes as the Rentable Floor Area of
Tenant's Premises bears to 95% of the Total Rentable Floor
Area of the Building.
6.2 TENANT'S SHARE OF REAL ESTATE TAXES. If with respect to any full Tax
Year or fraction of a Tax Year falling within the Lease Term Landlord's
Tax Expenses Allocable to the Premises for a full Tax Year exceed Base
Taxes Allocable to the Premises or for any such fraction of a Tax Year
exceed the corresponding fraction of Base Taxes Allocable to the
Premises (such amount being hereinafter referred to as the "Tax
Excess"), then Tenant shall pay to Landlord, as additional rent, the
amount of such Tax Excess. Payments by Tenant on account of the Tax
Excess shall be made monthly at the time and in the fashion herein
provided for the payment of Annual Fixed Rent. The
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amount so to be paid to Landlord shall be an amount from time to time
reasonably estimated by Landlord to be sufficient to provide Landlord,
in the aggregate, a sum equal to the Tax Excess, ten (10) days at least
before the day on which tax payments by Landlord would become
delinquent. Not later than ninety (90) days after Landlord's Tax
Expenses Allocable to the Premises are determinable for the first such
Tax Year or fraction thereof and for each succeeding Tax Year or
fraction thereof during the Lease Term, Landlord shall render Tenant a
statement in reasonable detail certified by a representative of
Landlord showing for the preceding year or fraction thereof, as the
case may be, real estate taxes on the Building and Lot, abatements and
reftinds, if any, of any such taxes and assessments, expenditures
incurred in obtaining such abatement or reftind, the amount of the Tax
Excess, the amount thereof already paid by Tenant and the amount
thereof overpaid by, or remaining due from Tenant for the period
covered by such statement. Within thirty (30) days after the receipt of
such statement, Tenant shall pay any sum remaining due. Any balance
shown as due to Tenant shall be credited against Annual Fixed Rent next
due, or refunded to Tenant if the Lease Term has then expired and
Tenant has no further obligation to Landlord. Expenditures for legal
fees and for other expenses incurred in obtaining an abatement or
refund may be charged against the abatement or refund before the
adjustments are made for the Tax Year.
To the extent that real estate taxes shall be payable to the taxing authority in
installments with respect to periods less than a Tax Year, the statement to be
furnished by Landlord shall be rendered and payments made on account of such
installments.
ARTICLE VII
LANDLORD'S REPAIRS AND.SERVICES AND
TENANT'S ESCALATION PAYMENTS
7.1 STRUCTURAL REPAIRS. Except for (a) normal and reasonable wear and use
and (b) damage caused by fire or other casualty and by eminent domain,
Landlord shall, throughout the Lease Term, at Landlord's sole cost and
expense, keep and maintain in good order, condition and repair the
following portions of the Building: the structural portions of the
roof, the exterior and load bearing walls, the foundation, the
structural columns and floor slabs and other structural elements of the
Building; provided however, that Tenant shall pay to Landlord, as
Additional Rent, the cost of any and all such repairs which may be
required as a result of repairs, alterations, or installations made by
Tenant or any subtenant, assignee, licensee or concessionaire of Tenant
or any agent, servant, employee or contractor of any of them or to the
extent of any loss, destruction or damage caused by the omission or
negligence of Tenant, any assignee or subtenant or any agent, servant,
employee, customer, visitor or contractor of any of them.
7.2 OTHER REPAIRS TO BE MADE BY LANDLORD. Except as otherwise provided in
this Lease and subject to provisions for reimbursement by Tenant as
contained in Section 7.5, Landlord agrees to keep and maintain in good
order, condition and repair the common areas and facilities of the
Building, including heating, ventilating, air conditioning, plumbing
and other Building systems equipment servicing the Premises, except
that Landlord shall in no event be responsible to Tenant for (a) the
condition of glass in and about the Premises (other than for glass in
exterior walls for which Landlord shall be responsible unless the
damage thereto is attributable to Tenant's negligence or
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misuse, in which event the responsibility therefor shall be Tenant's),
or (b) for any condition in the Premises or the Building caused by any
act or neglect of Tenant or any agent, employee, contractor, assignee,
subtenant or invitee of Tenant. Without limitation, Landlord shall not
be responsible to make any improvements or repairs to the Building or
the Premises other than as expressly provided in Section 7.1 or in this
Section 7.2, unless expressly otherwise provided in this Lease.
7.3 SERVICES TO BE PROVIDED BY LANDLORD. In addition, and except as
otherwise provided in this Lease and subject to provisions for
reimbursement by Tenant as contained in Section 7.5 and Tenant's
responsibilities in regard to electricity as provided in Section 5.2,
Landlord agrees to furnish services, utilities, facilities and supplies
set forth in Exhibit D hereto equal in quality comparable to those
customarily provided by landlords in high quality buildings in
Cambridge. In addition, Landlord agrees to furnish, at Tenant's
expense, reasonable additional Building operation services which are
usual and customary in similar buildings in Cambridge, and such
additional special services as may be mutually agreed upon by Landlord
and Tenant, upon reasonable and equitable rates from time to time
established by Landlord.
7.4 OPERATING COSTS DEFINED. "Operating Expenses Allocable to the Premises"
means the same proportion of the Operating Expenses for the Property as
Rentable Floor Area of the Premises bears to 95% of the Total Rentable
Floor Area of the Building. "Base Operating Expenses" means Operating
Expenses for the Property (as hereinafter defined) for calendar year
1997 (that is the period beginning January 1, 1997 and ending December
31, 1997). "Base Operating Expenses Allocable to the Premises" means
the same proportion of Base Operating Expenses as the Rentable Floor
Area of Tenant's Premises bears to 95% of the Total Rentable Floor Area
of the Building. "Operating Expenses for the Property" means the cost
of operation of the Property incurred by Landlord, including those
incurred in discharging Landlord's obligations under Sections 7.2 and
7.3. Such costs shall exclude (i) payments of debt service and any
other mortgage charges, including, principal, interest and points (ii)
brokerage corrimissions and legal fees incurred in the leasing of space
in the Building, (iii) salaries of executives and owners not directly
employed in the management or operation of the Building, (iv) the
general overhead and administrative expenses of the home office of
Landlord or Landlord's managing agent, (v) costs of special services
rendered to tenants (including Tenant) for which a separate charge is
made, (vi) the cost of any item or service to the extent to which
Landlord is actually reimbursed or compensated by insurance, any tenant
or any third party, (vii) real estate taxes, provided that real estate
taxes are payable as provided in Section 6.2, (viii) penalties,
interest and legal expenses for late payment of any obligation of
Landlord, including, without limitation, taxes, insurance, and
equipment leases, (ix) costs incurred in performing tenant improvements
for any tenant, (x) all capital expendituies, except as otherwise
explicitly provided in this Section 7.4, (xi) the cost of testing,
remediation or removal of "Hazardous Materials" (as defined in Section
11.2) in the Building or on the Site as required by "Hazardous
Materials Laws" (as defined in Section 11.2), (xii) legal fees and
other costs associated with the enforcement of any lease of space in
the Building, (xiii) the cost of any service or materials provided by
Landlord or its affiliates, to the extent such costs exceed the
reasonable cost for such services or materials absent such relationship
in buildings similar to the Building in the vicinity of the Building,
and (xiv)
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advertising and promotional expenses incurred in connection with
leasing space in the Building, but shall include, without limitation:
(a) compensation, wages and all fringe benefits, workmen's
compensation insurance premiums and payroll taxes paid to, for
or with respect to all persons for their services in the
operating, maintaining or cleaning of the Building or the
Site;
(b) payments under service contracts with independent contractors
for operating, maintaining or cleaning of the Building or the
Site;
(c) steam, water, sewer, gas, oil, electricity and telephone
charges (excluding such utility charges separately chargeable
to tenants for additional or separate services and electricity
charges paid by Tenant in the manner set forth in Section 5.2)
and costs of maintaining letters of credit or other security
as may be required by utility companies as a condition of
providing such services;
(d) cost of maintenance, cleaning and repairs (other than repairs
not properly chargeable against income or reimbursed from
contractors under guarantees);
(e) cost of snow removal and care of landscaping;
(f) cost of building and cleaning supplies and equipment;
(g) premiums for insurance carried with respect to the Property
(including, without limitation, liability insurance, insurance
against loss in case of fire or casualty and of monthly
installments of Annual Fixed Rent and any Additional Rent
which may be due under this Lease and other leases of space in
the Building for not more than twelve (12) months in the case
of both Annual Fixed Rent and Additional Rent and, if there be
any first mortgage on the Property, including such insurance
as may be required by the holder of such first mortgage);
(h) management fees at reasonable rates consistent with the type
of occupancy and the services rendered;
(i) the Building's share of operating expenses (as herein defined
in this Section 7.4) related to the maintenance and repair of
the Loading Dock and of other common areas and facilities
within Parcel 4 of the Development Area for use of tenants of
the Building in common with tenants of other buildings in the
Development Area;
(j) depreciation for capital expenditures made by Landlord (x) to
reduce operating expenses if Landlord reasonably shall have
determined that the annual reduction in operating expenses
shall exceed depreciation therefor or (y) to comply with
applicable laws, rules, regulations, requirements, statutes,
ordinances, by-laws and court decisions of all public
authorities which are
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enacted after the Date of this Lease (herein collectively
called "Legal Requirements"), (plus, in the case of both (x)
and (y), an interest factor, reasonably determined by
Landlord, as being the interest rate then charged for long
term mortgages by institutional lenders on like properties
within the general locality in which the Building is located),
and in the case of both (x) and (y) depreciation shall be
determined by dividing the original cost of such capital
expenditure by the number of years of useful life of the
capital item acquired, which useful life shall be determined
reasonably by Landlord in accordance with generally accepted
accounting principles and practices in effect at the time of
acquisition of the capital item; and
(k) all other reasonable and necessary expenses paid in connection
with the operating, cleaning and maintenance of the Building,
the Site and said common areas and facilities and properly
chargeable against income.
Notwithstanding the foregoing, in determining the amount of Operating Expenses
for the Property for any calendar year or portion thereof falling within the
Lease Term, no decrease in Operating Expenses Allocable to the Property shall
result in a reduction in the amount otherwise payable by Tenant if and to the
extent said decrease is attributable to vacancy in the Building rather than to
any other causes.
7.5 TENANT'S ESCALATION PAYMENTS. (A) If with respect to any calendar year
falling within the Lease Term, or fraction of a calendar year falling
within the Lease Term at the beginning or end thereof, the Operating
Expenses Allocable to the Premises (as defined in Section 7.4) for a
full calendar year exceed Base Operating Expenses Allocable to the
Premises (as defined in Section 7.4) or for any such fraction of a
calendar year exceed the corresponding fraction of Base Operating
Expenses Allocable to the Premises (such amount being hereinafter
referred to as the "Operating Cost Excess"), then Tenant shall pay to
Landlord, as Additional Rent, on or before the thirtieth (30th) day
following receipt by Tenant of the statement referred to below in this
Section 7.5, the amount of such excess. Base Operating Expenses (as
defined in Section 7.4) DO NOT include the $ 1.00 for tenant
electricity to be paid by Tenant as part of the Annual Fixed Rent.
However, if and so long as Landlord is NOT allocating the cost of
electricity among tenants of the Building in accordance with Exhibit H,
then the Base Operating Expenses shall be increased by $ 1.00 per
square foot of the Total Rentable Floor Area of the Building.
(B) Payments by Tenant on account of the Operating Cost Excess shall be made
monthly at the time and in the fashion herein provided for the payment of Annual
Fixed Rent. The amount so to be paid to Landlord shall be an amount from time to
time reasonably estimated by Landlord to be sufficient to cover, in the
aggregate, a sum equal to the Operating Cost Excess for each calendar year
during the Lease Term.
(C) No later than ninety (90) days after the end of the first calendar year or
fraction thereof ending December 31 and of each succeeding calendar year during
the Lease Term or fraction thereof at the end of the Lease Term, Landlord shall
render Tenant a statement in reasonable detail and according to usual accounting
practices certified by a representative of Landlord, showing for the preceding
calendar year or fraction thereof, as the case may be, the Operating Expenses
for the
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Property and the Operating Expenses Allocable to the Premises. Said statement to
be rendered to Tenant also shall show for the preceding year or fraction
thereof, as the case may be, the amounts already paid by Tenant on account of
Operating Cost Excess and the amount of Operating Cost Excess remaining due
from, or overpaid by, Tenant for the year or other period covered by the
statement.
If such statement shows a balance remaining due to Landlord, Tenant shall pay
same to Landlord on or before the thirtieth (30th) day following receipt by
Tenant of said statement. Any balance shown as due to Tenant shall be credited
against Annual. Fixed Rent next due, or refunded to Tenant if the Lease Term has
then expired and Tenant has no further obligation to Landlord. Upon notice to
Landlord given within ninety (90) days after Tenant's receipt of such statement,
Tenant, at Tenant's expense, may examine Landlord's books and records regarding
such statement at any reasonable time specified by Landlord during Landlord's
business hours at a place designated by Landlord. Tenant shall hold such books
and records in confidence and not disclose the same to any other party,
including, without limitation, any other tenant in the Building. If such
examination reveals that Landlord's Operating Expenses for a calendar year have
been (a) overstated by Landlord, then an equitable adjustment shall be made in
the amount paid or payable pursuant to this Section 7.5 for such calendar year,
and appropriate credit shall be made against (i) monthly installments of Annual
Fixed Rent next thereafter coming due or (ii) any other sums due from Tenant to
Landlord under this Lease (or refund such amount if the Term has ended and
Tenant has no further obligation to Landlord other than an indemnification
obligation for which no claim has been made) or (b) understated by Landlord,
then an equitable adjustment shall be made in the amount paid or payable
pursuant to this Section 7.5 for such calendar year and an appropriate payment
shall be made by Tenant to Landlord within thirty (30) days after Landlord bills
Tenant therefor.
Any payment by Tenant for the Operating Cost Excess shall not be deemed to waive
any rights of Tenant to claim that the amount thereof was not determined in
accordance with the provisions of this Lease.
7.6 NO DAMAGE. Landlord shall not be liable to Tenant for any compensation
or reduction of rent by reason of inconvenience or annoyance or for
loss of business arising from the necessity of Landlord or its agents
entering the Premises for any purposes in this Lease authorized, or for
repairing the Premises or any portion of the Building however the
necessity may occur. In case Landlord is prevented or delayed from
making any repairs, alterations or improvements, or furnishing any
services or performing any other covenant or duty to be performed on
Landlord's part, by reason of any cause reasonably beyond Landlord's
control, including, without limitation, strike, lockout, breakdown,
accident, order or regulation of or by any Governmental authority, or
failure of supply, or inability by the exercise of reasonable diligence
to obtain supplies, parts or employees necessary to furnish such
services, or because of war or other emergency, or for any cause due to
any act or neglect of Tenant or Tenant' s servants, agents, employees,
licensees or any person claiming by, through or under Tenant, Landlord
shall not be liable to Tenant therefor, nor, except as expressly
otherwise provided in this Lease, shall Tenant be entitled to any
abatement or reduction of rent by reason thereof, nor shall the same
give rise to a claim in Tenant's favor that such failure constitutes
actual or constructive, total or partial, eviction from the Premises.
Subject to the foregoing terms of this Section 7.6,
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Landlord shall use reasonable efforts to remedy as soon as practicable
any delay referenced above.
Landlord reserves the right to stop any service or utility system, when
necessary by reason of accident or emergency, or until necessary repairs have
been completed; provided, however, that in each instance of stoppage, Landlord
shall exercise reasonable diligence to eliminate the cause thereof. Except in
case of emergency repairs, Landlord will give Tenant reasonable advance notice
of any contemplated stoppage and will use diligent efforts to avoid unnecessary
inconvenience to Tenant by reason thereof.
ARTICLE VIII
TENANT'S REPAIRS
8.1 TENANT'S REPAIRS AND MAINTENANCE. Tenant covenants and agrees that,
from and after the date that possession of the Premises is delivered to
Tenant and until the end of the Lease Term, Tenant will keep neat and
clean and maintain in good order, condition and repair the Premises and
every part thereof, excepting only for those repairs for which Landlord
is responsible under the terms of Article VII of this Lease and damage
by fire or other casualty and as a consequence of the exercise of the
power of eminent domain. Tenant shall not permit or commit any waste,
and Tenant shall be responsible for the cost of repairs which may be
made necessary by reason of damages to common areas in the Building by
Tenant, Tenant's agents, employees, contractors, or invitees.
If repairs are required to be made by Tenant pursuant to the terms hereof,
Landlord may demand in writing (except in the event of an emergency, when no
prior notice is required, provided that Landlord shall give verbal or written
notice to Tenant as soon as practicable after making repairs) that Tenant make
the same forthwith, and if Tenant refuses or neglects to commence such repairs
and complete the same with reasonable dispatch within thirty (30) days after
such demand (except in the event of an emergency, when Landlord may make such
repairs immediately), Landlord may (but shall not be required to do so) make or
cause such repairs to be made and shall not be responsible to Tenant for any
loss or damage that may accrue to Tenant's stock or business by reason thereof
If Landlord makes or causes such repairs to be made, Tenant agrees that Tenant
will forthwith on demand, pay to Landlord as Additional Rent the cost thereof,
and if Tenant shall default in such payment, Landlord shall have the remedies
provided for nonpayment of rent or other charges payable hereunder.
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ARTICLE IX
ALTERATIONS
9.1 LANDLORD'S APPROVAL. Tenant covenants and agrees not to make
alterations, additions or improvements to the Premises, whether before
or during the Lease Term, except in accordance with plans and
specifications therefor first approved by Landlord in writing, which
approval shall not be unreasonably withheld or delayed. Landlord shall
not be deemed unreasonable:
(a) for withholding approval of any alterations, additions or
improvements which (i) in Landlord's opinion might adversely
affect any structural or exterior element of the Building, any
area or element outside of the Premises or any facility
serving any area of the Building outside of the Premises, or
(ii) involve or affect the exterior design, size, height or
other exterior dimensions of the Building, or (iii) enlarge
the Rentable Floor Area of the Premises; or
(b) for making its approval conditional on Tenant's agreement to
restore the Premises to its condition prior to such
alteration, addition, or improvement at the expiration or
earlier termination of the Lease Term.
Landlord's review and approval of any such plans and specifications and consent
to perform work described therein shall not be deemed an agreement by Landlord
that such plans, specifications and work conform with applicable Legal
Requirements and requirements of insurers of the Building (herein called
"Insurance Requirements") nor deemed a waiver of Tenant's obligations under this
Lease with respect to applicable Legal Requirements and Insurance Requirements
nor impose any liability or obligation upon Landlord with respect to the
completeness, design sufficiency or compliance of such plans, specifications and
work with applicable Legal Requirements and Insurance Requirements.
9.2 CONFORMITY OF WORK. Tenant covenants and agrees that any alterations,
additions, improvements or installations made by it to or upon the
Premises shall be done in a good and workmanlike manner and in
compliance with all applicable Legal Requirements and Insurance
Requirements now or hereafter in force, that materials of first and
otherwise good quality shall be employed therein, that the structure of
the Building shall not be endangered or impaired thereby and that the
Premises shall not be diminished in value thereby.
9.3 PERFORMANCE OF WORK, GOVERNMENTAL PERMITS AND INSURANCE. All of
Tenant's alterations and additions and installation of furnishings
shall be coordinated with any work being performed by or for Landlord
and in such manner as to maintain harmonious labor relations and not to
damage the Building or Site or interfere with Building construction or
operation and, except for installation of furnishings, shall be
performed by Landlord's general contractor or by contractors or workmen
first approved by Landlord. Except for work by Landlord's general
contractor, Tenant shall procure all necessary governmental permits
before making any repairs, alterations, other
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improvements or installations. Tenant agrees to save harmless and
indemnify Landlord from any and all injury, loss, claims or damage to
any person or property occasioned by or arising out of the doing of any
such work whether the same be performed prior to or during the Term of
this Lease. In addition, Tenant shall cause each contractor to carry
workmen's compensation insurance in statutory amounts covering the
employees of all contractors and subcontractors, and commercial general
liability insurance or comprehensive general liability insurance with a
broad form comprehensive liability endorsement with such limits as
Landlord may require reasonably from time to time during the Term of
this Lease, but in no event less than the minimum amount of commercial
general liability insurance or comprehensive general liability
insurance Tenant is required to maintain as set forth in Section 1.2
hereof and as the same may be modified as provided in Section 13.2
hereof (all such insurance to be written in companies approved
reasonably by Landlord and insuring Landlord, Landlord's managing agent
and Tenant as well as contractors) and to deliver to Landlord
certificates of all such insurance.
9.4 LIENS. Tenant covenants and agrees to pay promptly when due the entire
cost of any work done on the Premises by Tenant, its agents, employees
or contractors, and not to cause or permit any liens for labor or
materials performed or furnished in connection therewith to attach to
the Premises or the Building or the Site and immediately to discharge
any such liens which may so attach.
9.5 NATURE OF ALTERATIONS. All work, construction, repairs, alterations,
other improvements or installations made to or upon the Premises
(including, but not limited to, the construction performed by Landlord
under Article IV), shall become part of the Premises and shall become
the property of Landlord and remain upon and be surrendered with the
Premises as a part thereof upon the expiration or earlier termination
of the Lease Term, except as follows:
(a) All trade fixtures whether by law deemed to be a part of the
realty or not, installed at any time or times by Tenant or any
person claiming under Tenant shall remain the property of
Tenant or persons claiming under Tenant and may be removed by
Tenant or any person claiming under Tenant at any time or
times during the Lease Term or any occupancy by Tenant
thereafter and shall be removed by Tenant at the expiration or
earlier termination of the Lease Term if so requested by
Landlord. Tenant shall repair any damage to the Premises
occasioned by the removal by Tenant or any person claiming
under Tenant of any such property from the Premises.
(b) At the expiration or earlier termination of the Lease Term,
unless otherwise agreed in writing by Landlord, Tenant shall
remove any wiring for Tenant's computer, telephone and other
communication systems and equipment and any alterations,
additions and improvements made with Landlord's consent during
the Lease Term for which such removal was made a condition of
such consent under Section 9.1 (b). Upon such removal Tenant
shall restore the Premises to their condition prior to such
alterations, additions and improvements and repair any damage
occasioned by such removal and restoration.
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(c) If Tenant shall make any alterations, additions or
improvements to the Premises for which Landlord's approval is
required under Section 9.1 without obtaining such approval,
then at Landlord's request at any time during the Lease Term,
and at any event at the expiration or earlier termination of
the Lease Term, Tenant shall remove such alterations,
additions and improvements and restore the Premises to their
condition prior to same and repair any damage occasioned by
such removal and restoration. Nothing herein shall be deemed
to be a consent to Tenant to make any such alterations,
additions or improvements, the provisions of Section 9.1 being
applicable to any such work.
9.6 INCREASES IN TAXES. Tenant shall pay, as additional rent, one hundred
percent (100%) of any increase in real estate taxes on the Property
which shall, at any time after the Commencement Date, result from
alterations, additions or improvements to the Premises made by Tenant
if the taxing authority specifically determines such increase results
from such alterations, additions or improvements made by Tenant.
ARTICLE X
PARKING
10.1 PARKING PRIVILEGES. Reference is made to the fact that affiliates of
Landlord have constructed two (2) parking garages and propose to
construct one or more additional parking garages (hereinafter the
"Garage" or the "Garages") within the Development Area shown on Exhibit
F to serve the Building and other buildings constructed or to be
constructed by Landlord or affiliates of Landlord within the
Development Area. The existing Garage, with vehicular entrances from
the south side of Broadway and the east side of Ames Street, is also
sometimes hereinafter referred to as the "East Garage". The existing
Garage, located on Parcel 2 of the Development Area with vehicular
entrances from the north side of Broadway and the south side of Binney
Street is also sometimes hereinafter referred to as the "North Garage".
Landlord shall provide to Tenant monthly parking privileges in one or
more of the Garages in number not to exceed parking for two (2)
passenger automobiles for each 1,000 square feet of Rentable Floor Area
of the Premises for the parking of motor vehicles in unreserved stalls
in one or more of the Garages by Tenant's employees commencing on the
Commencement Date of the Lease Term. Such parking privileges may be
shifted from time to time among the Garages by notice from Landlord;
provided however that parking shall be provided in the East Garage for
no less than one-half (Y2) of the total number of automobiles for which
Tenant elects to have parking privileges pursuant to this Section 10.
1. Within thirty (3 0) days after the date of execution of this Lease,
Tenant shall notify Landlord of the number of parking spaces which
Tenant desires be made available in the Garage(s) for its use in
accordance with this Section.
10.2 PARKING CHARGES. Tenant shall pay for parking privileges in Garages at
prevailing monthly rates from time to time charged by the operator or
operators of Garages, whether or not such operator is an affiliate of
Landlord. Such monthly parking charges for parking privileges in the
Garage or Garages shall constitute Additional Rent and shall be payable
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monthly as directed by Landlord upon billing therefor by Landlord.
Tenant acknowledges that said monthly charges to be paid under this
Section are for the use by the Tenant of the parking privileges
referred to herein, and not for any other service.
10.3 GARAGE OPERATION. Unless otherwise determined by Landlord, each Garage
is to be operated on a self-parking basis, and Tenant shall be
obligated to park and remove its own automobiles. Tenant's parking
shall be on an unreserved basis, Tenant having the right to park in any
available stalls. Tenant's access and use privileges with respect to
the Garage shall be in accordance with regulations of uniform
applicability to the users of the Garage from time to time established
by the operator of the Garage. Tenant shall receive one (1)
identification sticker or pass and one (1) magnetic card so-called, or
other suitable device providing access to the Garage, for each vehicle
paid for by Tenant. Tenant shall supply Landlord with an identification
roster listing, for each identification sticker or pass, the name of
the employee and the make, color and registration number of the vehicle
to which it has been assigned, and shall provide a revised roster to
Landlord monthly indicating changes thereto. Any automobile found
parked in the Garage during normal business hours without appropriate
identification will be subject to being towed at said automobile
owner's expense. The parking privileges granted herein are
nontransferable. The door of the Garage will be open during normal
business hours except during periods of severe inclement or cold
weather. For periods during which an attendant is not on duty at the
Garage entrance or when the door to the Garage is closed, or at any
other periods as may from time to time be stipulated by the Garage
Operator in accordance with its regulations, including normal business
hours, the magnetic cards furnished to Tenant shall be used by Tenant
to gain access to and egress from the Garage for motor vehicles.
10.4 LIMITATIONS. Tenant agrees that it and all persons claiming by, through
and under it, shall at all times abide by all reasonable rules and
regulations promulgated by Landlord or the operator of the parking
facilities with respect to the use of the Garage or such ongrade
parking facilities as may be provided by Landlord within the
Development Area. Except to the extent of gross negligence or willful
acts, neither the Landlord nor the operator of such parking facilities
assumes any responsibility whatsoever for loss or damage due to fire or
theft or otherwise to any automobile or to any personal property
therein, however caused, and Tenant agrees, upon request from the
Landlord, from time to time, to notify its officers, employees and
agents then using any of the parking privileges provided for herein, of
such limitation of liability. Tenant further acknowledges and agrees
that a license only is hereby granted, and no bailment is intended or
shall be created.
10.5 INTERIM ON-GRADE PARKING. Notwithstanding the references to Garages in
this Article X, Tenant acknowledges that, from time to time, Landlord
may satisfy the requirements of providing Tenant with parking hereunder
(except for parking called for as to be provided in the East Garage) by
providing such parking in on-grade parking lots within the Development
Area, in which case such parking shall be paid for in accordance with
the prevailing monthly rate from time to time charged by the operator
or operators of such lots, whether or not such operator is an affiliate
of Landlord, and in all other respects in accordance with the terms and
conditions of this Article X.
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ARTICLE XI
CERTAIN TENANT COVENANTS
Tenant covenants during the Lease Term and for such further time as Tenant
occupies any part of the Premises:
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11.1 To pay when due all Annual Fixed Rent and Additional Rent and all
charges for utility services rendered to the Premises and service
inspections therefor (except as is otherwise provided in Exhibit D)
and, as further Additional Rent, all charges for additional and special
services rendered pursuant to Section 7.3.
11.2 To use and occupy the Premises for the Permitted Uses only, and not to
injure or deface the Premises or the Property, not to permit in the
Premises any auction sale, vending machine or flammable fluids or
chemicals, or nuisance, or the emission from the Premises of any
objectionable noise or odor, nor to use or devote the Premises or any
part thereof for any purpose other than the Permitted Uses, nor any use
thereof which is inconsistent with the maintenance of the Building as
an office building of the first-class in the quality of its
maintenance, use and occupancy, or which is improper, offensive,
contrary to law or ordinance or liable to invalidate or increase the
premiums for any insurance on the Building or its contents or liable to
render necessary any alteration or addition to the Building. Further,
(i) Tenant shall not, nor shall Tenant permit its employees, invitees,
agents, independent contractors, contractors, assignees or subtenants
to, keep, maintain, store or dispose of (into the sewage or waste
disposal system or otherwise) or engage in any activity which might
produce or generate any substance which is or may hereafter be
classified as a hazardous material, waste or substance (collectively
"Hazardous Materials"), under federal, state or local laws, rules and
regulations, including, without limitation, 42 U.S.C. Section 6901 et
seq., 42 U.S.C. Section 9601 et seq., 42 U.S.C. Section 2601 et seq.,
49 U.S.C. Section 1802 et seq. and Massachusetts General Laws, Chapter
2 1 E and the rules and regulations promulgated under any of the
foregoing, as such laws, rules and regulations may be amended from time
to time (collectively "Hazardous Materials Laws"), (ii) Tenant shall
immediately notify Landlord of any incident in, on or about the
Premises, the Building or the Site that would require the filing of a
notice under any Hazardous Materials Laws, (iii) Tenant shall comply
and shall cause its employees, invitees, agents, independent
contractors, contractors, assignees and subtenants to comply with each
of the foregoing and (iv) Landlord shall have the right to make such
inspections (including testing) as Landlord shall elect from time to
time to determine that Tenant is complying with the foregoing.
11.3 Not to obstruct in any manner any portion of the Building not hereby
leased or any portion thereof or of the Site used by Tenant in common
with others; not without prior consent of Landlord to permit the
painting or placing of any signs, curtains, blinds, shades, awnings,
aerials or flagpoles, or the like, visible from outside the Premises;
and to comply with all reasonable rules and regulations now or
hereafter made by Landlord, of which Tenant has been given notice, for
the care and use of the Building and the Site and their facilities and
approaches, but Landlord shall not be liable to Tenant for the failure
of other occupants of the Building to conform to such rules and
regulations.
11.4 To keep the Premises equipped with all safety appliances required by
law or ordinance or any other regulation of any public authority
because of any use made by Tenant other than normal office use, and to
procure all licenses and permits so required because of any use made by
Tenant other than normal office use, and to procure all licenses and
permits so required because of such use and, if requested by Landlord,
to do any work so required
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because of such use, it being understood that the foregoing provisions
shall not be construed to broaden in any way Tenant's Permitted Uses.
11.5 Not to place a load upon any floor in the Premises exceeding an average
rate of 70 pounds of live load (including partitions) per square foot
of floor area; and not to move any safe, vault or other heavy equipment
in, about or out of the Premises except in such manner and at such time
as Landlord shall in each instance authorize. Tenant's business
machines and mechanical equipment shall be placed and maintained by
Tenant at Tenant's expense in settings sufficient to absorb and prevent
vibration or noise that may be transmitted to the Building structure or
to any other space in the Building.
11.6 To pay promptly when due all taxes which may be imposed upon personal
property (including, without limitation, fixtures and equipment) in the
Premises to whomever assessed.
11.7 To pay, as Additional Rent, all reasonable costs, counsel and other
fees incurred by Landlord in connection with the successful enforcement
by Landlord of any, obligations of Tenant under this Lease.
11.8 Not to do or permit anything to be done in or upon the Premises, or
bring in anything or keep anything therein, which shall increase the
rate of insurance on the Premises or on the Building above the standard
rate applicable to premises being occupied for the use to which Tenant
has agreed to devote the Premises; and Tenant further agrees that, in
the event that Tenant shall do any of the foregoing, Tenant will
promptly pay to Landlord, on demand, any such increase resulting
therefrom, which shall be due and payable as Additional Rent hereunder.
11.9 To comply with all applicable Legal Requirements now or hereafter in
force which shall impose a duty on Landlord or Tenant relating to or as
a result of the use or occupancy of the Premises; provided that Tenant
shall not be required to make any alterations or additions to the
structure, roof, exterior and load bearing walls, foundation,
structural floor slabs and other structural elements of the Building
unless the same are required by such Legal Requirements as a result of
or in connection with Tenant's use or occupancy of the Premises beyond
normal use of space of this kind, Tenant shall promptly pay all fines,
penalties and damages that may arise out of or be imposed because of
its failure to comply with the provisions of this Section 11.9.
ARTICLE XII
ASSIGNMENT AND SUBLETTING
12.1 PROHIBITION. Tenant covenants and agrees that it shall not assign,
mortgage, pledge, hypothecate or otherwise transfer this Lease and/or
Tenant's interest in this Lease or sublet (which term, without
limitation, shall include granting of concessions, licenses or the
like) the whole or any part of the Premises, or to permit occupancy of
the Premises or any part thereof by anyone other than the Tenant. Any
assignment, mortgage, pledge, occupancy arrangement, hypothecation,
transfer or subletting shall be void, ab initio; shall be of no force
and effect; and shall confer no rights on or in favor of third parties;
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and, at Landlord's sole option, shall constitute a default of Tenant
entitling Landlord to exercise its remedies in the event of default
hereunder by Tenant. In addition, Landlord shall be entitled to seek
specific performance by Tenant and or the equitable relief with respect
to the provisions of this Article XII.
12.2 EXCEPTIONS FOR PARENT OR SUBSIDIAR. Notwithstanding the foregoing
provisions of Section 12.1 above, but subject to the provisions of
Sections 12.3 and 12.4 below, Tenant shall have the right to assign
this Lease or to sublet the Premises (in whole or in part) to (i) any
entity that controls, is controlled by or is under common control with
Tenant or (ii) any corporation into which Tenant may be converted or
with which it may merge, provided that the entity to which this Lease
is so assigned or which so sublets the Premises has a credit worthiness
(e.g. assets on a pro forma basis using generally accepted accounting
principles consistently applied and using the most recent financial
statements) which is the same or better than the Tenant as of the Date
of this Lease.
12.3 TENANT'S NOTICE. Tenant shall give Landlord notice of any proposed
sublease or assignment, and said notice shall specify the provisions of
the proposed assignment or subletting, including (a) the name and
address of the proposed assignee or subtenant, (b) all of the terms and
provisions upon which the proposed assignment or subletting is to be
made, and (c) such information as may be reasonably required by
Landlord to determine that such proposed assignment or subletting
complies with the requirements of said Section 12.2.
12.4 ADDITIONAL CONDITIONS. (A) It shall be a condition of the validity of
any assignment or subletting of right under Section 12.2 above that
both Tenant and the assignee or sublessee agree directly with Landlord
in a separate written instrument reasonably satisfactory to Landlord
which contains terms and provisions reasonably required by Landlord,
including, without limitation, the agreement of the assignee or
sublessee to be bound by all the obligations of the Tenant hereunder,
including, without limitation, the obligation to pay the Annual Fixed
Rent, Additional Rent, and other amounts provided for under this Lease
(but in the case of a partial subletting, such subtenant shall agree on
a pro rata basis to be so bound), including the provisions of Section
12.1 through 12.4 hereof, but such assignment or subletting shall not
relieve the Tenant named herein of any of the obligations of the Tenant
hereunder, Tenant shall remain fully and primarily liable therefor and
the liability of Tenant and such assignee (or subtenant, as the case
may be) shall be joint and several. Further, and notwithstanding the
foregoing, the provisions hereof shall not constitute a recognition of
the assignment or the assignee thereunder or the sublease or the
subtenant thereunder, as the case may be, and at Landlord's option,
upon the termination of the Lease, the assignment or sublease shall be
terminated.
(B) If this Lease be assigned, or if the Premises or any part thereof be sublet
or occupied by anyone other than Tenant, Landlord may upon prior notice to
Tenant, at any time and from time to time, collect Annual Fixed Rent, Additional
Rent, and other chargesfrom the assignee, sublessee or occupant and apply the
net amount collected to the Annual Fixed Rent, Additional Rent and other charges
herein reserved, but no such assignment, subletting, occupancy or collection
shall be deemed a waiver of this covenant, or a waiver of the provisions of
Sections 12.1 through 12.4 hereof, or the
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acceptance of the assignee, sublessee or occupant as a tenant or a release of
Tenant from the further performance by Tenant of covenants on the part of Tenant
herein contained, the Tenant herein named to remain primarily liable under this
Lease.
(C) As Additional Rent, Tenant shall reimburse Landlord promptly for out of
pocket legal and other expenses incurred by Landlord in connection with any
assignment or subletting.
ARTICLE XIII
INDEMNITY AND COMMERCIAL GENERAL LIABILITY INSURANCE
13.1 TENANT'S INDEMNITY. To the maximum extent this agreement may be made
effective according to law, Tenant agrees to indemnify and save
harmless Landlord from. and against all claims of whatever nature
arising from or claimed to have arisen from: any act, omission or
negligence of Tenant, or Tenant's contractors, licensees, invitees,
agents, servants, independent contractors or employees; any accident,
injury or damage whatsoever caused to any person, or to the property of
any person, occurring in or about the Premises after the date that
possession of the Premises is first delivered to Tenant and until the
end of the Lease Term and thereafter, provided that during any such
period after the Lease Term Tenant or anyone acting by, through or
under Tenant is in occupancy of the Premises or any portion thereof, or
any accident, injury or damage occurring outside the Premises but
within the Building, the Garage or on the Site, where such accident,
injury or damage results, or is claimed to have resulted, from an act,
omission or negligence on the part of Tenant or Tenant's contractors,
licensees, invitees, agents, servants, independent contractors or
employees.
This indemnity and hold harmless agreement shall include indemnity against all
costs, expenses and liabilities incurred in or in connection with any such claim
or proceeding brought thereon, and the defense thereof.
13.2 COMMERCIAL GENERAL LIABILITY INSURANCE. Tenant agrees to maintain in
full force from the date upon which Tenant first enters the Premises
for any reason, throughout the Lease Term of this Lease, and
thereafter, so long as Tenant is in occupancy of any part of the
Premises, a policy of commercial general liability or comprehensive
general liability insurance written on an occurrence basis with a broad
form comprehensive liability endorsement under which Landlord and
Landlord's managing agent (and such other persons as are in privity of
estate with Landlord and Landlord's managing agent as may be set out in
notice from time to time) and Tenant are named as insureds, and under
which the insurer agrees to indemnify and hold Landlord and Landlord's
managing agent, and those in privity of estate with Landlord and
Landlord's managing agent, harmless from and against all cost, expense
and/or liability arising out of or based upon any and all claims,
accidents, injuries and damages mentioned in Section 13.1 of this
Article XIII, in the broadest form of such, coverage from time to time
available in the jurisdiction in which the Premises are located. Each
such policy shall be non-cancelable and non-amendable with respect to
Landlord and Landlord's said designees without thirty (30) days' prior
notice to Landlord, and a duplicate original or certificate thereof
shall be delivered to Landlord. As of the
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Commencement Date hereof, the minimum limits of liability of such
insurance shall be as specified in Section 1.2 and from time to time
during the Lease Term for such higher limits, if any, as are carried
customarily in the Greater Boston Area with respect to similar
properties. All insurance required to be maintained by Tenant pursuant
to this Lease shall be maintained with responsible companies qualified
to do business, and in good standing, in the Commonwealth of
Massachusetts and which have a rating of at least "A2' and are within a
financial size category of not less than "Class VIII" in the most
current Best's Key Rating Guide or such similar rating as may be
reasonably selected by Landlord if such Guide is no longer published.
13.3 TENANT'S PROPERTY INSURANCE. Tenant, at Tenant's expense, shall
maintain at all times during the Term of the Lease insurance against
loss or damage covered by the so-called "all risk" type insurance
coverage with respect to Tenant's fixtures, equipment, goods, wares and
merchandise, tenant improvements made by or paid for by Tenant, and
other property of Tenant (collectively "Tenants Property"). Such
insurance shall be in an amount at least equal to the full replacement
cost of Tenant's Property.
13.4 NON-SUBROGATION. Any insurance carried by either party with respect to
the Premises or property therein or occurrences thereon shall, if it
can be so written without additional premium or with an additional
premium which the other party agrees to pay, include a clause or
endorsement denying to the insurer rights of subrogation against the
other party to the extent rights have been waived by the insured prior
to occurrence of injury or loss. Each party, notwithstanding any
provisions of this Lease to the contrary, hereby waives any rights of
recovery against the other for injury or loss due to hazards covered by
such insurance to the extent of the indemnification received
thereunder.
13.5 TENANTS RISK. To the maximum extent that this agreement may be made
effective according to law, Tenant agrees to use and occupy the
Premises and to use such other portions of the Building, the Garage or
Garages, the Site and the Development Area as Tenant is herein given
the right to use at Tenant's own risk; and Undlord shall have no
responsibility or liability for any loss of or damage to fixtures or
other personal property of Tenant.
ARTICLE XIV
FIRE, CASUALTY AND TAKING
14.1 DAMAGE RESULTING FROM CASUALTY. In case during the Lease Term the
Building or the Site are damaged by fire or other casualty, and such
fire or casualty damage cannot, in the ordinary course, reasonably be
expected to be repaired within one hundred twenty (120) days from the
time that repair work would commence, Landlord may, at its election,
terminate this Lease by notice given to Tenant within sixty (60) days
after the date of such fire or other casualty, specifying the effective
date of termination. The effective date of termination specified by
Landlord shall not be less than thirty (30) days nor more than
forty-five (45) days after the date of notice of such termination.
Unless terminated pursuant to the foregoing provisions, this Lease
shall remain in full force and effect following any such damage
subject, however, to the following provisions.
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If during the last fifteen (15) months of the Lease Term, the Building shall be
damaged by fire or casualty and such fire or casualty damage to the Premises
cannot reasonably be expected to be repaired or restored within one hundred
twenty (120) days from the time that repair or restoration work would commence,
then Tenant shall have the right, by giving notice to Landlord not later than
thirty (30) days after such damage, to terminate this Lease, whereupon this
Lease shall terminate as of the date of such notice with the same force and
effect as if such date were the date originally established as the expiration
date hereof
If the Building or the Site or any part thereof are damaged by fire or other
casualty and this Lease is not so terminated, or Landlord has no right to
terminate this Lease, and in either such case the holder of any mortgage which
includes the Building as a part of the mortgaged premises or any ground lessor
of any ground lease which includes the Site as part of the demised premises
allows the net insurance proceeds to be applied to the restoration of the
Building (and/or the Site), Landlord, promptly after such damage and the
determination of the net amount of insurance proceeds available shall use due
diligence to restore the Premises and the Building in the event of damage
thereto (excluding Tenant's Property ) into proper condition for use and
occupation and a just proportion of the Annual Fixed Rent, the Operating Cost
Excess and Tenant's share of real estate taxes according to the nature and
extent of the injury to the Premises shall be abated from the date of casualty
until the Premises shall have been put by Landlord substantially into such
condition. Notwithstanding the foregoing, Landlord shall not be obligated to
expend for such repairs and restoration any amount in excess of the net
insurance proceeds.
Where Landlord is obligated or otherwise elects to effect restoration of the
Premises, unless such restoration is completed within one (1) year from the date
of the casualty or taking, such period to be subject, however, to extension
where the delay in completion of such work is due to causes beyond Landlord's
reasonable control (but in no event beyond eighteen (18) months from the date of
the casualty or taking), Tenant shall have the right to terminate this Lease at
any time after the expiration of such one-year (as extended) period until the
restoration is substantially completed, such termination to take effect as of
the thirtieth (30th) day after the date of receipt by Landlord of Tenant's
notice, with the same force and effect as if such date were the date originally
established as the expiration date hereof unless, within such thirty (30) day
period such restoration is substantially completed, in which case Tenant's
notice of termination shall be of no force and effect and this Lease and the
Lease Term shall continue in full force and effect.
14.2 UNINSURED CASUALTY. Notwithstanding anything to the contrary contained
in this Lease, if the Building or the Premises shall be substantially
damaged by fire or casualty as the result of a risk not covered by the
forms of casualty insurance at the time maintained by Landlord and such
fire or casualty damage cannot, in the ordinary course, reasonably be
expected to be repaired within ninety (90) days from the time that
repair work would commence, Landlord may, at its election, terminate
the Term of this Lease by notice to Tenant given within thirty (30)
days after such loss. If Landlord shall give such notice, then this
Lease shall terminate as of the date of such notice with the same force
and effect as if such date were the date originally established as the
expiration date hereof.
14.3 RIGHTS OF TERMINATION FOR TAKING. Except as hereinafter provided in
Section 14.4 hereof, if the Building, or such portion thereof as to
render the balance (if reconstructed to the maximum extent practicable
in the circumstances) unsuitable for
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Tenant's purposes, shall be taken by condemnation or right of eminent
domain, Landlord or Tenant shall have the right to terminate this Lease
by notice to the other of its desire to do so, provided that such
notice is given not later than thirty (30) days after Tenant has been
deprived of possession. If either party shall give such notice, then
this Lease shall terminate as of the date of such notice with the same
force and effect as if such date were the date originally established
as the expiration date hereof.
Further, if so much of the Building shall be so taken that continued operation
of the Building would be uneconomic, Landlord shall have the right to terminate
this Lease by giving notice to Tenant of Landlord's desire to do so not later
than thirty (30) days after Tenant has been deprived of possession of the
Premises (or such portion thereof as may be taken). If Landlord shall give such
notice, then this Lease shall terminate as of the date of such notice with the
same force and effect as if such date were the date originally established as
the expiration date hereof.
Should any part of the Premises be so taken or condemned during the Lease Term
hereof, and should this Lease not be terminated in accordance with the foregoing
provisions, and the holder of any mortgage which includes the Premises as part
of the mortgaged premises or any ground lessor of any ground lease which
includes the Site as part of the demised premises allows the net condemnation
proceeds to be applied to the restoration of the Building, Landlord agrees that
after the determination of the net amount of condemnation proceeds available to
Landlord, Landlord shall * use due diligence to put what may remain of the
Premises into proper condition for use and occupation as nearly like the
condition of the Premises prior to such taking as shall be practicable
(excluding Tenant's Property). Notwithstanding the foregoing, Landlord shall not
be obligated to expend for such repair and restoration any amount in excess of
the net condemnation proceeds.
If the Premises shall be affected by any exercise of the power of eminent domain
and neither Landlord nor Tenant shall terminate this Lease as provided above,
then the Annual Fixed Rent, the Operating Cost Excess and Tenant's share of real
estate taxes shall be justly and equitably abated and reduced according to the
nature and extent of the loss of use thereof suffered by Tenant; and in case of
a taking which permanently reduces the Rentable Floor Area of the Premises, a
just proportion of the Annual Fixed Rent, the Operating Cost Excess and Tenant's
share of real estate taxes shall be abated for the remainder of the Lease Term.
14.4 AWARD. Except as otherwise provided in Section 14.4, Landlord shall
have and hereby reserves and excepts, and Tenant hereby grants and
assigns to Landlord, all rights to recover for damages to the Building,
the Site and the Garage or Garages and the leasehold interest hereby
created, and compensation accrued or hereafter to accrue by reason of
such taking, damage or destruction, as aforesaid, and by way of
confirming the foregoing, Tenant hereby grants and assigns, and
covenants with Landlord to grant and assign to Landlord, all rights to
such damages or compensation.
However, nothing contained herein shall be construed to prevent Tenant from
prosecuting in any such proceedings a claim for its trade fixtures so taken or
relocation, moving and other dislocation expenses, provided that such action
shall not affect the amount of compensation otherwise recoverable by Landlord
from the taking authority.
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ARTICLE XV
DEFAULT
15.1 TENANT'S DEFAULT. This Lease and the term of this Lease are subject to
the limitation that Tenant shall be in default if, at any time during
the Lease Term, any one or more of the following events (herein called
an "Event of Default" a "default of Tenant" or similar reference) shall
occur and not be cured prior to the expiration of the grace period (if
any) herein provided, as follows:
(a) Tenant shall fail to pay any installment of the Annual Fixed
Rent, or any Additional Rent or any other monetary amount due
under this Lease on or before the date on which the same
becomes due and payable, and such failure continues for five
(5) days after notice from Landlord thereof, or
(b) Landlord having rightfully given the notice specified in (a)
above to Tenant twice in any twelve (12) month period, Tenant
shall fail thereafter to pay the Annual Fixed Rent, Additional
Rent or any other monetary amount due under this Lease on or
before the date on which the same becomes due and payable; or
(c) Tenant shall fail to perform or observe some term or condition
of this Lease which, because of its character, would
immediately jeopardize Landlord's interest (such as, but
without limitation, failure to maintain general liability
insurance, or the employment of labor and contractors within
the Premises which interfere with Landlord's work, in
violation of Section 4.3 or Section 9.3), and such failure
continues for three (3) days after notice from Landlord to
Tenant thereof; or
(d) Tenant shall fail to perform or observe any other requirement,
term, covenant or condition of this Lease (not hereinabove in
this Section 15.1 specifically referred to) on the part of
Tenant to be performed or observed and such failure shall
continue for thirty (30) days after notice thereof from
Landlord to Tenant, or if said default shall reasonably
require longer than thirty (30) days to cure, if Tenant shall
fail to commence to cure said default within thirty (30) days
after notice thereof and/or fail to continuously prosecute the
curing of the same to completion with due diligence; or
(e) The estate hereby created shall be taken on execution or by
other process of law; or
(f) Tenant shall make an assignment or trust mortgage arrangement,
so-called, for the benefit of its creditors; or
(g) Tenant shall judicially be declared bankrupt or insolvent
according to law; or
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(h) a receiver, guardian, conservator, trustee in involuntary
bankruptcy or other similar officer is appointed to take
charge of all or any substantial part of Tenant's property by
a court of competent jurisdiction; or
(i) any petition shall be filed against Tenant in any court,
whether or not pursuant to any statute of the United States or
of any State, in any bankruptcy, reorganization, composition,
extension, arrangement or insolvency proceeding, and such
proceedings shall not be fully and finally dismissed within
sixty (60) days after the institution of the same; or
(j) Tenant shall file any petition in any court, whether or not
pursuant to any statute of the United States or any State, in
any bankruptcy, reorganization, composition, extension,
arrangement or insolvency proceeding.
15.2 TERMINATION; RE-ENTRY. Upon the happening of any one or more of the
aforementioned Events of Default (notwithstanding any license of a
former breach of covenant or waiver of the benefit hereof or consent in
a former instance), Landlord or Landlord's agents or servants may give
to Tenant a notice (hereinafter called "notice of termination")
terminating this Lease on a date specified in such notice of
termination (which shall be not less than five (5) days after the date
of the mailing of such notice of termination), and this Lease and the
Lease Term, as well as any and all of the right, title and interest of
the Tenant hereunder, shall wholly cease and expire on the date set
forth in such notice of termination (Tenant hereby waiving any rights
of redemption) in the same manner and with the same force and effect as
if such date were the date originally specified herein for the
expiration of the Lease Term, and Tenant shall then quit and surrender
the Premises to Landlord.
In addition or as an alternative to the giving of such notice of termination,
Landlord or Landlord's agents or servants may, by any suitable action or
proceeding at law, immediately or at any time thereafter re-enter the Premises
and remove therefrom Tenant, its agents, employees, servants, licensees, and any
subtenants and other persons, and all or any of its or their property therefrom,
and repossess and enjoy the Premises, together with all additions, alterations
and improvements thereto; but, in any event under this Section 15.2, Tenant
shall remain liable as hereinafter provided.
The words "re-enter" and "re-entry" as used throughout this Article XV are not
restricted to their technical legal meanings.
15.3 CONTINUED LIABILITY. RE-LETTING. If this Lease is terminated or if
Landlord shall re-enter the Premises as aforesaid, or in the event of
the termination of this Lease, or of re- entry, by or under any
proceeding or action or any provision of law by reason of an Event of
Default hereunder on the part of Tenant, Tenant covenants and agrees
forthwith to pay and be liable for, on the days originally fixed herein
for the payment thereof, amounts equal to the several installments of
Annual Fixed Rent, all Additional Rent and other charges reserved as
they would, under the terms of this Lease, become due if this Lease had
not been terminated or if Landlord had not entered or re-entered, as
aforesaid,
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and whether the Premises be relet or remain vacant, in whole or in
part, or for a period less than the remainder of the Lease Term, or for
the whole thereof, but, in the event the Premises be relet by Landlord,
Tenant shall be entitled to a credit in the net amount of rent and
other charges received by Landlord in reletting, after deduction of all
reasonable expenses incur-red in reletting the Premises (including,
without limitation, remodeling costs, brokerage fees and the like), and
in collecting the rent in connection therewith, in the following
manner:
Amounts received by Landlord after reletting shall first be applied against such
Landlord's expenses, until the same are recovered, and until such recovery,
Tenant shall pay, as of each day when a payment would fall due under this Lease,
the amount which Tenant is obligated to pay under the terms of this Lease
(Tenant's liability prior to any such reletting and such recovery not in any way
to be diminished as a result of the fact that such reletting might be for a rent
higher than the rent provided for in this Lease); when and if such expenses have
been completely recovered, the amounts received from reletting by Landlord as
have not previously been applied shall be credited against Tenant's obligations
as of each day when a payment would fall due under this Lease, and only the net
amount thereof shall be payable by Tenant. Further, Tenant shall not be entitled
to any credit of any kind for any period after the date when the term of this
Lease is scheduled to expire according to its terms.
15.4 LIQUIDATED DAMAGES. Landlord may elect, as an alternative, to have
Tenant pay liquidated damages, which election may be made by notice
given to Tenant at any time after the termination of this Lease under
Section 15.2, above, and whether or not Landlord shall have collected
any damages as hereinbefore provided in this Article XV, and in lieu of
all other such damages beyond the date of such notice. Upon such
notice, Tenant shall promptly pay to Landlord, as liquidated damages,
in addition to any damages collected or due from Tenant from any period
prior to such notice, such a sum as at the time of such notice
represents the amount of the excess, if any, of (a) the discounted
present value, at a discount rate of 6%, of the Annual Fixed Rent,
Additional Rent and other charges which would have been payable by
Tenant under this Lease for the remainder of the Lease Term if the
Lease terms had been fully complied with by Tenant, over and above (b)
the discounted present value, at a discount rate of 6%, of the Annual
Fixed Rent, Additional Rent and other charges that would be received by
Landlord if the Premises were re- leased at the time of such notice for
the remainder of the Lease Term at the fair market value (including
provisions regarding periodic increases in Annual Fixed Rent if such
are applicable) prevailing at the time of such notice.
For the purposes of this Article, if Landlord elects to require Tenant to pay
liquidated damages in accordance with this Section 15.4, the total rent shall be
computed by assuming the Tenant's share of real estate taxes under Section 6.1
and the Operating Cost Excess under Section 7.4 to be the same as were payable
for the twelve (12) calendar months (or if less than twelve (12) calendar months
have been elapsed since the date hereof, the partial year) immediately preceding
such termination of re-entry.
Nothing contained in this Lease shall limit or prejudice the right of Landlord
to prove for and obtain in proceedings for bankruptcy or insolvency by reason of
the termination of this Lease, an amount
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equal to the maximum allowed by any statute or rule of law in effect at the time
when, and governing the proceeds in which, the damages are to be proved, whether
or not the amount be greater, equal to, or less than the amount of the loss or
damages referred to above.
15.5 WAIVER OF REDEMPTION. Tenant, for itself and any and all persons
claiming through or under Tenant, including its creditors, upon the
termination of this Lease and of the term of this Lease in accordance
with the terms hereof, or in the event of entry of judgment for the
recovery of the possession of the Premises in any action or proceeding,
or if Landlord shall enter the Premises by process of law or otherwise,
hereby waives any right of redemption provided or permitted by any
statute, law or decision now or hereafter in force, and does hereby
waive, surrender and give up all rights or privileges which it or they
may or might have under and by reason of any present or future law or
decision, to redeem the Premises or for a continuation of this Lease
for the term of this Lease hereby demised after having been
dispossessed or ejected therefrom by process of law, or otherwise.
15.6 LANDLORDS DEFAULT. Landlord shall in no event be in default in the
performance of any of Landlord's obligations hereunder unless and until
Landlord shall have failed to perform such obligations within thirty
(30) days, or such additional time as is reasonably required to correct
any such default, after notice by Tenant to Landlord properly
specifying wherein Landlord has failed to perform any such obligation.
ARTICLE XVI
BANKRUPTCY OR INSOLVENCY
16.1 CHAPTER 7 PROCEEDINGS. If the Tenant shall become a debtor under
Chapter 7 of the Bankruptcy Code and Tenant's trustee or Tenant shall
elect to assume this Lease for the purpose of assigning the same or
otherwise, such election and assignment may be made only if all of the
provisions of Sections 16.2 and 16.4 of this Article XVI are satisfied.
If Tenant or Tenant's trustee shall fail to elect to assume this Lease
within sixty (60) days after the filing of a petition, or such
additional time as provided by the court within such 60- day period,
this Lease shall be deemed to have been rejected. Immediately
thereupon, Landlord shall be entitled to possession of the Premises
without further obligation to Tenant or Tenant's trustee and this Lease
shall terminate, but Landlord's right to be compensated for damages
(including, without limitation, damages pursuant to Article XV), in any
such proceeding shall survive.
16.2 CHAPTER 11 PROCEEDINGS. If a petition for reorganization or adjustment
of debts is filed concerning Tenant under Chapter I I of the Bankruptcy
Code, or a proceeding is filed under Chapter 7 of the Bankruptcy Code
and is transferred to Chapter 11, Tenant's trustee or Tenant, as
debtor-in- possession, must elect to assume this Lease within the
earlier of (i) confirmation of the plan and (ii) one hundred twenty
(120) days from the date of the filing of the petition under Chapter 11
or such transfer thereto or Tenant's trustee or Tenant, as
debtor-in-possession, shall be deemed to have rejected this Lease. If
Tenant's trustee or Tenant, as debtor-in-possession, has failed to
perform all of Tenant's obligations under this Lease within the time
periods (excluding grace periods) required
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for such performance, no election by Tenant's trustee or by Tenant, as
debtor-in-possession, to assume this Lease, whether under Chapter 7 or
Chapter 11, shall be effective unless each of the following conditions
has been satisfied:
(a) Tenant's trustee or Tenant, as debtor-in- possession, has
cured, or has provided Landlord with Assurance (hereinafter
defined) that it will cure (i) all monetary defaults under
this lease within ten (10) days from the date of such
assumption, and (ii) all nonmonetary defaults under this lease
within thirty (30) days from the date of such assumption; and
(b) Tenant's trustee or Tenant, as debtor-in-possession, has
provided Landlord with Assurance of the future performance of
each of the obligations under this Lease of Tenant, Tenant's
trustee or Tenant, as debtor-in-possession, and has (i)
deposited with Landlord, as security for the timely payment of
rent hereunder, an amount equal to one annual installment of
Annual Fixed Rent which Tenant was obligated to pay to
Landlord under this Lease during the Lease Year in which such
default occurred, and (ii) paid in advance to Landlord
Tenant's annual obligations for Additional Rent and all other
monetary charges payable by Tenant under this Lease. The
obligations imposed upon Tenant's trustee or Tenant, as
debtor-in-possession, shall continue with respect to Tenant or
any assignee of Tenant's interests in this Lease after the
completion of bankruptcy proceedings.
For purposes of this Section 16.2, Landlord and Tenant acknowledge that
"Assurance" shall mean no less than: (i) Tenant's trustee or Tenant, as
debtor-in-possession, has and will continue to have sufficient unencumbered
assets after the payment of all secured obligations and administration expenses
to assure Landlord that sufficient funds will be available to fulfill the
obligations of Tenant under this Lease, and (ii) the Bankruptcy Court shall have
entered an order segregating sufficient cash payment to Landlord, or Tenant's
trustee or Tenant, as debtor-in-possession, or shall have granted a valid and
perfected first lien and security interest and mortgage in property of Tenant,
acceptable as to value and kind to Landlord, to secure to Landlord the
obligation of Tenant's trustee or Tenant, as debtor-in- possession, to cure
defaults under this Lease, both monetary and nonmonetary, within the time period
set forth above.
16.3 BANKRUPTCY EVENT FOLLOWING LEASE ASSUMPTION. If this Lease is assumed
in accordance with the provisions of Section 16.2 and thereafter Tenant
is liquidated or files or has filed against it a subsequent petition
for reorganization or adjustment of debts under Chapter I I of the
Bankruptcy Code, Landlord may, at its option, terminate this Lease and
all rights of Tenant hereunder, by giving Tenant notice of its election
to so terminate within thirty (30) days after the occurrence of either
of such events.
16.4 LEASE ASSIGNMENT FOLLOWING LEASE ASSUMPTION. If Tenant's trustee or
Tenant, as debtor-in-possession, has assumed this Lease pursuant to the
terms and provisions of Sections 16.1 and 16.2 of this Article for the
purpose of assigning (or elects to assign) this Lease, this Lease may
be so assigned only if the proposed assignee has provided adequate
assurance of future performance of all of the terms, covenants and
conditions of this Lease to be performed by Tenant. Landlord shall be
entitled to receive
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<PAGE> 34
all cash proceeds of any such assignment. As used herein, "adequate
assurance of future performance" shall mean that all of the following
conditions have been satisfied:
(a) the proposed assignee has furnished Landlord with either (i) a
current financial statement audited by a certified public
accountant indicating a net worth and working capital in
amounts which Landlord reasonably determines to be sufficient
to assure the future performance by such assignee of Tenant's
obligations under this Lease, or (ii) a guaranty or guaranties
in form and substance satisfactory to Landlord from one or
more persons or entities with aggregate net worth which
Landlord reasonably determines to be sufficient to assure the
future performance by such assignee of Tenant's obligations
under this Lease; and
(b) Landlord has obtained all consents or waivers from others
required under any lease, mortgage, financing agreement or
other agreement by which Landlord is bound to permit Landlord
to consent to such assignment.
16.5 USE AND OCCUPANCY CHARGES. When, pursuant to the Bankruptcy Code,
Tenant's trustee or Tenant, as debtor-in-possession, shall be obliged
to pay reasonable use and occupancy charges for the use of the
Premises, such charges shall not be less than the Annual Fixed Rent
which Tenant is obligated to pay to Landlord under this Lease, plus all
Additional Rent and all other monetary charges payable by Tenant under
this Lease.
16.6 FURTHER PROVISIONS. Neither the whole nor any portion of Tenant's
interest in this Lease or its estate in the Premises shall pass to any
United States trustee, receiver, assignee for the benefit of creditors,
or any other person or entity, or otherwise by operation of law under
the laws of any state having jurisdiction of the person of property of
Tenant, unless Landlord shall have consented to such transfer in
writing. No acceptance by Landlord of rent or any other payments from
any United States trustee, receiver, assignee, person or other entity
shall be deemed to constitute such consent by Landlord, nor shall it be
deemed a waiver of Landlord's right to terminate this Lease for any
transfer of Tenant's interest under this Lease without such consent.
ARTICLE XVII
MISCELLANEOUS PROVISIONS
17.1 WAIVER. Failure on the part of Landlord or Tenant to complain of any
action or nonaction on the part of the other, no matter how long the
same may continue, shall never be a waiver by Tenant or Landlord,
respectively, of any of its rights hereunder.
Further, no waiver at any time of any of the provisions hereof by Landlord or
Tenant shall be construed as a waiver of any of the other provisions hereof, and
a waiver at any time of any of the provisions hereof shall not be construed as a
waiver at any subsequent time of the same provisions. The consent or approval of
Landlord or Tenant to or of any action by the other requiring such consent or
approval shall not be construed to waive or render unnecessary Landlord's or
Tenant's consent or approval to or of any subsequent similar act by the other.
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No payment by Tenant, or acceptance by Landlord, of a lesser amount than shall
be due from Tenant to Landlord shall be treated otherwise than as a payment on
account. The acceptance by Landlord of a check for a lesser amount with an
endorsement or statement thereon, or upon any letter accompanying such check,
that such lesser amount is payment in full, shall be given no effect, and
Landlord may accept such check without prejudice to any other rights or remedies
which Landlord may have against Tenant. Further, the acceptance by Landlord of
Annual Fixed Rent, Additional Rent or any other charges paid by Tenant under
this Lease shall not be or be deemed to be a waiver by Landlord of any default
by Tenant, whether or not Landlord knows of such default, except for such
defaults as to which such payment relates.
17.2 CUMULATIVE REMEDIES. The specific remedies to which Landlord and Tenant
may resort under the terms of this Lease are cumulative and are not
intended to be exclusive of any other remedies or means of redress
which they may be lawfully entitled to seek in case of any breach or
threatened breach of any provisions of this Lease. In addition to the
other remedies provided in this Lease, Landlord shall be entitled to
the restraint by injunction of the violation or attempted or threatened
violation of any of the covenants, conditions or provisions of this
Lease or to seek specific performance of any such covenants, conditions
or provisions, provided, however, that the foregoing shall not be
construed as a confession ofjudgment by Tenant.
17.3 QUIET ENJOYMENT. Landlord agrees that, upon Tenant's paying the Annual
Fixed Rent, Additional Rent and other charges herein reserved, and
performing and observing the covenants, conditions and agreements
hereof upon the part of Tenant to be performed and observed, Tenant
shall and may peaceably hold and enjoy the Premises during the term of
this Lease, without interruption or disturbance from Landlord or
persons claiming through or under Landlord, subject, however, to the
terms of this Lease. This covenant shall be construed as running with
the land to and against subsequent owners and successors in interest,
and is not, nor shall it operate or be construed as, a personal
covenant of Landlord, except to the extent of the Landlord's interest
in the Premises, and this covenant and any and all other covenants of
Landlord contained in this Lease shall be binding upon Landlord and
upon such subsequent owners and successors in interest of Landlord's
interest under this Lease, to the extent of their respective interests,
as and when they shall acquire same and then only for so long as they
shall retain such interest.
17.4 SURRENDER. (A) No act or thing done by Landlord during the Lease Term
shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept such surrender shall be valid, unless in writing
signed by Landlord. No employee of Landlord or of Landlord's agents
shall have any power to accept the keys of the Premises as an
acceptance of a surrender of the Premises prior to the termination of
this Lease; provided, however, that the foregoing shall not apply to
the delivery of keys to Landlord or its agents in its (or their)
capacity as managing agent or for purpose of emergency access. In any
event, however, the delivery of keys to any employee of Landlord or of
Landlord's agents shall not operate as a termination of the Lease or a
surrender of the Premises.
(B) Upon the expiration or earlier termination of the Lease Term, Tenant shall
surrender the Premises to Landlord in the condition as required by Sections 8.1
and 9.5, first removing all goods and effects of Tenant and completing such
other removals as may be permitted or required pursuant to Section 9.5.
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17.5 BROKERAGE. Tenant warrants and represents that Tenant has not dealt
with any broker in connection with the consummation of this Lease other
than the broker, person or firm designated in Section 1.2 hereof; and
in the event any claim is made against the Landlord relative to
dealings with brokers other than the broker designated in Section 1.2
hereof, Tenant shall defend the claim against Landlord with counsel of
Landlord's selection and save harmless and indemnify Landlord on
account of loss, cost or damage which may arise by reason of such
claim. Landlord agrees that it shall be solely responsible for the
payment of brokerage commissions to the broker, person or firm
designated in Section 1.2 hereof.
17.6 INVALIDITY OF PARTICULAR PROVISIONS. If any term or provision of this
Lease, or the application thereof to any person or circumstance shall,
to any extent, be invalid or unenforceable, the remainder of this
Lease, or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and be enforced to the fullest
extent permitted by law.
17.7 PROVISIONS BINDING, ETC. The obligations of this Lease shall run with
the land, and except as herein otherwise provided, the terms hereof
shall be binding upon and shall inure to the benefit of the successors
and assigns, respectively, of Landlord and Tenant and, if Tenant shall
be an individual, upon and to his heirs, executors, administrators,
successors and assigns. Each term and each provision of this Lease to
be performed by Tenant shall be construed to be both a covenant and a
condition. The reference contained to successors and assigns of Tenant
is not intended to constitute a consent to assignment by Tenant.
17.8 RECORDING. Each of Landlord and Tenant agree not to record the within
Lease, but each party hereto agrees, on the request of the other, to
execute a so-called Notice of Lease or short form lease in form
recordable and complying with applicable law and reasonably
satisfactory to Landlord's and Tenant's attorneys. In no event shall
such document set forth the rent or other charges payable by Tenant
under this Lease; and any such document shall expressly state that it
is executed pursuant to the provisions contained in this Lease, and is
not intended to vary the terms and conditions of this Lease.
17.9 NOTICES AND TIME FOR ACTION. Whenever, by the terms of this Lease,
notice shall or may be given either to Landlord or to Tenant, such
notices shall be in writing and shall be sent by hand, registered or
certified mail, or overnight or other commercial courier, postage or
delivery charges, as the case may be, prepaid as follows:
If intended for Landlord, addressed to Landlord at the address
set forth on the first page of this Lease (or to such other
address or addresses as may from time to time hereafter be
designated by Landlord by like notice).
If intended for Tenant, addressed to Tenant at the address set
forth on the first page of this Lease except that from and
after the Commencement Date the address of Tenant shall be the
Premises (or
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to such other address or addresses as may from time to time
hereafter be designated by Tenant by like notice).
Except as otherwise provided herein, all such notices shall be effective when
received; provided, that (i) if receipt is refused, notice shall be effective
upon the first occasion that such receipt is refused or (ii) if the notice is
unable to be delivered due to a change of address of which no notice was given,
notice shall be effective upon the date such delivery was attempted.
Where provision is made for the attention of an individual or department, the
notice shall be effective only if the wrapper in which such notice is sent is
addressed to the attention of such individual or department.
Time is of the essence with respect to any and all notices and periods for
giving of notice or taking any action thereto under this Lease.
17.10 WHEN LEASE BECOMES BINDING. Employees or agents of Landlord have no
authority to make or agree to make a lease or any other agreement or
undertaking in connection herewith. The submission of this document for
examination and negotiation does not constitute an offer to lease, or a
reservation of, or option for, the Premises, and this document shall
become effective and binding only upon the execution and delivery
hereof by both Landlord and Tenant. All negotiations, considerations,
representations and understandings between Landlord and Tenant are
incorporated herein and may be modified or altered only by written
agreement between Landlord and Tenant, and no act or omission of any
employee or agent of Landlord shall alter, change or modify any of the
provisions hereof
17.11 PARAGRAPH HEADINGS. The paragraph headings throughout this instrument
are for convenience and reference only, and the words contained therein
shall in no way be held to explain, modify, amplify or aid in the
interpretation, construction or meaning of the provisions of this
Lease.
17.12 RIGHTS OF MORTGAGEE. This Lease shall be subject and subordinate to any
mortgage now or hereafter on the Site or the Building, or both, and to
all renewals, modifications, consolidations, replacements and
extensions thereof and all substitutions therefor, provided that the
holder of such mortgage agrees to recognize the right of Tenant to use
and occupy the Premises upon the payment of rent and other charges
payable by Tenant under this Lease and the performance by Tenant of
Tenant's obligations hereunder. In confirmation of such subordination
and recognition, Tenant shall execute and deliver promptly such
instruments of subordination as such mortgagee may reasonably request,
subject to receipt of such instruments of recognition from such
mortgagee as Tenant may reasonably request. In the event that any
mortgagee or its respective successor in title shall succeed to the
interest of Landlord, then this Lease shall nevertheless continue in
full force and effect and Tenant shall and does hereby agree to attorn
to such mortgagee or successor and to recognize such mortgagee or
successor as its landlord. If any holder of a mortgage which includes
the Premises, executed and recorded prior to the Date of this Lease,
shall so elect, this Lease, and the rights of Tenant hereunder, shall
be superior in right to the rights of such holder, with the same force
and effect as if this Lease had been executed, delivered and recorded,
or a statutory Notice
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hereof recorded, prior to the execution, delivery and recording of any
such mortgage. The election of any such holder shall become effective
upon either notice from such holder to Tenant in the same fashion as
notices from Landlord to Tenant are to be given hereunder or by the
recording in the appropriate registry or recorder's office of an
instrument in which such holder subordinates its rights under such
mortgage to this Lease.
If in connection with obtaining financing for the Demised Premises a bank,
insurance company, pension trust or other institutional lender shall request
reasonable modifications in this Lease as a condition to such financing, Tenant
will not unreasonably withhold, delay or condition its consent thereto, provided
that such modifications do not increase the monetary obligations of Tenant
hereunder or materially adversely affect the leasehold interest hereby created
or Tenant's rights hereunder.
17.13 RIGHTS OF GROUND LESSOR. If Landlord's interest in property (whether
land only or land and buildings) which includes the Premises is
acquired by another party and simultaneously leased back to Landlord
herein, the holder of the ground lessor's interest in such lease shall
enter into a recognition agreement with Tenant simultaneously with the
sale and leaseback, wherein the ground lessor will agree to recognize
the right of Tenant to use and occupy the Premises upon the payment of
Annual Fixed Rent, Additional Rent and other charges payable by Tenant
under this Lease and the performance by Tenant of Tenant's obligations
hereunder, and wherein Tenant shall agree to attorn to such ground
lessor as its Landlord and to perform and observe all of the tenant
obligations hereunder, in the event such ground lessor succeeds to the
interest of Landlord hereunder under such ground lease.
17.14 NOTICE TO MORTGAGEE AND GROUND LESSOR. After receiving notice from any
person, finn or other entity that it holds a mortgage which includes
the Premises as part of the mortgaged premises, or that it is the
ground lessor under a lease with Landlord as ground lessee, which
includes the Premises as a part of the Premises, no notice from Tenant
to Landlord shall be effective unless and until a copy of the same is
given to such holder or ground lessor at the address as specified in
said notice (as it may from time to time be changed), and the curing of
any of Landlord's defaults by such holder or ground lessor within a
reasonable time after such notice (including a reasonable time to
obtain possession of the premises if the mortgagee or ground lessor
elects to do so) shall be treated as performance by Landlord. For the
purposes of this Section 17.14, the term "mortgage" includes a mortgage
on a leasehold interest of Landlord (but not one on Tenant's leasehold
interest).
17.15 ASSIGNMENT OF RENTS. With reference to any assignment by Landlord of
Landlord's interest in this Lease, or the rents payable hereunder,
conditional in nature or otherwise, which assignment is made to the
holder of a mortgage or ground lease on property which includes the
Premises, Tenant agrees:
(a) That the execution thereof by Landlord, and the acceptance
thereof by the holder of such mortgage, or the ground lessor,
shall never be treated as an assumption by such holder or
ground lessor of any of the obligations of
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Landlord hereunder, unless such holder, or ground lessor,
shall, by notice sent to Tenant, specifically otherwise elect;
and
(b) That, except as aforesaid, such holder or ground lessor shall
be treated as having assumed Landlord's obligations hereunder
only upon foreclosure of such holder's mortgage and the taking
of possession of the Premises, or, in the case of a ground
lessor, the assumption of Landlord's position hereunder by
such ground lessor. In no event shall the acquisition of title
to the Building and the land on which the same is located by a
purchaser which, simultaneously therewith, leases the entire
Building or such land back to the Seller thereof be treated as
an assumption, by operation of law or otherwise, of Landlord's
obligations hereunder, but Tenant shall look solely to such
seller-lessee, and its successors from time to time in title,
for performance of Landlord's obligations hereunder. In any
such event, this Lease shall be subject and subordinate to the
lease to such purchaser provided that such purchaser-lessor
agrees to recognize the right of Tenant to use and occupy the
Demised Premises upon the payment of rent and all other
charges payable by Tenant under this Lease and the performance
by Tenant of Tenant's obligations under this Lease. For all
purposes, such seller-lessee, and its successors in title,
shall be the landlord hereunder unless and until Landlord's
position shall have been assumed by such purchaser-lessor.
17.16 STATUS REPORT AND FINANCIAL STATEMENTS. Recognizing that Landlord may
find it necessary to establish to third parties, such as accountants,
banks, potential or existing mortgagees, potential purchasers or the
like, the then current status of performance hereunder, Tenant on the
request of Landlord made from time to time, will promptly furnish to
Landlord, or any existing or potential holder of any mortgage
encumbering the Premises, the Building, the Site and/or the Complex or
any potential purchaser of the Premises, the Building, the Site and/or
the Complex (each an "Interested Party") a statement of the status of
any matter pertaining to this Lease, including, without limitation,
acknowledgments that (or the extent to which) each party is in
compliance with its obligations under the terms of this Lease. In
addition, Tenant shall deliver to Landlord, or any Interested Party
designated by Landlord, financial statements of Tenant, and any
guarantor of Tenant's obligations under this Lease, as reasonably
requested by Landlord (but in no event more frequently than on three
(3) occasions during the Lease Term) including, but not limited to,
financial statements for the past three (3) years. Landlord agrees that
it shall execute an instrument in a form reasonably acceptable to
Landlord, wherein Landlord agrees to keep any information contained in
such status statement or financial statement confidential, except that
Landlord may provide the same to any Interested Party. Any such status
statement or financial statement delivered by Tenant or Landlord
pursuant to this Section 17.16 may be relied upon by any Interested
Party.
17.17 SELF-HELP. If Tenant shall at any time fail to make any payment or
perform any act which Tenant is obligated to make or perform under this
Lease and (except in the case of emergency) if the same continues
unpaid or unperformed beyond applicable grace periods, then Landlord
may, but shall not be obligated so to do, after ten (10) days' notice
to and demand upon Tenant, or with notice as soon as may be practicable
in the case of
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any emergency (which notice may be before or after the exercise by
Landlord of its rights hereunder), and without waiving, or releasing
Tenant from, any obligations of Tenant in this Lease contained, make
such payment or perform such act which Tenant is obligated to perform
under this Lease in such manner and to such extent as may be reasonably
necessary, and, in exercising any such rights, pay any costs and
expenses, employ counsel and incur and pay reasonable attorneys' fees.
All sums so paid by Landlord and all reasonable and necessary costs and
expenses of Landlord incidental thereto, together with interest thereon
at the annual rate equal to the sum of (a) the Base Rate from time to
time announced by Bank of Boston as its Base Rate and (b) two percent
(2%), from the date of the making of such expenditures by Landlord,
shall be deemed to be Additional Rent and, except as otherwise in this
Lease expressly provided, shall be payable to the Landlord on demand,
and if not promptly paid shall be added to any rent then due or
thereafter becoming due under this Lease, and Tenant covenants to pay
any such sum or sums with interest as aforesaid, and Landlord shall
have (in addition to any other right or remedy of Landlord) the same
rights and remedies in the event of the non-payment thereof by Tenant
as in the case of default by Tenant in the payment of Annual Fixed
Rent.
17.18 HOLDING OVER. Any holding over by Tenant after the expiration of the
term of this Lease shall be treated as a tenancy at sufferance at one
and one-half (I V2) the rents and other charges herein (prorated on a
daily basis) and shall otherwise be on the terms and conditions set
forth in this Lease, as far as applicable; provided, however, that
neither the foregoing nor any other term or provision of this Lease
shall be deemed to permit Tenant to retain possession of the Premises
or hold over in the Premises after the expiration or earlier
termination of the Lease Term.
17.19 ENTRY BY LANDLORD. Landlord, and its duly authorized representatives,
shall, upon reasonable prior notice (except in the case of emergency),
have the right to enter the Premises at all reasonable times (except at
any time in the case of emergency) for the purposes of inspecting the
condition of same and making such repairs, alterations, additions or
improvements thereto as may be necessary if Tenant fails to do so as
required hereunder (but the Landlord shall have no duty whatsoever to
make any such inspections, repairs, alterations, additions or
improvements except as otherwise provided in Sections 4.2, 4.3, 7.1 and
7.2), and to show the Premises to prospective tenants during the six
(6) months preceding expiration of the term of this Lease as it may
have been extended and at any reasonable time during the Lease Term to
show the Premises to prospective purchasers and mortgagees.
17.20 TENANT'S PAYMENTS. Each and every payment and expenditure, other than
Annual Fixed Rent, shall be deemed to be Additional Rent hereunder,
whether or not the provisions requiring payment of such amounts
specifically so state, and shall be payable, unless otherwise provided
in this Lease, within ten (10) days after written demand by Landlord,
and in the case of the non-payment of any such amount, Landlord shall
have, in addition to all of its other rights and remedies, all the
rights and remedies available to Landlord hereunder or by law in the
case of non-payment of Annual Fixed Rent. Unless expressly otherwise
provided in this Lease, the performance and observance by Tenant of all
the terms, covenants and conditions of this Lease to be performed and
observed by Tenant shall be at Tenant's sole cost and expense.
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17.21 LATE PAYMENT. If Landlord shall not have received any payment or
installment of rent on or before the date (the "Due Date") on which the
same first becomes payable under this Lease, the amount of such payment
or installment shall bear interest from the Due Date through and
including the date such payment or installment is received by Landlord,
at a rate equal to the lesser of (i) the rate announced by The First
National Bank of Boston from time to time as its prime or base rate (or
if such rate is no longer available, a comparable rate reasonably
selected by Landlord), plus two percent (2%), or (ii) the maximum
applicable legal rate, if any. Such interest shall be deemed Additional
Rent and shall be paid by Tenant to Landlord upon demand.
17.22 COUNTERPARTS. This Lease may be executed in several counterparts, each
of which shall be deemed an original, and such counterparts shall
constitute but one and the same instrument.
17.23 ENTIRE AGREEMENT. This Lease constitutes the entire agreement between
the parties hereto, Landlord's managing agent and their respective
affiliates with respect to the subject matter hereof and thereof and
supersedes all prior dealings between them with respect to such subject
matter, and there are no verbal or collateral understandings,
agreements, representations or warranties not expressly set forth in
this Lease and such Agreement to Lease. No subsequent alteration,
amendment, change or addition to this Lease shall be binding upon
Landlord or Tenant, unless reduced to writing and signed by the party
or parties to be charged therewith.
17.24 LANDLORD LIABILITY. Tenant shall neither assert nor seek to enforce any
claim for breach of this Lease against any of Landlord's assets other
than Landlord's interest in the Building, and Tenant agrees to look
solely to such interest for the satisfaction of any liability of
Landlord under this Lease, it being specifically agreed that neither
Landlord, nor any successor holder of Landlord's interest hereunder,
nor any beneficiary of any Trust of which any person from time to time
holding Landlord's interest is Trustee, nor any such Trustee, shall
ever be personally liable for any such liability. This paragraph shall
not limit any right that Tenant might otherwise have to obtain
injunctive relief against Landlord or Landlord's
successors-in-interest, or to take any other action which shall not
involve the personal liability of Landlord, or of any successor holder
of Landlord's interest hereunder, or of any beneficiary of any trust of
which any person from time to time holding Landlord's interest is
Trustee, or of any such Trustee, to respond in monetary damages from
Landlord's assets other than Landlord's interest in said Building, as
aforesaid. In no event shall Landlord ever be liable for any indirect
or consequential damages.
17.25 NO PARTNERSHIP. The relationship of the parties hereto is that of
landlord and tenant and no partnership, joint venture or participation
is hereby created.
17.26 SECURITY DEPOSIT. IF, in Section 1.2 hereof, a security deposit is
specified, Tenant agrees that the same will be paid upon execution and
delivery of this Lease and that Landlord shall hold the same,
throughout the term of this Lease (including any extension thereof), as
security for the performance by Tenant of all obligations on the part
of Tenant to be performed. Landlord shall have the right from time to
time without
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prejudice to any other remedy Landlord may have on account thereof, to
apply such deposit, or any part thereof, to Landlord's damages arising
from any default on the part of Tenant. If Landlord so applies all or
any portion of such deposit, Tenant shall within seven (7) days after
notice from Landlord deliver cash to Landlord in an amount sufficient
to restore such deposit to the full amount stated in Section 1.2.
Tenant not then being in default and having performed all of its
obligations under this Lease, including the payment of all Annual Fixed
Rent, Landlord shall return the deposit, or so much thereof as shall
not have theretofore been applied in accordance with the terms of this
Section 17.26, to Tenant on the expiration or earlier termination of
the Lease Tenn and surrender of possession of the Premises by Tenant to
Landlord in the condition required in the Lease at such time. While
Landlord holds such deposit, Landlord shall have no obligation to pay
interest on the same and shall have the right to commingle the same
with Landlord's other fimds. If Landlord conveys Landlord's interest
under this Lease, the deposit, or any part thereof not previously
applied, shall be turned over by Landlord to Landlord's grantee for
proper application of the deposit in accordance with the terms of this
Section 17.26, and the return thereof in accordance herewith.
Neither the holder of a mortgage nor the landlord in a ground lease on property
which includes the Premises shall ever be responsible to Tenant for the return
or application of any such deposit, whether or not it succeeds to the position
of Landlord hereunder, unless such deposit shall have been received in hand by
such holder or ground lessor.
17.27 GOVERNING LAW. This Lease shall be governed exclusively by the
provisions hereof and by the law of The Commonwealth of Massachusetts,
as the same may from time to time exist.
(HERE ENDS THIS PAGE.)
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EXECUTED as a sealed instrument in two or more counterparts by persons
or officers hereunto duly authorized on the Date set forth in Section 1.2 above.
WITNESS: LANDORD:
/s/ David Barrett
----------------------------------------
- -------------------------------------- DAVID BARRETT AS TRUSTEE OF ONE
CAMBRIDGE CENTER TRUST FOR HIMSELF
AND CO-TRUSTEES, BUT NOT INDIVIDUALLY
Tenant:
Witness: THE MEDICINES COMPANY
/s/ Helmut Giersiefen By /s/ Clive Meanwell
- -------------------------------------- --------------------------------------
Name Clive Meanwell
------------------------------------
Title Chief Executive Officer
-----------------------------------
----------------------------------------
HEREUNTO DULY AUTHORIZED
By
- -------------------------------------- --------------------------------------
Name
------------------------------------
Title
-----------------------------------
----------------------------------------
HEREUNTO DULY AUTHORIZED
(CORPORATE SEAL)
<PAGE> 44
EXHIBIT A-1
DESCRIPTION OF SITE
A certain tract of land situated on the southerly side of Broadway in the City F
Cambridge, in the County of Middlesex, Commonwealth of Massachusetts, bounded
and described as follows:
Beginning at a point in the southerly line of Broadway at the northwesterly
corner of the Premises S 60(0)-30'-18"E a distance of Six Hundred Sixty-Six and
Eighty-One Hundredths feet (666.8l') from the point of curvature of the
southerly sideline of Broadway and the easterly line of Sixth Street; thence
S 60 degrees-301-18" E a distance of Two Hundred Six and EightyThree
Hundredths feet (206.83' ) bounding on the
southerly line of Broadway to a point; thence
Along the arc of a curve, curving to the right with a radius of Five Hundred
Eighty-One and Eighty-Eight Hundredths feet (581.88'), a distance of Fifty-Five
and Fifty Hundredths (55.50') to a point; thence
S49 degrees-201-28" E a distance of Seventy and No Hundredths feet
(70.00') along a certain parcel of land, now or
formerly owned by the Cambridge Redevelopment
Authority for the next four (4) courses to a
point; thence
S 34 degrees-35'-57" W a distance of Thirty-Four and Fifty-Five
Hundredths feet (34.55') to a point; thence
N 81 degrees-44'-36" W a distance of One Hundred Ten and No
N 05 degrees-30'-53" E a distance of Forty-Four and Fifty-Nine
N 84 degrees-29'-07" W a distance of One Hundred Seventy-Six and
Forty-One Hundredths feet (176.4l') to a
point; thence
N 05 degrees-34'-07" E a distance of Twenty-Four and Five Hundredths
feet (24.05') along the outside face of a
brick building for the next four (4) courses
to a point; thence
N 84 degrees-151-14" W a distance of Nine and Ninety-Five Hundredths
feet (9.95') to a point; thence
N 05 degrees-29'-37" E a distance of Fifty-Six and Ninety-Two
Hundredths feet (56.92') to a point; thence
S 84 degrees-25'-46" E a distance of Twenty and Two Hundredths feet
(20.021) to a point; thence
N 05 degrees-27'-58" E a-distance of Fifty-Three-and Forty-Four
Hundredths feet (53.44') to the point of
beginning.
The above-described tract of land contains 26,325 square feet, more or less, as
shown on a plan entitled "Kendall Sq. Urban Renewal Area, Cambridge, Mass.";
Dated November 19, 1985, Revised August 19, 1986; Prepared by Allen & Demurjian,
Inc., Scale 1"=40'. (Sheet 1 of 4).
The Site has appurtenant thereto and. is, subject -to. all rights, easements and
restrictions of record, whether currently existing or to be hereafter created.
<PAGE> 45
EXHIBIT D
ONE CAMBRIDGE CENTER
LANDLORD'S SERVICES
I. CLEANING
A. OFFICE AREA
Daily: (Monday through Friday, inclusive, holidays excepted)
1. Empty all waste-receptacles and ash trays and remove waste
material from the Premises; clean ash trays daily and wash
receptacles as necessary.
2. Sweep and dust mop all uncarpeted areas using a dust-treated
mop.
3. Vacuum all rugs and carpeted areas.
4. Hand dust and wipe clean with treated cloths all horizontal
surfaces including furniture, office equipment, window sills,
door ledges, chair rails, and convector tops, within normal
reach.
5. Wash clean all water fountains.
6. Remove and dust under all telephones and other furnishings
(but not computer terminals or other specialized equipment)
and replace same.
7. Wipe clean all brass and other bright-work.
8. Hand dust all grill work within normal reach.
9. Upon completion of cleaning, turn off all lights, lock main
entry doors and any other doors found locked, and leave the
Premises in an orderly condition.
Weekly:
1. Dust coat racks, and the like.
2. Remove all fingermarks from private entrance doors, light
switches and doorways.
Quarterly:
Render high dusting not reached in daily cleaning to include:
1. Dusting all pictures, frames, charts, graphs and similar wall
hangings.
Exhibit D Page 1 of 5
<PAGE> 46
2. Dusting of all vertical surfaces, such as walls, partitions,
doors and ducts.
3. Dusting of all pipes, ducts and high moldings.
4. Dusting of all venetian blinds.
B. LAVATORIES
Daily: (Monday through Friday, inclusive, holidays excepted.)
1. Sweep and damp mop floors.
2. Clean all mirrors, powder shelves, dispensers and receptacles,
bright work, flushometers, piping and toilet seat hinges.
3. Wash both sides of all toilet seats.
4. Wash all basins,.-bowls and urinals.
5. Dust and clean all powder room fixtures.
6. Empty and clean paper towel and sanitary disposal receptacles.
7. Remove waste paper and refuse.
8. Refill tissue holders, soap dispensers, towel dispensers and
vending sanitary dispensers as required, materials to be
furnished by Landlord;
9. A sanitizing solution will be used in all lavatory cleaning.
Monthly:
1. Machine scrub lavatory floors.
2. Wash all partitions and tile walls in lavatories.
C. MAIN LOBBY, ELEVATORS, BUILDING EXTERIOR AND CORRIDORS
Daily: (Monday through Friday, inclusive, holidays excepted.)
1. Sweep and wash all floors.
2. Wash all rubber mats.
3. Clean elevators, wash or vacuum floors, wipe down walls and
doors.
4. Spot clean any metal work inside lobby.
5. Spot clean any metal work surrounding Building entrance doors.
Exhibit D Page 2 of 5
<PAGE> 47
Monthly:
All resilient tile floors in public areas to be treated equivalent to
spray buffing.
D. WINDOW CLEANING
Windows of exterior walls will be washed on the inside and outside no
less than three (3) times per year.
E. Tenant requiring services in excess of those described above shall
request same through Landlord, and any such excess services provided
shall be at Tenant's expense.
II. HEATING, VENTILATING, AIR CONDITIONING
A. Landlord shall furnish space heating and cooling as normal seasonal
changes may require to provide reasonably comfortable space temperature
and ventilation for occupants of the Premises under normal business
operation, daily from 8:00 AM to 6:00 PM. Saturdays from 8:00 AM to
1:00 PM, Sundays and holidays excepted.
If Tenant shall require air conditioning or heating or ventilation
outside the hours and days above specified, Landlord shall furnish such
service at Tenant's expense.
B. The air conditioning system is based upon an occupancy of not more than
one person per 150 square feet of useable floor area, and upon a
combined lighting and standard electrical load not to exceed 3.0 watts
per square foot of useable floor area. In the event Tenant exceeds this
condition or introduces onto the Premises equipment which overloads the
systems, and/oroin'any other way causes,the system not adequately to
perform their proper functions, supplementary systems may at Landlord's
option be provided by Landlord at Tenant's expense.
III. WATER
Cold water at temperatures supplied by the City of Cambridge water
mains for drinking. lavatory, toilet and (if the same have been
approved by Landlord for installation in the Premises), kitchen and
restaurant purposes and hot water for lavatory purposes only from
regular building supply at prevailing temperatures; provided, however,
that Landlord may require Tenant at Tenant's expense, to install a
meter or meters to measure the water supplied to any kitchen (including
dishwashing) and restaurant areas in the Premises, in which case Tenant
shall upon Landlord's request reimburse Landlord for the cost of the
water (including heating thereof) consumed in such areas and the sewer
use charges resulting therefrom.
IV. ELEVATORS
Exhibit D Page 3 of 5
<PAGE> 48
The passenger elevator system shall be in automatic operation and
available to Tenant at all times except when necessary repairs or
inspections are being rendered. The use of the service elevator will
have to be scheduled with the Landlord and coordinated with the needs
of the other tenants.
V. ELECTRICAL SERVICE
A. Landlord shall cause to be provided electric power for up to 1.5 watts
per square foot of useable floor area for lighting plus 1.0 watts per
square foot of useable floor area for office machines through standard
receptacles for the typical office space.
B. Landlord, at its option, may require separate metering and direct
billing to Tenant for the electric power required for any special
equipment (such as computers and reproduction equipment) that requires
either 3phase electric power or any voltage other than 120. Landlord
will furnish and install at Tenant's expense all replacement lighting
tubes,-lamps,znd ballasts required by Tenant. Landlord will clean
lighting fixtures on a regularly scheduled basis at Tenant's expense.
Useable floor area as used herein means the area between the central
building core and the interior face of the exterior walls, unless
Tenant's space includes less than the entire rentable floor area of any
floor, in which case the useable floor area shall mean the area within
the demising walls but shall excludes any common area on the floor.
C. Notwithstanding anything else in this Exhibit D to the contrary, Tenant
shall pay for all electrical service provided for lights, power,
..HVAC, -,etc. , pursuant to the terms of the Lease to which this
Exhibit D is attached.
Exhibit D Page 4 of 5
<PAGE> 49
EXHIBIT H
ONE CAMBRIDGE CENTER
PROCEDURE FOR ADJUSTMENT OF COSTS
OF ELECTRIC POWER USAGE BY TENANTS
This memo outlines the procedure for adjusting charges for electric
power to tenants at the office building to be known as One Cambridge Center.
1. Main electric service to this building will be provided by the
local util ` ity company (currently Cambridge Electric Light
Company) to a single main meter. All charges by the utility
will be read from. this meter and billed to and paid by
Landlord at rates established by the utility company.
2. All office tenants shall pay for electricity as- part of their
rental payments, including electricity for both common areas
of the building and for tenant occupied areas. Each lease
shall also contain a provision making such tenant responsible
for its proportionate share of any increases in the cost of
electricity used in the building over the base year amounts
established in the Lease.
3. In order to assure that charges for electric service are
apportioned fairly among tenants in - relation. to the
relative amounts of electricity used-by each tenant,
additional meters (known as "check meters") will be installed
by Landlord to permit periodic evaluations of electric usage
to be made. On each office floor there will be one meter
serving all of the floor.
4. Each meter shall be installed so that it will measure all of
the electricity provided to the floor governed by that meter,
including all lights and power in both tenant and common core
areas (restrooms, corridors, HVAC equipment room etc.). This
shall not, however, include the following, which `Shall be
wired from the main building service and not through the check
meters stairwell and emergency lights; elevators; lighting and
HVAC in the building lobby and main service areas; exterior
lighting; and all main building mechanical systems. (Common
areas on each floor, including the elevator lobby, corridors,
and bathrooms will have service through and check meters on
each floor.) In addition, further modification to the
number-and location of check meters may-be made by Landlord if
required to improve the quality of information obtained
thereby.
5. The Landlord will cause the check meters to be read
periodically by its employees and will perform an analysis of
information for the purpose of determining whether any
adjustments are required to achieve an equitable allocation of
the costs of electric service among the tenants in the
building in relation to the respective amounts of usage of
electricity for those tenants. For this purpose, the Landlord
shall, as far as possible in each case, read the meters to
determine usage
Exhibit H Page 1 of 3
<PAGE> 50
for periods that include one or more entire periods used by
the utility company for the reading of the main building meter
(so that the Landlord may, in its discretion, choose periods
that are longer than those used by the utility company --for
example, quarterly, semi-annual or annual periods).
6. A rent adjustment shall be made by Landlord on the following
basis:
a. The total kilowatt hour usage for the period under
evaluation shall be established for each check meter
and for each floor.andalso.for the building as a
whole by a reading of the main building meter for
that period.
b. The cost of the total amount of electricity supplied
for usage by tenants during the period (herein called
"Tenant Electricity") shall be determined by
multiplying the total cost of electricity as invoiced
by the utility company for the same period by a
fraction, the numerator of which is the total amount
of kilowatt hour usage as measured by all of the
check meters in the building .(Tenant Electricity)
and the denominator of which is the total amount of
kilowatt hour usage for the entire building as
measured by the main building electric meter.
c. Where one or more floors is occupied entirely by one
tenant, its allocable share of Tenant `Electricity
cost for the period shall be determined by
multiplying the total costs of Tenant Electricity by
a fraction, the numerator of which is the kilowatt
hour usage of tenant electricity by said tenant
(calculated as the sum of kilowatt hour usage during
the period measured by all check meters serving its
premises) and the denominator of which is the total
kilowatt hour usage of Tenant Electricity for the
same period.
d. Where a floor is occupied by more than one tenant,
the cost of Tenant Electricity for that floor shall
first be determined by the same procedure as set
forth in paragraph (c) above, and then the allocable
share of each tenant on that floor shall be
determined by multiplying the cost of Tenant
Electricity for that floor by a fraction, the
numerator of which is the rentable area leased to
each tenant (respectively for each tenant) and the
denominator of which is the total rentable area under
lease to tenants on said floor.
e. Where part or all of the rentable area on a floor has
been occupied for less than all of the period for
which adjustments are being made, appropriate and
equitable modifications shall be made to the
allocation formula so that each tenant's allocable
share of costs equitable reflects its period of
occupancy, provided that in no event shall the total
of all costs as allocated to tenants be less than the
total cost of Tenant Electricity for said period.
7. The results of the cost adjustment analysis made by
Exhibit H Page 2 of 3
<PAGE> 51
Landlord under paragraph (6) above shall be compared to the
schedule of amounts due from tenants in regard to Tenant
Electricity in accordance with the leases in effect during the
period in question. Where the .payment due pursuant to the
lease is less than the cost as determined by the cost
adjustment analysis, each tenant shall be billed for the
difference by Landlord. Where the payment due pursuant to the
lease is greater than the cost as determined by the cost
adjustment analysis, the tenant shall be provided with a
credit in the amount of such difference applicable to the
rental payment next due (or in the case of tenants no longer
in occupancy, Landlord shall refund such amount to such
tenants).
In addition, where the leases call for tenants to make
periodic payments to Landlord based on estimates by .Landlord
of their allocable share of Tenant Electricity, such estimates
by Landlord shall, so far as possible, be based on the
effective distribution of costs among tenants during prior
periods, resulting from the application of the cost adjustment
procedures established herein.
8. All costs of electricity billed to Landlord through the main
electric meter for use in and around the building other than
the costs of Tenant Electricity allocated pursuant to the
procedures established herein, shall be treated as part of the
Operating Expenses for the Property for purposes of
determining the allocation of those costs.
Exhibit H Page 3 of 3
<PAGE> 52
FIRST AMENDMENT TO LEASE
FIRST AMENDMENT TO LEASE dated as of this 17th day of July, 1998, by
and between MORTIMER B. ZUCKERMAN, EDWARD H. LINDE and DAVID BARRETT, the
TRUSTEES of ONE CAMBRIDGE CENTER TRUST under Declaration of Trust dated May 14,
1985, recorded with the Middlesex South District Registry of Deeds in Book
16221, Page 413 as amended by instrument dated July 31, 1986 and recorded with
said Registry of Deeds in Book 17438, Page 23, but not individually,
("Landlord") and THE MEDICINES COMPANY, a Delaware corporation ("Tenant").
RECITALS
By Lease dated March 15, 1997 (the "Lease"), Landlord did lease to
Tenant and Tenant did hire and lease from Landlord certain premises containing
4,063 square feet of rentable floor area located on the fourth (4th) floor in
the building (the "Building") known as and numbered One Cambridge Center,
Cambridge, Massachusetts. Said premises is referred to in the Lease as the
"Premises" and is hereinafter sometimes referred to as the "Initial Premises."
By letter agreement between Landlord and Tenant dated June 26, 1998
(the "Letter Agreement") Landlord and Tenant extended the term of the Lease for
one (1) period of one (1) month (the "First Extended Term") upon the terms set
forth in such Letter Agreement.
Landlord and Tenant have agreed to terminate the Lease with regard to
the entire Initial Premises and Tenant has determined to lease from Landlord the
8,811 square feet of rentable floor area (the "Rentable Floor Area of the New
Premises") located on the third (3rd) floor of the Building (the "New Premises")
shown on Exhibit A attached hereto, upon the terms and conditions contained in
this First Amendment to Lease (the "First Amendment").
In addition, the Lease, as amended, provides for a Term which is
scheduled to expire on July 31, 1998. Landlord and Tenant desire to further
extend the Term of the Lease upon the terms contained in this First Amendment.
Landlord and Tenant are entering into this instrument to set forth said
agreements and to further amend the Lease.
NOW THEREFORE, in consideration of One Dollar ($1.00) and other good
and valuable consideration in hand this date paid by each of the parties to the
other, the receipt and sufficiency of which are hereby severally acknowledged,
and in further consideration of the mutual promises herein contained, Landlord
and Tenant, hereby agree to and with each other as follows:
1. As of the "New Premises Commencement Date" (as defined in Section 2
hereinbelow), the New Premises shall constitute the "Premises" demised
to Tenant under the Lease and the Initial Premises shall no longer be
deemed to be and shall be deleted and removed from the "Premises"
demised to Tenant under the Lease.
2. The following definitions are hereby added to Section 1.2 and the Lease
immediately after the definition of "Commencement Date":
<PAGE> 53
NEW PREMISES COMMENCEMENT DATE: The later to occur of (a) August
15, 1998 or (b) the earlier to
occur of (i) the date on which the
New Premises are "Substantially
Complete" as provided in Section 8
of this First Amendment, which day
shall in no event be less than five
(5) days subsequent to the date
Landlord gives Tenant notice
("Landlord's Completion Notice") of
the day Landlord expects the New
Premises to be Substantially
Complete or (ii) the date which
Tenant commences beneficial use of
the New Premises.
NEW PREMISES SCHEDULED TERM
COMMENCEMENT DATE: August 15, 1998.
3. On or prior to the New Premises Commencement Date, (or the "Carpet
Delivery Date" in the event of a "Carpet Delivery Delay" (as such terms
are defined in Section 9 hereinbelow)) Tenant shall quit and vacate the
Initial Premises and surrender the same in the condition required by
the Lease upon the expiration or earlier termination of the Lease Tenn.
4. The Lease Term, which but for this First Amendment is scheduled to
expire on July 31, 1998, is hereby extended for the period commencing
on August 1, 1998 and expiring on the date which is sixty (60) months
subsequent to the New Premises Commencement Date (plus the partial
month, if any, immediately following the New Premises Commencement
Date) (the "Second Extended Term") unless sooner terminated in
accordance with the provisions of the Lease as herein amended, such
extension to be upon all the same terms and conditions set forth in the
Lease except as otherwise provided in this First Amendment.
5. (A) For the period prior to July 1, 1998, Annual Fixed Rent at
the annual rate of $113,764.00 (being the product of (i) $28.00
and (ii) the Rentable Floor Area of the Initial Premises (being
4,063 square feet)) shall continue to be paid as provided in the
Lease.
(B) Notwithstanding the rental set forth in the Letter
Agreement, for the period from July 1, 1998 until the New
Premises Commencement Date, Annual Fixed Rent shall be payable
for the Initial Premises at the annual rate of $113,764.00
(being the product of (i) $28.00 and (ii) the Rentable Floor
Area of the Initial Premises).
(C) For the period from the New Premises Commencement Date
through July 31, 1999, Annual Fixed Rent for the New Premises
shall be payable at the annual rate of $290,763.00 (being the
product of (i) $33.00 and (ii) the Rentable Floor Area of the
New Premises (being 8,811 square feet)).
2
<PAGE> 54
(D) For the period from August 1, 1999 through July 31, 2000,
Annual Fixed Rent for the New Premises shall be payable at the
annual rate of $295,168.50 (being the product of (i) $33.50 and
(ii) the Rentable Floor Area of the New Premises).
(E) For the period from August 1, 2000 through July 31, 2001,
Annual Fixed Rent for the New Premises shall be payable at the
annual rate of $303,979.50 (being the product of (i) $34.50 and
(ii) the Rentable Floor Area of the New Premises).
(F) For the period from August 1, 2001 through July 31, 2002,
Annual Fixed Rent for the New Premises shall be payable at the
annual rate of $310,587.75 (being the product of (i) $35.25 and
(ii) the Rentable Floor Area of the New Premises).
(G) For the period from August 1, 2002 through the expiration of
the Second Extended Term, Annual Fixed Rent for the New Premises
shall be payable at the annual rate of $314,993.25 (being the
product of (i) $35.75 and (ii) the Rentable Floor Area of the
New Premises).
6. For the purposes of computing the "Tax Excess" (as defined in Section
6.2 of the Lease), the "Operating Cost Excess" (as defined in Section
7.5 of the Lease), and Tenant payments for electricity (as determined
pursuant to Sections 5.1, 5.2 and 7.5 of the Lease), for the portion of
the Lease Term on and after the New Premises Commencement Date, the
"Rentable Floor Area of the Premises" shall be 8,811 square feet. For
the portion of the Lease Term prior to the New Premises Commencement
Date, the rentable floor area of the Premises shall continue to be the
rentable floor area of the Initial Premises for such purposes.
7. (A) For the purposes of computing Tenant's payments for the "Operating
Cost Excess" (as defined in Section 7.5 of the Lease) for the portion
of the Lease Term on and after the New Premises Commencement Date, the
definition of "Base Operating Expenses" contained in Section 7.4 of the
Lease shall be deleted in its entirety and replaced with the following:
"Base Operating Expenses" means Landlord's Operating Expenses
(hereinafter defined) for calendar year 1998, being the period from
January 1, 1998 through December 31, 1998.
For the portion of the Lease Term prior to the New Premises Commencement Date,
such definition shall remain unchanged for such purposes.
(B) For the purposes of computing Tenant's payments for the "Tax
Excess" (as defined in Section 6.2 of the Lease) for the portion
of the Lease Term on and after the New Premise's Commencement
Date, the definition of "Base Taxes" contained in Section 6.1 of
the Lease shall be deleted in its entirety and replaced with the
following:
"Base Taxes" means Landlord's Tax Expenses (hereinbefore
defined) for calendar year 1998 (that is the second half of
fiscal tax year 1997 (being January 1, 1998 to June 30, 1998)
and the first
3
<PAGE> 55
half of fiscal tax year 1998 (being July 1, 1998 to December
31, 1998))
For the portion of the Lease Term prior to the New Premises Commencement Date,
such definition shall remain unchanged for such purposes.
8. (A) Landlord agrees to use due diligence to complete the work for
and respecting the New Premises described in Exhibit B
attached hereto by the New Premises Scheduled Term
Commencement Date, however, the failure of Landlord to
complete such work prior to any particular date shall not
entitle Tenant to any reduction or abatement of Annual Fixed
Rent or Additional Rent or the right to withhold or set off
against Annual Fixed Rent or Additional Rent nor give rise to
any right to terminate Lease or this First Amendment. Landlord
shall have no responsibility for the installation or
connection of Tenant's telephone or other communications
equipment or systems.
Landlord's completion of the work shown on Exhibit B shall be subject
to delays due to governmental regulation, unusual scarcity of or
inability to obtain labor or materials, labor difficulties, casualty or
other causes reasonably beyond Landlord's control ("Landlord's Force
Majeure"). The New Premises shall be "Substantially Complete" on the
date on which the work described in Exhibit B attached hereto together
with common facilities for access and service, has been completed
except for (i) items of work and adjustment of equipment and fixtures
which can be completed after occupancy thereof has been taken without
causing substantial interference with Tenant's use of the New Premises
(i.e. so-called "punch list" items) and (ii) items of work described in
Exhibit B for which there is a long lead time in obtaining the
materials therefor or which are specially or specifically manufactured,
produced or milled for the work in or to the New Premises and require
additional time for receipt or installation ("long lead" items).
Landlord shall use due diligence to complete all items and work
excepted above along with the work described in Exhibit C attached
hereto and Tenant shall not use the New Premises in such manner as will
increase the cost of completion. Landlord shall permit Tenant access
for installing furnishings in portions of the New Premises when it can
be done without material interference with construction of the work
described in Exhibit B. Landlord shall use diligent efforts to avoid or
minimize disruption to, or interference with, Tenant's use and
occupancy of the new Premises during completion of the work.
Landlord and Tenant acknowledge and agree that Tenant is ordering the
carpet for the New Premises described in Exhibit B and in the event
that such carpet has not been delivered to Landlord on or before August
11, 1998 (the "Carpet Delivery Delay"), Landlord shall not be required
to install the carpet and the electrical data floor mounted monument
style recepticals (the "Carpet Work") prior to the New Premises
Commencement Date and the definition of "Substantially Complete" shall
not be deemed to include completion of such work. In the event of a
Carpet Delivery Delay, Tenant shall be permitted to hold over in the
Initial Premises until the Carpet Work is Substantially Complete (the
"Carpet Work Completion Date") and during the period form the New
Premises Commencement Date through the Carpet Work Completion Date the
Lease shall remain in full force and effect with respect to the Initial
Premises and in
4
<PAGE> 56
addition to Tenant's payments for Annual Fixed Rent, operating costs,
real estate taxes and electricity and all other amounts for the New
Premises as provided in this First Amendment, Tenant shall continue to
make payments for Annual Fixed Rent, operating costs, real estate taxes
and electricity and all other amounts payable under the Lease for the
Initial Premises as provided in the Lease prior to this First
Amendment.
Landlord and Tenant acknowledge that Landlord and Simon, Kucher &
Partners, Strategy & Marketing Consultants, LLC ("Simon Kucher") are
endeavoring to execute a lease with respect to the Initial Premises. In
the event that Landlord and Simon Kucher have not executed a lease for
the Initial Premises as of the date on which the work described in
Exhibit B is Substantially Complete, Landlord shall promptly commence
and use due diligence to complete the work for and respecting the New
Premises described in Exhibit C attached hereto and the definition of
"Substantially Complete" shall be deemed to include the completion of
the work described in Exhibit C, including the Carpet Work, except for
punch list items and long lead items as defined hereinabove.
Landlord and Tenant acknowledge and agree that upon the expiration or
earlier termination of the Lease (i) Tenant shall not be required to
remove any of the additions, alterations or improvements described in
Exhibits B and C attached hereto and (ii) Tenant may remove the glass
modular petitions installed by Tenant in the New Premises provided that
Tenant restores the New Premises as required by the Lease.
(B) Landlord shall provide Tenant with a special allowance in the
amount of $88,110.00 to be applied towards the cost of the
work to be performed by Landlord in the New Premises upon
notice from Tenant given to Landlord. Tenant shall pay
Landlord, as Additional Rent, any cost of performing such work
in excess of said special allowance within thirty (30) days
after being billed therefor. In the event that the cost of any
such work is less than the special allowance, Tenant shall not
be entitled to any payment or credit nor shall there be any
application towards Annual Fixed Rent or Additional Rent or
other amounts owed by Tenant.
9. Landlord and Tenant acknowledge that Landlord is holding a security
deposit in the amount of $9,480.34 as provided in Section 1.2 of the
Lease. Upon the execution of this First Amendment by Tenant, Tenant
shall deposit with Landlord good funds in an amount equal to
$142,068.66 as additional security for the performance by Tenant of its
obligations under the Lease. The total security deposit in the amount
of $151,549.00 shall be held by Landlord in accordance with Section
17.26 of the Lease; provided, however, that upon the first day of the
thirty first (31st) month of the Second Extended Term, Landlord shall
return a portion of such deposit in the amount of $75,774.50, provided
that (i) there exists no Event of Default (as defined in Section 15.1
of the Lease) and (ii) no portion of said deposit has been applied to
Landlord's damages arising from any Event of Default on the part of
Tenant whether or not Tenant has restored the amount so applied by
Landlord.
10. In the event Tenant executes a Lease (the "New Lease") with Landlord or
any affiliate of Landlord for contiguous space in a building owned by
Landlord located within the
5
<PAGE> 57
Development Area, which has a rentable floor area greater than or equal
to 15,000 square feet, Landlord agrees to terminate the Lease as of the
commencement of the term of the New Lease (the "Early Termination
Date") and Tenant shall be relieved of all obligations under the Lease
subsequent to the date of such termination, provided however that any
such termination of the Lease shall be conditioned upon (i) Tenant
actually occupying the space demised under the New Lease (ii) Tenant
commencing rental payments under the New Lease (iii) there being no
"Event of Default" under the Lease and the New Lease (as defined in
Section 15.1 of both the Lease and the New Lease) as of the Early
Termination Date (iv) Tenant having paid all Annual Fixed Rent and
Additional Rent due under the Lease through the Early Termination Date
(v) Tenant having surrendered and vacated the Premises in the condition
required in the Lease upon the expiration or earlier termination of the
Lease Term and (vi) Tenant having paid to Landlord good funds in an
amount equal to (the "Applicable Termination Payment') (as defined
hereinbelow) as of the date of execution of the New Lease. The
"Applicable Termination Payment" shall be equal to the product of (a)
the "Fixed Monthly Amortization Amount" as defined hereinbelow and (b)
the number of months remaining and any fractions thereof in the Second
Extended Term as of the Early Termination Date if Tenant had not
exercised its right under this Section 10 to terminate this Lease. The
"Fixed Monthly Amortization Amount" shall equal the monthly payment on
a direct reduction loan basis amortized monthly where (i) the principal
amount is equal to the sum of (a) the amount of the special allowance
(referred to in Section 8(B) hereinabove) utilized by Tenant and (b)
the brokerage commission in the amount of $35,244.00 payable to CB
Commercial/Whittier Partners in connection with the consummation of
this First Amendment, (collectively the "Transaction Costs") (ii) the
term is sixty (60) calendar months and (iii) the monthly interest rate
is 0.8333%. For example, if Tenant utilizes the full work allowance,
the amount of the Transaction Costs will be $123,354.00 and if Tenant
elected an Early Termination Date which is twenty (20) months prior to
the expiration of the Term then the Applicable Termination Payment
would be $48,098.95, being a principal amount of $123,354.00 amortized
monthly over sixty (60) months at a monthly interest rate of 0.8333%.
Notwithstanding the foregoing provisions of this Section 10, Landlord
shall not be under any obligation to enter into a New Lease with Tenant
and any New Lease shall be upon terms and conditions satisfactory to
both Landlord and Tenant; provided, however, that if Landlord and
Tenant do not execute a New Lease for whatever reason this Lease shall
remain in full force and effect.
11. Landlord shall provide to Tenant monthly parking privileges in one or
more of the Garages in a number not to exceed parking for two (2)
passenger automobiles for each 1,000 square feet of Rentable Floor Area
of the New Premises in accordance with the terms of Article X of the
Lease. Prior to the New Premises Commencement Date, Tenant shall notify
Landlord of the number of parking spaces which Tenant desires to be
made available in the Garage(s) for its use as of the New Premises
Commencement Date. Landlord and Tenant acknowledge that Tenant's
parking privileges with respect to the New Premises are in lieu of
those parking privileges provided with respect to the Initial Premises
and that the total number of spaces elected by Tenant shall not exceed
two (2) spaces for each 1,000 square feet of Rentable Floor Area of the
New Premises.
12. Article MI of the Lease is hereby deleted in its entirety and replaced
with the following:
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12.1 RESTRICTIONS ON TRANSFER. Except as otherwise expressly provided
herein, Tenant covenants and agrees that it shall not assign, mortgage,
pledge, hypothecate or otherwise transfer this Lease and/or Tenant's
interest in this Lease or sublet (which term, without limitation, shall
include granting of concessions, licenses or the like) the whole or any
part of the Premises. Any assignment, mortgage, pledge, hypothecation,
transfer or subletting not expressly permitted in or consented to by
Landlord under this Article XII shall be void, ab initio; shall be of
no force and effect; and shall confer no rights on or in favor of third
parties. In addition, Landlord shall be entitled to seek specific
performance of or other equitable relief with respect to the provisions
hereof.
12.2 EXCEPTIONS FOR PARENT OR SUBSIDIARY. Notwithstanding the foregoing
provisions of Section 12.1 above and the provisions of Section 12.4
below, but subject to the provisions of Sections 12.5, 12.6 and 12.7
below, Tenant shall have the right to assign this Lease or to sublet
the Premises (in whole or in part) to (i) any entity that controls, is
controlled by or is under common control with Tenant, (ii) any entity
which acquires substantially all of the assets of Tenant or (iii) any
corporation into which Tenant may be converted or with which it may
merge, provided that the entity to which this Lease is so assigned or
which so sublets the Premises has a credit worthiness (e.g. assets on a
pro forma basis using generally accepted accounting principles
consistently applied and using the most recent financial statements)
which is the same or better than the Tenant as of the Date of this
Lease.
12.3 LANDLORD'S TERMINATION RIGHT. Notwithstanding the provisions of Section
12.1 above, in the event Tenant desires to assign this Lease or to
sublet the whole or part or part of the Premises, Tenant shall notify
Landlord thereof in writing and Landlord shall have the right at its
sole option, to be exercised within thirty (30) days after receipt of
Tenants notice, to terminate this Lease as of a date specified in a
notice to Tenant, which date shall not be earlier than sixty (60) days
nor later than one hundred and twenty (120) days after Landlord's
notice to Tenant; provided, however, that upon the termination date as
set forth in Landlord's notice, all obligations relating to the period
after such termination date (but not those relating to the period
before such termination date) shall cease and promptly upon being
billed therefor by Landlord, Tenant shall make final payment of all
rent and additional rent due from Tenant through the termination date.
In the event that Landlord shall not exercise its termination rights as
aforesaid, or shall fail to give any or timely notice pursuant to this
Section the provisions of Sections 12.4-12.7 shall be applicable. This
Section 12.3 shall not be applicable to an assignment or sublease
pursuant to Section 12.2.
12.4 CONSENT OF LANDLORD. Notwithstanding the provisions of Section 12.1
above, but subject to the provisions of this Section 12.4 and the
provisions of Sections 12.5, 12.6 and 12.7 below, in the event that
Landlord shall not have exercised the termination right as set forth in
Section 12.3, or shall have failed to give any or timely notice under
Section 12.3, then for a period of ninety (90) days (i) after the
receipt of Landlord's notice stating that Landlord does not elect the
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<PAGE> 59
termination right, or (ii) after the expiration of the thirty (30) day
period referred to in Section 12.3, in the event Landlord shall not
give any or timely notice under Section 12.3 as the case may be, Tenant
shall have the right to assign this Lease or sublet the whole (but not
part) of the Premises in accordance with Tenants notice to Landlord
given as provided in Section 12.5 provided that, in each instance,
Tenant first obtains the express prior written consent of Landlord,
which consent shall not be unreasonably withheld or delayed. Landlord
shall not be deemed to be unreasonably withholding its consent to such
a proposed assignment or subleasing if:
(a) the proposed assignee or subtenant is not of a character
consistent with the operation of a first class office building
(by way of example Landlord shall not be deemed to be
unreasonably withholding its consent to an assignment or
subleasing to any governmental agency), or
(b) the proposed assignee or subtenant is not of good character
and reputation, or
(c) the proposed assignee or subtenant does not possess adequate
financial capability to perform the Tenant obligations as and
when due or required, or
(d) the assignee or subtenant proposes to use the Premises (or
part thereof) for a purpose other than the purpose for which
the Premises may be used as stated in Section 1.2 hereof, or
(e) the character of the business to be conducted or the proposed
use of the Premises by the proposed subtenant or assignee
shall (i) be likely to increase Operating Expenses for the
Property beyond that which Landlord now incurs for use by
Tenant; (ii) be likely to increase the burden on elevators or
other Building systems or equipment over the burden prior to
such proposed subletting or assignment; or (iii) violate or be
likely to violate any provisions or restrictions contained
herein relating to the use or occupancy of the Premises, or
(f) there shall be existing an Event of Default (defined in
Section 15.1).
12.5 TENANTS NOTICE. Tenant shall give Landlord notice of any proposed
sublease or assignment, and said notice shall specify the provisions of
the proposed assignment or subletting, including (a) the name and
address of the proposed assignee or subtenant, (b) in the case of a
proposed assignment or subletting pursuant to Section 12.4, such
information as to the proposed assignee's or proposed subtenant's net
worth and financial capability and standing as may reasonably be
required for Landlord to make the determination referred to in Section
12.4 above (provided, however, that Landlord shall hold such
information confidential having the right to release same to its
officers, accountants, attorneys and mortgage lenders on a confidential
basis), (c) all of the
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<PAGE> 60
terms and provisions upon which the proposed assignment or subletting
is to be made, (d) in the case of a proposed assignment or subletting
pursuant to Section 12.4, all other information necessary to make the
determination referred to in Section 12.4 above and (e) in the case of
a proposed assignment or subletting pursuant to Section 12.2 above,
such information as may be reasonably required by Landlord to determine
that such proposed assignment or subletting complies with the
requirements of said Section 12.2.
If Landlord shall consent to the proposed assignment or subletting, as
the case may be then, in such event, Tenant may thereafter sublease
(the whole or part of the Premises) or assign pursuant to Tenants
notice, as given hereunder; provided, however, that if such assignment
or sublease shall not be executed and delivered to Landlord within
ninety (90) days after the date of Landlord's consent the consent shall
be deemed null and void and the provisions of Section 12.3 shall be
applicable.
12.6 PROFIT ON SUBLEASING OR ASSIGNMENT. In addition, in the case of any
assignment or subleasing as to which Landlord may consent (other than
an assignment or subletting permitted under Section 12.2 hereof) such
consent shall be upon the express and further condition, covenant and
agreement, and Tenant hereby covenants and agrees that, in addition to
the Annual Fixed Rent, Additional Rent and other charges to be paid
pursuant to this Lease, fifty percent (50%) of the "Assignment/Sublease
Profits" (hereinafter defined), if any shall be paid to Landlord.
The "Assignment/Sublease Profits" shall be the excess, if any, of (a)
the "Assignment/Sublease Net Revenues" as hereinafter defined over (b)
the Annual Fixed Rent, Additional Rent and other charges provided in
this Lease (provided, however, that for the purpose of calculating the
Assignment/Sublease Profits in the case of a sublease, appropriate
proportions in the applicable Annual Fixed Rent, Additional Rent and
other charges under this Lease shall be made based on the percentage of
the Premises subleased and on the terms of the sublease). The
"Assignment/Sublease Net Revenues" shall be the fixed rent, Additional
Rent and all other charges and sums payable either initially or over
the term of the sublease or assignment plus all other profits and
increases to be derived by Tenant as a result of such subletting or
assignment, less the reasonable costs of Tenant incurred in such
subleasing or assignment (the definition of which shall include but not
necessarily be limited to rent concessions, brokerage commissions,
reasonable legal fees and alteration allowances) amortized over the
term of the sublease or assignment.
All payments of the Assignment/Sublease Profits due Landlord shall be
made within ten (10) days of receipt of same by Tenant.
12.7 ADDITIONAL CONDITIONS. (A) It shall be a condition of the validity of
any assignment or subletting of right under Section 12.2 above, or
consented to under Section 12.4 above, that both Tenant and the
assignee or sublessee agree directly
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<PAGE> 61
with Landlord in a separate written instrument reasonably satisfactory
to Landlord which contains terms and provisions reasonably required by
Landlord, including, without limitation, the agreement of the assignee
or sublessee to be bound by all the obligations of the Tenant
hereunder, including, without limitation, the obligation to pay the
Annual Fixed Rent, Additional Rent, and other amounts provided for
under this Lease (but in the case of a partial subletting, such
subtenant shall agree on a pro rata basis to be so bound) including the
provisions of Sections 12.1 through 12.7 hereof, but such assignment or
subletting shall not relieve the Tenant named herein of any of the
obligations of the Tenant hereunder, Tenant shall remain fully and
primarily liable therefor and the liability of Tenant and such assignee
(or subtenant, as the case may be) shall be joint and several. Further,
and notwithstanding the foregoing, the provisions hereof shall not
constitute a recognition of the assignment or the assignee thereunder
or the sublease or the subtenant thereunder, as the case may be, and at
Landlord's option, upon the termination of the Lease, the assignment or
sublease shall be terminated.
(B) As Additional Rent, Tenant shall reimburse Landlord promptly
for reasonable out of pocket legal and other expenses incurred
by Landlord in connection with any request by Tenant for
consent to assignment or subletting.
(C) If this Lease be assigned, or if the Premises or any part
thereof be sublet or occupied by anyone other than Tenant,
Landlord may upon prior notice to Tenant, at any time and from
time to time, collect Annual Fixed Rent, Additional Rent, and
other charges from the assignee, sublessee or occupant and
apply the net amount collected to the Annual Fixed Rent,
Additional Rent and other charges herein reserved, but no such
assignment, subletting, occupancy or collection shall be
deemed a waiver of this covenant, or a waiver of the
provisions of Sections 12.1 through 12.7 hereof, or the
acceptance of the assignee, sublessee or occupant as a tenant
or a release of Tenant from the further performance by Tenant
of covenants on the part of Tenant herein contained, the
Tenant herein named to remain primarily liable under this
Lease.
(D) The consent by Landlord to an assignment or subletting under
any of the provisions of Sections 12.2 or 12.4 shall in no
wise be construed to relieve Tenant from obtaining the express
consent in writing of Landlord to any further assignment or
subletting.
(E) In addition to the other requirements set forth in this Lease
and notwithstanding any other provision of this Lease, partial
sublettings of the Premises shall only be permitted under the
following terms and conditions: (i) the layout of both the
subleased premises and the remainder of the Premises must
comply with applicable laws, ordinances, rules and/or
regulations and be approved by Landlord, including, without
limitation, all requirements concerning access and egress;
(ii), in the event
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the subleased premises are separately physically demised from
the remainder of the Premises, Tenant shall pay all costs of
separately physically demising the subleased premises; and
(iii) Tenant, at Landlord's option, shall restore the Premises
and the subleased premises to their original condition upon
the expiration or earlier termination of this Lease.
13. (A) Tenant warrants and represents that Tenant has not dealt
with any broker in connection with the consummation of this
First Amendment other than CB Commercial/Whittier Partners
CCB/Whittier); and in the event any claim is made against
Landlord relative to dealings by Tenant with brokers other
than CB/Whittier, Tenant shall defend the claim against
Landlord with counsel of Tenant's selection first approved by
Landlord (which approval will not be unreasonably withheld)
and save harmless and indemnify Landlord on account of loss,
cost or damage which may arise by reason of such claim.
(B) Landlord warrants and represents that Landlord has not
dealt with any broker in connection with the consummation of
this First Amendment other than CB/Whittier and in the event
any claim is made against Tenant relative to dealings by
Landlord with brokers, Landlord shall defend the claim against
Tenant with counsel of Landlord's selection and save harmless
and indemnify Tenant on account of loss, cost or damage which
may arise by reason of such claim.
14. Except as otherwise expressly provided herein, all capitalized terms
used herein without definition shall have the same meanings as are set
forth in the Lease.
15. Except as herein amended the Lease shall remain unchanged and in full
force and effect. All references to the "Lease" shall be deemed to be
references to the Lease as amended by the Letter Agreement and as
herein amended.
EXECUTED as a sealed instrument as of the date and year first above
written.
WITNESSES: LANDLORD:
/s/ Michael A. Cantalupa
- ------------------------------------- ---------------------------------------
MICHAEL A. CANTALUPA, FOR THE
TRUSTEES OF ONE CAMBRIDGE
CENTER TRUST PURSUANT TO
WRITTEN DELEGATION, BUT NOT
INDIVIDUALLY
11
<PAGE> 63
ATTEST: TENANT:
By: /s/ Steve Roper THE MEDICINES COMPANY
----------------------------------
Name: Steve Roper
--------------------------------
Title: Business Manager By: /s/ Peyton J. Marshall
------------------------------- ------------------------------------
Name: Peyton J. Marshall
----------------------------------
Title: Vice President, Treasurer
---------------------------------
HERETO DULY AUTHORIZED
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
HERETO DULY AUTHORIZED
(CORPORATE SEAL)
12
<PAGE> 1
EXHIBIT 10.19
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON
ITS EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 4 OF THIS WARRANT
Warrant No. ____ Number of Shares: ________
(subject to adjustment)
Date of Issuance: October 19, 1999
The Medicines Company
Common Stock Purchase Warrant
(Void after October 19, 2004)
The Medicines Company, a Delaware corporation (the "Company"), for value
received, hereby certifies that ___________________, or its registered assigns
(the "Registered Holder"), is entitled, subject to the terms and conditions set
forth below, to purchase from the Company, at any time or from time to time on
or after the date of issuance and on or before 5:00 p.m. (Boston time) on
October ___, 2004, ________ shares of common stock, $0.01 par value per share
(the "Common Stock"), of the Company, at a purchase price of $4.32 per share.
The shares purchasable upon exercise of this Warrant, and the purchase price per
share, each as adjusted from time to time pursuant to the provisions of this
Warrant, are hereinafter referred to as the "Warrant Shares" and the "Purchase
Price," respectively.
This Warrant is being issued by the Company to the Registered Holder in
connection with the closing of the sale of the Registered Holder of an 8%
Convertible Note in the original principal amount of $________ and is one of a
series of common stock purchase warrants (the "Warrants") issued in connection
with the sale by the Company of 8% Convertible Notes in the aggregate original
principal amount of up to $6,000,000 (the "Notes").
1. EXERCISE.
(a) This Warrant may be exercised by the Registered
Holder, in whole or in part, by surrendering this Warrant, with the exercise
form appended hereto as EXHIBIT I duly executed by the Registered Holder or by
the Registered Holder's duly authorized attorney, at the principal office of the
Company, or at such other office or agency as the Company may designate,
accompanied by payment in full, in lawful money of the United States, of the
Purchase Price payable in respect of the number of Warrant Shares purchased upon
such exercise.
(b) The Registered Holder may, at its option, elect to
pay some or all of the Purchase Price payable upon an exercise of this Warrant
by canceling a portion of this Warrant
<PAGE> 2
exercisable for such number of Warrant Shares as is determined by dividing (i)
the total Purchase Price payable in respect of the number of Warrant Shares
being purchased upon such exercise by (ii) the excess of the Fair Market Value
per share of Common Stock (as defined below) as of the Exercise Date (as defined
in subsection 1(c) below) over the Purchase Price per share. If the Registered
Holder wishes to exercise this Warrant pursuant to this method of payment with
respect to the maximum number of Warrant Shares purchasable pursuant to this
method, then the number of Warrant Shares so purchasable shall be equal to the
total number of Warrant Shares, minus the product obtained by multiplying (x)
the total number of Warrant Shares by (y) a fraction, the numerator of which
shall be the Purchase Price per share and the denominator of which shall be the
Fair Market Value per share of Common Stock as of the Exercise Date. The Fair
Market Value per share of Common Stock shall be determined as follows:
(i) If the Common Stock is listed on a national
securities exchange, the Nasdaq National Market or another nationally recognized
trading system as of the Exercise Date, the Fair Market Value per share of
Common Stock shall be deemed to be the average of the high and low reported sale
prices per share of Common Stock thereon on the trading day immediately
preceding the Exercise Date (provided that if no such price is reported on such
day, the Fair Market Value per share of Common Stock shall be determined
pursuant to clause (ii)).
(ii) If the Common Stock is not listed on a
national securities exchange, the Nasdaq National Market or another nationally
recognized trading system as of the Exercise Date, the Fair Market Value per
share of Common Stock shall be deemed to be the amount most recently determined
by the Board of Directors to represent the fair market value per share of the
Common Stock (including without limitation a determination for purposes of
granting Common Stock options or issuing Common Stock under an employee benefit
plan of the Company); and, upon request of the Registered Holder, the Board of
Directors (or a representative thereof) shall promptly notify the Registered
Holder of the Fair Market Value per share of Common Stock. Notwithstanding the
foregoing, if the Board of Directors has not made such a determination within
the three-month period prior to the Exercise Date, then (A) the Board of
Directors shall make a determination of the Fair Market Value per share of the
Common Stock within 15 days of a request by the Registered Holder that it do so,
and (B) the exercise of this Warrant pursuant to this subsection 1(b) shall be
delayed until such determination is made.
(c) Each exercise of this Warrant shall be deemed to have
been effected immediately prior to the close of business on the day on which
this Warrant shall have been surrendered to the Company as provided in
subsection 1(a) above (the "Exercise Date"). At such time, the person or persons
in whose name or names any certificates for Warrant Shares shall be issuable
upon such exercise as provided in subsection 1(d) below shall be deemed to have
become the holder or holders of record of the Warrant Shares represented by such
certificates.
(d) As soon as practicable after the exercise of this
Warrant in full or in part, and in any event within 10 days thereafter, the
Company, at its expense, will cause to be issued in the name of, and delivered
to, the Registered Holder, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct:
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<PAGE> 3
(i) a certificate or certificates for the number
of full Warrant Shares to which the Registered Holder shall be entitled upon
such exercise plus, in lieu of any fractional share to which the Registered
Holder would otherwise be entitled, cash in an amount determined pursuant to
Section 3 hereof; and
(ii) in case such exercise is in part only, a new
warrant or warrants (dated the date hereof) of like tenor, calling in the
aggregate on the face or faces thereof for the number of Warrant Shares equal
(without giving effect to any adjustment therein) to the number of such shares
called for on the face of this Warrant minus the sum of (a) the number of such
shares purchased by the Registered Holder upon such exercise plus (b) the number
of Warrant Shares (if any) covered by the portion of this Warrant canceled in
payment of the Purchase Price payable upon such exercise pursuant to subsection
1(b) above.
2. ADJUSTMENTS.
(a) If the Company consummates an Investor Sale (as
defined in the Notes) for consideration per share (the "Investor Price") which
is less than the Purchase Price in effect immediately prior to such Investor
Sale, then, immediately upon, and only upon, the consummation of the first such
Investor Sale, the Purchase Price shall be adjusted to equal the Investor Price.
For purposes of this section consideration received by the Company shall be
computed as follows:
(I) insofar as it consists of cash, be computed
at the aggregate of cash received by the Company, excluding amounts paid or
payable for accrued interest; and
(II) insofar as it consists of property other
than cash, be computed at the fair market value thereof at the time of such
issue, as determined in good faith by the Board of Directors; and
(III) in the shares in the Investor Sale are
issued together with other shares or securities or other assets of the Company
for consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (I) and (II) above, as determined in
good faith by the Board of Directors.
(b) If outstanding shares of the Company's Common Stock
shall be subdivided into a greater number of shares or a dividend in Common
Stock shall be paid in respect of Common Stock, the Purchase Price in effect
immediately prior to such subdivision or at the record date of such dividend
shall simultaneously with the effectiveness of such subdivision or immediately
after the record date of such dividend be proportionately reduced. If
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such combination
shall, simultaneously with the effectiveness of such combination, be
proportionately increased.
(c) When any adjustment is required to be made in the
Purchase Price under this Section 2, the number of Warrant Shares purchasable
upon the exercise of this Warrant shall be changed to the number determined by
dividing (i) an amount equal to the number of Warrant Shares issuable upon the
exercise of this Warrant immediately prior to such adjustment,
-3-
<PAGE> 4
multiplied by the Purchase Price in effect immediately prior to such adjustment,
by (ii) the Purchase Price in effect immediately after such adjustment.
(d) If there shall occur any capital reorganization or
reclassification of the Company's Common Stock (other than a change in par value
or a subdivision or combination as provided for in subsection 2(b) above), or
any consolidation or merger of the Company with or into another corporation, or
a transfer of all or substantially all of the assets of the Company, then, as
part of any such reorganization, reclassification, consolidation, merger or
sale, as the case may be, lawful provision shall be made so that the Registered
Holder of this Warrant shall have the right thereafter to receive upon the
exercise hereof the kind and amount of shares of stock or other securities or
property which such Registered Holder would have been entitled to receive if,
immediately prior to any such reorganization, reclassification, consolidation,
merger or sale, as the case may be, such Registered Holder had held the number
of shares of Common Stock which were then purchasable upon the exercise of this
Warrant. In any such case, appropriate adjustment (as reasonably determined in
good faith by the Board of Directors of the Company) shall be made in the
application of the provisions set forth herein with respect to the rights and
interests thereafter of the Registered Holder of this Warrant, such that the
provisions set forth in this Section 2 (including provisions with respect to
adjustment of the Purchase Price) shall thereafter be applicable, as nearly as
is reasonably practicable, in relation to any shares of stock or other
securities or property thereafter deliverable upon the exercise of this Warrant.
(e) When any adjustment is required to be made in the
Purchase Price, the Company shall promptly mail to the Registered Holder a
certificate setting forth the Purchase Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment. Such certificate
shall also set forth the kind and amount of stock or other securities or
property into which this Warrant shall be exercisable following the occurrence
of any of the events specified in this Section 2.
3. FRACTIONAL SHARES. The Company shall not be required upon the
exercise of this Warrant to issue any fractional shares, but shall make an
adjustment therefor in cash on the basis of the Fair Market Value per share of
Common Stock, as determined pursuant to subsection 1(b) above.
4. REQUIREMENTS FOR TRANSFER.
(a) This Warrant and the Warrant Shares shall not be sold
or transferred unless either (i) they first shall have been registered under the
Securities Act of 1933, as amended (the "Act"), or (ii) the Company first shall
have been furnished with an opinion of legal counsel, reasonably satisfactory to
the Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Act.
(b) Notwithstanding the foregoing, no registration or
opinion of counsel shall be required for (i) a transfer by a Registered Holder
which is a corporation to a wholly owned subsidiary of such corporation, a
transfer by a Registered Holder which is a partnership to a partner of such
partnership or a retired partner of such partnership or to the estate of any
such partner or retired partner, a transfer by a Registered Holder who is an
individual to any members of such
-4-
<PAGE> 5
Registered Holder's family, heirs, executors or legal representatives or trusts
for the benefit of such Registered Holder's family, or a transfer by a
Registered Holder which is a limited liability company to a member of such
limited liability company or a retired member or to the estate of any such
member or retired member, provided that the transferee in each case agrees in
writing to be subject to the terms of this Section 4, or (ii) a transfer made in
accordance with Rule 144 under the Act.
(c) Each certificate representing Warrant Shares shall
bear a legend substantially in the following form:
"The securities represented by this
certificate have not been registered under
the Securities Act of 1933, as amended,
and may not be offered, sold or otherwise
transferred, pledged or hypothecated
unless and until such securities are
registered under such Act or an opinion of
counsel satisfactory to the Company is
obtained to the effect that such
registration is not required."
The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act.
5. NO IMPAIRMENT. The Company will not, by amendment of its
charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms 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 action as may be necessary or
appropriate in order to protect the rights of the holder of this Warrant against
impairment.
6. NOTICES OF RECORD DATE, ETC. In the event:
(a) the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time deliverable upon the
exercise of this Warrant) for the purpose of entitling or enabling them to
receive any dividend or other distribution, or to receive any right to subscribe
for or purchase any shares of stock of any class or any other securities, or to
receive any other right; or
(b) of any capital reorganization of the Company, any
reclassification of the Common Stock of the Company, any consolidation or merger
of the Company with or into another corporation (other than a consolidation or
merger in which the Company is the surviving entity and its Common Stock is not
converted into or exchanged for any other securities or property), or any
transfer of all or substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
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<PAGE> 6
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder a notice specifying, as the case may be, (i) the record date
for such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, or (ii) the effective
date on which such reorganization, reclassification, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock (or
such other stock or securities at the time deliverable upon the exercise of this
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other stock or securities) for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up. Such notice shall be mailed at least ten
days prior to the record date or effective date for the event specified in such
notice.
7. RESERVATION OF STOCK. The Company will at all times reserve
and keep available, solely for issuance and delivery upon the exercise of this
Warrant, such number of Warrant Shares and other securities, cash and/or
property, as from time to time shall be issuable upon the exercise of this
Warrant.
8. EXCHANGE OF WARRANTS. Upon the surrender by the Registered
Holder, properly endorsed, to the Company at the principal office of the
Company, the Company will, subject to the provisions of Section 4 hereof, issue
and deliver to or upon the order of such Holder, at the Company's expense, a new
Warrant or Warrants of like tenor, in the name of the Registered Holder or as
the Registered Holder (upon payment by the Registered Holder of any applicable
transfer taxes) may direct, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock (or other securities, cash
and/or property) then issuable upon exercise of this Warrant.
9. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
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<PAGE> 7
10. TRANSFERS, ETC.
(a) The Company will maintain a register containing the
name and address of the Registered Holder of this Warrant. The Registered Holder
may change its or his address as shown on the warrant register by written notice
to the Company requesting such change.
(b) Subject to the provisions of Section 4 hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, upon
surrender of this Warrant with a properly executed assignment (in the form of
EXHIBIT II hereto) at the principal office of the Company.
(c) Until any transfer of this Warrant is made in the
warrant register, the Company may treat the Registered Holder as the absolute
owner hereof for all purposes; PROVIDED, HOWEVER, that if and when this Warrant
is properly assigned in blank, the Company may (but shall not be obligated to)
treat the bearer hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.
11. MAILING OF NOTICES, ETC. All notices and other communications
from the Company to the Registered Holder shall be mailed by first-class
certified or registered mail, postage prepaid, to the address last furnished to
the Company in writing by the Registered Holder. All notices and other
communications from the Registered Holder or in connection herewith to the
Company shall be mailed by first-class certified or registered mail, postage
prepaid, to the Company at its principal office set forth below. If the Company
should at any time change the location of its principal office to a place other
than as set forth below, it shall give prompt written notice to the Registered
Holder and thereafter all references in this Warrant to the location of its
principal office at the particular time shall be as so specified in such notice.
12. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant,
the Registered Holder shall not have or exercise any rights by virtue hereof as
a stockholder of the Company. Notwithstanding the foregoing, in the event (i)
the Company effects a split of the Common Stock by means of a stock dividend and
the Purchase Price of and the number of Warrant Shares are adjusted as of the
date of the distribution of the dividend (rather than as of the record date for
such dividend), and (ii) the Registered Holder exercises this Warrant between
the record date and the distribution date for such stock dividend, the
Registered Holder shall be entitled to receive, on the distribution date, the
stock dividend with respect to the shares of Common Stock acquired upon such
exercise, notwithstanding the fact that such shares were not outstanding as of
the close of business on the record date for such stock dividend.
13. CHANGE OR WAIVER. Changes in or additions to this Warrant may
be made or compliance with any term, covenant, agreement, condition or provision
set forth herein may be omitted or waived (either generally or in a particular
instance and either retroactively or prospectively), upon written consent of the
Company and the holders of at least 50% of the principal amount of the Warrants
then outstanding; PROVIDED, HOWEVER, that no change, addition, omission or
waiver which causes any change in or extension of the time of payment of the
principal amount or interest, or the reduction of the rate of interest on, or in
any way affects or impairs the obligation of the Company in respect of the
principal of or interest on, any Warrant,
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<PAGE> 8
or causes any change in this Section 6(c), shall be made without the written
consent of the holder of such Warrant.
14. SECTION HEADINGS. The section headings in this Warrant are for
the convenience of the parties and in no way alter, modify, amend, limit or
restrict the contractual obligations of the parties.
15. GOVERNING LAW. This Warrant will be governed by and construed
in accordance with the internal laws of the Commonwealth of Massachusetts
(without reference to the conflicts of law provisions thereof).
EXECUTED as of the Date of Issuance indicated above.
The Medicines Company
By:________________________________
Title:_____________________________
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<PAGE> 9
EXHIBIT I
EXERCISE FORM
To:_________________ Dated:____________
The undersigned, pursuant to the provisions set forth in the attached Warrant
(No. ___), hereby irrevocably elects to purchase (check applicable box):
* _____ shares of the Common Stock covered by such Warrant; or
* the maximum number of shares of Common Stock covered by such
Warrant pursuant to the cashless exercise procedure set forth in
Section 1(b).
The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant, which is $________.
Such payment takes the form of (check applicable box or boxes):
* $______ in lawful money of the United States; and/or
* the cancellation of such portion of the attached Warrant as is
exercisable for a total of _____ Warrant Shares (using a Fair
Market Value of $_____ per share for purposes of this
calculation); and/or
* the cancellation of such number of Warrant Shares as is necessary,
in accordance with the formula set forth in Section 1(b), to
exercise this Warrant with respect to the maximum number of
Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in Section 1(b).
Signature:______________________
Address: _______________________
_____________________
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<PAGE> 10
EXHIBIT II
ASSIGNMENT FORM
FOR VALUE RECEIVED, ________________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (No. ____) with respect to the number of shares of Common Stock covered
thereby set forth below, unto:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
Dated: __________________________ Signature: ________________________________
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<PAGE> 1
EXHIBIT 10.20
THIS WARRANT AND THE SHARES OF COMMON
STOCK ISSUED UPON ITS EXERCISE ARE SUBJECT TO
THE RESTRICTIONS ON TRANSFER SET FORTH IN
SECTION 4 OF THIS WARRANT
Warrant No. ____ Number of Shares: ________
(subject to adjustment)
Date of Issuance: March 2, 2000
The Medicines Company
Common Stock Purchase Warrant
(Void after March 2, 2005)
The Medicines Company, a Delaware corporation (the "Company"), for value
received, hereby certifies that ___________________, or its registered assigns
(the "Registered Holder"), is entitled, subject to the terms and conditions set
forth below, to purchase from the Company, at any time or from time to time on
or after the date of issuance and on or before 5:00 p.m. (Boston time) on March
___, 2005, ________ shares of common stock, $0.001 par value per share (the
"Common Stock"), of the Company, at a purchase price of $4.32 per share. The
shares purchasable upon exercise of this Warrant, and the purchase price per
share, each as adjusted from time to time pursuant to the provisions of this
Warrant, are hereinafter referred to as the "Warrant Shares" and the "Purchase
Price," respectively.
This Warrant is being issued by the Company to the Registered Holder in
connection with the closing of the sale to the Registered Holder of an 8%
Convertible Note in the original principal amount of $________ and is one of a
series of common stock purchase warrants (the "Warrants") issued in connection
with the sale by the Company of 8% Convertible Notes in the aggregate original
principal amount of between a minimum of $12,000,000 and a maximum of
$15,000,000 (the "Notes").
1. EXERCISE.
(a) This Warrant may be exercised by the Registered
Holder, in whole or in part, by surrendering this Warrant, with the exercise
form appended hereto as Exhibit I duly executed by the Registered Holder or by
the Registered Holder's duly authorized attorney, at the principal office of the
Company, or at such other office or agency as the Company may designate,
accompanied by payment in full, in lawful money of the United States, of the
Purchase Price payable in respect of the number of Warrant Shares purchased upon
such exercise.
<PAGE> 2
(b) The Registered Holder may, at its option, elect to
pay some or all of the Purchase Price payable upon an exercise of this Warrant
by canceling a portion of this Warrant exercisable for such number of Warrant
Shares as is determined by dividing (i) the total Purchase Price payable in
respect of the number of Warrant Shares being purchased upon such exercise by
(ii) the excess of the Fair Market Value per share of Common Stock (as defined
below) as of the Exercise Date (as defined in subsection 1(c) below) over the
Purchase Price per share. If the Registered Holder wishes to exercise this
Warrant pursuant to this method of payment with respect to the maximum number of
Warrant Shares purchasable pursuant to this method, then the number of Warrant
Shares so purchasable shall be equal to the total number of Warrant Shares,
minus the product obtained by multiplying (x) the total number of Warrant Shares
by (y) a fraction, the numerator of which shall be the Purchase Price per share
and the denominator of which shall be the Fair Market Value per share of Common
Stock as of the Exercise Date. The Fair Market Value per share of Common Stock
shall be determined as follows:
(i) If the Common Stock is listed on a national
securities exchange, the Nasdaq National Market or another nationally recognized
trading system as of the Exercise Date, the Fair Market Value per share of
Common Stock shall be deemed to be the average of the high and low reported sale
prices per share of Common Stock thereon on the trading day immediately
preceding the Exercise Date (provided that if no such price is reported on such
day, the Fair Market Value per share of Common Stock shall be determined
pursuant to clause (ii)).
(ii) If the Common Stock is not listed on a
national securities exchange, the Nasdaq National Market or another nationally
recognized trading system as of the Exercise Date, the Fair Market Value per
share of Common Stock shall be deemed to be the amount most recently determined
by the Board of Directors to represent the fair market value per share of the
Common Stock (including without limitation a determination for purposes of
granting Common Stock options or issuing Common Stock under an employee benefit
plan of the Company); and, upon request of the Registered Holder, the Board of
Directors (or a representative thereof) shall promptly notify the Registered
Holder of the Fair Market Value per share of Common Stock. Notwithstanding the
foregoing, if the Board of Directors has not made such a determination within
the three-month period prior to the Exercise Date, then (A) the Board of
Directors shall make a determination of the Fair Market Value per share of the
Common Stock within 15 days of a request by the Registered Holder that it do so,
and (B) the exercise of this Warrant pursuant to this subsection 1(b) shall be
delayed until such determination is made.
(c) Each exercise of this Warrant shall be deemed to have
been effected immediately prior to the close of business on the day on which
this Warrant shall have been surrendered to the Company as provided in
subsection 1(a) above (the "Exercise Date"). At such time, the person or persons
in whose name or names any certificates for Warrant Shares shall be issuable
upon such exercise as provided in subsection 1(d) below shall be deemed to have
become the holder or holders of record of the Warrant Shares represented by such
certificates.
(d) As soon as practicable after the exercise of this
Warrant in full or in part, and in any event within 10 days thereafter, the
Company, at its expense, will cause to be issued in the name of, and delivered
to, the Registered Holder, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct:
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<PAGE> 3
(i) a certificate or certificates for the number
of full Warrant Shares to which the Registered Holder shall be entitled upon
such exercise plus, in lieu of any fractional share to which the Registered
Holder would otherwise be entitled, cash in an amount determined pursuant to
Section 3 hereof; and
(ii) in case such exercise is in part only, a new
warrant or warrants (dated the date hereof) of like tenor, calling in the
aggregate on the face or faces thereof for the number of Warrant Shares equal
(without giving effect to any adjustment therein) to the number of such shares
called for on the face of this Warrant minus the sum of (a) the number of such
shares purchased by the Registered Holder upon such exercise plus (b) the number
of Warrant Shares (if any) covered by the portion of this Warrant canceled in
payment of the Purchase Price payable upon such exercise pursuant to subsection
1(b) above.
2. ADJUSTMENTS.
(a) If the Company consummates an Investor Sale (as
defined in the Notes) for consideration per share (the "Investor Price") which
is less than the Purchase Price in effect immediately prior to such Investor
Sale, then, immediately upon, and only upon, the consummation of the first such
Investor Sale, the Purchase Price shall be adjusted to equal the Investor Price.
For purposes of this section consideration received by the Company shall be
computed as follows:
(i) insofar as it consists of cash, be computed
at the aggregate of cash received by the Company, excluding amounts paid or
payable for accrued interest; and
(ii) insofar as it consists of property other
than cash, be computed at the fair market value thereof at the time of such
issue, as determined in good faith by the Board of Directors; and
(iii) if the shares in the Investor Sale are
issued together with other shares or securities or other assets of the Company
for consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (I) and (II) above, as determined in
good faith by the Board of Directors.
(b) If the Company consummates a Consensual Conversion
(as defined in the Notes) at a conversion price per share (the "Consensual
Conversion Price") which is less than the Purchase Price in effect immediately
prior to such Consensual Conversion, then the Purchase Price shall be adjusted
to equal the Consensual Conversion Price.
(c) If outstanding shares of the Company's Common Stock
shall be subdivided into a greater number of shares or a dividend in Common
Stock shall be paid in respect of Common Stock, the Purchase Price in effect
immediately prior to such subdivision or at the record date of such dividend
shall simultaneously with the effectiveness of such subdivision or immediately
after the record date of such dividend be proportionately reduced. If
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such combination
shall, simultaneously with the effectiveness of such combination, be
proportionately increased.
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<PAGE> 4
(d) When any adjustment is required to be made in the
Purchase Price under this Section 2, the number of Warrant Shares purchasable
upon the exercise of this Warrant shall be changed to the number determined by
dividing (i) an amount equal to the number of Warrant Shares issuable upon the
exercise of this Warrant immediately prior to such adjustment, multiplied by the
Purchase Price in effect immediately prior to such adjustment, by (ii) the
Purchase Price in effect immediately after such adjustment.
(e) If there shall occur any capital reorganization or
reclassification of the Company's Common Stock (other than a change in par value
or a subdivision or combination as provided for in subsection 2(c) above), or
any consolidation or merger of the Company with or into another corporation, or
a transfer of all or substantially all of the assets of the Company, then, as
part of any such reorganization, reclassification, consolidation, merger or
sale, as the case may be, lawful provision shall be made so that the Registered
Holder of this Warrant shall have the right thereafter to receive upon the
exercise hereof the kind and amount of shares of stock or other securities or
property which such Registered Holder would have been entitled to receive if,
immediately prior to any such reorganization, reclassification, consolidation,
merger or sale, as the case may be, such Registered Holder had held the number
of shares of Common Stock which were then purchasable upon the exercise of this
Warrant. In any such case, appropriate adjustment (as reasonably determined in
good faith by the Board of Directors of the Company) shall be made in the
application of the provisions set forth herein with respect to the rights and
interests thereafter of the Registered Holder of this Warrant, such that the
provisions set forth in this Section 2 (including provisions with respect to
adjustment of the Purchase Price) shall thereafter be applicable, as nearly as
is reasonably practicable, in relation to any shares of stock or other
securities or property thereafter deliverable upon the exercise of this Warrant.
(f) When any adjustment is required to be made in the
Purchase Price, the Company shall promptly mail to the Registered Holder a
certificate setting forth the Purchase Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment. Such certificate
shall also set forth the kind and amount of stock or other securities or
property into which this Warrant shall be exercisable following the occurrence
of any of the events specified in this Section 2.
3. FRACTIONAL SHARES. The Company shall not be required upon the
exercise of this Warrant to issue any fractional shares, but shall make an
adjustment therefor in cash on the basis of the Fair Market Value per share of
Common Stock, as determined pursuant to subsection 1(b) above.
4. REQUIREMENTS FOR TRANSFER.
(a) This Warrant and the Warrant Shares shall not be sold
or transferred unless either (i) they first shall have been registered under the
Securities Act of 1933, as amended (the "Act"), or (ii) the Company first shall
have been furnished with an opinion of legal counsel, reasonably satisfactory to
the Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Act.
(b) Notwithstanding the foregoing, no registration or
opinion of counsel shall be required for (i) a transfer by a Registered Holder
which is a corporation to a wholly owned
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<PAGE> 5
subsidiary of such corporation, a transfer by a Registered Holder which is a
partnership to a partner of such partnership or a retired partner of such
partnership or to the estate of any such partner or retired partner, a transfer
by a Registered Holder who is an individual to any members of such Registered
Holder's family, heirs, executors or legal representatives or trusts for the
benefit of such Registered Holder's family, or a transfer by a Registered Holder
which is a limited liability company to a member of such limited liability
company or a retired member or to the estate of any such member or retired
member, provided that the transferee in each case agrees in writing to be
subject to the terms of this Section 4, or (ii) a transfer made in accordance
with Rule 144 under the Act.
(c) Each certificate representing Warrant Shares shall
bear a legend substantially in the following form:
"The securities represented by this
certificate have not been registered under
the Securities Act of 1933, as amended,
and may not be offered, sold or otherwise
transferred, pledged or hypothecated
unless and until such securities are
registered under such Act or an opinion of
counsel satisfactory to the Company is
obtained to the effect that such
registration is not required."
The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act.
5. NO IMPAIRMENT. The Company will not, by amendment of its
charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms 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 action as may be necessary or
appropriate in order to protect the rights of the holder of this Warrant against
impairment.
6. NOTICES OF RECORD DATE, ETC. In the event:
(a) the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time deliverable upon the
exercise of this Warrant) for the purpose of entitling or enabling them to
receive any dividend or other distribution, or to receive any right to subscribe
for or purchase any shares of stock of any class or any other securities, or to
receive any other right; or
(b) of any capital reorganization of the Company, any
reclassification of the Common Stock of the Company, any consolidation or merger
of the Company with or into another corporation (other than a consolidation or
merger in which the Company is the surviving entity and its Common Stock is not
converted into or exchanged for any other securities or property), or any
transfer of all or substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
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<PAGE> 6
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder a notice specifying, as the case may be, (i) the record date
for such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, or (ii) the effective date on which such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock (or such other stock or
securities at the time deliverable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Common Stock (or such other stock or
securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up. Such notice shall be mailed at least ten days prior
to the record date or effective date for the event specified in such notice.
7. RESERVATION OF STOCK. The Company will at all times reserve
and keep available, solely for issuance and delivery upon the exercise of this
Warrant, such number of Warrant Shares and other securities, cash and/or
property, as from time to time shall be issuable upon the exercise of this
Warrant.
8. EXCHANGE OF WARRANTS. Upon the surrender by the Registered
Holder, properly endorsed, to the Company at the principal office of the
Company, the Company will, subject to the provisions of Section 4 hereof, issue
and deliver to or upon the order of such Holder, at the Company's expense, a new
Warrant or Warrants of like tenor, in the name of the Registered Holder or as
the Registered Holder (upon payment by the Registered Holder of any applicable
transfer taxes) may direct, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock (or other securities, cash
and/or property) then issuable upon exercise of this Warrant.
9. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
10. TRANSFERS, ETC.
(a) The Company will maintain a register containing the
name and address of the Registered Holder of this Warrant. The Registered Holder
may change its or his address as shown on the warrant register by written notice
to the Company requesting such change.
(b) Subject to the provisions of Section 4 hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, upon
surrender of this Warrant with a properly executed assignment (in the form of
EXHIBIT II hereto) at the principal office of the Company.
(c) Until any transfer of this Warrant is made in the
warrant register, the Company may treat the Registered Holder as the absolute
owner hereof for all purposes; PROVIDED, HOWEVER, that if and when this Warrant
is properly assigned in blank, the Company may (but shall not be obligated to)
treat the bearer hereof as the absolute owner hereof for all
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<PAGE> 7
purposes, notwithstanding any notice to the contrary.
11. MAILING OF NOTICES, ETC. All notices and other communications
from the Company to the Registered Holder shall be mailed by first-class
certified or registered mail, postage prepaid, to the address last furnished to
the Company in writing by the Registered Holder. All notices and other
communications from the Registered Holder or in connection herewith to the
Company shall be mailed by first-class certified or registered mail, postage
prepaid, to the Company at its principal office set forth below. If the Company
should at any time change the location of its principal office to a place other
than as set forth below, it shall give prompt written notice to the Registered
Holder and thereafter all references in this Warrant to the location of its
principal office at the particular time shall be as so specified in such notice.
12. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant,
the Registered Holder shall not have or exercise any rights by virtue hereof as
a stockholder of the Company. Notwithstanding the foregoing, in the event (i)
the Company effects a split of the Common Stock by means of a stock dividend and
the Purchase Price of and the number of Warrant Shares are adjusted as of the
date of the distribution of the dividend (rather than as of the record date for
such dividend), and (ii) the Registered Holder exercises this Warrant between
the record date and the distribution date for such stock dividend, the
Registered Holder shall be entitled to receive, on the distribution date, the
stock dividend with respect to the shares of Common Stock acquired upon such
exercise, notwithstanding the fact that such shares were not outstanding as of
the close of business on the record date for such stock dividend.
13. CHANGE OR WAIVER. Changes in or additions to this Warrant may
be made or compliance with any term, covenant, agreement, condition or provision
set forth herein may be omitted or waived (either generally or in a particular
instance and either retroactively or prospectively), upon written consent of the
Company and the holders of at least 50% of the shares of capital stock issued or
then issuable upon exercise of the Warrants then outstanding; PROVIDED, HOWEVER,
that any such amendment or waiver must apply to all warrants then outstanding;
and provided further that the number of Warrant Shares subject to this Warrant
and the Purchase Price of this Warrant may not be amended, and the right to
exercise this Warrant may not be waived, without the written consent of the
holder of this Warrant (it being agreed that an amendment to or waiver under any
of the provisions of Section 2 of this Warrant shall not be considered an
amendment of the number of Warrant Shares or the Purchase Price).
14. SECTION HEADINGS. The section headings in this Warrant are for
the convenience of the parties and in no way alter, modify, amend, limit or
restrict the contractual obligations of the parties.
15. GOVERNING LAW. This Warrant will be governed by and construed
in accordance with the internal laws of the Commonwealth of Massachusetts
(without reference to the conflicts of law provisions thereof).
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<PAGE> 8
EXECUTED as of the Date of Issuance indicated above.
The Medicines Company
By: ______________________________
Title: Chief Financial Officer
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<PAGE> 9
EXHIBIT I
EXERCISE FORM
To:_________________ Dated:____________
The undersigned, pursuant to the provisions set forth in the attached Warrant
(No. ___), hereby irrevocably elects to purchase (check applicable box):
_____ shares of the Common Stock covered by such Warrant; or
the maximum number of shares of Common Stock covered by such
Warrant pursuant to the cashless exercise procedure set forth
in Section 1(b).
The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant, which is $________.
Such payment takes the form of (check applicable box or boxes):
$______ in lawful money of the United States; and/or
the cancellation of such portion of the attached Warrant as is
exercisable for a total of _____ Warrant Shares (using a Fair
Market Value of $_____ per share for purposes of this
calculation); and/or
the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in Section
1(b), to exercise this Warrant with respect to the maximum
number of Warrant Shares purchasable pursuant to the cashless
exercise procedure set forth in Section 1(b).
Signature: ____________________
Address: ______________________
______________________
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<PAGE> 10
EXHIBIT II
ASSIGNMENT FORM
FOR VALUE RECEIVED, ________________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (No. ____) with respect to the number of shares of Common Stock covered
thereby set forth below, unto:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
Dated: _________________________ Signature: ________________________________
-10-
<PAGE> 1
Exhibit 10.21
THE MEDICINES COMPANY
2000 OUTSIDE DIRECTOR STOCK OPTION PLAN
1. PURPOSE
The purpose of this 2000 Outside Director Stock Option Plan (the
"Plan") of The Medicines Company, a Delaware corporation (the "Company"), is to
advance the interests of the Company's stockholders by enhancing the Company's
ability to attract, retain and motivate outside directors of the Company by
providing such directors with equity ownership opportunities and
performance-based incentives and thereby better aligning the interests of such
persons with those of the Company's stockholders.
2. ELIGIBILITY
Each director of the Company who is not an employee of the Company (an
"Eligible Director") is eligible to be granted options (an "Option") under the
Plan. Any person who has been granted an Option under the Plan shall be deemed a
"Participant."
3. ADMINISTRATION, DELEGATION
The Plan will be administered by the Board of Directors of the Company
(the "Board"). The Board shall have authority to adopt, amend and repeal such
administrative rules, guidelines and practices relating to the Plan as it shall
deem advisable. The Board may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Option in the manner and to the
extent it shall deem expedient to carry the Plan into effect and it shall be the
sole and final judge of such expediency. All decisions by the Board shall be
made in the Board's sole discretion and shall be final and binding on all
persons having or claiming any interest in the Plan or in any Option. No
director or person acting pursuant to the authority delegated by the Board shall
be liable for any action or determination relating to or under the Plan made in
good faith.
4. STOCK AVAILABLE FOR OPTIONS
a. NUMBER OF SHARES. Subject to adjustment under Section 4(b), Options
may be granted under the Plan for up to 250,000 shares of common stock, $.001
par value per share, of the Company (the "Common Stock"). If any Option expires
or is terminated, surrendered or canceled without having been fully exercised or
is forfeited in whole or in part or results in any Common Stock not being
issued, the unused Common Stock covered by such Option shall again be available
for the grant of Options under the Plan. Shares issued under the Plan may
consist in whole or in part of authorized but unissued shares or treasury
shares.
b. ADJUSTMENT TO COMMON STOCK. In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares,
<PAGE> 2
liquidation, spin-off or other similar change in capitalization or event, or any
distribution to holders of Common Stock other than a normal cash dividend, (i)
the number and class of securities available under this Plan, (ii) the number
and class of securities and exercise price per share subject to each outstanding
Option and (iii) the number and class of securities available for automatic
grants shall be appropriately adjusted by the Company (or substituted Options
may be made, if applicable) to the extent the Board shall determine, in good
faith, that such an adjustment (or substitution) is necessary and appropriate.
If this Section 4(b) applies and Section 6(c) also applies to any event, Section
6(c) shall be applicable to such event, and this Section 4(b) shall not be
applicable.
5. STOCK OPTIONS
a. AUTOMATIC GRANTS.
(i) Each Eligible Director shall be granted an Option to
purchase 20,000 shares of Common Stock at the close
of business on the date such Eligible Director is
first elected to serve on the Board.
(ii) Each Eligible Director who is serving on the Board at
the adjournment of any annual meeting which begins
after the date of his or her election shall be
granted an Option to purchase 7,500 shares of Common
Stock at the close of business on the date of each
such adjournment.
b. OPTION EXERCISE PRICE. The option exercise price per share for each
Option granted under the Plan shall equal (i) the last reported sales price per
share of the Company's Common Stock as listed on a nationally recognized
securities exchange or the Nasdaq National Market, as the case may be, on the
date of grant (or, if no such price is reported on such date, such price as
reported on the nearest preceding day); or (ii) the fair market value of the
stock on the date of grant, as determined by the Board of Directors, if the
Common Stock is not publicly traded. Notwithstanding the preceding sentence, the
option exercise price per share for each Option granted on the Effective Date
shall be the price per share for which the Common Stock was offered to the
public.
c. EXERCISE PERIOD. Each Option shall [immediately vest and be
exercisable]. In addition, no Option may be exercised more than one year after
the Participant ceases to serve as a director of the Company. No Option shall be
exercisable after the expiration of ten (10) years from the date of grant or
prior to approval of the Plan by the stockholders of the Company.
d. PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of
an Option granted under the Plan shall be paid for as follows:
i. in cash or by check, payable to the order of the
Company;
ii. except as the Board may otherwise provide in an
Option Agreement, by delivery of an irrevocable and
unconditional undertaking by a creditworthy broker to
deliver promptly to the Company sufficient funds to
pay the exercise price, or by delivery by the
Participant to the Company of a copy of irrevocable
and unconditional instructions to a creditworthy
- 2 -
<PAGE> 3
broker to deliver promptly to the Company cash or a
check sufficient to pay the exercise price;
iii. to the extent permitted by the Board and explicitly
provided in an Option Agreement (i) by delivery of
shares of Common Stock owned by the Participant
valued at their fair market value as determined by
the Board in good faith ("Fair Market Value"), which
Common Stock was owned by the Participant at least
six months prior to such delivery, (ii) by delivery
of a promissory note of the Participant to the
Company on terms determined by the Board or (iii) by
payment of such other lawful consideration as the
Board may determine; or
iv. by any combination of the above permitted forms of
payment.
6. GENERAL PROVISIONS APPLICABLE TO OPTIONS
a. TRANSFERABILITY OF OPTIONS. Except as the Board may otherwise
determine or provide in an Option, Options shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the Participant, shall be
exercisable only by the Participant. References to a Participant, to the extent
relevant in the context, shall include references to authorized transferees.
b. DOCUMENTATION. Each Option under the Plan shall be evidenced by a
written instrument in such form as the Board shall determine. Each Option may
contain terms and conditions in addition to those set forth in the Plan.
c. ACQUISITION EVENTS. The Company shall give the Participant ten (10)
days notice of an Acquisition Event (as defined below), and the Option shall
expire upon the Acquisition Event. An "Acquisition Event" shall mean: (a) any
merger or consolidation which results in the voting securities of the Company
outstanding immediately prior thereto representing immediately thereafter
(either by remaining outstanding or by being converted into voting securities of
the surviving or acquiring entity) less than 50% of the combined voting power of
the voting securities of the Company or such surviving or acquiring entity
outstanding immediately after such merger or consolidation; (b) any sale of all
or substantially all of the assets of the Company; or (c) the complete
liquidation of the Company.
d. CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated
to deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Option have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
- 3 -
<PAGE> 4
7. MISCELLANEOUS
a. NO RIGHT TO BOARD MEMBERSHIP OR OTHER STATUS. Neither the Plan nor
the granting of an Option shall be construed as giving a Participant the right
to continue as a director of the Company.
b. NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the
applicable Options, no Participant or beneficiary designated by the Participant
shall have any rights as a stockholder with respect to any shares of Common
Stock to be distributed with respect to an Option until becoming the record
holder of such shares.
c. EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on
the date on which it is adopted by the Board. No Options shall be granted under
the Plan after the completion of ten years from the date on which the Plan was
adopted by the Board, but Options previously granted may extend beyond that
date.
d. AMENDMENT OF PLAN. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time.
e. GOVERNING LAW. The provisions of the Plan and all Options made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.
- 4 -
<PAGE> 1
Exhibit 21.1
SUBSIDIARIES
1. The Medicines Company Limited, a private limited company incorporated under
the laws of New Zealand, is a wholly-owned subsidiary of the Company.
2. The Medicines Company Limited, a private limited company incorporated under
the laws of the United Kingdom, is a wholly-owned subsidiary of the
Company.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
April 17, 2000, except for Note 14, as to which the date is May 17, 2000, in the
Registration Statement (Form S-1) and related Prospectus of The Medicines
Company for the registration of its common stock.
/s/ Ernst & Young LLP
Boston, Massachusetts
May 17, 2000
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